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 Jade Warshaw this hour. The number to call is triple 8825-5225 we've got a great crowd in the lobby of Ramsay solutions. Look, they're so happy to be here, Jade. And a good reminder that we're open to the public. You can watch the show on the glass. If that's how you want to enjoy your day, is to watch a radio show through glass, then come join us. We've got baked goods, coffee, all kinds of things. Fun for the whole family.

Love it.

So give us a call. Triple 8825-5225. And Jay, we're going to kick off this hour with a brand new segment. We are calling change my mind.

Ooh, change my mind. I love it.

It all started with a friendly voicemail from a listener who wanted to have a friendly debate.

Okay.

And so I thought you would be the perfect person to have a friendly debate with.

Okay.

And so if you want to join in and you have something you'd like us to change our mind about, or change your mind about, you can email ask@ramsaysolutions.com put change my mind in the subject line. And Brad, welcome to this brand new segment. You invented it, my friend. How you doing?

Great. Change my mind. New car versus used car value here.

Hot debate. Okay, make your case.

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

Okay.

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

What do you mean? Yeah, is this like maintenance?

No. If you buy a car for $20,000 and it lasts ten years and you throw it out, you paid $2,000 a year. Okay, that's the way I'm trying to do this.

Got it.

So I bought the $20,000 used Honda pilot, drove it for ten years. And it had some engine problems, and da da da, threw it out for $1,000. I sold it. But that is $2,000 a year.

Okay?

And I'm driving a 13 year old car.

Okay.

At the end of it. Now, my other scenario here that I did, I bought a brand new little Honda HRV, drove it for three years, traded it in, and I paid the same $2,000 a year.

What did the HRV cost you after taxes?

After all the micro.

Around $25,000 for a brand new HRV.

No, this is 18, 2018.

Okay. Because you're saying the argument here is new car versus used car.

Correct.

So are you saying, why shouldn't I buy a new car? This is your first time looking to buy a new car?

No, I've bought several new cars and several used cars, and I've seemed to win on the new cars.

Help us understand how you're winning, because.

You'Re saying your yearly cost of ownership, essentially correct, is lower on the new.

Maintenance, gas, none of that. Just the initial cost and what it's worth when you get rid of it.

So you're paying cash, whether it's new or used, is what you're saying?

Oh, yeah, always cash.

Okay.

So you buy it up front, it's a done deal. You sell it at the end, you complete the transaction.

So then really what we're talking about is whether or not you have the net worth to care about the depreciation that's taking place on the new car.

The depreciation is what the argument is, okay? Dave always says the depreciation is in the first three years, the heavy. I agree with that. Okay? Three to.

Me. Let me give some people the facts, because we're changing my mind, and I happen to have it right here. 1 minute after you drive the car off the lot. Let's say we're talking about a $35,000 car, 1 minute after you're losing somewhere between nine and 11%. So that's basically, what, $3,500 out the window right there in 1 minute. And then after one year, you're losing around 20%, maybe even more. And then after five years, you're down to about 60%, and then after that, you're 10% each consecutive year after that. So the idea for the people listening, because some people might not know it, the way we teach is, hey, if your net worth is a million bucks or more, you can buy a brand new car. Whatever year you are in. You can buy that car brand new in cash, and it's fine. Because I don't care if you bought.

$100,000 car as long as everything with motors and wheels doesn't add up to more than half of your annual income.

Because basically the argument is you're happy with burning that money in a pile and just seeing it go up in flames, and it's not going to affect your net worth.

We look at cars like a vacation property. It's a toy. It's a luxury toy. And it's going to go down in value, which, unlike real estate, it will go down in value. Regardless of what people tell me that cars are an investment, they also rust. And so, brad, in this scenario, what is your financial situation? Are you a net worth millionaire? Do the cars add up to more than half of your income?

We're almost a net worth million plus, over a hundred thousand coming in every year. And we have no bills, no debt.

Wonderful. You have a paid for house.

Oh, yeah.

Crushing it. Okay, so the argument here is over a few hundred dollars a year in cost of ownership. Wait, I'm sorry, is the argument here over a few hundred dollars a year of cost of ownership? Hey, the used one cost me two grand. The new one cost me 1700.

Yes.

Okay.

Sort of. Except, yes, that's basically it. I looked around today, I could not find a car that was half its value in five years.

Well, you're also looking at a very specific time in the car market. It's been real weird for the past three years or so. And so it's a weird time to look at this and go, well, this is reality, when this could all change and go back to normal. And so you're right. Cars have held their value more than they have over the last few decades because of this crazy time in the car market with supply and demand and the chip shortages and Covid and all of this stuff. And so we're starting to normalize, but everything is still so overpriced that it makes me just want to barf. Looking at prices of used cars or new cars, they're both terrible investments right now.

I agree. And I am not a car guy. I'm looking at 140 hp vehicle here. So I get that. But I am trying to save some money because I would much rather go on vacation than spend it on a car.

Love it. So give us the example of the car you bought, or you want to buy that's brand new.

Let's do my HRV again. $25,000 several years later.

Okay, and when did you buy this?

Well, I bought a couple of them. I bought the first one. I think it was 2018.

Okay, but you bought it new in 2018, correct? Okay, well, I would look at the next five years and see how it pans out for you. And again, it's a fun little debate. And you are not the problem, Brad. You are an almost net worth millionaire with a paid for house. And if you want to spring the extra $200, it's not changing your world. But if you want to check out the blog we have on new cars versus used cars, we'll put that in the description. It's called should I buy a new or used car@ramsaysolutions.com? More of the Ramsey show coming right up.

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Welcome back to the Ramsay show. I'm George Camel, joined by Jade Warshaw. The number to call ISA 825-5225 don't be scared. You can't DM. You got to call in. It's the only way. My Gen Z friends, I know it's uncomfortable to call on a phone, but they still do that. I found text in one day. We'll get there. That'll be like our Patreon edition. That'll be fun. All right. Gabrielle is on the line in Detroit. Gabrielle, welcome to the show.

Hi.

Thank you. My question is, should I apply for my first credit card so I don't have to continue paying for everything in cash?

No.

Where is this coming from? So right now, you're paying for everything with actual physical dollars, cash.

I mean, as in, that's in just money in my bank account.

Like your own money.

Okay. So what is your fear with using your own money from your own bank account with a debit card?

I know that a credit card can help me build my credit. I do have other lines of credit open, just not a credit card. And also, I guess sometimes it's going to sound silly, but it's kind of hard to let go of some cash all at once. So the idea of paying it in increments by the due date is somewhat appealing.

What if I told you that that's your body saying, don't make a stupid decision when you say letting go of a lot of money at once. What would be the purchase here?

I don't have anything in particular, just my day to day transactions. So things like groceries, gas, maybe like a leisurely item here and there.

So you'd rather lump it all into one giant mountain and then 30 days later have that come out of your account? If you're lucky?

I guess not.

That's even scarier to me because I've been there. I was that guy who opened the credit card to build the credit, who racked up a bunch of debt on there, and the balance carried. So I'm telling you, as a guy who did this, you don't want to do this. How old are you?

I'm 24.

Okay. Have you ever had a credit card?

No.

Wow.

And you've survived to tell the tale.

I just think it's interesting. Okay. Our screen says, I don't want to pay for everything in cash, which kind of feels a little bit like.

It.

Doesn'T feel like it's as much of a credit card and building. Is it for building credit, or is there something else behind this? I'm just trying to understand, because this might sound simple, but in my mind, I'm thinking if I want to buy something, I should use my money to buy it. That's the whole purpose of working, is so that you have money to purchase the things that you want and need, and you feel purpose in doing that. And so there's part of me that kind of feels like credit cards take away that feeling of satisfaction. I've worked. The money I've earned is good enough for me, and I can use that money to make my purchases. Where does that bother you? I'm trying to understand. Kind of your take on this.

Like I said, I guess just people always tell me that you should have a credit card to build your credit. I don't know if I should need that. Just my friends and family.

Are your friends outstandingly wealthy that you look up to them and go, I want to be them when I grow?

Not exactly.

There's one reason to listen to them.

There's a foundational difference here. And so where George and I are coming from is you might be new to this show, but everyone here is kind of of the mind. Not kind of. We are of the mind that we don't need or rely on credit at all for our lives, because, like I said before, we have jobs. Our jobs earn money, and we've learned to live on the money that we earn. And when we do that, we keep ourselves out of debt, and we keep ourselves out of risk in general in life, because we're just using and spending the money that we have. We're using that money to pay for our day to day needs. We're using that money to save up emergency funds so that we don't need to rely on credit cards. And so that's where George and I are approaching this. And it sounds like some of the people that you've been talking to have a different view of life. And their view of life is your money is not enough. And so you have to get credit because they can give you the money you need to have the lifestyle you want.

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

That's understandable. I appreciate you sharing.

Know, and I want to take it a step further. And George can help me with this because I think Gabrielle, what happens, it's truly, and I don't say this to be ugly to anybody, I truly think a lot of people don't know and don't have the education to understand. You can buy cars without a credit score, and you can get apartments without a credit score, and you can buy homes without a credit score. That's not taught in our culture. I mean, we're really the only ones talking about it over here at Ramsey.

Solutions become controversial over time just to pay cash for things.

Because when you pay cash for things, no one's really making any additional money off of you. So a lot of companies don't like that. They don't like that we say this, and I kind of want you to hear that we're teaching you something, that you can live and be self sustainable, and no one's constantly making money off you.

Right?

They're not making money off you on interest and payments and late fees. That's really what this argument is about. You don't have to play that game. So I hope you hear that with a know. What is it? Clear minds, clear hearts.

Yes. Clear eyes, full hearts. Can't lose.

Thank you, James. Texas forever.

I'm curious. You said you wanted this to build credit. Why do you feel like you need to build credit?

I guess in case I ever needed to take another loan out in the future. Because right now, like I said, I do have three other lines of credit open.

What are those lines of credit?

I have a mortgage, a car loan, and some student loans.

Okay. And so your path is, let's get more lines of credit. To get more lines of credit. To get more debt. To get more lines of credit. That seems to be the path.

I guess that's what I thought I should be doing.

Well, what I'm trying to do is unravel this to show you the insanity that America has fallen into. And so when you really look at what credit scores are for, it's a magic number that was given to us by the credit gods to get us into more debt. And so when you decide, I'm done with debt, I don't want a car loan anymore. I don't want the student loan anymore. You no longer have a need for credit. And even when it comes to buying a house, I've bought a house with no credit score. And we teach people, save up and pay for a car you can afford in cash, and then you don't need credit because they don't check your credit score when you pay cash.

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

I guess the material item of whatever it was I purchased, which was probably.

Not for me to pay off. And here's what I found. When you use someone else's money, you look at it differently. When you use your own money, you start to go, oh, crap, that's money leaving my bank account right now.

Well, that's science, George. There's actual psychological studies on what happens when you use credit card. That's plastic versus credit card. That's your debit card versus cold, hard cash. Your body becomes more and more removed from the process. The more and more it's removed from being actual money in your hand, even something like Apple Pay, even though it's your money.

But their tagline is cashless made effortless. They want to make spending so effortless. And here's what I found, Gabrielle. Now for ten years, living with a debit card. When it hurts less, it costs more, you spend more. You're hoping you can make the payment. You're lucky to make the payment. I found. When I use my debit card, I don't need hope or luck. I should actually pay attention to my money. And when I run out, I can't spend anymore. And to me, that is a great way to build wealth. And it adds really healthy guardrails. So that's why I'm recommending all this to you. And I unpack all of this in the credit cards chapter of my new book, breaking Free from Broke. I am telling you, you will want to take a shower after reading that chapter. I unpack the studies. I go through every objection that's in your mind. I'll show you how to live life outside of the credit card and credit score system. So hang on the line. Our team's going to pick up and we will gift you breaking free from broke. You can choose audiobook, ebook, the hardcover copy, however you like to read.

We want to make sure we get it into your ears or in your hands. Thank you so much for the call. Great question. Love your heart around this. And I hope we've convinced you to stay away from these gross companies because listen, Capital one's out here sponsoring the Taylor Swift tour. We can't afford tickets to the Taylor Swift tour. Who is winning here? It's not us. It's the companies with the big buildings downtown. This is the Ramsey show, guys.

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This is a paid advertisement. NMLs? Id 1591 nmlsconsumeraxis.org equal housing lender 1749 Mallory Lane suite 100 Brentwood, Tennessee 37027 welcome back to the Ramsay show. I'm George Camel, joined by Jade Warshaw. We're going to have some fun here in this next segment. If you've listened to the show for a while, you know, we've done some stupid tax segments, and if you don't know what a stupid tax is, you've probably paid one. This is a financial mistake with some zeros on the end. It's just one of those things. If you're over twelve, you've paid a stupid tax at some point in your life.

Most of.

And so we don't do these segments to shame people. We do it to kind of have a laugh and go, we're not alone. We can all grow from this. And really, it's only stupid if you do it more than once. That's how you know. And so we've got some folks we've scheduled on the show to call in and share theirs. And I have a whole list of stupid tax stories that were submitted from our listeners. So we're going to kick this off with Aaron in Dallas, Texas. Aaron, tell us about your stupid tax.

Okay. Well, I was working in downtown Dallas and I decided to start making some real money. And so I decided I needed this designer Prada handbag. And I'm not a flashy person, so I don't know why I decided I needed this handbag, but I bought it. $3,800? Yes. It was a beautiful purse.

I bet it better be for $3,800.

But I learned quickly that I didn't enjoy carrying it. I was too paranoid to mess it up all the time. I was worried it would get stolen. I wouldn't take it to the restroom. And, like, if I was out to eat and I had to go to the bathroom, I didn't like putting it on the floor on the counter. And one time it was rain thing outside at work, and I spent about a half hour covering it in those plastic grocery bags so it wouldn't get wet. And I finally realized I didn't like it that so much. So I sold it a year later for $350.

A year later?

Yes.

That thing depreciated by 90%. Were you just desperate or is that the going rate for a one year old product bag?

It was a buy sell page, so I guess that was market speaking. Designer bag.

Well, now I know where to get a designer bag for my wife. I'm going to go on one of those pages. Just a year old, honey, it's barely used. It's been covered in a Walmart sack for the last year because Erin was scared.

Honestly, it's going for $500. The same bag going for $500 on the same buy sell page now. And I still like it. So I kind of thought about buying it again.

Oh, my goodness.

You're like, I feel better buying it for 500.

Yes.

Oh, my goodness. What purse do you have now? What's your go to bag?

I don't even carry a purse. I just carry my wallet in my hand.

I know that's right. Which wallet is it? Is it fancy?

No, Brighton.

Like the mall.

Yeah. Oh, wow.

That is so funny. Do you know what that reminds me of, Erin? That episode of Friends where Monica wants those boots so, so bad, and she finally gets them, and they hurt her feet. Her feet are, like, bleeding, and then she has to return them.

Ouch. Are you married, Aaron?

I was at the time, yes.

What did your spouse think about this? Was this a conversation, or was this just, like, I'm doing?

He was. He was in the military, and he was deployed at the time, so I don't really remember asking.

Did this go on a credit card?

No, I wrote a check for it.

That's good.

At least there's the silver lining.

At least it wasn't 3800 with 22% apr.

Yes.

Added pain.

Oh, my goodness. Well, are you doing well?

Now learn a valuable lesson. Sometimes it's just not worth it when you have something you're worried about messing up all the time.

Yes, that's a very good point.

When you buy that really nice luxury car, and then you're parking it a mile away in the parking lot because you're scared someone's going to ding your door, I'm like, was this really worth it for this level of emotional paranoia and stress?

Look, I feel that way with kids. Sometimes. I see people with brand new cars, and they have, like, two and three and four year olds. I'm like, these kids are destroying the.

Inside of this car, covered in sauce.

They kick the back of the seat.

Oh, yeah. Now that you got to get a kick protector. I found out just to protect that Aaron stuff has a cost. And my friends, the minimalist, they talk about this stuff a lot of, like, it's not just the financial cost, it's the emotional cost, the mental cost, your time cost. And so thank you for being brave and sharing that with us.

That's good.

Yes. Well, it's good to talk to you guys. I listen every day.

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

Got to make a million bucks a year to have a $4,000.

No, because I know Jade probably has probably sneakers that are more than my retirement account.

That could be true, but not bags.

Okay, here's the thing. I don't know anything about sneakers. And then I'll see in the YouTube comments, like, oh, Jade's got those Travis Scott friends and family. I'm like, I don't know what they're saying. And then they're like, those are thousand dollar sneakers. And I'm like, jade is walking on pavement.

I couldn't wear. You know what I will say in the live like no one else, so later you can live like no one else. My thing is sneakers. Everybody has their things. I don't care about bags or jewelry. Some people like diamond jewelry. I like costume jewelry. But I love sneakers, and I'll pay cash for them. And, yeah, no stupid tax on that.

That's fair.

Well, if I was in debt, it would be stupid tax. And I'd be like, her. Like, trying to cover them up and walk without creasing them. And that whole. Although I do still try to walk without creasing them, but still.

Oh, that would stress me out.

Listen, when you sit in a stool and it's like your feet want to. Like, I have to sit with my feet straight so they don't crease.

That's too much stress for me. But you know what? The guys are not guilt free in this category. A lot of guys, if it's not the truck, it's the sports, it's the hobbies, it's the golf.

Well, what's your thing, George?

For me, it was gear and technology. So from a music world and from a technology world, I could justify every single camera purchase one time on a whim. I bought, like, every GoPro accessory money could buy, along with the GoPro, the latest hero, eight, or whatever it was. I spent hundreds of dollars on this. I can count on zero fingers how many times I used my goPro. I thought I was going to be some kind of, like, action adventure hero, going mountain biking with my goPro. Yeah, I don't leave the house. Jade. I don't know what I was thinking.

I could be like that with kitchen equipment. Like, you're like, ooh, if I had the juicer that has the attachment that does this, I'll become one of those people that makes ginger shots.

That's what it is. I'm an aspirational shopper. I'm like, if I get the vitamix. I'll start to enjoy smoothies.

Yeah.

I will like kale more. And if I buy the right equipment. I bought a Canon 7D because I thought, I'm going to be this big videographer photographer. It has been collecting dust, and I have too much shame to sell it because I know for whatever I sell it for, it would be cents on the dollar for what I paid for it. And so I think there's on the old shelf. Yeah. And guys can do that all the time. So I'm going to share a few stupid tax stories submitted from our listeners. Okay. Crystal said I financed a botox treatment with a six month no interest deal, quote, unquote. The botox wore off before I made my first payment.

Oh, man.

Her face unfroze. Just in time for her to go, oh, crap.

That's right.

I got to pay for this now. That's nuts, Amanda, in Australia, I used the equity in my home to up my 30 year mortgage to buy a brand new jeep wrangler worth $50,000 while making 40,000 a year. Ooh, that one takes your breath away a little bit.

I kind of know about that. Wait, let me share mine then.

Okay.

Because we had a paid for Jeep Cherokee, and we're like, yes, we finally paid it off. Most people would be excited and to have their money back in their pocket. We were like, paid off our car. Let's go finance a $35,000 Hummer and pay $435 a month.

You were a Hummer family?

We were a hummer.

We wouldn't take you for a hummer.

Yeah.

Wow, those were hot.

For a while, they were listening on the road. Now they're coming out again, and really, mama wants one.

Are they electric or something? Do they make coffee?

They're not electric, but they're less gas guzzly.

That's comforting.

I want to come back and do it the right way.

Thank you for that. All right. Pamela said, I got scammed out of $300 on Facebook by a friend, quote, unquote. It wasn't actually my friend. Keep in mind, we are babysep seven, both finance majors, and yet we found a deal on a car too good to be true and immediately sent a deposit after a short conversation with said friend on Facebook messenger. Oi. I've been scammed before, and it hurt the nigerian prince. Well, it wasn't a prince, but it is funny. And here's what's funny, is this went on TikTok and went viral, and everyone from Nigeria was like, I can't believe this guy is dogging Nigeria. And I was like, this is just where he had me send the shoes. So I was on Craigslist posting some Nike dunks I had, and I thought, I'm going to be a dunks. Guy. Could not rock the dunks. Sold them on Craigslist. This guy says, hey, these are a gift for my cousin in Nigeria. I went, what a kind gift. He said, I'm going to pay you right now for shipping. I'll pay beyond what it costs. Red flag number four.

True that.

And so I thought I got an email from Paypal with the confirmation of payment, and so I just went ahead and shipped them. Turns out that PayPal was not, in fact, that was fake. It was not a real email from PayPal. The money never actually hit my Paypal account.

That's sufficient.

And I was just an 18 year old knucklehead. And so, good news is, six months later, I got a box back to my house that said, return to sender address not found. I was only out the cost to ship. There you go. A small stupid tax.

No weapon formed.

That's right. Hey, we got more stupid tax stories coming up. Don't go anywhere. This is the Ramsey show. This episode is sponsored by Betterhelp. Hey, this is Dr. John Deloney. And some people think relationships have to be easy to be right. Sometimes that can be true. But more often, great relationships get that way because both people put in the work to make them incredible. Therapy can be a place to work through the challenges you face in all of your relationships, whether that's with friends, people at work, your significant other, or even how to get along with yourself. And if you're thinking of starting therapy, try betterhelp. Therapy isn't just for people who've experienced trauma. It's great for building skills so you can become the best version of yourself. Betterhelp is completely online, so it's flexible enough to fit your schedule. Just fill out a short questionnaire to get matched with a licensed therapist, and you can switch therapists at any time for no extra cost. Find the path forward to making all of your relationships incredible. Visit betterhelp.com Deloney today to get 10% off your first month. That's Betterhelp. He lp.com deloney. Welcome back to the Ramsay show.

I'm George Camel, joined by Jade Warshaw. 825-5225 is the number to call if you want to jump in and talk about your life and your money. We've been having fun sharing some stupid tax stories. And if you don't know what that is. It's just financial mistakes you've made with some zeros on the end. And we call it a stupid tax around here because it's kind of the price you pay to get an education the hard way. And we've all done it. If you're over twelve, you probably have some stupid tax in your life. And so we've got some listener submitted stories, and we've got Jenny on the line in Fayetteville, North Carolina, who is brave and willing to share her stupid tax story. What's going on, Jenny?

Hey there, guys. How are you?

We're doing well. Please share. I'm so excited about this.

So my stupid tax story starts at the beginning of COVID March 2020. I'm self employed, as is my husband. This was before Dave. So we borrowed money at every chance we got. Our business banker loved us, right? Ten days after everything started to happen, he sent us an email and said, hey, we want to offer you this great loan. $50,000 unsecured, low rate, no payments. We were like, yes, that's awesome, because we were really worried about the revenue stream. Over the next couple of months, we didn't really know what was going to happen, so we took out this loan that we didn't need. But just because we didn't have sufficient savings, we thought we should do it.

We thought it was a good idea.

Like I said, this was before Dave. Well, fast forward a year, and we had taken financial peace by then, and we were deep in the heart of baby step two. And that's when we really realized, what did we do this for?

It's ridiculous.

So that $50,000 debt went in our baby step two, and we put it in the debt snowball. And I figure when it was all said and done, the interest that accrued over the year with no payments, and the payments that we did have to make, it probably cost us about $3,000.

Yikes. So what did you do with that?

And looking back now out of it, we're baby step seven. We don't owe anybody anything. And I can't believe I ever thought that was smart.

Well, in a moment of panic and fear, you tend to make some pretty stupid decisions. Absolutely, Covid. I think a lot of people, I.

Took that loan out of pure fear, and I was using debt as my emergency fund, but I will never do that again.

Lesson learned.

So 50 grand shows up in your bank account. What do you do with it?

Yeah, they made me take the money. They didn't just give me a line of credit to use. They wanted me to take it so they could get interest ASAP.

Did you actually use it to cover the business or did it become sort of a lifestyle spending fund?

Well, honestly, George, I didn't even really ever need it. I'm more in real estate and real estate was booming.

That's right.

My husband's in a different industry that really relies on large gatherings like festivals and weddings. So we were really worried about his situation. But he's smart. He was able to pivot and figure it, so we didn't even need it. That's the carry on top. We didn't need the money, but it cost us three grand to have it in our account.

Are you still friends with the business banker?

Yeah, we're still friends.

Okay, maybe just limit that money anymore. Yeah, send him a Christmas card once a year, but maybe don't answer his emails when it comes to loans. Thank you for sharing that story, Jenny. That's a fun one.

Hey, you know what that reminds me of, George, kind of during the same time. Covid, remember, with student loans, it was like, Biden's going to forgive your student loans, so get a refund on the payments that you made during COVID Yeah, people were getting those advance refunds on the payments that they made. Like, people who had literally paid off their student loans got refunds on their payments and went back into debt. Thinking, Biden's going to forgive x amount and I'll give.

If you had paid your balance to zero and you made 20,000 in payments, the student loan company would bring your balance back to 20k, as if you went back into 20,000 of debt. They went, good luck. The government will take care of you. Oh, that was a scary time.

Yes.

A lot of bad decisions.

And a lot of people spent the money that they got back. And then Biden never forgave the student loans. And then they were on the hook again to pay off the 20,000 or the 7000 or whatever it is again. That was a big old stupid tax. I know a lot of you all paid that. I feel bad for you.

All right, I'm going to share a listener story here from Vincent about his stupid tax. My wife had this, quote, amazing idea of starting a hobby farm. So we moved from the city to a rural area. Over five grand later, I'm standing in the rain, getting kicked in the face trying to milk a goat. And I'm chasing foxes trying to eat the chickens.

Oh, man.

No milk and very few eggs. And neither of us had the courage to do what had to be done for chicken meat, if you know what I mean. Oh, boy. That was like the worst.

Wow.

The worst children's story ever right there. Yeah, that is true. A lot of people are like, I'm going to be a homesteader.

We're going to move and live off.

The fat of the land. And then you realize how difficult it is.

Yeah.

Or become. From a city slicker to the farm. Boy, that's a big jump to just.

Up and start a farm. Remember when eggs were so expensive and people were trying to buy chickens?

Well, John Deloney famously had some chickens, and I think they started getting attacked by coyotes. And so he ended the chicken coop situation. And eggs aren't that expensive. Now we've come back down to reality.

Yeah, but what you said about Jenny is true. And about so many of us, when we get in the state of fear, eggs are getting expensive. You go to these crazy extremes.

Or, like, chicken coop for $4,000, take.

Out a $50,000 loan. It's like your brain just. It's definitely a temporary moment of insanity sometimes.

Well, we always say no one makes good decisions when they're panicked or drunk.

That's right.

And some people were both during the pandemic. Okay, here's a fun one from Olivia. Buckle in. My mom is paying stupid tax and has been for about 15 semesters of college. My brother's 26, is a full time college student working towards a bachelor's. To be clear, he has no degree so far and has been attending college, quote, full time since fall of 2015. After he graduated from high school in May of 2015, he has been academically dismissed from an out of state college and is now attending an in state university where my mom pays for all of his bills and recently bought him a new truck after he totaled my mom's 20 year old Corvete. Every semester, when it's time to pay tuition, she hands him her debit card and has never officially seen his grades. Oh, boy. Every semester, he has a new, quote, graduation expectation date that's typically six months to a year out. And when that time comes, he has another excuse about why he's not graduating. And my mother continues to fund this lifestyle and never hold him accountable, all while financially supporting him 110%. Don't be my mom. People. Set goals and expectations with your kids.

Require some aspect of responsibility and accountability. And don't blindly pay for things without seeing the bill for yourself. Ouch. It sounds like mom is happy to pay this stupid tax bill for her little boy.

Yikes.

Well, what is it?

Come on, now. Now, Dave has a fun rule. He said, I will pay for college, but the requirement is you finish in four years. If you don't, it's on you.

Yeah, you're on the hook for the rest.

I like that mentality because that encourages you to go, I better finish in four years, because homeboy has been going on many, many years, and he's just having a good time out there partying on mom's dime and now driving a brand new truck, all thanks to mom being an enabler and having zero boundaries.

That stupid tax remains to be seen, but it'll come out in the wash.

Trust and believe that bill must be paid eventually. And if that means mom can't retire, that's going to be on her. We've seen that story, Jade, where parents are like, I signed up for the parent plus loan because I thought I was being a good parent by taking on the loan for my kid. And by the way, if you're taking on a parent plus loan, it's because the student loan company, who is scummy as all get out, doesn't even trust your little kid to pay back the money. So they go, we don't trust you. You need a co signer.

And the crazy thing is, when parents who already have their own student loans that they're paying back, then turn around and take out parent plus loans, which have their loan plus their kids loans on their back, and since they're older, they have less time to pay it all off before they just.

And they go, well, I thought little Johnny was going to pay, and I just took it out in my name, but he said he was going to pay. And all of a sudden, Johnny goes, this ain't legally my debt.

Yeah.

This on you, bro.

It's on you. Mom and dad, you signed up for this because we had a call the other day. This guy went 270 grand into student loan debt for a computer science degree, and now is making 50 working cybersecurity.

Yikes.

And I'm like, what made you think this was a good idea, that this was even going to roi? So, a lot of poor decisions being made out there, and colleges are happy to take your money to raise the tuition because they know you all are going to go out and take as many student loans as it takes. That's right.

Yeah. In the moment, it always sounds like a good idea because it's getting you what you want in the moment, whether it's I want to feel like, I want this anxiety to go away. I want to feel like I have money. I want to feel like I'm getting the degree. Like, whatever it is, we want it in the moment. And whatever solution presents us getting fastest, we kind of get fixated on that. Instead of opening up our mind and going, okay, what else is possible here?

A lot of stupid tax happening out there. But, hey, learn from these stories. I don't want you to create a stupid tax story if it hasn't happened to you yet. There is hope that you can avoid this.

Learn from us.

Learn from us. So we're having fun here, sharing these stupid tax stories, and we've all done it. We're not here to judge. We just want to help everyone get better, including ourselves.

That's right.

Avoid these financial mistakes. That puts this hour of the Ramsey show in the books. Thank you to my co host, Jade Warshaw. All the folks in the booth keeping the show afloat. And you, America, will be back before you know it. Live from the headquarters of 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 Jade Warshaw. This is your show, America. Give us a call at 825-5225 will help you take the right next step with your life and your money. Paul and Chris join us up first in Nashville, New Hampshire. What's going on, guys? How are you doing?

We're doing well. How are you guys doing?

Well, what's going on today?

Well, we are having an issue. We're trying to figure out how to increase our debt. Snowball. We earn $185,000 a year and are falling behind on our.

And is that due to debt payments or you're just not paying attention to the money? What do you attribute that?

Well, we have. Not counting our mortgages, plural, we have $287,000 in debt.

Can you break that out for us? What type of debt is it?

Student loans. We have about $70,000 in student loan, most of it mine.

Okay.

We have $19,000 in a single car loan.

Okay.

We have $122,000 in two different helocs.

Okay. Can you split the helocs out for me?

Sure. One is on. We have $87,000 on a heloc on our property, on the house that we live in.

Okay.

And another $35,000 on heloc that my ex wife lives in.

Okay.

And then we have another $30,000 in solar.

Okay.

And about almost $38,000 in credit cards.

Okay. And then you mentioned there's two properties. The other property is the property your ex lives in?

Yes.

What's the arrangement there?

Yeah.

So the arrangement is she lives there with my kids and I pay the mortgage on it.

And is that the legal arrangement? Is that from the judge or what?

It worked out to be just about the same amount as the child support alimony payment would be.

Okay, this is in lieu of those?

Yeah.

Okay. So you're stuck making this mortgage payment. You can't go sell this property, for example.

Correct. I mean, I could go sell the property, but then who gets the money?

If it sells?

We split it 50 50.

And is that part of the deal or you added that part in?

No, that's part of the deal.

Would that absolve you of having to make this mortgage payment and any financial tie? Or would you then still have to make alimony and child support?

I would still have to make alimony and child support.

Interesting.

And you have a new spouse now?

Yes.

And you're both working?

Yes, we both work full time. And I have a part time job that I work 30 hours a week at.

Okay, great. So you're working hard, which is good news. But we have a giant mountain of debt in front of us. And do you know what all the payments add up to for all of those debts per month?

Yes. Without the mortgages, it's just 49, 80.

And that's before food, utility, shelter, transportation. That's just the minimum payments on all these debts?

That's correct.

And then you still have the two mortgages?

Right.

What do those add up to per month?

20. 816.

And what's your take home pay between your wife and you?

Eleven five.

Okay. The good news is those mortgages together, I mean, you could have a 2000. You said the mortgages combined are 2816, right?

Yes.

Okay, so that's the good news in all this equation, is that the two mortgages combined are still less than 25% of your take home pay for the most part. So that's good.

And you have $3,700 left. That hopefully covers insurance, food, utilities, all of that.

Right.

But is there anything left over? If you guys got on our tight budget, could you have an extra 1000? 2000 left over, 3000 left over.

Well, that's what we're trying to do and that's why we're calling in.

Okay, well, it starts with the budget. To me, that is your source of financial truth. And we'll gift you every dollar premium to help you and your wife put a plan on paper. But right now you're great at counting up all your debt. But we got to start figuring out how we can attack the smallest one with a vengeance. Knock that out. Knock the next one out using the debt snowball method. So have you laid this out in a budget yet, or is this new to you?

No, we have, and we just are struggling to try and find extra to throw at. It seems like every time we start to. You're breaking up money. I'm sorry. It seems like every time we start to get caught up and get ahead, life happens. We just had $1,600 vet bill for one of the animals. All those little things just keep happening.

Do you guys have any money in savings right now?

No, just emptied it out for the animal yesterday.

So you had $1,600 to your name?

Yes.

Well, are you guys done?

We have a retirement account.

Sure.

We're not going to touch that though, right?

Should we stop investing in the retirement?

Yes. How old are you two?

I'm 56 and my wife is 54.

At what point did you guys decide we probably should stop going further into debt if we ever want to retire? What was your I've had it moment?

Well, most of this debt was incurred. Me, we started a business and we just kept incurring debt to try and keep it, to try and get the business to take off, and it just never did. So finally, about a year ago, that was it. We said, we're done, closed up the business, and now we're just trying to.

Clean up the mess.

How old are the kids?

Youngest is 21. The oldest is 24.

Okay.

There's five of them.

Okay.

What would you net if you sold the other property?

Um, I would probably net about 100 and 5170 thousand.

That's after everything.

After the split and after paying all the.

Feels like your best bet right now to get above this now, long term, you still have to change your behavior. So I don't want to feel like a shortcut, but that could knock your consumer debt down to 130 if you put all of the proceeds towards that. And of course, you would now have a monthly payment. You're making an alimony and child support. Right, right. But you also have freed up. You've knocked out over half the debt. I think that's the move. If you can legally do this without. You're uprooting your family, in a sense.

Right.

And they would have to find somewhere to live.

Right.

The kids are all grown, but yeah, the kids are about out of the house, if they're not already. Right?

Yeah. As far as my kids, not my current wife, Chris, my kids, one is out of the house. The other two are, one's living there, and one's still in college commuting.

Okay, well, I think that's the move. And then following that debt snowball method, using the every dollar premium budget that we're going to gift you, hang on the line, and our team will make sure you get the link to get that app, and we'll hook up with the premium version. But this is going to take some drastic measures. And I think part of that is taking the proceeds of the home sale and knocking out half your debt to free up enough payments to actually make some traction on this. But you got to cut your life down to nothing for the next probably three years to clean this mess up and get back to investing. This is the Ramsay show. This is the Ramsay show. Open phones at triple 825-5225 if you need to get out of the house, join us. We got a brand new event called Total Money makeover weekend, happening on May 10 and 11th right here by the headquarters at our brand new Ramsay event Center in Nashville, Tennessee. I know there's a lot of you out there. You've been listening a while, but you've been sitting on the sidelines. You've been kind of Ramsey ish.

You're sort of dipping your toes in the water. Or maybe you're in baby step seven and you need a little pep in your step because it's a long know. Turns out after you pay off debt, life isn't over. You still got to live for decades, potentially. So in just one weekend, you're going to get a crash course on everything we teach about money. We have brand new content from every single Ramsey personality. Dave Ramsey, Jade Warshaw, Ken Coleman, Dr. John Deloney, Rachel Cruz, myself. And we're going to light a fire under your butt to keep making progress on those money goals. And this is going to be interactive. There's live q as we've got smart money happy hour happening on Friday night. So this is a destination weekend event. So start budgeting for it and get your early bird tickets, which start at just $99 for a limited time. This is it. If you want the best deal. And if you're like me, I love a good deal, this is the time to get it. The Ramsay Event center holds about 2400 people, so this event will sell out. So plan to join us. Get your tickets now@ramsaysolutions.com. Slash events ramsaysolutions.com slash events we'll see you guys in May.

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

Awesome. Today's question comes from Ben in Oregon. He says, my wife and I own a house in our hometown where we have deep ties. Local real estate prices have gone through the roof, and our home is now worth more than we ever dreamed. I collect va disability and work as a janitor, and my wife is a substitute teacher. We could move to another state and live much better than we do here. Emotionally speaking, it makes sense to stay here. However, financially, it makes no sense at all. If you were in my position, what would you. Ah, I have free rein over this. This is cool. Well, I have questions. There's never enough information because I kind of want to know what their dream is. Right. Like, they live in Oregon. We know there's many places in Oregon where real estate has gone crazy. I want to know if they have kids. I want to know. Do you know what I mean? I want to know more about it.

What's the relationship like with their family and in laws and parents? Is everyone nearby? Is it close knit? Because they said deep ties. But we all have deep ties to our hometown. In a sense. It's emotionally, it's sentimental. We know it well. But the fact they're even asking this question tells me their heart is kind of going. There's something stern, and they're saying, I feel like we should just move.

Well, let's give them some scenarios to play out. My thing is, like, if you are, let's say they live in a really small place and they know they want to start a family, and there's no way to get the home that they want for the family size that they are thinking about, then moving could be a good option. But if I'm like, if you're in a house that's working for you, you just know that it's doubled or whatever, tripled in value, and you just are kind of, like, antsy to get at that money, that might be a reason to kind of slow down and just say, hey, just enjoy the fact that your property has appreciated in the manner that it has. I really just think that there's. Let me think philosophically for a moment, because I do think that it's great to be able to financially live the life you want, but you have to ask yourself, at what cost? And are you doing this as a necessity or as something you just want. Maybe because if they're debt free, if their house is a fine size for them, and they're just like, oh, but we have $600,000 in appreciation, they might just be wanting to get at that money.

But if they're out of debt, kids are fine. Space is fine. They might regret moving just to get a bigger house.

Yeah. The grass always seems greener. And then you move and you go, gosh, I just miss my hometown and the family, and people end up moving back. And so what's good is that none of this is fatal or final.

No.

And so what I would do personally if I was in your shoes, which is how Ben asked it, I would go travel and go to the places I'm thinking about living and explore the neighborhoods and see what's around there. And is this the place we want to live? And talk to a real estate agent and ask about schools and all the things you're wondering about before you make a move. And so he said, financially, it makes no sense to stay there, which tells me it may be an expensive area and it's not a sustainable place to live. So the other thing is they might move up.

Yeah.

I don't know about his VA disability income. And the janitor and substitute teaching. They may want to find careers that they can really sink their teeth into and increase their income to where they can stay there and make it financially sustainable. Yeah, that's our hot takes. Ben, you got some homework to do, my friend. But thanks for the question. That's an interesting one.

Yeah. Guys, when you sign in, these questions be detailed.

It helps us.

It does help us.

That's why we like the phones, because we can dig in with the questions. The question of the day, while fun, harder to do that. So appreciate the question. Ben, best of luck, no matter what you do. Olivia's up next on the phone lines in Cincinnati. Olivia, welcome to the Ramsay show.

Hi.

Thanks.

Thanks for taking my call.

Sure. What's going on today? How can we help?

So my husband and I are both 25 years old. We've been married for about a year and a half now. Pre tax, we make about 130,000.

Awesome.

A year. We have $13,000 in an emergency fund. We have another account with 32,000 in it for a down payment on a house. The only debt that we do have is that before we are married, my in laws purchased a car for my husband, and they said, we'll pay the first 12,000 on it. And then we have to pay the remaining 9000 and that is going to come up this July, we'll have to pay that. We have 5500 of it set aside and we will have the remaining 3500 in July. So we will be able to pay that off as soon as July gets here. I guess my question is we're renting right now in Cincinnati and we're kind of in a crossroads, not sure what to do. October, our lease is up and we're saying, okay, do we keep renting or do we buy a home? We are really young. We're only 25, but we do feel like kind of that itch to have something that's our own and not just keep renting from someone. So I would be interested to hear what your take on our situation would be.

I mean, can you afford the house that you're looking at with $32,000 down? Because at the end of the day what you're looking at is to fulfill an equation. You want to make sure that you're on a 15 year fixed rate mortgage where the payment is no more than 25% of your take home pay. So if you can meet that requirement, you know the area you've been renting in Cincinnati, then you're seeing a lot of green lights. You've got your emergency fund here. Yeah.

And you're saying this 5500 is outside of the emergency fund or down payment account?

Yes. So I have all separate accounts for everything. And so, yeah, I have 5500 set aside for it and then by July we'll have the remaining 3500 that we need to pay the 9000 off because my in laws had been paying payments on the car and my parents kind of drilled into my head my whole life, do not get a car unless you pay cash for it. So when they told me we were going to have to have, that's good parents, $9,000, I was like, okay, no, we will not. Because they said you could just take over the payment. And I was like, we're not going to do that. I don't want a payment in my life.

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

Okay. That is really good advice.

I love it. Well, thank you so much for the call. Love that question. Young couple wanting to be homeowners, but wanting to do it the right way. I looked in the constitution. There's nothing that says you have to be a homeowner by 25 or that you have to own a home as soon as you're married. So for all the couples out there, whether you're 25 or 55, don't just buy a home because you've heard it's smart to own a home, and that you've heard renting is a waste of money, because you're not building equity, because you're going to be calling the show a few years from now saying, the home is too much. Should we sell it?

Yeah.

We thought it was going to be fun, but turns out homeownership is really expensive. And there's property taxes and insurance and maintenance and repairs. And the HVAC went out, and the roof needs to be repaired. That's just too much stress. Life's too short to have that level of stress. So just rent. It's buying you patience. Do it wisely, and you'll be far better off in the long run. You'll have financial peace, and it's always worth the price you pay for it. More of your calls coming up. Triple 8825-5225 this is the Ramsay show. Welcome back to the Ramsay show. I'm George Camel, joined by Jade Warshaw. We've got a fun live stream happening next week. Jade, do you know anything about this?

I do know about this live stream.

What do you know about this live stream?

Okay, so what's cool about it is it's George and I. We're chopping it up right after the Ramsay show. Whatever Ramsay show airs that day. Right after, we're going to come on and we're going to pull up. Oh, that's right.

It's in the morning.

I forgot. We changed.

James, give us the details. Nine to 10:00 a.m.. Central. Okay, wonderful.

Well, there you have it.

James tells us all. I don't have the notes in front of me.

Okay, so let me run it back. Last time we did it. It was immediately after the show. This time we're going to do it in the morning so that more of you can watch it. But the thing is, we pull up every dollar right on the screen.

Never been done before.

Never been done. Except that one time we did it before.

That's right. And the second time in history it's ever been done.

But you guys call in and you give us your budgeting questions, and we can actually show you in every dollar how to do it.

So Tuesday the 27 February 9 to 10:00 a.m.. Central. That's ten to eleven eastern. If you're doing the math at home.

You have a specific.

Join us on the Ramsay show YouTube channel. And what's cool is you can go hit the little bell to be notified when we're live. Because a lot of people forget when it's like a YouTube live stream. So hit the button to get notified on the Ramsey show YouTube channel. You'll see a little thumbnail there that our team has got prepped. It's called something like how to build wealth with every dollar.

That's right.

So check that out. And we're going to have some fun. It is walking you through not only your questions about budgeting, but getting to show you how to tactically live this out with the everydollar app. So looking forward to that. Don't miss it. It's going to be a good time. And it's completely free, so you got nothing to lose.

Free. If it's free, it's for me.

If you hate it, we'll give you your money back. How's that? $0. All right, let's get to the phones. Alina joins us in Charlote. What's going on? Alina?

Hi, George. Hi, Jade.

Hi.

I have a question about my budgeting credit score.

Okay.

And so I am currently about $74,000 in total debt. This is including credit cards, student loans, an eviction, a car loan, and I'm including, like, car insurance and phone bill in there.

Are you behind on.

I'm sorry, these.

Are the car loan and the other, or, I'm sorry, the insurance. That's things that you're behind on.

That's things. Well, I'm including in my total debt, but I'm not behind on anything. Right. Besides the credit card.

Okay. So let's not include it. If we're not behind. Let's just call that a fixed expense on our budget. Is that fair?

Yes.

Okay, so what's your question?

So, for budging purposes, my credit score has gone down. So I wanted to ask you guys, would it be smart to eliminate one of these credit cards to begin with or start paying down through the snowball effect? Just my smallest amount up to the biggest one?

Yeah, definitely. So the purpose of paying off debt is so that we don't have to go into debt again. And when you don't go into debt again, that's also you simultaneously making this decision that I don't borrow money and I don't care about my credit score anymore. They go hand in hand whether people realize it or not, because you don't pay off debt to go back into more debt. The hope is I paid off this debt. I'm never doing that again. And when you make that decision, credit automatically kind of goes with it because you cannot have a credit score if you're not borrowing money. And so the piece I want to give you about that is when you pay this debt off, you will have money to where you won't need that credit score. So to answer your question, I would do it the way the debt snowball says. List them from smallest to largest by balance, by full balance, not by payment amount. And if your credit card is not the smallest balance, then I would not pay it. First, what is your smallest balance.

For my credit card? Well, the smallest balance is like a payment plan, but the total balance for that credit card is actually one of the biggest.

So just focus on balances instead of payments. If you ignore what the minimum payments are, what actually has the smallest loan balance out of all your debts?

One where the credit card company is going to pay off half the balance? If I pay one half in the.

Next two weeks, is that a settlement?

Yeah. It's like they'll pay the difference to cancel out basically the credit card to zero.

Okay, what's the catch here?

Why is this credit card company been delinquent forever?

Yeah. Are you way behind on this to where they're just willing to settle? Do they said, hey, give us 50%, we'll call it good?

Yeah, I think so. Yes.

Okay. Make sure you get that in writing and make sure that you don't give them access to your checking account.

Okay.

Did you already give them access to your checking account?

No, they just said it's like a credit card reduction where I pay the 50%, they'll cover the other.

Is this the actual company or is this the collection agency?

This is the actual credit card company.

Okay.

Get it in writing.

What's your income?

My income currently is about $1,400 a month. Okay.

What are you doing for work?

Currently, I'm a weekend receptionist at a senior care facility, but I have been looking for more, like full time work, including the weekend work that I currently do.

Do you have kids?

I do. I have one son. He's three years old.

Okay.

What's the childcare situation?

Childcare. He's with me during the week, and I will have help with childcare if I do get a job during the week.

Okay. You need to be working full time starting tomorrow. And if that's retail, whatever, Hospitality, whatever you have to do, you've got to be working at least 40 hours a week if you want to make headway on this debt, because you're at the poverty line right now, you're making 16 grand a year. And so trying to pay off 80, making 16, you're not going to have any margin to throw. You're going to continually go into debt because you have nothing, no margin in your income. And so we need to get the income up. That's the big factor here. And then we'll figure out childcare from there. What's left on the car loan?

Car loan. I just got the car last year, so it's $15,000.

Gracious.

I think we need a downgrading car. What's it worth?

I actually don't know. It's a 2013 Volkswagen Passat. So it's a used car, too.

I doubt it's worth 15 grand. Yeah, I think you got screwed on that deal.

Tell us about this eviction.

Yeah. So, basically, I switched jobs. So my income did change drastically, like $5 an hour. But I was much happier at the other job that I chose over the other one. So it's just really just the decision of my overall well being and stress level to work a job that was less paying, but I was more happy with the work.

Well, your current life feels real stressful financially, and so I'm okay being a little stressed when it comes to work if it means we can clean up this debt. So the eviction happened because you couldn't make rent anymore because you lowered your income?

Yes.

Hey. Is there a medical reason you're not working? Is there a medical reason, like, mentally speaking, that you're not working?

No. I moved from a different state, so I moved back home with my family here in North Carolina, and I moved from Florida. So Florida does have high rents. And as a single mom, not the brightest idea.

Are you living with family now? You've got your family around you, right? So you've got the support system.

Yes.

Are you living with them.

I am.

Okay. I think you need a sense of urgency. I feel like you're kind of like, lolly gagging and it's like, oh, this is not great, but here I am. And that job, I just didn't like it. And I mean, I'm going to talk tough to you a little bit, but I'm like, you've got a kid. You got to go after it. You got to go get it. And right now I feel like you're kind of leaning back a little bit, and I feel like I can talk tough to you now because there's not a health issue. There's nothing standing in the way other than you just getting after it. You moved back to Florida to be with your family. You cannot use this as an opportunity to get laxadaisical. Like, you've got to get moving and you've got to do it, like, yesterday.

Hang on the line. We're going to send you financial peace university. I want you to watch all nine lessons. Alina, I hope that puts some fire in your belly to get outside of this and change your family tree and give that little kid a wonderful, debt free life. This is the Ramsey show. Knowing your purpose is the key to escape your meaningless nine to five job, increasing your income and finding work you actually love. That's why I created the get clear career assessment. You'll discover your top talents, passions and mission, and then job opportunities that you'll be a great fit for. You'll get clear on what you were born to do. The truth is, nothing's going to change until you take action. Order your getclear career assessment@ramsaysolutions.com. Slash getclear. I'm George Campbell, joined by Jade Warshaw. This is the Ramsey show. If you're enjoying this show, be sure to check out all of the great shows on the Ramsey network. Many of the personalities are out there doing their own thing, with Ken Coleman show filming next door and the Dr. John Deloney show, which has just been blowing up. The Rachel Cruz show, smart money, happy hour, and of course, yours truly with the YouTube channel.

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

Thank you.

What's happening?

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

So you've got five kids, you're putting away $100 a month for gifts for when their birthdays come at the end of the year?

Yes.

Does include Christmas too.

Yes, it's Christmas. We're pretty much trying really hard to get the debt paid off. So we've been pretty light on Christmases and birthdays last couple of years. So that's about as low as we've been able to get it.

So this covers everything.

So you're saying, do we forego all gifts this year and tell the kids, sorry, kids, mom and dad are paying off debt, you're not getting anything or what are you planning on?

No, what I would say is the other option would be to come November December time, basically not put as much towards debt during those months. I'm just a little afraid to give ourselves permission to stop putting in as much as we are right now towards it and become a habit.

George, you can say what you're going to say. You have five kids, you're putting away $1,200 a month or $1,200 to cover.

Five birthday for the whole year, Christmas gifts for five kids.

I'm not going to stop. None of this sounds very reasonable.

It doesn't sound outrageous.

Okay.

Again, truly, it's not going to make that big of a dent. How much debt do you have?

So we have 42,000 right now.

Okay. What kind of debt is that?

We have 20,000 to a family member and then we have 11,000 on one car and 10,000 on another.

Okay. What's your household income?

So we are doing a lot of side hustles right now, but I make 26 a month and then my husband makes 26 a month. And then we bring in about 800 from doordash between. He does it in the evening, then we do it as a family on the weekend.

So you're bringing home 6000 a month?

Yeah, that sounds all right.

Great. And how much are you throwing towards those debts? Using the debt snowball?

Anywhere from 22 to 2300 we budget for, I'm sorry, 2000 to 2300. We budget for 2000. But if we're able to bring in a little bit more on the side jobs, it goes straight to that as well.

Okay, so you're on track to pay the rest off in about 18 to 22 months.

About 18 to 20 months.

Okay. You would speed it up slightly by.

Paid off by Christmas.

So, yeah, by pausing your gift fund. This might speed up by a month, if not. And so I don't know that it's worth foregoing the gifts for the kids. I'd rather see you guys use side hustle money to pay for that and to try to not slow down the debt process. But I'm with Jade. I feel like this is a reasonable expense that just stays in your budget. This is not frivolous luxury spending. And you know what I would do? I would try to be on a budget, shopping the sales hard and getting the kids just what they need and nothing more. And then if you have money left over in the gift fund, let's throw it at the debt come February.

That sounds good to me.

All right. Thank you for the call. It feels good to have solved one mystery in the show. Jay, I feel like that was a decent resolution for our friend Christine. But I don't know, gifts for the kids, that one just feels, yeah. Especially when the expectation has been like, hey, we get a gift a year. It doesn't sound like these kids are entitled and spoiled.

No, not at all. And when you really think about the cost around birthdays and holidays, it's kind of hard to do all of that for any cheaper than what she said. Because you think about Thanksgiving and Christmas alone, you're having a big meal. There's Halloween. You buy them a costume, or maybe they use the one from last year. But there's still these little bits of money that add up for all of that. And when I'm thinking about, with five kids, $100 a month, that goes lickety Split easily. She's doing good.

A lot going on there. All right, let's go to Ashley in Salt Lake City. Ashley, welcome to the Ramsay show.

Thank you.

What's happening?

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

How much is it?

And then about 15,000. Okay, so not a whole lot, but enough.

Okay.

And that covers about three months of our emergency fund type savings. Then six months ago, I decided to go back to school, which will increase my salary significantly. But I took out a loan for that and that's a 7% loan not due yet because it's stupid.

How much is the loan for?

When I'm done with the two year program, it's going to be $25,000.

Okay. When are you going to stop borrowing money?

Exactly. This is the cycle we keep doing. We keep having things come up, borrowing the money, paying it off.

And if it hadn't been for somebody leaving you money, you would have nothing. You would have zero savings. Let's be clear about that.

Right.

So what's the plan? You tell me.

What are you asking us for today? What do you want?

Which debt to pay? Should I just go ahead and pay for school instead of going into more debt? That's what I think. Because it's a 7% interest. No, but it's not due yet. So should I pay off the 13k?

Well, stopping the bleeding is definitely a one. So we want to stop going into debt. So you're saying you haven't gone into the debt yet fully for the school?

Well, I have, she did, but it's not duty for six months.

Okay.

Technically it's not due till you graduate.

You're already on the hook for the.

I'm going to keep going.

So we've got to go in order from smallest to largest. This savings, it's not really savings until you've paid off your debt. So yeah, keep the 2000 aside, pay off this HeLOC for 13,000. You've got 2000 there. And then this loan that you have, especially if it's unsubsidized, I'd start making payments and pay it off. There's no point in waiting until you're out of school to pay it off. Like I said, if it's unsubsidized, it's going to start accruing interest. So keep 1000 aside and put 1000 on this student loan. Knock it down to 24. And while you're in school. And what does your husband make? What will be the income while you're in school?

So he makes about 120,000.

What's he bring home every month?

Probably 8000 a month.

Okay. And are you guys contributing to retirement?

Yeah, he has a, his company contributes as well.

Okay. So again, I'm challenging this. If I were in your shoes and the way we teach is that I would pause that contribution because how much is it every single month?

If you had, I'm not sure the exact number.

Okay, let's say I'm guessing he invests up to the match probably 4% or so.

Yeah.

Okay.

So that would free up a huge chunk of change every single month to help you attack the debt.

Yeah.

And you know what? It's going to happen too. If he pauses, that he's going to want to unpause it real quick, which means he's going to be willing to do whatever it takes. And so will you to get rid of this debt fast. You all been living fairly comfortably. Slightly uncomfortable because you don't like the debt, but, well, the heater went out. We didn't have the money. Let's take out the home equity loan, which is now secured by your own home, which puts your home at risk.

Yeah.

And I want to go to school to increase my income, but I'm going to go into $25,000 in debt, and then we'll figure it out later. And so we've got to start thinking about future me and making decisions that would make you all proud. And part of that means we're taking this inheritance, and it's really not going to be an emergency fund. It's going to be pay off the home equity loan fund.

Yeah. I just worry about not having any savings because we do live in an older home.

You all didn't have savings before.

Yeah. You can't play that card because you didn't have savings before and you didn't do anything to get savings.

I'm worried about you all being in debt for the next ten years instead of cleaning this up in two. You all make too much to feel this broke and be experiencing this level of pain. So I'm doing whatever it takes. Pause the investing, use the inheritance to knock out the debt. Get on a tight budget. We're not eating out. We're not going on vacation. And in a year or two, you're going to be out of this mess. You guys make great money, and you don't have that much debt. You can clean this up real fast if you get intense. This is the Ramsay show, 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 Campbell, joined by Jade Warshaw. This is your show, America. So call us up at triple 8825-5225 and as you're enjoying the show, if you could do us a quick favor, it's completely free. Hit the subscribe button, the follow button. Wherever you're listening, hit the like button. If you're watching on YouTube, leave us a kind review and let us know what you think of the show.

All of that stuff helps us reach more people. It helps make the algorithms happy. And that's what we're all about here, is continuing to spread this message of hope in a world gone mad. Curtis joins us up first in Boston, Massachusetts. Curtis, welcome to the show.

How you guys doing?

Doing great. How can we help?

Awesome. So I'm in a little bit of a predicament here. Obviously, the housing market is kind of crazy right now. Interest rates are slowing down, but they're still relatively high compared to what my parents went through and so on and so forth. So this past year, I made $100,000 with bonuses, and I've been pre approved for $250,000. I am not sure what I can really afford due to the fact that my income fluctuates throughout the year. So overall, I did make 100 grand. Yes. But some months I'll make six to seven, sometimes eight, and then sometimes I make less than 4000. So it's hard for me to really budget what I can't afford at the end of the day. And I was hoping you guys could help me out.

Sure. So give us a bigger financial picture. Do you have any debt?

Yes. Well, I just paid off my college loans. That was about 40k.

Good.

And. Thank you. And I have my truck, and that's about it. And then I think 2000 in credit cards, but other than that, nothing.

And how much do you have in savings?

I have 41.

Cool. And that's everything that's non retirement, is the 41,000 liquid cash?

Yes, sir.

Okay. And I'm guessing that was kind of your down payment fund as you look to be a homeowner.

Yeah, that was going to be down payment, closing cost, all that fun stuff.

Okay. And then what kind of house range were you looking at? What's the price point here?

It's hard because anything below 200, it's a fixer upper, and that's putting it lightly.

Are you looking at a condo outside of the Boston area?

I was thinking about it, but I've always wanted to be a homeowner, to have my own land, my own property. So at the end of the day, I would like to be a homeowner. And I'm looking around the 230 range.

So 230 would get you a single family home?

Yes.

What area is this? I'm curious because I'm from the Boston area. I'm just trying to wrap my head.

Around this western mass.

Okay, cool. So let's say 230 is your goal. I would base your monthly mortgage payment on one of your rougher months, and you can create kind of a peaks and valleys fund. So if you have an eight k month, but you can learn to live off of three or four, then you can put away some of that money to cover you when you have a 4k month. Okay, so that's one strategy, but it's going to make your whole life more peaceful if you can go, all right, my worst take home pay is probably going to be four grand. And so I'm going to get the mortgage that's 1250. And that might mean I need to save up for a longer period of time before I get this mortgage.

Yeah. And that's kind of what I'm figuring out, that I need to save more and more in order to put that 20% down or more.

Well, I've got a plan that will help you, but it's not going to make you happy in the short term. You ready for it?

Okay.

Yes, sir. That down payment fund is about to turn into getting rid of the truck loan and credit cards fund. And the good news is you can get rid of all of your debt and still have $19,000 left as your emergency fund. But then you're basically starting from zero with your down payment fund.

Correct.

But let me help you out. What's your truck payment?

499.

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

Yeah.

Okay, so that feels like a more peaceful way to do this. That will allow you to then put 40, 50 down on a 230 property, and then you'd have, what, 190,000 mortgage.

Yes.

And so then I would crunch the numbers on the mortgage calculator to go, all right, if I did a 15 year fix, I don't want this mortgage hanging over my head. 25% of my after tax income. Is it around that 1250 mark? Is it around that $1,500 mark? Now we're talking. Okay, so we got to move slow so that we can move fast down the line. But right now, we've got a lot going on at once. Are you investing as well?

Yes, I am. I have Charles Schwab account, roth individual.

How much are you putting away each month?

About a.

So not a ton?

It's not a ton. But once you've paid off this debt, you've got the savings to do it. But once you get to baby step three b, which is saving for a down payment. You get to decide which one you're going to do first or if you want to do all three at the same time. You can save for the down payment and continue to invest, or you can say, you know what? I want every dollar that I can thrown at this down payment, if you can save it up in two or three years and then invest after that.

Okay.

How old are you?

Some options.

All right, thank you. And what was the other question?

How old are you, Curtis?

I'm 26.

Oh, amazing. Well, you've got a lot of time on your side, and so I know you're itching to be a homeowner, but the difference between being a homeowner at 26 versus 28, not a huge difference. And so I know it feels like, oh, my gosh, what if the housing prices go up? And I'm going, yeah, but what if you jump in a home before you're ready with a truck payment and you bid off more than you can chew? And we say that not to scare you, but because those are the calls we get on the show, is when it didn't work out like they thought it would on paper, and people are in a real financial bind.

Yeah, no, I listen to your show all the time, and I listen to these horror stories, and I just do not want to be one of those guys.

I love that. And, man, you're doing so well. You're making six figures at 26 years old, so good. You have a bunch of savings. You can clear this debt today. I mean, before your shift at work is over, you can be clear of this debt and be driving that truck completely debt free. And that's what I would do. And you'll be a homeowner in no time. That's pretty amazing. That's comforting to know. You can buy a home in western Massachusetts for 230.

I know that's great.

Way outside of the city. That helps.

That is true. But he said something that I think so many of us get caught in is right now. It's really easy to compare where we are financially, where we are with the state of economics, the housing market, to another time period.

And it's like your parents time period.

Yeah. Even ten years ago when you get caught up in that. And like Rachel says, all the time comparison is the thief of joy. And as long as we keep comparing it to, oh, but back then it was this and in 2020, and it was this, and back then, it's like you just get swept up in that all over again. It's like the wound you keep just opening the wound up. And it's like, we just have to, like John Deloney says, choose reality and go, this is the way it is right now. I don't know what it's going to be in the future. I can't compare it to my mom. I can't compare it to my dad who's on social media. The people compare.

How, the 1920s? Yeah, I see these TikToks, Jay. They drive me crazy. And this guy is just riling people up, going like, do you know how much harder it is? I'm like, this guy's not trying to give you hope. He's trying to get clicks and views and just make you angry with no solution.

But it's like, just live in where you're at right now and find solutions and find contentment and where you're at right now and just accept, listen, what a time to be alive, no matter what the time is. And then you can find some happiness and contentment there.

That's right. They didn't have smartphones back then. So do you really want to go back in time, kids? I didn't think so. This is the Ramsay show.

Hey, you've been listening to the show. Now it's time to start doing no more excuses. Join me and the rest of the Ramsay personalities for the total money makeover weekend here in Nashville on May 10 and 11th. Get a crash course in everything we teach about money, including budgeting, beating debt, investing, and more. In just one weekend, you'll leave with a plan to put it all into action. It's game on, baby. Early bird tickets start at $99, so don't wait. Go to ramsaysolutions.com weekend.

Welcome back to the Ramsay show. I'm George Camel, joined by Jade Warshaw. Well, it's everyone's favorite season, tax season, the filing deadline. If you didn't know. Monday, April 15. Mark your calendars. It's going to be a hot one for your federal tax returns and payments. So in 2024, I'll make this painless as possible. You got options on how you're going to file your taxes, so let's talk through them. One option is the IRS direct file. So this year, the IRS is launching a pilot plan known as direct file that will give you a free way to submit taxes. And only twelve states qualify. Arizona, California, District of Columbia, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. Now, this has to be like a really simple tax return in order for you to use the IRS tool and the timeline's a little suspect as it is with the government. It's going to be rolled out in phases and final testing is completed. And it'll be expected to be widely available in mid March by the time most people already filed.

I don't want to be a guinea pig for this.

Yeah.

You know what I'm saying?

The deadline is a hard April 15, but the rollout is like, I think mid March we'll have it available maybe.

Yeah.

Goodness. And this is software built by the government, so lower your expectations. The same people who brought you the DMV at healthcare gov introduces IRS direct file.

I don't know about this.

So here's some feedback from the New York Times about direct file. Here's some quotes. It's a half baked solution. It's the solution in search of a problem. Direct file is not free tax prep, but rather a thinly veiled scheme where billions of dollars of taxpayer money will be unnecessarily used to pay for something already completely free of charge today. Free to the taxpayer and actually free for the government.

Interesting.

Here's where it gets really interesting. Guess who the source of those comments was in that New York Times article? If you're guessing, it rhymes with Furbox. You're right.

Furbox.

Yes.

Turbotax.

It was a spokesperson for TurboTax that said all of that, which sort of muddies the waters when they're trashing the government.

Yeah. They want the business.

Yes. So let's talk about turbotax while we're at it. So we've talked about this. I broke this down. I was real early on the case, back in 2021. I talked about this on my narrative podcast series called the fine print. And it was all about how Turbotax is trying to screw you.

Yes.

And they're succeeding. So their whole business model is funneling you into debt products. Let me remind you, intuit owns Turbotax.

That's right.

Intuit owns mint. And they're shutting it down to push people to credit karma because they have a hard time selling you debt through a budgeting product which is meant to manage your money debt.

They want you to get into it.

And so think about that. That was very clever. I like that. So turbotax and credit karma are now in cahoots. They're kissing cousins.

That's right.

So the FTC ruled they had committed egregious violations of the federal prohibitions against deceptive acts and practices touting free tax prep on the popular platform. And in reality, they were requiring people to pay for its filing services so they reached a $141,000,000 settlement with state attorneys general in 2022 for this deceit. And the FTC commissioners ruled that intuit had, quote, blanketed the country with deceptive ads to taxpayers. And not even good ads. Let me remind you, USA Today rated them in the bottom five. If you watch the big game, you saw those turbotax.

So they weren't even good commercials.

They weren't even the $21 million on sucky ads.

Well, what a way. They don't know how to manage money.

Where are they getting that money from, you guys? Sir, their whole new model is trying to funnel you into debt products through their, quote, free tax filing software. So don't trust it. And if you want a better option for self filing, we introduced one a few years back to help you avoid these traps. It's called Ramsey smart tax. It's simple. You can trust it. It's easy to use. There's no hidden fees, no hidden agenda, just low upfront pricing. And it teaches you along the way, it educates you on everything you're doing. So it makes taxes feel less painful, less like you're stepping on a Lego brick.

So if you want been around for a while, we're not testing it on you guys.

No, we're not a guinea pig. And we'll never sell your data and sell you debt. So if you're ready to save up to 70% on the cost of e filing and file with confidence, go to ramsaysolutions.com smarttax to get started. And I think you'll see my smiling face when you get there. To encourage you that you can do this, I'm here for you. I like ramsaysolutions.com slash smarttax. All right, let's get to the lines. Don awaits with bated breath in Greenville, South Carolina. Don, welcome to the show.

Hey, guys, thanks for having me. How are y'all?

We are doing well. How can we help today?

Yeah, so I wanted to call and ask. So my wife and I, we are about $220,000. Just student loan debt, no other debts. And we bring in right now about $10,000 a month, give or take. Okay, so we're gazelle. So we've moved out of our one apartment. We're into a small apartment. My wife is picking up extra shifts. I picked up a side gig. So we're trying to knock this out. Good. However, we just found out that we are pregnant first. And so right now, my wife actually dropped down to PRN, which is as needed. So she's a physical therapist.

Okay.

So she is not full time. She's jumped on my benefits. However, this allows us to make more money as a family. The only downside is, if she doesn't work, we don't make money, essentially. And so with us being pregnant, my question is, we're anticipating her not working for about three months after the baby comes.

Right.

Should we pause paying our debt right now to save up about three months expenses and then continue back our debt right now? Because right now we're paying about $5,000 a month to our debt.

Yeah.

And so we're living on five. Paying five away.

So there's no maternity leave here. There's no pay during that time.

Exactly. No maternity leave. So she's as needed.

And you guys can't survive off of your income.

I bring in about $3,000 a month, so we could. It's going to be tight. We're probably going to have to get a bigger place.

I would consider this stork mode for you guys. As much as I'm excited that you guys are gazelle intense, you're paying off the student loan until the baby comes. I would pile up as much money as you can, not just three months of expenses for maternity leave, but honestly, as much money as you can from now until the baby's born. The hope is that everything goes well. Right. And the baby is healthy and your wife's ready to go, and then you've got that money that's also there for that period of time where she's not working. And then after that, whatever's left, you can throw it towards the student loans. How much could you save up between now and then? If you just piled everything that you were piling onto the debt?

If we save, at least at the minimum, if we save $5,000 for the next eight months, $40,000.

I like that plan.

That's great.

And beyond that, I think we need to find a way to get your income up because you've got a big hole. We need to increase the shovel outside of your wife even going back to work, and clearly she's crushing it. But $220,000, that's a big student loan.

That is big.

And so I'm doing the math here. Ideally, on average, people pay off their debt in 18 to 24 months. Now, Jade and her husband Sam, their story is pretty wild. They had almost half a million, and it took, what? Seven and a half years?

That's right.

And so it may not be that two year mark, but I also don't think this needs to be an eight year plan.

Right. You guys got to get pretty into.

Since I think it was May 2028, is what our goal. We're on every dollar, all that stuff. I think the goal is we did 5000 a month, so four years.

And that's if your income doesn't change. And my plan is your income doubles in the next year or two. What do you do for work?

Correct. I'm a college football coach.

Okay. What's the career trajectory look like for you to kind of move up the ladder and make more money in that field?

It's really just a phone call away, and I could double my income overnight. It just kind of depends on if I'm going to get picked up or not.

Well, why aren't we doing that every day to win that lottery?

How do I get that phone call?

Yeah, trust me, we're trying. Yeah, I'm reaching out.

You got to win some games or what connection.

Yeah, I got to win some games. That's a fact.

All right. Hey, let's really put the pep in the step of those players.

Yeah. And what can you do in the meantime to pick up some more money?

I picked up a side gig, valet.

Okay, that's good.

Can you do, like, private coaching or anything like that with your abilities?

Unfortunately not. It's like an NCAA legal.

Oh, got it. Well, I do all the side hustles I can until you can get that income up, because we need to be throwing seven, eight, $9,000 at this debt. And that means you guys have to be bringing in 13 1415. And so find that margin, and you'll be out of debt sooner. But we're excited for you guys and that little baby coming into the world. So stork mode. Stack up the cash, and we'll throw it at the debt once mom and baby are home safe. Thank you so much for the call. More of that coming up. Triple 8825-5225 this is the Ramsay show.

Hey, guys. Are you ready for the secret to help you reach those money goals that you've been dreaming about? It's simple. You gotta get on a budget. With our budgeting app, everydollar, you'll get intentional with your money and build the habits that will make those dreams a reality. And we'll be with you every step of the way from your first budget to that retirement home on the beach. Download every dollar for free on the App Store or Google Play. Remember today, download every dollar for free on the App Store or Google Play today.

Welcome back to the Ramsey show. I'm George Camel, joined by Jade Warshaw. Reminder, Jade and I are doing a completely free stream right here on the Ramsey Show YouTube channel. And it's really easy to join. Just go to the Ramsey show YouTube channel and you'll see our faces there. And the thumbnail says, build wealth faster for free. That's the name of it. And it's got a little picture of a question mark there. And we're going to show you the free app that will help you build wealth faster. So the only thing you need to do is hit the notify me button right below the video or on the video, and that will notify you when we're live. Because I know a lot of people, you want to set it and forget it. You don't want to have to remember. So it's Tuesday the 27 February, 9 to ten central time in the morning, ten to eleven eastern time. Do the Math if you're on the west coast. Sorry, that's too much for my brain. And we'll also put the details in the show notes of this episode, wherever you're listening or watching so that you can join us, we're going to be showing you how the everydollar app can help you and answering your questions, taking your calls, even answering questions from the chat, from the YouTube chat, which we rarely do.

Real time, baby, real time. We're going to be little talking heads, and the focus is going to be showing you the tactics of how to use every dollar to build wealth and to get control of your money. So hope you can join us on the 27th. 09:00 a.m. Central time. Valerie is in Sacramento, California. Valerie, welcome to the show.

Hi, everyone.

Hello.

Just to give you I'm $34,000 in debt. Cancer was in 2021, March 2022. We got ripped off by a contractor of about $25,000.

Shoot.

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

You can't pay the 34,000?

You can't pay the 34,000. And things are just really tight and things started breaking down other than the stuff that was fixed in the house and everything is not even fixed.

Was this like a fixer upper situation? What happened?

No, the house that we have, we gained from my dad. My dad passed away and me and my sister live in the house. I have three other siblings that own the house as well, but they're all out of state, and so it's just me and my sister living in the home. So we're paying the mortgage on the home, which the mortgage is only $1,600.

Okay.

I'm a little over 16.

What's your income?

And I bring home. Oh, shoot. Gross is 47. Wait a minute, it counts backwards. Yeah, about 46, 46, 56, something like that.

Okay. And you're splitting this mortgage with your sister?

Splitting the mortgage with my sister. Splitting everything with my sister.

So is it 800 apiece then, for the mortgage?

Yes, it's about eight. Yeah.

Okay.

So all the siblings, you said own the house though, right? Your dad left it to everybody.

Yeah.

So my question is, so you're putting in this work to the house. Is everybody chipping in for it since everybody has a piece of the equity?

No.

Why no?

Because they don't want to.

And you're just thinking, I'm going to live here and it needs to be a place that I want to live in, so I'm going to spend my money to fix it up.

Fix it? Yes.

So when the time comes to sell, they're going to get a piece of what you made profitable.

Right.

There is nothing that we can actually do about it except for he told us, because it was a living trust. So he told us that we could actually charge them for if we sell the house now and we have 160,000 left on the mortgage if we sell it now, whatever we've paid for the last, since 2000, almost eleven years that we've paid on the mortgage, then we can actually make them pay it back.

To us through the net proceeds.

Right. For what we paid into, we can actually make the three of them pay us back for it if that's what we want to do.

What does your sister make? What's her income?

My sister makes just a little bit more than I do a month.

And the 34k, is that between the two of you, is both of your names on this debt?

No, my credit was really good, so I opened up these credit cards. Me and my sister, we don't have any issues whatsoever. She's paying, she took on two of the credit cards and I took on the other two credit cards. And then whatever else we have together separately.

And this adds up to 34 grand between all of this?

No.

Add up to 34.

What's the other portion?

Cards that are on my name say again.

What's the other portion that she owes?

That's her stuff. I don't know what she owes, but.

All right.

The 34,000 is every credit card that is in my name. But there's two of them. That. When we opened that, we opened up four credit cards. When we opened those up, it was to fix the house. And she's paying two of them. I'm paying the other two.

Equal 32 cards. 34,000 balance between them.

Say that one more time.

You got two cards, and they have a 34,000 balance between the two.

In your name. The ones that you have.

In my name?

In my name, yes, there are two.

And then the other ones we won't worry about because those are in your sister's name.

You're saying you can't afford this. What are the minimum payments on these cards?

The cards.

The minimum payment.

One is 251. Is 171. One is. Oh, gosh. They're all in the 100.

You said there was only two.

Unless you have debt from other places other than this renovation, is there other debt laying around that you have?

Yes.

And so the total. That's what I'm saying. The total of it is 34. 34,000.

So list out the different forms of debt that you have. Let's just go one by one so we can get our heads around this. List out everything that makes up the 34,000 if you can.

Okay.

There's two credit cards. We know one's 251, is 171. Where's the other? Is it personal loans? What is it?

No, it's not personal loans. They are all credit cards, along with my car notes. Okay, but my car notes are not in. My cars aren't in there. It's the $34,000 that doesn't include your car loan.

Say that again.

That doesn't include your car loan.

The doesn't include the car.

What's left on the car loan?

Probably.

Maybe about three years on.

No. How much money?

Four years on both car 28.

Why do you have two cars that are so expensive?

Okay, so, once again, my credit was good, and my sister needed a car.

Okay. That's all I need to hear.

Okay, Valerie, Valerie, Valerie. Help us help you. This is a.

You're just.

I think you need to get out of this house and cut ties with family, because they aren't doing you favors. You're not doing them any favors. Y'all are causing each other to make bad decisions. Whoever has the good credit of the day makes the next bad financial decision.

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

Are you underwater on that car? Do you owe more than it's worth?

No, actually, I don't know. Actually, I'm not.

Yeah, we're definitely getting out of them.

Do you have any savings?

No, I don't, because we took of what we had to try to fix.

And then this home is a money pit, and you need to sell it. It is not a blessing from your father. It is a curse on your family. It's time to get out of this and straighten up your financial life. Valerie. This is the Ramsay show, our scripture of the day. James 112. Blessed is the one who perseveres under trial, because having stood the test, that person will receive the crown of life that the Lord has promised to those who love him. William James said most people never run far enough on their first wind to find out they've got a second. Ooh, I like that. Good.

That's good.

Makes you want to go for a run.

I know, right? Listen, I'm training for a half marathon now, George.

Wow.

It's not pretty.

Well, it's not your first. You've done this before. It's not, but it's been a while.

It's been a while.

It's been a while.

That's a deep cut.

I couldn't do a five k if you paid me money, so I'm impressed with you.

Yeah.

These legs ain't made for running yet. Producer James has seen me run because he forced me to go one time with his fitness crew that he has. They lapped me so many times that it became a running joke.

A running joke. I love what you did there.

George Campbell, the name of my new comedy special. It's called a running joke. How? I thought a 401K was a really long race. Now, that's the only thing that ends with k, that you'll see me being a part of. Jade 401. That's what I'm all about, George. All right, we're getting spicy towards the end of the show here.

I love it. I'm here for it.

We're having all day, baby. All right. AshCon is next in Nashville, just up the road. What's going on, Ashcon?

Hey. How are you guys doing?

Well, how can we help?

I appreciate you guys taking my call, so I'll make this quick and fast if I can. I'm in law enforcement, so I don't make a lot of money.

Obviously, there's some law enforcement folks out there making high six figures.

Well, they must be way out there in these big cities, then, I guess.

Are you in the Nashville area or on the outskirts?

I'm on the outskirts, so I actually live in Kentucky. I'm a state trooper, and Nashville is about 45 minutes from me.

Okay, got it. If we ever get pulled over in Kentucky, I'll be looking for ash.

Ashcon. And remember what we've done for you.

I got you guys.

Those Kentucky state troopers scare the crap out of me.

Well, we have a reputation. It's usually good.

Well, we'll try to keep you happy today. How can we help?

I appreciate it, guys. So, basically, I don't have a lot of debt. The only debt that I have, and I've worked really hard to be debt free, is just for my home. I owe $103,000 on a home. On my home. I have a little bit of money. Not a whole lot. I'm basically looking at investment opportunities. I wanted to kind of just see what you guys recommended. I basically just found out that when I do retire in about another 15 years, 16 years, I'm only going to get half of my retirement, or 50% of my high three, so to speak, of what I made my highest three years as a state trooper, which isn't enough to live on, obviously. I've been thinking of getting into rental properties. I've been trying to educate myself on those opportunities, but with the housing market the way that it is and things I'm hearing from people that are already into it, it's a lot of a headache. And I've already got a crazy enough job that keeps me busy and things like that.

Okay, so how old are you Today?

I am 43 years old.

Great. And do you have any other retirement options through work?

So I do. I have a 401, and then I have what's called a deferred comp. I'm sure you guys have heard of that. I pay into as well, about $150 a paycheck. So about $300 a month towards that, which isn't a lot, I know.

And you also can use a Roth IRA outside of your employer.

Thought about using that, and that was another option I was going to ask you guys about. I've been told to look into getting a Roth IRA and putting money into one of those.

I'd go to that.

I would do that. Before you go, quote, invest in real estate opportunities, because right now, your focus. You said you have no debt outside of the mortgage.

That's correct.

And you have an emergency fund.

I was going to tell you I have $26,000 in savings. I know it's not a whole lot. I've got 8000 in my checking. That's basically all I have financially.

What's the eight k in your checking? Is that for this month's bills or is that some saved money that you have earmarked?

Some saved money that's just in my checking that I've built up.

Okay. Are you single?

I'm not. I am engaged with three kids. We've been together for ten years. She doesn't make a lot of money. She only makes about 30,000 a year.

When's the weding?

She has no debt either. The wedding is near the end of the year. We don't know if we should delay it, though, until next year.

No, I wouldn't delay it any further. You've been together ten years.

We have. Believe me. I already get enough crap from her and everybody else while I waited.

I won't give you any more crap, state trooper. I won't press my luck here. Listen, combine the 26,000 with the eight k, call that three to six months of expenses. Is that fair? Is that three to six months for you?

Yes.

And then you're off to the races with investing 15% of your income and.

Then trying to attack that mortgage. That's my goal for you. When you're 60, you should be completely debt free. No mortgage. And you have been funding the Roth IRA and the. Until the house is paid off, is.

There any sort of match on that? It's just as it stands.

It just as it stands. And that's another thing, is I've been trying to make an extra. I have been making an extra payment every year on the mortgage, sometimes twice a year, just to try to bring them.

That's good, but I don't want you to do the mortgage at the expense of the 15%. So the thing with baby steps four, five and six is you do them simultaneously, but you do them in order, simultaneously, and you knock out as many of them as you can. So you've got to do four before you do five and six. Like you don't do six instead of four. Does that make sense? So you got to do the 15% first. And since there's no match on your do, George said, and I'd max out a Roth first, you can put $7,000 in there. When you and your wife get married, she can put 7000 in one, and then you go back to that. Can put in that. So that's a lot of money. And I would do this deferred comp thing last, simply because you have less control over that. And that's the way I would work through this.

What's your income?

I make about 69, 70,000 a year.

Okay, so $70,000. If you were just going to invest 15% of your income, that's ten, five a year is what you want to be putting away. And that becomes 875 a month, which means you could fully fund a Roth IRA and still put a few thousand to the 401K.

That's right.

And if you do that, let me.

Tell you, I apologize. I didn't interrupt you. Even with the market, everybody's talking about, know, everyone's expecting a big crash.

Who's everybody? Fox News and some apocalyptic guy on the.

Yeah, yeah. I am from Kentucky.

So there it is. Well, I'm telling you, man, if you can turn off the inputs and the headlines, what you'll actually see is the stock market is way up.

This year it is.

Next year it could be down, but then next year it's going to be way up. And so the S and P 500 is hitting a record high. And so that tells me that I have faith in the US economy as a whole over the long term.

That's true.

I don't have faith in any politicians. But as the economy goes, I feel good about putting my money into mutual funds and index funds in the stock market.

And the good news is, if you look back on the record, anytime it's crashed, it's recovered very quickly and very well. So people have ended up. If they stuck by it, they ended up on the upside. So hopefully that gives you a little.

I'm truly grateful. Thank you. Do you recommend we do two different, separate Roth Ras, me and the future wife, or do our own?

Yeah, do them separate until you're.

I mean, one for you, one for her. If you can max that out every year, as long as you have income, you will be crushing it. I did some math for you, Ashcon, to give you some hope. If you start with zero in one of these retirement accounts and you put that 10,500 a year into that for 20 years, from 43 to 63, assuming a 10% annual average return, which is what we've seen in the S and P 500, you would have over $600,000 in that account. At 63, that ain't bad. And that's that your income never goes up, and that's not including anything your spouse does.

Wow.

That's just that one account.

You're doing the math for me.

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

Awesome. Great.

I hope that encourages you. Right.

I called. I am truly appreciative and grateful for you guys. Thank you so much.

You too. Thank you for serving your community.

And remember me when I get my next ticket.

I know I'm like, love the state trooper. As long as they're not behind me with the light.

That's right.

That's encouraging, though. I think that helps us. Just look at the math. Yes. Because when you're just focused on what the market's doing today and what I could be doing in real estate opportunities, I say slow down because that investment account will cash flow potentially way more than that real estate opportunity. When you got it with nothing down, high interest rate, 30 year on top of your other mortgage, that creates too much risk and stress going into retirement.

And it's important to make sure you're doing four, five, and six, like we said, consecutively. But at the same time, because a lot of people, they start thinking about their age, and they're like, I got to get this house paid off. And so they pull back on investing. But I'm like, chances are you're going to be living in your house. Like you need access to liquid money.

Absolutely.

And so you need to make sure that you're doing that 15% and then anything above that. That's what you're throwing on, paying off your house early.

The gravy. And if you want to know more about when to invest in real estate, that's baby step seven. Do it in cash. And Dave's new book, Real Estate the Ramsay Way, covers that, as well as how to make homeownership a blessing, not a burden. So check out Dave Ramsay's new quick read. It's real short, 60, 70 pages. You can read it this weekend. Get it@ramsaysolutions.com. Store that puts this hour of the Ramsay show in the books. I'm George Campbell. She's Jade Warshaw. We'll be back before you know it.

Hey, folks.

Dave here.

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