Live from the headquarters of Ramsey Solutions, this is the Ramsey show. It's where we help you, the people. That's right. We help you win in your life, specifically in your money, in your work, and in your relationships. I'm Ken Coleman. Jade Warshaw joins me this hour. The phone number to jump in, because it is your show, America is 8825-5225 that's triple. 8825-5225 the fabulous Jade Warshaw. Ready to go? Warmed up? Did you do voice exercises in the green room? There she is. Pitch perfect as always. She'll take your money questions. I'll jump in and then, hey, we got some work questions, some mindset stuff. Hey, I'm struggling here. I feel like I've got a lid on me professionally, which has affected me financially. Any of those work related questions, I'll take on. And Jade weighs in as well. So let's go to the big apples, where we start. Julie is waiting on us. Julie, how can we help today?

Hi, guys.

How are you?

My call.

Yeah, I'm good.

So I'm calling. I've been listening to your podcast probably over the last year, and then since 2024, I've really been obsessed with it and listening to it every single day.

That's awesome.

I think I need to call it. So I'm calling because I feel like my husband and I have the baby steps, like, all out of order.

Okay.

We have debt. We have credit card debt. We have car payments, we have a mortgage, and we have student loans. But I feel like we have savings to pay off our credit card debt. But I'm just nervous that if we pay it off, we're going to plummet our savings, and then if there is an emergency, it's been hard since we bought our house to build our savings back up. So I'm just like, I like having that cushion. We have about a little over 30,000 in our savings and about 13,000 in credit card debt.

Okay.

So I'm like, we could just pay that off right now.

Yeah.

But I'm nervous to just see it plummet. And then we have other payments, too.

That's right. Yeah. That emotional feeling is normal because you're used to seeing a pile of money in your account. You log in, you're used to seeing it, and there's part of that. It's giving you truly a false sense of security. Right. Because if you do the math, which you don't have to do much, you can do the math and see, well, that 30,000 is not actually your 30,000. It belongs to capital one and the car company and Sally Mae or Navian or whoever holds your student loan, and you're just keeping it from them. That's not actually your money. And so when you put it that way and you start to realize, listen, the debt that I owe, that's the real scary thing. That's the risk that I've created in my life. And until I give them the money that I owe them, they're not going to stop coming after me. And so the real question then is what's scarier? To have these companies relentlessly coming after you for money or to just give them the money that you owe them and get on with your life? Right, right.

Yeah.

Back to your point of kind of. I feel like we're doing the baby steps out of order. That means, you know, the right order. There's a reason. And I want to take a moment and explain the reason.

Insecurity.

Yeah. But I think if you understand the reason underneath it, it'll make a lot more sense. And this is for anybody listening, it's not just, we don't do it like this because it has a nice ring to it. Right. We do it like this because it truly does work. So when you do the first thing, you have the $1,000 of security. Let's debunk that. That is supposed to make you feel a little bit shaky. So if you were to take that 30,000 and apply it to debt, in this case, take 29,000, apply it to debt and keep 1000 there, that is going to make you feel uncomfortable. And it should. So I want to validate that feeling. The hope is that you go, okay, I can't live like this forever. Let me tackle baby step two, which is paying off all that debt besides your mortgage. And so that should light kind of a fire underneath you to like, let's keep going. Let's go as quickly as possible. And the funny thing is, okay, so your credit card payments, how much do you pay every month to credit cards?

So this month we actually put like a large chunk. We threw like six grand towards it.

Okay, six grand. How much do you pay towards your car notes every month?

About 1000 for both of our cars.

Okay. How much do you pay towards student loans every month? 1000. Okay, so that's $8,000.

I don't have any, but it's my husband's.

But look at what I'm doing here. In three months, in three and a half months, you'll have the $30,000 back. Once you pay off this debt. That's how quickly you'll resave this money, because all of that money is going out the door in payments. But when you have it back, you'll save lightning speed. You'll save so much faster, then you'll be able to start investing a full percentage into retirement. So there's a way that this works, because the thing is, if you don't pay off this debt, it's going to linger on.

Right? And that's the thing with the interest rate and everything, I feel like we're.

Just wasting money and you're not going to be able to do the things that most people say they want to do. I'm sure you want to have a nice retirement. If you have kids, you're going to want to save for their college. You're not going to have.

That's the thing, too.

Go ahead.

When I mentioned the baby steps are out of order. We have a retirement for our daughter. We have a college savings for her. We're tithing to our church. And I'm also like, is it wise to tithe?

Yes.

When I have debt, yes, I know. It's more like a spiritual heart thing.

Well, no, it is, but it's also a principle of giving. When you give, you receive. When you have an open hand, money goes out and money comes in. So even if you're not a christian person, it is a great principle to just live by. So I would continue to tithe at the minimum, like 10%. I would continue to do that. I would pause all other investing for the time being. Again, the baby steps. It works for a reason, because here's the thing. Let's pretend. Let's say that you say, I'm going to keep investing my money and I'm going to use this $30,000, though, and I'm going to pay off some of this debt. You're already out of order because you're continuing to investing to invest, which means you're paying off your debt slower, which means it's going to take you longer to get out of debt. And if you happen to have a major emergency, do you want to know what people do? They look at their, they go, oh, well, maybe I can use that money. As opposed to when you only have $1,000 saved, baby, you get what is known as creative, and you start coming up with ideas and you do everything you can because you've removed that false safety net from under you, and now it's just you and your money.

But when you do it the right way, you're out of debt. You start investing, and then your investments are actually your investments. You don't touch them. They stay there. They grow. They compound interest like they're supposed to. And now you're doing things the right way. So there really is all sorts of structural components in building this house the right way.

Julie, how much time will it take to get out of debt if you do this? You use this 29,000 or whatever the situation is. As Jade's walking you through this, when are you going to get done? If you use the savings now to eliminate debt, what's your payoff date?

Well, I could pay it, like, today.

That's the credit card. What about the rest of it?

Yeah, we still have the other stuff.

How much of the other stuff?

So how long do you anticipate it would take? You guys are making large chunks, which is good, but we're running out of time. Just give me a ballpark.

Okay.

How long before we pay it all off if we liquidate the savings?

I would have to sit down and.

Really do the math. Well, we know for sure you got $8,000 a month. So my guess is you could probably strike that up to 10,000.

We make about 12,000 a month.

Okay, listen together.

So here's the point. Here's why I'm asking you. You have got to map that out today, like, as soon as this call is done. What's the payoff date? Once we use most of that 30, and when you get the picture, the vision of how quickly your life changes and you get ahead, like Jay just laid out, this is a no brainer. There's nothing to be insecure about. This is the Ramsay show. Hey, guys.

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Welcome back to the Ramsay show. Thrilled that you're with us, America. The phone number to jump in is triple 8825-5225 we're going to talk about your money. We'll talk about your work. We'll talk about your relationships. All three of those areas are intricately connected. And when you're not winning in one, we tend to see that you may not be winning in others. And if you're in a four alarm fire in any of those areas, we're here to help as well. Jade Warshaw joins me. I'm Ken Coleman. We're Ramsay personalities. We are your host today, triple 8825-5225 Julian is up next in New York City. Julian, how can we help?

Hi. Thank you for taking my call. My question right now, I am around 20 years old, or I am 20 years old in college, and I'm currently making around $20,000 to $25,000 a month. And my boss wanted to give me a pretty big bonus for basically hitting a pretty big benchmark in sales, around 1.5 million. And he wanted to give me a $50,000 bonus to put towards any gift. He didn't just want to give it to me cash, and he wanted to essentially help me buy a new car. And I'm 20, I'm in college, and realistically, financially, it wouldn't make a really big dent for me to put an extra ten to 20 into a car and potentially get, like, a $60 to $70,000 car. And I was wondering if it wasn't a stupid financial decision, do you think that would be potentially a good decision for me to make, given that I'm 20 and it wouldn't hurt me financially?

You have no debt or any debt at all?

No debt, nothing.

No debt.

200,000 in savings.

And you're making 25 grand a month?

Correct.

And he's going to give you 50 towards a car. So if you buy a $50,000 car, you don't pay a nickel. If you buy a $70,000 car, you pay 20, and you've already got 200 plus in the bank. Am I hearing all this right?

Yes, exactly. I know it sounds a little bit crazy.

What's your concern?

I have a concern.

Well, let's hear his first. Why'd you call us to ask us about this?

Well, I was just wondering because I think that I'm relatively mature for my age, and I guess going back to school, I'm taking this semester off, and I'm going back to school in August, in the fall. And I was just wondering, given that I've worked so hard for the last few years, I feel that I deserve it. And I'm excited to drive around in a nice car, not have to drive around in the Subaru. But I don't know, I guess other people kind of seeing that. I don't want to look like the kind of person, like, my parents bought me a really nice car. You know what I mean?

I understand what you're saying. But if I'm in your shoes, I don't give a crap what anybody thinks about the car I'm driving, especially if it was a gift. And if it were me, unless I'm missing something, the guy's going to give you 50,000 towards if he will not give it to you as a bonus. He's going, I'm doing it this way, then the rules are the rules. And you're busting it. You're killing it. Unless I'm missing something. But if it were me, I wouldn't get $70,000 car. I'd get a $50,000 car and not pay a nickel. I'd take the free car. I wouldn't put any extra money into that. But let me also say, if you've been listening to this program, Dave talks about the ratio. Jade can break that down when we talk about ratio to what you make. So for you to spend 20 on top of the 50 based on what you make and what you've got in the bank, it's a no brainer. So if your concern is I'm worried about what others are going to say because I'm young and I'm driving a nice car around, first of all, I don't give a crap what they think.

And secondly, you've got a legitimate story. You're not a trust fund baby. There's nothing for you to be ashamed of. You've worked really hard to get to this point where you're making incredible money, young man. You've been frugal, you have no debt, man. I'd say enjoy this bonus.

I have a question, though. I have a couple of questions. You mentioned going back to school. What does that mean for your income when you go back to school?

Well, surprisingly, I've actually been able to balance this pretty well with school. I just want to finish getting the degree. I think that it's valuable and my parents are very thankful they're paying for it.

You're doing this while in school, correct?

Correct.

Yeah, he's making this money while in school.

When you said going back to school in August, it made it seem like you were gone for a while or had finished.

I may take a bit of a pay cut, but realistically, I'll still be able to make a pretty decent amount.

Yeah. You're crushing it.

That's crazy. Listen, you're 20 years old. I want to know, what do you sell? Can you tell us?

Yeah. So I work with influencers online who have very big audiences, like anywhere from 200,000 to a million followers online. And I basically help sell and market products to basically their audience, whether it's real estate or make money online, coaching, anything like that. Fitness coaching market. Yeah.

This is a no brainer.

That's excellent.

This is a no brainer.

Get the car. Hey, how much of your own money are you going to add with it? Or are you just going to take the 50,000 and get a $50,000 car?

I'm thinking if I decide to get a car, I'll just get the car I really want. And if that ends up being 70, I'll put an extra 20 if it ends up being 50.

Just be smart.

That's great. And who cares what other haters think? They're drinking on that haterade. You worked hard for this.

Yeah. That's fantastic. I love that story. You don't get that call very often. That's why I ask all the questions, want to make sure I got all the facts. But that one's pretty straightforward. Way to go, young man. All right, let's go to Andrea in San Antonio, Texas. Andrea, how can we help?

Hi. Thanks for taking my call.

Sure. What's up?

My husband and I don't know what we should do regarding a house we have been trying to sell since last June. There are three builders in the neighborhood building homes and apartments. There are several streets of brand new homes for sale. The builders have their own financing companies. So on top of having lowered the prices of the new homes for sale, they are also offering lower interest rates to potential buyers. We don't think this scenario will change in 2024. The expenses for this home total about $1,100 per month. My husband has been unemployed for seven months now, and I just got a part time job. So with my part time job, I'm guessing that our income is going to be about 5000 a month starting this month.

Okay.

So we are nervous because we've been digging into our savings for several months now. My husband is a software engineer, so we thought that he was going to be able to find another job quickly, but it's been seven months and he hasn't found a job.

Help me understand the timeline a little bit better. And what caused you to move in the first place? So you had this house and you moved. Did you move far away? Are you in the same state? Help me understand a little bit more.

We are about 30 minutes from this house. We downsized. Our kids, grew up, left, joined the military. The house was too big for us.

And you bought another house?

Yes. Both houses are paid for?

Both houses are paid for?

Yes.

Then why did you say so? The 1100, what is that, like, taxes and insurance?

Yes.

Okay.

Yes. Taxes, insurance, utilities.

So you've got two paid for homes. You're not able to rent it?

Well, that's the issue with the location. It is something like a dormitory city.

Okay.

And it has lots of new homes, but traffic is really bad to get there. We only had two complaints from potential buyers. One was that there was no bathtub in the master bathroom, and the other was the location they thought was too far. And there are no grocery stores.

Yeah, but you said builders are in their building around you, right and left.

That means it's a good location.

Lower the price. Do you have a good real estate agent?

I do. It's one recommended by Dave. We think he's really good. It's the second time we work with him. We really don't think the problem is the real estate agent. We think it's the competition.

Yeah. Ken is saying lower the price. He's not saying, take a drastic plummet, but go little by little until you can really pinpoint what the value of this property is. Let me point out another problem, though, because you're telling me the problem is this and this and that. Let me tell you what's bothering me about this situation. I see someone with two paid for homes, which I think that's great. You bought two homes in cash. $1,100 shouldn't be breaking your world right now. And I think it's because you guys'income is so low, and I know your husband's looking for work. You guys got to get that income up. That's the biggest fire that you need to put out right now, because when you're earning the right amount of money, suddenly this one, $100 on two properties that you own, you're going to start to look at that as a blessing instead of a burden. And right now it's a burden because your husband is not working full time.

Yeah, it's been seven months. I don't know what the seven months is. We're running out of time. But you don't need a part time job. You need two or you need a full time job. Until you figure out how to sell this house, you don't need two houses either. So you guys are close, but this is just some hustle right now in a couple different areas. Thanks for the call. This is the Ramsey show. We'll be right back.

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Welcome back to the Ramsay show, America. Thrilled that you are with us. It's where we help you win in your money, in your work, and in your relationships. I'm Ken Coleman. Jade Warshaw joins me this hour. The phone number is triple 8825-5225 and, Jade, across the studio, through the glass, on the debt free stage in the lobby are some folks, and that means we've got a debt free screen coming your way. Gary and Melissa, welcome.

Thanks. Thanks.

All right, where are you guys from?

From Bell Plain, Minnesota.

Bell Point, Minnesota. Is that near Minneapolis?

Just south Minneapolis.

Okay, good. Boy, are you just excited to see the sun this time of year?

Yes.

There it is. All right, so all this way to do a debt free scream. Very exciting. So let's hear the numbers. How much debt did you pay off in how long?

We paid off $165,000 over 47 months.

All right.

Wow. And what was your range of income?

We started at about a 160 and ended at about 200.

Oh. What led to the bump in pay?

We just leaned into our careers. We both earned promotions and stuck to it.

What do you mean by promotions?

He moved from a factory position to a safety manager, and I just kind of took different roles at my current company.

And what are you doing?

I'm a client relationship manager.

Okay, fantastic. That is awesome. All right, what was all this debt? What did the 165 get comprised of?

By the time we finally got down to just writing everything out, we had a heloc that we had been leaning on. We had a car, and then we had a credit card that we were just kind of paying off every month. So that was probably the smallest and easiest one to pay off.

Okay, so pretty good size heloc.

Yeah, it was about 40,000.

Yeah.

We used it to remodel our basement and then kind of kept it and kept it going.

Okay. All right, so tell us 47 months ago. What happens? What was the catalytic moment to lead you on this journey?

Yeah. So he was going back to school. It was his last semester, and we had found, we were trying to cash flow it, but we'd get a little short, so we'd pull a little bit out of the HelOC. We were getting kind of sloppy, and his last semester came up and the tuition payment was going to be due, and we finally said, this is it. We're doing it in cash. And we had about two and a half months before that was due, and we did it. And that was kind of our biggest victory as we got started.

That's awesome. So you're funding education out of the heloc?

A little bit, yeah. Cash flowing it, but then we were kind of filling the gaps. We were just being sloppy. There was no reason for it. Yeah.

So what was kind of like, you hit the moment of like, listen, we're not going to do this anymore. We're going to start paying. What. How did you find, Ramsey? How did you find. And this is the way we're going to do it going forward?

Yeah, we knew about it before that. We just weren't following it. We kind of thought we were doing good on our path. We were kind of budgeting, but then it was just like, just tired of the revolving debts. Like this year it was a HELOC. A couple of years before it was a 401K loan. It was a shell game. We were just kind of moving the debt around and just got tiring.

It does get tiring. So you're working the baby steps, you're getting on a budget. Is this you guys picking up extra work or is this like, listen, we're just tightening up on the budget. We're just getting very clean on what we're doing. Tell us about that.

Yeah, it was pretty much just us tightening it up as much as we could, cutting out any unnecessary expenses. We didn't have any side hustles, but we tried to do more experience based activities with the kids. We do a lot of camping, going up to the cabin, stuff like that. So just try to cut out those unnecessary expenses.

Do you do the ice fishing in Minnesota? Do you guys do that?

We do. And I guess spear fishing is probably.

Yeah, I learned about that. I don't want to go down the rabbit hole for the rest of the people who don't care. But you talked about camping, all that, and I heard about how you do the ice. Like it's like a whole thing. It's like a whole experience. Everybody goes out and all that jazz.

Yeah, it's fun.

No, I don't think it is.

I'll be honest.

I heard it described, and I didn't think it was fun at all. But much love to you on that. All right, so let's talk about this. Was there a beginning point that you guys said, okay, we'd heard a little bit about this Ramsey stuff, now we're going to do it. Was it hard or was it. We were on the same page. What was the beginning of that journey, like when you finally said, all right, we're committing? Was it hard for you, or did you just roll right through it?

It was a little bit of getting on the same page. We started with that first goal of getting that last tuition payment, and then from there, it was adopting the budget, which I wrote out the budget on the nerd. Took him a little bit to get into the budget, but once we started rolling, then we were both fully bought in. Yeah, it was reluctant at first. The idea of getting on that budget was a little rough. But once you saw it start to really work, that's when I brought bought in all the way.

So relate to that a little bit, because I know a lot of people dislike budgeting.

Right.

They hear the word budget, they think it's a punishment. They think it's something that's holding them back. What changed that for you? Because I love talking to people who don't like budgeting and changing their minds.

So the one thing that was neat is Melissa printed out this kind of.

Like.

All the little pieces equal to certain amount of money, and we had that sitting on our refrigerator. And then every time we were paying off any amounts, Melissa was really good at filling in those spaces. I like to fill it in.

So you like to feel the milestone? Like you want to feel the milestone you're celebrating. It's kind of a fun process.

Yeah.

And it was a way to see that work. And we did the same thing with our house, where we printed off a picture of, like, balloons holding up our house, and each one was a certain dollar amount.

Now, wait a minute. Did you pay the house off?

We did.

What?

Oh, you didn't tell us that.

Wait a second.

I was digging 65. I was trying to figure out how big was that credit card?

Listen, you paid your house off?

Wow.

Okay.

That makes a little more sense.

Yes. We just got into it. Guys, I need you to shout that from the rooftops.

Yeah, you guys, congratulations. Ho hum. Who are your biggest cheerleaders on the way?

I would say we've got some family that was walking the journey along with us. And then my parents, we just like to talk money. There's more that's caught than taught. And it was those conversations that just kind of kept us focused and motivated.

Wow, that's awesome.

So what's next? You got to pay for a home. No debt. Life is good. What do you do? What do you do to celebrate? And don't say ice fishing.

Well, we came here.

Okay.

And then we've got some fun projects for the house. Now that it's all done, it's time to have some fun there.

Yeah. And you don't have to take out a heloc to do it. That's the best part. Exactly.

Speed of cash. That's so fun. All right, I see the kiddos over there. Let's bring them up and then we're going to talk about them for a second. Tell us who they are and the ages.

Yeah, we've got Charlote is 13, Kelvin is eleven, and Caleb is seven.

Okay, how quickly did you bring them into this journey? And then how involved were they in the conversations around this? Because you just said, melissa, that you and your family talk about money. I'm guessing these kiddos have a pretty good idea about what we're about to.

Oh, yeah, they do. They listen to the podcast with us a lot of the time. We have the game at home. We've played that a few know our debt trackers were up on the fridge, so they saw it the same as we did. So it was really a family journey. They knew kind of what the goal was and why we did things the way we did.

Okay. And no griping, no complaining. They were pretty good soldiers.

Nah, they're pretty good. They're pretty easy.

All right, that's awesome.

Well, this is really exciting. Well, listen, before we do the screen, I want to let you know we're also going to give you some gifts here. One is Dave's total money makeover. That's for you to give to someone else because you guys have actually done this. And then baby steps, millionaires, Dave's latest book. And that's where you guys are headed probably pretty quickly with the income you guys have. So those are our gift to you. All right, let's do this. Is the team ready? The kiddos, have they been practicing? They're old enough to. I got to hear you guys. All right. I don't want to hear all those different tones coming out. Let's do this thing. We've got Gary, Melissa, Charlote, Kelvin and Caleb, all from the Minneapolis area, they paid off $165,000 in 47 months, starting out making 160 and ending at 200,000. Let's go, team. Let's hear your debt free scream.

Three, two, one.

Word. Debt free. I heard them all. I heard them all. Did you?

I heard every voice.

You're the professional musician. I picked up all three voices. I don't know what you call.

I heard all of them. There was no harmony, but I heard all three.

Well, you're tough. You're a tough one. It's like a judge from American Idol.

That's right.

I would never want to do that in front of you. But this is a great example of how a family's tree, as Dave has said for decades, so very, very cool, awesome stuff. All right, don't go anywhere. We've got to take a quick break. Jade Warshaw, Ken Coleman with you. This is the Ramsey show. We'll be right back.

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Welcome back to the Ramsay show. I'm Ken Coleman. Jade Warshaw joins me. The phone number for you to jump in is your work questions, your money questions today. And don't forget, your income is your greatest wealth building tool. And now more than ever, I'm telling you, if you're not making what you want to make, the opportunities are there. We want to help you spend that money wisely as well. Triple 8825-5225 let's go to Oklahoma City, Oklahoma. And that's where Jacob is. Jacob, how can we help?

Hey, guys. Thanks for taking my call.

Sure. What's up?

So me and my fiance are about to be out of pharmacy school in May, and it's about to be a huge 180 from making pretty much little to no money as interns. And we're about to be pharmacists.

Nice.

So I just don't really know where to start. I guess I understand a little bit about budgeting and understanding where my money is going, but I just don't know 100% where I put my money. While we're saving for things like getting married.

What'S your income is going to be individually. Give us those numbers. Roughly individually.

I expect either one of us to make 100 to 120 a year, I would say starting out would be pretty reasonable.

When do you get married?

So we thought about doing it this summer, but with getting licensed and the big tests and everything, I think we're going to push it to fall. But really, we want to get married as quick as possible. But not being ridiculous.

Any debt coming out of school?

Yes. So I have about 55,000 in student loans, and she has about 80, so 135 total.

And are you guys planning to live together?

We are. We are already living together, yeah.

What other debt do you have besides the student loans?

She has about, I think, $5,000 left on a car.

Okay.

A 2013 jetta. And then I have, obviously, about $2,500 in a ring.

2500 in a ring. Okay. Anything else?

2500 in a ring? Yeah. That is all the debt that we have.

So you're living together. You're not combining your money, though, right? I just want to be sure.

So that's the thing. I mean, we are going to combine our money when we're married, but obviously, day one, when we collect a paycheck, we will not be together, I guess, in a bank account.

Right. Okay. This is me being your big sister for a moment. Don't postpone the wedding out of the comfort of you're living together and you're already kind of. You're doing life. Marriage, in your case, is just the piece of paper, and I don't want the comfort of that to cause you to push that date even further, because that piece of paper is really important for you guys, protection wise. So just a little note there. When you graduate, you're going to be making upwards of $200 to $240,000 combined. And you guys probably won't get married till the fall. So the question is, who's paying for the wedding and how much do you need to save up? That's the first question.

I mean, that's a great question. And I will say it's pretty early on. I proposed, like, three days ago on Friday.

Congratulations.

That's cool.

Yeah. So I'm coming down from that high, and I'm trying to think about all this stuff, and this stuff is obviously piling on top of me, those type of questions. I think I am obviously going to be paying for the wedding. I don't really know. I've heard tradition that the father is supposed to pay, but when I shook his hand and talked to him and got her blessing, I never even thought about that stuff. I was fully thinking that I'm going to pay for this.

Whoa. Okay, here's the deal. Don't assume that. Let her bring it up to pops.

Right?

You're not supposed to talk to him about that. Anyway, you didn't do anything wrong. Just a little side note. You asked for his daughter's hand in marriage, not what he's going to pay.

Let her find out.

Yeah, let her dig into that one for sure. But Jade's right. That's a pretty big checklist item to get.

Yeah, I think that that's really important to find out. And here's the thing. Regardless of what they're going to add, you should kind of just decide on you two together. Get together and say, listen, what are we willing to spend? Fiance, what can you chip in? And husband to be? What will you chip in? And that way, at the very least, you can know your own numbers. Now, let's deal with this debt, because you've both got more than half a year to make some serious headway on paying off your debt. Are you earning anything while you're finishing up school?

I would say the bare minimum, just to get there. We're going to be skipping barely along.

Okay. And so really, not until it's an unpatched. Go ahead.

I'm sorry.

I was going to say, really, not until May. You won't have much even to knock out the ring or the car. 2000 and $5,000.

Right. Just because it's an unpaid internship in the last year of your pharmacy school. And really, the weekend pay. We make weekend just paying groceries pretty much right now. We're in a lucky situation that we're staying in a place that my grandpa owns right now, but we're just staying in a little apartment.

Okay. So when May comes, you're hitting the ground hard. You're saving up for this wedding. If there's anything extra, you're paying off your smallest debt, which is the ring, and she's paying off her smallest debt, which is the car. It'd be great if you guys were able to get into. I mean, with that salary, it's possible that you can both get into this marriage. And both, all of you. You both only have your student loans to go. So that's what I'd aim for. And of course, like Ken said, we're having that conversation with the dad, not you. But she is. About whether they're contributing or not to the wedding.

And how familiar are you with our Baby steps, Jacob?

I am not hear. I need to get on some stuff like that.

I've got brother. We're going to help you out.

Yeah.

So let me just. Jay and I walk you through this really quick. So, baby step one is to get $1,000 in a savings account. It's your rainy day. Something happens. It's only $1,000. It's low on purpose. That means that as soon as you guys get out of school or anything beyond your basic payments and minimum payments, you both need to establish the $1,000. You got it. And then you take on your end. Baby step two is to take on your individual debts, smallest to largest. Okay. Baby step three is once you've paid off, all debt is to then accumulate three to six months of your living expenses. Baby step four is now you're going to contribute 15, you're saving 15% of your income to retirement. Baby step five is you're funding kids college. Six, pay off the house. Seven, live and give like no one else. Okay. None of those are relevant to you right now. We're going to give you the program. We're going to get you all connected here so that you guys can go through FPU on us. That's our wedding gift. Are you okay with that? Jade? I love it, but that's where you got to be right now.

I mean, right out of the gate, Jade, they got to each individually tackle this. Hey, we come together, right?

Let me tell you something. I'm not opposed. And this is what I would do. Because you're going to start making money in May.

WWJD.

What I would do, I would secretly go to the courthouse and get a marriage certificate and be married on paper. And I would combine and start hitting this debt snowball in May instead of having to wait until you guys get married in the fall. And then in the fall, you just have a celebration and it's a party. But I'm like, y'all been living together. You may as well get married.

I like this. I'm going deeper. Who's on the list of the.

No, I think they.

Two of them.

Yeah.

Jacob, what do you think about. This is a rather radical suggestion.

This is radical.

I like it, by the way, Jacob?

Yeah.

I didn't even think about that. I didn't think about.

That's why you call here, obviously.

It's been three days. 100%.

And by the way, that's WWJD. That's. What would Jade do?

Yes. Okay, listen.

You have to. But I like it.

The party is for the people. The paper is for the.

What does it allow them to do immediately?

They can combine their finances in a safe way. Under the COVID of the law of matrimony.

Jacob, what do you think your fiance would say about this idea?

Honestly, if I'm going to be honest, we feel 100% invested in each other. Yeah, but that I'm talking about, we're not lawfully married, but we feel like we know we're going to spend our lives together.

Listen, everybody thinks they're going to spend their life together. Nobody gets married and goes, I'm going to spend a couple of years with you, and then I'm a piece out. No one does that. So I'm not saying that to be negative, but I am saying that to be a realist, in that it is a fact. There is true protection under the law for those who are married. So that's why we always just suggest people do it as quickly as possible, because you never, ever know what's going to take place. No one ever says yes. That was the plan all along, was to get married and then we break up or to get married and then I'm not going to even say anything negative like that because I don't believe that that's going to happen. But you have to plan and be smart as though you don't know what will happen because you don't.

So we need to do this. Shouldn't we also give them every dollar? You're the every dollar queen. Listen, what can we do? We're giving away Dave's stuff. I feel very generous.

As the wedding gift, we give them financial peace university, for sure. Or like that. Ramsey plus bundle. That includes the every dollar I think you get. Several months of every dollar you get. Financial peace university. The Ramsey plus bundle has all these wonderful coaching and so many good things in it.

It's our gift to you, buddy. You guys use everything we're giving. You begin to have the conversation now about all of this and understand the baby steps. They're going to guide you really well. Great hour, Jade. This is the Ramsey show. Live from the headquarters of Ramsey Solutions, this is the Ramsey show. It's where we help you win in your money, in your work, and in your relationships. Alongside the fabulous, the incomparable Jade Warshaw. I'm Ken Coleman. Welcome aboard this hour. We're here to coach you up. We're going to have some fun. We will shoot you straight along the way. The number to jump in is triple 8825-5225 triple 8825-5225 Kevin in Reno, Nevada, starts this hour off. Kevin, hi. Thanks for taking my call.

What's going on?

What's going on? He didn't quite get that cue from home alone.

I got it.

Oh, got it. Right over the head.

That's all right, my man. How can we help you?

So I just recently found you guys. So we are just kind of starting our journey, I guess you could call it. And the main concern we have is retirement. The only retirement we have as of right now is in alert, a life insurance to retirement plan. And I watched a video last night from you guys that basically was talking about infinite banking. And it sounded similar to what we have going and that it was a dumb idea. So I thought I would call and get some more information about it, see what you thought.

Oh, my goodness. Okay, so I'm just assuming all the other things are in place. I'm assuming that you don't have debt. I'm assuming that you've got three to six months saved before we've started. Whatever this path is, it's not a good path, but can I just make that assumption?

Yes. We don't have any debt and we do have six months worth of cash. Just happened to have it. I didn't know those were baby steps, but now I do, so that's pretty sweet.

So how long have you been doing this?

About six years. We signed up for it about six years ago. Right when my first born was born.

Okay, and so what did you put in to start and how has it grown?

I don't think we put anything. We've just been paying monthly payments. The Cash value of it right now is we pay 400 a month. So right now we're putting in 4800 a year.

And you've been doing that for six years?

Yes.

Okay. I'm just going to pull this up because I love doing this. So let's pretend. Let's see. I'm pulling up an investment calculator. Because what I want you to see is that this is a terrible investment. Fair enough.

Yeah, absolutely.

Because I'm just trying to understand. Give me 1 second, Ken. Help you keep the conversation.

Creature and a rabbi walk into a bar and. No, I'm kidding. So here's the deal. She's going to pull up the numbers. You saw the video. Did you understand why we think it's a bad idea?

Yes. Okay. I think so. And again, is infinite banking and are these the same thing?

It's very similar in concepts.

Yeah, philosophy is the same.

At the end of the day, insurance is insurance and retirement is retirement. You shouldn't be combining the two because they're not intended to do the same thing. Insurance is intended to remove risk that you can't handle yourself. It's not intended to make you rich or wealthy. It's intended to replace income for people who were dependent on your income. If something were to happen to you, it's not there to be what builds you wealth. And I'm about to prove that here. So you said that you've been investing $400 every month for six years. That's so much. Okay.

Yeah.

The first few years were 300 a month, and then it stepped up. So I think the first three were 300 a month.

Okay.

Equaling 3600 a month or a year. Excuse me. And then 4800 for the past.

Sure.

And your cash value that you've retained from that is 18,000, which, by the way, dies. If you die, you do not retain cash value in these situations. So you've gotten 18,000 out of this. If you had just taken that money, that $400 a month, and invested it in good growth stock mutual funds, heck, if you had just invested it in the S and p 500, in a just basic index fund that has a normal annualized rate of return of maybe 8%, 10%, if you're doing well in mutual funds, you would have had $40,000 and it would have been all yours. And that's really the end of the that for me. There's a lot of ins and outs to that conversation. But just simplifying it, that's the most staggering piece of information that you're going to receive from this is the fact that whatever growth you've accumulated is going to die with you.

How old are you? I want to do one more thing. I'm teeing you up, Jade, because you're ready to punch the numbers.

Listen, I made my argument.

Kevin, how old are you? No, this is going to be more fun.

You're how old?

36. Okay, so he's 36. Do 400 a month between age 36 to, let's call it 66. 66.

So, 30 years.

I just want you to see, Kevin, why we really preferred this type of.

Investing, and I'm putting this at 8%. Okay? Like, you can count on that. The s and p 500, you can count on 10%. So that puts you in 30 years. If you just invested $400 a month at 8%, starting with nothing, that puts you at almost $600,000.

Okay.

Yeah. And that's what the projections. That's what we're supposed to be cashing out or have for retirement. At retirement.

But you're not on pace at all. You're grossly off pace, okay? Which we just proved with I mean, we just forecasted exactly what you did the six years, and you're not even close. Not to mention, not to mention that the benefit, you don't keep the cash value. If something happened to you today, that cash value is gone. So what I would tell you to do is I'd say, all right, $400 a month, stop it today, if you can cash out, get out of it. I'd get out of it instantly. And then I would say, from now on, I'm taking 15% of my gross monthly income and I'm investing it in good growth stock mutual funds. And what we teach here is a mix of four, growth, growth and income, aggressive growth and international. And you could do that. Listen, if you just said, hey, I don't care about that, I would even be happy if you just invested 15% into index funds, anything. But this is basically what I'm telling you, okay? Because rate of return wise, you're going to far outpace this. And if you're like, let me just try to play through a scenario that I think people care about, because I know people like to borrow against this money and blah, blah, blah, I would say invest that money into retirement.

But if you're like, listen, I want access to it, and I want to invest my investments or something like that. You put in a brokerage account to where you can get to it. All I'm saying is, anything that you're doing, anything that I'm saying is better than what you're doing. What you're doing is probably the worst possible way to invest your money in an insurance product. And so, like I said, term life insurance.

The whole idea was to just recoup some of that money.

Yeah, term life insurance. I would get out of this policy. I'd get term life in place first, and then I'd get out of this policy, pick up a 20 year term, it's so cheap, and you're going to be covered. And remember, the whole point of this ultimately, is that we're self insuring. And so if you're walking the baby steps as we teach, by the time you're 50 or 60, you will have accumulated so much wealth because you're going to be investing, from this point on, 15% into retirement. You're not even going to need life insurance because at that point, you can assume the risk. Because, remember, the whole point of that was to cover the risk. Now you'll be wealthy enough to assume that risk on yourself. And so this is how this works. This is what wealthy people do.

Thanks for the call Kevin. Trust us, you don't want to invest in insurance. Just think about that sentence. Does that make any sense? If it does, this is not the show for you. This is the Ramsay show.

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Id 1591 nmlsconsumeraxis.org Equal Housing Lender 1749 Mallory Lane, Suite 100 Brentwood, Tennessee 37027 welcome back to the Ramsay show. I'm Ken Coleman. Jade Warshaw joins me. We're here for you, America. Triple 825-5225 if you're new to the program, we take your money questions. We take your work related questions, we take your relationship questions because they kind of all blend together. In fact, it's rare that we take a call like that where there's not some work component, some relationship component. So we're here for you, America. Triple 8825-5225 the Ramsay show question of the day is brought to you by our good friends at neighborly, your hub for home services. There are a lot of things you need to remember when the weather gets cold. Thankfully, neighborly has a free winter maintenance checklist that can help save you time and hassle. And a side note, if you're a moron like me, their maintenance checklist, Jade, does save me thousands of dollars because they just do basic reminders to things that I don't even know about. So it's huge. Check it out@neighborly.com. Slash Ramsey. That's neighborly.com slash Ramsey.

Today's question comes from Dalton in California. He says, my current salary is based on pandemic consulting salaries. So if my contract is not renewed, I would likely be earning ten dollars to thirty dollars less per hour than I make now. Is stability and benefits of a full time job worth the potential $50,000 pay cut?

Probably not. I'm going to say 99.9% of the time not. And the reason I say that, Dalton is because stability is the wrong word to lean on here in the first place. This is the very job where you may be taking a ten to $30 an hour pay cut. I don't consider that stable. We're talking about a wobbly table at best. At least one of those legs is wobling if you're potentially going to lose that kind of income. Secondly, and I've said this a million times, benefits play to our safety gland. Obviously, everybody needs, and health insurance is obviously a tremendous value. However, when you start comparing insurance plans, I would always take the better job, meaning better pay, better environment. I enjoy the work and I've got a ladder for growth, which means financial growth. I'm going to take that better opportunity over the better health care plan and whatever else the benefits are.

That makes sense.

Usually, it's just not a huge difference. So I never give anybody advice to take a job on benefit packages alone because trust me, that's going to wear off pretty quickly. And in this case, let's say you stay at this current job that you think is stable and I think is wobly. You take a pay cut, but you love those benefits versus let's go out and let's have a backup plan. When we get on a plane, the lovely flight attendants and folks get up there and they tell us about where we go in case of emergency landing. And I want to have that same exit pattern laid out for myself professionally. And I'm telling you, I've always practiced that. I still practice that. And so in this case, if I knew this, and I'm you, Dalton, jade, I'm immediately going, okay, where does my skill set and experience allow me to potentially land? Let me start looking for options so that I got options, and the health care and the benefits usually take care of themselves. So, no, I would not stay. Take a huge hit, which could be 50 grand. That's a big hit.

That's a big hit. I would not do that. What's that called? Because in money, let's say you invested in a job opportunity or business or a property and it's failing, but you keep pouring money into it. We call it sunk cost fallacy, because it's like, I've come this far, I may as well keep writing down, even though all signs point to the fact that this sucks. What is it called in a career when you feel the need to cling on to something that is sinking, like it's losing you money, it's not good. What do they call that? Is that a word?

It's not a word, but I'm going to call it this phrase. It means that we'd rather be miserable than uncomfortable. And what that means is I know what I'm dealing with. I'm going to take a big pay cut and it's going to suck, or I'm dealing with a toxic leader or I've got gossipy coworkers and I hate going in, but I'm going to keep doing it because the fact that I'm miserable doesn't matter because at least I know what I'm up against, and I know what I got to deal with, and I got to bite a stick, hold my nose. You pick the analogy versus going, I got to face my fears, right, and step into the unknown of what else could be out there. And I leave one place that I'm miserable in to go to a place where I might be uncomfortable for a little while, but ultimately better off. So I think the dynamic there is, what you've so expertly pointed out, is our comfort factor. Yeah, you've seen the motivational posters. Who knows who said it? But life is on the other side of comfort and all that. And that's what's going on with people will stay in a job like this with those sunk costs because they go, at least I know it.

And you can see the fear in this.

You can.

This person is rationalizing. This is an otherwise very sharp individual. This dude.

Yeah.

And he's rationalizing swallowing a $50,000 pay cut. Rationalizing. Well, the benefits are good, Dalton. I'll bet you the benefits are good at other companies, as well, and you don't take a $50,000 hit. So I think at the core of it. What do you think? I think it's fear of the unknown.

Yeah. I think it's that old adage that's like, the enemy of best is just fine. Right? It's like, oh, this is fine. My life's fine.

It's good. Good is the enemy of great.

Yeah. And it's like, it keeps you from getting to that best. It's like at Home Depot, where they have the good, the better, and the best quality, the paintbrush.

And you're like.

You go with the one that, you know, it's not good quality, but you're like, well, it's not going to cost me much in the moment. So you go with that. Then you get home, you start painting, and you're like, I should have just spent and got the one that was best.

Interesting that you make this point, because when it comes to the Ramsey show and the wine taste test, you brought in a party platter we recently tested, and I chose the good wine. Not the better wine, the good wine tasting. I know, but I'm pointing out that you make a very good point here. Don't scrimp on the paint. Scrimp on the wine. Is that what I'm hearing? I'm only learning from you.

Yes, but does it have, like, a ring to it? I'm trying to get to where you're at, Ken.

No, it doesn't have a ring. I don't know what I'm doing. I just thought it's interesting that you said, maybe don't do that. But then you're telling me, teaching me, to do the knockoff cookies and chips and the wine.

Listen, quality.

I'm learning all the way around.

Quality over comfort. Is that good? Can we say that? We can just say that the comfort place is a great place to be, but nothing grows there. Yeah, leave it at that.

Never mind the last 30 seconds of what I said. Just go ahead and scrub it from your memory. Apparently, I'm learning. I'm learning this budgeting thing.

All right, men in black style.

Well, here's the deal.

It's over.

I tend to lean always towards the better. Always.

Here's where the analogy is.

Better car. So it lasts longer.

All these to have, you're going to have to come out of pocket. You got to save to get what's better.

Save. That's it. There you go. I like it. All right, let's see here.

Let's go.

This is a quick one. Investing question from brandy in New Orleans. Poor brandy. She had to sit there and listen to that last minute brandy. What's your question?

Hi, Ken. Hi, Jade. My question is, my husband and I are both 22 year public school teachers, and we're about step four, five and six.

Okay.

And we're trying to figure out, are we going to. We have 8% taken out for our state pension plan. They take 8%. So are we taking 15% on top of the 8%? Are we doing 7% to meet the 8%? And are we putting it in a 403 B or are we putting in a roth IrA?

Okay, so let me make sure I understand. The school takes 8% of your paycheck, each of your paychecks, and puts it into the 403 B, right?

No, they put it into a state pension plan for our retirement. 403 B is extra for us.

Okay. And on your 403 b, do you get to choose the investments, like a 401K? It's got some good investment options that you get to select.

We can choose the investment mix.

Okay.

As far as particular, the stock investment or whatever? No, but we can choose the mix.

Okay.

Large cap value, small mid.

Okay, good. So what I would say is, for those listening, obviously we want to get to 15% of your gross income. So because the money, they're taking, 8% of your money, you don't get to choose with that pension. And it doesn't have a great rate of return. So let's pretend that each of that for you guys counts. Instead of it counting at 8%, count it about half, and then do the rest. Whatever's made up into your 403 b. Make sure you're choosing a good mix. Growth, growth and income, aggressive growth and international. And you should be set. So again, instead of counting it at 8%, count it at 4% and do the other eleven into that 403 b.

All right, great stuff. Thank you for the call. And thank you both for teaching and serving in that way. This is the Ramsay show. Welcome back to the Ramsay show. I'm Ken Coleman. Jade Warshaw joins me. The phone number for you to jump in is triple 825-5225 that's triple 825-5225 let's go to Cincinnati, Ohio, where heaven awaits. Heaven. How can we help? Yes.

So, hi, how are you doing?

I'm talking to heaven. I don't know that it gets much better than this professionally. What's your middle name?

All right, well, it's actually Miel. It's honey in Spanish. If you know Spanish.

Okay, well, I don't, but this is great. You learn something new every day. Heaven. This is awesome. How can we help you?

Well, I am 29, single, with no kids, and I just heard about this show, and I'm hoping that you could give me some really good advice. I'm in about $65,000 in debt. I live with my mom, and I have a low paying job. I grew up with poor financial habits. And even in moments of having money, I didn't build wealth like I really wanted to. I just got deeper into financial debt. Now I'm feeling scared and stuck. I really don't know. I don't want to keep depending on people to loan me money for me to pay back and just stay broke. And I'm just sick of constantly being in a cycle. So if you could offer any help or anything. And I heard about the class, but I don't have $80 either.

Well, let me tell you something. Let me get that out of the way. All right. We're going to take care of that. I want to ask you really quickly about your job and possibilities before Jay takes over on the debt, because she can give you the plan. Okay. I'm just curious, what are you doing for a living?

I work at a middle school. I'm an IA.

Sure. Absolutely love our ias. We've had some amazing ias in our life for our kiddos. And so thank you for that work. But you've got the degree, correct? Or am I right about that?

So I have my associates in psychology, and I haven't finished my bachelor's.

Okay, great.

Because I can't pay.

What do you get paid?

I get paid $779 a check.

$779. You get two of those?

I get two of those a month, and that's after taxes. And I have health insurance and whatnot.

Okay. All right. And I don't want to get bogged down here, but this is a part of the equation. What are your opportunities if you just think about what you have done, do you think about what is a better paying job, a path for you to where you are making 40, 50, $60,000, $70,000 a year? Have you thought through that?

Absolutely.

Okay.

So what I did was sign up to be in care provider and home care provider, which starts at about $25 an hour. But it also gives me flexibility and time to do other things. Also because I wanted to do that plus work as an IA, because I love my job. I just don't pay nothing.

Got it. Okay, good. Yeah. So here's the deal.

And I have a juicing business I'm.

Starting, but go ahead.

What business?

So I'm starting a juicing business. Eventually, I wanted to grow, but right now I'm just starting off just selling juices from stores and stands and whatnot. So that's also a, like, going to be kind of incurred.

So, real quick, I want to hand you over to Jade, and Jade's going to walk you through how to get out of this debt. But I'm glad you've thought of some things. Let me tell you this about the juicing thing. I don't want to discourage you in any way, but that needs to be your third job right now, if you have time for it, or a second job if we go and we get a better job. But I like the idea of what you have mapped out. And I'm going to tell you, you need to pursue that with the same abandon that you need to pursue these baby steps that Jay's going to walk you through, because your ability to make more money right now while living with mom is huge. So you've got to treat that as life giving, like, I have got to make more money. And if you can go get something that will allow you to keep the IA job, and that's extra money, great. You hear me? But you have got to be crazy intense about making more money right now. And then Jay's going to tell you what to do with it.

All right, sweet. Thank you.

So, yes, Ken, good job. Okay. My two cent here is I can walk you through the baby steps. You're not going to be able to do too much until you get your income up, which is what Ken suggested. And I might also offer this little piece, which is I want you to get your income up so that you can pay your debt off. I think that's really important. But I think the most important move that you're going to make in all of this is moving out of your mom's house. Because what you described to me was a cycle. And it sounds like a cycle that you're trying to break. And it's very hard to break a cycle when you're right. Literally living in the midst of it. You know what I'm saying? Because you've got to deal with everybody else's mindsets, too, because your mom has an opinion. Auntie comes over, she has an opinion. Everybody's got an opinion. So I really want to get you in a place financially where you're able to remove yourself from that position. That's going to be so important. Because here's the thing. Here's what I know. You start making some money, you start making some headway, and people see it now, you're the one who's got money, and now everybody's coming to you, and that just adds another layer of.

All right, I got to tell these folks. No, I got to tell them I'm trying to do my thing. So just let that marinate somewhere in the back. Your position as an IA, is it 40 hours a week or do you have a good amount of extra time?

It's 40 hours a week, but it's from 730 to 230.

Okay. And you don't have kids. So until you move into this home health care thing where you're doing 4000 and more, I really want you to pick up something that's earning you any money. And I say this to anybody listening. Sometimes we wait around because we're like, it's not making maybe the money that I think I should be making, but in this case, making any money is better than not making any. Right? So you going over and picking up whatever it is Instacart. I know folks who can make a weekend on Instacart, and that's not even including your afternoons after school. So I think that you can be double your income just by you picking up anything. Okay. Right. So that's what we're doing as we work towards this home health care idea. You're 65,000 of debt. Can you tell me what kind of debt it is right quick?

My car, I owe about 20,000 on that.

Okay.

And then college stuff past banks. But it's the college and the car. That's most of it.

Like student loans? Yeah. How much student loan.

And I haven't even started paying on those, but that's about 20,000.

Okay, so 20,000 car, 20,000 student loans. I'm missing 25 because you said 65. Yeah.

So that's just. There's an old car that I have to pay out that I really haven't started. And that's about 700. I owe a bank about one, bank about 1000. A couple more banks about. Around that much. Like around 500. What else?

A couple of $500 ones. A couple of little personal loans. Like micro loans.

Yeah.

Okay. And then we've got the credit card for $700. I feel like we're still missing a good chunk.

Yeah, we're still missing stuff. I gave that number just based off of. I don't know.

Okay.

Just ballparking, honestly. But the car in college are the most.

Right. What's your car payment?

Strainful things. My car payment is 647.

Girl heaven.

What's the car worth?

Well, she's selling it. We going to sell it.

Heaven. Are you upside down? You got equity in it?

I think it's upside down.

I'm sure it is.

Fine, but I got crappy payments because my credit.

How far away from work do you. How far away from work are you?

Not far.

About 10 minutes. 10 minutes. Listen, I want you out of this car and if you're upside down, if you call them and you find out you're upside down, I want you to do anything you can do to get out of this car payment. So let's say you owe 20, but it's worth 18. You got to come up with $2,000 any way you can. In any way that you can. That is legal because I want you out of this car payment because $647 would be everything to you right now. Yeah. You live close enough to work, you get you a $2,000 car. Or you walk or you jog or you get one of those razor scooters. But we're getting extreme because. Listen, Ken, razor scooter. When you have to break these cycles, you have to go into the extreme because all of that gravitational pull. Listen, that gravitational pull will break her ankles. So she might as well get on a razor scooter. But she's got to get free.

I condone all of it except for the razor scooter.

Get you a razor scooter.

And get you.

Really?

The kids will think you're cool.

Oh, boy. I don't know. 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, America. You are joining the conversation about your life with you here on the Ramsay show. It's America's show because we're talking about things that no other show talks about. Your money, your work, and your relationships. All together. We want you to win triple. 8825-5225 is the number. The fabulous Jade Warshaw joins me. I'm Ken Coleman. I'm not fabulous. You're all right, Ken, but I'm here. You do all right. I'm all right. I'll take that. I'm all right. That's about as good as it gets. I'll take it. I got three teens. I'm never right. I'm being told all the time I'm cringe. Oh, my daughter likes to tell me, dad, you're so cringe.

Oh, man.

Yeah. I don't know what any of that means. Although every once in a while, you teach me a word here on the show that I take home, and they kind of look at me like, where did he come up with that? And I don't reveal my source.

Tell your boys next time that you guys are having a, it's you against them. Be like, I'm telling you such and such, and I'm standing on business. Tell them you stand on business.

Stand on business.

Stand on business.

Standing on business. All right. I will guarantee.

Wait to see what they, yeah, yeah, James.

I'll mess that up for sure. It'll come out completely different than that, but I'll try. Speaking of standing on business, Kathy is joining us. I'm confusing millions of people as we speak. And the great part is, I have no idea what it means. Kathy's joining us in Milwaukee. Kathy, how can I help?

Hi, Ken.

Hi, Jade.

Hey, how are you?

What's up?

I have a question on baby step three, getting my larger emergency fund.

Okay.

So me and my husband are both on board. We paid off all of our debt and we started sinking funds. Do I include the sinking funds, like, the balance of those in my three to six months?

No, because the sinking funds are going towards future needs that, you know, you're going to. It's just future purchases. Whereas the emergency fund is strictly for emergencies. And emergencies are things that are completely necessary, completely unavoidable, and have an urgent time frame, is what I would kind of call those three things that you're looking for. It's something that. Oh, my goodness. You lose a job and so you don't have enough money to fully make ends meet. So that would be you pulling a little bit, maybe, from your emergency fund or something, that you're unable to cash flow, but it's necessary for it to happen right away.

HVAC.

HVAC, right. And so sinking funds really doesn't fall into that. Sinking funds is just a way for us to save separate money. So, in essence, you kind of have two savings accounts. You've got your emergency fund, and then you've got separate money that you're saving up for things that you just want to do in life.

Okay. So even if it's not like I get annual purchases that I know are going to happen, that I save up for. But, for example, if I'm saving for a new car.

Right. But see, and that's why you use this framework, unexpected. Saving for a new car is unexpected. So that would not be emergency fund. That would be separate savings. Okay. Does that kind of help you? So, unexpected, completely necessary and urgent timeframe are the three boxes that must be ticked. Am I leaving anything out? Ken?

I don't think that's pretty good. You got it, Kathy?

I think so.

Fantastic. Thanks for calling the show. Appreciate it. Really fun. Let's go to Megan now in Salt Lake city, Utah. Megan, how can we help?

Ken?

Jade.

I can't believe I'm talking to you.

This is awesome. We feel the same way about you. We really do. We can't believe we're talking to Megan.

Yeah.

What's up?

So, I have a question regarding how to manage and stay within the 25% of my take home pay when my rent keeps going up every year. It was 25% when I moved in, and now it has been increased to 28%. And I'm trying to save for a house. I'm currently in baby step four, but I don't know if it would be considered three b, because I have a fully funded emergency fund, but I'm not doing 15% in retirement because I'm trying to save for a house.

Yeah. How much do you have saved up? How much do you have saved up for your house payment? Down payment?

I just got started. I'm about 3000.

Okay. So there's a couple of things I want to address with this. So you're telling me you've gone up from 25%. And for anybody listening, our rule of thumb here is we really don't want your mortgage or your rent to be any more than 25% of your take home pay when it starts creeping up and up, especially if you don't see a plan to be able to match it with the income and kind of smash it back down. So that's what she's talking about. So you're upwards to 28% now. It's kind of got you worried, especially with you trying to do this down payment. Do you see a course to where you're able to up your income 3%?

Yes, I'm currently working a second job and I get a raise every year. That's around 5% to 7%.

Great.

And I won't get that raise until August. But I'm just kind of worried because I want to stay within the guidelines. And I think Davis said you could go as high as 30%, but 25 is best, and I'm just.

25 is margin.

Yeah. Let's look at real numbers. How much has your rent actually gone up? Don't give me percentage.

When I moved in, it was 950. And then he raised it. My landlord raised it to 1100 this year. And I think I factored it was about 27 or 28%.

So you go up $150. I mean, I get it. That sucks. You're like, man, what? But I love that you've got something that can cover it. Here's the thing. You're doing extra work. You're trying to accomplish a goal. You want every cent of that money to go towards a goal. But one of the realities of renting is you do have to deal with rent increases. And in this case, unless you say to me, Jade and I know of a place down the street where I can rent for 850, my lease is up in May, and I can go do it. Then I'm like, yes, go do it. So you're going to have to kind of decide a couple of factors. You're going to think to yourself, okay, how long, realistically, is it going to take me to save for this down payment. Okay. And I don't know how long you've been living in this apartment, but you can also look at historically, how often and how much have they raised the rent. If you've been living there for ten years and they never raised the rent, and this was the first time, then I'd probably be willing to wait it out a little bit.

But if you're seeing every single year, it's going up 100 and $150, and you're like, listen, Jade, I don't know if I want to wait it out. My term is about to be or my lease is about to be up, then you've got options there. You're not locked in. But to Ken's point, I don't want you to over freak out over the 150 unless it really starts to become a problem. Because here's where I'm looking. I'm kind of looking long term around the horizon. But on baby step four, if this is going to take you more than two years to save for your down payment, after two years, I'm going to tell you, hey, listen, you need to start putting something aside, even if it's 5% or up to your match, because I don't want you pushing off retirement any longer than maybe a two, three year window to save for this down payment. Is that fair?

Yes. I am doing 5% match on my employer, okay? Because I put retirement off for way too long when I was in baby step two. So I don't really want to stop retirement, and you don't have to.

Megan.

I was just wanting to.

Yes, Ken, question. Are you single?

I am single.

Okay. I got to tell you, I'm kind of using the spirit anal George Campbell, because if he were sitting here with me, he would be recommending that you have a roommate for a season. You want to get your own home anyway. And if you could get a roommate now, all of a sudden, this is a game changer for you. And especially if we can go 50 50.

I love it. Come on, Ken.

Consider it.

Let's do a chant. Roommate room.

Require a move.

Oh, you have a studio.

What I'm trying to avoid.

Well, you're.

Okay.

I don't want to move.

I understand, but you said it. And I want to remind you, Dave has mentioned many times that these things are guidelines. This is not you being irresponsible. This is not you going out and getting too much rental property. It is what it is. If you can find a cheaper place, like Jade said, great. But right now, I think more income is your play. This has not gone up really crazy. You're going to get maybe a five to 7% bump on your salary. Watch your budget, the extra income. Between your discipline and the extra income, you're going to be okay. But do be freak out about it.

Be watchful in your complex because of. If I agree, a one bedroom or a situation comes available where you can look at the numbers and go listen, with a roommate, I could pack in a little bit more. Do be watchful for that.

Yeah. And I know you don't want to move, but if the moving proves your financial situation so much more, I'd say the ROI is worth it. But you're okay. You're not breaking the rules. This is the Ramsey show. Live from the headquarters of Ramsey Solutions, this is the Ramsey show. It's where we help you win in your life, specifically in your money, in your work, and in your relationships. Triple 825-5225 is the phone number. Triple 8825-5225 you're one call away from some hope. We're going to be honest with you. We're going to have some fun as well. Speaking of fun, the incomparable, the combustible Jade Warshaw.

Combustible.

You can be combustible in a good way. You're kind of like catching fire. You're like the star of the movie Hunger Games.

Thank you, Katniss.

Thank you. You remember who her costume designer was?

Listen, that's better than bostic.

Who was her costume designer?

I don't know. Ken.

The one, the only. Speaking of incomparable Lenny Kravitz.

I did not know that Lenny Kravitz.

Played her costume designer and designed the combustible costume.

Good to know.

But that's just speaking to your charisma and enthusiasm, which I enjoy. It is infectious. We're here together. I'm Ken Coleman. I don't know that I mentioned that she's Jade Warshaw. And speaking of combustible. Yes? You and your amazing social media specialist have come up with some fun clips recently of the two of us, and I feel like I'm next to one of the big shots, like I'm just one of the supremes next to the star. I don't know. But it's been fun. It has been fun, and there have been several. So one of them, you tell me, has garnered quite the reaction. And dare I say, is there an overwhelming amount of criticism for you?

I don't know that I would call it overwhelming.

What were you saying to me?

Okay, so in the clip, here's what I want you guys, to know, we post these clips from the show on our social media, and we're on social media. We're watching it. We're reading the comments. So we posted today a clip, and let's just play it so you guys can see it.

Okay, here we go.

If you have time to watch Netflix, you have time to get a side hustle. Let me just say it like that.

Why'd you have to go and do that?

I'm just saying.

Making us all feel guilty for sitting there and watching some.

I'm just saying, do something during that time. I have a buddy that I follow online, and she does the surveys. You can do the surveys. And it's like, there is always something you can do to make money, even if it's a little bit. There's always something you can do with that extra 30 minutes here and 40 minutes there. Okay, so there you have it.

So I'm clearly being facetious. I agree with you. Get after it. You shouldn't be watching Netflix if you're broke. Yeah, but people, they're giving us some grief.

Yeah. Somebody said, while it makes sense, let's not underestimate the value of rest, some hobbies, and doing something that also makes you happy. Listen. Yeah. But not now. You got to get out of debt first. You got to earn your rest.

Rest when you sleep.

Yeah. What does the scripture say? No sleep to your eyes. No slumber. Deliver yourself like a gazelle from the hand of the hunter. And I know that's not exactly literal, but there is a piece to. When you're getting out of debt, you have to be willing to sacrifice and do things that people who aren't in debt don't have to do, which is me.

I can watch Netflix tonight. You know why? Because I'm not broke.

I do think that there's something to be said for working to the point.

A couple good shows I'm into right now. Sorry, I'm over in my reverie. I was just thinking about, what do I got in the queue tonight? But you make a very good point, though. What you were saying in this clip is you don't need to be watching Netflix. You need to be working until it's time to fall into the bed because you're exhausted.

And we all say, know. We all say we don't have time. Oh, I would do it if I had time. And I'm like, listen, you go and do a time audit and see where your time is being spent. And I bet you.

Ouch.

And when I say time audit, everybody should do this practice a couple of times a year, really journal out what you're doing from sun up to sundown, all the time, what time you woke up, what you did after that, what you did after that, and really start seeing where your time is going. And I think that you'll be shocked at how much time you can find throughout the day. Because here's the thing. It might not be in big blocks. And you might learn, like, listen, I need to scoot my day around so that I can create blocks of time. Or you might realize, listen, I could wake up an hour and a half earlier, or I could stay up or stay up later. There's things that you can do, and I don't want to create excuses and reasons why I can't get where I need to go, because ultimately, and I get. Don't get me wrong, rest is important. I get it. But here we're trying to motivate your butt to get out of debt. So when I'm telling you to go pick up jobs, don't come at me with like, but, Jade, we need to rest.

You'll have time to rest.

What else are they saying?

Let's see a little bit more.

I'd like to know some more.

This person said, why did you have to go and say that, Jade? This person said, rest and live within your means. And I'm like, I'm talking to folks who are trying to get out of debt now. What I like is what Julie 9658 said. She said, all right, jade, I needed this. I hear you deleting Netflix. That's the kind of energy I'm rocking with.

Julie 9568. Thank you.

Very literally, I need the person who looks at it and says, oh, this person is giving me away. They're showing me how to get to succeed.

Yeah, I bet she's her username on Netflix.

Julie 2568, whatever it is.

I just think that's really funny that that's what she went with.

Yeah.

Just cracks me up.

I think that you make a very.

Good point, and I agree with you, by the way. I got to say, I don't know if sometimes people realize that I'm being, like, facetious in that clip when I said, come on, jade, why do you got to do. But come on. I think you're right. I think watching tv, let me tell you this. Millionaires don't watch a lot of tv. Multimillionaires, billionaires. They don't watch a lot of tv. Listen, they really don't.

We can tell people, I'm gonna get into it. We can tell who said what to who. You can tell me what Taylor Swift said to what's his guy's name? I don't even know the guy's name.

Oh, her boyfriend.

Yeah, the footballer.

This is what's wrong with America. Everybody knows her, but we don't know who he is. But I'm saying, my daughter walks into the living room last night, and she sees the chiefs are on. True story. She's like, oh, is Taylor there? That's what she said. And I'm just like, go out of the room. Leave the room now. Go to your room. I can't handle it. His name is Travis Kelsey.

Travis Kelsey. Folks can quote exactly what Jay Z spent on a meal. People can quote.

Really?

Yes. People know numbers, but they don't know their own numbers. They can tell you exactly what somebody else's plan is and what they're doing with their money and their business, but they don't even know what's going on in the state of their own life. And they would rather spend time gathering information and gossip about celebrities than going out and getting your own life together. Like, that's not your life, that's fake. Or we spend time on social media, scrolling and looking at other people's lives, comparing ourselves to other people's lives. We'll spend more time. Hold on. I'm about to get them, Ken.

Oh, boy.

We'll spend more time looking for the right lighting to take a photo than we'll spend looking for the right side hustle.

It's a very good point. You are 100% correct. I should have built you a podium. And then here's the deal. Then. They're griping, and they're exhausted. And all this rest when what you're really exhausted from is the stress. You're exhausted from the stress. You can't sleep enough, and you'll rest.

Better when the debt's gone.

Yeah, but you want to watch your shows. And by the way, it's not just Netflix anymore. What is the deal? There's 75 platforms that you got to pay for to watch everything.

Hulu plus, back in the day used to say, I got to watch my stories. Remember that? I don't ever remember saying soap operas be like, oh, my stories are on today. She knows what I'm talking about. I got to watch stories. That's what they call. Yes.

I will say this for about a six month period that I regret. James, I did watch days of our lives during college.

Yeah, I know about that.

I'm never getting that time back.

No, you're not.

All right. The good news is we'll be back before you know it. It's a very quick commercial break. Don't move. This is the Ramsey show.

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

Ramseysolutions is a paid non client promoter of participating pros. Learn more@ramsaysolutions.com smartvestor. Welcome back to the Ramsay show. I'm Ken Coleman. Jade Warshaw joins me. We're here for you. Triple 8825-5225 is the phone number for you to jump in. Triple 8825-5225 let's go to Jesse now in Buffalo, New York. Jesse, how can we help?

Hey, guys, thanks for taking my call. I'm just trying to get some advice on how to navigate kind of the disposable income I have at this point.

Tell us what you got that's disposable.

Well, so I pull in about $3,300 a month. That's my take home and my current expenses, including the contributions I already have to my retirement accounts. And that's kind of the core of the question here. So I'm pulling in 3300. I have about 2500 in expenses right now. So I have about $1,000 a month that I'm not really doing much with at the moment.

And you have no debt?

I have no debt. I'm very lucky that I have no debt.

Do you have an emergency fund?

I do. I have about $3,000 in a savings account.

Okay. And are you investing at all, any kind of investments?

So that's really the core of the question. I am pretty focused on investment at this point in my life. So I have a Roth and a traditional IRA through Vanguard, and that has about $30,000 in it currently. I have a 401 through my employer that I just started. So that only has about $600, but I'm contributing $200 a pay period to that. And then I used to work for the YMCA, which I'm not sure if you're aware, they're a great company to retire with because they match 12%. And just for years of doing that, I have about $20,000 sitting there.

Great.

So how old are you?

I'm 32.

Okay, you're 32.

Good.

I'm listening to everything I hear. It sounds good. What's your living situation?

So I live with my partner. We have a monthly rent of $1,600 and then utilities cap out about, I would say $200 a month. So between the two of us, we're looking at a little under 2000 per month.

Okay. And you just split the rent? Everything is just split. Right down the middle?

Yes, down the middle.

So of all the things you said, the thing that sticks out to me most first is that you only have 3000 saved. So the way we would teach is for you to have at least three to six months saved. So I would beef that up and I shouldn't have jumped forward, but do you have any other debt?

No, I'm very lucky. I got help with my undergrad and then I didn't do grad school until I had the money for it.

Okay, excellent. So no debt. The next step then is to save up what would be akin to three to six months of expenses. And I'm not going to lie, I love when people have six months. So if you can get six months, considering you're not technically married, so you're treating your income as a single guy. And so I do six months of savings since you're the only one who funds your lifestyle. So that would be next. And then I would walk with that extra $1,000 that you have after you've beefed up your savings. I'd walk down the additional baby steps with you. So if you don't see saving for kids college anywhere in your near future, I'd want to make sure that you're definitely saving 15%. So what percentage are you at at this point?

So I'm putting about $500 a month into my Roth and then $200 per pay period. So $400 a month into I have a equitable.

Okay, is that a part? Just to clarify, you still have $800 in additional money surplus even after doing those two things?

Yes, sir.

Okay, so what percentage? Because only you know your gross pay. I want you investing 15% of your gross pay every month.

Okay?

So that's before insurance comes out. That's before taxes. So look on your pay stub or whatever or however you get paid and figure out what 15% is because that's what I want you doing. And you're going to mix it across like what you said, if you've got a match on your 401k, invest up to that match and then go over to your Roth and try to max that out. And if you still have money to go, come back to the. Try to max that out and for you, go ahead.

Oh, I'm so sorry. So that's really the question I have. So I'm on a bit of a grind, and I'm at an age right now where I've shifted focus to how do I really maximize these retirement contributions? So I work full time, I have, like, a main job. I'm a school social worker, but I also have two part time jobs.

Okay?

And I'm actually going to be getting another job that's going to be seasonal.

Okay?

So all of this to say is really, there's a lot of my money that I can be. I maxed out my IRA last. My roth out last year.

Okay?

I'm on track to max it out this year. I don't think I'd be able to max out the equitable, just because that's about 23,000 I could put into there, and I don't think I'd get there. But the thoughts I'm having right now is I have all these different spots and obviously it's not going to hurt me, but is there something better I could be doing with that money? Because I have so much, I stopped working. So that's a question. I'm not sure what that looks like right now.

You don't have to. But do you feel like at some point you're going to buy a house? I mean, you're 32. I would assume at some point you want to buy a home. Yeah, that's true. You don't have to know what the price of the house is down the line, but you can start saving at this point, you're doing a really good job with investing if you do what Jade says. In our baby steps, we have what's called three b, which is saving for a home. And so right now, at your age, I would start socking away some money for a house down payment in the future that may be three years from now. I don't know if you think it's.

More of like, a five year or longer play. I'd probably take whatever money that you think, listen, this might be my down payment or my home money, and I'd just put in a brokerage account, invest it in an index fund and let it sit as long as you know it's at least a five year play. Because we just see that the chances of you having a positive return on your investment is better at the five year point than it would be at, say, the two or three year point. And so that's what I would do. I would start focusing on the idea of buying a house with a super high down payment or dream a little and be like, listen, what would it look like if I one day paid cash and bought a piece of real estate completely in cash? Because it seems like you're really in a money motivated mode right now. And I'm not mad at that. You're like, I'm willing to do what it takes. And technically, the state you're at, you could just continue to pile up investments. Listen, maxing out a 401K, maxing out a Roth IRA, maxing out whatever other situation you said you had there, that's all good.

All that stuff is compounding over time. And if that's your goal, there's nothing wrong with that. But I do think that to Ken's point, real estate is going to sneak around the corner before you know it. And if you've been paying attention to anything going on, it's harder and takes people longer to save up to buy a house than ever before. So it might behoove you to kind of get that process started. That way, when you're ready to buy the money, it's just sitting there and you have your pick of the litter.

Okay.

Yeah.

I think I've just been so focused on retirement because of that compounding aspect. But then I'm wondering if, what are the other things I could be doing with that money that would be beneficial. And that makes a lot of sense.

Yeah.

Sometimes I wake up and I feel like I'm on track. Sometimes I wake up, I feel like I'm behind. Some days I wake up, I feel like I'm ahead. Listen, it's really hard to.

You're not. Let's think about it. Let's do some math. Because I love bringing up a retirement calculator. You said you are, and I'm just on the Ramsay solutions retirement calculator. You said you're 32 years old. Let's pretend Social Security starts at 62. So let's just say at 62, you decide that you're going to be done with things. And let's pick the 401K, since you already have $600 in there. And let's say that each month you're contributing how much to your, let's say another $400. All right. Let's pretend it's getting a 9% rate of return, even though we could probably do more just in an S and P 500. That's just in that account alone, if you only for the rest of the next 30 years of your life only put $400 in that account, that account would have $741,000 in it. Just that account. And don't forget, you're also maxing out Roth iras and you've got these other accounts through your work. So that should give you some hope that you're going to be just fine. And you got a long path to do a lot of great things here.

Yeah, definitely. I think one of the catalysts for this change in mindset was setting up the equitable account and seeing my retirement year date being 2060 and just being like, whoa, that's really not that far away. Getting kind of freaked out by that.

Listen, a lot happens in 30 years. A lot happens in 30 years. And I like that you're diversified in a lot of different accounts. Like, sometimes people think it's just one big nest egg and one account, Ken, and that's not the case. I mean, you've got a lot going on here, and you'll soon add real estate to your portfolio, too. And we've seen that most millionaires do have a paid for home as well. So adding that to the mix is going to be very good for you as well.

Yeah, Jesse, you're on a great path. You don't have to freak out. Just continue to be disciplined. If you haven't found someone to really help guide you, go to ramseysolutions.com and click on smartvestor Pro. Find some of those folks in your area. Go interview them. See who's the best fit for you. Having someone to guide you and explain it and teach it to you to where you understand it, it's going to give you even more confidence. Thanks for the call. This is the Ramsey show.

Hey, if you want to make real progress with your money and get that extra push to keep going, then you need to be at our brand new event, the total money makeover weekend on May 10 and 11th. Join me, the rest of the personalities and a community of people like you at Ramsay headquarters for new talks, new focus and new motivation to stay gazelle intense on your money goals. Early bird tickets start at just $99, so don't wait. Get yours@ramsaysolutions.com. Weekend.

Welcome back to the Ramsay show. I'm Ken Coleman. Jade Warshaw joins me. Triple 8825-5225 is the phone number. And this is a show built on basic baby steps that get people out of debt and allow them to live a life that they have dreamed of. And there's no better example of that than when we have our debt free screams. And as I look across the studio, I see two fabulous people by the names of Joe and Kat, and they're on the debt free stage. Joe, cat. Welcome. Thank you.

Glad to be here.

Where are you guys from? We're from Floyd knobs, Indiana. Okay, good. All right. And you're here to do a debt free scream, I presume? Right, fantastic. All right, give us the numbers here. Let's walk through this. How much debt did you pay off and how long? It was 122,749. Took about 60 months. 60 months. And what did that. Well, let me first ask you, what was your range of income during that time? 125,000.

Okay.

Stayed at 125. That's very good. What do you do for a living? I'm a registered nurse. Okay, great. Fantastic. And what was the debt comprised of the 122 749? Well, it ranged from credit card debt to our house payment. Hey, there you go.

Paid for house.

Well, no, I take that back. We didn't pay for our house yet. We're still trying to work through it. So what was the 122 749? Some of that's what you've paid in the house or what? Help me out. We did pay some of the part of the house off. Okay, got you. But mainly credit cards, and we had some student loan. Parent plus student loans for our kids. Got you.

How much in student loans?

It was probably around 50,000. Wow.

Parent plus loan.

Man, you guys got out of that alive.

There were home repairs.

Home repairs. Home repairs.

Okay.

Got you a couple of car loans and cars we had to replace.

Okay. Right. Well, take us through this journey. Let's start 60 months ago. Okay. What caused you guys to get on this journey?

Okay, well, we originally had attended a financial university in 1993.

Okay.

And probably have been in and out of debt about three times.

Okay.

But we just couldn't seem to stick with a program. And so that many months ago, we found ourselves paycheck to paycheck, and we called our older son. It's like, can we borrow $100 until we get paid? We just don't have it. And he's like, yeah, but he's like, we need to figure out what's going on with your finances because you all got to get ready to retire.

Yeah.

And so we found out at that time, we had given both our sons the financial peace university as wedding presents when they got married that my son David and his wife Amelia actually stuck with the program. They paid off all their student loans for Vanderbilt and Butler. And they don't have any debt at all, except their house. That's all they're doing now. And they've moved up three different houses and just their excitement. We even called my son David. David Ramsay sometime.

There you go.

Because he's just so excited about it.

Is this the sharp looking young man you keep looking at here?

Yes.

Okay. Is this also the same son that you called and asked for $100?

Yes.

So you gifted him financial peace university back in the day?

He did it.

You all didn't do it yet?

We didn't stick to it.

Wow. I love it. But you saw the fruit.

He sent us back to the class. So then we did it again. And then he just helped us stay with the baby steps. And when you say, like, who's our cheerleaders? There they are.

David. Way to go.

What a good son.

And so we also had, like, 18 snowballs that we had to work on.

Sure.

And so Amelia knows we like cats, so she met us, like, a cat chart, and we'd color in a cat when it was paid off and have a glass of wine.

Oh, very good.

That is so cute.

And then David would make progress reports for us, and we didn't always do quite as good as he wanted us to do. But I think we have found out what our problem was. This is the nerd, and I'm the free spirit, but the discipline and accountability is what we were lacking, and that's what they helped us find. And so now we finally have the real peace, and it's just really awesome.

I think you guys have an incredible family. I think that what I'm hearing is really something special and spectacular that you would be willing to hear from him, because that's the hardest part. We call it powdered butt. Very. The hardest part thing to do is to hear from the person whose butt you powdered when they were a baby.

Sorry, David, we're talking about you like, you're not here.

I love this. I think it's so great.

Yeah, no, it is, actually. Really? So, okay, so that's how it got started. So your income did not change in this time. So that means you guys just started working with what you had. What did you do to start getting momentum?

We did both work extra.

Okay.

I don't know what you had.

Yeah, I got a part time job.

Okay.

Worked for about five years, I guess. Okay, so you did make additional money beyond the 125. Okay. Yes. Got you. All right.

Okay. Let me clarify something, because you said your son came to you and said, hey, you're getting ready to retire. You got to clean this up. So did you retire from your normal jobs and just pick up other work? How did you do it?

No, I'm still working. I plan on to retire finally.

Yeah.

He was saying, you need to get ready to retire.

Okay.

We were in such a mess, but Joe has been wanting to retire for the last couple of years, and he's actually going to be able to retire this coming December.

Way to go.

We've been working with Kevin Wells. That's one of the. David Ramsey finance.

Smart investors.

Smart investors, yes.

Okay, good.

And David kind of turned us over to him after he took us as far as we could. So now David's got us with the house plan to pay the house off and being able to do some trips and just enjoy the.

So what would you tell people that are listening and watching to you right now? The key to getting out of debt is, what was it for you guys? Well, I would say probably, gosh, I don't know. What do you think?

It's the discipline and being able to actually finally see that it's going to make a difference and not go back, because that was our problem. We kept going back and we just had to actually use the steps in the program, right?

Yes.

And then we would just get off of them or start one credit card or do something like that. We finally don't do that.

That's interesting. So the other times that you tried to do the baby steps, you kind of did it your way. You went over here instead of going over there. Right. And that caused you to go backwards.

Yes.

But when you finally submitted to listen, this is the plan. I'm going to walk the plan the way the plan goes. That's when it.

Well, and David's like, you got to get rid of all the credit cards. I was like, no, we got to keep one. Everybody just stumbling all the way, and it's like Christmas, we got to have credit cards, vacation. And it's like, no. So all this time we've not put anything on credit for Christmas or vacation. Good job saved and did all that. So it felt really good.

Very good. Breaking the mold.

We've already covered this, but it bears repeating because you keep repeating it, Kat, that David, your son, just kept riding this process.

No, it's that private Dave Ramsey.

Right. This is exciting. It's also a testament, though, to you guys kind of swallowing your pride and saying, all right, I'm going to take some encouragement wherever we get it. And in this case, it's your son.

These are the role models. That's awesome.

So how does it feel? What's the feeling now? House is coming up next. You're going to pay that off? Retirement.

I mean, we just really feel like we can enjoy retirement.

Just a peace of mind, be able.

To travel a little bit. Yeah, peace of mind. And we both wanted to be on here just to say, no matter where you are, just start now.

Yeah, that's right.

Yeah. That's a very good point. I didn't want to ask you how old you are, so I'll ask Joe. Joe, we're not going to ask cat. I'm a gentleman. Joe, how old are you? I'm 66. So it's not too late. No, it's not. Started at 61 if I'm doing the math. Right, right. Wow.

Way to go. You guys are awesome.

How about that?

Really great. What a great family.

All right, so I want to call out again. David, the son, is over there with his lovely family and so very cool. And his wife and the kiddos watching and cheering. I love that. Let's get this ready. Here we go. You guys ready to go? Mom and dad. All right, here we go. We got Joe and Kat. And they paid off 122,000 and 749 in 60 months, making 125 plus plus here or there. And they were hustling. Let's hear your debt free scream. All right, three, two, one. We're debt free. There it is. Joey Kent bringing it. I love it. He was 61.

Yeah.

When they started this process. And it's not too late. They went out and hustled. And how about that, son? I mean, is he not nominated for son of the year?

Son of the year?

I don't know who gives out that award, but we're going to nominate David. He was their own Dave Ramsey. She is possible. And, folks, this is a reminder. It's not too late, because these baby steps work. I don't care who you are or where you're from or how old you are, they work great. Great stuff. All right, don't move. More Ramsay show coming right up. You're listening to the Ramsay show. I'm Ken Coleman. Jade Warshaw joins me. And our scripture of the day comes from proverbs 16 nine. In their hearts, humans plan their course, but the Lord establishes their steps. Our quote today from the fantastic legend, Zig Ziglar. Lack of direction, not lack of time, is the problem. We all have 24 hours days. That kind of goes with your rant about Netflix and paying off debt. I feel like you and Zig said it that's it. You were channeling some zig.

I love it.

All right, let's go to Rob, who joins us down in Milwaukee, Wisconsin. Rob, how can we help?

Hi. Thanks for taking my call. Hopefully, you can help me out here. I think I've got a fairly straightforward question. My wife and our income has increased drastically over the last couple of years. We're finally getting our finances in order that we should have been doing a long time ago. But my question is, I've got a car right now, vehicle that I owe about 35,000 on. It's worth about 27,000, give or take. And I'm wondering if that's something that I should just work on paying off, or if it's something that I should try to sell and just pay something cash and get something that's going to be workable.

Do you have any other debt?

We've got about $6,000 on another vehicle that we'll have paid off by April. In February. Here we just have some small miscellaneous debt. A couple of. We'll have paid off in February. Other than that, we've got a house and then about $50,000 in student loans.

Oh, Jade.

At first I was like, well, if your income could allow you to pay that off, I'm wondering, upside down. Yeah. What's your income?

Total gross before bonuses, about 240,000.

Tell me about the bonuses.

For me, it'll be about 33,000 a.

Year, on top of that. So that's going to take you to roughly 275, roughly a little bit below. Listen, you like the car?

Yeah. But I've kind of grown up a little bit here and realized that it's just a car.

Well, I like that, Jade, because I'm always for selling the car.

I mean, it's up to you. Here's the thing. What you don't necessarily have to do, if you liked the car, I'd be like, listen, keep the car. You can pay it off in two years or less.

Yeah, exactly.

So it's not changing anything. Or if you're like, I don't like that car, I'm going to take the $10,000 hit, I'm going to put some more cash with it, and I'm going to buy another 25 or $1,000 car in cash. I'm not mad at that either, because your income allows for, easily allows for it. Your income allows you to be debt free over the course of this next year. So none of these things are going to make or break you.

Yeah, I figured if I got rid of the car saved up for $12,000 car. I could probably do that in five or so months. If I paid the car off, I could probably do that within the next twelve months. I also have part of the equation too, is late summer. I've also got tuition bill, about $17,000 for the three kids that I'll be paying as well. So I'm factoring that into it.

Okay. I think all of this stuff is feasible. I'm seeing 8500 thousand dollars of debt, give or take. Because you said you had a couple of other little things lying around. I see $270,000 of income and I go to myself, okay, 270. Can you live on 170 and can you take the other 100 and pay off all this debt? And the answer is an overwhelming yes. And that includes the tuition, by the way. I say it all the time, and this is not directed specifically at you, Rob, but I think that when you get into this higher dollar earning, it gets tough because people are like, listen, I'm making a good income. I want to be able to live the life and I want to show it. And it gets harder to pull back because it's more visible when you pull back. When you sell a $35,000 car and start driving a $12,000.01, people see that. And I don't think that's really a problem for you. I feel like you're at a place where you are ready to make those changes. And it sounds like this higher income is relatively new, right?

Yeah, last three years or so. But our biggest problem is the income went up. All the little miscellaneous spending went up.

Exactly.

It's just money flowing out the bottom that you don't even realize.

Yeah, it can get messy. And before you know it, you're like, oh my gosh, how are we spending? So my prescription coming from here because, you know, you have to pay off the debt. But really being on a good budget is the prescription here, because that's where you really see what you're spending. And for anybody listening, not just you, Rob, but a budget is. It just gives you that custom organization for your money. A budget is not a spending restriction plan. That's not what it is. It's just a plan for your money. And so it allows you to see, okay, with an income of 270,000, being able to live on 170 is still very nice.

Yeah. And Rob, I'm going to come back to your initial question, and I just think that the fact that you don't like that car that much, when I asked you the question, point blank, you're kind of like, and for that reason, because there's no emotional attachment to it, I would sell it and it's going to give you momentum. I think you're a guy who gets it now. I think you're sick and tired of being sick and tired. I can hear it. And for that reason, I'd pay the car off. Sell it. I'm sorry, I'd sell it and you've making enough money to where you can go do what you need to do for second car or whatever. But that's what I would do if I were you, based on how you sound. But there's no wrong decision whether you want to pay it off or sell it. Put it in the baby steps if you're going to pay it off, if you change your mind after this call. But the way you sound. Yeah, I'd probably get rid of it and it would be like a way to go. I got that mistake out of my life is the way I would look at that based on how you sound.

But I'm curious, is that where you are or am I projecting on you?

No, that's correct. It was one of those stupid purchases.

That I shouldn't have done, then I'd get rid of. I tell you what, first of all, I've made plenty haunting him, but I like getting rid of my mistakes and trying to remove them from my mind as much as possible.

Yeah, that car is haunting him. So you're right. I think it's like a ghost.

I mean, he's got enough money and he's going to knock this out either.

Way, which, let's talk about that right quick. Okay. You, you have a car, you're upside down on it, right? He owes 35, it's worth 27. Some people face that and they're like, hey, I don't know if I can get out of this car, walk through.

What we tell people to do there because we didn't cover that. I'd like you to do that.

So ideally, if you have some money saved, you can cover the difference between an upside down situation. Meaning in this case, he's about $7,000, $8,000 upside down. If he's got that in savings, then when he goes to sell the car, he can put the 8000 with it. It's a clean deal. But now you're Carless, so you've got to make sure you've got some money for the next car. 2000, 3000, $5,000 cash, whatever you can muster up. Now sometimes you may hear us say listen, if you don't have that cash to meet the difference between what it's worth and what you owe on it, go down to a credit union, go get you a loan, because that's the only time we would say to take out any form of debt because you're still lowering your main amount. Let's say he didn't have any cash if he went to the credit union. Heck, if he even found a credit card that would give him that $8,000, he's still taking away the $27,000 of debt, and now he only has eight, right? So we're doing math here. We're still going lower. He now owes 8000, not 35,000.

And we put that 8000 in the debt. Snowball. So now what was 27 is eight. And then you continue to work, baby. Step two.

And now the math that we did there beforehand, I told him, I said, if you can't pay this car off in the next two years, that's kind of a rule of thumb. If you can't pay it off or if it's just grossly, way more than what your income is, like we say the rule of thumb is about 50%. You don't want your vehicles to be any more than 50% of what you earn in a year as a household. In his case, that wasn't the issue. He made $240,000. But if you're sitting in a situation, your take home pay is $70,000 and you have a car that's 30 and your wife has a car that's 35, you all are tripping and tripping hard. Both of you all need to sell those vehicles. So that's kind of how we do it. Am I leaving anything out? So if you're selling it private sale, you're going to get the best value for that. If you're upside down, you put the car on the market, you write a bill of sale for it, you get your money from the credit union, put it with the money from the sale, you're good.

And now you're able to get the title, and then you're able to send that title to the person who sold the car.

Yeah. And again, we prefer your local credit union to get a better rate on that 8%.

Yeah, you want a good rate on the 8%, but at the end of the day, you're paying it off quick.

I get it. You said credit card, and that could be. Listen, really high percentage.

It could. But to go from walking away, you're still walking away.

But our preference is the other and for obvious reasons.

That's right.

But that's a great explanation for how you get out of an upside down car. Thank you, Jay. That's really helpful. Hey, great hour. Thanks to James childs and the crew for keeping us on the air. Thank you, America. This is the Ramsey show. Hey, folks, Dave here.

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