Live from the headquarters of Ramsey Solutions. It's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Camel, joined by Rachel Cruz. This is the Ramsey show. It is not Smart Money Happy Hour, which is another show that we co host together. But we're going to bring that kind of energy and fun today.

Rachel we hope so. It's going to be a fun show.

George we're already bringing it with our outfits. We're very brightly colored today. Bright yellow, bright orange. So if you're watching on YouTube, I apologize. Dim your screens.

My shirt is like, Get some sunglasses.

But it's fun. It's what makes you so joyful and evervescent.

Rachel bright.

Well, hey, give us a call. We'll talk about your life and your money at jeff joins us in Toronto, Canada. Jeff, what's going on?

Hi.

Thanks for your call, guys. How are you doing?

Doing well. How are you?

Okay. Just wanted to talk to you today. We're concerned that we probably look better than we are. We've got no student debt, no credit card debt, no other debts per se other than the mortgage. But the mortgage is 625 and amortized over 28 more years, and we're 49. So we've obviously sort of refinanced things into the mortgage a couple of too many times, and we're on a variable mortgage. We can't help that right now. I guess I'm wondering, how should we look at our situation more? Like we have, say, 100 grand left in mortgage debt, but we've maybe got a half a mil in debt we should really tackle.

But this whole thing is in one mortgage?

Yes.

Okay. What's your household income?

210. Canadian.

Okay. And what is the mortgage payment every month?

Because of the variable rate, we're up to 6.2% now. So it's gone up to about just under 4000.

Wow. And what's your take home pay?

Take home on that is about eleven a month.

Okay. All right. That's a hefty mortgage. Even with your great income? I don't know that it's a fire right now. You don't have any other debt, right?

No, everything else is clean.

So how much extra do you have as you kind of create a budget? How much extra do you have to throw at the mortgage every single month right now?

Well, now that it's gone up like that and saving for general repairs and the four kids, very little. We're just trying to rebalance and bring it down to bare bones this week.

Okay. So the other 7000 is just disappearing into expenses. Are you investing? Yeah.

Sorry.

We do have retirement. We get a match at work, so I got to keep that going because it's free money.

What's the total you're investing out of your household income?

On mine, it's 6% to get a match, and my wife's is 4%. So it's kind of like an average of 5% total.

Okay. Man I'm still wondering where all the leftover money is going I thought you're going to say we're investing 2300.

No, grocery is about 2300. I mean, all the other insurances and things. Yeah, we're going to cut it down and try and cut it back.

Okay, well, to your original question, there's no way to really split this debt up if it's in one giant mortgage. We're just going to attack it. You would be what we call baby step six if you have a fully funded emergency fund. Do you guys have that money set aside in savings, three to six months of expenses?

No.

Okay. How much do you have in savings?

Oh, it's just kind of month to month. So very little, because we just throw that at you're straight up, paycheck to.

Paycheck, even making 210?

That's correct. Okay.

Yeah. So, Jeff, I think that's probably one of your biggest problems. It feels like, oh, my gosh, we're on the edge, because you kind of are on the edge if you don't have that savings. So I do think that buffer of six months put away is going to ease some of this tension. Knowing that there's cash there if something happens does lower your stress because, yes, you have the big mortgage, but other than that, you're going to be able to breathe at night when knowing that you have this emergency fund. So I think doing that's going to relieve some of the stress. And then I think, yeah, you and your wife have to kind of look at each other and just be like, all right, this is our mortgage, and we don't want to live in too deep of sacrifice for too long. Right. Because then you just burn out of steam if you're doing this for ten years. But there needs to be enough 15 years. Yeah.

Right.

So there needs to be enough, though, to say, yeah, we're feeling this progress. And again, I know the real estate market in Canada is just wacky. Like, I feel like it is here right now in America, too. But maybe you guys look up in three to four years with things that have changed, and maybe you say, like, hey, maybe we would rather be out of debt faster than to keep this mortgage, and maybe there's some equity there and you make a different decision with the house if you want. Right now may not be the best time, because I know rates and everything are just nuts. So, like George said, it's not on fire. But you guys may reconsider this mortgage depending on how much it's still weighing on you here in a couple of years.

Sure. If we could rent the house and actually take an apartment that was cheaper, I mean, that would create a cash flow benefit.

Would it?

If we could rent the place for about the same price as the mortgage?

I mean, in a perfect world, yes. But then suddenly you have renters and you still have a mortgage on it. And if the renter doesn't pay, it's up to you. Or if something breaks, it's still up to you. I mean, you're still owning a house. I think the passive cash flow that real estate provides is somewhat of a lie. It's not very passive. It's very reactive.

Especially when you have debt on it.

Yeah. And especially when it's not paid off. But I understand what you're saying and, yeah, the numbers would make sense, but life usually doesn't work that cleanly, sadly.

I would work my way to aggressively attack this mortgage, and that might mean we've got to get our income up. Even though you're making great money, it might mean a season of getting our income up, getting our expenses down. If you looked at your budget outside of your mortgage, what would you say are the biggest expenses? Eating away that take home pay?

$2,300 is attributed to groceries, $250 for dining out. Utilities are, say, 400 electric and water.

How many kids do you all have?

Four.

Okay, now, I know Canadian food prices are insane. Is 2300 normal over there? That still feels really high.

Yeah.

I think we're pretty conservative. But I mean, 2300 is everything that the house consumes, like soaps and food and that sort of thing.

Household essentials, all that.

Yeah. Well, I think, Jeff, I think y'all's first goal to feel some level of traction and piece is that emergency fund. I think that will really do something to you guys, a sense of confidence that you're not living on the edge, because you won't be. But that would be the goal I tackle. And then I would up some of your retirement. I would still be investing more than what you guys are, which I know is going to give you even less to put at the mortgage. But then that's when I feel like you guys could maybe reevaluate this house here in a year or two.

Yeah. And the other thing I would do, Jeff, which may hurt right now because it's free money, is pausing your investing until you have this emergency fund in place. It's going to speed that up, number one, but it'll also put a fire under your belly to really get some financial foundation under you and get back to investing into the match. And I want you investing beyond that, because investing 4%, you may not have a great retirement if that's all you do for the rest of your life is treading water.

Yeah, for sure. Is there a way to get Dave's list of good mutual funds, the long term growth ones that he talks about? Is that on the website?

Well, we just split them up into four categories. We don't actually list any specific funds because it's so dependent on your investment vehicle, which firm and brokerage you're investing with. But we've got that resource. You can go to Ramsesolutions.com slash Investing. We've got a whole investing hub over there to help you out with that. But, Jeff, the real key is there's no life hack here. It's spend less, make more. That's how you find that margin. And I know it's tough for our Canadian listeners. We feel for you guys. We've heard how insane it is over there, and we hope you get some respite soon from the chaos and craziness. This is the Ramsey show.

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So, George, I don't know if you've been having the Christmas discussion in your house. You got a new baby.

Oh, yeah.

So I'm sure the first Christmas is going to be a special one.

Mia's list is very long.

Is it very long even for a two month old?

She's just like her mother. She likes nice stuff.

I know, and we all do. I know. We've been talking to our kids about it and always trying to temper the expectations because that contentment piece of teaching our kids about this stuff is really important because even people listening that are on baby steps two and three are getting out of debt. Maybe you're saving up for your emergency fund. And it's going to be a season of sacrifice. And we're right in the middle of the holidays, and so that means the holidays may look a little bit different this year. But the good news is that the gifts that you do give can actually bring a lot of meaning. So I have a new kids book out. It just launched yesterday. But I'm glad for what I have. And it does. It talks all about contentment, that our stuff is okay. But you journey along with these little animals in the book to learn that, yes, the more stuff you have does not equal happiness. And that contentment piece is so crucial so make sure to check that out. Another great option for Christmas is George. You can actually pre order George's book.

Yeah. Breaking free from broke.

You won't have it in your hands this Christmas because it launches in January.

Very exciting.

But you do such a great job tackling all the myths. So make sure to check that out@ramsaysolutions.com store. And we have a $12 sale going on for Christmas with books like the Total Money. Makeover Baby Steps Millionaires. Own your Past, change your Future. Love your life, not theirs. A lot of the books that we've all written are in that sale. So make sure to check that out because again, the holidays are coming. If you're going to give a gift, give a gift that actually can help people. And a lot of people find the Ramsay plan and the Baby Steps through a gift. My parents gave me this book for Christmas, or my friend always had it and they lent it to me and gave me that book. So you actually can help spread this message of hope when it comes to our money. So go to Ramsaysolutions.com again, store to check out the $12 sale.

And what's cool is that when you go to Ramsaysolutions.com store, you'll also see the Ramsay cash giveaway we have going on that's $500 weekly prizes, a $5,000 grand prize you can enter every day for your chance to win. We're just spreading the cheer at the Ramsaysolutions.com.

Merry Christmas.

We're having a good time out here.

I'm ready for it.

Are you a Christmas person?

Yeah. Jump Thanksgiving. I mean, I know we need to be grateful and stuff, but we do.

Kind of skip it. We already have Christmas up. I know Thanksgiving decorations didn't make the cut this year.

This weekend is our Christmas decorating.

I can't wait. I love it. Well, let's get to the calls. Dustin is up next in Charleston, West Virginia. What's going on, man?

Hey, guys.

Thanks for taking my call.

Sure.

My wife and I, we feel that we make too much money to have know each month worry that are we putting enough in savings? Are we doing the right thing with our money? The interest rates have went back on student loans. We never had student loans prior to COVID and then post COVID, we probably weren't aggressive enough paying off student loans with interest off. We probably did things with that money that we shouldn't have done. But see, maybe get a little guidance on how to tackle student loans the best. And are we maybe saving enough and budgeting doing our budget right?

Okay. Yeah. So how much student loan debt do you guys have?

She has $203,000 right now.

What's her degree in?

Anesthesia.

Good.

How much is she making a year?

Combined, we gross about 340 combined.

340. Okay. So that's the student loans and then any other debt. How much do you all owe on the cars?

We have vehicles and we also have two mortgages. We have a mortgage on our house and then we have the farm mortgage, land, mortgage, separate. We rent an old mobile home on the farm. That covers that payment, though.

Okay, so how much debt is on them?

They're both a little over 50,000 we owe on them.

50,000 each? Okay.

Each?

Yeah.

And then any other consumer debt besides the mortgage?

No, we got mortgage, vehicles, student loans.

Okay. Yeah. With these numbers I'm like, yeah, you owe as much as you make a year, so it's going to feel tight. Do you guys have any savings?

We probably got 25 right now. Like I said, we weren't as responsible maybe as we should have been. When interest rates were off the student loans, we spent $100,000 building a new.

Barn and just doing whatever you want.

And now every month you're committed to paying that and you're thinking, maybe I should have been more responsible for the past two years.

Totally.

So how much should we think about having in savings? Should we go a different route on put less invest in invest?

Are you doing any investing right now?

We both max out 401.

Okay, well, that's going to free up a whole bunch of money if we pause that temporarily, wouldn't it?

Yeah, but should we do that?

If I had $300,000 in consumer debt, I would definitely pause investing. And here's the reason, because I know you're going, listen, you guys are smart people, you're really good at math. The truth is, making $340,000, you guys should retire, multimultimultimultimillionaires. The problem is there's a lot of people just like you out there who don't retire with that because they think, well, I'm just going to hang on to this debt. I'm kind of comfortable. We're just doing a bunch of things at once, but we're not really making any progress. So I think you guys could crush this $300,000 in debt in two years.

Less than yeah, that would be good. So maybe pause what we're putting in in retirement right now.

Yeah, I would pause all investing. Dustin, I would take your $25,000 in savings and this is going to make you feel real uncomfortable. I would take it down to 1000 and I would throw 24,000 at this debt. And if I were you, Dustin, I'm like $100,000 in cars. Even though your income can somewhat justify it, we don't want it more than half of your annual income. So it technically could justify it, but almost for the act of it, I would get rid of them. How much do you think you could sell them for?

We could probably clear ten on each.

So you'd make 20 grand total?

Yeah.

And use that, you could buy a used car for ten grand to putts around in for now.

Yeah. And then like our family, my wife's family, I guess they got used. So you look at that and they're always working on those cars. So how much is the benefit?

Well, a reliable used car to get rid of them. Yes.

They're so expensive nowadays.

Yeah, you purchased a really expensive car, so you definitely know.

But, man, you make 340 grand, $12,000 Honda Civic that's going to get you guys around for a year. I'm not selling to drive it for ten years, but be driving it for a year. Dustin I'm like because what you guys need, there's a radical mindset shift that needs to happen for you guys. You've been doing your plan and it's not working. You make $350,000 and I'm not trying to come down on you too hard, Dustin, but there's people listening right now that think, holy Rachel is being nice.

They're angry at Dustin going, oh, my.

Gosh, I could be doing so much with that income and they're still feeling stressed. Like this is crazy. So there needs to be a radical shake up. Dustin, you and your wife need to sit down and feel like we've done this all wrong. We have to do the complete opposite of what we've been doing, which means selling stuff. Yes. Buying a $12,000 car. Doing things that are so different than what you guys have been doing. Tackling this debt, getting savings. Because if I told you dustin that gosh, we could sit here and run the numbers, but I'm like within nine months, if you guys sold these cars and took your income and paused investing, threw everything at it, you. Could look up by next summer, be almost debt free. And then you guys could even look up and say, oh, my gosh, we're going to have savings with that income. Having no payments. No payments. How much you're going to be able to save a three to six months worth of expenses for an emergency fund, have that in place and then start investing like your whole financial world, Dustin, could look completely different in 18 months.

Completely different. But that means you guys are going to have to do some really different stuff. And I would encourage you, I want you to stay on the line, Dustin, because I want to give you Financial Peace University. This is our nine lesson course that I want you and your wife to sit down and go through. This is the basics of money and it is the fastest way to build wealth from point A to point B that's sustainable. And man, I just I'm so hopeful. And you guys live in Charleston, West Virginia. You're not out in La, California with insane.

Yeah.

Making that kind of got you guys can do this. You have so much going for you. You have so much going for you. But you have to have the discipline. You have to look at money in a completely different way and it's going to be uncomfortable, but I think that's good, Dustin, because you guys have been real comfortable for a while until it's caught up with you. So continue that but, man, $350,000 a year can do a lot for you guys, and it's only working for the bank right now.

You'll get there fast, man. If you follow this plan. This is the Ramsay show.

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Welcome back to the Ramsay show. I'm George Camel, joined by Rachel Cruz. This is your show, so give us a call at AA 825-5225. We'll talk about your life, your money. We will give you our unfiltered opinion. And Rachel's a lot nicer than I am. Naturally. She's just a sweetheart, and I tend.

To be last call. I tend to be a nicer.

Well, some people deserve a hug and some people need a swift kick. But generally, our callers, I give them hugs. Rachel, we're here for and I think that will be the case with our friend Deanna, who's in Atlanta. What's going on, Deanna?

Hi, how are you doing?

We're doing well. How can we help today?

I am a single mom of one. I live with my family, and I make 53,000 temporarily from home. But I have a twelve year old felony, so sometimes I cannot pass background checks for the jobs that I want. So I'm not sure what to do at this point. Like, should I still try to go to school or still try to become an entrepreneur or I'm just stuck.

What are you doing right now for work?

I am a fraud case manager.

Okay. And you said it's temporary?

Yes, it's a contract.

Okay. Would you want to do that full time?

Yes. I love what I do.

Okay.

Is there more opportunity for it?

Yes, there are more opportunities. I failed one opportunity with a big four company because of my background, though. I don't know.

Tell me again why you're not passing the background check. I missed that because I have a.

Twelve year old felony.

Okay. Twelve year old felony. That's still on your record. Does that fall off at a certain point? What is the plan to kind of circumvent that going forward?

I'm not sure. It's a lot of money to try to get it removed.

Okay. And then you're saying, should you go to school, what would school do for you? What would be the goal with that?

I don't have a degree, so I feel like I would beat the competition as far as having a degree in maybe computer science or accounting. That's all I know is, like, accounting and office administrative.

Okay. Well, there's a lot of paths. I don't know that a degree is what would make you stand out. I mean, someone's paying you $53,000 a year right now without a degree, which tells me you have skills and experience.

Yeah, because honestly, DNA, there will be some career paths that will require a degree, for sure, accounting, things like that. Yeah, they're going to probably want to see that. But there's a whole other world out there that don't require college degrees, and you can still make a great living doing it. How old are you?

I'm 34.

34, okay. And do you have a son? Daughter?

I have a son who's four.

Who's four. Okay, so great. Yeah. If I were in your shoes, I wouldn't necessarily be looking to go back to school, I would probably be looking for the next gig. Right. That's in the same context of what you're working in now, because you have great experience and that's going to take you really far. And then if there are options that you're like, yes, maybe I do want to go back to school here in the future. We don't want you taking on debt for it. But I would look to see if there's community college to get some of your prereqs. There some online classes, there's ways to do it if you want to slowly and with cash. But I just don't want you to believe that you can't make a great living without a college degree because you can. And we talked to a lot of people on this show that do it. And so I believe in you enough. I mean, you have a very great job right now, Mike. You're very smart to be able to do what you're doing. And so I would look to see what those skills are and what you enjoy and see if there's a path.

Because in a perfect world, you would save 60 grand or whatever it is to get a degree and save that money and be working instead of that. Do you have ROI on it?

Do you have any debt right now, Deanna?

Yes, I have 40,000 in debt just because of my car and 3000 in credit cards. But I plan on playing the credit cards down just to improve my credit. But I do have an expensive car.

Okay. What's the car worth?

I haven't got it appraised yet.

Okay, what do you owe on it?

I owe roughly $38,000 on it.

Well, I would Kelly Blue book it when you get off the call with us. Okay.

If you can get what you've put into it without being underwater, I'd get rid of that car and drive something cheap for now. Do you have any money saved?

Yes, I have $2,000 saved.

Okay, good for you.

Good start. So here's your game plan for the next few months, because you're living with family, so you don't have any bills, right? No big bills. So what if we could use that wonderful $53,000 salary and we start throwing 1000, $2,000 a month into that savings account? And once you have a nice chunk of change in there to buy a used car, we can sell that car, hopefully for what it's worth or even more, and that way you can get out from under this thing, leaving you with you'll be knocking out these credit cards real soon. Right. So now you're debt free, making 53 grand.

Yeah. What's your car payment a month?

$740.

So if you could imagine that just being back in your pocket right. You'll get a raise. Yeah. Because your car payment, Deanna, is very high compared to your income. So I would say it's pretty much a requirement. I would sell the car. So I would do that as soon as you get some money saved to buy a cheap used car to get you where you need to go, it's not going to be a pretty car. It's not going to be the car you're driving now, but it will relieve so much of that pressure and if you'll hold on the line, deanna, I want to give you a copy of my New Kids book. I'm glad for what I have. Because as you're on this journey of figuring out your money and possibly selling your car, and you're going to be working to pay off this credit card debt, and you're in a big transition. And I think it's just a great conversation to be had with your son. And, girl, I just think that there's so much ahead of you. I think you're doing a really good you.

Thank you.

Oh, hey, Deanna, we're pulling for you. Hang on the line. We'll send you Rachel's new Kids book. And man a single mom alone is a warrior, but one has that kind of background that has overcome so much and that is doing so well. I'm just so proud of you, and I have full faith that someone is going to hire you without a degree because Deanna's the secret sauce, not the piece of paper that says Deanna did some schoolwork. So we believe in you. David is up next in Gainesville, Florida. David, what's going on?

Hi, how are you?

We're doing well. How can we help today?

Well, I'm embarrassed. I have messed my finances up pretty much my whole life. I'm 59 years old and want to take better care of my wife, who has been had to quit her job. We don't have her income anymore. She has a permanent brain injury from a concussion.

I'm sorry.

She has Crohn's disease, and she's just been diagnosed with some oh, David, I'm so.

You'Re fine.

I've been a kid. I've been an adolescent my whole life. I've not been well worth money, and now she's suffering for it. We don't have a lot of debt. I do make decent money, and I just don't know where it goes.

Yeah. How much are you making a year?

This year is my worst year. It's only going to be about 62,000. And it's because of many. Doctors appointments. She can't go alone. She can't do these things alone. We have nobody to help us, so I have to take off work to do it, and thankfully, I work for an excellent company. Good.

And how much debt do you guys have?

We have about $26,000 in medical okay. Small credit card debt of about $2,600, and then a few tiny purchases of some household items, probably totaling 2000. That's it.

Okay.

But I don't know when the money.

Goes well, we're going to help you, David. We're going to take a short break, but I want to carry this over because there's a lot to unpack here, and I want to make sure that we serve you well, especially while you're going through such a difficult time. And before we go to the break, I want to let you know that you can release the shame and the guilt and the baggage. We've all made mistakes, man. That makes you over twelve years old. The big thing is, what are we going to do now? What does 60 year old David want to be? 65 year old David, what does the next right step look like as we take care of your ailing wife? And we're going to walk you through that right after the break, so please hang on the line, David, and we'll be back with you in just a moment.

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Welcome back to the Ramsay show. I'm George Campbell, joined by Rachel Cruz. Before the break, we were talking to David in Gainesville, and we still have him on the line. Let me recap his situation. His wife has been through it health wise, can no longer work. He's dealing with a cancer diagnosis, and he makes 62. They've got 26,000 in medical debt, 2600 on credit cards, some other little debts hanging around, and we just want to wrap our arms around them and see what we can do to help them take the right next step. David, are you still with us?

Yes, sir.

Was that a fair recap?

Yes, sir.

Okay, wonderful. Well, welcome back. So let's walk through some of the numbers and get you kind of a game plan moving forward. So you're 59 years old. How old is your wife?

56.

Okay. And you are now the sole income for the family, and you're trying to take care of her, and so having to take time off of work to do that, which is also limiting some of your income, correct?

Yes, sir.

Okay. And you do have some money in savings?

No, absolutely none?

None. So we're paycheck to paycheck right now?

Yes.

Are you able to cover your bills? Are you current on all bills?

Two credit cards are in collections.

Okay. And what about your are we able to put food on the table, cover the renter, mortgage, cover the utility bills?

That's one of the embarrassing things. I can put food on the table. We have no rent. I drive a truck for a living and we live in the truck.

You live in the truck?

Yes, sir.

What kind of truck is this? Is it a livable situation?

It's a semi. It's a eight by eight box.

How long have you guys been doing that, David?

Five years. Four years. Excuse me? Four years.

And is that purely because you don't have the margin to pay a rent or a mortgage? Or is that because you guys are on the move all the time and it's like, what you decided?

Some bad places that I work, we made a move to Florida, and we have a fifth wheel trailer that is in an area that we stay in on the weekends, but there's no rent there. It's the company that I work for lets me keep it there.

Okay. Do you think it would be prudent to find a more stable living situation for her if we just found a cheap place to rent?

We would love to, but I've got the finances so messed up that I'm not saying I can't afford it. I just don't know where it goes. I don't know why we don't have it.

So you make $62,000. What is your monthly take home pay?

Monthly take home, see, it varies. And a lot of that's because the doctor's appointments, if this was a normal year, it would be around five grand a month.

Okay, so you're making closer to that's a good year, though. So these days, is it closer to three grand a month?

I don't know. That's where we're having trouble, too. We don't understand because if one week we've had two doctors appointments, I miss out on so many loads that my paycheck is like, $500 when it's normally take home 1300.

And David, for these doctors appointments, because you're having to miss work, is she able to drive herself or is it that she can't physically drive?

She's no longer able to drive. She can't stand very long, gets dizzy. She just can't be alone.

Yeah. And you guys have no family? Where is your family right now?

Do you guys have any closest family would be my father in Illinois, and he's 90 years old.

Yeah.

And we have a 41 year old daughter in Illinois that do you guys have a relationship? But not much help.

Okay. Because in a perfect scenario, David, what I would want for you guys is a place to live, especially going through all the medical stuff. So you keep saying yeah, we don't know where it's going. We don't know where it's we and we hear that all the time, right? That's not just you. A lot of people feel that way because there's not an intentional act of where this paycheck is going. So I would say two things on my end, and George can walk you through some more stuff, but we want to gift you every dollar premium and FPU, which is Financial Peace University, our nine lesson course. But that every dollar premium, David, is going to help you guys budget and you're going to bring your paycheck in and you're going to say, okay, this is what we're planning on making. We're going to have to guesstimate, right, because you may not know exactly, but we think that we can at least make this now. We're going to plan out to the cent where every single dollar is going and there's not going to be out to eat, there's not going to be all this.

I mean, you guys are we say rice and beans, beans and rice. Like your grocery budget is nothing. You all are going to be eating spaghetti and tacos, cheap food. You're going to go as cheap as you can on everything, see where that ends up and what margin that is. And then I think a good goal for you guys in the next few months, once you kind of get that in order, then is to be able to find a place to rent. And again, I don't know where exactly location wise, but you want to make sure, especially if it's a good month, where you guys are around $1,200 a month probably. So that's going to be a one bedroom apartment or just something just to give some level of stability from a living situation point. And the second thing, David, which I know is really difficult, but we have to figure out how to solve this problem, is the income. And so if we're going to be losing income by taking her to doctors appointments and stuff, what are things at night that maybe three nights a week that you're doing something? Because the income is one of the harder parts of this formula.

And I know the life situation you guys are in, it almost feels impossible. But I think that's going to give you guys some breathing room if you can find extra work, either with your current job and taking on more or finding something a side hustle or something at night. Because again, upping that income is going to be really big.

And David, a question on the insurance side and medical bills, are you able to cover those future bills? Does she have health insurance?

We have health insurance. What the medical bills are or what's out of pocket?

Okay, so I want to make sure you have the right type of insurance to avoid going another 25 grand into medical debt. Have you hit your out of pocket max yes. Okay, so that's good, at least for the rest of the year.

For this year, yes.

And then it'll restart. And so we need to start looking at those numbers. I want you to start saving towards that so that we don't go further into debt as we continue to take care of her. So that's one piece of the puzzle, is the ongoing medical care is going to continue to rack up on top of getting rid of these other debts. So using your income, what you're going to want to do is lay these all out. The facts are going to help you lay out every single little debt from smallest to largest, and you're going to start attacking the little one with a vengeance.

And the credit cards and collections, David, I would get a hold of them and see if you can settle because usually if it's within collections and get it in writing, if they will, but tell them your situation. I don't have it. I don't have the money. If you scrape together if you have $2,000 in these credit card bills, they might take $400. Yeah. And you scrape together four, five, $600 and you're like, I can pay you. Now, most of the time we'll settle to the point that it's in collections and if they do get it in writing, but I would go down that avenue for sure because you're not being immoral in that you genuinely don't have the money. I mean, you don't and sometimes they'll negotiate with you and you can actually lower that.

And the same thing will go for this medical debt, see if you can settle that, negotiate that, because you guys truly don't have the money. You're living in the truck right now, trying to take care of her, trying to work. And so I have faith that we're going to get you out of this situation. But it might be a really difficult year or two to get some financial footing under you so that you're able to take care of her and have some breathing room, not just with your time, but with your money.

Well, can I say two things real quick?

Sure.

I know that's going to happen because the Lord has provided very well and it was like a slap in the head. He said, I've given you what you need, now you need the tools. And that's where you guys come.

Oh, David, that's beautiful. Thank you for that. We're going to also, on top of giving you Financial Peace University, on top of every dollar premium, we want to go one more step and give you a free financial coaching session with one of our Ramsey coaches. And so they're going to walk you through this in a way we can't do here on air in a few minutes. But I appreciate the call. One last thing. We're going to give you every dollar. I'm going to walk people through how to use every dollar in a webinar happening tomorrow. EveryDollar.com slash budgeting, we'll make sure you get signed up for that. And everyone listening can sign up for that as well. Man we are all pulling for you, David. Everyone listening for you and your wonderful wife. This is the Ramsey Show, live from the headquarters of Ramsey Solutions. It's The Ramsey Show, where we help people build wealth, do work that they love and create amazing relationships. I'm George Camel, joined by best selling author Rachel Cruz, who is a newly minted author of a kid's book called I'm Glad for What I Have and I'm excited to read it to my little two and a half month old.

I've heard you can do that, rachel many people message me, you should. Their brain is forming.

Always be reading.

That's beautiful.

And she'll learn contentment from two months old. What a gift.

What a gift.

What a great dad you are. George I've been told reading her, if.

I had a nickel, Rachel, I'd have one nickel, maybe from you. That's fun. Well, we're taking your calls at we'll talk about your life and your money. Jared joins us in Salt Lake City to kick us off. Jared, welcome to the show.

Hi.

Thank you. Sure. What's happening?

Well, I was just kind of wondering, your guys'opinion right now, me and my wife are full time employees at the family farm and we're going to move away. And my grandparents who own the farm are about to go on a one year religious thing, so they're not going to be around at the farm to kind of run things. So the only people left at the farm would be my aunt and uncle. I kind of feel like when the time comes for us to leave, there's going to be some we really need you to stay. And I don't really know what to do.

How old are you?

23. And my wife's 22.

Jared, I want to release you from any burden that you are feeling right now. You are carrying something that you don't need to carry. I understand why you're a great guy, but this is not your responsibility, this farm. It's not. This is something that you guys have chosen for a season to be a part of. But you're also 23. And if you handcuff yourself to something like this, especially a family business, there's going to be a lot of resentment and a lot of pain that you don't have to carry and that you don't need to live in. So for your aunt and uncle, is it a story you've made up in your head, Jared, or have you all had discussions, actually, in reality about this?

So I've discussed moving away with my aunt and uncle and I'm kind of too afraid to talk about it with my grandparents because they really do need the help.

But why does it have to be you? Are you the only person on planet Earth capable of helping sometimes it feels like it.

They're not.

And they've probably made you feel that way. They're like, you're so helpful. We can't imagine doing this without you. You guys are so great. And you're married, right?

Yeah.

Did your wife sign up to be a part of this family farm for the rest of her life?

I guess not. We kind of want to move away and farm. We're really passionate about agriculture. That's really what we want to do.

Well, you're not doing anything immoral.

I have a question. Why do you want to move away? Is it just to kind of have your own thing? What's the motivation for that kind of.

To have our own thing? My dad doesn't work there, so the kind of writings on the wall there. Like, I work my whole life, but I'd kind of just be an employee. And right now, we rent my grandparents old house, which also doubles as the farm's office. And there is nowhere near us that is even close to within budget, like, at all. What do you make reason we can work there? I make about 40,000, and then my wife makes maybe about 5000 on top of that.

Okay. Is she working on the farm too?

Yeah.

You guys are severely underpaid. She makes $10,000 a year. Is she working full time?

No, I guess my wife doesn't work full time. I guess I said that wrong. But she just kind of does some clinical stuff, which works out good. It works out really well because we have a year and a half old, and then we've got another one on the way.

Congratulations.

Nice that she can work and be a mom at the same time.

Yeah.

So what happens? Let's say you snapped your fingers. Where would you go and what would you do?

We would be farming down south from us, and we'd probably be just farming produce.

But that means you would need to have some land. How would that work?

So her family lives down south from us, and we'd probably maybe move in with them for a little while. And then I want you to get.

Your own place and have some independence. I want you relying less on family because it's going to add these weird handcuffed situations like you found yourself in. So what would it take for you guys to live on your own, rent your own place, have your own financial stability, and then do your own thing?

I've kind of looked at that. I need to get my CDL and then maybe have a full time CDL job lined up right when I get out of the farm and then kind of use that money to buy some property.

Okay. Do you guys have any debt?

So we got all our student loans paid off, and the only debt we have now is my truck, and I only owe, like, $1,700 left on it.

Okay. So we can knock that out quick. What were your degrees.

Leave it there to build the credit. We didn't finish our degrees out.

Okay?

So what I would say, Jared, if I were you guys, you're 23, you guys are figuring out life. You're starting a family, and you've had a great opportunity working on the family farm, but, you know, in your gut, it's not going to be the long term play. So, Jared, you're gonna have to have the uncomfortable conversation. And here's the deal. To be unclear is to be unkind. To be clear is to be kind, and Jared has to be very clear. Kind. Be kind in the clearness. But you need to be very clear with your aunt and uncle. And I would have the discussion personally sooner than later. And just to say, hey, we don't have a time frame, because you don't right now, Jared. I mean, you guys are talking about, maybe we'll move in here. I kind of got to get this license. You don't really have a plan right now. There's not a concrete like, hey, this is exactly what we're going to do, step one, step two, step three, we can do it in 18 months, and boom, you don't have that yet, but you know it's coming. So I would have the conversation just out of respect for them, so that they can plan and to say, hey, guys, here's kind of what our gut is saying.

We're probably not going to be here full time. My wife and I, we're going to sit down. We're going to create a plan, create a timeline. And once we do that, we're going to let you guys know that so that you have the time to backfill our positions if you need to. But I just want to give you the heads up that we're not going to be here long term, and you need to have that that and regardless of how they react, that's on them. Nothing in this means that you were born into this thing and you have to do this like that's. I work for a family business. I'm like, I would be miserable if I felt like this is where I had to be all the time and I was forced in it, and I didn't want to have some awkward conversation. Life is too short, Jared. Life. And your wife deserves a husband, and you guys deserve a marriage that's yours full. So don't live with someone else's expectations. So create a plan, communicate it early, and be guilt free of it, because that's okay.

Yo, yo, Dr. John Deloney here. Hey, it's pumpkin spice latte season. Just joking. Those are gross. But it is fall. It's a little cooler. The sun's going down earlier, and God help us, daylight savings time is ending or starting or whatever. The time is changing again, and it can be exhausting to adjust, so make sure you're moving your body every day. Make sure you get some sunlight in the morning and hopefully in the evening and make sure you get seven to 9 hours of sleep every night. And I can't stress enough how important this is. Sleep is the cornerstone to your physical and mental health. And for me, amazing sleep starts with an extraordinary mattress. And that's why I love DreamCloud right now. DreamCloud is running an incredible offer 40% off all mattresses, plus an additional $50 in savings exclusively for our listeners. Go to dreamcloudsleep.com and enter promo code John Deloney. That's Dreamcloudsleep.com with code John Deloney for 40% off all mattresses, plus an extra $50 in savings.

Welcome back to the Ramsay show. I'm George Camel, joined by the Rachel Cruz this hour, and the number to call isa 825-5225. This is a rare combo when Rachel and I get to host together. We do host Smart Money Happy Hour, another show on Ramsay Network where we have a great time, usually with a.

Cocktail in hand, very different style, a little bit more relaxed on that.

That's right. We're real uptight over here.

We're we're gonna do the Ramsey Show, but we got this voices on for this show.

Yeah, we put on our big boy pants today. But, hey, if you want to check out all of the shows, we got so many on the Ramsey Network with our friends ken, John, Rachel. I've got a YouTube channel, so there's always something coming out from a you can't be bored. You can't say we don't put out enough content. We're trying to help as many people as we can out there. So we appreciate all of you who.

Tune in, and if you guys love it, will you share the show and subscribe to some of these put reviews out there? It's just really helpful when you all spread the word, sharing it with friends and all of it. Again, we want people to get control of their money, and I think that's one of the best ways to do it.

It's free.

You can listen, cost you nothing. Yeah. So share it with your friends, with your family, and again, subscribe if you can leave reviews, all that's so helpful.

All right, let's get to the phones. Danielle is in Los Angeles. What's going on, Danielle?

Hi, you guys. I hope this was a fun one for you.

Thank you. We needed a soft toss here, Danielle.

So my husband and I were 48 and 52. We have a lump of cash, about $112,000 right now that we'd saved up for taxes. Cancer messed with us earlier in this year, and so we just weren't doing anything with the money. But now we're past all of that stuff, and we are past cancer.

Wonderful.

Thankful.

That's awesome. Congratulations.

Thank you.

So we are behind on retirement savings for our age. We only have about $200,000 combined between the two of us, and we have a mortgage balance of $337,000 that we are very anxious to pay off. We've had a lot of things come up since we've been debt free in 2017. So we haven't been able to push on the mortgage like I want to. And I want to know if you guys would condone playing around with the money a little bit. Like getting a brand new car, which we've never bought, a brand new car, doing some home upgrades, or if we need to be smarter and just lump it into investment because we're so behind or push on the mortgage.

What's your household income?

We were at about three hundred K a year.

That is good news. Okay. And outside of the retirement, what kind of equity do you have in the home?

A lot. Our home is probably worth about 1.6 million if we were to sell it. But we're not moving. We have young kids still.

But you've got about 1.2 plus million in equity in the home.

Yeah.

Okay, that's good.

But I want to have all of the equity.

Sure.

Yeah.

Well, you're going to knock this mortgage out real quick, making 300,000. I'd love to see you guys get aggressive now that you have this, but the question is we have this pile of money. Is this above and beyond your emergency fund?

Yes, we have an emergency fund besides.

This, plus the 112. Okay. So if I'm in Danielle's shoes, I've got this mortgage, we're behind on retirement, and you want to buy a brand new car. And we tell people, just so the listeners are clear, the only time you should buy a brand new car if you want to, is once you have a million dollar net worth and the cars should add up to no more than half of your annual income. So you guys are not violating any principles so far. But the question is the opportunity cost. That's what you're struggling with.

Yeah. And we're thinking that we would probably spend about 60K, which sounds ridiculous to us on a car because we've always bought used cars.

Okay.

But yeah, I'm wondering if it's just not worth it to do that yet. We should catch up or at least.

Shovel this into you all need a new car. Danielle, what's your current okay, it's more just for.

Because I drive a boring gray van and I want something more fun for yeah, that would still fit my yeah.

Okay. We may have different answers on this, Rachel. I feel like there's some middle ground here where we can get you a great car and we can shovel a bunch of money into retirement.

How much for the gray van?

Could you much what do you mean, how much could I get if I sold it? No, it'd be more probably like 25.

We just bought it two years ago.

But you're not driving a hoop and.

It has low mileage.

Beautiful.

No, it's a nice van, it just doesn't exciting about it is nice, except for that I know that to me I have trouble finding in the parking lot because I forget what it looks like. That forget.

I love it.

Just slap a live like no one else bumper.

Danielle yeah, you can get 25 for it, which is awesome. Yeah, I would probably throw another I'm just throwing numbers out. 1520. Go get a great I would get a used car. I don't think you need a brand new one. I mean, George and I were just talking about cars. One of the specific car.

What's the planning on a specific model that's coming out next year? It's an electric van. The VW Buzz vans that are coming out that are so cute, and they're electric. And it would fit my family and it would fit our lifestyle.

And how much is it going for? 60.

Well, I think all in all, it would be about 60. For what? We need to install an electric plug and do some things. So that would be my plan.

Okay.

It's really specific.

Well, you got time. Is the car even available?

No, it's coming out next year. I'm planning ahead.

I'm a planner.

That's good.

I feel like I'm the type where if I eat my vegetables and I finish my plate, then I can have some dessert. And so I feel like for you, you're in a similar boat where if we attack some of the mortgage, we put some of this and maxed out our retirement accounts for the year. I would feel good about money left over going toward upgrading the car. And if it's a year from now, maybe we start a sinking fund separately for the car.

Just save to get what you want. It's not like you mean we get people calling the show and their car is breaking down, they have to get a new one or they have to sell it because they have too much car debt and they have to find another one. You guys aren't in those dire straits. You just hate the van, which you know understand. Yeah. I would do what George said. I would kind of use this money, split it three ways, put some at the mortgage, I would put some in retirement and then map out and say, okay, how much is left after that? And then how much do we need to save per month? And again, you're not in a rush to get this new car, but what if it took twelve months and you put some money away every single month, save towards it, and then when it comes out, or six months after it comes out and you're like, okay, we have the cash for it. And you kind of just slowly walked away? I think you would feel more peace at that than just kind of jolting and making kind of a snap decision.

I like the idea of planning and putting some money aside.

The low amount that we have in retirement doesn't scare you? I mean, it scares me.

How old are you guys? We're.

48 and 52.

Okay.

We only have 200K.

So let's say you had twelve more working years making $300,000. I think you can have a fine retirement if you max out. All retirement do catch up contributions. You may use a taxable brokerage account outside of that if you start to run out of options. So you guys will be okay. But that's like, we're getting on a plan here. We're not just going to spend willy nilly for the next ten years and we're going to knock out this mortgage.

Yeah.

So I would have a set game plan. And if I was in your shoes, Danielle, truthfully, I'd probably pay off the mortgage and then feel really good about getting whatever the heck kind of car I wanted. And you guys could do that in a few years. It wouldn't be a long time.

Yeah.

So we're talking three years and we attack this mortgage.

You came out of a hard year, Danielle, with a cancer scare and everything that you guys have walked through. So there's a level of an emotion for you that is understandable, but it's also you feel this like, oh, my gosh, I just want to have fun. Can I just please just have fun? And you're looking for an outlet to do that, and I'm wondering if you can kind of scratch that itch elsewhere while still being wise with this money that you guys have. Because I think this money could go further than just throwing it at a new car.

I think you're right.

But I'm like, for this man, I'm like I don't know.

Again, you're not violating any principles here, so we're not going to yell at you. If you do it, you'll be okay. But I think because of your own fear that you haven't done a good enough job with retirement, you would enjoy the new car. At this point, you're going to have some guilt.

Yeah. Because it feels like more an emotional purchase than, like, a rational one.

Yeah, I think that's very much right. That's exactly what I wanted to do. I wanted to feel really great after getting through it.

Yes. And that's totally understandable. But see if you can celebrate. Go and spend $400 at an amazing dinner in La.

That's true.

And go big. Go do something that you're just like, oh, I want to kind of scratch that spending itch, because I get that. I feel that I love to spend.

Rachel's not scared to spend. I have a little more of the guilt. So this was a very balanced call here. But Danielle, thanks for letting us talk it through with you. We're honored to take the call. So glad to hear that this cancer is behind you and we hope it stays that way. This is the Ramsey show. Welcome back to the Ramsey Show. I'm George Camel, joined by Rachel Cruz. We've got a lot of fun things happening@ramsaysolutions.com and if you head to the store there's a lot more fun happening because we've got the Christmas cash giveaway right now. We're giving away $500 a week, $5,000 grand prize. You can enter every day for more chances to win. We also have the $12 sale, which is a killer deal to get some of our best selling books like the Total Money Makeover, Baby Steps, Millionaires Own Your Past, Change Your Future, some of the Questions for Humans decks. And while you're at the store, you'll see some new and exciting products. And I'm biased, Rachel, but my new book, Breaking Free From Broke, is there on presale, as well as your brand new kids book. I'm glad for what I have just released yesterday.

There's also the 2024 ramsay gold planner. We've got the Rachel Cruz wallet in Navy. I mean, we have it in Camel, but why not have it in Camel?

You're welcome, George.

It's not with A-K-I was a little upset about that. Missed opportunity. I know.

Color palette, but we're going navy this season. Very excited about it.

Very classy.

Love a good navy.

Very classy. So you can check that all out. It's a one stop shop for all of your Christmas shopping. Just go to Ramsaysolutions.com slash store to check it all out. Let's get to the phones. Sean joins us in Irvine, California. Sean, how can we help you today?

Hi, guys. How you doing?

Doing good.

Good. So I just had a quick not in I'm not in debt really that much, really. Just from school and a surgery that I had. But that doesn't even amount to, like, 20 grand, which is totally manageable. On the other hand, I have about seven credit cards with very little balance. If anything, they're just my remedial. They're paying for Netflix, stuff like that on payment plans every month for that kind of stuff. However, it does amount to over $100,000 of open credit. Now, with that much, are you trying.

To impress us, Sean? Because it's not working so far?

No, it's scary, because I'm going to buy a house soon.

Why?

And what was that why? Because our rent is just going out of control that I'm paying right now, and it's almost amounting to a new house payment, a mortgage. If I just paid, like, $1,000 more, I'd be in a mortgage.

How much do you make?

So I make about $90,000 a year.

Okay.

Be married.

No.

You kept saying hour rent. Our rent.

Sorry.

You kept saying, our rent is going up. Who's the hour? Is there someone else in the picture?

Oh, our roommate. Roommates.

Got it. How old are you?

So I'm 31.

Oh, I thought you were younger, the way you were talking. Okay. No, I meant it in a good way. I meant it in a good way. Sean, you have a very young, energetic voice. So you're 31. You want to buy a house for Sean.

Yeah.

Okay. Which will somehow save you money.

Well, yeah. Because I have like $170,000 saved up for this.

Why are you hanging on to debt when you have $170,000 sitting there?

No, the hospital bill is interest free, so if I'm not paying interest on it, I figured not to.

So what do you owe in medical bills?

Well, I want to know from Sean, what are you calling us for? What's your number one question? Should you buy a house? Is that the number one thing that.

You want to know with lenders? Like seeing how much credit cards I have? Is there a problem with me having so many credit cards? Do I need to close some? I don't want to close any because I know it hurts your credit score.

So Sean, you called kind of a different show. Just so our advice is going to be probably opposite of what you usually hear because we are not fans of credit cards. We're not even fans of a credit score. We're not fans of keeping around debt. We want debt in that entire game that everyone plays out of your life 100%, forever, ever. Amen. And that Sean's $90,000 that he makes is all his. There's no game to play. He has cash in the bank that's saved in a high yield savings account for an emergency fund. He has a good down payment, he's funding retirement and he's doing things that are good for sean, this whole game that you're playing is normal. It's what most people do. But here at Ramsey, it is a completely different mindset to the point that we would say, close all of your credit cards, pay everything off, get a debit card, pay for Netflix with a debit card and your credit score will lower because it is all mathematically calculated by debt. There's about seven layers of your credit score and it all has to do with debt. So when you stop going into debt, when you start paying off debt and eliminating debt, that score inevitably will go down to the point in about twelve months after paying off all your debt, it will be undetermined.

It goes to a place that they can't determine your credit score because you haven't had debt in over a year. So then you'll do a process called manual underwriting where they will actually underwrite you a mortgage. But that's after you're debt free with a fully funded emergency fund and at least 5% down for that mortgage. Because for so many people, the thought is, well, if I just had a house, because, yes, like you said, in some people their rent is even more expensive than what a mortgage would be, right? I mean, it is insane what people are paying for rent. So I totally hear you, but when you own a home, it's very expensive. When things go out, there's not a landlord to be there, there's not roommates there to split up the rent. Right? I mean, it becomes a very expensive process and it's a great thing. Home ownership should be part of your financial picture. That's a part of building wealth. But we want you to do it in the right way.

Okay.

We're so off everything so against credit cards, right?

Let's just say I have a business of my own and I wanted to expand and use credit for myself. Without credit cards, how do you get expansion and trust from lenders?

Why do you want more credit and more lenders? You just told me you were frightened by $100,000 line of credit.

Well, no, but let's just say okay, so let's say I need to get something for my business, right? Some huge purchase that's going to help me make money in the long run.

Okay. Save up and pay cash. Move at the speed of cash.

If I pay that cash, though yes. Am I essentially draining my savings and all my no, what's draining your savings.

Is making payments to 14 different lenders. You're going to spend the money anyways. We're just telling you do it upfront when you have the money so you don't make stupid decisions. That no risk.

And that's the other thing is you add on so much risk, especially in a business. We actually have a business conference going on right now with small business owners from all over the country. And it's amazing, especially in small business, that people out leverage themselves. And when something doesn't work, the amount of stress that is caused on that, it never ends up good.

We teach them that to run their business completely debt free. And so even for this company, Sean, we have 1000 team members and we only have business debit cards. We don't have a single dime of debt on this place. It's a 300 million dollar paid for building and we moved at the speed of cash. Dave's been doing this for 30 years. This building just opened four years ago. And so it's a slower pace. You're wanting to move very quickly and there's a lot of podcasts and shows that will help you do that. By leveraging debt, we just happen to swim upstream and go countercultural.

Yeah. And too, sean, part of this you have to understand is that debt, there's a weight that you carry with debt and everyone does. And now in our culture today, it's so normal that people get used to what they carry around. But there is a freedom that is caused when you don't owe anyone anything. And that autonomy is what's missing in our culture today. And that autonomy of being able to make your own choices, being able to have options because no bank is in your life, there's nobody that you are financially attached to. You have complete autonomy. And there's power in that to be able to use your income to build wealth on the mathematical financial side. But there's an emotional, spiritual side of money, too, that a lot of people don't talk about. And there's a freedom that comes when there is no payments. You're not owed by anyone. You make different decisions in life when you don't have that risk.

I never really thought about it like that.

Yeah. Okay. I want you to hold in the line, Sean, because Emily's going to pick up. I would love to give you total money. Makeover it's the best selling book that we have here at Ramsey, written by Dave, and it'll walk you through the seven baby steps. It's a quick read, very easy, and it'll give you an overall picture of it. And I hope you're enlightened by it. Sean, I love that you called because.

I want to hear your paradigm shift.

Millions of people build wealth and get control of their money. It's just a totally different way than the world does it. I'm glad you found this, though.

I've personally done manual underwriting Sean without a credit score after I cut up my cards. And between Rachel and I, we have zero credit cards. That's what it amounts to. And our wallets are lighter and our souls are lighter for it. This is the Ramsay show. Our Cyber Monday deals are ending this week, which means it's your last chance to get meaningful gifts for as low as $7. Need a last minute gift that doesn't scream last minute? Well, pick up an audiobook for just $7 or get the ladies in your life the Rachel Cruz wallet in limited edition Navy today and have it delivered just in time for Christmas. There's something for everyone on your list, but you gotta hurry because deals end this week. So shop the Cyber Monday sale@ramsaysolutions.com slash store. That's ramsesolutions.com slash store. Welcome back to the Ramsey Show. I'm George Camel, joined by Rachel Cruz. This is your show, America. You can give us a call at 825-5225. We're doing something fun this Friday, November the 10th, 1230 Eastern time, 1130 Central time. I'll be doing a free every dollar training, showing you how to break the paycheck to paycheck cycle in just 90 days.

Now, this isn't just for people who are broke. You might be doing the baby steps. You're out of debt. You still don't have the margin to invest. That 15% to throw at the house. To save up for that vacation, I'm going to show you step by step how to create margin in your budget by spending less, by making more, and by using our EveryDollar budgeting tool. So join me. It's totally free to sign up, but you got to sign up to get the link. EveryDollar.com slash budgeting is the place to go. EveryDollar.com slash budgeting. And if you can't make that exact time, don't worry about it. We'll send you a link. You can watch the replay, but I hope to see many of you there virtually. We'll be answering your questions and it will be a good time. All right. Esther is in Logan, Utah. Esther, how can we help today?

Hey, thanks for having me on. So I kind of have a loaded question. I'll just give you a little background info real quick. So my husband and I finished baby step three, and we want to buy a home so we don't throw away our money on rent, essentially, but we plan to move within the next four years after my husband graduates college and commissions as an officer in the Air Force. It's also important to note that we do not qualify to buy a home for the next 18 months because we are self employed. So basically, we'd only be in the home for two years. So our question is, do we save money for a down payment or spend our money elsewhere?

That was a loaded question, Esther. A lot to unpack there. So how old are you? Two.

So I'm 22, and my husband is 23.

Okay. And you're in baby step three?

Yes.

When will you be done with that?

Sorry, we just finished.

Okay, so now we're on to what we call baby step three. B. You want to save up a home down payment, and you're going to do that. How quickly do you have a goal?

Our goal is within a year.

How much can you save in a year?

We could probably save a little over 20K. So if we're looking to buy, like, a $400,000 home, it'd be about 3% or sorry, 5%.

And what's your household income?

Right now? We're both working part time and we make about eighty K per year, but that is projected to increase.

Okay.

So, Esther, when it comes to buying a home, timeline wise, I wouldn't buy one that I'm not there at least five years. So if you guys won't even qualify for something and you're only going to be there, would I would probably rent until he's out of the Air Force and you guys know, will you guys be stationed and move around, do you think, for a good.

Do you guys not recommend buying a home and then renting it out?

No, because you're going to move, and now you're going to be a long distance landlord, and then you're going to want to buy something else, and then you're not going to have the money to do it because it's all tied up in this mortgage that you still have. And so you can see how it creates this weird cycle of risk and stress.

Yeah.

So I'm going to pause on this dream. I want you to be homeowners, but Rachel is right. I want you to think long term and not just what's going to help us in the next two years. And you said these words at the beginning that I want to call out, because I've heard this from many, many people. You said, we're throwing away money on rent. Can I free all the renters out there? You're not throwing away money on rent. Renting is not a sin. Renting is buying patience, and it's very wise. And I know it hurts, but you know what else hurts? Becoming a homeowner before you're ready, and you become broke because you didn't realize how expensive home ownership can really be.

And you buy at the top of the market, and then who knows? And then you guys go to sell it in two years, and you don't know where it's going to be. So there's just not enough time for it to fluctuate up and down, to have some kind of sustainability to ride out any weird ups and downs. So, yeah, I would still be having the dream, though. Esther and how long will you guys be moving? Because I know with military families, you move every, what, 18 months, two years? Do you know what the future will look like, how long he'll be doing that for?

Yeah, I mean, I'm assuming it'll be at least ten years, so it'll be a while, but with that money, would it be silly to upgrade our card?

What money do you have? What do you have in savings, or you're just talking about future savings?

Yeah, future savings.

Yeah. I think upgrading your cars, I think is great. And again, in ten years, you guys will be in your mid thirty s. And if that's the first time that you're putting a great down payment for a house, if anything, it just kind of buys you time to say, hey, we have a decade to save a great down payment, maybe even 50% of it. 70% of it. Right. You have a while because, especially with military families going from city to city, short term, I wouldn't recommend buying a house. So, yeah, you guys have time on your side, and it's just going to be hard. Esther I think you're probably going to look around and see your friends on, I don't know, Instagram, holding their keys and smiling. Yeah. And that's just not going to be your story. It's just not smart financially for you guys, and that's okay. And you have plenty of time to be homeowners. You have plenty of time to do all of this, and you're going to do it the right way in a really wise way. And I think that patience is going to be key, but it's going to be a level of contentment, Esther, that you're going to have to find.

But thank you guys for your service. I know there's so much sacrifice in that for you all, so tell your husband thank you.

Thanks for the call. Esther Tion joins us up next in Washington, DC. Tion, what's going on?

Hey, how you guys doing? I'm excited to be on. So I have a question. I recently acquired or inherited some rental property or property. I also have my own rental property, but I do also have some debt. So I'm trying to figure out what's going to be the best approach for me for paying down the debt and then also investing for my future.

Cool. How old are you?

So I just turned 38.

All right. And what's your household income?

So I make about 160.

Great. And how much debt do you have?

Okay, so the debt so I have 53,000 spread out between three credit cards.

What's on the credit cards? Just lifestyle.

A little bit of lifestyle.

A little bit of lifestyle. That's $53,000 worth of lifestyle?

Well, no. What else? Is there other stuff, or is it just lifestyle?

So I also recently lost a parent, so I had to put a lot of funeral expenses on credit cards as well.

Sorry about that.

A big portion of it.

Is that where the inherited property comes into play?

It is.

Okay.

So $53,000 in credit card debt. What else? What? Do you own your car?

Yes. So I don't have any car payment, so I pay for a car in cash. Okay, so no car payment.

Awesome.

I have a personal loan for 1800.

Any student loans.

And then my last I do, I have about 83,000 in student loans.

Okay. And then this property that you inherited, what's it worth and what's owed on it?

So it's worth probably around, like, 300,000 and about 70,000 left on it.

Okay. And then you have another oh, go ahead. Sorry.

Oh, yes. So I do have another rental property. I paid 110 for it, and I currently owe about 80,000 on the property.

And what's it worth? You think it's worth 110?

It's worth about 200, I would say $200,000.

Okay. And then what's your primary residence?

So right now I'm living with my girlfriend. We rent, so no mortgage on that.

Okay.

Yeah, no mortgage.

Okay, awesome.

All right, I have a plan. I don't know if you're going to like it.

I'm ready to hear, man.

If I'm in your shoes, you could slog and try to knock out all this debt aggressively, but I think selling your rental property would clear a huge chunk of this, and then you could clear the rest with your future income and hang on to that family inherited property.

Okay.

It would clear it all, because if you could sell it for 370 well.

The family one is 300, right?

Yeah.

Yours is yes. 200. And you owe 80.

Yes.

You have 120 in that one. So if you wanted to keep the more expensive, you could do that. But one of these has to go either way. You could knock the debt.

But, hey, Tion, when you clear out your debt like that, you can't go back into credit card debt for lifestyle. It's going to be a sweep that's going to help you. But Tion needs to change teon, or it's not going to work. You're going to be back in the same position if you're not careful.

Yeah.

You're too successful and too strong.

I'm excited for you, though, Tion. You got some good stuff ahead.

Future is bright, my man. This is the Ramsey Show, live from the headquarters of Ramsey Solutions. It's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality George Campbell, joined by my good friend and fellow Ramsey personality, Rachel Cruz. And we are here for you, America, to help you take the right next step with your life and your money. The number is triple 8825-5225. You call us up and we will give you our opinion, and that's a guarantee. Blaine joins us first in Indianapolis. Blaine, how's it going?

Good.

How are you?

Doing well, how can we help today?

Yeah, thank you for taking my call. I am curious about debit cards that are store specific and if you feel like they're okay or if you'd group these into cards that you would give the plastic surgery.

What a fun question for Rachel Cruz. And I this is right up our alley.

I'm going to be honest, I was hoping and praying that it would be you two, because I'm like, well, maybe there's a little grace here.

Your prayers were answered.

We're the nice ones.

I know. I have the Target red card. I opened it almost ten years ago. But I have the version that is specifically a debit card. There is no credit capability. I have the same thing exactly out of my checking. Oh, I am so relieved.

Welcome to the club.

It's a debit card that the holiday is coming up.

Yes. So you're saying, is it okay to use, like, do you have Rachel and I's blessing?

Not necessarily. Is it okay? But we've been going through our wallets and we've just been trying to do, like, a cleanup and looking at everything, and I got my new Target card in the mail and I have to update it, and I just sat there staring at it.

What's causing this? Do you feel like you have a spending problem? Are you guys in debt? What's your financial situation?

No, we are on baby steps four, five and six. So we're both employed full time. We have a three and a half year old, a twelve week old. So we're in the stage of buying a lot of diapers, buying a lot of wipes.

I feel that phase.

Yeah, we've done a lot of diaper shopping at Target.

Yeah. And honestly, that's where I bought my diapers and wipes Blaine with my Target red card debit card. Because you would get the gift certificate. You would get like the I don't know, it would be like the 5% off each purchase.

And then you get like, gift cards. If you spend 100, you get $20.

Gift card, all of that. Which was great, because then I would just roll that back into diapers and wipes because that's what I used it for. So no, I think it's great. I think any level of spending that has convenience with it and what I mean by that is like the Amazon app. I mean, the Target red card. I guess I'd say more the Target app would fall in this category. Apple Pay. Like when we go and order I have the Papa John's app. So when we order pizza, Rachel and.

Her Papa John's, goodness gracious, apple Pay.

With it and it's great. So all of these are conveniences, which is fine. But you do end up can tend to overspend more because there's just not that level of emotion that you're feeling, because you almost feel it more when you're at Target. Swiping your target debit card or your regular debit card, you at least have some action in it that you're feeling and knowing. Money's leaving your account. But when it's just like taps on your phone and stuff, that's where I think the subconscious overspending can really happen because there's just no friction in having to have the no, Blaine, I think you're totally fine if it's a debit card, you're not borrowing the money, it's coming out of your checking account. You're good to go. And if you feel like you need to pull back on spending, I think that's more of the question, not necessarily the method of what you're doing.

It yes, exactly. If you find yourself going to Target way more and buying things you normally.

Probably wouldn't buy, you're a normal woman.

You can get 5%.

We all do that at Target.

Been there.

Yes.

It sounds like you're a very reasonable, logical person.

I appreciate the question, though, because I think all of our and I think know Blaine, I'm like, I have to ask myself, why am I spending the things I'm spending? Am I spending it to fill some kind of void, to have some level of excitement in life, to want to feel cute in that outfit, like, whatever. The thing is, what's the reason I'm spending? And asking that question is a really honest one. And that's when I ask myself as a spender, I have to ask myself that a lot. Am I doing it? Just kind of get the dopamine hit of like, oh, yeah, fun. Amazon purchase.

Blaine, I don't know if you've been through Financial Peace University, have you?

We have the full every dollar class. We've watched the first two, but we haven't actually participated in the class.

Okay, so you already have it, though. I was going to gift it to you. We do all right.

Yeah.

So in I believe, lesson five.

I appreciate it.

Yeah, absolutely. Lesson five, it's all about wise spending. And I cover five questions in there as part of my smart spender plan. And those questions will help you regardless of where you're shopping and the method of purchase. But it really walks through some simple things. Am I buying this for the right reason? Is one of the big questions that's the M for motive affordability? Is this actually in my budget? Have I planned for this research? Is this the best option retailer in price?

You.

Might find you can get a better deal elsewhere, even outside of the 5% target red card discount. And then t for timing. Is now the time to buy it? Are there other priorities? Think about opportunity costs. So those kinds of questions, I feel like they will supersede and transcend all of your spending decisions and help you just go in and build a habit asking simple questions before you purchase.

Awesome.

Well, thank you. I appreciate it.

Absolutely. Thank you, Blaine. What a fun. Rachel, we needed that question. We needed a win this hour, and that was it.

That's the first call of the hour. George.

I know. That's all I needed. Jacob is in New Orleans. Jacob, what's going on?

Hey, guys. How's it going? Appreciate y'all having me.

Sure. How can we help? Do you break up on it?

I should sell my house. That's my question, and I'll give you the details.

Should you sell your house?

Yeah. My wife and I just celebrated our three year anniversary yesterday.

Congratulations.

Yeah.

Thank you. We have a son who is also three. He is autistic. Recently, we've discovered, and they say the earlier the better. So we're trying to do everything we can to give him the resources, the therapy, everything that we can with him. And insurance has been less than helpful on some of those things. So it's been a challenge. And as far as debt goes, we have probably 280,000 in debt.

That's all consumer debt.

No, 270 of it is our house.

Okay, so you have 10,000 in consumer debt?

Correct.

Okay.

Correct. You could probably tack another two on. There just medical bills sure. That we're paying on. And man, this house, it's great. It's fantastic. We wanted to buy a house to get him more, I guess, concrete and consistency. We were renting. I was paying $1,500 a month to rent. And I thought, well, at that price, we might as well just buy something and gain a little bit of equity. So we did so. And the house that we bought, we were looking and looking and looking, and we found this one. And it's a great house. It's fantastic. But it was at the very top end of our budget. And by the end of closing and everything, I mean, it's been wild. And down here in Louisiana with homeowners insurance and required hurricane and flood. Yeah. So my house note right now, after the first year, we went into an equity deficit. I don't know what the exact term is, but basically they upped the note to pay for the increase insurance.

We're up against the clock. Jacob, what's your mortgage payment and what's your take home pay?

So I make 117 a year before taxes, and our mortgage payment is 26 50.

That feels a little high. It may not be worth selling at this point, but what I would do is give it six months, see if you can decrease expenses, increase income before I go ahead and sell the house, but, man, if it's stressing you guys out that much, it's no longer a blessing. It's a burden. And for those reasons, I'd probably be out on this thing. Sorry to hear what you're going through, man. This is the Ramsey Show.

Folks.

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

Checkup. Welcome back to the Ramsay show. I'm George Camel, joined by Rachel Cruz. This is your show, America. You can call us at triple 8825-5225. Want to remind you guys, in honor of Veterans Day, we're giving away Financial Peace University to 10,000 veterans totally free now through Monday, November 13. If you don't know, FPU is the proven fastest way to beat debt and build wealth. It's a nine lesson course, and it's helped nearly 10 million people. So if you're a veteran, you want to take FPU for free, it is on us. Just go to Ramsaysolutions.com veterans and fill out a simple form, and you guys can help us get the word out there. I know we all have a veteran we love in our life. Tell them to go to that link. Ramsaysolutions.com. Slash Veterans. Our question of the day is brought to you by Neighborly, your hub for home services. Neighborly has local service providers who can repair, maintain, and improve your home. Their network of experts offers top quality work and customer service. By trained, reliable service providers, you can find the help you need@neighborly.com. Slash Ramsey.

Today's question comes from Chris in Michigan. I know this may be a silly question to ask. However, if I hear your advice on this, I might feel much better. A couple of weeks ago, I went to the grocery store to get a few snacks and items for the week, and the total cost was $100 with coupons. Then on my social media, I started seeing reels and TikTok videos about how bad inflation is today compared to the 1980s and 90s. They say that $300,000 is the new $100,000 in buying power for homes or to be considered well off. Is what I am seeing just more than inflation, fear, porn? Or is everything getting worse out there and I'm just now noticing? What are your thoughts? Thank you and God bless.

Okay, so, Rachel, I've seen these videos. There's this real estate guy out there who makes all these videos comparing the 1950s and prices then versus what it takes now and the incomes now and how much more impossible it feels. And all it is is really rallying people up to get clicks and views and the data is skewed. I mean, even on that video, it has one of those, like, context needed. Click here. Like, one of those warnings from Instagram that's, like, this isn't totally factual.

Okay?

This was taken out of context from this data from 1950s that only took into account this and that.

Right.

I'm not sitting here to parse out this guy's data and debunk it, but is inflation really that bad for some people? And if you follow the Ramsay plan and you've been on a budget and you've stayed out of debt, inflation feels more like a pinch than a punch. And depending on where you are in your housing market and your lifestyle, and if you're in Canada, goodness gracious, our friends in Canada are going through it, Rachel, with their food prices alone.

Right.

But is it worse than it ever has been? Maybe. Is it going to crush your life financially and there's no way to survive it? We need to shake our fists at the inflation gods until they do something about it. No. So I think it largely is kind of that inflation fear porn, as he said, and there's a lot we can do about it, which is comforting, but I also don't want to minimize the fact that it's hard.

Yeah. And I think there's a reality to the real estate side of it. Right. Yeah. Houses are insane, interest rates are insane, but it's also perspective because when you look back at certain times, even in the 80s, what interest rates were on houses, it was like 16, 18%, right. For mortgages. And if it dropped to 12%, everyone went crazy. And so we're at that seven ish percent. And from our perspective, especially if you're a millennial and if you went and bought a house, your first house 1012 years ago, and you lived in the 2% world for so long, that became normal, and then all of a sudden, when it jumps up, it does feel like, oh, my gosh, this is insane. But it's been more insane in the past. Right? So I think it's all perspective. And yeah, you look at tuition for college is insane. There's just things that yeah, I think the math can prove it out, but it doesn't mean that it's impossible. It may mean that there's going to be more patience and you have to be more on a plan, be more intentional.

One more reason to get out of debt, too.

Yeah.

If you need margin, one of the things stealing from your margin is your debt. And so getting out of debt is a huge help if you're feeling the.

Pinch of a and I would say this too, and I'm not a historical economist, George, I know you may think that, but I'm not. All right? But I would say life is like it is a roller coaster. It is up and down, and there's going to be good times, there's going to be bad times you look at eight and what the housing market was, it's the opposite. And what it is now in the sense of how expensive houses are. So things fluctuate in life. There's an election year coming up next year that always kind of changes the economy to a degree. People hold on to their money, they wait and see. I mean things just they shift all the time. So to be in this permanent mindset that this is how it's going to be forever and ever, amen. It's just not true.

Well Rachel, you always say comparing your life to someone else's is always going to end. Just kind of drinking your own poison in a sense. And so the same goes for comparing your life to the folks of the 1980s. Do you understand the standard of life we now have? You all need to get a new iPhone every single year. They didn't even have a smartphone. Look at the cars they drove.

I was going to say they were usually a one car family. The square footage, average square footage of what a home was.

There was no marble countertops, there was no white cabinets, they were all these small dilapidated homes and dinky cars and no one cared. But now we have social media.

No seatbelts. Remember those days, George? Oh yeah, walk around the van.

Simpler times, Rachel's. Walking around the van while it's going 90 miles down the interstate.

It was a different world, y'all, in so many ways. And so yeah, to your point George, if you just sit there and complain about it, sure it hurts and you're like, man, that had been nice to have bought a house five years ago. Sure. But you didn't. So you are where you are now. So what are we going to do about know there's a level of this reality and if you just sit in.

This I can tell you what doesn't help.

The boomers.

Doom scrolling instagram is not going to get you any closer to your financial goals. So you can hit heart on his thing and leave a comment and say, oh my gosh, he's so right, life is so hard. Or you can just get up and go to work and take the side job and get out of debt and do the hard stuff to get to where you want to go. But I see both sides of this.

Coin those platforms, George, as you know, continue to fill your feed with what you watch.

That's right.

So I opened mine up and it was all t swift coming out of a New York restaurant with all her friends because obviously that's what I've been looking at recently. So there she all was. So if you're doom scrolling to your point and you have like these like.

You need to be Swift scrolling.

Yeah, just change to something happier. So at least you're not being continually fed this fear. Remember that too.

Taylor Swift paparazzi videos that's the positivity we need in today's world.

She just seen an escape from Linda's.

Up next in Olympia, Washington. How can we help? Linda?

Hi. Thank you for taking my call.

Sure.

My husband and I went through the Financial Peace University several years ago, and we are debt free.

Awesome.

Amazing.

Congrats. Thank you. And we have a million dollars now.

Well done, Linda.

Yeah. But my question is, we are both going to retire in about three years, and we have some cash, and we're trying to figure out where the best place would be to put the cash. We have about $308,000 is just sitting in our bank, and 100,000 of that is earning about 4.7% interest. But the other $208,000 we're thinking about putting towards maybe a rental property, because we don't have any of those. But just wanted to get your advice on what might be the best place to put that.

Sure. So you've got million in your nest egg. What are those? In what accounts?

So my husband has a work 401 Roth account that's got 360,000 in that, and then our home is 364,000. We have 380 in cash, and then I have a really small retirement count of, like, 3200 from when I worked for a company before.

Okay, good for you.

And you're going, hey, should I put it in real estate? Should I be investing this? What's your take, Rachel?

Yeah, I mean, I think you guys at this point, I would continue to fund that 15% into your retirement as you guys are working for these.

And you got a paid for house, right?

Our house is paid for, yeah. I think diversifying yeah. And taking 200, and I'd pay cash for it. But also know, Linda, when you get into real estate, it sounds all great and wonderful, and it is to a degree, but there's a lot of work involved. You're going to have to have renters, you have to do background checks. You're going to have to fix stuff when things break. It's a kind of a part time job. So just know you take on a level of responsibility when you do that route. It's a great route because I like the idea of diversifying into other things. But just know it's not just, oh, it's there, and we sit there and it's fine. There's going to be some work involved when you have rentals, so just know that on the front end, but pay cash for it. Don't go into debt for it.

Yeah. I would just park in a high yield savings account for now. When you're ready to pull the trigger on real estate or invest it, go for it. You guys are doing great. This is the Ramsay show. Hey, if you're planning ahead and already starting to think about Christmas presents, number one, you are my people. And number two, I've got a great idea for you. What if you skipped the scented candles and matching pajamas and instead gave a gift that can change lives, the gift that keeps on given. I'm talking about an EveryDollar gift card for just 49 99. You can give loved ones an entire year of premium budgeting features that will help them kick money stress to the curb. Just head over to EveryDollar.com store to get the deal that's EveryDollar.com store welcome back to the Ramsay show. I'm George Camel, joined by Rachel Cruz. If you missed it, we've got some fun stuff happening right now@ramsaysolutions.com. Of course, we have the $12 sale. One of our favorite things we do every year, where you get a killer deal on some of our best selling books and products and tools. And while you're at the store, you'll see the Ramsay cash giveaway.

We're giving away $500 every week, grand prize of $5,000. And on top of that, we've got some really fun new products in there, like Rachel Cruz's brand new kids book. I'm glad for what I have beautifully illustrated, a wonderful message for both parents and kids alike. And Rachel's modeling it like Vanna White holding it up right now. It's so great.

If you're watching George, you should like my fourth trial.

It's so fun just to look at.

Pretty.

It's a wonderfully illustrated book. We also have the 2024 Ramsay goal planner, a Rachel Cruz wallet navy, as well as my brand new book, the first one ever. It's called breaking free from broke the ultimate guide to more money and less stress. You can check that all out@ramsaysolutions.com slash store. All right, let's get to the phones. Cade is in Toledo. Cade, how's it going?

Hey, guys. How are you doing?

Doing well. How can we serve you today?

Yes. So I have just a quick question involving a budget. So my whole life, nobody's ever talked about money or budgeting or anything like that. It was always work and shove your money in a traditional savings account. And so I work construction, and my pay fluctuates throughout the year. So there are some months where I'm bringing in a lot more money than other months. Like around the wintertime, whenever it kind of slows down. But I get paid on a weekly basis. So I was kind of just wanting to ask you guys what your opinions are as far as a good weekly budgeting strategy.

I love it. Well, you're here with the budgeting queen herself, Rachel Cruz. So you're in good hands, my friend. We're going to walk you through it.

So great. Kate okay, so we call it like the mountaintops and the valleys throughout the year. Knowing that you're in an industry that you're going to have great months and not so great months, can you predict those months? Is it seasonal? Like, can you look out over a calendar and say, yes, I know these months will be high and these will be low? Or is it per project most of the time?

Yes. I would say 95% of the time, yes.

Okay, perfect. Okay, so what I would do, Kate, is I would look at the month, and we teach you to budget on a monthly basis to look at a whole picture. Even though your pay may be different, you get paid weekly. Is that what you said?

Yes.

Okay, perfect. Yeah. So your paychecks will be coming in. So we'll do some paycheck planning. We'll talk about that in a second. But I would just estimate per month. Hey, here is what I think I'm going to make in November. Here's what I think I'm going to make in December. And you do it every single month before the month begins. Now with the higher months, let's just pretend you do December next month and it's a high month, so, you know, okay, here are my priorities, which is going to be giving, it's going to be some saving. Do you have any savings right now?

Yes, I actually have a high yield savings account.

How much is in that?

Well, I've got about two grand in there right now.

2000. Perfect. Okay, so you're done with baby step one. Do you have any debt, any consumer debt?

Yes, I'm paying on a car right now.

Okay, how much is left on it?

About 12,000.

12,000. And how much do you make a year?

I would say it's between about 90,120 thousand. So we'll just go 100?

Yes. Okay, perfect. Okay, so what you're going to do on the budget is you're going to give first, I would skip saving because you have your emergency funds already done your $1,000. Then you're going to go what's called the four walls, which is food, shelter, utilities, transportation, make sure those are covered. Then you're going to go to your next kind of necessities. That's going to be like insurance. For those of you listening, this may not be UK, but like, childcare may be one. It's things that you're like, we pretty much need. We really do need these things.

It's not the exciting, frivolous, luxurious yeah.

That next kind of group being is like, yeah, I really need this stuff paid. I put your car payment in that one, in that section and then below that, kade have like oh yeah, you have a personal line item, maybe a miscellaneous line item, a couple of other things just through life, a subscription or.

Whatever you got going on.

Yep, exactly. And so what you're going to do though is on the high months, like if December is a high month, I don't want you to spend all of that. Right. You're going to put some of that away. And I would do a separate account than your emergency fund. I would open up even another high yield savings and park some of that money to the side. So that's going to be the fund that you're going to use when March hits. And it's a really low month. Well through December, January, February, that are high months. You've been putting some money aside to know that you can grab out of that account to make sure that all these things are covered, your budget is covered month to month. So it's kind of this game you really do have to play and it's going to take a second to get used to, but it's really important. And then what you want to do, too, is make sure that when you get paid weekly, that all the bills coming in you can cover with that paycheck. Which may mean if a lot of your bills hit at the first of the month, you may want to call your utilities or subscriptions or whatever and say, hey, can I move this pay date to the middle of the month or later of the month so that these other paychecks hit so you're not overdrafting?

But that's called paycheck planning, which gets a little bit more detailed, but with every dollar premium, our budgeting app, that's part of the budgeting app, every dollar is this paycheck planning. So if you hold on the line, Kade, I'm going to get you a free subscription for that for a year because this app is really going to take kind of what I just said in a two minute radio call to really give you the details and actually see these categories, figure it all out. But I would encourage you to, Kade, that it's not going to be great. The first month, you're going to mess up. You're going to over budget in one category, you're going to have to change some stuff throughout the month. The second month gets a little bit better, but by the third month, it really will start working. And so there's some planning because of your industry and what you have, but it's still very possible. It's still very possible to budget. And I love this call because this is one of the basic foundational principles of personal finance that is so key that it allows you to really have control over your money and actually let your income work for you and do what you want it to do.

Beautifully said. Kate, does that hit you right?

Yes. Thank you so much. That was perfect. That was everything I needed to hear.

Great. And I want you to pay off that car debt. Yes. So in that budget, Cade, you're not going to be going out to eat, you're not going to be doing all that. You're going to get all of this paid off, this $12,000 car debt paid off as fast as you can and then save up an emergency fund so you have some goals that your budget is there to help you. You're able to look at your budget and say, okay, I can cut this category. I can cut this category. I'm going to throw all this extra, and you can actually watch it on the app as you start throwing more money at it, watch that car debt go down and it's really motivating.

That's what gets exciting.

Yeah, you're in a great spot, but hold on the line, Kate. Emily's going to pick up and we'll give you every dollar premium because it's a great tool. It's one actually I open up every day, genuinely.

Oh, yeah. And Kate, this is a great time for you to call. On Friday, we're going to be walking through how to use that feature in EveryDollar so sign up@everydollar.com slash budgeting. I'm doing a free training where I show people how to break the paycheck to paycheck cycle, how to find margin to attack the debt, to get the emergency fund to invest for the future. And part of that, we show you what these premium features in EveryDollar do and how to use them. And paycheck planning is one of those, so please join me for that. And if you're listening out there and you want to join, there's plenty of virtual spots because it's virtual. So go to EveryDollar.com slash Budgeting and we'll send you a link. You can even watch the replay if you miss it there. But, Rachel, what you just laid out is really just a prioritized spending plan for those that have regular income on commission, pay their contract, work, whatever it is they need to budget more than anyone. But a lot of them self, they opt out and go, Rachel, I have a regular income, so this budgeting thing, it doesn't work for me.

Yeah, the commission is and it is a little bit more tough. It'd be nice to know, oh, I'm going to make X every single month. Every paycheck is going to be the exact of course that's going to be easier to plan, but if you are commission again, there's some fluctuation that's happening, but it's still possible. And I think budgeting it is. It's one of those. Getting out of debt is a huge financial principle that changes your life. Investing in compound interest is a principle that you look at in a way to save your money. That's so helpful. There's all these pillars, if you will, to win financially, and budgeting is one of those, if not one of the biggest. I mean, it's such a crucial part of it. And when you actually have control over your income and know where it's going, it goes further, it goes further. You get out of debt faster, you save faster, you actually know what's going on versus a paycheck, hitting your account, spending some stuff and looking up and be like, gosh, I don't know where my money is.

Yeah, well, you've always said budgeting is permission to spend.

Yes.

And so I have a whole chapter in my new book, breaking Free From Broke, and the chapter is called Budgeting is Freedom. That is my thesis, and I show people how to gain that freedom because it's so true. People look at a budget like a straitjacket. I'm going, no, it's freedom, it's permission to spend on purpose. With a plan so you actually hit your goals instead of just fingers crossed, eyes closed, hope we get there. That's the power of a budget, and every dollar is the best tool out there. You can go check that out if you haven't already. Welcome back to the Ramsay show. I'm George Camel, joined by Rachel Cruz. Our scripture of the day comes from Proverbs one Seven. The fear of the Lord is the beginning of knowledge. Fools despise wisdom and instruction. And in a left turn here, Taylor Swift once said, I think fearless is having fears, but jumping anyway. Beautifully said. That was I feel like Rachel planned the Taylor Swift quote.

I didn't. Y'all always give me great quotes that.

Feel very inspiring and uplifting.

Shout out to Don.

Thanks.

Our friend Don Medley. Love it.

What a oh, well.

Hey, another news. The Ramsey Show annual listener survey is now live. People have been clamoring for this, Rachel. They went, Where is that survey?

And it is here. We have heard your cries, America.

They said, I want my opinion heard. It is so helpful. We do this once a year, and here's what we want to know. Your favorite parts of the show, what you like, what you don't like, what you want to hear more about whatever it is we want to hear from you. And there's two ways to participate. There's something for the whole family here. If you're a texter, just text the word survey to this number, 33789. We'll send you a link. Or you can go to Ramsaysolutions.com survey. It's about the same amount of typing, but, hey, to each his own. If you want to go website or text, there you go. And if you sign up today, you can be entered to win a $500 gift card just for taking a few minutes to share your opinion with us. We always want to continuously improve this show and make it better.

Yeah. And it's so helpful, so please do it. It is helpful for us.

Rachel's plea really hit it. Added some punch to mine. So thank you for that.

Genuinely, though, we do this show for you guys who are listening and watching. So we want to make sure we're giving you what you want. Or we're just sitting here for 3 hours, just wasting everyone's time.

That's fun. Well, hey, Stephanie joins us. She makes this show worth doing. She's in Allentown, Pennsylvania. Stephanie, what's going on?

Hi. I have a question regarding an investment. So, about two and a half years ago, we had sold our house and purchased a new house and had some additional funds that my husband and I chose to put into an investment account with a financial advisor who is a fiduciary. And in the course of two years, the account has fluctuated quite a bit and profited none. But we still pay the 1% fee to the financial advisor, and I'm torn between pulling all of the money. From that account and just putting it in an S and P 500 investment account where I don't have that financial advising fee and I wanted your advice.

How much money are we talking?

So it was 150,000 and then now it fluctuates between 130 and 140. It really has not gone to or surpassed 150.

Okay. And what's it invested in? Do you know what types of funds.

Some of it is? I think there's a small lump sum in cash and then several accounts that are stocks.

Single stocks or mutual funds?

I think both.

Okay, well that could be one reason. Did you choose these or did the financial advisor say, hey, here's what I'm going to put you into and you went, okay, sounds good.

The financial advisor does well.

I know you said it's a Fiduciary, which I don't think it's one of our SmartVestor pros. We would recommend mutual funds if you're going to be investing in that or index funds in an account like that. And so I can't tell you why the reasons are you haven't seen the return. Obviously the market has been all over the place. We've seen it come back nicely. But it may take some time to recover from the year previous. And so I want you to invest with a long term mindset if you were trying to allow this money to grow in two years or else it's bust. That worries me from an investing standpoint, but it worries me from you taking that money and managing on your own because if the money doesn't grow next year you're going to go, I got to move it elsewhere, I got to move it elsewhere. And the key with investing is to ride that thing like a roller coaster until the bitter end so that you don't get hurt jumping off early.

Yeah. Well you guys use this money, Stephanie, for anything or is this in retirement? This isn't within your Roth, right? This is beyond that.

It's a brokerage account.

Yes. Okay.

Yes, this is beyond that. I have an investment account that I invest in every month and is in a mutual fund and my husband also has another investment account that he manages which is also in another mutual fund. It just seems like this broker managed fund, I think because we are in our early or mid thirty S, that it is more aggressive and leaning on stock because every time I look at the portfolio it does change. Whereas at least with the stability of the S and P 500 accounts that my husband and I manage, we understand that there's a long term gain that we expect to hopefully have.

Yeah. There's another piece of this, which is financial advisors don't exist just to help you choose funds. There's so much more value they can add from estate planning and tax planning strategies, bigger picture financial decisions. And so I don't want you to ditch a financial advisor just because the funds they chose didn't ten X your money, and it feels like you're comfortable managing some of this on your own, correct?

Yes.

Which is fine. The key is to be thinking long term. Now, you mentioned you have a mortgage as well.

We do.

What's left on that?

We have about 400,000 on our mortgage, but we have like A-3-I think we have about 3%.

So that tells me you're not in a rush to pay it off.

Correct?

I would pay it off. Just saying. Are you guys already maxing out retirement? It sounds like you have a great income. What's your household income?

Yes. So I make 180, and then my husband makes about 120.

Amazing. You make 300 grand a year. I'm guessing you're maxing out every tax advantage or retirement account possible.

Yes. So we both max out our retirement. We both make contributions to the investment accounts. The one hanging fruit that we have is I have one car payment. Stephanie yeah, that was a question that they said you guys didn't have time for, but that was another question. Have do we bite the bullet, take out money from the investment accounts and pay the car, or you leave the money in the investment account.

Do you have any money outside of investment accounts you could use first?

We do. So we do have about 16 grand in savings, and then immediately, like, just cash. And then we have another about 15 grand in, like I said, the investment accounts that I manage and then about 25 in the one that my husband manages.

How much is left on the car?

50,000.

I mean, I would probably have a dent into the car. Yeah, I would use some of this honestly just to get that completely paid off. And then I would look Stephanie at aggressively paying off the know your income is there and you guys are doing great, but you're going to be fine with retirement and all of them. You're doing exactly what you need to be doing, and you guys have just extra margin. I would be taking that extra margin instead of putting it into these brokerage accounts. I would be throwing it at the house and start getting that paid off quicker than what you guys are doing now.

Okay, I'm sorry.

No, I was going to say that. Yeah, that would be the goal. I would have that kind of goal because I feel like with you guys, you guys are in such a great position.

You're young, you make amazing money. You're going to be multimillionaires. We're just trying to give you a real simple, peaceful path to grow that money.

No, I appreciate that. I guess. Do you find that year over year, any investment appreciation like the paying off of the mortgage and the car would be better than potential appreciation that would come from investments?

Well, it's all hypothetical. We don't know what the future holds. And even if my investment would have been 10%, but I paid down a 3%. It's beyond math at that point. It's emotional. And having a paid for house, having no debt to anyone while making 300 grand, who cares what the spread was going to be at that point? You're going to be investing so heavily. So if I'm in your shoes, let me lay out the game plan real quick. You're in baby steps four, five, six of the Ramsay plan. Invest 15% of your household income. That's 45 grand. That's maxing out 2401 KS. Pretty much right beyond that, any money is going to go to knock out the house. Once the house is knocked out, you're in baby step seven, where you can start maxing out everything.

Would you cash out a brokerage to.

Pay off the car if you don't have the money? I would cash out the brokerage. It doesn't sound like you're going to have much capital gains, if at all, so that would be my plan. Stephanie, I appreciate the call and letting us give you our two cent. Don't know if it was worth that much to you, but you got it. That puts this hour of The Ramsey Show in the books. My thanks to my co host Rachel Cruz, all the folks in the booth, and you, America. Thanks for listening. We'll be back before you know it. In the meantime, spend wisely, save intentionally and give generously.

Dr. John Deloney here. Mental and emotional health challenges, broken relationships it's all just part of life. But they don't have to define you. The Dr. John Deloney Show is here to help. It's a caller driven podcast where you can get practical advice on dealing with anxiety, loneliness, depression, relationship challenges, your kids and so much more. Listen to questions from our callers, or if you're walking through a tough situation and need some help, give me a call. You were never meant to do life alone, and that's what this podcast is all about. Follow along on Apple, Spotify, YouTube or the Ramsey Network app. Remember, you're worth being well.