Transcript of A Fresh Start With Money Is Possible

Normal is broken, common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairways Credit Union studio, this is The Ramsey Show. I'm George Camell, my co-host. Jade Warshaw, taking your calls at 888-825-5225. Kayla kicks us off in San Diego. What's going on, Kayla?

Hi, how are you guys? Hope you're doing well.

We're doing great.

So my husband and I have a bit of a conundrum for you guys. I'm hoping you can help us out. It's kind of more of a moral issue, I guess. So every year being military, we move a lot. Every year we just make sure we have the will, we have it updated, everything's going well. Right now the beneficiaries stand as my niece and nephew on my side of the family. My husband's side of the family has just had an addition to their family, which was great.

Well, hold on a second. I just want to make sure I have this straight. You were planning on including you were planning on including your new nephew in the will, but whatever kind of beef that you had with the mom and dad, that would cause you to take the nephew out of the will at one year's old?

I think the nephew is fine. I don't want it to be an issue for him. Obviously, I'm assuming we're not going to pass away for some time.

Right.

However, I'm more worried about what the parents will do with the money itself. Honestly, things have gotten so spiteful.

But it would go to the nephew.

I feel like they take the money and yeah, it would. I don't know. I feel like there might be some issues. Again, it was something very simple that caused the break of relationship.

What was it? Have you had things before that's caused strain? Or it was like one incident that caused you.

Yeah, we've had problems before. My husband hasn't married for 10 years. There have been little things. It's almost like they can't handle someone's differing opinion. So when they announced their pregnancy was great, my husband and I have had multiple miscarriages. When they announced it was on the anniversary, and so we were on the anniversary of one of our miscarriages. We were extremely excited for them.

Okay.

But obviously we're still grieving. I mean, that miscarriage was only two years prior. So I still feel it.

Sure.

Sorry, I'm getting worked up. And we got a text after they had announced that, well, that was just rude of you. And we have videotape of everything.

Did they know that it was on did they know that it was on your anniversary?

Yes.

Okay.

Yes.

And did you tell.

And there was no contact.

But you told them that. You reminded them of that? Like, hey, I'm excited, but this is just a hard day for me in general. It has nothing to do with you guys.

Yes.

Okay.

Exactly. And then they didn't talk to us at all for the rest of the pregnancy. We tried to reach out, hey, how are you doing? You're like three months along. Woohoo. I mean, she's my first sister-in-law on that side of the family to have a baby. I am very excited for you. There's just some things, and I told her when she announced.

So.

I just take baby showers. Like that. I don't know what it is. It kills me. But when they announced the baby's name, it was one of our deceased baby's name. And now I don't own that name, but a conversation would have been nice.

And they knew that.

They knew that.

So you've got beef with the parents. Understandable. I just wonder, is your thought, hey, this nephew's growing up in their household, whatever they think he's probably going to think, and as much as we don't like them, we're probably not going to like him either. So let's put it.

Kind of. I also the different size of family, they see money very differently. My side of the family, it's a wealth-building tool. It's there for the.

Listen, it's your money. You don't have to put anybody in the will that you don't want to put in the will. But I will say this, and George, I would love to hear what you have to say about this, because you are even Steven. I feel like I'm getting worked up.

Jade's fired up.

I would hate for I'm just putting myself in the nephew's shoes. Let's pretend my grandparents if my grandparents had a bunch of money, I would hate for them to leave me out of their will because of any beef that they had with, I don't know, say, my mom. Right?

Right.

Her mom made us mad, so we're going to keep Jade out of the will. That I would feel like I got the short end of the stick, because I'm like, I wasn't even here when all the beef popped off. I'm an innocent party. So that's something to consider.

Yeah, I totally agree. I totally agree with that. My concern would be I mean, he's a year old. We've not even seen a picture. We just know his name. I mean, the grief, like the beef between them and us, and we've tried to have multiple conversations. It's just not happening. So then I'm like, well, if I leave it with the executive of the will, like they have to deal back and forth sides, and I don't know. I don't know. I just don't want there to be beef when we're dead. But I guess I'm not here. But also.

It's someone else's problem.

I don't know.

Yeah, I think I would get to the bottom of the actual facts of if something were to happen while that child is a minor, here's what would actually happen. And likely what would happen is there's going to be a trustee or someone that's handling the money that is not the parents. Because if it's in the will, they legally have to abide by it. The parents can't just go blow that money.

Can they here's my thing. So we sent him on his birthday for every niece and nephew, we sent them craft supplies and $20. That got returned to us.

Ouch.

It's like.

Oh, this is petty.

It costs more to return it to you.

Okay.

They returned it to me. I'm like, at least donate it. I don't even care. But they don't even get that.

So they don't want you to have they don't like you meddling in their family at all is what it is.

No. When he was born and the name came and my husband said, that was very hurtful. I'm so excited for you, but that's my son's name, and that really hurt. That's going to take a minute. And they set us an expectation for aunt and uncle. And we're a military family. There is stuff on that list. There is no way on God's green earth we can fulfill that. So my husband took it as, you don't want us to be aunt and uncle, and I'll take it. And my heart is like, that's my nephew.

So.

We're back and forth on this will thing of like they didn't even want the birthday gift. The will revision is coming out.

Why don't you just play it.

It's what we do.

If I were in your shoes, I'd play it by ear. Today is probably like how old are you guys?

30s.

You're in your 30s. God forbid you live long full lives. If I were in your shoes, today it doesn't feel right. Right? You're estranged from the family in general. So it doesn't clearly it doesn't feel right for you. You've tried to give gifts. They've been revoked. There's a long laundry list of water under the bridge and on the bridge and above the bridge with you guys. So I would just say for now, the will is as it stands, and maybe look you know I don't know how often you review your will, but maybe in the next two years when you review it, something's changed.

It's a living, breathing document.

Yes.

So what's your net worth?

Okay. About $250,000.

Awesome. Well, as you guys continue to build wealth.

No house included.

It might be worth looking into a trust with staggered payouts eventually if you want to have more control over how this money gets disseminated and when. Now, that's not a today problem. You don't need to go create a trust today, but it's something that you can look into for the future as you guys continue to build wealth. Work with a good estate planning attorney and figure out what are all the laws in your estate, what are all the pieces you need to know, and try to just take the family drama out of it. I don't want to punish this nephew.

No.

And you don't either. And regardless of how they feel about it, whether they want you meddling, I'm going to take the blessing of generosity. So don't let them block that blessing.

When they go low, we go high.

Up next, we go to Atlanta. John is there. What's going on, John?

Hey, how's it going?

Great. How are you?

I'm doing great.

Let's talk. What's going on?

So I just graduated college, and I got an architecture degree. And now I work as an architect and project manager. But I did go to school out of state. And I was kind of young and chose to go to an out-of-state public university, and it left me with a lot of debt. And architecture is a five-year program, so I have accumulated about $340,000 worth of debt. They're in five different loans for each kind of year.

What do you make now?

I'm wondering. I make 60K, which is kind of on the upper kind of right out of college for an architect, actually.

What's your top end, do you think? And what do you think is a fair timeline to kind of start hitting that upper end of what you could make?

Yeah. So it takes about probably seven years to get your architecture license. And once you get your architecture license, that your kind of pay, you become more valuable to your company.

And there's no way to expedite that seven-year process.

I mean, yes, you can. Like a lot of people can get it done in three years, four years.

Let's do that.

So yeah.

Here's my fear. That $330K, if you don't start attacking this thing, it's going to become $350, $375, $400 by the time you have your license seven years from now. Because that interest is going to crush you if you're just making minimum payments. And making 60K, how much margin do you have currently to attack the debt?

I have a decent amount of margin. I don't pay a lot for rent. Rent is about $600. And I don't have a car payment.

Good. No other debt.

I don't have any credit I don't have any credit card debt. I have a credit card that I kind of use for the perks, but no debt is paid.

What kind of perks are we talking?

Like flights and other things like that.

Where are you going?

Nowhere. Not with this debt.

We got work to do, man. We're not going on vacation.

How much margin do you actually have, John, at the end of the month once everything is paid? John?

We lost him. He didn't like my take.

Maybe he didn't like your comment.

John, well, hey, if we get you back, John, let's keep talking and get you a plan. But we can talk in generalities right now. Jade, you have a very similar story. You and Sam paying off $460,000 total?

Yeah, that's right. That's right. And $280 of it was student loans. So the short answer is going to sound very simple, which is there's two things you can do here. You can cut back from your budget, which there's only going to be so much he can oh, John is back. Great.

John, we lost you, bud.

Sorry. I don't know what happened.

You got mad and hung up on us.

I just thought I offended you, so I apologize if I did.

Just joking.

But we're glad you're back.

You did not offend me at all.

Okay. So yeah, I was just sharing that Jade has a very similar story paying off a massive amount of debt. So you're on with the perfect person today. And we want to walk you through a plan, but Jade was getting at this idea. You can only spend less and make more.

Yeah. There's two things you can do here. And so right now you're at $60,000. My question to you is, there's only going to be so much that you can cut from a $60,000 budget. Right? And by all means, do that, because that margin does matter. But there is going to be part of this where we've got to bring in extra money in order to make this something that you can sink your teeth into and feel motivated to go on that journey. Fair enough?

Yeah. Fair enough.

Okay. So what do we think we can do? Just brainstorm some ideas. How can you make some money fast? If I said, hey, somebody's life is on the line, you got to bring in $1,000 a month to make it go away, what would you do?

My first thought is maybe try and find like a drafting. You can make some money doing draft work.

Yes. Love that.

Architecture.

Okay. So drafting. Let's add that to our homework list of things that we're going to figure out this weekend. Not just an idea, but kind of bring it into fruition. So drafting is going to be number one on that list. What else?

I'm not sure. I'm not too familiar. I mean, I had a job in high school where I worked at Publix, but.

Okay. So that'd be number two on my list. So this weekend, when you get a little bit of time, I want you to sit down and do the research and figure out what must be true for me to get into the drafting game in the next 30 days. So that's thing one. Thing two is I'm also going to brainstorm a couple of other ideas this weekend that I can start to track down. Make yourself come up with five ideas, okay, of how you can make some money. And then what did you tell me your margin is now after everything's paid? How much do you have?

I'm sorry. Could you further explain that?

Sure. So after you've paid for all your expenses, right? You've paid all your minimums. How much money is left for you to kind of say, I can throw this at debt?

I say after rent and groceries, I don't pay anything on health insurance. My company provides health, dental, and all that. So I would say I could probably throw like $2,000 of my paycheck.

Extra on top. What are your minimum debt payments on $330K or $340?

From what it is from what the company is telling me, it's $3,000, which is so much more than what I can do right now.

You just told us you had $2,000 left over. That's why I'm confused. Because if you're going to be bringing home, what, $4K a month or so?

About, yeah. A little under that because of tax, yeah.

So under $4K a month, and your student loan minimums are $3,000, your rent is $600, you're barely going to be able to eat, let alone throw extra at the debt.

Yeah. Are you able to get with the.

That's why I'm worried right now.

Are you able to get with the student loan companies and negotiate a lower minimum? And that way we can take all the margin and throw it at the smallest of those five student loans?

I have been looking into ideas. I called them earlier kind of in October, and they told me to wait until mid-November for my grace period to end to talk about it. But the company doesn't do 20 I was looking for a 20-year loan just so in the beginning, I can kind of be relieved of an intense payment.

So you're going to refinance it?

Yes. I'm thinking of refinancing to another company to consolidate three of the loans. Because three of my loans are at 12%.

Are they private?

Yes.

Okay. You could try contacting Yrefy and see if there's a consolidation that would work for you. But I caution you this. There is pluses to that. Obviously, you can lower the interest rate and have an affordable payment for you. And when you do that, the point is to use all that extra margin and throw it at the smallest debt. But the one negative of that is you've taken something that's kind of conveniently broken into payment, like broken into five different loans, which is helpful for doing a debt snowball, and you then slice it into one big lump sum.

Yeah.

Okay. So you weigh that and decide what's right for you. But I do agree. If you can find a way, and if you could find a way without refinancing to get that payment lower, I would, again, put that margin on the smallest debt. So here's some practical tips to take away for you. This is going to take some time. All right? This is a long-term play, and you have to treat it as such. Most of the folks that call into the Ramsey Show, George, they're paying off their debt within 18 to 24 months. That's kind of the normal range. Every once in a while, we get a caller in like John, like myself, who you're just in this for a longer haul, and it's no reason not to start.

Yeah. You want to build a sustainable way to do this because of how long the journey is going to be. And who knows what's going to happen in the meantime? Your income could go dramatically up. You could meet someone and double your income. All of these are factors. So have hope versus just looking at the math on paper going, "Whoa, woe is me." But this is a good lesson learned for anyone out there. If you're 17 or 18, you want to go to the out-of-state school for fun, rethink that plan if it's going to cost you student loan debt, especially six figures worth.

Oh, you know, just did the smart thing that most people do nowadays, went home broke pretty much.

Oh, no. Tell us about it.

So me and my wife, we bought our house last year, almost exactly last year, the 21st of November. It will be one year we've been in it. And I assume from everybody that tells me, got in a little bit of debt, need this, this, and this. And now I want to buy a semi-truck because I can essentially double my income in like two years. The first year will be strictly paying off debt.

How much?

I think when we did the math, what is it? A little bit of retail debt we have is like maybe $6,000. We might have about $12,000 in total. Thankfully, only maybe $1,000 of it is credit card debt. So we're actually decent on that.

Okay. Keep going.

$3,000 left on a personal loan, and I think $2,500 left on my dental care debt. And that's it for and then obviously the house, which we probably we actually I think we got a good deal. We got two and a half acres in Florida for $250,000.

What's the payment?

$2,100, but that's mortgage with escrow and everything.

And what do you guys bring in every month?

I'm bringing in about $6,000. Single income family. Six to seven, somewhere in between that range. I deliver fuel for a living. Gas, all the gas stations and everything.

And how are you doing that now? Do you have a semi now?

I'm a company driver now. So the company I work for actually offers contractors. You go out, you go get your own truck, and they contract you. And essentially, you almost quadruple your money. So right now, I gross about if I work six days a week, which I do most weeks, I make anywhere between $18,000 and $2,000 a week. And if I do the.

Gross?

Yeah, that's my gross.

What's your net?

My net, I average probably after tax and insurances and everything, between $15 and $17.

And that's that 6 to 7K take-home you mentioned.

Yes.

Okay. What's the semi going to cost you?

I've been looking around, and I've found some for about $35,000. So I currently tithe. And that was my main question when I got on this. Should I stop tithing temporarily? Keep track of what I owe in my tithes, but wait to pay that essentially in a lump sum.

This is kind of like a loan on God.

Yeah, that's pretty wrong.

Let me hit you on payments.

I never heard that. Trust me.

God, I got you back, bro.

It's such a conflicting thing for me because.

Don't you think that's a good indicator, though, the fact that you're feeling conflicted about it?

And that's why I'm like, I feel conflicted because it's something that I always do. It's something that's very important to me.

Yeah.

But I know.

Now, if you couldn't pay your mortgage or your light bill, I'd be like, "Cry. Let's pause the tithe." But you're talking about, "I want to afford a vehicle, and so I'm going to stop it." And so if it's a value for you, then I'm going to tell you, you got to stick to your values.

Yeah.

It's going to eat you alive.

But there's something about this situation, I'll be honest with you, that's still not quite adding up for me, Eric. You're making the $6,000 to $7,000 a month. Sure, your mortgage is a little high. It's about a third of your take-home pay. But honestly, it's not I thought you were going to tell me it was like 40 or 50 percent. So when you told me that, I thought, "Okay, we can work with that." That happens actually a lot around here. And then when you told me your debt, your debt's not very high. So part of me is wondering if you guys just need to tighten up your budget in order to find margin.

Yeah.

So are you guys following the baby steps otherwise? Are you doing the debt snowball? Do you have $1,000 saved?

Yep. We actually had $1,000 before we even heard of the baby steps, thankfully, just because we got into a situation once. We were like, "Well, at least we have $1,000. We needed tires once."

How much is in savings now?

Maybe $1,200. Just a little bit over that. Just kind of we had a little bit extra money because our savings account is the where we oh, our car. Sorry, I forgot about that one.

Tell us.

That one is the expensive one. Sorry. That's about a 20 we have $23,000 left on that, and that's about $465 a month. Sorry.

Okay. $465.

That's almost a semi right there. What's the car worth?

I think when my I don't know how reliable it is. When we get stuff in Carfax on our emails, it's like, "Oh, it's $7,000." And I'm like, "I don't know how reliable that is."

Yeah, it's a.

Yeah. It's a 2020 Nissan Pathfinder. It's got like 110,000 miles on it, I think. No, I don't think it's got that. But.

I had seen some things. Okay. Well, I would check Kelly Blue Book and get the private party value and see what that is. It might be worth selling if you're really aggressive about this. If you're like, "Hey, I want to get out of debt fast. I want to save up for this semi fast." I mean, you told us you had 12K in debt, and now we got an extra 23 on top of that.

Yeah.

So this debt-free journey just expands.

To me, it's one of those things that I don't think of it as debt just because I go, "I make the payment every month." It's just it rolls into.

Let's reset the definition real quick. Debt is owing anything to anyone for any reason.

Yes.

That's simple. How about this? Here's a good way. There's a great old quote. It's like, "If you don't think it's debt, stop paying and see what happens." If the repo man shows up, it's debt. You don't own that car. It owns you.

That's the word.

So that's where I would reset your definition. And you're a man of faith, clearly. I'd go check out some proverbs. I'd start with 22:7, "The borrower is slave to the lender." And right now, you can't do the things you want to do for your family and for your business because of the debt. Can we agree on that?

Definitely.

Can we agree that that should piss you off?

Oh, trust me, it does. I opened my LLC back in July because I don't know how well familiar you guys are with trucking companies. My dad says they're a step below a politician on honesty. And one of it was, "Oh, zero down." And then you go and look into the policy, it's like, "Oh, yeah, no, two years of business experience." All the.

Are you promising to us, though, that since you've been burned and you know too much, that you're never going to touch debt again?

Oh, yeah. No, trust me. After this, me and my wife, she needs some dental work. And we were like, "Yeah, we're not doing any more of this payment plan stuff." The way we looked at medical debt, we were like, "As long as it's not a detriment to our health.

Well, everything so far has been, "Well, as long as we can afford the payment, as long as " and so I want you to just reset your definition of saying, "We just don't borrow money." Take that off the table. You got 35K in debt. You want to buy a $35,000 semi. So you have $70,000 of cash flow ahead of you. So now it's how much margin do I have in my 6 to 7 grand, and then how fast can I do it? And so if that's $1,000 a month, it's going to take you 70 months to get this whole thing done.

Now, what does your wife do, Eric?

She's a stay-at-home mom.

How old are your kids?

We have a 10-year-old girl, a 4-year-old boy, and a 1-year-old.

Okay. So she's got her hands full. I'm going to give you a couple of homework things because I think that this will help you take the next steps that George was talking about. First things first, you got to get on Kelly Blue Book this weekend and figure out what the value of that vehicle is. And then you and your wife can make a decision of if we can sell it, and if we're upside down, can we come up with the cash to get right side up and get into a cash car. That's one thing, too, is you need to do a clean sweep of your budget, and you need to cut out anything that's not completely necessary because you need that margin to go towards debt.

Danny is in Charlotte up next. Danny, welcome to the show.

Hi, guys. Thanks for taking the call.

Absolutely. How can Jayden and I help?

Well, due to some of my own behaviors, I've gotten a pretty late start in life, getting on the right track. I'm 28 now. And long story short, I've only been doing the right thing for the last couple of years. I struggled with being sober. I'm sober three years in March, so.

Congratulations.

Two years, eight months today.

That's awesome.

That means a lot.

Wow.

I thought you were going to say you're like 58. 28? That's a late start?

Yeah, man. It feels like it. It shouldn't feel like it, right?

Well, let me free you, Danny. You're right on time, bud.

Well, so I'm from New York. I moved to South Carolina about a year ago, last December. Tried to do a couple of things. Tried to join the military. I thought that would be a good path to get my finances on track. That didn't work out. I did find a good warehouse job at $20 an hour. I bring home about 3,000, give or take a couple of overtime hours. So I am struggling to figure out how to get ahead.

So what's ahead?

Yeah, what's that mean for you?

Well, I have debt. It's just personal credit card debt. I do owe the IRS some money. I'm not exactly sure how much because I'm kind of scared to go talk to a tax representative and get that straightened out.

If you had to guess, how much do you think it is?

IRS, last notice I got was about 2,000. I'm sure that increased by now.

Well, don't keep putting it off because the more you put it off, late fees will start to add to that. And 2,000 sounds like a scary number, but with your income, you can knock that out quickly, I think. So don't keep putting it off. Let's add that to your list of things to do this weekend. Find out the actual amount. How about the credit cards?

Credit cards. So at the beginning, it totaled about 18,000. I did a debt relief program that I've been in since April. I paid 300 a month towards that. They've negotiated one of the four credit cards, which will be paid off by December, which is really great. So that leaves me with about 12,000 for them to negotiate and bring down.

And when should that be done in total?

It was projected about three and a half years from April.

Oh, okay.

So I have three more years to go, and I need to expedite that.

No, no, no. No, because that's unbelievably ridiculous for them to say it's going to take you three years to pay off 12,000. It's 1,000 bucks a month. You could drive Amazon.

All while paying 300 bucks, all while they've just destroyed your credit. So it's going to be hard to live your life financially now, right? They told you to stop making payments, pay us that payment, and then we'll settle.

Yes, sir.

So I would get out of this program.

So would you I can take my money out at any time.

Yeah, cancel it this weekend. Cancel it this weekend.

Paying the credit cards directly seems like it would be a lot more. They've negotiated one card.

Right, but how they did it.

For 4,500 to have.

Let's explain how they did it because if you choose to do this, you could do the same thing. All they did was they stopped you from paying the payment. They said, "Don't you pay the payment. Pay us instead. We'll pull the money so nobody's making a payment," which means the credit card company is going, "They're not going to pay. This is going into collections. They're going to sell that debt off." And once that debt's sold off, then they can say, "All right, now we settle it." And now your debt consolidation company comes in and says, "We'll settle it. We'll settle it for 25 cents on the dollar." You can do that if you want to do that. You don't need to do that because you actually do have some income here.

That's true. So my monthly expenses come just short of 1,900, and my monthly income is a tad above 3,000. So I only have about 1,000 to play with.

I understand.

Not worse than any emergencies happen.

I understand. So if you have 1,000 in margin now, plus you got a second job because it's just you, right?

I'm in a relationship. I do have a lease with my girlfriend.

Okay. But I'm saying you don't have a wife to take care of. You don't have kids to take care of.

I do not. And that's part of why I watch your guys' show, and I wanted to call in because I want so badly to be able to propose, and I want so badly to be a dad. And I'm just very.

And you will be.

Scared that that can't happen.

It will happen, and I'm going to show you how. So it sounds like in your mind, "I want to clean up this money first. That's going to give me some confidence that I can handle this responsibility." If you have $1,000 of margin now, Danny, and then you say, "I'm going to pick up a second job because I owe that to myself to clean up this debt fast," and you make another $1,000, first thing that's going to happen is that IRS debt is gone in one month. It's gone in December. And then the next thing that's going to happen is the $12,000 of credit cards is gone in six months.

Maybe I picked the wrong second job. So I worked this warehouse job from 6:00 AM to 4:00 PM. I did work at Amazon overnight, only a few hours. So I went home at 4:00 PM, woke back up to work 11:30 PM to 3:30 AM. And I was also donating plasma twice a week.

And what was that getting you?

Amazon was an additional about 300 bucks a week, and the plasma was about 125 extra a week.

Listen, there you have it.

That's 500 a month right there.

It was killing me. Yeah, doing all of it was killing me, but it did give me short-term.

But it's short-term, right?

We're talking six months. If it was six years, I'd say, "Yeah, that's unsustainable."

Or even if you said, "Hey, I'm going to do that. I'm going to do that until I pay off the IRS, get that out of my hair, and then I'm going to go back to the $1,000 margin, and then I'm going to intermittently do the thing that you just said that kind of kills you for a while," right? You don't have to do that a year straight, but if you picked up a rhythm of it, because either way, it's gone in six months.

Okay. Yeah. And the thing about the IRS debt is I'd like to go to community college. And from the research I've done, I can't apply for FAFSA if I have outstanding IRS.

That's true.

I'm not too educated on it, but.

Well, you'll be able to cash flow community college at that point when you don't have any payments and you got an extra 1,000 bucks a month laying around. And so I want to encourage you that you'll be able to cash flow this. I think you're a guy who has overcome a lot at the young age of 28. And if you can get sober for three years, you can get out of debt.

You can do anything.

I believe in you, man. You've already done some of the hardest work possible. And so you know the discipline. You know your boundaries. You know the guardrails. So now it's just making a budget and sticking to it and going, "All right, 1,000 bucks a month is going to go towards those debts come hell or high water because I have a lot of life ahead of me. I want to be a husband. I want to be a dad. I want to improve my career." And all those things will be possible, but it's one day at a time.

And I just want to encourage you, Danny.

One day at a time is hard.

I want to encourage you. You called us and told us a little bit about your past, and thanks for trusting us with that. But listening to you talk, all I heard was a guy who's really motivated to do hard work, and I only heard a guy who's going to make it happen. I'm not caught up in your past. I only see what you're about to accomplish. And when you said you wanted to have a wife and a family, I just thought to myself, "Wow, this guy's going to be a great dad."

And you're not scared of work. That's one of the key indicators that tells me you're going to become debt-free. You're not making excuses.

No, not at all. Not at all. I just push myself too hard sometimes.

So give yourself grace. You've been through a lot. You're only 28. I didn't have my first kid till I was 34.

Yeah, you got time.

And so you are ahead of life already. The fact that you've got this, you've already sort of had your failures and mistakes. Now we can clean it up. I mean, by the age of 30, you're going to be debt-free with an emergency fund. Think about that.

Gosh. That's so good to say it like that, George.

Think about how many people would have loved to be debt-free with an emergency fund by the age of 30.

No way. Yeah. I mean, when you say it like that, it's so true. I mean, when I think about I was 35. I was 36 when I had 35 when I had my first baby, and I was debt. I didn't get debt-free until age 34.

And so in the middle of all that, you were getting married, having kids, still working the plan. So it is possible. We always tell people, "Hey, you don't need to wait until you're completely debt-free and have your life together financially to get married or have kids." But you do have to be aligned with that person, that person you're going to do a life with forever.

That's right.

On, "Here's the game plan. Here's what I'm up against. Are you in?"

For sure.

"Are you with me?" And so if you've got a good lady by your side, hang on to her, man. That's fantastic. And I would love for you to call back and tell us, "I'm debt-free. I proposed." And then another call, "There's a baby on the way. I'm investing." Man, that's the kind of life change that we exist to see happen.

Yes. Keep us posted. Yeah. Keep us posted. I want to see that day because I'll go Hulk Hogan style if he ends up on this debt-free stage.

And, Danny, you inspired a lot of other people out there who probably also felt like it was too late for them. "I've made too many mistakes. Everyone's ahead of me." Who's everyone? I don't like that. Everyone's broke. You're different, man. You're going to be debt-free sooner rather than later, and you're going to be a great dad and a great husband. And we're praying for that sobriety journey to continue on strong.

Welcome back to the Ramsey Show in the Fair Winds Credit Union studio. I'm George Camel here with Jade Warshaw, taking your calls at 888-825-5225. Chris is in Boston up next. What's going on, Chris?

Hey, how you doing?

Doing great.

I'm just giving you a call. So this year, my wife and I are going to pay off our student loans, which we're really excited about.

Awesome.

And we don't have any credit card debt, which is great. We're in a good situation. We do have two mortgages. We have one house that we're currently renting out, and that's been going great. It's the first year doing that. And we are coming up on our first year of our new house, which we did a 51 ARM at 5.5%, which was the best rate.

Wow.

It was the best rate at the time. I think the best rate I can get is 6.5. And I thought, one, it's the best rate, and within this next five years, I think I can start keep making more money. But obviously, right now, with the economy, I'm a little nervous. I still have four more years. But yeah, I'm not sure if I might have made the wrong decision.

I think that you may have made the wrong decision with that ARM because it can go up, and there's an unknown that's always associated with it that I think would keep me up at night if I were you in your shoes. So there's the two properties. I'm just curious. You mentioned, I think I heard you say, no student loan debt. Is there any debt of any kind that you guys have besides the mortgages?

Other than the student loan debt, we do have one car payment.

Okay. And how much is that?

Right now, it's 373 a month.

And what's the total amount of the debt of that car?

It is a lease, so that will be done in March.

Okay, good. And then the student loans, how much?

Just about 30,000.

30K. Okay. And can you just tell me a little about the rental property? What do you guys owe on it, and what's it worth if you were to sell it?

Yeah. So the principal balance is 224 on the rental property. I think we could probably get 390 to 400, I believe. We are renting it out right now. The mortgage per month is 1,480 a month, and we are getting 2,800 a month for the rental.

So after all expenses, you're clearing a little over 1,000 bucks, probably?

Yeah.

Okay. And what's your current household income every month aside from that?

Every month, we're probably around 12,000 collectively a month.

Okay. Solid. Okay. So you're going to get rid of the student loans ASAP. And then when the lease is up in March, what's your game plan?

Well, we need a bigger car. So we have twins, and they're both under two. And we're getting maxed out of the vehicle that we have right now.

So are you going to buy a cash car? What's the financial game plan?

Yeah.

When you hand in that car, you need a different one.

Yeah. We're going to need a different one. We're probably going to have to go up in payment. I'm trying to stay around 450 or 500 a month for that car.

So you're still invested in making payments every month. I thought at this point, you'd be looking for a way to get out of that lifestyle and kind of end that for good and have some peace, especially with twins, no?

No. No. Definitely. I think the car is just obviously, we just need a bigger car, and especially if we want to keep growing our family too.

So can I challenge that mindset? I mean, I agree with you. You have two kids. You want to make sure both car seats fit in the back. That's a real logistical thing. So whether it's a van, whether it's something with a nice fourth row where you got one on either side, I get it. But to George's point, he said, "What's the financial game plan?" And you keep saying, "Well, we need a car. We need a car." What we're looking at is, "What's the plan that we can make to get you the car and not go up in payments and not have a payment at all?" So let's open up our minds to that idea because, I mean, it means nothing to me whether or not you have payments.

Definitely. Well, yeah. So with the car, maybe obviously, I don't want to put more money down. Maybe my plan is to get a used car and try to get low mileages and.

I love that.

Low mileage and get a good, reliable car. I don't care about the flash or anything like that. It's more of just being able to fit my family in and.

So my challenge to you is, can you do that with cash?

Yeah. What if we said what if we worked backwards and reverse engineered it and said, "Okay, we got $12,000 of income," and I'm just making this up. "You got $12,000 of income, and after our bills are paid every month, we've kind of got $3,000 to play around with." If we were able to save up between now and what did you say? May or March? I can't remember.

March.

So we got five months to save 3,000. Okay. Is there something we could buy for 15,000 and work our way back like that? You see what I'm saying?

Yeah. Definitely. No. Yeah. That definitely makes sense. Like I said, I just want a reliable car. I'm not really a car person. So obviously, Toyotas are expensive, but I know they're going to last. For example, I have a Toyota Corolla right now. I have 150,000 miles on it. It's been paid off for four years.

I love that. I want you focused on the financial side of this. I want you just as focused on the financial as you are on what the car is, how many miles is, is it good for my family? All that matters. But just as equally, how you buy that car matters because if you go into debt for it, you're going to be calling us back in March going, "Oh my gosh, I think I made another mistake. I bought another car on payments." So let's do that plan. How much margin do you have left after you've paid bills and done all the expenses?

Yeah. We're usually around probably we save about 1,500 probably a month.

So you spend over $10,000 just to cover the basic bills and minimum debt payments?

Yes.

Why?

That's a really good question.

I mean, you could have legitimate expenses. I'm not trying to get on you. I'm just wondering, is there more margin here?

No. Of course.

Because for a guy who makes this much money, it's crazy that you have this little to show for it at the end of the month. You know what I mean? To attack your other goals.

Because what that means is if we got rid of this rental, you'd only have $500 of margin in an $11,000 take-home?

Yeah. So I mean, like I said, our student loans is about 500 a month at the moment, but the plan is to have that paid off this year.

What's your mortgage?

My mortgage is 2,951 a month, but that's not including taxes and insurance.

Oh, so it's probably closer to 4 grand a month.

Yeah, probably.

It's on the high side.

I have a crazy thought, Chris. We got 30 seconds. So let me just lay it out for you. If I was truly in your shoes, I would sell this rental. You'll walk away with 150K. You'll knock out the student loans instantly, leaving with 120K. You can set aside an emergency fund, buy yourself a nice used van, apply the extra toward the principal, and refinance into a 15-year mortgage. Boom. You just solved all of your life's problems. Now you lost your 1,000 bucks. What you gained is a whole bunch more margin back. And so I would highly consider getting rid of that rental. It's not that it's not cash flowing.

Pam is in West Palm Beach up next. Pam, what's going on?

Well, thanks for taking my call. I'm calling regarding taking Social Security. My husband retired three years ago and will be 62 in February. Should he take Social Security at 62 or wait until he's 67?

Ooh, the age-old question. How old are you?

I'm 67.

Okay. You're 67.

I took mine at 62, yes.

So you took yours early. Who is the higher income earner out of the two of you?

He is. He was.

Okay. This helps me. And how is your health and family longevity for both of you?

Pretty good. I have had open-heart surgery, but I think I'm pretty good now.

Okay. And do you guys need the money?

No, we don't. He has a pension, and then my Social Security total is 100,000 for his pension and my Social Security.

And so you guys are living comfortably as-is?

Yeah. We have 1.9 million in investments, a paid-for house. So I think our net worth is.

Let's go, Pam. That's great.

2.4. And I want to tell you, I have never paid interest on a credit card in my life. I followed the Baby Steps, and I didn't know about Baby Steps. I was. Baby Steps before Baby Steps was something.

Listen. Grandma called it common sense.

Yeah. There you go.

Way to go. Way to go, Miss Pam.

So based on the factors you told me, and again, this is like napkin math from a random guy. You may want to double-check all this, but I would consider waiting for him to be 67 or even 70 if you think he's going to live a good long life. And here's why. If he were to pass, you could then take his bigger check.

Right.

And so it's basically you're guaranteeing your income for the foreseeable future. And I like that plan if you don't need the money.

Right. If he passes before me, I do get 66% of his pension.

Oh, nice. So that's another bonus on top of that. I hope he doesn't, but I mean, that at least gives you some peace about the whole situation. So how much would he get?

I was looking at 31,000. And I was just thinking, "Well, five years, he's missing out on $150,000."

Sure. And you've done the math on the break-even on that?

Yep. Yep. Yes, I have.

So at 67, how long would it then take for him to break even on this deal into his 70s?

I did it for 80.

It will take him till 80 years old.

Yeah. I did it for no. The break-even is at 80 years old.

Yes. So if he lives beyond 80, it would be a better deal to wait. That's what we're saying.

Yes. Yes.

So that's the game you're sort of playing here is, do we think with his health and current healthcare and technology and all of that, that he could live into his 80s? I think if you guys made it into your 60s, there's a good chance you could make it into your 70s and 80s.

Yes. I think easily.

And because you don't need the money, for that, I would pause and also wait. Now, the good news is there's no rush, but I would consider all those factors to go, "Okay. I don't need the money now. If I did take it, what would we even do with it?" That's another question. And then if we do wait, here's the upside on the other side of, "I can guarantee this income for the rest of my life if something were to happen to him."

Right. So if we wanted extra money to take vacations because we do vacation a lot, would I take it out of my I have 250 in a Roth.

Okay. What are your other retirement vehicles?

Well, he's got a 457 with 700,000, and he's got a 401(k) with 700,000, and my total is 500,000, making it 1.9. So I do have 250 in the Roth. So if we wanted extra money to do something, just take it out of the Roth?

I would not start there. I like saving the Roth for last. I would rather you use so the sort of buckets that I look at personally. And again, you can talk to a financial planner if you haven't already. It's a good thing to sit down, lay out all the numbers. They can look at your Social Security statements for both of you and lay out a great game plan. But based on what you told me, I would be looking at cash savings first, then any taxable accounts, then any traditional accounts where you're going to pay taxes on taking the money out. Then I would save the Roth for last because that is sweet, sweet tax-free money that's just compounding right now.

Okay.

But the truth is a lot of people, Pam, end up not taking enough out of retirement. People who are in good shape, I'm talking about. People like you have 2 million bucks and are going, "I don't know if we're going to actually use all of this." And so I would be looking at what it's actually invested in and making sure that it's still invested pretty aggressively because you guys could live another 30 years. And so you want to make sure that it's not just barely beating inflation sitting in a bunch of bonds. So do you guys currently work with a financial advisor?

Well, I do with mine. And she did have me in bonds forever. And so I finally got her to switch to half in bonds and half in mutual funds.

Do you guys have cash savings?

Yeah, like 35.

Okay. And you have some traditional accounts as well?

Traditional what?

Is the 401(k) traditional?

Yeah. Yeah. It's into an IRA now. Yes. Yes. I have 250 in a traditional. And I guess his 401(k) is probably really an IRA now too.

Sure. Well, I just don't want to see you guys getting just super poor returns because half your money's in bonds for the next 20 years, let's say. Because the market, it's up 12, 13 percent year to date. And if half of your money's sitting in bonds, you're not going to see those returns.

Right. His isn't. His 1.4 is not. He manages that himself, and he's pretty aggressive.

Okay. Well, in that case, that's where I would sit with the planner and go, "How much can we realistically spend without depleting our nest egg too early based on all of these factors?" And that's why I was kind of laying out things like healthcare, longevity, family history, other sources of income. Those are all the factors you want to plan out before deciding to take Social Security or withdrawing more from retirement. But you guys have done a great job. This is a good place to be. Debt-free, paid-for home, you're flexible on your spending. I would go take that vacation, and I would definitely take it out of an account that is not growing tax-free like that Roth one first so that you might cash out some of the traditional 401(k), for example, to make that happen.

And that's what you want. You want to be in a position where you saved up a nest egg, you don't need to take it. And gosh, at 62, what a wonderful thing to say, "I don't need that money. I can take it and invest it and let it grow for me." That'd be ideal.

Exactly. So you've got a lot of options here. All right. Levi's in Huntsville, Alabama up next. What's going on, Levi?

Hey, thank y'all for taking my call.

Sure. What's your question?

So right now, me and my wife are looking at potentially building a house in the next couple of years, and we're just trying to figure out if we're on the right track as far as paying the debt off and then saving up for the down payment.

Okay. How much debt do you have?

We currently have a mobile home. It's about 58,000. And then we have her car and my truck. It's about 24,000.

Okay. What do you guys make a year?

Take-home each month is roughly 7,800.

Oh, wow. Good. Great income. Okay. So what is the mobile home worth?

If I tried selling it right now, I might could get 45,000 out of it.

Ouch.

Do you have any money saved anywhere?

I have 10,000 in a 401(k) and then 10,000 in checking account.

I love that you have 10,000 in that checking account because if you needed to close the gap and make the sale of that mobile home and you guys rent something in the meantime, you could.

Right.

My fear is that mobile home keeps going down in value and the gap gets bigger and bigger, and you're still going to have to come to closing with that difference.

Right.

So I'm wondering, that's why I was wondering if you could sell it now and just go rent for a year and then knock out these car loans real fast, making 7,800 bucks, then start the emergency fund, three to six months of expenses, then start the down payment. That might be a couple of years out from buying a home. How soon were you wanting to do this?

About three to four years.

Okay.

And I think that's perfect. It gives you some time. It doesn't feel like you're moving and then you're moving again right back to back. And to George's point, the mobile home won't continue to drop in value because you're going to offload it right away. And then how quickly with that margin back, well, I guess you may not get much margin back because you're going to turn around and rent, but how quickly with the margin that you have now, could you pay off the car and the truck for 24,000?

I know kind of the plan I've been doing that. I had a camper. We just sold it. And then I've been putting at my job, I get per diem, which is untaxed.

I mean, if you find 2,000 bucks a month that you can put towards this, I mean, you're for sure going to knock it out in the next year. And if you have more than that, well, then you go even faster.

Welcome back to the Ramsey Show. I'm George Campbell here with Jade Warshaw taking your calls at 888-825-5225. Listen, if you're sick and tired of working super hard and have nothing to show for it, that is normal, unfortunately. And normal is broke. You don't have to live that way. We've got a budgeting app called Every Dollar that helps you find extra money every month and helps you build a personalized plan to beat debt and build wealth. So go check it out. Start Every Dollar for free in the App Store or Google Play. Micah is in Kansas City up next.

Hey, yeah. So me and my wife, we were trying to figure out we've paid everything off but our mortgage. And this past year, we made the decision to have her stay at home. We have four kids. Our youngest one had some health issues. Two of them are under the age of five. And so now we're down to one income. I'm trying to figure out how, though, I can still kind of get across the finish line and pay this mortgage off. My goal has always been to pay it off before I turn 40. I'm 34 right now.

I have a question about the intensity of this and why it feels so urgent to you. Because I mean, you know around here, we kind of teach that baby steps one through three. Those are the ones that we're super intense on. And then we can ease off the pedal for baby step six and kind of get on a rhythm of saying, "We're going to put this much, and here's how often we're going to do it." But it doesn't have to feel so balls to the wall like the other steps feel, right? So what in your life is causing you to want to do this at such an intense pace?

I think it's more of just the way that we are wired. We've wanted to have complete debt-free for years. And we have been free of everything else, and this is kind of the one thing standing in our way. So it's just us wanting to push to get across it. So it's not.

To the extent of her not staying home with the kids?

Well, part of that came with it's a one-and-a-half-year-old who had a lot of health issues and then a four-year-old. And so we made the decision because it was that or paying for daycare. And the cost of daycare versus what she was making wasn't a whole lot of a difference. So we felt like it was better for at least the time being to have her stay home.

No, and I agree with you. But you had mentioned, "How can we pay off this mortgage without her going back to work as though that were maybe on the table in order to get this done in the next six years?"

Right.

So what do the numbers tell us? Lay it out for us. What's your current mortgage balance?

So I currently owe 172,000 on the house. We've paid off roughly close to 100,000 on it.

Fantastic.

It looks about 280.

What's the principal and interest every month?

I don't know the breakdown. We pay roughly about 7,000 or sorry, 1,500 a month on it is the monthly mortgage.

And what's the interest rate?

6.7%.

Okay. So based on your math, how quickly will you pay it off if you are making any extra payments you can?

With the extra income and everything you have, based off of what we've looked at, I'm looking closer to versus the six years, more like 10 years.

Okay. How much extra are we talking per month that you could dedicate?

So we pull in roughly every month total about 7,000 extra after groceries and everything else. Usually, roughly about 3,000 left over every month.

Wow. But you're saying you wouldn't put all of that on the mortgage. Are you still doing college funding and living life, saving up for vacations?

A little here and there, but we try to shove as much towards everything that we can, putting some back, continuing to adding into our savings and towards kids and everything else. But that's what's left over. So even if I split that in half, 1,500 or 2,000 towards the house, so an additional payment if I could, I don't know that that's feasible every month because things happen.

Yeah. And you want to enjoy a little of life too at this phase.

Right. Yeah. Because I'm seeing I just did the 2,000 extra a month, and I'm using our mortgage payoff calculator. You can see here if you're watching on YouTube or Spotify, your payoff date currently would be August of 2031, which is you'd be there. You're 34 now. You said you want to pay it off in the next six years. And that's more like four and a half years.

That would be if I'm super aggressive.

You said 2,000 a month, which felt reasonable, right?

Yes. As long as nothing else comes up. We have things that maybe occur or to your point of living life still because we don't owe anything else still with four kids trying to do still family vacations.

And that's where I wouldn't let your dollars compete. I would just plan for it ahead of time. You have your emergency fund for emergencies, right? You have that three to six months of expenses.

Right.

Do you have sinking funds in your budget for things like vacations, car upgrades, insurance premiums?

Yes. Yeah. We have everything to cover us in those situations. And we don't owe anything on any of our vehicles, and we don't owe anything on anything else. I mean, I've never even owned a credit card, so.

You're doing fantastic. I would set a goal that challenges you a little bit and then also give yourself grace that you've got a lot going on. You've got four little kids. There's some health issues going on. And the other side of this is your income will likely go up over time from 34 to 40, right?

Yes.

And so at that point, you can throw even extra at it. And so it's going to happen faster than it actually is represented on paper. People who are like you and me, Micah, we tend to beat the goal faster than we thought in the end, especially if you and your wife are aligned that this is a priority for us. And if life happens, take your foot off the gas for a season. We always say you move from intensity to intentionality once you hit baby steps four, five, and six, and even seven. And so it's okay to say, "Hey, we wanted to put extra this month, but life happened."

Yeah. Yeah. Yeah, you're right. Yeah.

Because the calculator gave me some confidence, and your budget's going to give you the actual facts on whether that can happen. So that's what I always do is what must be true. Okay, I've got to put 2,000 extra a month for this to happen by August of 2031.

Then work it backwards.

That's it. And then stay disciplined on it.

And then the thing to remember is just kind of keeping it in perspective is what's normal is a 30-year mortgage that you never really pay off. You just keep borrowing against it. You take out HELOC. You do this. You do that. The fact that if you take our advice and you take a 15-year fixed rate, you've already cut that thing in half. And if you just practice our principles and say, "All right, I'm going to do the 15-year fixed rate. I'm never going to borrow against it," to know that even in 15 years, you'd be out of a payment.

Just making that minimum payment.

Just that is such a huge leap forward for mankind. And then if you get even more aggressive and go, "You know what? I'm going to take this baby step six thing seriously, and I'm just going to make a 13th mortgage payment a year," right? That's taking it to the next level. So just to remember, there's levels to this and stages to it. And then you could be like the guy that just called in, be like Micah and get super intense and go, "I want to do this in four years." So I just think it's good to keep that in perspective. I think what we teach around here, if you just follow it at the most base level, you're going to do so well.

It's true. And a lot of times, people who follow the Ramsey plan, they're just very goal-oriented people.

Yes. They want the next thing.

And what's funny is you pay off the mortgage. It is a very exciting milestone. Don't get me wrong. But now you're like, "Okay, we got an extra 1,000 bucks, extra 1,500 bucks. What next? Great. What now? Well, I guess we could invest that. I guess we could take a slightly better vacation." So it definitely changes things. It gives you way more peace, but it's also not your ticket to freedom. I'm retiring tomorrow. There's still a lot of work to be done. There's still bills to be paid. The kids are still going to be kids. The dogs are going to dog. And so.

Income is still your income.

It's a good reminder. The term financial freedom. You're never really free from having any financial obligation, but you can create peace in your life, which is why I like the word financial peace a lot more.

I do too.

But let's always aim for independence, freedom, autonomy, options.

And it's also good to look back on all the hours you worked and all the hard work you put in and say, "You know what? I can say with full certainty, I was a financially responsible adult with my money, and that itself feels good."

Right. And the bank doesn't own my house anymore. I do. And if you want to use that mortgage payoff calculator, we'll drop a link in the description of this episode for you to crunch your own numbers.

Sarah is in Lincoln, Nebraska, up next. Sarah, welcome to The Ramsey Show.

Hi. Thanks for taking my call, Jade and George. I'm a longtime listener. I'm so excited to be on. Just a little nervous.

Oh, we got you. We're happy to talk to you.

Thanks. First, I have a question about my marriage and my husband. And I will say I already ordered Dr. Delaunay's marriage kit today.

Awesome.

I look forward to that. Just a tidback story. My husband and I have been married for 10 years. We did financial peace university when we were newly wedded, but I'm definitely the Excel sheet planner map out person in our relationship. My specific question today is I need some help on how to communicate with my husband about what is a money issue, but really the heart of the matter involves some broken trust.

So what broke the trust? What was the situation?

Yeah. So we had some available funds. We basically live on our salaries. And my work is two times a year, I get large distributions from my business. And so we live on the biscuits and the gravy is what helps us meet our goals. We live below our salary means. And so we had some extra cash. And my husband has a keen eye for buying equipment, and he can turn around and make a profit on it.

Is it sentimental to him? Why has he hung onto it?

Right. It's a piece of equipment kind of in his industry. So I said, "Does the business want to buy it? Why don't you want to sell it?" For the longest time, it came from California. So we had to do some work to it to take off some special emissions thing. So we put 5,000 into it in June or July. I mean, once a month, I'd ask, "What's going on? Do we need to do something?"

And what does he say?

So in June or July, he got that fixed, and it was finally ready for sale. And then nothing. I guess there may have been a buyer, but then the buyer didn't get to him. And I said, "Well, then just list it."

But if you asked him today and said, "Hey, I mean, it's pretty soon we're going to look up and it's January. What's the story on this truck?" What would he say today?

So just a couple of weeks ago, he said, "Well, I'll just have the business buy it. I'll just go get a loan for it." I said, "That would be great. I'd just like to move on. Just make it." And I asked him, I said, "Have you gone to the bank yet?" And no. And so I fear I'm on this three more months of not going to the bank. And.

What do you think is behind this? I mean, you know him better than clearly George and I. What do you think is behind all this? Because for you, I'm guessing you want the 45,000 back to, I don't know, throw whatever your next goal is. So you've kind of got some skin in the game on your end. What do you think is behind him not selling this truck? Do you think from the very beginning he never planned to sell it? I mean, what's your gut telling you?

I did ask him. I said, "Is there something I'm missing that you need to tell me? Is there a problem with a truck?" I mean, I asked him that very openly and nothing. I think it's literally a lack of motivation. And I think that's what's really.

So could you just go list it and sell it?

Yeah. Yeah. I guess I could. Yes.

What's stopping you?

Yeah. What if you said, "I'll take care of it"? It seems like you got a lot going on, and I want to get it sold, and I don't want to keep nagging you about it. I'm just going to take this over and get it done that way. Right now, it's causing too much drama, and I don't think it needs to be all that. I'll handle it. What about that?

Yeah. I tried that all except for I'd do it by myself. I said, "Hey, I'll write the listing. Find me the title. I'll do it. You're busy." And no, I'll take care of it. It's like this brick wall. And yeah. I mean, I could list it, but it is a specialized enough piece of equipment that I mean, other than the title.

And he has the knowledge about it. Is that it? Is that he kind of he's the expert on this equipment?

Yeah.

Okay. So how's that feeding into is that part of a bigger story, or is that the story? How do we solve this thing?

How do we solve this thing? I have a big amount coming to me at the end of the year because of my business. I have a good idea of what it is.

How much?

And I think he's just at least six figures. That will be our gravy.

Do you guys have combined finances?

Yes. Oh, all of that. 100%. I follow.

So there's no other areas in your marriage or finances where this has been an issue. It's just about this truck?

Right. And I feel like it was a big leap of faith to invest that much of our family money into something like this. And he makes about 50,000 a year. So this was a personal him and I investment and something that's what he bring home. So it seems very urgent.

What's the 45 need to go towards? Explain the urgency on your side, which is like, "I need this 45 back in our budget because we have to do XYZ." What's that thing that you feel the family needs the money for?

Yeah. Praise God, we're on baby set five. But we did have a financial goal of we set up 529s for our boys, and I'd love to put 19 in each of those to make this annual tax year. And then I can do 19 again next year. And basically, I'm just going to let my our kids are under 10.

Does he know that? Does he know that that's the goal?

Oh, yeah.

Okay.

Yes.

I would just do this thing together this weekend. Say, "Hey, I know it's been slow going on this. We're just going to do this thing together and knock it out. One hour. We're going to get together, list it, take the pictures, whatever needs to be done, just get it done." Because at that point, it's out there, and now there's going to be people who are inquiring, and it'll eventually sell at that point, right? How long do you think it'll take?

I mean, he could get a loan next week from the business for it to pay us and make it.

But why is his business going into debt to buy this to artificially get it off the books? That's the part I'm confused about.

I know.

It doesn't seem like a good deal because that business loan is tied to his name.

Yeah. If you want to ask Dr. John Delaunay, I feel like I just don't want to emasculate him when I'm like, "Let me take this from you." Let's take a boundary.

Let's take a page out of Dr. John's book, right? Because the truth is you can't make him do anything. And that's the frustrating part. You want him to do an action. You can't make him do the action. You can nag and nag and nag. Clearly, that hasn't worked. So you're going to have to come up with a strategy of either finding a way to communicate what's really going on or figuring out who you're going to be in the midst of this, I think. So Dr. John might say, walk up to him and say something like, "The story I'm telling myself is that you're not aligned with our goals anymore.

But yes, I get it.

My point is eggshells is not getting you anywhere. So maybe you say, "Hey, if you don't get this done, I'm going to do it. And I don't think you want me to do that, but stand on business, I will do it."

Welcome back to The Ramsey Show in the Fairways Credit Union studio. I'm George Campbell. My co-host this hour is Jade Warshaw, and we're taking your calls about life and money at this number, 888-825-5225. Join the conversation. Scott is in St. Louis up next. Scott, welcome to the show.

Thank you. Thank you for taking my call.

You're so welcome.

George and Jade, I'm really excited to talk to you guys. I listen to you all the time.

I feel the excitement.

I love the energy. Yeah. I'm ready to snap into a Slim Jim.

Thanks a lot. So okay, I've been listening a couple of months. I accidentally found Dave Ramsey on YouTube. I don't remember the question I was putting in. But anyway, I accidentally found Dave, and I'll never forget the day. My life has completely changed. So I started doing the debt snowball, started attacking all the little debts. I paid off my phone. I paid off the chiropractor. I paid off the diamond ring for my fiance.

Way to go.

Okay. Thank you. Thank you, Jade. And it gets better. So I have a rental property in Las Vegas, and I have hopefully 310,000 equity in it. So from listening to Dave, I've decided I want to sell that rental because it's always going raco on me anyway. And I'm going to pay off my house and my Jeep.

Wow. Fantastic.

So that'll be good. I'm just so excited. And I got to say, paying off them little debts, that was the funnest thing I've ever did financially. I mean, I was making little payments. It was really fun paying them off.

Yeah. That debt snowball is rewarding.

It really was fun. But okay, here's where I need some help. Okay. So I got the sale of the Vegas house right around the horizon in 2027. And December is my best month of the year. It's usually 20,000. I'm a garbage man. I pick up a rich town, so I get a lot of tips. Thank God.

Nice. That's awesome.

Yeah. Thankful to God for that. But yeah. So the 20,000, okay? This is where I need to reach out to you guys. And because I got that on the horizon, I have not fully stopped investing. I brought my 401(k) down to 6% just to get that match while I was doing the snowball because I do listen to Suze Orman a little bit.

I mean, if you're going to sell this rental right away, the months that you pause is going to be negligible. Why would you wait until 20? How late are you waiting to sell this house? I mean, are you going to list it in January, or what's the?

I got a tenant in there. I got a tenant in the house. And the lease is up four months from today. It's up March 3rd.

Okay. Great. So you'll sell it in the spring. It's a great time to sell a house. And you're saying in the meantime, why pause retirement if you're going to take that money and put it on the debt? Is that your question?

Yeah. I'm really not feeling like I want to just like I did with the debt snowball with the little ones. The Jeep.

What's left on the Jeep?

I just refinanced it. What's that, George?

What's left on the balance on the Jeep?

32.

Okay. And what do you make a year?

I make 95.

Fantastic. And you're single still? Engaged?

Engaged. And I got a wedding on the horizon.

Wonderful.

And that's another thing. Yeah. Thanks a lot.

Maybe set aside some of that equity money for some wedding and honeymoon.

Yes. And we can't make the cruise this time, but eventually, if you don't forget me, I'll look for you.

Hopefully, we'll do another one. And I'll meet you on there. You'll bring some fun energy.

All right, George.

So you got 32K. What's left in savings right now? How much do you have? Do you just have 1,000 bucks or more?

I have the 1,000. I just got my Fairwinds card in the mail.

Okay. So 1,000.

A $1,000 saved, but you're also going to get another 20,000 in December. And how much margin do you have left over from the month of November?

I got about 5,000 in saving right now.

5,000.

That's for my mortgage. I don't do a budget. I really need to tighten that up. But I just got my file.

Yeah, you do. Because here's the thing. Here's what I think. Hold on for a second, because here's what I think. I think that if you pulled things tight and said for November, because November is not done yet. We're just getting started. If I pulled my margin for November, I pulled my margin from December because I know I'm making bank at least 20,000. Like you said, you're a single guy for now, getting married soon. And then in January, took my margin there. I think you could have that Jeep paid off and out of the picture.

Before the tenant's gone.

Exactly. And that way, when you do sell the house.

30,000?

I mean, you named off 25 without even blinking.

Okay. Okay. The 20 before taxes.

But hear me out. Hear me out. Hear me out. Even if you're not right on the nose, my point is you're going to pay off the majority of that Jeep. And the truth is, should you pause your investing? Yes, you should. The amount of time is going to be very negligible for the 6%. That's the truth. And I would suggest that you do it, but if you don't, nothing's going to catch on fire. You should do it, but I think that you're probably not. And my point is you're going to pay off that Jeep really, really fast either way because you're going to either sell the equity or you're going to use your cash flow to do it.

But I wouldn't just pause any extra payments until this thing is paid off because who knows when that's going to be? And who knows what's going to come from it? So instead, I would just keep on with the debt snowball, attacking it. I would encourage you to pause investing because it's going to light a fire under you to get back to investing, which means the car is getting paid off faster. You're going to stick to that budget when investing is on the line. And so I think all of these are married together. The Ramsey plan is a package deal, and it's not an à la carte buffet. And so when you go all in, the plan works even better. And you know we've shown you that the debt snowball works, that this plan really works when you work it.

That is a great way.

Well, let's walk through this because a lot of people get it twisted. They're doing it out of order. So baby step one, we've talked about this, $1,000, no more, and a starter emergency fund. It is not meant to be enough to cover all emergencies. It is meant to be a buffer to get you through baby step two. And if an emergency happens, you can pause baby step two, cover the emergency, and then hit play on baby step two. So baby step two, knock out all the consumer debt, everything but the mortgage, using the debt snowball that Scott was talking about, that smallest to largest balance. Ignore the interest rates.

That's great.

And then you get to baby step seven, which is the mountaintop. You get to live and give like no one else and just continue building wealth and living life on your terms. And for most people, that first three baby steps happens in a couple of years. One month for baby step one, 18 to 24 months on average for baby step two, 6 to 12 months for baby step three. Think about that, where you might be two to three years from now if you just trust us. I feel like Aladdin on the balcony. Do you trust me? Just trust me, bro. This plan works. Listen, if you go all in on the plan and it doesn't work, come talk to me because I think you did it wrong.

All right. Today's question comes from Grace in Massachusetts. She says, "We've been meeting with an insurance agent, and he recommends rolling our IRA investments over to a whole life policy." He says, "Doing this and then borrowing from the insurance to purchase multiple rental properties is the best way to generate income for our retirement years. Does this sound like a good idea?"

For him.

I don't know how else to say this, Grace, but you need to run for your life. You in danger, girl. This is terrible. This is horrible advice.

Yikes.

And I mean, obviously, it's from an insurance agent. It's not from.

Don't take investing advice from your insurance agent.

Yeah. This is terrible.

Oh, boy. So here's what he's looking for, Grace. Let me just cut to the chase. This guy's looking for a big, fat commission. And that's what he's going to get from that big, fat whole life policy that you help him fund.

You got to be ashamed of yourself for this.

Okay. This idea that you can this is the big thing on social media, Jade, is you can borrow from your whole life policy tax-free. Yeah. All debt is tax-free. You nimwit. What is going on here? And they're like, "Well, you just pay yourself interest." Okay. Life hack. You get to pay yourself back interest. You can do that without taking on debt. Merry Christmas.

And then the purchase multiple rental properties part of it is.

So highly leverage a bunch of rental properties to hopefully get some cash flow from your tenants so that you have retirement income. Or just keep the IRAs invested.

Yeah. What about that? And keep earning your 10, 12% that you've been earning, and you just build wealth.

Please fire your insurance agent. And if you need a good one, you can jump on ramseysolutions.com and whatever insurance you're looking for. Look for that thing specifically. Don't look for investing advice through an insurance policy. Never mix the two. It's always a scam. It's always good for the person selling you that insurance and bad for the person buying it.

Yes. Just remember that insurance doesn't involve investing. Period.

They start pitching you on loan.

That's all you need to remember.

There's a cash value portion that can build over time. Just run. Just run.

That guy messed around and made me angry this segment.

I hope Grace hears this. That's the scary part.

I know.

But all right.

Everyone, tell Grace.

Tell if you're Grace. If your name is Grace, you live in Massachusetts.

This is for you.

Reach out. All right. Brie is in Atlanta, Georgia, up next. What's going on, Brie?

Hey. Oh my gosh, y'all. This is so cool. I love you guys.

I think it's cool too. Thank you.

So I just have a question. I have four boys as 6 to 2 months old, and we are looking at kind of like our 6-year-old is starting to want to help around the house and kind of in school, learning about money and different things. And we're kind of trying to find the line between I know Davis talked about commissions before. I've heard him say that. And the line between what we pay our child for and what is normal household chores.

Yeah. I love that question. I mean, I have a 6-year-old. My kids are 6 and 8. And we started them on earning an allowance at about 5 years old. That was kind of when they were wanting things that we did not want to purchase them and kind of started thinking they need to have their own money. And now's a good time. So I agree with you. I do think that there are chores that they need to do. The way I say it in my family is you're part of a society. And when you're part of a society, there's certain things that you just have to do. That's your responsibility. You don't get paid to do it.

Brushing your teeth, not getting paid for that.

But there are things that you can get paid for. And so for my kids, my 6-year-old, she has to unload the silverware parts of the dishwasher. And my 8-year-old son has to unload the plates and everything like that of the dishwasher. My 6-year-old, we have a shoe closet that we put all our shoes in when we walk in the house. She has to make sure that's straight. She has to sweep it out, make sure it's clean, make sure everything's organized. That's part of some of her tasks that she has to do. Another task she has is after my husband has cleaned the dishes, she has to sweep up the floor and make sure the floor is clean, right?

It's the max.

Yeah. It's the max. So be thinking like that. And the other thing I could probably go on and on about this, but the other thing that's really a big thing in our house is the day that they get paid. So they get paid once a month, but they are not allowed to spend their money the day they get paid. They have to be telling us what you're thinking about buying. And then the day they get paid, they don't get to they can research it, but they don't get to buy it that day. They have to wait at least one day before they purchase it and be sure that that's the thing they want to buy.

Is that something that you put in the budget as a line item that you're paying them?

Yeah.

Or we would add that in?

Yeah. I put it in the budget because if they mess around and do all their chores for the month, it can actually we'll feel it. So it's like, okay.

Once you have four kids that can make 20 bucks a week or something, you're like, okay, that's actually a decent amount of money setting aside here.

Yeah. And then sometimes, I'm not going to lie, sometimes I'm like, I hope they don't make it. Because it's a line item on the budget.

More money I get to keep. But do you have things in your mind that would make sense in these categories, Brie, where you go, okay, make in your bed, I'm not paying you for that. But if you go pull the weeds in the flower bed, you go pick up, rake a pile of leaves, I'll pay you for that.

Yeah. And I have them doing chores. They have a little chore thing on the 6-year-old and the 3-year-old do. And I have my 3-year-old do the silverware. But I don't know. I was like, I'm not going to pay you for that. You eat off these you eat this stuff. So you're going to clean it too, right? That's where I really struggle with what do I pay? Because they're not old enough to be doing extra stuff, right? And I'm like, oh, well, your clothes. Well, you wear your clothes. You should put your clothes away, right?

Well, it's certainly not a one-size-fits-all. Parents can suggest things that work for them and work in their house.

And not all 6-year-olds are created equal.

That's true. But I do think that it does create a bit of a delineation because it gives them responsibility over their own things to say, hey, the things that are yours, you don't get paid for that. So if I'm asking you to do anything that has to do with your things, put your books away, put your backpack on the hook, put your laundry in the drawer, that's your stuff. I'm not paying you for that. Clean up your room. But if it has to do with the rest of the society of the home, then yeah, you can get paid for that because that's kind of like being in the real world.

No, that actually makes sense. I didn't really think about it in that way of contributing in the real world.

Yeah. And so it can kind of follow them as they get older, which is like, okay, you're making a contribution to the greater good. That's the type of thing that you get paid for.

And the key is, what is the underlying thing we're trying to teach them? Money comes from work and that you can't just be entitled and expect us to just hand you money for existing. If you want to go buy a toy, you're going to have to go earn it at a certain age. And it's good for them to learn that. It actually gives them a sense of independence. It's good for their growth. So hang on the line, Brie. I'm going to send you Rachel Cruz and Dave Ramsey's book, Smart Money, Smart Kids. It walks through how to handle this based on their age and what's age-appropriate. I think it'll really help you navigate this. But you're doing a great job. Way to go, just handling those four boys.

Hi, Ed. Hi. How are you?

Doing well. What's going on?

Okay. Here's my question. I've been following the Baby Steps and we're a couple around 70 years older. Both retired and we don't have life insurance anymore. We had term insurance that expired. And we don't have any long-term care policies in place. And we're being told that a good solution would be to buy an annuity for about $250,000 to cover the both of us for long-term care needs that would turn into a life insurance policy if the long-term care part isn't used.

How much savings do you have?

What do you recommend? We have about a million dollars in CDs and about 500,000 in an individual IRA.

Okay.

The 1 million in CDs, can you tell us more about why that choice versus investing it in the market?

Because that's the proceeds of the house that we sold when we retired. And my husband is very risk-averse. And so he wanted to keep it safe and not put it in the market. The individual IRA is in the market.

Okay. So his risk-averseness explains the interest in the annuity, I think.

Right. No, actually, the interest in the annuity is mine. He's averse to that too, mostly because he's afraid to invest any of what we have.

Okay. Well, you said we've been told. Who told you? Who was trying to sell you on this annuity?

A good friend, a very close friend who is very highly insured with annuities and does this for a living.

Oh, they sell annuities for a living.

They sell insurance for a living and they're highly invested in annuities.

And they do well.

They're doing very well. Yes.

How do you think they've done so well?

Well, they're doing well in the monies that they're getting from their annuities.

Okay. So they're eating their own product here.

Yeah.

I would imagine they're also doing well because they've sold people annuities and got some sweet commissions for it, right? That might be part of it?

My husband says that, yeah.

Okay. I'm with your husband on this. So I'm not a fan of annuities. They're sold to people. They're sort of fear-mongered of, hey, you don't want to lose money in the market, do you? No, of course not. What about a guaranteed payment? $250,000 is a lot of money to give up to potentially cover some long-term care, to maybe get some death benefits.

It's kind of like that old lottery kind of question. Would you rather have would you rather have a million dollars or would you rather have $1,000 a month forever? And somebody's going to take the $1,000 a month forever. You know what I mean? It's like that mindset that's like, hey, you're guaranteeing me something, but just because it's guaranteed doesn't mean it's better than investing the money. Does that make sense?

Yes. But my question is, if we don't have long-term care insurance and there is a family history in one of our families of dementia, and I'm very concerned about the cost of care.

Absolutely. So there's part of this and I don't know that you're going to do this because, like you said, your husband's very risk-averse, but you're at the point where you can be self-insured because you've got this million dollars. But what concerns me is that it's not in a position to really grow for you guys and become the stability that I'd want for it to be in a CD. But even still, you've got 1.5 million.

So you can cover it. And here's the other part. Why not buy long-term care insurance?

Because I understand that it's very expensive at our age.

Well, 250 grand is expensive for an annuity, don't you think? Paying a couple grand a month, it would take you a long time to get to 250 grand paid into that. So I would look into that.

Well, the difference is that a long-term care policy would be use it or lose it and this would be something that could roll over to become a life insurance policy for our kids.

Well, but your kids don't need it, right? They're not relying on your income.

No. No, they're not.

And that's the only purpose of life insurance is to replace income if something were to happen to you. So they're going to be just fine. They're going to inherit whatever's left over out of your nest egg, right?

Right.

So we don't need to create another account for them over here while giving this guy a bunch of commissions. So it's trying to do a lot of things at once that you can do separately. So if you wanted a life insurance policy, which again, you don't need, so let's just take it off the table. You could go buy life insurance. If you want long-term care, go buy long-term care insurance because right now they're trying to bundle it in a way that sounds super appealing and then you can't lose.

Right.

But you're locking up 250K with very poor returns and high fees. I'd rather you see you invest that 250,000 because I'm doing the math right here. If you guys live another 10 years, which are you both in decent health?

Yes.

Okay. Let's say you lived another 10 years at least and you invested that money, 250 grand, and you just put it all into the stock market for 10 years. If there was an average rate of return of 10%, which is what we've seen over the last 100 years, you would have, ready for it, $676,000 in that account.

Wow.

Which we can agree would cover both of you in a long-term care situation. And more. And so that's personally what I would do. And that way, you're not paying all these fees. The money's flexible. You can invest it. It's on your terms. No one's getting a big commission for it. And I would encourage you and your husband to sit down with a good financial planner, not an insurance agent, to map this all out to go, we can do better than a million dollars in CDs because guess what? If he's risk-averse, there's risk of inflation eating away at your money.

Absolutely.

That's a bigger risk at your age than the money disappearing into the abyss. And if you invest it wisely into index funds and mutual funds, you're diversifying across hundreds of companies. I mean, the market is up 12%, 13% this year already, even in the midst of chaos and uncertainty and headlines. So I don't want you guys to miss out on it.

What were the other funds? The index funds and which other funds?

Mutual funds. They're essentially the same thing. It's just a giant group of stocks. So we're not talking about when your husband says, "I'm scared of the stock market," what he's really thinking of is one single company going way up and way down. So to smooth that out, index funds and mutual funds pool together 90 to 200 or more stocks inside of one fund. And then we even recommend diversifying across four different funds. One that's more aggressive, one that's sort of mildly aggressive, one that's a lot more stable, and then international funds.

Okay. I have one other question, please.

Sure.

Okay. We are living right now, retired, with $4,000 a month coming in from Social Security. And you know how much we have put away. And we spend approximately 100 to 125,000 dollars a year or have been spending about that much. Are we in a position to continue to spend that amount by using just the interest that comes off of these investments and our Social Security?

If it's invested well. So if your investments are fully in the stock market and not 60% in bonds, then it would be much more feasible. Because if you, let's say, you said you have one and a half million.

She has one million in CDs and the 500,000 is invested.

So that's one and a half million right there.

Right. Plus there's another couple hundred thousand dollars that was invested in real estate that we don't know.

So even if you peeled off, let's say, 6% a year out of that 1.5 million, that's 90 grand a year plus your 50 that you're taking from Social Security.

But the key is that money has to be invested.

But it needs to be invested well. The key is that money, what George just said to you, that's barring that that money is invested and earning at least 10%. Where it is now sitting in a CD, where is it? 4 and a half? You're not going to be able to peel off 6. So it needs to be invested well. Go to ramseysolutions.com, click on SmartVestor for more help with that. Medicare is confusing for everyone.

Our scripture of the day, Psalm 145 verses 16 and 17. You open your hand, you satisfy the desire of every living thing. The Lord is righteous in all his ways and kind in his works. Stephen Covey said, "Our most important financial asset is our own capacity to earn."

Facts.

That sounds a lot like your income is your greatest wealth-building tool.

For sure.

That's good. All right. Henry is in Oklahoma City up next. What's going on, Henry?

Hey, Jade. And George, thank you guys for taking my call. I have two main questions. Do I need to file for bankruptcy? And then my second question is, how do I save while drowning in a deficit? I fully liquidated my retirement investment to maintain the lifestyle I was living. And right now, I'm really struggling. And so I'm just trying to figure out a way out of this.

Did I hear you say you broke up a little bit. Did I hear you say you liquidated your retirement?

Yes.

Was it try to avoid the bankruptcy? What happened?

No. So I ended up being impacted in a layoff. And so I was out of work for about two, three months. I was making 90,000 and now I'm making 50,000 due to my field significantly shrinking due to automation and AI. And so I currently am around like 45,000 in debt. And so one of my paychecks every month is going entirely to paying debt. And so I'm truly just drowning.

So there's a deficit. How are you covering the gap right now?

Robin Peter at PayPal, to be honest.

How much is the deficit? Do you know the exact number that you're in the red every month?

I mean, on average, like 100 to 200. I've shrunk my expenses down to the nitty-gritty. I'm not able to really have a life. I can no longer just go to Starbucks or whatnot. And so for me, it's hard.

Yeah, that is hard. Everybody wants to feel like they can enjoy some form of a lifestyle from the work that they're doing. So that makes total sense. So $45,000 in debt. You're down from making 90 to 50. Are you working 40 hours a week? How many hours a week is your job?

Yes, around 40.

So at 40 hours, and I'm assuming it's just you or is there kids, wife?

Just me.

It's just you. So if I woke up and I found out, man, I'm making less, making 40 hours, but I'm making less, and I've got this 100 to 200 dollar deficit, my first thought would be like, let me go get a side hustle until I can find a full-time gig that pays more, right?

Yeah.

So what prohibits you from doing that?

Transparently, I'm going to be starting school soon. I've never went to college. And I think with that, I would be able to expand, I guess, my horizon in my career. But right now, I'm just limitated. And so what do you mean by that?

What are you going to school to do?

It's going to be in logistics.

Okay. So that's the career field you want to get into?

Yes. And currently, I'm in the HR technology field.

Okay. So what makes up the 45,000 in debt?

I have a car loan of 26,000. I have almost 4,000 in credit card debt. And then in personal loans, I have almost 15,000.

Okay. Have you cut off the credit cards?

I have not.

Are you still using them?

Yes.

Do you think that's part of the problem?

Yes.

What if we did something drastic and we said, "I'm not turning to debt for any reason?" It's just off the table. I'm going to pay my bills in order of four walls. That's food, utility, shelter, transportation. I'm going to cover my insurance bills, and I'm going to cover the minimums on the debts. And if there's anything left over, it's going to go towards extra on the debt. But that way, you stop the bleeding because it's really hard to get out of debt when you're still even temporarily going into it month over month.

Okay.

So if you do that, that's homework piece number one, is cutting up the credit cards. You can still pay them off even if you close them and cut them up. So that's the good news. Then the side hustle Jade talked about. If you can come up with even, let's say, 100 bucks a week in a side hustle, that's $400 a month. You would have a surplus for the first time in a long time.

And then the next piece of this is let's talk about this car, the $26,000 car. Do you know how much it's worth if you were to sell it or looked it up on Kelly Blue Book?

I actually just put it on CarMax, and I would get around 25,500 for it.

I love that. That means you've got some options here. You could trade it in if you really needed to offload this very quickly. Or you could do what I would do, which is let's list it, private sale, and see if we can collect a couple more thousand dollars. Because if you can get a little bit more plus add some cash to this, not only can you sell this vehicle, get rid of the car payment, but now you can buy something in cash. How quickly, if you did the things George said, you cut up the credit cards, you picked up a side hustle, how quickly could we save up a couple of maybe two to three grand and then sell this car off?

620.

Oh, Lord.

Plus the insurance. Imagine that payment gone.

Yeah.

And it's a lot of your world right now. It's over half your income tied up in this car.

Yeah.

That's scary. So I mean, that'll really speed up this debt-free process to get you back to some freedom and peace. And so once you do all that, you cut up the cars, you get the side hustle, let's get this car sold, get as much as we can for it. I would get quotes from everywhere you can, not just CarMax, Carvana, local dealerships, everywhere to see just what is the highest number you can get if you got rid of it today. That'll help you sort of find the floor.

How far away from work do you live?

It's funny you mentioned that. I will be transitioning to a remote job later this month.

And I love that because do you want to know what I might do? And this is extreme. I might be like, "Hey, I'm on public transit for a minute because that's going to light the fire under my butt to do all of this." If I sell my vehicle and I go, "It's up to me to now figure out the rest. I'm going to be working from home. I'm going to be saving up every dollar I have." That means if I want to go somewhere, I have to take an Uber. I don't want to do that.

I'm getting Walmart plus grocery delivery.

Yep. Or I'm walking. I'm using my bike. I'm using my feet. I don't know if you'll do it, but that could be an extreme measure that might.

That's a serious sacrifice.

Push some sense into you.

Okay.

And last piece, how are you going to pay for school?

I got accepted for FAFSA, so the government's going to pay for it for now, and then I will just pay on it later on.

Wait, that's called a loan.

Yeah. Be careful because FAFSA doesn't necessarily just because you fill out the form doesn't mean that what you're offered is aid. Sometimes it's in the form of a loan. So be careful. Is it aid or is it a loan?

I want to say it is the loan.

Okay. We don't need any more debt. You called us because the problem is debt, right? You can't solve a problem while simultaneously creating it. So the same way that George told you, "Hey, with the credit cards, you've got to cut it off. You've got to stop the behavior." That goes with debt across the board. And I'm saying this not just to you, Henry, but to anybody watching. If debt is your problem, the very first step, before you start the baby steps, before you start the budget, the first thing you must do, it's the invisible baby step, George. It's the thing you do on the inside where you go, "I'm not borrowing any money anymore.

It's an identity shift. It's I'm a person who doesn't borrow money. I take that off the table because I want to own my future.

Period.

I want to have all the options in the world. And I don't want you going to college to get that job to now all of a sudden have another 40K to pay off. You just restarted the process.

I do have one final question. So one of the loans, which I recently did take out, is at a 35% interest rate.

Oh.

Should I go back to my credit union, which I actually just did a debt consolidation with less than two months ago? Should I go back to them and say, "Can we close out both of these final two cards and combine everything into just one loan or just power through from here?"

What was the 35% interest? Why did you get such a terrible interest rate?

It was through one of the bigger financial institutions that just give out loans.

Oh, gosh.

Versus your credit union.

Correct.

Oh, boy. I mean, I don't think consolidation is the answer because you've already done that. And so we're sort of just trying to fix a problem with another problem. But if you can get a lower interest rate and clear that other debt with a local credit union, I'd rather you owe them at a lower interest rate. So you can go see what they're willing to offer you to get you in a better position to fight the debt.

But just know that's not the solution. If you are out here doing everything it takes and that's just one of the many things that you're doing, that's fine. But that should not be your first course of action. First course of action is let's cut up the credit cards, let's get three jobs, and let's sell the car. You need to be doing those three things first because those are actually going to move the needle for you.

And I'll send you my book, Breaking Free from Broke, Henry. So hang on the line. We'll get you an audiobook or ebook. That puts this hour of the Ramsey Show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.