Transcript of A Life Built on Debt Is a Life Built on Risk New

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Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is The Ramsey Show. I'm George Campbell, joined by my good pal and co-host of Smart Money Happy Hour, Rachel Cruz. We're taking your calls at 888-828-1111. 5-5-2-2-5. Muhammad kicks us off in Halifax, Nova Scotia. It's a fun place to go. What's going on, Muhammad?

Hi, how are you?

Good, how can we help today?

Um, I have a question. So my grandmother is going to visit me in July. Um, now I love her very much. This is more of a love question. I know it's not one of the most smart decisions to make. I drive a really nice car right now. I drive a 2022 Nissan Pathfinder. I paid all cash for it.

Good.

And now when she's coming, I want to get an even better car just because I would love to spoil her with an even better car. Um, is it wise for me to sell this for— I'm going to probably be able to sell this for $35,000 and buy, uh, around a $90,000 car for your grandmother?

I'm so confused. For her to keep?

Yeah, well, yeah, no, no, no, not for her to keep, for me to keep, but just, it's just I'm making an impulsive decision because she's coming and I really want her to see how well I'm doing for myself.

So you wanna make a 6-figure impulsive decision to impress somebody who's there temporarily so that they think you're doing better than you are?

No, I am doing, I can easily, I could pay full cash for that car.

That wasn't the question.

The motivation is what we're asking about. Oh, and it's your grandmother.

Does she actually care?

I don't know. All people in the world, nanas, love their grandchildren.

I was like, you don't care? But I, I have a feeling she would appreciate having like massage seats and, you know, and just like—

are you—

how often are we— are we living in this car for 5 months?

Is this—

are you being for real? No, no, no. I am, I am. I'm being very for real. I went and checked out the car yesterday. I told the guy I'd come around like 5 or 6 o'clock today and tell him if I want it or not.

What car is this?

Uh, this is— it's a Yukon.

What does Grandma need a Yukon for? Is she sleeping in the back? Is there a mattress?

Oh no, it's also because—

are you single?

How old are you, Muhammad?

I am single. I'm— I am 22.

I kind of wish you were married because your wife would slap you right now if she heard this call. This is insane.

No, yeah, I know.

It's like, it's insane.

But my parents, like, when my grandmother comes, she's like a magnet. So when she comes to like North America, she's—

where is she coming from?

All of her relatives, she's coming, she's coming from India, my home country.

Okay. And in their culture, is it big to like, hey, look at how impressive my life is? It's not, it's not so much like that, but, um, how much do you make a year?

It's like, so I currently own 2 companies. I started one when I was 16 and one I started 6 months ago. Uh, the one I started when I was 16 was a clothing company which does really well for itself. It has 9 employees full-time. I maybe go there twice a week to just look, look at stuff.

Way to go.

And but nothing Uh, just, just to like the warehouse we have.

So what did your taxes show last year? What'd you bring in? What was your taxable income?

Uh, last year I pulled in around $250,000.

Amazing. Dude, you're crushing. If I'm grandma, that's what I'm proud of, not the car upgrade.

Or just you.

You're a successful, bright young man. She loves you for you. And if a car is going to be the ticket for her to love you even more, this relationship is built on, on a farce.

Oh no, it's not like she's gonna love me more because of the car.

You just want to impress your grandmother.

You just rent a car for 5 months if you want to impress her.

No, Muhammad, you gotta like— you gotta detach your identity from all this stuff. This is not who you are. Like, if you woke up tomorrow— if you woke up tomorrow and you're driving a Honda Civic, would that absolutely trip you out? And if it would, then I would— I would ask some deeper questions of what's going on, how much your identity is wrapped up in this.

I have a Honda Civic right now. My second car is a Honda Civic.

You have two cars?

I use it for short trips.

Oh my gosh.

Yeah.

You got two cars.

I use it for short trips.

Okay.

I think you need some problems, Muhammad. Right now you don't have enough.

Oh my gosh.

I do, I do.

You need some reality. And you've done so well, and I think that's caused you to go, well, I have to live a certain way because I've done so well. And the more you can realize that your identity is not wrapped up in stuff, and how much money you make, the better relationships you're going to have and the better life you're going to have.

Listen, we're not mad at $90,000 cars. And if you can pay cash for a $90,000 car and that's what you want, Muhammad, because you want to upgrade your car, you enjoy cars and whatever the motivation is. But asking yourself, if nobody sees this purchase, would I still want it? And if the answer is yeah, I still would, I would still want this. Like if that was your— if that was the beginning of this call, it'd be a green light for me because I think you could afford it and you would be fine. But what I'm scared of is that if you make this purchase because of the motivation that you just explained to us, you have set up a pattern in your life and a lane which is unrealistic and unfulfilled. It's an unfulfilling lane that you're setting up that if I just get this purchase, I'm going to feel good from the ego stroke of my grandmother who says like, oh my gosh, you're just amazing and look how successful you are, whatever, whatever you need from her, whatever that need is. That need is still going to be there, and it's going to— and you're going to look to other people to fulfill it.

And so I want Muhammad to be content and happy with what Muhammad has, regardless of what anyone thinks. And especially Grandma. I mean, my gosh, grannies and nanas, they're like the number one fan of grandkids. Like, they— she will be happy to be in a Honda Civic, you know.

What is she— what is she driving? That's the question. What's she used to? Is she rolling around in Rolls-Royces?

Uh, no, but she, she, well, my parents are doing very well for themselves too, and they have obviously spoiled my grandmother a lot, and her husband did very, very well. So my grandfather, who just passed away this January, um, so, uh, she drives, uh, she does not drive, but she gets driven around in a Toyota Land Cruiser, which, which, yeah, that's right.

I think you come from a successful family. You do. You come from a successful family and you want to graft into that message that's been told to you. And what we're giving you is, is a different perspective on life. And again, it's not that the stuff is bad, but when the stuff has you at that point, to the point that you're going to go and make a purchase, again, solely out of wanting someone to feel good about it and, and feel good about you because of this purchase, all of it— I just don't like the motivation. And I think it's, it's gonna end up— you're gonna end up in a, in a, like a rat in a wheel running and running and running the whole— your whole life. Because it's not gonna be Grandma next, it's going to It's gonna be a parent, it's gonna— you know what I mean? Plug in anybody.

And then the goalpost moves too, because now it's like, well, you don't have a sports car. It'd be nice to add a Lamborghini to the mix if you really want to keep up. And then it becomes a lifestyle you, you can't keep up with even if you can afford it. You admitted this was impulsive, and there's better ways to spend this money, right? Do you have a mortgage?

Uh, no, I currently rent. That was my second question. I have two options right now. I rent a two-bedroom apartment. I live alone. I don't need 2 bedrooms. I know, I know that's for— but I like an open space. Now that grandma's coming and she's a magnet, she's going to pull maybe my parents or my brothers and everyone here. Hence, I'm going to need a little bigger of a space. I was talking to a realtor yesterday and she, she showed me this house that's up for sale for $395,000. Now I could scramble and gouge and get that $395,000 to get that house. How? And She gave me a second option. Near where I live, they built new townhouses that are up for rent. I currently pay $2,500. Those townhouses are up for rent for $3,500.

It's all the same philosophy. No, I would not be making an impulse— I would not make an impulse decision on buying a house, Muhammad. They can afford to go stay some months and wait till they leave, and then you make a decision for your future, for you. No, we do not need to be impulsing.

But if I was going to drop money, I'd rather be on a house than a car. But do it for you and for nobody else.

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Patty is up next in Salt Lake City. Patty, welcome to The Ramsey Show.

Hi, how are you?

We're doing great. What's your question today?

Good.

My question, my husband has worked for his parents, his family farm for the last 31 years. Um, they're super controlling. Um, is it crazy for me to expect a plan for succession? Um, they control his salary, his time. They even control the house we live in. Like, we paid for half of the house and they refused to put any of it in our names. Like, we can't even remodel it. I went to them and— because it's built in the '70s, I have like electric blue bathrooms. I asked them to remodel it, and— or he wouldn't ask them, I asked them by a letter. They wouldn't even respond, but they told him that I wasn't grateful enough, um, for the house that they provided for us, but we paid half of it.

So it's zero or in cash, but they paid half, you paid.

Yeah.

Yes.

This is insane, Patty. You know that nothing about this is normal.

Okay, so for on one end of the spectrum, that they control his income and time, yada yada, that would be like having a boss, right? You're the company.

You could say Dave Ramsey controls my income and time.

Yeah. So there's a level of like, I'm working for a person and they have set up a company in a certain way. But the housing situation for sure is not— yeah, you guys are not in a good spot because if the house is not in your name and you've put half of your money into it, you legally have no assets, right? From a, from a home perspective. Um, correct. So what is your husband saying? These are his parents. Does he see that as not good for your future?

Um, he doesn't really mind. He thinks that they will just be fair when it— when the time comes. But my thing is I will ask him, like, we have no retirement plan with him because of course you expect your ground on a farm to be your retirement plan, and that is fine. Um, when we started this 30 years ago, we used to have family meetings and it would be like, oh, we're going to let you start signing checks, we're going to let you do this, we might have you buy some more ground and put it in your name. None of that ever came to fruition. And so now here we are 30 years later, and you're in a bad business deal.

Yeah, you're in a bad business deal.

If they were going to be fair, they would have done it by now.

And that's— so that's a, that's a marriage problem, Patty, between you and your husband deciding what you want your life to look like. And, uh, it's as much his fault and your fault as the parents' fault. They've just set up the life they want, and you guys have chosen to go along with it until you're fed up and you've called this show. So, uh, right at that point, it's going to be, yeah, you and your husband have to figure out which one's your future look like in a pretty big way, because it'll probably— if you do it the right way, I think the healthiest, uh, plan is going to include a lot of boundaries, uh, that have not existed for 30 years. And I don't know if his parents will be up for the task, but your husband kind of has to decide, do I want my, my future and my marriage and my family to be taken care of, or am I going to just still be a child and still do what Mom and Dad say, right? I mean, to a degree.

Oh, absolutely. Absolutely.

I don't think they're going to take kindly to him all of a sudden having a backbone, do you?

No, no, they won't. And, and he knows, like, he tells me he's stuck between a rock and a hard place. And when I ask him, I'm like, so basically we can't make a plan for our family.

Yeah, you're trapped.

I mean, you can't even get the money out of this house because you have— you can't even sell it.

No, we can't.

My question, Betty, why did you write them a letter? Why did you not just call and talk to them? Is the relationship strained right now that you can't just call and have a discussion about it?

I can talk to my mother-in-law, but the father-in-law doesn't talk on the phone, or, you know, or he doesn't talk, or, you know, he doesn't want to. So I just thought it would be easier, then I could just express myself a little better with that. And I thought my mother-in-law would call me back, but she didn't. And then she just went to my husband, and she wouldn't even show it to my father-in-law because she said I wasn't grateful enough.

Because there's some narcissistic behavior that I'm, I'm capturing here, and I think this is going to have to come between your husband and his parents.

It's your— yeah, I mean, at this point, Patty, it's you and your husband that it's the issue.

So there's a marriage issue between you and your husband, and there's a business family issue between your husband and his parents, and It's gonna get awkward.

And for him to continue to choose them over you, Patty, that's what hurts. That's where the resentment is coming. You're— I mean, I hear it all in your voice, which I get. I would be pissed too, probably. But also, have you said anything for 30 years?

Oh yes, lots of times. Lots of times.

And so what does he say? What does your husband say?

He just shut down.

He said, yeah, you guys need to go to marriage— you guys need to go to marriage counseling. You'll have a breakdown.

He showed up for 2 times and then he wouldn't do it again because they told him that it was crazy too.

Okay, so, well, Patty, you have some decisions to make about your life. So I don't know if we can fix that on a, on a 7-minute call.

I'm so sorry, but fixing 31 years of toxic relationships—

yeah, so I mean, it would— I mean, there would be some ultimatums for me, not for like, not in a threatening way, but just in a, hey, I'm sick and tired of this and I don't feel safe. I don't feel like we have a future. I don't feel secure. I have a lot of fear. I don't like how I've been treated in this part. And, and, and Patty, if you've had stuff in the past that you've done wrong, admit that too, right? I mean, like, it's not like it's all their fault. I'm sure there's been tiffs and taffs throughout the years. Um, but if my— but yeah, if I'm married to a guy, and, and as a wife, that you're saying all these things and he doesn't at least listen, take into consideration, have conversations about it, figure out a way to make this life work for you. I don't, I don't know what else, I don't know what else to tell you.

Yeah, that's kind of what I thought. And he, he makes it like when I say, so basically we are not going to know what we're going to get until your parents are no longer with us, and he'll go, so now you want my parents dead? And I'm like, that's not the case. This is just common sense and planning.

And so, well, then yeah, and you guys need it. Yeah, I think, and I think an ask would be that we need to create our own retirement plan. How old are you guys?

Uh, 55 and 52.

Okay, well, I would say for me to feel secure, secure, I need a path of retirement that has nothing to do with your family and the farm because nothing is documented. And so there's not security there. We don't have security in it because we don't know what's going on. And so I need to start— I want to start putting money away for our family in retirement, right? And you guys put that in the— but, you know, and he— I don't know if he'll go for it, but that's what— that would be a plan.

Are you working outside the home, Patty, or have you?

I have, I have. So about 10 years ago, I started my own business, and I was super blessed. And so I have been putting away for me, uh, you know, or putting into retirements and stuff— SEP plans, Roth plans.

Um, good.

That's what I would be doing, is creating your own little island. To be insulated from the chaos that could ensue.

But like, I was just told like that— he's like, well, now you're becoming financially independent from me and you don't need me. And I was like, yeah, that's been part of my plan because you just didn't care for our family and you just do everything with your family. So I had to take care of myself. Um, so, so I have been blessed to be able to do that.

Yeah.

I would continue that.

Yeah. And conversations moving forward, something John Deloney always talks about is, um, the more you point the finger— your family, you, you know, all of that— immediately defenses go up. Like, that's just human nature. You're immediately— he's going to want to defend himself. And, you know, I mean, that's, that's natural. So as much as you can talk about you, Patty, and what you can control is you, um, and what it's doing to you, and Um, that's how I would— that's how I would approach the conversations with your husband. But yeah, you guys need some, um, deep entanglement. And there are a lot of generational farmers that we've talked to on this show. That's very difficult from a financial perspective, a, um, passing down generationally between siblings. I mean, there's, there's just a— there's a lot there. And people have done it really well and communicated very clear expectations. Everyone is in the know. It's, you know, very, very I don't know, it's been very clear. This sounds like the opposite, Patty, that it's very, very muddled and, yeah, and a lot of questions.

So all you can do is continue to ask for clarity and set up your own boundaries and set up your own financial world, not because you don't trust your husband, but because you need security in your own life, whether that's with him or without him. You deserve that. So I appreciate the call. This is going to take a lot of untangling, and I don't know that you can do it in their lifetime, but I, I hope there's a lot of redemption and healing on the other side.

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Hey, what's going on, man?

Not much.

I am, uh, 24 years old, living paycheck to paycheck, have been since I was 18. Can't never seem to get ahead. I'm just trying to figure out some way to get ahead. Mm-hmm.

Um, what do you think is the cause of that?

If you look back over those 6 years, I've just, just been one thing after another. Every, every time I get ahead, get money saved up, whatever else, something happens, something breaks, something, and I just, I can't never seem to get ahead.

So you got a lot of emergencies. Murphy's moved in with you. Is it— what's your income right now? Has it been going up over those 6 years?

Um, no, not really. Um, uh, I'm, I'm making $22 an hour right now, which would be what, like $45 a year? Yeah.

What are you doing, um, in that career or that job right now?

I am a service technician.

Okay.

What does the ladder look like in that world if you were to move up and up and up?

I can, uh, I can move up pretty well, um, within, within probably The next— I've only been doing this for 6 months now, but majority of the time within about 8 years I can move up to a position where I'm making $100 grand if I work really hard at it. But right now it's just trying to make it to that point.

Yeah. How much debt do you have?

I'm sitting at $26,000 in debt.

Break that down for us.

What's—

what types of debt? What's the balances?

I have $15,000 in debt on a truck loan. I have $6,000 in debt on a boat loan. And then the rest of it is stuff I did when I was younger, dumb and stupid. And it's like Amazon Affirm stuff for—

Buy now, pay later, all that.

Mm-hmm.

Okay, so what I'm hearing is you said, man, life's just been coming at me. I've never heard of a boat coming at you. You know what I mean?

Like, that could be kind of scary, but you know what I mean?

Yeah, that's true. But you see what I'm saying here? If I looked in the mirror, I go, man, like, yes, life has happened. There have been some emergencies, but that's not the problem. The problem is I want some stuff and I can't wait till I have the money to buy the stuff. So I'm going to borrow money from other people. And so if we can get out of that mentality, then we can get you out of this cycle. But it's going to have to start with you saying, I'm done with debt. I'm never touching this stuff again. Tried it, got burnt. I'm gonna sell the boat. I'm gonna work those 3 jobs. I'm gonna live on nothing in the meantime so that I can get an emergency fund, so that it's a never-get-into-debt-again insurance plan.

Well, the thing about that is, so when I turned 18, my grandma had some money she left to me. It paid for my truck and my boat. I didn't owe anything on them. I bought them right out in cash. My truck broke down 5 years later. I had to buy another one. It was that big of a money pit. Had to buy another one. My boat motor that I had, it blew up. Had to buy another one. I'm in my boat any and every chance I can get.

Okay, Joseph, Joseph, Joseph, Joseph, we gotta, we gotta change our language, okay? You did not have to. No one had a gun to your head that you had to, okay? You wanted to. That was a want. Well, so, okay, so just, I'm being for real though, because when there's a mentality of this thing breaks. So that means I immediately— and you're normal, this— we get calls like this all the time. People, this is people's mentality. Well, there's no other option. I have to go. I have to go and get a car loan. I have to go and buy a new boat. I have to. No, you don't. You really don't.

I mean, you'd like to.

Yeah, I mean, you like— you could, you could get a ride from a friend. You could bike. Like, see what I'm saying? Like, I know those are not—

get a canoe.

I know those are not realistic. You can get a canoe. Those are not realistic. I get that. But the point is, when you start separating needs and wants from like a very extreme degree, it causes you then to say, okay, this is not a— this is not a need. I now have to make other decisions if debt is not on the table. So that means I have to go buy a $2,000 truck that barely puts, puts, puts down the road, but it's gonna— but like, that's what I can afford. I don't have money for a boat, so I'm gonna have to say no. I'm gonna say no to myself. I can't get a boat. So, so there are this— you, you do have to, um, filter through some of these decisions because that is what's caused you to be here. And when you go that extreme, Joseph, which it sounds extreme, but when you do, I'm telling you, every purchase you make, you're going to be thinking, do I need this? And in this point of you getting out of debt and all of it, a lot of it's gonna be like, nope, I don't need it.

Nope, I don't need it. Saturdays, I'm gonna be working. Sundays, I'm gonna be working because I need to be making some extra money to pay all this stuff off. And then once we have money, then we can start saving towards goals of things that we want. Because boats are not bad and trucks are not bad, but the way we've gone about them has caused a lot of stress in a paycheck-to-paycheck living because you have payments. Like, if all those payments were freed up every month, you wouldn't be paycheck-to-paycheck.

Yeah, what's your truck payment?

My truck payment's actually— it's only, uh, uh, $426.

Okay, do me a favor, never say only in front of the payment again, Joseph.

You hear that?

Because that was you justifying the payment.

Yeah, you don't have— you don't have that money. You're living paycheck to paycheck. $425, that changed your life. That was just sitting in your account month to month.

So we got $425 on that. What's the boat payment?

The boat payment is $160.

Okay.

And then the motor.

What are the rest of those payments for all the other stuff you mentioned?

Um, uh, one of them's $60, the other one's $80. Um, and I think the other ones, there's one more that's like $60. Okay.

Okay. So we're over $700.

Yeah. $750 is what I have.

So if I gave you a $700 raise, would that help you get out of this paycheck-to-paycheck cycle?

It definitely would.

You see where we're going with this? It's time to aggressively attack the debt with no other focus. You don't need to be on a boat. You don't have time. You're going to be working too much. That's the great news. So what could you sell the boat for today?

Not much. It's a piece of junk, honestly. The motor's the only thing that's worth anything, and that's because it's brand new.

I'm so confused. So did you buy it as a piece of junk?

So no, I bought it in 2018 as a decent boat, and over the years it has proven to be a piece of junk. It sounds like you destroy everything you touch.

You put a $6,000 motor on a piece of junk.

$10,000 motor.

Oh no, Joseph.

See, bad, right?

Not good.

Would you agree?

I do.

Not so great. I'm glad we're like tracking. Some people, you know, you don't really track. We're tracking with you.

We love Joseph.

At the time, at the time, continue.

This is gonna be good.

60 to 80 hours a week, I was making the money. I— it wasn't a problem.

Um, but, uh, um, but life happens and you have risk in your life, and suddenly it does become a problem when things change. That's what— that's what happens with debt. That's what happens with debt. Every— everyone's fine. Everyone can afford the house payment. They can afford the car loans. Everything's fine until there's a job loss, until a kid gets sick, until whatever life happens, and you've built your life on risk. And it all comes tumbling down. So, Joseph, I'm excited for you. I feel a lot of work in Joseph's future.

And I—

wait.

And I really think, Joseph, you can get out of this.

Yeah. Joseph, here's the truth. When I was your age, I was $40,000 in consumer debt and I wasn't even making $45,000 like you are. And I got out. And the way I did it was by cutting my expenses down to nothing and working 2 or 3 extra jobs. And then all that margin I created by doing that, I threw only at my smallest debt. The rest you're going to make minimum payments. That's called the debt snowball method. Then once you get rid of all the debt, now we can focus on savings and our emergency fund. So hang on the line. I'm going to give you EveryDollar. It's our budgeting app. That's the one thing it does is it helps you create margin to throw at your debt. But you've got to actually do it. You got to look at that budget every day because that's going to be your ticket to saying no to the next thing that's going to be happening to you that you had to do.

Hey, Joseph, call us back, though. We're cheering you on. If you need help through this process, we are here because we really— I really do believe in 2 years your life could look so different.

You're gonna be a success story. Hang on the line, we're gonna get you EveryDollar and a copy of my book Breaking Free from Broke. That'll give you the roadmap to getting out of this thing.

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Marie is in Columbus, Ohio, up next. Marie, how can we help today?

Um, hi, um, and thank you for taking my call. Um, I started listening to you guys in 2020, and by that time I think I was in a bad situation right there. Um, my current live-in boyfriend, um, who I plan to serve a 30-day notice to very soon, um, he ran up to my credit card, and I've been following the Baby Steps and I've paid everything off. Except for those two credit cards. And it was actually the Baby Steps that helped me realize that those two cards had been run up. I didn't realize it at the time. Um, and I guess I'm just looking for, I guess, a way through to figure out, um, if there's, if there's a possibility for me to recoup my money back.

Yeah.

So he came for the paying for it because it's on my credit.

Yeah. Well, was he an authorized user on your card? How did he get access?

Um, he was not an authorized user on my card. Um, so at the time, still we're living together and, um, we had a mosquito tick flea service that he was— we were supposed to be paying for. Um, they said they wanted to do like the automatic, um, they wanted to charge us automatically. And I was at home at the time, and so I used my credit card and gave it to them. And he said, you know, don't worry about it. I'll pay for the service. And so that's how it started.

So he grabbed your credit card while he was at home, saw it on a table.

What happened?

No, I gave it to them.

You did it?

Okay.

And with the promise that he was going to pay it back?

Yeah, and they would be charging the card every month. It's a monthly recurring charge, and then he would, you know, pay for it. That was part of one of his bills. He was part of the household.

But then what happened?

He—

you said he ran it Well, yeah, I didn't realize he had ran it up because I, um, he was just supposed to be paying that recurring charge. Um, and then it was in 2023 that I realized that this card had like a really big balance on it. And I was like, hey, what are you doing? And I said, and I noticed like your payments aren't covering the charges. And he told me, don't worry about it, I got it, I've been paying it, I'm going to keep paying it. And he said, you know, like, we haven't done this before.

That was 3 years ago. So what happened since then with the balance?

It, it continued to— it continued to balloon.

And what does the credit card statement say?

Is it all this one company on this credit card?

This particular one, yes. Um, he actually ended up doing it to 2, but what I was on my radar was This one credit card, one company.

Okay, well, if it truly was without your knowledge, it was unauthorized use, that's fraud, and you can call your credit card company.

She gave the card to the company. Well, you know what I mean, from a legal perspective.

Yeah, but was there other things on this outside of that flea and tick service?

That's what I'm wondering.

Is he buying other stuff?

That's what— and that's what I didn't realize. So he was supposed to be paying the recurring charges for the flea and tick company But then I started looking in there when I noticed that the credit card balance had gone up. And then he started using— I saw he was using the card to pay for our car insurance, um, you know, like $700, $800 to pay for the car insurance.

For your own car insurance?

For yours or his or both?

Ours, because we were in the house together and he had two cars on the insurance. I had one car on the insurance. The insurance was another bill he was supposed to pay. I did not know he used my card to pay the insurance. And then I started seeing other transactions for like advanced auto parts and car parts this and car parts that. Okay, yeah, random other stuff.

For the credit card statement every month, where was that being mailed to or sent to you? It was being mailed to our address, our home, and you just didn't see it, or he would take the bill and you never saw the bill?

I never saw the bill. He would take the bill because he was supposed to be paying it for the GreenNet.

Okay, okay.

And so I just didn't— I didn't think anything of it that he was taking the bill because he was—

So some of this, Marie— so some of this from a legal perspective, George, correct me, but some of this, if it really was without your knowledge, I think you can flag that as fraud. But Marie, if you willingly gave your credit card over and you just have a crappy boyfriend who's not paying it, that's more on you guys.

That's not a legal standing, especially after 3 years. And all of a sudden you're calling the credit card companies and, hey, there's some fraudulent charges here from 3 years ago.

Yeah, I didn't call the credit card company and say they were fraudulent charges. I noticed that— I didn't say that. Um, I went to him and said, hey, what are you doing? Like, you're supposed to be paying these bills.

Have you called him?

I just met this—

I'm sorry, have you called and, um, put a freeze on anything on your credit or this account or for more money not to be taken out?

Well, by that time I had, um, so what ended up happening is, um, I told it— what ended up happening is he just stopped paying the bill, just period.

Okay.

And I said, why aren't you making the payments? He said, I'm sorry, I missed the payment. And he was going off of the fact that we had done this before. I, I haven't just met the man, I've known him for a very long time. He's used my credit card to do other things like buy tires, and he paid the bill, and we just kept moving. It had never been an issue.

Okay, so from this— from today where we stand, Marie, how much is on the card balance?

As of right now, the card balance is $8,100, but that's because I paid it down. Yes, at the time it was $10,900.

And are you guys broken up? What's the— what's the status of the relationship?

I don't consider myself to be in a relationship with him anymore, and I plan to send him an eviction notice pretty soon.

What do you mean you don't consider it? Are you guys broken up or not? Um, it's not like a feeling. Well, I don't consider— you know, I don't identify as a single person. It's just, did you guys break up or did you not?

I have broken up. He keeps saying he's in a relationship, and I can't change his thoughts.

Who's he saying it to?

Yeah, yeah. So, okay, so yeah, so you're—

you're done.

He's in denial. He's in—

is his name on the lease?

I own the home.

Okay, there's no lease on the home and he won't leave.

Yes, so that needs to be— a sheriff will need to show up and evict him, correct? Because this has gotten so entangled. Yes, from a, um, from a financial perspective, so entangled. And this is what happens when people commingle finances. When you're not married, you have no legal protection, really.

Well, on your end, I learned that in 2020 once I started listening to you guys.

Yes. So I'm so sorry. So already, okay, so you got $8,000 left. So, Marie, we gotta figure out, is that the only debt you have?

Is this card, um, he did the same similar thing to the Lowe's card. I didn't know that card. I didn't know he was using that at all.

Okay, how much is on that?

And, um, the current balance is now $4,900, but he ran it up to like $5,600.

Okay.

And outside of those two bills, I have no other balances because I started with your debt snowball.

Oh yes, you said that.

Okay, perfect.

Okay. So what I would do is I would become— I would investigate as much as I can, calling these two credit card companies, and in good standing of faith of what you can say honestly, yes, these were charges I did not know about. You probably can't say about, about the flea tick company because you willingly gave over your credit card and he just never paid you back. And that's between you guys. But from a legal standpoint, here are charges that I did not know about. And I would try, I would see what, you know, see if they'll reverse it. Yeah, if they can reverse any of it. Um, I don't know if they will because it's been so many years, but it would be amazing if not. And then if it doesn't, Marie, it's— I mean, yeah, this gets chalked up to $12,000 of stupid tax is what we call it, of just like a really hard lesson, which is so frustrating for you. It's so frustrating for you because you've been working this plan and you've been doing it, and it's just— it may be a really not fun lesson to learn, if you know what I mean.

If this is the bills that you have to end up paying because it's all in your name. But I would cut off any, any access of any accounts from him and making sure he has no access to you financially.

And yeah, and I would go on to every credit bureau's website, TransUnion, Equifax, all of them, and freeze your credit completely so that nobody can open up any accounts in your name.

He didn't do it to any other card, just those two, and he hasn't done it. And it just—

I don't care.

As far as you know, I don't trust him.

I've already checked.

No, he hasn't.

I would still freeze your credit.

Freeze your credit. Do not— no, I don't trust him. Who knows what he would do when he gets pissed that you evict him? I mean, uh-uh, nope.

I'm closing down every credit card account. You can still pay it off after that, but close them down freeze your credit, and get this guy out of your life, and then clean up the debt yourself. This is not going to be fun, but it'll be a lesson well learned. You'll never do this one again.

No, I won't.

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See website for full details. Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell, joined by Rachel Cruze. Open phones at 888-825-5225. So Rachel, we recently just took a call from a lady who was going through a hard time because she has had this sort of toxic relationship. The ex is living in her house. Who she now has to evict. He's been using her credit cards, yeah, with and without her knowledge, running up $13,000 in credit card debt. And it just was a great reminder of why we tell people to not combine your life and your money before marriage.

Because some of it, it wasn't outrageous stuff, right? It was like our car insurances, we're just going to pay them together, right? It's like, it's very normal things. But when you combine your life with someone, even from a financial perspective, Yeah, you just, you set yourself up for a lot of chaos and untangling that is exhausting and ends up costing you a lot of money. That's what we end up finding over and over again, because usually the person that is the financial responsible one ends up getting the bad end of the deal, right? It's usually the one that's not great with money ends up kind of mooching or figuring out how to like, not necessarily in a, you know, I don't think they're always malicious by doing that. It's just the way it happens. And when you're not married, yeah, there's no protection for you.

And what's funny is we get a lot of flak for our advice that you should combine finances once you're married.

Yes.

And they all get so angry at that. They want to combine when they're not, but once they're married, they want to stay independent.

Yes.

I'm like, okay, so let's stay codependent while we're not married. And once we're married, we want to be independent, right? That is insanity.

Yeah. Crazy.

So aside from any of like your faith background and some moral judgment on living together, It is just a really bad idea to combine your financial life, to cosign, to add someone as an authorized user, or to buy a house with someone.

Yeah, big purchase together where both your names are on it when you're not married. Not good. Not good.

So much risk, so much drama. And you're assuming everything works out perfectly. And this show would not exist if everything always worked out perfectly.

We wouldn't have jobs.

We're on the other side of it when they go, well, I could handle the payment until I couldn't. Well, everything was great until until I found out he was—

yeah, and honestly, it just adds to, um, I think more of the heartbreak. Because not only when, when you break up and you got to untangle everything, not only is it just your heart's broken, right, or the situation is really sad because you've been— you were obviously very close to that significant other to share finances. And when they— when you break up, if you break up, um, not only are you dealing with like the heartache of just the breakup, but then you're sitting there trying to pull your credit report, right? And figure out who's, you know, who's on it, what debts, and what do you owe me. And then it's just, it just gets so messy.

Anger and guilt and resentment. And why did I waste so many years with that person? I tried so hard all to leave with this mess that I have to clean up. It just sort of makes you look in hindsight to realize how messy it was and how you didn't see it. So you're too close to it.

That's right. So clearly, you guys, do not combine your finances until you are married. And when you are married, married, yes, we are a proponent of combining your finances, sharing a checking account. When both incomes or one income hits the household, that is the household budget. We both have a say in it when we're married. We both have opinions. We both are able to agree on this is what we're doing with our money. Because when you do that, you agree on your life at that point and where you're going. Now, there's always the asterisk. If there is, um, if the— if there is a divorce coming, if there is abuse, addiction, like there situations that you have to protect yourself 100%.

We need to untether, have your own account.

Yes, yes, that's right.

Protect yourself from this person.

Yep, that's right. Um, but for all the other marriages in the world that are just going along, I'm telling you, combine your— combine your finances, be one in that, and it creates so much unity.

Yeah.

And the other thing is, you noticed she wasn't paying attention. She wasn't checking the credit card statement. She was just assuming that he was telling the truth. And so You've got to stay on top of this. Your money is your responsibility and nobody else's. So don't ever assume that they've got it under control. That's usually a sign that things are going south. You don't even know about it. So there's our soapbox. We are now stepping off. Although I liked— I liked the height boost it gave me.

But yeah, thanks for listening to our TED Talk.

Back down to earth. All right. Karen is in Toledo up next. Karen, welcome to The Ramsey Show.

Hi. Thank you.

What's going on?

So my husband and I can't decide if we can afford a new vehicle or a new-to-us vehicle for $30,000 to $40,000 just with our other expenses, our mortgage and potential other expenses with our 100-year-old home as well. Alright.

Walk us through this. How much money do you guys have right now saved up?

So we have about $120,000 in our savings.

Awesome. And you guys have any debt?

We have our mortgage, but no other debt.

Okay. And what's your household income?

So I just went part-time, so it was $180,000. Now it's going to be about $160,000.

That's still a great income. Okay. So what's the, what's the argument about this? Sounds all reasonable. You're going to pay cash. It's not a huge part of your world. Are you going to buy it used or brand new?

Well, I previously would have bought it new, but since being married, we're probably going to get new to us, but maybe a year or two, maybe 3 years old.

Okay. And is your husband not wanting to do this, or are you?

So my husband does not want to buy a vehicle. I do want to buy a vehicle just because I think we need the space. We have 2 small old cars. We have a 2017 and a 2014 car.

So, um, space for kids or what?

Um, we do have a new baby and then we also have a large dog. So yes.

Okay, so new baby, large dog, you want more space and he thinks it's a waste of money? Um, is it the financial part of spending that much money or is the idea that you guys don't need a car at all?

Um, so he agrees we do need a car, but it's the financial aspect of it. Just because we live in a 100-year-old house, um, we were living on borrowed time with our AC furnace unit it, potentially a new roof, potentially a new sewer pipe. I mean, yeah, all this is all functioning now, but it's just kind of— we're on borrowed time for all these very expensive items.

Add it up, if everything hit the fan and everything went out at the exact same time, what would that cost you guys?

So the sewer is probably about $15,000. Um, the AC, furnace, I would have to say probably about $6,000 to $8,000. Um, and for a roof, we don't know the roof, we haven't looked into quotes because it's working well now. That's probably in the next couple years or so.

Okay, um, because I'm just doing some quick math that if you guys have $120,000 saved, if you had an emergency fund of $40,000, if that was a fully funded emergency fund for you guys— I'm not sure what your household expenses are per month, but that'd be a hefty, good emergency fund— um, you'd have $80,000 left. Let's say you spent half of that on a car, you'd have $40,000 left. And if everything hit the fan, I think you'd still have enough to cover all of that, right?

Uh, yes, but that's very scary to think about. And then plus, we just didn't know with having a mortgage— we still have about $130,000 to owe on that— if that's something we should be prioritizing over purchasing a car.

Not necessarily. Um, yeah, I mean, buying a new car is totally acceptable in Baby Steps 4, 5, and 6, which is where you guys are.

Your life is a priority. And so if you need the car for your life because your lifestyle— you guys are doing it right. And I think having $60,000 still left over after covering the car and the emergencies, you're going to knock out the house fast knowing you guys. You're going to just start throwing chunking money away at that thing after the renovations are done, repairs, the car's here. Now you've sort of freed up all that savings and money, right? Your future income, right?

That is very true. Um, it just, it makes us, uh, you know, it's unnerving to think about all this potential very expensive things that are saving, but it's dwindling.

Yes, I hear you, but you would have enough still in savings to cover those things, and they have not happened yet. And more than likely, they'll be stagger— staggered while you can be saving money on top of that. So it's not like your savings completely stops after you buy this car. Pick it back up and save some more if you guys want. And then if you have too much in savings, you throw some at the house, right?

I would earmark each savings account. One is for the car, one is for the house stuff. That way you're not confused as to where this money's going.

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This is a paid advertisement. NMLS ID 1591. NMLSConsumerAccess.org. Equal Housing Lender. John is in Richmond, Virginia, up next. John, welcome to the show.

Thanks for having me, guys.

Absolutely. What's your question today? Got a—

I've got— I feel like I've hit the job lottery. I'm kind of a specialist in my field, and, and I recently just got a humongous increase in income. Um, my wife is also getting a raise starting in July. So we're suddenly— we feel like we're kind of suddenly wealthy, but I'm kind of panicking because I don't know what to do and I'm really behind on my retirement. And I'm 48 years old almost, so kind of lost as to what to do. I'm happy, but I'm nervous.

Yeah, no, that's actually a good feeling, John. That tells me you're going to be very wise with this and cautious and actually use it to build wealth. If you were just like, yeah, double my income, we're gonna go buy some stuff, I'd be like, all right, we gotta slow down. So walk us through this. What is your household income now?

What will it Okay. So it's going to be $330,000. Fantastic. Right? Yeah. I think we're getting about $120,000 between the both of us increase all of a sudden.

So are you both getting increases or just one of you?

Both of us.

Oh, you both are. And it just happens to fall at the same time.

Yeah.

Yeah. My new position just started. My wife starts in July.

So right there around the same time.

That's great. Congratulations.

John, good for you guys.

Where are you guys at financially?

Thanks.

Do you have any debt?

What's up? Um, well, we have our mortgage. We owe $214,000 on our house. Um, I— we do have two used car loans, um, that are fairly recent, and that's it. That's it for debt. No credit card debt.

What's the balances on the cars?

Uh, combined at $24,000. Okay.

How much do you guys have in savings right now?

Uh, $22,000.

Okay, is that just liquid or is that retirement?

It's liquid.

Okay, and then how—

my retirement, my retirement is very low. My retirement's like $45,000. $45,000.

Okay, what's your wife's?

Yeah, uh, she's— her retirement's at like $340,000 or so.

Okay, so hers is— okay, hers is more.

Yeah.

Okay, great. So, um, yeah, so I would make a plan to probably feel like you didn't get a raise for a hot second once it starts to get these cars paid off. So pay off the $24,000.

And honestly, you could do it with the next paycheck. If you take your next paycheck plus most of the savings, these car loans are knocked out and now you free up those payments for the rest of your life.

Yeah, that's right. And the cars are fairly new even though they're used. So yeah, that's fine. But yeah, but yeah, so we have like like, like, basically that leaves us with the little bit we have in our checking account, and that drains our savings/emergency funds.

So, yep, temporarily, yeah, then you'll bring it back up with the new income, um, and have a good fully funded emergency fund. And all this hits in July, or what, it's almost May, so that's 2 months. Yeah, so I would, I would throw all— I would throw your savings at this car. You'll have a little bit left on it, on one and keep $1,000 in there and go ahead and pay everything off. And then once July hits, you guys start really stocking away some money for a fully funded emergency fund. And then beyond that, John, you just go down the Baby Steps. You guys need to invest 15% of your income into retirement, throw all the extra you can at the house.

Sure.

Okay. Um, and have some fun in there too, right? If you guys want to take a trip or something, that's okay. Uh, but have an aggressive goal to pay off this house. I mean, if you guys said, hey, what if we did this in 2 years, right? Like a pretty aggressive way, because once the house is paid off and everything, then to your point about retirement, all you do, all that's left is to stack money in, in those retirement accounts. And then even beyond that, because you guys will probably max out, um, a lot of your 401k or your, um, your Roths and your 401k even.

So because you guys, 15% of $330,000 is almost $50,000. So that's over $4,000 a month you guys are going to be putting away, and that's without any employer match. So I did the math for you, John.

My, my company won't start letting me have a retirement for a year, and my job just now started, so I'm kind of like, well, well, do I start? Like, talk to a financial advisor, get it.

Well, you can still, you can still do a backdoor Roth IRA.

Yeah, I would do the Roth, and then I would just put some money, um, yeah, I would sit down with a financial advisor. I'd probably open up like, um, an index fund or something and just throw some money in investing. It may not be retirement specific, but I would get that habit of 15% of my income being invested. And then, and then once the 401(k) is available next year, then maybe, you know, turn down the, the index fund and put, put it, the rest in the 401(k), because you'll have great tax benefits with that.

But even in the meantime, I mean, $15,000 would fully fund 2 backdoor Roth IRAs for you and your spouse. So you still have options even before you can contribute to the employer plan.

Yeah.

So let's walk through this real quick for you, John. How much money would you free up? How much could throw if you didn't have those car payments? How much could you set aside every month in savings?

With the new income?

Well, with the new income, I have a daughter.

I have a daughter that's starting college. My new income is $330,000. The college expects us to pay about $30,000 a year for my daughter.

And we're not—

we don't want to take out loans for it. We want to pay it.

Okay.

So my bills are— my bills are going to be like $12,000 a month on average with all that going on.

That's without the car payments or with?

That's, that's without car payments.

Okay, great. But you're still gonna be taking home like $20K a month.

Yes.

Okay, so you still have $8 grand to put away. Well, when all said and done, if you do it right.

Are we taking home $8 grand? How much are we taking home a month? Because I have like my—

$20K a month is 2/4.

So if you're making $330K after your after-tax income, My after-tax income is going to be about $1,668 per month, I think.

And that's without your wife?

It's with my wife.

Okay, that feels low.

I'm a W-2 employee. I'm a W-2 employee. I mean, federal taxes, state, Social Security, all that stuff is like $75,000 a year off my $225,000 that I'm making, or will be making.

So yeah, but you're not paying $130,000 a year in that out of your 3/3.

40.

That's what it amounts to, is you taking home $200. So I would look into that. This is about 60%. It might be a little bit more after all of your deductions, 401(k), all of that stuff is hitting. But either way, you're going to have some margin of $4,000 to $5,000 a month to sock away, which means your emergency fund is going to get built up quick. Then we'll be investing 15%. So let's even say you're 49 and you start investing that for a little over $4,000 a month between you and your wife's retirement as sort of the base nest egg. If you just do that from 49 to 62, you guys would have about $2.7 million at 62. All right, when you're 62— I don't know how old she is, I assume younger. Is that a fair assumption?

You're older than me.

Oh, what for the older lady, John?

So she's 63, you're 62, you got $2.7 million. And then you guys can decide, do we want to keep working or not? You probably will have the option by then.

And with a paid-off house at that point—

and that's without you increasing investing. Investing or making more money, which at this point you guys are only going to make more money in your careers if you keep this up.

Yeah. Okay.

So I hope that's encouraging to you. If you do this right and you just stay out of debt, pay off the mortgage, follow these baby steps, and when the daughter's out of college, that frees up money in 4 years, you know what I mean?

Free up a lot of money.

That's like $2,500 a month. You can go on a vacation every month, John.

That sounds good, George.

You're doing great. Don't beat yourself up, John, for the past. You guys are crushing it.

And yeah, and the caution is, is is very fair because as you run the numbers, you know, you look and it's like, yeah, it's not a million bucks, you know what I mean? Like, it goes fast if you're not careful. That's why we get people that make $300,000 and they're still living paycheck to paycheck, right? It's like, that's what ends up happening. So the intentionality is key. I think writing out the numbers, you and your wife seeing it, I think having a great financial planner on board, especially with some of this retirement stuff that's going to be picking up, is really wise. And yeah, I think if you guys just plan it out month to month, you're just, you know, you have that level of intentionality, have a goal for paying off the house, all of that lined up, you're gonna do great. You really will.

Great, thanks.

You got this, man.

Thanks, John, for the call.

Love a call like that. That's a fun problem to have.

Good.

Our income doubled and I want to be wise with it.

Yes.

And the truth is, I mean, $214,000 left in the mortgage, if they just take the daughter's college money when she's done, they just throw that at the mortgage, right, right, right, plus some of the extra margin they have, they're done in a couple years.

Yeah, that's right.

So before they're 60, they're gonna have a paid-for house, maxing out retirement accounts, millionaires.

How aggressive? I said 2 years. That was too aggressive.

I like, you know, I love that spirit.

Why, why, why not go big, right?

Rachel goes big and she goes home. She does it all.

Most people don't struggle with money because they can't do math. They struggle because they don't stick to a plan. And when your bank makes your money feel confusing or hard to track, plans fall apart fast. And that's why I love Fairwinds Credit Union and their mobile app. Because let's face it, most banks build systems that make it easy to swipe and hard to stay organized. But with the Fairwinds app, you open it and you know exactly what to do. No clicking through 11 menus just to move your own money. Just tap, transfer, and done. You can deposit a check from your couch by taking a picture. You can get real-time alerts so you're not guessing what's in your account. And you can add your Ramsey Be Weird debit card to Apple Pay and tap to check out. See, a lot of banks leverage convenience to make it easier to go into debt, but Fairwinds offers convenience to help you stay in control. It's a huge difference. That's banking that actually supports the Baby Steps instead of working against them. So if you want to bank someplace that's both faster and wiser, check out Fairwinds. Go to fairwinds.org/ramsey. That's fairwinds.org/ramsey. Insured by the NCUA.

Ramsey is taking over an entire cruise ship. Not like pirates, we're just— we, we booked it legally, don't worry. But this is 2,500 people coming together for the ultimate debt-free celebration. This is so much more than buffets and deck parties, which I am personally excited about those those things. But you get to hang out with Dave and all of us Ramsey personalities for 7 days, hear new teachings on wealth building, join the world's largest debt-free scream, watch live episodes of your favorite shows on stage, and so many more surprises. Who knows?

It's so fun. It's a fun week.

Yeah, I mean, ever since the last one, I was like, I was kind of riding a camp high after. Like, that was something special.

I know, it was, it was such a great—

the people working on the cruise were like, who are these people? They're all so kind.

They kept saying that. They're like, this is the nicest, like, week of people we've ever had. Yeah.

And there's no strangers because they all have— you have like-minded people all in one place.

Well, not to make anyone uncomfortable, but everyone's like, yeah, they would stand in line for the buffet and be like, how much debt have you paid off? You know, they just talk, talk very openly. You would never, ever probably share. But a place to celebrate and get to go to the Caribbean.

It's going to be fun. Not mad about it.

It's going to be fun.

All right. Click the link in the show notes or go to RamseySolutions.com/events to book your cabin. Hopefully we'll see you in 2027.

7.

Iris is in Bismarck, North Dakota. What's going on, Iris?

Hi, George and Rachel, how are you guys?

Doing well, how can we help today?

Okay, so, um, I'm in quite a bit of debt, and I actually started going through the Baby Steps at the beginning of the year. Um, started like going, um, full, like full intensity, uh, about 2 months ago. Already paid about $5,000. Awesome.

Great.

And my boss, my boss, uh, offered to lend me the money that I need to pay off the rest of my debt and just pay him without interest.

Hmm.

Lend you the money? How much is this?

Um, so I have $41,805 left to pay off.

Oof.

And this is, um, so credit card, um, $9,373. I have $6,573 I owe to the IRS and a nasty personal loan with OneMain Financial for $25,859.

Okay, um, no, I would not do that, Iris. I know it sounds Sounds good because you don't have to pay interest and all of that, but suddenly now you are tied to your boss as, as a bank, basically. Um, and any missed payments, anything that happens in your life, um, any— I mean, anything that is going to be happening, he's going to be just there, right? From like an emotional, financial perspective. And so keeping things clean and just saying, hey, keeping the creditors the creditors and keeping your boss the boss keeps very healthy boundaries and keeps everyone in the lane they should be in. And when you start muddling those, it can get messy really quick.

And the truth is, right, interest, the way you're attacking this thing, isn't going to be the issue.

That's a good point.

So the issue is the behavior that got us here, and you are actively transforming that. And I think there's something really powerful about using that debt snowball method to knock out the next set, the next set, freeing up the payment. And if you just owe your boss one weird giant payment, it's just kind of hit different and it's probably going to take longer. You're probably going to get a little comfortable because, well, I'm saving on interest. I don't need to be that aggressive. He only said I needed to pay $500 a month. And again, to Rachel's point, just add the risk. It changes the relationship. I would much rather owe all these other people money than my own boss.

Yeah. Iris, how much do you make a year?

How much do you make a year? Well, it varies. I work in a restaurant, so this year I made $54,000 before taxes. I started doing some side hustles so I can pay off this debt.

Good, good.

Hopefully by— my goal is February of 2027.

Awesome. I love how specific you've been. You knew your exact numbers on your debt. You have an exact debt payoff date. That gives me a lot of encouragement.

I have a concert to go to, so I need to see this.

That's hilarious. What concert is it?

Um, it's not Backstreet Boys. It's, um, Karol G. She was in Coachella this year and she's gonna perform in Puerto Rico February 26th.

Destination. How fun. Um, Iris is the boss at the restaurant that you work at?

Yes.

Okay, so I'll be be honest, even more so why I wouldn't, because that has— that industry turns over so much. You could look up in 6 months and get a great paying job somewhere else. But then you weirdly have this like loyalty to him because he like did this big favor for you. And, and so I—

or he leaves and goes to a different restaurant and now he's like, hey, I need all that money up front.

Yeah, yeah.

Well, he's, he's the owner of the restaurant. The thing is, I've been working with him forever. I've known this guy for 11 years and He's seen me for 11 years and the thing is that he asked me, he's like, hey Iris, like I've seen you be stuck. I haven't, you know, why haven't you bought a home? Just life things. And so that's why he asked why I haven't, you know, sure, progressed in a way.

Yeah. And his heart's probably in the exact right spot, right? I don't think there's any malice or anything. We just see these, these situations go sideways. Like if we do, when you start mingling relationships and money money, especially when it comes to borrowing money, um, it, it just, it changes the relationship. And even though I think it, the heart of him is probably gold and it's probably great, um, I just, I would have the more conservative approach of keeping him my boss and not my banker. Like, that's just basically, you know, at the end of the day. So that's, that's what we would do. That's what I would do.

George, I guess you could speak for yourself, but 100%, the more I'm thinking through this, I'm just going, this just feels like I can count on zero fingers how many times someone's called into the show and said, hey, I borrowed $40 grand from my boss and it worked out perfectly, paid them back and everyone was happy and the relationship was great. It just doesn't happen. It's sort of a pie in the sky thought. And any time you lend money to anybody that you know, it usually ends up changing the relationship for the worse.

And to your point earlier, George, is so true. Iris, like, you are the secret sauce to getting yourself out of debt. It's not rearranging debt. It's not consolidating here or getting this lender there. And all of those people, people shuffle their debt around. Even if it's not their boss saying they'll pay it off, but like to get a better deal here with the interest, all of it. But listen, at the end of the day, it's really not going to matter. It may save you a month or two, right? But at the end of the day, it is you that's going to be paying this off, um, and you're the secret to it all. It's you not trying to finagle the interest. And so, um, because of the risk of the relationship and your employment and all of it, um, yep, keep it at—

and you're less than a year away according to your goal, right?

Yes.

So Yes, so less than 12 months.

I'll call you guys back for the, for the debt-free scream.

Yeah, and I hope you get to go to that concert.

I'm not hip enough to know. I mean, I know Coachella, that's about— and I have heard of Karol G because I know that it's a really hip—

I need to look.

I'm so out of touch. Rachel and I only know music from like the early 2000s. We never learned anything new and exciting.

Let me see. Oh, she's pretty.

It's about the music.

Okay, I know, I'm— I think it's great.

Well, thank you for that.

Give me a— give me a millennial boy band and I'm there.

And dangle a carrot. I love that she has a thing that she wants to do that gives her a why.

Yes, sure, I'm gonna work an extra shift, pay it off.

Yeah, it doesn't have to be this really deep why of like, you know, childhood trauma that I'm running from. It could just be a fun concert and you go, I want to feel like I earned it.

That's my finish line.

And not put "Put it on a payment plan." Yep, that's my finish line. I was just at Disney, Rachel, and we did these street interviews. Can't wait for you to see the Disneyland version.

You did the Disneyland in California?

Yes.

And how was it?

Everyone I talked to, it was like an 18-year-old on a payment plan for the annual pass. It's only $130 a month. That's what they tell me. And her mom's on the payment plan too. So, they're doing this together.

Do it.

Just launch it.

Not paying it off, just paying the monthly payment.

Some generational debt to the old Mickey Mouse.

It's like a family tradition now. But it's funny how we teach our kids that payments are okay as long as you can afford them.

100%. 100%. And just stupid financial decisions we get ourselves in, from timeshares to car payments, all of that. And it's like, when it's so normalized, that's what your kids pick up. Yeah, that, that is how you do life. And that's what ends up, I think, the, the— of being average, right? Of just being paycheck to paycheck, barely have enough for retirement, if that, but really having to depend on Social Security, and you work your whole life for that, for that ending. And it's like, no, you can get rid of all of that, pay yourself instead of paying other people.

And that—

let's not be here on the other side when you're in control. Humans are really good at one thing, and that is justifying the things that they want even when they don't have the money. That is the American way. And the sooner we can go the other way, the better off we're going to be.

Caesar is in Colorado Springs up next. Caesar, welcome to the Ramsey Show.

Hey George, how are you guys?

We're doing great, man. What's going on with you?

Well, I'm in a little dilemma. I feel like I have been for like about a year now. My question is like, what will get me closer to happiness, money or experiences?

You called the right show.

I have.

What do you think, Cesar? I think you know the answer.

I think so, but I know experiences will, but I know at my age, I'm 21, so I feel like right now everybody says, it's split. Some people say, "Oh, you should go have fun," and some people are like, "Oh, you should go work and make your money now and later have fun." I'm like stuck in between those two.

Yeah, I don't think it has to be an either-or at this point for you. Um, I think there can be financial goals that can set you up to have a peaceful life because money does bring options and choices. And instead of being stressed and living paycheck to paycheck, which will rob your happiness, um, you know, you can set yourself up well. And especially at a young age, yes, investing and all that will, will do that for you, Cesar. So on one end of the spectrum, absolutely. But the other end, the lie that money at the end of the day is going to be the thing that fulfills you, that's a lie. I mean, it doesn't. Even people that have a goal of like, oh, I want to get $1 million, once they get it, it's like, okay, it's still me, so I got to do something else, right? That's— it's not the— there's like we always say, the finish line always moves. So, so yeah, I think it could be a both and. I think you can enjoy your life life and save some money and be wise with it.

So, and also, no amount of experiences will cure you if there's something going on inside. And so, I want to tell you that as a 21-year-old, I think that will free you to go. There's not a single trip that's gonna be like, "Well, that did it. Yeah, I'm happy now." Like, it's all ephemeral. It's all temporary. And so, the key is what's going on in you, in Caesar, that's even stirring this up.

Yeah, well, like, I feel like it's more like on the lookout for the future because like, right, every, every now and then I'm like, wow, like, I'm happy right now in life, you know, just I guess what, like, like a lot of young people, it's like, I want an exotic car, or like, I want a mansion one day, you know, it's like, I see like entrepreneurs go like, don't like, they work 7 days a week, 15-hour days for 10 years, and they finally have it, but then they're like empty inside. And at the same time, I know people that just have the normal life and they go on vacations and they invest a little bit and later on they're like, "Oh, I wish." I guess what my fear is that I don't want to be limited by money in my life to be able to live, if that makes sense.

Yeah, I think so. And I think it's just a mindset of what money is, where money is placed in your value system, and how you see it. So if you worship money and you think it's the thing that is going to cure all, I think you're going to get to the end of your life and like you said, you're going to be— you're not having anything to show for it from a relationship standpoint, right? Like nobody lays on their deathbed and they're like, man, I wish I had a little bit more in my 401(k), right? They're asking for their family and their friends. Like, like the things that money can't buy in life, I really do believe are the things that give us the most joy and where we can actually find levels of contentment. We put our time and energy into our families and into our marriages and our friendships and our spiritual life and our health. Like, these things are really, um, those are the important things in life. Our friend Arthur Brooks talks about this though, about how there's 5 things you can do with money. 4 will actually bring happiness and 1, uh, will not.

Yes. And the one that will not, Caesar, is everything you listed out, which is stuff. That's the one thing that, like, from a chemical reaction in your brain, like, like genuinely scientifically, the stuff does not— it will give you a momentary hit, dopamine hit, but it wears off.

It doesn't last.

Yep.

So the things that will give you happiness that he talks about is spending money on experiences, especially with people you love, people you love, buying your time back. That can bring happiness because you're not doing something you don't want to do and you get to refocus that time. Saving money and investing, that actually brings to set up your future self for success. And then generosity, making giving a habit in your life also brings you happiness. In fact, it's the most fun you can have with money. So the sooner you not only learn that, but you believe it and you act it out and it becomes a habit in your life, the better your life is going to be. And my friend Sahil Bloom wrote a book called The Five Types of Wealth, and he goes through relationships, family, social, your physical health, money, and work. Like all of those things combined, if you're healthy in all of those areas, areas, you're going to be a happy person.

List those out again, George. What are they?

So, family.

Yep.

Social life, relationships, friendships, your physical health.

Yes.

Your finances and money. And lastly, your work.

My gosh, I just— I basically did the book. I just rambled off some stuff. But that's the stuff money can't buy right there.

Like, if you have a miserable job, you're going to be a miserable person. If you are broke your whole life, stressed, you're not going to be happy.

Yeah.

If your health is in poor shape, all you care about is your health at point. And if you don't have good social relationships, you become the loneliest person on Earth, even with a pile of money and in your big mansion. And you find that people who have the big mansions who don't have a lot of people in their life and family, they want to go get a small apartment somewhere that feels cozy because it's just so lonely. It just amplifies the loneliness. So all that to say, Cesar, you're on the right path that you're even asking this question.

It's a good—

you're not, you're not calling saying, hey, I want to buy a Lamborghini Lamborghini. You're calling saying, "Hey, I know the Lamborghini is not going to bring me that joy." And the last thing I'm going to throw in there is faith, Cesar. I don't know your faith background, but I would say faith brings a deep level of grounding and a deep level of joy that the worldly treasures can never give you. That sermon hit you?

01:21:19

Yeah, I'm like a little speechless right now, because I thought you guys were going to tell me something else. But yeah, I guess, yeah, that makes a lot of sense. Yeah, yeah, because like I just don't want to be like at the top of the hill and be like, oh, this is not what I wanted, you know?

And 100%, can you do me a favor?

Go ahead.

Can I recommend a book to you if you promise me you'll read it? And I'm not even gonna give it to you because you can access it for free right now, like on your phone.

Perfect.

Read the book of Ecclesiastes in the Bible. The Bible, because this is a tale as old as time, and Solomon did it bigger and better than anyone else, and he has the best message for you at the end of it.

Okay.

Have you heard of that book?

Yes.

Okay.

Great story. Richest man on earth, had it all, and at the end, he goes, "Everything is meaningless." George loves— Spoiler alert.

George is such an ecclesiastic.

I love an emo book of the Bible that's just like, "Yes, dude." It's like a goth kid, you know what I mean?

What are we doing?

Yes.

What are we doing with our lives?

But this is like, I have this existential crisis once a week, right? Go, what are we doing? I know, when you just pan back, you go, okay, what really, you know what, that's meaningful.

That's why I liked the book Die With Zero. Not that I agreed with everything in it, but you're like, okay, what are we doing? Like, you know, I mean, you get to a point financially, which I get, all of you listening, you'll— everyone is at a different place financially. But, you know, if, if or when you get to that place of like, okay, um, you know, we've done it all, what am I doing? Am I just like stockpiling money and then when I die in my 80s or 90s, my 60-year-old kids just get everything? Like, is that, is that it? And it's like, no, Go live life now. Like, and again, you have to set yourself up well to do that. So, I'm not saying go into debt or spend everything every single month, 'cause no, that is, from a biblical perspective, that's gonna cause stress, like that will. But getting to a point of like, okay, if you work hard and you're smart with money, and yes, and you're in your, you know, Mom and Dad, I think they're a great example of this. They're in Argentina right now.

They were texting me pictures of waterfalls.

Waterfalls, and I'm like, "Look, there's Dave in front of another waterfall." Uh, but you know what I mean? But it's like, enjoy it. And then they like love our family so well and they, you know, they take, take us all on a trip every year and it's like some of the best times. So it's like, spend some of your money, like, yes, when you have it, spend some of it and enjoy it. And then the other part is the generosity part, George, which is exa— you're exactly right. When you actually have the means and the ability to reach into someone's situation and completely change their life. Like that is wild. And you know what? Like an $8,000 car for a single mom sometimes will do that, or a $10,000 car, and you can just pay for it and you just give it to her and that's it, right? I mean, like that kind of stuff, when you can use your money while you're alive to do those kind of things, like that is like there's a level of satisfaction that you're actually using your money as a tool to create a life that you love.

That's it. In my book, I say I talk about money so we can stop talking about money.

Yes.

Let it become the tool that funds the rest of the things.

That's right.

Um, and then ask yourself this question: well, I brought up this one from Galatians because this is, this is really it for me. But the fruit of the Spirit is love, joy, peace, forbearance, kindness, goodness, faithfulness, gentleness, and self-control. That to me is the goal. That's why we get our money right, so that we can focus on have peace, joy, and peace and love and all the things that are on TJ Maxx stitch pillows. That's what's— that's what it's about, Caesar. So I appreciate call, it launched a good sermon for Rachel and I. Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell, joined by Rachel Cruz. The number to call is 888-825-5225 if you want to join the conversation. If not, just keep listening. You'll have a good time. Joseph is in New York City up next. Welcome to the show, Joseph.

Yeah, thanks for taking my call.

Absolutely.

Um, yeah, so the issue that I'm trying to sort through right now is my daughter is heading off to college this year. Um, I do have two other kids to follow behind her, about 4 years apart, which is a good thing. Um, I have a lot of debt, about $200,000 worth of credit card debt loans with personal loans and HELOC. It does not include the mortgage of about, you know, I pay about $4,400 a month there. So, you know, the issue that I'm having is that I make too much money that we don't get any financial aid. We were fortunate enough that we got some merit aid. My daughter's going to be going to an SEC school and they're giving us like in-state tuition, so that helps a lot, but we're still going to be left with about about $30-some thousand after the fact. So I'm stuck with the question, do I try to pay that in cash? Because I can work extra that I could probably do that. Do I take the $20,000 Parent PLUS loan out and make that— put that extra money towards the debt that I have? I just don't know which way I go.

My wife and I here, you know, we— not that we fight about it, but we argue about, you know, what the heck we're going to do because we totally miscalculated. And we were just, um, just didn't know— we didn't know anything about paying for college. I was still living in the '80s and '90s, and things have changed since then.

Yeah, for sure. Yeah, the affordability of college, um, is, is tough. So we, you know, we find that, you know, we, we are not a proponent of any kind of debt, Joseph. So no, we will say no to the Parent PLUS Loan. And we're about going to a school that, um, that everyone can afford. And it sounds like you guys can't afford this college, right? So that puts an awkward conversation in the air, uh, with the 18-year-old, because it's May and I'm sure the acceptance has already happened and the plans have already started rolling. But the truth is, if you guys don't have the money to pay for this, you don't have the money to pay for it. So either your son or daughter who's going off to college works and finds a job and has a different looking college life than just sorority houses and frat parties and football games. Um, and you know, he or she will be working and/or they can't go to that school, at least not right right now?

Have they already, like, have they have it in their heads they're going to this school?

Yeah.

How far are we?

Yeah, we already committed.

Got the t-shirt and everything?

Yeah, for sure.

Okay, so let's talk through this. How much money do you guys make a year?

Combined income, about $340,000.

Okay, so help me understand how a family making $340,000 is $200,000 in consumer more debt. What happened?

So we have a lot of credit cards, um, you know, we have— I took a HELOC loan out, uh, probably about 5 or 6 years ago. There's about $50,000 on that. Um, we had a roof leak that was about $20,000 on that.

But what was, what was happening to the actual income you had coming in? Because this is all outside outside of your, you know, $15,000 or $20,000 take-home every month?

Sure.

Where was that going?

Um, a lot of credit card misspending. Bad, bad, bad decisions. Bad decisions over a long period of time. Yeah, that— when we bought our first home, uh, we were— which, again, I, I'm financially illiterate and I will take the full blame on that. When we, uh, when we bought our first Um, when we bought our first home, um, our agent set us up with this financial person, and then we were making the minimum payment at the time. But I didn't realize that despite me making the minimum payment, which I thought was satisfying everything, it was borrowing against the principal of the mortgage, and my principal was actually going up. So that put us in a hole there. We have since sold that house and have moved on. Um, I knew we couldn't afford house that we lived in. We had a couple friends, family, actually family to front us some money so we could get the house. Right now our mortgage is about $4,400.

And what's your take-home pay every month? What's coming into the bank between the two of you?

So my wife is about $6,000. This is take-home after taxes. My wife is about $6,000. I'm about $8,000, $9,000, roughly about $10,000. That's before, before overtime and extra shifts. Okay. I can work work pretty much as many extra shifts as I can, and after taxes I get about $1,000 per shift. Okay, after taxes.

Cool. Well, the math should be pretty clear here on how we're going to cash flow this, and if that means it slows down your debt payoff a little bit to get her through this first year and buy you guys some time, that's what I would do. Because I do think it's a great goal for her to go to school debt-free, but I think she needs to have some skin in the game versus dad just working his tail off so she go enjoy the frat parties and sorority parties. So that would be the game plan. And then the long term, we need to clean up the $200,000 of debt using the debt snowball. So attacking the smallest one first. We need to rent, you know, really dial down our lifestyle because my guess is your total expenses are close to $16K a month, if not more.

Yes, definitely.

What's coming out of the bank account every month?

Uh, mortgage.

I mean, is it more than $16K? $50K or is there any money left over?

No, no, there's, um, I, I would say, you know, I was doing rough estimates over the last week or two. I would say it's roughly about the like $14,000, $15,000 that's coming out.

Okay. Because you said $4,000 is the mortgage, right? Right. So you got $12,000 left. How much are all the payments on all the debt, the credit cards and everything?

Um, let me see. We have— I just paid a car off. We have 2 cars that are about $700 total between the 2. The HELOC is about, um, $500 a month. Um, the credit cards are several thousand. It's a couple thousand a month. Um, you know, it's like 30% interest, which is killing me. Um, uh, I'm trying to think of what else.

Yeah, well, I mean, I'm at $7,000 right now. I mean, it's just to the point, yes, that these are— and these things I don't— we don't want you to get behind on. Um, so yeah, so Joseph, I mean, I would sit down tonight and we'll give you, uh, every our budgeting app. We'll give you a year subscription to it because I would want, if I were you, you and your wife to sit down and list out everything that we spend money on in the month. And my hope is, and my sense is, that you guys are gonna look up and be like, oh crap, $3,000 to $4,000 is just getting blown on subscriptions and how we eat and just whatever the flip we wanna do. And all of that has to be tightened up to not only pay off this debt, but if you guys are serious about this college, of starting to save to cash flow and have to make payments for this college— forward payments, not back payments of debt. And so getting on a really strict budget, Joseph, I mean, even looking at selling some of these cars if you want, like whatever you can do to get out of this as fast as possible is what you need to do.

Yeah, I would not turn any more debt. That's what's got us here, it's not gonna get us out. So no more Parent PLUS loans, no more just kind of phoning it in. You guys make too much to be this broke.

Cut up the credit cards. Be done with them.

Dave Ramsey here. Most people stay stuck with their money because they're not paying attention to it. Most people are living paycheck to paycheck, stressed out and broke. Don't be most people. You work way too hard to be broke and feel broke, and you deserve to have something to show for it. That's why we built the EveryDollar budget app. It gives you a personalized plan for your money that shows you how to free up extra money every month and use it to beat debt and build lasting wealth. Wealth. Plus, you get real coaches guiding you through your plan step by step. Look, most people hearing this will just keep hoping something changes, but not you. You're ready to make change happen starting now. Go download EveryDollar in the App Store or Google Play and start for free today.

Today's Ramsey Show Question of the Day is brought to you by Yrefy. If you've lost control of your private student payments, your financial progress has stalled out. But Yrefy helps borrowers explore refinancing options with payments built around their real-life situations. Learn more at yrefy.com/ramsey. That's the letter Y, R-E-F-Y, dot com slash Ramsey. May not be available in all states.

Today's question comes from Susie in Washington. I recently paid off my Tesla.

I love that.

As two Tesla drivers, we appreciate that. Uh, and have $20,000 in credit card debt. Should I take a loan against my 401(k) to knock out that debt?

Not in a thousand years. No, no, no. You paid off the Tesla. Use the same intensity and get rid of the credit card debt. The problem with this loan against the 401(k) is there's multiple reasons. Number 401(k), you are unplugging all of that compound growth that was happening.

Yes.

So that $10,000 loan you took out against your 401(k) is now not growing for you. On top of that, you're basically double taxed on it because you likely paid taxes to put the money in, and now you're going to pay taxes as you pay it back in while paying interest on it. So, uh, no, I would not do this 401(k) loan. And it also puts you at risk with your employer. And we've gotten this call recently of, I got laid off, I got fired, and now the entire loan is due within 30 days.

Yes.

Or else it gets counted as an early withdrawal.

Yeah.

Which then gets IRS penalties.

That's right. And if you don't have the money, it's just gone then. Yep.

And doesn't change the behavior that got you here. It feels like a little shortcut.

Yes.

Robbing your future self.

That's right. We say to never cash out retirement— that's 401(k)s, Roth IRAs, traditional IRAs— unless you are facing a bankruptcy or foreclosure. Closure. So we are not pulling it out to pay the house off early. We are not pulling it out to pay off consumer debts. So none of that.

So no withdrawals, no loans. That's right, none of it.

Yep.

Just pay it off with your future income, with your savings, with your gazelle intensity. We've got it, girl.

She's doing it. Susie's on it.

Yeah, I don't know how much that Tesla was and what the loan was, but if you can knock that out, yeah, hopefully it freed up a couple hundred bucks in the payment and throw that at the credit cards. Love it. Thanks for the question, Susie. All right, Azalea is in Raleigh up next. What's going on, Azalea?

Hi, um, thank you so much for taking my call.

Sure, how can we help?

Uh, so I, uh, so I want to know if it's a smart idea for, um, my husband and I to invest in his business, uh, or, or should we pay off all of our debt first? Um, we have about, uh, I forgot about his 401k. I was just listening to whatever was going on on the phone But we have about $15,000 that he— a loan that he took out of his 401(k) that we need to pay back and about $25,000-ish in credit card debt. We don't have any car payments. And our household income is around $200,000 a year. And he— his business is growing and he wants to invest a trailer, a dump trailer and a new truck. The van he has is so old, it just— it can't do the work that he needs reliably. Uh, so with the truck and the dump trailer, it would be a total of about $70,000. Um, but that would immediately— he would be making around $2,000, um, a month extra immediately, um, with the work that he would be doing.

Okay, so he wouldn't recoup that.

That's like 5 years to break even.

3 to— yeah.

And, and you guys would have to go into debt for that. This?

Yes, we have zero. We don't have any savings at all, like cash. What we do have, um, assets, but we don't want to like touch that.

What do you mean assets?

So we, uh, so we have land, we own land, uh, we bought that cash and we have gold. Um, we have a total of that at those assets is around $90,000.

How much is the gold?

About 50.

What are you hanging on to that for? Is this like apocalypse?

Uh, uh, yes, like rainy day. Uh, you never know what's gonna happen. We just want to be able to—

more than a rainy day, like, like the world ends kind of thing.

Yeah, that's a little bit more than a rainy day. A rainy day is like, well, HVAC goes out, but you're not gonna pay your HVAC guy in gold. I'm sure he'd take it, right?

Well, so it's just for us, it just, it's just a question that we feel comfortable with. God forbid something really bad were to happen, we feel like we have that to, like, you know, it'd be easier to grab a piece of gold and trade versus, like, selling land, food.

What about money? Did we forget money's an option?

Yeah, so, well, with all of that being said, we don't know what to do, if we should just pay off our debts completely or if we should invest.

No, you should not invest. No, because the return is opposite. If you I need to, I need to get a $2,000, which we had this call, I think earlier this week or last week. I needed $2,000 to get a new license for my, for my career. And I'm going to make $5,000 more a month because of it. And it's like, done.

That's different. That's different.

This is flip-flopped. This is $70,000 of debt to make $2,000 more.

Even if you had the cash, I would say this probably is more.

You guys should go be Uber drivers at night and make $2,000.

More.

Okay, so no, no, no, no.

So pay off the debt, pay off the largest balances.

So I'm telling you, I would— and you're not going to do it— I take that gold and I'd pay off your, pay off your debt. You guys will be debt-free. You'll have some cash from that and then use that to slowly save up to invest in his business for his, um, for, for, um, like the truck, like one, one thing or the other, right? Because I do want him to be able to grow his business, but we got to do it at the speed of cash and not at the detriment of slowing down getting out of consumer debt. So how much does he make a year off this business?

So his, his main job, thankfully, he works from home and he has a lot of flexibility, which is why he's able to run his business. His main job pays him about $110,000.

Okay.

And then he makes around $40,000 to $50,000 with his business.

So that's okay.

And then you make another $40,000 or $50,000?

Yeah, I'm a home baker, so I make money from home. I'm home with my kids, I homeschool them.

Okay, okay.

So yeah, make an extra $50,000 to $60,000.

So from a, from a business perspective, I would have— which I'm sure you guys do, you know— his own business account with that. And then I would break out, yes, how— what's the cheapest truck I can get? Not a new nice truck, like what's the cheapest truck I can get to do what I need do, make that, you know, that goal number one after you guys have paid off debt and have an emergency fund. And then, and then the, you know, what was it? It was the truck and a what?

Credit cards?

It's a dump trailer.

It's a dump trailer.

Dump trailer. Yeah. Or one or the other. You're right. So like, yeah, but we're going to be cash flowing those purchases.

It's easy to try to justify it with the money on the other side. The problem is that's not a guarantee and we're not doing the math on what it's really going to cost us to break even all of that. So I would pay off all of your debt now. I personally would sell the gold. Otherwise, you're just gonna be— I would love for you guys to sacrifice and get rid of this debt over, you know, a fast period of time. But the scary part is, to me, is that you guys are making— bringing home $12,000 a month, and yet you still turn to debt. So what's causing that behavior underneath it?

Well, the debt— majority of our debt was from when we moved from— we moved from New Jersey. And honestly, it was completely my fault. I accumulated a lot of debt buying things that were unnecessary. And that's And also, yes, it has. And the other debt that we have, a credit card, was from investing in my business. I've invested a total of $50,000 in my business, which means basically I only made $10,000 last year. Uh, investments, however, have stopped. I have everything I need to continue making money. So at this point, it's just how— yeah.

And I do want you to— I want you guys to critically think, though, of the situation. Situation I keep going back to, let's go $70,000 in debt, we'll make $2,000 more a month, but the debt payment on that may be $1,000 between the truck and the, and the trailer, you know, so that you're really only making $1,000 a month.

And again, plus there's interest.

Yeah, people are doing that dog sitting, do you know what I'm saying? Like, like I'm just like, like just keeping perspective of reality of these numbers because it's not to me, um, it's like a— it's like a non— a non-starter.

So I'm just so afraid to sell the gold because we bought like $20,000 worth and now it's at $50,000. So like, I'm afraid to—

hold on, hold on. Are we doing this to get rich or are we doing this to, you know, secure ourselves in case of an apocalypse? Because right now you're mixing a lot. Uh, you told me it's just in case and now you're keeping it because now it's like, well, we could make And gold's the fear commodity.

When fear happens, which is happening right now, the market's kind of up and down, the war, everything.

As soon as that calms down, gold's gonna go down, the market's already come back up. I would get rid of the gold and get off the internet, 'cause that's what's caused you to buy this. If the internet didn't exist, you'd own zero ounces of gold.

Or cable news, it's all gold and reverse mortgages and walk-in bathtubs. Oof. Let's don't go down that path.

¡Hey, guys!

Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com.

Welcome back to The Ramsey Show. I'm George Campbell here with Rachel Cruze. You've heard us mention EveryDollar, and if you're working the Baby Steps, the best and fastest way to do it is by using the EveryDollar app.

Our app.

And it's more than just our budgeting app. Now the plan is built right in, and the singular focus of EveryDollar is to create margin to throw at your focused financial goal. You can track your progress, get personalized recommendations and coaching, and that will free up more money to work the plan even faster. So start EveryDollar for free by downloading it in the App Store or Google Play. Diane is in Philadelphia up next. Diane, welcome to the show.

Uh, hello.

And thank you for this opportunity to get your advice.

Oh, we're honored to give it. Hopefully it's good.

I hope it is too. But anyway, let me give you some facts. I'm a caregiver for both my parents. They live with me in my home. They were divorced when I was like 12 years old, and they each remarried, and each of their spouses have paid Yes. So I've had my dad— and they each have dementia too, by the way. But I've had my dad for 8 years, and I've had my mom for 5. My mom had a condo, which we kept. I didn't sell it. I rented it out. I was a landlord too with all of us.

That's a part-time job too, girl. I know.

Tell me about it.

But so anyway, I rented it out for about 4 years. It's in a really quaint little town, really nice town that I'd like to move to when all this is, um, you know, done. But, um, my, my question is, um, okay, the renter moved out. I've, I've had it for about a year where I use it to go to just relax and get some respite. Um, I have a sister, I'm power of attorney, we're both on the will for both of them to receive one half beach. I want to know, the condo still has a mortgage on it, and most of the mortgage payment— not most of it, about half— is still going to interest. So what I'd like to do is pay off the mortgage, uh, the remaining mortgage on the condo. My sister has said she hasn't been helping. I've been doing most of it by myself. She just started helping maybe about 8 months ago. Um, she said that she would forfeit her inheritance for the condo just because, you know, it would have been gone anyway had they been in a nursing home or anything like that. They would have taken any assets they had, um, or that my mom has.

Um, so I want to know, one, is it okay? Would it be good to pay off the mortgage about $33,000 left. And second, if I should get what my sister said in writing so that there will be no problem, you know, in inheriting that property and having it for myself to move into.

Okay, so you're saying you're gonna— you want to take the condo and she'll take the rest of the inheritance?

No, I mean, what do you mean I mean, uh, any other— there, there are no other assets. Is that what you're asking?

Oh, it's just the condo right now.

Yeah, for my mom. Yeah, in fact, yes.

So what is your sister getting in this?

She wouldn't be getting anything, not from my mom. My dad, my father has money. I've been, you know, a good steward of his money, so he has, he has money left.

Okay.

And they each have, they each have insurance, but, uh, like an insurance policy that's, that, that we could have for life insurance. Insurance? Yeah, but my mom's is a small policy.

Okay.

It's only about $15,000.

Okay.

So, um, but on my dad's side, uh, she would get money because she hasn't really done anything for—

Yeah, I was gonna say, the compensation of you being the caregiver, uh, is something usually most siblings, you know, talk about because, to your point, you would be paying for someone to be doing this and you've been doing that.

And so some states you can get paid to be the caregiver of your parents, but they don't.

Yeah, you'd have to be on Medicaid, and, and, um, you know, they'd have to spend down all their assets at work. You know, they have a lien on my condo, would be gone.

So how much is the condo worth if you were to sell it?

Yeah, the market value right now is, is, um, so it's— I should say only, but it's about $130,000.

$130,000.

Okay, okay. So the one-bedroom, one-bedroom condo? Yes.

So, so technically, if it was paid off and that was the asset that you girls had, that you, you and your sister had to split, then to buy her out, you would have to pay $65,000.

Yes, definitely.

Yeah, to pay her out. Yep. But you're saying you have $33,000 that you could do just to pay it off right now?

I could pay the mortgage so she— my mom wouldn't be paying, uh, interest, you know, on that, because I am, uh, using— she gets a monthly pension, so um, a small pinch, about $2,500 a month, and I use part of that to pay the mortgage.

Um, yeah, because at the end, when the— like, if you didn't pay it off and she passed, the estate has to settle up.

You'd have to continue the payments on your own.

Yeah, I'd be paying it anyway.

Yeah, exactly.

Sell it. That's the thing.

Yeah, if you get it in writing that you're going to get your money you put into it plus your share, then I think that's fair.

Yeah, you just may have to still continue to buy her— you— there may still be a difference, but I wonder if you can add up from an hours perspective of the caregiving and just see if your sister would negotiate with you like some of it off just for what you—

well, even at that, like, if they were— if she was in a nursing home, that's why I figured if she was in a nursing home, the local— just a mediocre nursing home nowadays is like $9,000 a month, and it's $350 a day.

So, um, that's what you're saving by you being the caregiver. Yeah, that's what is that, $108,000 a year easily.

And I've had it 5 years, so I figured I've earned, I've earned the condo. That's my point of view. But I just wanted to—

have you mentioned that to— have you said that to your sister at all? Have y'all had that conversation?

She did. Yeah, she, she said, yes, you can have it. But saying it— and that's what I'm saying.

So she's good with it, but you seem to get it in writing because you're like, it's a handshake agreement. Right now. We need this in writing.

Right, exactly.

Yeah, so just say, hey, I'm working with my estate planner. We just want to formalize some of these things and get it in writing so that we're clear, there's no confusion. And you guys have a good relationship right now?

It was better when she wasn't helping out. It wasn't so good.

Okay, there was enough pause there that I went, oh, okay, just a slight pause. But yeah, you want to salvage what's left of the relationship at least, and it can go south when, you know, family passes, you're grieving, and now you're like, well, you said— and now she's looking at the numbers going, well, I could— I'd love to have $60 grand in my pocket.

Yeah, I never said that. Yeah, right, exactly. She doesn't— she never listened to me. I've been telling her about your program. I'm debt-free, but they're, they're in, you know, in dire— not dire straits, but, you know, they're struggling. That's how I got her to help me. I offered her money. That's how she's helping.

Yeah.

Well, I think what you're doing is very fair. You sound like a real noble, sweet person. I mean, the fact that you've, you know, given your life to care for your family at this point is—

yeah, you're amazing.

Incredible. They're, they're so lucky to have you in their life. And that's a much better life than being in a nursing home, by the way. The quality of care that you're giving them, um, is priceless. So I appreciate the call, and I wish you the best. Yeah, you know, formalizing all of this.

For sure. Yeah, I was going to say, if you called to get permission to— if it's formalizing okay, yes, it should be a requirement. And so I would—

and should I pay off— should I pay off the mortgage now?

Once it's formalized, I think it's wise to go. If you got the money sitting around burning a hole in your pocket, you don't want to deal with the mortgage and the interest, it'll definitely give you some peace of mind. But make sure it's formalized first, and then you can decide if you keep the condo.

Great idea. And then think about— okay, all right, thank you so much.

Absolutely. Thank you for the call, Diane. I love that we're talking about this now.

What a jewel of a human. Yeah.

And two parents with dementia, I cannot imagine.

So hard. So hard. Oh wow, that's a lot of work.

And the other thing to think about here is power of attorney, which it can be very difficult once they have lost the cognitive ability to make decisions. So depending on the diagnosis, you know, I would be talking to the doctor and the estate planning attorney to figure out, make sure, can we get financial power of attorney to move the money around, make financial decisions on their behalf? That's an important piece of the puzzle too. But I appreciate the call. This is the, the hard stuff you deal with, and the Baby Steps don't make any of this easier. It just takes away the stress of money problems on top of all of this. So I'm so glad that you followed the plan, Diane. You're debt-free. You have options because you set yourself up for that kind of life, for that kind of flexibility, for that kind of generosity. Because if you were broke, you wouldn't have many options. You wouldn't be able to take care of your family the way you are. You wouldn't be able to pay off the condo. So I appreciate you being a living example of what life looks like when you follow this plan.

All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates, but when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey Trusted Agents aren't just experts who guide you through buying or selling. They're people you can trust to have your back from the first call to closing day. Find a Ramsey Trusted Agent near you at ramsysolutions.com/agent. That's ramsysolutions.com/agent.

Our scripture of the day, 2 Corinthians 4:16: Therefore we do not lose heart, though outwardly outwardly we are wasting away, yet inwardly we are being renewed day by day. Thomas Edison said many of life's failures are people who did not realize how close they were to success when they gave up. There we go. Thanks for the light bulb, my guy. We got a lot of lights in here thanks to you. Never give up. All right, Michael's in Louisville up next. What's going on, Michael?

Hey, how are you doing, sir?

We're doing great, just having time.

Uh, so my question is, um, I just recently came across, um, a financial reset myself, and I came across a decent sum of money, and I'm looking to see moving forward what is the best way to be a good godly steward of, of what I've got.

Oh, it's a great question. How much money has come upon you, Michael?

Well, believe it or not, I just sold a baseball card for over $300,000.

Come again now, what card was this?

Tell us the deets. How do we get into the business?

Yeah, literally, I'm telling you, um, went to the card shop. Um, finances have been tight and, uh, had spent a lot of money, uh, or been so selling a lot of baseball cards to help pay, um, pay bills, uh, this winter. And so I thought I owed it to myself to go buy some more. And so I bought a box that had 2 cards in it and pulled a 1-of-1 Ohtani refractor, which just sold an auction for $324,000.

Oh my God, that is wild.

That is crazy.

So is this like, like an auction that will handle this all for you and they take a fee?

Um, yes, so they've already taken it, it's already sold, I've already gotten a large cash advance, and the rest of it comes within the next week through a wire transfer.

Wow.

All right, what's your net worth currently without this card?

Oh, Without this card, I mean, I've never been Dave Ramsey financially free. I struggled with credit cards early on and kind of never was able to get out of that hole. I've got investment properties, just a few, the wife and I. And so we have, we're in really good shape on those. And thanks to this baseball card, completely debt-free with the exception of mortgages.

Oh, great.

Okay.

So you don't have credit card debt anymore? Anymore?

I just paid it off.

Yeah, but you have your primary home as a mortgage.

Well, he had it before the baseball card. How much did you have before the baseball card? I'm just curious.

That's embarrassing. Probably like 40-some thousand.

Okay, because that part of you has not changed, okay? The guy that got $40,000 in credit card debt, he's still there. He's still in you, okay? And you just were able to wipe it off with a lucky—

same part of your brain. That impulsivity that caused you to go into credit card debt is the same one that got you that card. It just happened to work out this time, right?

So I'm just saying we got to be cautious, okay? Because— okay, um, meaning I'm glad you paid it off, but do you know what I'm saying? You had no emotional sweat equity, if you will, by paying off $40,000 of credit card debt. It didn't take you a year with extra jobs and you had to really sacrifice. It was just in one fell swoop, it was gone. So nothing in you has really changed.

So it's just a red flag, it's a marker, just easy to go back Yep.

Just a marker of, hey, I got to be aware that that is my— that's my propensity is to go into debt. So we got to remember that.

Okay. But just to say this, I have definitely changed. This has given me a new perspective on life. I knew it's given my wife and I financial breath. The stress is completely gone. Understand those impulses may be there, but I'm very much aware of the blessing this is and that things need to change moving forward.

Good.

Okay.

I'm so glad, so glad you said that. Yes.

So what's left on the mortgages?

Um, so with investment properties, we have about $230,000 that's owed, and then— I'm sorry, uh, $320,000 that's owed on investment properties, and, uh, $100,000 and some on personal mortgage.

Okay. And you guys have savings already?

Um, we've got a little bit, not much. Okay.

And what's the amount that's sitting there from the car right now?

Um, we still have over $200,000 coming.

Okay, great. So you can fully fund an emergency fund of 3 to 6 months of expenses and still have, what, $160 grand, $175 grand?

Yes.

And that would pay off your primary mortgage, correct?

Okay, well, um, first of all, I gotta give, um, I mean, I know that I need to give something back to the Lord here. Sure.

And, um, we weren't done with the list. I was just walking through the things you could be doing. We're gonna give someone enjoy for sure. I just want to see what was left over after you paid down the mortgage and set aside the emergency fund.

I got you, I understand.

Would there be a good chunk left over after that?

Um, no, there was another, um, secondary, like a Home Equity Line of Credit that I paid off as well. So I'm looking at, as it says, with mortgages and about a little over $200,000.

Okay, that's just your primary plus the HELOC the HELOC, not the investment properties?

Um, the primary is about $180,000. The HELOC is paid off, and then I have investment properties.

Okay, the HELOC's paid off, so we don't even— it's out of the picture now.

Great. Yes.

Okay, so what I'm thinking is we set aside an emergency fund. If we have enough to pay off the mortgage completely, let's do that, and then the rest, let's give some and enjoy some.

That sounds good.

Any different thoughts on that, Rachel?

No, I—

frees up a mortgage payment, so I love that idea.

Yes, for sure.

Um, yes, one of my— one of my mortgages has like 8.5%, which is higher than everything else. It's, uh, $55,000 for one of the properties.

I thought about getting rid of that one just because I was gonna say, yeah, how many—

how many investment properties do you have?

Um, I have, uh, 4.

Okay, and they all have mortgages mortgages on them?

Yes, but they're all— I mean, there's all— there's plenty of equity in all of them, but the highest interest rate is one that's 55%.

So I'm just curious, um, if you sold all your— all 4 investment properties, I'm just curious, and paid off all the mortgages, how much equity, how much cash would y'all be sitting on if we sold everything?

Yeah, sold all the investment properties and paid off my mortgage.

No, no, no, it didn't pay off yours. Pay off the mortgages on those 4 properties. So what would you net out?

Oh, with the money from the card? There's not enough money from the card to pay everything off.

No, no, no, no, Michael. You have 4 properties. Here, we have time. We got 3 minutes. Okay, how much is one of the properties? How much do you, how much is it worth and how much do you owe on property number 1?

Um, $94,000 is what's owed and $120,000 is what it's worth. Okay, property 2, uh, $55,000 is owed, $120,000 is what it's worth.

$120,000.

Okay, property 3, $80,000 is what's owed, $160,000 is what it's worth.

$150,000. $160,000. $60,000.

All right, so we got the last one.

Yep, property 3 is owed, uh, $180,000 is what it's worth.

Okay, got it.

Okay, so we got— I got I got like $280,000, George.

I was gonna check your math on it.

I'm chicken scratching on this.

$271,000. Final answer, Bob.

$271,000. Oh, it was pretty quick. I rounded. I was a rounder.

So that's, you know, that's before any kind of closing costs and realtor fees. But let's call it $250,000-ish.

$250,000 just for the heck of it of equity that's in some of these. Okay. I'm just trying to paint— I'm just, I'm trying to get different scenarios because when you come into a pile of money, there's a lot of different— and because you guys have so many things happening in your life, um, and you're asking us— the word steward is on the screen, which I'm impressed.

You brought God into it.

You brought God in, so we're, we're going to talk about that. We'll go there.

100%. My pastor and I have talked about like a possible foundation with a little bit of money, or, you know, help paying for some mission.

Here's the thing, generosity comes from overflow. And right now, you know, if you look at Proverbs, the borrower is slave to the lender.

Yes. So we're going a biblical world view, um, with our money. Every time debt is mentioned in scripture, Michael, it's in a negative fashion. It is not a sin, so you're not going to like go to hell because you have a HELOC. Like, none of that, okay?

It's not— the word hell is in HELOC.

That's true, the letters are there. Uh, you know, you don't have to confess anything. Like, it's not a sin, um, but every time it is mentioned, it is negative. It's a curse on your family. You are a slave to the lender. It is not good. Like, nowhere in debt— in scripture is debt good. Okay, so Michael, I'm gonna be a little hard on you, but you've been playing around the edges and the fringes of this debt world. HELOCs and credit cards and 4 mortgages. And I mean, it is like you have become— you have loved debt. Like, you do. You use debt as a tool, and it's gotten you in a really bad spot. And now it's gonna be so bad. I was gonna say, like, get out of hell free card. Get out of hell free card came upon on you. And so if we're gonna go all in with the biblical perspective, let's go all in and let's just pay everything off. Let's sell everything. Let's start with no debt. And if you did that, you would have probably almost $300,000 back in your pocket after you sell everything and pay off the primary home with the proceeds of the car.

$300,000 in the black, Michael.

You got That's what I want to do. Hey, that puts this hour 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.