Transcript of Behavior Matters More Than Math New

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studio, this is the Ramsey Show. I'm Dave Ramsey, your host. Rachel Cruz, Ramsey Personal personality, number one bestselling author, co-host of the Smart Money Happy Hour on the Ramsey Networks, and my daughter is my co-host today. Open phones at 888-825-5225. Andy's in Indianapolis. Hi Andy, how are you?

Good, how are you?

Better than I deserve. What's up?

Yeah, well, uh, I'm 50 years old, married, uh, with two kids, uh, just getting one off to college here just now, and, um, We're in a situation where leading into last year, uh, had corporate buyouts cap my pay and really cut my pay significantly. And in the process of trying to make up that income, my wife became severely ill and we're heading towards disability. So she's definitely disabled now. We're looking at— she basically, we should— she should have been on disability years ago, but we've had trouble getting her there due to various reasons with her sickness and diagnosis and whatnot. So we've kind of made it this far trying to put bandages on everything. Uh, 2 credit cards maxed out. We, um, sort of foolishly took the opportunity to take, um, mortgage forbearance. We were kind of doing it at 3 months at a time. And through the end of the mortgage forbearance here this year, uh, they will not defer our payments. So they're, they're asking for $13,000 to keep us out of foreclosure. We weren't, we weren't aware that after 6 months they can't defer payments, but we're in a situation where we're going to file Chapter 13 bankruptcy and restructure.

But I wanted to talk to you first.

Andy, I'm so sorry. That's a lot.

So you have $13,000 that you're behind on your home today?

Correct.

And they want it by the end of the year.

They want it, um, by the end of this month.

Okay, so that's, that's a, that's a, uh, a train that's been coming down the track for a while. You've seen it coming for a while though?

Absolutely. Yeah.

Yeah. Okay, but now it's, now it's on.

Okay, we thought it was going to be temporary.

What is your home worth?

Uh, about $350,000.

$350,000?

$350,000?

Correct.

Okay. And what is the mortgage balance? What's it take to pay it off today?

$150,000.

Okay. All right. And, um, what do you make now?

So I just started a new job about a year and a half ago. I used to be on commission, so that was always another thing too with, um, trying to manage cash flow, but I'm on salary now at $90,000 a year.

Okay, that's good news.

All right.

And you, and you have 2 credit cards and the balances on those are— the balances on those are what?

$18,000 total. Total. Okay.

All right.

And how much on your cars? How much do you own your cars?

One car is paid off. One car we owe $8,000 on, pay $278 a month for it.

Okay.

All right.

And, um, what other debts?

Uh, we have $2,000 in medical bills. Usually that's kind of a standing number. It seems to erode. We've, we've, I have an $8,000 deductible right now. Previous years we had a $15,000 deductible that we would max out. And then I refinanced the house twice in the last handful of years.

Why?

Just to pay off credit cards that we had used for medical expenses, which I know is Extremely foolish.

Okay.

But we keep thinking, you know, we thought it was temporary. You know, we kept thinking she was going to get better. You know?

Okay. Well, the reason I'm asking all these questions is it's the only way I can get to your answer. A Chapter 13 bankruptcy takes the balances that you have and you have to pay the minimum normal payment plus something on the arrearage on the car and on the house for 60 months, for 5 years, okay? Your unsecured debt can be paid back on a formula that they use when they're calculating it. Some percentage of the $18,000 would be reduced. So pretend like they gave up half of it, so you had $9,000 that would be in the 5-year plan as well. Okay, so you're gonna be in there for 5 years and you're going to pay every dime that you owe on the house. It just spreads it out, it's all it does. Okay, there's no deal, there's no back of the mortgage. So that $13,000 is gonna be spread out over 60 months plus your regular house payment. So in Chapter 7 bankruptcy, you're gonna have your regular house payment, or Chapter 13, you have your regular house payment plus something on this $13,000. Whatever $13,000 divided by 60 is, okay?

Mm-hmm.

So here's what happens, that 78% of the Chapter 13s in America fail. The people don't make it through the 60 months because they can't make the payments. And we already knew that because they couldn't make the payments, and that's what put them here. You follow me? And so it's like when you refinance the house and didn't change anything, and now you got new credit card debt after that, okay? So because you didn't change anything, you didn't fix what the actual problem was, you just treated the symptom. And that's what the bankruptcy does. So I always try to figure out a way if there's anything we can do to not file Chapter 13, because it is a bankruptcy. And then for the rest of your life, if you're filling out any form anywhere that says, have you ever filed bankruptcy? Yes, I have. I filed a Chapter 7 in 1988, and for the rest of my life, I get to answer, "Yes, I have filed bankruptcy." So I don't recommend bankruptcy. I try to figure out a way to avoid it where I can, if at all possible. So let's pretend that you paid the car payment, you got on beans and rice, rice and beans, and you work 2 jobs or 3 jobs more, and you didn't pay a dime on the credit cards, and you stacked up cash.

I bet you could scrape together the $13,000 before the foreclosure actually occurs.

Which would be how long?

Probably 6 months.

Right, I see.

Get current on that and then go work on your credit cards. Your credit is going to be damaged, but not damaged as much as if you file bankruptcy.

And Andy, I'm assuming you have nothing in retirement, right? No 401s?

We emptied that years ago with her diagnosis.

Yeah, what's her diagnosis?

Uh, chronic neuro-Lyme disease.

Oh wow.

Okay, it's been, it's been controversial in the previous years. Insurance didn't cover it.

We lost a team member to just the disability. We didn't lose his life, but he lost his— lost him to disability on exactly the same thing a few years back. Oh man, that's harsh.

Um, well, you remember, you remember the stimulus we received way back when, the Biden stimulus? We spent that on a $3,000 test just to confirm whether treatments were working or not. Wow. For example, you know, out of pocket. So we're hoping that changes. We're hoping insurance gets better. But here's We do not have insurance right now either.

When I filed, I heard my attorney say something loud and clear, and I always say it to folks, is after you file bankruptcy, you're still in the exact same position you were except for the debt. So all the things that are draining your emotions, all the pull of this medical, all the exhaustion of fighting and fighting and fighting against the system is all still there. Bankruptcy didn't fix any of that. And really, that's kind of what caused you to get here. So what I would do is find out how long it takes for an attorney to do a foreclosure in your state and see if I can't scrape together the 13 by going all hands on deck before the foreclosure and avoid the bankruptcy. That's what my first goal would be. As your business grows, everything becomes more complex. There was a time when Ramsey Solutions had too many disconnected systems and not enough visibility across the business. We wasted too much time chasing information instead of making decisions. That's why we got NetSuite. NetSuite brings your financials, inventory, CRM, and more together in one place. More than 44,000 businesses run on NetSuite, including Ramsey.

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Good, how are you?

Better than I deserve. What's up?

Uh, well, we have $50,000 owed on a credit card, $17,000 on a car, and we're getting a tax return of $17,000. I want to put that $17,000 tax return towards the car and get it done. My husband wants to put it towards a credit card because it's a higher interest rate. What say you?

Well, you know what we say. We say pay it off small. We say pay it off smallest to largest. You knew that, right?

Yes, I knew that. My husband just wants to do that credit card so bad.

Well, um, I would not do that. I would pay off the car and I'll be— can I be smart aleck for a minute? If we used his plan, we'd be where you are.

Exactly.

Okay, so I don't need his advice. His opinion is invalid based on the pattern of his life. No thank you. So now my Smart Alec's done. Okay.

Well, the first win, Carrie—

You win the argument, Carrie. That's the bottom line.

The top win for me is that he wants to pay off debt. We have so many people that call in that can't even get their spouse on board. So arguing about which debt to pay off, It's a good argument to have. But the umbrella, it's a positive. I'm glad that you guys are on the same page with that.

Agreed. Agreed. Now that I got my smart aleck out, I completely agree. So anyway, yeah, I would pay off the car. And actually, here's the weird thing. I've done this a bunch of times because his angst is that the interest rate on the credit card is so much higher than the interest rate on the car. Correct? Yeah, that's what is— that's the burr in his saddle. And so if you said, do you have any idea what these two interest rates are? Do you happen to know?

Um, the car is like 5, 5 point something, and the credit card is 18 something.

Okay, so it's a 15 swing or 13 swing. Okay, so if we do round numbers and just to make it real easy, so let's say it's a 10 swing, it's a little more than that but not much, it's $1,700 $1,700 a year is the difference. 10% on $17,000.

Okay?

Okay.

So it's costing you to do it my way $1,700 for the year. However, you don't have a car payment anymore, and your car payment is what?

About $500, over $500.

Okay, and your household income is what?

Um, about, well, he brings home about $12,000 a month.

Okay, and $50,000 means that if we don't have a car payment, we should pay, and we make that kind of $12,000 a month, we should pay off $50,000 in about 10 or 11 months.

Oh, okay.

Okay, so it won't even be a full year.

So it won't even be $1,700 difference. And the other difference is, is that you cannot calculate The sense that we have traction, the sense that we've done something big with this money, and what that does to the momentum towards paying off the rest of the debt, that's hard to put into simple mathematics. And all we're doing is simple mathematics.

How much is the credit card payment every month? I'm just curious. I'm 50,000.

Well, the interest would come up to almost $600 a month if we just paid the minimum.

Yeah, so you're gonna put, I mean, you need to put, you need to put $5,000. Yeah, without a car payment, you need to put $5,000 a month on the credit card and be done with it in about 10 months, give or take. And so it's gonna cost you about $1,700. $1,700 was a round down so we can actually be correct now. And And yet, it's also got the highest probability of actually succeeding. And so, having taught people this for 30 years, having done it myself, having literally gotten tens of millions of people out of debt, I'm going to encourage you to do it that way.

Yeah, Carrie, have you guys started the process? You said that this is gonna be a tax refund check of $17,000. How much are you guys throwing at debt right now, the car and the credit card?

How much are we what?

How much are you throwing at the car right now? I mean, are you guys paying off debt right now, or y'all waiting on that check?

Um, well, we're—

I wouldn't say we're actively like rice and beans paying off debt right now. Um, so we're kind of waiting on that check, but this check has gotten me motivated to do the rice and beans, beans and rice thing. You know, like, let's get it done because it's momentum.

It's—

I see something can happen.

Yeah, sure. Totally, totally.

Yeah.

Yeah. So $500 plus, uh, the $600 that you're already paying is $1,100. So I'm asking you to come up with another another $3,900 out of your budget, and you'll be done in 10 lousy months. And of course, you've cut up the credit card, or you will tonight, and the two of you are on the same page and everything else. So overall, let's give him an 8 out of 10 because he's under the umbrella of husband that wants to get out of debt.

Yay!

Like Rachel said, that's a big win. That's a huge breakthrough. So at that point then, we're only arguing about concepts, which is a fun thing to argue about. Which play to call to win the Super Bowl? These are good arguments, right, that we get to have this question. And so it's a good thing. But I would, and we would, tell you to pay off your smallest to largest. So Rachel, here's the interesting thing, okay? Let's go ahead and throw out the rest of it because everybody out there— this is all the crap we get on TikTok and Reddit and all the other stuff— that the debt snowball is not mathematically correct. And that the avalanche method that some people talk about, where you pay off highest interest rate to smallest interest rate, is mathematically correct and you will get out of debt faster. The answer to that is, is that you're wrong because your math formula is incomplete. If you learn how to do sophisticated mathematics, you have to include probability of completion. The number of people that complete the debt snowball, because it gives them a positive feedback loop, is over 10x the number of people that actually complete the avalanche.

Because the avalanche is emotionally, relationally hard to do because you don't get traction. You don't have something saying, "Way to go! Way to go! Way to go!" And every time you pay off that little debt, you get a "way to go" feedback loop. And that "way to go" feedback loop keeps you in and increases your chance of actually finishing the freaking program and getting out of debt instead of having some kind of mathematical theory that you do nothing with and you get paralysis of the analysis. And so when you add in probability of completion, the debt snowball is far superior to the avalanche, mathematically. But now we've actually done some sophisticated mathematics instead of 6th grade math, which is how most people do their math, and that's what gets them broke. So in her case, it actually is more expensive. What I just told her to do is going to cost them more money. It's gonna cost them about $1,500 more, mo— dollars more, maybe $1,700 more, somewhere in there, to do it the way I just outlined if she does exactly exactly what we just told her to do. And if he does exactly what we just told him to do.

That normally is not the case, though. Normally, when you run the math out, it's like a month and a half, 2 months difference on how fast you get out of debt, if you work the avalanche precisely and you completed it, which almost no one does.

Well, people do. I mean—

They do, but the probability is much lower of completion.

Yeah, yeah, yeah, yeah.

And so, and that's why when MIT did a study, They figured out that personal finance— and they came back and said on the front page of Time magazine, "Ramsey's right." You know, because the debt snowball works because of the behavior aspects of personal finance. You're modifying behavior, you're not fixing math.

And always the joke is, if you're $50,000 in credit card debt, you wouldn't be there if you were doing math in the first place with your bank account, you know.

Which is kind of what I just did a minute ago when I was abusing him. Yeah, if your math was so good, you wouldn't be here. So, um, you know, that's the thing. So the debt snowball is superior because you understand that personal finance, including saving, including investing, is more behavior-based than it is actual math-based. Another example of that is in our millionaire study, when we studied 10,000 millionaires, we found they weren't that great at picking mutual funds. Their mutual funds were good, to okay. They weren't bad, but they weren't the best. The difference was that they actually freaking put money in them instead of talking about it. That's the difference. So the behavior matters more than the math.

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Dave, I'm doing well, but I got myself in a financial predicament with my father-in-law I just can't figure out how to get out of. Prior to my wife and I getting married, he purchased us a house for $1 million cash, and he pulled ahead $200,000 of our inheritance, leaving an $800,000 balance for us to pay off in a mortgage. That he said he would help us out by just only charging us a 3% interest rate until the balance is paid off on a 15-year mortgage. So that's a lot of money, um, but I have no documented equity or ownership in the house for which I pay a majority of the mortgage, the maintenance, the repairs, the upgrades. And I find myself just digging myself every month into this deeper hole that I possibly one day if something bad happens, I will just have no equity in.

Have you talked to him about it, Matt?

I have, to which he said, uh, to trust him and everything will work out.

No, thank you.

They would. Yeah. Mm-hmm.

Okay. So let's pretend— how old is he?

He's 70. Okay.

Let's pretend that his heart skips a beat. As he's driving down the road, which could easily happen to a 70-year-old, and he loses consciousness and goes across the lane and hits someone head-on and they die, he's gonna get sued for millions and millions of dollars, and it's gonna be a lien on the property that he owns. You're screwed.

And he has put it in a trust in order to—

Doesn't protect it. It does not protect it from that. Okay, this is absolutely bogus. This is controlling beyond belief. No, no, I'm not going forward with this.

Would it be what, an LLC that protects it in that case?

There's nothing that'll protect it. I mean, the LLC is owned by the guy. You can go after the LLC shares. So the property, if you're gonna pay payments on it, needs to be in your name. There's no excuse for it not being. Trust me is not an answer.

Mm-hmm. And he's worried that I would take the property potentially from his daughter, and I haven't nearly paid my half or a fair share of it. So how can we—

how long have you been married?

We've been married over 1 year.

Okay, so here's what I'm gonna do. I mean, you guys do what you want to do, but this is not tenable for me. Okay, I'm not gonna live like this. So I'm sorry, I shouldn't have done this deal. It's turned out to be a really, really bad idea, and I wished I hadn't done it. And so we're going to undo it.

Mm-hmm.

We're gonna let you have your house, and we're gonna go buy a house, or we're gonna refinance this, and we're gonna put the $800,000 mortgage in our name at 6%— at 5.5% right now— and we're gonna pay you off and you're gonna put the house in our name. But we are not going to continue forward with the house only in your name, period.

How will your wife handle that, Matt?

She's not gonna be too thrilled because that's gonna increase the interest rate inadvertently for us. That wasn't necessary in her eyes.

It's necessary because you don't own a house. And you're so freaking vulnerable that it's ridiculous.

Mm-hmm.

Your father-in-law says, trust me, but he doesn't trust you.

Mm-hmm. Yeah, it needs to go both ways.

This is not cool.

Yeah.

And my— and my fear, Matt, is that a 3% interest rate is going to rattle your 1-year marriage.

You know what I mean?

If your wife is already taking his side in a level of logic, right, of just math, just like, "Oh, I just wanna save money," and not looking at the relational equity of what this is doing, and then the potential risk of your home, yeah, it's probably gonna cause some waves, but I would say it's probably necessary.

I'm gonna cause some waves. I'm gonna start out gentle and I'm gonna turn it up. Start out kind and honoring and say, "I appreciate this. I know you've got good intentions. I love you and I appreciate this, but I simply am not going to go forward with this." forward with this. It's not going to happen.

Okay.

And you and your— it's not worth the 3% savings.

Mm-hmm.

Your risk that you're taking is astronomical. It's ridiculous. It's a horrible deal for you.

Mm-hmm. And I asked my wife if she was in the opposite role, if my family had purchased us a house and she was paying a majority of it, would she be comfortable in this deal? And she said she wouldn't be comfortable.

Well, then we have to decide, are we going to leave our father and mother and cleave to our husband and cleave to our wife? It's an old-fashioned saying, you leave the father and cleave. It's Old English from the Old English Bible. But yeah, you know, but we have to set up, okay, who's running your house now, her dad or you guys?

And again, this to me, I'm like, this is a totally different— I don't like the idea of people using family as a bank, right? People do this with student loans, they do it with mortgages. And it just always, it's always a little icky and weird. It just kind of changes, it changes the relationship. But the thing on top of it for Matt, for me, is like, if you guys start having kids and you're building a family, the place that you call home, that is supposed to be your home. That's why it doesn't make sense to me of his logic. This is your home and her home, his daughter's home. And why he doesn't give you all the dignity of putting your name on the title, of following through with the plan that's already agreed to, is odd to me. And his fear, I'm like, I'm a little offended. If you're going to do this deal with me and be my banker and be the husband to your wife and you can't trust me with a million-dollar house, you know what I mean? Like, it's just like, oh, it just adds to the relational dynamic.

Yeah.

Yes, it does indeed. And that's why I kind of lose sleep over it. And I see as every month goes on, it's harder to bring up this conversation.

Yeah.

I think the two of you, you and your wife, need to sit down with a good a good financial counselor— I mean, a good marriage counselor, and maybe your pastor if you have one. And you guys need to talk it through, and then you need to decide what you're gonna do. And then—

and you guys together—

and I feel unified front— you've got to present it to him.

And yeah, together, or her, you know, either gonna—

we're either gonna refinance this and get it out of your name and put it into our name, or we're gonna hand you the keys and we're gonna move. And so, because we're not going forward— and listen, don't accept a mortgage from him either. If he says, okay, I'll put it in your name and I'll just put a mortgage on it— no, I do not want to owe this man money. This has got a bad vibe on it. The best thing you can do for your wife and your marriage is for this guy not to be between you anymore.

Mm-hmm. And I think his intentions are good.

I don't think his intentions are bad. I just think he's emotionally immature.

Mm-hmm.

I would never look at Winston Cruz and say, "I can't put this in your name because I don't trust you," after I handed my daughter's hand to him.

That's what I'm saying, it's so odd.

I gave him the most precious thing I have on the planet, one of my daughters. I trust you with my daughter, but I don't trust you with my house. But I don't trust you with a stupid house.

Oh, that's backwards.

No thank you.

That's backwards.

That's just emotionally Oh, Matt, I'm sorry.

And your wife. I'm like, it's going to be—

this is going to be a hard process, but dude, but it's going to be good for you guys if you guys get through this. Choose the conflict today because the one that's laying out there 10 years from now is much bigger.

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Whether you're a person of faith or not, Proverbs is the book of the Bible that is called the wisdom literature. The vast majority of it was written by Solomon, which those of us that are Christians or Jewish believe Solomon to be one of the wisest men to ever live. And he wrote wisdom in the book of Proverbs. And then we fast forward and it becomes our Bible, or in the case of Jewish person, their Bible, the Talmud. What Christians would call the Talmud, what the Jewish person calls the Bible. And the wisdom literature is— most of us in evangelical Christianity or Orthodox Judaism believe it to be literal. And so that gives people trouble in some cases, but that's okay. The borrower— Proverbs 22:7 says, "The borrower is slave to the lender." Now everybody that's listening, think about this for a second. How many times have we had payments to some organization? A car company, a credit card, a bank, And we resent that organization. We signed up for it, but by the time we finish paying off the truck, we hate Chevrolet, or at least Chevrolet, you know, General Motors Finance. By the time we finish paying off the Toyota, we can't stand Toyota Finance.

By the time we finish paying off Citibank, we hate Citibank. Make fun of the mortgage company name that you pay payments to? It's because slaves seldom love their masters. Now, it's not literal slavery in the sense of you gave up ownership, but it is mathematical and legal slavery, and if you don't believe it is slavery, try not having it.

Financial.

Hmm? Yeah, financial.

Try not having it. When you pay off your mortgage and you pay off all your cars and you pay off all your student loan and you don't have a single— people they stand differently.

Well, it's a spirit. It's a spiritual freedom because money is so tied to so much of our lives. And when you hand that part of your life over to someone else, it is a form of bondage.

You've given them ownership.

Yeah, that there's not full autonomy over the work that you have created and the paycheck that you've created through your work.

So when Sharon and I went broke and we discovered that scripture, among others, we decided not that debt is a sin, but that it's really dumb. And so we decided under no circumstances are we borrowing money, but we also have observed in 30 or almost 40 years of doing this now that there is zero case that I'm going to loan money to one of my children. I'm going to loan money to another relative. I'm going to loan money to a friend because it instantaneously, whether you want it to or not, you don't have a choice have a choice in the matter. The law of gravity is the law of gravity whether you like it or agree with it. It changes your relationship with your friend to two good friends from master-servant. And the old joke is if you loan your brother-in-law $100 and he never speaks to you again, was it worth it? Yeah, haha. Okay, so, but, you know, because it severs relationships. It ruins relationships. And some of you try all kinds of ways to twist it up and make it okay and figure out that the math works, all this other bullcrap, and it doesn't work.

It doesn't work. It doesn't work. So if you have a friend that needs some money and you want to give them some money, give them some money. Period. Don't loan them money. If you want to help your kids get a million-dollar house, Give them a million-dollar house. I got some questions about that, but before you loan them a million dollars, give it to them. See what that does? It changes your decision then. Or my mom is 69 and she has no money saved and I'm— she's paying rent and I'm gonna buy a house and let her rent it from me.

No.

You just changed your relationship. Your mother is now your freaking renter. How dumb is that? That's just dumb. Think about it. That's relationally inept.

No.

If you have the money to buy a house and pay cash for it and your mother live there until she dies free, fine.

Or you pay her rent somewhere else.

If you want to write her some check to give her some money every month to help her with her rent, Fine, but don't make her your renter. Good Lord, when you say that out loud, it just sounds dumb, y'all. And yet some of you have figured out, oh, intellectually, this is the best I can— I'll have the investment and at least I know the tenant.

What?

Yeah, she changed your diaper, you butt, and now you're charging her rent. Unbelievable. Yeah, you know your renter. Golly!

And if you have to have the rent in order to pay the mortgage payment, you shouldn't buy the house.

Exactly, you can't afford the house. You're doing crap you can't do. If you have to have the return on investment, you can't afford it. Don't do it. Buy a rental property and put a renter in it if that's what you want to do. But don't, don't do this to your parents. Don't do this to your kids. Don't do this to your cousin. Don't do this to your friend and expect them to be a friend. The number of families that are split up and never speak to each other again over a couple of thousand dollars that was handed to somebody and no deal was really made, just pay me back when you can, and then 4 months later you're like, "Hey, I need that money back." The borrower is slave to the lender. Stop it! Stop it! And another version of that's co-signing for them. Proverbs 17:18. New King James says, one lacking in sense cosigns for another. The Contemporary English Version says, if you cosign for someone else, you're stupid. That's what the Bible said. So you guess what? The bank doesn't want to loan them money because they don't think they're going to pay them.

But I'll sign up for it because I think they're going to pay, even though the bank, who eats, lives, and breathes debt, more than anything wants you to be in debt. Doesn't want to give this guy money, but you're gonna cosign for him. How ridiculously stupid is this whole thing? And yet it's very commonplace, and it's why most people are broke, and it's why relational breakdown in the marriages everywhere. So moms and dads, if you want to help your kids and you have the money, give it to them. If you want to put some stipulations on it, like, "I don't want you to borrow money on this house if I give you a free house." That's a reasonable stipulation. "I want you to stay out of debt because that's how we got here." That's a good stipulation. You should do that. But then you don't go over there every week and go, "Are you about to borrow money? Are you about to borrow money?" You don't have a weekly check-in on—

No!

Stop it, you control freaks! And boys and girls, when you leave your mommy and daddy's house, leave.

Talking about all the adults that move back in, period.

Leave. Leave emotionally. Set up your own household to where you and your husband, you and your wife are a family unit, and these other people are separate from you. You don't keep your mother— you don't stay on your mother's cell phone plan. What are you, 14? You know, get your own Netflix account, for God's sakes.

Hold on.

This is one I just ripped our own family on.

Hypocritical. I pay my own.

I know.

I pay my own Netflix. We have found out other Ramsey children—

I just discovered that my wife gave our code to one of the other people in our family, and I had a duck fit. I'm like, you're a grown man. Human being. Get your own freaking Netflix account. You don't need to suck off— that's ridiculous.

That's okay.

I know.

No, get your own. You pay your own insurance. Have a life.

The worst, I think, is people sharing Amazon Prime accounts with their parents. I'm like, uh-uh.

Well, now I know exactly what all you're spending.

I know.

Stay out of my life.

I don't want to know when you order toilet paper.

I got a new mahjong set and I don't want you to know about it.

Okay. I wouldn't have known anyway, but your mother might have.

Yeah.

No, but for real though, there is, there is a separation to happen. It's very important.

And the problem is, well, we're going to pay the grandkids. No, you're broke. Stop it. Be grown-ups.

But if you have the money, be generous and give without strings attached.

That's wonderful.

And be generous.

That's wonderful.

Be generous.

But then there's no strings attached.

That's right.

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Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey. Rachel Cruz, Ramsey personality, my daughter, is my co-host today. Jason's in Pensacola. Hi, Jason, how are you?

I'm fine. How are you?

Better than I deserve. What's up?

Well, I have some serious questions based on some serious debt. Um, basically I got sick about 5 years ago and I've been in remission for quite a few years now. I was released to go back to work, but in that time, it was a month after we bought our house, um, that I found out I was sick. So I was a firefighter for 30 years and I was medically retired. Of course, I had to wait on the government to pay me for, you know, workman's comp except me for being, uh, getting cancer on the job. And then once they paid me, of course I used my credit cards just to pay, keep my house afloat that we had just bought. And, uh, medical bills and other things. And so basically I have zero retirement. I'm 51 years old, married, all my kids are grown, and we own a house. And about, not counting my truck payment, about $40,000 in credit cards.

Okay.

And I don't know what to do. I just know that I'm tired of living like this.

But you beat cancer.

Yes, sir.

You beat cancer, right?

Yes, sir.

Wow.

Well, that's the number one victory, Jason. You're still here. It's amazing.

That's a big deal.

It's amazing.

Yeah, congratulations.

It's a hard road.

Yeah, way to go. Um, so, um, what's the truck? What do you owe on the truck?

About $40,000.

And what's it worth?

Um, I'm under— I'm upside down underwater about, uh, $8,000 to $10,000.

So you looked it up, man, you can sell it for $30,000.

Yes, sir. I've been offered $30,000 from, um, the dealer, Kelley Blue Book. They— the dealer called me and offered me that much.

That means you probably can get $35,000 for it. Okay, because that's a wholesale offer, uh, which is not evil, it's just a low offer because they're trying to turn it and make money on it. Um, now then, um, and your credit card debt is how much?

About 40. So you got 80 between, between me and my wife.

Yeah, but that— so that— but you have 40 in addition to your— so 80 total?

Yes, sir.

Okay, gotcha. And you are retired medically from the fire department, and you are paid what a month from that?

I bring home about $900 after all my health insurance and everything comes out. $900 a month, and then $900 a month. And then I went— once I was released to go back to work, I went and got a full-time job, and I make, uh, that much I bring home, uh, every biweekly. And then—

I'm sorry, how much do you bring home from that job?

Um, about $900 biweekly. Oh, I saw $1,800. And then my wife brings home about about $1,400 and something biweekly. And I've never done— I just started, I was past your name via the church. So I started listening to your podcasts about 2 weeks ago. And I know on— well, actually on the first, because I went and got a second, I went and got a third and fourth job. So I'm side hustling about $1,000 to $1,200 a month.

Good. Okay, so we got about, got about $5,000 or $6,000 coming in total then.

Yes, sir. I went from— we went from making $99,000, basically $99,000 a year, and then I'm, I'm bringing home about $1,000 a month, uh, between me and my wife. We're bringing home about $1,000 a month with side hustle.

Yeah.

Okay, so about $6,800. Yeah, with the side hustle.

Yeah.

Yes, ma'am.

Great, Jason. Great.

Yeah, you're not afraid to work. Um, so it sounds like, it sounds like your health has recovered pretty well?

Yes, sir. I had, um, I just had a section of each kidney cut out.

Okay, but you're, you're back and, um, so, um, back and working, and I'm not afraid to work. Your, your new job is— your new career, the 1800, is what?

I deliver nuclear medicine.

Okay, so it's a delivery job.

Okay. Yes, sir, delivering nuclear medicine to hospitals. So, um, that's the way I figured I could still help.

Yeah, sure.

Once I was— they helped me, so now I'm helping them.

I just wonder, Jason, if you're able to sell this truck, take out a, a small loan of maybe $14,000, go get a $4,000 car, have the difference of the $10,000, put all that together, and then your— and then your credit card. If you guys can throw $2,000 a month at this debt, you could be out in 2 years.

Okay.

And then you'll be in a position to rebuild your retirement. Now the other piece that goes with this is you made a lot more than this when you worked for the fire department, didn't you?

Yes, sir. I worked at, I was a federal firefighter, so I worked on the base.

Oh wow.

Okay. I wasn't, I was a civil service.

Yeah. But you were making a lot more than $1,800 a month.

Yeah.

Okay.

So yeah, we were making about 9, I was making about 90 before, not even counting my wife. And then we dropped it. Now I make about, with my retirement, I'm about 27.

Okay, so yes, I would sell the truck and get a $4,000 car and start working on the credit card debt and work 8 jobs. That's what you're doing. Every bit of that makes sense to me. I also would tell you that you're in Chapter 2. Chapter 1 was a $90,000 firefighter. Chapter 2 is not an $1,800 delivery driver. That's a temporary stop.

Yes, sir.

So we got to figure out what Chapter 2 is that's $90,000 or $120,000 a year, because you're only 51.

Yes, sir.

So you've got lots of time to do lots of things, and you know a lot about, you know, things in and around emergency care, first responder stuff. There's a lot of options and things that you may be able to do there, and And I would explore every bit of that and say, "Okay, what do I want to be when I grow up? I'm starting fresh." And what you did is you landed on your feet, got anything you could get so you could get back to work, and this enables you to get back to work and help people, which is good, but you're not making any money. And so I want you to go help people and make a lot of money. And because it cleans up your life and it's the final step of your rebound. Is to get your income back up to where it was, not just your debt or your finances back where they were.

Yeah, 'cause if you can, Jason—

I mean, that kind of money, you can get out of this mess fast.

Yeah, absolutely. And then, you know, just think, you got you working, you know, 10, let's say 10, 15 years. And if you invested $3,000 a month, just threw a ton at retirement every single month, month, it'd be about $640,000.

To retire on.

Is what it comes out to be.

You can retire a millionaire.

Yeah. And that's just that at that, at 10%. So, I mean, even if there were some great months going on, and if you went a little bit, you know, more and worked a little more, I mean, all of it, like the numbers really can work in your favor.

Yeah.

But part of this is you have to emotionally recover from thinking you were gonna die. And from recovering. You recover mentally. I mean, you have to recover mentally and emotionally and then start to see, you know, the possibilities again, and your income.

And the frustration of cancer, like what it's taken from you, your health, and then your money, you know, your retirement, everything.

It stole everything.

It's so defeating, so defeating.

So maddening.

But the fact that you are here, Jason, amen, and you and your wife on the same page, amen, you really can make a great second chapter of your life.

So, we're gonna send you a copy of Finding the Work You're Wired Inspired to Do by Ken Coleman. I hope it'll help you. When it comes to your health insurance, one of the biggest mistakes you can make is believing you're stuck in a one-size-fits-all plan that costs too much and covers too little. That's why I recommend Health Trust Financial. They're the only Ramsey Trusted Health Insurance partner because their advisors take the time to understand your situation and help you explore the coverage options that are available to you, whether you've changed jobs welcomed a new baby, or had some other life event, Health Trust Financial shops multiple top-rated insurance carriers for you. Then they help you understand your options so you can make a smart decision instead of guessing. I've recommended Health Trust Financial for more than 20 years because they work for you, not the insurance companies, so they offer unbiased advice. Visit healthtrustfinancial.com to connect with an advisor today. That's healthtrustfinancial.com. Mm. Our question of the day is brought to you by Why Refi. Missed private student loan payments can leave you feeling like your goals are on hold cuz you're stuck. Why Refi helps borrowers explore low fixed-rate refinancing options that'll fit your budget and make you not stuck.

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Today's question comes from Evan in South Dakota. I hear you talk frequently to callers who have high car payments and are living beyond their means. I travel a lot for work and I need a dependable— and I need dependable transportation. Anytime I bought a beater car, I ended up paying for it in repair bills. Where do you recommend finding a $4,000 to $5,000 vehicle that is reliable? It's a good question. Well, I mean, honestly, finding an individual who's selling is gonna be your best bet. And we usually find, this is funny, but it's true, usually an elderly person, a lot of people's grandparents who have a car that's literally been sitting in the driveway. It's probably older. But the mileage is so low because they're not using it a ton.

Got a lot of life left in it.

Yes, yes. And if you go, I mean, honestly, if you look on Craigslist, Facebook Marketplace, you can do some research and find, and again, you're going to be in this car for maybe 9 months and then you'll move again. Like, it's not like you're going to be in it long-term. There may be moving up slowly, slowly, slowly out of it, out of that price range. But The, I mean, we see it a lot that people have it. So you, and you wanna make sure you have an inspection, right? You go to a mechanic, make sure they look over it. And if there's anything obviously wrong with it, that's gonna cost you a lot, then don't do it.

But—

Yeah, and part of that is research the type of car. You know, an old Chevy Chevette is not good 'cause they weren't good when they were new. So, I mean, an old Dodge Neon is not good, because it wasn't good when it was new. So get a car that has some life to it, you know, the Toyota Camry, the Honda Accord, those kinds of things. They're very seldom sexy cars, but they're cars that just are workhorses, and they go and they go and they go. They're Eveready bunnies. They go and they go and they go and they go. Okay? And that is— it's not a forever thing.

Mm-mm.

It's you drive like no one else, so later you can drive like no one else. Now let's go ahead and parlay this into— he mentioned one thing here that I want to add to this. I travel a lot for work. Now I don't know what that means in your case, Evan, but I will tell you this: there's a mistake that a lot of people make that are literally on the road every day. Now if you travel a lot for work, it means you drive out of town and you're there all week and you drive back, that's different. But if you're putting 50,000 miles a year on a car, you're destroying whatever you drive. Because you put 50,000 miles on a car, you've destroyed its value. And so the value is going to not only go down normally, it's going to go off a cliff. You're going to lose value like crazy. And so you, when you're a road warrior because you're in sales or you're in whatever, whatever you're driving is an expense.. That's all it is. It's not a luxury. I drive 12 minutes to work. That's a luxury. I can drive whatever I want and I'm not destroying it.

Okay, but if you're driving 50,000 miles a year, you're turning— and you drive a $50,000 car, you're turning it into a $5,000 car, $10,000 car.

And I do wonder, for your work, because a lot of— I mean, one of my good friends, I mean, she goes— we're in Nashville, but she goes to Chattanooga, Birmingham, Huntsville. I mean, she's doing day trips.

Yeah, if you're doing that, the $4,000 or $5,000 car is probably not what you want.

No, but work furnishes for a lot of people.

Some people, or it gives them money.

Money, yeah. So, I'm curious what that reimbursement looks like for you, Evan.

But reimbursement does not require you being in debt. It just requires, in some cases, that you have a car of a certain age. So, here's the thing. If you're putting that kind of miles on a car, I wouldn't drive more than a $20,000 car. But I wouldn't drive a $5,000 car either, because it's not gonna be reliable. So, you need to drive the least vehicle that will, in quotes, get get the job done. And let me tell you what that means. It means it's reasonably comfortable because you're in it all the time. So again, we're not putting you in a Smart car for 12 hours a day. You'd be in a chiropractor, okay? So it has to be reasonably comfortable and it has to be reliable. So again, I'm back in a Honda Accord, I'm back in a Toyota Camry, I'm back in a RAV4, you know what I mean? I'm back in a, you know, a Chevy pickup. Pickup, a Ford pickup, you know, any of that, depending on your gas mileage and what you're doing and what you're hauling, what you're selling, all that kind of stuff. So, but you want something that's dependable and comfortable, but you don't drive an expensive car or truck when you're doing this because you're destroying the freaking thing value-wise.

So quit going and, you know, and, and, you know, that goes for my friends that are real estate agents. Quit buying $200,000 cars to show houses in. We all know you can't drive. You drive over the edge of a curb, run into a mailbox, hit something, you're— because you're always paying attention to something else. Oh look, there's a house for sale! And whipping around. And real estate agents, I'm one of them, we're ADD, and you're just all over the place. So quit buying expensive cars. Buy a reasonably nice car to show houses in. But no one buys a car because you had a— buys a house because you had a $200,000 car versus you had a $50,000 car. Nobody does. That's just bullcrap. That's in your head, and you're justifying buying something you can't afford. Stop it. So all of that to say, Rachel's right. When you're doing the $4,000 to $5,000, there's plenty of good ones, but they're usually not cool. They're not cool cars.

No one's gonna stop at the stoplight and go, "Woo-hoo!" Well, and it might be 7 months, and you're gonna have to trade out again, which is a pain. But if it's the thing that gets you out of debt the fastest, that's the inconvenience that's worth it.

We did it. We drove a borrowed car that had 400,000 miles on it, and I drove it for—

400?

400,000 miles.

No.

It did. It did. It was an old Cadillac. It had predominant color was Bondo. The vinyl roof was torn loose. We drove it for 3 months. I told people we drove it for 10 years in one 3-month period. It felt like 10 years. But I didn't have a car payment, and I saved up $1,000 because I wanted to get rid of this. I took it back to my friend and gave it back to him. He loaned it to me. Gave me because he knew how broke I was. And then I got a $1,000 car, and that $1,000 car, believe it or not, got totaled. I left it in a parking lot and some people beat it up, and I actually, for some stupid reason, put insurance on it, and I got $2,000 from the insurance company. So I put $1,200 with it and bought a $3,200 car, and then we sold that about a year later for $3,200. It didn't go down. It was already— and then we bought a $10,000 car. and so on. And so that's how we did it, and you can do it too. But your friends are not impressed.

The brown car?

That's the 3200 one, yeah. You remember it. The front-wheel drive Oldsmobile. It was pretty ugly.

Well, and the vinyl roof was detached, so every time we would stop, it would just bubble up.

Yeah, yeah.

I do remember that.

Poking, exactly. I'm not spending money to impress you at a stoplight. I don't even know you. I'm just trying to feed my kids. I'm just trying to eat. I'm just trying to get out of this mess and never come back. I drove like no one else, so now what I drive is anything I want. And I don't buy cars for what other people think. I buy cars now 'cause I like them. And that's kind of a problem, 'cause I like a lot of them. But it's, you know, you can get there. If you live like no one else, later you can live and give. Like no one else. So Road Warriors, quit wasting your money. And those of you that are driving hoopdees, they're not all bad. And Rachel's point is really valid. You're probably not doing this for even a year. That car only needs to last you a year.

Yeah, some people think the car buying— and I can get in this mindset where it's a permanent— it's, yeah, it feels like I'm gonna have to drive this to the wheels fall off, like I have to drive this forever and ever. And it's like, no, no, it's okay.

I can just get another one.

You're fine.

It's not a house.

It's not a house. You could just sell a house.

Yes, you could buy a different one every week. I mean, other than the tax problem and the registration, it's, you know, but it's not a long-term thing.

No, no.

Yeah, yeah. So you don't feel so permanent. And so here's the thing, if you don't have a car payment for 12 months and your car payment was $1,000, that's $12,000. So then you can sell that $5,000 car. By the way, it'd be about like my 3200 when it doesn't go down in value. So you can sell it for $5,000 and put your $12,000 with it and get a $17,000 car. Car. And do that for 12 more months, and then you could get a $29,000 car if you just save your own car payment. Stop it with the car payments.

¡Hola!

One of the biggest mistakes home buyers make is talking to a realtor and shopping for houses before understanding their real budget. And that's how you end up falling in love with a house you can't afford and trapping yourself in a bigger payment than you can handle. That's why you should talk to Churchill Mortgage first. Churchill shows you what you can actually afford, not just what a bank will approve. And with their Certified Home Buyer program, your financing is completely secured before you shop, so you won't miss out on your dream home while you're waiting for or pre-approval. I've recommended Churchill for 30 years because they help you buy a home the Ramsey way. So here's your plan: contact Churchill, know your numbers, and then when you find the perfect house, you're ready. Go to churchillmortgage.com/ramseyoffer for a special offer only for Ramsey fans. That's churchillmortgage.com/ramseyoffer, or click the link in the description. Alan is in Indianapolis. Hey Alan, how are you?

I'm all right, how are you?

Better than I deserve. What's up?

Uh, so I'm looking for some help getting my fiancée on board with sticking to a budget. Okay.

How long have you been engaged?

Uh, we've been engaged for about a year.

Okay. And when will you be getting married?

Oh, we, uh, we haven't set a solid date on it yet. Um, we've got a 1-year-old, so between taking care of him and I'd like to be a little bit better out of debt before we get married.

Why? You already had a baby. Yeah, and what's the point? Might as well get married.

Yeah, okay.

Anyway, side subject. All right, now the, um, hmm, uh, how old are you guys, Alan?

I'm 26 and she's 25.

Okay, great. And what's the conversations been like about budgeting together? You're not married, so you technically should still be on separate budgets with separate incomes and everything until you're legally married, just to protect— she needs that protection for her and you need that protection for you. But, um, what's—

well, she won't be entirely honest about how much that she has. I know it's excess of $15,000.

Um, why won't she be honest?

You know, I don't think she wants to tell me how much, and I know she hasn't been paying a lot of it. She moved away from her hometown to move down with me, and I've been the primary source of income for both of us since that happened.

You think she has $15,000 in debt or savings?

Debt.

Debt. Okay. And why would she not want to be honest with you?

Um, I think she's embarrassed about it because of the way you've presented it. I mean, that could be some of it. I think she just— she doesn't like where she's at, and she, she doesn't want to open up to me about it entirely because it's a vulnerable thing for her, and that's something that she kind of struggles with, being vulnerable, especially about stuff like that.

Okay, so I think that's probably more of the root issue, is that you guys are living together, you have a baby together, you're engaged to be married, and from a Relational IQ stance you guys don't have the, um, equity, relational equity to hold each other's situations. And that's— does that feel like a red flag to you, that you guys can't be fully honest about what's going on?

Yeah, it definitely does.

Yeah. So I would work on having that conversation, and the way you present it, Alan, is really, really important, because if she feels like crap when it comes to money, if she feels dumb, if she regrets all of this. And you're like, "Well, you need to be doing this, and this, and this, and you gotta," you know, sometimes people can come hard on someone that's already down. And so, I would say to love her really well in that, and to have a lot of humility, a lot of grace. And your desire is to know her, and to know her situation, and not to shame her, but for you guys to start working together, to have a plan for your future, because your future, I'm hoping, is together, right? And to be a married couple. And so to make some forward, some, some progress forward.

What do you make?

Uh, so last year I made about $96,000.

Okay, what do you do?

I'm a law enforcement officer.

Okay, good. Okay, um, Well, if, if, um, what the way I answer questions and the way we always have on the Ramsey Show is what would I do if I woke up in your shoes, knowing what I know about the data that's out there and what it takes to win in a marriage and what the data that's on that and the data that's what it takes to win to build wealth. And by the way, they're pretty similar, which is interesting. So, um, the single people that are 30, that are living together have a net worth that's somewhere around 14 times smaller than the married people that are 30 that are living together. And so the data tells us that marriage tends towards a much better financial situation versus being in the same— being in shacked up. Okay, that's what the data tells us. So now that I know that, I'm getting married this weekend. I already— not for the money, not for the money, but I have a child, but you have quality. I'm taking this lady, this is— I'm already taking care of her.

Basically married, Alan.

I mean, might as well be. Yeah, I mean, it will be. And so go ahead and get that done. And, and there's no like, I have to get out of debt first. I didn't have to get— I didn't have to wait to have a baby. So no, I mean, that's a lot bigger deal than getting out of debt. So let's, um, you know, that's what I would do. I'd get married this weekend and then And then, to Rachel's point, I would begin to say, "Okay, we are gonna work on all of our prosperity and all of our bright future together, and we together are gonna make decisions that cause that to happen. And so— and I'm gonna help and you're gonna help, and we're both gonna have a vote, and we need to sit down and say, 'Okay, what's blocking that?'" And so whatever debt you got, hon, we're gonna clean it up right quick. That's our first thing. And then we're gonna start saving money for retirement. I mean, saving money for an emergency fund. Then we're gonna save money for a down payment. Then we're gonna save money for retirement. Then we're gonna save money for Junior's college fund.

And then we're gonna pay off the house. And we're gonna become millionaires in the next 12 years. And we are gonna sit down together and we're gonna look at that and we're both gonna tell each other everything about everything. And I'm gonna help and you're gonna help. And that's what Rachel's talking about, building relational equity. And there's no shaming in that. It's like, "You did what?" You know, unless after we agree to doing something, you go back and do something else.

But the power dynamic in the situation— I mean, is she home with the baby, Alan? Because she said she's not bringing home an income, right?

She is.

She works part-time. Okay. Because she feels like she needs time out of the house, and I'm not going to be one to argue with that.

Okay. Yeah, yeah, no, it's great. It's great.

Yeah, so that's what I would do. And you say, we're gonna— I want us to be aligned on saving money. I want us to be aligned on getting out of debt. I want us to be aligned on what we're spending, and both of us talking about it, and both of us having a vote in this as a husband and wife team. And let's go see the pastor or the justice of the peace this weekend, and let's get— and then let's go build our life together.

Yeah.

Because you're trying to run around with one foot on the boat and one on the dock, and the boat keeps rocking, and you're gonna end up in the lake. And so, you just, you need to get all into the boat or back off on the dock, one of the two.

And remember, Alan, money is, it's not the end goal, right, of marriage for you guys.

It's the working together thing.

Exactly, it is. It's what it produces, what the money represents. When you guys are on the same page, you both have a voice, You're both being heard. Both of your opinions matter. Like, all of that is a practice to every other part when you're talking about parenting, and you're talking about in-laws, right? Like, all— you're all the same person. And so, when you can kind of work on one area of your life like that, to get on the same page together, it's huge. And to know her, and to serve her well, I mean, honestly, yeah, Alan, I mean, I would be like, "You're a police officer. You know what to do.

Step up." "Step up and take care of her." Yeah, you see the families every day that things aren't going well with. And so, yeah, you can just— you know, all you gotta do is look at that and go, "That's my anti-mentor. I'm gonna go the other direction of those things." And none of the things Rachel and I've been talking about, I'm really seeing.

And the life— yeah, the life you can create, Alan, as a husband, as a father, like, all of that is incredible. Like, men that step up—

To serve and protect.

And take care of. Yes, it is literally part of your DNA in your job. And when men do that, that. And their wife, again, I'm so big on this, but they have an equal say. They have the ability to have an opinion, and they are heard. Like, all of that together is beautiful. It is. I mean, almost every man I know wants to step up.

And we also see it works.

And it works.

It's very practical.

Yes, yes.

You know, it absolutely works. What ends up happening is you have a high-quality marriage, and you have lots of communication.

She feels secure. She feels secure.

Yeah.

You feel like, you are doing your part and stepping up. Like, all of that is in this conversation. And so, I think there's a quality of marriage element there that's so big that you get to step into, Alan. And not to shame her, but you get to walk beside and help. And it's a really— it's a beautiful thing. And thank God for that, for two parents like that with this baby, you know?

Good for this kid.

Yep, absolutely.

Get married this weekend.

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Devin is with us in Denver. Hi, Devin. How are you?

Good. How are you today?

Better than I deserve. What's up?

Uh, I was a minority owner in electrical business and I had to sell it. Well, I sold out and I'm going to get my payout. Um, and I'm trying to decide if I invest in a mutual fund or pay off my mortgage, which is at 2.78%.

Okay.

On a 30-year mortgage with 25 years left.

What's the balance on your mortgage?

$422,000.

Wow. Nice payout. What's your payout? What's your payout?

Payout's $335,000.

Oh, so you don't have enough to pay off the mortgage?

No, no.

You don't have the other $100,000.

I mean, I do have, I have about $90,000 in savings right now. No, but I was going to use that to start my business back up and keep that aside for our 3 to 6 months emergency fund.

Okay.

All right.

Well, let's go back to the original premise and then let's figure out what to do with your particular situation. The original premise is, I don't want to pay off my 2 and 7/8 and rather, I'd rather invest it instead. I would not go with that theory. That theory doesn't hold up when we study the actual data of people who become millionaires. When we studied 10,000 millionaires, the number of them that said, "I borrowed on my home so that I could invest and that made me a millionaire," was precisely zero. We didn't find a single millionaire that did that. And that's the essence of what you're doing. You're saying, "When you don't pay off your house, it's the same as borrowing on it, right?" And so No, I'm always going to lead you to getting out of debt completely as fast as we can, but you've got some competing goals and you don't have enough money to do this whole thing here. So there's something to think about. So how long have you been away from that business?

I'm still employed. I have to work here till the end of the year.

Oh, okay. All right. And what do you make?

Right now I make $150,000. Good. $150,000.

And are you going to go in— I assume you've got a non-compete, so you're going into a different business?

The non-compete is not all of the existing customers, it's some of them. But I had my own business for 7 years and I partnered with a person.

But you can go into the same industry again, but just not take the customers?

I can. Yeah.

Okay. Wow, that's unusual. Good, good. Okay, and so you're gonna go open up a new shop?

Shop? Yeah, yep. Okay, I had my own shop. My shop is still alive. I never turned it off. It just, for the past 3 and a half years, it hasn't done any real business.

Okay, so why does it take so much money to turn it back on?

I guess I was, you know, saving out of the leftover money.

I know, I know, but I'm saying you said you needed 90 grand to turn it back on. What does it— why does it take that 90 grand to turn it It doesn't. Okay, good.

$50,000 of it is our 6 months of emergency fund. What is 6 months?

$60,000?

$50,000.

$50,000. So you have a $4,000 a month burn rate on your house. Okay, all right. Okay, so $50,000 is that, so we got $40,000 there to start the business and/or put towards the house, and we're getting $300,000-something towards $400,000-something on the mortgage. So what I would do in your shoes is, is I would just take the buyout and the $40,000 and separate the— set the $50,000 aside as your emergency fund. We're not touching that for anything, okay? Do you have any debt other than the house?

My wife's car has $9,000 and change.

Okay, pay that off.

And we're on track to Okay, pay that off today.

Okay, just, just write a check and pay it off. Okay, so now we got $30,000 to start the business and $50,000 in emergency fund, but you don't have any payments but a house payment. Am I right?

Correct.

Okay, now then, what I'm gonna do is I'm gonna take your $30,000 and park it with your buyout money in just a high-yield savings account for 6 months and let it just sit there while you get your business started. When you get your business started and you're back to making $100,000 a year again, and which will be pretty quick, I suspect, because you're gonna start working on it between now and the end of the year to kind of get it restarted. It's not gonna be a cold start in January. Then when you get back to making $100K again, then I'm gonna take that money and throw it at the mortgage and be done, and be mostly done with the mortgage. And then your mortgage will be paid off in about 3 years or 2 years. If you do that.

Okay.

And when you don't have a house payment, it changes the way you do business. Your business will prosper when you don't have a house payment. It changes everything, and people do not grasp it until they don't have a house payment. And then you take that huge cash flow that you've got without a house payment, and you go become a multimillionaire. And, and really what that— what this buyout has done is it sets you free from all this debt and And it took me a minute to kind of wander around through our system to get you to where I would go. That's what I would do. I would not keep the mortgage like it's a pet just because it only eats a little.

Mm-hmm. Just requires a little bit.

Yeah.

It's still there.

2 7/8.

Yeah.

Little bowl of dog food.

It's exciting, Devin, though. You made some big headway.

Wow.

You did great. Yeah, great deal.

Well done.

Very good. Stacy's in Boise, Idaho. Hi Stacy, how are you?

Hey, thanks for taking my call.

Sure, what's up?

So we have maybe an unusual problem. Um, my husband and I have been on the same page for 27 of our 30-plus years of saving, scrimping, saving, scrimping, not spending money. And we are now at a, I think, a very good safe place, and I am comfortable starting to spend some of that money.

Good.

And what's the safe place?

What's your net worth?

Um, almost $12 million.

Well, yes, you should be able to enjoy some of your money now for sure.

That's, that's how I feel. And my husband is, you, you would think we're, we're one month away from losing our house when, when I talked to him about things.

And, uh, it's, it's very hard for someone who has held so tightly to savings, particularly his nature as he's a saver. To loosen up and enjoy life. But that's why God sent him you.

It's just so— I feel like, you know, even on little things I was telling your screener, just we both work from home, we have one car, one of our kids went to college.

You need a car!

I mean, that's weird, isn't it?

Yes, that's weird. You have $11 million, $12 million, you need to go buy a car. Yeah, for sure.

It's like the The parable of bigger barns. That's a classic to me. You're just building and building and building and building and building. For what?

For what? For what? Just for another barn?

Yes.

No, that's not why you do it.

How do I break through?

Because I don't know.

It's—

it's— you're not going to be able to change him. It's going to be— it's going to have to be his work. That's— that's deeply ingrained. If you got $12 million sitting there and you don't want to buy a car for your wife. He's got some issues, Stacy. God love him, but right.

Yeah.

And that's what I—

how did he, how did he grow up with money? What's his story?

Poor.

Um, yeah, he grew up poor, but I'll tell you, I grew up more poor. I mean, I was the driving force here in our household of like, you know, coupon.

This is not a, this is not a financial thing. It's not even a relational thing. It's a spiritual thing.

It is for him.

Yeah. Godliness with contentment is great gain. And if you gain only from your money the fear of losing it, you didn't gain anything. And that's the parable of the bigger barns that Rachel's talking about in the Bible. And so enjoy some of it, be generous with some of it, and continue to save with some of it. And you should always be doing all three. I will tell you this, sometimes the way to get someone to loosen up on spending is first get them to loosen up on generosity, helping others with some of this money. You need to allocate $100,000 a year to give away. That's gonna blow your mind, 'cause you've never given that kind of money away. All you've done is save.

Now, to force yourself, Stacy, to give away $8,000 a month, you have to— And it can be in tips, it can be to an or— like, but to do that—

An orphanage, a shelter.

You'll hear of something going on and you'll write that check to help. I mean, there is some amazing things that happen in the world.

And when you start to participate in that— Yeah, your money's making a million dollars a year.

It opens that hand and that freedom is what that does. It gives you freedom from money and bondage.

And then it allows you to, gives you an excuse to enjoy some of it.

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Welcome back to the Ramsey Show and the Fairwinds Credit Union Studio. Stephanie is with us in New Haven, Connecticut. Hi, Stephanie, how are you?

Good, and you?

Better than I deserve. What's up?

So my question is, I have an issue. I'm currently 6 months pregnant.

Yay!

My husband and I— yes, with my second child. My husband and I are trying to get ready for this maternity leave, but we don't really have a solution. I am the breadwinner. I am an entrepreneur, so I won't be having really any income during my 3-month maternity leave. Um, my husband doesn't know what to do. I don't really know what to do. We don't have any savings. We had to blow through most of our savings recently to get a heating and cooling system in our home, um, which was absolutely required because I just don't want to use space heaters anymore. And, um, we're really trying to figure out what we're going to do. My husband thinks that he can handle this. He doesn't want to get a part-time job. He thinks that we should just sell the house, and even though we have a 2.65% interest rate on our mortgage, um, he thinks we should just sell it and just live off his income and go back into a one-bedroom apartment.

What do you make?

So I bring home about roughly $6,000 a month.

Okay, we're doing what?

Uh, I'm a consultant.

Oh, what kind of consultant?

I help businesses with grant writing and strategic plans.

Say again. We help business—

strategic plans.

Strategic planning.

What does he do, Stephanie?

Processing technician.

And how much does he bring in?

He brings home— this is net income, so he brings home about $3,500 a month.

Okay.

And how much do you guys need?

How much is your house payment?

Uh, so we have two— we have one mortgage, which is $800 that's not escrowed. Um, and then we have a second mortgage, it's $880.

And so that's what you guys are short? You're short $1,600 a month basically is what you're needing him to bring in for 3 months?

No, we have other expenses. So we have an auto loan, we have student loans.

Okay, so how much extra does he need to bring in a month for you guys to keep your situation?

I would say comfortably it would be great if he could bring in an extra $3,000 because groceries, household expenses, and then upcoming with daycare, it just—

okay.

Um, and, um, all right. Um, how much is the car payment?

Our payment is $350.

Okay.

All right.

Yes. Um, he should you should pick up a part-time job, and you should keep your home. And you should— you're self-employed. You don't— when we're self-employed, we don't get the same benefits as employees. And so, there's no reason for you to be off from work for 90 days.

Oh, man.

You're self-employed.

Nope, I'm sorry.

You do strategic planning and consulting.

No, I disagree with that. You push a baby out and try to be be somewhat normal 60 days later.

So nope, this is what y'all— this is what y'all signed up for.

Nope, husband, get to work.

Nope.

Yeah, he doesn't want to get a part-time job.

Well, that's the problem. That's the problem to me. That's the problem. Go get a job, dude. Go get a job. Don't make your wife— after you've been through what you've been through and you're—

I can't—

I "You should have seen me 60 days after a baby." No.

Uh-uh.

Nope.

Yeah, well, it's a difference between whether you have to, to keep your house or not. You know?

I guess so. It just sucks.

You just decide, you know, you both signed up for this. You're self-employed, and you plan to have a child, and you have no money. And instead of keeping the space heaters, you decided you had to have heat and air. Now you're gonna sell the heat and air with the house, I guess. Us. So, you know, you've made some choices here that have painted yourself in the corner, and you're gonna get paint on your feet.

That's fair. I hear that.

I hear that. You're gonna get paint on your feet. So, you're gonna have to decide. We have to choose our pain. Pain is coming, okay? And the pain I would choose, if I was in your all's shoes, is he— I'm with Rachel. He needs to go get 6 jobs and take care of his family and do all that, if he can.

Yeah, but if you could do something a little bit from—

And if you can do a little bit of work from home, that you're, you know, gradually re-entering faster than the 90-day swing because you're not an employee. You took on running a business. And so, you know, you don't have a choice. You get to go back to work. That's it. If you want to keep the house, really both of you should be willing to do some of this or make the decision to sell the house. But I don't agree with him that he just gets to bail and do nothing. I'm with Rachel on that. That's, you know, No, that's crazy. No, he needs to step up. And but I also think both of you made this mess. And so the thing I want to take away from this more than this particular situation is fixing how we got here, which is, you know, no savings, lots of debt, owning a home, sell a car. I'd sell the car before I sell the house.

100%.

But it doesn't fix the problem. Or if you told me $1,200, that car would have been gone about a minute and a half ago.

Yeah.

Yeah. But it's not, it's $350,000. So it doesn't fix the problem mathematically to get rid of it. But yeah, I think there's going to be pain. Now the two of you look at it because of where we are. Now we have to decide what the name of our pain is.

I think, yeah. And gosh, it would be— so the house conversation's always, we're getting more and more of these calls, and the housing market, people are frustrated. They're sometimes frustrated with our advice because we're very conservative on the numbers and what you can buy. But this is why, like, if your house payment and $1,600 and everything, yeah, it's true. It's not that bad.

Yeah, it's not. It's just, they just had no money.

But when you buy a home and you're a homeowner, you're stuck in this, you're stuck. And to get rid of that, you— yeah, it's expensive to have to move out and then go back and reenter into the housing market.

So, what I would say to you and your husband then is, we love you and we want you to win. 10 years from today, you'll be glad if he takes extra jobs and you take on work as you are able, reasonably, after the baby.

Snapped!

Okay?

Got 3 kids!

I was like, "Mm-mm!" Well, I know, but you know, again, when you're self-employed, there's lots of—

I know, I hear, I hear.

I've come to work sick for years, and I don't have a choice. Choice. You know, I mean, I don't have a choice. If I blow out my knee, I'm, you know, put it in a cast, I come to work. I don't have a choice.

Do you understand that's very different than growing a human being?

I know. I'm not, I'm not, I'm not the baby.

I was sneezing a lot, but I came to work. Such a hero.

Such a hero. Oh, brother. Anyway, no, I'm telling you, the deal is this: if you have a major medical event, it's not unusual for people that are self-employed to be back at work a lot faster than an employee would be.

Okay, that's a fair statement. That's a fair statement.

That's all I'm saying.

I know.

So listen, it's not sneezing.

We don't—

Dave's like, "Oh." That was cute.

That was good.

I like that. I had an earache one time and I came to work.

One time my nose was running.

I'm an owner. I'm an owner and I came.

Well, I have.

Yeah, I'll tell you, you know, it's the other thing is, okay, let's Let's just, if we're gonna continue the fun, you know who comes to work in Tennessee when it's snowing? The people that own the business, not the employees. Not many of them.

And that own trucks.

Only the hardy of hardy employees show up.

That own trucks come in.

Well, that's it.

Listen, the Tesla doesn't have 4-wheel drive. I ain't gonna get on a piece of ice on a Tesla.

I wouldn't get on anything with that Tesla.

You won't even get in the Tesla.

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Rebecca is in Tampa. Hi, Rebecca, how are you?

I am great. How about yourself?

Better than I deserve. Serve. What's up?

Absolutely. So thank you for what you do. Um, I am a single Christian mother, two teenage boys, love them with all my heart. Um, I have been blessed financially by God. I've been going through my healing journey as a Christian, and money is this step of the sanctification process I'm currently going through.

Wow.

My, my business, it's in an engineering field. Um, there was a tragedy in Florida which allowed my business to earn almost $1 million. Um, but then the state mandate stopped and now my income is back to around $200,000 to $250,000. Um, in my excitement, I paid off everything, paid off a car, student loans, all my credit cards. Um, tied about $50,000 to my church. Um, basically just spent it like it was going out of style and you didn't spend it, you paid off debt. I did, and then I incurred more debt than I could imagine. I said, you know what, I need a stable home for my kids. So I went from renting to purchasing a home. When I bought the house, I bought an older house because they said we'll just tie in a construction mortgage or a construction loan with that, which they did not do. So I applied for one, got denied, applied for another, got approved. And I later got approved for the other one. So bought a house for $550,000, put a percentage down, got 2 construction loans, and then I bought a truck because my son does motocross. Um, it's just been a lot.

I got to the point where I was physically ill with how much I was spending. Um, and I'm bringing in about $15,000 to $20,000 a month, but my bills are $11,000 without including gas, food, and everything else. Okay, so I'm making myself sick with how God has blessed me that I've been brought to tears, humbled. So when it comes to that humbling process, he blessed you with the income.

He didn't bless you with the house or the truck. Absolutely, because the house and the truck don't have, uh, the blessings of the Lord have no sorrow added to them. And so the money didn't bring the sorrow. The income was wonderful, but the purchases did bring sorrow because of the debt. And so, or the lost, or the lost money or whatever. So is the truck paid for?

Um, I had an Escalade that I paid off. Um, it was worth $22,000. So of course I went and bought a $62,000 pickup truck. Um, with my son doing motocross, I don't care about your son's motocross anymore.

I'm already tired of it.

Yeah.

Okay. It's $62,000 to ride a bicycle. Give me a break. All right. So no, we're going to sell the truck. What do you owe on the truck?

I owe about, um, $31,000.

Great. Get rid of it. You hate it. And he wasn't doing motocross with that pickup before. If he was, to go back to doing it the way he was doing it before you had the pickup. It didn't bring you joy. It didn't bring you joy. Yeah. Okay, so what about the house? We're gonna sell it?

No, I just bought it. I put $70 grand into renovation, so I have the house.

How much is your payment a month?

Yeah, I love the house. So my mortgage is $4,068, but when I was bringing in $20 grand, I'm like, well, that's, that's peanuts. But the construction loans is what got me. So I have one for $1,600 and another one for $2,400.

On top of the mortgage?

Correct.

Yeah.

So another, so it's $9,000 going to the spouse.

Is the house, is the construction completed?

Yes.

Okay. If you refinanced the house and got a new mortgage that took out your first mortgage and the two construction loans, could you afford the payment?

Without a doubt, because I bring in about $20,000.

It's just, uh, refinance the mortgage and refinance the house. Okay, refinance the house and sell the truck. Now we've got a mortgage we can afford, we don't have a truck payment. Because the other thing about that truck is every time you look at it, you feel dumb. I bought stuff when I did something dumb, and the thing just kept reminding me I did something dumb. And you're not dumb. You make a lot of money. You're smart. But you did a couple dumb things. That's okay, we've all done dumb things. I got a PhD in DUMB.

It's a lot. It's been a lot. I've made $150,000 to $200,000 a year and my lights have always been turned out in my home, even when my home was $1,500 a month.

How?

I've told my— my kids are amazing. I said, guys, we need to change, because their dad's a multimillionaire. He's retired at 48, but but he, he doesn't do anything for the kids or with the kids.

Are y'all married?

No, she said she's single.

Oh, you're single? I'm sorry. Okay, we're divorced. Okay, gotcha, gotcha.

Well, that's, that's, that's—

well, that's him.

So I think I love doing things with them because I feel like—

yeah, but you can't do that. You can't do that and put it in the foolish column.

Yeah, yeah, because you're—

the things you, you know, you outlined for us, that the things that you did that you were ashamed that were bothering you, that you were regretting, right? So let's just undo those things or restructure them to where they work in your world, and your peace comes back, and then we clean up the debt. So would you be debt-free if the truck was gone and you refinanced the house, except for the house?

Yeah, I have no credit card, no student loan, I have nothing else.

'Cause you cleaned all that up in that first blush, yeah.

Rebecca, and you need to be— and do a monthly budget. You need some control. It feels a little bit— Um, just from— yes, just talking to you.

Budgets for— I do reserve studies for Hi-Rite. That's literally what I do. I do budgets for other people and it makes me barf that I keep— but with BMX and motocross, it's so hard because we have state— I've spent thousands every month traveling, staying in hotels for racing. So I go, how do I do a budget and I don't know what my expenses are? The bike breaks, he needs clip shoes, that's $1,000. Okay, um, I've made that an excuse because I could still budget without that. I could leave—

well, you need to figure out on average, here's how much I spend on my son's motocross, right?

And can I afford it? And what you just described didn't sound like you could afford it.

Well, I believe I could if I just stopped getting Chipotle and DoorDash every week.

Well, okay, well, maybe.

I don't think that's the thing. I, I kind of think this motocross thing's out of control. It sounds like he may need to hear the word no. Yeah, it's probably— no is probably a word he needs to be introduced to.

And don't feel guilty about that, Rebecca.

Sometimes he's not gonna make a living at 48 years old doing motocross.

Yeah, but as— and we hear this with a lot of divorce situations, that there is this overcompensating Disney mom, um, of it. And I get why you want your kids to have great experiences and a great— all of it, um, but you can't go broke doing it.

Yeah, and there is a limit. You're not in Congress.

So, I would figure out how much on average are you spending a month on motocross? Make that a line item.

Or set a budget up and say, "We're not spending more than that." Yeah, exactly.

Well, just in that, but then you gotta, you know what I mean? Like, you, that's the great thing about a budget is you get to put your money where you value. So, Rebecca, if you really do value this for your son and out to eat, it has not much in it in order to make that happen, you get to decide that, Rebecca.

You're an adult.

That's what the budget is. You get to make that decision on where you want your money to go. Go. But it has to be purposeful or you're gonna feel out of control constantly and always asking, "Can I do this? Can I do that?" The budget is permission to spend. It's where your values are. And so, yeah, I think that's gonna be a big change for you in a really positive direction once you sell this truck.

I'm 100% sure you need to spend less on motocross. And I'm 100% sure that you need to put a limit on it. Because right now, you spend whatever comes up and never ask a question and then look back later and go, "Oh, those clip-ons were $1,000." You know, no, couldn't afford it this month.

And depending on the age of the kid, maybe he gets a job and pays for half of it too.

Maybe he needs to win a race and get some prize money. I don't know.

I don't know how that world works.

I don't know. Hey folks, changing gears here for a second. George and I will be doing the Investing Essentials virtual event event next Tuesday and Wednesday. Anyone can become a millionaire. It's not that complicated. We've shown a whole lot of millions of people how to do it. This is the only place— we've only done this a couple times, I think the third time we've done one of these— it's the only place I unpack my playbook for investing and wealth planning. And we'll cover the basics of investing from mutual funds all the way into real estate, and even some of the nerdy stuff as well. New content on reducing taxes, on wealth, on, um, wills and so forth. Tuesday, Wednesday next week, join us from the comfort of your own home. Tickets start at $199. You can get them at ramsaysolutions.com/events. That's September 1st and 2nd. Dave Ramsey here. For more than 30 years, I've been talking to folks on the air, and I can tell you that most people are broke not because they don't make enough money, but because they don't have a plan. You need to give every dollar you earn a job, because when you do that, something changes.

You stop guessing, you stop worrying, you stop stressing. Our EveryDollar budgeting app will show you how to find extra cash, pay off debt, and finally start winning with money. But most people won't do it. They'll keep living paycheck to paycheck, keep hoping things will change without making a change. It's time to say enough is enough. It's time to take control of your money. It's time to start your Your EveryDollar budget for free today. Go download it in the App Store or Google Play. In the lobby of Ramsey Solutions is the Debt Free Stage. On the Debt Free Stage, Colton and Allie join us, which means they're debt free. Congratulations, you two. How are you?

Good.

Thank you.

Doing good.

Excellent.

Where do you guys live? We're from Hillman, Michigan. Which is near what? Alpena, Michigan. Which is near what? Northern—

northeast Michigan.

Ah, okay.

Thank you.

You got the glove.

Thank you. I had to get something on there. Way to go. Well, thank you for coming all the way to Tennessee. Where did you guys— how much debt have you paid off?

Paid off $140,000.

Wow.

How long did that take?

22 months.

Good for you. And your range of income during that 2 Um, around $150,000 to $170,000.

Wow.

What do you guys do for a living? I'm an electrician. Mm-hmm.

And I work in mergers and acquisitions.

Ah, very good. And you're killing it. Way to go, y'all. What kind of debt was your $140,000?

It was our mortgage.

You paid off your house? You guys are so weird. How old are you two?

I'm 24.

I'm 23.

But you can't buy a house in America today. We have an affordability crisis. But you two not only bought one at 24 and 20— 24 and 22?

23. 23.

And you paid off— what's the house worth?

About $250,000.

Good.

Oh, it's a good-looking house too.

I love your planters.

Thank you.

Love the hanging planters.

That's a great starter house.

Well done, y'all.

So how long y'all been How long have you been married? About 3 years.

Okay.

Just over 3 years. So a little bit into the marriage, like a year into the marriage, you went, were we by the house at that point?

Yeah.

And then you went, we're tearing into this thing, we're gonna knock it out. Yeah, we were on the same page basically right when we got married. Okay, so how did all this Ramsey stuff infect you guys? I actually basically grew up with it and then kind of infected her once we started to hang out and get married. There's no vaccine.

But did you guys have— Did you guys have any student loan debt or anything going into the marriage? Like, you guys went in debt-free?

We were actually high school sweethearts, so we actually started dating when we were 14, and he showed me the Dave Ramsey podcast. We actually worked at a berry farm together, and so like in the summers, and so we'd actually listen to the podcast while we're picking strawberries and raspberries.

Okay, um, to get through school, did you guys do school?

So yes, so we, we paid our way through school. We had no— we're both on the same page, no student loans. We paid through with our wedding. We paid through our wedding, so we didn't want to have any debt going into the marriage.

You guys are like unicorns. You're amazing. So what's your degree in?

Financial planning.

Of course.

And I just had a certificate, electrical certificate.

Oh yeah, yeah.

Did your apprenticeship and all that. Yeah, and you're both killing it. Way to go. And what'd you pay for the house? It was one, or it was two—

$225,000.

$125,000.

Okay.

Wow. Amazing, you guys. And within 3 years, right? 2 years. 2 years, you said?

2 years, yeah, 2 years and—

Okay, so what did life look like? 'Cause you guys are newlyweds. What did you do lifestyle-wise to—

Pay off $140,000 in 22 months.

To pay this off? Was it just like, "We're gonna cut everything and go intense," or do you feel like you kind of did what you wanted still and threw extra? Like, how did you do it?

Yeah, we didn't feel like I mean, we were still doing what we wanted to do. We still went on multiple vacations. We actually did some house renovations. Mostly what we did is we lived on his income, and then anything I made, we just threw at the house. So, we just basically lived on one income, and yeah, threw my income at the house.

And did it.

I just figured it out. So, you know these guys on TikTok that say, "Dave Ramsey bought his first house for a box of strawberries." That's what they did. That's what they did. They picked berries. That's how they did it.

That's right.

That was the Dave Ramsey way.

That's it.

That's it.

For a bucket of strawberries.

Oh my gosh, you guys, amazing.

Wow.

What do your parents say?

They gotta be dancing. Yeah, I think they're proud. Yeah. They're pretty sure you're not gonna be in their basement. No, no, they didn't think we were too crazy, so that was good. Well, they both taught you to work, they taught you to live like this, both of you. You know, you had, that's hard work.

Yeah.

I mean, you're— Yeah, I'm glad we're not doing it now. Yeah, yeah. You know, if you do that, you're pretty sure you wanna get an education. You're pretty sure you wanna get a trade, right? So you don't end up there for life.

How much was your mortgage every month?

It was $1,236.

Okay. That's amazing. I mean, what's crazy is if you, not that you have to live in this house forever, right? You guys can upgrade eventually if you want. But if you just invested your house payment at your age of 26 all the way to 67, you'd have $16.5 million. —just investing your house payment from here on out. Yep. That's insane, y'all. Isn't that crazy?

Yeah. It's crazy.

Crazy. I have a financial calculator, so I do a lot of the financial numbers.

Oh, so she knows. She knows. I know we have this new fancy studio phone. I was like, oh, I want to plug in those numbers.

Yeah, I'm definitely the nerd.

Oh my gosh. Okay, so does it feel different? I mean, it wasn't— you guys didn't have it for too long, but how does it feel? It feels good.

It feels awesome. It feels free. Like, we don't have— like, it literally just felt like a deep breath. Like, just, "We can breathe. If anything happens, if I were to lose my job, if he were to lose his job, like, we're okay." We're okay, yes.

And on top of that, you're gonna be really, really, really okay.

Yeah, that's right. And generous. Yes, and generous, that's right.

Yeah, absolutely.

So, what do you tell the young people listening? Because we have a lot of younger listeners now, a lot of Gen Z. What would you tell them if they're sitting there at 24, 25, and they want to be you all eventually one day.

I would say, I know a lot of people say to be on the same page before you get married. I mean, that's— mm-hmm. Yeah, definitely just be on the same page as each other. Yeah.

And it's possible. I think a lot of times, it's like we get so caught up in this victim mentality almost, where it's like, yeah, I mean, expenses— there's— I mean, groceries are expensive. Gas is expensive. Like, we're feeling it too. Mm-hmm. But you don't have to let that be everything. Like, you can— like, yeah, whatever you want your reality to be, you can go and fight for it. 100%. And there's power too, like when you get married and you guys are on the same page, working for the same goals, and you're on the same track, there's a power in that.

Oh, there's a huge power. Yeah, like $170,000 worth of boom! Yeah, that's pretty stinking incredible. That's amazing. So, i mean, you guys, you were not in debt, or not been married long enough to really have felt just the grotesque weight It was kind of a brush with it. So instead of that feeling, the relief from that, I'm guessing you just really feel accomplished. Yeah. Like you really, you really realize how sharp you are and how we really did this. And I'm just going to kind of walk around with my shoulders thrown back a little bit and be proud. You should. I'm proud of you. And I know your parents are proud of you. And you're, you're an example where we all, we hear is that you can't buy a house, you can't buy a house, you can't buy a house. And not only did you buy a house, but at 23 freaking years old, you paid it off. So, I mean, shut up, hold my beer, right?

Oh my God. When we actually bought the house, our goal was to pay it off in hopefully less than 5 years. And it just kept kind of snowballing. And then we're like, oh, well maybe 3 years. And then actually, then it was— It's kind of addicting. Yeah, it was addicting to see the number go down.

It's gamified is what it is. That's exactly right. That's exactly what it is. That's hilarious. Well, cool. Now y'all are great. You guys are powerful.

I'm so proud of you. Well done.

You're going to have so stinking much money, it's going to be ridiculous. And you're going to be able to be generous and change your family tree and then send your grandkids to pick strawberries later. Yeah. That's good. That'll be a good thing.

Hopefully for fun and not for work. That's right. That's right. That's right.

I don't know. As a hobby.

I don't know. It was good money. It's not the end of the world for 3 months. You can do a lot. A lot of stuff for 3 months. And yeah, yeah, you can pull a lot of things together. It's, uh, man, I'm so proud of y'all. Very cool. Your work ethic, your character, everything. Thank you. Stellar. Stellar. Wow. Wow. Anytime someone wants to tell me that Gen Z is a bunch of losers, I'll tell them I have seen otherwise. Colton and Allie. I have seen the Colton and Allies of the world. They come in here and they stand on this stage, they work on our team, and they're absolutely incredible. We love Gen Z. Not all of them, but we love them. We love the good ones. Yeah, the good ones are there. That's amazing. All right, Colton and Allie from Michigan, 23 and 24 years old, $140,000 paid off, mortgage and everything, in 22 months, making $150,000 to $170,000. Count it down, let's hear a debt-free scream! 3, 2, 1. We're dead free!

Yeah!

Yeah! Okay, moms and dads, I have a goal for you. Create another Colt in an Alley for us. Some of you that are raising these little characters, turn them into Colton and Allie that can pick strawberries and pay off their house by the time they're 23.

Oh, and all you parents with little kids on the debt-free journey, your kids are gonna be that. That's what they're gonna be. That's what they're gonna be.

He grew up with this stuff. He grew up with it.

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 RamseySolutions.com/agent. That's RamseySolutions.com/agent. Our Scripture of the Day, 1 Peter 3:15, "But in your hearts revere Christ as Lord. Always be prepared to give an answer to everyone who asks you to give the reason for the hope that you have, but do this with gentleness and respect." John Wooden said, "If you don't have time to do it right, when will you have time?" time to do it over. Folks, we wish we could get to every call and every question here on the show. We can't. If you have a money question and you want an answer for your situation, head over to the website. Use Ask Ramsey. Ask Ramsey is our free AI tool that is built and trained only on Ramsey answers and Ramsey principles.

3 years of this show, all the books we've written, all the articles we've written, 2,000+ over the years, all dumped into the Ask Ramsey app. and it gives you an answer the same way we'd answer it right here on the show. Ask your question today at RamseySolutions.com or just click the link in the description if you're listening on podcast or YouTube. Wesley is with us in Montgomery, Alabama. Hi Wesley, how are you?

I'm doing great, Dave. How are you?

Better than I deserve. What's up?

All right, so I'm 21 years old. Me and my girlfriend have been dating for for some time now, and I am thinking about getting engaged. She, she goes to Auburn. She has about 5 years left in school. She's going— she's in pharmacy school. And I close on my house next Friday. And so I'm just trying to decide if it'd be wiser to wait and get engaged to her, you know, later on in school, maybe like the year before she gets done with everything, or go ahead and do it next year because next year will like be her senior year. But anyways, she has like 4 years post-grad that she has to do.

So are you, um, going to be— the house is near where she's going to do her post-grad work, I assume?

So it's about 45 minutes from it. Okay.

And so if you were married while she's doing post-grad work, she's going to do a 45-minute commute?

Yeah, so that's what, uh, she, she has said that she's totally fine with that. Um, and she said that even if like it wasn't like if we weren't engaged or if we weren't married by then, she would live with her parents and make that drive, and it's also 45 minutes.

Yeah, okay. So, um And you've graduated?

Okay, so I never went to college. I'm a real estate agent and a firefighter. So I work 24/48 and then I do real estate full-time, I guess. And what do you make? My apartment's kind of like that. So this year I'll do 6 figures. I'm on track for 6 figures. That's both of them combined. Is that like $100,000, Wesley?

Or when you say 6 figures, is that $150,000? $100,000. $100,000. Right at $100,000. Okay, perfect. Okay. And what do you make as a fire—

how much of that's the firefighter?

So firefighter salary, um, I take home without any overtime or anything around $63,000. Okay. Who's paying for her college? Who's paying for her postgraduate work?

So her grandparents would pay for that regardless of if you're married, correct?

Yes, sir.

Okay. All right. Well, I wouldn't— I wouldn't base a marriage decision on a 45-minute commute. So I would say if you love her and she's the one and you guys want to get married, do it. I mean, get married. And you know, so many stories— I still had some school left when Winston and I got married, and it was for a short amount of time. But I think there is something, Dad may, my dad may roll his eyes at this, but there is something kind of, I think, sweet when you start off and you guys are just hustling. You know, like you'll look back on these years and be like, "These were the simplest times." You know, she was in school.

I'm not gonna roll my eyes at that. That's good.

I like that. Okay, okay, okay. I know. Sometimes it's like, "Oh, my life was so much better." When you're doing well financially, Eventually. But yeah, so there's, I don't know, something about that, that's, I think, great. And again, it's all if you guys feel like you're in a good spot, relationally and spiritually and all of it. I mean, I was, I got married super young. So, I'm, if she's the one, I'm definitely not against it. And I think she can make that 45-minute commute. And I think that's fine.

Yeah, she's gonna be making a 45-minute commute anyway, because she's with her parents, it's 45.

Yeah, but I wouldn't make it—

And I wouldn't wait, but I wouldn't wait 5 years to get married either. No. —make it. Yeah, that's the thing. That's the thing for me is, you know, I, you know, we encouraged our kids to get out of school before they got married. Rachel obviously chose to do that. She came in and said, Dad, you always said this, but we really want to get married in December and I'll graduate in May, and we really, really, really, really want to get married. And I'm like, okay, that's cool. So we worked it out.

And I can't believe y'all let us get married that young. I still laugh all the time.

I mean, we liked Winston a lot, and so it was that simple, and he's a stud. So, you know, that's kind of the thing. And so, if you two have your act together, as Rachel's point, then it won't interfere with her completing school, and it won't— you know, you're not holding each other back. There's no desperation in this. And I wouldn't sit around and wait 5 years to get married. That would drive me nuts.

I mean, we just had a couple on the stage she's 23. They've been married 2, 3 years. She got— they got married young and paid off their house and, you know, made some big adult strides. So just because you're young doesn't mean that it can't be done.

So you just— but you need to do it from a healthy spot, both of you being in a healthy spot. Yes. And it sounds like you are. I didn't hear anything in this discussion that's like neediness on her part or your part or something like that. Right, right. Your only question was timing. And it's what I heard. Anyway, so If I were in your shoes, I would be engaged and be married as soon as possible, within, you know, within reason. So I would not wait 2 years and 3 years and 4 years and that kind of stuff. I didn't, and I don't, I don't tell people to do that. All right, Sarah is in Baton Rouge.

Hi Sarah, how are you? Good, thanks for taking my call. Sure, what's up? I attended Financial Peace University, and I try to follow the Baby Steps principles. I'm debt-free except for my mortgage, and I'll pay that off next year. I am single. Yeah. I'm single. For the first time in my life, I'm self-employed. I was contributing 15% to a Roth 401 when I was employed. I wanna continue to save 15% for retirement, but I don't know if I should deduct the self-employment tax from my gross income first and then figure the 15%, or do I just look at the gross income and then take 15% of that.

We teach people to save 15% of their gross at Baby Step 4, and that's where you are. So 15% of your gross. It's the same thing if you're a W-2 employee. Before taxes are taken out, we figure 15% of that gross. It's the same thing. And you've just got, with self-employment tax, you've got, when you're a W-2, you've got half of that. You pay 7.62% plus your— 7.62%, and you've got you've got the whole 13, you know, the whole 13%. So, uh, Medicare and Medicare and everything. So yeah, so it's 50— it ends up being 15% plus your, uh, income tax. So, right, that's what the government does to us. So there's a lot coming out. But, but that's, you know, the only difference in you and a W-2 is you've got an extra 7% coming out because, I mean, Washington's here to help the small business person, so they double tax them. So that's how that works. But, you know, yeah.

So, yeah, good job, Sarah, though. Well done.

Way to go, way to go! You're killing it, kiddo. Very well done. Evan is in Corpus Christi. Hi, Evan, how are you?

Hey, Dave and Rachel, I'm, uh, honored to talk to y'all today. You too.

A little short on time, go straight to your question.

All right, I'm looking for permission to spend some money on a truck. Um, just sold our house, and my wife and I have never been sitting on this much cash before. We've been in a little bit of a mess and so we're crawling out of it. And I think that's kind of—

how much debt do you have?

And pause and pull the trigger.

How much debt do you have? No debt. No debt.

What's your net worth?

We have $210,000 in retirement. We're both 29 years old and we're sitting on about $150,000 in cash.

Okay, and how much of a truck are you talking about buying?

I'm just struggling to pull the trigger. Somewhere $20,000 to $30,000. I make $120,000.

Okay, what's the other car worth?

Uh, she got an Expedition, probably about $22,000.

Okay, all right. Yeah, we— if you've listened to the show, you know that we tell people not to buy cars and things with motors and wheels totaling more than half your annual income. It doesn't sound like it is. And you're paying cash. And so, that's the two things we tell people to do. Mm-hmm. 20 to 30, you're fine. Obviously, you're using part of your down payment money towards the house when you do that. Mm-hmm. Trading it off for a truck. But pay cash for it and make sure it's in that 20, 25 range and you should be okay. That puts this hour of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.