Transcript of Change Your Mindset, Change Your Life

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broken. Common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studios, this is the Ramsey Show. I'm Dave Ramsey. The phone number's 888-818-1111. 888-825-5225. My co-host today, number one bestselling author, Ramsey personality Rachel Cruz, also my daughter. Jump in and talk, folks. It's what we do here. We're here to help you. Neo is with us in Jacksonville, Florida. Hi, Neo. How are you?

Hello.

I am so honored to be on the show. Thank you so much.

Honored to have you. How can we help?

All right. So I have recently had a conversation with my parents about, um, what they are planning to do for retirement, and I was a little concerned. Um, they don't have any money invested at all right now. Um, and so I was like, I didn't pick apart, you know, what they have in savings or debt or whatnot, but how can I convince, or how can I have a conversation of investing even at their age? So my mom is 55 and my dad is 62.

Oh, I'm surprised they're still alive. They're as old as me. They're as old as me. I can't believe it. Oh, um, Well, the thing that has always helped me sell hope, which when you say I'm too old to invest, that means I've lost hope. And so if I want to sell hope in the world that I'm in, I often use the actual math.

Okay?

And so I would jump on and play with some numbers and then take the numbers to them and show them on your laptop. Okay? And just go to RamseySolutions.com and look at our retirement calculator. And say, "Mom and Dad, if you put in—" I don't know what their income is or whatever, but you could guess at it and say, "If you put in $500 a month, you know, when you're 72, here's what it'll be. But here's what it'll be if you put it in at 3% in a high-yield savings account because you're too old to invest." All right? And the market has done unbelievably well in the last 5 years, and it's not going to stay at that level forever. It doesn't average as high as it has lately. But in the last 4 years, in '23, I mean, the numbers are in '23, it was 26%. In '24, it was 25%. And '25 was 18%. We're already at 13% up this year. So the stock market, basically, if you put money in in '23, a lump sum, it would have doubled by now. So if you put $100,000 in and didn't touch it, it would already be $200,000 just 4 years later, 5 years later.

So is there anything I need to do on my end to help them? Like, okay, if the next step is investing and I've convinced them that this is a good idea, what would be the next step?

Well, the other thing that holds people back from investing, other than belief that it's not going to work, is knowledge. And so anything that we don't understand is scary. That's human nature.

Yeah, but to answer your question though, you would reach out to a SmartVestor Pro and sit down with an investment professional with them if they would, you know, if you're kind of guiding this journey with them and they want your help and you in the room and your opinions.

"Hey Dad, I got in touch with a SmartVestor Pro on the Ramsey site, and I talked to them for a minute, and they said they'd love to sit down and talk to you." And these people are not there to put their glasses down on the end of their nose and talk down to you. They are teachers. And if you learn, your fear goes down. And if you believe the numbers are gonna work, your hope goes up.

And what you put your money in. And then you invest. Yeah, and what you put your money in, you trust the system, right? Ultimately, which is the market. Like you are putting your money in and saying, I trust that this is, it's not going to go to zero. I'm going to trust that if anything, it's going to make me more money. And so when you sit down with an investment professional, they can run those numbers, run the history, you know, you can just see and get kind of a confidence of, okay, it's not as dramatic as what everyone thinks, right? When you live in that fear bucket of the market, people, they dream up all the scenarios in their head that aren't, aren't true, you know. And so, exactly, they repeat the mythology.

I'll give you an example. I was doing Fox yesterday. I was doing an appearance on the Fox show, one of the Fox shows yesterday, and they were talking— was it yesterday or day before? I don't know. They're talking the Dow has broken another record, 54,000. Okay, but does anybody remember when Grandma said, or your friend said, we lost all of our money in the stock market in 2008. Does anybody remember that? And that's an absolute lie. It was mathematically impossible for you to lose all your money unless you bought a single company and that company went broke. But if you were invested in a mutual fund, the Dow, which is now 54,000, had peaked at 13,000 in '08 and then dropped in half. Oh, like the— to $6,300. Yeah, yeah, yeah. And so, if you had a million dollars in at $13,000 and it dropped to $6,300, your million turned into half a million. So, I lost half of my money if I bought at the top and sold at the worst possible day.

But if you kept it in—

but if you kept it in, it went from $13,000 to $6,300 to $54,000. Right. As we sit here today. Our memories are so funny about remembering negatives and not positives. I read an investment psychologist that did a study one time. They said, "For every dollar you lose in an investment, you have to make $3 to feel the same." We're such negative ninnies. Yep, yep. The human nature is we have this little black cloud over the top of us, Totally. If we lose a dollar, it takes $3 in gain to feel the same. To feel it, yeah.

But I would also say to the 62-year-old dad, "Dad, you gotta get on it. The dollar you put in now is not like the dollar you would put in when you were 30." You know? George Campbell— You missed that though. I was just in a— yeah, we were just in a content meeting and George was showing about— and I need to pull up the numbers maybe for next segment because it was so fascinating. But he talked about, you know, if you put in a dollar, I think it was like at 25, it actually means $72 at retirement. And so you back it out, but you start to see how quickly— and that's not to lose hope, but there's a reality to your money and your time. So, it's almost this urgency of, "Get in now. Like, go now. How much can you save? How much can you invest lump-sum-wise?" 'Cause you're gonna be 72, unless you die. Exactly. It's going to happen.

And you're either gonna be eating Alpo, or you're gonna have some more money.

Why do you always say Alpo? Is that dog food?

'Cause it was a thing. Say ramen. Ramen noodles. No, no. People actually, poor people actually opened and ate dog food, 'cause they have nothing to eat. Have you not heard these stories? I have, but I always wondered, why not just— ramen. Ramen's not dog food.

Exactly. Why? I know, but—

Because it's not as dramatic and not as horrible.

That's what I needed. I always was like, why do we always use this example of people eating— and maybe people did and no offense to the Japanese.

No, they do. I mean, I've heard the stories. I've heard the stories. And so, but if you need to eat, eat ramen. I'm too poor. I opened Granny's cabinet and there was Alpo in there and she doesn't have a dog. Okay, so there you go. Get her ramen. Yeah, well, there you go. But still, I don't know. I don't know if ramen's any better or not, but I've never had either. The chicken flavor.

You've never had ramen noodles?

No, I have managed to avoid that. I eat well. Can't you tell? Do I look like I'm underfed?

You are not a millennial that went to college during those days.

You're right, I'm not a millennial.

I would have made you a bowl of beef ramen noodles.

So, George's point is, and her point for her dad that you're making, All drama aside, sorry, is the best time— the old saying, I think it's Franklin or somebody said it— best time to plant an oak tree is 30 years ago. Next best time is today. That's right. Today.

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We're talking about the math giving hope. I was 22, maybe 23 years old. I have a degree in finance with specialization in real estate, a degree in real estate and urban economics, which is a finance degree with real estate classes thrown in. And I had never sat down and looked at mutual funds. They don't teach personal finance in that. They teach corporate finance and analysis and, you know, concepts of future value and net present value, those kinds of things. And I went to this thing and the guy put up there compound interest if you do your investing in a mutual fund. And I was 23 years old and I went, "I can be rich! It'll work!" What he put up there was $100 a month invested from age 25, and I was 23, so I had a head start in my mind. $100 a month invested from age 25 to age 65 at 12%, which is a little bit more than the stock market is average, but right around there. It's averaged 11.8%. $100 a month, and it's still true, $100 a month at 12% from age 25 to age 65 is $1,176,000. And I went, $100?

And guys, that was 1983. $100 was a lot of money, but I went, $100, I can do this. Now $100, if you don't do that and don't become a millionaire, is laughable. And but it should— you should be going— you put that stuff in that Ramsey calculator on the website and it shows you that compound interest. And the compound interest gives you hope, and hope will make you act. It'll make you go do the $100. But if you thought, well, I'm too old, "If I put in $100, oh, it's too late." Well, if you don't put in $100, it's really gonna be too late.

Yeah, you won't have anything. What'll make you sick is a car payment.

How much you'd have if you paid yourself a car payment instead of staying in debt on a stupid car. And it used to be that $500 was an outlandish car payment. Now $2,000 is an outlandish car payment. Bailey is in Lubbock, Texas. Hey Bailey, what's up?

Hey y'all, thanks for taking my call. I'm super excited. Sure, what's up? Um, so my question is, my husband and I, we bought what we thought was a cosmetic fixer-upper, um, 2 years ago. Turned out to be a lemon, and we're trying to decide if we should sell it or keep working on it.

Oh man, what's been, what's been wrong with it? Everything from like foundation, I mean anything and everything? We've had to redo all of our plumbing.

Um, oh man, now that you're asking me, I'm kind of blanking on— No, no, it's fine.

No, no. Did the inspector—

A lot of things that are in— Did you— That our inspector missed. Okay.

And how much, how much money have you guys put into the house already?

We haven't really been keeping track of it, but we're thinking we've put about $30,000 into it already. What'd you pay for it? We bought it for $163,000 and we still owe $150,000 on it.

And is it in worse condition now that you've been doing the renovation or better than when you started?

No, it's in better. We have been doing— my husband's really handy, so we've just been doing all the work ourselves. So what can you sell it for? Well, that's the thing. We don't know. We're—

I mean, let's pretend you could sell it for $200,000. Would you not sell it?

Well, that's kind of my question because I don't really know if it makes more financial sense to sell it. Nothing about this house makes sense.

When did you guys buy it, Bailey?

How far— how long ago?

2 years. August of '24.

Okay, you've been working on for 2 years, you said, right? Yes. And you are emotionally over this house. We can tell by talking to you.

Yes. Yes. So it is a— it's even—

even if this house is completed and it's excellent when it's completed, you're still not gonna like it because of what you've been Yeah, maybe.

Or maybe you fix it. I wouldn't. And it is what you love. So do you, do you not like the house, Bailey? Like when you're in it, what, are you annoyed by it?

The thing, yes, very much, because it's a constant construction zone all the time. We've got things going on here, things going on there, and so there's never any like peace at the house. It's chaotic all the time because there's always something.

And whenever we start a project, it just turns into, you know, uh, how long will it take you if you finish the projects and have a perfect house, how long is that gonna take from today?

We anticipated about a year and a half.

More? Yes. This is a 3.5-year renovation? Y'all are slow. Well, her husband's doing it. I know, y'all are slow. That's what's killing you.

Probably costs. They're keeping their costs down. They're taking a little bit at a time.

That's what we tell people to do on the show. And you eat sawdust for breakfast.

Yeah, living in it is what that— that's fair.

That's one thing. Yeah. Mm-hmm. Well, and then the other thing too is that it's only a 2-bedroom house and we do want kids in the future. Um, so if we stayed in this house with kids, then we would need—

I would cross that bridge when you get there though. I wouldn't make the decision.

That had nothing to do with it when you bought it 2 years ago. Yeah. There were kids in the future then, but what happened is this is taking 3 times longer than you thought it was going to, and it's costing more than you thought it was going to. And more, and that took all the fun out of the fixer-upper. You watch watched too many of those fixer-upper shows on TV and thought it was gonna be that easy.

Oh man, yeah, yeah.

I hate those shows because they're a lie. It's not what really happens. You've lived the reality. Mm-hmm. They're a lie. Yeah. So I used to do historic rehabs, and I did a bunch of rehabs of all kinds, but we would buy houses in the historic end, and I bought several houses from like 1898 They're beautiful old gingerbread-looking houses when you get them done, but the construction techniques in 1898 and in 1905 were substantially sucky compared to today's construction techniques. They don't build them like they used to, thank God. It was crap, okay? And we would open up a wall, one of these plaster walls, which once you open it up, you gotta do the whole stinking wall. It's not like drywall where you just open up one little piece and then put it back. We'd open up a wall And then we'd end up taking the whole stinking room down to the studs and hadn't anticipated that. It was a freaking nightmare, and we were doing it for investment. It was crazy. I bought one house for $13,000 and spent $78,000 fixing it. In today's dollars, just add a zero or two. Like buying it for $130,000 and spending $780,000.

So when's the break-even? So for someone like Bailey who's asking— I would move if I'm Bailey.

You're done. I'd put it on the market. If you can get your money—

Get it show ready.

If you can get your money out of it and get out of there, "Today, get out of there. This has lost its glamor. There's no romance in this relationship." And it just keeps going.

Yeah, it's just not fun.

It's not fun. And by the way, her husband, bless his heart, he's been working his butt off, and he's got, you know, he's got a black fingernail from hitting his hand with a hammer and all this stuff. The pipe wrench slipped and busted his— you know, he's sick of this thing too. He's sick of it too. I've been that guy too, you know, like, "Honey, would you do that?" The problem with knowing how to fix stuff is you've got to fix stuff.. And so, yeah, man, man.

Okay, don't you think though, homes like good old ranchers from the '60s and '70s, they're built well though? Yeah, when you say like there's a period of time—

'62 is different than a 1902. No, that is true. Yes, way different. 1962, in most areas, the construction technique is very similar to what it is today.

Yeah, just, or even better than some of these pop-up houses that go quick too, you know? Yeah. Yeah. Be good. That's how it works. I will say though, basic—

So recommendation, I would never buy a fixer-upper that I'm going to live in. That's what I was gonna say. Unless I'm in the construction business and unless I've already owned a home before that.

Never do that as your first home. And if it is, their intention, I think when she said, was cosmetic, right? Like if you want to like change out cabinetry and like those kind of things, you can do You wouldn't do that.

Paint and bushes and a roof and carpet. Well, our floors. Yeah, but I'm not going— I'm not touching the plumbing or the electrical. Right, right. That's right. And that— and once you pull the cabinets out, you just got the plumbing and you just got into all the appliances. And so here we go.

Paint the cabinets. Just paint the cabinets.

Well, there you go.

From a distance. Yeah. Spray them. Yeah. I mean, it's just— well, touch them.

The romanticized idea. Okay. Okay. Okay. And I'm going to keep going back around, though, is because the market is high, people are buying smaller, older homes that do need some work. And so you do have to estimate that you may not be able to afford the nice new home. I'm fine with that.

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You know, there's some things people don't realize about wills. Wills are not about your age. They're not about your net worth. Wills are about being an adult. 30-year-olds die and 70-year-olds die. Everyone needs a will. If you're an adult with people you love, kids, pets, anything you want handled in a certain way and you don't want the government or a judge to decide, and you don't want a judge to decide because all a judge is is a frustrated lawyer. You don't want them deciding anything. And there's nothing worse than a lawyer except a frustrated lawyer. So if you're ready to create a will, go to mamabearlegal.com. If you're not sure where to start, text quiz to 33789 and we'll help you figure out which option fits your situation. Nick is with us in Detroit. Hi Nick, how are you?

Hey, good, how are you? Thanks for taking my call.

Sure, what's up?

Sure. Um, so my wife and I, we manage most of our investments, um, ourselves, and we just sort of follow the broad strategy of index funds or other broad mutual funds. Um, but recently, as our net worth has been increasing, uh, Fidelity has been calling and then trying to sell us on SMAs, or separately managed accounts. And from some reading, we've got some reservations, but curious what your thoughts are.

Well, it's basically an individualized mutual fund without as much diversification, but it may— it's really appealing to you DIYers. There's nothing wrong with it except it's just not as efficient as a good mutual fund. I can buy good mutual funds and whip your butt with it.

I see. So one of the things that they were pushing that they do, like tax harvesting, to try and offset all their gains by You know, taking losses. Yeah, that's fine.

You can actually do that with a mutual fund too. You don't have to have single stocks to do that.

That makes sense. The one thing that concerned me though was like with buying mutual funds, we typically just buy and hold for a long time. So everything sort of turns to long-term gains, um, pretty reliably. And with this, like they'd be sort of buying and selling stocks frequently. And so we wouldn't sort of have that and we'd have some short-term If we ever need that money, we'd be paying essentially income. If the only way—

if you don't pay any taxes with this, it's because your tax harvesting outdid your gains, which means you're not making any money. You have to lose as much money as you make to have no taxes with tax harvesting. That makes sense. That's the only way it works. And so tax harvesting is smart because we're going to take the losses and offset some of our gains, and we're getting out of the stupid stock that we're losing money on.

That's tax harvesting. Yeah, and with the Fidelity account, Nick, is somebody gonna be doing that for you, managing that? Or with this SMA, will it be you doing that? That's a lot of work.

Yeah, it would be them.

Okay, okay, okay. It's good.

Yeah, I mean, Fidelity's a good company. I own some of their funds. I do not use them to manage my money. I have a professional broker who is not dialed in on one brand. A SmartVestor Pro. They're not brand loyal, and they're going to do what's best for Dave, not for Fidelity. And that broker is going to manage that in such a way that if there's tax harvesting to be done, fine. But I don't want to set up my portfolio to go rushing towards tax harvesting. That means I'm losing money. I would rather have no taxes to harvest, meaning no losses. It's not possible. But I would rather have that to be my goal rather than, "Ooh, tax harvesting." You know, it's kind of cool, but that's just taking advantage of something that went bad. That's all it is. So no, I, you know, Charles, you've chosen to do this this way. I've got— Nick. I'm sorry, Nick. You know, Rachel and Winston have substantial money in mutual funds. Dave and Sharon have substantial money in the stock market, and neither one of us use either of the processes you've been using.

And index funds are easy too, just the S&P. I mean, yeah. Anything under that umbrella.

Yeah, index funds, what's called, you know, it's a Bogle head. Bogle invented the Vanguard brand, and he started the push on the index funds because the index outperforms a lot of the mutual funds. And that's true, but there's a lot of mutual funds that still outperform the indexes. You just got to go find them. They're not, it's not rocket science.

And that's why having a SmartVestor Pro in your corner is great, because they know it. They know those accounts inside and out, which is great.

My SmartVestor Pro is never going to bring me a mutual fund that has not outperformed the index. 'Cause he knows immediately the first thing I'm gonna ask is, this has outperformed the index, right? And that's kind of a Ramsey thing, you know?

Yeah, so for people out there investing, have those high standards. That's not just for you to be pushing to, if you have a mutual fund, for it to be outperforming. Yeah, yeah. Those are very valid.

100%, you know, though I understand that. Okay, so let's talk about that.

But be very valid, you know what I mean? Like, that's a valid question. That's not just, or a statement to make if you have an investment professional in your life, push them on that.

Yeah, so Nick, back to your original question, No question. Fidelity is a good company. I don't have a problem with them. They're not like a whole life company that's ripping people off, that I tell people stay away from. They're a good company. I guess Fidelity Magellan is probably still the largest or one of the largest, one of the two largest mutual funds in the world. It's the first one to go over a billion dollars years ago when I was first getting in the business. It was like, "Woo, Fidelity Magellan!" It was the thing. It was the hot chick. It's a good company. The concept that they're talking about is not a bad concept. Tax harvesting is not a bad thing. It is a bad goal, but it's not a bad thing to do as a minor goal. Take advantage of the things that went wrong. That's all it is. But we don't want things to go wrong very often. It's not the— but overall, whether we're doing your DIY approach or whether you're doing your modified DIY approach with them, The research says you're gonna underperform a portfolio of actively managed people looking at good growth stock mutual funds with long track records, and you ride the ups and downs of the market, and you don't sit and chew your fingernails off looking at your computer screen all the time talking about this.

And so, the research says getting in the market in a good steady fund that has good performance ratios good expense ratios, and staying, and don't screw around with it all the time, outperforms all the stuff you're talking about. That's what the research says. And also, it has a lot less anxiety. So that's what we do, and it's also what we recommend. But I would not throw you under the bus or what you're talking about under the bus. I just think if you click to the right 2 better notches, you would do what we're doing. But if you want to stay where you are, you're not over in the dumb side. Okay, you're not over in the crazy or getting ripped off side. You're not buying whole life or indexed universal life or something where your insurance agent's acting like an investment professional and they're not really. They're just a stupid insurance agent. And so, you know, that kind of stuff. You're not anywhere near that end of the spectrum. You're over on our side of the boat. Okay, so we love you and we hope it works for you. And you apparently get some joy out of tinkering with all this in your nerdiness, and that's fun too.

I don't get joy from messing with it. That's the other thing. I don't want to screw with it.

I was gonna say, for the average person out there, that's, that's to me the parts of money. If you can outsource, once you understand it all, right, you're not turning a blind eye, but you have someone else helping you with this. I mean, it's almost like an automatic out of your checking that you pay bills. Like there's something about outsourcing some of this button clicking in the financial space is it takes the brain calories out for you that are all juggling 1,000 different things in your life. This is one less thing that you feel like you need to check in on all the time.

I know how to cut my grass. You need to every year. I know how to cut my grass and I know how to make it look perfect, but it's a lot more fun for someone else to do it.

Yeah, the outsourcing.

The outsourcing. I know how to change my disc brakes, but I don't wanna bust my knuckles with a wrench. It's a lot more fun for somebody else to do it that knows how to do it. And they're gonna be faster at it, more efficient, and it's net, net, net, I'm not saving that much after I pay myself $1 an hour for changing my own brakes or mowing my own grass.

Yeah, and when you try to DIY all financial stuff, you guys, you miss out on these professionals, whether it's real estate, you know, trying to sell your home yourself versus having a real estate agent. You know, your taxes could be either way, but you find these—

The data on that one's there. Fizbo. Yes, I know. For sale by owners, on average, get 12% less in price than a professional high-octane real estate agent. Yep. Now if you got one of those donut eaters that sells once at one house a year, you might beat them. But if you get a professional high-octane real estate agent that knows what the flip they're doing, they're gonna kick your little for sale by owner butt. You don't really save the commission because you don't know what you're doing.

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Thank you for joining us, America. So, Rachel, you're seeing some people comment about the $1,000 Baby Step 1, you said.

Yeah, I just mentioned to you in the break that we're seeing, number one, more and more new audiences coming to Ramsey Show thanks to podcast, YouTube. I feel like we're just easy to find these days or on social media. And the very first step as you are starting the Baby Steps is $1,000. And so, So, I see kind of two ends of the spectrum. Either some people, because we see 40% of Americans can't cover a $400 emergency in cash. So, getting $1,000 for that group feels like, "Oh my gosh, that's a lift. I don't even know if it's worth starting because it does feel so, such like a big mountain to climb." Other people on the other spectrum are like, "Gosh, that's not enough. Like, $1,000 would have been fine in 1992, but in today's world because of inflation and everything, most, you know, what it feels like, anything big that happens, it's gonna be over $1,000 very quickly, very easily.

So, oddly enough, it was about 1995, but that's about right. Oh, I just guessed. I mean, you hit it pretty close. It's not enough. It was never meant to be enough. Let's talk about it for a second. So, what we figured out years ago, and so some of the things we teach kind of give people a head tilt, and they kind of go, "Oh, that feels weird," is like, stop stop your retirement, even if you get a match, temporarily while you attack the debt. Because your most powerful wealth-building tool is your income, and you've given it all away in the form of debt. You have to clear the debt to build wealth. Mathematically, emotionally, relationally, habit pattern-wise, everything. And we've proven that, because now teaching this since 1995, right? That tens of millions of people have become millionaires doing what we teach. We got Baby Steps millionaires everywhere. And so when I started teaching, we didn't have the Baby Steps. I just said, "Shut up, get out of debt, and sell everything that's not retirement. All your stocks, clean out all your savings and put it all on your debts, smallest to largest. Get your debt snowball rolling." And what was happening then was that people would come in, and we were teaching Financial Peace University, people would come in and say, "Um, yeah, that's all great.

I just did what you said to do. I got zero money. I got $50 in my checking account, and the alternator on my car just blew, and it's $400. I'm screwed. So now I got to go back in debt or not get to work to have the money, and so I'm screwed. I was cornered." And so I started looking at that, and that was a very real thing, and it happened a lot because I'm so hardcore. I mean, can you imagine You're not even personally meeting with me once a week, and you're not getting out of debt. I pound them, man, because I want you to win. I want you to win so bad, sometimes I want it more than they want it. But I would talk them into doing this stuff, and then they were cornered. So I said, "Okay, we've got to have a little baby starter emergency fund to cover the little stuff," because it was little stuff that was knocking people off the wagon. And so we said, "Okay, $1,000." Then fast forward to today, people say, "Well, $1,000 is not enough." It wasn't enough in 1995. A properly funded emergency fund has always been 3 to 6 months of expenses.

So in 1995, that might have been $10,000. Today it might be $20,000. But it wasn't enough. $1,000 isn't enough. And if you— so if you inflation adjust, you say, "Okay, we're gonna make Baby Step 1 $2,000." It's still not enough. It's not an emergency fund. It's a starter little baby tiny horrible emergency fund. It's not designed to cover you if you lose your job and you're out of work for 6 months. It's not designed if the $14,000 heating and air system goes out. It's not designed to cover that. It's designed to cover the little stuff, which is what most things are while you're learning to budget. And you're selling everything in sight, and you're cleaning off your debt. And it's only until you work your Baby Step 2, which if you're working your Baby Step 2 with the focused intensity, extreme intensity that we teach, you've stopped your emergency fund, you've cleaned out every bit of savings that's non-retirement, thrown it at your debt, non-mortgage debt. If you're attack, attack, attack, you're on beans and rice, rice and beans. You're not going on vacation. You're not whining about your $5 coffee that you have to have.

You're not doing any of that. You're just totally nose down getting out of debt. Your friends think you've lost your mind. You're out of debt in 18 months on average. And we've taught millions of people this. Now, that's the average, meaning some people do it in 18 days and some people do it in 3 years. Right. I don't know what your debt is, but 90%— the bell curve on the people that get out of debt is right around the 18-month mark. So, the only 18 months— you're only living 18 months with only $1,000. And by the way, You're already broke! So what's the big deal living like you're broke? You know, and so you're on— we're only saying $1,000 is not enough, but I will cover a lot of little tiny things while you're learning to budget. And yes, because when you don't know how to budget, everything's an emergency. You don't have money set aside for car repair. When you don't know how to budget, the kid forgetting that they have a field trip is an emergency. 'Cause you never taught the kid yet they gotta put it in the budget or they don't get to go on the field trip.

Or you don't have a miscellaneous, you know, there's no organization. There's no organization.

Everything's chaotic. And so, every little thing is an emergency. But the longer you budget and the more wealth you build, the larger the event has to be to be declared an emergency. So, $1,000 in the first 18 months will cover almost all your emergencies.

Well, and my thing is too, if it doesn't, if you're deep in the debt snowball and you're throwing so much of your income that used to be going to debt payments, where those debt payments are now paid off 'cause you rolled onto the bigger debts. You could pause it for a month and collect a couple thousand bucks if you need, if something did major happen, fix the emergency and then plug back in, right? Because that happens. Life does happen. It goes up and down. And we hear that a lot from people. And so, I think that's the important thing is to know that there's a way to finagle it, to figure out how do I get through this event if there is one.

And it's not supposed to be enough. That's right. And if it is, if $1,000 is a lot, to you, that means you really need to do this. Your new name is Facebook Marketplace. You need to sell everything. Sell so much stuff the kids think they're next. Name the dog eBay and the cat Facebook Marketplace. I mean, everybody's got a new name. You're all for sale. We're getting— we're getting out of debt. Those golf clubs— 7 sets of golf clubs— eBay, baby! Get rid of the crap in your house and clean out this debt. You got to get completely dialed in in and focused on this. And Rachel, you were a baby, so you don't remember this, but I distinctly remember two things that were emergencies. Okay, so I've got a wife who's been through bankruptcy and is living on the edge of terror at all times, who has a toddler and a brand-new baby, and our roof started leaking. And we had started working this. We're not not borrowing money. We did not have thousands of dollars to put a roof on the house, and it was dripping through the light fixture over the top of the kitchen table, so it would drip onto the kitchen table, running down electricity— water and electricity.

This is not good. And so that's what's wrong. We said, okay, we— this is bad. This is an emergency. Yeah, but you know what? When you decide you're not borrowing money— I got the hardware store, I got that black tar stuff, I crawled around like a redneck up on top of the roof and spread that black tar stuff around. It looked like white trash lived there, and it was a nice home, but white trash was there right then because we were broke people. And it stopped the leak, and 18 months later we'd gotten out of debt and we'd saved some money and we put a roof on the house. The same summer, stupid air conditioning goes out, August in Nashville where you can cut the humidity with a knife, and there's nobody happy. The dogs aren't happy, everybody's sweaty and mad. And the air conditioner guy says, "It's gonna be $2,000." I'm like, "I ain't seen $2,000, I don't know when." So we bought some box fans, little fans, and then I've talked to a guy at church who works on heat and air, and he said, "If you'll buy the parts, I'll try to fix it." And they ended up fixing it for $89, and it made it for 4 more months.

To winter. By the next summer, we saved up the money and bought an air conditioner to replace the condenser that was bad on the back of the house. Now, this was a house that was a reasonably nice home. It was not a— this was not a white trash house. But it was just— the air conditioner was old, the roof leaked, and we don't borrow money. But this is what you do when you change your mindset. We made the decision after filing bankruptcy, we don't borrow money. Did people think we'd lost our minds up there spreading that black stuff around on the roof? 100% of them did. I had no black stuff on the roof cheerleaders. Nobody going, "You're the wisest guy I've ever met." They all looked at us like we had one eye in the center of our head. Well, welcome to being different. Normal is broke. You have to be different to win. Most people think making a will is some huge legal project they'll get around to someday. If you're working hard to get out of debt and build wealth to change your family tree, don't miss one of the most important steps that can help protect it all.

Making a will. At Ramsey, we trust and recommend Mama Bear Legal Forms. Mama Bear has taken something people assume is complicated and made it simple. Their wills are specific to your state, and they're built by attorneys to help you protect your family the right way. You're not downloading some generic form from the internet and hoping it will work. You'll have guidance every step of the way so you can be confident you're doing it right. Plus, the whole process only takes about 20 minutes. And August is National Make a Will Month. Right now, you can go to mamabearlegalforms.com and save 25% on your will with the promo code RAMSEY. It's their biggest discount of the year, but it ends August 31st. So don't wait. That's mamabearlegalforms.com for 25% off with the promo code RAMSEY. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Rachel Cruz, Ramsey personality. My daughter is my co-host today. Lindsay is with us in Los Angeles.

Hi Lindsay, how are you? I'm drowning and on the dumb side of things. Ouch. But thanks for taking my call.

Ouch, I'm sorry. Hi Lindsay.

What's going on, kiddo? So I, I will withhold my emotions as best as I can because I know this isn't a therapy session, but I'm definitely, um, I'm some in general relief right now, which is $221 a month and food stamps. I've been on disability for about 2 years. I had temporary disability run out in February, which is why I'm on general relief right now with food stamps. And just found out I'm not allowed to pay that off with the $221 I receive, which is— I mean, obviously, how can I survive on that and pay off debt? I have $20,000 and plus in credit card debt over the last couple years, and unfortunately, this isn't my first rodeo of paying off debt. And trying to, um, what is the, uh, what's the nature of your disability? Oh, so I had a total hip replacement, and I had a— when I tried to go in for surgery last year, I had an anxiety attack, and, uh, that kind of put me in about 3 to 4 months of hot flashes and, um, basically, uh, palpitations and emergency room visits and medications and all that. And then I was able to finally get the surgery, which is successful.

I'm still under doctor's care though, and I'm not allowed to get unemployment or work.

So that's— how old are you, Lindsay?

49. 49. Okay. And so your hip surgery, did you do a hip replacement?

Yeah, total hip replacement. Okay.

And you're, you're up and around, and the hip replacement was how long ago?

March, beginning of March, so about 4 months out, 5 months out.

Okay, so based on the hip replacement, you would be able to go back to work, but the anxiety and some of the mental issues, the emotional issues, are keeping you from it.

Is that right? Not necessarily. Um, I just— they, they haven't cleared me completely. Why? And I—

most people that I know that have had hip replacements are back going within 2 weeks.

And sadly, I've been kind of— that's been thrown at me. Why are you special? Because you're 6 months still on disability. Um, so I don't know, uh, other than my expertise or my training is a medical field, and the surgeon did say that because of the work that I do, he prefers to keep people 6 months out. So that's the only reason I have been given, and that's what I tell others. Okay.

The reason I'm asking you all these questions is that you— what you have is an income crisis. Agreed? Yes, sir. Okay. Because $221 isn't going to do anything. That's not even going to feed you.

By God's grace, I've been blessed to have a rent-free stay with a lady from church. So I'm only surviving. Yeah.

And she's feeding you and everything. So yeah, I mean, that's it. That's— that is grace. You're right. And that's generosity. It's wonderful. It's a wonderful thing on the short term. It's not a long-term plan, obviously. And so, you know, if we want to solve a debt problem or a situation like you're in, and it's very scary where you are because you feel overwhelmed, I'm sure. I'm sure it's added to the anxiety problem, not subtracted from it. And so The weird thing is, is that what, you know, I really, I'm not a medical person. If I were in your shoes and were as scared as you are, I would go to work, right?

Even work from home. I would do something.

Yes, I would do something starting today, right?

And interestingly enough, I do have a trade of making jewelry and like suncatchers and things, so that actually just got a free desk last week and Lindsay, I just started to clean it up.

Yeah, you do that too, but also you—

I mean, you need a job.

You need a job. Like, I would, you know, be on a phone bank for a company and make $22 an hour.

You don't necessarily be walking around or lifting things or something else. I don't care, but you need an income. Get a house. And suncatchers are not an income. That's a nice side hustle. It's a nice side hustle. I think there's nobody making $60,000 a year with suncatchers. No, I— you're right. All Okay, so that's what I— I want you to go make $60,000, because here's the thing: a whole bunch of your anxiety and all of your financial troubles go away when you get a $60,000 a year job.

I don't even know how to spell that, but—

I know, I know, but I'm speaking that for you. Okay. Because I'm talking to a lady who's not unintelligent. She's had a really rough patch. And we're coming out the other side of the rough patch, and no pun intended, but I want to run out of this rough patch. Yes. Okay. And so I want you to get up and go right now and just tell your doctor, I'm sorry, I would love to have laid around in rehab for 7 months like your theory of your textbook, but I had to do this thing called eat. And so me and I, we went and got a job Me, myself, and I, all three of us went and got jobs. And so, you know, that— and the weird thing is what I found in working with people over the years— I'm not a psychologist, that's Dr. Deloney's field— but I have found that depression and anxiety leave with increased physical activity and increased income. Right. They are— they don't leave completely, but they're diminished to where they're not overwhelming. You're not struggling with depression, but you should be.

No, it's definitely bubbling up.

Yeah, using your mind over your body.

Yes. I've been there. When you're that broken, that scared, it takes your breath away every morning just to get out of bed. It becomes your God.

Yeah. Ultimately. Yeah. And I— you're right about the work and functioning because it gives a sense of purpose. Exactly. At the beginning of the year, I was trying to figure out who was going to take care of me.

Your brain is too busy to spin out.

Lindsay, what What were you doing in the medical field? What was your position before?

Just a caregiver.

I mean, I say just because it's the, you know, bottom of the rung in that security.

Is that what you said? Uh, caregiver. Caregiver. Okay, gotcha.

You're not going to be lifting anybody though?

Not right now? No, no, no, no. I just was wondering going forward, you know, 2, 3, 4, 5 years from now, what's your new career gonna be? Yeah, you're only 50.

50, right? And you're just half done.

What are we gonna do with the other half?

So I've, I've, I, I've spun out because of all the options. Do I go to school? Um, then the other side of it, Dave, is my hand is starting to show nerve damage. So I— and I also have like spinal stenosis. So there are other physical ailments that could contribute. And actually, when I went in for the hip, uh, doctor, he said, oh, people think it's their hip but it's their back. And I really believe him because what screams the loudest is what gets the most attention, and that was my hip. And I couldn't walk for 7 years. I mean, I really was in a, you know—

yeah. Are you overweight? Of course. Okay. I mean, substantially?

I'm on the— I'm walking up to 2-3 miles a day now. Oh good.

I mean, okay, so you're doing something about that too. See, that's awesome right there. You're walking 2 or 3 miles a day. Hey, you can go to work! This is awesome! I'm so happy! Hey, listen, we'll help you any way we can, kiddo. You have an income crisis and it's because you've been through a hard time. I'm sorry. Sorry you've been there. But you're gonna be okay. It's an income issue. Get the income flowing, a lot of this is gonna self-fix. If you're behind on your bills, doing more of the same isn't going to fix it. You need a different plan. And that's why I tell people about Guardian Litigation Group. If you've missed payments, if collectors are calling nonstop, or if you're getting letters about legal action, that's your signal. And it's where a lot of people wait too long, because the longer you wait, the fewer options you usually have. And once it turns into a lawsuit, things can get more expensive and more complicated fast. Guardian Litigation is a law firm, not a call center. From day one, you are assigned an attorney who represents you. So if a creditor moves forward, you're not caught off guard and you're not hit with surprise legal fees.

Guardian Litigation only gets paid when the debt is negotiated and the client accepts the settlement offer. This is about stepping in early while you still have leverage. Don't ignore the problem, take control of it. Go to Guardianlit.com/ramsey right now. That's guardianlit.com/ramsey. Attorney advertising, results may vary, and no specific outcome is guaranteed. Hey guys, if you like this show, We could use some help. Please share it with a friend. Click the share button or share a link or just tell them about it. Send them where the podcast or the YouTube, or if you're listening on talk radio, tell them what radio station we're on and what time of day they're carrying us. All that kind of stuff. Spread the word for us. You guys are our number one marketing method. We don't spend any money marketing this show. The only way it gets spread out is if you tell people about it. That's how it works. Now, we put it out on social media, we put out all that stuff, we do that stuff, but I don't have— we don't like buy ads, come listen to the Ramsey Show. You're it. So if you like it, help us and send your friends and your family.

We would appreciate it. John is in Pittsburgh. Hey John, what's up?

Hey Dave, I appreciate you taking the call. So yeah, just looking, you know, mostly for, I guess, some career slash life advice. Okay. Um, yeah, ultimately, you know, curious right now I'm looking, um, at, you know, if it would be an unwise move to maybe take a job that pays a lot less to sort of get rid of the stress that I have with my current job. Um, that's ultimately at a high level what I'm asking, but I'm happy to map out anything you need for some advice.

What's the nature of the stress at your current job?

Uh, so I am essentially doing a split role with this company. So I'm a renewals and growth specialist and also an account executive for one of their products. So why is that stressful? Constant firefighting on the renewals and growth and contracting side. I'm getting hit up, you know, all the time for, you know, contracts that need out within the hour. On top of that, trying to manage a quota carrying experience for the account executive side, managing that. It's, it's just becoming a lot mentally for sure.

What do you make?

So my base is— so I have a base salary and an OTE, and the base is $85,000, and And if I hit my own target earnings, it's another $35,000. So all in, $120,000 per year.

Okay. All right. Is it essentially two different jobs you're doing, two full-time jobs into one? Like, could you hire someone and do something and that position be filled with just your time, half of it?

I think so. Yeah. They don't necessarily look at it that way, but I certainly feel that way. How old are you? Uh, I am 27. How long you been there? Uh, a little over 4 years. Okay.

All right, well, the first thing I want to do is say, um, reset your narrative on how you're looking at this. Somewhere along the line in human nature, we're taught and our brain goes negative. And, uh, so I get this call, it sounds like this, John: Hey Dave, I just got laid off. "and do I just take any old job to get back in the workforce and make half of what I used to make?" Why do we assume, why does that person assume that if they got laid off that they can't go get a job making more than they used to make? Because we all kind of have this little negative ninnie in our head, you know? Everybody does. And so I'm gonna have you reset your narrative. I think I want you to get a job making $150,000 a year. That is less stressful than the one you have. Stress does not equal income. Okay, so you don't have to go make less to get rid of the stress.

Yeah, I mean, that's definitely true. I guess within— yeah, I guess just my concern, if I, you know, were to stay in the sales/renewals field, you know, maybe it is company-specific where where, you know, it's kind of a lot on me, and that's where the stress is coming from. Well, there's always pressure to perform.

Everyone has that. If there's no pressure to perform, you're a bureaucrat, you work at the DMV, okay? But everybody else has pressure to perform. The plumber has to stop the leak, the electrician has to get the light to turn on, or they don't get to keep their do your job. Okay? And you have to get enough lights to turn on so your lights stay on, if you're the electrician. That's how— I mean, the marketplace has always got pressure to perform. So I don't want you to think you're going to get away from that. That's just called being a grown-up. You're going to carry some weight. You're going to carry some water in order for somebody to be willing to pay you. But it sounds like that your day has gotten extremely chaotic. And the stress is coming from the unknown. Like about the time you feel like you've got this thing on the rails, somebody comes along and hits the side of it and knocks it off the rails again.

Yeah, exactly.

Yeah, that's what it feels like.

And there's no end in sight. It's not like it's seasonal, right? Yeah, it's every day.

Every day, all day long. And it's just like, well, crap. Could we just follow through one time? And so what I'm going to do if I'm you is the first step is I'm going to sit down with my supervisor and say, "All right, the way I'm experiencing this pressure to get this job done is— it's really— I need some help with that, okay? And so can we restructure some of the flow in my day so that I still get the work done, but so that everything's not an emergency?" You know, it's like the old guy with the thing on his desk that says, "Your lack of planning is not my emergency." Some people would follow that a little bit more to heart. Yeah, for sure. And, but you're gonna have to have backup from leadership. You can't just do that to your fellow coworkers and not get fired, right? And so now, and then if an emergency does occur occasionally, you're easily gonna handle that, but living life emergency to emergency is called stress. And it's emergencies not created by you or your lack of anything. It's just stuff that keeps dump— they just come along and throw up on your desk every so often.

Yeah, yeah, exactly.

Yeah. And so what I want to do is restructure that. Now, if you worked here, and we could— that could happen at Ramsey. I mean, we work hard at Ramsey, and we throw stuff around, and we're moving stuff, and anything that moves is shoved, and everything that's shoved has friction. I mean, there's stuff going around this building, I'll just tell you. And if you came in and sat down with one of our leaders and said, help me restructure my day, we would just go, okay, there's a little bit of a system broken here, a little bit of a process broken here, and we need to set up and go, okay, all emergencies have 24 hours to be solved, not 24 minutes. Okay, that's a new system, it's a new policy. And so then what we're gonna do is we're gonna stack all the emergencies and do them from 4:00 PM to 5:00 PM before I go home, instead of stopping in the mid-flow on being account executive and fixing somebody else's crap right? Am I reading the mail right?

Yeah, I think so. It's a system.

Is it a company culture that would listen to that, John, or do you feel like it would fall on deaf ears?

So I think it might be— I think it would probably be received on deaf ears. Excuse me.

Okay, here's what I want to do. I want to try that first. I'm gonna sit down with a leader first and say, I think we have systems and a process problem. Would you help me fix it. I want to participate. I want to be a good team member, but the way we're doing it right now is killing me. Okay? And if they say, oh, screw it, you just do your job, then I'm gonna go look for a new job. But I'm gonna try keeping my $120,000 a year job first. Okay, so the first thing is one conversation, a simple short one, kind and respectful, honoring. Listen, I want to be a good team member. I'm not saying anybody's doing anything wrong. I think we just have a systems and a process flow, and the way I'm experiencing that pressure is stress, and I don't think I'm doing as good a job as I could do. 'If we could put together a little bit of a system, would you help me with that?' And if they go, 'No, you just shut up and do your work,' then I'd go get another job, because this is a bunch that's gonna run this car into the wall.

Yeah, no, that definitely makes sense. Yeah, and what I want you to get is a job that makes $150,000 a year. Okay, okay. All right, and hang on, I'm gonna send you a copy of Ken Coleman's book, The Proximity Principle, and I want you to use it to land that job, because obviously you know how to juggle. Mm-hmm. You can join the circus, man. I mean, you know how to juggle. You can join anybody's circus.

Having a large capacity to be able to handle a bunch of things thrown at you, that is a skill set.

Multitasking.

And do you want to be in that forever though, at a high stakes rate where you just, you know, you feel like you're never getting traction either?

I don't mind having a bunch of tasks as long as I can get them accomplished within reasonable expectations of the people that handed them to me.

Yes. And that there's a reasonable— And I don't feel like I'm being abused. Yes. Yes.

The abuse of— They take advantage of. The lack of respect of your space is the thing. And so, like, we've got a whole bunch of workstations through our 1,000 people here, and a lot of them just put up a little sign that says, "Not now, I'm working. Send me an email." Because people just walk by those workstations, interrupt people, right? So, it's a systems thing. I would never.

Not you. Just chat it up with everyone.

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Debbie's in Jacksonville, Florida.

Hi Debbie, how are you? I'm great, how are you?

Better than I deserve. What's up?

So I have a question. My husband and I are looking at retirement. He's retiring actually in a couple of months. I'm already retired. And we've been— I've been looking at our investments. I have one annuity that isn't— it's not a lot of money, it's about $120,000. It's not earning much interest at all. It's mature or actually will be fully matured next year. And I'm wondering if there's any downside. I've been thinking about trying to contribute to each of my 4 grown children's Roth IRA just to help encourage— they already save, but to help encourage them if they're doing their 401s and also to be still alive during part of the time that I, you know, during a time where I can see them enjoy it. It and get excited about it, and if there's any possible downside to that.

Hmm, it's an interesting question. Well, the two issues are separate issues. The annuity comes to you, cash it out. Okay, it's a crappy product, and then we're going to invest that money into a good product, okay, into some good mutual funds. All right. And move away from that insurance garbage. And so then there's a different issue of, do we want to give our kids money? And if so, do we want to do it in the form that they open? You can't open a Roth IRA for someone else.

They have to open it. Do they have one already, Debbie? They all have them, yes. So you just— are they funding them every year?

As soon as— no, I haven't been, but I opened—

are they funding their Roth IRAs?

They are.

You can't do another one on top of what they are doing, right?

No, they, they are, but they have slowed down. Um, a couple of them have had some challenges, so some are funding more than others. Um, I feel like if I did that, they could still contribute to their 401. But as my husband and I are looking at retirement, as you know, I— all I can see is, oh my gosh, you pay so many taxes for all the savings you've done your whole life.

And if it's not in a Roth, it's If it's not in a Roth, you do, yeah. Right.

How much do you guys have? So, Debbie, you just wanna give them each $7,500 a year to just max out their Roths as a gift is kinda what you're thinking?

About that. It's a $120,000 annuity. I could give them $5,000 a year for 5 years each, which would just help them and then encourage them to put the additional funds that would max it. My husband and I are, this is not money I think is gonna be important to us. About, well, are you asking me? Yeah, what's your net worth? I'm sorry, Rich. We've got about $4.5 million. Okay.

And you want to give away a couple hundred thousand bucks. That's fine. No problem. And again, though, we're going to move it out of the annuity into a good mutual fund, and then you're going to decide later. It's a separate decision from moving it out of the annuity into a mutual fund. Now I've just got some money money here, period. It doesn't have to be— the gift doesn't have to be tied to the annuity in any way. It does no good to tie it to the annuity. Okay? It's just that you— this, for you, it's emotionally found money, and you don't need it, and so you're— that's how you're tying it, but they're not necessarily connected.

How old are your kids, Debbie? Yeah, they're older. That's fine. They're between 33 and 45.

Okay. Well, you just made the comments, and it made me think of the book. There's a book called Die With Zero, and I don't agree with everything in the book, But it's a little bit of that premise of parents who have done well and their adult kids are there and they're in a time of life, maybe they're buying a house, they need to upgrade a car, fund retirement, I guess could be an example, whatever. And you help them while you're alive. What you said were your words, "I want to see them enjoy it." So I would just throw out that, you know, if you—

You're actually not going to see them, right?

Yeah, if you put in the Roth, they're going to be 59 and a half.

And you're going to be dead.

Well, we'll hope for longevity for Debbie, but I'm just saying, if you want—

I'll get to see them enjoy it as it grows.

Yeah, you'll get to see the growth.

They all save well. None of them have any debt. Well, I have one child that has debt.

That's okay, but Debbie, I'm just saying, if that's your heart, you know, there could be, if you wanted, you don't have to. I think this is a great, a loving thing to do, for sure. What a nice, kind gift. But if you wanted to see it, you know, I don't know if the kids are having babies and you're like, listen, we just want to upgrade the minivan for you. I mean, like, I don't know, there's another way to do it.

I want to put money in a college fund. College fund for a grandkid. Or the—

yes, or that. But a Roth would be a beautiful legacy. There's nothing wrong with the Roth.

There's nothing special about the Roth either, is Rachel's point. And so if you want to give, you can give— an individual can give an individual up to $19,000 without any gift tax. And if you're married and your kid is married, you can do 4 times that. So you give $19,000 to each kid and spouse, your husband gives $19,000 to each kid and spouse. So each family unit you could get almost $80,000 if you wanted to do that in one fell swoop. And if you wanted to do that, and it sounds like you have good relationships and respect for them, you could just say, "What I would like to see you do with this is put some in the 529 and make sure your IRAs are maxed out, because I just discovered taxes on our IRAs and I don't like it. And I want you to do some Roth IRAs. Make sure your Roths are maxed out. But you do what you want to with it. Here's our gift." gift. I mean, you can do that. That's another way of getting at this, because you're gonna have to get their permission anyway. You can't just write a check into someone else's Roth.

Mm-hmm.

Yeah, you're gonna be giving them the money, and then it'll be up to them to put it in if that's what you wanted, right?

You could be very controlling about them putting it in there, but it doesn't sound like that's your relationship.

No, but it is a, it is a really creative way to think through, you know, I haven't really thought about that, funding your kids' Roth, because that is something that's going to grow versus an adult's—

children's Roth.

Yeah. Versus a depreciating asset like a van. I threw out the van as an example that's going to go down. Like, this will be something that builds forever and ever and amen, which is— that's a pretty cool way to build that legacy.

So there's nothing wrong with any of that.

Well done, Debbie, for $4.5 million. You know, and your husband, we probably at Ramsey would say—

Ramsey's would say Hey, use it for wherever you are on the Baby Steps.

That's what I would do. That's a good point too, yeah.

That's what we would do with it, and what we would tell our kids to do with it. But we say, hey, we suggest that you finish up that debt, and that you get yourself clear on that budget, and then you make sure you're putting 15% away, and you throw the rest at the mortgage. And that's what we suggest. And we would walk right up that with whatever the size of the gift is if we did it with our kids and in this situation. But there's nothing wrong, there's nothing dysfunctional or wrong. There's no advantage to it being a Roth for you or them tax-wise today. There's no tax write-off for you contributing to a Roth or them contributing to a Roth. A Roth is all after-tax, as you know. It does grow tax-free, but that's the whole thing. So yeah, that's an interesting question. Thank you for calling with it. Charles is in Charlotte, North Carolina.

Hey Charles, what's up? Hey Dave and Rachel, thanks for taking my call. Sure, how can we help? Um, yeah, so I'm under contract on a new house, supposed to be closing at the end of the month here, and I'm starting to have some reservations. Um, just want to make sure I'm making the right move for my family here.

I don't think you have a choice, you're signed contract?

Yeah, I mean, my realtor, I've talked to him a little bit about it and he said, you know, you haven't— you're not closed yet. So if you, you know, if you're not sure, it's not done.

Um, what do you mean it's not done? I've got— is there a contingency in the contract that if you get cold feet you can walk away? Yeah, that's—

well, that's what I've been told. Really?

Um, yeah. What makes you uneasy?

Well, I have I have only 10 years left in my current home. And to give you a little context, I have a baby and another one on the way. So the house, we're just outgrowing the house right now. We've talked about doing renovations, but either way, the current home, I have 10 years left on it, $110,000. I'm at a 2.25% interest rate. The new home, I'd be taking a $210,000 loan out. It's going to be $1,800 a month. What's your income? I make $100,000 right now. My wife has not been working, but she's actively trying to get a job now. So she should be back to work soon.

Is there anything wrong with the home at all? Is it just the move up in money that's bothering you?

Yes, the cash flow and then starting over the 30 years when I'm—

Well, you're not starting over. You can attack it at whatever rate you want to attack it at. I'd close on the deal. You gave your word. When I wrote my first book and launched the radio show, things looked a lot different. I was out selling books out of the trunk of my car. If you wanted to build a business, you had to figure out distribution, inventory, payments, and 100 other things on your own. Today there's Shopify. There are still plenty of challenges that come with building a business, but Shopify helps you build your online store, manage your business and start selling without knowing how to code. Their world-class checkout makes it easy for customers to buy from you, and Shopify's AI assistant Sidekick can help answer questions and guide you as you grow. Millions of businesses trust Shopify because it brings everything together on one platform, so you can spend less time figuring out the technology and more time serving your customers. All you need is the idea. Shopify handles the rest. Start your free trial today at shopify.com/ramsey. Shopify.com/ramsey. That's shopify.com/ramsey. Folks, our EveryDollar app, the number of you that are now using it and using it almost every day is, uh, exploding.

Thank you so much for the number of you that are learning how to handle your money properly, working together with your spouse, and working the Baby Steps, working the Ramsey Plan. The EveryDollar app helps you do every bit of that. And one lady wrote in, "I love this app. It makes it super easy to budget with my husband. We've implemented this practice since our wedding day, and we've had zero money fights." You know, that's pretty cool. And what's even more cool is the traction that you're gonna get in getting out of debt and into wealth. EveryDollar is free to download in the App Store or Google Play. Free. EveryDollar. Check it out in the App Store or Google Play. Phil is Phil is in Phoenix. Hi Phil, how are you?

Hi Dave, I'm good. Thank you so much.

Sure, what's up?

Okay, so I have about a combined debt between business and personal of $55,000. I'm liquidating the business. I'm going to get out of it. I just took on a new commission job and it's slow going right now. I've only been doing it 3 months. My take-home pay is about $2,450. $5,000 right now, but I could expect with a little, with a little ramping up to be about $7,000 to $10,000 a month. My question is primarily I want to avoid bankruptcy at all costs. So I'm trying to figure out if that's the only option I have or if there is a way to deal with the creditors by settling and what that process looks like.

What kind of debt is the $55,000? It's all credit lines.

Credit lines?

Yeah, with a bank or credit cards or—

I apologize, it's credit cards.

I apologize, credit cards. It's 100% credit card debt. Yes, sir. How many different ones?

How many different cards?

There's 8 cards, 4 personal, 4 business.

Well, they're all personal. You signed for them. Okay, your business did not, uh, that was not big enough for them to loan your business money without your personal signature, so They're all personal. They're all gonna sue you eventually if you don't take care of it, but that's, that's okay. How long has it been since you've paid on them?

I've been keeping up. I've been making minimum payments.

Oh, you're making minimum payments now? How?

Yeah, I'm trying to— well, it's the business was winding down, and I know, but as I realized I had to get out of it and get a new job, so you're still making a little bit of revenue? Yeah, I mean, minimal. I got you. I don't have the time to— I don't have time to commit.

And when you said liquidate, is there anything being sold except just selling off the inventory and closing it?

That's exactly it, yeah.

Okay, how much inventory you got left?

Oh gosh, it's probably less than 1,000.

Okay, all right, so you're just about done with that. So there's no real asset as far as the business goes? Correct. You got equipment or anything that you're gonna sell off furnishings or anything left over from the business that's going to bring any money?

No, sir, it was e-commerce. Okay, pretty much just— it was inventory that just went into the various platforms.

Gotcha. Okay, all right, that makes sense. Okay, um, you're nowhere near bankrupt, not even close. Beautiful. Okay, okay, you're going to be able to work through this. And actually, I mean, there's a couple of ways you can do it. They are not going to settle with you for less than 100 sense when you call them as an individual while you're making payments. Okay, but if you're 6 months behind, which I'm not going to recommend, okay, sure, then you could call them up and say, okay, I owe you $10,000 and I have $3,000 and I will offer you that as settlement in full. And after a bunch of haggling and whining and spit and all that other stuff going on, then eventually you'll get them to about to do that. Okay. The other thing in your situation you could do, we have a sponsor called Guardian Litigation, and they specialize in working with people where you are, not people that are 6 months behind, but people that are worried that they're going to get there because their income is not able to maintain the payments on these. Because at $2,450, you're not going to eat and pay all these payments correctly.

And that's what you're already seeing. And you're saying this is coming to a screeching halt and then these people are going to get mean and nasty. And you're right. They are. So I'm gonna put you on hold and Christian's gonna hook you up with Guardian Litigation. Again, it's a sponsor of ours. They have attorneys on staff and they will start the negotiation process while you're current. They don't require you to get behind in order to put you into a plan, and they work with the companies all the time and are able to pull things off that the individual can't. And so that's why we brought them on as a sponsor. I generally— there's a lot of people in that bucket that I don't recommend. Debt consolidation people, we don't recommend. But Guardian does a great job, and so we'll send you that direction and see if you can't get some help. You're not gonna file bankruptcy.

No, and as quickly as you can get to that $7,000 to $10,000, that changes your life. Yep, you just clean it up. Yep, absolutely. And in the meantime, I mean, probably working extra, working side jobs on the weekends just to keep something afloat, because $2,400 $1,500 in general is— in Phoenix—

yeah, I don't think you can live on that. So that's tough. Yeah. All right, Grace is in Raleigh.

Hi Grace, how are you? Hi Dave and Rachel, I'm doing great. How are you guys?

Better than we deserve. What's up?

So I was just calling. My husband and I, due to a series of unfortunate events, our car got totaled. Not our fault. You got insurance? Uh, yes, about $5,000 for it, but that's what the car was worth.

Birth, right?

Yeah, yeah, exactly. Okay. Um, but we are currently under contract on a house, and so obviously no buying cars yet. But looking ahead, just because we've been sharing a car and it's been a little difficult with work and schedules and such—

I'm sorry, you have a $5,000 check from the insurance company. The contract on the house does not prohibit you from buying a $5,000 car for cash.

Yes, which leads me to my question, which was, do you think that it would be smarter to get like a $5,000 car or wait until we're closed on the house and we have some funds coming in and get a nicer car as we're looking ahead to having kids and wanting like an SUV or minivan.

You were doing fine in the $5,000 car before this happened?

We were, yes. So it's a little bit earlier than we were expecting to get a nicer car.

So you have extra money set aside for a car already in addition to the house?

Um, just the $5,000. We had not been planning on getting a car quite yet.

Okay, do you, do you have an emergency emergency fund?

We do, yes.

How much is in that? About $25,000.

Okay. And what should your emergency fund be?

$25,000, just about right for 6 months. Is that a 6-month—

do you guys have kids, Grace?

No, not yet. We were kind of hoping next year. Sure.

Yeah, yeah, totally. Uh, pretty stable jobs? Yes.

Okay. And that— there's a— what's your household income?

Household income is about $140,000.

Okay, yeah, $25,000 is probably pretty— that's probably about 3 months. Yeah, that's 6 months.

Yeah, it's not, um, well, we—

I guess now with the mortgage it might be about 3.

Okay, okay. When are you closing on the house?

Um, next Wednesday, August 12th.

Okay, and you're not using any of the $25,000 to close on the house?

No, no, we're doing it the Ramsey way.

Good, okay, good for you, good for you. Well done. All right.

I'd be okay throwing a couple thousand.

Yeah, I mean, if you took it to $20,000 or something, but I'm not— it's not an emergency to move up in car. This is more of a gyration in your budget than anything else. You make a lot of money, you don't have any debt.

Yeah, and go get a $10,000 car. Don't get a minivan yet.

Yeah, get a $10,000— you don't have kids.

Yeah, get whatever you want, and then, you know, when life happens, you can sell a car.

Put the $5,000 back in the emergency fund as soon as possible, and then start saving for the next car after you get the house. Yeah, yeah. Don't just jump out and buy a car. You don't need a $25,000 car when you totaled a $5,000 car. For sure. And you certainly don't need a car payment. But purchasing a car and using some of your emergency fund or some of your $5,000 from the insurance with no payments at all, no bank involved, is not going to spoil the purchase of your home in any way.

That's fair. We just were wanting to be safe.

It won't mess up the mortgage company if you bought a $25,000 car. I would just call you stupid. Yes, that's fair. Okay, so don't do that. You're awesome. Thanks for the call.

We appreciate you being here. Yeah, a $5,000 to a $10,000, that's a big jump. That's a jump. So, take it, and then drive it for 18 months, and it's a good car.

Listen to what they did. They have a fully funded emergency fund. They're 100% debt-free. Yep. They make $140,000 a year.

They're buying a house. They're buying a home.

Nobody can buy a home! But they're buying a home. And guess what they were driving? A $5,000 car. They're doing everything right, and then some stupid person totaled their car. Somebody T-boned them at the light, you know.

Now she gets a $10,000 car though. Blessing in disguise. Hey guys, it's Rachel Cruze. If you're working the Baby Steps, every major expense deserves a second look. And healthcare is one of the biggest expenses in most families' budgets. And that is why I recommend that you check out Christian Healthcare Ministries. Ministries. CHM isn't insurance. It's a health cost-sharing ministry. That means members help pay one another's medical bills, and they've been serving Christians since 1981. CHM programs start at just $115 a month, and here's why that matters. If you are paying more than you need to for healthcare, that money could be going toward paying off debt, building your emergency fund, or reaching your next financial goal. And your monthly cost isn't based on your medical history or where where you live. Y'all, a lot of families find CHM gives them more room in the budget. That's why so many members say they're better with CHM. And right now, new members can receive a 50% credit towards their first month of membership. Go to chministries.org/budget and use promo code RAMSEY. That's chministries.org/budget and promo code RAMSEY.

Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey, your host. Thank you for joining us, America. Open phones at 888-825-5225. Rachel Cruz, Ramsey personality, number one bestselling author, my daughter, is my co-host today. David's in Virginia Beach. Hey, David, What's up?

Hey David, how you doing?

Better than I deserve, man. How can I help?

I was wondering, I'm at $35K of credit card debt and I'm keeping up with minimum payments, but I'm making just a little bit over them every month. I'm wondering if I should get a personal loan to get rid of all the credit card debt. That way it's at a lower interest rate. And then I just try to tackle that loan as aggressively as I can.

Interest rate's not your problem. The amount that you're paying on the debt is the problem.

Um, yeah, no, for sure. Yeah.

What do you do for a living? Virginia Beach? Are you military?

No, I, uh, I work with an ISP, an internet service provider. I work as a, uh, construction project engineer, kind of managing fiber crews and construction. Gotcha. How much do you make?

40 hours a week?

Uh, around there. It's like more or less, it's kind I just, I work, I kind of like the work I do, so I do more, or I just kind of stay on top of my stuff. But I make around $84,000 a year.

Okay. And how much is your car payment?

Car payment is around $800, but I've also got a, I've got my own business where I do fiber splicing, um, and that I bring in around $2,000 to $6,000 depending on how much work is available and I can do in that month.

How much, how hard is it to get work? Um, just depending on, um, because you're not getting the $6,000 very often or you wouldn't ever called me, right?

Exactly. Um, yeah, it's, it's more on the $2,000 on the minimum a month is what I'm bringing in consistently with the business. But, um, I'm gonna try—

the way that I can get more is, you know, take stuff out of my hands, permits and stuff, how much Okay, let's pretend for a second that we took $33,000, $35,000 and we put $4,000 a month on it. It would be gone in 9 months. Okay, and the interest rate doesn't matter in 9 months. The interest rate only matters if you keep it 9 years.

Right.

What you need is $4,000 a month to put on this. You have a stupid $800 car payment that's insane. Sanity. So maybe we sell a car and get a beater, and maybe we work $6,000 worth of splicing, and gosh, that's $7,000 a month if you just lived on your other income. You freed up $800 plus $6,000 splicing, you'd be done in just a handful of months. So what I would tell you to do is work your tail end off, live on nothing, don't go to Happy Happy Hour. Don't go out to eat. Don't go to happy hour. Don't go out to eat. Sell your car and you'll be out of debt in no time. And don't go to happy hour.

Definitely don't go to happy hour. Loud and clear. You can listen to Smart Money Happy Hour on the Ramsey Network and have a mocktail and watch them have a drink, but you're not going to happy hour.

No, I'm serious. You have to, you have to focus on If you focus on getting out of debt like your life depended on it, you would work all the time. You wouldn't have time to do anything else, and you would sell everything in sight because your life depended on it. And you'll be out of this debt in no time when you do that. Okay, so $4,000 to $7,000 a month makes $35,000 go away really fast, right? And I think you've got that at your fingertips. Tips, but we just got to adjust a few things because you make good money. Exactly. And you've got a great skill set. Yes, that is very marketable. I mean, this first time I heard of splicing as a side hustle, and I just love it, I'll tell you.

Yeah, yeah, it's good. It's— I definitely am in a good opportunity. I was just super stupid when I got into it and made a bunch of money, and then I just got out of hand. And now I'm like, well, how old are you, James? How old are you, Granger? I'm 24. Perfect. Okay, yeah.

Have you cut up the credit cards?

I threw them in the freezer into a giant— and into a pot, and they're at the bottom of the frozen pot.

Well, we're not going to eat them as leftovers, so just get them out, thaw them out, and cut them up. Okay. You don't need them. They've not been a blessing. Get you a debit card, which will mean you spend your own money to buy crap. You know, that's it, because that's the problem. You've been buying crap with other people's money, and that's what a credit card is. So yeah, just thaw them out. That freezer thing has been around for 40 years. People been putting them in freezers for 40 years, as if we're gonna thaw them out and they're suddenly gonna be okay.

It's like, "Oh, now they work good." It's still like a safety of like, they're still there, they're really hard to get to, it takes work.

Here's the other thing, if you cut them up— I'm sorry, I probably shouldn't say this, but if you cut them up and you call the bank— Glue them back together. No, the bank will send you another one in the morning.

Okay, there you go.

I mean, it's easier than the freezer. Razor, actually. If you want to— if you want to fall off the wagon, the bank will help you. They like having you in debt.

They're not going to be mad at you wanting another credit card.

You know, I placed some scissors across someone, went, oops, and so can you send me another card? And they're like, oh yeah, well, that happens all the time, those Dave Ramsey people. We'll send it. We'll send you one in the morning. They'll fix you right up, man. Sarah in Austin, Texas, what's up in your world?

Hi Dave, how are you? Better than I deserve.

How can we help?

So, um, Dave, I get married in, um, 3 weeks. Congratulations. Austin, Texas. Boston. I'm 27. Awesome. Austin. Cool.

How can we help? How can we help?

Um, my fiancé is 30 and after we get married, we are considering buying, I mean building a home, and I'm, I'm curious of your opinion about building rather than, um, just buying.

On your first home, I would purchase an existing home. Yeah, okay, because building is a royal pain in the butt, and I don't want to put that strain on y'all's relationship in your first year of marriage. I want you to concentrate your energies on other things in the first year of marriage. Rachel, you guys have been you have built a home and you have bought a home before that straight up, right? Yeah, I mean, easier to buy. And building a home is a hassle.

And it's, but it's fun. It is fun. If you enjoy it. So, later, make that your next goal. Just to say maybe—

Number 2 house was you. Yeah. Yes.

So, you know, you could look out and say 3 to 4 years, let's, a dream, a goal is to build. But there's a lot of decisions, unless, I mean, my husband is in real estate and does project management, all of it. So, he, it was up his alley. It was, we were fine. We loved the process.

You had an excellent builder too. And a great builder, yeah.

We had a great experience, but that's, I feel like, more rare than not.

It's also because they went into it with their eyes wide open and they'd been married a while and they had a basis in the relationship to make the arguments about what kind of kitchen sink we buy. It's just a lot of decisions.

It's a lot of decisions.

Yeah, you're picking out a lot of stuff.

And unless it's, I mean, there are a ton of neighborhoods going up of, you know, homes that the floor plan's picked out. You may pick out a couple of fixtures. It's not a custom custom from the ground up.

I still wouldn't do that on your first home. They've been— they're not even married yet. They're getting married next week. Yeah, totally. The first one, I just go buy a house. Go buy a house and, you know, pay for it and build later. Building is an extra level of stress.

Yes, but if it is built, and it's just a new house, and it's like—

Oh, it's a brand new house, and it's a spec house. It's sitting there. That's what I'm saying.

All done. Or maybe you get to pick out It's not the light fixture here or there, and it's not from the ground up. The ground up process is a— that's a mountain.

Let's start with dirt and a piece of paper called a blueprint, and then let's lay out a budget and lay out a schedule and get the builder and the subcontractor all along.

And you're gonna know, Sarah, how to build the house that you guys would want. You know what I mean? Like, you haven't lived together and created a family, and so it's—

We always laugh and say it takes a year of being married to know how close to your mother-in-law to buy. You gotta get to know each other. You work your butt off for your money, but your money's never going to return the favor if all you do is hope for the best. If you're ready to learn how to make your money work for you, check out the SmartVestor program. SmartVestor can help you find advisors who specialize in retirement planning, charitable giving, advanced investment investing strategies, and more. Whatever your goals, your pro will take the time to explain your options so you never have to invest in anything you don't understand. Head to ramsaysolutions.com/smartvester to get connected. Ramsey Solutions is a paid, non-client promoter of participating pros. Learn more at ramsaysolutions.com/smartvester. Buying or selling your home is high stakes. One bad deal could cost cost you tens of thousands of dollars. Guy called in the other day and his mother-in-law had sold her house for $325,000 and the appraisal came in at $379,000. Well, she sold her house. It's over. She made, she made a huge mistake because she hired a realtor, didn't know what they were doing.

Real estate agent didn't know what they were doing. And so it's— you don't want to make a big mistake in real estate business. You don't make a small mistake, it's tens of thousands. So that's why Ramsey Trusted connects you with vetted real estate agents who we have checked out, and they are pros, and they have the experience to guide you step by step to make smart decisions and don't sell your $380,000 house for $325,000. Connecting's easy. Just compare agent profiles, interview your top choices, pick the right one for you. Find a local Ramsey Trusted real estate agent that we have vetted who has your best interest at heart for free at ramsysolutions.com/agent, or click the link in the description if you're listening on YouTube or podcast. Folks, if your private student loans are in default— that's when you've fallen so far behind the loan is considered unpaid— Yrefi might be able to help. Yrefi helps borrowers in tough situations explore low fixed-rate refinancing options that fit your budget. Go to yrefi.com/ Yrefy.com/ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Might not be in all states.

Today's question comes from Lisa in Maryland. I have been getting paid once a month for 10 years, but my employer just changed their process and now we're getting paid every 2 weeks. Even though I am getting the same yearly salary, it's divided into 26 paychecks throughout the year instead of 12. How should this impact the logistics of the budgeting process? That's a good question, Lisa. Well, you just need to make sure that when all your bills hit, that you have money in your account for it, where you used to have a lump sum that you could probably pull out throughout the whole month. Now you just have to plan and make sure that there's enough in there that's gonna hit between the 1st and the 15th before that next paycheck. But if you're beyond Baby Step, I mean, I would even say beyond Baby Step 2 or 3, you need at least at least a good amount in your checking that could cover one of those paychecks, just for a buffer, is always a great safety net from just a logistics standpoint. But yeah, it would just be maybe moving some bills around so not everything hits right between the first and the 15th.

Well, the EveryDollar app has the paycheck planning. That would, you just lay it out which item comes out of which check.

Exactly. Yeah, that's true. So if you have EveryDollar, plug it into the paycheck planning and then it'll flag you.

Yeah, it'll say, you know, pay your internet bill in the second check and pay your, you know, your electric bill in the first check. And it'll show you what, you know, you figure out which one comes out of which check before the month begins.

That's right.

The other thing is, with EveryDollar, you're spending that month's income on that month's bills and goals before the month begins. So 2 times a year, you're gonna have a larger month, because you have 2 times a year, we call them magic months, that you get an extra check. You're gonna get 3 checks in a month, 2 times a year when you get paid every 2 weeks.

And so, and that always confuses people sometimes, because if you do get paid at least twice a month, or I guess in her case, it would be every 2 weeks. Every 2 weeks. But when that paycheck hits, for some people, the paycheck hits at the, like an October 30th, 1st. And technically, that's quote-unquote October money, but you're going to use that as if it is November 1st. And you use that through November.

Some people get— November's, that's the pay from October, it's going to be November 1st. And that's what we have to work with. And so, you got that 2 weeks, you got the next 2 weeks, and then twice a month, you're going to get another one at the tail end. That's right. Or twice a year. Yeah, that's right. And so, you just, for those 2 months, you're going to budget that money. You're going to spend all that money on paper both times, and it's a little less on the 10 months, and the other 2 months it's a little more, and then it used to be. And so you're gonna make a little less progress on some of your goals, is all that is, and then a little more progress suddenly, some big chunk, like getting a little bonus check is kind of what it is. But you still are gonna spend that money that month, whatever the month has. And it's just going to change that around a little bit. You need to be doing a unique budget every single month anyway. These budgets are not templates. This month's income on this month's needs and goals.

Yeah, and the truth is 75% will probably stay very similar.

Yeah, but it's not the same.

No, it's not.

Your income might change a little, in this case twice a year.

And life is different.

And then some, you know, you get that card paid off, so you have a You've got a new goal. You're moving up the Baby Steps. You're moving up the debt snowball, or down the debt snowball. Jenna is in Des Moines.

Hi, Jenna, how are you? I'm great, thank you.

How are you? Better than I deserve.

What's up?

Well, I am approaching the 62-year-old mark, Dave, and I've made some foolish decisions, and I have zero retirement. And I also lost my hearing in 2013 and did not know that my health insurance would pay for a cochlear implant until 2022. So I went through a major income shift, and I started cleaning houses, and I have a successful quality cleaning business. Good. And I'm the only employee. Thank you. I'm proud of that. Um, however, my mom passed a few years ago, and I'm sitting on $150,000 in the bank, and I don't know if I should get a second job. I mean, I'm, I'm working a substantial amount, uh, 5 a week, uh, 9 and a half hours between 30 and 40 after my expenses.

How much, how much debt have you got?

Um, zero. Oh good.

What about the house you live in? I rent. Okay, cool, cool. All right, um, well, I would sit you— I want you to sit down with a professional and begin to learn how to invest invest the $150,000 so that it will grow while you're still working instead of it sitting in the bank. When you are putting money with the bank, you are loaning them your money at 3% on a high-yield savings. Okay, when you buy an investment, you're an owner, not a loaner, and it grows.

Who should I contact for that?

Just jump on RamseySolutions.com and click on Smart investor, and it'll drop down the number of different people in your particular area there in Des Moines that we have checked out and that we trust. And the big thing they're gonna have that I really, really, really want for you is I want you to go slow and I want you to learn. Do not invest money because I said to or someone else said to. Do it when you understand. And the good news is it's not super complicated. Everyone can understand it.

I want a financial fiduciary, I guess.

That is who I'm talking about. That's what I'm talking about, financial advisor. Okay. And they're gonna, they're gonna walk, they're gonna hand help you. But the way they help you is they teach you, and then they say, okay, here's an example of a mutual fund like I'm talking about, and it's one that I might do. And you look at it now. I— now you understand and— but people put money sometimes in investments and they can't even spell investment. Don't do that. You need to understand it because otherwise it'll rob your peace. You're not afraid of that money sitting in the bank. If you put it into an investment that you don't understand, your anxiety level is going to go up, right? Right.

Don't do that. Do I need to do it incrementally?

If that helps you have peace and knowledge and understanding, If you have full understanding, and it's not gonna steal your peace to put it all in at once, then put it all in at once.

But I would say too, easy math, Jenna, if you think about it, every 7 years that money should double.

If it's in a mutual fund making 10% or more.

So, that $150,000 in 7 years, if you don't touch it, turns into $300,000, right? So, as you continue down, now you'll probably be living off some of this stuff, you know, some of that money. Eventually, but that's the point. You want to take as much advantage as you can with it just sitting there. And so, the compound interest, it will happen.

Yeah, your money will grow. And so, if you learn about this and you get comfortable and you're invested in a mutual fund that makes 10% or more, in 7 years at 69, your $150 will be $300. In 7 more years at 76, your $300 will be $600. $1,600. And if you have earned enough through there and/or living on Social Security, one of the two, without touching this nest egg and let it alone and let it grow, that's what's going to happen to it. And that's good news.

You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance coverage to protect your biggest assets. I recommend using Ramsey Trusted Pros. Whether you're looking for car, home, or any other type of insurance, Ramsey Trusted Providers have been coached and vetted to serve serve you like we would. Find what you need at ramsaysolutions.com/insurance. In the lobby of Ramsey Solutions, we have the famous debt-free stage. On the debt-free stage, is Keith and Candice. They're now famous because they're debt-free. Congratulations, you guys! Where do y'all live? Abbeville, South Carolina. Very fun. What's that near?

Greenville, about an hour south.

Oh yeah, love it, love that area. It's beautiful.

And I see a little button on your, on your dress. It's your anniversary, is that right? Yes, yes, today is.

How many years? 32. Wow, way to go! Look at you guys. And how much debt have you paid off?

$201,555. Cool.

And how long did that take?

About 5 years. Okay, and your range of income during that 5 years?

$140,000 pretty much the whole time. Okay, what do y'all do for a living? I'm a funeral director.

Mm-hmm. And I'm a nurse educator. Ah, very cool. Good for y'all, well done. So if it took 5 years and it's $200,000 and it's in small-town South Carolina, is that your house? No, no, no.

It was, let's see, cars, credit cards, camper, Sea-Doo, student loan, student loan.

Y'all were normal. You had a little bit of everything. We were, yes. And normal sucks. And you said, I don't want to suck anymore. I'm getting out of this. That's right. Look at y'all, man. Way to go. I'm so proud of you, man. You've been scratching and clawing for a while at this. A lot of baloney.

A lot of eating at home. I like it.

I like the expensive meat, ham. Yeah, there you go.

Very good, very good. Okay, 5 years ago, something flipped, some switch flipped, something happened, 'cause y'all been married for 32, so at that time you would have been married for 27. Right. So you've been doing it a long time one way, and you went, we're getting out, we're changing. What happened?

Trying to make it, trying to figure out when to make a truck payment, what I was going to put off to make the truck payment, or, you know, if I was going to put the truck payment off. And I said, I'm tired of this. It's almost $600 a month, you know. And, and I just put the information in. I just got curious about Carvana, and I put the information in, got the offer. 2 days later, it's truck was gone.

Whoa! Sold it quick.

Got more than what I paid for it.

You said enough already. Okay, and then, and then you— how did you find Ramsey? How'd you get with us?

We failed Financial Peace University twice.

We had to repeat your course. A beauty school dropout. That's right.

Yes, I told her the first time that we took it, I said, this is crazy, this will never work. Well, we might as well not even try, you know. And so we didn't. And we stayed broke for 27 years.

Oh my gosh. So you took it a long time ago?

Yes, back in the 'O's. Oh wow.

Back in the 'O's. Wow. I'm sorry. Wow. Yeah. I wish I'd have been a bit more persuasive.

Well, I mean, we're a little bit hardheaded.

A little stubborn. But you look up and you say, I'm— truck's gone, maybe Ram's He's not lost his mind. We're doing this. We're doing it. We did it. And you plug back— you got your old— got your old tapes back out, your old CDs back out, dusted off the envelopes.

Did you really? Yes. Yes, we did. Yeah. We have all the CDs from the original.

Back in the day. Wow. How funny. Yeah, I had hair, man. That's a long time ago.

So did I. Yeah. Now I have a hat.

Now I have a hat. So good.

You guys. Oh, okay. So were you both kind of at the same point to jump in and do this?

Sick and tired of being sick and tired.

Both of you, you kind of hit the wall at the same time and you're like, all right, this is worth it. We're gonna just sacrifice and eat bologna and get out of this debt.

His mom passed in 2010 and then his dad has always been almost squeaky with money. And my parents are the opposite of that. Like they, so we were like, we need to find somewhere in the middle where you can have joy with your your money, but tell it where to go. You know where it's going.

So, I don't have to figure out how to hide the $600 truck payment under a pea just so I can buy a shell. So, I look good at the red light.

Mm-hmm, right. We had one of the houses we lived in, we lived two summers with window units in it because we couldn't afford to replace the HVAC.

During this? Yes. During one of the times when we were failing, I'm sure.

Yeah, yeah.

I mean, that was back before you did the show.

Before we did this, you know.

Okay, so then you get on a budget and you start selling the truck. And you said, what else did you sell? The camper. The camper went. The Sea-Doo. The Sea-Doo went. Wow, you're on a selling spree. Yes, we sold—

there was nothing left. I mean, everything else we just took to the dump because we couldn't sell it. And so you just cleaned house.

And how much did that reduce the debt?

Well, the truck went $35,000. Boom. The camper, I I think it was another $10,000 or so. And then the Sea-Doo was actually paid for. I had paid it off already, but I sold it anyway. So that was another $5,000 just to throw at it.

'Cause $201,000 of consumer debt, that's a big, yeah, y'all did it.

That's a lot. You plowed through a bunch.

That's a big mountain. $76,000 was a student loan. Ah, okay.

Yeah, yep, yep. The educator. Yeah. All right. Wow. Wow. Well, congratulations, y'all.

Thank you. Well done, you guys. How does it feel? Feels great.

I mean, we're here. Yeah. On your anniversary.

On our anniversary. You chose to come here to this romantic spot.

I chose to get on an airplane for the first time in my life.

No way.

Yeah. And I was a little anxious because when I got here, I didn't have a car. I couldn't just, you know, so we're ridesharing and that kind of thing.

Good for you guys. Wow.

All kinds of new experiences.

You're on a trip. Debt free on a trip.

Love it, love it, love it. It felt so good to see that student loan where it says zero.

That was it.

That was April 28th.

Okay, so tell the audience two things. One, tell them what we always ask, which is what's the secret to paying off $200,000 worth of debt in, you know, 50-something months? Paying it off, actually paying it.

Do it. Yeah, just gotta—

it's not a theory.

You got to make the decision. Okay, I can, I can keep having fun and keep being broke and living paycheck to paycheck, or I can just not worry about when the paycheck comes because there's already money there. That's the way we are now, and we love it.

How connected were you all through this time? I mean, were you a lot of communication Oh yeah, yeah, yeah, good.

I hate, I hate the budget meetings, but I know it has to be done.

I am the nerd. Ah, look at that.

So you can guess what I am then.

Yeah, girl, free spirit. I like you, Kansas. I like you. Uh, but from a relationship standpoint, does it feel different not having the stress of money in a marriage? Like, it's just, there's a freedom there.

Yes. The only money arguments we have are where we're going gonna eat dinner.

Yeah, we're gonna actually go to the restaurant.

Yeah, yeah, yeah. Now that we can go to one. Now that you can go. Yeah, good for you.

I actually had a conversation with my boss at the school, the dean. She said in a meeting the other day, said, I'm probably gonna die with my student loans. I said, well, if I can have this, you can too. I could teach you how. And she said, what's that like? I said, freedom.

I like it. It's great. So the next question I got then is, you took it years years ago, and we laughed and said you flunked it. But basically, what happened was you didn't believe it would work enough to go do it. That means we failed you, and I apologize for that, because we didn't sell it to you hard enough.

I think it was laziness, honestly. That's okay.

But if you've got somebody that's been listening to the show, maybe they didn't go to Financial Peace, but maybe they've been listening to the show, and they're kind of going to that same conclusion, "Yeah, but that won't work for me." That's it. What advice do you have for that person that's listening that was you many years ago. Just, you're crazy for the thoughts.

It's a crazy way of thinking. It does work, and we're living proof that it does work. And we're not, you know, we're not on any Forbes list or anything. We just have a normal everyday average income, and we were able to pay off a lot of debt just by working hard at it. And not worrying about, well, we're going on this cruise or we're going on this vacation. We're not, we're not going with you.

We're paying off debt.

We're gonna pay off some stuff.

And now you can.

And now we can.

And now that you flew to Nashville for the first time, by the way, I'm amazingly honored that your first airline flight is to come do this. Well, I take that as a compliment. That's great. I take that as a badge of honor. That's very cool. That's a very big honor you pay us with that. Thank you. You're welcome. You guys are incredible. Keith and Candice from South Carolina, $202,000 paid off in 5 years, making $140,000. Count it down. Let's hear a debt-free scream! 3, 2, 1. We're debt-free! Woo! Yeah! That's how you do it! Woohoo!

Hey, what's up, guys? It's Jade Warshaw. Listen, summer spending adds up so fast.

Between vacations and road trips and camp fees and events and all the extra gas and grocery runs, money can get tight before you know it.

To really get your money under control and keep it that way, you're gonna need a plan. And that's what you'll get with the EveryDollar budget app. It helps you track your spending, free up cash to put toward debt and savings, in savings, and it's the simplest way to make a plan for your money before the month begins. So no more wondering where your money's going. You're telling it where to go. Download EveryDollar in the App Store or Google Play and start for free today.

Our scripture today, Galatians 6:9, let us not grow weary of doing good, for in due season we will reap if we do not give up. T. Harv Eker said, it's simple arithmetic, your income can grow only to the extent that you do. True, true, true. Joe is with us in Phoenix. Hi, Joe.

How are you? Hi, Dave and Rachel. It's an honor to talk to you today.

You too. How can we help? Thank you.

So I'm a, I'm the trustee for my, my parents' estate. Uh, my father passed earlier this year and, um, my mother the year before. Um, I'm sorry, but thank you for that. Um, as the trustee though, you know, you, you probably know what that job entails, but I'm consolidating assets. And I'm almost done with everything, and I was wondering if you could tell me the best way to distribute this inheritance that the beneficiaries are going to receive. I'm one of them.

I take it it's all actually in a trust.

Yes. Okay.

Because you are using the proper terminology for a trust, which is you're the trustee and the heirs are the beneficiaries, and that's the proper words. What's the size of the estate?

Estate? By the time everything is consolidated and liquidated and consolidated, it'll be a little over $300,000. Okay.

There will be no estate taxes on it on the federal level? Federal— no federal estate taxes. Is there anything that was in a 401 that's traditional or a traditional IRA? No. Okay, because that would be taxed taxable income tax when it comes out in traditional. But any other investments— what was the money in?

Uh, they had a, uh, they had just a standard investment type of portfolio. It wasn't a lot. Um, and then they had a couple of bank accounts and the house. Then that's really—

okay, there'll be no tax. There'll be no tax. There's no federal estate tax and no federal income tax on anything you've described. That's a general statement, and if you want to check me out, that wouldn't be a bad idea to sit down with one of our tax ELPs and comb through the details to be 100% sure. But in general, the type of accounts you're laying out there should not have any taxes. If there's an inherited IRA that is a traditional, it's going to have income tax on the entire amount because it's never been paid income tax because it's stuck in an IRA, okay, or in a 401. If the estate was over $20 million, you might have some federal estate taxes, depending on how it was laid out. But we don't have either one of those concerns. Any capital asset you sell, like stocks or bonds or stuff in that investment account or that home, is considered to be sold at market value if it's done within 6 months of death or so, and the IRS won't question. That's pretty much what it's worth. It sold for what it's worth. And the basis in something like that is market value at the time of death.

So there's no tax, there's no gain, there's no taxable gain. Now, if you took that house and held it and it's worth $200,000 and you held it 10 years and it's worth $200,000 at the time of death and you sold it 10 years later for $500,000, you'd have taxes on that $300,000 gain. Gain since death. But because you're selling it within 6 months of death, it's considered sold at market value, so zero gain. Okay, you see what I'm saying?

Very educational. Thank you. Yeah, yeah, I do.

And so you're, you're perfectly clean, uh, and the stuff you're describing is very easy, very clean. And thank you for loving your mom and dad well by honoring their wishes and executing this in a business-like and thoughtful And wow, that's very, very big of you and very good of them. They picked the right person to be the trustee. And again, to be 100% sure, if you want to spend $200 and sit down and have a tax professional, not a guy on the radio, go through your stuff and be sure I'm right, that's not a bad idea. Because I'm not that great at taxes. I do know what I'm talking about on what we just talked about, obviously, but there might be something down inside this that I I missed, because it's a simple 3-minute conversation. So just go to RamseySolutions.com and click on Tax Preparers for ELPs, Endorsed Local Providers, and there are people in each market. We definitely got them in Phoenix, that in each major city that do those things that we have vetted, and they're people we believe in and we endorse, and they're local and they provide help. Endorsed Local Providers, that's where that comes from.

Garrett's in Los Angeles. Hi, Garrett. Good.

How are you, sir? Better than I deserve. What's up? So, and, uh, hi, Ms. Cruz. Uh, thank you for taking my call. So the short version of my question is the following, uh, and I know, um, I'm blessed to be in the situation, but the, the, in a nutshell, I'm trying to figure out with our current amount of money saved and our current income, what is the right amount to continue to save, which we will, versus how much we can safely spend and enjoy, travel. And yeah, and, and look, you know, look, let's say my— buying my wife beautiful purses and nice things like that. Um, yeah, how do I come up with those numbers? And I'm happy to tell you, you know, tell me where you live.

How much, how much do you guys make a year?

So the average over the last 3 years is about around $800,000 to $900,000.

Nice. What do you do?

Um, so I own a small company and my wife's a doctor. Okay. Good for you guys.

You have any debt? So our house is paid off.

Our cars are paid off. We have no consumer debt, nothing like that. We do own a rental property, a home, um, that we share with some friends. Uh, it's fully rented, long-term rental, um, it's cash flow positive. What do you owe on it? Uh, we owe $550,000 between the two of us. Okay, gotcha.

All right. And how much do you have in investments right now?

Um, and we all— I also own an industrial property that my business also uses, and that one we also can't prepay because it was an SBA loan, so there's a, there's a prepayment penalty. Um, and that I share with a business partner, and that's $1.5 million, and about a million on it.

Okay, and how much do you have in investments?

Um, in liquid, we have about $3.2, $3.3 million.

Okay, I want you— the first thing before we go back to your question, I'm gonna stop where I got stuck on this. I don't run into any SBA loans that actually have prepayment penalties on them, so I think you've gotten some kind of tangled information. Either this is not an SBA SBA loan, or it is, and it's some kind of other loan, or it's an SBA loan and someone misunderstood. I don't think there's a prepayment penalty on an SBA loan.

So it's a 504, and I double and triple check, Mr.

Ramsey. Okay, when does the prepayment penalty run out?

10 years. And then the—

I would consider how much the prepayment penalty is and look at it very carefully. I might pay it off anyway. I don't know. I don't want to get into that on this call because you asked a different question. So you You make a gob of money, how much do we save and how much do we enjoy?

Yeah, well, I think the balance of giving, saving, and spending has to be there. So I would be maxing out all that you can investment-wise with retirement. So, you know, the backdoor Roth, if you, I guess you own your, you own your business, but. 401k. All of that I would do. And then you're gonna be surpassed that with that 15%. So I would for sure be hitting that 15% in retirement. And then I would have extra money. Internal goals of, we make this amount, what feels reasonable to set aside for these other goals that we have long-term in the next 2, 3, 4, 5 years? Have a goal out there, be putting money aside for those goals. And then beyond that, lifestyle-wise, I mean—

Enjoy some of it. Yeah, for sure. I would set a percent, I'd say a percentage of my income that the two of you agree to, that we are going to spend on excess lifestyle. Wonderful travel, wonderful cars, wonderful purses, wonderful whatevers, okay? And then beyond that amount, we're going to invest and be generous, because it's really the only 3 things you can do. You can invest, you can be generous, and you can enjoy it. And so set a percentage of your income that you're gonna do that with. And so if you put— if you said, I'm gonna enjoy enjoy 20%, that's $180,000 a year. You're still going to be unbelievably wealthy. Yes. Or if you enjoy 30%, you'll be driving anything you want to drive, traveling anywhere you want to travel, and carrying any purse you want to carry. But it would keep you from accidentally being one of those morons that spends $900,000.

Yeah, I was gonna say, but be intentional about it, because being sloppy is— that That starts to feel gross spiritually. I feel like in the financial space, so—

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.