Transcript of Facts Are Your Friends...Not Feelings

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is The Ramsey Show. I'm Dave Ramsey, your host. Jade Washall, Ramsey personality, number one bestselling author, is my co-host. Host today. The phone number is 888-825-5225. The call is free, and some say the advice is worth exactly what you pay for it. Nick is with us in Philadelphia. Hey Nick, what's up?

Hey Dave, I'm just, uh, I have a couple questions concerning how to get out of debt.

Okay.

Um, so I am a sanitation worker. I make roughly $75,000 a year. I just got married about 2 months ago.

Congratulations.

Thank you. Our combined is— she makes anywhere from $20,000 to $25,000, so close to around $95,000. Okay. Um, I am currently in $41,000 in debt across personal loans, uh, credit cards, and a car loan.

Okay, how much of it's car?

Car, I'm halfway paid off my car. It's about 15, 15 and a half almost.

Okay, and what's the rest of it again?

Um, 21 of it is personal loans and 5 of it is credit card.

Okay, what kind of personal loans? Just at the bank?

Um, so when we got— when she got pregnant a couple years ago, it was a really quick thing. We had to move out quickly and I had to call cover the, um, maternity leave and all that stuff. So I took out a quick little $6,000 loan so I could be secure after we moved into our apartment and just have the money to fuck help her. And then I just, what I started doing is I just started racking up personal loans because I was stupid with my money and would get in credit card debt and need to take out another one, another one. And then the last, then I took out one, uh, to get her engagement ring.

So what happened the other day that stopped you from, and you said, I gotta call Dave and Jade and we gotta change. What happened?

I just, um, living paycheck to paycheck and something ain't working.

Yeah.

And it doesn't make sense to me. This should not be happening.

You're a good man. You're a good man. Thank you for calling. You are why we're here, brother. Okay. So, um, hmm. How old is the baby now?

2?

She'll be 2 on Friday.

What does your wife do and why does she not work full-time?

She works 4 days a week. She is a—

Makes $1 an hour.

Wow. Yeah, that's a lot of time working and not a whole lot of money being made. What's the type of work?

She's a dog trainer. She makes— it's based on commission. She can make anywhere between $20 to $25. And she's not working as much as you said.

Mm-hmm.

I almost wonder if she could dog train on her own and make more money. And set her own clients and set her own pay. Because she'd probably— um, here's the thing, she'd probably do more— she'd probably do more money in less time doing that freelance, and she could probably make that a side hustle and get another job.

Oh yeah, I mean, I'm, I'm also looking to get back into— I also, I don't know, tax services, uh, I am a delivery driver, so I work on GetCash under the books, although I haven't been doing that for the past 2 months. Because I had, uh, like issues in the summertime, slowed up, so they, uh, let me go for a couple months.

Why are they paying you off the books? Why can't you have a job where you're paid above board?

Uh, I don't, I don't know any pizza shop I've ever delivered at, they've always paid under the books.

Okay.

All right.

Um, all right, so here, one part of the equation, the reason we're poking at that is the income part. The other part is the outgo part. Okay, so we're gonna, we're gonna get up above this problem because what happens is when you get down in the weeds, you get lost and it becomes overwhelming and really, really scary and chaotic. And that's kind of the way you were feeling right before you called us. So what I want to do is I want to get in the drone and I want to get up above the weeds. I want to get up above the situation and say, okay, there's two parts: income and an outgo. You and your wife sit down tonight and start talking seriously about what we can do to add to your good $75,000 job that is reasonable with a 2-year-old in the house. What can she do to double, triple, quadruple her income? What kind of side hustle can you have that has integrity to it and that doesn't get you in some kind of a bind later and that is steady? Sounds like these guys come and go. And then on the outgo side, We're just going to sit down and say, all right, gang, we're two grown-ups with a baby.

Game on. Because that's why you called. Game on. And we're going to say beans and rice, rice and beans. No eating out unless you're— you can't see the inside of a restaurant unless you work there.

Do you have a budget, Nick?

Um, no, not really.

Okay, though. There we go. That's—

let's start. Let's start with that.

We need that.

That's the foundation. Every dollar budget. Jade.

Yeah, we'll give it to you. We'll make sure the phone screener picks up and gives you that. But here's the thing, you've got to do it tonight with your wife. You both sit down, you fill in the numbers, you make sure you're both in agreement on how we're going to spend our money. And that's it. That's how you do this going forward. And the biggest number to look for when you plug in all your numbers, uh, Nick, because the goal is to go through and think of all the things you might spend money on. And at the top, it's either going to be in the red or it's going to be in the green. Whatever is in the green is your extra margin. That's what goes to your smallest debt. Okay, after you make minimum payments on everything, whatever is green, that number goes towards the smallest debt. We're going to do them smallest to largest, and that's how you guys are going to work this out.

Yeah, list the debts.

Yeah, I actually just— I've actually just wiped away a good, uh, like $500, $600 of credit card debt.

Okay, good. Um, do you have any money saved? Do you have any money saved?

Uh, we have the remaining of our wedding.

Okay, wedding gift, which is how much?

Uh, I want to say around $5,000.

Okay, good to know. So here's what I would do: get rid of all your credit cards tonight.

Pay them all off and chop them up. That's your wedding gift.

Oh, I like that.

Credit card debt-free. And, uh, if I gave you a wedding gift and you were a sharp young couple and you had a new baby and you told me that that's what you did with your wedding money, I would be very proud of you. That's what I would want to do with it.

Hang on, I think you're gonna get your mind—

yeah, we're gonna put you to action, man.

That's right.

What you've been doing, sitting on the sidelines and letting all this crap happen to you, and now you're about to happen to it. That's what's gonna— it's called proactive, and it's one of the 7 Habits of Highly Effective People according to Mr. Covey, Dr. Stephen Covey. And so check it out. You happen to things instead of things happening to you. Most people in America, Nick, are right where you are right now— broke, chaotic, disorganized— because all these banks and car companies are more than willing to happen to you.

Mm-hmm.

Their job is to screw you, and they are better at their job of screwing you than you are at keeping that from happening. So not today. Today it changes. Nick's a dad. Nick's a husband, and we're gonna get on it. We're gonna get grown-up land. No eating out, no vacations, no buying nothing till we get this debt cleaned up. Because if you didn't have any payments and you had two good solid jobs, y'all be making some serious money. Yeah, and that's where you're headed. You're gonna be in a position— think about what it'd be like, Nick, if you had no payments.

Holy—

that's what's gonna happen if you do what we teach you to do, and we're gonna show you how it's possible. Hang on, we'll pick up and get you signed up for EveryDollar. It's our gift to you. Oh, there's another wedding gift.

Shift.

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Candy is with us in Philadelphia. Hi Candy, how are you?

Hi, good. Thank you for taking my call.

Sure. What's up?

Um, my husband and I are 53. We have no debt. We have a fully funded 6-month emergency fund. Um, our investments, we're contributing the 15%. Um, most is in a traditional and some is in the 401 through his work, which is a traditional.

Way to go.

Um, we have a house. Yeah, we have a house fund. It's Almost $250,000. Um, a year ago we sold our home that we raised the kids in. We're basically empty nesters. We decided to rent for the past year just to see where our youngest ended up, but we're looking to move to Northern Virginia, which is a pricey area. Um, at this point I'm just concerned about being my age and possibly I'm going to have to take a somewhat of a mortgage. Um, obviously 15-year. How do you feel about, like, I'm hoping It would only be about $200,000 or so.

Um, what's your household income?

We're a little— $205,000.

How much of the $250,000— didn't you say you had $250,000 saved?

Yeah.

Yeah. If you're going to Northern Virginia and you're thinking you're going to spend $450,000.

Yeah, I know.

Is that what you said?

I'm— I know it's probably nearly—

no, I mean, $450,000 in Northern Virginia is not much. Yeah, it's not.

So you would put half down on the outskirts.

Yeah, we're looking to put half down. Okay.

$250,000 down, take out a $200,000 mortgage. Is that the plan?

That's what I want to ask you about.

And your household income is what?

I was hoping $205,000.

Okay. And you're how old?

We are 53. So I'm worried about being behind in retirement investments. That's my concern right now.

How much is in the 401s?

The traditional has $585,000 and the 401 has about $24,000. But they're both traditional. So should I open a Roth with the extra that I put in?

If your company offers a Roth 401, I would switch my contributions to that. Did you say 5-3 or 6-3 years old?

With the traditional?

How old are you? 53 or 63?

Oh, we're 53-5, sorry. 5-3.

My hearing, I'm sorry. All right, so 53. So you got plenty of time. Okay. So you've got $600,000 plus, it'll be $1.2 million when you're 60. It'll be $2.4 million when you're 70 if you're invested in good mutual funds, and that's if you don't add anything to it. So you're fine on retirement. You're doing fine. You keep adding to it, you're gonna have millions of dollars at retirement, and you're gonna have the house paid off. You're gonna pay it off how quickly if you take out $200,000 making $200,000? You guys have done a great job of diligence and excellence so far.

So I'm gonna guess 4 or 5 years you got this thing paid off.

Does that sound right?

I, yeah, I could easily put a lot towards it.

Yeah, easily be able to double the payment every month if you wanted to, or more.

Yeah, totally.

Yeah, yeah. Okay, it doesn't— you're not setting yourself back in net worth, you're increasing your net worth because the house is going to go up in value and the debt's going to go down. So if you took out a $200,000 loan on a car and the debt went down slightly, but the car went down in half, then you'd be setting yourself back. But a house is going up in value, so you're not setting yourself back. What you are setting yourself back in is cash flow, because you have to dump some on this mortgage to get rid of it.

Mm-hmm.

But that's not setting yourself back. It's going to actually cause you to accelerate faster, especially when you get it paid off.

Okay.

Yeah, I would do this. I would do this plan. I'd put it on a 15-year fixed rate or a 10-year fixed rate, one of the two, and I'd pay it off in 4 or 5.

Totally reasonable.

Yeah, absolutely. I could do that.

Yeah, you're gonna be fine, Candy.

That's awesome.

The good news is with people like you, that if you just are smart enough to ask the question, you're already on the way.

Right.

And you're already dialed in. You've got everything else dialed in perfectly the way we teach.

Okay, great.

15% going into income, 15% going into retirement today, $250,000 sitting in an investment account from the last house that sold. You've got an emergency fund in addition to that. You've got no consumer debt, no debt at all today, and you're gonna make this move to be with family. This is why you work, to be near family.

Good for you.

Absolutely.

Well done.

Well done. And then the mandate is that that little turkey has grandkids. If you move to Northern Virginia for that little turkey, that little turkey needs to have grandkids. That's your job, little turkey. The number of my friends and my age group that are following kids— oh, wait a minute. They're following grandkids.

Yeah.

Around the country, moving from places they've lived for 40 years is amazing to me.

You'd probably do the same thing if you had to.

Yeah, Sharon would, and then I'd have to go with her. That's how it works. Yeah, they've just done—

Dave loves Tennessee. That's all right.

Dave loves Tennessee. God bless America. Elijah's in Indiana. Hey Elijah, what's up?

Hey Dave, how you doing?

Better than I deserve. How can we help?

Yeah, so my boss put me on the Ramsey Plan. Just a few weeks ago. So I've been reading the books, using the app, all that good stuff. But, uh, just the other day I went back and used my credit card. So I can, I'll explain why I did that.

Forgive me, Father, for I have sinned.

Indeed.

Yeah.

There was some, there was some paint on my sink and I didn't want to gouge the surface with a metal scraper. So I found my credit card actually works really well.

That's funny.

Okay.

Well played.

You got us. You got us. Okay.

You reeled us in. We're hooked. Yeah, there was some frost on the windshield.

Yeah.

All right.

Well, so I do have a question and it's, uh, about money gifts. So in a situation where a friend or a family member gifts you money for like a specific purpose, should you just use the money for that specific purpose or is it kind of disrespectful or dishonorable to instead just throw that money at debt and try and get out of Baby Step 2?

I don't think it's dishonorable or disrespectful. It would be one thing if they said, here's some money for you to— we do a family vacation and here's the money for you to go on the vacation with us, right? That feels a little different than just happy birthday, here's a couple hundred or however much money cash.

How much was the gift and what was it for and who was it?

Uh, so my fiancée's parents, uh, gifted us $5,000 to help cover wedding costs.

Oh, okay. Um, so they're paying for the wedding?

Uh, in part, yeah.

They wanted to just—

how much were you planning on spending on the wedding?

We had a $10,000-$15,000 sort of window that we wanted to stay in.

Um, and yeah, that's more than $5,000, so where's the problem?

The problem is I, you know, I've sort of paid for a lot of things myself and like we could use that money to make the wedding like a little nicer.

Uh, wait a minute.

Wait a minute.

Wait a minute.

And so the wedding budget, you had already covered some of it and they refunded you.

Oh, that's a good way to look at it.

I guess, I guess that's one way to look at it.

Yeah.

If we had a $15,000 wedding budget and they put in $5,000, and I've already paid $12,000, I'm pulling my $2,000 out.

It's a refund.

Yeah, I mean, that's fine. Okay, nothing wrong with that.

Now, did they say—

did they give it saying you have to spend this on top of what you've already done? Was that specific?

Sorry, did they say $10,000 to $15,000 is not enough, we think you need a nicer wedding, here's $5,000 more dollars?

Well, they just like love helping and being involved with the wedding, and they felt like they weren't doing enough, so They're just like, here, like, have some more money.

Oh, uh, wait a minute, wait a minute. That sounds like code for your fiancée was whining that she wanted something she didn't have yet in the wedding, so Mommy gave her some money.

We're cutting corners. Yeah.

So what does your fiancée think about this money?

Every wedding, otherwise they're $400 grand.

Yeah. What did— when you, when you said to your fiancée, hey, I'd like to use this money to pay off some debt, what was her response to that?

I haven't asked her yet.

Um, but she would know.

Okay, let's pretend this call never happened.

All right, let's stop. Let, let's go through a couple of possible scenarios and then you go work it out in the real world. Okay, scenario number 1 is good, um, that you guys are in agreement we're going to spend $15,000 and you've already prepaid some of it and you're going to refund yourself for the $5,000. That's perfectly fine. I don't think that's what happened. Scenario number 2 is your fiancée was whining to her mother because she wanted a better XYZ for the wedding. So her mother said, oh, I'll give you some money to do that. Well, now you gotta deal with your fiancé, not your mother-in-law. You better get some clarity on communication here, brother.

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Brianne.

Brianne.

Brianne. I don't know why you say this. Brianne. Brianne.

Yeah.

Is it Brianne?

Yes.

Hi, how are you? I'm Dave. Good to meet you. Welcome from Indianapolis. What's up, Brianne?

Yeah, so I just had a quick question. A little bit of a background to my question is I am a I'm a 20-year-old college student that currently has no debt. I have almost a $1,500 emergency fund, and I am someone that's also trying to get better at budgeting. My question is, um, what advice do you have for somebody that is looking for somebody who is on the same track for a life partner? Um, is it too much to ask of a guy to to have an emergency fund, to have no unnecessary debt, to be able to budget. Um, and then how do I explain that to people who think I'm just being picky when all I want to do is be able to be smart financially?

I, I love this question. I love that you're thinking about this. Is there somebody that you're seeing now, or there's nobody— there's nobody in the picture right now?

Well, um, about 3 months ago I just ended a relationship that was a bad idea. Emotionally, mentally, and financially.

Okay.

So to restructure, uh-huh.

What I'd be looking for more so than dollar amounts, I'd be looking for someone who has the same financial philosophy as me and is working towards the same goals as me. And we might be at different points along that path and that's okay. But if we see eye to eye on money, and just the basic philosophy of money and debt and spending and wealth, that's a really, really good sign. Um, that being said, I'm not interviewing every guy I go on a date with. I'm not interviewing them on the first date, right?

Mm-hmm.

Because there's also opportunity for people to evolve. And so I'm looking for the things that show this person is interested in personal growth. This person is interested in growing in, in growing and getting better, not necessarily changing towards me, but getting better.

Yeah, because the relationship I just got out of, there was no, no sense of knowing how to do a budget, unnecessary purchases for a vehicle, and just multiple— I don't know what we call red flags.

Sure. Yeah, yeah.

And that's fine.

Is it too much? Like, is it unrealistic to have some financial expectations for—

I don't know if financial expectations are the question. It is, it is, it's not what we would recommend that you say, okay, you have to have a $10,000 emergency fund and be doing a monthly budget. Let me see your budget or you're not available. No, that's not, you're not eligible. No, that's not what I would say. I would not tell my own kids to do that, and I did not. And I'm freaking Dave Ramsey, okay? So my kids were taught to look for someone, like Jade said, that's into personal growth, They have character, they have some maturity, because a lot of times financial irresponsibility, just complete irresponsibility, is just tied to immaturity. It's like, it's like a 4-year-old in the cereal aisle. I'm keeping my 4-year-old grandson, taking him to the, to the fair, and he has a complete meltdown if I don't give him what he wants. That did not happen, by the way, but it would be like dating that person, right? And so give me what I want. I want it, I want it, and I get it. I'm going to go into debt and I'll get whatever I want. And I don't need to.

I'm I mean, you know, and you just hear this kind of pattern in their emotional, or lack, in their emotional maturity or lack of it. And so maybe they don't have an emergency fund. Maybe they didn't come from the exact same background you came from, but they're going somewhere. And you can see that, and you believe that. That's what I'm looking for more than, let me see your budget, and let me see the balance on your emergency fund account.

I agree. That's very good.

"You know, and because you can get a budget and an emergency fund in about 20 minutes." That's right.

And I also want to say this because this is just part of, I think, dating people and meeting that person is you have to go on dates to get to know that person. You're not going to be able to avoid getting to know someone and liking someone and then maybe they don't meet the standards. And so, there's a little bit of heartbreak. Sometimes you can't avoid that. And that's just part of, of finding that person. So, this is not something that you can figure out the prerequisite and save yourself from it on the first date, if that makes sense. You have to go through the process a little bit. And that's just part of it.

Yeah, it's been so long ago, I forgot.

So—

You got it. Dave, I'm not gonna— I'm not gonna—

No, really. I mean, I've been married 45 years. All I remember is I chased her till she caught me. That's all I remember.

So—

Oh my gosh. Tommy's in Dallas. What's up, Tommy? How are you?

Very good. Very good.

Thank you.

How can we help?

I have a question. I'm an 84-year-old man. Um, I'm still working. I have an office that I have other people run for me so I don't have to do a lot of work, but I have, uh, recently gone through a divorce and I'm looking at trying to recover. And I have a good income and I have some debt. And my question is, which comes first? Should I pay off the debt and then stack some money away for retirement or—

How much debt do you have?

I have $20,000, $20,760 in debt.

And what is your income?

Uh, $278,000— $290,000— I'm sorry, $278,944.

It seems like that you could pay off that $20,000 fairly quickly, couldn't you?

I could.

Uh, I probably have the money in the account right now to pay it off.

I do. Okay.

Um, so if you paid— if you paid— if, if it's me and I paid it off, it would give me peace. I'm solving for peace.

Yes.

I mean, I don't think we're working with a 30-year time horizon here that you're gonna go build wealth. You're 85. I'm 65. I don't think I'm working with a 30-year time horizon. All right, so, you know, I'm making decisions today on what gives me peace or what influences and helps my family tree that I want to change. So long-term with the kids, grandkids, that kind of stuff, So how long were you married?

20 years.

Wow.

Oh man.

So you got married at 65 to that lady and at 85 y'all get divorced. That's wild, man.

It is.

What's in your nest egg?

Um, not much.

Um, I have about $100,000.

That's it.

How much do you have in savings?

Uh, $50,000.

Okay.

Okay.

All right.

Well, what was the $20,000 in debt?

That was, um, a credit card for $3,600, a car for $13,000, and a personal loan for $4,100.

Wow.

So when you, when you are not going into this office at all, will you continue to rent it? Is it something that you still own that you'll continue to make income off of after you retire?

I'll continue I continue to make income as long as I'm in the picture. Uh, as when I step away, walk away, income ends.

Okay.

So I'm hanging on as long as I can.

Yeah. Well, what I would do then is hang on as long as I can. I'd write a check today and pay off the $20,000 and I would not borrow another dime the rest of my life. And then I would start setting some money aside, adding to that $100,000, which gives me the ability to step away. The bigger that number, that $100,000 number becomes, the easier it is to step away when you want to.

Yeah, that office rental, is that a building that you own that you can sell?

She's going into the business.

Okay.

It's a business. I own a business.

Yeah. When he goes to the office, it's going to the business.

Gotcha.

Yeah.

All right. And so, yeah, that's what I would do. I would build the emergency fund. And then, you know, but, and she makes a point, when you step away, is there not some way to sell your ownership rights at that point also? To someone. They ought to be worth something if you're making $270,000 out of it. So I don't know how you're structured or what you've got there, but that's a good question to go with it. First thing I do is pay off the debt. Second thing I do is start stacking cash in good— in a good investment and adding to that $100,000. While you're making $270,000, that's pretty easy to do. And third thing I'd do is assess if there's anything in that business business that— and we don't know that because we weren't talking to you long enough— that you can sell and make money on.

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If you're sick and tired of being sick and tired and you're ready to get off the rat wheel. Don't be a rat in a wheel. That's normal. And there's only one way to do it when it comes to money, and that's actually tell your money what to do instead of wondering where it went. That's called a budget, and the best way to do that is with EveryDollar. Now, this is not simply a budget though. The budget's just part of it. Gets you started on working the entire Ramsey Plan, and then as you work the Ramsey Plan, the EveryDollar app's gonna teach you how to walk those baby steps the shortest distance between where you are and being a millionaire. A debt-free millionaire, by the way. In just 15 minutes, you're gonna find thousands in hidden margin. You're gonna feel like you got a raise. Don't be normal. Normal sucks. Start your EveryDollar app for free in the App Store or Google Play. Skyler is in Richmond, Virginia. Hey Skyler, what's up?

Hey Dave, how's it going, man?

Better than I deserve. How can I help?

Yes, sir. I am 19 years old. I have an 8-month-old daughter and a fiancée. I'm making about $10,000 to $11,000 a month consistently for the last 8 months.

Doing what?

My question for you today is pressure washing and exterior window cleaning.

Wow. By yourself?

Yes, sir. Totally by myself. I thought about hiring technicians. I'm trying to go as long as I can without hiring people, but my question for you is how Do I get out of debt at 19, uh, with the money I'm making? My problem is I don't feel like we're seeing the money that I'm bringing in. I have about $58,000 in debt. That is from 2 cars, $1,600 in credit cards, and a $3,500 personal loan.

Okay, um, is part of the reason you're not seeing the money you're bringing in because you're not subtracting expenses out of what people are paying you? Or, I mean, do you have it separated in the right ways?

Yes, ma'am. Uh, I think the problem is not a budget. I watch you guys a lot, and I've been talking a lot to the fiancée. We are on a complete scattered budget. Okay, we know what the bills are, and then it's constantly, you know, going to Walmart, buying this, buying that, uh, eating out 7 times a week.

Her or both of you?

Both of us.

Okay.

All right.

Well, let's stop for a second, um, and let's make sure we've got some basic structures in place that, uh, that statistically tell us you have a higher probability of winning. You have a baby, you're 19, and you have a fiancée. When is the wedding scheduled?

The wedding is scheduled at the end of this year, and we're not looking to spend a lot of money on a wedding. Honestly, I think what she wants to do is just go to the courthouse get married like that and then maybe have like a little get-together because—

How about next week?

Yeah, if it's a courthouse, how about next week?

We can't do it now. Next week.

That sounds good. That sounds wonderful.

Statistically, she and you have a higher probability of your marriage working, your relationship working, and your wealth building working, and your careers taking off as a married couple than you do as two shacking up thinking there's a courthouse 5 months in the future. Okay, so I'm just giving you the data points. And so if you were my little brother, that's what I would tell you to do first. This weekend we're having a wedding and a get-together. Okay, now then let's move on. With your business, you are kicking butt because you are not afraid of hard work, and you're showing up on time, and you're pricing yourself reasonably. I know all of this because you're making freaking $120,000-$130,000 a year as a pressure washer by your freaking self. You're incredible.

Way to go.

Very proud of you.

So it's not easy. I wake up about 8 o'clock.

You just get— somebody taught you how to work, young man, and I'm proud of whoever that was. You are a good young man. This kid has a good dad. You're going to have a good future. All right, now here's how we run a business. First thing is, if you— do you have a separate checking account for the business?

No, sir. My dad told me that I need to start doing that ASAP.

Yeah, you need to do that today. Go down to the bank. You don't have to have anything except your Social Security number. It's called a DBA account. A doing business as account. It's, uh, Skyler So-and-So, DBA, doing business as Skyler's Pressure Washing, or whatever the name of your company is. It's all it's got to be. Okay, then here's how the math works, and it's going to help you get organized. 100%, not a dime less, of the money that you get from a customer for doing a job goes into only the business account. Got it?

Got it. Now what about—

Just a minute, just let me finish. I'll walk you through it and then you can ask, okay? Then the second thing is nothing comes out of the business account except you and the business expenses. You don't buy groceries or lights or car payments out of the business account. I'm gonna get there in a minute, okay? So what expenses do you have at the pressure washing company. You have gasoline you have to buy for your pressure washer and your truck that pulls it, right?

Yes, sir.

What other expenses do you have?

Chemicals, you know, like mop squeegees, right?

Right.

Those things go out.

You write a check for those or use the business debit card for those. You don't buy anything else out of the account. So in business, your revenue minus your expenses equals profit. Follow me?

Yes, sir. Profit this month was $9,500.

Good, perfect. Now, when you take— if you want to leave a little bit in there for next month's expenses, that's fine. So when we take $8,500 out of that account, or $8,000 out of that account, we leave $1,000 or something in there. We don't want too much in that account, but enough in there to run the business. Then we take $8,000 home, we write a check to Skyler that he's gonna deposit in his personal account. Oh wait, taxes have to come out. And taxes on self-employed business your size are about a fourth of your net profit. So on $8,000, that's gonna be $2,000. So you write a $6,000 check you put in your personal account and a $2,000 check you set in a savings account for your quarterly estimates. Remember this and go back and watch it on YouTube. Your quarterly estimates have to be filed on this, and you have to file and pay your income taxes quarterly, and they're gonna be about 25% of your profit. So now you're not gonna get behind with the stinkin' IRS and mess up this whole thing. Now I got $6,000 in my account to now start working on $58,000 worth of debt.

Now we sit down and say, "All right, I got a budget this month of $6,000," and we put that in EveryDollar.

Yeah, I think that was your problem, having one account. You and your fiancée were seeing, "Oh my gosh, there's $10,000 $12,000 in here.

We can eat out if we want.

Yeah, and we can do whatever we want.

You can't eat out unless you sell both cars.

Uh-huh.

And now that Dave has separated that for you, I think you guys are going to have a more realistic approach, uh, that combined with EveryDollar. Now, I just want to know, you said you have two cars. We might be able to clear some of this out really fast. What are the cars worth?

Yes. Uh, I have a truck. That's why I use it for the business. Uh, not being smart, I was 18 when I bought it. Not being smart, I saw it at the lot, signed the papers, paid $32,400 for it, and the Kelley Blue Book is $16,500.

Yikes.

And it has a salvage title.

Yes.

Okay, what about the other one?

The other is her car. It's a little Volkswagen. We paid $24,000. It's worth $20,000.

Okay.

That's a lot of cars.

Yeah.

I mean, for what you're earning, you're right on the line, but it sounds like you're interested in being debt-free, so I'd work on either knocking these out or selling off at least one of them.

Yeah, I'd get them paid off.

Very, very quickly. Here's the good news: you guys aren't used to making this kind of money, so quit spending it. You know, you're just spending like you're in Congress, man. So your dad's right. Get your EveryDollar budget out, write it down, put everything down. And dude, you're way too smart to be acting this way, all right? And so— and you're way too good at the other parts of this. So we give every dollar a name. $6,000 at the top. Every dollar has an assignment and don't go out to eat again. She gets to cook.

My last question is, should I tackle every extra dollar on payments?

Yes.

Or should I just bite the bullet and get rid of the truck or the car?

You might get rid of the car, but let's just attack the debt for a month or two and see how it feels.

Mm-hmm.

After fighting it and fighting it and not going out to eat and not going on vacation and not doing anything except except paying off debt, because you've made a mess that you can clean up fast if you lean into it. But if you screw around with it, you're gonna be looking like this when you're 35. You don't want to do that.

The good news is for your truck, since it is your business truck, you could use your business money to pay it off.

Nah, no, I would just pay it off out of— it's a personal— he signed for it personally. He's just started his business. It's not a— yeah, yeah, I'll just knock it out. Let's just knock it out. It's not a— okay, you can't— there's nothing you can write off on it anyway at this stage except maybe depreciate it, and that might be a nightmare. So, um, no, I, I— let's just lean into this thing and take $6,000, $7,000, $8,000 a month after taxes, and let's attack the $58,000. How fast can that be gone? Crap, man, 6 or 8 months, you're done. But you live on nothing, dude. As your business grows, everything becomes more complex. There was a time when Ramsey Solutions had too many disconnected systems and not enough visibility across the business. We wasted too much time chasing information instead of making decisions. That's why we got NetSuite. NetSuite brings your financials, inventory, CRM, and more more together in one place. More than 44,000 businesses run on NetSuite, including Ramsey. And now they're taking the next step with NetSuite Next, making it easier to put AI to work across your entire business. NetSuite Next helps you make the most of your time, automating routine work like forecasting demand and following up on overdue accounts.

With NetSuite Next, AI is built into everything you do, so you can ask it questions just like when you're talking to a member of your team. And right now you can try NetSuite Next for free. If your revenue is at least 7 figures, go to netsuite.ai/ramsey. That's netsuite.ai/ramsey. Welcome back to the Ramsey Show. In the fair Men's Credit Union studio. Jade Washaw, Ramsey Personality, best-selling author, number one best-selling author, is my co-host today. Alice is with us in Raleigh, North Carolina. Hi Alice, how are you?

I'm good, how are you?

Better than I deserve. What's up?

First of all, I can't believe that I'm talking to you guys right now and I am so anxious, so if I sound completely dumb, please forgive me.

You'll be fine. We've never lost a Questioned.

Okay. Okay. Um, so my question is, how do you get over the fear of not being ready, financially ready, to start a family?

Okay. Uh, tell me what that means, you're not financially ready to start a family.

Okay, so my husband and I are in a little bit of debt. We've, we've paid off a lot of our debt, and I'm very proud of us so far, but we still have some to work on. Um, we have a $20,000 student loan that's mine. And then we have a $45,000 student loan that's my husband's, but he's about 6 months away from the public student loan forgiveness program. So right now we're kind of just paying the minimum monthly payment on that and hoping that forgiveness comes since we're so close to the end. And then the only other, the only other debt that we have is our house and our mortgage.

How much have you paid off so far?

Uh, our student loans?

No, you said you paid off a bunch and you're proud of that. What did you pay off and how much?

Um, we paid off our credit cards. That was about $6,000. And then, um, we paid off both of our cars. Um, I lost my mom last year and I got some inheritance money and we were able to pay like $50,000 worth of car payments off. And, um, yeah, that felt really good to have that weight off.

So what's your household income?

Um, it's about $110,000.

So if you make $110,000 and you have a $20,000 and a $45,000 student loan, why can you not have kids?

Because I just feel like there are so many things that I would want to do if I became a mom and like, like, stay at home. Well, I would love to stay at home, but I just know that that option is not possible.

Um, I think that's where we, I think that's the first step in this is clarifying what that means to you and having a really clear picture of of, if I want to have kids, this is the way I want it to look. And solving for that.

And so it's not the— yeah, she's exactly right because you're not—

it's not the debt. The debt's not the problem.

It's not the debt and it's not the kid. It's what you want to do because there's a kid.

Yeah. And what's the income breakdown? The— I think I heard you say you make $110,000. What do you make and what does he make?

We both make around $55,000. So it's pretty split down the middle.

So you already have a mortgage, right? I think I heard that. Yes.

So our mortgage with like taxes, insurance, and everything is like $2,200 a month.

All right. So yeah, that's, that's the game you've got to play is if, if I want to have a child, I want to stay home. Now I've got to run out the budget on $55,000.

Or if I don't want to stay at home and I want to do other things associated with the kid, maybe it's the other things that are the problem and not the kid.

Right. My biggest concern is like, I want to contribute to a 529 plan and I don't want Well, get out of debt.

Finish getting out of debt and then do it.

Yeah, we're trying to.

Well, I mean, you'd have 20 years to work on that. The kid's just born. The kid's not even born yet.

So, right, right. It's just, I know, like daycare and things like that, like it's such a common, like, here's what you got to do, so expensive for people. And so I'm just like, ah, you've got to run a faux—

but you've got to run a faux budget. The running a budget and seeing the actual numbers is going to give you real answers to your questions. Right now, they're just a bunch of things floating around in your head, and you're thinking, "I think it's this, it might be this, it could be that." Just give real numbers to it. And you can do that. You can run the budget as it is, looking at your margin and saying, "Okay, looking at the margin we have now, working extra, this is how quickly we're gonna pay off the $60,000 in debt. Once we've paid off the debt, this is how quickly we can have the 3 to 6 months of expenses saved. Once we do that, after we start investing 15%, this is how much money we can put in the 529." $499,000. These are all numbers you can know this evening.

Your child is going to be fine. You make enough money. If you pay attention to the money and you continue on the track that you're on, you guys are gonna be fine. You make enough money to have a child. What you may not have enough money to do is spend $462,000 on a nursery.

Right, right.

I mean, like, go nuts, okay? Or $46,000 on a nursery. Either one. Neither one is gonna work. This is a very small human. They don't even know what's in the nursery. It's only the mother that does. The father doesn't even know what's in the nursery. And people go bananas. So if the things like that, and you feel like, "Well, we'd have to get a bigger car." No, you don't. It's a very small human. They'll fit in that car. They don't take up that much room. Their car seat takes up more room than they do.

But if you do, and you have to decide, are you thinking that you're going to stay home? Because that is the biggest part of this conversation. Because if you do, that does reflect on your comfort of living with a $2,200 mortgage. So you guys have to look at, okay, if you make that choice, what's your husband gonna do? Are you gonna work part-time? There's gotta be something that you do so that mortgage doesn't become half of your take-home.

Yeah, so the answer to your overall question is facts are your friends. When you don't, Jade's exactly right, lay out a budget for the way you see this going., and the budget will look at you and say, "No, you can't spend that on a nursery, and here's your daycare budget." Go out and shop some daycares. Talk to 5 or 6 or 10 daycares. Get actual numbers. Not what your friend said, not what you heard on the internet, because both are liars. And so let's go find out what's really going on and what the real cost is, and honestly, diapers and formula, they're not that much.

Diapers wasn't the thing. I feel like there's too much emphasis on diapers.

Everybody goes crazy talking about it. I mean, it's like—

I feel like the other things, everything is—

I think our kids got like 2 years' worth at all the baby showers.

Yeah.

I think they were— we had a warehouse for diapers.

But all that being said is, I think it's— what she's trying to do is plan for this.

And I—

If you plan for it, your anxiety will go down.

Yes. Planning for when you're going to have a family is so important. And that's exactly what you're doing. That's what this is called. That's what it looks like. This is what it looks like to plan for children, is what you're doing right now.

If you use some common sense in your choices, yes, that is mathematically sound, you should have no trouble. And you're eligible, based on the numbers you gave us today, to be a responsible person and have a baby.

Okay, let's play this out, because I have to say this, because we get this call. What there is the potential for is, I have this baby, now I want to stay home, now I'm down to a $55,000 income, with a mortgage that's $22,000, I can't do it. And I never paid off the $60,000.

Can't do it.

Now that is the call that we get. And that's the person calling in stressed out.

The answer is sorry.

Exactly. And that's the part that I just want to call out is there are things you can do to make this a better, easier process for you. And if you have the ability to do that, and you would like to do that, it's a good thing to do.

Yeah, like get the debt paid off.

Yes.

As an example, build your emergency fund.

Yes.

The further along the Baby Steps you are, the easier this, all of this is going to be.

Right.

Yeah, but you can't just go, "Oh, I'm really sad. I'm really sorry," and you get to go to work. You make, you know, play grown-up games, get grown-up prizes.

I know, that's right.

So that's how it works. That's the deal. So, but the actual child thing of, "I can't afford to have children," I mean, if you've got, you know, too many kids and you just keep spitting them out, you're gonna have trouble. In trouble, okay? That's not the issue. But you need to think about, you know, what is a reasonable process here with the income that you have and, you know, the, the, uh, a, uh, typical family size, and you will be fine.

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Alex is in Rochester, New York. Hi Alex, how are you?

I'm doing well, thanks for having me on. Uh, long time listener, appreciate you finding time to get me on today.

Uh, our honor, sir. How can we help?

So I have, uh, a question for you. I think my wife and I are in a phenomenal position based on how old we are and everything we've been able to accomplish so far. But I have one point of contention with her. I think you'll agree with me, but I want to make sure I'm not violating another rule while I try to accomplish this. So my wife and I are disagreeing about paying off the one vehicle that we, that we have a note on right now. So we paid off her vehicle. We have my car. It's about a $60,000 balance on it. I'd like to pay it off with what we have in savings, but I want to make sure I'm not violating any other rules based on our our income, uh, so on and so forth.

What's your household income?

It's $150K a year.

Okay. And, um, did you say you had your mortgage paid off? Did I hear that?

Yeah, we, we were able to sell, uh, pay off our mortgage when we sold the business, um, and also did well on selling our first home.

So it's just this one car.

Did you buy the car after that?

Uh, no, I bought the car before.

Why did you not pay off the car too while you add it?

Well, I would. I wanted to. That's what I'm saying.

She wants to keep a car payment?

What's the difference between the car and all the other debt?

She wants to keep the cash. She wants to have more in our savings. And I think we have way more than we need in savings.

How much is in savings?

$150,000.

Okay. So she, it makes her feel uncomfortable to take $60,000 of the $150,000 to pay off this vehicle. And be completely debt-free.

Correct.

As with anything, I mean, there's more to the story. So we had a second child, and at the time we were concerned about medical bills. We'd gone through infertility, so we didn't pay off, you know, we didn't want to pay off the car at that time. But now I think we're in a position, baby's healthy, you know, and I think we're in a position where we could pay off the car and be completely debt-free. And I think at that point, there's really nothing else for us to do than into the 15%, um, make sure we're funding the 529s.

And you make $150,000 a year, correct?

Yep. Just, it's, we're just, just on my salary. She stopped working back in October, which is another, you know, thing that happened that changed.

So if you run out the numbers, pretend that you pay, let's just pretend you pay off the car today, you have $90,000 in savings. How quickly, if $150,000 is the magic number, how quickly could you get back to that?

Yeah, well, again, I don't want to get back to that. That's like part of the contention as well, because I'd like to shift anything additional to You know, um, obviously I agree with you.

I agree with you. Okay, let's back up a second. Where you guys should be, um, is your emergency fund should be about $30,000, maybe $40,000. Yeah, you should have $50,000 in investments and no car payment. That's where you should be.

Agree.

Agreed. Okay, and so now what we've got to figure out is why we're not there in her mind. So if we have no car payment and we have $50,000 in investments that we can get to on a 1-day's notice, if it's in a good mutual fund with a SmartVestor Pro, you can send them an email and you'll have the money in 24 hours.

Yep.

Okay, maybe, maybe 48, but somewhere in there. Okay, so it's not like it's not liquid and accessible. And it's going to be making a good deal more than that stupid savings account. And I've got $30,000 or $40,000 sitting there— $40,000 in this case— for an emergency fund, and we've got no debt. Now what's the problem? That's what I want to ask her.

And I would—

because it sounds like it's a mythology in her head.

I would play this out with her because there's something that's causing her to freak out. And you, you should probably ask her question: what is the worst in your mind that you see taking place, and what would it cost?

And how could we— and why could we not handle that with this arrangement?

The roof blows off the house randomly, right? You know, what truly in her mind is the worst thing? And that's how you run this back and help her see, uh—

I mean, even medical bills with a child with, uh, you know, issues when they're born. You've got freaking insurance. Your maximum out-of-pocket's probably $20 grand. And you're sitting on $150,000 worried about it.

Yeah, yeah, no, I totally agree.

Well, what we got to deal with is facts are your friends, and we need to say, okay, with these facts, explain to me what the fear is. Yeah, Jade's right. And then let's get into it rather than just fighting about, no, I don't want to pay off the car, right? Okay, bullcrap. Now, why? If we have $50,000 in investments and $40,000 and no debt in the world and we make $150,000 Jade's right. What is the scenario that you're worried about, that you've dreamed up this catastrophized in your head? And let's talk that through. And then you go, "Oh, okay." And so an example of that is my wife and I were considering a large generosity gift. Okay? For us, what's a large gift? And she's like, "I'm kind of nervous about this." Okay, well, let's just pretend that we took that much money and we put it in the middle of the floor and we burned it. Are we okay? Oh yeah, yeah, we got this and this and this and this and this. We're okay. So what is it you're nervous about? Uh, I guess I'm playing tapes from the old days. Oh, okay, that's fair, because our tapes in our— the old days, the best of in the Ramsey House, I It was bad.

You don't want to play those tapes, right? And that's fair to say, "Oh, some of that bankruptcy stuff when we were 28 and the lights got cut off is coming up in my throat when we start talking about giving a gift with that many zeros on it." That's a great conversation to have. But all that is is admitting that where we are is different than where we were, and just as Deloney says, just because your body is reacting doesn't mean that those are facts.

No, and it's a good time to remind yourself of that.

It's a feeling.

Facts are your friends. And the facts are that your family is in great shape. Your family has done a wonderful job. Such a good job that you covered all the infertility issues, you covered her quitting work, you covered any issues that came up with the child that was born with issues, you've covered— and your debt-free house and everything but one stupid car. I mean, you guys have done great. Y'all are amazing. You're in the top 1% of Americans. So, yeah, so that's a fact. Now, what are the fears, and what is the thing we're believing that's the boogeyman? Well, let's turn on the lights and see if there's really a boogeyman. Come look under the bed. Ain't no boogeyman under the bed. Okay, let's look in the closet. No boogeyman in the closet. Can you tell I've been keeping grandkids? Yeah. And so, you know, I mean, it's like, but this is— what are we afraid of?

Of.

Facts are, you know, and it's not to speak down to her in a condescending way. That's not what I'm doing.

No, it's to get to understand to the root of it.

But I am saying, you need to, as a grown-up woman who's staying at home with your children as a result of our financial decisions, you need to have a grown-up adult reason for this, not just a, "I don't want to." Bullcrap. Let's have an adult discussion here. Because here's the thing, that $50,000 in investments would be $100,000 if you'd have put it in an investment back then, because it would have doubled when y'all did this since then. So you've lost $50,000 for screwing around with a stupid savings account. That's expensive. That ain't okay. You know, and so we're gonna have this discussion. That's called opportunity cost, folks, when you miss out on an opportunity. Yeah, yeah, yeah.

That's, that's, that's scarier than letting go of the $60,000, missing out on all that money.

Yeah, and I But I'll tell you what happens, and it happens at my house too. Y'all probably don't do this, but sometimes you get to arguing about something like that, and you finally go, "It ain't worth it. I'll just leave the stupid $150 over there." It's not the right thing to do. It's wrong, but it ain't worth it. I did that with life insurance a few years ago. Like, SWI, Sharon wants it. There's no reason I should have had life insurance. I had millions and millions and millions of dollars, and if I die, she had millions and millions and millions of dollars. She was fine. But she said, "I want life. I want a million dollars on you." I'm like, "Why?" So you got another million? I mean, why am I buying this stupid life insurance? And it wasn't that expensive. It was like, I don't know, $1,000 or something. I'm like, "Whatever. It ain't worth it. I'll just buy it. S-W-I." And then one day, finally, she went, "I don't think I need that." And I went, "Oh, you didn't. You didn't look 4 years ago, but there we go.

Okay."

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All right, today's question comes from Cooper in Maine. He says, our household income is $225,000 $150,000, and our only debts are $9,000 in student loans and our $300,000 mortgage. We pay $150 a month on the student loan, and her employer matches our payment. Should we include this loan in our snowball and make larger monthly payments when we get to that point, or should we keep taking advantage of the employer benefit and let this thing ride for another 2 years? Well, first Yeah, 2+ years.

Mm-hmm.

Yeah.

Uh, well, first of all, you said your only debt is the $9,000 in student loans and the mortgage. So you're not debt snowballing the mortgage with the student loans. You're just paying off the student loans. And yes, I would 100% go ahead and knock this out. You make freaking $225,000 a year. This should be done in one month. It should be gone out of your life forever, not squeezing out 2 or 3+ years of $150. I mean, gosh, what is that?

Yeah, are you couponing? Are you clipping coupons too? I mean, my God, it's just not necessary. No, it's amazing how, like, in the name of math, we do some of the dumbest, smallest, little dinky butt things and act like we're financially sophisticated.

Well, yeah, because it's pain. It's your body.

I'm getting a free airline miles, which you will never use, you fool. 78% of them are not redeemed. That's the actual number. 8 out of 10 never get used.

Yeah.

And yet you went into credit card debt in the name of airline miles. And see, this is the kind of stuff people deal with. Or the guy who's like, I get 1% back on my Discover. That means for every $100,000 you overspend, they give you $1,000 back. Under what— on what planet does that make you a millionaire?

Yeah, that's interesting.

$100 out for $1 back. Hella, are you in Congress? What in the world? Who thinks that works?

That's a very good point. All of a sudden you're interested in $150, but when it was—

And you make $225,000.

When it was time to take the debt, you didn't care about the money.

Exactly. Oh my. Yeah, pay it off yesterday. You probably have the money in savings right now.

Absolutely.

Quit screwing around with— don't major in minors. Madeline is in Los Angeles. Hi, Madeline, how are How are you?

Hi, I'm good. Thanks guys for taking my, um, question.

Sure.

Um, I guess this question is coming more out of fear than anything. Um, because, uh, for the last 10 years I've been in real estate, but prior to that I used to work in, uh, dental, uh, practices and, um, Being that the current state of the real estate market is what it is right now, I am feeling like I'm back in, you know, the dental field where I capped at, you know, whatever, $20 an hour back then. And I guess that's where my question is coming from. I need to know if I'm doing the right thing, if I have—

What is your question?

My money and Um, I have way too many accounts and I feel all over the place.

How many accounts do you have?

Doing the right thing. I have 2 CDs, 1 IRA, 2 business accounts, another just savings account sitting there doing nothing. And, um, yeah, and cash that, um, I don't know if I, you know, should put them— the cash in into more of a—

How much money in cash do you have, hon?

Um, I think it's like $80,000.

$80,000? What's your, um, what are you trying to accomplish by having all these separate accounts? Is that your way of diversifying? What are you telling yourself by having all those?

Um, yeah, and I, I really didn't know that I could have a SEP IRA and then I just thought, okay, well, I'll just put them in CDs. And okay, I did well, simplify my last 10 years. Yeah, in real estate. And I have 2 rentals, and basically that's where my income is coming from right now. And that's why I feel like I'm back in the dental office, you know, because now I have to pay a mortgage, um, where I live. My condo is paid off, and Um, the rents are what's keeping me afloat. I pay the mortgage and then I'm back to, okay, my income.

I'm not sure what this has to do with the dental, but let's go through the numbers and see if we can simplify this. So you've got a paid-off condo. That's great. The two rentals, uh, do you carry mortgages on those?

One mortgage, yes. I just paid off a HELOC that helped me build the ADU that I rent, um, you know, from, from that.

So how much debt do you carry on the rental total rental?

Uh, $360.

Okay. And then the $80,000 in cash. What's in the savings account?

Combined with IRAs, it's almost $300,000.

No, no, no, just the savings account. What's in the savings account?

Oh, uh, the savings that's in, uh, that's like $30,000.

Okay.

And then what's in the 2 CDs?

That's The, there's 3 cities. Um, okay. That's almost 3, almost 300, 300,000.

Okay. And when, when do those mature? When are you, when do they reach their target date?

Uh, they have different dates. Uh, some on are on 5 months or 6 months.

How, how old are you?

I'm so nerv— I'm so nervous.

That's okay. Don't be nervous.

How old are you?

I'm 50. I've been a single mom.

Um, what's your best year in the real estate business?

Business? My best year was 2020, 2021 through '24, '25. I sold nothing, like zero. And '26—

why did you sell zero in '25?

Um, I was exhausted. I was burned out. I was building my ADU in '24. I got the occupancy certificate of occupancy in '25. I was burnt out. I was so tired. I'm a single mom. I, everything is on me. Um, my daughter is amazing. She just graduated from CSUN and, um, why were you burnt out?

You made more money than you ever made in your life. You were tired.

That's why you're tired.

Why were you burnt out?

Um, I hustled like big time, like a lot. Every day from 7:00 AM to 11:00 PM.

Um, so why not cut your hours back to normal hours instead of going to zero houses sold? Just cut the number of houses you're selling back.

Why didn't you do that on purpose? I think I was, I was working.

You said you quit because you were burnt out. That is on purpose.

And you said you're mostly living off of the rents. Yeah, the rentals.

Here, so yeah, go ahead.

Uh, here's what I would do.

I am, because I don't touch anything.

There's two parts to this question. There's two parts to this, Madeline. Number one is if you feel like you need to cut back on work working, uh, you can do that, but you still need to be working in some way. I don't think there's any reason that you shouldn't be selling any houses. I think that, um, there's just something there that you've got a mental block there. As far as this money, I think there's ways that we can clean it up. I would take the $300,000 and I would invest them. You can do a SEP if you want. You can do an individual 401. Maybe get with a smart investor and decide what the best, uh, option is for you for retirement. I think the savings for you, I would keep 6 months of savings in a high-yield savings account. If 6 months for you is around $30,000 to $40,000, that, that feels fair. And then the rest of that cash, I'd put it with the $300,000 and I'd invest that. And then if you want to simplify even further, I'm not sure, uh, but you might get to the point where you sell off one of these rentals to pay for the other, and that way you have one paid-for-in-cash rental that's generating cash, and then your own condo is paid off.

How does that sound?

I know it doesn't cost much to exist at that level. And you need to be working. You don't have to work 7 to 11. No, but you could work from 9 to 4. I mean, and do a lot of house sales because you're good at it. You just talked yourself into the corner of saying, "Oh, oh, I'm dying." You're not dying.

Yeah, go back and listen to this call.

You just need to slow down. You don't need to quit though, because you have the potential to earn a bunch of to income. And so yeah, I, you do a, what I would do is go to Ramsey Solutions and hit SmartVestor Pro, sit down with them. They'll help you put some of this cash together and do some real investing. But that only works if you can, you're not sitting on your butt trying to live off the rentals at 52. Go to work, girl.

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One of the biggest mistakes people make is thinking they can skip doing a will because they don't need one. I'm too young, I'm too healthy, I don't own anything. Not is the case. Not is the case. Not is the case. You can die at any health or age and anything you have will be dictated by the government. Lord help you if you don't have a will, including where your kids go. Yeah, so it helps protect your family. It gives clear instructions and can keep your loved ones from having to guess what you wanted during a difficult time, or from going at each other's throats. 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 best fits your particular situation. Amanda is in Minneapolis. Hi Amanda, how are How are you?

Hi, I'm doing well. How are you?

Better than I deserve. What's up?

Um, so thank you for taking my call. Um, so my husband and I are on Baby Step 5, and before we kind of go, uh, into saving for our children's future, um, we were kind of met with a mandatory very kitchen renovation, uh, that came up. We— it was a kitchen back from the '80s, and, you know, we had rotting cabinets and appliances were falling apart, and it was time. And so we felt with our finances where they were, we were able to save up. We did about a $25K budget for that with about $5K in fluctuation in case something came up. But the problem with that is that we experienced a huge mold problem that we had no idea. And so my question in this goes into, we have about $30,000 saved up for the renovation, and then we have another $30,000 in what we call our emergency fund. And my question is, should we be going into our emergency fund? And just to give a little bit more detail, we were told last Friday, I work for a big corporation, that layoffs are coming. And then our manager followed up shortly after and stated that our group was not safe.

And so my question is, should I be— right now I make about $105,000. What do you do? I work for Med Device.

What do you do?

Sourcing for the big med device company. Company.

What's your husband make?

Uh, he makes about $135,000.

Okay, so did you start your job hunt last Friday?

My job hunt?

Uh, no, you didn't. Hey, the guy told you he's getting ready to fire you. You need to listen, okay? You need to— you need to— you need a job by next Friday making $120,000.

What's the mold rent?

And then give them the finger as you walk out the door. Corporate America is trying to piss on you.

You better get ready.

Okay, it's come, it's coming. I mean, they're not kidding when they say your group's not safe. That's code for pack your bags.

Yeah.

Okay, what's the mold remediation cost?

Uh, right now they have told us it's looking about an additional $12,000 based on the rotting that they continue to find as they, uh, move So you said—

I have mold remediated many, many, many properties. The one thing I have found about it is it's a very emotional subject for the property owner, typically. And the mold remediation companies have a spectrum of work that they can do, from safe to crazy and drastic. And so that industry does not have good credibility because, in other words, I hear stuff anywhere from $30,000 to $4,000, and $4,000 absolutely will fix it in that case. And I've personally experienced that, taking bids and remediating mold. But it's so— it's like, "Your children are going to die!" And so that's where they start, right? And it's a problem. And so— and I've got, you know, we've got rental properties, and the renter calls us up and goes, "My children are going to die!" No, they're not. We're gonna remediate it, and remediate simply means get rid of mold. That's all it means. So I want you to get 3 more bids on this mold issue because anytime someone says that mold has taken over the house, I always want to make sure that really happened and is there something else we can do and, you know, what's the process we do.

Basically, we need to be rid of the mold and we need to seal so that it doesn't come back and get rid of whatever water problem it was that caused the mold mold in the first place? Have you identified that part of it?

Yes, it was a renovation that we did about 5 years ago that caused it, where a storm came in and it just caused a major leak. And so we know where it came from. It's already been dealt with.

Okay, good.

Obviously finished.

So we just got to tear out whatever rot there is and seal it and, and do the proper remediation. Then that might not be $12,000. It might be. It it might be. $12,000 doesn't sound completely unreasonable. So, but I'm guessing you've already torn the— you got no kitchen right now, right?

There's nothing there.

We have no kitchen.

No kitchen and no job. This is great. What a great week. And so, yeah, you've got to put it back. You don't have a choice.

Yes.

Okay, so I want you to get 3 more bids on the mold, the mold and the mold-associated rot repair. Get some more bids. It's different than the kitchen guy. You may or may not use the kitchen guy after that. And then if it is $12,000, you've got $30,000— $12,000— you got $30,000 in your remodel budget, right?

Correct.

And you've already given them some of that, right?

Yes, we've put down about 90% of our money already.

Oh, work that hasn't done yet?

On work that's not not done?

Uh, well, it was to get everything kind of delivered, and yeah, it don't take 90% to get it delivered.

Oh, that's scary.

It is scary. I hope they— I hope they meet your standards.

Yeah, so they have— so they have $27,000 of your $30,000, correct?

Oh boy.

Okay, can't breathe.

Okay.

And right now you've just got a hole in the wall, no cabinets, no nothing.

Nothing.

Okay. Gulp. All right, so, well, be careful how you talk to this contractor because he owns your butt. So in terms of getting the other bids on the mold and stuff, but I would get some other bids just to say, I need to make sure we're safe and make sure our numbers are right because I think I'm losing money.

Job.

Just tell the contractor that and then get some other bids. And then you have how much in your emergency fund again?

30. 30.

So it's 30 and 30. The two numbers are both 30. Okay, and you need 12 of that in addition the way it's bid out today to be able to finish the mold remediation and put the kitchen in?

Correct.

And just a question, which leaves you $18,000, and your husband makes how How much?

$135,000.

Can you live on your husband's income when you get laid off if you hadn't gotten your new job yet? Yeah.

I hope so.

Okay, good.

All right.

Have you plugged that into a budget just to see what it looks like temporarily?

Yes.

Okay, good.

And it's scary. Uh, we have 2 kids in daycare, which is obviously not cheap. Um, our mortgage is about $2,500 a month.

Um, it won't be there if you're not working.

Mm-hmm.

Yeah.

I mean, if you're sitting at home and we're living on his income—

Yeah, take him out for a couple months.

Yeah. So, all right, so here's thing. Thing 1 is get more bids and finish the kitchen. $12,000 or less, okay? Leaving you $18,000 and his $135,000 to live on when you get laid off. Thing 2 is go get a job right now, as fast as you possibly can. Making $120,000 and then quit and go, well, my group left. That's what my group did because we saw it coming. I mean, that— yeah, your group is not safe. That's some scary butt words right there. Yeah. All right, so there's something about that process that makes people think it's not gonna happen to Maybe it'll be everybody else but me. Yeah.

No, I'd be trying to get a job now while you have a job.

Get out of there as fast as you can. And your mentality is good. And make more money somewhere else as fast as you can. Well, I mean, I gotta get severance. My severance is, "See, you wouldn't want to be you." I'm done. Getting out of this place. Whew.

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$25 forever requires customers to remain active on Boost Mobile Unlimited plan. Welcome back to the Ramsey Show. In the Fairwinds Credit Union studio. Jade Washaw is my co-host today. Greg is in Seattle. Hi Greg, how are you?

I'm doing good, actually better than I should be.

Amen. How can we help?

Well, I'm 70 years old, retired. I have an $81,000 mortgage. Is there any reason I should not pay that off?

Nope, you should pay it off. And well, I guess there is if you only have $81,000 $1,000,000. How much do you have in your nest egg?

About $150,000.

Ooh.

That's good. That's your total nest egg to live on?

No. Let's take that cash, $150,000.

Okay. No, no, no, no, no. I said nest egg. What is your net worth?

Nest egg? About $1.8 million.

Now look at this.

That's what I thought. I kind of smelled that. Way to go, Greg. Congratulations. I don't guess you inherited that, did you?

No, I, uh, I worked for it the old-fashioned way.

I earned it.

Yeah, uh, right, right. Check and pay off your mortgage today, Greg. Okay, let me ask, let me ask it another way. Okay, let me reverse it on you. There's sometimes when I'm making a financial decision, I use this reverse engineering thing to check my logic. Okay, you got $150,000 in cash on a $1.8 million net worth. I heard that right? Correct. Okay, and an $81,000 mortgage. Okay, so if instead you had called me and said, Dave, I have a paid-for home— by the way, what's your home worth?

About $600,000.

Okay, I have a paid-for $600,000 house, a $1.8 million net worth. And I have $70,000 in cash. I'm thinking about going and borrowing $81,000 on my house so I've got $151,000 in cash.

Okay.

You wouldn't have made that call, would you?

No, I wouldn't. No, I wouldn't. I guess one reason I made the call is my interest rate is 3.875%.

Yeah, but you didn't get rich on borrowing on your home to invest.

Exactly.

You got rich by avoiding debt and investing steadily.

Okay.

Am I right?

You're correct.

Because you're not a debt guy. The only reason this debt's around is because it was so cheap, you just made you think about it twice. So the other debt you got rid of years ago, correct? Yeah.

Yeah.

That's how you got here because you're, You're what we call a Baby Steps millionaire. You follow the stuff, the principles that God and Grandma talks about, that you and me grew up with, only most people didn't do them even then, and you're one of the unusual ones that did. And so now you're what we call sitting pretty. Well done, sir. I'm so proud of you. Yes, debt-free! Greg's debt-free!

Yeah, and he worked for it.

How'd you get that money? I worked for it. So he's one of those guys like me. When somebody says, "You're so lucky," you just want to smack them.

Oh, yeah.

No, I'm blessed, but I'm not lucky. Luck came dressed in work clothes.

I know. That's right.

That's how it came. Luck knocked on the door and said, "You got some calluses handy? Put your hand to this." And that's where— that's where that came from. Yeah. It's not accidental and it's not random and it's not a lightning strike. Greg followed the age-old principle of living on less than you make and investing it. I'm so proud of him.

Way to go.

Very cool.

Very cool.

Gabby's in San Antonio. Hey Gabby, how are you?

Hi, I'm doing good.

Good. What's up? What's up?

So I recently got laid off from my job 2 weeks ago. And previously before that, I had, um, last year actually, I had the company closed that I was working for. They had been, and I had been laid off for 9 months. So I was just starting a new job and I was starting to get settled. I had moved to be closer to work, and I really enjoyed that new, um, city, um, since I grew up in a rural area. And I was budgeting and starting to get into the swing of things. I had even gotten a part-time job for the weekend to make sure I had a buffer in my budget. And then I got laid off.

What kind of work do you do that you've been laid off twice?

IT work. The first time it was because the company shut down. Um, again, um, um, uh, they were based up in a rural area and Uh-huh. It was a government job they closed off. And this time around they just decided not to move forward with me after the 6-month probation. Hmm.

Why?

Um, it was due to a project that I didn't know how to do. And I felt like, um, and, and I would ask the manager for help and, uh, I didn't get the help that I needed on that project. And, um, nor did I get all the information. Clearly for that project. So he based off my 6-month probation on that one project. Hmm. Okay.

Oh, what kind of IT work do you do, hon?

Um, that one was a network. Um, so it was dealing with switches and things like that, which, um, when I first started, I told them that I was willing to learn, but I was not— that's not what I, I would do help desk and other things like that. So they still hired me on even though— I mean, they knew my background that I would do, you know, help desk, fix computers, things like that, but that was a higher level. And they said, okay, no, don't worry, you can learn it. Of course, I wasn't— they expected me to do the project without training me. Okay.

Okay. The way you've approached this each time, I don't want you to ever tell anybody that again. Okay, that's right. 3 times you blamed them, and you took a job knowing that you didn't know how to do the job, and then you did not force help, and, and you're blaming them. Yes, they are also at fault. I don't really disagree with you, but if you're ever in an interview and you blame your former employer for not training you, you won't get the new job in the interview.

You got to have some personal responsibility.

Does that make sense? You follow my logic here?

Yes.

So I want you to reframe that in your head and go, "This was a bad choice. I should not have taken the job, and I certainly shouldn't have settled in like I was going to get to keep it forever, knowing that I didn't know how to do the job." And that I was— there's a gap between your knowledge and your ability to perform, and that's okay. We all have that in something, but then— and this company was not set up set up to do that. And you're young and you're just starting your career, so you don't know yet. You're learning the hard way to be forceful on— before I take a job doing something I don't know how, I have to be forceful about the processes that are in place to make sure I can learn fast enough so you don't fire me later. And that, that's, you know, that, that's part of the interview process for you. So I think your position is simply this: you need to get another job.

Yep.

And you learn from these last two things. Okay, I had a rule thing that folded up because it was government-supported. Learn something there. Took a job I didn't know how to do, didn't work out. Learn something there. So now let's go do it again. I think you still have a good knowledge base in IT, and I think you land yourself a new one. Hang on, we're gonna send you a copy of Finding the Work You're Wired to Do with an assessment in it. I want you to take that and and see if this is really the stroke where you want to go with your life. And if not, if you want to go a different direction, that's okay too. But you're young and you're learning, and this is an experiment. We found two things that didn't work. Now let's find one that does.

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Well, we wish we could get to every single call and question on the show. Huh, we can't. Sorry, I'm— there's just 4 lines and just 3 hours. I mean, all we do— we love you, we want to get to you, but we could do this 24/7 and still not get to everybody. But guess what? We can now because we have something that's 24/7. It's called Ask Ramsey. It's free. It's a free AI tool, and it's built and trained only on Ramsey answers. AI can only spit out what you feed it, so we only feed it Ramsey, and it only spits out Ramsey. How cool is that? You get an answer the same exact way we'd answer it right here on the show. Free. Ask Ramsey. Ask your question today at RamseySolutions.com. Ask Ramsey is the tool, or click the link in the description. You're listening on the podcast or the YouTube, and you'll find out exactly what we would say about that. Sarah's in Boston. Hi Sarah, how are you?

I'm doing great, thank you. Thanks for taking my call.

Thank you. How come We help.

So I'm just wondering if I am missing anything here. Um, my husband and I, we make about $90,000 a year. I do stay home with our 3 young kids, and we have a two-family house, and my mom is going to be moving in upstairs. And I think my, my main—

who was upstairs before?

Who was upstairs had a renter before who was there for 4 years.

Okay, so it is a duplex. It is a— it is actually 2 sets of utilities, 2 operating domiciles, correct?

Yes.

Okay, cool. All right, and Mom, you're gonna let Mom live up there. Is she supposed to pay your rent or what?

Yeah, so the plan is that she would pay us $2,000 a month. My concern is that we— that is a part of our income and long term, does that make sense? Because she is 64 and she's planning to retire next year, and, um, I'm not sure that I'll be going back to work anytime soon. Our youngest is 1, our oldest is 5.

I don't think you working has anything to do with it.

Are you saying she won't be able to— she won't have any income after she retires to pay the rent?

Is that what you're concerned concerned about? I think— no, I think she will have the income. I'm just concerned about never being able to increase it.

Okay.

I don't know if that's something, um—

okay, so 30 years from now she could be 95 and paying that.

Yeah.

Okay. Um, so is she selling a home to move in there?

Yes.

So she's going to have a big lump some.

Mm-hmm.

Why is she not just purchasing something for herself?

She wants to be close to the grandkids.

Purchase something close to the grandkids.

Either that or be treated like a normal renter where the rent goes up periodically.

Yeah, but if she's 65, when she's 85, I wouldn't have wanted her to— if she just called, said I want to rent from 65 to 85, I would tell her not to do that. I would tell her to buy something for her own own good.

Right. So that was a thought I had too, is that she moved in temporarily as she looked for like a condo or something.

Yeah.

Um, another reason why she's moving in is to downsize because my two brothers were living with her and recently both of them moved out. Good, good.

So how much is her home selling for?

Right now it's off market, starting off market, $765,000.

Is it paid paid for?

No.

What does she owe on it?

Hmm, maybe 5-something.

Okay, all right. So she could put a $265,000 or $200,000 or whatever down payment on something that is smaller, maybe a $400,000, a nice condo that's near you so she can be near the grandkids, and then her life is stable. She's not stable as she moves in with you unless you take the hit and don't increase the rents. So—

That's my concern.

Yeah, so I think that, Mom, here's what the plan is. The most you can stay here for your own good is 2 years. During that 2 years, I want you to purchase something that's good for you, for you to go forward and have a great retirement.

In.

Because here's the thing, you tell her you talk to the financial coach and he told you that, because I am, okay? Because for her, if she just asked me— if you hadn't called me, if she called me and said, hey, I'm selling my house, I'm gonna move in with my daughter, I would say do that only as a temporary measure and get out of there and get you a condo, $300,000 or $400,000, put down the $260,000, $250,000, whatever, get the condo paid off. So when you go into retirement, you're living in a paid-for property, and that stabilizes your most expensive part of living, which is housing.

But I will say, I mean, I'm just— this is a caution to you. Even if you put the caveat out there that this is only for 2 years, the minute you welcome her in there, there's a risk associated with that. Because if she gets comfortable and you guys get comfortable and you get lackadaisical on your own deal, this gets messy real fast.

Yeah, I've already seen it in the past. And I think my other concern is, um, she enables a lot of them. Don't do it.

Listen, don't do it. You've already said enough that you have enough misgivings about this, don't do it.

Okay, tell her to go rent a one-bedroom somewhere while she looks for a house. I think you think this is gonna go sideways. You keep saying it in different ways.

I'm just nervous.

I know you're— you think it's gonna go sideways.

You're nervous for good reason.

You've observed your mother's enabling. You've observed her inadequate behaviors around money, and you think it's gonna end up in your lap, and you're right.

Yeah, listen to your gut.

Okay.

Yeah, it's not mean. Mom, I think you need to own a house. I don't think you need to be a renter. And to encourage you to do that, I want you to rent a one-bedroom. I found a really cool one over here in the neighborhood. I'm gonna rent mine out. You shouldn't be paying $2,000 a month for rent. I want you to rent something cheap while you look for your new house or new condo so you're not spending much on rent. I'm gonna charge too much over here. It's not gonna be good for you.

Mm-hmm.

And I'll help you. I'll coach "and we want you to be around the grandkids. We want you around, but it's not gonna be good for you to be upstairs, and so, for so many reasons, so I'm gonna help you not do that." And just be kind and forceful and say, "No, because you told us 4 different ways why you don't think this is gonna work. We kept trying to say, 'Oh, you could do this, and you could do this.'" Oh, you convinced us out of it. And then it's like, "No, that's not gonna—" So, you know what this is gonna be. You just know it. Know, and you want someone to say out loud. So, okay, you talk to a financial coach and they told you not to do it. I'll be the bad guy. There you go.

I'll be a bad—

it's Jade's fault. Yeah, tell her Jade.

I'll take the blame.

I'll take the hit. You could get the hate mail, Jade. That's okay, I'll take it.

I can handle it.

You know, the funniest one was the first 2 years I was doing talk radio show, a lady called in And she goes, "We've been married 3 months and my mother-in-law's coming to visit for a week and we don't have a couch." And I said, "Well, you don't have any money. You can't buy a couch." And she said, "Yeah, but my mother-in-law's—" I said, "Tell your mother-in-law, sit on the floor." And she said, "What do you mean?" I said, "You don't have any money for a couch. You need to be a grown-up. No couch." Yeah. And she's laughing and she's like, "She's not going to like that." And I said, "She's going to like it." She's gonna love it, 'cause she used to have to do that, and she used to have to put up with a mother-in-law. And you be kind, and you say, "We got no couch 'cause we're broke, and we're getting out of debt, and we're gonna get a couch later. I'm sorry. We appreciate you coming to visit, but here's—" "Y'all, stay in a hotel." "Welcome to the camping chair." You know, and so, I go out to dinner that night, lady comes over to me, and she goes, "Hey, I was your caller today, and this is my mother-in-law." Ooh!

Ooh! And the mother-in-law's laughing. She goes, you were right. That's so funny. It's so awkward.

So hilarious. That is awkward.

This is my— I was your caller this afternoon. And when you're doing local talk radio, that stuff happens, you know? Oh, man. I was your caller about the couch lady. And this is the mother-in-law. Oh, you told her to sit on the floor. Yeah. That lady's going to call up Jade and say, hey, I want to meet you. You wouldn't let my daughter rent To me. Yeah, we'll meet you in a back alley. All right. I'm pretty strong.

I can take it.

You don't feel threatened, do you? No, no.

She's probably what, she's 60? I can take her. You can take her.

Hey, hey, hey, hey, Jason. I love it.

Oh, that's what— that's a new story. I've never heard that one, Dave. Oh, that's a good one.

You do talk radio long enough, you've done a lot of dumb things. I can just tell you. Well, that wasn't dumb. It was just interesting. But yeah, too funny.

Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles. Principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to ramseysolutions.com and try Ask Ramsey today. That's ramseysolutions.com. If you If you didn't know, you're more than welcome to visit us at our headquarters where we do the show from. We're on the glass in the lobby, and generally speaking, there's 50 to 200 folks out here, closer to 50 today, watching the show. I think school's back in. And we've got a big lobby, big bookstore. We've got free homemade chocolate chip cookies and coffee for those visitors. And you can sit and watch the show. We do it from 1 to 4 Central Time every day, Monday through Friday. Also in that lobby is This is our debt-free stage, and guess who's on the stage? It's Kevin and Ashley.

Hey guys, how are you? We're great, how are you? Better than we deserve. Welcome. Where do you guys live?

We live— we're from South Bend, Indiana.

South Bend, very cool. And how much debt have you guys paid? We paid off $30,000.

Alright.

Cool, and how long did that take? 12 months. Good for you, that's quick. And your range of income during that time?

We started with $30,000, and and we're at $65,000.

Wow. Way to go.

What do y'all do for a living?

I'm an administrative assistant for a women's ministry.

Mm-hmm. And I'm a full-time seminary student, and then I also work part-time for the school.

Ah, very cool. So how'd you pay off $30K making $30K? Well, we lived in a family friend's basement, so that brought our rent down. And we just were on the same page, and we just knew that we wanted to pay off our debt.

So we got a few extra part-time jobs and just worked—

But did you let— Kevin ate at all? Lots of—

whatever was in the basement. We had a lot of 15-bean soup.

15-bean soup. Okay, well, that's, that's not as much as a 20-bean soup. There we go. Wow, look at you guys. So, I mean, you really— you, you're, you're acting like, uh, broke college kids, uh, to knock out this debt. What kind of debt was it?

Uh, $23,000 of it was student loans, $7,000 was a car.

Mhm. Very Very cool. Okay, so now you're free and you're, you're continuing in seminary. Yep. And you're continuing as an administrative assistant. And, uh, so the plan is to get out of seminary and go into— be a pastor or what?

Yeah, so I'll graduate in about 2 and a half years and then, uh, would be a pastor. And then I've also talked to the school about staying on there, so— but I'm willing to serve wherever God calls me. So pastoral role would be great.

Good to be available. Good Good for you. And educated. There we go, both. Very good. Congratulations. So what put you on this track? What made you decide to go all Ramsey?

Yeah, so finishing up college right after we got married, we had the debt and the car loan, and we were making payments and realized we were just making no progress. And we said, we're just never going to be done making these payments. And that was discouraging. And we had listened to Ramsey, the show, a little bit. And, uh, we just said we need to sit down and talk about this and figure out our money with a real plan. And so we got EveryDollar, and, uh, we were like, we're just gonna go for it. And so we, we made our first budget because we said someday we want to have a house, and we, we want to have things, some things that we want, and that would be good for raising a family. And we want to go out on a date every once in a while. And so we made a budget and started doing it.

So what about the friend's basement? Did they approach you or you approached them?

Uh, we approached them. I had known them for a while and known that they'd, uh, housed some other people who were especially looking to go into ministry. So, um, I just said, hey, we need somewhere cheap to live, are you guys available? And they said yes. So that's where we started.

Well, there you go. All right, very cool. So is it, is it cool to ask what they're charging charging you?

Oh, well, we're actually not there anymore, so that was, that was like the first step. We were there for a little less than a year.

Um, okay, and that knocked the debt out.

So we're out of the basement now. We're out of the basement.

Yeah. Okay, good. Yeah, Ashley's happy. Yeah, in a real apartment now.

Yeah, no more basement, no more bean soup. I love that for you.

Life is so much better. I like it. We're free. Okay, this does set you up though. I mean, you guys really, you sacrificed at a time when things were already pretty lean because you're in school. And then on top of that, you sacrifice even more to go ahead and clear the debt so that when we can come out, we'll come out swinging, right? And there's a lot of stuff you'll be able to do now because you don't have this weighing you down. But it was kind of an inopportune time to attack this, agreed? Yeah. Yeah. But you both did it. Ashley, did he have to talk you into it, or did you talk him How did you talk him into it?

At first, I was a little bit hesitant, but it didn't take very much to— You're like, "I'm committed to this." Yeah.

Yeah. "Let's get rid of this mess and get it behind us." How's it feel to be 100% free?

It feels really great, Dave. It feels freeing, and we are able to save for a home now. And when I finish seminary, we know that we're gonna be ready to move wherever God calls us to serve. So it feels very freeing.

You know, as a person of faith, as a fellow Christian, I've run into this a lot over the years of people who are serving one way or another. One of the places I run into is like people that— young people that want to go on the mission field. "But I've got $187,000 in student loan debt." You know? And well, you're not going on the mission field because you've already— you already made that decision accidentally. Accidentally when you decided to go so far in debt you couldn't breathe because on the mission field nobody is going to give to you to pay off your student loans. They'll give to you to eat and maintain a household while you do mission work, but nobody is excited about supporting $187,000 of student loan debt. And so you really do get to live out in that setting. You mentioned twice, "Wherever God calls me to serve. Wherever God calls me to serve." You're living out that scripture where Jesus Jesus said, "It's tough to serve two masters." You will love one and hate the other. And what that means, of course, you know as a seminary student, is that you've got to make a choice.

And I've got to pay the bank, or I've got to go where I feel like God's calling me. And I can't go because I've got to pay the bank. And so, the borrower truly is slave to the lender then. You can't listen to God's voice as clearly, or at least you can't respond to it as clearly. As you can now that you've set yourself up in this situation. It's very cool. I'm very proud of you. Thank you. Who was cheering you on?

Uh, parents and grandparents. Really? Yeah, they, they helped us out in any way they could, and they were just always there for us. And we did laundry at their house, so that's fabulous.

Yeah, very cool. Good for y'all. Well done, well done. Well, we're proud of you. I know they're proud of you. Congratulations. And so how How long before the seminary's finished? 2 and a half years. 2 and a half. I think you said that, but I want to make sure I heard it. Okay, very good. And paid off $30,000 in 12 months making— All right, here we go. Kevin and Ashley, South Bend, Indiana. Paid off $30,000 in 12 months making anywhere from $30,000 to $65,000 and lived in the basement. Whatever it takes to get debt-free. Count it down, let's hear a debt-free scream! Free!

3, 2, 1. Word up, free!

Yeah! Woo-hoo-hoo-hoo!

I love it! Well— A major sacrifice. I can't tell you how many people I know that are people of faith, Christians. You do too. We've both experienced it and watched it, that God has blessed them financially. They've done really well financially, financially, and they let somebody live in their basement or let somebody live in their condo. And I've got one friend, he has one condo that's just dedicated to missionaries when they're home. He just leaves it open and they have a place to stay when they come home. That way they don't pay a hotel, they don't have to live in a hotel, which is not as fun as a condo. When they come home for 3 months or something like that. Which is a short term. And it's all he does, it's what he does with the whole thing. And sometimes he has weird stuff happen, but most of Most of the time, it's just a great joy to be able to be generous. So, that other couple— We're doing the same thing. —that's living like no one else, so later you can live and give like no one else, they're on the other side of that, letting this little seminary student couple, brand new marriage, have a place to stay for almost nothing.

Not fancy, but we're not trying to be fancy. We're trying to get out of debt. Yeah, getting the job done. And that's truly beans and rice. Only they did 15 bean. 15 bean.

Have you had 15 bean soup? I didn't know there were 15 beans.

Well, I wouldn't— that's not a Southern thing to make soup out of 15 beans. That's not something I've run into. We'll have to learn about that when we talk to them again. Yeah, we will.

We will have to learn about that.

When I said beans and rice, I didn't know I meant 15.

That's to a whole different level.

Yeah, a lot of 15 bean soup. But in the South, I guess we'd have pinto beans, or we'd have white beans and cornbread.

Black-eyed peas. Blackouts, yeah, we're getting close.

Yeah, we keep counting up, we might get to 15. Tuna fish. Oh, go away, get away from me, gross.

I knew that'd get you.

Oh, uh, I always just runs a little chill down my backbone.

It's a scary sandwich. I love it.

Cat food. Hey, I'm proud of them. Great, great young couple. How fun is that? Way to go, guys.

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, 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 of the Day, Colossians 3:17. And whatever you do in word or deed, do all in the name of the Lord Jesus, giving thanks to God the Father through him. John F. Kennedy said, I would rather be accused of breaking precedent than breaking promises. Oh, there we go. Shooting sacred cows instead of breaking my word. I like it. Jeanette is in Pittsburgh. Hi, Jeanette, how are you? I'm good, how are you? Better than I deserve. What's up?

Hey, so my husband found out about 2 weeks ago that he's going to be losing his job at the end of December. And my question is, should we stop contributing to his 401 now, or should we wait until his time is done before we stop contributing? And then also, what should we do after he's done with the company? Should we— how should we refinance or, you know, roll over that money to make money for us? Good question.

We teach to always take your 401 with you and roll it to an IRA. And so what I would tell you to do is go to RamseySolutions.com. And find a SmartVestor Pro, which is someone in the investment business that we recommend. They'll have the heart of a teacher. And then you do what's called a direct— when he leaves, you do a direct transfer rollover. Now what that means is that you sit with a SmartVestor Pro and you say, I want to put the 401 in these 4 mutual funds, and I want to roll it over into an IRA in those 4 mutual funds. And you sign all the paperwork paperwork. The paperwork is then sent directly to your husband's HR or former HR department, and they will send the money directly to the mutual fund. That's called a direct transfer. You have to do it that way or you're going to get messed up, because if they send you the check, they are required by the federal government to withhold 20%. How much is in his 401?

K? He has about $200,000.

Okay, and so they would withhold $40,000. You'd get $160,000, but you're required when you do a rollover into a 401 from a 401 to a Roth to put all of it into the 401 or into the new IRA within 60 days, or you will be penalized. And you don't have all of it in the scenario I'm talking about, about, because they've sent 40% of it to the government on withholding, and you won't get it until April. Okay, so don't do that. Let the money be direct transferred and pick out the mutual funds. We suggest, and I personally do, Jade does, Sam does, Jade and Sam, Dave and Sharon put ours across 4 types of mutual funds: growth, growth and income, aggressive growth, and international. Traditional, and I put a fourth in each, so about $50,000 in each. Now, what does he make a year?

He is making about $48,000. Okay. What's he do? He's a warehouse employee, so he works for a communications company, but he does, you know, load, doing, taking all the stuff in and taking it back out.

Why are they laying our rabbi off?

Um, I think they're just looking to close down that warehouse. Um, there's kind of a merger going on.

And how long has he been there? 26 years. Wow.

Yeah, so they're offering him a severance. I mean, he is going to get a severance.

So that's a good thing.

Um, 39-week severance at his current rate. Okay, so at least we have that. And then I, I— as soon as, you know, December comes, we're going to start looking for a job for him.

No, I'm hoping that we can— we're going to get a job. Between now and December that starts at the end of January.

But you start looking now.

Okay, you know how fast Christmas is gonna be here? You blink and it'll be here. Don't— I do. Yeah, don't blink and go, well, we got 39 weeks. No, listen, here's the plan. The day he gets laid off and they send it— they put him— sign him up for the severance, a week later he starts the new job. That means you just gained a signing bonus of 39 weeks. That's right.

Okay, now should we stop contributing now to his 401 and work on paying off our debt? I mean, we do have a little—

you should have already done that regardless of being laid off. I'm sorry.

Yeah, how much debt do you have? No, we're definitely trying. I mean, I've been trying.

You're not trying.

You haven't stopped contributing to it.

Well, the problem was, is I got— I was let go last year unexpectedly, and That kind of—

that doesn't keep you stopping to contribute.

No, what Dave is talking about is the best way to pay off debt quickly is to temporarily pause your investing so that you have all of your income to throw at your debt so that you can pay the debt off as fast as possible. So in your, in your situation, no matter how much debt it is, go ahead and temper— it's a temporary pause, right? Pay off the debt, and then once you've stacked up 3 to 6 months of expenses, now we can press play on investing again. Do you guys have any savings?

Uh, no, not really. Um, I've been really just trying to pay off the debt. Um, and then like I said, I lost my job, so we kind of got set back a little bit.

How long ago did you lose your job?

Um, I lost it last November, but I got a new job in January, so I've been, you know, trying really hard. My son just got married, so we were helping them with the wedding as well. Um, so there was just a little bit of a delay there. Um, but we are definitely back on track. Like, he's gotten a second job. Um, just, we're just trying to pay this stuff off so that we can temporarily stop all investing and saving.

Okay. And focus every ounce of energy you've got on reducing debt.

How much debt have you got? Um, it's $13,000 in credit cards, and then we still owe on our house.

Okay, so only $13,000 and you're done.

The feeling you've got to have, the feeling you've got to have around this is, is a never again feeling, because you experienced the job loss last November, he's experiencing the job loss now. And that would feel completely different if you had no debt with 6 months saved, wouldn't it? Right. So, that's what you've got to tell yourself is there's going to be another storm at some point in the future. And when that happens, I'm going to be ready. I wasn't ready last November. I wasn't ready this time. But the next time, I'll be ready. And that preparedness starts today, right?

Okay. Yeah. Yeah, very good. So, Jeanette, I want to reiterate, because I really think you drove by this on me. Get a job. You have him get a job now. Start working on it now. Do not wait because it's gonna sneak up on him. And December is not a good month to look for a job. No, it's not, right? So September for sure. I want him to have several good leads, if not already figured out, that says, okay, I'm gonna have to start late. I can't start until January because I'm getting 39 weeks severance. Unless you want to pay me for the 39 weeks, I can't start early. Early, but I really want to come to work here and I want to come in January. And he starts shopping around and looking for that position. It's going to take a little while to land something. He's not used to doing it. It's been 26 years since he went on a job interview.

Right, yeah.

So don't wait. Just because there's severance doesn't mean he gets to sit on his butt.

No, no, no, he definitely doesn't.

I know, but he's going to be sitting on his butt if he doesn't have a job.

I'm trying.

So we got to line him up a job. He's got to be ready to go January 1st, if they lay him off, you know, first week of January, they lay him off last week of December. Wow. But 39 weeks of severance, so 6 months, 7 months, 8 months, which is not much for 2016.

It's not much, yeah, and if you're not careful, it can make you kind of lull you to sleep a little bit.

Yeah, it acts like it's a lot of money. "Oh, I got 8 months." No, you don't. You get to put that 8 months in your pocket, extra money to build wealth with, and turns this job loss into a blessing. That's right.

The goal is not to have to touch that.

That's the goal. That's the thing. And turn it into a signing bonus by getting your timing lined up and your dominoes lined up, and then push that end domino and go, "Go, baby! Go! Here we go! Go, go! Get it! Get it! Get it! Let's go!" And that makes all the difference in the world. But the human tendency is to act like December's a long way away, 39 weeks is a lot of exit ramp, "I'm okay, everything's okay," and you're gonna look up and it's gonna be December the next year and you're me going, "Well, that's when we went through the hard patch." Yeah, because I didn't get off my butt and go get a job.

Now consider it a blessing to know.

Oh, and by the way, if someone offers him a job for $75,000 this week, forget the severance. Gotta go get it. Take it. That's more than your severance is going to be. Take it. Yep. He might have— he might figure out he's worth more than they've been paying him for the last 5 years. This could be, if you treat it right, the biggest blessing that's happened in years, because it pushes you out of the nest and makes you go fly.

Oh yeah, you gotta— you have to believe that that's a possibility.

It's as big a possibility as a crash. Yeah, but you better get after it while you can. It's good, good stuff. That puts this hour of The Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace. In Christ Jesus.