Transcript of Focus On What You Can Control And Start Crushing Debt

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Normal is broken, 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. The phone number is 888-825-5225. Alongside George Campbell, I'm Ken Coleman, excited to to have you with us. We get it started off right now with Mary in Dallas, Texas.

Mary, how can we help?

Hey, thank you for having me. Um, so I, I've been stuck in kind of like a situation where I really— I'm newly married and I don't believe in dates, and I really love what you guys preach. I'm trying to get my husband on board. He has— when we got married, he has like over $35,000, $40,000 in dates, and that's okay. So I was trying to encourage him to get out of debt, use my salary to— use my salary to pay his debt, but he currently lost his job in last year and he has no motivation in trying to find a new job. So I'm always trying to like— my money, all I do is just pay bills, mortgage, and by the time I'm done paying, there is nothing left. So it just feels like I'm never getting ahead.

Wow.

So sorry, Mary. I mean, I can think of one way to stay motivated, maybe providing for your new wife. Is that not on his radar?

Providing for his new wife?

You.

You said you just got married to this guy. He doesn't have a job. You're struggling to pay bills and you say he has no motivation to work.

Yeah, he lost his job. So his excuse is like, oh, I can't.

Did he get fired? What happened? Is he, is he in a depressive state because of this?

Yeah, he got fired and he's, he's kind of like really, he's kind of really confident that I'll get a new job and he'll only apply like one job in a month and it's been 6 months now and really like no motivation at all. If he gets out of his 401k to pay some of the bills, like to pay some of his debt, he took a withdrawal from his 401k to pay bills.

And cover his debt payments?

Yes, because my salary can't pay all his bills.

Oh my goodness.

It can only cover— my salary can only cover mortgage and the house bills, not his bills.

Well, the challenge is there's really no answer. We can't give you a step 1, step 2, step 3 on this. I really can't. This has to be a very, very serious marriage conversation. Have you confronted him about this to say, "Hey, I don't think this is sustainable. We can't keep doing this." My salary is not enough to take care of all of this. We're falling behind. I feel like you're not applying for enough jobs. What's his response?

I haven't. His family has encouraged him to like to even just take any stupid job, like to just pay bills, but his pride will not let him to take anything. He's just like, until I get something that is comfortable for me.

Yeah, but I mean, okay, okay, I appreciate that. And you've identified that it is pride. I assume that he's calling it pride as well.

No, he doesn't. No way. Like, he still does. He still thinks he's always— I don't know.

Have you shared how uncomfortable and how afraid you are?

Yeah. And he sees me cry when it comes to bills, when it comes to—

What does he do?

I'm sorry.

What does he do when he sees you cry? He just says, I'm sorry.

I'm sorry. And that's it.

Well, you know, again, there's nothing that we can say here. I mean, this is a— you have to tell him that if you can't help us, then is there an us? You know, I mean, it's that serious. This guy is just kind of waving at every day, kind of going, well, I'll just do this. Hope it works out and there's just no urgency and it puts you in a very tough position. And I don't have some magical answer. George, I don't know what your thoughts are here. This is very, very frustrating for you.

Yeah, well, I do think you need to make it more clear how serious this is. And it sounds like he's disassociating is what we call it when he's just going, well, I'm just gonna sort of numb out because I don't have the willpower to do anything about it. Is that what's happening here? Because you got married to this guy because you wanted the companionship, because life is better doing it with someone else, right?

Yeah, I even— I see, I see some jobs and send him— send them his way. Like, everybody's trying to give him leads about jobs, but it's just the motivation for him.

What was he doing for work and what was he making?

He was making $130,000. He was an engineer.

Engineer making $130,000, and he's been applying for engineering jobs, or he applied for one?

He's applied for engineering jobs.

And why did he get fired?

They say he threatened his boss.

He threatened his boss?

Mm-hmm.

Okay, so how long you been married to this guy?

2 years.

Yeah, I mean, I think you have to get his attention and go, we got to talk about our marriage. I've already brought up all the money stuff to you and you're not doing anything about it. And you're not in a good place. You were in a bad place. You're in a bad place if you threaten your boss. Can we agree you're in a bad place?

Yeah.

Okay.

He doesn't believe— he still doesn't agree that— he thinks it was unfair that he was let go.

Well, there's a lack of ownership all over the place with this guy. Is that the case throughout your marriage? Yeah. It's never his fault. It's always someone else's fault.

You got to take care of you right now. I, I think, I think this is a legit conversation about separation to get his to get his attention. But at this point, if he's willing to go to marriage counseling, you're gonna have to figure out how to afford that, 'cause you guys are broke. But I would give that a try and get a therapist in the room with you two. You gotta try that. But I wouldn't keep letting this guy just put all the pressure on you and show no desire at all to help out. So, you know, at this point, how can you make more money and, uh, you be in control of the finances so this guy can't wreck you anymore.

Yeah, I wouldn't be concerned about his debt right now. It's about covering the four walls and protecting yourself. So the first thing you cover is going to be your mortgage. You guys own a home or you rent?

Yeah, we own a home.

Okay, so we're going to cover the mortgage, we're going to put food on the table, we're going to keep the utilities on, cover all of those bills, and cover your transportation needs. Outside of that, If you can't pay for it, you can't pay for it. If you can't make the minimum debt payment, so be it. I'd rather have the credit card companies mad than your house being taken away from you. Okay, so you come first. Don't cover his bills. We're not covering anything for his lifestyle. Yeah, in fact, you may want— if this isn't going well and counseling is not an option for him, you may want to create your own separate account so that he doesn't start to drain it. That's right, in his depressive state.

We've never joined accounts.

Okay, so it's separate, your money goes to your account, and you're paying all the bills from that one account?

Yeah.

Do you have a full picture of his finances? Do you actually know how much debt he has?

It's around $45K.

And what kind of debt is that?

Mortgage, school loans, he has a personal loan, and his car.

And none of that is in your name?

None of it is in my name.

Great, well there's the good news. So that's the best news of this entire call is that he can't drag you down. You can take care of the mortgage. I think you need to be thinking about how do I make more income? How do I create, you know, an emergency fund? How do I create more margin so that his destructive behavior and what he's doing, by the way, is destructive. He's not doing much, but it's destructive. And so you got to take care of yourself right now. And we're hoping, we're hoping we can get you guys in some therapy and that you guys figure this thing out, but you got to protect yourself right now, unfortunately. And we're so very sorry to hear that you're going through this.

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All right, let's go to Kayla in Miami, Florida. Kayla, how can we help?

Hi, how are you? Um, so right now I'm at a crosspoint. My father just told us that he doesn't have enough money for retirement. He's been retired for several years. Um, he's been retired for about 8 years, and, um, basically he's been living off like an annuity that he thought would have covered his mortgage. He still has a mortgage, about $300,000 left on it. And right now my family and I are deciding how we're going to approach this. Do we bail him out, essentially pay off his mortgage? Um, or, you know, do we have him sell his house, move to a cheaper area, uh, cost of living area? So keep in mind, you know, that $300,000 is what my family and I would use for our retirement once we're at that age.

So Why?

What do you mean?

The $300,000 is what you would use for retirement?

No, like investing that for our future retirement, you know, like as an inheritance. No, no, no. Like, so we have— we— my father owes like $300,000 on his mortgage. Yeah, we were thinking that like that's a debt we can essentially like— exactly, help out Dad and basically give him like 20 grand every year to pay off his mortgage because I don't have $300,000 laying around. And so that was our thought, but at the same time, that's money that we otherwise would be using to investing.

Yeah, you guys are going to be in the same spot. Your kids are going to be funding your mortgage. It'll be a wonderful generational gift.

Yes.

So this is definitely a bad plan to bail dad out after he did some real poor planning. Now, I'm not saying we need to be cruel. We don't want him on the street. But I also don't want you artificially propping up his life for the next 20 years.

Yes.

How old is he?

He is 71, and on top of that, his mother, my grandmother, lives with him, and she had no retirement at all and doesn't qualify for like anything because she immigrated to the country like a couple years ago. So it's kind of like a series of bad decisions. I'm fortunate my husband and I do extremely well, and it wouldn't be my children's burden, that will be for sure, because they're pretty much already taken care of for their life, for their major events in their life. But I just find like I'm having a moral dilemma with You know, that's money I otherwise would have lost my children. So I don't know what to do.

Have him sell the house.

What's it worth?

The house is worth like $700,000. So that was my thought to sell the house. But then he kind of says, well, then I'm going to go move somewhere really far away. And then, and then I kind of struggle with like, well, then you're leaving your grandkids.

You know, why does he have to move super far away?

I feel like South Florida is pretty expensive because even if you go downsize into a condo or a townhouse, those HOA fees are still pretty high. You'd have to move a lot further.

OK, so what would a rental cost that's reasonable, that's somewhat in the vicinity?

Probably like $2,000 for a one-bedroom, no-frills, more or less.

OK, so that's $24,000 a year. And if he has $400,000 in equity, and he invests that money, it could spit off $20,000, $30,000, $40,000, $50,000 a year. So that would essentially cover his rent.

Okay.

I'm trying to figure out a way for him to be independent and not relying on you guys forever. 'Cause how old is your grandma?

She's 93. They seem to live very long in my family.

The genetics are good, the financial decisions are bad.

Remind me, how old is your dad?

My dad is 71.

Yeah, I, you know, here George is giving you great advice on the money stuff, um, he can weigh in further. I'm just listening to this and I'm listening to a very good daughter, but I'm also listening to a very good daughter who has worked up in her mind this burden that you have to carry. And once we solve the one burden, then you immediately gave us another burden. So we said, well, then sell the house. That was one of your options. It's great, gets him, gets him in better shape, uh, and you can, he can go somewhere else, pay cash. And your immediate thing was, well, he's gonna have too far away, and that's too far away from my kids. And I feel like we're creating problems that aren't really problems. Feels like you've got too much of this, uh, kind of stuck because it's not a moral— you kept mentioning the moral. There's nothing immoral about the situation at all. So I'm just trying to maybe— I'm trying to free you, uh, by giving you some feedback here. I'm for you. You're a great, great lady, great daughter. Phenomenal. Your heart's in the right place.

I think your head's in the wrong place.

Yeah, exactly. And then I feel bad about, you know, to my own family, my own husband who works very hard. I work very hard, you know.

Well, that's where your head should be.

Yeah, your responsibility is to your own immediate family first.

Yeah, I, I—

that's your household.

I agree with you on that. You should be making good decisions for you and your kids. Dad's not your responsibility.

Yeah, and I— and he's not putting it on me, but at the same time, I feel like he sacrificed so much to put us through college to then get us to the point, like, where we're making so well money only because of him, not my husband, just like for me and my other siblings. So like, I think that's where that dilemma comes in.

Like, this is false guilt.

It's false. Yeah, I guess so.

You can honor him without bankrolling him.

Give him some good advice.

He could downsize and buy something for $400,000 in cash further out. True. It's not going to be as nice, not going to be as fancy, which would, which would solve the problem you're trying to help solve, correct?

Yes. Yes.

And what is his foreseeable income for the next 20 years? How much is this annuity spitting off and for how long?

Well, the annuity ends in like a year, so he was supposed to use that annuity to pay off the mortgage and he never did. Instead, He, like, just enjoyed— I think it was just like lifestyle creep. Like, he was just enjoying his retirement, and not in like an extravagant way because that's not how he is, but like—

but he was irresponsible once again with this annuity. And then what's going to happen if you guys are now funding his lifestyle and he gets comfortable?

No Social Security coming in?

He does, so that's what he would rely on, and that's like going to be like That's about like $3,700 a month.

Okay, so that's our number. How do we live off of $3,700 a month?

And if you've got no house payment, he can do that. And by the way, I wanna remind you what you just told us when this guilt starts to creep in. Oh, my dad sacrificed for us. Yeah, he did. Not taking any of that away from him. But he also did not use that annuity how he's supposed to. You just said it. So you gotta have, you can't have both of those thoughts in your head at the same time. So you gotta choose the one that is the most accurate. And the most accurate is, he squandered his money putting himself in this situation. Not, my dad sacrificed so much for us and we aren't taking care of him. That's a false narrative and that shouldn't be in your head anymore. When it pops up, you need to immediately replace it with, my dad is a grown man and he was not responsible with his money. And gosh, I feel so sorry for him that he has to sell his house so that he can stabilize in his, his final season of life, but that's what he's got to do, and that's what I'm going to recommend to Dad.

And then I'm going to wash my hands of it. That, that may sound heartless, but it's not. That's what protects you from overthinking on all this stuff and emotionally getting sucked into something that you're not supposed to be involved in.

Now, just out of— like, out of— if you had the money to pay it off, would you pay it off? And then look at it as like a way, like whenever he passes, you'll sell the house and almost like it's an alternative investment.

I would not try to justify this as anything other than I am gifting my dad something that he simply cannot pay because I love him and it's a small part of our financial world and it's not going to set us back. And it sounds like you're not at that point right now.

What? I'm sorry. At what point?

You don't have $300,000 sitting around, right? That's what you said earlier.

Not like a hundred. I mean, they're in assets, but not—

yeah, we're not going to sell off our retirement to cover Dad's mortgage. So if I'm in your shoes, what I'm going to do is love him in the way of saying, hey Dad, you're going to need to downsize. We can't afford this. You can't afford this. We're going to help you create a budget for this $3,700 to make sure that it covers all of your bills and you can enjoy some life, but it's going to look different. This is your boundaries. Versus, hey dad, he's 93 and now it's— he wants $2,800 a month from each of the siblings to cover his lifestyle. I would not go down that path. There may come a day where he has to move in with you and you take care of him just like he's doing with your grandma, but I wouldn't make that day today.

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All right, let's go to Manchester, New Hampshire, where Bonnie joins us. Bonnie, how can we help today?

Hi, thank you for answering my call. It's my birthday, so this is the best.

Happy birthday, Bonnie! How old are you today?

Thank you, thank you. I'm 30.

30? Oh, that's a big one.

Do you feel like an adult now?

Yes, I officially feel old.

No, no, no, not old. My gosh, careful. Careful, you're gonna offend people that are seasoned like I am. Uh, but congratulations. Oh, okay, gotcha. Well, now you are, you are entering a decade where at some point you will just wake up one morning feeling like you had a great night's sleep, and as you begin to move, you feel as though someone was punching you the entire night. And I can't explain that, but that's the reality.

Science can't explain science. So I already, I totally understand that already. Well, we're there for you.

Okay, how can we help you today?

All right, so I am an occupational therapist and my husband is an engineer, and right now we're in about $113,000 debt, and $96,000 of that is student loans, and I have about $13,000 in personal loans, and that comes from a truck that we had paid off and sold, and then, um, we redid our basement because our house flooded a lot, so Um, but my question today is, how do I pay off my top student loan, um, when the interest is compounding almost every week? I log into my account and my, my loan has been about $79,000 for years now, and I'm at my wit's end just trying to pay that one off because it's the largest. And I do want you to know that I am doing the debt snowball with all of my other debt besides that $79,000. but I get so discouraged. How do you do both at once?

You're either attacking the smallest one or you're attacking the one with the most interest.

So I have them listed out in order from smallest to greatest. And I'm definitely throwing most of my extra money at the smallest one. But I am throwing more at the highest school loan as well. So my, my minimum payment was $314 just to cover the interest for the highest loan, and I decided to throw a couple hundred more dollars towards that one just so I could get ahead. And it's, it's just still growing, so I don't know, um, I just don't know how to go about it. So, I know this sounds crazy, but the $79,000 is made up of about 19 small school loans. It's a federal loan, so they're all between 4-6%.

OK. So none of that is crushing. I know it feels like a lot, and there's a big balance there, but it's actually great that they're split up. Because that means you're going to see progress faster than if you were attacking this as one giant loan. So what is the smallest balance?

So it's really confusing because—

It's not. Just go down to the bottom of the list and tell me the smallest balance.

So when I pull up that on my computer, it doesn't have it listed smallest to greatest.

Sort by smallest.

I know this is such a confusing—

You should be using EveryDollar, Bonnie. I'll give you EveryDollar. It'll sort it for you. I think the spreadsheet is where this went out of whack.

I actually have it, and I stick to it every month, but I'm just trying to organize it in my brain to make it sound less confusing.

The human brain is the worst place to organize anything. It's a junk drawer up there. All right, could you two move forward, please? I'm trying to get to the bottom of this. What is the smallest balance?

Let's just speak philosophically at this point since we can't figure it out.

If a third grader looked at your spreadsheet, they would find the smallest number to be what?

It's about $800. Boom! Okay, there we go.

What are you guys bringing in per month? $9,500. Great. Why is this loan not paid off yesterday?

So because that's, that's only a snapshot of all of my debt, like it's only a little portion. So my— I'm just gonna read off what my spreadsheet says here so it'll be less confusing. So my medical debt is $33,000. $190. My basement, I owe $5,000. My next school loan is $6,000. My husband's truck that we sold, and we were negative underwater with that, and we owe $7,000 on that. My next school loan is $11,000. And then the big one that I'm specifically talking about right now is $79,000.

But that $79,000 you said is split up. It is. So it's not really $79,000. It's $800, $2,000, $3,000, so on and so forth.

Right. Right.

So that's how we're actually looking at this. Don't look at it as a $79,000 loan. Split everything up. 19 of those in the spreadsheet, looking at the smallest balance. That's where your focus goes. So out of the $9,500, how much extra do you have each month to throw at the smallest debt if you stop this avalanche deal?

Probably $2,000.

Boom! Do you see what just happened there?

You actually cleared a debt. I guess that's why I called in, because I've been so confused. So, total, I have 25 loans instead of 1, 2, 3, 4, 5, 6.

Yes, 25 loans, and we're just going to work our way down the list. That's it. And if you guys are living off of $7,500, that includes your minimum payments, right? Minimum payments plus all of your expenses are $7,500, and you have $2,000 left to throw on top of that smallest debt. So now the game is, how do we get more of that margin? How can we make more? How do we spend less? Are you guys doing any investing whatsoever right now?

No, we put that on pause.

No match whatsoever? No.

I'm trying to look for another job at night when my kids are asleep that I could do from home, which was something else I was going to get to.

That's awesome! I love that you have that level of intensity about this. Do you guys have anything in savings? You have $1,000 at least? We do. Yep.

Anything above that? Just $1,000.

Just $1,000? No. Okay, great. So you're so close to doing this plan full-on. We just need to switch our brain around this debt avalanche thing. I think that's what's screwing you up. Okay. It's causing you to stall out because you're trying to do 3 things at once. Just try it my way for 1 month, Bonnie, and see if you feel better. Because a lot of getting out of debt is emotion. It's behavior. It's The psychology of it. It's not the spreadsheet that's the enemy here. It's the person in the mirror. And we can solve that with this amazing income. They're bringing in $10,000 a month. I'm going, I think there's some expenses we can cut out of that $7,500.

And that's your homework assignment, Bonnie. Where else can we cut? Can we sell some stuff? You know, between cutting and selling, can we make another $5,000 dent? It's a good question. Maybe you can't, maybe it's only $2,000, but that's the mindset. Where there's a will, there's a way. That still works. Let's go to Gina in Salt Lake City. Gina, How can we help?

Hi, hi, hi, George. Hi, Ken.

Hi, how are you? How can we help?

I have a question that kind of centers around how to prioritize, um, my husband and I's finances as we near retirement.

Okay. Hit us with the question.

Um, so we are, about 6 years out from retirement. And right now we're both doing 401(k) with our employer. We have a mortgage and I think that we have enough in our 3 to 6 months. And I'm just wondering the excess that we have each month, we bring in Uh, roughly $6,000 take-home, and our expenses are roughly $4,000.

Great. That's after investing?

Uh, yes.

Great. So you got $2K left over and you're wondering what to do with it. Yeah, because what's your more— what's left on the mortgage? What's the balance?

What's left on the mortgage balance? It's $91,000.

Love it. Okay, are you investing 15% of your household income?

I have a 401(k) that I'm putting 11% in and then my employer matches 4%.

You should be investing 15% and then your employer matches on top of that. The match is gravy on top in Baby Step 4. This is what I would do in your shoes. Make sure that you guys are dialed up to 15% of your gross household income going into these tax-advantaged retirement accounts. Anything on top of that, I would be throwing at that mortgage. Let's get this thing knocked out before you enter retirement. Then we can really start maxing out things as we head to the finish line. I think you guys are going to be in great shape if you do it that way. Hey guys, George here. Listen, 99 times out of 100, when people say, "I don't know where my money goes," it's not a math problem, it's a behavior problem. They're not budgeting, then they're shocked when their bank account hits triple zeros. Well, here's the deal. Winning with money is about doing the boring stuff consistently, and that includes banking someplace that helps you stop guessing with your money. Like Fairwinds Credit Union. They're not going to fix your habits, that part's on you, but they do support people who are ready to take control of their money.

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Today's question comes from Liam in Washington. He says, I'd appreciate your perspective on a recent news story. When actor James Van Der Beek passed away, a GoFundMe was created for his family. Reports indicate the goal has increased multiple times and now exceeds $2 million, despite him reportedly owning a multimillion-dollar home and significant property. Many people are pointing to this as evidence that medical expenses can financially devastate even high earners. If someone with that level of income and assets needed financial help, what hope is there for the average American? What concrete steps should families take to ensure their loved ones are not left relying on public donations after a death. There's a lot in there, Wonka, and I did see this floating around the internet. I have not studied it, but I did see that there was this GoFundMe, and it's always interesting to me when the number keeps increasing. You know, I try not to be skeptical, but I go, so you needed $20,000, and now you go, well, actually, $50,000 would be nice. Actually, $100,000 would be even better. So I don't know. I'm not here to speculate. I've seen there was speculation. People are wondering what's going on here.

And I don't know the state of James Van Der Beek's estate when he passed, if he had a bunch of debt. A lot of rich people out there who can pass away and have a bunch of debt to their name. That's not unheard of. Yeah, we simply don't know.

And so instead of focusing on which report on social media is correct, because that'll drive you nuts, I think that the final, the final question in that email is the one we addressed, you know, and you're basically going, how do we prepare for something like this? And in this situation, George, the question is, if the medical debt medical debt was in his name and he dies, what happens to the medical debt?

It's gone. They're not coming after your family for that.

So that's the fundamental answer, right? But that only feeds into the conspiracy theory even more, which we're not going to take on.

Yeah. Now, in terms of—

So why would they even need it?

Yeah. My guess is this is the best-case scenario. They didn't want to have to sell off any assets of the estate. In order to cover any debts that were owed. And so they're probably raising these funds to try to cover those separately so that the estate remained untouched. Right.

And so that goes back to your answer though. It doesn't just wipe away. If there's money in the estate to cover the medical debt, then creditors can go after the estate. They can go after it. Yeah. And so therein lies the issue. So, you know, it's a tough situation. There's really no clear-cut answer as to what you do in that situation.

But I would not be freaked out if you're the average American. There are a lot of concrete steps you should take to ensure your loved ones are not left relying on public donations. I pray that there's never a GoFundMe after I pass, Ken. I'm hoping to do a good enough job for my girlfriend and family.

So what are you going to do?

Give them a quick tip. Number 1, the thing you need today is term life insurance if anybody relies on your income. 10 to 12 times your annual income in a term-level policy. 15 to 20 years makes sense for most people. And here's the thing. If you follow the Baby Steps, you get a 15-year mortgage. Guess what? After 15 or 20 years, you've got a paid-for house and you've been investing 15% of your household income for decades. So there's a nest egg and a paid-for house. So the goal here is become debt-free as soon as possible so that your family has no headaches. There's no debts to pay off. And so they can just grieve your loss instead of also dealing with the stress of paying bills. And then the other thing you can do is create an estate plan. For most people, a will is the simplest route to go, and Mama Bear Legal Forms is our partner on this. They're fantastic. You can knock it out online in minutes. And for some people, when they have this level of wealth, a trust makes sense. And I'm sure there was trusts involved with his estate, and that can help you sort of control the assets as well.

That reminds me, our good friends at Zander Insurance— if you're somebody that does not have term life insurance, and the advice that George gave, you need to go talk to Zander. You won't believe how affordable, truly inexpensive, good term life life insurance is, and our friends at Zander have been partnering with us for decades. They'll help you out. And that's how you rest well at night to go, all right, if I rack up a bunch of expenses and I've got the right term life plan, I'm going to be in pretty good shape not to leave anybody in the lurch.

Yeah, think about that. You've got a will in place so everybody knows what's going to happen if and when it happens. And you've got term life in place. Should you pass away within that term policy, there's going to be a payout of $1 million to help cover your family's expenses for the long term as you invest that. And then stay debt-free, have an emergency fund, build a nest egg for the future. Your heirs will inherit the IRA or the 401(k), helping them cover any bills that need to be paid. But that's the goal, is become debt-free, stay debt-free. It's one of the best reasons to follow the Ramsey plan, is it puts you and your family in a great position for legacy. Really good.

Let's go to Dylan in Phoenix, Arizona. Dylan, how can we help?

Hey, what's going on, guys? How are you?

Good. How are you today?

I'm doing good. Uh, so I just had a question for you. I'm 22 years old. I make $10,000 to $12,000 a month. My monthly bills are about $3,000, and I'm saving for a Can-Am side-by-side, but they can be $20,000 to $25,000. So my question is, um, would you recommend paying cash for something like that or financing it if I can afford the payment? I only have like $5,000 saved for the Can-Am.

What are you going to use the side-by-side for?

Um, I go to the, like, sand dunes a lot, and all my buddies go do off-road riding like every weekend, so it'd be used a lot. Okay.

Are you newer to the show?

What's that?

Are you newer to the Ramsey Show? You've been listening for a little while?

Uh, yeah, I'm pretty new to the show here.

Okay, so one of the values on this show is not owing people any money. And an even bigger value is not going into debt for depreciating asset. And so the goal here— and you can do this very easily at 22, making $10,000 to $12,000 a month— that is wild. I'm very happy for you. You're very successful for your age. So here's the deal: if you can't stomach paying $20,000 out of pocket, it's probably not the right time to purchase the side-by-side, because too many people can stomach a $400 payment because they don't want to part with their $20,000, or they don't have it, is most Americans. And so to feel the pain of purchase is actually the best thing in today's America, because everything is frictionless. Every dealership will make sure the payment is low enough for you to feel good about leaving, paying them a ridiculous amount of money with interest. So can I tell you what's smarter? Why don't you find a $5,000 used side-by-side off Facebook Marketplace?

Yes, that's kind of what I do. Like, I got my truck off there, so the only The only debt I have is my home I just purchased. The only reason I was thinking of financing the side-by-side would be I could not have the $20,000 out of pocket and invest that and make money while I'm paying off the debt.

Are you doing that right now? Is that $20,000 invested? Yeah, yeah.

It's in a high-yield SPAC account.

That's not invested. So it's making 3% and you're going to take on this side-by-side loan for a brand new side-by-side at $20,000 at what, 6% interest? Probably, yeah. This is a bad trade, man. There's guaranteed return of you staying out of debt. There's a volatile return in the stock market. There's a volatile return even with these high-yield savings accounts, and you're paying income tax on the income you make from the savings account.

How much cash do you have put away?

Um, so I have like $40,000 in savings, but that's not for a Can-Am. That's just kind of for rainy day or, you know, just a savings account. And then I only have $5,000 saved up for the Can-Am so far.

Well, then here's the deal. I'm online right now and I'm seeing a 2021 Yamaha Wolverine X2 R-Spec 850. I like just saying that. I don't even know what I just said.

The more numbers and letters, the more they can charge.

Uh, I'm, I'm no side-by-side guy, as will come no surprise to anybody who knows me or knows what I look like, but, uh, that's $8,000 $995, you only got another month of saving up for that, and you pay cash for it, and you're gonna beat the snot out of this thing anyway, right?

Yeah, I guarantee you every single side-by-side that is financed in America today is underwater. They owe more than the thing is worth, and then they call this show saying, hey man, I did a dumb thing, and I was making $10,000 a month at the time, and so I thought I could afford it, but I lost my job now, and this thing's gonna get repoed, These are the calls we get, Dylan. And so let some other dingus prepay the depreciation, by the way, and you get a deal.

And I'll bet you all your buddies have financed these things, and so you just think it's normal. And you want— by the way, I could hear the tone in his voice when I said a 2021. He was like, yeah, gross. Like, this thing is gonna be nasty and full of sand and all kinds of crap. What are we doing here?

I don't know, Dylan. Buy used. This is too much of your world. You're too young to be making a decision this stupid, and you're too successful as well.

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Attorney advertising. Results may vary and no specific outcome is guaranteed. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Ken Coleman. George Campbell is alongside. We're excited that you're with us. Fabulous studio audience out in the lobby today, George. Yeah, look at them. They're all waving at us. So fantastic.

Some people from Venezuela. That's right.

So this is a global show. I got to call my mom and tell her.

You made it. I made it international.

I made it, Mom. I've done you proud. Uh, 888-825-5225. We're having fun today. We're gonna help you out. We'll have some fun along the way, if that's okay with you. Christina's up in Salt Lake City. Christina, how can we help?

Hello, thanks so much for taking my call.

I appreciate that. Sure, what's going on?

Yes, hi. Um, so we have 4 kids, um, and my husband and I went on our first cruise, just the 2 of us. And so, Grandma watched the kids, really liked it. And we went ahead and want to plan another cruise just to take all of us together. So, I got 2 part-time jobs because on one single income of his, the cruising money is just not quite there. And we're just trying to figure out the best way to manage what I'm earning. And I make about between $10,000 to $12,000 a year. And how to go on a cruise with that money. And the reason I'm asking, my husband wants to, he's like, what about 10% towards charity? What about 15% towards retirement of that? What about extra mortgage payments? So, he keeps kind of nickeling and dining me like 10% this, 10% that. But I feel like we don't have much left for the cruising fund. So, tell me if that's the right thing what he's telling me to do, or should I just take 100% plurge on vacation for the family? That's my question.

Well, based on the conversations you guys had, it sounds like he just doesn't want to go on this cruise.

He does, he does, but he wants like, what about an extra mortgage payment? Because he's 47 and we own—

he's a tightwad like me. He's just like, ah, we should be doing other things with that money. Exactly. Okay, got it. I love it. I, I'll play, uh, husband and then Ken will play the role of Christina. Oh great, perfect.

But my question before we role play is Uh, why isn't— why aren't you guys doing this with his income, the charity giving and the other things that you rolled through? Why does it have to come out of the $10,000 to $12,000 that you're making?

Exactly, exactly. That's what I said. But he's like, well, everything helps. Come on, we only got $184,000 to go on the house. Like, even if you put, you know, like— but I only work during—

and by the time it's paid off, the kids won't even want to go on a cruise with you. That's the sad truth.

Exactly. And the oldest is 15, going to 10th grade. Oh, this is your last shot.

You'll be lucky if the 15-year-old even wants to go. So here's the deal. You guys are completely debt-free outside of the mortgage? Correct. You have an emergency fund?

Because of you guys. Uh, we're getting there. He was unemployed like a month and a half, so we didn't— we realized we didn't have enough, but we're really close to be finishing with that.

Okay, what's the price of the cruise for 6 of you including everything, travel, cruise, any other expenses?

So we're thinking between about $12,000. I mean, between airfare, the cruise fare, hotels, you know what I'm saying?

Like, okay, now is this the Ramsey cruise you're talking about? No, just the Royal Caribbean. I was kidding. I knew it wasn't, but I thought I'd get a little plug in there, you know, because, you know, the cruise you're going on isn't going to have George and I on it. That's true. No pickleball with Ken.

No pickleball.

Yeah. So, okay.

Okay, but $2,000 a person, that sounds reasonable. It does sound— uh, here's what I would tell you. The budget will dictate the type of cruise you guys can go on. It's that simple. So if you got $12,000, we're going to make sure that all of our expenses are within that $12,000 budget. You got $13,000? Well, that budget just got upped a little bit. You got $10,000? Well, now we're gonna have to do some budget shopping, see if there's a different cruise that is still great.

Correct.

So the thing you don't want to do is go, well, we only have $10,000 saved, but the cruise we really want to do is $15,000. We'll just put $5,000 on a credit card. That's what most people do. So don't be most people. A little bit, right?

Exactly.

So to your husband's point, as long as you guys are investing 15% of the household income you're giving, we're not going to nickel and dime your, your side hustles here. If you are working solely to save up for the cruise, let it be for the cruise.

Perfect. See, he did not like it, and I'm like, my little contribution is just not going to make a difference. That's what I'm saying.

Well, you're working temporarily for a specific purpose. Correct. This is not regular income for the household in perpetuity, forever. You're only doing this to save up for the cruise, which I love that intensity. That tells me you really want this thing, because you're not robbing Peter to pay Paul. You're going, "I will create this cruise money out of thin air because I want this so bad." And the question is, is there room in your income, from his income, to also help contribute to this cruise savings fund?

I mean, not really, being honest. That's why we haven't done that since the kids were little. We just were camping and all that stuff. So, so what kind of—

what kind of tension is around this conversation? I detect a little bit of tension. Like, you're going to get off this call and be like, I called Ken and George and they said it was okay. And I don't know if I like that. Am I, am I right or am I wrong? There's a little tension on this.

It is. Wow, you guys can listen really well and can tell. Um, he just hands me the paycheck. He doesn't do any bills. I take care that. So really, he just kind of like, tell me when you have the money, then we can book. That's kind of how it is. So we're even looking either, either in the summer right now, which the prices are high, you already been talking to the travel agent, or the next spring. Because this fall we did find one for $6,400, but he's like, it's my hunting season. I'm like, what am I going to tell my siblings?

I'm like, oh my goodness, it's what season?

Hunting season.

You know, they want to do their hunting, so Like, okay, so the siblings will be upset if he misses one hunting trip? Apparently, correct. I mean, a season is more than a week. You're going on a cruise for a week, I imagine?

Yes. Oh, let me tell you this, sorry. Being the 10th grader and the 7th grader next year do not want to miss school, so it has to be either fall, spring, or the summer.

I think we got to have a family meeting is what I think. I think this is not what it is.

I think so. Everybody's got to get on the big old giant calendar and go, all right, spit shake, we're doing this week. Everyone in disagreement.

Yeah, because I think we got levels of intensity is what I'm picking up on. I think you really want to go on the cruise with the family more than anybody else. I think husband is probably number 2, but him saying, well, what if we do this? I think George picked up on that. I don't think he's 100% bought in on this. And then I think the kids are kind of like, eh, so let's have a family meeting and decide, you know, do we really want to do this? And if the answer is yes, Or if you're the mom and you're going to throw some influence around, as moms and wives can do. Hello, happy wife, happy life. I've been married 28 years. I pretty much do what Stacy wants us to do. It's okay.

I mean, you just can't read the room and go, Stacy wants us to do this, guys. We're doing this. Yeah. Like, we're going to have a smile on our face.

Throwing out the, well, I'm going on a hunting trip. That's just a guy kind of testing the waters. Want to see if there's a—

Oh yeah. That's an excuse.

100%. It's an excuse. So let's have a family meeting and decide. Side, do we all really want to do this? And then see where it lies. And then you got to meet with hubs and go, hey, look, I'm working for this sole purpose. You need to look at what I'm doing as vacation money. If we want to give charitably and give over here, then we got to do that in this pile. And if he disagrees, that's fine. But I just— there's enough tension around this that I think it's showing me that we need to have a greater conversation about what we're doing with money, how, win. Yeah, there's really a—

yeah, there's a gap in the values here. You value experiences with your family, and he's going, hey, there's other financial needs that we need to take care of. Well, let's make a plan for both. I think there's a compromise here. We're going to have the mortgage paid off this year if we keep at this rate, and we're going to go on this trip. I'm saving on the side. So plan the schedule, plan the budget, get everyone aligned, and then just go. Don't overthink Take it. Life is short. That 15-year-old, the time is ticking. They're going, oh, cruise with my parents, lame. This is your last shot. If you're looking for a more budget-friendly way to save on medical costs, costs and stay true to your values, Christian Healthcare Ministries is a great option to think about. CHM is not health insurance. It's a health cost-sharing ministry, a biblical community-based way for Christians to share each other's medical bills. That means no enrollment deadlines, and you can choose any doctor or hospital you want. That kind of freedom is big, especially if you're self-employed, between jobs, or you just need something that fits your budget CHM has been around for decades, faithfully serving the Christian community, and many members save hundreds of dollars a month compared to traditional health insurance.

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All right, Chris is up in Omaha, Nebraska. Chris, how can we help? Hi, how are you? Good, how are you, Chris?

I am doing well. My question for you guys is, I'm curious how much I should have in my emergency fund with a family of 4, a high-commission job, and a wife that's an educator.

Love it. Great question. What is your household income on average?

About $250,000 a year.

Fantastic income. The commission is coming through, my friend. Husband? Yes. How long have you been doing this job?

9 years?

8 years? OK. And how old are the kids?

2 7-year-olds, 2 4-year-olds. Fantastic.

Are they twins? Yes. 2 sets of twins? That's amazing. OK. Well, here's the deal with emergency funds. We say 3 to 6 months, and there's a spectrum there for a reason. Some people 3 months is plenty. For some people, 6 months makes more sense. And for a commission job where it is variable, I would definitely be leaning 6 months, especially every kid you add is just one more thing that could come up. You're just adding more potential emergencies. So what is 6 months to run your household of actual expenses?

$25,000 to $30,000. That's 6 months worth? A total? Yeah. Are you asking per month?

Yeah, per— so you're saying per month you're talking about $4,000 to $5,000 covers all of your bills? Correct. Wow, you guys are living frugally for making $250,000. That's impressive.

Yeah. Are you guys off the grid?

No. Oh, everyone healthy in the family? Yes. Okay, wonderful. Then I would just lean towards 6 months if $25,000 does has it, that's great. And here's the truth of the matter: if you did have a bunch of emergencies all in one month that were $26,000, $28,000, you could cash flow it very easily with your income, correct? Yes. Great.

All right, there you go, Chris. Appreciate the call.

We helped at least one person today.

I think so. Nick is joining us in New York City. Nick, how can we help? Hello. Hello, Nick.

He seems surprised to be on the air. It's Ken and George.

It just went blank all of a sudden.

Um, that happens to me all the time. Don't worry about it. What's going on?

So I have two large loans that I was curious the smartest way to get rid of, uh, at least one. Um, I make about $76,000 a year and, uh, one is, uh, $9,300. $16,000 interest, and the other one is going to be almost $15,000 at 9% interest.

Okay, well, is that all of your debts total?

That's all my debts.

Okay, so you got about $24,000 in debt, you're making $76,000. Are you single?

I'm with a girlfriend, a live-in girlfriend.

Are you covering her bills? At the moment. Oh, boy. Well, that's a rabbit trail that I want to go down badly, but I will not. I'll just say this: please do not combine finances or pay off anybody else's debts.

We don't have to go down the rabbit trail, although I think it might be fun. But the point is, that's the answer to your question. Stop paying for her, and that allows you to pay off debt faster.

It sounds like you're stressed out about the interest. My guess is you want to tackle the 16% interest first, right?

Right? That, that was my thought. Uh, I have about, um, $16,800, uh, saved. Um, you have $16,000? $16,000, yeah.

Oh, awesome. How much are you paying? I'm not leaving the girlfriend alone because it's actually real money. I'm serious. How much are you paying every month for her bills and her stuff?

Well, it's basically, it's, uh, bills that we both use. Uh, so, you know, uh, phone, we have 2 lines on the same phone line, electric and all that stuff. When she had her job before— she's currently looking for a new one— she was paying half the bills. I was paying a majority of the other bills, so like rent and some other stuff. Oh boy. Other than that, it's small. It's not much, but my goal— How much is it?

You sound like a politician on a Sunday morning show when you ask a direct question.

Is it $500 a month? Month? I get that they're split.

A little less. OK. So currently, because it's winter— we're coming out of winter now— it was about anywhere between $200 to $300 in electric, $825 in rent, and then maybe $200 with the phone and internet.

I'll tell you, Nick, I wouldn't be job hunting super hard if I had Bank of Nick at hand to cover the bills anyways. Fact. Just saying. But to the question at hand, We teach the debt snowball method because we have found that that's what actually causes people to get out of debt. So the debt snowball method says focus on the smallest balance first, regardless of the interest rate. Now, it's your lucky day because your smallest balance has the highest interest rate, right? Yeah. So the main question is, why haven't you used part of that $16,000 you have saved to just knock out this debt?

That's what I was planning on doing, but I figured, you know what, let me call one of you guys and see what my options are because this is the first time time I've ever been able to hold savings. My whole life has been one step forward, five steps back.

Do you think that's partially due to the debt that you've been taking on? Wouldn't it be easier to save up money if you've had no payments? Oh, absolutely. Well, there you go. One more reason to knock out the debt. What's the payment on that $9,300 debt?

Uh, $9,300 is $430 a month.

Boom. So you know what happens? You clear that debt and you still have have what, almost $7,000 left over? Uh, yeah, about. Yeah.

So let's take $6,000 of that.

Unfortunately, apply to the next one. I have a car trouble, so I'm, uh, $3,000 of that's actually going to my car fix. Okay. Luckily I do my own work.

So we're down to $13,000 minus the $9,000, right? So that leaves us with around $4,000. You could take another $3,000 of that and tackle your next debt. So that brings you to a total balance of $12,000 left over, and we have an extra $430 to throw at that.

And girlfriend needs to be pulling her weight. That's another nice raise.

She's been bashful now. She hears you guys.

How much are you paying for these phone lines? I'm sorry, how much what? How much are these phone lines?

Uh, we're paying $70 for, um, the internet, so that's $140, I believe, for the, uh, phones.

Oh, your phones are included with the internet? Is that what's happening?

It's a cheaper plan for the phones because we have the internet bundled in, but the internet itself is $70.

Okay, I was gonna tell you to switch your phone. I think you're overpaying for your phone plan is what I was getting at. You could save some money there. So I think there's some savings to be had in your expenses. If you want to switch, we have a great partner with Boost Mobile. You can jump on to boostmobile.com/ramsey. $25 a month. So if you're paying $50 now, well, you just freed up times 2. You save $50 a month just like that. So there's a lot of things you can do in your budget. My guess is you haven't been paying super close attention to what's actually going on with your money. And if you did, you'd go, oh, I can shave here, I can shave here. You'd find another $500 on top of this $430 you're about to free up. Yeah. So now we got $1,000 a month going at this remaining $13K. And what do you do for a living?

I do water treatment.

Yeah, you're a pretty handy guy. I picked up that you do your own work on your own car Yes. I mean, I'd be looking for—

I'd be saving at least $2K in labor, I believe. Yeah, good for you.

So a $5K job became a $3K job.

But my point is, is could you do some work on the side given all that handy skills that you have just to make more money to just make this thing go faster? You know, so I'm just— I want you to be thinking, how do I do this? George just walked you through a lot of it, but you could also bring in some more income. I mean, every time we have a debt-free scream on the stage, the income goes up every time. We go, okay, they tell us how much they paid off and how long, and we say, all right, what was your income in that time? And they go, it was this, and then it went up every time. And so, uh, know that you can do that as well to fast forward all this.

Okay. Do you have a goal in mind of when you're actually going to become debt-free if you follow this plan?

As soon as possible. Don't love that.

It's not a date. You sound like a politician again.

How about this? You're paying off your debt today, the $9,300. We're going to to put a little bit remaining on that $15K. We're down to $13K, right? So now it's, I'm gonna pay off $13,000 in 6 months and put that on the calendar, mark it, put it on your bathroom mirror. Come hell or high water, we are getting rid of this debt. And that means no matter what it takes, no matter what sacrifices. And that might mean, hey girlfriend, you're gonna need to cover your own bills through some side gigs, 'cause I got some debt to pay off. That's a real conversation that should have happened yesterday.

Well, She just heard it, apparently. Oh boy.

Is she on the line too?

Well, he said that she was listening.

She's no friend of mine.

No, no.

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All right, welcome back to the Ramsey Show. Thrilled to have you with us. 888-825-5225 is the number to jump in. Hey, if you've ever wanted to see the person who's calling in, asking these questions, what would it be like to be in the same room with them? You got your chance. We're taking the Ramsey Show back on tour. We've got 4 cities coming up. You get to experience the show live, raw, in the room. And it's a lot of fun. We did 2 last fall. They were great, sold out. These are gonna sell out. We're in Charlotte, Denver, Phoenix, Phoenix and Anaheim coming up this April. We're doing these in really cool venues, only 300 seats, uh, and they're very intimate. So we'd love to see you, uh, grab your tickets at ramsaysolutions.com/events. That's ramsaysolutions.com/events. Brian is up in Syracuse, New York now.

Brian, how can we help? Hey guys, good afternoon. Hey, so I've been interviewing at some companies and I am anticipating hopefully a couple offers to come in in the next couple weeks here. I have background and experience in the roles I'm interviewing for, but the roles are net new to the businesses I'd potentially be joining. So my question is, what resources can I use to help determine market value so I can most wisely negotiate my total compensation?

Yeah, well, if it were me, I mean, I would be doing research on this, and so you can choose whatever you want to do, whether that's Claude, ChatGPT, Grok, I don't care, Google, but you want to dive in and get as many resources as you can that create a pretty good narrative that's provable on the range and see where you stand first. So I would be doing that first. Okay, based on where I think I'm at from a skill standpoint and experience based on again, the size of the company, the industry itself. There's a lot you can do, and you get a pretty good idea of the range that you think is realistic. So that's where I would start and, and see where you land on that. And, and then when you get an offer, any kind of negotiation is based— it needs to be based in reality.

Yeah, that's where I was trying to land. You know, like, I, I can use GPT and that's fine, but I want reliable, good data so I can say, hey, here's my experience, here's the conversation we've and then based off of this rock-solid data, here is where I've come to this number.

Well, again, when you get that information, ask for the sources. Yeah, you'd be surprised, you know, you can find that, you can find that.

And then you'll have a range and you know what you're looking for. And so when you go in there, be confident, don't be rude, but be firm and say, hey, I'm currently interviewing for positions in this range. And usually what you want is your bottom end is really the kind of where you want to be.

At this stage though, you should have already discussed with them in the interview process, uh, salary expectations, yes or no?

Uh, yeah, I left it a little open, um, so I didn't say, you know, I need X. I thought that'd be better positioned once they, they want me, they know that I can really get it done, then I have a bit more leverage. Great. So I have an idea, but I would say like even their range is lower than what I came from, so it's still doable. But again, you know, I want to maximize, and I'm looking at more than just that I want to look at the total package as a whole.

Have you let them know that? Yeah. Okay. Yeah, I did. So they're aware of, hey, we're kind of low for where this guy's at and what he's currently making. How can we make this compensation package as a whole a little bit more exciting?

Yeah, exactly right. And these interviews as well just came from networking, like direct conversations. So I didn't want to necessarily blow it before we got there. And the conversations have been really exceptional. Great. I want to make sure I have good data, good information.

All right, so now we take the data that you're going to go find, and you can prove it, and you got some sources. And again, you're never going to get an exact amount. You're always going to get a range. But if we do our research and we've got some real sourcing, which is easy to do in today's world— trust me, I could find out in about 5 minutes on any one of those AI agents, okay? And so we're going to take that research, and, and that just informs us based on where you are right now. You're not going to go take the job for less money. So this, right, the starting point is where you are now. That's the basement, correct?

Uh, yeah, I mean, honestly, I would— I'm— I was part of a big layoff, so I would even take a little bit less just to kind of get back up there and work back.

Okay, but know what your basement is, is my point. So when you go into respond to an offer, you got to say, okay, I know what my basement is, and that's the worst case scenario And then how does the research inform where I'm at on my basement? And then you'll be fine, you know. And look, here's the thing, all of this is about posture. If you act like a jerk or act like an entitled punk, which you're not going to, but if any of us act that way in our response to an offer, then, then that's where it could go south on you. But you have to control what you can control. And if your posture is one humility but confidence, okay, based on knowing what you need and knowing where you belong from the research. If we've got a nice mix of humility and confidence to go, gosh guys, I— there's a lot about this I like, but realistically, and I don't know what you can do, that's a great negotiation tactic. I don't know if you can do more, but this would be ideal. I mean, that's all you can do, and you let the chips fall where they fall.

I like like that, an open-ended, can you do any better? I'm just curious. And if you leave it like that and the spirit's right, the vibe is right, then it's not offensive. It's not gonna hurt your chances of getting the job. It sounds like he's at the tail end of this thing. Let's land the plane, Brian, let's go. Yeah, I like it.

Let's go to Richard next in Los Angeles.

Richard, how can we help? Hi guys, hopefully you can be some great assistance and some great recommendations for me. I currently have owned my home for about 4.5 years. I have about $300K in equity, big mortgage payment. I'm single income in my family. I'm married with 3 children. I take care of the household. My wife's a stay-at-home wife, homeschools the kids as well. So she's busy, busy, busy. Okay. Basically I'm, I'm just living every 2 weeks. I get paid, I net about $9,000 a month. My mortgage is about $5,000. I don't have any car payments. My cars are paid for. I have about a $2,000 credit card that I owe some money. I owe money on, and I have a $5,000 credit card that I owe money on. Money on. My utilities are averaging anywhere from— all the utilities included, about $700 a month. So, you know, and then I got food bill, right? So I got to feed the whole family. So it's just— I'm literally just, you know, tired of just hand-to-mouth. I'm 51 years old, so I need to know, you know, should I sell my home and just move out of the state and buy something within my means?

You know, my mortgage rate's 3.9, so it's very low rate, you know, so I hate to lose that because rates are high. But I'm just torn and I'm tired of, um, living this, you know, every 2-week paycheck to paycheck kind of thing. It's just, it's tough. And not to mention, I do have a little bit saved away in my 401k, not a whole lot, but, you know, I, I can't even do the, you know, 7% company match. I'm barely hitting 3%. So, you know, it's just—

yeah, you're treading water in every area. You're trying to pay off the debt, but even that's hard. You don't have anything in savings. You're putting a amount in retirement and things are tight. It's directly tied to that gigantic mortgage payment. That's eating your lunch right now. That's over half your take-home pay. It doesn't seem like any of the variables are changing. Your income is not going to go up drastically in the near future, is it? 6 to 12 months?

No, no. I've been on the job for 13 years.

I'm not going anywhere. OK. So, $9K is where we're staying. And guess what? The mortgage is only going to go up. Part of that is your escrow, which is your taxes and insurance. As we know, As you know, insurance has been going up. Taxes are going to continually go up on property taxes, especially in California. And so the issue here is if your income stays about the same and the mortgage goes up, it's only going to get worse. And so your best bet would be to downsize. Okay. Take that equity you have. It might be renting for a little while. It might be taking that $300K equity and putting a down payment on a much, you know, cheaper or smaller house. I don't know how that affects your family. Family and where you are location-wise?

It affects them. It's, you know, the average house in California is like, I think, $540,000 right now, average, in the region where we live. So, you know, but I don't— I wouldn't be able to— those neighborhoods aren't— that we live in, I hate to say that, but the neighborhood just wouldn't be something that we would feel comfortable living in.

Yeah, well, the reality is you're in a, a very high cost of living area and it requires a very high income, and you have a great income, but you bought too much house too soon. And so you need to make some drastic decisions here, and that probably includes relocating, downsizing, and maybe a rent in a neighborhood you want for now, and hang on to that $300 grand, get out of debt, get the emergency fund, and get to a better spot before purchasing your next one.

All right, do you plan on retiring a millionaire?

Yes. Oh, that was that rhetorical?

I'm sorry. No, no, I mean a lot of people do, but the vast majority of Americans, uh, George, never hit that mark. Here's a piece of data that I thought was shocking: only 3% of U.S. adults have $1 million saved for retirement. Is that shocking to you, or are you showing the numbers that you're You're unshocked.

Yeah, I mean, 97% have less than $1 million saved. If you switch the data around, you go, yeah, that tracks. That tracks. And here's the funny part, Ken. In the comment section, as I encourage people to do this, they go, $1 million is nothing in today's America. I go, are you even investing? No, the answer is no. So here's the thing. We're not saying that you only need $1 million. For some people, that might be more than enough. For some, it might not be near enough. But I want to show people today that you can retire with a $1 million nest egg no matter how old you are.

All right, cynics, pay attention.

So, it's not about income. It's about margin. How much you're able to put away a month and how early you start. And here's the other thing. We talk about investing. It's different than saving. You can't save your way to wealth. Saving is just parking money in an account. A high-yield savings account maybe gets 3%. Investing, we're talking about in the stock market, in companies we're rooting for, partial ownership called shares, and we're rooting for these companies to grow in revenue, which increases the share price, which increases our NASDAQ. That's how compound growth works. Your money making more money, making more money. So I'm going to use the Ramsey Investment Calculator today to inspire you all to become wealthy. All right. And if you don't become wealthy after watching this, that's your own fault. So you guys can click the link in the description or jump on RamseySolutions.com to use the calculator. So, Ken, let's throw out some scenarios, some ages, and I'll tell you how much you need to invest at that age to become a millionaire by 65. Or 62, in this case.

Am I throwing these at you? Throw it out. OK, here we go.

How about age 24? Oh, OK, so we're out of college, we got our first big boy job, probably, right? And 24, and let's say you're going to retire at 62. You have the ability to do that because you started early. We're going to invest, and we're going to also imagine you got $1,000 in there so far. How much will you contribute monthly safely $150 a month, we're going to assume an 11% average annual rate of return. People go, where are you getting 11%? This guy's crazy. I'm literally looking at historical data of the U.S. stock market over the last several decades. And if you look at the last few years, it's been up 23%, 25%, 17%. So don't act like these numbers are crazy. This is pretty conservative here. So calculate, as you can $1.1 million. 24-62, $150 a month. It's unbelievable.

Alright, let's jump it up a bit. Let's talk about these people that have been out of college for 10 years or so. No longer the young professional, but still young. 35.

OK, so let's say by 35 you followed the plan, you're debt-free, you've got the emergency fund, you are ready to invest. 35, you would need to invest, and we're going to say 65. You've got a little bit of a later start, 65 is still a great age to be retiring, to not have to work anymore. You're going to have to invest $375 a month and you would have a little over $1 million. Now what you'll notice here, Ken, is you have to invest a whole lot more as you get older in order to hit that same goal. And the beautiful part here is you don't need to invest $1 million to have $1 million. If you look at my screen here, you contributed $135,000 The growth alone was $942,000. That's the magic money of you just staying in the market, staying put, letting compound growth do the work. 87% was just the growth. Let's say you get an even later start.

Let's take a 10-year swing here.

Let's go to 45. OK, 45. Most people who call in the show at 45 go, "I am way behind. I've got nothing saved in retirement." You need to invest. Here's— you ready for the sticker shock? $1,200 a month to have a little over $1 million in that one account. You see what I'm talking about here? We went from $150 a month to $1,200 a month if you had a 20-year gap. And so the power of starting early is powerful. And you'll notice at 45 to 65, you had to contribute $288,000 to get that million. But at the ripe age of— well, we go back to that 24 to 62. Look at this. You didn't contribute $288,000. You contribute about half a mil— oh, sorry, I messed it up here. Let me go back to that $150,000. All right, here we go. Look at this, $68,000. So not only did you have to contribute less per month, but it was a total of $68,000 that got you that million. That's wild. It's doable. That 94% of that account balance was compound growth, and it's the power of starting early. And let me tell you, if you're listening and you're going, well, George, must be nice to be 24 or 35 or even 45, 55, it is not too late for you.

There is still hope yet. And that is just one account. And so think about it, you got a paid-for house. Well, that reduces the expenses that you'll have in retirement. So it's not defined by your age, but by your financial goal. It's a number and you can get there. So go use the calculator for yourself to get inspired, not to lose hope, but to gain hope that you can build wealth for your family and leave a legacy. We'll drop a link in the description to that investment calculator for you guys to check out.

And this is why, by the way, you need to be using every EveryDollar, right? When you've got to get to a point to say, okay, I've got to be disciplined now. No longer am I going to let just money come in and leave and not know where it's going. So having a budget like EveryDollar, to use that app, to have a coach, a personalized plan, that's what's going to help you be disciplined, to be able to put the right amount of money away to actually take care of you long term.

Exactly. People go, Ken, where am I going to get $400 a month? I'm going, dude, your car payment's $600 a month. I think we found the investment money. You just traded it for something going down in value. Yeah, exactly right. It's there. Use every dollar. It'll, it'll find you that margin.

All right, let's go to John in Boston, Massachusetts. John, what's your question?

Hey Dave, and how you doing? Good. My wife and I have been there about a year. I moved from South America here to Boston with her, which was a big life change. We're now making— I'm making $60,000, she's making $80,000 a year. And right now we're doing like half and half, and it's starting to weigh on me a little bit. My wife feels very strongly that, uh, her, her, uh, a little bit bigger salary and her savings, it should be all hers. And I don't feel like telling her that we should combine it, but it's kind of weighing on me because, uh, we moved into an apartment that she, she preferred and we bought a car that she preferred. Uh, so I'm just feeling the pressure of paying half the expensive, uh, expenses.

So you guys have never been aligned on money? Money, right?

We've— I mean, we've tried. We did the financial peace university. We took a couple shortcuts, I would say. Um, no, let's be honest, shortcuts—

you're not only feeling pressure, you're feeling depressed because your wife doesn't listen to one thing you say about money.

Does it make you feel disrespected? Disrespected, emasculated, a little small, a little left out.

Yeah, well, I'm trying to, I'm trying to keep up, you know, but keep up with what?

Marriage isn't about keeping up. It's about a minute ago making your life better.

You said, I don't feel like telling her. I mean, you're— you have been absolutely put in a jar, my friend, and you don't— I don't need you to validate that. I was just trying to get you to realize what we're hearing. We're on your side. But you guys have a massive marriage communication and values alignment problem that you got to get fixed. George and I can't give you some little one-two punch today. You guys need to get on the same page, and you may need a professional to help you, or you're going to end up resenting your wife if you don't already. Are you feeling what I'm saying?

Yeah, absolutely. Am I wrong? Uh, well, I feel like she's a bit more open, uh, to find a solution. That it sounds like maybe I made it sound a bit more—

okay, well then if she's open— okay, great. If she's open to meet you in the middle, then you guys need to have a candlelight dinner tonight and we get out every dollar and we say we're going to combine finances. And then after we combine finances, we're going to put it in a budget and we are going to get aligned and we're not going to take shortcuts. We're just not gonna do it. Because she's thinking a shortcut's okay, you're stressed out by the shortcut, which leads back to the same problem. You guys aren't on the same page.

George, what advice would you give here? Well, everything right now is, well, that's yours, this is mine, I make this money, you make this money, this is my thing, that's your thing. When you guys got married, everything became one. Total unity, right? You share a house, you share a bed, you should share a bank account. You should share the debts, share the load. Everything goes in one pot. If you want to have a successful marriage. You can do it separately, it's just gonna be a whole lot harder, and there's so many more ways you can screw it up. And so you need to reset the conversation and say, hey, I have not done a good job leading in this area. I would like to restart and be totally unified for our financial goals so that we can win together. That's why we got married.

Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Ken Coleman. George Campbell is alongside, and we're here for you. 888-825-5225 is the number. Robert joins us now in Denver, Colorado. Robert, how can we help? Hey, Ramsey team.

So I got a lot of debt. It kind of escalated back in June, and I'm looking at things and I think I need some help. Okay, how can we help? So I got a car that was too expensive. And I ended up putting a lot of my daily expenses on a credit card. And so it was at a point where I couldn't really afford the car payment and I was putting everything else on a credit card. So now I'm kind of looking back at everything and, uh, I, I just recently got rid of the car and how'd you do that? Uh, so I went, I traded it in at a dealership and, uh, Yeah, I just got trade-in value for the vehicle. And that paid off the loan? It did not. So I actually have too much debt-to-income and I couldn't get a loan to pay for the negative equity. So I had to borrow money from my dad to pay that negative equity. How much was that? That was $4,100.

Okay. So $4,100 to dad. What else— what other debts do you have?

And then I also have another $4,100 on a credit card. I got $3,000 in a personal loan and $34,000 in student loans.

Okay, so that's the big one. Is that split up into a bunch of separate loans?

No, I actually refinanced in June, and so now it's just one, one loan for that.

Okay, with a private lender? Yes. OK. Well, we're going to debt snowball this thing. Do you have the income to support it? And do you have reliable transportation right now?

I do. And that's another part of this. I ended up borrowing money from my boss to buy a car. Oh my goodness. My boss sold me one of his old work cars. And I'm currently making him payments on that. Well, that's an awkward situation. Yeah, so it's real debt and IOUs.

Hard to ask for a raise right now, isn't it? A little bit.

What do you make? So I make about $46,000 a year. Doing what? I'm an arborist. Okay. And how old are you? I'm 27 years old.

Okay. Single? Single. Great. Which means we have a lot of time on our hands and we can cut our expenses down to the bone and no one is affected but you. Uh-huh. We agree? We agree. Sweet. So what can we do to make more money? Because right now you've got a big pile of debt, right? You've got as much debt as you do income. Yeah.

Is that right? Yeah. That is true. That is right.

So that debt-to-income ratio, you're going, "All right, something needs to change here. We can't change the debt picture. There's nothing we can sell." You've already got rid of the car. How much do you owe your boss?

Uh, I owe my boss $500.

Oh, what car was this? Was it a $500 car, or did you give him money on top of that?

It was, it was a $2,000 car. And, uh, I told him, I was like, hey, I really don't have the money right now, but I want the truck.

And he's like, okay, well, uh, is he garnishing your wages? He is not garnishing my wages.

No, he is not.

Where did the $1,500 come from?

Uh, it came from my tax return.

Okay, which is essentially your wages. That was money that would have been in your paycheck. Okay, well, Robert, uh, the path forward is going to involve a whole lot of work. So what can you do? Is there anything in your field as an arborist that you can do on the side?

Um, probably. I would just need tools for it, uh, because right now my company supplies all the tools and I'd have to go out and, uh, buy all that stuff. So that's kind of why I'm hesitant to do something like that.

Wait, wait, wait, wait, wait, wait. What can you do that doesn't require you to buy tools?

You're breaking up on us.

Sorry about that. Um, I could work overtime. Boom! How much? Yeah, uh, I could probably get an extra hour or two a day.

Okay, but what else? What I'm getting at is I want you to think outside of the box of, well, I'm an arborist and I usually use my company tools, so I'd have to go buy tools. No. Well, what other skill sets? Or if it's just manual labor, what can you what can you do to make an additional $1,000 to $2,000 a month? That— you don't have to answer it on the air, but that's the homework exercise, right? Okay, let's go make some more money and throw it at this debt. Because as a young guy, you have— and George put you on the spot— you have, you have all kinds of time. And the more you can work, the more money you make, the faster you get out of this. That's the mindset. What can I do? Where can I— can I sell something. This kind of intensity gets you out of the situation.

Can you cut down some trees? Can you do landscaping? How wide is your skill set here?

Uh, so it's, it's between trimming and plant healthcare, so applying, uh, herbicides and fungicides, pesticides, things like that. Great.

Those guys are knocking on doors all day long selling people, and so you can be doing that. You can jump on a Facebook group and say, hey, here's what I provide. I'm not going to rip you off. I know what I'm doing. I'm an actual arborist. I'm a corporist, here's what I provide, here's my services. You do a few good jobs in the neighborhood, now all of a sudden you got 14 homes in the neighborhood that you're taking care of. You see where I'm going with this?

I do, yeah.

I mean, we just had a storm come through Nashville, Ken. The amounts of money people were charging just to remove a tree branch was astronomical.

I had to cut one of my trees down. There you go. Of course I—

where were you, Robert? Yeah, so you see what we're getting at here? Get creative with the skills you have, and if that runs out of steam, you can always do some of the side gig economy stuff. But you're going to make way more doing the thing that you're already good at.

I like that idea.

So yes to overtime, because right now at this rate, it's going to take you forever to pay off this debt. You only have a few hundred bucks a month, if you're lucky, to throw at the debt, right? Yeah. But if we could throw $2,000 a month at the debt, now we're done in 2 years. Uh-huh. That's the math. So that's your number, is I need to find $2,000 worth of margin to throw at these debts, smallest to largest balance, attack the little one with a vengeance while making minimum payments on the rest. Once one balance is knocked out, frees up a payment applied to the next one. That's the debt snowball method.

I understand. Have you ever done a budget? Uh, not really, no.

Today is your lucky day, Robert. I'm going to hook you up with EveryDollar if you promise to to use it. This is our budgeting app, and as you go through the onboarding experience, it's going to personalize recommendations to help you find more margin, just like I'm doing right now. It's going to do this on steroids all day long inside of the app, making a plan for every dollar. Are you in? Yeah, I'm in. All right, 24 months. That— I hope you do it even faster than that, but 24 months is the final, final, final cutoff. Make that a goal. Find the margin. Stick to to it. Oh, to be young again, Ken, because when I was his age, that's what I was doing. When I started here at 23, I had $40,000 in debt. I wasn't making $40,000. What did you do? I did about 17 side hustles. I was building websites for entrepreneurs and speakers and authors. I was doing marketing consulting. I was driving for Uber, driving for Lyft, on top of cutting my groceries down to the bone.

How many hours a week would— do you remember how many hours you were doing?

Uh, it was at least 2 hours hours every night when I got home from work, and then I would go heavier on the weekends, try and knock out 6 hours.

How much additional money were you making per month as a result of all of this?

I probably made an extra $25,000 my first year, just, just in side hustles alone.

That's huge. That's huge. It's very doable.

It's possible. And the younger you are, the less responsibilities you have, even better.

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

All right, let's go to Daniel in Chicago.

Daniel, how can we help?

Hi, yes, my, my father has a term life policy that he's considering canceling. There's 10 years left on the policy. My mother passed away in September, so he no longer has my mother's to provide for, and he's always had a little bit of a strange relationship with life insurance. And so now he's highly considering canceling that policy, and I'm just trying to get him the best advice on whether that is a wise decision now or not. He doesn't have anyone else at home, you know, my, my mom was the only other person there. And so I'm just looking to give him the best advice I can on whether he should keep that policy or let How does it go?

Yeah, tell me about the weird relationship. I didn't know you could have a weird relationship with term life insurance.

He has, from his father and from his bringing up, you know, my grandfather never had life insurance. It's always been seen as something of, you know, people getting rich off of your death type of mentality. He's changed that view a little bit over the years. I think your show has helped him with that, and he does understand that it's, to help provide for your family if you were to pass type of thing. How old is he? He is 65 years old.

All right. And what is his net worth?

That's a little tough to say. I mean, I think he estimated it somewhere around the $350,000 to $400,000 when, when he said it was all said and done. That is his His entire estate, his retirement, everything. That's what he's told me he estimates it at.

And what's the face value of the policy?

$250,000.

I'll tell you right now, it's a steal of a deal. 'Cause that's half of his net worth right there. Does he still have any debts, any mortgage?

No, his only debt is one car payment that he continues to pay on, but the house, estate, and everything else has been paid off.

Paid off. Okay, well, the rule of thumb with life insurance is it exists to replace your income, to cover the people who need it. And you're saying that there's no one who needs it at this point? The kids are grown and gone, they're doing well on their own, um, he has enough assets to cover final expenses, burial, the debts, all of that is what you're saying?

I— as far as what he's communicated to me, yes, he does, uh, he does have that. I think my, my one main concern is he has talked about dating in the future where there would be somebody that might be in the picture in the future.

That's a great reason to hold on to it, because if he gets rid of it now, he's going to have a real tough time getting it again, especially for the rate he's paying. That's right. How much is he paying per month? $80. Oh my God. Okay, what's his income?

Roughly about $50,000 a year.

Okay, so as a part of his world, it's not much. It's very reasonable, especially for a guy his his age. It's not a huge policy, if we're going to be honest. We recommend 10-12 times your income. And so if he makes $50,000, it should be a $500,000 policy or more. And he's got $250,000. So he's got half as much as he needs, but again, he doesn't fully need it. What he needs is a bigger nest egg, and unfortunately, he's not going to be able to get that out of the insurance policy. So if I'm in his shoes, I would personally keep it for the peace of mind? Because if you look at the actual math on this, we're talking he's paying $960 a year for 10 more years, right? Yes. So what we're really saying is, is it worth the risk transfer? If something were to happen to me from 65 to 75, there would be a $250,000 payout to the beneficiary for the low, low price of $9,600. Correct. You see, so when I put it in those terms, I go, that's a good I would hang on to that, not knowing what the future holds, not knowing if I'm going to get remarried one day.

10 years is a long time.

That's been my advice to him. He has just been hesitant to take that advice, mostly because he feels that he should take that extra $1,000 a year and invest it into something so it's guaranteed return, even though it's not as big of a return. Return. Got it.

At what age did your mother pass?

She was 63 years old. Wow. Was it health reasons? Yes, she died of lung cancer. Oh my goodness, I'm so sorry.

Thank you. Well, that would put things in perspective for me, going, "We're not promised tomorrow." I mean, he's 65, not 25, and so the chances go up over time that he could pass. I hope he lives a very long life. 30 more years and the policy lapses and he goes, "Wow, that was a waste of $9,600." $1,200. I would love for us to be looking back in hindsight having never used it. That's sort of the goal with term life is that you never have to use it. And that's the point of insurance. I don't want to have to use my car insurance, but I sure as heck am going to have it. So I can't make the decision for him, but I would find $80 elsewhere to go invest and he should be investing. And that $80 is not going to make or break his world right now. And therefore I would keep it for the next 10 years.

And Daniel, again, we talk about this all the time on much bigger issues, much stickier issues than this. It's very difficult for an adult to convince or persuade their parent to do something. You can advise, you can give some ideas, but other than that, you got to let it go. And he's going to decide. I think your winning point is, hey, you mentioned wanting to date and that could turn into something, then this would be a good thing to have. I think George's point on that is probably the best case you can make for him why he should keep it. Because again, it's just not that much money.

And if you don't have term life or you don't have enough, which can A lot of people, they go, well, I have it through my employer. And I go, how much do you have through your employer? $10,000. Right. That's barely gonna cover the coffin, man. You gotta have 10 to 12 times your annual income, 15, 20-year level term policy. And the people that I have mine through, Ken has his through, is Zander Insurance. You can jump onto zander.com and just knock this out. It really is not that difficult. Some of these now, Ken, the policies are no medical exam. You can literally do it online if you're in good health. Oh, is that right? If it's under a million dollars when you're in good health. There's a lot of these where you don't even need to get your blood checked.

I've had to do the old nurse.

I've had to do that. Shows up, takes the blood.

But even that is just really not a problem. They do such a good job of scheduling around your time. It's 5 minutes. They come in, they do the thing, and you got peace of mind.

And by the way, it does not increase your chances of dying if you get term life insurance. No. It's the same exact chances regardless. I know.

And I got 3 kids, a wife. I put a pretty good amount on me.

I sleep with one eye open. You got enough in there that you're a little bit worried. I like that.

I told Stacy, "Don't get any ideas." ideas here. All right, there's a clause in there where George has to sign off on it after he does his investigation. Oh, I like that. You like that?

I love a clause. What can I say?

You like a clause where you're the main part of it. Well, can you imagine if I'd have done that with Xander? Is there a way to put George Campbell in this that, uh, he comes in, he's got a lot of questions, he's very suspicious, uh, there's enough money in here to handle George hiring a private investigator investigator, and you would then determine whether or not Stacy gets the money.

If I get to be Camel P.I., sign me up.

I think I may ask him if I can write you into that.

That could be great. Stranger things have happened. I'm sure a lot of people are leaving me as beneficiary on their term life and in their wills for all I've done for them.

Now that's a really dumb question, but let me tell you about good questions. People are flooding to Ask Ramsey, our free AI tool that's built and trained on our proven Ramsey Principles. And today, George, we're going to break down the most asked question from this week. Are you ready? The main question is, what are the best strategies for paying off debt while maintaining a good credit score?

Interesting. Okay, well, I'll tell you my take on this. You start by making a budget, save $1,000 starter emergency fund, list all your debts except your mortgage from smallest to largest balance regardless of the interest rate, and pay minimum payments on all the debts except the smallest one. Knock out quick, move on to the next debt. And by the way, I cheated. That was from Ask Ramsey. Yeah, joke's on you guys. See, it actually does. Life is an open book test. Why would I not utilize the tool at hand?

Well, Ask Ramsey is, is, is playing off of what we say on the air.

And here, let's talk about the credit score angle. It hits this too. For your credit score, it may dip a little as you pay off debt and close accounts, but that's okay. The goal is financial freedom, not a good credit score. So I love this comment, Ken. Can I read this to you real quick? Yeah, go for it. I just saw this in the Ramsey Facebook group. Donald said, "It has answered some very obscure questions I've had for a long time. I listened to about 5 total years of Ramsey shows and try to hear some situations, but this tool can answer them right away for your specific situation." There it is.

Go to ramsaysolutions.com. You can't miss it right there at the top, Ask Ramsey. Or, you know, I like to send you the show notes, folks.

Click Click the link down there.

There's just good stuff in the show notes. Click the link.

When people hear my story of paying off debt, they say things like, dang, that must have been so hard. I could never do I tell them, sure you can. It's a short-term sacrifice for a long-term gain. But do you know what's really hard? Working your whole life and never having anything to show for it. Never having the long-term gain. Just feeling broke and stressed and maxed all the time. And sadly, that's the hard that most people choose.

Listen, you're capable of transforming your situation and living a life of freedom.

But you need the right tools to do it. To do it, like our EveryDollar budget app. In minutes, it'll build you a step-by-step plan that's tailored to your money situation. And every day, it finds ways you can free up extra money in your budget so you can get rid of your debt and actually build wealth. So make the choice today. Short-term sacrifice, long-term gain. Choose the tool to help you get it done fast. Download the EveryDollar app and start for free today.

Tax season is upon us. To get free checklists and guides that will help you file, make sure that you go to ramsaysolutions.com/taxes. ramsaysolutions.com/taxes. All right, let's go to Josh in Baton Rouge, Louisiana. Josh, how How can we help?

Yes. Hi. Can y'all hear me? Just wanna make sure I can hear me.

Yes, we hear you well. Uh, it's an honor.

It's an honor to, to be here on the show with you guys. Y'all are awesome. Just want you to know. Thank you.

How can we help?

So my question is, um, my dad's gonna be calling me here shortly and I need some help with communicating with him without overstepping as being the son. Okay. Um, he's gonna be giving me good news that he's retiring after 6 years with the company, and he wants to take out his whole retirement and pay off the house, which I'm okay with. It's not really a house, it's a mobile home. And, um, he has a lot of other debt though, like a lot of other debt— cars, um, a lien on the house. Um, why is he retiring? Like a lot. He wants to go to another company, uh, He said he was offered the job today. Okay. So he's not retiring. He's switching jobs. He's not— yeah, but I just wish he would take the money and maybe move it to another account. It's $70,000 is all it is, but it's all he's got.

But what is it? Is it in a 401(k)?

It's in single stock. With the company? Yikes.

Oh, okay. So it's really not retirement money. It's just, he's got stock. The company, right?

It's not—

is it trapped in a retirement account or is it a non-retirement account buying stock up from the company, like an employee stock purchase program?

Yeah, yes, yeah, it's like a stock option, so he can cash out. Okay, so he has a lien on his mobile home.

Yeah, from my understanding, like, he, he wasn't really upfront with me— well, about my wife, about it. He had just talked to her at lunch, and he's going to be calling me because I just got off work.

Oh, I see. So he's all excited. I feel like he could ring in while we're talking to you. This is like fresh. Oh man.

So you don't want to be a buzzkill going, Dad, congrats, and don't do this really dumb thing.

Yeah, I'm just having a little struggling moment right now.

Well, what's his total debt? What's What's the total debt?

It's $800,000 on the house for sure. He's got, he just rolled over the car twice, so I don't even want to know how much that brings.

He rolled over negative equity twice? Yes. Oh my gosh.

And then he's got a bunch of credit card debt that I know of.

Well, he's going to get taxed. So let's reframe this. Let's reframe this. I appreciate you calling us about this, but we need to reframe this whole thing because your dad is excited. He's so excited he called your wife at lunch today, right? Okay, this is hilarious. And he's coming into some money and he's excited and he's 62 years old and he's made a bunch of boneheaded decisions with money. All right, let's just— can we pour all that into the cup? Because that's the cocktail we're dealing with. All right. And you got to think through this. And as an objective bystander that you called to say, hey, what's your opinion? This is my take. Okay. Um, all you can do is ask him some really good questions. I— their questions are better than suggestions when we're talking about our dad who's excited about cashing out and has made a bunch of bonehead decisions. You would— you agree with that?

Yes.

Okay. So questions like— and George, you jump in here, popcorn it. But some questions are, hey dad, Are you aware how much you're gonna have to pay in taxes on that stock? I'd start with that, right? And who knows what he's gonna say, but that question versus a suggestion is, it's your best chance of allowing him to think through some stuff that he may not think through, and you're not making a suggestion. Or if you said, Dad, you know, you're gonna pay this in taxes, so here's what I think you ought to do, boom, boom, boom, boom, and he's like, Hey man, I just called to hear you say congrats. So questions, not suggestions. That would be my advice. First question I would ask is, Dad, are you aware what the tax implications— what are you going to— do you know what you're going to pay in taxes on that? And hopefully he registers, oh, so I'm not walking away with $70,000 or whatever it is, I'm going to end up walking away with this. And then you go, what are you thinking about doing with "Where'd you get that money?" And then when he tells you what he's going to tell you, then you can ask some other questions.

I just think, as the son, that's about all you can do. George, I want to bring you in here.

You're not going to be able to force him to do anything, but if you can scare him into it or excite him into something, that's a better route. The main question is finding out if this is in a retirement account or in a brokerage account, because that vastly changes the advice here. Either way, we want to get out of this single stock. That is very risky. If it's in a brokerage account, it's simpler. Ken said, there's going to be some capital gains taxes and that's it, versus early withdrawal penalties on top of income tax, which is going to be a whole lot more. But let me show you the math on this. If he just left the $70,000 and he rolled it over to a rollover IRA— so a direct rollover, never withdraws the money but rolls it over to an IRA in his control, sells the stock inside of that and buys diversified mutual funds— now we're talking. And now you'll see an 11% return over the long haul. So from $58,000 to $68,000, if he he does that, his $70 grand turns into over $200 grand. That's pretty wild, right?

That is wild. And I just, I kind of know that. I have— pull up the calculator, show it.

Say, hey, hey, uh, I talked to my financial advisor about your situation because I was curious as to what they would say. Because now it's not just your opinion against his. You brought a professional into it and said, hey, I talked to this guy, he thinks, uh, you really need to be thinking about the taxes on this and the implications of unplugging the compound growth, the withdrawal penalties, and it would be a much wiser use to use your future income to pay down these debts, pay down the mobile home, instead of robbing your retirement early. Because here's what it will turn into if you just left it alone and never added a dime. See, now we're quoting some facts. We're not leaning into just anger or emotion. It's just very calm, very much you love him, you want the best for him, you have no skin in the game here. You would treat him like he was a friend of yours. So the question is, does he respect your opinion enough?

Oh, there's your answer. We've, uh, we've been Dave Ramsey fans for a while, you know. Who?

Um, not him.

I follow— me and my— yeah, me and me and my wife. Oh, okay. I was like, you and your dad?

I mean, we already got the answer. When you ask someone, does he respect your opinion and And your answer is, ah, I mean, that's like a whole paragraph.

And that's where the third, I think the third party angle based on what you said is the best route to go of, hey, I really, this is a big decision. I'm so excited for you. This is a huge next chapter of your life. And I just thought I'd bounce it off of a friend of mine who's a financial advisor and he's got no skin in the game. He just had this to say. And then you share everything we've talked about. Yeah.

But I have to calculate. Yeah. Ask questions though. Ask questions. Listen, he can't get defensive if you're just asking questions. Yeah. Yes, but it's the right kind of question. In other words, don't ask a question where he feels pinned in. Just be like real light. Like as soon as the call comes in, just go, okay, I don't want to tell dad. I don't want to tell dad. I don't want to tell dad. I want to ask, ask, ask. And I want to just be low-key, light. And let's just see where it goes from there. Because the minute, listen, after your long sigh and you reaching for the words to answer the question, does he respect your opinion? I already know where this is at. And this is really hard. And by the way, I'm going through this in a different level. My parents are in great financial shape, but my parents are 75 and 74. And it's just a function of life that when they get to this age— and your dad's younger, I understand— but still, it's like the parent becomes the child and the child becomes the parent. And that's just life. And so you've got to honor but still keep a boundary there.

And I catch myself all the time kind of saying something in a way that I go, well, that was a little bit like, you know, it's just be really careful here because it's his life, his mistakes. There's only so much.

But at least you can sleep well knowing you said your piece. And you make this the Oreo method here, all right? The top layer is, Dad, I'm so excited for you, that's awesome. Middle layer, a little bit of advice going into the questioning. And then the bottom layer, again, I'm so excited for you. That's the way to attempt it so he doesn't get too defensive and shut down.

It's that time again, folks. Tax season is here. I know some of you would rather bury your head in the sand until April 15th. 15th, then face your taxes. But here's a better idea: if your tax situation is complicated, get in touch with a Ramsey Trusted Tax Pro today. That way, they can take the stress off your shoulders once those tax forms come in and teach you how to keep your tax bill as low as possible. But don't wait— Ramsey Trusted Pros can book up fast. Go to ramsesolutions.com/tax tax pro to find one who serves your area with excellence. That's RamseySolutions.com/taxpro.

Our Scripture of the Day is Proverbs 9:11. Proverbs 9:9, "Instruct the wise and they will be wiser still. Teach the righteous and they will add to their learning." Our quote today from one of George's favorite entertainment icons, Joan Rivers. A classic. "People say that money is not the key to happiness, but I always figured if you have enough money, you can have a key made." That's actually pretty good. Oh, thank you, Joan. To the late Joan Rivers. Yes, Zachary is up in Springfield, Michigan. Zachary, how can we help?

Hi. Hey, Ken. Hey, George. Hey, appreciate you guys taking my phone call. Sure. Yeah, I was wondering, wondering if you guys could share some advice or wisdom. So I've been reading the Bible lately. It gets me thinking if my wife and I are, are being generous enough at the moment. But I know the Bible talks about tithing, and I'm wondering if that's the best approach when I'm on Baby Steps 4 through 6?

Baby Steps 4 through 6, and you say you're tithing and you're saying, is that enough? You're doing 10% of your income? No, no, no.

I know the Bible talks about tithing. I'm currently giving, um, about 1.5 to 2% of my— well, 1.5 gross income, 2% take-home pay. Well, what do you believe?

I'm wondering if— let's just— well, but this is, this is— so, so if you're gonna come at this from a a biblical point of view, then it comes down to what the Bible says. What do you believe it says? Because a lot of people have a lot of different opinions about a lot of different parts of Scripture. And so, and so ultimately, you know, we can't tell you if you're giving enough, but I can ask you a few questions. So the first question is, do you believe in tithing? Do you believe that's something that you should do?

It's something that I definitely want to work to?

I didn't ask you that. I didn't ask you that. Yeah, no, I—

yeah, I do believe in tithing. I don't think the Bible would mention it as many times. Okay, so otherwise—

so, so there's that standard. And again, you didn't call and I'm not preaching at you, but you called and you asked based on reading the Bible. And so that's between you and God as to how you take obedience on that particular issue. Okay, so you don't need me to, you know, preach reach at you. So you've already stated, well, I do believe I should be tithing. I'm not now. I believe I'm going to work up to it. But again, that's your deal. I do believe in the tithe, and I think that you should. And so that's a baseline. And many people in different sects of the faith still believe that there's a tithe and an offering. And again, the offering is above and beyond the tithe, and that's between you and God. As well. Okay. So without getting into a theological foundational lesson or some type of debate, you get to answer, am I giving enough? That you get to answer that. We don't.

It's a matter of the heart.

Yeah. So I'm not trying to evade your question, but that's as solid as I can answer that. You have to decide.

Right. I think the, I think maybe a more specific question is, uh, if that would apply to people of all ages, of all incomes. I mean, we're, we're in a financial good situation right now where like, let's say I did want to go about tithing right now and go from 1.5% up to 10%. It would just kind of slow down, you know, what I'm, what I'm putting into like the brokerage right now, which is in the future going to be for, uh, a house. And then also like for retirement, uh, we're— we are looking into saving for, well, children's—

so here's what I would tell you to do, okay? I would tell you to, to go read more scripture, uh, buy a book or two on tithing, go listen to some sermons on tithing. And I think you're going to hear a consensus. And if Dave were sitting here— and I'm not going to try to quote Dave— but if he were sitting here, I'm pretty certain he would say that that's the wrong mindset to look at tithing, that if I tithe, it's going to slow down my financial progress. He would say if you tithe and you give, you will receive more blessing. And it doesn't mean it's dollar for dollar. So that's bad theology. I'm not saying that. But this idea— and George, I want you to weigh in on this as well— this idea that if I tithe and give a tenth of my increase, my income, to the Lord who blesses me with it. It's his money. I'm not going to be slowed down at all. But again, that's, that's a spiritual mindset in believing in what the Bible says about tithing. I want to bring George in. George, what am I missing? I love what you said, uh, Pastor Ken, and I want to add to that.

I'll be taking an offering, by the way, at the end of the—

well, that's At the heart of this, I feel like it's actually a really good spiritual challenge for you because what we're really saying is you see it as a finite pie. If I take this slice away, then I don't have that slice for XYZ, for the house, for the kids. And I think what's so cool about the Bible is it's outside of a pie. It's— we can't look at it in finite when you're talking about the infinite, right? And so we can't think of it like, if I give 10%, I won't have enough to pay off the mortgage. I think what you'll find is when you were when you are faithful, you never lack. You are given enough to manage. And I can throw some verses for you to look up later. You can watch this back. Proverbs 3:9-10: Honor the Lord with your wealth, with the firstfruits of all your crops. Then your barns will be filled to overflowing. Your vats will brim over with new wine. Malachi 3:9-10: Bring the whole tithe into the storehouse, not 1.5%, whole tithe, that there may be food in my house. Test me in this, says the Lord Almighty.

'Whoo, them fighting words,' and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it. And finally, Matthew 6:26, I love this one. Look at the birds. They don't plant or harvest or store food in barns, for your heavenly Father feeds them. And aren't you far more valuable to him than they are? So I think at the heart of this, it's a scarcity versus abundance spiritual challenge, Zachary. And this is— you are not alone in this. I struggle with this. This This is still something I'm figuring out and grappling with because it doesn't make sense on paper, right? But I think if you can learn to live on the 90% of what God has blessed you with, which I assume you have a great income, right? What's your household income?

Oh, so gross is about $101,000.

That's a pretty fabulous income anywhere in America. Would you agree?

Yeah, yeah, no, it's enough for us.

And how much are you putting away? Are you right at the 15% in baby steps? To have 4?

Uh, I was doing the math. It's closer to 20%. It's— I mean, overall retirement, we're putting about 27. Okay, a little over 27.

So now you're going, you're going 12% extra above what we teach, and you're having a hard time giving 10%.

Oh no, I'm sorry, it's $27,000. So— oh, actually, $27,000 out of your $101,000. Oh yeah, no, yeah, yeah, that's 27%.

I didn't have to take my shoes off.

That was easy math. I'm sorry. Here's my challenge for you. You try it, you try it for a month. Try for a month. If your life is worse and you hate it and you're going to retire broke because of it, you can, uh, you can go back to the way you were doing it. But I think what you'll find is that when you're spiritually challenged, you will actually mature and you will find that you lack for nothing. That's That's going to be my hypothesis in this fun social experiment. So Zachary, you call us back and let us know how it goes. But I think there's room to tithe. I mean, you read about the widow giving her last pennies.

Well, here's the irony in this, Zachary, and I'm not picking on you, but I want to give you this context before we let you go. You are concerned about tithing the 10% because you feel it's going to slow you down in these other areas. Areas. And then we dig into the Baby Step 4, and we recommend 15% of your income towards retirement, and you're doing 27%. So there is fear driving all of this. You're afraid, if I tithe, I won't be able to do as much as I'd like to do over here. And we've got a tried and true system. And we say 15% is enough. And George can run through the investment calculator all day long till he's blue in the face. So what we're getting out of this is, is that you're really afraid. And fear is not a good driver for any decision. Would you agree with that?

Yeah, no, that's fair. There's definitely some anxiety of, like, currently given, like I said, both $1,500 a year.

Here's what I want you to do, extra homework, okay? George gave you some verses. I want you to do a little Bible study tonight or tomorrow while it's fresh on worry. What does the Bible say about worry?

Be anxious for nothing. That one comes to mind.

Oh, George, you were all over it today. I mean, you got— you pulled up a concordance over there.

I got my Concord.

If I could play a keyboard, I would have noodled underneath of you while you were— see, you can play the keys.

Yeah, I can hit a nice chord. You'd be— you'd— I can fake it.

Well, if I put an acoustic guitar on you, you could have, uh— there we go. What do you call that? A little altar call? No, it's— if noodling is on the keys, what's the— what do you call the equivalent? Ah, Oh, don't quit me on that. Strumming? Strum while I preach? All right. Speaking of. Speaking of preaching. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

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