Transcript of How Do I Get My Boyfriend To Step Up and Make More Money?

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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, jump in to 888-825-5225. Alongside George I'm Ken Coleman. Excited to be with you, and we're ready to take your calls. Nancy gets to start it off in Jackson, Mississippi. Nancy, how can we help?

Hi. I'm considering filing bankruptcy, and I'm not sure if that's the right move for me right now.

Tell us why you're considering it.

My husband, who I've been separated from for about two years, he's going to be filing. I I have $25,000 in credit card debt.

You mean filing for divorce? Is that what you're talking about? No, for bankruptcy. He's the one that wants to file for bankruptcy for himself? Correct. Okay, got you. Okay, keep going.

Since we're separated, I'm taking care of all the bills. And so the credit card bills have been a pretty good amount each month. I'm considering it to take that load off. But in the future, I'd like to be able to still get home loans. I used to flip houses. I'd like to get back into that, but I don't know how much a bankruptcy will hurt me. Oh, why? I should just do.

Okay. I mean, would you loan you money after going through a bankruptcy?

Probably not.

So there's a better way out of this, Nancy, and I know it feels like the walls are coming in right now. You've got a lot of life happening. And so step one is to look at some facts. So fact number one, is your name on all these credit cards?

The 25K my name is on. His debt is separate that he's going to file for.

Good. Okay, so is that your total debt or is there other debts as well?

That's my only debt for me, personally.

Okay, great. And what is your income?

It really varies and fluctuates. I go from anywhere, a thousand a month to 3,000 a month.

What do you do?

I'm a transaction coordinator for a real estate company, and I am a photographer.

Do you have any control over that variation from one to three a month? In other words, more effort or just being more available? Do you have any control over that?

I don't. It depends. I work basically per contract, and I never know how many contracts I'm going to get each month.

Is there an exclusivity? I just don't understand that role in that industry well, so forgive me if that's a silly question, but is there any exclusivity to where you couldn't do for another broker or something like that in order to get more contracts and more money?

I'm not really sure. I've been loyal to this company because they're promising in a few months that I'll be moved to a full-time salary position. But it's not guaranteed. It's based on his ebb and flow of his company.

I appreciate loyalty. Love loyalty. Don't want to dismiss loyalty. But if there's no exclusivity and it's not a conflict of interest is the meat of my question, then, in other words, an ethic, then you could still work for them and still step into this full-time role if it materializes, but you could also start getting more contracts and thus more money. I'm jumping in here. George is going to pick back up, but I'm trying to address the income issue. You need to look into that. By the end of this week, at the latest, you're finding out the answer to my question. Do you still understand my question? Yes. Okay. Because that would theoretically be maybe the quickest way or the best way to get more income. Am I tracking, George? Yeah.

And if not- That's what I'm seeing here, just an income problem.

That's what I'm seeing here, just an income problem. Because of what George is about to tell you. So Nancy, right now is when we need to increase our income. And I mean, urgently. And George, why? What does she do with this increased income?

Well, if you think about it this way, Nancy, two grand a month towards your credit card, that's done in a year. Now you're going, sweet. Must be nice to have two grand extra on top of your bills. It is nice. That's where if you made $4,000 consistently and your bills were $2,000, well, Now we have a fighting chance to get out of this. So the next question is, why are you covering all of the bills for the household?

My husband's currently unemployed.

And why is that?

Well, he's been using drugs for the last four years, and so we've been separated for the last two years.

And he's still living at the house?

No.

He's not living at the house? No. Okay, so what bills are you responsible for, For him?

For him? None. I just pay the mortgage, all the utilities, and my credit card.

Okay. So you've essentially been on your own financially for how long?

A hundred % since May, we've separated multiple times. So this time I stayed in the house.

And it's over for good.

We don't know yet, but I'm leaning that way without a miracle from God.

Do you have any kids?

I have two, a three, and a four-year-old.

And they're at your house?

Yeah. Okay. And the four-year-old is special needs, which is my reluctance to take on more hours.

I totally understand. Didn't know that. But what we're trying to help you understand is you don't need bankruptcy.

I would rather see these cars go to collections and you settle them later than you go through a bankruptcy. It will do less damage to your financial future That's the type of- So what you need to focus on now is your four walls, Nancy. That means you put food on the table, you're going to cover all your utility bills, the mortgage. All of that comes first before you pay the credit card company a single dime. If you can't pay them that month because you had to put food on the table, I don't care about the credit card company hunting you down, being upset, calling you, whatever. They're going to threaten to sue you. It's going to go to collections. If that's what it takes in the season, that's what it takes. But the bankruptcy is going to cost you money, money that you don't have right now. It's actually cheaper and more financially-wise to choose the other... This is a rock in a hard place, and so we're just going to choose the rock right now, which is the credit card debt. So stick with Make the minimum payments if you can. Make extra when and if you can.

And soon you're going to be out of this. This is not a forever season, right? Right. Do the children have childcare while you're at work? How does that work for you guys?

I work remote, so I take care of them all the time.

Okay. So what might be helpful is to find a full-time remote role that is sooner. And you might need to talk to your boss and say, Hey, listen, I'm going through one of the hardest seasons of my life. I need some stability right now with my income. I can't risk having a $1,000 month. And therefore, I need to go find XYZ job. Now, they might fast track and go, Hey, you know what? We'll start you full-time now if you can handle it. But you don't have the option of just waiting around hoping for this job to materialize.

Nancy, while you're waiting on that miracle, I'm also going to throw out there, you got to get some community. If you don't have community, go get involved in a church. It's not the worst thing in the world. You got to get some people to come around you and help out with the childcare for a season. This marriage is completely up in the air. We totally understand. But you have got, while praying for a miracle, hoping for a miracle, you've got to act as though you're divorced in the sense of taking care of you and the kiddos. You've been doing that, by the way, and you're amazing. But it's okay for you to raise your hand and say, I need some more help. We just hit you with a lot, but you're going to be okay. Bankruptcy is not the plan for you. I think George gave you really tactical advice, and we're for you, and we're very, very sorry that you've been put in this very difficult situation.

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All right, let's go to Ashley in Ann Arbor, Michigan. Ashley, how can we help?

Hi there. So nice to talk to you all. I'm so excited. So first off, and most importantly, my boyfriend and I just had a baby. He's 11 weeks old right now. My boyfriend is a car salesman and has not been making sales. So I have been paying all of our bills, and I can just cover our bills now, and we've been doing okay. But when I need to go to work in just about a month, we're sending the baby to daycare. And in the area we live in, daycare can be up to $3,000 a month, and there's no way I can afford it anymore. So with my boyfriend not making any sales, and we don't know when and if he's going to start making sales, I'm really struggling to figure out how we're going to make it.

Okay, a lot here. Yes. Let's talk about your income first, just because you're not married. I know your boyfriend is the father of the baby, and I appreciate all that. We'll get to him in a moment. I got thoughts on that whole situation. I have a lot. Boy, do I have some thoughts, George? But what's going on with you and your ability to make more money? What's happening there? I understand the outrageous cost of child care, believe me. But what has changed? Because the way you laid that out, I'd like to know what's behind all this.

I make $145,000 a year. I work in tech. Fantastic. Yeah. And I live in... The city is pretty expensive. It's a very long story behind this That's what I don't want to get into. Sure. But basically, I live in my dad's house, and when my boyfriend moved in, actually just pretty recently, my dad increased the rent of this house. So it's now $3,000 a month, which isn't astronomical, but with all the bills and the insurance and the theory.

What was it prior to that?

It was $2,200 prior to that.

Okay, so you had an $800 increase there. What's your debt situation?

I stupidly have a car that I still owe about $15,000 on it, but that's it. No credit card debt or school loans or anything like that.

Okay. George, a quick analysis. She's making good income, very good income.

Yeah, your income is It sounds like he's about to be a stay-at-home dad if he doesn't come up with income quick. That's exact. Is he capable of that? Would you even trust him with that role?

That is the problem. I wouldn't necessarily trust him, and we've been having a lot of relationship issues Okay, rule number one, don't have a baby with someone you wouldn't trust to watch your child. Yeah. We did not plan it this way.

Okay.

So much there. Okay, I'm not going to dive drive into that lane, although I get it. And to that point, he shouldn't be your boyfriend. He, because of that moment, is the father of this child, but you don't trust him to actually be the father of the child. Let's just be really, really gut-level honest. You should dump this guy really soon. Multiple reasons why. And I'll give it back to George and we'll start walking through some money stuff. But number one, you didn't want to have a relationship with the guy. Number two, you didn't want to have a kid with him. Number three, you don't trust him to actually watch your kid. Number four, he can't sell cars.

He's dead weight right now.

This guy doesn't need to be in a relationship with you, and he certainly does not need to be in that house with you. So I would legitimately dump him for those four reasons. And by the way, you can quote me, and he can go watch this segment on YouTube, and I'm not trying to be unkind to him. He needs a wake-up call of adulthood. And the wake-up call is you going, buddy, as George said, you're dead weight, you're out. So he's done. Done, gone. And maybe he wakes up. But we've got to make plans as though he's not going to wake up. Okay, there's my You've got to make this decision in light of the money advice that we're going to give you. All right, George, bringing you in here on $145,000, $15,000 worth of debt.

Yeah. Okay. You're called in saying that you don't have enough to cover the bills or it's getting tight. I want to challenge the expenses here because can you rent for $1,600 a month in your area?

So that is the another, like the complication that I would be a whole separate call that I don't, I think we probably don't have time to get into.

You're a prisoner in this home, aren't you?

Basically, yes.

I had a feeling dad needs you to pay this money.

No, he actually does it. Well, it could get somebody else.

Yeah, it's not your problem. What's actually keeping you in this house?

It's such a long story.

I guess I'll just- You don't have to give us a long story, but- Link twice if you're okay, Ashley.

We just want to know- No, I am fine.

Okay. I'll try to say it in in 20 seconds. So my dad bought the house a bunch of years ago. It's appreciated in value significantly, doubled in value. It's a multimillion dollar house. He is in very poor health. He's actually in the hospital right now for the third time in the last two weeks. And he says if he sells the house, he would incur a massive tax bill. And if we wait until he passes away, then we won't incur the tax bill.

You'll inherit it?

Yes. Yeah.

With a step-up in basis. Correct. That is true. That still doesn't mean that we can sit paying three grand a month forever.

So I wonder if you kick the deadbeat boyfriend out and get some roommates. That's George's go-to move.

I like that You're on a plan. Now, you don't need to sell the car. I think you can pay it off aggressively. But you're bringing home, what, eight or nine grand a month?

Yeah.

Have you got a budget?

I do, yeah. I'm pretty buttoned up about it.

So what's the car payment?

Car payment is $3. 50. I'm currently paying $700 per month on it to knock out the principal.

So looking at these things here, trying to speed this up, George, I've got I've got $3,000 in rent. I've got $3,000 in childcare.

In future daycare.

I got $3,500 in a car payment. So we're right at $6,500 immediately.

You got $1,500 left to pay for gas, food, insurance, and a tiny bit of fun money.

Yeah.

Now, that's not amazing, but it's a good start, and it gets you to survive and thrive on your own regardless of him.

But, George, what's the quick fix on that? I think we've already talked about it. I mean, she can make some moves.

A roommate If you can get this rent down, you're going to free up. I mean, think about it. You split it with two people. Now you're talking three of you in there. You're paying a thousand bucks a month, if not more. You might charge them more than a thousand bucks for their spot.

I've given this advice a million times, and people You may be sick of it. But I think instead of the traditional institutional childcare, can you find a retired grandmother who's bored out of her mind and has got all the motherly instincts? We did this with our kids when my wife was working full-time, and it's a fraction of the cost. If you're paying three grand in childcare, what if you paid 1,500? I'm not telling you that's the number, but we're trying to give you real solutions here between a roommate and an awesome grandmother in your community would I love to take care of your little guy. That's slashing your cost in half.

Yeah.

Even shared nanny situations that exist in your neighborhood.

We break up or at least kick deadbeat out. I'm not telling you to break up with him at this point, although I would. But if we kick him out and then hopefully he wakes up, start selling something.

The sad part is we just have to assume that it's going to be status quo and that he's not going to contribute. You have to craft a plan forward with or without him. Right now, without him.

What did I leave out, George? What else would you do on that reducing cost now that you know what her margin is?

I mean, you're going to have to keep this job you have, hopefully it's steady, and work on getting rid of all the expenses in your life. The car is one of them, bringing down the rent. I can't solve the daycare problem instantly, but I think you at least have more options than you think. And even then, you got some room left over, which isn't a terrible thing. I would use every dollar, craft a budget tonight, and then go, what does the next six months look like? What does the next year or two look like? And hopefully this is just the season and you'll be out of it.

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Chelsea, how can we help today?

Hi. I needed just some input. I've been able to successfully pay down since July over 12,000 in debt. Way to go. I've been working super hard at it.

That's awesome.

But I have... So I did a credit card balance transfer I had no interest, so I have no interest until October. And so I still have 6,000 remaining on that. Do you guys have any input on how I can pay down the rest of that 6,000 by October? Because what I've been doing is $100 each week, and any extra leftover from my paycheck, I take either half or most of it towards that credit card to get it as low as possible. So that way I can consolidate as much as possible.

So what has that been averaging out to?

Probably around $450 to $500 a month.

Okay. And you said you want to know how can you pay the rest of the $6,000 off by October?

Yes, that's That's my goal, at least, to try and get to.

It should be more than a goal. It should be this is on fire, because what's going to happen is they're going to backcharge you 29% APR, which is exactly why they offer these 0% cards. They're betting against you, Chelsea. They're hoping that you don't pay it in time.

I know. I'd go old school. This is the way I'm wired, so this may not work for you. But the first thing that came to my mind is I would take how many months that is. What is it? Seven months from now or six?

I think six now. Six.

Yeah. Okay. It is February. So that means a thousand bucks a month.

That's exactly what I do. The old school division, and that's what it's going to take. But your question was how. But we got to first get with the what. It's a minimum of... I mean, that's your average, a thousand bucks a month. How How I make an additional thousand bucks a month is essentially the question I would then be asking. I think that's doable.

How much do you make in a month?

I bring home 4,100 a month.

What do you do for a living?

I do insurance.

Well, George is the budget king here. If anybody could crunch it and try to find that- Crack the case on this. Or some of it, he could, and I'll give it to him. But I would say, George, I think she also needs to look at a second job selling everything, the basic stuff we've said for decades. I just think, Chelsea, that's your number. I think if you circle $1,000 and put it on your mirror, your refrigerator, put it all over the house, and it becomes so much a focus for you.

It's visceral.

You will make that additional thousand bucks a month. I think if you gamify it, I think it's something you'll look back on 30 years from now and go, That was one of the most inspiring things I ever did. That's my two cents on this.

Are you doing any investing right now, Chelsea?

No, not now. Previously, I had Bitcoin and I had profited $1,500. I went ahead and with the drew that just at the highest peak that I had in October. Good. You put that on the And put that on this credit card. Yes.

Okay. Do you have anything else in savings?

Technically, I don't have a savings, but I always keep a month and a half's worth of my rent in a separate checking account. So my rent only goes in and out of that. I have my paycheck split.

Okay, and what are your total expenses to cover your rent, food, utilities, all of that?

Around 3,200.

Okay, hence it being pretty tight to the end of the month to throw money at this credit card. So that's where we need to figure out, hey, how much of this 3,200 can we free up? And that might mean we are not eating out. We're going to get real intense about budgeting. Every single penny is going to be accounted for, and we're going to get a second job. All of that I mean, you don't need a huge number to throw a thousand at the debt. You need a few extra hundred dollars. Because you said you're able to throw 500 bucks a month right now, so you need an extra 500 on top of that. There you go. So that becomes the number. And so you can Do the math and go, Hey, if I get a job making 15 an hour, here's how many hours I need to work. If I can do whatever, Uber Eats, Instacart, DoorDash, whatever the thing is, if I do it this many hours, here's how much I can reliably make. And you can do anything for six months, especially as a young girl. You have time on your side and energy, something Ken and I do not have.

That's true.

Speak for yourself. You're very inactive. That's fair. You have no gluten. That's fair. Okay, Ken. So that's your problem.

This is about Chelsea.

Let's focus on Chelsea. I, on the other hand, am very active and I'm okay with gluten. I have You have plenty of energy. Thank you very much, George.

We're having fun, George.

I'm somewhat young. I'm probably sound younger than I am.

How old are you?

I'll be 35.

Trust me, that's young. Go ahead, George.

I'm your elder.

Take the shot here.

No, I'm not going to mention Ken's age on air.

You're pulling me into the low energy deal. I don't know about that.

But can you do this for six months? That's what we're asking. Can you make this sacrifice to become completely dead free?

Five hundred extra bucks a month. That's the challenge. Can you do it?

I think so.

I need a little more confidence out of Chelsea.

I don't like that answer. I don't like that answer.

I feel like I can. I definitely could be eating out less because that's been about four to five times a month, so I could cut that down to maybe once a month.

What if you went for a zero dollar month as far as spending on things that weren't absolutely necessary to survival? I promise you eating out is not necessary to survival as much as it can feel like it.

Yeah, I definitely could do that.

Then try the next month. Then it becomes a game. It's addictive, and you want to see how much money you can save. Then all of that money going towards the credit cards will validate the sacrifice. That's what you need right now. You need to see some progress. You thought you saw progress with the zero % balance transfer. What really happened is you paid the credit card company three to five % of the balance for the pleasure of delaying the interest. That's all it was. Right.

Because we're doing that because my credit card payment was so high, I was able to basically eliminate the interest and actually make a dent in it.

Yeah, which is great. I'm happy that you're able to make more progress than you would have, but we need to take advantage of that right now and go, Okay, we're actually going to attack debt harder because of this, not get comfortable because the interest isn't racking up. Because I promise you, behind the scenes, it is. When October first, it's going to hit, and that interest will charge you.

What's the four to five times eating out a month? What do you think that adds up to?

Probably a couple of hundred dollars.

Looks like we just found our debt payoff money. Wow.

I think so.

So your side hustle has become not eating out.

Yeah, but I still want to see you- Both and. I want to see you not just hold back activity. I want you to do something, too. That intensity combined with sacrifice. So effort plus sacrifice is what I think is a really powerful combo.

That's a good combo right there. That's a good formula for life. What? Effort Effort plus sacrifice. If you just do those two things, you will be successful.

I think you're right. I think I didn't plan to... But that's true. It's actually true in any area of your life. Think about relationships. Put in the effort, guide Guys, to be a good husband, sacrifice as much as you can, when you can, how you can.

That looks like serving in a relationship.

That's a big win, relationally, physically.

I mean, you know on the pickleball court, there's pickleball, there's the wait room.

Two things that you would do well to introduce into your life.

I would not darken the door of a wait room.

I'll tell you that right now. What are the chances that I get you in the wait room in this 2026?

If we filmed it for content, I think we could do it.

Okay. As long as I've always had a vow to my wife and kids and close friends that I'm never going to post anything on social media where I'm working out. I think that is-Tacky. I don't like it. But if it's you and I'm holding the phone and watching you and encouraging to get that five-pound dumbbell curled up?

On each side.

Each side, I think that's the content America needs to see.

That's good. I much prefer a financial sacrifice and effort. I can do that all day long.

Yeah, but see, that's my point. That to you is not a whole lot of effort. You are naturally tight and frugal.

Tell me, my muscles?

You're tight there, too, but that's your anxiety. That's a whole other issue. All right, so can I get this on the record? Yeah. I'll talk to your social media person. I'll talk to mine.

You will be my personal trainer for a day.

I'm just going to be there to cheer you on and try to make it funny.

No, it's competition.

America is going to need some comments that they hear while you're in workout gear, number one. Number two, doing workout moves.

I guess we got to go shopping for workout gear now. Not sure I own that.

You don't have any workout gear?

I try not to, because if I have it, I'll probably work out.

I thought I saw it on the Ramsey Cruise.

Yeah, I was in there. That was only to get to the sauna. You got to go through the gym.

Folks, don't go anywhere. We got more coaching calls, and George is going to do some pushups real quick, get his energy up.

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Hey, I'm really just wondering, am I being a little bit too aggressive on my student loan debt repayment?

Are you starving? No. Probably not, but give us the numbers.

So my wife and I have about 70,000 total in student loan debt. Okay. Since March of 2025, I've made almost $25,000 in payments. And I guess I just worry, is that too much to be paying when I only have a $1,000 emergency fund with a wife and a two-year-old?

Well, you've been doing this for a year now. How's it been going? You like the progress you've been making?

Yeah, I do like the progress. I'm almost done. I've almost completely paid off my bachelor's degree loans. So I really just have my master's degree loan and then my wife's bachelor's loan, which is she might have the public service loan forgiveness as a teacher.

All right, so let's just back into this a little bit. The $2,000 a month is essentially what you've been putting away, correct? To the loans.

Correct. It was a lot left at first.

I understand. But is that a zero-based budget? Is that 2,000? There's no other margin left. Is that essentially your margin? If we were to look at your budget?

No, there's probably much more.

You could put three or four towards the debts a month? Yeah.

So there's your answer.

By definition, you're not being aggressive enough. Oh, boy.

I had a feeling you were going to come off the top ropes on that one.

I'm looking at these numbers and going, Are we going to do this for three more years at this rate? Because I think, yes, that's too much. Four years to just lodge through this debt is just too long based on your numbers and your income. I agree.

I was just trying to give him enough time to let it sink in that he's not doing that, that You have a margin. So this is not reckless behavior. That's how you position the question, right? Too aggressive. In other words, unwise. But to George's point- I would have told you it was unwise to go $100,000 into student loan debt for a master's.

But we're on the other side of this. You guys are using the degrees, right? You have great careers. Yeah, I make a well above average salary, and she probably makes above average teacher salary. Great.

So let's George, I want to take him somewhere here now because we've answered your question, and then George has made a really strong challenge. But I want to get to the emotion behind your question. Actually, I'm going to ask him a question, and then George way in on this, okay? So, nick, here's the deal. If something were to happen, a major emergency, George, let's have some fun. Pick a garden variety emergency that would be more than $1,000. That would happen for someone like him, and he would have to come up with more than $1,000 that he has.

It's summertime in Richmond, Virginia. Come July, HVAC goes out. They go, Hey, man, you got to replace this whole thing. It's going to be $6,000.

All right. So, nick, that's the scenario. Based on what we all know now, what would you do?

Probably just make minimum student loan payments and just pay that payment up front.

Boom. You take your thousand from the emergency fund and take your next paycheck, and you go, All right, we're going to get this done. We're going to cash flow it, and then we're going to hit play on the baby steps once we're through this mess.

Now, the reason that I walked you through that, nick, is because I want you to deal with the emotion that was behind that question that you asked us.

Yeah.

You have fear that you're being irresponsible and couldn't take care of wife and baby if something were to happen that would go above and beyond the $1,000 emergency fund. True or false?

Yeah, that's I hear it.

Okay, and so we just walked through it? Yeah. It's important to not just call into a show like this and get our logical and philosophical and methodology answer, which we gave you, but not address the emotion. Because if you don't address the emotion and do that exercise, it goes in one or out the other. That's what I find. Isn't that true, George? There's a powerful emotion here.

You don't want to just pay off debt more aggressively because George and Ken told you You want to do it because you truly want financial peace for your family, because you feel at risk with $70,000 owed to these student loan companies, and you want that income back in your life, don't you? How good is that going to feel when those payments don't leave anymore? Yeah, it probably will feel very good.

Really, I started off with $360 payments, and then these recent months have been more like $3,700.

I'm Amazing.

Yeah, great job. Keep it up. There it is. You know what to do now, so go do it. Let's go to Hannah in Cincinnati, Ohio. Hannah, how can we help?

Hi. Me and my husband, we inherited a house from his family, and we have another house that we have a mortgage on. So we're in the process of selling this house for the next couple of months. And with paying off all of our debts and paying family back, we're going to have an extra $100,000. And we're torn between, I want to pay off the mortgage on our current house, just pay $100,000 to that. He wants to save the money and invest it and just make money from that point. So we're at a crossroads of what to do with this extra money that we're going to have.

So at that point, you guys will be in Baby Steps 4, 5, 6, no debt with a fully funded emergency fund and $100,000?

Yes. Okay.

Well, what if you split the difference? What if you max out two Roth IRAs for the year and you put a bunch toward the mortgage and you enjoy some of it and give some of it? So I'll add to the list of things to do with this $100,000. Oh, that would also be- Would that make everyone happy? You got 15K growing with compound growth for retirement. You put another 70 or 60 on the mortgage, and that still leaves you with some fun money.

Yeah, because I mean, so we're like... Because They're saying that we could sell it for $280 to $290, and obviously we have to pay taxes and stuff. We're paying his grandpa back because it's his grandpa's house, and he's just giving it to us. And then we took out a small loan to fix the house up because we have a 13-month-old, so we don't have the time to fix it. So paying off all that, paying off my student loans car, a couple of credit cards, where it's an extra, I think, $125,000. So I said, let's just- Hey, while we're at it, let's put $5,000 or $10,000 in a $5,29 plan for that little 13-month-old. Oh, yeah. That was also part of the discussion of we need to start doing something for him for school in the future. We're in a very thankful, grateful situation financially. I'm just like, okay, what will get the most bang out of our buck of, hey, let's do this smartly and smartly, and the best way possible.

Well, either way, everything you're doing is building wealth, whether that's paying down the mortgage, that's building equity, and it's a forced savings plan with a fixed rate that you're making, which is your mortgage interest rate. So it's not lost. The money is not locked up in the house forever. That's part of your networth. That's part of your state. And so that's part of it. Now we're going to invest over here. We're going to get some compound growth going. You guys are young, right?

I'll be 31 in a few weeks, and he is 28.

So think about that. If you guys are in your early 30s with a paid-for house, are you going to be okay in retirement Yeah, I have almost 100,000, and he has 120,000.

Oh, that's great.

So lay out the numbers. Your income, 15% or more once the house is paid off, invested. You guys will have millions and millions of dollars well before you even retire. I'm not concerned about building wealth necessarily. I just think we need to split the difference to enjoy life now and build wealth for the future. I think splitting the difference will make everyone a little bit upset, and that might be the solution.

George, you need your own Judge show where they come to you with one idea and you say, I'll tell you what, I see your idea. I'm going to raise you five different ideas, and everybody's so happy, George.

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Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. Alongside George Campbell, I'm Ken Coleman. Excited to have you with us. 888-825-5225 is the phone number. Jessica is up in Seattle, Washington. Jessica, how can we help today?

Hi. Thank you so much for having me. Sure. I am a newly single mom. I just left a domestic violence situation I'm a mama, too, so I'm trying to figure out what should I prioritize first.

Well, first of all, we're so sorry you've been through this, and we're glad that you're safe. I hope you're safe, yes?

Yes. Okay, great. What does life look like now for you guys, you and the kids?

So currently we are in a shelter, and I am going to get assistance with housing assistance. I'm looking for a rental right now, but how that looks like, it's a two-year program. Each, every six months, they start with the 100% covering rental up to just independent. So the 100, 75, 50, and 25. So right now I'm unemployed. I only have the $1,000 savings. I'm trying to figure out what to do now. I'm looking into going back to school.

Do you have any debt?

$20,000.

What is that comprised of?

It's personal loans, credit cards, but a big chunk of it is Probably about 15,000 is in student debt.

Okay. What schooling are you considering?

I'm trying to maximize my time with housing assistance. I'm looking I went to going to school for a dental hygienist.

How long of a program is that?

If I go to a trade school, that would be about two years.

How much would that cost?

A hundred thousand.

Okay, that's not an option. Is there a cheaper option to get into dental hygienist work? I'm guessing not, but you were about ready to say something else, and I cut you off.

I've been exploring community There is a program, but I would have to do... Because I have my associate, so I would just have to take some science classes, and that would be about a year and a half.

What's the cost on that?

That one is about $15,000, but I would have to do a year and a half of prerequisites, and then the two-year program.

Okay, so three years, $15,000, or two years, $100,000?

Yeah. Okay.

I just want to make sure that we put this out here. Let's take the two years, $100,000 off the table, okay? And let's also press pause on this idea of the $15,000 plan. That's doable, but that, to me, is a pause, and we get to that later. We need to get ourselves employed, get ourselves out of the government housing and the assistance, and get rid of all this debt. George is going to walk the baby steps. But I want to talk. I want to cut off this idea of, I need to go to school right now while I'm in this shelter situation. No. What you need to do is get employed if they'll allow that. Do they allow that? If you were to get full-time employment, would they kick you out?

I believe not. Great.

All I'm trying to do is, George is going to walk you through the get out of debt and get stable financially. But I really want you to hear me on School is down the road, and that option is still going to be there, but the $15,000 option I like. Why in the world I'd rather spend a little bit more time and way less money on that? That's done. We're not going to touch that right now. You have bigger emergencies. George?

Jessica, you've got $1,000 starter emergency fund. You do have a bunch of debt to clean up. To Ken's point, if you could work full-time right now and clean up the debt, Now, you had a fully funded emergency fund, now it's going to be a whole lot easier to cash flow any program that you go through, correct?

Yeah.

What do you do for childcare if you're working full-time?

My children go to school.

Oh, great. Okay, so they're taken care of during the day. You can go work. Do you have reliable transportation?

I do, yes.

Fantastic. Okay, you are ahead of the curve in a lot of ways. That's awesome. So you said, what do I Number one is your own health and safety and your kids health and safety. We've got that covered? Yes. Number two, we're going to protect our four walls. That's our housing, food, utilities, transportation. You have housing covered. Can you pay for all of the rest currently?

I'm going to be... No, I'm not going to be honest about it.

Okay. So we need income ASAP in order to just even, even with housing covered, which is a huge blessing, we still have other Yes. And so we're going to do whatever we can working right now, even if it's a part-time retail job or hospitality job, to bring in some money to cover the gap, while we look for something that's full-time.

Okay.

And that means you're going to make minimum payments on the debts, if you even can. And don't feel bad if you can't. If you can only cover your four walls, and that's how you need to get by right now, then it's okay. I'd rather you not fall behind on payments, but yourself and your house need to come first. You see where we're going here? Yes. It's a priority list of me, kids, the house. Now we can focus on the other things. That's only going to come through income like Ken talked about. Have you looked at jobs in your area that would make sense for someone with your experience?

We live in a rural area, so there's not much locally. Probably the closest is about an hour. For, I guess, support with my children, I'm pretty much the only one, so I don't want to be too far out.

You're stuck in this area because of their school? Is that what's going on? Yeah. The housing?

Mm-hmm. Okay, but let's just brainstorm really quickly. Are there any big box stores, big stores that are employing hourly workers?

Probably about 45 minutes away, yes.

Okay. Is that too far, or could we make the 45 minutes work?

I I can make it work, I think, just for emergencies and anything.

But you know what? I'm telling you, mama bears like you have had to face far worse, and I believe in you. I'm just telling you right now, you cannot have this mindset of, Well, I live in a rural area, and there's not a lot here. Does it matter?

I have an ignorant question. What do other people who live around you do for work?

I don't know. There's a lot of big houses, so.

Start talking to people.

I would start up some conversations. Wait a second.

Wait, I just got an idea. You said There's a lot of big houses.

Those houses need to be cleaned.

Those houses need to be cleaned. I'll guarantee you, I know the type of people that live in those houses. They're usually unhappy with somebody that's working for them. If you come in and do something better than them, then you are going to get the job. Yeah.

Yeah, that's great. I actually used to do that. I used to go.

Perfect. You know what's great about that is? You're minutes away from the kiddos. If something were to arise, you're in a safe environment.

Yeah, and it's It's flexible.

It's flexible. They don't care. They just need it cleaned.

You can charge 200 a cleaning, couldn't you? Yeah. All right, let's go. You do five of those a week. That's one cleaning a day. It's a thousand bucks a week. That changes your life.

Yeah.

I would start knocking on some doors and just say, Hey, listen, I live in the area. I do house cleaning. Here's my card. Go get them printed cheap at your local Staples, whatever's nearby.

Jessica, this is not even in the category of, Would you do whatever it takes. We know you would. This is something that's doable. It's not demeaning. It's safe. Go start knocking on doors. Talk to everybody that'll listen.

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All right, Sarah is up next in Phoenix. Sarah, how can we help?

Hi there. My husband is getting laid off in May. He's been applying for jobs for almost a year now, it feels like, and he works in ministry, so that's why he's been applying for jobs for a while already, because he's just not making enough money for Our family of five. He makes $45,000 a year. We've been able to stretch that for a while, but there's things that we haven't been able to have, like life insurance, can't pay for our debt, just lots of things. He can't find a job, and it's getting down to the wire. And so we're not sure whether we should move in with his parents and him get some certification that will get him a job that pays well enough Also, that's the trouble because anything that is hiring, it's $18 an hour, which is not enough. Or if he should join the military, or if he should start a business. We don't know where to go. What to do.

I think we will look I get some of those options, but I don't think that that's the primary thing we need to be looking at, is my guess. I could be wrong. How much debt do you guys have? A lot. Lay that out for us. Lay that out for us. Go smallest to largest. George is writing it all down.

Okay. Smallest is his student loans. It's about $20,000. Then mine, I have $40,000 with federal loans. And then my mom, this is complicated, took out the parent plus loans for another $40,000, and she expect me to pay her back for that eventually.

Did you agree to that upfront? When you say expect, was that just like a handshake agreement? Did you say, Hey, I'll pay you back?

Yeah, I think I did when I was 18. So right when I started college, I didn't know. I just signed up for it You know what I mean? Okay. What else? I said, Yeah. And then our house, our mortgage, and that's it.

How much is the mortgage? What's the balance and what's the payment?

It's 85,000 right now for the house, and then our payment is only like 8: 30 a month.

Okay, well, there's some good news in the mix. So we definitely need more income to pay off $100,000 in consumer debt.

Do you work outside the home?

No, I just started a holistic nutrition business, so I haven't really made any money from that yet.

Is it like a multi-level marketing thing? No. This is on your own?

Yeah.

How much How much money do you think if he were to get a bump from the $45,000, how much do you think he needs to make for you to feel like, Okay, we've got enough income coming in?

Yeah, our goal is Fifty-five thousand. Total?

Yeah. So another 10,000?

Yeah. Okay. I mean, it's probably not enough just that to start paying off debt, really.

Well, that's probably right. I don't know. I'm asking this question. George will walk you through here, but I definitely don't think he needs to start a business, and I don't think you need to start your business. I think you need to press pause on your business and let's see if you can go get a 25, 30, $40,000 job. Then he's not waiting around to make some giant career move at this point because we're under the gun three months away or less to be laid off. So he's going out and doing whatever. We're going to do whatever for a season. Let's say both of you can make 40. That's 80,000. Now, based on the debt, you just what?

I just had a baby five months ago, and I really don't want to put my babies in daycare.

Okay, I get it. But that's, again, assuming that daycare is your only option.

We don't have any family around here.

Your husband's in ministry at a church. I bet the church has got some old ladies in it, right?

Yeah. Well, not that could watch our kids.

Do they have a daycare as part of the church?

No, it's a small church.

What's keeping you guys in this area if he's laid off and you're not working?

Nothing, really. We love the area, but we could move back to where his parents are, and that would be helpful. But it's more expensive over there, the cost of living is.

Here's what I'm hearing, Sarah. You called us for some advice, and everything we throw at you feels like a long shot, the way you're answering it. I think that's a mindset issue.

Yeah.

You are in some deep water right now, yes? Yeah. How do people act when they're thrown into deep water?

I don't know, the panic.

Urgent, at least. What do they do? They start flapping their arms and kicking their legs, and they make some effort to get out of deep water, yes or no?

Yeah. My husband is. He's doing- He's applying.

He's not working.

There's a difference- Well, he has a second job. He does work for his job.

Okay. I'm sorry. I didn't get that information. All I heard was is he's in ministry. I'm operating on information I've been given. Here's the point I'm trying to make. I think there needs to be some urgency. I think living with our parents or his parents, I don't think that's the answer. I think it is We need to get out of this. So enough of my mindset stuff. I'm very concerned, though, if I can challenge you. I'm concerned about the mindset that I'm hearing. Now, let's get to the numbers, George. Based on that rundown of numbers, what realistically do they need to be doing?

Well, as it plays out, if you guys kept a $40,000 or $50,000 salary, you would probably be paying off this debt for the next decade. That's just a math. That's not me just trying to be negative. Now, if you guys made $100,000 and you had $100,000 to pay off, probably could do it in three-ish years, maybe four max.

Okay.

And so that's the math we're up against here, is you need to make double the income or more in order to pay off this debt in a reasonable amount of time. Because the baby steps exist, those first three, for aggressive gazelle intensity. It takes most people about three years to get all the way through that, from baby step one to three, completely out of debt, fully funded emergency fund. And I don't want to see you guys treading water all because, well, it's only the job he can get out here. Not much out here.

He's been trying. I get it. But just filling out applications and all that stuff, and while the clock is ticking down, here's what I don't think you realize, and I'm coming at this much older and much more experienced. So this isn't me looking down my nose at you. I'm just telling you the reality is what you don't realize is what the debt and the stress of him not having a better job and the shoe falling in May, that he loses his job, the debt payments. Your baby is feeling all that anxiety, and you don't even know it. And so what I'm preaching is a mindset of urgency, and you're letting life happen to you instead of happen to life. So, yeah, if you got to move where you can get childcare for free, but it's a little bit more expensive, that's fine, because you can make a lot more money. And if you got grandparents to take care of the baby. Great.

You guys both have degrees? Did you graduate?

Yeah, he's got a degree in Communication Studies. I have a degree in Fashion Merchandising.

Perfect. So you both could get jobs in those fields. My gosh. If he gets out of Ministry and does... I mean, there's a lot of jobs in Communication. I've got one of those degrees. I made use of it.

You need to go get you a job at a fancy department store like Nordstrom or Bloomingdale's. Use that degree. Learn how to do makeup. Something. You've got some real experience and skillset. True or false?

Yeah, in nutrition, not really fashion merchandising.

You got a degree in it?

Yeah.

If I'm hiring and I look at your resume, I go, Oh, she's actually got a degree in fashion merchandising.

She knows something about it. Every serve I hit to you, you just hit it back. I don't know what to tell you, Sara. We see this as actually a young couple who could come together and lock arms and double their income by just sheer effort.

No matter what you choose, it's going to be hard. Moving across the country and higher cost of living, it's going to be hard. Staying where you are is also going to be hard. Right now, we got to choose the thing that has our best shot of getting us out of this muck and mire that we are in.

Well, Dave, on the show all the time we get calls about cars, used cars.

What's One thing you want folks to know.

Well, really a couple of things. Number one is always buy used unless you got a million dollars. We don't buy new cars. If you're going to buy used, number two, you want it to last. That means regular, proper maintenance.

Yeah, that's a big deal. I know when Sam and I moved from South Florida up to Tennessee, that's the first thing you're looking for.

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Hey, how are you?

Doing well.

I'm about 65,000 in debt, 45,000 on a car that I leased for my wife, 5,000 on credit cards, and about 15,000 on other unsecured loans. And living paycheck to paycheck. I do work three jobs, but living paycheck to paycheck and don't have any savings, nothing for retirement. I'm 42, and just wondering if being able from this point to get to a millionaire status and on our own home, and we're renting as well.

What do you make in these three jobs combined?

Combined altogether, I'm bringing roughly between $105 and $125 a year.

What do you do? What are the three jobs?

Well, I do security, granite fabrication, and law enforcement.

Which one is the full-time day job?

Granite fabrication. Security is night time, full-time.

What's the law enforcement?

It's a part-time.

Okay.

Did you pick those up out of necessity to pay bills?

Yeah, I did. Well, I've had two of the jobs for a long time, and I just come back to the granite. I've been in it for several years since around '99, and I come back to it just to try to get straightened out and try to get some of this off of me.

I've been listening to Dave's Baby Steps Millionaires and the other book he has out, and it's just had me intrigued.

I'm doing everything I can, but it seems like every time I get a step ahead, I go two steps backwards with something.

I've got three kids and a wife, so just- Is your wife working outside the home?

No. My wife had two strokes back in 2019, which she is 100% well She's good. That's great. But she doesn't work. I just decided that...

And she doesn't want to work either as far as outside.

She's a homemaker. She stays home and takes care of the house and the kids, what their needs.

So why did we need a $50,000 car?

Well, she's never had a new car. I guess I started listening to Dave a little too late, and you guys a little too late. But that's where We got stuck with it after going there to get it. We was going to buy, and we got stuck in the lease instead of buying. And now it's already over. So they a lot $10,000 miles per year, and we're already over the $30,000.

So you're paying extra on top of that. What's your lease payment?

Well, I'm not paying extra. It's 628. 96 per month. But no, I'm not paying extra. But if we don't buy the car or if I don't jump into something different...

And see, I paid 8,500 cash down, and I paid for it for a full year, so I paid over 16,000.

Yeah, that is brutal. Because you need to either have the full amount to pay it off in a lump sum, which you don't have, or a lease transfer, which if even that's allowed, it's going to be really difficult to find someone else to take it over.

Right.

And so there's not a lot of good options with leases. That's why they're my least favorite way to drive a vehicle. I hate car loans, but leases take the cake.

Right.

Do you guys have money and savings at all?

We don't have any savings.

And no retirement whatsoever?

No I don't know whatsoever.

Okay. Well, I can give you some good news. You asked, Is it still possible for me to become a millionaire? Yes. Yes. If you guys are done playing this game.

We're done. We're done. That's why I'm on the phone with you guys.

Have you worked up your cards? You're working too hard. You know that? You're working too hard to be broke.

Yeah, I agree. You're going to pick up a fourth job just to keep up with another payment at this point. And so you guys are done. That means your wife is done, too. She is ready to downgrade her lifestyle in order to have a financial future that's worth having.

Absolutely.

Okay. Well, here's what it looks like. It looks like you working more. You're going to keep the three jobs, keep making 125K as we knock out the $65,000. That is your The only goal for probably the next, could you put three or four grand a month towards these debts?

Oh, yeah, absolutely.

I just don't know the strategy to go with, but yeah, I definitely can.

You're just going to debt snowball them. The smallest balance, probably one of these little credit cards, that's your first one to go. You're going to make minimum payments on everything else, make your normal lease payment, the unsecured loans, make the minimum payments, and on that lowest balance, you're going to attack it with a vengeance. If you can throw 3,600 a month at this thing, it's done in 18 months.

That's the car and all?

That's everything. I mean, you said 65,000 total. So just- That's correct. Napkin math says- Here's 65,000.

Okay, but here's what's off for me, George and John. John just told us, George, that he can't seem to get ahead. Something always happens. Then you ask him if he could throw 3,000 plus a month away, and he instantly says yes. So that tells me something's off. What's off?

Well, I guess this is what's off.

I get ahead, and then I turn. When I get ahead, I put out everything at once. So my snowball, this is what I've been calculating. My snowball is off. So I'll put so much to this and then get back behind and then I have to turn around and borrow again.

Behind for what? Are you not paying your bills?

Well, no.

I'll pay on something.

As of right now, I owe 65.

I've been paying toward things, but then I have to turn around and borrow, then I get back behind again.

It's a budgeting issue. You're not properly allocating your paychecks.

Yeah. All right.

That's what I- I guess that would be right. Okay. That's what I was digging for. George, that's where the coaching's got to happen right here, is to really, truly get control of the money so you know where it is, because that makes sense now. You've got the income. It just sounds like you're not putting it where it needs to go.

Then it's disappearing into bills and lifestyle and spending. I'm going to gift you every dollar, John, the premium version, and I want you to do something very specific. You're going to click on the Paycheck Planning tool, and it's going It will help show you where all the bills fall by the due dates. You're going to enter all that in. It will actually show you if and when you're going to run out of money. Then you can move the bills around so that they fall behind the paycheck. Because right now, everything's happening and you're going, I don't have the money to cover this next bill. It will visualize that all for you inside of every dollar. I think that will change the game for you on top of having a little bit of buffer in your checking account. Because right now, it sounds like you're riding real tight to cover all the bills.

Yeah, right now, as a matter of fact, my checking account is in the negative.

It shames me to say that, but it's in the negative right now.

Oh, boy. Can you turn off the overdraft with your bank? Because right now, you're getting dinged 35 bucks a pop every time that happens.

Yeah.

So just turn it I can. Transaction won't go through.

Okay.

And that'll reflect the reality that you guys are in. And that next paycheck, leave 500 bucks in there. Never let your checking account go below $500. That becomes your floor. Then you'll budget with everything on top of that. Every dollar will walk you through this, John, on top of giving you personalized recommendations on how to find extra margin because you have a great income. You're working your tail off. I want you to feel it. You can become a millionaire. I did the numbers for you. 45 to 67, you invest 15% of $100,000 income, you'll have over $1. 5 million. That's 22 years of consistent investing, but you got to get out of debt first, got to get that emergency fund, and I'm giving you three years to do all of that. You got this.

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Scott is up in Denver, Colorado. Scott, how can we help?

Hi. So I was calling to see if I could get some advice. Long story short, my wife and I had purchased a house about three years ago. We were in good. We were making all our payments. Then recently, she got laid off, had to get a job, got a job as soon as possible, and was able to help again in that sense. But currently, we're living paycheck to paycheck with a house, and it's eating us up. So I'm trying to think of what would be the best solution or how to go about this and to see if selling our house would the next best step.

Sorry to hear that. What do you guys make a year now?

So now we're making about 96,000 a year. That's like after taxes, I guess.

Okay, so what's your monthly take home pay?

Give me two seconds.

I can- I can crunch it for you if you're saying that's your take home. It'll be eight grand a month. Just about, yeah. Okay, and what's your mortgage payment?

Twenty-eight.

Okay, so nothing's on fire here. Is it higher than I would like? We say 25 % of your after-tax income, that would be two grand. 2,800 is not end of the world. I would not go selling your house tomorrow because of this. You should still have over five grand in margin to then live your life. So the question is, what is all that getting eaten up by? Do you guys have other debt?

So, I mean, we do. I have my student loans, which is just a lump sum and then a smaller lump sum.

What's the total of all your consumer debt?

So, no credit cards, but just student loans is about 27.

Okay. Anything else?

Not that I can think of, no.

Okay. So why are you paycheck to paycheck?

I don't know. I mean, we save. So I mean, we We try to save as what we can, we tive, and then we also set aside money for the mortgage, and then end up scratch. I mean, I can't really I don't know.

Have you guys ever sat down as a couple and completed an every dollar budget, where you just lay out, Okay, $8,000 coming in. Here's everything going out. If we follow this to a T, this is what will happen.

We do. We do budgets meetings. But I think my issue is that I don't know.

It's hard to say because- No, it's not. Hold on a second. I'm listening here, and I'm just going to be real blunt with you. Either you do know and you're not comfortable owning up to it, or you don't know. I got a gut. Tell me if I'm wrong, my gut is you guys actually might do a budget, but you don't follow it. That's my guess.

That sounds right, yes.

What do you mean it sounds right? Well, you're right, sir. It's right. All right. You see where I'm going here? You're being coached right now, and you can't coach somebody who doesn't go, Oh, okay. Yeah, I do see that. Because either we're right or we're wrong. I heard that. The issue then, George, is that's what I thought. They do a budget, and I think that's a generous It's like me making a workout plan.

Do I do the workout?

Right. I love to pick on George. If George had a workout plan that he found online and he went to the gym and he only was in there for 15 minutes, and I went to the sauna and steam room and didn't actually do the workout? Would you call that working out? No. I don't think that what you're doing is budgeting.

Okay.

Again, it's not to pick on you. It's to help you see that's why you can't answer George with certainty.

We want to solve the right problem here. The truth is, yes, it stinks that the income went down, but you have a great income still. I mean, you guys are making six figures after tax. I don't know how you grew up, but that's rich in my neck of the woods. And so your mortgage payment isn't the thing that's sinking you. I think it's the lifestyle creep and spending that you now... It's been exposed because of the lower income because you could stomach it when you guys were making more. And now you're going, Man, things feel tight. Which means if you look at your bank statement, it might be a better picture of your real financial reality of, Man, we spent a lot on DoorDash this month. We've been going out to eat. We have all these subscriptions. We have all these luxuries that we really can't afford right now while we clean up debt. So if I'm in your shoes, I'm not going to be doing any saving or investing right now. I'm just going to be cleaning up those student loans. What do all those payments add up to for the student loans?

It's like $325 Okay, so you'll get a raise right there.

That's almost four grand a year that you'll have back in your life once you pay these student loans down. And then you'll have a fully funded emergency fund of three to six months. How much do you have in savings now?

I mean, we do have 10 grand in savings.

Okay, so we're not quite following the steps. If you're following the baby steps, you would take nine of that 10 and throw it at the debt. Okay. Which gets you down to 18. And if you stop saving and investing right now, you could probably knock out 18 grand pretty quick. What? Four months?

All right.

So by fall, we are now completely debt free, restocking our emergency fund. And by 2027, you guys have no debt, fully funded emergency fund Your income's probably gone up, and the mortgage payment will now feel very reasonable. Now, I hope your income goes up and the mortgage payment becomes 25 %, but I don't think that's the root issue here that you called in about.

Got you. Okay.

Is there a Is it time for her to make more and get back to what she was making?

I think eventually. She had a tech job now. It's basically just different feel, different everything. She was just able to get something as soon as possible. Got a job with what she wanted to try. Good. Yeah. She's able to try that and enjoy it and try this job that she's always had an interest It's just a little bit less, but that's okay.

Well, I think she'll make up the difference because as Ken Coleman talks about, if you enjoy what you do, you're probably going to be better at it. You're going to want to become a master at it and Excel at it, which usually leads to promotions and raises.

That's right. So appreciate the call, but I think you guys just lock in, and actually know where our money is going.

Which means tracking the transactions as the month goes on, and not just setting it and then forgetting it and looking at next month going, All right, let's plan for the other month. That's right.

Let's go to Chris in Boise, Idaho. Chris, how can we help? Chris, how can we help?

Hey, how are you doing? I've been following you guys pretty religiously since I was a young man, and I've done pretty well for myself. Haven't bought a I'm going to buy a car in 10 years. My truck's actually almost 15 years old, but it's going strong. I had to give my wife's car away to my son because he needed it for work. So now, the first time in 10 years, we got to buy a car, and I'm thinking about going against all the things that I learned over the years and taking out a loan. We want to get a nice call. I know.

Listen, before we say anything, I just would love to know what your mental process was when you called into the show. Since you've listened to Dave and presumably us for many, many years, what was your thought process in asking that question? What did you think we were going to say?

I know. Here's the issue. I'm retired, and if I pull the money out of my IRA, it's going to be a 20 % tax on it.

Don't do that.

If I take out a short term loan, right now they're at three to two to four %.

And if I do- Chris, you told me this has been a decade long process. You know you got to save up for things that you want over time. Why is it now all of a sudden an emergency?

Well, it's not really an emergency, but we want to do something. We want to buy a nice car. We haven't had a nice car.

Let me rephrase that. You want to live beyond your means, and you did not have the discipline to save up for it. And so you want to shortcut it with a loan that's now going to add stress and risk to your life.

Well, it's not really that. I mean, we've got a lot of money.

I don't know. If you have a lot of money, then buy it in cash.

Well, but then I'm paying 20 % versus 20 %.

Then you don't have a lot of money. If you're talking about retirement money, we're not going to touch that if going to be tax and penalized. So we got to save up and have money we can actually use right now that's liquid, a high yield savings account. And so it sounds like you got to save up. We're going to be down to one car for a little while until we can do that.

I think it's great advice. I don't know why you needed to shout. I don't know. I don't think that was necessary.

I got upset because he knows better. I got upset because he knows better.

You're going to stop yelling at the callers. Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. George Campbell is sitting alongside Me, I'm Ken Coleman. And, warning to all of you, he is a little frisky today. He's a little upset. He's had it up to where, George?

Top of the head? Up to here. And I know I'm not that tall, but-I'm telling you. Still, that's pretty high.

He's a little upset, so we'll see what happens here. Beware, callers. Michael is up in Orlando. Michael, how can we help?

Oh, man, I hope you're not too upset. How are you guys doing?

I'll be kind.

Hey, Michael, I'm here to protect you because he is steaming. I'm kidding. We're having a little bit of fun. Go ahead.

All right. Yeah, absolutely. Thank you, guys. I'm not sure if I'm a little too... What's the word? If I'm exaggerating or if it's a really big problem, but I just wanted to hear what you guys think. So basically, I got laid off from my job as a health care retention specialist about April of last year, so maybe eight months, I guess. I ended up going back into my family's business. So that did not work out as well as I thought it would for me, and it caused a lot of family drama. So I drifted off from that. And Since about November or December, I would say, I've been looking for new work, and I went back to school working on my PMP certification. I've always followed you guys since my childhood, basically. Basically.

So you've been out of work for a few months. What's your question for us?

Yeah. I have been out of work. I do flip cars. You can call it a side hustle. So I carry myself that way. Okay. I went to school for my PMP certification. I went back to school for that. And since then, I've been looking for work. I do travel a lot.

How can How can we help you today?

So basically, I'm wondering. The schooling put me about $9,000 in debt.

Okay.

And you finished? Again, maybe. You have the PMP certification now?

No, I do not. I have the PAPM, so it's basically the associate of the PMP.

Okay. Okay, so you got $9,000 in debt.

Yeah. I'm just a little worried because I haven't really found the work yet. I'm looking for work as a project coordinator or assistant project manager at this point.

What's your monthly payment on the 9,000?

I think it's about $450.

Any other debt at all? No, sir. Michael, I love all the background you've given us. Fabulous context. What is your question?

I'm not exactly sure how I should approach this because- How you should approach what?

The debt? The debt, yeah.

Let's assume that your question is, how do I pay off the $9,000 as quick as I possibly can? What's the best way to do it, George?

You need income to do that. Right now, you're saying you don't have any income except for the car flipping, which is just getting Can you by? Right. Okay. Where are you living?

I move back and forth- Where are you living, Michael?

Just tell me, right now, where are you living?

Right now, I'm in New York. I'm going to go to India in a few days.

Why? You said you're traveling all the time. A guy who's broke shouldn't be traveling all the time.

Right. I actually help out with my family. They do some work over there.

You're going to India to make money?

Hold on. You don't have time to be a missionary?

Hold on. Are you going to Indy to make money?

I'm not going to get anything for myself, no.

Michael, what are we doing, buddy? You need a job.

My screen says, Should I file for bankruptcy? So you're telling me you're doing volunteer work while on the verge of bankruptcy?

Yes or no?

I guess you could say yes.

No, it's yes. All right, so- Yeah, you're right. Yes. So you need a job working at a gas station. You need a job working at a warehouse. You don't have time for this degree or certificate, whatever that is.

You've been floundering for too long. Can we agree on that?

Define floundering.

I don't know what that word means. You've been just floating through life, bopping around in the pinball machine, and just hoping that you make it through. Can we agree that's not a good strategy?

Yes.

Yeah, absolutely not. We We need some purpose. We need some clarity. We need some urgency.

But not bankruptcy. Let's just boil this down. You don't need to file bankruptcy for $9,000 worth of debt when you're an able-bodied young man. You pay off the $9,000. George is going to tell you, very straightforward, how you... Let's assume the income is there and he's got to go do that.

You get the project coordinator job. Here's what you do. Making $40, $45,000. Or warehouse or gas station right now.

Or whatever. Just right now, you need some income. By the way, it's not on the way to India. All right, George, how does he pay the 9,000 off?

You were going to live like a broke person, which should be easy because right now that's how you're living. But you're going to spend nothing outside of food, utilities, housing, transportation, and every other dollar that you can free up is going to go toward that debt. You'll pay it off pretty fast. If you can throw a thousand bucks a month at this thing, you're done in nine months. You're done before the end of the year. That gets you to freedom. But the thing is, the $9,000 is not the major problem here because for most people, that's nothing. They're like, This guy's barely in debt. Why is he calling the show? There is a mindset issue here because you called in saying, I'm on the verge of bankruptcy because I went into some student loan debt for a certification. That tells me there's a deeper issue here that you've been living this way for your whole adult life without real purpose or clarity or mentorship, coaching. That's what we're here to do. You need to get that job, and you need to stop traveling. You need to save up some money and avoid going to debt ever again.

I hope you can do that. At least you got the certification done. I don't know what it takes to get to a full If you need that to get the job, more money sounds like. But maybe they'll pay for it. If you get a good job and you work your tail off, they'll go, Hey, we'll send you back to get the full PMP certification. I hope that helps.

All right, we're going to go to Sam in New York. Sam, we got to get the quick question here, straightforward, and it looks like we can answer this one. What you got for us?

Okay, I'm looking at my 401(k). It's just a common money company known, and the choices are mutual funds, and there are known money companies The first row means they get a cut. The second row, they get a cut to mutual funds. And so the mutual funds, investors, other mutual funds, I'm paying multiple layers of fees. I'm thinking I might be just ahead just to take my money and go to one of these platforms where there's zero trading fees. And just go buy a couple of shares of the Dow, if I want that, or a couple of shares of the S&P 500, or a couple of shares of the Russell, or maybe the Russell is 2,000, 1,000, 2,000.

So the question is, should you do your own trading?

I'm just saying, get all the fees of management.

Right. What's that? So we got it. Should you do your own trading? Should you be your own stock investor or broker? All right, George.

If you want to invest in a Roth IRA and you want to open that yourself, you've done your research, you want to just invest in the S&P, you can absolutely do that with low fees. But I would actually look into what you're really paying with your 401k. I doubt it's as much as you think it is when you look at the expense ratios. But start with the Roth IRA, and then once you max that out, go back to your 401k, and you'll be fine in the long run. Your return should beat any expenses there It's that time again, folks.

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Today's question comes from Ethan in New Mexico. He says, I'm an unmarried sales rep in my mid-20s and considering buying my home. I want it to be a blessing, not a burden. So I'm confused as to why you use net take home pay to determine the recommended monthly payment and other money experts go off of gross income. I understand the difference, but would appreciate an explanation about the why behind your recommendation. Okay, so to be clear, Ethan is talking about our housing parameter. So your rent or mortgage should be no more than 25 % of your after-tax monthly income. And he's wondering, why do you say after-tax? All these other guys say gross income Fine. Or 30% of your gross income. Here's why. Your net income versus gross can vary greatly depending on where you live. Just ask anybody in California. Their gross income does not mean that's how much they get to use in our economy. And so net income is a much better indicator of your financial stability as far as what you can actually use to pay your bills. So net income, yes, it's more conservative than your gross income. 25% is more conservative than most people suggest, but it is to allow you to get through the other baby steps.

So baby step four, five, six, investing for the future, saving for kids' college, paying off the house early, which is something that most people don't do. So that's why it's conservative. If you're an unmarried sales rep in your mid 20s, you got time on your side to buy a house. Don't rush into it. Just wait until you can do it to where it's a blessing. Yeah, good advice. That's my take. I don't know. Dave may have a different explanation of it. It's his parameter, but I agree with it, and it worked for me.

Yeah, I like it. I Liked it. Jefferson is up in Indianapolis. Jefferson, how can we help?

I had a question on... When I first started working, I set up my retirement to increase one % every year, and now that's several years later. I have some debt, and I'm wondering if I should back off the retirement to pay down the debt and then push it back up later, because my company only offers 1% match, so it's not like I'm getting much free money from them.

Yeah. How much debt do you have?

About 68,000.

Okay, and how much do you make?

Together, my wife and I bring home about 140.

Awesome. So how long do you think if you paused investing, you would save the amount your invest, your percentage you're investing Which is how much? What's the percentage?

It'd probably be 13 %.

Thirteen %, and how much do you make?

I make myself 82.

Okay, so you would gain 10 grand back for the year if you pause investing for one year, which would get you out of debt faster. Now, are you still going to be able to retire if you do that? You're going to be okay with your nest egg if we come back swinging at 15 % or more for the rest of your life?

Should be.

Okay, that's what I would do.

Only 33, so I should have done that.

Oh, you got plenty of time on your side. So I'm making 140K. If you throw, let's say, how much do you think you could throw right now towards the debt if you paused investing? Which would give you You know, a decent chunk, 833 bucks back in your life every month.

So we have, I sold a bunch of silver coins recently, so I have almost 20,000 I have in a mutual fund. Great. Sorry, not sorry. Money market account. Okay. But we have to do a new roof inside our house this year. So I've been holding on to that to do that first, and then whatever's left from that, I can throw at it.

Okay. So I mean, the new roof might take 20 grand these days.

I'm going to do it myself. So I only have to buy the supply, so it should hopefully be a lot less than that.

Wow, that's impressive. Okay. So let's say. I wish I could do that. Let's say you got 58 grand. Let's say you have 10 grand, you pay down to 58. Could you throw, I don't know, five grand a month towards this debt at that point?

Probably not five grand because we have two kids that are both in daycare, and that eats up a lot. But we can probably do maybe an extra grand a month.

So how much total going towards the It would be between two and 2,500 a month. Okay, so I'll do the math for you. 2,500 a month, it would take you roughly two years. Okay. If you did it that way. Now, if you can free up more money, it'll take you less time, obviously. So that would be the goal, is worst case, we're out of debt in two years, and then I'm back to investing not 13 %, but 15 %, until the house has paid off, and then you can invest even more beyond that and catch up. So you got plenty of time. You still got three decades of a working career, so I have no doubt you'll catch up. But right now, it's, let's get rid of this debt and stay out.

But I want to challenge you. What would you say that you would owe that you could do to shorten that timeline that George just threw at you?

I've got some other stuff I could probably sell, and a couple of side hustles, like making mint Syrup and making lumber.

That's where I was going, knowing your skillset. Now, the fun exercise, George gave you a great starting point. Now, it's Okay, how much money would I need to make to do it in 12 months? You put that number out, then you go, How can I make that money? All of a sudden, it just gets really, really fun. You are a serious person. You'll get pretty motivated. I'm telling you, the exercise is to say, How much money to do it in 12 months? George, give us that number.

Twelve months would be five grand. That's the number I originally threw out. Man, it'd be cool to knock this out in twelve months.

Okay, so then now we have a number. With your skillset, stuff you can sell, how quickly can you make the five grand? That's your homework assignment.

Okay.

Watch how fun that gets. I got to do a little A mini lesson on this, George. I nerd out on this stuff sometimes. I haven't nerd out in a while, and this is important.

It's about time. You've been holding out on this.

There's a lot of people that need to hear this. They're in different situation than Jefferson, but it is the power of focus. You remember the last time you bought a car, George?

Yeah, it was recently. Okay.

Do you remember seeing that car all over the road?

Yeah.

Like three, five, seven days after that?

Oh, yeah.

That's an actual effect from psychology.

I noticed them a lot more.

Everybody does. This has happened to everybody. This is the power of focus. What I want people to understand is that when you buy a car, that's an intense, right? There's a lot of maybe research, of course. There is a lot of-Sleepless nights. Sleepless nights, maybe, or positive emotion. But you are focused on it. The day comes and you make the purchase, you drive it off the light. We see it everywhere. Now, the car gods didn't just drop that in there all of a sudden to mess with you.

There's not actually more of that car around me.

There's not more of those. But why do we see it? The answer is this nerdy thing in our brain called the reticular activating system. It's the part of the brain that takes pictures on what we focus on. That's why some days when we're having a bad day and we feel like everybody's against us, and you're at the grocery store and the kid talks to you like you're an idiot, but he probably wasn't. But you've been walking around all day going, I'm getting treated this way at home. I'm getting treated this way. Whatever. The point is what we focus on, our brain then goes and takes pictures of it. And so very nerdy, I get it. But this is all scientific, it's all psychology. The brain is powerful. And so him focusing on $5,000. Somehow Now, some way, my life changes dramatically for $5,000. But for people that are listening that are in much deeper debt, $50,000. That seems insurmountable until you start to focus on, how can I come up with or how can I pay off $50,000? I just wanted to encourage people that are listening and watching today that if you focus on the right steps and the baby steps are what you focus on.

It's why Dave preaches it. It's why we preach it. By the way, it's why it's worked.

It's focused intensity.

Focused intensity over time, multiplied by God, unstable momentum. I just want people to understand your brain will do the work if you give it the right inputs. So focus on whatever I got to do to make $5,000. And then opportunities that you didn't see previously will absolutely appear, just like the car that you bought.

Things that looked like work before now become an opportunity to go make an extra thousand bucks.

Yeah. I mean, this mindset stuff isn't motivational gobbledygook. This is the way your brain works. So focus on the right stuff and watch good stuff happen.

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 help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to ramseysolutions. Com and try Ask Ramsey today. That's ramseysolutions. Com.

Hey, if you have a simple tax situation, like you haven't had any major life changes or big investments, you need to use Ramsey Smart Tax. It's affordable and it keeps your filing simple for a simple tax situation. Plus, it's got built-in support in case you need a little bit of help. Filing early means getting the best deals and you get that tax stress off your shoulders. So go to ramsey solutions. Com/smarttax. That's ramsey solutions. Com/smarttax, and you can start filing now. All right, George, you ready for a Baby Steps Millionaire call? These are always really fun. Let's go to- Inspiring. They are. Sioux Falls. Have you ever been to Seau Falls, by the way? I haven't. Yeah, I have. It's lovely. The Falls, by the way, runs right downtown.

I didn't think about it. There's real Falls there. It's not just in the name.

It's absolutely stunning. Eric is joining us in Seau Falls. Eric, congratulations Congratulations on being a Baby Steps Millionaire. Thanks for being on with us and sharing your story.

Thanks, Ken and George. It's an honor.

All right. We like to run you through the list of questions here. Are you ready to roll?

Let's rock and roll.

All right. Tell us your net worth, Eric.

We just creeped over a million, basically at the first of the year. So we've been watching it little by little and finally got there.

Congratulations on that. That's got to feel good.

It did. We didn't get to quite celebrate with the millionaires on the Ramsey Cruise last March, but it just took us a few, almost another year, and we were there.

Well, I got great news for you, Eric. We got another one coming in 2027, and it's half full, so you might want to join us on that.

I know. I just got to hope my schedule lines up and allows us to go because it looks like a great route.

Well, George will write a note to your boss if you like.

A doctor's note. That'd be good. Yeah, it'd be great.

Tell me more the kids that are the problem.

Oh, well, I can't help you there.

No, no, I probably can't.

How old are you, Eric?

I am 44, about to turn 45. My wife's a couple of years younger than me. Nice.

All right, tell us what the mix of the one million net worth is.

We've got a house that's probably worth about a half a million. We still owe about 165 on that. We've got about 400 and some thousand in 401(k)s and IRAs, and then we've got about 150,000 in liquid cash.

Okay, very, very nice. Very, very nice. What's your income?

When we got married, 20 years ago, it was maybe all of 50,000, and now it pushes about 200.

What do you guys do?

I'm a CFO for a local power sports family of dealerships, and my wife is a manager at a sporting goods store.

Oh, I like that. Well, I bet you guys get the fun discounts between the power sports stuff and the sporting goods store. That's fun for me. George doesn't know what any of that means, but I would enjoy that. You got to be careful not spending at all. Right. That's good. Do you use a SmartVestor Pro by any chance?

We do. We use a local Compass Financial that we've used for a good 12 or so years that we love. He certainly helped us with that.

Got you set up well for the future because you're still a young man. Yeah, absolutely. How much of the... Well, we know this already, but we want to point out a lot of people think that wealthy people like you inherited, you inherited zero, I'm guessing. Is that true?

That's actually not true. About three years ago, my grandmother died. Because unfortunately, my dad had already died, my dad's portion went to my siblings and I. How much? About 90,000. Okay.

All right. Not a huge amount.

But I give it back, though, to have it gone to the generation before. But it's going to pass on its blessings.

What did you do with the 90,000?

It's actually sitting in a CD earning more interest than in paying on my mortgage. When those lines cross each other in three years, the mortgage is going to be gone.

Wow. All right. Very interesting. Let's see here. Do you have a degree? You and your wife, do you have degrees?

Yes, I have a bachelor's in accounting. She has a bachelor's in business administration.

All right. What was your GPA?

I probably barely got through. I had about a 2. 4. As Dave I would say, I played a little too much beer pong, and she was much smarter than me. She had close to a 3. 7, she tells me.

Isn't that fascinating? George, some of these questions, this is a pattern from our largest study ever done, over 10,000 net-worth millionaires, and these are very interesting facts. Everybody thinks, Well, you're a valedictorian or whatever. Got to be a genius. Eric, again, like every good man, clearly married up. She did better than you in GPA.

Even with your 2. 4, you became a CFO making a great income. I know. Just to give people hope that it's not all down to how well you focused in school.

Here's another fun thing we love to ask Networth Millionaires, what jeans do you wear, Bill? Excuse me, Eric. Eric, I apologize. Levi's. You wear Levi's? The newfangled ones or old school?

No, no. I'm probably about three, four years old now.

Where do you guys shop normally? Where does an actual real-life millionaire, where do you guys tend to go for things like groceries and clothing?

We've got Fairway and Hyvee here in South Dakota. I might try to keep the wife out of target as much as possible.

I got to do a follow-up, Eric. Are you a bootcut on the jean? What cut do you like to wear?

Probably more just straight.

Just straight? Okay, very good.

You got to wonder because you picture a millionaire, Ken. In Sioux Falls.

I thought maybe he rides a horse and he wear his boots.

Yeah, you think of an athlete, a celebrity, and you got the Erics of the world just out there in their straight-cut jeans.

Now Eric, George and I are both short, so we have to have our jeans tailored. Do you wear right off the rack?

Right off the rack. It's the most amazing thing.

What a blessing.

That's great. That's great. I love it. Too much on the jeans now. I got to move on.

I want to ask about the cars. People always want to know, what do millionaires drive? We see people driving around fancy cars. What do you guys have? Give us the year, makes and model.

We drive Handas. There you go. We have one of our Toyotas in the past, though. My wife drives a '15 Honda Pilot. I just got a '12 Honda Pilot because it just passed an '06 Accord down to a 14-year-old driver.

Wow. That's awesome. You were driving a car that is 14 years old.

Yeah, and I miss it, to be honest with you.

Tell people why, Eric, we're asking that question. How does it play into this financial picture you gave us?

Well, I mean, yeah, we've spent some money in repairs and maintenance, but I'm not going to write a check for $40,000 for a brand new car and just watch all that value disappear. I got too much tight wad syndrome in me. It's going to be hard enough just to upgrade even when we are debt free.

I love it. Even if you had an extra 500 grand lying around, you're still like, I don't know that I want to sink it all into that. Yeah. Well, especially as a CFO, you understand fiscal responsibility.

Yeah, a little too much.

Would you ever upgrade to a Hyundai by any chance?

No, probably not.

Okay.

There you go. I don't think I would call that an upgrade at all.

Boom. Oh, wow. Hyundai burn. Wow, he took a shot at them.

Well, if you're a Honda man, you're- Well, that's why I asked. He's an elitist. He knows that's the top tier.

Well, those cars are great cars. Okay, what would you say to young people that are listening and watching this?

There's a 24-year-old who's 20 years younger than you just getting started.

Could they mirror what you did? What would you tell them to get to where you are today?

Yeah, I think they certainly can. You just got to live off a budget. You can't just be racking things up on credit cards or not paying attention. I just started using every dollar like two years ago, but I still have Excel spreadsheets going back to when we were first married. You just got to pay attention to what you're doing. Be diligent, pay yourself at least a little bit first, and the baby steps work, just use them. That's good.

Just stay out of debt, live below your means. As you make more money, don't spend it all. Don't have lifestyle creep eat it all up and drive those used cars and instead build wealth instead of just trying to look wealthy.

Yeah, 100 %. I remember my parents saying, If you can't pay for it, then you can't afford it.

So there you go. That's good.

I love How do you feel now about the future of your family, the things that you might be able to do, the kids and what they've seen you do? How is this lifestyle and now where you've just crossed this line, what a big achievement. What's the emotional and mindset now that you have having crossed this line of being a Baby Steps Millionaire?

It feels good. I think, honestly, it'll probably feel even more real when the house is paid off and about the same time that you got a kid getting ready to go to college, line those things up. The bills never disappear, right? As the kids get older, the bill, there's just more zeros on it. But every once in a while, that's why it's good, like you say, to meet with the smart investor pro. About once a year. It's like, okay, you stay, sit back and take it back and take the big picture and everything starts to open up for the future. And it's like, all right, we did it. We grounded out. We can't afford to do some things and let go of the purse strings every once in a while.

I love There you go.

You might wake up someday and you can't anymore.

That's so true. I love it. You know what else I love? The straight leg Levi's, you can dress those up or dress them down. He can wear a sport coat.

That's good advice from a millionaire.

From a CFO.

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All right, our scripture of the day comes from 1 Thessalonians 5: 18. Give thanks in all circumstances for this is God's will for you in Christ Jesus. Our quote of the day from Zig Zigler, Be grateful for what you have and stop complaining. It boors everybody else, does you no good, and doesn't solve any problems. Wow. How about that?

I felt personal, Zig. I try to make my complaints entertaining.

That's the goal. I find them entertaining. I don't know if that's just because of your delivery or my weird sense of humor. All right, Bill is up in Santa Fe, New Mexico. Bill, how can we help?

Hey, guys. How's it going? Good. I had a question for you. I have all my debt paid off except for my house. I had to take out a home equity loan on that house. I'm trying to decide which loan I should focus on paying off, either the mortgage or the home equity loan, and I'm trying to get some advice on that.

Yeah, lay out the balances for us.

So the principal mortgage is $135,000, and the home equity loan is $125,000.

Goodness gracious. You said you had to take the Heloq out. Who forced your hand on that?

My ex-wife.

Oh, so it was a buy-out as part of the divorce? Yeah, exactly. You needed to give her her share, and so Heloq, yeah. Correct. All right. I mean, you win in the exceptions to the rule.

And You know what I like about this? Bill, you got him. He thought he had you in a corner and you put him in his place.

I thought Bill put a real nice pool out back. Okay, so you got the heelock and you've got the mortgage. They're similar balances. I would still attack the Heelock first. It's a variable interest rate and can be called due at any time. So it's riskier than your fixed rate mortgage. I assume your mortgage is fixed rate.

So, yeah, they're actually both fixed.

Oh, it is a fixed rate. Okay.

Yeah. And the principle is a two and three quarter %, and the HLock is like five and a half.

Okay. Yeah, I would just attack that HLock. At that point, since they're similar balances, they're both fixed rate. The HLock's got the higher balance. It's just an added layer of risk. I would want to get rid of that first and just make your normal mortgage payment outside of that.

Should I stop investing and do like I was doing when I was doing the debt snowball?

What's your income?

A hundred and fifty five a year.

Okay. So because this heelock is more than half of your annual income, it would be a baby step six item.

Okay.

And so that would mean you're investing 15 %, putting money away for college if you need to for the kids, and then anything else will go towards that heelock while making minimums on the mortgage. So I don't know how long that's going to take you at this point. This sounds like it's probably going to be... You're making 155, so to pay off 125 while making investments investing and paying the mortgage, is that going to make things tight?

No. So what I did when I took the heelock out, I did it for 20 years, so the payment was manageable. But my focus was to get it paid off, obviously, well before the 20-year mark Yeah, what's your goal with this?

How long you think it'll take?

I'm hoping in the next five years is what I'm hoping. I know on the principal mortgage, about five and a half years is what I owe left on it. And so I I'd like to get both of them knocked out at the same time.

Okay, so you'll knock out about 25 grand a year off that heel-off, and you're done in five years, and you'll be how old by then?

Five years, I'll be 49.

Okay, cool. And yeah, investing 15 % that whole time, only because it's more than half your annual income. Okay. And so I would just keep on rocking. It stinks that you're here. I'm sorry to hear about your situation, but you'll clean this up in due time. Luckily, the mortgage is reasonable. I mean, it's rare I'm sure you hear about someone with a mortgage of $135,000.

Yeah, well, the goal is to have that paid off next year, but other things happen.

Life happened. Yeah. Well, best of luck, man. Just think about it like this. You got $260,000 to pay off, which is still In America today, a reasonable mortgage, wildly.

That's a very good point. Richard's up in Las Vegas now. Richard, how can we help?

All right. How are you doing?

Good. How are you?

I'm okay. Thank you for asking. I'm calling because I have a question. About a few years back, I bought a bunch of Snap-on tools from the Snap-on truck, and I racked up about, I want to say, about seven to $8,000 in debt with a toolbox, a scanner tool to scan vehicles. And the shop that I was working for shut down, so I was supposed to just take my tools home, and I didn't continue with a mechanic career. I ended up doing construction, and things weren't going so well for me. And I went down the wrong path a little bit, and I'm barely starting to get back on my feet. And I got a phone call from a recovery agency saying that now they have a judgment against me, and now I owe them $17,000. Actually, $17,000 $500 for those tools, the interest, and the judgment. Now, my question is, do I try to call Snap-on tools to pay Snap-on tools, or do I just pay the recovery agency? Because they say they're going to go into collections and then they're going to start a wage garnishment and take 25 % of my check.

Do you have cash? Do I have cash? In other words, you just asked, should you pay? I'm asking, do you have money? It didn't sound like to me, at the start of this call, you had any extra money laying around. You got money in savings or checking?

I got $3,000 saved, though, but I'm just saving that for a rainy day because Well, it's raining.

Yeah, you need to validate all this debt. So I wouldn't do anything yet. Because here's the thing, did they actually sue you and win and get a court order?

Well, that's what they're telling me. I remember getting- Do you recall being sued and them winning? I recall them receiving a paper from Snap-on, and I messed up and I never showed up to the court date. But after that, I never got another letter in the mail saying that he had been won.

Okay, I would call your county clerk's office. That would be your next step. Ask if there's a judgment under your name and then validate that. And if it's true, then yes. If there's a judgment against you and they won, they can harness your wages, and they will.

Okay. Should I pay the recovery agency or do I go directly to Snap-on? Because they said that Snap-on- Snap-on likely sold them the debt because you didn't pay, right?

It went to collections because you didn't pay. No, I didn't pay. And now this debt recovery agency is trying to get as much as they can for this debt. So the truth is, you don't have the money. So what they'll likely do is allow you to settle, to call this good. But you're going to need some money in order to do that.

Do you have the tools still?

I have some of them.

Well, how much are those worth?

Not even half of what they're asking for.

I didn't ask you that. That's a homework assignment. Now, I have no idea. I don't know anything about tools. But if these are nice tools and you can get some money for used tools, find out how much. Go do some research. You got to take this thing. You got to take the bull by the horns.

If you can sell the tools for $4,000 and then give that money to the debt recovery agency and say, Hey, I've got four grand if you'll settle in full, but I need a letter in writing saying that you agree to this, and it'll be paid in full if I give you this amount.

Got that? They wanted eight. They said they would settle if I give them... First, they said 9,000. I said, I couldn't do that. Then they said, Okay, they will settle for $8,000.

That's great news for you. So contact them and tell them, I can't do eight, but I think I can do four.

Or if you give me Until this date, here's how much I can do.

But look up what you can sell those tools for. That's the primary thing you should be doing because you essentially stole the tools, right? Yeah. So sell the tools and take whatever cash, sell a bunch of other stuff. If you can scrape together four grand, they'll probably take it. Don't you think, George? Yes. But the key to this is, Richard, you got to make sure that you have something in writing so that they can't come back and say, Oh, it's more. This is the settlement amount, and I'm going to pay you.

You record everything, everything down, who you talk to, when you talk to them, what they said, get everything in writing and email, and do not give them debit card access. Do not give them your bank information. Do not agree to random payment plans. Do not let them harass you. You just got to say, I don't have the money. I want to settle, and I will settle. At some point, I'm working on saving up the money.

Don't let this sit. You've ignored it for far too long. You didn't show up to court. Don't let somebody talk you into this or whatever path you've been down. Don't go back down that path. Own up on this thing and fix this thing. This is doable, and you can move on. This is not the end of your life. All right, everybody, remember this. There's only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.