Transcript of One Decision Can Change Everything

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Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is The Ramsey Show, and I am Rachel Cruze hosting this hour with my good friend and co-host of Smart Money Happy Hour, George Campbell. And so we're here to answer your questions about life and money. So give us a call at 888-825-5225. Up first, we have May in Oklahoma City. Hi, May. Welcome to the show.

Hello. Thanks.

Yes, absolutely. How can we help today?

So I'm getting a little bit of conflicting advice. A couple years ago, me and my husband set up like a set kind of budget plan, and our goal was to pay down our mortgage, you know, as quick as we can as part of that.

We don't have any other debt.

Debt.

And, um, we've been paying basically double payments on our mortgage. So instead of $1,500 a month, $3,000 a month for the last 2 years.

Awesome.

I have $195,000 left on my mortgage with no other debt. Um, but last year when I went back to work full-time, we met with a financial advisor because with both of our combined incomes, we didn't like qualify for a Roth. And I finally had a 401k to contribute to. And he was looking at my savings and the amount of retirement we had already saved up at age 45, where we are now. And he was like, "Your interest rate is 2.9%. You shouldn't be making payments on your mortgage extra. You should be putting that towards your retirement because in the long term, you're going to make like 8% or more off of that by the time you retire. And that's more important at this time in life." So I was just wondering which is correct. Like, should I be putting money towards my mortgage extra, or should I be focusing on retirement and more savings for my kids, like their 529s and stuff like that?

Says every financial advisor out there.

That's the hard part. They're not terrible people. This person sounds like a level-headed person who's just doing math. And as you know, money is way more than math. It's about your peace, your options, your margin. Paying off your house leads you towards freedom. Now, investing can lead you toward a different kind of freedom. That's also true. But they have a vested interest in you giving them more money because that's how they make money. Do you understand?

Right.

Yeah. They are the investment.

Yeah.

So their judgment is clouded.

Might be a little sus.

Yeah.

I don't know.

I mean, and I'll say this too, from a mathematical perspective, yes, you're going to make more in the market if the returns are 11, 12%, right? Than paying off a 2% debt. Like it, the math of it, makes sense. Just like when you have debt, a lot of people want to pay off the highest interest rate first because mathematically that's all correct. But what George was saying is so true. I'm like, well, we have found is that money is so much more than math. I mean, we say personal finance is 80% behavior. It's only 20% head knowledge. So your behavior is not factored into his financial calculator, if you will. Your peace of mind, your, sleep at night, your autonomy, when you own everything, including your home, which is unheard of these days, like when these things start to play in and you have no debt, you have complete say over everything in your life, there's just something we have found from a psychological, emotional, spiritual perspective, it just changes. And what I tell people all the time, Mae, is listen, because I get the math argument, I understand it, So I would tell you, pay off your house, and if you hate it, go get a second mortgage and you can invest the, you know, go back to Netflix.

It'll be a higher rate, unfortunately. And that's what, like, hanging onto this mortgage.

I have a 2.9%.

Sure.

Yes.

But to me, it's golden handcuffs. 'Cause I'll tell you what my mortgage rate is. It's 0% for the rest of my life with no payments. And so I'm optimizing for something different. I'm gonna be okay in retirement. And the truth is, Mae, you guys are gonna be just fine in retirement. You'll be multimillionaires. Am I wrong?

I have no idea. My husband's military. We were not very good at doing— we did the bare minimum for retirement a long time. And I just started working a few years ago.

How old are you guys?

45.

OK. How much do you currently have in investments?

$70,000 contributed.

OK, great. How much are you contributing per month right now across everything? Retirement, anything else?

Um, just this year was the first time I maxed out my 401. I tried to do that like upfront at the beginning of the year. Um, before that we were like only doing 3%, 6% of our income at the most.

So you guys are easily investing $2,000, $3,000, $4,000 a month at this point?

Yeah.

Okay.

We tried to basically play a little catch up because we just, I don't know, for some reason we must've missed the memo on like retirement.

Welcome to the club.

Everybody feels like, man, I wish I knew this sooner.

So here's the math. You got $70,000. If you contribute $3,000 for the next 20 years, 45 to 65, at an average 10% rate of return, you'd have $2.8 million.

Oh, okay.

So I'm just saying, if you did nothing else, you just kept doing that. And by the way, once you pay off the mortgage, you can invest $4,000 a month, $5,000 a month.

And don't get us wrong, we still want— we still—

I was telling the advisor, I was like, I could play catch up. After my mortgage is caught up, you know, because I feel like I've been hitting a really good pace with paying it down.

Yes, but I will tell you, Mae, when you're looking at the overall Baby Steps, Baby Steps 4, 5, and 6, which is funding 15% of your income into retirement, saving for kids' college, and paying the home off early, those are all done at the same time. So we're not saying stop everything and just pay off the house. Like, you need to be contributing 15% of your income.

Right.

Yes, into retirement. You need to be putting some away for your kids' college, and then anything extra goes on the house, right? So you don't have to be intense and all this crazy, but the idea The idea of putting nothing extra towards your home and just keeping a 30-year mortgage for 30 years is wild. And so people that do the Baby Steps, we find they pay off their homes, it's average of what, 9 years?

It was actually 7.

Oh, 7 years. Yeah, 7. I'll say 7 to 9.

Pretty crazy.

I'm on track at my rate right now to be done at 9 years.

Yes, and that's great. So for a financial advisor to be like, oh my, you know, he's just looking at math at that point completely, just. Focused in on those numbers.

And they're not listening to your values and your goals.

And what you're wanting to do. That's a good point.

Financial advisors work for you.

That makes sense.

So a lot of people get it twisted and go, "Well, I just need to do what they say because they're smarter than me." No, they work for you.

If you tell them, "Hey, a value of mine is being completely debt-free. This is a goal of ours to get the house paid off. We also want to make sure that we're okay for retirement." They should be developing a plan that gets you to that goal.

Yeah, and I would encourage you, Mae, to go to RamseySolutions.com and check out SmartVestor Pros. 'Cause I know there's some there in Oklahoma City that follow, you know, they're amazing. These people have the heart of a teacher, not the heart of a salesman trying to get more money. So if you wanted just to spread your wings and have some options, SmartVestor Pros, and they're all over the country, they're amazing, amazing when it comes to financial planning.

Yeah, but it is hard 'cause you can crunch numbers all day long, but unfortunately numbers, and I'm a numbers guy, I love crunching the numbers, but it doesn't reflect the reality. So when, A job loss happens, a health scare, somebody wants to stay home, you want to move. Well, now you've got these golden handcuffs because you have to make these payments and you don't want to lose this 2.9% rate. So you stay there regardless of what you want to do with your life. That's the part that makes me sad.

Yeah, what your gut's telling you is something else, right? And then you're having someone, especially when it comes to financial planning, you know, pushing you another direction, which, yeah, I want them to, I want them to listen to you, Mae. But this is a question we get all the time. All the time. But the truth is, freedom is freedom, and building wealth and having autonomy over your money, there's nothing like it.

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Up next, we have Sarah in San Diego. Hi Sarah, welcome to the show.

Hi, thank you for having me.

Yes, absolutely. How can we help?

I'm calling because my side hustle has turned into kind of a long-term situation, and I'm now wondering if I need to include it into my retirement investments.

Oh, very cool. What is it? What kind of side hustle?

Um, so I'm a speech pathologist and my full-time is speech therapy, and then I picked up a side gig as speech therapy for a different company.

Okay, nice.

How many hours a week are you working?

Um, it varies because I can—

I'm in home health, so I can choose my own schedule, anywhere between 30 to 40. Okay, that's great. So how much income are you bringing in a year if you include the side hustle?

Including the side of, for me and my wife or just me?

Both, household income.

Household income is around $350,000.

Oh my gosh, well done, y'all, well done. I mean, at this point, yeah, I probably would. I mean, we kind of say any income coming in, but with your main sources of income, you guys are gonna be fine if you just invest 15% of just that.

That's $52,000 right there.

Yeah.

So you guys will, you'll be fine either way. But because this has become more significant and you were like, it's gonna be probably long-term, I would count that as my income for towards that 15%. Would you, George?

Yeah. I mean, it sounds like it's consistent. You're gonna continue doing this and you're debt-free with an emergency fund. There's no other sort of goals right in front of you.

Yeah, that's correct.

Okay. If you were like trying to save up for a house or something, I'd say, hey, it's okay to allocate that. If the side hustle exists for this purpose to save up for this goal, it's okay to allocate it there. But if this is just a part of your regular rhythm, you guys are in Baby Steps 4, 4, 5, 6, then I would just invest 15% of whatever else comes into your world. I don't think you're gonna regret it later. If you're too rich later on, you can call me and yell at me. I'm okay with that. No one's taken me up on it.

You can blame us.

People yell at me for worse things, so.

Way to go.

I know.

I have someone to blame. So great. Well, well done, Sarah. That's awesome. That's amazing.

The work ethic is there.

The income is there. That's the questions we want. Well, and the fact she's working 30 to 40 hours. Usually the side hustle comes into play for a lot of people on that Baby Steps 1 through 3. They're building up that first emergency fund, they're trying to get out of consumer debt or build up a fully funded emergency fund. So we usually see that, but it sounds like the way her life is structured—

It's sustainable.

It's sustainable.

It's not going to burn her out.

Yeah, I was going to ask if she was working like 60 hours a week. I'd be like—

And if it went away, you're still okay.

Yeah, it's not a big deal.

So that's a great place to be.

Well done, Sarah. All right, let's go to Elle in Cleveland, Ohio. Hi, Elle. Welcome to the show.

Hi.

Thanks for having me.

Absolutely. How can we help?

Well, I wanted to get your advice on where to allocate my funds. I am taking a new licensing or taking on a new licensing in my career. It doesn't necessarily guarantee an increase in my salary, however, career growth. There are 6 more modules I need to take and they're about $850 each and it's monthly., and then there's a review after that. That's $1,500. Um, I currently have $18,000 to pay off in credit card debt and a mortgage about $180,000 due, um, on the house.

Okay.

So as a single mother, few kids, you know, just wanted to know where, where, what do I do? Do I slow it down? Do I hold off on this until I'm in a better position.

How soon will this advance your career? Like, how— when do you have to— because you said it's not an immediate raise financially.

Financially, no, but at the same time, it is, it is part of a, um, part of the deal of this position that I took about a, you know, a couple years ago. So it's required goals for me to obtain this.

Yes.

Okay.

And they're not going to pay for it?

Well, I get reimbursed after I pass the final exam up to $5,000, which doesn't— I will still be short a couple thousand dollars.

Yeah, I mean, you said it's $850. You got $600 more plus $1,500 for the exam, right?

Yep.

Mm-hmm.

OK.

So that's $5,100 for the classes and an extra $1,500. So basically, you're just paying for the exam when you think about it that way. So in that regard, it's not necessarily— it's slowing down your debt-free journey, but then you get that $5,000 reimbursed. You can slap that on the debt, right?

Yeah. Yeah.

And it's somewhat required for your position too, right? So I see this as like a— it's a—

Non-negotiable. I have to do this.

Yes, for your career. So I would go ahead and make sure, number one, can you cash flow it? How much do you make a year?

About $115,000.

Oh, good.

Fantastic.

Oh, well, you could probably do, you could do both of this.

Yeah, do you have enough margin to cover the school plus throw money at the debt?

Yeah, I think in some months it might be short, but most months I might be okay. I guess I just am like, am I, you know, should I get this debt paid off fast, like faster so that I'm free of it, you know, and just slow down how, cause I can push back the exam. It's offered a couple of times a year.

So the exam portion could be, cause once you, once you go through the classes, you can get reimbursed or is it only once you pass the exam?

—once I pass the exam. Got it.

So that money's sort of locked up. You sort of already paid that.

How long would it take—

let's say you didn't do the courses and you just went full throttle on the credit card debt. How quickly could you pay that off making $115,000?

I think I could pay it off rather quick. And I'm fortunate— well, kind of. I had rolled it into 0% about a year ago. And I know I had that transaction fee. But I think long term, I knew it was going to save me money based on what I could do. So I think at this point I could, I could knock it out within, I don't know, maybe 15 months.

When is the 0% period over?

One of them, there's $7,000 that I have, uh, 7 more months on and then, oh, I'm sorry, $7,000 that I have 13 more months on and $10,800 that I have 7 months on.

So we need to get this done real fast.

Yeah, I was going to say, 15 months, I would do it.

Because you already paid 5% for the balance transfer and now you're going to pay the 25% interest once it pops back up.

Right, good luck out. They were 3%. But yes, there was a fee.

3% for the transfer out of your $18,000. Then in that case, I would, if you're saying, "Hey, I can push this off," it sounds like you're not dying to get these courses done. Uh, but I would use this as fuel to get out of this so much faster and make it— can you do this in 7 months? I think that's really intense.

7 or 8 months. Yeah.

That, well, I, I don't know with what I currently have.

Um, are you bringing home $9,000 a month? No. $8,000, $7,000?

What is it? About, I think it's about a little under $7,000.

Okay. Yeah.

So $2,500 would get you done in 7 months on the credit cards. So out of your $7,000, can you find $2,500? That's your goal when you make your EveryDollar budget tonight. What can I shave? Do I need to sell stuff, make more, liquidate some savings over here? Do you have anything like that? Any liquid cash you could use?

I have my emergency of about $1,600 right now.

OK. We'll leave that there and just use your future income then if there's nothing to sell. But that would be my goal now. You kind of have it set for you by the credit card companies. 7 months, $2,500 a month.

It'd feel good, you know, spring of '27 that you're completely debt-free. You save throughout the summer and you can retake, you know, or take this test.

And then Tiny Homes and the courses kick back up, right?

Yeah, absolutely. Yeah.

And I think where I can cut would be some food. I mean, I try to keep it minimal, but it's been crazy with family coming in and out. But also, I mean, tithes would be the other area going by my budget. So I am trying to do 10% for tithe.

Yeah, I would keep generosity in there. I think there's something— Yeah, I didn't want to give that up. Are you investing at all? I wouldn't.

No, well, other than what goes out of my paycheck into my 401.

I would pause that for those 7 months and even until you have an emergency fund, because that's going to give you even more margin. How much are you investing right now? What percentage? 5%. 5%. Okay, so here's the math on that. Out of your $115,000 income, you're talking about freeing up $5,700. Okay. So that's almost $500 a month that you could be putting towards this credit card debt.

Add that to this, yeah, absolutely.

So now you need to find $2,000, 'cause you just freed up $500 per month.

But if you can find the $2,500, add this, that's $3,000, you're out of debt even faster. So it's a, yeah, it's kind of just that math game. And Elle, remember during this period, it is beans and rice, rice and beans, is what we talk about, but it is that scorched earth mentality where even like Aldi is a great, grocery store, super inexpensive food, right? So you can do that. I mean, like, you find your ways just to push through. Yes, to get creative. And it's just for a couple of months. It's not forever. And Christmas may look a little different this year for you, and that's okay. Everyone's gonna survive. But being debt-free, that's gonna be your key.

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When it comes to buying or selling your home, it is high stakes because a bad deal could cost you tens of thousands of dollars. And listen, you do not want to overpay for your next house, or you don't want to sell your current house for less than what it's worth. And that's why Ramsey Trusted connects you with vetted real estate agents who have experience to guide you step by step to make smart decisions when it comes to buying or selling your home so you don't make expensive mistakes. Now listen, connecting with an agent is very easy, and what's great is every agent has a profile so you can compare profiles, you can interview your top choice, and pick the one that's right for you. So to find a local Ramsey Trusted Agent who has your best interest at heart for free, go to ramseysolutions.com/agent or click the link in the description if you're listening on podcast or watching on YouTube. All right, up next we have Caitlin in Indianapolis. Hi Caitlin, welcome to the show.

Hi, my name's—

oh, you already said my name. I'm so sorry.

No, you're great. You're great. Yes, absolutely. Thanks for calling in.

Yeah, we purchased our home in May of 2025. We are up to date on all payments. We don't do badly at all. However, we discovered there are about $100,000 in structural damages to our house foundation-wise, and it's also resulting in our electric bills being around $1,600 a month. Um, it's not really feasible for us anymore to keep living here with how it is. Uh, however, we did find out that through my hairdresser, she was actually apparently under contract to buy our house before us, and her inspector found all the structural damages and reported it to the seller. So the seller never disclosed it to us on the seller's disclosure, um, which is fraud. So we have an attorney set up and everything. We already paid the retainer and sent demand letters. However, our attorney is wanting about $30,000 $30,000 to proceed with this case. So our options kind of right now as it stands are spend the $30,000 to, um, sue the people who sold us the house. And if we win, then we would profit about $250,000 to $300,000. If we lose though, then we're $30,000 in debt and we still have the $100,000 in structural damages that would be unfixed completely.

Um, and we can't sell our house because of how much is wrong with it. We would end up losing about $30,000 on it. Right now as it stands as well. So we don't really know what to do. Like, is this an okay situation to put ourselves into debt?

What's your financial situation? How much debt do you guys have outside of the mortgage?

Um, about $3,000. I mean, nothing— I know it's not— it is debt, but it's nothing absolutely astronomical.

And how much do you have in savings?

Um, about $1,000, not much.

Have you contacted other lawyers?

We have looked around everywhere in our area and everybody's running about the same exact price. Uh, it's about the $400, $450 an hour. They all want a $7,000 retainer and they're saying that it's going to cost anywhere from $20,000 to $30,000 to get it done start to finish.

Man.

Yeah, I'm trying to think if there's any lawyers that would do it Sort of, you know, knowing that, hey, they'll collect on the back end.

Yeah, my uncle's a lawyer in the area. He doesn't practice this type of law, but he said that that's not really a common thing in this area because it sounds like if you guys pursued this, you would win.

I'm confused how, how it happens. You can, you can prove the seller's new because you have the previous inspection report. And so at that point, I don't know how they go, yeah, we're not going to pay this.

Right, exactly.

I, I— what worries me is that they're saying that they're not going to pay it, and they may not have it either, right? That's my guess, is they don't have the money to pay it either.

Yeah, so my fear would be they're not—

they aren't poor either. These are people who are flipping houses for a living. I mean, they, they live in a massive home. I don't think that they're poor. I just don't think they have the $100,000 straight up front to pay it.

Yeah, probably not. They're probably leveraged in all areas. So that would be the thing. They would be forced, I guess, from a lawsuit perspective, either to come up with the money in an amount of time, or they would sell an asset, you know, their primary home to pay. I don't know. It does feel like, it still feels like a gamble to me that you're gonna get that much money out of the situation. So I would hate for you to go $30,000, risk that. So the, so the next option is if you were to sell it, you said you would lose probably $30,000 on the home sale. Is that with the structural damages, like being upfront with those?

Yes. Since we would have to legally disclose all of the structural issues to the house that we know about our house, that we bought it for $200,000, our home wouldn't be worth anything more than $120,000. We'd maybe get $150,000 out of it is what a couple of realtors have spoke to us about.

And have you had any contractors out to look to see if you were to rehab it, what, what that would be, what that would cost? $100,000. $100,000. How many bids did you get? How many people did you talk to?

We have spoke to probably 10 to 15 different companies. And they're all around there? Yes. $100,000 was actually the cheapest we could find.

Wow.

Well, I wouldn't, I wouldn't give up on the, on the search, 'cause right now your best case is still finding a lawyer who can do it on contingency. And so I would ask around, call more real estate attorneys and say, hey, do you take concealment, non-disclosure cases on contingency? The other thing I would do is check if your title insurance or a home warranty would cover a portion of that and dig into the fine print.

They said that they wouldn't.

Nothing would cover it. And your inspector, Caitlin, didn't find all this?

Sorry, what was that?

I'm so sorry. No, you're fine.

Did you have an inspection? Yes, we did, and our inspector missed it.

And missed it, but the previous one caught it somehow.

Yeah. So it's documented somewhere. Yeah.

Can you get a, a copy of that inspection report?

Yeah, we have it. My attorney already has it.

Okay. So they've seen this all, they know there's a case here, but they're going, hey, based on my hourly rate, this is gonna cost you this much. Yes. Mm-hmm.

Ah, man. I'm so sorry.

It's a brutal place to be. I know.

I, it's, it's not your fault.

It's just a bad situation.

It is a bad situation all around.

So yeah, yeah. My husband makes about $100,000 a year. So I mean, I, I don't even think that we could financially budget for $30,000. $100,000 over the course of a year with 3 kids as well. I just don't think that it's feasible for us. We would 100% have to take out a loan.

Right, and I can't, I wouldn't advise you in good faith to do that. So I would either continue calling attorneys and maybe some that aren't even local, right? I mean, like maybe you hop over to another city or something, you know, still in the Indiana— Somewhere in the area. State. I mean, I think I would slowly start trying to probably fix it because selling it then puts you in negative $30,000 with no equity, nothing, starting over versus like what stages over the next 3 years are we gonna fix this house, right? And it's a slow process and you fix it little by little and then you might get in there and do maybe half of what you feel like you need to do and it actually ends up fixing a lot of the problem. And you know what I mean? Like you could, you could get in there, but I would, that's where I tend to lean.

And on the other side, if you want to save up and pay the retainer and go, hey, we're going to pay you the rest once the case is closed, they might be willing to do sort of a partial contingency there if you cover the retainer. So that might mean we are selling stuff. Hey, once the kids are down, you're going to get a side job. He's working an extra 20 hours a week so that you can come up with that money. 'Cause that's still your best case scenario as far as the financial damage. Absolutely. Oh. Yep. The joys of home ownership. Man. As all the parents go, kids, you're throwing away money on rent, go buy a house. And then you see situations like this.

Yeah. But how immoral, that's the other frustrating thing, just immoral people that they know. Yeah. That there's an issue, the homeowners, and they don't disclose it. I mean, complete fraud, completely illegal. You cannot do that. And every part of me wants that justice, but also, I can't tell, I mean, I couldn't advise you to go $30,000 in debt for still a little bit of a gamble of if you win or not or what that looks like.

Because then it's just insult to injury. Now you're just in a way worse place. So, there's not a lot of good options here.

Where I would rather you be putting your money towards something you know is healing the situation rather than a guess, right? It's more in your control. Yeah, unless they can take the retainer, ask for the $7,000 up front and say, "Hey, would you pay this?" Yeah, that feels like enough to where I would go, "All right, I'm willing to at least lose the 7 grand." And maybe $1,000 bucks a month, you know, over time to get the rest. Um, I don't know what kind of deal you could work with an attorney to figure that out.

Just find an attorney with a heart. There's got to be at least one out there in Indianapolis.

Help Caitlin.

Help good people of the Midwest.

Where are they?

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Up next, we have Derek in Los Angeles. Hi Derek, welcome to the show.

Hey, how's it going?

Hi, we're doing great. How can we help?

Yes. So, um, just a quick question. Uh, just learned about you guys, I'll say like last year, and, um, been doing some studying and now I'm at a conundrum in life. Um, I'm about $15,000 in debt, I have zero savings, and I'm just living paycheck to paycheck and just trying to wrap my head around how I can get out of the rat race, you know, purchase some property and, you know, just, uh, set things up for my, for my children.

Yeah, absolutely. Do you have kids? I do.

I have 3 sons. Okay.

Are you married? I'm not. Okay. So you got 3 kids. Are you single dad or is it shared custody? Uh, shared custody. Okay. And what are you doing for work?

I work at an after-school program at a local school district. All right.

What do you make doing that?

Ah, well, during the summer months and, you know, uh, vacation time, I don't make anything. But on average, I'll say about $40,000 to $48,000 a year.

Okay. And what kind of debt is the $15,000?

Um, the $15,000 is mostly consumer debt, a few credit cards and stuff. Um, and I also have, um, a housing eviction. For $12,000. Oh boy. Yeah.

Is this from a past house that you didn't make payments on?

Uh, yeah, I took over a lease, uh, when my mother passed away. Didn't realize, like, uh, what I was getting myself into, and by the time I did realize, it was kind of too far gone.

Are you current on your rent payments now at your current place? Yeah, yeah. Okay, but you still owe the $12,000 on top of the $15,000?

No, no, that's part of the $15,000.

Okay, cool. So $15,000 total, we're making $3,000 in credit card debt then?

Yeah. Okay, gotcha. That's a better picture.

Yeah, I was about to ask, is it like a payment plan on the, on the past due rent for the eviction? How does that work?

Um, I, I have not started that payment plan. Um, it just recently popped up on my credit report, and so that's what Got me a little worried here.

Derek, what have you been doing this summer for work since you said vacations and summer you don't get paid?

I haven't. I've just kind of honestly blew through my savings and just spending time with my children, vacations. I'm kind of looking now like I could have used that couple grand for some other things. Yep, yep, yep.

Well, the biggest glaring piece of the situation that I see is income. How many hours of a week do you work when there is, like during the school year when you're actually doing the afterschool program? Is it a 40-hour-a-week job? 28. Okay, so yeah, I mean, I see there's a lot of time available and opportunity available for you to fill out at least till 40 hours getting a side hustle. Because if you can make Derek another $1,200 a month, like that, that's a game changer for getting this debt paid off. Like if you could get this debt paid off in one calendar year and I'm, and think about working 40 hours a week during next summer too, right? If you're thinking about the full calendar year through June and July of '27, when you map it out, there's a great chance that you could be debt-free in a year.

'Cause $1,500 a month, you're done in 10 months. Yeah. And so now the goal is, okay, where do we come up with this? And it's gonna be partially spending less, partially making more, probably mostly making more. 'Cause you're, if you're in the LA area proper, making $40,000, that's a tough way to live. Yeah. Are you in the city?

Uh, just outside the city.

How old, how old are you, Derek? I'm 36. 36. Okay. What's your dream? Like if you could look forward 5 years, what would you be doing? And let's say you're making $70,000 and you are loving life. What would that job be that you would be excited to get up and go to work in the morning?

Oh, well, right now working in education. I love working with the kids. So I'm in school for kinesiology. Degree. Okay. Um, trying to become a teacher, a PE teacher in essence, uh, football coach.

Yeah. Oh, that's awesome.

And you're in school right now, you said? Yeah. How much is that costing you?

Uh, it's community college and, uh, it's basically free. Okay. Yeah.

Good for you. That's good. What would you be making when you're done with that degree? And if you got a full-time job doing that, what would that bring in a year?

Um, I have seen some postings at different high schools in the region around $80 grand. Yeah. That's fantastic.

Okay, so Derek, that's great.

There's hope. When are you done with this program?

I have another year and a half.

Okay, okay. So in the meantime, we got to clean up this debt before then. So how cool would it be a year and a half from now you're done with the program, you have no debt, and you have fully funded emergency fund? That's what you need to put on the bathroom mirror. Like, that is the goal. Nothing's going to stop me from being there 18 months from now, which means 10 months from now I'm debt-free, another 8 months from then I've got $25,000, $30,000 in the bank.

That's the goal.

And however much work it takes to get there, we're gonna get there. So what is your schedule with the kids right now?

Uh, at the school or my children?

Your kids.

Oh, um, it's kind of fluid. Um, I'll have them a week, week on, week off.

Okay, that's what I was wondering, because if you're with the week that you don't have them I would be working like a madman. Mm-hmm. So that's gonna mean I'm selling stuff, I'm flipping stuff, I am, you know, doing the delivery apps, I'm going to be walking dogs. I mean, there's a lot of people. Go find some nice neighborhoods and go, what do they want done that they don't wanna do themselves? Yeah. Pretty much everything.

And sometimes, you know, these side hustles, you want to, you know, be the next kind of step into the next career in your situation, but you already have that. I mean, you'll have that in a year and a half regardless of what your side hustle is. So I would find the thing that pays you the most. For your time. Yes, absolutely. Yeah, and I'm doing some calculations here, Derrick, because I want you to think long-term. Because you said, "I wanna have a house for my kid." Like, I hear this in you that you're like, "I want my life to look different. I want my kids, our family tree to be changed. I want my kids to see something different." And here's what's wild is if you, 'cause investing for me is such a, it's such a game changer for future Derek. So, if you graduate this program, you become debt-free, exactly what George is saying, you get an emergency fund, you got a, you know, a down payment on a home, at least 5% to save up, which will be a little bit in that area because I know, you know, Southern California is expensive.

And then you do the Baby Steps, which you start investing 15% of your income into retirement. And as your income will continue to grow throughout your life, but let's just say, Derek, For 25 years, you work, and then you invest $1,500 a month. You could retire with $2.3 million. Oh, wow. So, there's something powerful about— I want you to map out what future Derek is gonna look like, right? And you may have to work past 59 and a half, right? I mean, I put in 25 years. If you go to ramseysolutions.com, you can pull up the investment calculator. These were just numbers I was just putting in, saying that you have nothing in retirement right now, and you invest $1,500 a month.

Even in your late 30s. Yes. Which people feel like, wow, I don't have time now. I should have started at 20. That's right.

You still have time. Yes. And it would be you working a little bit longer. But man, I mean, that's what's wild about all of this is starting today, something, you know, things are gonna change, but that means your life day to day is gonna have to change. It's gonna have to look different. Meaning you're gonna be working more to get yourself out of this consumer debt so that you can save for a house. You can start saving for retirement and so forth.

Understood.

Understood. Yeah, I got the marching orders.

As far as like, right, as far as like saving for a home, like how, how does that look?

Um, the same way you would say for your emergency fund. Once you free up that debt, you've got some freed up payments. Now we're just trying to live on less than we make. So if you make $40,000, we gotta try to live on $30,000. If you make $80,000, we gotta live on $60,000 and bucket that other $20,000 into high yield savings, for example. If you just You put that in a high-yield savings account year after year, 5 years at $20,000 is $100,000. So now by 41, 42, you have 6 figures for a down payment. So there's no magic wand for this.

No, but if you go to ramseysolutions.com/real-estate, there's kind of our perimeters around when buying a home, how to do it wisely. But yeah, you got some big goals ahead of you, Derek. If you actually stay on the line, Christian will pick up and we're gonna give you a copy of Dave's book, Total Money Makeover, because it walks you through the baby steps. And this is exactly where you're at. Like, you are starting off. And if you start today, man, Derek in 20 years is going to love Derek today.

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Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm Rachel Cruz. News here with George Campbell, taking your calls at 888-825-5225. Up next, we have Amanda in Dallas, Texas. Hi Amanda, welcome to the show.

Hi. Hello, how are you? I'm good, thank you.

Great, how can we help today?

Okay, so, um, a couple of months ago my last parent passed away and I have I received a substantial amount of money. Okay. And my fiancé, so I immediately did, you know, the recommended steps. Well, my fiancé is wanting me to help him pay off his debt. He has about $18,000, almost $19,000 worth of credit card debt. And of course, I'm willing to help him. I don't expect the money back because I know in the long run it's going to help us, like our family.

But my stipulation was, per the rules, you know, close your credit card account.

Once I pay these credit card accounts, you have to close the account.

And he is saying that I'm financially abusing him because I'm requiring him to do that. So I just—

wow. I don't know.

Oh my gosh, that's like saying, well, hey, I'll pay for your rehab if you stop using drugs right now. And he's like, hey, come on, that's abusive. Let me enjoy my life. So why is he Tie closing the cards?

Is he still using them? He still is using them.

Okay. He pays, he pays about, he gets a payment from his disability, his VA disability. He pays $1,900 off each month. So I know that, you know, he would pay it off soon. He started at a crazy amount of debt, like $60,000, and he's got it down to like $18,000, $19,000. But we also, he's looking to get a new vehicle and he wants to start saving for for that. And so he's like, this fast-tracks everything. So when are you guys getting married? Um, October of next year.

Okay, so a little over a year. Um, well, it sounds like you guys are not really aligned with financial goals or values.

It has been a process. We've been together for 9 years.

Um, and how old are y'all? I, I am 31 and he is 34.

Okay, how long have you been living together? 5 years. Okay, so he sees you guys as a married couple where it's like, hey, we're already doing life together, just go ahead and pay off my debts. What are you doing? Right. Okay. Yep. Well, the fact is it's harder to tell someone to change because they haven't had to change. Yeah, I mean, he it's been a lot of comfort here of just you guys kind of doing life together without the actual commitment and financial legal protection here. So that's my, my biggest thing is if you're going to ever pay off his credit card debt, please don't do it until you guys are legally married. Okay, that's number one. Number two, he's really not gonna like that. I would not pay his credit card debt if he's gonna go back into credit card debt. And it's not a you're financially abusive, it's we are are misaligned financially. And so I can't in good faith, from my values, do this knowing that you're going to go back into debt with a car payment the next day. Right. Yeah. So, okay, I don't— I think he's, uh, he's a little bit beyond his skis here saying that it's abuse.

I can't put that in my category. No, no, no, no, no, no. That's like so offensive to people that actually—

but I think he sees— he feels a little bit emasculated that you're stepping to sort of save his butt with stipulations like, you know, it's mom with rules.

Well, and the problem is it does sound like, 'cause it is, hey, there's a condition to what I'm going to do. And I believe, I mean, I don't think you're wrong in that, Amanda, but I think the biggest red flag, if you dig a little deeper, is that this is gonna, if you guys don't get aligned on this, this will be a tension point in your marriage going forward. It's gonna be really hard to build wealth. It will. And we see it all the time that, you know, the wife, you know, husband or wife, you could put either one in the scenario, but you're wanting to get out of debt, you're wanting to save for retirement and do all of this. And he's like, "Well, I'm just gonna go out and get a truck payment for $1,200 and not tell you because you would just shame me and make me feel bad. I'm gonna go do," right? Like there's a, it's this, it's a level of immaturity. On his part, personally, is what I think. So, I would get, I would be aligned. And again, you don't have to be the same person. I'm not saying that.

You don't have to be the same person when it comes to money. Winston is very different than I am with money, but our overall household values are aligned. And so, when we have to make big decisions, you know, for the most part, we kind of have these guardrails that we make the decision within, which is so helpful. And I'm scared there's no guardrail for you all. It's just, it is what it is. Is, and it's been like that for 5 years in your relationship because, you know, you guys have been acting like you're married. And so, that's when these habits and these patterns really start to play in. And then, the moment it changes and you start to feel like, "Oh my gosh, we are gonna be a married couple," and, "Oh my gosh, this windfall of money happened," or, "Oh my gosh, he lost his job." "Oh my gosh, I lost," whatever it is, right? Life starts happening. It starts to magnify the situation. And so, I would get— with a marriage counselor or something.

I would go through Financial Peace University, as well.

Yeah, and I would do work just on your relationship as a whole, Amanda, too, because I do wonder what patterns have creeped in for you all that you want to look different in marriage. And one of those is probably gonna be money.

Yeah, I definitely feel like at the beginning of our relationship versus, you know, now 9 years into it, that there's been, a lot of mental change about the way that he views money. My parents were very frugal and they taught me what to do, and his parents did not. And so it's been a big—

more of a learning curve for him. Mm-hmm.

I have faith that, you know, he's gonna get where he needs to be.

But also, like you said, it raises all my red flags.

Yeah, it should.

I mean, you're 9 years into this.

How much did you get with your inheritance?

Um, just shy of a million dollars. Okay. Wow.

Have y'all talked about what you want to do with that? Have you even had that discussion with him?

Um, yes and no. Um, I got it— everything wasn't liquid, so I got my parents, like, my parents' IRA, and then they also had a brokerage account, and then they had CDs, and then they also had checking and savings accounts. So they had a little bit of everything.

And, um, I'm keeping the brokerage account as is.

I'm not going to touch it.

I'm just going to let it keep growing, and I'll put, you know, invest into that.

Um, as far as any of the liquid cash, I don't know. We do have a house together, um, so I was thinking about maybe paying the mortgage off.

Is that in both of your names, the mortgage? Yes. And the deed as well?

Um, the house deed? Yes, like this is legally the ownership. I'm sure it is, usually if the mortgage is. Yeah, so I wouldn't do— I wouldn't touch that asset. I would not pay that off now. I would wait till you guys are legally married.

And I don't know why you're waiting till October of next year. Now, are we waiting till the 10-year mark? What's the goal with the October 2027 When are you guys getting married?

We had a specific venue that we wanted to use, and that was when they were first available.

Yeah. That's what we— Yeah. Wow.

Just not urgent. Well, Amanda, I would not combine it. I would not touch his finances, and I would not pay off this house. I would not do anything until you are married. And I'm telling you, if you guys don't get to the root of some of this stuff, it's gonna be constant conflict. And you may look up, after you get married, and this $900 grand of inheritance may be spent very quickly.

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Up next, we have Lance in Louisville, Kentucky. Hi Lance, welcome to the show. Hi, how are you all? Hi, we're doing great. How are you? I'm doing well.

So essentially, a year ago I bought my first house. And, uh, shortly, uh, a couple months after I bought my first house, I wanted to get some work done on the backyard and the parking area. So I hired a contractor to do that, and then they worked on it for a little bit and then eventually, uh, just stopped coming out and then left my yard a mess. And then I had put $10,000 down on that, and it had really actually detracted some value from the house. And so it's been a little over a year that I've been dealing with that now. And we're about 6 months into a lawsuit. And, uh, for the last 6 months I have been sort of funding the legal fees month to month, uh, on this lawsuit, just out of cash flow of margin that I have in my budget. Um, but I've essentially, you know, stopped a lot of my, uh, extra savings. I'm still contributing to my 401k, but, you know, I have a lot less peace, uh, with having to, you know, contribute to this ongoing legal expenses without a clear idea of when it might wrap up.

Um, and so I'm wondering, how can I get some peace in just waiting for this to wrap up, knowing that I've kind of had to pause my savings, um, while I'm, you know, how old are you?

I'm 29. 29. Okay. Did—

has, has your attorney told you somewhat of a timeline of, hey, this is going to be another 18 months, or hey— because I mean, it's hard to have hope when there's no end in sight, right? Have they given you any level of timeline?

I should know whether it's going to potentially settle or go to trial within the next 2 months, but there's not a clear idea because even if I get judgment at trial, you know, there can take some time to collect on that from them for sure.

Yeah. And do they know where— do you know where the guy is? Have they been able to contact him?

Uh, yeah, so there's an ongoing lawsuit, uh, against them. So yeah, you're not the only one. Just slowly, man.

Just go full class action, man. This really sucks. Well, how much have you spent so far fighting this thing?

Uh, it's about $8,000 in legal fees, um, to recover the 10 grand.

Fees.

But, um, so the good part about this is anything that I put in in legal fees, if I win the lawsuit, I can get it out because it's one of those special circumstances to where I can recover legal fees out.

So you'll get your $10K plus whatever you spend on legal fees?

I'll get— yeah, I'll get anything that I spend legal fees out of it.

Are they going for $10K? Is that it?

I mean, so theoretically, if you mean when we consider, you know, how much extra it took to get the project finished and that it detracted value, I mean, I could be looking at getting like a $40K Okay, I can pay off from this because of between legal fees and how much extra it costs to have the project done. So I mean, there— it's a high-risk, high-reward type of thing, you know, if— right, if I win. But, you know, so it kind of feels like anything that I put in legal fees is a little bit of a savings account that I should eventually get out. But there's always a small chance that I can't recover it. Um, I'm just looking to get some peace, you know, and paying these legal fees month to month month, and feeling like I've had to pause my savings and I can't really get back onto the path in life that I want to be on in terms of aggressively saving.

Sure.

Well, it's hard to find peace when you're in the middle of a battle, but I'll give you hope that this is not going to be forever. You are still going to be OK financially later on in life, and you'll look back and go, "Man, don't miss that era." That sucked.

Yeah.

"Remember when I had to spend $20,000 to fight this guy? Maybe I got it, maybe I didn't." How old are you right now? How old are you right now? I'm 29. OK. And how much do you make?

I make about $150,000 a year, $120,000 base, and then I'm a part-time professor. Incredible. I take classes.

And you have no debt and you have an emergency fund? Correct. Awesome! So, there's the good news. There is an end in sight and you'll be a 30-year-old making $150,000 with no debt and an emergency fund with plenty of time to invest and retire with dignity.

Is it the short-term savings you're discouraged about, Lance? Long— is it retirement and investing?

So I would say that, you know, for the past 6 to 7 months I haven't really been able to, um, save. Like, I haven't paused any kind of 401k contribution.

Okay, so it's just short-term savings and you're like, man, I make so much and I haven't been able to—

it bothers me not seeing, you know, the, the money go up on a monthly basis, right? Because like, by the time I cover the legal fees, that it's like, okay, there's no money left to save Sure.

Um, what happens if this contractor's broke, even if they do, you know, have the judgment against them?

So they, they do own some property. So we, we know that there's property to, to go after ultimately at the end of the day. And so that, that's not going anywhere. So we're feeling fairly confident about that. Okay.

And its value is obviously more than $40,000.

Yes. Well, I would just keep on fighting the good fight. There is a level of sunk cost if you wanted to set a ceiling for like "Okay, here's my timeline. Here's the financial ceiling I'm willing to pay in before I move on with my life." But it sounds like you're so deep into this thing, you're just gonna see it through to the end out of sheer anger.

Yeah, but I would not let this drag on. We see this a lot with people going through a divorce or, you know what I mean? Like there's just in that grind of the legal world, and dealing with attorneys and being in and out of cases. I mean, it's just, it's so, it just wears on you so much. So, Lance, I probably would have a timeline and say, "I just, I can't take this any further than," I don't know, you make it up, 18 months, 2 years. And I would just prepare myself. Okay, so, what would happen in 18 months if nothing came about this? And I've paid this much.

Like, emotionally take yourself there? Yes, I would.

So that you're prepared. Yeah, and just to be like, "Okay, so then what would my life look like financially?" actually at that point and, you know, run some numbers and say, okay, if I start saving, then I can get, I can save this much a month, and that's gonna go towards this next goal. Like paint your life of what that would look like. And then paint your life 18 months from now or whatever, I'm just making up a timeline, that you got $40 grand. What's gonna be happening? What are you gonna do with that, right? And so I would probably paint both scenarios because as much as you want the law on your side, But as sneaky as people are like that, I'm like, they're not. Yeah. Doesn't always follow through the way you want it to.

Not always a happy ending there, but I would let it live rent-free in your head. I think at this point it might be consuming more of you than it should, which I understand. I'd have a hard time not thinking about this every waking second.

Yeah, it's for the best. All right, let's go to Sarah in San Diego. Hi, Sarah. Welcome to the show. Hi. Hi.

Thanks for having me.

Don't be too excited to talk to us. How are you?

Listen, that's just my normal tone. I love it. I'm fine. I'm just overwhelmed and, you know, very anxious about my financial picture. Okay, what's going on? So essentially, I was doing fine, you know, had a really good job, and then this bug bit me that said, you need to, you need to start a business. So I started a business, um, about 2 years ago. Um, in the midst of starting that business, I started taking on, taking out loans for it. Um, And so like right now, so my husband and I combined, I would say we make roughly around $250,000, right? Yeah. But we have— oh man, let's start from the beginning. I have a personal loan, $35,000. The interest rate's 9.9%. Was that for the business? Started at $50K. Yeah, I took out for the business. Okay. Another one that's $95K, interest rate's about 7%, 7.7% for the business. For the business.

Yeah.

Is that like an SBA loan? No, they were just personal loans, and I started through the SBA route, but the rates were better on the personal side, and so my goal was just to pay them off early, right? Um, but then I think I just got in way over my head.

Okay, what else?

Give us the total amount since we're up against the clock. What's the total amount of consumer debt you have right now?

Okay, so I have, let me see, $85,000 $85,000, $95,000. So that's $180K. And then that $35K, so what's that, $115K? Or excuse me, $250K personal loans. Okay. And then I have 401K loan, which I recently did, which is $23,000. Um, and then I have student loans, only $60,000 because we had $220,000 forgiven, thank God. Um, a mortgage, which is $290K, and then a car loan for $29,500. As far as income, like I said, we make about $250,000, but all our money is wrapped up in debt.

Yes, it is.

We have about $10K. $10K in savings.

We got a lot to unravel here, Sarah.

So Sarah, if you'll stay on the line, we have to go into a break right now, but we'll come back to you in the next segment and try to look at this. I don't wanna say dumpster fire, Sarah, but it's—

Well, I just wanna say I got a complicated order.

That's how it feels.

It's starting to sound like that. No, we're going to help you, Sarah. We're going to make a plan, and you're going to go from overwhelmed to feeling in charge and really tired because there's probably going to be a lot of work that's about to happen, but it's going to be great. Hey guys, it's Rachel Cruze. When it comes to life insurance, most people fall into one of two camps: the ones who make a plan to protect their family and the ones who hope everything will just work out. But hope isn't a financial plan. When you get married or have kids, your money decisions aren't just about you anymore. Your income helps keep the lights on, pay the mortgage, and put food on the table. Stable? And if something happens to you, will your family have protection or uncertainty? Well, at Ramsey, we recommend term life insurance at 10 to 12 times your income with a 15 to 20-year term for the years that your kids are at home and your mortgage is still being paid off. That's why Winston and I have our term life coverage through Zander Insurance. They're an independent broker who works for you, shopping all the top companies to find the most competitive prices on coverage you you need.

Get instant quotes online in just minutes at zander.com or call 800-356-4282 to get your family protected with term life insurance. That's zander.com or 800-356-4282. All right, we're gonna go back to Sarah in San Diego. So just to kind of recap, I think Sarah, if all of our math was correct, you have $327,000 in consumer debt. You and your husband together make $250,000 a year. And most of this debt, a bulk of it was because of this business that you started 2 years ago. A year ago, is that correct? Okay, what kind of business is it?

Ah, it's a vending machine business.

A what? A vending machine business.

Vending machine business.

Where'd you get this idea? Social media. The internet.

TikTok. Yeah, I knew it. I've, I've seen this.

I've reacted to many of these videos and they were like, oh, you, if you just get 28 vending machines— Sarah, how many vending machines do you have currently?

Uh, 15. 15, and they're all leveraged. Doing well.

Yeah. Okay. Yeah, it's hard to make a profit, you know, 75 cents at a time on a, on a Reese's bar.

So, okay, so let's walk through this. Are we— and you're keeping it running, it's still happening. How much does it make a year?

Um, you know, after the expenses, yeah, maybe $45,000.

Okay, so it does, it does spit out a profit even after all of your payments? Yeah, let's factor it in. Okay. Wow. What other assets do you guys have? Like, if we said, hey, let's pull everything we can to pay this off quickly.

So we have $111,000 in an investment account, uh, retirement or non-retirement?

Non-retirement. Okay, that's good.

Then we have about— I said $10,000, but I guess it's closer to about $15,000 just in personal checking in savings. Um, all right, in retirement we have about $400,000.

Okay, all right. So how badly do you guys want to get out of this debt?

Uh, badly. Okay, you're willing to do anything.

Is your husband on board?

He is, he is. Yeah, that didn't convince me. Uh, you know, I mean, there may be a little more conversation around it.

Sarah's like, give me some time.

Okay, what would it, what would it take for you to get out of this business? Could you sell all the vending machines or sell the business as a whole? We talked about that.

We talked about that. I'm open to it, but the thing is, I didn't want to do anything until I got out of debt, you know?

Well, this might be your key to getting out of debt.

Have you priced it out, what you could get out of this business if you sold it?

No, I haven't.

And you know, we kind of bought it from a company where you buy them in bulk and then you pay that company a big dollar amount, right? Mm-hmm. It was terrible, terrible.

Okay, what do you do for work outside of this? I'm a PA. Okay, and how much do you make for— with that?

Uh, I mean, base pay about $165,000. $165,000.

And what does your husband make?

Um, I would say about $50,000. He's a supervisor.

Okay, hospital. So the, the $250,000 includes the $45K in profit from the vending machine Right, right.

'Cause it varies. I mean, I said on average $45,000. $45,000 may be on the lower end.

Okay. 'Cause a part of me is like, this is spitting out $50,000. If you did keep it going, you know, in 4 years, you know, that's helping take a chunk of this $200,000 off of your $325,000 plus your investments.

Yeah, I definitely would be selling those investments to knock out a huge chunk of this. And I would just list all of these debts out, smallest to largest balance.

Have you done that yet? That yet? I have. Um, I guess I was just kind of thrown off with the one that's like the 9.9% interest rate.

Sarah, we need to just ignore the interest rates right now. That is the least of our problems, because if we were doing the math, we wouldn't be continually going into all this debt. Well, it was 7%, it was a good deal. We need to start looking at all debt as the enemy regardless of the interest rate. So what is the car worth that has $29,000 left on Um, I want to say maybe $35,000.

Okay, is that—

you have 2 cars in the house right now?

We do, one's paid off.

Okay, because I'm wondering, if you got rid of that car payment, that leaves a little bit of room. You got $6,000 from the profit, take a little bit from your savings, go get you, you know, a $10,000-$12,000 car, get you from A to B, knock out 10% of your debt.

We actually did talk about that. It makes sense. Um, the thing is, I drive a lot though, so I just have to make sure I get a car that's worth worth it.

I promise you, there's $12,000 cars that run that are fuel efficient, probably more fuel efficient than the one you drive right now. Yeah, because if you take your $327,000 minus $111,000— now you're gonna have to pay taxes on some capital gains on that investment, right? Right. And that was the part— yeah, that's okay. That's still worth— it's still worth liquidating. And then we take out that, that car loan, we're going to sell that, make a little profit, and buy something in cash. Now we're down to $187,000. $250,000 while we're still making $250,000. That's true. And we freed up a whole bunch of payments.

And what if you learn to live on $100,000? God forbid. God forbid.

Yeah, we, we have a very low-key lifestyle. There you go. It's like $1,800.

Okay, so if you could throw— all the debt came from— yeah, and I know after taxes and stuff, $250,000 goes down, but I mean, if you could throw an extra, gosh, $75,000 or so plus, you know, a year at this, You guys are, you guys are looking real good in about 3 to 4 years.

Do you guys take home about $15,000 a month?

Um, maybe a little less, maybe about $13,000, because I also do have another side job too.

I forgot about— goodness, you're busy. Um, which I—

yeah, what is that? Yeah, I make about $25,000. I teach on the side.

Oh great, that sounds stable. Um, because I'm wondering, like, what is the maximum amount you think you could actually throw at these debts if you did what we said? You freed up a bunch of payments, now you're down $187,000 by knocking out some of those smaller debts. How much could you throw a month at this thing? Could you throw $8,000 at it? $9,000? I think so.

And the big thing too is I need to— so we've been, we've been maxing our retirement, which we probably should not be doing.

So guess what? If you pause that, you know what happens? You just gave yourself a raise to get out of this debt faster. Right. And guess what? You guys are going to be okay if you make this kind of money and you're debt-free. Imagine how much more you could be investing investing.

But Sarah, you, you guys, you and your husband, number one, y'all have to be on the same page. This is not going to work if you go and do all of this and you cash out $110,000, $111,000 out of a brokerage account, then you guys get right back into it. Like, you both have to really, really be on a team and say, this is what we're doing. It's going to be really hard to do it without him. And if you feel more stress because of all of this debt than he does, you you have to explain that to him and you have to tell him how important this is. He needs to tell you what he's feeling. I mean, this is like a therapy session, right? We're getting it all out because I want you guys so united. And this is an extreme situation, Sarah. I mean, $327,000 in just consumer debt. Like, that's a lot. That's a lot. And I know you feel that, but that means that extreme extremeness has to be swung the pendulum the other way, and how you handle it has to be extreme. And that's why you're selling stuff, you're selling investments, you're selling cars, you're lowering your lifestyle completely.

You're throwing so much at this. He's working extra at nights. You guys can still be doing, I guess, the vending machine stuff if you want to keep it. I would use maybe that $45,000 again to throw at this debt. I mean, whatever you are doing, but you guys are working like crazy. You're living on nothing, and it's got to be extreme because the numbers are extreme, right?

So how quickly do you want to get out of debt? If I— if you said, here's my timeline, how many months until you guys want to be debt-free?

I would say max of 36 months.

How about we do 18, split the difference?

I love it, I love it.

Well, here's how that works.

You do what we said, you cash out the investments, sell the car, buy something cheap. You're at $187,000. $7,000 and you put $10,000 a month toward it. Because remember, you paused investing too. So now you're bringing home $15,000. You live off $5,000, throw $10,000 at the debt. You're done in 18 months.

That's a dream.

18 months. So now you both know we said 18 months, we said $10,000 a month no matter what. That means we're going to live on way less than we make. We're going to make sacrifices, work extra. But if you both do that hand in hand, rowing in the same direction, you will be shocked at how far you will go. You're going to land on that shore in no time.

And to have just the no stress, Sarah, you guys are, you have $400,000 still in retirement right now. You'll press play on that after this is all done. You guys keep funding retirement. You're going to be fine at that point. But for you, it's the emotional stress. If you had no payments in the world, girl, you're paying out your ears every month. I mean, I don't even know how you keep up with it from a detail perspective.

I mean, if you told HR, You tell 18-year-old Sarah, hey, one day you're going to be making a quarter million dollars. You'd be like, what? And you're like, and we are broke. Yes. She'd be like, what? Come again. I know you work too hard, Sarah.

You work too hard. So you call in feeling stressed and just, I don't know what to do. We gave you a plan. And if you do it, 18 months, the peace that comes with that. And you guys make an incredible income. You guys are going to do fantastic, but you have 18 months ahead of you. That's the sacrifice.

So, you know what's so interesting about that last call, George, is, you know, you hear the income, you're like, $250,000, amazing. But your habits, what you do with that money says everything. And it either says you can make a great income, but you're still broke. Yep. You can make a great income, you could still be middle class. You can make a great income and use that income and build wealth, or you can make an okay income and build wealth or be broke, right? So much about it is our behavior. It's habits. It's our habits around it. And so, we talked about this on Smart Money Happy Hour, but your habits can really put you kind of in 3 categories: broke, average, and wealthy. And there's some clues, if you will, about what category you might be in. So, be thinking to yourself, does it— do I qualify for these things?

Or maybe you're like, "Oh, that used to be me and now it's not." It's kind of like the old Jeff Foxworthy, "You might be a redneck if..." "You might be broke if..." So, you tell us. Think about your own financial situation. Take a look at your own spending habits. And if you do these things, this is not a judgment call. We're not mad at you. We want the best for you. But it might be a good reality check as to how you're doing financially and if you're on the right track. That's right.

Let's just start with We'll start with the broke, shall we?

Broke people habits. OK. This one is probably the saddest one on the list, which is payday loans and title loans. You see these in low-income areas. They look like abandoned Pizza Huts. They're open like 24/7. And these are high-interest, short-term loans that spiral into a debt cycle or cost you like your car. And high interest, 100%.

I mean, like, it's insane. Because they don't disclose it.

It's just, well, it's a $20 fee to go get $500. You don't realize. That's right. That's 4,000% interest.

I mean, all of those, and they prey on the middle or on the lower class. Like they do, they go into these low-income areas and it's evil, it's horrible. It takes advantage of people that do not need to be taken advantage of, and it's just awful. But when you get stuck in that cycle, you're paying high-interest debt and you just feel like you can't get out of it. And that will keep you broke if you stay in that life. So, next is rent-to-own. Own and cash advances.

Oof.

I just mentioned kind of that. Yeah.

And it seems like a smart thing. Well, one day I'll own it, or, you know, I'll get the cash advance now. I'll pay it back when that paycheck comes in. But these deals are loaded with hidden fees, exorbitant interest, and it keeps people stuck in this really a cycle of poverty. That's right.

For a lot of people. Yep. And last but not least in the broke category, lottery tickets. Yeah. So per zip code, if your state has a lottery, lottery, you can see it's usually the low-income zip codes is where the highest amount of money is paid to lottery tickets.

And it's out of desperation. That's right.

It's like this, it's this false hope that, okay, this is my ticket out. This, I'm gonna win and everything's gonna be okay. And people end up spending so much of their paycheck on this. And it is sad because it is stealing from people.

And it's statistically impossible odds, but you tell yourself someone's gotta win. In. And when you're that hopeless, you turn to these, these terrible habits. So those are broke people habits. If you can break out of that, you probably then turn to the average person habits, which are not much better. This is sort of middle-class America. Yep.

This is what we see all the time. We'll start with chasing credit card rewards. So you, you live on the idea that I'm going to be able to travel, I'm going to be able to do these things because of what I spend on my credit card. And when that is mindset, you get stuck in a cycle of credit card debt. And we see it, probably because we host this show and people call in with their problems, but the one credit card that was supposed to be, "I pay it off every month," turns out to be the thing that catches when the job is lost and there's no paycheck because there's no savings. And then they look up and they're $18,000 in credit card debt. And so, what ends up happening with this so often is that broke people who have to pay interest and cannot pay the full balance end end up—

Subsidizing the rewards. Yes!

Credit card companies can do it because of it. The stats aren't great.

Half of the people don't pay off their balances, and America is now $1.2+ trillion in credit card debt. Yes. Sure, I would love a perfect world before the fall of man where we could all just swipe our cards and no one goes into debt.

We all get the airline miles.

But if there's a 50/50 chance you fall off the cliff, I'm not going to go near the edge.

Save and pay for things. Don't play this game. The game keeps you there. New car payments and leases. Ouch!

This is where someone goes, "Well, I want the newer car, and the dealer said he can get the payment down to where I can afford it." And then you get into this cycle where you never get out of these. You're paying top dollar for a depreciating asset. You paid $50,000 for a car. With interest, you end up paying $60,000, and that car is only worth $20,000 by the time it's paid paying yourself.

That's a bad move. That's a classic example of making someone else rich, right? You're making the credit card companies rich, the car dealers, the banks, and you're paying interest on something that's going down in value versus actually making interest for yourself, which will be later in the category. That's what Wilson people do. But yeah, the idea of staying in the cycle of debt and car payments keeps you, keeps you average.

Brutal. And then you have the bigger category of just consumer debt. I think HELOCs, student loans, buy now pay later plans, these are all really used to fund a lifestyle that people can't afford, or the home renovation that you really want but you can't cash flow, the student loan for the degree that you may or may not use that may or may not ROI, and then the buy now pay later, which is, a lot of the younger generations are falling for this one because it seems better than credit card debt. It's a couple of payments and I'm done. There's no interest until there is, until there's fees, until you miss the payment.

And until you just buy more crap than what you need. I mean, that's the craziest The weirdest thing about that is it's so easy. It's a psychological mind game. It is, where you're like, "Oh, I only have to pay that? Well, I'll buy a couple extra more things." No, you're spending more money doing that. So, cutting that all off, and yes, living within your means is so crucial. One of your favorites, George, last but not least, whole life insurance.

I just got a DM today, and they were like, "Hey, my financial advisor is really pushing this index universal life insurance thing for an investment." What did you say to her, George? I went, "Ple— I'm like, I don't want to be harsh." harsh, fire him immediately and run far, far away. That is not a financial advisor. That's an insurance salesperson. That's all it is. So whole life insurance, permanent life insurance, variable universal life, anything that has those words in it, it's a costly hybrid that tries to do both things, insurance and investments or cash value, and it is a terrible return and costs you so much more than term life. So keep it separate. Get term life insurance to cover, you know, your income in case something happened to you and invest separately on your own.

You'll be better off. Yes, the underinsurance insurance is a great place to check out for your term life. Everyone, and everyone needs term life insurance. Hear me, everybody needs term life.

All right, finally, let's get to some good news.

Well, sorry, unless you're self-insured. I guess the asterisk is if you become in the next category, the wealthy category, and you're self-insured.

If you've got a couple million bucks, you may not need it at that point.

But for a lot of people, you guys, that's key. Okay, wealthy category. I said it earlier and I'll say it again, you're earning interest, not paying it. So you're looking at, you have more things invested, you have things that are actually paying you or making you more money versus debt companies, right? Banks and car and, um, car dealerships, all of it.

You're not going backwards here. We're moving forward. So next up, investing in assets. So you have assets and liabilities. Liabilities are the debts. Assets are things that actually hold their value and make you money. So think stocks, mutual mutual funds, real estate. These are not going to depreciate and lose value. And that's how you actually build wealth. You can't save your way to wealth. You need to invest in assets. And really all you need is something like a 401, an IRA, mutual funds, and your primary home. That's what we found in our millionaire study. Most people just had those things. Yep.

And that's, again, that's what wealthy people do. That's what they end up buying into. And they're not worried about status symbols, including their cars. So one of them is that they buy used cars. You know, they're probably nice, like a nice, you know, truck or something. It doesn't have to be a beater. It doesn't have to be crappy, but they're like, listen, someone else take the, you know, depreciation when they drive it off the lot. I'll buy a 2-year-old car and we'll be good to go. I'll pay significantly less because of it. And they're just smart when it comes to their purchasing and they're not worried about what everyone else— there's no— for a lot of wealthy people, they're not very insecure. You know, there are some that are but in general, with their money, they're thinking more in a sense of, "What's gonna make me more money?" And they look at a car and they're like, "Oh no, not that. So, I'm not gonna put my money into it." Amen.

And then next up, debt-free housing.

They actually pay off their home early, which frees up cash for more investing and giving.

And last but not least, living below their means. So, budgeting what they've earned. They have a plan for their money. They know what their retirement self is gonna do. They know what their next goals are. They really live intentionally, including a monthly budget. You know, they say, hey, here's— some people, you know, depending on, I think, your net worth, there may be more broad categories, if you will. But the idea that you just have a plan, you're intentional with where your money is going, is so key. So, if you wanna know how your habits stack up, check out our net worth calculator. And if you have a negative net worth, Hey, listen, you may wanna look at some of these habits again and say, is this me? And what can I do to get out of debt? So we'll drop that calculator in the show notes, a link to it. So make sure to check it out. Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm Rachel Cruz hosting this hour with George Campbell, and we're answering your questions. So give us a call at 888-825-5225. All right, kicking us off, we have Jamie in Portland, Oregon.

Hi Jamie, welcome to the show.

Hi, thanks for taking my call.

Absolutely, how can we help? I need some guidance as to what to do from here. Last— this January I filed for divorce after 19 years of marriage from an emotionally abusive abusive spouse. And also come to find out how he's been neglecting our 8-year-old autistic child.

Oh my gosh, Jamie.

So I've basically just had my wits end and called it quits.

Um, he refused to help.

Not to mention we had a whole bunch of marital debt that when I asked him, can you please step up? Can you work extra shifts? Can you get a side job? Can you help in this manner so we can pay off credit cards, medical bills, cars, trucks, all the stuff that people get? Mm-hmm. Um, he refused to do it and basically said that I've worked hard my whole life. I'm not gonna step up anymore. You're the breadwinner. You make the money, you work. Um, so I'm a PA, so I make $175,000 a year. What did your attorney say?

How did you guys battle it out in court?

Court. Yeah, it's—

so we haven't gone to court. Uh, we had a date originally, but that was canceled by his counsel because they wanted to, quote, settle. Uh, but his idea of a settlement is my paying him an exorbitant amount of money.

Yeah, no, we are going to continue on and to make sure that you're protected.

And not to mention pay him $2,000 a month. And, well, he lives in a—

he lives in an alternate universe. So what did you— what did you—

he doesn't get to decide. Yeah, that's the good news. Yeah.

So My attorney said basically that's not going to work, uh, because I have sole custody of our child and we have, uh, split 70/30, so I have him 70% of the time. Okay. Um, I've been paying the child on my health insurance. I pay for everything. I arrange all his childcare, his appointments, everything. He— the— his father has not helped with any of that. Sure.

What does he make?

He makes $80,000 Okay. And what do the debts look like?

So, uh, we've owned a house that I financed solely under my name, uh, last year and, uh, decided to sell it because I wanted to get out from underneath the debt, uh, and moved into a rental.

Has it sold, Jamie? It has. Yeah.

So it sold and I paid off quite a bit. I paid off like $90,000. In debt. Okay.

Um, and I just don't want you paying off this debt if it's gonna be split eventually, because you're throwing a lot of money at it.

Have you figured out what the split is and what's his debt versus yours and how that's gonna shake down?

Uh, that's what we're waiting on.

My attorney said we're gonna go before a judge and let them figure that out. Yeah. But, but so far it's like, uh, what his debt is, uh, a 401k loan that he took took out to pay for his attorney, uh, and then his student loan, which is like $19,000. Okay, what else is left? Uh, what's left is my debt, which my student loan's $115,000, um, and then there's credit cards and consumer loan debts that I've had to take out in my name because he refused to help when I was trying to consolidate everything.

I fell for the consolidation thing.

Um, so I'm going to be stuck with those and that's—

say those totals again for us. You had $115,000 in student loans, $115,000 in student loans.

There's, uh, 2 consolidation debts. One's at, uh, $40,000, another one's at $35,000. Okay. And there's about, uh, $15,000 on credit cards.

Okay. And remind me, or say, clarify this. What you said, I had to take this out. To pay for every— or what, what, what was the cause for these?

So we are trying to, uh, well, I was trying to get one lump payment by consolidating everything. So, um, we tried to— I, I took out the loan up by myself because he refused to step up and help.

Uh, and this was just living above your means, like this was all in the marriage and it was— there was nothing specific. It's not like there was a small business that one of these loans went to.

No, no businesses.

But it's, yeah, we, I would say that we were living well above our means. Okay. And he got grossly comfortable living that way. Sure. And now that I filed for divorce, he thinks that he deserves to continue to live that way. Sorry, there's a helicopter outside my house.

No, you're fine. Um, how much a year, how much do you make Jamie in your job? Uh, $170,000. $170,000. Okay.

And what's your rent right now? You said you're renting after you sold the house.

Yeah, my rent is $1,400. Great. Okay.

So you have plenty of margin. Once the dust settles and we know exactly how much debt's going to be yours, now we can formulate a plan as to how we're going to pay it off. Okay.

Is that what you're wondering?

Yeah, I started doing this on my own without his help or input. I have $3,000 saved in a high-yield savings account that he can't touch. Much for the emergency fund. Okay. And I've been, I've been doing the EveryDollar to put everything towards paying my debts. And I had 3 credit cards originally down to zero, but now that I'm having to pay frequently for the attorney—

yeah, I would just stop the whole debt-free journey, which I know sounds crazy coming from us.

I would too.

But you're in the middle of a storm. We got to pay lawyer fees. Yes. And anything beyond that, I would just stack up in a high-yield savings account. And once the dust settles, we're There's a divorce decree, there's a judgment. We know exactly what's next. Then we can start pushing play on Jamie's new plan for her new chapter.

Yeah, Jamie, the $90,000 that you got out of your— the sale of your home, where did— was that— that all go to pay off debt?

Yeah, so it paid off, um, the truck.

Uh, he— his money from his truck.

That was nice of you. Yeah, I know it was. Um, it paid off, uh, money that his mother gave him. Um, so you paid—

okay, you need to document all of this, Jamie, because this— these are his assets.

I would use that to negotiate $90 grand less that you're going to pay him.

Yes, yes, all of that needs to be used.

Yeah, my attorney has everything, like, and it's all in the bank records as to everything that was his.

Listen, you need— your number one priority is to take care of you and your son and get through this divorce, okay? The debt-free journey can, it will happen for you. But you have had your heart broken. You've been in a horrible marriage. Gosh, the amount of energy, even with your son having autism. I mean, all of it. You have a lot that you're carrying, okay? So you need to just, don't make any more big moves financially, okay? Stay current where you can stay current. And that's it. You need to be stocking up cash on the side. That $3,000, you need to keep adding to that. So when these attorney fees hit, you have the ability to pay them in that you have money saved. Right now, cash is going to be your friend more than anything because it's, everything is just so chaotic. Do you under— does that make sense? Yeah. That's gonna give you stability for now. And then what George said is exactly right. Then once everything is set up, settled, then you can say, "Okay, now I'm going to take that amount of cash after attorneys are paid and everything. I'm gonna apply it to my debt for what's left," 'cause that judge may give him some of that debt, Jamie.

So, don't be paying on stuff, 'cause it may be going to him. And then you'll have a ton of cash sitting in the bank, hopefully, that you can actually throw at this debt and get some big progress starting it. And then you're gonna just chip it away little by little. But yeah, there's a lot swirling for you. So I think simplifying and just stacking up cash is gonna be huge for you right now. And I'm so, so sorry you're going through this. It's horrible.

All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates, but when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey Trusted Agents aren't just experts who guide you through buying or selling, they're people you can trust to to have your back from the first call to closing day. Find a Ramsey Trusted Agent near you at ramseysolutions.com/agent. That's ramseysolutions.com/agent.

We wish that we could get to every call and question question here on the show, but if you have a money question, make sure to head over to our website and use Ask Ramsey. Our Ask Ramsey is our free AI tool, and it is built and trained on proven Ramsey principles, and you'll get the answer that you want the Ramsey way, just like if you called in on the show. You don't have to worry about Dave yelling at you. You just get your question answered. Unless you want that. In which case, you'll be disappointed.

It's gonna be a little bit nicer.

A little nicer, no, but yeah, make sure to check it out. It's awesome. People have been talking so much about Ask Ramsey.

Yeah, they'll DM me, and then by the time—

time I get to it, they went, oh, never mind. I went to Ask Ramsey and it was great. Yes. Oh, okay. I'm useless. It's great.

Go to RamseySolutions.com and check it out. We'll leave a link in the show notes if you're listening on podcast or watching on YouTube. All right, let's go to Veronica in Detroit. Hi, Veronica.

Welcome to the show. Hi, Rachel. Hi, George.

Thank you for having me on.

Absolutely. Thanks for calling. How can we help?

So in back in 2021, my, my husband's brother asked me and my husband to cosign. Actually, my husband really He asked him to co-sign on the loan for a condo. Oh no. And since then he has been paying on the condo, but he stopped paying his HOA over a year ago. And now we just got a letter saying that there's going to be a foreclosure on the condo because we owe $10,000 on fees for the HOA currently.

Oh no.

What time period was this? Over that he didn't pay?

Since April of 2025. Okay, so over a year.

Yeah, he had— he had made some payments, uh, last year, like a few times he paid here and there, but it's almost $500 a month, uh, every month, you know, plus $25 late fee. And, uh, quarterly they have like an additional $1,000 fee.

Have you talked to him? Yes, we did.

3 months ago, he said that he will make a— it was at that time, it was $6,300, almost $400 that he owed. And he said that he will make a lump sum payment of almost $3,000, uh, like next month. And at that time we were like, okay, yeah, he didn't, he didn't do anything since.

So what's he saying now?

I'd be calling him every day. Not— well, he said 3 months ago we haven't been in touch.

Yeah, we just got the letter last night, and, um, in the letter it says that we have to come up with the payments, uh, before July 31st, which is tomorrow.

Yeah, I was gonna say, we got a couple of hours before that happens.

Do you guys have any money, Veronica?

So, um, the situation is that he's been trying to sell this condo, and it's been on the market for 81 days, uh, and it's just been— had 5 showings. Which is—

I don't know how to communicate. Is it overpriced? Why is it not selling?

Uh, it's underpriced for what he paid for it. I think he paid for it, um, $220,000, and right now it's listed for, uh, $215K. Oh, but yeah, honestly, I'm willing to just part with it.

You got to come up with the Magyar underwater on to get out of the loan.

Yeah. So, um, currently left to pay is $172,000.

Okay. Well, I would do anything to stall this foreclosure, right? I would much rather—

That's my question. I would like to know how to stall it because this is the first time we're facing something like that. We always pay everything on time with my husband. We don't really have that much, you know, how much do you have in cash?

Like liquid savings you could come up with by tomorrow?

Tomorrow?

Well, if I was like, um, like on our save, like in our checking account, anything under the mattress and checking, an investment you could sell?

Yeah. How much?

Yeah, we're basically check to check right now, but I think we could save $1,000.

I'm saying, could you hand them a— could you write them a check for 5 grand to buy yourself some time and have the other 5 grand by the end of next month and negotiate with them.

Um, okay, I see what you're saying.

Because if you go through foreclosure, it's going to be much more financial damage than this $10,000.

And you're on the hook for it because he co-signed them.

Yeah, that's, that's what we're, we were thinking. We were like, let's sell this condo. Like, I want to sell it.

I want to, I want it out of it.

I don't want anything to do with it.

But it's just, you know, well, yeah, you do have something to do with it. And I would, I would take it over and I I would look to see if there's a Ramsey Trusted Agent in your area. I'd get this thing sold. Like, I would take it on as if it's mine and be like, okay, step aside, brother, because you're obviously— you and your agent doing nothing. Incapable. No, I'm gonna like get in there and do it because you would much rather on the front end to go through the hard work and the misery of getting this sold quickly than—

I do have, I do have some like investment in stocks.

Do you think it would be worth just selling my Yes, to avoid a foreclosure.

Well, I have a, I have a $50 grand in stocks in just a brokerage account, in like individual stocks. Perfect. Yes.

Okay, it's gonna hurt, Veronica. You're gonna be pissed and you're gonna be like, I cannot believe I'm taking this money out of investments. Believe me, it's horrible. I know, but that is why, and I pray your husband will never ever ever ever ever even entertain the idea of signing. Yeah. I mean, y'all been burned. Burned.

Yeah.

We actually helped him a few years ago with his— he had a credit and he had a, um, you know, he, he took some credit cards out and he owed some money and we just took a, you know, a second mortgage while we were buying a car and we covered that up.

And Veronica, this is not help.

This is enabling. This is not a good pattern.

This enabling. So here's your homework. Let's make it very clear. You're going to sell off enough stocks to pay what's due so that you don't get foreclosed on. Then you're gonna write up a contract with a real estate attorney to recoup that amount when this condo sells. So he will not see a dime until you guys are paid back for what you've put in.

And then he's got to figure out how to get the difference after this condo is sold.

Hopefully, if he has— you know, he owes $170K, you sell it for $215K, you guys can still walk away walk away unscathed even after fees. That's the goal. And if he makes zero profit, fine. But you guys need to get your $10K back at least. Yes. Out of this deal. Yeah. And you can hire your own real estate agent to do this. You can go to ramseysolutions.com/agent and you can find one that can actually sell your thing.

And tell them you're in a pinch. Well, thankfully you do have the money to at least push off the foreclosure, so it doesn't have to be very urgent.

But we want this thing sold for your own peace of mind, less about the foreclosure at that point, because that'll be all be paid, the HOA fees, But oh man, Veronica, as soon as you're off this call, go sell enough stocks to cover this because by the time you can get it into your checking account to then wire the HOA company the money, hopefully we can avoid this. But be proactive. Call them right now and explain what's going on. They're trying to get this money by the 31st and hopefully you can walk out of this thing with just a slight burn.

Well, what's wild is, you know, as we're recording this show, it's Wednesday, you know what I mean? And it's hard sometimes Sometimes with depending on the banks and everything. You have transfers? Yeah, so like business day. So business day. This is urgent. Yes, absolutely. Oh my gosh, man. You know, guys, this is another—

I got secondhand stress from that.

Reason. This is another call. We can have a whole show about cosigners. This is why you do not cosign. And it is because the person who is taking out the loan, the bank does not trust.

I don't care how much you love them. No. Because here's what happens. The relationship is destroyed forever. So, how was that for loving them? Yep. You know, we love the camels.

And if you and Whitney ever came and said, "Would you co-sign for us?" I would say, "I love you, George and Whitney." And then, "No." That's all you gotta say is, "No." No.

No. And I'm a people pleaser. I wanna be helpful and I still wouldn't co-sign.

Yes, and 'cause it's not helpful. It's not helpful to the person. They're not at a good standing place to even be going into debt.

What that says, the lender said, "I can't afford a house, but he said if you can promise that you'll pay it, they'll let me have it." Yes.

Oh, man. This happened. And I mean, it sounds like Veronica is pretty much done with the brother-in-law. But what's sad is that just, that, that it ruins, it puts a bad taste in your mouth about the person.

He's not showing up to Thanksgiving, even if you invited him.

Yes. And then if he didn't pay some of his stuff back to them, I mean, like all of It's just, it's not good. It takes a strain on a relationship. It is not helpful to people. Okay. So you are not mean if you say no, no, I will not cosign. We're not cosigning. I'm sorry.

And if you cosigned on anything, you better keep up with what's going on with that thing. I would have known the HOA fee wasn't paid month one. Oh man. I'd be getting notifications and emails.

If you can get out of it in any way, if they can refinance, I'd get out. Right, if you are in one, if there's a way to get out. So, uh, make that all be a warning call out there. So Veronica, I'm so sorry you're going through that, but I think there's hope on the other end. Thank God you have that stock because that is going to help you guys, um, in the meantime. But man, that's tough.

Hey guys, George Campbell here. You ever feel like you make good money and still have nothing to show for it? You run into Target for one thing and somehow walk out $87 later with toothpaste and emotional support candles. Just me? Okay. Well, that's the problem. Most people don't pay attention to how they spend their money, so it does whatever it it wants. And that's why we created EveryDollar. It's a budgeting app that helps you create a simple plan for your money. EveryDollar's simple, it's clear, and it helps track where your money's actually going. Plus, you get daily lessons, to-dos, and reminders along the way. It's like having a money coach in your pocket. Your money's been freelancing long enough. It's time to give EveryDollar a full-time job. Go download EveryDollar for free on the App Store or Google Play.

The Ramsey Show question of the day is brought to you by Yrefy. If you keep putting off dealing with your private student loans, now is the time. Yrefy helps borrowers explore low fixed-rate refinancing options and affordable payment plans. Go to yrefy.com/ramsey. That's yrefy.com/ramsey. Ramsey. May not be available in all states.

Today's question comes from Carson in Ohio. The only debt I have is $15,000 on a credit card. My car and student loans are paid off and I earn $65,000 a year. I'd love to know how to attack this while still being able to maintain my lifestyle, which includes playing golf weekly, seeing my favorite sports teams play, and going on dates. My friends and I are all in the same situation and we need some to help?

Oh, Carson, sweet, sweet Carson. I still want to bro out and still get ahead financially and not have to make any sacrifices.

Gotta have my golf. Okay.

And make any sacrifices. Well, here's the hard truth.

Do you want financial freedom? Do you want to build wealth? Or do you want to keep your hobby temporarily, which is going to slow down those other plans? So, you've got to figure out what the priority is for you. And it's fine if you want to say, hey, I don't want to lose my lifestyle. It's just my That might mean you take 24 months to get out of debt and pay an extra $5,000 in interest. That's right. That's your prerogative. But if I were you, I'm going to go, "You know what? As much as I love these hobbies, I'm going to have to say no to my friends and put pause on my favorite sports team's play." And it's going to take 4 months.

If he really buckles down, I bet he can pay off $15,000.

$65,000 a year, he probably takes home $4,000 a month is my guess.

Oh, yeah, yeah, yeah. That's what I meant.

Yes, yes. And I don't know what his lifestyle is, how much margin he has, but if he can afford golf and seeing his favorite sports sports teams regularly and going on dates. Okay, maybe just pause the dates.

Let's stay single for a little while longer.

Yeah, everything else— okay, I was a little aggressive. I was a little aggressive on my—

I'm just— I talked to you like if you were my friend, Carson. I hit you straight. So that's the honest truth. $15,000 on a credit card is an emergency. That's like 27% APR you're paying for the privilege of carrying that balance. So I don't care if Even if it's the only debt you have, I want you to treat this like a crisis, which means we are only covering the four walls: food, utilities, housing, transportation, insurance. Every other dime that comes in, including you working extra, is going to go towards knocking out the debt, getting an emergency fund. Then we can bring back in some of our hobbies.

Yes, it's not a no forever, but instead of paying extra on all the money you're working for on interest, get out of debt. And if you want to check out EveryDollar, that's a great place to look to see where the most of your money's been going. And then you can like delete categories and say, okay, I used to spend it on this, but if I take that out, that's more margin. And so that is one thing I love about EveryDollar. There was actually a fan quote that said, I love this app so much, makes it super easy to budget with my husband. We have implemented this practice since our wedding day and we have zero money fights and full transparency. We are on the same page. So that's what's great about it.

Take notes from this married couple, Carson.

I know, but you just have not only transparency with another person, but yourself. You know where your money's going. And then you could say, "Carson, what if I add some extra income at the top of EveryDollar and I went and got a side hustle?" Right?

When you're young and single is the time to do it.

Yes! Bring in an extra $2,000. You add that on the income line item there on your EveryDollar budget and you get to see it all trickle down. So, Carson, come on, dude. You got this. Way more attractive on the dating circuit. That's right. When you say you're financially responsible. Women love it. We love security. Purity. So, that's what you're proving out there. So, hope that helps, Carson. And you guys, if you wanna check out EveryDollar, you can go download it for free in the App Store or Google Play. All right, let's head to Miami. Welcome to Miami. We got Brian on the line. Hi, Brian. Hey, how are you guys? Hi, we're doing great. How can we help?

Hey, so I'm relatively new to you. And I think you answered this question in a segment about 30 minutes ago, but I'm gonna ask you anyways. Um, after, when I get paid each month, uh, after expenses, I put money in my tax account, uh, and giving. I've got about $3,000 that I've been investing every month. Nice. Um, my question is, uh, I just talked to somebody about permanent life insurance, um, as kind of diversifying some of my portfolio. So instead Instead of giving $3,000 a month into my mutual funds and IRA and all that, they talked about possibly doing $750 in a permanent life insurance and then $2,250 in investments.

So by diversify, they meant, can you give me a bunch of that money in commissions?

I brought that to my financial advisor. He said, please God, don't do that.

Oh, what a great financial advisor you have.

Well, here's your second financial advisor, me, saying, please God, don't do that. I'd rather get cyclospora than get a permanent life insurance policy.

Okay, I'm curious.

I haven't been listening to you guys. I am curious to why your thought is that way. George was made for this moment. This isn't what I do.

My blood pressure went up.

Well, here's the thing.

This is where George is about to shut up.

The reason why these guys sell— I'm guessing, is it an old college buddy?

It is not. No, this is actually Uh, this is a family member.

Oh good, even worse. A blood relative who's— yeah, they've done well because they've sold scams to people like you, Brian. So here's the thing, these policies try to mix two things at once, life insurance and this cash value portion which grows at a snail's pace, way slower than your investments will grow. And they often make 50 to 100% of your first year's premium in commissions. Goes to them. So, they make all their money on the front end, and then when you try to get out of it, you'll lose most of what you put in. So, now there's a sunk cost fallacy where you go, "I might as well stay in. They told me I'll ROI if I stay in this thing for 15 years." So, you do not need life insurance if you're a single guy. Are you married?

I'm married.

Good. Do you have term life insurance?

I just got term life insurance. Hallelujah!

Wonderful! Does your wife have term life insurance?

Insurance? I just put her on term life insurance as well. We both have, we both have $2 million each.

Fantastic. Okay, so we have life insurance covered, check. Now let's do investments separately. And you're already doing that through what, index funds in a brokerage account, through retirement accounts?

Yeah, the majority is in— I keep 30% in CDs, 60% in high-yield high-yield brokerage account. And then I invest in an IRA just for tax purposes.

OK.

Well, I would keep your investing and insurance separate for the rest of your life. There's zero upside to this, to you giving this guy $750 to then lose money on it. You will make so much more just putting it in a high-yield savings account.

And no upside of having these CDs, Brian. You need to invest! Have index funds. You can diversify within your investments. Get a good growth stock mutual fund that's $70 to $200 stock. I mean, it's a, what it can do from a return standpoint is gonna be way more on your side by putting this stuff in, again, something like an index fund. And is your IRA, is it a Roth IRA?

It's a traditional IRA.

Okay, so I would look into the numbers on that and maybe converting it. You'll pay some taxes on it, but converting it to a Roth because you guys are so young, the growth that's gonna be happening in that account account is going to be astronomical. By the time you're 59 and a half, most of what is going to be in that, in that Roth IRA is going to be growth, and you don't want to pay taxes on that. You can pay it now. So I would look into a couple of things. Is, is your financial advisor, the one that we love, who said stay away from permanent life insurance, is he looking at all of this with you? Yes. And he's okay with all of it?

Yeah, he's, he's good with it.

Um, my CDs get capped So, uh, right now I don't add any more into CDs. It's, uh, I capped out at like $40 grand. Um, and now what's the purpose of—

what are you doing with that money?

Say that again.

What's the purpose of that money in the CDs? What are you doing with that?

Um, I'm going to buy a house in the next probably 2 years. Okay. So it's just money that I can take whenever.

Got it. Fully matured? Matured?

Yes. Okay. Okay. That's good. I would, I would personally move it to everything to high yield savings for short-term goals and anything long-term, which is 4 or 5+ years, I would do in retirement accounts and index funds. So hang on the line, Brian. I'm gonna give you a free ticket to our Investing Essentials virtual event where Dave Ramsey and I will unpack his personal playbook for building wealth. We're gonna walk through all of the stuff you're talking about. Out and probably steer some people away from ever getting a permanent life insurance policy. Yeah, it's a—

I'm glad you called in though. It's a, it's a great question, and you, you're on the right path. You're doing so many great things, Brian. I think if you tweak a couple of these things, from a mathematical perspective, it's going to be more on your side.

The problem with online investing advice: you hear so many different opinions and you're left wondering if you're even doing it right. And that's why we created Investing Essentials. Join me and Dave Ramsey at this two-night virtual event to learn Dave's playbook for investing and wealth Planning. We'll break down 401s, mutual funds, passing on wealth, and more. So join us September 1st and 2nd. Tickets start at $199. You can get yours today at RamseySolutions.com/events or just click the link in the show notes.

Our Scripture of the Day comes from Proverbs 11:25: "A generous man will prosper; whoever refreshes others will be refreshed." Richard Branson said, "Train people well enough so they can leave. Treat them well enough so they don't want to." Ah, I like that. It's a good quote. All right. All right, let's head to Dayton, Ohio. We have Patrick on the line. Hi, Patrick.

Welcome to Welcome to the show. Hi, I appreciate you taking my call.

Absolutely. How can we help?

I just, I've had, I got a lot going on right now and I feel really stuck. Like I'm just spinning my tires and I could really use some wisdom.

I'm sorry. Yeah. What's going on?

So, well, my daughter's currently in the hospital. She, I've got 2 kids with kidney problems. The 3rd kid has seizures and we're And I mean, I've been doing the baby steps. I've been— felt like I've been doing everything right. And I'm just— I'm not seeing any hope. We're not getting anywhere. I feel like I'm starting over every other week.

Are you talking about financially or no hope as far as the medical sort of getting that under control?

No, no, that kind of stuff. I sort of made my peace with it and always been very positive outlook. But I guess it's more the financial.

Yeah, well, give yourself some grace, Patrick. The journey looks different for you, and it's okay if that goes slower. Yeah. And, you know, you don't see the progress that other people see around you. You've got a storm, and it might be a longer-term storm where you just have to batten down the hatches and have the bigger emergency fund and not be able to invest as much in a season. And that's okay. Yeah. So what does the expenses look like right What's sort of stressing you out financially?

So, you know, when she's in the hospital for a week at a time or 2 weeks at a time—

Is it dialysis? What's going on?

What's her treatment? Well, she already had the transplant, but now she's on immunosuppressants, so she's always getting sick. Every little thing. Well, right now she's got salmonella real bad and septic shock and everything. Oh, gosh. And we just got over that, and then I guess it just came back. But that's just one instance where with all 3 kids, we're just always in the hospital. Okay. And obviously while I'm here, I'm not making any money. I got my wife's at home and it's more than an hour drive from here. She's got the other 2 kids and, and, uh, yeah. Okay. So what is— little things just always popping up for sure.

What does your work life look like right now? What are you— how much are you making? And is it sustainable from like a remote perspective if you're able to help with the kids? Or what is— what is that going to look like?

Well, I, I do construction, so I got to be there. There's nothing remote. Um, what do you guys make in a given year? Uh, I mean, if I never missed a day, I guess I'd be getting like $39K.

$39,000 a year? Yes. Okay, and your wife stays at home? Correct. Okay, so $39K is a best-case scenario for what we're with here, right?

But with the doctor's appointments, the sicknesses, the—

yeah, because you're getting paid per day on the construction site, correct?

Okay, so what do you think you'll bring in this year if it— if the top's $39,000?

What is— God, maybe $25,000 if I— if I can get back to work.

And really, what are your expenses every month?

Because that's $2K a month you have coming in.

Yeah, that's, I mean, I would say we probably could get by with like $2,400 bringing in. So there's definitely a deficit.

So your expenses are $2,400 a month. So we need at least that coming in. Do you guys have any debt?

Yeah, I still own the house.

Just the mortgage, no consumer debt? Correct. Okay, that's positive. That's good. Yeah. Savings?

Anything in cash? I mean, no, I'm, I'm wiped out. I'm telling you, I'm starting over from zero. I put our last money in the gas tank to get her down to the emergency room. Yeah.

What do you— do you guys have health insurance?

Uh, yeah, it's like through the state, you know, Medicaid. So I, I don't have medical bills. That's not— never been an issue. I've never had a credit card, so that's never been an issue.

So that's one thing we don't have to worry about is how are we going to pay for this medically. Yeah. Now the goal is to make enough money that you may not even be eligible for that, but you have good health insurance, a better job, you have margin left over to invest and save. Because while this is a blessing right now, the long term of you never having any money left over is a major problem.

That's what the issue I'm running into is because I took a $5 an hour pay cut in the year 2022. I left a good job. That wouldn't want me to miss a day. And I took this job for much less money so I could have the flexibility of always being here with my daughter. For sure. And then I have no problems at that job with, um, missing work. You know, they— we're like a family there. They don't— they don't— they understand my situation. That's amazing. I'm not getting paid while I'm up there.

That's right. Yeah. Um, it says she's there a week at a time. Is what you said. I'm just wondering if there's a predictable, if there's any predictability to her condition of when you're going to be at the hospital versus not and the days you're home. Wondering if you can pick up something extra just to bring in some side income for a bit.

Right. I work when I can and everything will be fine for a couple weeks. Then all of a sudden, then her sister will be having seizures and I got be done in the hospital. The predictability part is out of the question. No, I—

okay. Do you guys have any family nearby?

Uh, yeah, I mean, our parents live around, you know. We got— we live in a pretty small little town. And good church?

Are you guys involved in a good church?

Um, not really, but the town itself has helped us out before. At, you know, Christmas time, they'll give us something, and, and our parents help when they can. But the Yeah.

I think my goal—

The condition is so demanding, it takes all of my time.

I'm just wondering if there's, and it would be hard as a parent, I'm like, this is, it's heartbreaking. But if there's a stint that you and your wife agree, and maybe with grandparents' help, and you guys just say, "Hey, we need," I'm just making this up, but 6 months where you, Patrick, are consistent on the job just for the goal goal of getting back an emergency fund just to have some buffer. And it may take 5, 6 months to get that. And maybe it's a grandparent going to the hospital or watching the kids while your wife goes to the hospital. Or if there's some length of time for you just to focus on work and even work nights, work weekends, Patrick, I'm like, just so much of that, you can at least build up some cash flow. Because I think the stress is now, now that there's no margin, there's nothing. And that, let alone all the health issues with your kids, I mean, that keeps you up at night. And so I'm wondering if, you know, having $10,000 in the bank sitting there, that changes your world financially at this stage of the game.

It does, it would, it definitely would.

So I just wonder if you and your wife, and again, that's gonna be so hard 'cause I know you guys are in a rhythm and you're taking such good care of your kids, but where you both kinda look at each other and say, "Okay, for between now and Christmas," or I don't know what it looks like, but it's during a significant period of time, enough to get some cash in that's margin, and we're just saving that. That's our goal because we just need that buffer. That's, I think that would cause some level of peace. That could be your first step, right? And then over time, like what George is saying, looking at your career, career and getting to a point where, I mean, God willing, you're making $70,000, $80,000 in construction and a great job and you have great health insurance for the kid. I mean, you know what I mean? That's the ideal dream long-term. But for now, man, just having some peace of buffer to fill up your tank and not have to think twice about it, right? To help your kids.

Yeah. What does the ladder look like for you if you were to step up into a different role in construction, making $30, $40 an hour?

Uh, is it management?

No, it could be, because if there's no long-term trajectory here, then I think we need to find a totally different field where your skills could transfer. Because if you're stuck making $20 an hour and you're an hourly worker, that's going to be really hard to climb out of this and, and get that margin long term.. Yeah. So that's another piece to look at and I'll send you a copy of Find the Work You're Wired to Do. It has a Get Clear Career Assessment in there and that'll start to show you, hey, you know what? I do have all these skills. This is what I'm wired to do. And maybe it's not construction for the rest of your life. So we'll send you that copy of, uh, Find the Work You're Wired to Do to help. But man, there is no easy answers here.

Yeah. We're so sorry, Patrick. Any quick wins you guys can get, I think is your number one goal today. Just for you to kind of get through day to day.

And lean on that community as much as you can.

Absolutely. Oh, thanks for the call, George. Great show today. Thanks to everyone in the booth. And remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.