Transcript of Simple Habits Create Lasting Peace

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Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is The Ramsey Show. And I'm Rachel Cruze, hosting this hour with Jade Warshaw, and we are taking your questions. So give us a call at 888-825-5225. We'll talk about your life and your money. All right, first up, we have Willow in Springfield, Massachusetts. Hey Willow, welcome to the show.

Hi, thanks for, uh, hearing me out today.

Yeah, absolutely.

First-time caller. Um, you know, so my question is about changing habits. Um, I'm kind of an impulsive spender. I like to eat out. And I noticed, so a couple years ago, I really got intense and got it, you know, I had a second job. I worked like 70 hours a week. I paid probably like $25K off in debt.

Nice.

And yeah, it was nice. And then, you know, a couple years later, I realized I'm pretty much right back where I was. And what really got me to think that is Someone from your show did— now we have SmartDollar through my work, and someone through your show did a little webinar, and that made me realize, wow, I got so intentional, or I got so intense but not intentional. So, when you really want to get down to it, how do you change those bad habits? Even if you know you can work hard, you can get all those hours that you want to get.

I mean, Willow, I would boil it down to why are you doing this to begin with? Because if you don't have a good reason why, yeah, you probably won't stick to it. Or, um, and I just was talking about this on social media, I just don't think that if you, if you don't have the personal buy-in, like your own specific reason for doing the plan, you won't do it. It's very easy to hear Rachel or George or myself or Dave say information to you and logically you kind of know like, yeah, that makes sense.

That's.

That, that sounds right. But it's kind of like if you don't have that personal buy-in, that personal reason for it to be right for you, something that you must do that is really that urgency inside of you, you won't do it. It's kind of like when you go to the doctor and they tell you you need to start eating healthy.

Mm-hmm.

And you're like, yeah, I got it. And then next thing you know, you go through, you know, the drive-through and get McDonald's, right? There's no personal buy-in. You haven't felt that pain or you haven't made that association with why it's necessary for you to make those changes. And that's probably what's missing for you. I mean, if I were to ask you why, you tell me why. Why is this a necessity for you?

I'm just so tired of like living paycheck to paycheck. I'm just so tired, you know, of renting a room with everybody, with a bunch of other people. You know, I just, I would love a house someday.

What'll happen if you don't? What'll happen if you don't get your life together? Where do you see yourself in 10 years if you don't do this?

Oh, as I am right now, you know?

Yeah.

Stuck.

And, and your main reason for being stuck in your head is overspending. Is that what you would blame it on? It's kind of how you opened the call, so I'm just curious. Or is it—

I really think so. Cuz I mean, I make okay money. I'm on a projection to make better money throughout my life. Yeah. But it's just like, if even when I, if I start making more money, I'll just wanna spend more and more of it.

Yes. Yeah. Yeah. And so, you know, it's, interesting because spending money, and I would say saving money as well, there's a motivation and a reason we do both. And in the extremes on both ends, they're unhealthy, right? So you have a saver on one end and all they do is save and they live their life where they end up hoarding, not enjoying their life, and their money ends up controlling them in a negative way because they, they have no freedom from it because it's become this thing that is deeply ingrained of security or whatever it is for them. of why they do that on this side. And on the other side, Willow, which I can relate to, 'cause I'm more of a spender, so I'd be probably more, more in your camp of what does spending give me? Like, what is it that it gives me? Is it the initial purchase and buying? 'Cause we know, you know, through, through research and studies that it does, it kind of, it gives you a hit, it gives you something, right? And so my question to you would be, what is that deep motivation when you are spending?

Is it out of, any level of achievement, accomplishment? You feel value when you buy something? Is it cuz you're bored? You're, you don't feel like your life's good enough, and if you buy this next thing, it's gonna, it's gonna do good for you. Is it laziness? I don't wanna cook, so I'm gonna go out. Like what, what would be the name?

It might be all of the above.

All the above.

Uh, yeah. So like definitely lazy. I don't wanna come home after a long day and cook.

Fair.

And then, and then when I, after you eat something out, it's like, wow, this doesn't really taste good. I could probably make this better at home.

Yeah.

You know, exactly. So I wonder for you too, if there's, if, and I hate to just to put it on so ta— such a tactical level, cuz I do think money is so emotional and it reveals so much about us. But even from a tactical side, there's a planning aspect. I know for me as a spender that I have put into place, and it's not perfect, uh, you know, I'm not, 100% all the time, but I've created these small habits around my spending that help me spend. And when I spend, I feel good about it versus regretting it, right? So for instance, like food, right? And I think we all can feel that. Jade and I understand that.

Yeah.

Like it's so hard. So I'm like, what does it look like on a tactical, again, we're going tactical here, to look ahead and say, okay, what nights am I gonna be home? What can I plan? What do I need to buy? Like what are the things that I have to do to force myself in this one area of my spending to have a plan and to actually stick to it. And you gotta stick, stick with it for, you know, 3 or 4 months to kind of get in a new rhythm of that. If I wanna buy something—

My therapist said the same thing.

Do what?

My therapist said the same thing.

Oh, there, there you go. Just therapist Rachel here for you, Willow. No, that, I mean, and, and for me too, like buying stuff, I mean, even for my kids on Amazon, I got in such a terrible habit. Like they would want something and I'm like, I'd look up, you know, jewelry for my girls or something. He's like, we want new necklaces. I'm like, okay, it's just $6.99 from Amazon. Something pretty easy. It's cheap. Just like ship it and do it. And when that becomes the norm, that's what I, my body expects. So I don't have to deal with them hearing the word no and dealing with this, like, you know, if there's tears or whatever and having to actually step in for me and parent. Or if I wanna buy myself something and I'm like, hey, what's my motivation for buying this? and then stopping and actually having to deal with myself, right? Like spending can be such an escape for me sometimes to not actually deal with what I need to deal with. And that can be, again, something small with like a parenting thing or I didn't plan well, so I'm exhausted, so I don't wanna cook.

I mean, you know, or clothes, like—

Just an avoidance of discomfort in general.

Yes, that's right, that's right. So I do wonder if there's a, you've developed a life and a habit where money gets you comfort even though you're at the end of the day not getting the ultimate result for your life that you're wanting.

I could see that. Um, okay. No, this all makes sense. Thank you.

Yeah, absolutely. Yeah. I don't know. I've, I hope that helps, Willow, but I do think asking the questions underneath of why, why, why, and you ask it 3 or 4 times to actually like, why, why, why, why? Um, and, and even in periods of my life, I would always ask, you know, before, if nobody sees this purchase, do I still want it?

Mm-hmm.

Mm-hmm.

As an Enneagram 3. And so, you know what I mean? Like, I, I was like, man, for a season there was like a, Ooh, that feels good because X, Y, and Z. I know someone will probably see it and say something. Well, that doesn't get you very far in life, right? And so cutting that off at its source. But when you start to actually unwind the spending and your money habits of the person underneath it, it changes the game.

Yeah. I think in his case, I think there definitely, I could hear that there was the convenience, like not wanting to deal with. I could hear that there was, sounded just like some insecurity on like what my life would look like without these purchases. And I think that if he continues to work with this therapist, I think he'll be able to unwind that even more.

Yeah.

Because at the end of the day, you have to be able to trust yourself to say, I'm gonna do something, and trust that you'll be able to make good on your promise.

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Hi. Thank you very much. Thank you.

Absolutely. How can we help today?

Um, I am 67 years old and went through a divorce here not too long ago and pretty much wiped me out. And, um, so, uh, I don't have any savings for retirement. Um, I'm a sole proprietor contractor and, uh, I stay busy, fortunately, thank God. And, um, I'm just trying to figure out what's the best way to move forward and, uh, try and catch up for some lost time. I got, um, got my sons through college. Uh, without any debt. And, um, I'm basically starting over. I have about $23,000 in debt, like credit card, medical, and a personal loan. Okay. Okay.

Did you, during the divorce, um, did you obtain any assets or like a home or anything?

Well, I, I do. Yeah, I do have, uh, my home and it is paid off.

That's good. How much is it worth?

So I would say probably $150,000 to $160,000.

Okay, gotcha.

And you said you're a sole proprietor. What do you do for work and how much do you bring home on a given month?

Um, well, I do construction, uh, new construction, remodeling, and obviously it varies depending on But I would say on average, I would say $4,000 to $6,000 a month.

Okay.

And do you currently have a budget? Because I mean, for a single guy, $6,000 a month isn't bad, especially with a paid-for home. I just wonder if we need to reallocate that money and make sure it's going to good places.

Um, I honestly really don't have a budget. Made up. Um, some of that money goes to like liability insurance and, uh, um—

For the business?

For the business.

Okay. Are you keeping the money separate? So are you keeping your personal money separate from the business money?

No, I am not.

Okay, so we definitely need, need to start doing that. That'd probably be my first course of business. is just going down to the bank and opening up a, a doing business as account and just keep that money so that way you actually know what you're earning from the business. Because if you don't, Jim, you're gonna be thinking that you make $4,000 to $6,000, but after expenses, maybe it's closer to $3,000. We won't know until you separate that money.

Right.

And then from there, uh, my second course of business would be to, to do a budget. Once you've separated that money and you can say, okay, after all my expenses, here's what's left in the business. I'm going to transfer that over, pay myself. Now I'm making the budget based off of that money. So we'll give you every dollar to get you started on that. And knowing that number is going to be key because that's, that's where your margin is going to come from. Do you have any money saved anywhere?

I, I do. Um, I've got the $1,000.

Okay, good. So anything else?

Um, you know, just my equipment, and, um, I have, uh, musical instruments, stuff like that.

Okay.

Uh, you wouldn't mention it if it wasn't a lot. How much do you think you have in musical equipment that you could liquidate?

Uh, I probably have somewhere around $8,000 to $10,000, I would say.

I might do that. I'd probably do that immediately because that knocks out half of your debt if you can get $10,000 for that. Because the first step here, you've got the Baby Step 1, which makes me think you're familiar with our steps. The next step is, yeah, to look to clear out this debt. And I would liquidate the musical instruments as quickly as I can. And then in the meantime, with whatever margin you're finding in your budget, really getting after this $23,000 of debt. Um, tell us about your vehicle.

Um, it's my work van.

Okay. Is it paid off or does it have a note?

Oh yeah, it's paid off.

Okay. And that's, that's the only car you've got? Only vehicle?

Correct.

Okay.

Yeah.

I mean, Jim, I would, I mean, just because of your age and situation, I think as aggressively that you can do this, the faster you could do this. The more upside you're gonna have on the end of saving for retirement. So let's just pretend you did, you know, sell some stuff, and that could be anything and everything, right? Maybe, and you get $10,000, that's $13,000. And if you could find an extra $2,000, which maybe means working, you know, more jobs, finding that income, because your income is gonna be key here, is to be throwing that.

Right.

And if you found $2,000 a month, you're, you're outta debt and everything in 5 months. and then save up an emergency fund. And by this time next year, you could be in a totally different spot financially. And then the only, you know, the thing from there is to start investing. And that's where 15% of your income will go. And yeah, and it probably won't be to the, just because of the time. I mean, there's just a limit of time and income to a certain point.

Absolutely.

That you're gonna have to realize, okay, with Social Security, anything coming in that I will have at some point in my life, how much do I need to live off of every month? And getting to that number with your investments that you can live off of that. And again, it may be another 5-ish to 6 years, which I hate. I mean, these are always tough calls, especially when someone has gotten to that point of for sure retirement age, but then up to the point of, you know, physical work is tough.

Absolutely.

And the older you get, that is much harder. And so, the reality of all of that, Jim, really is gonna depend, I think, of you, of getting, clearing this debt, getting some cash in the bank that's there just for expenses. And it could be 3 months. You don't have to do the full 6 months because your house is paid for.

Thank goodness.

It's just you, like, yeah, get at least 3 months, but do all of that very, very quickly. And then start throwing some money in investments. And that would be my goal. But it's a, And I, and, and I, and it's possible, Jim. Like we, we hear stories all the time of people doing this. So, but I do think for other people listening and watching, you know, it's a cautionary tale of realizing like, you know, life is gonna happen. It's gonna keep moving.

Yes.

And so where you are today, and this includes Jim, the decisions you make today, they affect your future. And so you can either choose to ignore it and, not think much about it until it's too late, or to say, no, I'm going to do something different. And it's not too late for you, Jim, right? You're not at the end of your story, but it just means it has to go that much more aggressively to see some movement.

I think we hear that a lot. There's people who call in and they've kind of been around the water cooler. They hear the information, they've listened to Ramsey for a long time, or maybe you just watch the show out of just entertainment.

Mm-hmm.

And you get a kick out of seeing what other people are going through. But if you're not actually applying this in your own life, that time is ticking.

That's right.

And with Jim, it totally, it's, it's, it's a look on the other side when you don't make that move. And just life happening.

You know, the divorce.

Absolutely.

Absolutely.

That is just life happening that maybe you didn't see around the corner. And all of these things, they really have the ability to affect our lives. But financially, if we do the things that, if you do the things that we teach, you're prepared for those things and you can kind of handle those storms when they come. And I mean, gosh, if you need, if you never had a reason to get started, this is the reason. I mean, it's like the caller that we took prior to.

Yeah, that's right.

You know, gosh, lock in.

If you don't change the habits, yeah. And for those of you that are new, we do teach on the 7 Baby Steps. It's what Jim mentioned. Baby Step 1 is getting $1,000, and then Baby Step 2 is paying off your debt. But when you go down the line, 4 is invest in retirement, Baby Step 4, Baby Step 5, is fund your kids' college. And so, the fact that he paid for his kids' college is wonderful. That's such a feat to put your kid through. But we always say, invest in your retirement first. Like, your kids may or may not go to college. They have ways to pay for it, make decisions with their higher education to do what they need to do. But at some point, you're going to retire. At some point—

You won't be able to work.

You're not gonna be able to work. And so, taking care of yourself first in that Baby Step 4 of 15% of your income, That is not selfish or wrong. That is, that's wisdom. And then out of that, if there's more to fund kids' college. But Jim, call us back if you need us. But I think honestly, in 12 months, if you do this, you get out of this debt quickly, you get some savings and you start investing, all of that could happen in the next 9 to 12 months for you. I really do believe. And then you'll start to see some progress for sure. I love a good sale. I also love the holidays, but if you're like me, sometimes those two don't mix well because 6 promo codes and a commercial later, it's so easy to convince yourself that you need just one more scented candle or a waffle maker shaped like a Christmas tree and some flannel pajamas. The temptation to spend more than you budgeted for is real. That's why I love having a bank that keeps my free spirit in check. And for me, that's Fairwinds Credit Union. With their Smart Bundle, you can choose a Ramsey-themed debit card that says, Live Like No One Else.

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And I mean, we live on our phones all day, let's be honest.

Absolutely.

So to have something that's accessible to you and that you're able to see and keep track of, like all of that intentionality is what pays off. So again, go download EveryDollar. You can start for free in the App Store or Google Play. All right, let's go to Bob in San Francisco. Hi Bob, welcome to the show.

Hey, thanks for having me.

Absolutely, how can we help?

Yeah, so, uh, I'm relatively early in my career, uh, it's been about a year. Um, I've— I work in tech as a software engineer and the field is pretty up and down. Um, there's a lot of layoffs. I've had friends that have been laid off for several months or a year. Kind of just comes out of nowhere. So my question is, I've been saving, you know, like 30 or 40% of my paycheck for the past year and, you know, working some other jobs before that. But sometimes I feel like I'm not saving enough just in case something like this happens. And I don't really know how to balance kind of spending the money that I have versus I'm kind of always feeling like, hey, I need to like save more just in case something like this happens. Um, and I'm, yeah, I, and long-term, I don't know kind of what to do.

It sounds like the biggest thing you're, you're, it's showing itself in what you're doing with your money, but it sounds like the bigger problem is if you were to lose your job or to get laid off, you don't sound like you have confidence that you could get another one in a reasonable timeframe. Is what I'm hearing. Because you could say, oh, I'll save for 6 months. Well, that's not enough. I'll save up for a year. Oh, that's not enough. Do you see what I'm saying? So am I right about that? What is— you're just concerned that, oh my gosh, if I get laid off, will I ever be able to find something?

Yeah, I think that's, that's my— yeah, I think you've gotten to the, the core of it there.

Yeah, because how much do you have saved? I'm just curious.

In terms of how long it may take, it's not Like, yeah, I feel like I don't have a lot of confidence that, you know, for sure within 3 months I'll find something for sure within X number of months.

How is AI affecting your industry?

Yeah, it's like heavily affected. Pretty much everything I do looks very different than what I was doing maybe, you know, 7 months ago, 8 months ago.

Right. Is it?

And I think that also plays a role in it as well.

Is it taking your job or is it changing your job?

I think a bit of both, but there's just so much uncertainty.

Okay.

That, yeah, like it's very hard to tell because every month something drastically changes.

So I think for you, I think that adds to the anxiety of it. I think for you, yes. I think it's really wise for you to, I mean, I'm always gonna suggest 3 to 6 months of expenses. Obviously, if I were in your shoes, 6 months. And depending on your Baby Step, if you're like in Baby Step 7 and you want more liquid cash, I think that's totally your bag as well if you wanna do that. However, I think the thing that I'd be more concerned with is going, okay, in my field, what does it take for me to be ahead of the curve? Is there knowledge that I need to have? Is there something I need to be learning? Is there something, do you see what I'm saying? And figuring out what it takes for you to be, um, really, uh, just assert yourself into that and make sure that, you know, okay, like this is where the industry's going. Here's what I'm gonna need to know how to do with AI, or If you do see, man, I just, it's not gonna exist. I don't think it's gonna exist. Now is the time to start going, okay, what am I gonna pivot to?

And I think that if you start solving that problem instead of the dollars and cents side of it, I think that's actually gonna give you more peace cuz you can't outsave this.

Yeah, that, that makes sense. Yeah. Yeah. From what, so it's not really a money problem, right? I mean, or like a savings problem.

Yeah.

Don't give me, don't get me wrong.

You—

it's better to have savings than not have savings. And if you have 6 months of expenses, I think that's fabulous. That could give you the runway that you need to do the next thing, right? But hopefully you don't even have to touch that and you can just look ahead and go, okay, what am I seeing is the trend? I mean, I don't know a whole lot about your field, but I got to believe that AI is making a major impact, scarily so. And if I were you, I'd be looking out on that horizon going, okay, what do I need to shift to Do I need to move careers in general? What does this look like? And I'd be getting way more peace of mind behind knowing what my next career move would be versus having more money in the bank.

Okay. Yeah, that makes sense.

Is there anything adjacent, Bob, to what you're doing now that would be applicable still in this new world in technology? Are there other fields, other friends, other contacts you have where you're like, okay, that side probably isn't moving as much and they're always going to need X, Y, and Z? Or can you even answer that?

Yeah, honestly, I'm not sure. I feel like if I knew that, I'd have a little bit more peace, but it's just the uncertainty of it all. If even things that are potentially adjacent, because they share the same commonality of being potentially fragile.

Yep. So I, I mean, I would take Jade's advice for sure and find something that you enjoy and that you're still good at. It, which is a scary, terrible thing. Scary thing. Yeah. Because she's a year into a career field that was booming, right?

Yes.

I mean, tech still is, but it's just ever-changing, like what you're saying. And so, um, and so I think there's a reality. And, and, and also, Bob, I wanna make sure that you're, there's, and I don't think you're being irrational, but sometimes fear can cloud us so much where something is so magnified.

Yeah.

But you actually look at the facts and you're like, okay, well maybe my position with this specific company in this way probably isn't gonna be affected like my friends because X, Y, and Z. Or you look up and rationally you're like, oh no, it is.

Yeah.

So then that's when the decision has to be of, okay, what, what do I need to change to, to make sure that I'm, yeah, prepared? Because absolutely it's, yeah, that's a real thing. All right, let's go to Allie in Knoxville, Tennessee. Hi Allie, welcome to the show.

Hi, Rachel. Thank you so much for taking my call.

You're so welcome. Thanks for calling in. How can we help?

So my husband and I have been dual income and have been working towards buying a house for the past couple of years.

Allie, can you, can you talk directly into your phone? Sorry, you're breaking up.

Oh, I'm so sorry. Can you hear me now?

Yes, thank you.

Okay. My husband and I have been dual income, and we've been working towards buying a house. We paid off all of our student loans and everything. And so, for the past 2 years, we've been just pocketing everything that I make and just living off of his paycheck. But I'm having our first baby in December.

Wow.

And I'm about to stay at home. So, my question is, how can we still work towards saving for a house if we lose that dual income?

Sure. Well, it'll be a little bit harder. Can, can you take me off speaker, Allie, or am I on speaker?

Uh, yes.

Perfect. Okay. Thank you. Um, so what I would say is your home purchase needs to be around what your husband makes then. And so it's going to probably limit some options possibly depending on how much, how much do you guys have saved?

We have about $50,000 saved up.

Okay. Yeah. So if you wanna go to ramseysolutions.com/realestate, there's a, We have a mortgage calculator on there. And so you can actually do some, you know, moving some numbers around on that for you guys, because depending on what your husband makes is what I would plug those numbers as, that this is our income, here's our down payment, and plan around that. Don't plan as a household income of what it is today if you're for sure not going back to work. And so that is— go ahead, Jade.

I was gonna say, what does your husband make?

He makes about $31,000 right now. He recently made a career change and he's been working in IT, so he's obviously still looking for other jobs too and applying for jobs that might pay a little bit better.

Did you say $31,000?

Yeah.

And what were you making?

I make $38,000.

Okay. Yeah, I mean, that, to be honest, that's going to be a tough— that's going to be a tough ask. I mean, obviously I believe you that he's going to go up, Um, and, and what he's earning. But I mean, if we're just looking at median listing prices, I mean, that's, that's a, that's a steep climb from $3,100. What's the top?

$3,100 a month. Sorry.

Oh, a month. Thank God.

Okay.

Great.

I'm sorry. Again, pregnancy brain.

No, you're fine. You're fine.

That's all right.

Well, still close to $3,700. I mean, yeah, it's still around $3,700. So it's, um, yeah, you guys are gonna have to do that, that research to look in the market. and to see what you guys can afford and when you can afford it. And staying home, amazing. Just know it's probably gonna push your timeline on the house you're probably gonna want eventually. And so you just have the patience of saving for a little bit longer in order to get the value of what you guys want to be a stay-at-home mom. Hey, this is Dr. John Delony.

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Next up, we have Andre in Greenville, South Carolina. Hi, Andre. Welcome to the show.

Hey, thanks for answering my call. I appreciate what you guys do.

Yes, for sure. Thanks so much. How can we help?

Hey, so I've been having a lot of fun listening to, um, all the best of reels and all that good stuff on YouTube, and I can't help but see a pattern over and over where debt of any kind, shape, or form, no matter the circumstance, is almost never a good idea in the Ramsey advice that I'm picking up on.

Yes.

I'm a— I'm in business and I can't help but feel like people in business live in a different world. And the reality of like what I see on a day-to-day, what I've experienced, and most of the advice feels like it's, it's very good for people that work a typical 9 to 5 and the way they should structure their, uh, whole financial thing. And I understand, you know, that, you know, slavery to the lender and all that. My question is, when you use leveraged debt To make money. Why is that bad when if you didn't do that to begin with— for instance, me myself, I wouldn't even be in business to begin with. And if I tried to cash pay my way to having my business, it would be years and years before I could even start it. While using debt, I'm already growing my clientele, I'm already growing my yearly income, so on and so forth.

Well, I mean, first off, I thank you for hanging out with us. Thanks for listening to everything. And thank you for your question. I think that's a very good question. One of the questions I have for you is what kind of business are you in? And I want to know how much you've borrowed to this point.

So the circumstance changes from business to business. So I'm an excavation contractor. I have my own dirt moving equipment. And I I do full site prep, turnkey for new construction essentially. And then just various grading and dirt work in general. But in my industry, anything you touch, it's thousands of dollars in repair. And basically $100,000 for any piece of equipment. Everything is very top dollar.

So how much debt do you have to this point?

The debt that I have to this point, Is based on, you know, what I have financed on my equipment is one thing.

Yeah, how much?

That's not my question.

No, it's my question. It's because it's going to form my answer for what you asked us.

Right, I understand, but I'm trying to, I'm trying to understand the system and process and why it doesn't matter.

Right, and I'm gonna, I'm gonna use your situation to explain my answer. So how much, uh, okay. It, it just helps to speak in pictures. How many, how much debt do you have on your business?

So just strictly business debt.

Uh-huh.

Um, I'm, I'm gonna roughly say I am at, uh, $60,000.

Okay. $60,000.

Well, that's not bad if each equipment's $100,000. Yeah. Andre, you've obviously cash flowed something or paid something off. That's not terrible.

Well, the thing is, I didn't buy it brand new because if I would have, I would have been much higher debt.

Right.

Smart.

Payments would have been much higher. So I bought things that are used, but still relatively low hours.

But there was, let's, let's hang out there. Cause this is going to form our answer. There was a reason that you didn't want to leverage yourself to a certain extent. And there was a reason that you're like, you know what? I'm going to buy used where I can. I'm not going to go crazy with this. And part of that was number one, the more debt you pulled out, you would start to feel the weight of that. And then you would start to feel the pressure of, you would start to feel the pressure of, oh my gosh, this business better be able to pay this back. And if it doesn't, I'm gonna be screwed. And at that point, that's where you start to feel really just, um, a foundational shift of why you're running the business the way you're running it. When you have debt on a business, it will cause every move you make to be considering that debt. Oh gosh, I have to pay this back. I have this lien out, I have this loan out, I have this, right? This interest. And it starts to really shape how you're doing business versus—

The decisions you make.

Yes. Versus when you're going slower, you're moving at the speed of cash. To your point, maybe you're buying the used one instead of the brand new one. Now you can actually make choices that are informed by your business, by the customer, by serving people well. And so it does change your mentality.

What I love is, If I never got the debt, I wouldn't even be in, because I, I wouldn't have been able to purchase even—

Well, you would've done— well, Andre, I would, I would push back a little bit on that to say, if this was your dream, you would've found a way to do it, whether that's slower renting equipment for a season. I mean, to, to tell, to sit there and tell us that it would be absolutely impossible.

Can I share a couple of real, real life examples that I—

I get, I mean, Andre, I don't, I don't know if you, do you want our help or no? It's fine. We just have people on the phone that are like, they have income issues.

They want help.

Yeah.

Yeah. Yeah.

So, well, I just don't feel like my question was actually answered.

Okay, here's the answer. The answer is there are people in the world who choose to operate on debt, and there are people who don't. You get to choose. There's plenty of successful people who have debt, and there's plenty of successful people who don't. That is the truth, and you just get to choose. Around here, we love the identity of complete freedom, complete control, complete peace.

We just like that autonomy overall, Andre, is what we're going for. And to live in a life, in a culture where a bank is constantly at your beck and call and you have to make decisions around them and paying them. And if you don't, you're screwed and your family doesn't eat because you go bankrupt. And so that level of risk, a lot of people have decided, I'm not gonna associate myself with that. I'm gonna live in a level of peace, even though that means I have to go slower and make different decisions. So ultimately it's that. Is there some math you can play in there? Sure.

Sure.

But ultimately, Andre, we want you to go to bed at night and not have a care in the freaking world Versus knowing if this happens and AI robots take over your industry and here you are upside down, what are you gonna do?

I don't know.

But I'll just say this, we sleep good at night knowing that we're not gonna borrow. And this business that we're sitting in right now, built 100% debt-free. And guess what? Do you think Dave Ramsey wanted to go buy a bunch of crap that he couldn't afford to get it going bigger and faster?

Sure.

Yes, 100%. But the discipline at moving at the speed of cash changes you. And let me just tell you too, Andre, go to EntreLeadership. We coach literally hundreds of thousands of businesses to do this and do this well and transition legacy-wise, thinking long-term. Like all of this has wisdom in it. So, uh, uh, that, that's all we can say. I don't know if, if that helps you. And you know what? If it doesn't, we can still be friends.

Sure.

It's fine. Yes. It's not the end of the world. It's not a sin. I'm not saying you're gonna go bankrupt tomorrow, but you're choosing a life with risk. And that is what debt is. You're choosing that where other people choose autonomy and peace. So you can do what you want. Totally fine. All right, let's go to Kat, and she's in Canada. Hi, Kat. Welcome to the show.

Hi, how are you? Thank you for having me on.

Absolutely. How can we help today?

So I finished medical school and started my residency in July, so I'm getting paid for the first time.

Awesome. Yay.

Yes, thank you. I've accumulated a lot of student loan debt through medical school. My question is about how to go about paying that off. So, I got really into Ramsey principles this year since I started making money. So, I started budgeting seriously for the first time. I completely stopped using my credit card and I saved my $1,000 emergency fund.

Good for you, Cass.

And right now— thank you. Right now, I'm just paying the minimum payment on this student loan. And my goal is just to have it not get any bigger for now. And I know that based on the Baby Steps, I should be intensely attacking this debt with all the extra money I have. But I was wondering, in a situation like this where I'm a resident and I know that in 5 to 6 years when I finish the residency, I will get a substantial increase in pay and will likely be able to pay off the debt in 2 to 3 years at that time. I was wondering if it's okay to not go full-blown Baby Step 2 right now and wait until I finish my residency and get my full salary to really attack it.

Well, what will you be doing with your margin instead?

Well, I'm saving for right now. I'm mainly just saving for a few things in the future. I'm hoping to probably get married in a couple years, and so I'm saving a bit for that.

Are you engaged?

Not, not quite yet. Okay.

Yeah, so I would say throw— be throwing this at the debt, because the great thing is, for some reason, Kat, if, if, if all this works in your favor, and you get out of the student loan debt, or you take a big chunk out, instead of taking 3 years to pay it off when your income increases, it's gonna take you 6 months, and then you're gonna have a massive income. And I'll tell you this too, when life happens and you're on Baby Step 2, there's a point that you can kind of give and take a little bit to save for a wedding.

Yes.

Like, there's some things you can do if life starts to happen and make those adjustments. I think you're gonna look down the line and be like, wow, there was 5 years of income. I don't even know really where it went, where it could have been actually picking at the student loan. And then when that big increase comes, it's gonna take you so much of a shorter time. And then, oh my gosh, Kat, you'll be making good money with no debt.

Yeah, absolutely. That's a no-brainer. A lot can happen in 5 years. Pay off as much debt as you can. If you've ever been really sick or been the caregiver to somebody who was, You know how broken the healthcare system can be, man. Nothing is easy. Finding the right doctor, sitting on hold for hours, or gosh, trying to understand copays and treatment plans and weird medical terms that no one really explains, and so much paperwork. But what if you had someone to do all of that for you? Someone to take the burden off your shoulders? Solace Health pairs patients with a personal advocate whose entire job is to fight for you. And these advocates are covered by insurance nationwide. They handle the paperwork, fight denied claims, and make sure you're not getting lost in the system. Solace advocates are experts who average 16 years of healthcare experience, and they serve people who are going through a healthcare challenge. Now, if that's you or a loved one, please reach out to Solace so everyone can focus on what really matters— getting better. So remember, the next time you or a loved one have a health issue, you need Solace in your corner.

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Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. Up next, we have Rebecca in Memphis, Tennessee. Hi, Rebecca. Welcome to the show.

Hello, how are you?

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

Yeah, so, uh, my situation is that I am a very recent empty nester. 41. My son is a college student now. Raised him on my own.

Oh, good for you, Rebecca.

Because of that— thank you, thank you. Because of that, I have always been financially behind, you know, just trying to make sure that he had everything he needed, some wants. He was very active in sports. Might I add that he's in college now on an athletic scholarship.

Wow, good for him.

So I don't have to pay Thank you. I don't have to pay for college, which was, you know, huge relief. Definitely a blessing.

Yeah.

So now my question is, how can I get myself on track? I don't— I've always lived from paycheck to paycheck. I don't have any savings whatsoever. When I left my last 2 employers due to getting a new job in a, you know, another company, I did not roll over my 401 because I've always needed money.

So would you cash it out?

Yes, I was cashing out.

Okay. So to this point, give us kind of where you are today. Do you— is there debt? Is there savings? Kind of give us a lay of the land.

So no savings whatsoever. I am now at a company where I feel as though I can move up and retire from. And so I've started with their pension plan, but I've only been here 4 years. So of course it's not a lot in there.

Sure.

But I'm about $50,000 in debt, about $30K in student loans, about $5,000 in credit card debt, and the rest would be personal loans. Which a big chunk of that personal loan, about $8,000, was because, um, spent on attorney fees. You know, after my son's dad, he, you know, filed for full custody and tried to take him out of state. Yeah, yeah, yeah. After he became a, you know—

How much do you make right now? Yeah, how much do you make right now?

Right now I am at $66,000.

Okay.

And I do get annually, and I, and I do get an A1C, um, bonus. And like I said, this is my, you know, first year, and it was about $2,800, $2,600, $2,700.

Okay. And you said you're, uh, investing. How much are you investing every check?

I, I think I, I honestly don't know what is— I think I may do $25 a paycheck and I get paid weekly.

Okay. Okay. So I, I mean, to your point, as a single mom, you really were just doing everything you could for your family and making sure that everything was, uh, covered. And, but now you're able to look out and go, okay, what do I need to make— do to make sure myself Right. You know, everything is good for you and you've got this great job. You're finally, it feels like you're finally in a place where you feel secure to, on a foundation that you can actually build from. So let's do that. I, you know, I understand the temptation. I think for you, the temptation is to wanna go straight to saving for retirement at 40 years old. I think we start to feel that like the, the time is starting to tick, but yeah, if we still have the debt there, And if we don't have any savings, what will end up happening?

I don't.

Yeah. What will end up happening, Rebecca, is if there's no savings and there's still debt, anytime there's an emergency, you will go to the 401 and you'll start to drain back out what you've put in. So we need to change that behavior and do it in a different order. The first thing that we need, and if you don't have this, this is your homework. You just need $1,000 cash.

Okay.

If you can just keep $1,000 cash somewhere that you can get to it, that way, if you, you know, come up on a flat tire, if something happens and you need a quick repair around the house, you can go to that and you don't have to put it on a credit card and you certainly don't have to pay, you know, pull it from your 401. So that's just gonna kind of give you this buffer from debt and from, you know, from to protect your 401. After that, After the $1,000, the next thing is let's try to tackle this debt. And I know that that's probably not what you wanna hear, but every dollar, including what you're currently investing, let's pause that temporarily and let's put every single dollar onto this debt. And we'll make sure that you have EveryDollar so that you can see how much margin you actually have. But now that you've got a son going to college and you don't have kids at home, also, Rebecca, I would look into any kind of side hustle, extra work.

Yeah.

I mean, if you can put $2,000 a month towards this debt, Rebecca, you know, you're, you're gonna be done so fast. So fast.

Okay.

And it's probably not what you wanted to hear because you've been scrambling, like you've been working hard.

Yeah, I've been, yeah, I've been running around, you know, like a headless chicken. Uh-huh. Yeah. Um, but you know, like I said, the reward for me is not having to worry about college expenses.

Right, right. Yeah. Well, in 2 years, Rebecca—

I did.

Uh-huh.

Well, I was gonna say, in 2 years, your life could look drastically different in the sense of getting outta debt and then starting to build that emergency fund. And I just ran some quick calculations to say, okay, if you, 'cause I think your income's gonna continue to grow. So let's pretend that you put $1,500 away in retirement, you know, at 43, 44. and you give yourself till about 65 for it to grow, that's gonna be $1.8 million at retirement.

Okay.

But that's $1,500 a month going straight to retirement at age 44.

Starting at age 44.

Putting that away, right? But in order to do that first, you first have to get out of this debt. So there's kind of that motivational domino effect, right? That if you're like, okay, $2,000 a month.

So let me ask this. I'm sorry, let me ask this. So with open enrollment currently, my job is going, on right now. So are you saying I do not need to contribute? Like, I don't need to contribute myself to my company's 401 because they do? That's right. Or, um, um, I'll just— I work for FedEx.

Okay, so if they want to put money in there and they don't require you to match it, fine. Like, if they're putting money in and you don't have to match it, great, that's free money. But if it's a required match, like you have to put in in order for them to match it, yes, I would say temporarily let's not put any of your money in until you get out of debt. Once you're out of debt and then you save up 3 months of expenses, then you can start putting your money into that 401k or into that pension plan.

Okay, so how much would you— so based on my salary, how much would you say once 15% now.

Yeah. Once, once you're out of— so first things first, we pay off the debt, we save up 3 months, and then you can start putting, Rebecca, 15% of your gross income. So if you make $66,000 a year, 15% of that every month.

Yeah, that's right. So yeah, I mean, and I think you'll be up at that point 2 years from now. Hopefully you're making $70,000 or so, right? And so you can look and be like, okay, around probably $10,000-ish, $1,000 bucks a month. That's going to be great for saving for retirement.

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Next up, we have Josh in Charlotte. Hi, Josh. Welcome to the show.

Hi, how are you doing?

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

So, um, I have $4,000 in credit card debt and, uh, I have a lease right now that I have a year and a half left on, um, that my mom co-signed for me because I had no credit built up at all. I was just wondering what would— what, like, what, what, what should I do? I'm 20 years old. I have— I work in HVAC. It's a slow season right now, so I'm not getting a ton of hours, but when it hits summer, I'll rack up a lot of cash. Um, what would you recommend me doing?

Okay.

Uh, for my next step, for when the lease is up, like, do I buy cash with the car with the cash, or I go to a car with the cash? What do I do with that?

Yeah. When is the lease up?

Um, I think it's gonna, it's gonna be July of 20— let's see, 2028.

Oh gosh, a while. I might try to get out of that lease sooner if you can. Uh, especially because your mom is on it. What's the car worth?

Um, about $30,000.

Okay. And have you looked to see like what the buyout would be?

Yeah, so I looked, um, about a month and a half ago and it was, uh, I think they said $12,000.

Okay, so if you bought out the car— no, no, not to get to— not to buy it out of the lease, to get to buy the car, like if you wanted the car. And then—

Okay, to buy it out. Um, I think at the end of the lease, I think it'd be $15,000.

Okay, but that's in a year and a half too, right?

Right, right, right.

I'd, I'd want to get out of this just about any way I can because 2028 is a long ways from now. Because what are you paying every month?

Uh, $353.

Okay, and your mom's on it?

Yes, ma'am.

Uh, what do you bring home every single month?

Uh, it's around, uh, if it's slow season, so it's around like, uh, I don't know, maybe like $3,000, maybe.

Okay, where are you living?

I'm living with my sister. I pay her rent.

Okay, how much do you have left over after rent, food, Utilities, all of that?

Um, after all that, I think it's around, uh, like $2,000.

Is that what you have left? Okay, that's great.

So in 2 months, the credit cards are gone, no problem, right?

Yeah. Do you have any money saved, Josh?

I had $1,000 saved, but I let— I got let go of a job and I had to use that for my car insurance and my, uh, car payment.

Okay, okay.

Well, at least that's, it was there for an emergency, so that's good. At least you don't have to go $1,000 deeper into debt. So it did its job. So yeah, so build that back up. And then I would work. And since it's slow season, if there's nights that you can be working somewhere, I mean, right now would be the time to like grind it out. I mean, this is hustle time. Because if you can get outta debt, get some, an emergency fund, kind of a buffer, and then I would save to see if I can get a cash car for $6,000. Or something, right? And then you can get out of this lease sooner. Because I want you to be able to purchase something if you can.

Yeah, if you can buy out the lease and then turn around and sell the vehicle and break even on that sale, that's the ideal situation here. And then you can have, in the meantime, you're saving up a couple thousand dollars cash and you buy yourself a $5,000 car or what have you. I mean, that's amazing. Now you're not paying $400 a month for the next, you know, 2 years on this lease.

Right, right.

So that's the game plan.

All right, thank you. Yep. So I, so, um, I have a second kind of job, like I do DoorDash on the side, like when I get off work early, like I'll DoorDash. Or me and, uh, my, uh, my nephew has like a lawn care business, so I'll help him out sometimes and he'll give me, he'll give me some cash or whatever, just like some fun money or whatever. But I probably need to start saving back all that instead of like just spending it on— because I like to play golf, so I go and play golf, you know.

So just remember this, like every week or so, there's 3 things to do with money: give, save, and spend. And in your season, you're gonna be saving a lot.

Yep.

Because you've gotta get outta this debt. You're gonna be saving up the money, throwing out, throwing it at the debt, then saving up the money, making an emergency fund, all of that. And I mean, you're at the age where starting those habits now is so, so, so important.

That's what I was gonna say.

Yep. And just realizing that this is not the life you want. Like you don't want the life of, signing up for debt every time you want something and then having to grind, grind, grind to pay it back. Like that's, it's not very gratifying.

No.

I mean, 20-year-old Josh, if you get this stuff, you live on less than you make, you learn to put money away in savings, you eventually start investing, all that, even just those simple things.

Yep.

Those simple things will change your life. Like you will be a different person financially if you choose that. Or you just choose a route that everybody does and it's like paycheck to paycheck. I use debt to get what I need, all that. I mean, And at 20, like, you're making some pivotal decisions of who you're gonna be, because untangling 12 or 15 years at 35 of habits that you've had that long, it's much harder. It's doable, very doable, but some people have a crash and burnout session in order to make that happen.

Right.

And you can avoid a lot of that. There's a lot of preventative stuff you can be doing now, Josh. So, I love it. If you hang on the line, Christian's gonna pick up and we're gonna give you EveryDollar for a year. Because I do want you to start budgeting. And this $3,000, you know, it may not sound like a ton, like it's life-changing, but the way you're living right now, if truly $1,000 is all you're living off of—

Yes.

$2,000, that's $24,000 a year that could be going towards something for future Josh to figure out, which is what we love. Love that. So, the give-save-spend model is big, but not when you're broke. So, you got, you really do have to, you gotta buckle down, Josh, in this time and get out of this debt. All right, let's go to Jessica. And oh, she's in Charlotte too. Hey Jessica, welcome to the show.

Hey guys, how are y'all?

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

Okay, so I'm probably going to be all over the place because talking to you guys is making me very nervous. I don't know why, because you're just so smart and I'm not, but I'm going to try to break this down simple. So my husband and I, uh, 23 years ago took out a whole life policy when we were young and not very smart. And we've been paying on that at $85 a month for 23 years.

Mm-hmm.

So, we are at a point in our life now, we were both government workers, we are retired, we have a pension. We're not old enough yet to get our Social Security, but we have all of our stuff set up to where if either of us die, the other one continues getting that monthly. We get less now so that the spouse will continue getting what we're getting now, um, if that makes sense.

Okay.

In North Carolina, that, that's how it works. And then, you know, when we both turn 65 or whatever, we'll get the additional income of our Social Security. We have no debt, we have no mortgage, our cars are paid off, we don't have any debt, so we're doing pretty good. My question is, with this whole life policy, we have 7 years left on it. Um, at the end of the 7 years, which is 3 years, 7 years, we will, we will get $30,000, which is what we paid in. If either of us were to die within that 7 years, the policy is worth $125,000. So my question, I'm trying to tell him, had we known Ramsey 30 years ago, we could have been taking that $85 a month and we would have— Yes. Hundreds of thousands of dollars more, which is what this insurance company has made off of us. And I get it. But we're at a point now where, can— if I cash this in and get $14,000 in the 7 and invest that and continue paying the $85 a month towards it, can I still— will we— would we still have that $30,000 at the end of 7 years, or should we just keep paying it?

No, I would not keep paying it. Do you know what the surrender charges would be?

None. There's none.

None. So you just— you just— yes, 100%, Jessica, close it. Stop it. Yes. Don't keep putting something into a bad product. Don't keep it around.

I guess the surrender, I guess there are some surrender charges because I'm only gonna get $14,000 if I cash it in.

Right. But—

If I paid in more than that.

But you're gonna be paying close to $7,000 still with all these.

Right.

Yeah, yeah, yeah. So that means you're only, so that's, we're talking about a $7,000 difference at the end of the day.

Yes.

Which is nothing in your life right now, Jessica. Nothing. You got paid for everything. You were fine. So I would— no, I would stop the madness.

You gotta stop it. Just because you've paid into this for 23 years doesn't mean you need to keep going. I mean, if you— to your point, if you had just invested that $85 for 23 years, it'd be $95,000. It'd be $90,000 instead of $30,000. Exactly right.

So how do I talk him into that? Because he's saying, well, in 7 years we're going to have $30,000 if we just You have to think of it from the law.

It's a loss. You're, you're continuing the loss. You're not gaining anything. You're continuing a loss, and you don't want to do that. That's— it's a— you're not considering what you could be doing with that money, and that's where he's confused. You could be investing that money. Invest it for the next 7 years.

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Yes, me too. Love it all day.

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I'm so excited for that.

So, so good. So we were just talking, Jade, about whole life insurance. Oh my gosh. And term life and all of it. And insurance is not the most exciting, fun topic in the world, but it's information that people need. And if you don't realize what you're signing up for, you could be stuck into decades of paying for a crappy product, essentially. Yes.

I mean, I go back to that call that we just took and the lady said, okay, we're paying $85 per month. And they'd been paying it for 23 years. And at the end of the 23 years, there was only $23,400 to their name, which, I mean, if you do the math on that, that's less than a 1% return. Number one, that's horrible. And then she says, oh, and then the payout, if somebody dies, the death benefit is only $120. And so the thing that you guys have to remember is, With whole life, there's always 2 pieces of it. There's the cash value that you're paying into. That's the investment portion. And the rate of return is really poor. Usually it's somewhere between 2 to 4%. Hers was like 1%.

Terrible.

And then there's the side where it's like, okay, here's the death benefit if you die. And so for her, I was trying to get her to understand like there's an opportunity cost here. Because if she took that same $85 and they invested it themselves over that same 23-year term, that would've been closer to $90,000. If they invested it for the full 30-year term, that would've been $192,000, which is more than they would've gotten from the cash value and the death benefit combined.

That's right. They were doing both.

The only difference is they don't have to die to get the money. They can just invest their money and live and have it. So we suggest, guys, term life through Zander Insurance. With term life, you're only paying for the death benefit. You're not paying for a cash value. There's no investment portion. You're simply paying a low premium. That somebody who's dependent on your income, if you pass away, they're protected. And that's all you need.

Yes. And term life is so inexpensive, especially, you know, if you're healthy and even on the, you know, the lower, the younger side of life. If you have a young family, there should be no excuse. Like getting term life insurance, it is, it is so crucial. I think it's some of the saddest calls we take of someone passing away and the mom or the dad is left and like they have nothing. Yeah. They're having to go back to work. Keep life afloat versus having a pile of money if something happened, right? And obviously that's not gonna bring your loved one back, but in the grieving process and all of it, you guys, that's a gift to be able to slow down.

Yes.

And to have those resources.

So again— And do it right away. It's not a baby step. It's not something to wait until you're out of debt. It's not something to wait until things feel better, whatever that is. Because I mean, the truth is, Rachel, I mean, Everything's expensive. And even though term life insurance is way less expensive than whole life, it's still an expense and it's still something that people are like, gosh, another thing to pay for.

That's right. That's right.

But you, I mean, you gotta have it if something were to happen. I mean, all of these things are always unexpected. So if something were to happen to you, you wanna know that your family's covered.

100%. All right, let's go to Caitlin in Pittsburgh, Pennsylvania. Hi Caitlin, welcome to the show.

Hi, thanks for taking my call.

Yes, absolutely. How can we help?

Um, so my question is, my fiancé and I decided to do a small, immediate family-only wedding so that we can prioritize buying a house. My parents were really mad about this decision whenever I told them because they expected our entire family to be invited. While it'd be nice to have everyone together, the cheapest cost that we could find for a wedding of that size in this area would be around $30,000. So we're just calling to see if We're making the right decision.

So the, the, the wedding with everybody would cost you $30,000. Is that what you're saying?

Yeah. Yeah, exactly.

And the wedding that you guys want is gonna cost around what?

It would be probably around, around $10,000.

Around $10,000.

And, um, are the parents paying for it? Would they be willing to pay for the $30,000 wedding or was that gonna be on you guys?

It would be on us.

Oh, well, come on now.

Sorry, Caitlin, they don't get a vote anymore.

It'd be one thing if they were gonna pony up the cash.

Okay, that's what we thought too.

How do you feel about that? Is that, is, is that out of character for them? Or is that like, in my head, my parents always be like, Rachel, you gotta cut the list. It's too big. It's getting too expensive. Like, you know what I mean? Like, uh, so to think that your daughter comes like, hey, I just want an intimate small wedding and be responsible financially. You would think most parents would be applauding that. And, but I mean, I know that weddings bring out a lot of emotion in people, but sorry, I'm, I'm just curious, is that, that shock you that that was their response?

Um, it didn't shock me that much actually.

Okay.

Okay. I was expecting it. Yeah.

Okay. So conflict and you having a set of values and decisions that are different than them. Has become normal, has become semi-normal.

They're, they always taught me to be very frugal. So it was a little bit surprising from that aspect whenever I told them the cost that they were still upset, but I did know that they would want everyone to be at the wedding.

When you say everyone, is this like all the cousins, all the uncles, all the aunts, or is this like, I mean, your immediate family is going to be there.

Yeah. My immediate family, um, would be there, but, um, yeah, it would be around my family alone is around 60 people. And then my fiancé's family is around 40 people for Cousins, aunts, uncles, grandparents.

So it'd be, you'd have to have a 100+ wedding in order to make everybody happy.

Yeah, exactly.

I mean, the truth is, I think that anytime you go against what somebody's expectations are, they're going to feel it and they're going to make their thoughts known. And then at that point you just have to decide, do I care or not? Or is this something that I'm going to make a priority? And it sounds like for you it's not.

Yeah, that's right.

And that's okay. Yeah, that's fine. You're— it's— you're the one paying for it, and it's your experience, and it's your wedding. It's your money, and it's your wedding.

How old are you, Caitlin?

Uh, 29.

Okay, so yeah, so you've lived— you've lived enough life on your own to be pretty confident in your decision-making, um, you know what I mean? And that you're your own You're your own person. And that's the hard thing. Parents, family, friends, and life, all of it. It's not everyone is going to understand every decision you make in life, but if it comes out of a place that you feel confident that you're in line and have self-integrity with your own values, then you can go in much more with your shoulders back knowing this is what I want. And you're a 29-year-old woman, Kaitlyn. You know what I mean? I feel like it's a little different if you're 21 and you're like, oh my gosh, I don't want to hurt my parents' feelings or something. I'm so young. I don't know. You're You're 29. You got this.

I do wanna say this though, like, I, I wanna be fair. Like, I can totally understand, and I'm, I'm gonna caveat this. I can totally understand. I think a mom and a dad probably have something in their mind that they're envisioning, whether it's walking down their, you know, walking their daughter down the aisle and they, they see something in their minds. And so I can appreciate that. But if what they see in their minds costs $30,000 or $40,000, they should be saying, hey, Here's $30,000 or $40,000. Would you be open to this type of wedding? We've always envisioned this. And that's a different conversation.

Sure, absolutely. Well, and they can be disappointed. Like, it'd be totally fair to say, man, we had this envisioned. It's not happening, but whatever you guys wanna do. Giving them the dignity.

Sure.

It's when they freak out and they're all mad about it.

Yeah, you can't get—

you can't get—

And let me tell you about a bunch of those aunts and uncles and cousins are totally okay.

Listen, they don't mind. I'm telling you.

Especially the uncles. I think all the men are okay to skip every wedding from this point forward. So you might be giving them kind of a gift.

Okay.

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So go to xander.com to enroll today or call 800-356- Next up, we have Nicole in San Francisco. Hi, Nicole. Welcome to the show.

Hi, I'm so grateful for both of you to take my call. My question is, I have the opportunity to buy a home, but does it make sense to buy a home so close to retirement in a high cost of living area?

Okay. Well, how much— what's the financial situation? What do you have? How much money do you have? How much do you have for a home? All the things.

Yeah. So, in total, I have about $114,000 in total for all my investments, but about $100,000 And $15,000 in a brokerage account. The house I have an opportunity to buy is $870,000. And I'm at age 50 right now.

When you say opportunity to buy, is there something— is somebody giving you this house? Is there something special about it? What's causing it to be a quote-unquote opportunity?

Yeah, great question. In this area that I now live in, Homes are very high in price, and there's typically 15 to 30 people putting bids on homes. And so, in this particular circumstance, it's a friend of a friend that is saying that they would give me the opportunity to buy the home, and we would not include real estate agents, but rather a real estate attorney. So it would be more direct. And I would have more of a, you know, the opportunity to buy the home, you know, directly from them without going through all the process of trying to outbid.

And you'd only put, you'd only put $115,000 down, or how much are you planning to put down on this $870,000 house?

I, you know, that's where I don't want to make a dumb decision. I was thinking, do I borrow from my 401? Um, to help with the 20% down payment.

What, what, how much is in your 401k?

Uh, right now I have, uh, $619,000 in my 401k and then I have an IRA and a Roth IRA. Um, and I also will have a pension from my work.

What's in the IRAs?

Yeah, for the IRA, uh, $43,000 and then the Roth, $36,000. Okay.

And then you'll have a pension too. Yeah. I, uh, Rachel, I'm looking at these numbers and I just, Nicole, I, I can't in good faith tell you that it's a good idea for you.

How much do you make a month, Nicole? How much are you bringing in?

Yeah, I bring in just over $11,000. So my gross income is $211,000 each year. And currently I'm paying, like, I have $4,200 in rent. Um, and so I think that's where I'm a bit of like, ugh, I feel like it's not going towards something, um, that will be a long-term asset.

So let's, let's show you some real numbers because I think that showing you real numbers will help you get your head around what's possible. So I've just got our mortgage calculator plugged in here, and I don't know if you'll, you'll be able to watch this later, but if you tell me, okay, if I plug in $870,000, which is what you say you wanna spend, let's see, you should be able to see it. $870,000, which is what you say you wanna spend. And if I put your down payment, $115,000, that's what you have in cash. And I'm assuming the whole amount. I'm not even leaving anything out for 3 months of emergency, which is what we would advise. And then I'm running that out right now. I've got it at 6.6%.

Um, Mm-hmm.

Gosh, I mean, that puts you with everything. And it, of course, it's guessing on taxes and home insurance. That puts you at $8,270.

For your payment.

For your payment.

Every month.

And even if I were to drop that down, I would never suggest a 30-year, but even if I dropped it down, it's still at $6,600. It's still more than half of your take-home pay. So when we look at that, that's kind of like the sobering wake-up call of, well, not only living in the San Francisco area, but just what it kind of takes to make a down payment. Now, if you were in a lower cost of living area and we dropped that down to, You know, a $450,000 house, right? Or even a $500,000 house. Now maybe we're starting to talk about something, but I think for where you're at and knowing, gosh, did you say you're 59?

No, I'm 50. So I have, I have, you know, at least another decade to 15 years left. But—

Right. But if you're having a house that's cutting into 50% of your income, you're not gonna have any margin to pay it down.

Yeah.

Nor pay it off.

And you'll have that mortgage.

Yeah.

Yeah, for all the way into retirement. And I think what's hard, Nicole, sometimes about these situations is it feels like just because it's a good deal doesn't always mean it's a good deal for you. And, but homeownership is something that we do want you working towards, right? And I understand you're like, oh gosh, I'm 50, I'm paying $4,000 a month in rent. Like it's just, it's a frustrating reality, but I think, Doing this right now with what you have saved and everything, um, I don't think in good faith I can tell you that that's gonna be a smart move long-term.

But you can start to, you can start to think about, okay, obviously for this portion of your life up until this point, it's been a value for you to live in San Francisco, whether it's for the people, the job, for whatever reason you've lived there. If you decide that purchasing a home is going to be like that top value in your life, Then you've gotta start thinking about, okay, what would it look like for me to relocate somewhere where I could actually make that possible? Could I find a job there? Could I? Right. So I'm just wondering, is that something, is buying a house so important to you that you'd be willing to relocate to an area where it's possible?

Yeah, it's a great, I, you know, I recently divorced at the beginning of the year, so I did re— I located myself to, um, a more expensive So, I did own a home before. And I guess is the other option, if I do want to own a home and think about retirement down the road, would it also make sense to maybe look into purchasing a home in, you know, the state I came from, which was Nevada, or another state with more affordable housing? And, you know, and stay here for right now because I'm so grateful I'm around my family, I can still work remote, all of the things that— are good after being divorced and all of the things. So could that be another option, I guess, would be think about looking at investing in a property in a place that I would feel comfortable maybe retiring in later down the road, but I could still start to build some—

Yeah, I hear you. I hear you. My only fear is being a long-term or a long-distance landlord's really difficult.

Okay.

And the location at which you buy could look drastically different in 10 years, and it may not be where you wanna be anyways in 10 years. So I would rather you invest this money, let it grow in the market. And then when you're ready to buy a house, you're like, all right, I got, you know, all this. Um, cuz how much are you able to save a month? I'm just curious.

Really only $3,000 a month.

Um, okay.

I don't have any debt and, um, you know, the Baby Steps changed my life 15 years ago. So I've also, in the process, I have everything paid off for my kids and their tuition.

Amazing.

So yeah, it really— the work, um, that you all do is awesome.

Well done.

It has changed my life.

And you've already got—

yeah, well, let me just say, if you just put that $115,000 and instead of a down payment in San Francisco, and you continue to invest, you invest that, invest $1,500 a month, that's gonna be close to $700,000. in 10 years. And that's a conservative, right? Like you could be putting $2,000, you could just be thinking, okay, I'm gonna have this index fund and it's gonna be my house fund. And in 10 years, where's it gonna grow to? And I'm gonna cash it out and buy a house with this specific, right?

Yeah.

Because that doesn't touch your retirement or anything. So I'd feel better about you doing that right now, Nicole, and just investing so you have options. I'm just, I don't wanna lock you into real estate where you may not wanna be. And you don't know, you know, at all what's gonna, what's gonna happen. And your investments are probably gonna go at a faster rate, grow at a fast rate. And I say this during a tough stock market week or two, I understand. But overall, overall, I think you'll probably get a faster rate of return in the market than with real estate.

Yeah, absolutely. And I mean, frankly, you just can't afford that house right now.

Yes. Yeah. Okay. This all totally makes sense. Thanks for your perspective.

Yes. And Nicole, I'm sorry about the change in life earlier this year with the divorce and everything. Yeah, that's tough. And I, and that feeling of just wanting to plant roots and, and make some big decisions for yourself, I'm sure it's just right there. I could imagine that being part of the motivation too, um, because your life has changed so much. So, um, but I'm, I'm so impressed by you of what you've done thus far. I mean, like, it's unbelievable. I mean, you have almost $1 million.

Really, really cool.

Uh, you know what I mean? $750,000 in, in retirement. You're sending kids to school debt-free. I mean, you're doing amazing, Nicole. Amazing. And I think you would thank yourself later of having a bunch of money in the market versus buying this house right now.

I agree.

Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. Up next, we have Cindy in Orlando. Hi, Cindy, welcome to the show.

Hi.

Hello, hello, how can we help? Yes, absolutely, thanks for calling.

Uh, thank you. Um, this is one of God's daughters and she's in debt. Her and her husband are in debt and we want to get out of debt.

It's you?

Yes, ma'am.

Oh, not your daughter.

I was thinking—

No, God's daughter. God. God's daughter.

Gotcha.

Yeah, there's a lot of those for sure, Cindy. For sure. And you're one of them. All right, so what's going on?

Well, um, we're retired and our income every month is $2,324 and our roof We owe on our roof and a home equity loan. The roof is $30,599 and the home equity loan is $58,000.

What did you— what did you get with the home equity loan?

Just things to fix the home up with.

Okay.

And how old are you guys?

We're in our 60s.

What, 60? What?

I'm 69.

Okay.

Okay, and you're looking for a way—

You have nothing in retirement. The only income you're making is about $2,300 a month.

Yes, ma'am.

Okay. How much is your house worth?

It's about $244,000.

Okay. How much do you owe on it?

It's— we don't have a mortgage.

Oh, good. Okay, so that's paid off.

Okay, it's paid off.

Okay. But you got the home equity line, yeah, of credit, and then the $30,000 roof. Okay. Yep. Well, that's a tough one. I mean, 88, well, I was gonna say, I mean, you could make a drastic move and say, hey, this house has some equity in it and we're gonna go buy a condo that's half this and pay this debt off, or we're gonna have to make an income and do something to get some money in.

How much of your $2,324 does— do these 2 payments take up?

Um, one, so probably about $600.

Okay. And what about cars? What are you— do you have paid-off vehicles?

Yeah, we don't have— we don't, uh, owe anything on a car, a truck. We have a truck. We have one vehicle, it's a truck, and we don't owe anything on it.

And they're in good working condition?

Yes.

Okay. Because, yeah, I mean, to Rachel's point, you're either going to do something drastic with your home, which I don't even know if there's something available.

Yeah, that's true.

In your area for that. Or you're going to have to look for ways like, what can I do at 69 years old that would bring in income to just start hammering away at this?

Mm-hmm. Okay.

Yep. And no, sorry, I think I did ask this, Cindy, just double, double checking. No savings anywhere though, right?

No.

No. Okay. Yeah. Because I mean, if even if you threw $1,000 at this, it would take you 7 years to pay it off. Um, which feels, um, it feels big, but I mean, it's almost $100,000 in debt.

So, right.

At your situation, um, I mean, I would, that, that would be aggressive to put half of your, what you're making. I don't think you could live.

Yeah.

I don't think you would be able to financially do that. But if you were, if you guys could work somewhere.

Yeah.

2 or 3 days a week, Cindy, which I know is not what you like. It's kind of like a rock and a hard place. So it's just the math side of it all. So either income goes up or something changes with the equity in the home. And you guys just say long-term, but I'm with Jade. I mean, it's probably gonna be a hard reality.

Yeah.

But I love that there's a paid-off home, 'cause that's one thing we do want in retirement. But you got this $88,000. So either you guys, Buckle down and say, all right, we're gonna try to bring in each $2,000 a month.

Yeah, while you're in good health.

While you're in good health. And that's, you know, $4,000, we knock it out in 2 years.

Yeah.

You know? And so that's probably what's gonna have to happen if you want this out. So, I'm so sorry though. That's not fun. All right, let's go to, is it Marissa in Orlando as well? Back-to-back cities. Hi, welcome to the show.

Hi, it's a pleasure speaking with both of you. So my husband and I, we have a question. So we paid off our mortgage about 2 to 3 months ago.

Amazing.

We have now 2 properties, both mortgage-free. And I wanted to know, so we've maxed out our 401, our Roth IRA, we're big givers. Kids' college, all, you know, we invest on everything.

Yeah, very good.

We've got about $330,000 in retirement now and about $100,000 just sitting in the bank. And now we have all this money coming in and we don't know what to do with it.

How old are you guys?

So, we're 42 and 47.

Wow, way to go.

So, the question is, what percentage of our net worth should be in real estate? I love real estate and my husband is a little, If.

He's a little if. Is that what you said?

Yeah.

So funny. Well, I think it would, I think it's a pretty personal take. You know, some people don't wanna deal with real estate at all and they have nothing except for their primary residence and everything's in the markets. You have someone, if Dave was sitting here, a lot of his stuff is real estate. He loves real estate. And so, A lot of his money's tied up in real estate because he loves it that much. So I think it's going to be a decision that you guys make together. And again, it's kind of a personal feel. I like the diversification of it. I don't like to be too heavy real estate for too long, or for me, even too much in the market. I kind of like the idea of both if you're able to, which it sounds like you guys are. And so we don't have like a set percentage. It's kind of more based on you guys personally. Of if it's, you know, of course paid for, um, all that. I mean, that, that, that's really the, the game changer in it all. And you guys have that. So it would be you and your husband sitting down and you guys getting to agreement within your marriage and your family of what do we want?

What, what feels comfortable to us?

How much margin is it, Marsha, every, every month?

Oh, uh, right now we're about $15,000 a month. Mm-hmm. Okay.

And is there a property that you have your eye on?

I do, I do. But then that's the issue. It's something up, uh, like in another state, right? It'll be kind of a, kind of a cabin type of a thing. And I think that's why my husband is a little bit, um, you know— Oh, for like a good investment?

It's like a second home, like a vacation home?

It will be kind of a vacation home.

Okay. Yeah.

Well, the good news is—

I have a second property here in the same state and it's rented. It's been rented ever since.

The good news is no matter what you do, you're gonna have to put money aside for quite a while. So you guys have some time to think about it. It's not like, yeah, after 1 or 2 months you'd have the money to buy this.

Right.

So you can start socking that away in whatever brokerage account or wherever you guys keep your real estate money. And then, Spend some time thinking and talking about what that next purchase is.

Yeah, but I would look at your entire household income and still be investing into that retirement account at 15% of what you guys are bringing in. And I would include the rent in that as well. You know, everything coming in, we're gonna invest 15% into retirement because we want that stable and good for sure. And then anything above and beyond, You know, make a, make a 5-year goal of, hey, let's buy another property in 4 to 5 years. And what do we have to put away each month? And if that's a goal that you guys decide as a couple to, to go after, I think, I think it's wonderful. But you guys are doing it the right way for sure. I finally get to announce that my brand new book, Building the Marriage You Want, is available for preorder.

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We love to hear from you guys. You make this show possible, everyone that calls in and asks their questions. So make sure that, uh, that, yeah, you, you stay involved, you guys. You can call us at 888-825-5225, and the, the show is our callers. It's you guys. And so if you have a question, give us a call, get on the line, and hopefully we'll be able to help you out. Uh, and then another option we do have for questions is Ask Ramsey. And our question of the day is brought to you by Ask Ramsey, which is our free AI tool that provides you with personalized money answers based on Ramsey principles. You can visit ramseysolutions.com/askramsey.

Yeah, today's question comes from Travis in Hawaii. He says, is the $1,000 emergency fund and the 3 to 6 month emergency fund 2 different funds, or does one build on another? Also, how are they different from having sinking funds for car purchases, vacations, et cetera? That's a really good question. They are 2 completely different things. So let's start with the $1,000 emergency fund. You are correct. Baby Step 1 does build into Baby Step 3. So you do Baby Step 1, you get the $1,000 saved, you pay off the debt, and then on Baby Step 3, you add to that $1,000, and that's what you use to create your 3 to 6 month fund. The thought there is that if you ever have to dwindle that $1,000 emergency fund, you go back and build it up before you start paying off more debt. So yeah, you do build off of that. And then the other part of the question is, is it the same as a sinking fund? How is it different? So emergency fund is for emergencies. The way that you think about an emergency is something that is totally urgent. It's totally necessary. And it's like, it can't wait.

You have to do it. Did I leave anything out?

Unexpected.

Oh yes, unexpected. 100%. So, um, an emergency is not, I need new tires. That, if, if your tires wear out, that's going to happen over time. Now, if you were to drive over a nail suddenly, right?

Right.

That could be an emergency, right? So you have to think about it like that. And a sinking fund is separate because this is something that we know is coming. We know it's like a Christmas sinking fund. We know that Christmas is there. It's the same time every year. Um, maybe you're going to a wedding, you know it's coming up, you're starting to put aside Small amounts of money into sinking funds. And I would say this, if you're in Baby Step 2, you need to limit your sinking funds because you need to have most of your money going towards your debt every single month, not dwindled away in all these little $30 sinking funds.

That's right.

Yeah.

Yeah. And the sinking fund is knowing an expense is coming and there's like an end date to it. So it's like there's Christmas or there's a trip or something like, you know, it's coming and it's there and you're just putting a little aside. every single month so that when the expense hits, you have the money saved.

Yeah.

But yeah, the, and the emergency funds, yeah, just like what you were saying, all together. And you guys, that step we hear for so many is like that Baby Step 3.

Yes.

When that's done, oh, it feels so good. Then you get to start putting money in retirement and kids' college, paying the house off, like all of that. And so there's a world of difference from a financial standpoint, I would say, and an emotional standpoint when you hit that and you get outta debt and all of it.

Absolutely. Absolutely.

All right, let's go to Ty in Destin, Florida. Hi, Ty, welcome to the show.

Hi, thanks for having me.

Yes, thanks for calling in. How can we help?

So my wife and I were raised by normal people. So about a year ago, we found ourselves in about $100,000 in debt and divorce papers on the table. We found Ramsey, and you guys saved our marriage through our journey of getting through Baby Step 2, our daughter has started picking up on a couple of things. She knows that we're in debt. She knows that we're trying to get out. She knows that we want to come do a debt-free scream. Every time she sees one when we're watching the show, she gets excited. She's only 5 though. So what are some age-appropriate ways that we can look at teaching our daughter, her and her younger sister when she gets older, about finances and how to be weird people?

Yeah, it's a great question. Well, there's kind of two sides I always think with my kids is I kind of bucket them into like tactical side of money, and then there's the emotional side of money. And so with the tactical side, you know, even at 5, you know, doing chores, getting paid for them, and then eventually, you know, I'd say 5, 6, 7, I'm just thinking my son just turned 7. So yeah, I mean, I think around his age, especially starting to, which we've not done yet with him, just some full transparency, but to do where when they make, when the after they get paid to start putting money in little envelopes. And that's what we did as kids. Some is in giving, some is in saving, some is in spending. And letting them physically budget, Ty, like with actual money. And it's funny that that's really what it is.

Yeah.

Like they're learning, okay, I have to do all these different things with money, and reward them in that, you know? Like let them give to where they wanna give. Let them have save and have a goal they're saving for. And something small, obviously, at that age. Like maybe it just takes like 2 weeks or 3 weeks to get what they're saving for. And then let them have fun and they can spend some of it, right? So you start to ingrain some of the tactical side of it, and then you'll start to, yeah, run into the emotional side of money, which is, I mean, contentment. You know, so-and-so's getting this and, you know, I want that too. And, you know, teaching them there's always gonna be people in life that have, bigger and better stuff than you. Start getting comfortable with it.

Yeah.

That's what I tell my kids all the time. There will always be someone that has something better than you. That's just life. And so, again, whether it's gratitude, contentment, I mean, all these elements of money that allow them then to live below their means and do the give, save, spend as adults without debt, it all kind of, it kind of plays together. So I would say that that's an important thing. And then obviously, Ty, you know, I mean, obviously Jade, you have kids, so you know this, but more is caught than taught.

I know. That's right.

So what you're doing now, honestly, some would say is just enough. Like they're just seeing an example, right? Anything above and beyond just what you guys are doing is gonna be just icing on the cake.

I mean, yeah, the same way you said you were raised by normal people and you picked up on that behavior just by seeing that, they're gonna pick up on behavior just by seeing what you guys do.

Right. Okay. So literally the same thing we're doing just on a smaller scale.

I mean, seriously, yeah. I mean, honestly, yes. I mean, absolutely. That's what I would. And then as they get older, I think my parents did good with this. They brought us into money conversations, looking at statements. I remember of like investments.

Yeah.

And it was nothing like crazy, but it was like, hey, here was like a, you know, a fund that we started and this is what it's at. Learning what bills cost. You know, what it takes to run a household, how to do taxes, what compound interest is, right? So you can start to magnify and give them the knowledge of how all this works age appropriately as they get older. But at 5, honestly, Ty, I'd have 'em do some chores, let 'em give, save, and spend that money, and tell 'em debt equals death. You know, just to stay away.

I know, that's really good.

I was brainwashed. So that was my upbringing. Well, y'all are doing awesome.

I appreciate the advice.

Yes, absolutely. And it's so encouraging too, to hear from the marriage perspective. You know what I mean? Like, it's, there's something so healing about couples coming together and having a shared goal and a shared purpose for their lives. That's, it's bigger than just money, right? It plays out in a sense that it's financial, but it's so much more than that. It's so much deeper than that. And that's what, they're experiencing. So, Ty, I mean, I applaud you. I was talking to someone in the lobby earlier. I don't know if she's still out there, but she was like, I've been listening to you guys since I was 5 years old. And I thought, oh, God bless you.

God bless you.

But you think about—

For sure.

But when you're 20, 21, those kids, they look back and they're like, thank you for setting an example and a way to live with this. And I used to say all the time that my dad's like the emergency surgeon and I'm the preventative medicine, right? Like these two, night and day stories of bankruptcy and heartache and having to figure out the right way. And that second gen, you guys, those of you that have little kids, let me just tell you, second gen, we're not perfect by any means, but there's a gift. I was given a gift because we learned this at a young age. And you're not gonna be perfect with money. You're not gonna be perfect. But to avoid so many of the big traps that are set right before you, especially as a young adult, that you can just see it, you know it, and you go around it. And it's just not even a thing.

It's huge.

It's just not even a thing. And so, So, for all you young families listening, there's a beauty in that changing your family tree that's so real. And it starts with you and your example that more is caught than taught. And those can be hard days and exhausting days. I know you and Sam's journey was long and hard, but what your kids now—

These kids are never gonna know debt. They don't even—

They don't even, yeah.

They know to avoid it.

That's it, that's it.

I love it.

You work your butt off for your money, but your money's never going to return the favor if all you do is hope for the best. If you're ready to learn how to make your money work for you, check out the SmartVestor program. SmartVestor can help you find advisors who specialize in retirement planning, charitable giving, advanced investing strategies, and more. Whatever your goals, your pro will take Take the time to explain your options so you never have to invest in anything you don't understand. Head to ramseysolutions.com/smartvester to get connected.

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Next up, we have Sandrea. Sandrea in Calgary, Canada. Hi, welcome to the show.

Hi, thanks for having me.

Yes, absolutely. Thanks for calling in. How can we help?

Um, so my question— I have a daughter. My oldest is getting married this coming summer, next summer.

Congratulations.

Thanks.

Yeah.

And every year my husband gets a good chunk of a tax return because Canada has this crazy system. And so we usually always put a massive chunk towards our mortgage because we're trying to pay it off really quick. We have a 17-year mortgage. He wants to pay it— 15-year mortgage. He wants to pay it off in 7.

Mm-hmm.

So we're wanting— I'm wanting to pause it this year so that we can give her a bit towards her wedding. We can't pay for the whole thing. She's— her fiancé and her both have, you know, they've both worked. They're both in school though, but they'll— they have a chunk to help pay. But I want to give a little bit more so that they can, you know, for those extra things. Photography is expensive.

For sure. Yeah.

Yeah.

How much do you want to put towards it?

I just want to give her $5,000, which isn't a lot.

Um, you got it.

So that would mean that we can't put— we usually put 10 grand towards our mortgage extra every year, and we can't do that this year. And he— I'm just, is that reasonable? Yes.

Totally.

Yes, that's reasonable.

Totally.

You're fine.

Oh, yes.

100%. Yes.

Totally.

Your daughter's never— she's gonna get married once. And if you're like, hey, we're able to contribute to this. Yes.

Yeah. Even—

yeah.

I'm gonna go out on a limb and even say if it was $8,000, like, if you wanted to do—

Oh, $10,000.

All of it.

Yes.

Well, we can't do all of it.

But I'm saying if you wanted to, if you wanted to, the way that we teach, the point is that you're on a rhythm that you decide that you're putting extra towards your marriage, towards your mortgage. And if you're doing that, yeah, and then you decide, hey, we're gonna pause that temporarily to do something that we think is important, whether it's a wedding, a trip, you have the ability to do that because you're being intentional about that mortgage. Yeah. And putting extra on it.

Yeah. True.

Okay.

Yep.

Okay. You're good. Yes. Tell your husband you got the green light from the Ramsey Show.

Okay. I will. He was curious what you guys would say, so.

Yes, for sure.

Absolutely. Thank you.

Yeah, absolutely. But that is a good point to remember that 4, 5, 6, and 7, or 4, 5, and 6, I should say, till you get to 7, is intentional. So you don't have to be hard driving crazy, right? It's good to have a goal and be like, hey, it'd be great to have this paid off then. We're gonna work towards that, but also life's gonna happen in the middle of it. And so, um, yeah, totally fine. All right. Uh, up next we have, uh, a, a, is it Adrian in Fort Lauderdale?

Yes.

Yes. Welcome to the show. Sorry, I said that with all question marks. I was like, Adrian in Fort Lauderdale? Sorry. Yes. Okay. Oh, welcome to the show, Adrian. How can we help?

Thank you so much. Thank you for having me. Um, I'm calling because my wife and I have been aggressively saving to purchase a home, uh, given in Fort Lauderdale, aggressive is, uh, it sounds aggressive, but it doesn't seem like a lot, but, um, we're really, we're working towards it. And we do have a couple loans, uh, not a lot, but just car loans. So, um, about $6,000 in one car and $24,000 in the other. Um, but total saved, we have about $180,000 and, um, $30,000 of that I saved as like an emergency fund. I know I'm a little bit backwards here and like all over the place. My question is, should, given that we're saving, you know, we're living with the in-laws, we also have 2 small children, should I just take money from that big lump sum, just kind of wipe out those car loans and continue forward? Is that like smart? It seems like crazy to me, but also it seems like— the best decision, especially debt-to-income ratio and being able to open up that. It's about $700, like $750 a month in car payments.

That's right. How much do you guys make a year?

I make $91,000 and my wife makes about, I think total it's like $115,000.

Okay.

Perfect. I mean, I would totally do that, Adrian. I think you have the right idea, which is, gosh, if I, If I reach into, I've got $150, or I mean, I guess the whole $180, if you think about it in terms of the Baby Steps. If I reach over, take $30 to pay off the debt, then set aside $30 as the emergency fund, and now you're down to $120 that can be saved up to go towards this house, I would do that. And now you have $750 a month that's freed up.

Oh yeah.

You can use that to, you know, start funding some cash cars here? Because you're going to have to reach in and do something for you guys to drive. How much do you want to spend on— well, I guess you're going to pay them off. Never mind. But yeah, I would definitely do that. And then you've got the $750 saved up that you can start chucking away at this house fund some more.

Right. Right.

Yeah.

Because I mean, that's the positive side of doing it is that all the payments go to the house fund. So you just have freed up I mean, man.

You can go really fast at that point.

I'm such a rounder-upper, but am I close to $1,000?

You know what I mean?

Yes. But genuinely, I'm like, you just keep, yeah, throwing money away and you'll get there that much faster to replenish it. And you go into the house buying process, oh, so free.

Oh, you're totally debt-free.

Yes. And it is so worth it doing it this way versus, for some people, which you guys have a ton saved, so well done on that. But some people go in with not a lot saved, Very small down payment, big mortgage and debt, and it's just a recipe for disaster.

But I just love what he's doing. Like, they obviously have the mentality of it's worth sacrificing. Like, it's worth the long-term, short-term sacrifice for a long-term gain. And I think that is what you have to have in today's market.

That's right. All right, let's go to Christine in Pittsburgh. Hi, Christine. Welcome to the show.

Hi, I'm so happy to talk to you guys today.

Oh, thanks for calling in. How can we help?

I'm looking for some detailed guidance and direction on transitioning into retirement.

Okay.

We basically— we did FPU 17 years ago and the one thing— FPU saved our financial life, but the one thing that I've done well or that we've done well over the years is we did save for retirement. So now I'm sitting on all this Yeah. Money in 5 different accounts and I have no idea what to do with it.

Well done on the saving. What do you have? Can you list out what you have in your investment accounts?

Sure. It's a total of around $1.3 million. I've got 5 401s, so basically one for every employer. I never rolled any of them over. Because I wasn't sure exactly how to do that. And then my husband has a Roth IRA with some money in it as well.

So what's in the 5 401s total?

Hold on one second. It's almost all of it.

Okay, so the $1.3 million doesn't include your house?

No, it doesn't include my house. I do still have a mortgage on the house. We owe about $74,000 on the house. It will be paid off before we retire.

That's great. Yeah, well, um, I can tell you—

We have no other debt.

Well, if I were you too, Christine, I would, I would sit down with a SmartVestor Pro and I would, um, combine a lot of this just to make it simple for you guys. I mean, having the 5 401s, all of it, you can just roll everything into a traditional IRA and let that grow. You'll pay the taxes on it, but you would do the same with a traditional 401 as well. But, um, that's probably going to simplify your life, and a SmartVestor Pro can help you do that. But yeah, the withdrawal rates, this is always a, not a tension point, but it is, we're probably a little bit more aggressive here at Ramsey talking about it, because it could be, you know, up to 7% to withdraw a year.

Okay.

Where kind of the standard in the financial space is more like 4%, if you will.

Okay.

So, and again, we get that 7% because overall, on average, the market is doing 11 to 12% on average, 11.8% since, you know, since it began, if you will. So, right. So if you kind of, you know, look at that and say, okay, there's a good argument to say 7%, you'll probably be fine. You'll be fine. And again, some financial advisors are gonna be a little bit more on the conservative side at 4%.

I feel like that's a little higher than I thought.

Yeah, yeah, yeah.

So yeah. It makes, it does, it always makes me laugh because I feel like this is one area Dave's actually more aggressive in and less conservative. I feel like everything we do is very conservative and safe, and this one it's like, you got it, you can do it. But I would sit down with a SmartVestor Pro and kind of simplify everything and talk to them. They'll put you in some good funds. You can look at the tax implications and everything, but you can go to ramseysolutions.com and find one in your area, Christine. But you guys have done a fabulous job.

Thank you.

I mean, we applaud you. Well done.

Thank you.

Listen guys, I've heard just about every excuse for why folks think they can't get ahead with money. So let's go ahead and settle this right now. You get the final say on what happens with your money.

That's why you have to start telling your money where to go so you can stop wondering where it went. So if you're gonna start winning with money, you have to get on a budget.

And the easiest way to get started and stick to it is with the EveryDollar budget app.

EveryDollar is a free app that helps you manage your money. It'll help you make a plan for every single dollar coming in and every single dollar going out every single month.

And guess what?

It's free.

So no excuses.

Download EveryDollar in the App Store or Google Play today.

All right, our scripture of the day comes from Micah 6:8. He has shown you, O mortal— well, that's some biblical language right there.

It really is.

O mortal, what is good? What does the Lord require of you? to act justly and to love mercy and to walk humbly with your God. That is a good one. Micah 6:8. Winston Churchill said, sometimes doing your best is not good enough. Sometimes you must do what is required.

Dang.

Man, that could have been used on some of the collars, I feel like. Do what is required.

Yes, do what is required.

Do it. All right, let's go to Cassidy in San Diego, California. Hi, Cassidy. Welcome to the show.

Hi, Rachel. How are you guys today?

We're doing great. How can we help?

So my question today is, when do you decide to continue taking a paycheck from a job that in hindsight is kind of like the American dream? It's corporate, it has great benefits, 401, that type of thing, and leaving it when you can't stand it any longer?

Oh no, were you miserable?

That's like lack of a better word.

What makes it so bad?

So I'm a personal banker for a large financial institution. And the biggest thing for me is a lot of the services and products that we provide, it doesn't sit well with me. Like all day I'm pushing credit cards and loans and I have been following Dave Ramsey's Baby Steps, and I currently, literally a month ago, paid off my car. I have no more consumer debt.

Oh, wow.

I'm just trying to like stockpile cash as much as I can. And like pushing credit cards makes me deeply ill. Like, I can't do it. And then like my commission isn't as great, so my paycheck isn't as wonderful, you know?

Right.

And then the other side of it is The type of people I deal with is just like, I don't, I don't like dealing with other people's money to begin with. It's hard. Like everyone's protective over, over their money and as they should be. Um, but it's, it's really, it just, I literally, I can't get out of bed in the morning. It takes me like an hour to even just find the strength to get up.

So what do you want to do instead?

And I used to work for a large company, like a large sunglass company, and I did like events and all this stuff. I had a life-altering event where I went like $30,000 in the hole with medical bills and had no insurance and had to figure all that out. And I was able to get myself out of it, thankfully. But my family was like, Cassie, you should really go into like a corporate job, like work a 9 to 5. And the pay is great because it's guaranteed. I have those health benefits and I, you know, they're matching my 401.

But you don't like the work.

That type of thing.

You said you can hardly get outta bed.

I don't know how to like get myself out of it.

Yeah. Transition. Well, I would start applying. I think it would be unwise to just jump ship. No. Um, right tomorrow and just put in your notice. Um, but how quickly do you think you could find something else? I mean, could you find something in the next 30 days, 60 days?

So I've been applying for the past like 4 months.

Mm-hmm.

And I haven't gotten like a single callback. I've just gotten constant rejection letters. I've I've reworked my resume like 4 or 5 times. I don't wanna like jump ship. I've done that once before when I was younger and I was blessed because I had my parents to help me.

Let me tell you this. Our friend Ken Coleman always talks about the proximity principle and it's more these days about who you know than just putting in an application online, right? And so if you do that, yeah, it ends up kind of in a black hole. So what I would concentrate on is who are the people that I know or people that I know that know people, right? It could be someone's cousin or, I mean, I don't know, be thinking out the box, start talking to people and say, hey, where can I get an in, a personal in, in a company that I would feel good about? Because yes, as much as your value system is bumping up against this job, I do want you out because I don't want you living in a miserable situation for the rest of your life, your working life. So I want you out.

That's right.

But I also will say nothing immoral necessarily is necessarily happening. You know what I mean? We do talk to some people and there's fraud or people are stealing, and you're like, I just gotta get out because this is an illegal situation that I'm in.

Absolutely.

And this is more just going against your value system, which I would listen to, and it sounds like you are. So that should give you maybe some urgency to make some connections and to say, hey, where can I go? Where is this urgent step next? Because I don't know if there's another way to do it well. Um, until you have something landed, you know?

Mm-hmm. Absolutely. Um, absolutely.

But, you know, we'll give you Ken's book. Um, he wrote a book which is great. It's called Find the Work You're Wired to Do. And, um, and there's a great assessment in the back and it may, you know, that may just help you just have, um, maybe a different idea of like, oh my gosh, there's like these other fields out there I wasn't even thinking about.

Yeah.

But my skill set.

Mm-hmm.

And my passion, you know?

Mm-hmm.

And end up in this category that I never even thought about. So if anything, maybe it's a springboard of some new ideas. So we'll ship that to you. Christian will pick up and we can get you a copy of that. But I would say like, yes, applying for places, excellent. But the best thing you can probably do is who do you know? Where are your connections?

That'd be my homework. Make a list of—

Absolutely.

10 people. And I would call them. I would not text them. I would call them. I'd take them to coffee. I would make an impact.

Yes.

When they're thinking, cuz it's, it's always like, who do you think of in a conversation? Mm-hmm. And it's like, oh, I just had coffee with her.

Yes.

It's that kind of thing. Yes. So I, I would make it, make it a point to make a meaningful connection. Don't just text 'em, don't just pop in their DMs, like call them on the phone, invite them somewhere and say, here's what I'm looking, what do you know? And just make that part of your process.

Process. Yeah. And I would not stop applying either. Like I would still continue. Yeah. Put your application in, but Again, the most success we see these days is about who you know or who's somewhere that you wanna be. And you're like, how do I get there? Right? It's the people around us that make a big impact. So yeah, but I want that for you in the next 60 days.

Oh, I know.

Just to have the motivation to get up. That's a miserable way to live, right? I mean, you wanna enjoy your job and when you don't, then yeah, that's a reason to move on. So I hope that helps, Cassidy, and good luck to you. Let's go to Kate in St. Louis. Hi, Kate. Welcome to the show.

Hello. Thank you. I had a question today around how old do I have to be to retire? I'm 55 and I'm married and I have a— both my husband and I work. And I have questions kind of around my 401s and the rule of 55. And I'm kind of asking these questions now because I work in sales, outside sales, and my current employer is currently systematically going through and laying sales staff off. So I don't think I can stay where I'm at.

How much do you guys have in 401s?

I have in a not-work 401, one I rolled over into, I guess you call it a personal one, from previous jobs. I have $1.3 million in that one. And then the one I have at work right now that's tied to my job, I only have about $95,000 in.

Okay.

Because I haven't worked here a super long time. And then my husband, he didn't do as well with the savings. This is, The second marriage for both of us. And, and anyway, he had a— he was one of those that cashed it in before, so he has about $95,000 in it. But he's 48 and he loves his job and plans to work till he's 65.

How much does he make a year?

Um, without bonus, around $115,000.

Can y'all live on that?

Well, that's what I'm— I think I already know the answer to my question. I don't think we can Well, I don't think I want to quite yet.

Okay, that's fair. That's fair. Yeah. How much do you make?

Um, you know, the last 2 years I've made right around $100,000, and then the few years prior to that it was more like $70,000 to $80,000. My job with commissions and bonus can kind of vary quite a bit.

I wonder if you could go to like more of a work-at-will, like part-time, instead of like completely I bring in zero income and I'm pulling as much as I need off of that nest egg. You're only 55. Sure, I, I gotta believe there's something that you want to contribute at a level that's maybe not as strong as it has been, but it does bring in an income to where you can let this money continue to grow.

Yes, and you're not 59 and a half yet, so you can't pull without that penalty. Well, thanks for the call, Kate. Thanks to everyone in the booth. Jade, always fun. Thanks to our great audience today. They are amazing. They've been amazing. And remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.