Transcript of Stop Letting Excuses Keep You Broke

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Normal is broken. Common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is the Ramsey Show. I'm John Delony, joined by Jade Warshall, taking your calls live. Let's go out to Fort Myers, Florida, and talk to Martha. What's up, Martha? Yes, hi, how we doing?

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

You got it, what's going on?

Okay, so, um, I've been watching your show, um, for many years, but just recently me and my husband, we're kind of fed up with the way we've been living and we are trying to make a lot of changes. And it just seems like we're being thrown curveballs now that we're trying to get our lives on track with money. Um, everything's coming up, I, I mean, there's a lot of things coming up, but one thing that's staring us in the face right now is our septic tank. Um, it's failing. Yeah. And it's backing up and we're having a lot of issues, uh, trying to make sure that we're, you know, providing a sanitary area for our kids to live. We have 5 kids and my husband is the only one currently working full-time and I'm trying to find odd jobs, um, you know, to cover some credit card debt that we have. But I, I got a job at a hospital and I'm starting my orientation in August, but I need money now.

Yeah.

And we don't know what to do with the septic tank. Um, we're, we're actually, um, I'm ashamed to say we're about $100,000 in debt and we only make $136,000 a year. So we are up to our ears with debt and we just don't know what to do about this septic tank. We, it makes us sick thinking that we need to maybe get into more debt to cover this, but we don't know what, what else to do.

What's it?

Go ahead.

I was gonna say the, Is it not an issue where you can pay somebody $400 or $500 to pump it and get you to limp along until, um, for a few months?

That's what we did, um, back in March.

Okay.

Uh, we noticed that it was backing up, so we got that pumped out and then it's been only about 4 months and we got it pumped out again today.

Okay.

Um, and, and it's failing, so we don't know what, what else we, we can do. It's gonna cost up to, it, it can be from $10,000 to $18,000.

Yeah.

I mean, I, I, I, I've, I've gotten quotes on septic, like, to replace them. I, I, I had one up to $60 grand because they're going to have to go through rock uphill. I mean, it's a whole thing. So yeah, it can be expensive.

Um, let's see, when you, when you pump the tank, it gets you 2 more months, is that what you're saying? 2 to 3 months?

Yeah. So it was March, April, May, June.

Yeah, you got your 4 months. I'd rather you spend $400 every 4 months until y'all can get up the cash than to go backwards. But I'll let Jade walk you through the dollars and cents because y'all got a mess on your hands.

Yeah, and it does. By the way, I just want to acknowledge that this is normal. This is, this is a normal thing people face when you start working a plan and you say, I'm going to get serious about it. It's almost like the universe says, prove it.

Well, it's everything, right?

Like, these things start happening.

I'm going to start eating healthy. And then someone's like, hey, we just made you a cake. We're going to drop it off at your house. That's just life.

Exactly. So don't— this is not abnormal. You're not alone in that. So what I want to find out is, is there any money anywhere that we can utilize So do you guys have vehicles? Tell me about the $100,000 in debt and tell me, tell me more.

Um, okay. So we, we bought a house. It's about, when we bought it was about 35 years old and nothing was renovated on this house. So we thought we're gonna update this house as we live in it. And as we grow, um, we had 3 kids when we moved into it. Now we have 5 kids. It's a 3-bedroom. 2-bathroom home. So it feels small, but we're trying to like make it as homey as possible.

Um, but so is the $100,000— is that a HELOC on upgrading, or what's the $100,000 of debt?

Okay, so during COVID um, we were backed up on our mortgage and we were behind like $10,000. So that's on the mortgage. Like, if we sell the house, we have to make sure we cover that, but we're not paying that monthly. Um, Our most debt, I would say, is cars. We have a big Chevy Suburban car that we're paying about $45,000. We still have $45,000 on it that we owe, but we can only sell it for $20,000.

Who said that?

It's a huge—

Kelly Blue Book.

On private sale?

On private sale, probably $25,000. It has a lot of miles. It's a lot of miles on the car.

Any negative equity in there, or that's just—

we rolled— we had a van and we rolled it into the new loan because we had a circumstance with family.

What about the other Suburban? So what you're going to find is that as I ask you questions, if you give me an excuse on why you did it, I'm going to cut you off because we got to get past that. It doesn't matter, right?

And I get it. And we did it and it was like we didn't think it through. But I mean, we do love the cars. It's our whole family.

Um, you probably can't afford it, and we'll figure out if we can get you out of it. But you said, so the Suburban— what's the other vehicle?

It's, um, a small Toyota that my car— my husband uses to travel to and from work. It's, uh, he owes $17,000 on it.

And what's it worth?

Um, it probably is exactly what it is.

Okay.

Um, yeah, I didn't expect it.

Okay, good. And then from there, anything else notable? Student loans, credit cards?

I have a student loan of $6,000 that I've been paying like monthly on, but just $6,000 on it. I'm going currently back to school trying to get a technician job certificate, and that's $3,000 that I'm paying monthly on and has zero interest.

Every month.

And then we just have a bunch of credit cards. We have a $15,000 credit card when we were doing, uh, home renovations, so we're paying that off.

Okay.

Um, and I didn't ask you this, but what do you bring home every month? Like, when you guys get your paychecks, what's it total to?

Um, about $8,000. My husband is currently working full-time, and I'm trying to get back into the workforce after being home with my daughter. Okay.

Um, but you said you make $136,000.

Feels a little—

Yes.

So $8,000 seems pretty low to me.

Maybe I miscalculated, but we were putting away for—

That seems about right.

Are y'all putting into retirement too?

Yeah, but currently we've stopped doing that because we're not keeping up with our payment.

Okay.

Good. Now, how much is the mortgage?

Currently our mortgage is $1,550, and that's really good.

Yeah, that's not bad. Yeah, that's excellent for where you're at. Okay, so I think there's some money in these cars that is going to help you not only pay off your debt quicker but solve the septic tank issue. Um, do you have any money saved? I didn't ask. I'm guessing no.

No, uh, every time we try to save money, like, every— something comes up. Like, either we have to— our battery died last week on one of the vehicles, so we had to pay $200. I mean, and that's all we had.

So some of this is, you know, we're trying to deal. Yeah, yeah. Some of this is emergency and some of it's just better planning. So we do need to be planning for maintenance. I mean, one of the things with cars is they need batteries every so often, they need tires every so often, they need oil changes. So let's get in the habit of starting to think ahead a little bit more. And I know it, you've got 5 kids and a husband, you got a lot going on. But I think starting to learn to look forward in the budget, if you're not using EveryDollar, we'll make sure to get you that. But John, I think there's some money in the $17,000 vehicle getting that out of your—

goes, goes today. And by the way, I was a dean of students at a law school in a $3,000 truck, and I did 2 years on this show driving an old used Prius. You should have seen me pull that Prius up next to Dave Ramsey's Raptor, right? And we, we had a lot of bickering back and forth. Your husband's going to be fine, but y'all need that $17,000 margin today. So that car gets sold this week.

Okay.

Help me. And then we're going to just put us up. We're going to stack up as many thousands as we can. He can drive a $3,000 beater. They're out there. My old Cadillac is worth $1,500 and it drives just fine. So they're out there. Yeah.

Yeah. We need to start looking for that. Yeah, that might be something that we didn't even consider.

We thought— Yeah, it's going to take a lot of work and a lot of planning.

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So Jade, I talked too much in that last segment, and I think I do. We didn't get, uh, Martha like the outline of a plan, and so she's still on the line here. I want to make sure we get her an outline of a plan. So she got $100,000 in debt, They make $136,000, but it's credit cards, it's two giant car payments.

Mm-hmm.

And now they got septic issues. The one thing I heard throughout that call was, yeah, but here's why we have this debt. And yeah, here's why we have this debt. And there's a, there's a story and there's an emotion in it. The only time I've seen people be successful in just saying enough is enough, we're gonna take back ownership of our home and our money is a, I don't care why it happened. Here we are. And I don't give a crap. Come what may, we're never borrowing money again.

Yes.

Moving forward.

Yeah. It's not about what you did. It's about what you did next. And you're so right. The first two things that she's got to do is, to your point, decide she's never going to borrow money again. The people that walk the Ramsey Plan, that is the line in the sand that they draw. Otherwise, it's all for naught. Like, what are we even doing here? Second thing she needs is a budget. Christian is going to hook her up with EveryDollar. You need that. That's the basis of the plan. More tactical into her numbers is we've got to sell the $17,000 Toyota or whatever that was, that's going to leave them with no car but also no car payment. And so just before we do that, you should be able to, within a pay period, stack up $2,000 that we're going to do to buy a car in cash, a beater. Like I said before the break, my car, my old car, it was a Cadillac SRX. It had 200,000 miles on it. It's worth $1,500. Somebody's going to buy that. For $1,500.

I might buy that.

You might buy it.

It's a fancy looking car.

Yeah, absolutely.

Listen, I might give it to her. I might. It's just sitting in the driveway. Uh, maybe I will. Um, so that's thing one. Sorry, I'm really thinking about giving her that car. That's, that's thing one. Uh, the next thing is, why don't you take over? Cause my brain is really thinking about that right now.

The next, the next step is we, we have to start looking at listing these debts out in smallest to largest. And it— you got a— you got this old mortgage back pay hanging out there. You got all these credit cards out there. You've even upside down $20,000 on this car that you just had to have that we love.

You might be able to go to the credit union and get a loan for that difference. And if you are willing to hold on private sale for a little bit more than $25,000, that could be worth it for you. Run the numbers out, because maybe not. If you say, okay, I'm going to get a $30,000 loan, that means you're $15,000 less in debt is the way to look at it. Because that means I'm paying off the $25,000 and I'm buying a $5,000 van used. That's what that looks like.

And people will talk about you when you drive down the road in these cars.

Yes.

And what we're suggesting is, I don't care what other people think. As for me and my house, we're going to choose freedom.

Yeah. And the only way that works, by the way, is if you have a better interest rate. That if your interest rate is cruddy because your credit is bad, I don't know that I would do that. I might just ride it out. But look into that because that might be the key to set you free.

Yeah.

All right. Let's go out to Louisville, Kentucky, and talk to Whitney. Hey, Whitney, what's up?

Hi, John and Jade.

How are you today?

I'm good.

What's up?

Um, so my question is, my son is starting college in August, and as a parent that wants him to learn from being an adult before he actually gets out on his own, I wonder how much or when I should start charging him rent to live at home, because he is going to stay at home to go to a cheaper college, um, and he's going to try not to take out any student loans, so he is going to be cash flowing, um, in scholarships.

Oh, I have a hot hot take on this one?

I might have one too. I want to hear John's hot take.

My hot take is, if my— I, I have a 16-year-old, he's heading into his junior year of high school. 2 years from now, if he says, hey, I have a small scholarship at a local college, I want to go there, I want to cash flow it, but I'm not going to be able to afford room and board, I would invest in him and let him live at my house for as long as he was in school, full-time enrolled, also working a part-time job, and he kept his grades up. I, I wouldn't— I'm way more concerned about the young people who graduate and then just kind of aimlessly wander back to mom and dad's house. I don't even mind folks who graduate and they're starting a new job and they want to get ahead. And so mom and dad and this young adult sit down and they come up with a plan for 6 months or a year with no rent. I got no problem with that. It's the unintentionality, the aimlessness that I struggle with. I, if I'm you, Whitney and, and Jade, I wouldn't charge my kid rent for, cuz it sounds like he's trying to do this the right way and this is a way you can invest in him.

Mm-hmm. Um, moving forward. But that's, that's my thought on it.

I, 100% agree with what John said. When you said it, Whitney, my first question was gonna be, tell me about your financial situation, because if you're not careful, even unbeknownst to yourself, you could end up kind of, for lack of a better word, cashing in on this for your own needs.

Yeah, do you need the money?

Right. So I'm in Baby Step 1, and I do work 3 jobs. I work really hard to try to make sure that, you know, I'm, as gazelle intense as I have time for. So, um, I, I don't feel like that I need it. I just don't want him to miss out on the learning experience of paying rent. He does have— he doesn't have a car payment. He saved up and he bought a car, and then it broke down. At that point, he was planning on going to IU Indy, which would have been away from home. Um, and at that point he realized, oh wait, stuff is expensive. And so he was like, hey, are you okay if I stay at home? Um, and that way I don't have to pay like room and board, and then he can eat at home and have meals and stuff like that. And so I feel like he's on the right path, and I don't want to charge him, but also I don't want to rob him of that learning experience of doing his budget every month and, um, knowing that at some point he will have to pay a rent or a mortgage.

You could split the difference. I mean, you could not charge him rent, but say you still have to have a budget, which is if you are bringing in money, you've got to plan out for how you're going to spend that money, which I do think is a valuable tool. And maybe he does kick in some for groceries. Yeah.

And yeah, he can buy his own milk and cereal or whatever. I— are you a single mom?

I am.

Okay. I need you to hear me say this, how you're handling this and how the action steps he has already taken when life threw him little bits of adversity, like a car broke down and he started looking at the room and board cost. And he also has this underlying principle in his heart and mind that I don't wanna owe anybody any money. I want you to hear me say directly, he's learning from you. You're doing a great job.

Thank you.

He's watching his mom scratch and claw and grind it through. And so you, part of changing your family tree is maybe investing in him. And you don't have the cash to do that right now. You're digging yourself out of your, out of the hole you found yourself in. Um, but just that little gap of you can stay in this room. And I, I love the idea of every month you're gonna sit down and you're gonna go over family expenses together. And I want you to learn how this house runs and how expensive things are, et cetera, et cetera. And yeah, maybe after a sophomore year he can kick in the light bill or the water bill or whatever. But I, I think he, you're doing a great job. I don't think this kid has any notion that he's, that life comes with a free ride at all.

Plus he asked you, what do you think if I stayed home? It wasn't just like this entitlement of, oh, just stay home and sit on the couch. Yeah.

Right. Yep. My mom heart was definitely like, yes, he's gonna stay at home. I was like dreading looking forward to, you know, moving day, moving him away. So I'm pretty excited that he's staying home even though, you know, we pretty much see each other in passing. And even when we do, I'm like, I have to force him to hug me sometimes. He's like, mom.

Okay. So I want you, I want you to draw up a lease and that lease might say you have to have dinner with me once a week. Or every, every Sunday, and you get to do the laundry in the house. Like, start to think if you're working 3 jobs, if you had the ability to hire a 5-hour-a-week personal assistant, what would you have them do?

Okay.

Your job is the air filters and make sure all the light bulbs are changed every month and make sure the, like, the trash is taken out. Like, take some of those things off your plate and he can start to learn how a household runs underneath it all. But as for me and my house, I would just, I would just, uh, support him doing it.

Yeah, I think so too. So not such a hot take, more like a, uh, room temp.

Room temp. Yeah, yeah, reasonable take. I'm so torn right now, Jade. As my son's talking about college, I'm like, you could just stay here. But I know he's got to go, but I'm like, you could just stay forever and ever and ever.

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Hey, what's going on?

What's going on? I'm— we're doing great, man. How about you?

Well, I guess if I was doing great, I wouldn't be calling, but I will play.

That's fair, that's fair. What's going on?

It's all good. Uh, so I guess, you know, I've been listening for a few months and I hear, you know, some of these really intense saving goals when you're in, you know, step 2 and earlier. I guess you'd say I'm in 3B/456 26, no debt, um, saving for a house. My wife and I are in our mid-30s, we've never owned a home, and we live in Indiana now, but we'd like to move east to the DC region, which is much more expensive someday. And I guess I just love some perspective on like what is the right setting for saving per month to make this happen.

I love that question. Uh, so tell me right now, what are you doing? How much are you putting towards the down payment and how much are you investing?

Yeah, so we're both doing 15% 401 through work. We take home $5,800 every 2 weeks combined between the 2 of us. So around like $11,500 a month.

Okay.

You know, and so of that right now we're targeting $3,000 for the house and then $450 or so for 529 for our son who turns 2 in a couple of months.

$450 a month?

Yeah, for the $529, yeah.

Good.

Yeah, so those— but we keep chafing kind of against it, and I'm wondering, is that just because that number is really high and we should keep fighting for it? Shoot for the moon, you land amongst the stars. Or, you know, should we try to pull back somewhere else?

$450 is a lot.

I feel like that's kind of a lot. And also, it all depends on how quick— the problem we're solving for is how quickly do we want this home? So I think that's the guiding principle here. I agree with John, $450,000 is a lot. I mean, it depends on how long you plan on doing that. What's your target amount? All of those questions I would ask. But I think first things first is making sure we're not focused in the wrong area. And I really do think the House needs to kind of wag the tail here.

Let me ask you this, dude. Um, you talked about some of the people you listen to on the show and some people are very aggressive. Once you don't owe anybody any money, there is, there, there's, we're talking about building wealth so that when you get in your 60s, 70s, and 80s and 90s, and maybe even beyond by the time we all get there, um, that you, because you were diligent when you were younger, you're able to take care of yourself and your family in those, in those years, right? As my buddy Arthur Brooks says, we way over-index our 20s and 30s and we forget about our 40s, 50s, 60s, 70s, 80s, and 90s, right? So the question that people have to ask themselves after they're outta debt is, what kind of life do I wanna have? And I want you to own a home so that nobody can come in there and take it away from you so that come what may, me and my family have a house. We have a place that, that we can put a flag out in front of. Um, I want you to have some retirement savings. I want you guys to have some fun too.

I want your kid to be able to go to school, whatever that looks like. I don't know if he's gonna have some college robot teaching your child, like, like who knows? Right. But the question you and your wife have to ask yourself is what kind of life do we want? And I'll tell you, there starts to get some variance in there. In my house, I have, I'll, I'll call it pathological, a psychological problem with owing people money. I don't sleep. It keeps me up. I spin out all the time. And so for me and my wife, there was, I'll call it a panic on my part. She's like a walking Xanax for me. And so it was much more intentional on her part, but we focused on getting a house and getting a smaller house than we could have qualified for from a mortgage standpoint. And we got it paid off as quickly as we could so that I could have some peace. Cause I was solving for peace. Right. And so you and your wife asking each other, what kind of life do we want to create together? And then you're talking just math problems at that point.

Yeah.

And let's run out some of those numbers. Let's run out the math that plays next to what John is saying. So if you say, hey, we're gonna get a house in the area, what's that cost you? What's that look like dollars-wise?

So in, yeah, in DC, I mean, it's, you know, the, the county that I grew up in, in Maryland, I mean, you can't, you can't sneeze in there without spending half a, half a million bucks. Yeah. I mean, it just, it's gotten crazy expensive.

Yeah.

So like looking out, you know, you can, you can find, you know, $400,000, $500,000, uh, if, if if you're willing to drive a little bit to work, you know, some of these details are kind of hard to forecast cuz there's career changes involved in making this happen. Right?

Sure.

But, but hold on, Rick, let me, let me, let me call this out. You and I were told a lie. You and I were told if we just go to school and, or, and, or we just get a good job and if we get a good ride or die spouse that we can live wherever we want, we can quote unquote follow our passions at this work job thing and it would all work out. And that's not true. The truth is you, me, Jade, our families, everyone listening to this has to make uncomfortable choices. Do you want to go back and live where you grew up, where you were raised? You have this picture in your head of the perfect childhood. That's amazing. Here's the math problem associated with that. And if that math problem costs you the life you want to have, going out to dinner, going to concerts, being silly, like buying your kid the nice basketball shoes if they make the team, like those kind of, then we're going to have to be sad and grieve the fact that we can't do everything that we— what we want because the world didn't hand itself to us.

You get what I'm saying?

I hear that. And part of our calculus for trying to move out there is we're basically alone here in terms of— we have a, you know, we obviously have a son.

Sure.

Um, we want to— we want another child, and we just— we don't have really any help out here.

I totally—

yeah, I think being around family, I get that.

I can get that.

Yeah.

Well, let's put our— let's put our heads around the numbers, and then that'll help you make the choice on this. Because if you say, hey, we're in Baby Step 3 right now, you guys are investing 15% and you're saving $3,000 a month. But if I plug in, if I— and I'm just on the Ramsey Mortgage Calculator— you said in the D.C. area it's around half a million. So $500,000. If I plug in current 15-year fixed rate interest rate, 5.9%, let's say you get that. And I know this is in the future, so I'm just— this is napkin math, okay? But in order for that to be a fair portion, 25% of your $11,500 income, that mortgage with everything all built in— HOAs, home insurance, taxes, insurance— it can really be no more than $2,800, $2,700 a month, $2,900 on the highest, right? So if I am solving for that, you're going to have to put down at least $230,000 to $240,000. Right now we're saving at a rate of $36,000 a year. So taking that data, we can say, okay, if we want to do this, if we're serious about doing this, this in the next, I don't know, 3 to 4 years, we've got to, we've got to be serious about saving more.

So I would be okay with you backing down the 15% that you're investing for the next 3 years. Even I wouldn't surpass 3 years because I don't want you to miss out on time in the market. But do you see what I'm doing there?

Yeah, I really hadn't thought to touch that. And we do have about $55,000 towards this in a specific account.

Good.

And then I do have $125,000 in a managed brokerage that I'm hoping not to touch.

You're burying the lead.

You're there.

Start with that next time you call. You have it.

You're on your way. Look, Ask Ramsey told me to try to avoid touching it.

I get it.

Hey, don't let that— let that become generational and see if you can get there without it.

It's just in the brokerage.

It's not retirement.

It is.

It's not brokerage. Sorry. It is not retirement.

Yeah. As long as it's non-retirement money, I totally would be interested in touching that for this reason, because this is a— owning a home is a major part of building wealth. And so for that reason, it's not like we're sacrificing wealth building in that way.

Did you put in there, I want to buy a house and I put down 15% in retirement and This thing knows my life story. Well then that's a glitch in the matrix that I gotta get, I gotta get with the team and we gotta get that fixed. Yeah. Because yeah, if you said, hey, I have this money in a brokerage account, I'd say, yeah, don't touch it if you can avoid it. But if you wanna buy a house, that's what that money's for. That's exactly what that money's for.

Yeah. So if you pulled back even for a year and made that $36,000, I don't know, $50,000, you're there in 2 years.

Great.

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All right, let's go out to Roanoke, Virginia, and talk to Chris. Hey, Chris, what's up, man?

Hey, how are you guys?

We're doing great. How about you?

Hey, good. I really appreciate you. I'm a big fan. The term "solve for peace" has changed my wife and I's view on finances. It's awesome. So thanks for doing that again.

You got it, brother.

Yep. So our question, my wife and I make about $200,000 to $250,000 a year and we own 5 homes. They all have mortgages.

I thought you were solving for peace, dude. That's a lot of houses.

Yeah, I know, I know. That's why I'm calling you, bro.

Okay, gotcha.

So our primary residence has $290,000 on the mortgage and then our rentals have 91, 95, 125, and 139. We have $250 grand in cash. Do you snowball the rentals or do you pay off your primary?

Well, I, I am interested in paying off the primary. I want to know what each of these— you told me what you owe. I'd love to know, can you go through and say what they're worth?

Sure.

The 91's worth about $150,000, the 95's worth about $150,000, the 139's worth about $200,000, and the 125 is worth about $160,000.

And is there one of them that, um, is a pain in the butt that you like— tell me which ones that you're like, if I had to sell, it'd be these ones, and, and here's why.

Yep. So the 125 we would sell because it's an HOA. Um, made a lot of mistakes over my life. I'm a real estate professional, and we've narrowed it down to just single-family homes. That's what we're good at. So the, the 91, the 95, and the 139 we're going to keep, but the 125 I would sell.

Okay.

Okay. And so if you— so there's $75,000 in equity there. Maybe when everything is all said and done, what do you think you'd take home?

Um, on the $125,000, if we sold it, you'd probably only take $30,000 home.

Okay.

$160,000.

Okay. And so that gets you with the cash, $250,000, that gets you pretty close to what you owe on the primary?

Mm-hmm. Yes, correct. You'd be about $10,000 short.

Okay. So is that what we're trying to solve for is just getting that primary paid off? Would that be enough for you and then cash flow and the rest to pay off?

We've went back and forth so many times doing this, my wife and I, on whether it's do you pay off your primary residence or do you pay off the rentals and leave and get better cash flow on them. So ultimately they're all going to be paid off anyway. We're not buying anymore until we get to that point. But you have this huge chunk of money right now.

Yeah. And let me tell you, nobody— my renters are not going to be paying, living in a paid off house while I live in a house with a mortgage. I could tell you that right now.

You know what I'm saying?

Like, My wife would appreciate that. Yeah.

Like you guys are the ones working hard. I, all day, every day, I want my primary mortgage paid off. Here's why. And this is just, this is just life experience. Whenever the stuff hits the fan, right? When there's a diagnosis, when there's, not to say that there'll ever be a COVID ever again, but you know what I'm saying? When somebody loses their job, when things shift and change, the number one thing that people want to protect, John, is their house. That's the number one thing they look at is they go, oh my gosh, as long as my house is secure, I don't want anything make me have to, you know, give up my mortgage. No foreclosure, right? That's the scariest thing that we can imagine, is the, the place where we lay our head to be in jeopardy. And so that's why I say what I say, which is take this cash and pay your house off first.

And do you have— I'm assuming you have a fully funded emergency fund, right?

Yeah, we do. About $30 grand, just, you know, 6, 7 months.

With the having 5 houses or 4 houses right now, hopefully you'll sell one of them and you'll have 3 house or are, yeah, 4 houses left. Um, yep. I was, I, I'm biased right now. I just need to tell you, I had a, a day a week ago where I got up before work. I took one vehicle with one of family members to one shop. I took another vehicle to another shop and had another family member drive me back. My primary air conditioner in my house went out.

Ooh.

My well wasn't working, so the house had no water in it and it all happened on the same day. And after I've unwound all of that, just let me tell you, it's very, very expensive. So you've got that times 3, 3 or 4. And so your emergency fund, I would wanna hang onto some more cash cuz you're, you've gotta, unless you've got retained earnings on each one of these, uh, rental houses, which I doubt you do. I mean, if the air conditioner goes out on these things, you got to pay for it, right?

Right.

Yeah. Well, that brings me to the next point. Like, you paying off your first mortgage, that was thing one. But the next step that I would take, because I'm all with John on solving for peace, is now I'm looking at mortgage number 2, number 3, and number 5, and I'm going, okay, amongst these, is there one that I can sell to make good on the other properties? Because my goal would be my goal would be to have as many of these paid for as possible, as quickly as possible, even if that means letting one go. Because again, we're, we're, we're, you know, cutting down on the risk. And I know what it is that you're trying to do, but you do have a lot of risk right now. So my question to you is really, how well are these cash flowing?

They break even at best. Realistically, the— oh yeah. I mean, after the mortgage, you got to figure you set aside for your expenses and we do have retained earnings for things like that that happen in the business. Yeah. How much? Um, the only one about $40 grand.

I just don't know that these are a success. I think they're just something you have.

The only one we are absolutely opposed to selling would be the one for $139,000. So ultimately, if tenants leave, you know, it's more difficult to sell property with tenant in it. If tenant leaves, we're not opposed to selling the $91,000 or the $95,000 either.

And I love that. I, I, I actually think that's really good. I— this is what came to my mind when you told me this. I bought a pair of jeans and they were expensive, but they didn't fit. I put on too much weight and I didn't get rid of them because I spent over $100 on them and I felt like I needed to keep them even though they're of no use to me. They don't make me feel better about my life. And every time I go in the closet, I'm like, come in, you know? And that's the way these properties are. It's like you bought them.

Them.

They're not cash flowing. They're a pain in the butt. They're keeping you from paying off your current mortgage. Just accept it and end it.

And you're one of me a week ago from having one air conditioner, a roof on another, and then somebody trip on a driveway and this whole house of cards you built up is over. Like you're in a mess. You know what I mean? And so going back to the Solfeggio, here's a fun, and, and again, like, I'll tell you, my friends who are in the banking industry laugh at me cuz they tell me I'm too risk-averse, whatever. Um, well, they'll actually say like, how do you stage dive off of a, off a stage at a punk rock show, but you won't even do like, right? So I'm risk-averse on, on some things, but not on others. But here's the thing. I want you and your wife to just imagine you don't owe anybody for your primary house. It's yours. You don't owe anybody on this one mortgage or maybe two on these other two houses. And you don't owe anybody anything. And so you're making $230,000, $240,000 a year, and 100% of that is your money minus what the government takes. Is that gonna give you a, a, the exhale that you're looking for in your own home?

Do you get what I'm saying? Will that, will that take the edge off the electricity of the angst of what about this? And did you get this? And hey, this guy called. And what is there just this mo— this notion of like, whew, we got peace in our house now. And some people like the electricity in their house, man. That's how they choose to live. And I'm not their guy, but, but good, good on them, dude. I got friends like that. But like you said when you, when you first called, like, as for me and my house, dude, I love owning properties. I've got properties, I like them, but I just don't want to worry about them.

Mhm.

So you're saying to pay off the primary and then sell these as the tenants leave until you just no debt anymore?

Until I— and I would roll that equi— I I, Jade, I'd probably baby step to these cuz I, these are big debts you have outstanding here. So I, yeah, I would sell what I could and reverse engineer it until I've paid off the remaining 3 or the remaining 2 or the remaining 1 if I have to. And then I would take that cash flow and start building them back up. You're not, you're not buying $600,000 properties. And so it would take you another year or year and a half to save up another $150 grand to buy another one of these houses.

Yeah. So with the money that we have now, pay off the primary.

Yeah.

Then go back to the snowball.

Yep.

And sell them when they come up.

Yep.

And I would go ahead and sell number 4 since you identified that right off the bat. I'd go ahead and do that as quickly as possible. Yeah. Pay off the primary. And then as, like you said, as those leases go up, knock them out one by one. Sell them off.

I appreciate y'all.

So I gotta know who won, you or your wife?

Oh, we're on the same page.

We both wanted it.

We both wanted to pay the house off.

Good.

Absolutely.

All right, good deal. Um, look at me and Jade bringing families together.

Look at this.

Usually, Jade, it's one or the other, but yeah, I like a united family every now and then.

This guy's a smart guy.

Yeah, well, and what I love about him is he's really smart, and then he got all— he did all the smart things that smart people tell you you're supposed to do, and then he heard the message What if I felt different though? And if I'm doing all the right things, why doesn't my home feel more at peace? And he's gonna solve for peace.

Hey guys, it's Rachel Cruze.

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Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm John Delony, joined by Jade Warshaw. Let's go out to Minneapolis, Minnesota, and talk to the great and powerful Laura. Hey Laura, what's up?

Hi guys, so my question is, um, I have 3 kids. We are currently in Baby Step number 2. We use the EveryDollar app and we budget for what we call Adventure Day a couple of times a month. So our kids still get fun memories, just in a smaller, more intentional way while we're still paying off debt. And my question is about teaching contentment and financial responsibility at young ages. I have a 5-year-old who especially notices when his cousins get really big extravagant gifts, and he doesn't understand why we don't do those things right now. He will be heading into kindergarten this fall and he'll see even more kids with more experiences and things that he doesn't have. And so my question is, what are some age-appropriate conversations or ways that we can talk about money comparison and contentment so that he understands why we're choosing to be responsible and that he's not missing out while we still work on Baby Step 2?

Okay. So I'm going to reframe a lot of this. Is that okay?

Yes.

So he is missing out. And contentment is a lifelong journey that I would never— it's not developmentally appropriate for a 5-year-old to have the understanding of commit— like, contentment and like innate joy when I've got used shoes and my cousin just showed up here with Rocket shoes, right? And He is missing out because that kid's got rocket shoes and he doesn't. And so instead of trying to shift his, oh, you should be, you should be feeling this way instead of what your body's telling you, sit with them in that frustration because you probably know, you probably have friends and family members that have a nicer car or newer clothes, et cetera. And you know how that feels too. And so it's not about taking a 5-year-old and trying to disassociate them from their body, from their own feelings. It's showing your 5-year-old, 6-year-old, 10-year-old, I'm not scared of your feelings and I'll sit in 'em with you.

Mm-hmm.

You get the difference there?

Yes. Yep.

And so a conversation we have a lot at our house is, um, like when we go to Dave Ramsey's lake house, Dave has us all out once a year and we all go ride the jet skis and do all the wild stuff and then we'll come home. And my son was with us during the, the days when we were trying to figure out how to keep the lights on, but my daughter doesn't have have that lived experience. And she's like, Dad, why don't we have a lake house? Can we get jet skis? And so we have the conversation like, as for our family, this is how we do life. And we're so blessed to have friends that have this cool stuff. And that doesn't mean that she doesn't want a lake house, and that doesn't mean that she doesn't think her dad's cheap, and that, you know, all this— she's allowed to have those thoughts. She's 10, right? But the, the conversation always comes back to, as for our family, here's what we do. And you have to be able to hold that space when your kid gets frustrated with you and they get mad at you.

Why can't Why can't I have this? And why can't I have that? They're not gonna understand complexities of budget when they're 5, 6, 7, 8, 9, 10. Um, they will understand mom and dad hold firm and they still love me. You get that? Where, where I see most parents struggle here is it begins like you wanna be able to give your kid nice stuff, right? You wanna be able to give your kids some of these things and then you start feeling less than, so it's you being able to hold your own. Like, no, we're making the right decision for our family now and into the future.

Yes. I, yes. I love that mindset shift.

But yeah, I, I always wanna caution parents when kids have big feelings and when they get, when they get really sad or really mad or really frustrated, it's easy to A, treat 'em like an adult. Don't talk to me like that, or you shouldn't, whatever. And it's also easy to turn into a moral issue or a character issue. I like to look at it as a tools issue. This kid's feeling big kind of ways and they don't have the toolkit yet. So my My job is to give them the tools, and that tool comes from, I'll sit right here with you. And by the way, not every behavior is acceptable. You can't talk to me like that. You can't throw things. You can't break things, but your feelings are fine. I'll sit here with you. And I'll tell you, man, it's— I, Jade, I don't know if— I hate it. I hate it when my son or daughter's upset with me. I still don't like it. You know what I mean?

Yeah.

But it's my job to sit in it with them.

I feel that. Yes, I hate that feeling as well.

Yeah.

Can I tell you I'm proud of you? Oh, thank you for putting a stick in the— like, like, just planting a flag in the ground and saying, as of now, we're going to weather this storm because the future is worth it. Y'all are worth it in the future.

And that's, that's really the only, like, tool that I have that I, I keep repeating. And I, I just feel like I keep repeating that and telling him, like, not today, but someday we will get there.

Some someday for a kid is abstract.

Yes.

It's, it's why, uh, like Christmas feels like 1,000 years for a 5-year-old and it feels like 30 minutes for me. I feel like I'm, I was just buying Christmas presents, right? And we're already entering into like the fall season here, right? And summer's almost over.

Can I also float out there that part of this though, kids want whatever it is that they don't have.

Yeah.

Like it doesn't even have to be like a money money or like a standard of living thing. My kids, uh, I introduced them to original Nintendo because I had one in the attic and I was like, I'm gonna see if they like playing. They love it. It's so, it's so old, but they were already arguing about who got the controllers and it's not fair that he gets to play more and it's unfair that, right? And it's, it's an old game, but it's just because somebody else had it that now they want it. That's what I'm saying.

That's developmentally appropriate. Appropriate.

Yeah.

For, for young kids.

I think it probably has less to do with lifestyle than it does to do with, it's just a thing I want and don't have. And I think because adults understand what money can get and not get, we make it more about lifestyle.

Does that make sense?

Yeah.

And, and so I would probably back off, not today, but one day, cuz you're confirming we're, we're less than now, but one day we won't be less than. And maybe shift the conversation to, yeah, they've got, they got, they got a cool four-wheeler and maybe when we get to go visit 'em, we can ride on that four-wheeler. But our family, we like to go on walks and we like to go fishing and we like to do, I, I love how intentional you are with your kids. Yeah. They're gonna get special laser beam time from their mom and dad. I promise you for their nervous system, for their brains, for their relationships down the road, you're putting in some major deposits in their relational bank account.

Bounce.

Yeah, you still there?

I'm still— yes, thank you so much.

She was, she was letting it marinate. She was letting it sink in.

Are you tearing up?

You're—

oh, hey, we're on your team. I'm, I'm so proud of you. I can hardly even— I mean, it's, it's amazing what you're doing for your family.

Thank you so much.

You betcha, you betcha. Jade I, I, I'm still haunted by that. Hey Dad, can I have this? And it's, it's like, nah.

Yeah.

And it's harder now. It's harder now that I could and I'm choosing not to.

Yeah, that's true.

Because it's not a part of the value set, or it's because we don't need anything new, or, or I don't know.

I don't know. And I'm just, I'm just gonna say this just in the spirit of being old school, because I'm, I feel like I'm getting older and older. When I was a kid, we didn't get nearly this kind of treatment. It was just like my dad would just be like, we ain't got no money. And that was that. And we just adapted. So on the one hand, I get it. And on the other hand, I'm like, they'll be strong.

Like, they'll be fine.

They'll be fine. Especially for parents in Baby Step 2, you can't buy 'em all the stuff.

Yeah.

You can't buy 'em all the fancy birthday parties, whatever. But what Laura's doing, but I will give you a half a day of directed time, if I got it, is magic. Yes. Magic. Way more important than any old plastic trinket you can buy.

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All right, let's go out to New Orleans, Louisiana, and talk to Desiree. Hey Desiree, what's up?

Uh, thank y'all so much for taking my call.

Yeah, thanks for calling in. What's going on?

So my husband and I need to get a new car, and we're debating between getting a $10,000 older vehicle or a $25,000 a newer used car. We currently have— both would be paid for in cash, either option. We have another vehicle that has 130,000 miles on it, and my husband drives, he commutes for work, and so he puts about 27,000 miles on a car per year. And so I'm expecting the current car that we have to go out within the next like 3 to 5 years.

Why?

And so that kind of where You're talking to two people that drive their cars into the dirt.

Is it like a Ford Fusion or something?

No, I mean, it is a Toyota.

Is it a square Kia? A Toyota? It hasn't even started yet.

It is, but I guess I did the math and I was just thinking like with it at $130,000.

Oh no, that Toyota is going to last longer than y'all.

Yeah, okay.

Yeah, buckle up on that one. Y'all have the cash to pay for it? Do you have an emergency fund?

We do, yes. So, uh, we have a $40,000 emergency fund outside of— so we have $28,000 saved in addition to our $40,000 emergency fund.

Good.

Um, so, so if we were to go, y'all have the money, y'all have the cash. What do you— what's the, what's the congestion in your heart over this decision?

I guess my big— we've always had a larger emergency fund, and so it bringing us down to like what I would consider our true emergency fund is the $40,000. And so, yeah, yeah, um, and then if this car were to go out or, um, I don't know, something were to happen, I would have to actually pull from—

where else? Where else? And this is the pot talking to the kettle here. Give me another thing totally not money related where you're anxious about a future thing happening?

Um, not money related.

Yep.

I don't know. I guess—

are you, are you a worrier?

No, I don't think so. I think it really just comes down to having the financial— we're not able to save as much as we used to. So like, we have two kids now, um, and so we still save, but there are months where we don't.

And I mean, it's We're budgeters, but, but if you use some of this $40,000, it's going to take you a while to build it back up again, and you don't want to do that. Yes, I get it.

Yes, I think that's—

so if you solve for peace, which one do you want to have? Would you rather have a nicer car and less money in the bank account that you're just like, you snuggle in every night, you check your bank balance and you go, ah, or, um, would you— I mean, a crappier car in that, or not a crappier car, just an older used car, or do you want a newer used car?

I guess I don't look forward to— if we were to do the, like, a $10,000 vehicle that's, um, like 10 years old, I don't look forward to like, hey, what's the— and like, are there any underlying issues with it that we're not able to see like at purchase price rather than spending the money up front?

Let's look at a bigger picture of your money. So what do you guys bring home every month and what do you bring home every year?

Yearly we bring home, um, $130,000, and then monthly we bring home 8,000 a month.

Okay.

Give or take.

So what we, let's use this to kind of be our framework and how we think about this. So two things are true. We do have a framework for cars, things that go down in value, and we don't want any more than half of your annual take home to be tied up in cars. So for you, that's somewhere around $60,000, $65,000. Uh, and you're nowhere near that. So that's thing one that kind of gives me a, a green checkbox that, okay, we're we're not breaking any rules of—

We're not being unwise.

We're not being unwise here. The second thing that I wanna bring up is you've got $40,000 saved, which you yourself has said, like, that's 6 months of expenses. Like, that's a full emergency fund. Something that I find, and I wanna call this out with you because I think it'll help the greater audience, is when we teach our 7 Baby Steps, the first 3, right? Get $1,000 saved, pay off all of your more consumer debt using the debt snowball, and save up 3 to 6 months. Those are intended to be extremely intense. Intense. We sacrifice everything. We give up what we want to do those things. But then once you cross that line, uh, now we're going from intense to intentional. In the same way that you had to practice what it feels like to say no, to cut back, to change your habits, once you cross over into Baby Steps 4, 5, and 6, you have to do those same things only in the opposite direction. Now we have to practice what does it feel like to actually enjoy my lifestyle in a responsible way because I'm now a financially responsible adult. What does it feel like for me to know what my limits are and feel good about making that choice?

And instead of doing the easy thing, because the easy thing to do is just avoid and go, that feels weird, I'm just gonna buy the thing that's less expensive. Huh, that's what I know to do, right? But that would not be really enjoying what you're working so hard for. So I actually, in your case, I would push you to enjoy the work and the money that you have. And I'd say, hey, you're no in the season of life where you have to drive the cheap hooptie. Not that $10,000 is cheap, but the less expensive hooptie that's got, you know, already has 100,000 miles on it. You've actually earned the right and you have it in your margin to get the $25,000 car and feel really great about like, hey, this is the nicest thing I've ever bought. What about that?

Yeah.

And as a guy who has commuted in multiple different states, in multiple different job jobs with used Toyotas. I like the idea of my wife and our two kids being in the $25,000 car. That's just me. I would like that.

How does that make you feel?

I think a relief. Oh yeah, I think, um, just because I want to make sure that we're making, like, what y'all said, a wise decision.

Yeah.

And so, um, this is what it's about. I gotta tell you, like, this This is what it's about. We get a bad rap around here for, it's like we're cheap and you gotta live low forever. And I'm like, no man, you gotta make the transition.

Well, yeah, I was just seeing that recently. It's kind of come out all over the place. Like Dave Ramsey's stupid because he wants you to sacrifice your whole life. You've never gone out with Dave. You've never had dinner with Dave. You've never been to a party with Dave.

Yeah.

Buckle up. You've never been out to dinner with Rachel. You've never been out to dinner with Jade.

Right.

Dude, the only person is George. He's the worst. But other than that, I mean, When you, when you, the whole purpose of sacrificing like bananas in your first, second, first, second, third baby step is so you can have finally have a real version of the life that you want. Right. And it's not unrestricted. Even Dave has to keep a budget.

Right.

But like, it's not unrestricted, but inside of that, dude, it's the best, man. So yeah, you guys have worked your butts off. Y'all saved a whole bunch of money. You got two young kids. Kids. Yeah, I'm with you. I'd get the nice car.

Yeah. And this is something I, I think we're saying this because I think we've all struggled with it to a degree because it's true. Your brain is in one form. Like you have to be a certain way to do Baby Steps 1, 2, and 3. And you have to do a complete, in many ways, an about-face because in Baby Step 2, you have told yourself spending is bad. Yeah. Spending is not good. Yeah. And then you have to train your brain to be like, you know what? All spending is not bad.

Yeah.

This spending is good.

Right.

This is fair. You know, like you've told yourself anything We don't want it.

And now you have to go back and say—

Let me call this out.

Desiree, let me call this out with you because you sound like me. Here's the deal. You know this about yourself. I know this about myself. If you went to the store and you and your husband bought a $10,000 car, you would get home and you'd immediately have regretful feelings. You know that. And if you go buy that $25,000 car, you're gonna see your bank balance and you're gonna have regretful feelings. So just knowing that no matter what I do, I'm gonna have the little feeling monster inside of me be like, you know, you should have, you know, you should have. Just know that's coming. Coming and then say, gotcha, I got it. I feel it. I'm not even gonna fight. I'm not even gonna fight it. And then I'm gonna go do the next right thing after that. And that's emotional maturity. I have this feeling and it's real, and then I'm gonna go do the next right thing and it's getting right back on the same plan. But yeah, all you people out there that think Ramsey followers live boring, awful lives, come to Ramsey Cruise, man. It gets wheels off.

I can tell you though, I, I relate to that. I put off buying a new car for the longest. I said in the other segment, my Cadillac SRX, it's worth $1,500. It's got over 200,000 miles on it. And I just would not buy myself a new car.

I know.

I talked to Sam. He was like, I struggle. I don't know, man. She won't.

I won't. And then finally I did. And I did. And I'm like, what was I waiting for?

I saw you roll up in your new car and I was like, whoa.

They see me rolling.

Dude, for real.

They hating. I'm just joking. But just, just do it.

I love it.

Enjoy when you can afford it.

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$25 forever requires customers to remain active on Boost Mobile Unlimited plan. Buying or selling your home is high stakes because one bad deal could cost you tens of thousands of dollars. You don't want to overpay for your next house or sell your current home for less than it's worth. That's why Ramsey Trusted connects you with vetted real estate agents who have the experience to guide you step by step to make smart decisions, not expensive mistakes. Connecting is easy. Just compare agent profiles, interview your top choices, and pick the person who's right for you. Find a local Ramsey Trusted agent who has your best interest at heart for free at ramseysolutions.com/agent, or click the link in the description if you are listening on YouTube. YouTube or podcast. Let's go out to Eric in Chattanooga, Tennessee. What's up, Eric?

Hey guys, thank you for taking my call.

You got it, brother. What's up?

Um, my question is, my wife is currently making about $75K a year, and our household take-home pay is between $150K and $175K a year. Um, we're actively saving to buy our first house, but these She got accepted into a program to go back to school, which would require us taking about $80K out in student loans. After her degree is done, she would be expected to triple her income. With our goal of buying a home, do you think taking $80K out in student loans is a smart decision, or would you recommend delaying school?

What's the program that's going to triple her salary? That she's going to be making $210K the day she graduates?

Uh, it's CRNA school. She's a nurse currently right now, an RN. Okay, so it'd be a nursing assistant for, uh, um, anything. Sorry, drawing a blank.

But, but there's a— there's data that shows that that's what her income will be right out of school?

Yes, ma'am.

Then I— then is— so how long is the—

yeah, I noticed CRNA is—

how long is program?

It's a 3-year program with a year of clinical in it, so she gets paid during that year, but it's very minimal what you make during that one year.

So, so is she going to be in school full-time, so she's going to lose her $75,000 a year salary while she's doing this, or is she going to work and go to school full-time?

No, she'll be in school full-time. Um, I'm making anywhere right now— I work in outage season with my job, So it's not completely guaranteed, but I make anywhere between $85,000 and $100,000, but it should go up to around $150,000 here soon. I just started.

So what I hear is, I hear this is a decision about what do we want to do the most? Because I think you can do a lot of this over time, but something's going to take the first seat, right? Um, right. You're either gonna say, right now we're focusing on the house and we're gonna, you know, try to buy this house. Or you're gonna say, you know what, we're putting the house to the side and right now we're gonna focus on her going to school. Because what's off the table, at least in my book, is debt. Uh, a student loan is 100% off the table here. So we have to figure out, are we gonna cash flow and save up $80,000 to go towards education, or are we gonna save up $80,000 to go towards a down payment on a house?

How much do you have saved for your house yet so far?

Well, we're 21 and 22. We just got married a few months ago. So we really just started our jobs not too long ago. So right now I only have $20K saved, but I already bought, well, we built a mini house with cash without paying. That's what we're living in right now, about 600 square feet. We don't have any debt. We don't even have credit scores because we've never owned a credit card.

I love that. So let me tell you this. I'm 25 years down the road. From you, more than 25 years, okay? And I understand what it would have been like talking to 21-year-old me. I was dumber than a box of hammers. You don't sound like that. You sound like you're way ahead of where I was at 21, okay? So I'm pleading with my 21-year-old self here through you. Is that cool?

Yes, sir.

If you and your wife will just make a scratch-and-claw commitment for 36 months months, 3 years, 36 months. Make one of those, uh, uh, construction paper chains that just has 36 months on it. And y'all will take that $20 grand you've got saved. Actually, you got emergency funds. I'd hang onto that and cash flow this school that's coming up with $26 grand, uh, a year. And that means you're gonna have to really contract how y'all live, but you gotta pay for tiny house. Y'all, you're just living small. At the age of 24, based on the numbers you gave me, y'all will be making $370 grand a year. You know what that will make you at 24?

Rich. Yes, sir.

You know what house you can buy? Whatever house you want. If you're 24 years old making $370,000 a year, you at $150,000 and her at $210,000 or $360,000. I'm sorry, $360,000. Grand a year. It's just gonna take you deciding at the, at this early part of your marriage. As for our household, we don't borrow money because we always wanna be in control of our lives. And I'd rather us have tuna fish sandwiches for dinner and us have eggs, like breakfast for dinner for 3 years than to ever be beholden to somebody else. And I've worked— I, I want there to be good CRNAs out there in the world. I've got young kids, right? I want there to— I want them to be out there in the world and licensed and credentialed. I want that. And I want them not owing anybody any money so that they can make the next right ethical choice and not be stuck between some machine because they got to pay their student loans off. You know what I'm saying?

Well, I guess my, my main question would be, and main concern— I completely understand what you're saying, and you know, my goal Goal was to never really take out a debt besides my mortgage, but here in high school is very competitive and she got in. I'm sure she can get in again, but I guess she's nervous about that too. Maybe the, that what if they don't take her back in next time we want to apply. I'll let you know our monthly take-home right now is about $13,000 and we spend about $3,000 a month, right?

So why can't we cash flow it?

Cash flow it.

Go.

If you're only spending— if you have $10K of margin every month, there's no reason that you can't cash flow this.

Yeah, go.

Okay.

Yeah, she shouldn't put it off. Plus you got $20K in the bank. You already have this— you already— you almost completely have the first year tuition in your bank account right now.

Yes.

And so that puts you basically a year up.

First year, I think we would possibly— because I mean, semester's coming up soon and we possibly have to pull out a small loan.

But no, I don't think—

I don't think Why do you think that?

Uh, well, let me think about this. Tuition, got $20K right now. We're making about $10K.

And all you do is put it on a semester payment plan and you pay them every month for over the course of that month. They're going to charge you an extra $50 for that and you cash flow it.

So put it on a payment plan?

Yeah, with the university. I'm not taking out a loan.

Yeah, I was just thinking about paying it up front for that. I understand what you're saying.

If you can pay it up front, that's great.

I don't think it can even work.

Oh no, you're doing a great job.

No, you're doing awesome, man. But here's the thing, if you take debt off the table, you'll figure it out is what I want to hear. I want you to hear me say, right? If that's not an option, you're like, okay, you got in, we're going to figure this out.

And if you had the, if you had the stack of cash to just pay for the whole semester, That's, that's fine. But what John was saying is making it more palatable so you can do it bite-size every month with this $10K of margin that you have every single month.

And by the way, you have the first semester's tuition's gonna be about $13,000 or $14,000.

Mm-hmm.

You have that in your account right now. Plus you'll have $6,000 left over. Write that first semester check and then y'all start living September, October, November, December. Your Christmas is gonna be different cuz y'all intentionally are sacrificing for a whole lifetime. Time of winning. They could never take her CRNA license away from her. This is a good degree, dude.

I understand.

But, but you're in a position to do it and never owe anybody anything, which means if she gets pregnant year 2 and she looks at you and says, I don't want to be a nurse anymore, you're like, that's cool, we don't owe anybody money.

The hard part about being 21 and 22 and having a lot of goals is you want to do them all at once.

Yeah.

And it's like if I'm not doing them all at once, you almost feel like you're failing or you're just not achieving.

Well, and also feel you can get that loan and then you don't have to change your lifestyle. And I want people, if you're going to make an $8,000 investment like they're doing, that I totally support, it's going to come at a cost. Have that cost be now, not for the rest of your life.

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That's betterhelp, H-E-L-P, .com/ramsey. All right, let's go out to the 806, Lubbock, Texas, and talk to Caleb. What's up, Cale?

Hey, how's it going? This is, yeah, this is Cale.

What's up, man? How we doing?

Uh, good, good, good.

So what's up?

Oh, sorry, I just thought that was my turn to come up with a question there. Yeah, um, I got a question for you. Um, I work in, in safety for, um, a big solar company, um, out here. Well, they're nationwide, but I just happen to be in Texas. Uh, and my wife is starting, um, uh, well, she's, she's in an internship for the same company, um, but she'll be starting a salary position here in probably about the next 3 months, 2 to 3 months here. And it'll bring our total income, which sounds crazy to say for belly's need now, but a little over $210K or $215K after all of it's said and done, not including bonuses. And I'm 22 and she just turned 21. And we don't actually enjoy our job at all. I actually don't mind my job per se. I think the circumstances for my job, I really enjoy, um, where I'm located, the travel, um, and everything like that. Um, but I definitely don't enjoy, um, um, where I'm at personally. And, and same thing with my wife, you know, she's going to be dealing with the same issues, issues that I have.

Um, and is it the people or the tasks?

I'd say it's people. Yeah, I definitely say it's the people. Um, it's not my favorite type of people and they're more blue-collar workers, you know, all at the end of the day., but, um, in solar, it's kind of a funny thing, but, uh, we're, you know, it's kind of like bougie construction, um, building these solar farms out here. Um, so not necessarily your, your typical blue-collar workers. Um, and I don't know if that's quite the environment for my wife long-term as well, which is maybe also factoring into my, you know, concern here.

Okay. But, but hold, hold on. Like, I, I've, I've lived out in your part of the country for half my life. Okay. So I know that area well, and I know there's some places where it's tough to be around some folks. And I know the, the aesthetic is pretty tough. And I know in the middle of the summer it's miserable, right? There's a lot of hot, it's hot, the wind is blowing, right? It's miserable out there, right?

Yes. Yes. 100%.

Okay. So I, I get that. And closer into city, it's a cool place to be, but also it comes with a lot of stuff. Here's what I want you to think about. You're 21 and 22. What would 3 years of y'all doing this hard job in your early 20s and living on like minimal, just deciding we're gonna, we're gonna, the first fuck couple years of our marriage, we're just gonna go all in hard on this deal. And yes, there's gonna be goofballs that we have to work with. It's gonna be not beautiful out here all the time. It's gonna be miserable when it gets hot in the summer. And we're gonna set up our entire family lineage age because we worked really hard when we were 22 and 23 and 24. I just think the whole follow your passion thing is one of the most nonsensical, moronic things. Um, I don't want people to be miserable and I never want someone to work in an unethical place, but there's a, I don't know, man. I look, I look back at 20-year-olds and I'm like, dude, this is the season to work like crazy to set yourself up.

I'm li— I, let me put it this way, brother. I'm living the life I have now, me and my family based on working like a maniac in my 20s and early 30s. You get what I'm saying?

Okay.

I would, I would agree with John. I think most of us in our 20s and even into our 30s did jobs that we knew were not the end game and we knew we didn't like very much. The only difference is we weren't making $200K. Yeah, $200K. We were making $18 an hour or $12 an hour, whatever.

Yeah.

Um, what baby step are you you guys on?

Um, I honestly have no idea. I, I don't know. I don't know. My parents actually met Dave Ramsey like 25 years ago, and they've always craved Dave Ramsey. And I did the stupid college or teenager thing and was like, oh, that's cool, but I'll never have to like really think about money.

Well, let's see if we can diagnose you.

Hold on, I don't know. How big is your truck?

Oh, I'm sitting in it right now. It's pretty big.

Is it a, is it a 250 or 250?

No, no, it's a, it's a '26 150.

Okay, a '26 150.

Yeah, that's nice. It's nice.

Oh my God, does it have payments?

Yes.

No, no, it doesn't have payments. This is actually— wow, this is from work.

Oh, it's a work truck.

I don't, I don't pay. I know it's, it's a personal vehicle and we have an option to buy it at the end of, end of it, and it usually ranges about $10,000 to $12,000, um, with one of our fleets that work with. And so you bought it for the— it's a pretty sweet deal. No, it'll be at the end of the—

okay, so what's this? What is so bad about your life?

Okay, so to throw a wrinkle in this, I probably should have stated this earlier. I'm living in Lubbock right now. We moved to Lubbock with my wife, but I work 2 hours away from Lubbock. Wow. So that to throw a wrinkle, we're not working in Lubbock. I drive, I leave at 4 in the morning.

Oh my gosh.

Every morning I don't get home till 5:00.

Okay, but when she gets done with her internship, are y'all gonna move out there?

No, no, there's nothing out here. I don't know if I could say names on the show, but I'm next to a really big ranch in West Texas. Yeah. Actually, the 8th largest ranch. I don't know if I wanna say names. Sure, yeah, yeah, yeah. Can't say names. So it's out here in the middle of nowhere. It's really just this ranch and 2 small towns of 120 people, and there's no houses, there's no anything, no RV spots. We looked into everything. We exhausted every option.

So you're in the car 4 hours a day?

Yes, sir. Yes, ma'am. Sorry, 4 hours a day.

Oh no.

Okay, but there—

yeah, that's pretty bad.

It is bad. That's, that's a brutal—

pretty bad.

It's a brutal commute. But I also know there's other towns in between there.

No, no, I legitimately— if you look at the map, you look in Dupree, Texas, there's, there's nothing. There's, there's Spur, which is about, yeah, 20, 30 minutes closer, but there's no houses for rent in there. So You're gonna be making $210,000.

Go write somebody a check for $78 grand for their home.

Well, let me ask this. Can you do the same work someplace else? That's why I asked you earlier, is it the people or is it the, the tasks? Are you able to do this type of work? Is it transferable?

Yes. Uh, with this company specifically, they're— we're almost nationwide. Um, they're here, I believe we're in like 26 states. My main issue is I just started this position where I'm at with all this, uh, money, which is why also I'm concerned because I've never been in charge of this much money. Yeah.

Um, you know, feel like you could ask to transfer?

No, not, not this early on because of where we're at specifically. It's such a hard, uh, position to get people to come over here, um, our hourly people and our salary people. So basically it's like you're locked in for the next 2 years here.

I won't lie, I won't lie, you have a tough— 4 hours a day in the vehicle and it's hot, that, that's very tough. Now, are you— you and your wife are doing this separate, or are you commuting together?

No, we commute together, so that's—

so at least you're together.

Yes. I also don't pay for gas. I don't want to make it seem like I'm paying for all this stuff. I don't— I have a gas card.

So let's get back to your baby step right quick. Let's get back to your baby step right quick because that, that'll help us know if you really need to do this. Do you have any consumer debt?

Is that like credit cards?

Yes, credit cards, student loan, cars.

I have no, no student loan. I have a car payment, which is going to sound so dumb, but I also have a Chevy called Colorado, which I got right before starting this job.

What do you owe on it?

I was going to need a truck. I owe $17K on it.

Okay. Anything else? Anything other than mortgage debt? Any— anything that you owe to anybody?

No, just, um, I think I have like $500 on a credit card and that's it.

Okay. And do you have any money saved that's not retirement money?

I have— without looking actually into it, my actual savings only has $800 in there, but I don't transfer anything over from my checking account when I get paid to my savings account, so I, I don't know off top of I would assume with what's in my checking that won't come out this month, you know, if that's how people do it, then it's probably close to $3,000 or $4,000.

Okay, here, before we hit the break, here's, here's what I think is necessary at the bare minimum. Before you can quit this job, you have to do 3 things for me. 4 things. Number 1, you have to have a budget. You have to budget your money, and you need to be budgeting your money for at least 3 months to see how much money you have and what it's going towards. So promise me that. Number 2, you need to pay off all of your debt. The $17,000, the $500,000. What if you sell it? I don't mind. If you pay it off, I really don't mind, but you need to get out of debt. And number 3, I want you to save up 6 months of expenses. And I'm going to add a 4th thing to the list. This is your 4th thing of homework. You and your wife need to have other jobs secured before you leave this job. And if you do those 4 things, I think that, that it's a smart way to exit. I would not come back to haunt you for that choice.

And I'll just tell you right now, I can't remember what I, what I was doing when I was 21, 22. And so if you think about 30-year-old you or 40-year-old you, that commute's going to be non-existent other than you and your wife got to spend a lot of time together. I still vote for 2 or 3 years. Of just sucking it up and making a jillion dollars. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm John Delony, joined by Jade Warshall. Let's go out to Savannah, Georgia— Savannah, Georgia— and talk to Robin. What's up, Robin?

Hey, how are y'all doing? Thanks for having me.

We're doing great. Thanks for calling in. What's going on?

All right, I am 45 and I want to go back to school to be a physician assistant, but the only school that offers it near me is private, um, and it's $136,000.

$30,000 per year for the entire program?

For the entire program.

Okay.

2-year program. And so I talked to my husband about it and he thinks, well, he literally said, "Call Dave. See what Dave thinks." But he doesn't think that it's responsible.

What's the difference in cost between a non-private institution? What's a non-private cost?

The non-private, I think, is like— well, I called one and they said that it was $40,000, and I'm not sure. I have to be per year because I looked up another school and it was the school I did my bachelor's in, and it was $40,000 per year. I mean, so $80,000.

The cost is all over the place. Yeah, usually it's about half.

Yeah.

60% to half, yeah.

Yeah, but the non-private school is a 2-hour drive from me. And I would have to redo all of my prereqs.

So, let's back out a little bit. Why PA? What about the medical profession do you wanna get into?

Well, I love the independence of PA versus nursing, but I'm kind of having a midlife crisis, like I said, and so one of the things that I've been kind of looking at is what makes life feel meaningful to me. And I'm looking back at like high school years, and it's always been when I went overseas, when I was involved in some sort of mission work. And so I've been thinking what would be meaningful to me in the next part of my life is if I have the opportunity to, to be hands-on with, um, third world country and, and make a difference in that way. Um, but also it would have to be something that I could do here as a career sustainably and enjoy working.

So this is going to be a strange question, a strange next question. What about this idea? Had your husband— did your husband's first response be, that's a— that's not a good idea, call Dave? Is it that— is it that he's seeing you struggling? Is it that he knows my wife faints every time she sees blood? Is it like— or is it we don't have the money? Like, what is it about that?

It's been $130,000, $140,000 on my next phase. Then that's $140,000 we don't have— for whatever else.

Yeah, but that's a foolish argument because you're going to make a bunch of money being a PA.

Yeah, and what is whatever else, right? What is whatever else?

Like retirement. We started a little bit late for retirement, um, so we only have probably— excuse me— about $600 saved for retirement.

You'll be fine.

Um, yeah, you're all gonna be fine.

So you think that it would be—

well, Here's the deal. You have these feelings. You're having a, what you, what you self-diagnosed as a midlife crisis. You wanna, you're having a crisis of meaning. Uh, like all that stuff's, all that stuff is important and it's awesome and it's good. Let's move that aside for a second. What you have in front of you is a math problem.

Mm-hmm.

Do you have $136,000 or over 2 years? Do you have 70 grand and 70 grand?

Um, yeah, I mean, and my mom just passed recently and she left like $80,000, so there's that, but we were going to, you know, give that to our son, give him a leg up. So that would be taking away from him.

I really think that I'm looking at this and I think it's important that people do, uh, to quote Ken, uh, do the work they're wired to do. And I think it's important that you have a career that gives you meaning. And some people find that later in life. I also think, uh, your 40s is when you really start to be like, okay, like I'm, this is who I am and this is what I'm doing and this is the contribution I'm making. And then when you get into your 50s, like that's when you're really just kicking it. Right. Um, yeah, I think going back to the retirement, uh, you have $600,000 there. If it's invested well, if it's making at least 10% in 7 years, it's gonna double and you're not gonna stop contributing it to it. You're going to keep contributing the 15%, right? No one is saying stop doing that, so you're going to be fine there. But you do have this money in front of you, and you do have options. Some of them may be uncomfortable, but you do have the non-private option. And if you did that, then you'd have the cash to cover it through this inheritance.

And nothing says that you can't continue to put some money away for your son. Um, I think there's a way to tick all the boxes here, but there is going to be some level of sacrifice if you choose to to do this. Whether it's, okay, we're not giving our son a lump sum of $80 grand like we thought, or I'm gonna have to be in the car for 4 hours a day, that's different than I thought, right? There is going to be some give and take on this, but I do think that it's worth it to pursue the thing that you know in your guts you're supposed to do. Now, if you don't know in your guts that you're supposed to do this, that's a different conversation.

Yeah, before I did anything anything, I would spend $3,500 and go as an assistant on a medical missions trip. 'Cause what used to give me life was mowing. I could spend all day mowing people's lawns, mowing my lawn. I love it. Now, man. So if I look back at 18, 20, 25-year-old me, I was like, dude, you know what used to gimme life? This, that used to be always my stock answer. If I won the lottery, no one would ever see me again and I'd have a huge lawn business. I would not do that. That anymore, right? Because it doesn't— it used to give me life. And when I think back on those, those days, I romanticize them. It's not real anymore. So before I did anything, I would spend the money and go spend 10 days doing medical missions as an assistant, handing a surgeon gauze and doing whatever I need to do in a third world country, and see, is this still what lights me up? And if it is, can you get that from coordinating medical missions? Can you get that from 50 other avenues before I go back to quasi- med school.

I love that.

Right? If you want to be a physician's assistant in the States day in and day out, deal with, um, managed care, deal with insurance companies and help people day in and day out. And then a couple of times a year go overseas. If that's who you want to be for the back half of your life, then yeah, dude, you'll have the cash. It's a worthy investment and you're not, you're not robbing Peter to pay Paul. All here and we're gonna give our son a leg up in other ways. Right.

Um, mm-hmm.

But man, there's, there seems to be a bunch of other steps before you're just like, you know what? I don't know. I don't know. Uh, let's put $140,000 in 2 years of my life down on the table. That just seems like a huge, a huge bet without knowing convincingly this is what I want to go do.

So step 1, let's give you Ken's book, Find the Work You're Wired to Do, and let's do the career assessment that's inside of that. And that's gonna help kind of put the pieces together. And then in the book, it's just a little short read, he walks you through what to do with the results. So I think that's thing one. Thing two is, if that's— if everything still points to kind of this field-ish, then do exactly what John said and test it out in multiple areas. There's nothing that stops you from testing this before you invest any money into it. And so I think those two things are your homework that must be done first, before you You sink even a diamond to this.

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 the time to explain your options so you never have to invest in anything you don't understand. Head to RamseySolutions.com/SmartVestor to get connected.

Ramsey Solutions is a paid, non-client promoter of participating pros. Learn more at RamseySolutions.com/SmartVestor. Our Why Refi— nice talk, John. Listen, the words get stuck in the old mind sometimes. The Why Refi question of the day. Our question of the day is brought to you by Why Refi. When past due private student loans keep pulling you backwards, it's hard to focus on what's ahead. Why Refi helps borrowers with low fixed rate refinancing options that fit your budget so you can focus on the future.

Again.

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All right. Today's question comes from Keith in Tennessee. He says, I found out today that my brick-and-mortar bank allows children with a joint account to get a debit card as young as 3 years old.

Wow.

I was mortified thinking of a preschooler walking around with a card in a world of marketing.

Okay.

At what age do you think it's appropriate to give a child a debit debit card. Uh, Keith, I think you're overthinking this. Um, I mean, I'm just saying, obviously we're not giving a 3-year-old. I think a fair time is when they get their first job because then they actually have a little bit of money to speak of. I think I got mine when I was 15 or 16 when I started working at Kroger bagging groceries, and, uh, my mom was on it. It had a check— it had a checking and a savings, you know, a debit card attached to it, checking and a things. And, um, I'm trying to think what else. I think there was— she, she could see the transactions I was doing, and it was just a great way to kind of like be connected on there. But yeah, I, I mean, what say you? 16, whenever they get their first job.

Yeah, I think when— yeah, when my son started working, um, yeah, we got— he has it online, so it's a till account. But yeah, so we can transfer money back and forth. But now that he's in school, when he goes on school trips and things, it's easier just to make sure he's got eating money and stuff that. But, um, yeah, if, if somebody was to get a debit card and hand it to a first grader, that's madness. Like, right? And there's no point.

No.

Or a second grader or whatever with the debit card, there's just no— there's no point to it. But, um, yeah, I'm with you. I think when, when, when kids are getting their first job—

yeah, you get your first job, then it teaches— I mean, you can do all the stuff together. It's like, okay, we go down to the bank together, we open up the account. Obviously, mom or your dad is, you know, listed on there just to be able to see what's going on. And then it's a great way you start teaching budgeting, you start teaching just that basic next steps in managing money, so.

I'm so old, Jade. My dad, I remember it was like a cool day we had, but he took me and got me my first savings account, but it had a checkbook attached to it.

Yeah.

But it's 'cause I had a mowing business and I think I was 10 or 11, but I had to ride my bike to the bank to deposit checks that I got from customers or to get cash cash out to do whatever me and my knuckleheaded friends want to do.

Isn't that so funny? I, George and I were talking about this on the previous show. Just checks in general is crazy work. The fact that it's a piece of paper that you just hand out to people that has your account and routing number on it.

Oh, well, now that, now that it can all be done electronically, it is, it is madness.

It's crazy. And the funny thing is there's this, uh, reel circulating on, on Instagrams and TikTok where it's, uh, I guess why. And they're like, if you can read what this says, you can have it. And you know when you write a check, it's like if you write a check for $3,000, $3,100.26, it says it's written out $3,000 and then it has 0 over 26 as the change. The kids don't know what that means. So no one can read the check. They're like, what is this? I don't know what it is.

I saw— no, it was a website about 2 or 3 years ago that said like how to write a check, and it was a website for young young adult men, learning how to shave like your granddad and how to shine your leather shoes. But it was like, how to write a check. And I was like, oh gosh, I'm old. Yeah. I still write 2 checks every month.

For what?

I deposit into an account for my kids. And I write a check and it's a strange, this is gonna sound ridiculous and I know this is nutty. It's a, I'll call it a spiritual discipline for me. I want to stop and pause and write this check that's going into an account for my kids that they don't know about.

Okay.

And it's a moment. And then I still to this day write my giving checks to my church on a check.

I can respect it.

And there's one guy that I hand them to and he's like, "Brother Davis, it's you." Yeah. He smiles and says, "Thanks, man." Or we'll put it in the box. But let me tell you why. I sometimes will hand it to, but usually I give those checks to one of my kids to tell 'em to go put it in the box.

So they know mom and dad.

So they know. See, "Oh my gosh, Mom, what are y'all doing?" Or Dad. And I can, I remember a couple weeks ago, I leaned over, my daughter looked at the check and I said, she goes, "Dad." And I said, "Remember, it's not our money." And she's like, "Oh yeah." You wanna know what, John?

I'm so glad you said that. And Kelly, I'm taking a detour here because the people need to hear this. You know, I'm so glad you said that because I ran into something very similar in my life. So I think the way that the world is so digitized, you, it's harder to show your kids the things that you're doing so they can learn from it because everything's on our phone. So if we're doing something on our phone, they don't necessarily know that that's what we're doing. So case in point, you writing the check, if you had just gone on your phone and did the little, you know, Apple Pay or Zelle, however they do it, they would have no idea that mom and dad are generous and this is a monthly rhythm or weekly rhythm that we have of generosity, right? So taking the time and doing it the manual way, same thing with like, I don't know, I'm just gonna go ahead and say it, like the Bible app on your phone. I'm like, you want to know what, let me get back out this paper one because my kids need to see me opening up these texts and seeing the text.

That's what my mom used to do. So it's like, well, let me see it.

Jade, even in my house, like over the last couple of years, my wife has started reading more and more on her phone. Um, and because she used to have a Kindle and now she can just get an ebook on her phone, I thought she was just texting and texting and texting all the time. Yeah, I was like, hey, who are you texting? And she's like, I'm reading a book. And that, I mean, it affected me even. Like, um, your kids and the people around you are just gonna see you staring at the screen.

Yeah.

And they're gonna make up what you're doing on that screen.

So get analog.

Yeah, I, I do. I, I still, I still order checks. I'm probably one of 10 people.

You want to know, recently I ordered checks, and the reason was because of this place right here. I forgotten one of the receipts I needed to turn in. And if you don't have the receipt, you gotta check to Ramsey every month. And they were like, you gotta write a check. I was like, a check?

Yep. I write a check to Ramsey every month because I always lose my receipts when I'm out on the road. Every time. Let's go to Minneapolis, Minnesota, and talk to Jane. Jane, we're right up against the clock, so jump right into your question.

Okay, thanks for the— thanks for taking my call, guys. Um, so I am looking for, uh, what Dave Ramsey calls —counsel.

You got it.

I have, I think it's an iceberg question, not an icebreaker, an iceberg question. So I'm 43 years old. I have $35,250 in debt. It is, that debt is exclusively what Dave also lovingly refers to as stupid tax. I have no mortgage. I paid off my home. I've got an 18-year-old about to start college, but she already has her associate's. I am wondering wondering, since I'm doing this out of order, what is the best way to pay this off? Do I continue to tackle this monthly, or do I just cash out some investments that some of it taps into a little bit of retirement? Or— I'm not sure exactly what the right path is. Um, so I'll pause there and let you guys talk, and then we can go on from there.

I just want to make sure I wrote down the amount of debt correct. Did you say $33,000 or $30,000? $35,250. $35,000. And you did say you, you're out of order, so you've got no mortgage. I think that's a great thing. Do you have any money saved, any cash money?

I— yep. Um, so my net worth, even with this $35,000, is a little over $700,000, but all of that's in retirement except for I do have some in a brokerage and I have some in a high-yield savings.

Okay, tell me what's in the high-yield savings. Um, I've got $12,000 there. Okay, and tell me what's in the brokerage?

Brokerage is $16,000.

Okay, I think there's your debt payoff money right there.

How much do you make every month? Okay. What's your monthly take-home?

Uh, a lot. So the reason that this is an iceberg question is because, um, job situation. I'm not sure how long I will have it. My daughter has been— I have been working over 80 hours or 90 hours a week for over a year. My daughter is tired of it. I'm tired of it. Um, and where I live currently, the market is not very good.

So all of this is reason to— all of this that you're saying is reason to get this under control and get this debt paid off. Because when you don't have payments, suddenly you have options, and you don't have to work jobs that you don't have to work, and you don't have to stay in situations that feel unsafe for you or unsustainable for you. So I would, I would reach over and I would pay off this debt, and then I would stack up 3 to 6 months of expenses in the meantime, and then if you have to transition jobs, you're in the perfect situation to do that.

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We're taking your calls live, 888-825-5225. Let's go out to Indianapolis and talk to Veronica. Hey Veronica, what's up?

Hi, how's it going guys? I'm good. Excellent.

Where do Doing great. How are you? I'm good.

So, um, I just had a question. So, um, my boyfriend and I, um, are looking to combine our finances, um, when we get married. Um, I am debt-free except for my home mortgage. My boyfriend makes a little over 6 figures, but he does have $50,000 in student loans, um, in addition to his car payments. Um, so I own my own home and he owns his own separate home. He thinks once we're married, we should tackle his loans together and wants to get my house put in both of our names. But I would like to keep my home, pay off my mortgage, and just kind of have him finish off paying off those loans before we get married. So how would you advise us to structure this?

Okay, I mean, it, it, he sounds like he wants to get married now.

Um, I'm thinking probably in the next like year, year and a half or so, like, we'll get engaged.

Well, let me put it this way: when you get married, your stuff and his stuff becomes y'all's stuff.

Yes, I'm thinking maybe like if we move in together, we would just be engaged and have like a long engagement, so then I would be able just to pay off my mortgage, and then he would live in the home but could pay off like utilities I think you guys are making it too, uh, complex.

I think we can make this really simple and clean. Do you want to hear what I'm thinking? Okay. I think the simplest, cleanest way to do this is until you're married, you have your things, your money, and your residence, and he has his things, his money, and his residence. And then when you guys get married, wherever you guys are at the point of marriage, everything combines. So if your home is paid off by then, it's our house. And yeah, you could add him to the deed.

You're, you know, I think you should add him to the deed.

It's y'all's stuff. And even if you're not, it's not finished paid off. Yeah. You still add him to the deed because it's yours and it's ours together. And then if he still has a little bit of debt left, that's ours together and we'll combine our money and pay, pay it off together. But I think it starts getting complex. Complex when you start doing unit things but you're not a unit.

So like, if we were to be engaged, would you guys advise that he move into my home? Because at that point we're not married, we're just about to get married. And then just have him aggressively try to pay off those loans?

I would engage— I wouldn't, because engagement is I intend to be a unit, but I'm still not a unit yet. So let the intention. Let the intention, period, play itself out because there's a reason that it's there. Let it play itself out until it's— the intention is actually realized and, oh, we are a unit. And then, because if for some reason, if for some strange reason, because it happens every day and I would never, you know, project that onto you, but if some reason, uh, one of three things that could take place. Number one is you start living together, you decide we don't really like each other that much, and you've already got everything tangled up mingled up. And then it's like, "Oh man, that sucks." And then number 2, what happens all the time is it kind of just gets comfortable. And before you know it, it's like, "I thought we were getting married." But somebody just gets comfortable with this intention to marry situation and they just want to stay there. And then you end up calling me 5 years later wondering, "How do I get this guy to budge?" Or vice versa, maybe he calls and says, "How do I get this girl to budge?" And you've already commingled everything up together.

And it's just a kind of a web there. Or the third thing happens, which is somebody starts to be codependent on the other, and it's like, I don't even know that I really want to be with this person, but we're all commingled together, and my income is based on hers, and she's already paid off some of my debt, so I kind of feel like I owe it to her. It gets messy. You're the expert on this, Jonathan.

The question I— yeah, all three of those things are, are excellent. And I'll tell you, the— I just finished a 2-year marriage project that ended up up in a, in a marriage book that I, I hadn't superintended to write, but it, it, I'm proud of it and it'll be coming out next year. One of the data points that surprised me the most was the everything from life satisfaction to net worth, to amount of sex, to health outcomes, even between the difference between cohabitating couples and married couples. And my wife and I have, we've talked, I've talked openly. We've been— today's our 24th anniversary. We've been ride or die for almost a quarter century. That's today. But there's— congrats! Thank you. But there's been seasons where we're only married because of what a pain it would have been to go to the courthouse and unwind everything. I know, that's right. And so here's why that's important, that even people will tell you in Hollywood, well, that means the relationship's over. No, that means there was a hurdle that we both put up to protect us from ourselves sometimes. And that's a a good thing, right? So my bigger concern for you is if you're not ready for your stuff to be y'all's stuff, then just be his girlfriend and pause the marriage talk for a while.

Okay? Because if your identity as a homeowner is more important to you than your identity as a wife and a co-creator of an amazing future with another person where y'all are creating a singular universe a future for y'all, that's gonna— it's gonna have two independent people in it merging over time. But if it's— if your identity is more, this is— I'm a homeowner, I'm a— I'm, I'm a boss, I do my thing, that's awesome. You get to pick that. But don't try to do that and get married too, because it's going to be you getting in a boat that is your marriage, but you're gonna have one foot in your other life, and it's a recipe for getting yourself hurt, for getting him hurt, and y'all ending up in drifting into two different oceans, right?

So are you saying like if we were to get engaged to still live apart?

I would, because you don't have the legal protection to unwind the relationship if something goes sideways. And again, like Jade said, I don't want to wish that on you, but Jade and I only have jobs because people's plans don't work out.

Yeah, and I'd also ask, what's the rush? Why, why do you feel that you, you need to do that so quickly?

I guess like I just wanted to be completely in debt before we like intertwine our lives together, just to put us in like the best financial position to hopefully buy like a future home together in cash. I mean, we both have homes of our own that, um, I know we're gonna appraise. And so I guess like the bigger picture would be to, um, since I am on Baby Step 6, to be able to buy like my next home together with him in cash.

Okay, but here's all that matters. That means let's get married tomorrow and I'm gonna help you, and together we're gonna pay your stupid student loans off so fast. And then we're both going to sell our homes and buy this other house. Like, or I'm just going to sit here and wait on you to pay off your $50,000, delaying like this future house that we want to buy together. The end date may still be the same, or you may be able to accelerate it if y'all get married and work together. But it almost sounds like you want to— like, you did this, and so you clean up your mess, and when your mess is cleaned up, then you can join me. Is that— is that— is that part of it?

If it is, it's okay to say that.

I mean, I just feel like I worked like really hard to where, you know, I'm at financially. You know, it took me a really long time to be able to get to Baby Step 6. I put 25% down on home. Um, and so, um, you know, I've been picking up extra days at work, but I also know how hard he works. He also picks up extra days, weekends. Um, so you can look at it—

you can look at it two ways. You can look at it, I did all of this, and so until you bring yourself up to my level, I'm gonna— I'm, I'm not gonna engage in this future thinking with you and this future action steps with you. Or you can say, thank God I worked so hard so that when we join, all we have to do is get over this $50,000 hurdle together and then we are off to the races. Okay. If you view yourself in, um, like a lifeguard stand at a swimming pool, looking down at him swimming and thinking, when you climb up here, then you'll be up here with me. I'll tell you right now, your, your relationship isn't as on the same footing. But if you, if you climb down off that stand and you pull him out of the water and y'all come up together, man, y'all can accomplish anything.

And if you take that same way of thinking and you transfer it out of money into other areas of life, where spiritually when they get where I am, or, you know, relationally where they get where I am, you start to realize that it's not really a wonderful way of thinking.

It's two imperfect people trying their best to create a pretty amazing life together.

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

Today's scripture of the day is Luke 12:15. And he went on to say to them all, watch out and guard yourselves from every kind of greed, because because your true life is not made up of the things you own, no matter how rich you may be. Nathan W. Morris says, edit your life ruthlessly and frequently. It's your masterpiece after all.

Love that.

Let's go out to Dallas, Texas and talk to Ross. Uh, Ross, I need to let you in here. There we go. What's up, Ross?

Hey, how you guys doing? Doing great, brother. Meet you guys. Good to hear you guys. Yeah, great. Thank you. Um, I have a quick question about, um, a Roth IRA, like an IRA account. I'm, I'm a freelance musician and I, uh, I'm poised to make like a decent amount of money for the first time after a few years of not making a ton. And I'm just trying to set myself up for retirement. Um, and I'm not, I'm kind of confused on like which type of, uh, retirement account to open, uh, Roth IRA versus traditional.

I love that you're asking that question. Is it— the first thing I want to find out is if it's time for you to start investing, if it makes sense for you to start that path yet, because there's kind of a good, better, and best way to look at this. And so we found over time that the best time to start investing so that, that money can actually stay invested and you don't end up pulling it out for an emergency or anything like that is after you've paid off your debt and after you've stacked up 3 to 6 months of expenses. Expenses.

Have you done those things? We are currently paying off, uh, student loan debt and a little bit of credit card debt.

Okay, how much do you have left to go?

Um, we got about $38,000 in student loan debt, about $2,000 or $3,000 I think in credit card debt.

Okay, $2,000 to $3,000. And how old are you?

I started doing the Baby Steps recently. Oh good. I just turned 31.

Okay, great. So what I would advise, and I'm going to tell you the answer to your question, but I would I would advise for you to pay off the student loans and the credit cards, uh, stack them smallest to largest and, and pay minimums on all of it. But put any and all extra money that you have to that smallest. It's probably a credit card right now unless you have the student loans broken up into smaller pieces. But whatever the smallest debt is, that's the one that you attack first. And the reason for that is it's going to allow you to invest an amount that really is going to move the needle for you. 'Cause ideally we want you investing 15% of your gross income. That's where we want you. And if you can do that, that's the magic number that we have found that over time, if you do that, it really is going to build wealth for you and your family, and it's going to set you up for retirement in a major way. So that's kind of the underlying thing there. And then the second part of that is now we want you to save up 3 to 6 months of expenses because that's your emergency fund.

That's kind of your insurance policy against debt in the future. If you've got— let's spitball. What would you say is 6 months of expenses for you?

Probably about $12,000.

So if you had $12,000 just sitting in a bank, I mean, what would you really need to go into debt for? Right. You know, the car could break down. You could do a roof repair. You could do a new AC unit.

It depends on what kind of guitar he needs or what kind of music What kind of musician are you?

I'm a classical musician.

Oh, see, like, he's got like an upright bass. Yeah, or violin. Like, those violins can get real, real expensive.

Yeah. What do you play, by the way?

Uh, I play the trombone. Love that.

How much is like a good OG trombone cost?

Uh, mine cost about 4 grand. Okay, okay.

Yeah, so you gotta not enough money. $12,000 really is like— if you're saying that that's 4, uh, 6 months of expenses, that's super good. So now you have that money there. If anything pops up, you don't need to use a credit card, you don't need to go back into debt. So that's kind of your buffer against going back into debt. And then from there on, yeah, you're investing 15% of your gross. So whenever you get that check, 15% of the gross amount goes straight over into a Roth IRA. And I would suggest Roth because that's one where we're paying the taxes upfront. That's really one of the biggest differences. Traditional, uh, you pay the tax when you pull the money out in retirement, and Roth, you pay the taxes upfront so that later in retirement you don't have to pay the taxes, and the money is also growing tax-free, which is so important not just for you but for your heirs. Because the goal is you're going to keep investing, That money's going to keep stacking up, and at some point you're going to leave this earth, and that money, whatever was left, is going to transfer to your heirs.

And guess what? They're not going to have to pay taxes on it either, because it's already been— the bill's already been footed. See what I'm saying? Yeah, totally. So that's kind of the nuts and bolts on it.

Can I celebrate you as a musician thinking about this?

Yeah, so good.

I hang out with a lot of musicians, and I've never had the IRA conversation before. So good on you, brother. Uh-huh. It's— yeah, very, very good. That's impressive. I You know what, it's 'cause I hang out with punk rock musicians and he's a classical musician. So maybe that, maybe that's it.

A little more, I don't know, more thoughtful.

I don't know. Hey, listen, the right insurance acts as a shield around your loved ones and your wallet if and when disaster strikes. Our free insurance coverage checkup helps you figure out if you have the right coverage by giving you a personalized action plan with clear next steps. Go to ramseysolution.com/checkup to take the coverage checkup and find out if you have the protection you need. Let's go out to Louisville, Kentucky and take one more call. Let's talk to Andrew. Hey Andrew, what's up?

Hey guys, thanks for taking my call. You got it, brother. What's going on? I recently graduated, um, from nurse anesthesia school and this is, um, you know, the end of an 11-year process for me. Um, and now I'm at the point where I'm trying to put away as much money as possible, um, and also, you know, get my mortgage payment down. I'm very lucky to have no student loans, and I'm really trying to see if I'm being a little too aggressive with it because I've been picking up a lot of overtime to try to make this, um, you know, my, my current plan work.

How old are you? I'm 29. 29. Are you married? Uh, no, I'm not. So you're just cruising and crushing all by yourself? Yep, cruising and crushing.

It's been a good 6 months since I got out of school.

Congrats on that degree. Really That's really good. Well, thank you. And how'd you do it with no student loans?

Uh, I was very, very fortunate. Um, my mom and dad helped with my, uh, bachelor degree and my master degree. Uh, and I was a travel nurse for, um, 2 years, which allowed me to save up enough to pay for my graduate or my, my doctorate program. All right. So hold on.

You, I want you to change your story up a little bit. Okay. And then we'll get to the answer of your question. Yes, you were fortunate and you had some help along the way. But unlike me, when I got my first big boy job, you made a choice and that was to save money cuz you had a different vision for your life down the road and it allowed you to cash flow a really critically important, um, credentialing and education that now has changed your future in a pretty dramatic way. So yes, you get, you were pretty fortunate and you got some support, but you also, you, you made some pretty important choices on your own and I'm proud of you for that. I do. That's good. So, well, thank you.

Thank you. So how aggressive are you? I mean, you, you're like, am I being, am I, am I going too ham? Let's decide. How much are you putting aside like percentage-wise for retirement and how much are you saving towards your mortgage?

So my mortgage currently, it's a 5.4 or 5.49%. It's a $3,100 a month mortgage and I'm paying $6,100 every month towards that. Okay. Um, through retirement funds, uh, my employer contributes, uh, 8.5% of my monthly take-home pay. So that ends up being around $2,500 that they contribute. I also max out my 403 and my 457, so that is, uh, right around $2,500 each. And then through a brokerage account, I'm putting a little over $1,000. So total, right around $8,500 a month I'm putting away.

What percentage of your take-home is that?

Um, or of your gross?

Uh, my take-home, uh, if I don't work any overtime, would be $17,000 a month. Um, with the overtime I've been working, uh, that can be anywhere from $25,000 to $30,000 a month. Okay, so here's what I'm putting away— a good amount. You are.

Uh, here's what I would suggest. I would suggest capping at— for the time being, I would suggest bringing your, uh, investing to 15%. 15%. So 15% of your gross, okay? Not of your take home, 15% of your gross. And that's a great place to start. You're gonna build plenty of wealth like that. And then whatever's left, if you wanna be aggressive about paying off your mortgage, you can do that. Now the question is how aggressive, because we do want you to enjoy life a little bit. Go on some dates, dude. You've just spent 11 years in school.

Go to some games, go have some fun, get some friends, go bowling or trivia nights and stuff.

You're 29. You have so much time. I mean, this is the time.

Here's a question I want you to ask, okay? We're gonna run out of time here. What kind of life do you wanna have? And you've worked so hard to give yourself tons of options. I want you to have some joy in your life. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. This has been the Ramsey Show. Thanks for joining us.