Transcript of When You Don't Have Payments, You Have More Options

Brought to you by the EveryDollar app. Start budgeting for free today. 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. Rachel Cruz, Ramsey personality, number one bestselling author, co-host of Smart Money Happy Hour. My daughter is my co-host today. So Rachel, we did that post, that silly thing you wanted to do with acting like we're doing a Netflix documentary or something.

Oh yeah, we haven't talked about that.

And the thing's gone bananas.

Whatever.

You were right, it's a big, big deal. Apparently it's a trend to sit down in the chair and act like you're doing a documentary, right?

Yeah, exactly.

So we did it and it went on Instagram, it went crazy.

Yeah, is it?

Well, like 1.3 million.

And so yeah, they brought like a million or so.

Yeah, yeah, over that.

Crazy. Yeah. So, the guys, some of them were saying they had read the comments and a huge number of people didn't realize you were my daughter. Yes, there was a lot of like, well, today, I would say here's all the things I knew. A huge number of people don't know it's an ad and a trend.

Yes.

And they actually think there's going to be a Netflix documentary about being Dave Ramsey's daughter.

On Facebook.

Eh, eh, eh, there's not.

On Facebook specifically, a lot of people are like, oh no, I just canceled my Netflix membership. I'll miss, you know, miss it. And we had to go in and calm him down and be like, it's a joke. It was just a trend on Instagram. Just a trend.

And I made Dave do it.

I made Dave do it. Sometimes he, you know, he's the anti-social media guy. He's our boomer. Our resident boomer who we love.

But we will—

but we get to rope him in sometimes.

Go boomers.

Boomers sooner.

To some of the trends. And sometimes he says yes, sometimes he says no. But it was a good one. Yeah, it was fun.

Well, that one was fairly innocuous. It wasn't like, you know, you have to be a clown or something to do it.

No.

We did one. Years ago, you remember the, uh, when Twitter was Twitter back in the day? Yeah, the, uh, was it the Ice Water Challenge or whatever?

You dump buckets of water on people for, um, ALS.

For ALS. Yes. You, uh, dump— what was it called?

It was Ice Bucket Challenge, something like that.

You dump buckets of ice on people and then you would play them doing it on—

yes.

And so we ended up having the fire department come over to the front of our building and our whole team got dumped.

Yeah, yeah, yeah.

Remember, they rained on us with stuff. That was a pretty good—

when you donate to—

that's one—

that's—

that was a trend that I participated in.

That was fair.

That was only 30 years ago.

I was gonna say that was like 15 years ago, but that's fine. Roping you in, Dave. We're roping you in.

That's it. Yeah, I'm gonna make me relevant yet. Nisi is in Minneapolis. Hi, Nisi, how are you?

I'm doing well, how are you?

Better than I deserve. What's up?

Okay, I'm calling because I am in a position where I don't have to pay any household costs as far as rent goes, and I'm just wondering if I should use my income in this time that I have living rent-free to use this time to build my business or use this time to get another job and pay off debt as fast as possible.

How much debt do you have?

About $108,000.

What does that consist of?

Um, student loans, stuff in collections, and a tax bill.

Okay.

Why are— where are you living? How are you living without rent?

Um, so I converted my SUV into a tiny camper, and I've been living out of my vehicle to expedite this process. Um, and in the process, when you start working on your debt, everything starts coming into full swing. And then next thing you know, I'm getting garnished. My wages are getting garnished. So now I'm thinking maybe I should just put building the business on hold and get another job. But also I don't have any rent to pay. So it's kind of like, which, which road do I take?

Who's garnishing your wages?

Um, the state. For taxes. Okay.

For a business that you own?

No, it's not for a business.

So it's like income tax?

Okay. Yeah.

And how much in tax do you owe the state?

Um, I owe about $20,000 for, uh, state and about $12,000 for federal.

Okay. And the state is what's— who's garnishing you? The federal's not?

That's correct.

Okay.

All right.

And what do you make at your current job?

Um, about $83,000 a year.

And that's being garnished?

Yes.

Okay.

So how quick can you come up with $20,000 making $83,000 and living in your car? Pretty quick. Pretty quick.

Yeah.

I mean, like quickly and get rid of the garnishment by paying it off.

The thing is I've been attacking my car loan debt—

No, no, no, you need to take care of the tax debt. And when you're doing your Debt Snowball, you put IRS and income tax for the state at the top of the list because of what you're experiencing. And so we're going to get rid of this state debt as soon as possible. So $83,000, so $7,000 a month So you're coming home with $5,000 or $6,000 a month and you've got very little—

I'm coming, I'm down to like about $35,000 or $3,500 because of the garnishment. Yeah.

How much are they taking?

Um, it's about $276.

$276 a week. Oh, okay. $1,000 a month. Okay, well, in 20 months that'll be gone if you don't do anything, but we need to do something and get rid of it as soon as possible. So the, the question is, do I work a side job or a side business?

The question is, do I work a side job or continue letting them garnish me, continue paying off my car, and then use this time to start my business as well?

No, you don't start a business right now. No, you need to work as many hours as you can work getting paid money quickly, as much money as you can make morally. And you start with this tax debt and clear it first before you clear the car, and then you clear the, uh, then you clear the IRS, and then you work your debt snowball from there. And when you get, um, back on your feet financially and you've got the IRS and the state off of you, and you've got a place to live, then you get a place to live. Live? Yeah, yeah, you've been— you were very nonchalant about the fact that you're living in your car, but I don't want you there for long.

No, yeah, it's not a long-term plan. I definitely plan on saving for down payment for a house.

You need to go rent one bedroom cheap apartment.

I'll rent after my car so Yeah, and I would want to be out of that. I mean, I would want you out of that situation in a couple of months. Like, if you can go get—

we don't need to go into Minneapolis in the winter, right? You need in the back of the SUV. So I want you to clear this debt as soon as possible, working extra, and throw $3,000, $4,000, $5,000 a month because all you do is work at this, at this state debt. And then, then go after the IRS and then get you— and somewhere in there, get you an apartment. Yeah. And get out of the car. And, um, yeah, because if they're making $83,000 a year, you can live in an apartment and you can clear this debt and work side jobs.

Well, and you have $3,500 left. So if you threw an extra $2,000, lived on $1,500 with food and the car payment, right? Um, and then worked extra, you could technically put $5,000 away per month.

Yeah, and that'd be 4 months, you'd be done. Yep, that's the direction.

I'm sorry, Niecy.

Oh wow, you're after it, kiddo. Get after it. I love it. I appreciate your willingness to sacrifice like this, but let's have a plan so we— that this is definitely in our past, not in our present anymore.

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Jacob is in Canada. Hi Jacob, welcome to the Ramsey Show.

Hi guys, thank you so much for taking my call. I'm very appreciative. Sure.

What's up?

Um, so my question was, should I let my fiancée's family move into our newly purchased home even though she's been manipulative her whole life? Her, her, uh, the family, her mom.

Her mom's been manipulative her whole life? Is that what you said? Yeah.

Yes.

So you're not a fan of this?

No, I love my fiancée dearly.

Yes.

And does she— I see how much it just affects her.

And does she recognize that?

Yes, she does.

She does recognize it. And I think for her right now, it's just kind of grieving that we might lose her family, like we might have to draw a boundary to a point where we don't really see them.

If your family is only going to have relationship with you because of what they can get from you, they've already abandoned you.

Yeah, which, you know, I try to let my fiancée know, and it's just—

we're getting to a point where if you have to pay for a relationship, it's called prostitution.

Okay.

Yeah.

Yep.

That's a good point. Um, and so you guys are saying then if it does get to a point where, you know, they just got a notice in the mail that they're going to be kicked out tomorrow.

You didn't do that.

And yeah, no, I know it's been their decisions. They've been kind of struggling and I feel like they won't take any help.

Yeah. They don't work much.

Yeah.

Yeah.

Um, so you would recommend then just, you know, set the boundary and they can react however they want to react.

And you can't control their reaction, uh, you can predict it.

Yeah.

And Jacob, they've come to you all, they've said, we're, we're good, can we, can we move in?

Like, they've, they, they haven't, but we're like 99% sure it's going to come. They got the letter, they've been talking about it. She's been making jokes like, oh, we could just stay in your backyard. You know, I'm not really funny, but tomorrow's the day.

Well, I don't think then a boundary has to be set until the question is asked.

So I wouldn't advance a boundary on that. And just say, you know, thanks for asking. We're going to be cheering for you. We love you. We'll try to do some other stuff to coach you and help you, but moving in with us really isn't something we're able to do. I'm sorry.

Okay.

And by the way, when you're setting the boundary, the fewer words that you use, the more powerful it is. Okay, don't go into a lengthy explanation about family dysfunction or anything else. Just go, you know, we talked about this and we're just not able to do it. I'm so sorry, but we love you. Yeah, we're coaching, we're cheering for you. We want you to win. And do you got— do you have any money? Are you doing well financially?

We're doing pretty well financially. Like right now, we're in that— we're about to finish up the renos. We'll be a little low on cash, but we both have jobs, you know, we're good at budgeting.

So you don't have any cash to like give them $1,000 to help them with the deposit on the next place or something like that?

No, no, I would not be able to help her with first in or last out or anything like that.

Okay, that's what I was asking. All right. Yeah. And Jacob, buying a house with someone you're not married to is really a dumb idea. You guys should get married yesterday.

I would agree. We're getting—

don't argue with me, just go get married.

Can I give you one reason? You can totally shut me down.

Yes, yes, you can.

The re—

we're getting married in September. The venue's all booked. And the reason we went with the house earlier than we would have liked to is because it was a private sale. My cousin had owned the house previously. It was a good deal. That was kind of the idea behind that, but I agree.

Except you don't agree, but yeah. Okay.

Hey, at least they have a venue and a date.

Yeah, that's good. September will be here in a month.

Yeah, we're moving. We're moving that way.

The reason I bring that up too is it does change the discussion too. If it's your mother-in-law versus your fiancée's mother, that's a, that's a little, little change there. My girlfriend who lives with me, who I'm planning to marry, parents have trouble versus who I am, is different than my in-laws have trouble.

Yeah.

—well, different thing. It is, but also the result will be the same.

The answer is the same, but how you think about it is different. So, you know, in other words, if you were married, I would suggest that you don't answer the question when it comes—that she answers the question. Because if you tell her mother no, you're going to be the bad guy forever and ever. The evil man that stole her daughter and that is selfish and won't share everything with our dysfunctional family. But she needs to handle her blood that's crazy. And she does anyway, probably. But if I'm the boyfriend, I'm just gonna be like, what do I care if you're mad? Just be mad. You know, I'm a husband. I'm a little more worried about the long-term relationship aspects. Sure, sure. And I know we're planning to be a husband next week, but we're not a husband yet. So yeah.

—And that's the hard— that's one of the hardest parts of the money dysfunction with family. And especially, we're seeing more and more grown kids with their aging parents, you know what I mean? And it is a— that's such a hard place to be, that if you have the relation— the relational equity and the means to be able to help, and you choose to, that's beautiful and wonderful if that's what you want, you know. But this idea that I have to, that it's now my responsibility to take care of them when they have not been responsible adults. We're seeing that, I feel like, more and more.

Oh, we see it all the time. And, you know, again, boundaries are a decision. But here's the thing. You can— Henry Cloud talks about that in the famous book that is his bestselling book of all of his bestsellers called Boundaries. And but if you set a boundary with someone that doesn't like boundaries, please expect them to be pissed. 100% chance they're not gonna like it. Because, you know, you don't have to be mean, but I mean, 100— if they— they don't like the word no because they feel entitled. Mm-hmm. They feel like you owe them something because of blood, that you have to live there. I'm going to live in your backyard. Hey, no, you're not either. Not funny. I agree with him. Not funny. Throwing that out there.

That was pretty funny. Not funny.

Not funny. Not Funny. I like it.

Trying to be funny, but not funny.

Jake is in Pensacola. Hey Jake, what's up?

Hey guys, thanks for having me on. How are you doing?

Better than I deserve. How can I help?

Um, so my wife and I just recently started saving for her to go to PA school and, um, that's about 3 years out from now. Um, and what we've been doing is stacking cash into a money market account. Mm-hmm. And I want to know if we're doing the right thing by doing that.

Yeah, that or high-yield savings is fine.

What's your rate on it? Yeah, uh, it's 3%. That's, uh, what I found through Fidelity. Okay.

Yeah, you might do a little better than that with, um, Fairwinds Credit Union. You might check their, uh, their high-yield savings. It might be a little better, but it's not, it's not going to be like 5% better or something. So here's the thing, how much are we going to save total in the next 4 years for this?

I want to save, uh, we both want to save around $90,000. That's a little bit overshooting for the nearest school, but I just don't know if our expenses are going to be that much higher. Gotcha.

Gotcha. So the reasons that she will have $90,000 and get to go to school without debt is because you put $90,000 in the account, not because of the rate of return.

Okay, yes sir.

Because 3% on $50,000, the middle range of this, which would be like 2 years before you get there, okay, so 3% of that is $1,500. $1,500 does not mean she gets to go to school. In other words, if you got 0%, it'd be real close to getting 3.

I, I see what you're saying. That does make sense.

Yeah, it's not— it's mathematical, not the reason.

It's too short of a time frame to probably put in the market.

If you wanted to put some of it in a growth stock mutual fund and maybe an S&P 500 or something, you could, but it could go down. That portion could go down. But again, if $50,000 was in there and it went down 10%, which would be unheard of, very rare, then you would have lost $5,000, and that won't keep her from going to school. Yeah, so the investment vehicle is not going to make her go to school or keep her from going to school unless you gamble it 100% on something stupid like crypto or a hand of poker or something dumb like that, or DraftKings, you know, which we're not discussing any of those things without laughing.

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What's up? Hi, thank you for taking my call, and I have lots of respect for you.

Thank you so much. Thank you.

Um, so my question to you is, um, I have a real estate property. It's a townhouse that I bought a few years ago. I paid cash, so there's no mortgage on it. I have credit card debt of $50,000 and a student loan of $40,000. So the, the, um, the real estate is worth about $200 grand. So my question to you is, should I sell that property for $200,000 and then use that to pay my credit card and my student loan. What's your household income? Um, my salary is $70,000, but I rent my— a couple of the rooms in my house, so it brings me up to like $110,000.

Including the rent on the townhouse? Uh-huh. Okay. All right, so you make $110,000, you owe $90,000, and you have this $200,000 paid-for investment. Correct. Okay, number one, I love the investment. I think it's great, and you like it. I can tell by the way you talk about it.

I do.

You don't want to sell it, okay? No. So the trade-off is that you're gonna have to live on beans and rice, rice and beans, no vacations, no eating out, and do anything you can to earn some extra money. You're already doing a lot of things to earn extra money. But anything you can do to get these debts knocked out fairly quickly to make keeping the investment make sense. If you're gonna be 10 years wandering through this debt, it doesn't make sense. You need to sell it. But if you're gonna say, I'm gonna knock this out, $30,000 a year and be done in 3 years, or $45,000 a year and be done in 2 years, which would be like $4,000 a month or $3,000 a month.

Okay. Could you do that? Yeah. I, yeah, I should be able to. Yeah.

If you do that, then I'd probably try to hang onto it because it sounds like a good piece of property.

Yeah. I get $1,750 per month.

That's a good return on $200K. That's good. That's a good cash-on-cash return. Good. I'm doing bookkeeping on the side too.

So I didn't even count that salary that— Okay.

So what's the most you could throw at this debt per month right now? If you just really tighten down the budget.

If you're telling me that I can do $3,000 a month, then I'm going to do that.

Well, I'm just asking, have you looked at your budget?

I have. I mean that other than my credit cards, that's it. I have no car payment. I have nothing else. My mortgage, where I live, that's the only thing, which is $2,000 a month.

Yeah, so I'm saying when you get on the— get on EveryDollar and download it tonight and lay it out. You're a bookkeeper, you're smart. I can tell by talking to you that you know your numbers. And so what we're looking for is $3,000 to $4,000 a month. And if you can find that and commit to doing that, then keeping the investment makes sense because you're going to be done in either— $4,000 is done in 2 years, $3,000 is done in 3 years. Okay. See, 36 times 3 is going to knock your $90,000 out, or 4 times, um, $12,000 is $48,000 a year, and that's $90,000 in 2 years. Okay. Okay. So I've been doing the snowfall effect.

Yeah, I would do that. So I've been—

I'll do that and throw it at this, but you've just got the 2 debts, right?

Yeah. Yeah. My credit card and my loan, my student loan.

Yeah, and so knock the credit card— the credit card's a smaller one, right?

Well, there's different credit cards.

Okay, so yeah, knock out— list the credit cards out smallest to largest and attack them in that order. And that's going to put the student loan at the bottom, which actually ends up mathematically correct as well. So that's good. Got that going for us. But yeah, I think you're amazing and I think you can do this. But the answer to your question is it does not make sense to keep the investment property and drag this debt out a long, long time. Time. It does make sense if you like the investment property and want to sacrifice and do $3,000 to $4,000 a month on this debt and be done in anywhere from 2 to 3 years and keep the investment property. That does make sense.

But you would tell someone if they had $200,000 in an index fund to cash it out, cash out part of it to pay off the debt?

I would, but that's a lot easier transaction than real estate and less expensive transaction. And this is a known— this piece of real estate's a known factor. Of course, that's a known factor too. But yeah, but that's very liquid is what I'm saying. Yeah, you just gotta, you just gotta push one button and that money shows up in your account. Right. With real estate, you got to sell it, you're going to pay brokerage fees, and then later you're going to reinvest, you're going to pay a bunch of other fees. And so there's a lot of gyration, a lot of gyration that goes on.

And the point is too that she enjoys it, because we do talk to some people and they have an extra property and it's a headache and they don't enjoy it. So you're like, yeah, if you want to take $200, throw $100 at your debt, take the other $100, stick it in an index fund and just let it ride. And, you know, be more of that passive investor.

Yeah, go that direction. Exactly.

But if you love real estate and that's part of how you want your long-term play, keeping that. Good point.

Brett's in Kansas City. Hey Brett. Hey Dave, how are you? Good, man. What's up?

Hey, um, yeah, just question. Um, so recently just went through a divorce, uh, finally got all our financial child child support, all that stuff kind of figured out. Um, in the next few months, I'm going to be getting some equity in the house I used to live in. And I'm curious, since she's going to be getting some of my retirement, I'm wondering, should I put that money back into my retirement or should I use that equity to pay off my bills, uh, some of the loans, lawyer fees, and then that would pretty much put me debt-free.

How much is she getting from your 401?

Well, it's Capers. Um, I'm in the public school system here in— here in— how much is she getting from that? Um, it's going to be about half. Um, I've worked for 20 years and we've been married 17 of that. So does it have a dollar amount on it? I have $87,000 in there right now. Okay, so she's getting $43,000. Roughly. Yes. Okay.

And how much equity are you getting out of the house?

About $60,000. Okay.

Why didn't you leave your 401k alone and take less out of the house?

Uh, that was just part of the deal. I know why we came to during mediation. Why?

Um, it's a bad idea. Well, I can't go back now. You could hypothetically.

Uh, Brett, how much is all the bills, the lawyer's fees, debt, everything?

Um, about, let me see. I got the biggest ones, a vehicle that I got in divorce that she basically kind of gave me, or that we came to an agreement on. Um, $47,000, right about $50,000.

What's the, what's the, uh, what's the car worth?

Uh, the car is probably worth $35,000.

Okay. And you don't need it, right?

I have two vehicles. One's paid off. Um, and that one's super old. And it's always in the shop getting repaired. And, uh, basically we bought a truck about a month before we separated. So we don't, I mean, it's $30,000. I owe $30,000 on it.

Is that, and that's part of the $50,000.

That's part of the $50,000. Yes. Yeah.

I'd sell the truck and yeah, throw some of the money at the difference.

And if you need to buy an, uh, you know, a $10,000 car with some of the cash. That'll be fine, but I'd get out of that truck debt instead of paying it off and keeping it. What's your income?

Um, my main job, I make about $87,500, and then I make about $25,000 and just some other side stuff that I do.

Yeah, okay. Well, yeah, you're— I don't think you go back and change it. Like I said originally, I think you stay with the deal you got. Take the cash, you become debt-free by getting rid of the truck, and you're not got enough to do much else with. Build an emergency fund. By the time you pay off everything, there's not much left, and then go back to retirement.

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Tari is in Charlotte. Hey Tari, what's up?

How you doing, sir?

Better than I deserve. How can I help?

Okay, so I'm trying to clean up my debt. I'm trying to clean up my debt, and so Um, a debt collector, they sold it off to another debt collector. So I called them up and tried to basically settle the debt. So they told me they can't collect on it and it's reached the point of, uh, some— I can't, I can't remember the term he used, but they said that they can't collect on it or they don't report on it to the credit bureaus. And I'm trying to get it off my, off my credit report.

The debt collector that bought the bad debt said he can't collect on it.

Yeah, he can't collect on it.

And, um, you offered him money and he didn't want the money?

Yeah, yeah, I'll— I tried to settle, I tried to settle the debt, and he said it's the point of statute of limitations or something.

Exactly, exactly what it is. It's past the statute of limitations. Yeah, yeah, yeah, that is so unusual. That's true, right? But it's so unusual that a debt collector would actually tell you that instead of just taking your money.

Right. So now my thing is, how do I tackle it and get that off? I'm trying to settle it and get that.

Okay, first thing I would do is call the debt collector back and ask for an email from him saying in writing what he told you on the phone.

Okay. I mean, I'm so— so, so I did call him back, and what they said was, he said Um, our team to handle it, file it, file in the dispute.

Our team will handle it.

Yeah. She was like, no, I'm asking you to send me an email.

Call them back. I'm asking you to send me an email saying that you cannot collect this debt because it is past the statute of limitations. I'm asking you to send me an email saying that. That's what I want him to do. Number one. Then number two. You've got to write to— and there's an email place to do it on each of the websites— all 3 credit bureaus. Right, right. Okay, okay. And what you do is you say, this particular debt, I am disputing it as being valid. Don't go into detail, don't mention statute of limitations, just say, I dispute this debt. Now, okay, and according to And you may want to go back and play this on the podcast later, play it back. According to the Federal Fair Credit Reporting Act, you have— this is your verbiage in the letter— you have 30 days to prove the validity of this debt or to completely remove the entry from my bureau. Exactly, exactly. And, and you send that— I, I would send that by email if they've got a place on their site, and I also would send it in hard copy letter form, certified mail or FedEx or something where you can get proof of delivery on when the 30 days starts.

Okay, because all the other credit, you know what I'm saying, I was able to, you know, settle on, or this is the one that they said they couldn't, they couldn't really, they don't report, or they don't, um, they don't report on it Nor do they— whatever, whatever.

Well, he can't collect on it because it's past the statute of limitations. And if they found out later that they collected on something that they're not allowed to by law, they could get in trouble. But most of the time, these guys are so scummy, they don't care. They take your money anyway. So I'm a little shocked, but it's okay. I'm coming out in your favor. So yeah, you need to send a certified letter. Federal Fair Debt Collection Practices Act and Federal Fair Credit Reporting Act is the federal— two federal laws that dictate how this is handled. And when you dispute the validity of a debt on your credit bureau, they have 30 days to prove it or remove it. Now, for the rest of you out there, not for this guy, they will not be able to prove it in 30 days on any of your debts, even if they're valid, because if they write to Bank of America, Bank of America is not going to get back to them for 30 days. And so you could get that blown off your credit bureau, and there are people that teach that as a way to, quote, clean up your credit.

The problem is it doesn't work because it will get removed from your credit bureau report, but Bank of America or whoever downloads in batches to all 3 credit bureaus at least once a quarter. And so about, about 120 days from now, you're gonna see the thing pop back up on your credit.

It's not been passed.

If it's not a valid— if it's not an invalid debt, it's going to come back. You can knock it off for a minute, but it's going to come back. In this case, it sounds like these guys are not going to report it again, but if you remove it and they re-report that they have this out for collections, it'll show back up on there again.

How long does it take for the statute of limitations to—

statute of limitations on a debt is different in every state. But in his state, a lot of them are 3, 4, 5, 6, 7 years. Yeah, somewhere in there. Everything comes off of your credit bureau report every 7 years from date of last activity. The problem is if Bank of America, in this example, re-reports, that's activity and it starts the 7 years over again. So even though you didn't pay anything on it, even though you didn't actually have any activity on the account, you could— they can start the 7 years over again and keep you in limbo for freaking ever. So you cannot get out of paying these debts unless someone does what this guy's saying is happening with him, which is a very unusual circumstance that he called with today. But most folks out there listening, you're going to have to go get those things settled and you're going to get them paid off. You don't get your credit bureau cleaned up until you clean up the actual debt, because it's just going to pop back on there and you're going to see it, and it's going to hang out 7 years. A Chapter 7 bankruptcy is the only thing that stays longer than 7 years.

It stays on 10 years. And an interesting fact with that is none of the loan applications or applications that you fill out for other things say, "Have you filed bankruptcy in the last 10 years?" They say, "Have you ever filed bankruptcy?" And so even if my Chapter 7 bankruptcy from 1988 no longer shows on my credit bureau report, if I answer, "No, I have never filed bankruptcy because you can't see it on my credit bureau report," and someone does business with me due to me answering that question, that's called criminal fraud. I lied to get to do business. So don't do that. It's a bad idea. Be honest. So you tell the truth. And so since I filed bankruptcy in 1988, the year Rachel was born, for the rest of my life I get to answer that question. Yes, I filed bankruptcy. What were the dates? It's like filling out one of those medical forms. Have you ever had an operation? Yes, in 1982 I had one, you know, but you You still got to fill it out because they're still going to find it. And you know, for your life insurance application or whatever it is, you still got to put all the stupid medical stuff in there.

Anything, any hangnail that's ever happened has to show up. And that's the way this stuff is.

And by the way, interesting reason to almost avoid it so it doesn't just follow you your whole life. Hello. Hello. It's like, I know after like a—

have you ever been divorced? Financially you can recover. Have you ever been divorced? If you have, the answer is yes. Yeah, not lately. It's not— it's not a not lately. That's not the answer, you know. Not 20 years ago. That's not the answer. The answer is yes, you know. That's it. And it's that simple. So, you know, this stuff— these decisions are big life decisions.

Yeah. And Tari brings up a good point too, just to remind everyone: you can check your credit report for free, and you should, once a year. Yeah, you should. The Equifax, TransUnion— you can go to these websites, and you ought to also freeze your credit. Yes, and freeze your children's credit.

We did that. We— and that's a pain in the butt. I had to go in and just rip people's shred to get it, but I froze all of theirs when they were minors, when they first came out with the law allowing you to freeze it. And what freezing it does is if someone bothers to check your credit before they issue a debt that is not— that's like an identity theft thing, as an example— then they would deny the credit because the credit bureau is frozen.. And so they would say, oh, this person is not really applying for that. But the problem is about 9 out of 10 credit cards are issued without checking credit. So that's why a dead person and dogs get credit cards. And a guy named— a guy in West Virginia one time sent me a copy of his credit card, and he had applied for the credit card in the name of Buck Naked. Oh Lord. And they issued the card. Stop. Visa issued to Buck Naked.

Unbelievable. Love it. That's a good segment. Perfect. Craziest thing.

Craziest things that have ever happened. Yeah, yeah. Fru Fru the poodle got one too, and he'd been dead 3 years before he got his.

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Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. Rachel Cruz, is my co-host today. James is in Kansas City. Hi, James. Hey, how y'all doing today? Better than we deserve. What's up?

Good. So, uh, just, I'll shoot you the quick question here. So basically I work for a university, um, and I'm due to be laid off here in about a year due to the school folding into another, uh, here in the area. Um, I've got no debt. I've got a year's worth of emergency fund and I'm also due to get, um, some severance and retention bonuses while the school kind of, you know, goes towards closing here within a year. My question is, should I start really looking hard for a, you know, a new job right now, or should I kind of wait, collect those bonuses, and see where I'm at, you know, within about a year?

So, um, the bonuses and the severance are going to amount to how much money? About—

after taxes, I've done the math, it's about $24,000 altogether. Okay. And what do you make? Um, right now I make, uh, $70,000, about $70,000 a year. Okay.

And, um, what do you do?

You're a professional? I work as a— yeah, no, I'm actually a compliance coordinator for the financial, uh, business office. Okay. All right.

Um, and so what will you likely go to? What's your new career going to be, your new job? Same thing?

Well, well, I've been thinking about that. There's also some different, you know, whether I work for maybe a bank or a financial, like, credit union or something along those lines where I get back into compliance or risk management, I'm kind of, kind of on the fence with it. Probably a lot more money there, isn't there? 100%, by far.

Okay, so let's pretend that you found a new job making $120,000 today and they want you to start today. Well, you would take that because $70,000 plus $24,000 is less than $120,000. Yeah. Yeah, let's pretend you found another job making $70,000. I would not take that until the last day of my other job, of my current job, because I would want to get all the bonuses. But I think you're probably going to move up in pay as you shift the type of compliance work that you're doing so much that this bonus is not going to be worth sticking around for.

I think you're right.

I think that's the math. Have you been— I'm gonna let math drive it, but go out there and start poking around.

Yeah. Have you talked to anybody, James, just in that industry and just kind of have a feel out of how easy it could be to get your foot in the door somewhere? Yeah, I've done some poking around.

It's definitely gonna be a lot harder. I actually used to work in the banking industry. I want to maybe jump back in and I know you guys say, you know, don't just throw applications out there. So I'm really trying to hit my connections., you know, to see, to see kind of what I can get right now. I haven't had a lot of hits, but I know the job market is slow.

You ever had any history in the securities side of, like, working for a broker-dealer or something on that side of compliance?

I have not, actually, but it's worth looking into.

Okay. It pays better in banks. That's why I was asking. Sure. But, but, but if you've had the history in the bank and you can get your foot in the door, I don't care. But I'm actually thinking you're probably going to go move to six figures. Does that sound right?

It does, it does. It just takes a lot of, of course, effort. Yeah, obviously. But why not? Why not work on it now?

Mm-hmm. And if you could get six figures starting next month, then we would just go ahead and say goodbye.

Yeah, I think that's fair.

Yeah, so let's do that. And I'll send you a copy of Coleman's book, Proximity Principle, which is what you're referring to. Yeah, use your connections to get in the door on things for sure.

And the wisdom of I mean, he's at the luxury of, just say, it gets down to the wire. He's got 3 months or so of pay, plus a year big emergency fund. Nothing's on fire right now. You know, you know the end is coming. So, you wanna start having these conversations. But in a great way is, you know, if you have 2 or 3 options ahead of you, you get to kind of make that decision of what's best for you. You get options. There's no urgency of, "Oh gosh, we have to start making an income." 'Cause we get some of those calls and it's like, you gotta go, you gotta start to start doing anything.

Well, and when you're desperate, you don't interview as well. Yes. You know, your body language is different, your voice tone is different, you walk in the door different, you feel different. They can feel it in the air that you're scratching and clawing at this. And if you're like, yeah, I'd like to do this, it looks good, if it's a good fit, I'll, you know, let's talk about it, and is this a good partnership? And yeah, that's a completely different interview.

Yeah, for sure. And in this, there's nothing— I mean, there's no moral obligation by any means to stay, but is there any level of loyalty of, hey, I'm gonna finish out this?

I'm gonna go down with the ship. Roll with it. A college that went out of business. I don't know. Because they didn't follow my compliance guidelines and didn't stay financially solvent. Could be that too. Oh my gosh. Donald is in San Antonio. Hey Donald, what's up?

Hi, good afternoon. Thanks for taking my call.

Sure. How can we help?

Um, so me and my wife are retired. We're on Baby Step 7 and we are still doing the envelope system. And my question is, are we better off? Because a lot of the envelopes just build, like the ones we have for car repair and doctor copays and debt bills and all that.

They kind of just sit there.

And would we be better off just leaving that sitting in our IRAs instead of taking that money out every month?

Well, I would at least probably put it, Donald, in just a high-yield savings account. I would put it somewhere. So yeah, to your point that it's kind of growing.

If it's building up too much, you've got too much allocated to the category. Okay. So I mean, if you've got $5,000 in your vet bill envelope, but your dog's not been sick, you know, I mean, you see what I'm saying? Or you're, you know, you got $5,000 built up in your car repair envelope, you've over-budgeted for car repairs.. And so that, that's, you know, you should not have big buildups in there anyway. But a lot of people, including both of us, have gone to just very few or no envelopes and instead are just using the EveryDollar budget and using a sinking fund approach inside, which is a little miniature savings account like a miniature envelope per category inside your EveryDollar budget., and it explains where your money is. And a lot of people are using that digitally now rather than the actual physical cash in the envelope. My wife still carries a couple of envelopes. She still does that, but everything else we do at the Ramseys is now done with, with a debit card and with a budget system. And it is at your house too, right? Yeah, yeah, yeah.

So cash is gone, gone, limited.

Yeah, but you're right, what ends up happening is, is that you've got the money to do stuff stuff, and you just do it, and then you look up and go, God, that envelope's got like $6,000 in it, and I'm walking around with this in cash, you know. So no, that— you— yeah.

And I would say the envelope system, the purpose of it is to control your spending, to know what's going on per category, and to have a level of real-life accountability that when there's no money in the envelope, we stop spending in this category. So people that are just starting to budget, you know, I think it still is for 2 or 3 just test it on groceries. Yeah, on a couple of things, because again, it kind of just gets you back into this rhythm of knowing exactly what you have because it's physical money right there. And so that's really the purpose of the envelope system. But Donald, you guys are Baby Step 7. You know, you're— the, the main reason for it is I think you guys have probably outgrown that main reason. So if you put everything into, you know, a Fairwinds Credit Union high-yield savings account, you would be great, you would be fine, you would not be doing anything No, that'll be—

that'll work just fine. The interesting thing is, by the way, for those of you that want to try this or you're just getting started, that the actual research says that when you spend cash, when you hand Uncle Benjamin Franklin over to the cashier at the grocery store, it activates the pain centers of the brain. It hurts to spend cash. It does not activate the pain centers of the brain to hand them a piece of plastic. So you spend more. As your business grows, everything becomes more complex. There was a time when Ramsey Solutions had too many disconnected systems and not enough visibility across the business. We wasted too much time chasing information instead of making decisions. That's why we got NetSuite. NetSuite brings your financials, inventory, AI, CRM, and more together in one place. More than 43,000 businesses trust NetSuite, including Ramsey, and now they're taking the next step with NetSuite Next, making it easier to put AI to work across your entire business. NetSuite Next helps you make the most of your time, automating routine work like forecasting demand and following up on overdue accounts. With NetSuite Next, AI is built into everything you do so you can ask it questions just like when you're talking to a member of your team.

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Good, how you doing?

Better than I deserve. What's up?

Okay, so I have my— my question is, I currently have a truck. I owe $38,800. My payoff Uh, there's a dealer interested in purchasing it for $44,000. My question now is, I do have a side hustle that I do monthly when I'm off from my work. My side hustle brings me in roughly around $1,300 to $2,000 per month. My truck, monthly I'm paying average about $1,000 with insurance. My diesel monthly is about $400.

Does the side hustle have something to do with your truck?

Uh, yes sir, because my side hustle, I do pressure washing, so I need to tow my trailer with my water tote containers and chemicals.

Yeah, you could tow your trailer with a $10,000 truck.

Truck, right? That was my question. Now, should I sell my truck? Yeah, buy something cheaper. Yes. Or should I sell my truck and just get a daily where I don't have to do side hustles no more?

Oh, because you're— yeah, I hear what you're saying. Because your side hustle basically paid for your truck, for the payment, the insurance, the gas.

Do you— I mean, have you got other debt?

Not really, no. What's your income at your main gig? My, my main job, I'm making an estimate about $62,000, and biweekly after taxes and insurance, I'm making about $1,900.

Yeah, okay. No, there's two questions: should I continue my side hustle and should I sell my truck? The answer is you should sell your truck, and if you want to continue the side hustle, that's fine. Get an inexpensive truck to tow it with. Mm-hmm. But if you, if you don't want to continue it, then sell off the equipment. That's fine. Yep. But if you want to make some extra money, and this is a good way to do it, pressure washing is a good way to do it. It's a great side hustle, really good pay per hour, but you've got some equipment tied up. But you don't need a $40,000 truck to tow a pressure washer. That's kind of, that's backwards.

Yeah. And if you don't have any other debts and you have an aggressive way to get a 3-month emergency fund in place, to keep moving down the Baby Steps, that's okay. Yeah, you can— yeah, you don't have to do the side hustle.

But if you want to, I personally would keep the side hustle going by getting an inexpensive truck and pay cash for it and sell the big one. That's definitely what I would do personally. But I've always worked a lot most of my life. So Kayla is in Boston. Hey Kayla, how are you?

I am good, how are you?

Better than I deserve.

What's What's up? So my fiancé and I have been on the house hunt in Massachusetts for about a year now, and unfortunately we keep getting, um, overbid. Um, good.

You shouldn't be buying a house unless you're married.

Yeah, my house together. Um, what was that? Sorry, I was clarifying.

You should not buy a home together when you're not married.

It's not a good idea. Married people can buy Homes.

Oh, I see, I see. Thank you. Um, my parents' house is in a really great town in Massachusetts, and we've already went to our attorneys and put the house in an irrevocable trust since I am the only child. Um, in— instead of putting 20% down on a $600,000 house, should I consider or maybe putting 20% down into this house, my parents' house, because I will be inheriting it one day?

No, I would not. No? Okay. Because it, because it just, it locks you in to that home for a really long period of time where you and your husband may get married and in 2 years something may happen, right? And you guys may move and want to do something else. So yeah, it locks your money up into an asset that you can't get it out.

You can't get out.

It's— yeah, it's, it's done. Versus you guys building a life together and having a home, and then one day when your parents pass, you know, then you can decide, hey, do we want to move in? Do we want to sell our current home, take some of the equity to fix up Mom and Dad's home, or sell Mom and Dad's home? You know, you actually have options. This just locks you into one option for a long period of time, which I would not do.

When is the wedding? Sorry, when is your wedding? Uh, next fall. Okay, uh, this like 18 months from now? Yeah. Okay, well, um, in 30 years of doing this, almost 40 now, um, some of the worst nightmares I have seen are people that buy a home together who are not married. Please do not purchase a home until you're married. It is not together It is not a good idea. You're gonna make a mistake, and you're gonna— it's gonna cost you. You're getting this out of order.

And so, yeah, rent for a little bit, get married, and then you guys go and look for a home.

Yeah. So, and I think you've been protected so far from accidentally making that mistake by not being able to buy so far. So, and, and, and no, I would save up and put as much down as I can put down. After we are married. But too many things happen and you're too vulnerable, and most people are not going to do the proper documentation and everything else to make sure they're protected, and you're not either. So it's just best to wait until you're married if you're going to buy together. Now, if one of you wants to buy a house, that's fine. Now, the other wants to buy a house, that's fine— what Rachel's point was. But, but couples Couples should not buy homes together that are not married. It creates all kinds of relational problems, legal problems, financial problems, and the unseen things that come at you, the unexpected unintended consequences that come at you, create all kinds of issues for you. I'm begging you, don't do this. Gabriel is in Augusta, Georgia. Hi Gabriel, what's up?

Hi, Mr. Ramsey. I'm doing well. How are you?

Better than I deserve. How can I help?

So, uh, here's the situation. I'm active duty military. I am married with, uh, two daughters, a 1-year-old and a 3-year-old. And we own a home. Uh, I put no money down on it. I used the VA loan. Uh, no debt other than that. That's a $250,000 $250,000 mortgage and I owe $243,000 left on it. Um, and besides that, we just have my wife's student loans, which is about $12,700 left. So we're working on Baby Step 2, working on paying it off, but I'm thinking ahead and thinking if we have a third kid, we're going to need a car that can have 3 car seats and neither of our cars can do that right now.

Um, how old is your youngest?

Youngest is 1 year old.

Okay, so how far out is this problem, do you think? Problem? Child? No, the problem is the third car seat, not the child. Not the child. How far out? The problem is I need a car.

How far out is that? Yeah, so I mean, not to get, you know, too, too personal about it, but, but we're, we're not— we don't believe in using birth control. Oh, we're gonna try natural. So we're gonna try natural family planning.

9 months. We'll just say 9 months. Okay, so how much do you have saved towards the next car? Uh, well, I, I'm zero right now. Okay, and how much is the current car worth?

The— we have two cars. I have a beater I drive to work that's probably worth less than $2,000. What's your other car paid off? And the other car is worth, uh, I I could probably sell it for $17,000 right now. Oh, perfect.

So sell it for $17,000 and buy something that holds 3 car seats for $17,000.

Yeah, go get you a used van, a 9-year-old van. Honda Odyssey is what I'd recommend.

And if you can save up some cash to put with the $17,000, maybe you can move all the way up to $20,000.

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Today's question comes from Carly in New Mexico. She said, my husband and I are in our 40s and we have a household income of $80,000. We are debt-free except for mortgages on our home and business building. We have a fully funded emergency fund and about $75,000 in retirement. We have a net worth of over $1 million, but it's almost entirely made up of the equity and real estate investments. Smiths. Should we be concerned about retirement if we have all of our eggs in one basket? Um, I mean, over the long term, yes, I would be concerned. I mean, if you see a plan out of this where you start to equalize some of this in the next 4 to 5 years, I would be more okay with it because of your age and where you guys are at. Um, but I would be making sure that you're funding 15% of that $80,000 in retirement so that you become real estate heavy again over the long term. But that 15% will help you kind of balance it out. But yeah, I would— I personally wouldn't want all my net worth purely just in real estate. I would want cash available and real estate investments— or I'm sorry, retirement investments like 401s.

The problem is there's a shortage of cash in that situation. And so that lack of liquidity is going to pinch you issue, even if you have a high net worth and it's all in real estate. I don't mind it being very heavy in real estate, but being cash poor is what I mind. No liquidity. And so having some other types of retirement investments to provide the cash is fine. But because these are not— people that love real estate for some reason end up cash poor if you're not careful.

Right, because a lot of the investments, you know, they're not making, they're not providing the cash, right? It's tied up in a business building, and unless the business is paying rent to the building, then you make money that way. But there's no cash coming out of these investments.

Nothing to panic, but I would start building a liquidity position, is what we would call it, meaning some cash. And that would— a good way to do that, that's exactly what Rachel said, start putting 15% of your income away into retirement, into some good mutual funds. And that, you know, over time, that's gonna be plenty. You know, that, that alone will make you another several million. All right, Dennis is in Atlanta. Hi Dennis, how are you?

Hey Dave and Rachel, it's an honor to speak to you guys.

You too, what's up?

So, I got a question for you. I am 32, no kids, not married. I'm gonna be finishing Baby Step 2 this week and should be done with Baby Step 3 in about 2 months. And then that will put me into Baby Step 7. So I'm kind of not sure what to do. I know I'm gonna max out my Roth IRA, put some money in my work 401, but really just don't know what else to do at that point.

Is it because your house is paid off, or do you, do you own a home, or are you living somewhere else? Yes, yes, I own a home. It's paid off. And it's paid off. Okay, good for you, Dennis. Way to go, man.

Yeah, well done. Yeah, so yeah, uh, I would max out all the retirements, and then I would have some other investments going in non-retirement. Minimum of something like an S&P 500. But if you wanted to get with your SmartVestor Pro and open up a brokerage and have some after-tax investing going in addition to your maxed-out retirement, that's what I would— that's what I did do with it, by the way. That's not what I would do with it, it's what I actually did. And that money, that side money, is what I started buying real estate paid for with. And nowadays, many, many, many years later, Dennis, because I'm 65, you're 32, right? Right? Yes. And I was probably about 32 when I started that, but now I've got a lot more of my net worth in real estate than I do in mutual funds. Okay.

Yeah, I was gonna plan on opening up a brokerage account and kind of start building potentially a bridge account or something to pull from, you know, if I wanted to buy a second home or something like that. Exactly.

It's exactly— that's exactly what we did. And again, you can sit down with a SmartVestor Pro. You can find them at Ramsey Solutions. They can help you put all that together and lay out a game plan and start setting some targets on that that you're aiming for. And man, that's awesome. Yeah, well done. Very cool. Good stuff. Well done. Well done. Brandon is with us in Provo, Utah. Hi Brandon, how are you?

Better than I deserve. I've wanted to say that to you for such a long time. Well, you pulled it off. One goal down. I know. Amen. Alrighty, so I'm currently dealing with a problem right now. Well, in my mind it's a problem, first world problem. Um, we're going to be in Utah for about 3 more years, me and my wife. She's going to school for architecture, and then we're headed out to Florida so I could start my own HVAC company out there with my brother-in-law. That's currently what I do. What we're currently looking at right now is we have a lot of good finances available. We're wondering if we should be putting money into purchasing a home in Florida now to kind beat the market, so to speak. No, this is what everyone's been telling us to do. I don't care what everyone says.

Rent it out. Everyone's broke.

You think?

I don't listen to everyone on anything. Matter of fact, what everyone says, you usually run the other way. No, I wouldn't buy a house in Florida until you're ready to go.

Okay, so you think just keep on building up our nest egg pretty big? Yep.

Yeah, the market's not gonna move that much, Brandon, in 3 years at this, at this rate, right? It's not like it's 2022 again and everything's just skyrocketing. It's— it has slowed down in a good way. But yeah, I think if you guys stack enough cash, you can outbeat the growth there, if you will.

Yeah, you can outstack whatever change in values there are. Yeah. But either way, even if it was going up quickly, I still would not go buy a property in another state in anticipation of moving there. I know, 3 years, I know that's the plan, but 3 years is a long time. Time. It's also a very short time, but it's a long time. Yeah.

So, well, to make a big purchase like that— no, I wouldn't do it. And being so far from it, I— yeah, I wouldn't do it.

Nope, nope, not the way I'd handle it. Uh, David is in Chicago. Hey David, what's up?

Hey, pleasure to speak with you guys today.

Sure, how can we help?

I need a little advice. I've been with the company for 15 years, and, uh, through mismanagement, they are closing their doors in about 4 weeks. I have a traditional 401 that the company has been contributing to, contributing a flat amount, and I started a Roth 401 on the side also. It's handled through John Hancock, and I was wondering, once the company closes its doors What would be a good option for me if I were to leave it with John Hancock or move it, move it out into something separate such as like Fidelity or Charles Schwab, something like that?

No, I would move it to a more traditional mutual fund setting, and I would use a SmartVestor Pro that we recommend to do that, the Ramsey trusted one Solutions. And if you go to Ramsey Solutions, you can find the person that we recommend. I would move the John Hancock account over there. And your old 401 at your old company that's closing is very simple. It's a direct transfer rollover to a new traditional IRA, and there's zero taxes. Now be very careful, David, okay? You need to get in touch with SmartVestor Pro now and get the paperwork filled out, and they need to submit that then to the 401. If you take a check on the 401, the government require— directly to you, the government requires them to withhold 20%, and you don't have 100% then to rollover. And so that's going to burn you on taxes. So you don't want to do that. You want to directly transfer this rollover into the next IRA and you not touch it. It doesn't need to touch your hand. Because they're gonna withhold 20% on you. So go to RamseySolutions.com and click on SmartVestor Pro, and you can find somebody in your area to sit down and do that and get that opened up.

And they'll, they'll, you know, and, and you can roll your John Hancock thing over there too. It'll be easy. Do both of them. Do both of them. Keep them all in one place with your SmartVestor Pro. You'll be in much better shape than both of those situations. So I hope you got the next gig lined Lined up, brother.

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Www.ramsey.com/news/ramsey. Linda is in Houston. Hi, Linda. Welcome to The Ramsey Show. Hello.

Thank you for having me. Um, so I am 35 years old. I have 2 kids. I have a common-law husband who's been unemployed for 12 years. I've been with him for 15. I have a total debt of $45K in student loans on my car. I have a home that was gifted to me that was worth $400,000. And so I am a registered nurse. I— my father told me, hey, come work for me, I'll pay you what you were making as a nurse. Why you go to nurse practitioner school. So that's where I'm at right now. My question to you is, uh, should I pull a HELOC loan on my home to invest in real estate? And with that being said, one that would be helping me with the contracting and building is my father. He wants me to tell my husband to get a job, which my husband has had trouble listening.

Your husband's had trouble what?

Listening to my advice on him getting a job. He did not take it well when I asked him to get a job.

For 12 years, what's he been doing?

Um, he was taking care of the kids while the kids were during the pandemic doing online schooling, but the kids have been back in school for going on 3 years now and he refuses to find work or help me out. What's he do all day? Oh, he's at home, usually at home with the kids right now during the summer, but at home As well, whenever they're in school, keeps up with the home.

And he just says, I just, I want to take care of the home and the kids and I don't want to go get a traditional job and make a living.

Yes. I have talked to him and asked him to help me out because we are still currently living paycheck to paycheck. Even with the kid at home.

You said common law, so you guys are never married. Correct. You're never married.

No, we're not legally married. No.

Okay, so, um, I'm curious why you've put up with this for 12 years.

Oh yes, I asked myself the same thing, but the fact that we have kids and I have tried talking to him about helping me work— I'm tired of living paycheck to paycheck. I want to grow. I'm already— I'm 35 years old and I'm already planning retirement. Um, I want my kids to be able to be financially ahead, you know, just like I was thanks to my father.

Yeah, I also don't want to be married to a knot on a log, a lazy guy.

Oh yes, I agree.

Aside from all your personal goals, it's just hard to respect a guy that sits on his butt all day.

I agree, I agree. So because that— I wish he had the same.

And I'm assuming that attitude of a little bit of laziness and apathy faith plays into every part of his life, right? Your marriage and all. It's who he is. Yeah.

Yes. I make a decent amount of money, you know. I wish I made more. Um, we live comfortable, but like I said, we're paycheck to paycheck, one disaster away from everything crumbling.

And so the house is in your name? Yes. Correct.

Yes, the house was gifted to me by my father. Everything's under my name.

And in your state, the common law status does not give him any access to ownership in the house, right?

No, because it was gifted. He doesn't have anything. But now I worry if I do— if I do pull a HELOC loan to invest with my father.

I would not pull a HELOC loan to invest with your father under any circumstances. Okay, period. We don't teach people to borrow money to invest. We teach people not to do that. Um, But, um, yeah, so basically you're, you're, you're the owner of the house. And so relationally, this comes down to just telling him he has to leave, right?

Yes. I don't want to because I believe that, you know, every child deserves both parents in their home, but I don't want my children—

I don't want my children thinking this is how a man behaves. Exactly. Exactly. So this is not— don't tell me we're doing this for the children. The proper thing to do for the children is to not let this model be in front of them. Does he have an abuse problem? Is he abusing alcohol?

Uh, he's had a past with substance abuse.

You sure it's in the past?

Yes. So once in a while, currently.

Once in a while. That's not in the past, by the way. Now, if you've been an abuser, if you've been an addict and you're drinking again, that's not in the past. Okay. Um, okay. Well, I, I'm not sure exactly what our question is on the table, but what I would tell you to do is, uh, no, I would not take out a home equity loan to invest with your father borrow on the home that he gave you that's paid for? That's a little weird. Okay, not even thinking about that one, period. As far as—

I think some absolutes that are drawn.

Yeah, I think under the direction of a good marriage counselor, and I would go see one— he's not going to go, but if I were you, I would get somebody other than a couple of people on a podcast or your dad to advise you on this, and a relational What we're hearing though is, is if we were in that situation, we would say you're gonna have a job working 40 hours a week sometime in the next 30 days, or you're gonna have to leave. And that's what I would have done 11 years ago, not, not sit on your butt for 12 years. So this is now your fault. Fault. It's no longer his fault because you've tolerated it this long. So now you've got to correct your problem that you created by drawing a line in the sand. Yeah. And I think that's what a good counselor is going to tell you. But you ought to have someone other than us tell you how to do that, other than your dad.

Yeah. And I was trying to flip the script in my head. If a man called and said, we're paycheck to paycheck, my wife refuses to get a job, X, Y, and Z, you you know, um, like, does that make it— you know what I mean? I'm, I'm playing that out in my head if there's a difference there. I don't know if there is, but I think the problem is, is that I don't think this guy wants to be—

I don't think this guy's asking to be a stay-at-home dad. I think this guy doesn't want to work.

That's what I'm saying. And when one spouse is the only income earner and is struggling and reaching out to the other spouse— I mean, I know they're not married and saying, I need help, we need help to get us out of this situation, to get out of debt. It's kind of all hands on deck, do you know what I'm saying? Like, that's the attitude approach of a healthy marriage, that we look at our situation and say, okay, what do we have to do?

Instead, she has 3 dependents. She's—

yes, and that he's, he's doing nothing, nothing.

See, nothing drives me bananas. I know. Yeah, I can't handle it. And just a dude.

I, I mean, when you said that, I was like, it's so true. It's one of the most— that'd be one of the most unattractive things. Just lazy. Do you know what I mean?

Just a hound dog in the sun on the front porch, lazy.

I'm like, man, that's it. He had initiative. How do you sign up doing something like— you don't even mean within another context. I'm like, I'm trying to like— I'm playing gymnastics in my head a little bit of how I would approach it if it was something else and something different. But I think it's just—

I think the end of the day, the problem you're going to have is this, okay? Very little that you can do in this once there's much water's under the marriage is going to work because we have 12 years of the same pattern of script. Yep. And now to flip the script and go, oh, you gotta get a job or you're out of here—

it's just not—

it's just gonna— it's not gonna go. It's not gonna happen. It's not gonna happen. He's not gonna go, oh, you know, I was just thinking the same thing this morning.

No, that's not gonna happen. And I'll provide for my family.

Yeah, you know, no, you wouldn't have anywhere near the fuse on this bomb that you'd have around.

Man, and then you got Linda who's like killing it, working hard, a nurse heading towards nurse practitioner.

Yep, got paid for $400,000 house. Yeah, um, by the way, I think you need to pursue nurse practitioner, not your dad's business too. You didn't mention that, but I'll throw that in just for the fun of it.

Linda, I'm sorry.

I love, I love the independence that you can have and that you have. And you're gonna need it. Yeah. And that's where it's gonna take you. So yeah, I, I don't think this— as they say, leopard is going to change his spots. I got a feeling that as you just go, oh, you know, I was just thinking— no, that's not, not gonna come up that way. I think the old boy is gonna have to find somewhere else to take his naps because he takes a lot of naps. After he drinks a lot. And she's not being truthful. He drinks a lot still. Yeah, Linda, I'm sorry.

I appreciate the mom heart though of fighting for your family and, you know, all of it. But you got to figure out what's good for you, Linda, and for the kids. You— yes, and you being in the healthiest situation, safest situation for you is going to be the best thing for your kids. But I would— I would go get, um, some Advice from, from a counselor. I would sit down with someone, a professional, and talk it through.

Sit down with a good pastor, maybe. That's a good idea. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey, your host. Thank you for joining us. Steve is in Rochester, New York. Hi Steve, how are you? Hey Dave, I'm great.

How are you? Better than I deserve. What's up? I have a business that I've owned for about 8 years now. Within the last 16 months or so, it's taken a hit and it's basically breaking even. Um, and I haven't been paying myself throughout that. Um, so, uh, you know, I'm trying to figure out, it's listed for sale, not probably not gonna get anything close to what would've gotten a few years ago. Um, and I'm just trying to, you know, get some guidance on what I should do next, if I should try and pour some more money into it. Um, or go look for a 9-to-5 or start a new company.

Um, what kind of business is it, Steve?

It's a protein supplement company.

Okay, that you make or that you sell?

Can you repeat that please?

Do you make the protein supplements or do you just sell other people's?

We make it, we have a contract manufacturer and we sell it.

What happened to the sales?

Why is it down? Direct to consumer. We were using a 3PL, one 3PL, and they changed, they got bought out and then bought out again. And they threw out about $350,000 worth of inventory. We hired attorneys, went through the whole process, which was expensive and We were out of stock on pretty much everything for 6 to 8 months.

Um, so now you have inventory back.

Now we have most of the inventory back.

So why can't you sell it?

That, that flywheel momentum, we're trying, but that flywheel momentum hasn't gotten back up to speed. Um, as to where it was. I don't know. I don't know if people are spending less on it or spending— or spending more.

Why isn't yours selling?

Probably marketing, getting the name out there or back out there.

Um, how were you— I mean, the other company was doing all the marketing for you? You've never had any experience selling your own product?

No, we have— we used to use influencers, um, and we stopped using that because— stopped using them because it was— we didn't have great experiences with some of them.

Okay, because it didn't work?

Um, at first it worked. Yeah, but, but after that it didn't.

Okay, so It sounds like you know how to make protein supplements, but you don't know how to sell them. That's what it sounds like.

Me specifically, to go out and—

you own the company, right? I don't necessarily say you need to go door-to-door, but you ought to have an idea how you're going to directly get this, uh, thing that you created. And you created it with someone in mind, and who are you going— how are you going to get it to them? That's my marketing, right?

Right.

How many people work on the team, Steve?

It's small. It's about— not about—

it's 4 people. Okay, so after payroll and expenses and everything, you guys are breaking even? Yes.

Yeah, I'm not, I'm not paying myself.

And how is, how is that much product moving? Just on your website?

Yeah, yeah, on our website.

And how long has it been since you've had inventory back?

Um, almost about 4 months.

How long ago did you start this company?

Uh, 8 years ago.

You told me that, I'm sorry. So 8 years ago, if I had talked to Steve, would he have been more excited than he is right now? He sounds down in the dumps.

Yeah, very much so. It's been, it's been so frustrating. I've, uh, I'm married. I wasn't married when I started the company and we have a 5-month-old.

Um, and you've been through a lawsuit and all of it, it's just taken you out.

Yes. Yeah. It's been listed for sale for, um, since we got inventory back in stock, there's not been much movement. So it's, it has been Pretty frustrating.

Well, it's not, it's not really much of an asset to buy because it's not profitable. Right. I don't know why anybody would want to buy it unless they would just want to buy the inventory and then, yeah, and the formulas, recipes or whatever.

But, um, okay, so Steve, so what, um, next steps for you? You're wondering, your main question is, do you keep putting money into this?

No, not unless you have a reason to believe it's going to work. And right now I haven't heard a reason to believe it's going to work. So, okay, Henry Cloud says in his book Necessary Endings that we end something— a relationship, a job, a business, a department, an employment, whatever it is— when we lose hope that the situation is going to improve. And if you— and I have not heard a single thing talking to you that you have any hope this is going to—

I know it's been— well, I'm just thinking it's been 4 months since everything's been back, but there's no light at the end of the tunnel.

That's not an oncoming train.

I'm just wondering, Steve, if you were killing it right now, would you still love the business, or do you just want out in general?

I probably wouldn't be. You know, I've exited a company before and was making pretty good money then.

Okay, so you just want out in general, even if it was doing good? Owning your own company and doing all of this, it's just— it's not It's not fun right now for you in general. Hello? He's gone. Oh, we lost him. Oh, did I offend him? No, just kidding. I doubt it. I doubt it. Yeah, no, that's my job. Yeah, I would just tell him, I just wonder if there are strategies you go back to for 60 more days to see if there's anything.

Tell me 3 things you want to try to keep it open. That's right. I can't get any of that out of it.

Yeah, no, he seems like he's done. He's done. So what do you do? Sell off the inventory to another company or something? Try to get the cash out?

Keep your website open and shovel it out of your basement.

We got him back. Steve, you there?

Wait, press 2. We got him. Okay, good. We got you back.

Oh, there you are. Okay, good.

Okay, so do you have 3 moves you can make to try to salvage this thing and get it profitable that you want to try, or do you want to close? Close it?

My gut instinct is to close it and/or sell it, but, you know, to put money into it in 3 months, another 50 grand.

Yeah, you don't have anything that gives you hope. That's what I'm hearing. Yeah. Yeah. And I'm also hearing in your voice that you're out of gas. Yes.

Yes. You know, 3, you know, with a 5-month-old and staying up till 2 AM, 3 AM to try and make this work. It's, it's my family and faith are more important than—

Yeah, what is the, uh, what is the value of the inventory?

It's about $350,000. Okay.

Yeah, I wonder if you can sell that.

I think you can work that as your side hustle, just running the Alpha, your own website with no overhead, and get your inventory back out of it. You're probably going to make more that way than you trying to sell it, sell the business, because I don't think the business is a viable purchase because it's not got profit. And businesses that aren't profitable are called a hobby. So yeah, I'd go get a 9-to-5 and come in out of the cold for a while and heal. You may go back to being an entrepreneur someday, that's not a sin. But it's not unusual at all for somebody to take 5 years and go back in, out into the marketplace, work for someone else, get their emotions healed, get the lick your wounds, as they say. And, um, you know, you've got these responsibilities that are weighing heavy on you. So that's what I would do. Took a minute to get there, sorry about that. You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance coverage to protect your biggest assets.

I recommend using Ramsey Trusted Pros. Whether you're looking for car, home, or any other type of insurance, Ramsey Trusted Providers have been coached and vetted to serve you like we would. Find what you need at RamseySolutions.com.

Tessa.com/insurance.

Tessa is in Pensacola. Hi, Tessa. Tessa, welcome to The Ramsey Show.

Hi, thank you. What's up? Um, I am calling. My husband and I have been following your principles for the last 6 years. Um, we just paid off our mortgage. Yeah, really excited. We, and we've been investing 15%, um, since we hit Baby Step 4. Um, but now that we paid off our mortgage, we've been looking at how to like optimize that investment. Um, we've been investing between Roth and traditional and just like a split there. But now we just, um, we hit, we just found out that we hit, there's a, for Roth, there's an income limit. So we cannot invest in the traditional or the Roth. I know there's the backdoor, but the question is, Is there a recommendation on percentages of the 15% to invest in traditional versus backdoor versus IRA?

100% into Roth. 100% into Roth. Your 401 ought to be Roth. Everything ought to be Roth if it can be. Is Roth available on your 401s?

It is, but we don't qualify because of our income. That's not true.

Not true. 401 does not have an income limitation.

The traditional, but doesn't the Roth have a— No.

The Roth— a Roth individual has a $200,000 married filing jointly limit, and you have to do a backdoor, but not on the 401. I do a Roth 401, and my income is way above that.

Okay. So just continue— put the whole 15% in— No, I'd put everything.

I'd max out your 401.

401. Okay.

All Roth. And then I do two backdoor Roth IRAs, individuals as well. Okay. And that— and if you've got money, if you have the money to do all of that and still do some of the other things you want to do with your life, then that's what I would do. What's your household income?

Um, it's, it's variable because of a commission structure, but anywhere between $300,000 to $400,000. Okay.

Yeah, you got the money to have a wonderful life and max out all your retirement. Okay. Yeah.

So 100% Roth and backdoors.

Exactly. And then if you wanted to, beyond that, Tessa, open up— I mean, I mean, it would be like a bridge account, I guess, or, you know, just a brokerage account.

Yeah. Put some money in mutual funds that are not in retirement that you can use.

Because if you go down this rabbit hole, there's the mega backdoor for— I mean, there's all these other elements that are so such high numbers. And I remember we even— we, we've talked about this on the show, high earners. There is a point that you can max out all these things, you know, there's all these elements of massive retirement investments, but it's all stuck till you're 59 and a half. So there is a point of maxing out everything from the traditional sense, but then there's all these other layers that you could do, but I probably wouldn't.

At your level of income, I probably would not do MEGAs. Yes. But I would just take your full 401 at Roth and take your backdoor Roths, individuals. At your income, you'll still have plenty of money. You'll do some other investing, some other generosity, some other enjoyment, and you'll have plenty— you should have plenty of wiggle room in there making $300,000 or $400,000. So yeah, sit down with your SmartVestor Pro. They can walk you through every single bit of that and show you how to do it. Jared is in Chattanooga. Hi Jared, how are you?

Hi Dave, good, how are you?

Better than I deserve. What's up?

Um, well, I just want to say what an honor it is to talk to you. Um, my question is So right now I'm 30 years old. I'm in a pretty high-paying career. I would like to make a 10-year plan for myself to transition to a more flexible career path so that I can spend more time with family. I'm just wondering the best way to think about that. It'll be probably— I'll be making about a fourth of what I'm making now.

What do you make now?

Um, right now I make about $194,000. After taxes, it's like $170,000 a year.

And how old are your— how old's your family?

Um, I'm 30. My wife is 25. Uh, we have a 1-year-old and we have, uh, another daughter on the way.

Uh, and you want to transition your career to make less money so that you have more flexibility. Ability. How many hours a week do you work?

Um, right now I work full-time, so 40 hours, 45 to 50.

You make $200,000 a year, we're making— working 40 hours a week?

Yeah, probably more like 45 to 50 hours right now. Okay.

And, and what will you be making in 5 years if you stay in this career?

Um, probably slightly over 200. Yeah. And what are you doing?

What's your career?

Um, I work in finance and accounting for a manufacturing company.

Okay. And where did you get the numbers that it's gonna be a fourth? Like, were you looking at a specific role at a job that's 20 hours a week or something? Like, what— give me the reasoning of when you said it's gonna be about a forth?

Yeah, I wanna be a soccer coach, and we would like to homeschool our kids. Um, so I'd like to transition to that just to be with family more.

Okay, but you have a one— so you have the 1-year-old who won't be in school for another 4 to 5 years, right? Right. Okay, so is that when you're thinking, when they start kindergarten? But you won't be— will your wife be homeschooling, or will you?

Um, my wife is gonna homeschool. This is— I'm trying to find like a 10-year plan, hopefully. Okay, so I think I have about 10 years to—

okay, yeah, I mean, I would just work my— yeah, work hard. Don't overwork yourself, but work hard, save, get out of debt, pay off the house, get yourself in a position that, um, yeah, that if you, if you decide to pull back career-wise at 40 and make a fourth, that you'll have enough. But I just don't—

where are you a soccer coach at $50K? Where are you going to be a soccer coach for $50,000?

I was going to do like youth club teams and probably a local high school around here.

Okay. All right.

I, um, Yeah, this doesn't— Dave doesn't compute with this. No. And Jared, let me just tell you, I think in 10 years your life is going to look so different. I think you're 30, you have a 1-year-old. I think by the time you guys have another couple kids, they start school, you start your life, things may shift.

So you think there's a lot of different ways to accomplish similar goals that aren't as destructive as this is. So I mean, you can soccer coach on the side and make a shift in your career where you've got more flexibility in your current career and you're still making the same kind of money. I think that's an entire possibility. This idea that you somehow have to come home and, you know, destroy your earning power so that your children turn out is not a truth. That's not a true story. That's not true, okay? Men have worked 40 hours a week for since time began, and their children turn out. And so this idea that you have to be at home to nurture is not true.

No, but what I would say is true, at 40, to have the flexibility, just like you're saying, to be able to leave an office at 3:30 to go and coach your kids' soccer team on the side, as opposed to this, you know, as opposed to leaving the office for good.

Yeah, right. Yeah, I don't have a problem with that at all. Yeah, that's fine. Yeah. That's one of the reasons we work and build up a nest egg and some wealth is to give us some flexibility. Flexibility.

And Jared, you may look up in an accounting— you could have your own accounting firm in 10 years and do the business you want to do, you know what I mean? And create your, your own destiny. Like, it's a lot better idea. Yeah. There's a lot of avenues here. Yeah. So I would say— and again, money is not everything. We're not saying that, but—

no, I'm not saying that at all.

No, but it does give— this is—

it's a false narrative that, you know, you need to cut your income to a fourth in order to be a good dad. That's right. In order to be— have been called flexible, and in order to homeschool your kids, and in order— I don't know what you're reading, but that's just a false narrative. And so never seeing your children and working 80 hours a week and being workaholic is the other end of the spectrum. We don't endorse that either. Don't endorse that either. The reason we live like no one else is so that later we can live live and give like no one else, and that involves some flexibility. But I, I think you need to be careful what narrative you're buying off on. That's, that's what's bothering me with this. Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision decision, or just want something explained, Ask Ramsey is here to help.

It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com. You can tell it's summertime in the lobby of Ramsey Solutions. There's a bunch of folk showing up today, and we do the show from 1 to 4 Central Time every day, Monday through Friday, on the glass. You're more than welcome to come by and get a free homemade chocolate chip cookie and some coffee and visit the store, visit the museum, and sit and watch the show. And also, well, whatever you call that thing back there, Smithsonian of Ramsey.

Smithsonian of Dave Ramsey.

That's it. Our history wall. The history wall. The wall of history. What do you call that if it's not that? I don't know. Anyway, so also in the middle of that lobby is the debt-free stage, which is where Erin is standing on the debt-free stage. Hey, Erin, how are you?

I'm doing well. How are you guys doing?

Better than we deserve. Where do you live? From Columbus, Ohio. Very cool. Welcome to Nashville. And how much debt have you paid off?

I paid off $31,000 in 30 months.

Good for you.

And your range of income during that 2 and a half?

$35,000 up to $38,000. Wow, that's amazing numbers.

$1,000 a month. You lived on beans, not even beans and rice.

I moved into an apartment above the vet clinic that I work at that involved not paying any rent or utilities in exchange for taking care of boarding and hospitalized patients overnight on the weekends.

Wow, you went all in. Amazing. What kind of debt was the $31,000?

$23,000 of that was a car loan, and then the $8,000 were two student loans.

Wow, very cool. Did you go to vet school?

No, I'm a vet tech. Vet tech.

Okay, perfect. Okay, so I was gonna say that's pretty good, $8,000 for a veterinarian degree, but no, you got off the other way. It's good, it's good.

So how old are you? 28 years old. Very good, good for you.

So what happened 30 months ago that made you get so radical I took Financial Peace University through my church, and just knowing other people who were actively getting out of debt, or people who had gotten out of debt who I knew who were able to do that, that really inspired me and helped me get a jump start on getting, getting out of debt.

And what a cool opportunity to be able to get a free apartment for a little while and do what you love anyway. You love animals.

It's been a huge blessing. Yeah. Yeah, that's very cool.

That's a neat— that's a, that's all—

it's a creative way. It's always fun to hear what people do, you know, and you hear that, you're like, well, there you go, how great for Aaron. Yeah, you don't have to pay rent.

It's not a forever thing, but for a little while that was fun. Absolutely. Yeah.

Yeah, good for you. Awesome. Okay, so in the 30 months, what was, what was the hardest part, would you say? You're 28, you're like, I'm, I'm living on nothing doing this debt-free thing. What was tough about it?

I would say staying motivated. Motivated at first. There at the beginning, it just seemed like a huge mountain to climb. But as I kept going, as the snowball happened and I got the student loans taken care of, that was very motivating just to watch my payments be able to get bigger and just to watch my debt just decrease.

Yeah, just watch it go down. Yeah, yeah, that keeps you motivated, keeps you moving. Yeah, and it's like, I can see the end, I can see the end, I can do this, I can do this. Yes, that's called hope. Yeah, very cool. I'm so proud of you. Way to go! Who was cheering you on, this gang over here in the, in the peanut gallery?

Yes, yeah, my whole family.

All right, it's awesome. Very good. And they all came down with you to cheer today, huh? They did, yes. Very good. So mom and dad are proud? Yes. Yeah, you're living in the vet clinic, not their basement. That's good. I like it. Very cool. Now that you did all this, how does it feel How does it feel? Fantastic. Was it worth it?

Yes, it feels very freeing.

Yeah, yeah, very cool. So what do you tell people the key to getting out of debt is?

Having and sticking to a budget was very helpful. There's freedom within the budget too. Budgeting just gives you a plan for your money so you can still do the fun things you'll want to do and still save for the things that you want to do while also being able able to pay your bills.

Yeah, yeah. Were you doing it on the EveryDollar app or on paper?

Yes, I've used EveryDollar.

Okay, all right, very cool. Good for you.

So great. Very, very proud of you. That's awesome. Good work. Okay, so the other 20-something-year-olds that are listening and they have student loan debt, they got car loans, all the things— what would you tell them if they're sitting there thinking, there's no way I can do what Erin did? Like, she just, she killed it. She sacrificed so much and got out of what, $31,000 a day? I don't know if I can do it. What encouragement would you give someone listening in their 20s?

I would say to think outside the box. Look for opportunities to decrease your living expenses and find anything you can do to increase your income. So, and I was able to do this doing things that I love. I, on, in addition to living above the vet clinic, I've also done a lot of pet sitting on the side, which I love doing that anyway.

Yes, yes, I love that. When people can find a side hustle that they're naturally good at, it's what they're— it's what they can do well, you know, and then you get paid for it, just like what you're saying. That's awesome.

Works out perfectly, perfectly. Well done, Miss Erin. Proud of you. Good work, good work. And on to everything else in your life from this point forward. You got everything's wide open now. Yes. Congratulations.

Well, well done.

All right, it's Aaron in Columbus, Ohio, 31 $31,000 paid off in 30 months. For those of you slow at math, that's $1,000 a month. Making only $35,000 to $38,000, she did this. It's amazing. This is very cool. Those numbers are unbelievably cool. Very good work. All right, Erin from Columbus, count it down. Let's hear a debt-free scream.

3, 2, 1, I'm debt-free!

That's how it's done, ladies and gentlemen. That's how it's done. Love it. So, uh, we get to meet the, uh, Gen Zers and the Millennials that, um, are not victims and that are not entitled and that are actually go-getters. They, they get up, leave the cave, kill something, and drag it home. She's obviously one of of them, and we get to meet them. And so we have a distinct advantage over a lot of people out there because a lot of people can believe that these two generations are all entitled brats that live in their mother's basement or something, and they're not. There's a high percentage of them qualify like her. Yes. And we got a bunch of them working here in that age group too, and they're incredible.

Well, when you—

and I think what's always impressive is when you choose to do something when you are on the younger side of life. You know what I mean? Like, it's one thing when you're in your 40s or 50s and you're like, "I gotta get my crap together," 'cause it's retirement coming, all of it. But to have people in their 20s, like, step into this and be like, "You know what? I'm gonna do it early," 'cause it's what everyone else wishes they had done. You know, they're like living out the life that they— "I wish I had met you when I was 19." Yeah, that's so many people. That's right. Yeah. And for Aaron to think about, at 28, you think 10 years from now, 38, 48, 20, like what she can save and put away, like she will, she'll be, she'll be a Baby Steps millionaire, honestly, in no time. Like it's, it is wild what your income can do when you have no payments.

Yep. And what your career will do. Yes. Because it opens up, you don't have to sit in a bad situation. You can make different choices on where you work, how you work, who you work with. And because you're not stuck You're not dependent upon, oh, if I lose one paycheck, I lose my car. If I lose one paycheck, the student loan people are gonna come knocking at my door. If I lose one paycheck, we're gonna discover that Samuel L. Jackson's actually in my wallet. You know, it's a MasterCard, right? Who— what's in your wallet? Apparently you, you know. And so yeah, all that, all that's gone. And so when you learn to do what she did, which is take a very intentional approach, step-by-step, systematic, like she did did, uh, follow the process, didn't argue, didn't try to make up her own thing with some math thing she read on TikTok. She just said, I took this class, I'm gonna do this. Yes, it was real simple. And, uh, you know, there's a beauty to that simplicity.

Absolutely.

Well, and the consistency. And over time, like, it's not— it's not fast, right? I mean, 30 months, like, she, you know, 2 and a half years, over 2 and a half years. And it's— that's a— when you're in the grind of that, that's long, right? You can look up and think 2 and a half years ago from sitting here and you're like, oh my gosh, that went so fast. But when you're in the middle of it, like she was saying, it can be hard. So the, the perseverance and the motivation, yep, I think is great. Yeah. And I think another funny thing is being on this show and you get calls from all generations. And I'll say, I think we've met as many entitled boomers calling in expecting certain things as we have Gen Zers, you know.

I mean, oh, definitely there is a—

definitely an amazing thing that regardless of your age or generation, motivation. The people that win on this stage, I think the consistent thing that we see over and over again, regardless of age, is that they believe they can do it. And she looked up and said, "You know what? I'm gonna change some things for my situation and I'm gonna do it." And she did it.

I'm gonna take this. It's amazing. A buddy of mine said, he said, "Your stuff never worked, Dave, until I submitted myself to the program." And just like, yeah, following and do it. I had to submit myself to something that's different than I thought and different than my arrogance. Yeah. That's Very cool. Congrats, Aaron. Very cool, Aaron. Proud of you. Awesome.

Hey guys, Rachel Cruze here, and I love summer. There is more fun on the calendar, more time with your people, and way more chances to make memories. But you know what else there's more of? Spending. Oh, between the extra groceries and gas and camp fees and family trips, it all starts to add up so fast. And before you know it, money stress starts to steal the fun out of everything. And that is why I love the EveryDollar budgeting system. App because it helps you plan your money, track your spending, and find more margin in your budget so that you can put extra cash towards the goals that matter most. Enjoy your summer without the money stress. Download the EveryDollar app in the App Store or Google Play and start for free today.

Our Scripture of the Day: Teach me your way, Lord, that I may rely on your faithfulness. Give me an undivided heart that I may fear your name. B.B. King said, the beautiful thing about learning is nobody can take it away from you.

All right, up next we have Chase in Columbus, Ohio.

Hi Chase, welcome to the show. Hey guys, how are you?

We're doing great. How can we help?

Hey, so first off, I want to say I'm sorry if I stutter. I stutter when I get nervous, so it might be a little awkward here.

No worries at all. Dave just screwed up his whole in-ears, so he's, he's having issues too. So don't— you're in good company. Don't worry, Chase, don't worry.

Okay, um, so my wife and I, we make decent money. I mean, I would say it's okay money. Um, pay off So we make $118,000 a year combined. Okay. We just paid off her debt besides her car, which we still owe about $18,000 on it. And now we're transitioning into my debt. I made a bunch of stupid decisions when I was around 23, and I have 3 items on my, on my credit that are charge-offs, and those charge-offs total up to about $4,000. And then I have about an additional $3,000 that is medical debt. Um, that is not charged off. So my question is, how do I go by paying these off to be able to boost my credit and have, uh, be able to buy a house by no later than February?

Don't know if you're gonna make it by February, but we can help you get it cleaned up, and then we'll see how quick it changes your credit score. Okay. Um, of course. So the, uh, the $3,000 in medical, why has that not been paid, and how long ago was that?

So it was about 2 years ago. Pretty much it came down to, I used to work in law enforcement. I got injured when I wasn't working and ended up having to leave my job. I wasn't able to return just due to the injuries. And then we just, we lived pretty much penny-pinching paycheck to paycheck. I was trying to do odds and ends jobs.

Okay, so that's old debt, but it's not been written off or charged off. Yet, as far as you know. Yeah. So do you have a contact point on all 3 of these debts? Someone to call? Yes. Okay, so call them up and ask them what it takes to clear the debt, or what they will accept to clear the debt. Okay. Okay. They're all bad debts, and a bad debt made good, even if it's settled, is about the same thing as paying it. So that $3,000, they might say, oh, we've added charges and interest and it's $8,000 $8,000, and you may have to negotiate down and say, okay, I can't give you $8,000, but I can give you $3,000 if you'll take the original amount. I can send you a check today if you send me that in writing that you'll accept that as settlement in full. Okay, okay. So in all 3 cases, you're looking for a couple of things. One is you need an email or something in writing that says we, the organization, will accept 'X amount as settlement in full,' and then you keep that piece of paper in hard form, print it off, in a file for the rest of your life.

Because these people forget, they screw up, they call back, they go, 'Oh, we didn't settle that. Oh, that guy didn't have the rights.' Oh, I'm too sorry, I got it in writing. Okay, so you need to get it in writing. And then the second thing is, they will ask— some of them will ask for for electronic access to your checking account to pay the bill. They want you agreed on the settled amount. Do not allow them to have electronic access to your checking account. They lie. They will clean you out.

Okay? Okay.

So instead, you can wire them the money, or you can buy a prepaid one-time use debit card for the exact amount and put it on on that, and then give them that card number. But don't let them use your regular debit card, and don't let them use— don't give them your checking account number, anything like that, okay? Okay. So in writing, no electronic access to your checking account, and then you've got a deal on all three. The fastest— as soon as you do that, and then, you know, go ahead and put in— then you can— and, and you can even put in the in writing that as soon as we receive this, we enter on the credit bureau that it was paid in, that it was settled, or that it was paid in full, whatever. Settled in full is fair. That's fine. But that, that will remove the damage, the bulk of the damage. So if we were going to put it on a scale of 1 to 10, as an example, a bad charge-off is an 8 or a 9, if 10 is the worst, okay, which is where you are today. A paid-off charge-off off is a 3 or a 4.

So it still damages your credit because this really happened and it shows that you didn't pay a bill but you went back later and paid it. But it's not nearly as bad as where you are today. And that's what I'm saying, I'm not sure you'll quite be ready by February.

Yeah, and do you guys have an emergency fund, Chase, and a down payment? Will you have all that by February?

Yeah, so, so we've actually been looking now to go look at houses. We actually have $40,000 for a down payment and then we have $7,500 put aside if specifically for my debt. Yeah. Meaning we can go pay off everything. And we're lucky enough that my in-laws, they have like an in-law suite for their house. We're able to live here for free. They offered it to us instead of renting so we could fix everything up and be able to save for a house. So everything can be paid theoretically today. And I'm, I'm sorry.

Well, no, I was going to say it takes usually around 6 to 8 months, 6 to 9 months, with— for the credit score to go undetermined once all the accounts are closed. So yeah, you guys will be right on that line.

Yeah, that's why I keep saying I don't know if February is going to work. It might be May, but you got to do it anyway. So let's go get it cleaned up. Go get it cleaned up and get everything shut down. And if you have no other active accounts, yep, making sure everything's closed, then you may see it go all the way to undetermined, which is the best possible scenario.

Because if they pull your credit score when you're trying to get a mortgage and it's bad, you know, it's, it's going to hurt you more than having an undetermined credit score at that point. Exactly. When you can do manual underwriting and have 2 years of back bills that you're showing that you, that you pay, right? Cell phone, insurance, electricity, so on.

Exactly. Hey, we wish we could get to every call and question, but we can't. So we built a thing called Ask Ramsey. It's our AI tool that's and it's built and trained only on proven Ramsey principles. The data that AI is accessing is only Ramsey data, so you're only gonna get a Ramsey answer. Ask Ramsey, it's free. Ask your question at RamseySolutions.com or click the link in the description. Jada's in Sacramento. Hey Jada, what's up?

Hi, thank you for taking my call. Sure, how can I help? Hi, so my husband and I decided to pay off our $32,000 debt this year and we've made $6,000 progress so far. Good. So we're doing really well. And he's the one working. I stay home with our 1-year-old. And he works a lot. He commutes almost 2 hours to and from work. He has a side gig. He's really busy. So he feels like he should have a good size allotment of fun money, which we haven't budgeted up until this month. And so that ends up being— $360 for each of us, which I feel like is a lot because I want to— I'm the one who wants to pay off the debt. And so my question is, what do I do with that $360? Do I throw it at the debt? Do I try to save it? Do I, you know, go blow it somewhere? What should I do?

Well, have you guys— have you run out? I mean, how much debt you guys have left?

$27,000.

Okay. I mean, if I were you, I think having having some level of money, right, for yourself, because you're going to have to be buying, you know, there's things you have to buy throughout the month for yourself, which is fine. Um, but just to blow money for the heck of it while you're getting out of debt feels wasteful to me. Because as you're looking and running out the numbers, both of you, I mean, the, the math is the deeper you sacrifice and the more money that goes at the debt, the faster you're going to get out and the faster you can get back to a great life without payments. And so I guess that's a decision that you guys have to make because the you spend and just enjoy, the longer it's going to take you guys to get out of debt. And I know he works hard and all of that.

And yeah, wah, we all work hard. So yeah, that's too much. Y'all have too much fun money budgeted. I'd back it down. Less fun. It's almost $700 a month. Yeah. It's less fun. Yes.

And so that was the quote unquote compromise. He wanted about 10% at first, which is just crazy. Um, well, he's not on board.

You're the only one doing this. This.

Yeah, and so it feels like—

yeah, the problem is not the fund money. The problem is whether or not he's engaged. Yeah, once he's engaged, then he— we don't argue about this. He's not engaged.

Y'all need a timeline and to say, here's an aggressive way or aggressive time to get out of debt.

Yeah, he needs to believe that this is worth it, and he doesn't yet. That puts this hour of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, There's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.