Transcript of Wisdom Starts Where Debt Ends

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studio, this is The Ramsey Show. I'm George Campbell, joined by Rachel Cruze. This hour, we're taking your calls at 888-825-5225. Isabella kicks us off in Washington, D.C. Isabella, welcome to the show.

Hi, thank you so much.

Absolutely.

We are currently paying over $5,000 a month in bills right now, and in a few months we're going to be moving and then paying less than $1,000 in bills. And we're hoping that you guys have some advice on Maybe budgeting better. We're worried we're gonna see a significant drop in our bills, which leads to an increase in, I guess, our bank account. And I'm worried we're gonna see that money and be like, wow, now we can buy all these things that we want and go out to dinner and this is great. And we're 27, you know? So I'm worried that we're gonna wanna spend it.

What life hack did you find to cut your expenses down by 80%?

In 2020, I bought, a property, a 2-bed, 2-bath condo, and the mortgage— I put over 60% down on it, and the mortgage is $300 a month. So we're moving into it.

Oh, so it's the mortgage that you're basically giving up, that $4,000?

Yes. Yep. The rent in Washington, D.C. is insane.

What's your household income?

It's about 10 grand a month.

Great. So you have $5,000 in expenses. You should already have $5,000 left over, life as it is.

Yes, but then, of course, Washington, D.C. is expensive. Groceries and just life in general.

So that doesn't count groceries.

Are you guys moving out of D.C., then?

We are, yeah. We're moving to Hilton Head Island, which is where the property is.

Oh, gotcha.

Well, that's wonderful!

That sounds nice.

Rachel's jealous.

That sounds nice.

OK, so your income stays the same at $10,000, but your Your bare-bones expenses go down to $1,000.

Yeah.

And you're worried you're just gonna spend the difference instead of do something smart with it.

I am very worried. And then I'm questioning, do we try to pay off the rest of the house? I mean, we have $40,000 left on it, but if it's only $300 a month mortgage, is it smart to pay that off? I think at 3% interest, it's making more.

Making more where?

I think so, like, if we put it in like the stock market, like, I think it would make more there, wouldn't it?

Well, there's a lot of ifs here. Number one, you're not investing right now. Number two, we're hoping the market is up consistently, which over time it's going to go up and to the right, but there's going to be years where it could be down 20%. And so there's a guaranteed rate of return, which is paying down your mortgage systematically, and then there's the variable of we could make money in the market. So I want to make that part clear.

OK.

So the second part here, do you guys have any other debt outside of this mortgage? Nope, nothing.

Amazing!

And you guys have savings?

Oh yeah, we have over $100,000 in savings.

Oh wow!

$100,000, sorry, not $100.

$100,000 in savings and no debt. So you could pay off the house today and still have $60,000 left over.

Oh, absolutely!

What's stopping you?

Question of, is that smart?

Where is that $100 grand?

I don't know how to juggle back and forth.

Where is the $100 grand right now? In a savings account. Okay, so your point about making more is not really a point because that $100, if it's just in a regular savings account, it's making like a little over 1%, even less than 1%.

Is it in a high-yield savings?

Yeah. I'd have to ask him.

I bet it's just in a traditional savings.

All right, well, I'll tell you what I would do if I was in your shoes. It's besides the point from your question, but I would pay off the mortgage today, be completely debt-free, free, house and everything, the peace you will feel is unimaginable. Your risk will go down. Your margin will go up, even if it's by $300. And now you guys are making $10K with $700 in expenses. That's pretty wild.

Smart.

So here's what I would do to force yourself to do the smart thing, to eat the vegetables first, as we say, is to auto-transfer that money somewhere where you can't touch it. And for you guys, since you'll be in what we call Baby Step 7 with a paid-for house, that could be to investments every month.

And you're saying the $4,000 in margin that they're gonna get, you would just, you would direct those to?

Well, if you have $10,000 coming in and only $1,000 in expenses, you might go, we should upgrade our life in some ways.

Yeah, I was gonna say, I think you can do all the above, Isabella, honestly. I would, if I woke up in your shoes, I would write a check. I'd be done with a mortgage. I mean, and if you hate us, you can take out another one later if you'd like, but I would pay it off. And then from there, really, I mean, the uptick on lifestyle, and this is true if you're getting a lifestyle increase like you guys are, or if you're getting a massive raise, or people that change jobs and they see this, it's good to be in a practice and a flow of 3 things, of giving, saving, and spending, okay? So, when we're talking about the saving, you need, yeah, you guys need to be putting some away in savings. You need that rhythm in your life. And that will be for retirement investing. That will be for short-term savings, because you guys may want to upgrade things in the house in 2 years, right? And you'll just continue to take that. what would be, what, $60,000 in a savings account, and just continue to up that. I mean, I would. And then, increase your lifestyle a little bit.

It's okay to spend some. It is okay to go out to eat at this point in your life, Isabella. So, you're fine.

You've earned it. And you guys are only 27. The amount of wealth you're gonna build is astounding.

So, enjoy it. And then, Isabella, I really would encourage you, you guys need to be giving. Have that in a rhythm, because as your income increases, you're gonna see your spending will increase, your savings will increase. And if that giving element is not there in a rhythm, then life long-term starts to become pretty dull and can become very self, inward-looking, and that's it. And that's a pretty empty life. And so, that giving component is, I think it is, it's so big.

Yeah, no, I definitely agree.

So, enjoy some of it, save some of it, give some of it. And I think you guys are gonna do great.

Have you guys ever sat down and done a budget together?

We've kind of thrown it back and forth here and there, but we've never actually sat down, pen to paper, this is how much goes here type of thing.

That'll make you feel better, too.

I think you don't even know how many thoughts and feelings you have around this. Once you put it into the budget, you're going to go, oh my gosh, I can't believe we've never done this before. It feels so much better just knowing where the dollars are going to go before the paychecks hit. That's the key to preventing lifestyle creep. is having a plan for that money before your emotions have a plan for the money, before companies have a plan for your money, before the Instagram ad has a plan for your money.

Ouch.

Sorry, Rachel, that was personal.

That hurt.

But you guys are doing great. If anything, it sounds like you need to let loose a little more.

Yes, and I think your question is a good one just in the motivation of it, because for so many people that are listening, their money is such a question mark of like, I don't know, I don't wanna, fearful of this over here. I don't wanna do this. I feel like that's too much. Is it okay to do this? It's all these questions. And honestly, Isabella, a detailed budget and working through it, it answers a lot of those for you, where you feel there's not questions because there's a plan. And so, if you hold on the line, we'll give you EveryDollar, and we'll give you the premium version, even though you'll be fine. You can, I'm sure you can—

She can afford it.

She can afford it, but—

For Erin and Ben, your stuff's on the line.

I'm gonna give it to you as a friend because I do, I want you and your husband to sit down And do that budget because you'll see in EveryDollar, the first line item is giving, the second is savings, and then all of your expenses underneath. And when you live your life in that order, especially at 27 on Baby Step 7, I mean, it's insane, insane. You're just putting good practices in place financially.

You build these muscles now, nothing's stopping you guys. We're so proud of you.

Well done.

What a good place to be.

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Chase is in Birmingham up next. Chase, what's going on?

Hey, how you doing?

We're doing well. How can we help today?

Okay, thank you for taking my call. My wife is definitely not going to believe that I talked to y'all today.

Are you gonna tell her? Is she gonna find out?

She is definitely gonna find out. Yes, we've actually been going back and forth. She's like, I'm gonna call today. And, you know, she's just kind of been so busy.

But, oh, but you beat her to it. Oh, see, Chase, here's what happens. The callers that call in, we tend to naturally side with them because they're the callers. We want to help them. So you've beat her to the punch. So you're thinking there's a good chance you're going to win the arguments because you called in. But we're going to try to— no, we're going to play fair.

I don't think I think she is going to win the argument. And, you know, I feel like I kind of already know the answer. But, you know, I just kind of, you know, I think it's just my, my flesh and kind of, kind of own greed that I'm dealing with. So I wanted to call, you know.

Got biblical real quick. All right.

Get some knowledge and humbled, you know, because, you know, my wife's awesome and I want to, you know, I want to respect her in these, you know, financial decisions as well.

Okay. So lay out the argument.

What happened? What's going on?

All right. Do you argue? I would say, well, not really big argument, but anyway, so we just upgraded to a SUV, a bigger SUV. Um, cause we just had our second child. Um, and she's going to be going—

Congratulations.

Thank you. She's going to be going part-time. So of course she's going to be having the little kiddos more often. Um, so I just want to give her some space, more space. So anyway, um, I would say we upgraded, we got a 2021 SUV, um, for about $23,000, I believe. And kind of even going back before this, our kind of arguments have been, hey, let's pay off these vehicles, let's pay off these vehicles. And she's like, yes. And I'm like, no. Um, and that's kind of just been going back and forth. Um, thankfully, um, we did go ahead and pay off my truck. So we only have, uh, one car payment. Um, and so kind of, kind of trying to decide what we want to do going forward, um, given that she's going to be having a pay cut. Um, and she is the one to swipe the debit card more often than me.

Um, it's a very nice way of putting it.

Um, and I know she's not on the show to defend herself, so that's all I'm gonna say.

Okay.

She's probably the one buying a bunch of stuff for the house too. We'll throw that out there.

But so the only debt you have is this $23,000 SUV loan?

Yeah, yeah, just a loan.

Okay, so what's, what's the argument? How fast to pay it off?

In order to go ahead and pay it off.

You have the money?

Oh, okay.

Yes, yes, yes. So yes.

How much do you have?

Well, the money— so currently I don't— we don't, um, and I kind of did this about 4 years ago, so I don't keep anything in our personal banking savings. Um, I kind of like all my money to grow for us. Um, so I kind of, you know, I don't say banker I'm with, kind of like an Edward Jones type. company. So everything is growing in the market. So currently that we have in savings is about $130,000.

Okay.

And then additionally, we have 2 other— we got a traditional— 2 traditional accounts about $20,000, $25,000 each. And of course, we have a couple of Roth accounts. Everything totaling right now to be about $190,000 with mostly the $125,000 in savings.

Okay. And you don't have anything in checking or savings except your spending money for the month?

Well, yeah, so in savings, just in our personal banking, I keep about a $5,000 buffer for emergencies. Okay.

But if you had an emergency above that, you would have to sell off some of your stocks and mutual funds from Edward Jones to fund it?

That's correct, yes.

Okay. Well, step 1, I would encourage you to keep a full emergency fund outside of that in a high-yield savings account. And the market could do better, but man, when you are— when you have an emergency, the market doesn't care about the timing. So if the market's down 5% and you have to withdraw that money, it's gonna hurt. It's gonna add insult to injury along with fees and taxes. So I would— I love that you want your money to grow, but I still would keep your emergency fund aside because it's not an investment. It is insurance. against life. So once you do that, you have the money to pay the car off, and I would do it today. I don't know who's on what side. If your wife is saying, let's pay it off today, and you're going, oh, we got the money. What's the risk? It's a couple hundred bucks in a payment. We can stomach it. Is that your side?

That's exactly my side. It comes out to about a $370 a month payment. And with that being our only— I mean, we have a house payment and that vehicle payment, and that's the only debt that we have.

How come your wife is going part-time back to work? Is that because she wants to?

So she's just a— and this is what I love about her— she's just such a godly woman, and she wants to be there for her kids more than work and just nurture the kids at home while they're young.

Well, here's my case, Chase. Would she want to be home full-time?

You know, and that is definitely a goal in mind. Definitely, she would love to be home. Full-time, yes, I would agree with that.

But you guys can't from a financial perspective though?

It would be tight.

I would say, I mean, I wouldn't say it'd be tight. It'd be doable. But like I said, I just don't think, I got a toddler as well, so we're kind of getting her to some extracurricular activities and that's coming up. You got a little bit of monthly daycare payment. And then you get into the talks of when she starts kindergarten, are we gonna homeschool or private school? So it's just a lot.

Sure, yeah, you just want options. I get that. No, that's not bad. You can be a godly woman and work part-time too. So it's great. I bet she is a fantastic mother. So what I would do, honestly, Chase, is for sure, I would be paying that. I would just pay this off. And I would move what George was saying, some money, maybe 3 months. You may not need a ton. But I would up that $5,000 and have at least a 3-month emergency fund there in case something happens. It's just, it's there, and you don't have to go through the hoops of taking out investments and selling and all of that. So, that is, it's the clearest plan. And my question to you is, have you guys ever bought a car in cash, or have you always taken out a loan and then eventually paid it off?

Yes, no, it's always just been a loan and just paid it off, you know, as early as we can.

It would be an interesting experiment because like you're saying, the $370, it's not gonna, It's not gonna kill you guys. But this is the part about money and debt specifically that you can't put into a calculator or an Excel sheet, is the absolute freedom of just owning your stuff and not owing.

Right.

And we actually have some great friends, and they could easily afford the car payment. They always kind of had. It's just kind of always what they've done. And then they paid off their cars. And that he was laughing at me a little bit, 'cause I mean, he knows what I do. I don't like rub it in my friends' faces by any means. And he was like, man, I didn't really realize just how good that feels. Like, not to— like, it's our car. It's ours. And we're not attached to any loan department, any bank in it. And so, there's an emotional piece to this chase that actually is going to free you guys up. And what that unleashes Spiritually, I do wonder if it creates more creativity for you guys and your options in life. And does that free you all from a deeper level to be like, no, if she really desires to be home more, like, do you figure out an easier way to get there? Right? Where it's not just all math, there's something emotional about it.

Yeah, you guys are speaking 2 different languages and you're missing each other because of that. You're logic and math and she's emotion and freedom. and risk and security. And because of that, I don't think you're gonna find a compromise if you keep talking the way you guys are talking.

Right.

So here's what I did, 'cause I've been in your shoes, Chase. My wife retired after 9 years here at Ramsey. She now stays home with our kids.

I love that you say retired.

She retired. Well, I don't know if she's gonna work again. My goal is that she never has to go to an office again. But Chase, part of that was we got the home paid off and we didn't talk about, well, it's a 3-point— I could make more on the market if we put it there. We just went, we're gonna have more options and more peace and more margin and more freedom if we just get rid of all of our debt. And that's what happened. And we just upgraded to the minivan life because we got 2 little ones. And it was some grieving on her part to get rid of that SUV. But I'll tell you, walking in there and just writing a check and just leaving with a 0% interest rate, $0 a month, is the best feeling in the world.

And I'll throw this out there, Chase, because you brought it up, so I'll go there. But when you look in scripture, There is nothing positive about debt ever. And it's not a sin, it's not a salvation issue. There is nothing that points debt and wisdom in the same category. There's not. And so, if you want to live a life with wisdom with your money, and you wanna follow, whether it's Proverbs, the Old Testament, whatever, wherever you wanna pull from, it says over and over that the borrower is slave to the lender, and that there is wisdom And not owing people, but actually owning your own stuff.

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If you filed an extension for your 2025 taxes, the October 15th deadline will be here before you know it. And if your taxes are pretty simple and you can use the Ramsey SmartTax to finish filing, before it's too late. Ramsey SmartTax is affordable, keeps filing simple. It's got built-in support in case you get stuck and need help. And October 15th is your last chance to file and get that tax stress off your shoulders. So go to ramseysolutions.com/smarttax and start filing now. And if you filed an extension, your tax situation's maybe a little more complicated or you feel overwhelmed, get a pro in your corner before October 15th. Uh, that way you're not battling the IRS on your own. You can make a game plan for your unique situation or business. And if you wanna find CPAs and enrolled agents that have been vetted by our team, go to ramseysolutions.com/cpa. You can also get free checklists and guides that'll help you file at ramseysolutions.com/taxresources. And we will link all 3 of those down in the description of this episode. Tony is in West Palm Beach up next. Tony, welcome to the show.

Good afternoon. How you guys doing?

We're doing well. How can we help?

Um, so in February I paid off my house.

Awesome.

And, um, as definitely, you know, as a big accomplishment. And, but I just feel like I thought it'd be more freedom than I have.

How much did you pay off and how quickly?

I paid off, um, it was $110,000 in About 2 and a half, 3 years, closer to 3 years.

Wow, way to go. Good for you.

Why'd you do that? Um, actually, I listened to you guys about 5 years ago. I started listening to you guys, and that was my start journey of like, I gotta get this together. And I mean, I was I bought my house back in '09, so my payment was never really that high. Um, and so I just kept, you know, once I heard you guys, I started putting more money toward it. I had a piece of property I bought when I was like 20 years old, and I used that also toward it to pay off my—

You sold that property?

Yeah, sold it. And, um, just tried to pay off all the first, like you guys say, pay off like the low bill, like the smallest bill and work your way. And once I got those first ones out of the way, I really started trying to put as much as I could toward the house. I was also with that property. I had thought about using it as investment down the line, but I said, what's the best investment is my house. If I can have that paid off, you know, that's a big step. Step. But, um, the house is paid off and, um, I'm trying to invest. Um, I feel like I'm very— I'm 43 years old and I'm a little late. I have a pension at my job, but I'm kind of late as far as like investing in like a 457. I have an IRA outside of work, but I just feel like I'm kind of down. Like when you hear people say, oh, I have $300,000, I have this much. I have like $60,000 in, uh, between all my accounts. So I get nervous thinking I'm 43, you know, we'll have enough time investing.

I have 3 daughters, one in high school, one in middle school, one in elementary school. And it's like, uh, you know, I haven't put any money really yet toward college. So I started getting like, you know, a little worried about—

So you're just overwhelmed in general because you thought paying off the house would somehow solve all of the other problems. It would solve retirement, it would solve college funding, it would give you purpose. But all it did was it gave you freedom and peace and some extra margin. And so that's a step toward it, but it's not the whole picture. And so it's okay. What you're feeling is normal.

Okay.

And you're not behind. I know it feels like it because there's someone else has more than you. But man, the good news is it's not a, it's not a race where there's 1 million people running. It's just Tony's race.

Gotcha.

And there's gonna be times where it's slow, and there's gonna be times where it's fast. There's gonna be seasons where it's crazy because you're cash flowing college, and there's gonna be seasons where you wish you had something to save for.

Gotcha.

Are you married?

Yes.

Okay.

How much do you guys make a year, Tony?

Uh, $172,000.

Okay.

I mean, it sounds crazy. I should be able to, you know, put more money— like, I shouldn't be as, you know, Kind of stressed out about it, but it's still, you know, something always seems like every— at least the house is paid off, but something always comes up. I'm trying to save, you know, and try to keep— I used a lot of my, um, personal savings also to pay the house off. So I was— I've been trying to, you know—

How much do you have left in savings?

About $12,000. So now I'm trying to— I'm trying to put, you know—

Were you not— were you investing? Well, you have $60,000 invested, you said. So have you been investing in the The last 5 years after you paid off your consumer debt too, you've been putting money away?

I was only putting like $200. I was putting about $800 a month. And then I went down because I said my goal is I could see the light at the end of the tunnel here that I can get this house paid off. So I stopped really putting too much in investing and decided to really push to get the house done. But then, time, like they say, time, Helps for investing. And I feel like I kind of cut myself short, but I guess I could try to make it up now.

Well, you can. So, at this point, now that you're on Baby Step 7, which is to build wealth and be generous. So, if you invested, even if you went back to our 15%, which you can invest more, and say you have $60,000 saved now, say you put $2,000 in a month, okay, which would be $24,000 a year. And you do that for 25 years, then that's gonna be $4 million at retirement.

Oh, okay.

With a paid-off house. How much is the house worth today?

About $700,000.

Okay. Well, and in 25 years, you know, you'll be, gosh, close to probably have a $6 million net worth at that point.

And that's less than 15% of your gross household income is the written numbers Rachel just calculated. And you only put in—

What would you do? $2,500 a month? Let's just have fun with this. What would you say?

It would be, let's see, $25,800 divided by 12, $2,150. Would be exactly 15%.

Oh, okay. I was close, Torrence.

Yeah, I was just saying, I was saying Rachel's being conservative. You're being a little conservative.

By $100 a month, Tony, I was being conservative. Let's do it. Okay, hold on, hold on. Let's just up it just for the fun of it.

$2,150. Okay, there we go.

4.2.

All right, we're getting up there.

I only put $1,200 right now, so—

Yeah, you gotta up that, Tony. So I think that, that is a little— okay, and you paid off your house, which is Incredible. But that is one reason we talk about Baby Steps 4, 5, and 6. We don't jump from paying off consumer debt straight to paying off the mortgage because you wanna take care of retirement and that's 15% of your income. So if you had been doing that over the last 15 years or last 5 years since listening, you would have more, which is fine. I mean, you're, you're going to be okay.

Yeah.

And kids' college, we talk about that next. Like you need to be putting money away for kids' college and then throw extra at the house. So if you had waited, just in a different scenario, another 4, 5 years to pay off the house and instead did these other buckets, I do wonder if it would have felt less extreme. It would have probably felt a little bit more in rhythm with your life, right?

Gotcha.

But it's not a bad thing, Tony. But I think I could see how if you go straight there, you pay everything off, and then you're like, oh my gosh, I have college and retirement, these 2 big buckets that are very legitimate. So, That feeling you have is real, and I'm not negating that. But I also want to encourage you, yes, if you fund— and again, Baby Step 7, you can invest more than 15% of your income, right? So even if you went up to 20% and invested—

Once the kids are out of college and you've helped cover as much as you can from that, you'll be upping that to 30%, 40% of your income.

Yeah, you could throw so much in investing at that point. And then you have a paid-off house too, Tony, at the end of this, right?

Plus a pension, plus Social Security.

Yeah, and a lot of people going into retirement still have a mortgage, and that's a big thing that they try to you know, take care of before retirement. And yeah, you're done with that at 43, which is pretty remarkable.

Thanks. Yeah, just like you say though, the stress of just like— if I probably would have done it the other way around, it would have been a lot. At least those bases are covered, but you're still— yeah, I mean, it's somebody, you know.

Yeah, but that's okay. It's okay.

Yeah, I mean, listen, you said about $2,100 a month.

$2,100 a month.

Yes. To invest.

Okay.

You can put that in— That's the goal. Yeah. Roth IRAs. I don't know if you can remember who said he had 401s work-wise. Um, but yeah, to find, to find some investments to put that in. And yeah, and you'll be great. You'll have $4 million.

The biggest thing is stop beating yourself up over what you could have done differently. You got the rest of your life ahead of you. The windshield is bigger than the rearview mirror for a reason. So you got this, Tony. Keep fighting the good fight. Let me tell you what I get asked all the time. When should I get term life insurance? How much do I need? Is it affordable? Those are the right questions to be asking. So let's take a quick review. The fact is, term life isn't a baby step. So if anyone is dependent on your income, you need to have 10 to 12 times your income in life insurance now. And most people are surprised by how affordable term life really is, even if you're not in perfect health. Look, I understand the hesitation since most insurance companies make it more of a hassle than it needs to be. Not at Zander Insurance. They're not an insurance company. They're a broker that works for you. That means they'll shop and compare the top term life companies to find the most competitive options on the coverage for your family. For almost 30 years, I've recommended Zander for straight answers, competitive rates, and coverage that actually protects your family.

Call 800-356-4282 or go to zander.com for a quick and easy quote. That's zander.com. If you're new to The Ramsey Show, you hear us talk about the Baby Steps quite a lot, and that's because they are the framework that we use to answer every single money question on this show, and it works every time you work that plan. So if you want to learn more about the Baby Steps, you can learn more at the link in the description. We'll get you all the information you need to follow along. Isaac is in Montgomery, Alabama, up next. Isaac, welcome to The Ramsey Show!

Hi, thank you, Rachel and George, thank you for taking my call. Sure, how can we help? So I'll try to be concise and, and get to the point. Uh, so I'm recently married, I'm 27 years old, my wife is 26. I have a full-time job, a career. I make Take home about, say, $60,000 a year after taxes and all my benefits. She is still in graduate school, but she's getting paid as a graduate assistant. And then she has a second job that take home is about $3,500. So combined, we're kind of in the $8,000 range. I vary due to overtime. And at minimum, I'm usually around mid-4s, but She's about to get a full-time job. And at this point, I'm really excited about working in Baby Step 2 and killing all our student loan debt. We have about $100,000, just a little bit over combined. We have a little bit of credit card debt, about, I think, $8,000 total, and then $2,000 on the car that she drives. So we have a lot of kind of small student loans that I'm looking forward to getting paid off, including the car and the credit cards. But I've had these conversations and I've kind of tried to show her a timeline.

And, you know, if we really work hard and use all this, this extra money that we're going to have after our expenses, that we can get rid of this debt within maybe 3 years is the timeframe I'm looking at, uh, kind of generous in that we won't make as much as we think and, and we'll be spending more, just trying to be really, uh, Give a lot.

Is that about $3,000 a month toward the debt?

Say that again?

Is that about $3,000 a month getting thrown toward the debt and the debt snowball?

Yeah.

To get it done in 3 years?

Yeah, give or take. And having these conversations, there's just a bit of a split, a divide. She's very kind of concerned. She's not really been in this sort of situation before. I mean, she She finds it hard to believe that we're even going to be able to pay off the debt. And I've tried to, you know, been like, hey, you know, we, we can do this. We're gonna, we're gonna make the money for it. You know, I know we're not making the most, but even with what we do and what we spend, we'll be able to do it. It's going to take a little bit of time if we keep our noses down. Um, but we're, we're, I'm trying to compromise. She, she wants to keep a credit card. Uh, we're going to get rid of about 4 credit cards and we're compromising on keeping one. And then when it comes to the debt, we're compromising right now, or we've talked about it where she wants to be putting about 10 or 15% of our surplus away towards either an increased emergency fund or like a house fund, something. We're renting right now, but, uh, we really do want to Uh, buy once we get rid of the student loans.

And again, I've been like, hey, if we go hard at the student loans, we're going to make that up in the back end. As long as we get one done, then the next, and then the next, it's going to be over probably $1,500 to $2,000 of extra money we'll have once we get rid of all those student loans.

So Isaac, I'm curious from your perspective, Why do you wanna pay off debt? What goes on inside of you when you think about it? Name off a couple of emotions. I don't wanna put any words in your mouth, but what does it feel like for you?

Right now with it, it feels overbearing. You know, you've got this weight, I've got this weight on my shoulder, and I see all this money every month going towards these debts. And because of the minimum, I'm watching the—

No, I hear you, I hear you. So you're going math again. Stay with me in the emotional realm. As your wife, I'm trying to, I'm trying to give the woman's perspective.

Okay.

So it feels overbearing. So then what does that do to you throughout the day, at night? Like what, what, what, how does that affect your life?

It's just added stress. It's, I can see the finish line and I, it makes me excited. I feel like when we get there, we'll be free and it'll be the freedom, the weight off our shoulders. Uh, I don't— again, we're recently married, so I don't think it affects us too much. We, we have a good ability to talk to each other. And right now it's just kind of, it's an added stress that I want to, I want to be able to get rid of that. And I can see the, the route and the path. And that's like, that's my number one priority right now is Let's, let's follow the plan and make ourselves uncomfortable and really get, you know, get rid of it so that we can be free and, and have a bit more, you know, air to breathe.

Sure. No, I hear you. Yeah, totally. And I concur with what you're saying. I just think for her, probably she may feel a little overwhelmed because you're like, here's the, here's the timeline. This is what we're gonna do. I see the finish line. Get on track. We're gonna do this. Let's go. And she's like, whoa, whoa, I have other thoughts, and other goals, and other desires, you know what I mean? To have an emergency, like, she has her own goals. And the great thing is, everything you've named off so far as a couple, all the goals are amazing. They're all great, right? Like, she's not saying, oh my gosh, I just wanna go and spend a bunch and just go travel Europe for, you know, 2 months and do nothing. And you know what I mean? Like, she's not like a— a not realistic person. Like, everything that she's wanting is realistic. And so, that's the great thing. And so, the work is going to be for you guys to get aligned. And I would wanna make sure that she hears from you, Isaac, not just the numbers and the finish line and the charts and the calendarization of how you're gonna do this in Excel, but she hears from her husband, who's— from what I hear, has a weight on him that is so stressful.

You feel a responsibility, I'm sure, now that you're married, and she's in grad school, and you feel like you are the main source of income at this point. And so much is on your shoulders. And when this debt is gone, there is that deep level of relief. But I want her to hear you explain it in a way that's more human than just like a human calculator.

Mm-hmm.

So, I do wonder, sitting down and having a heart-to-heart with her and you showing your, yeah, I mean, your push towards that, I think would be helpful. And then I'll throw out, this is probably a little bit more on the knowledge side, but again, her goals are within the Baby Steps. And we, this plan has been proven for over 30 years, the fastest way to build wealth and to have, you know, these massive goals achieved is in a very specific order. And that is from a mathematical, but also an emotional level. And so, Mm-hmm. so I would probably kind of push her on that in a sense that, you know, that this is, this isn't something that people just made up, right? It's been done for over 3 decades and it is seen as the most efficient way to get to the goals she wants to get to as well.

Yeah. Um, I've got a couple Ramsey, uh, company books. I've got the Total Money Makeover that I've kind of encouraged her to read after I finished my reread of it. Uh, we use EveryDollar. Um, I've gotten her on that too, and I've showed her kind of how it works and how I like to use it. And we're, we've gotten a lot better at tracking our expenses. And now that we're doing everything together, joint bank accounts and And all that. We've gotten better with making sure we know where our money's going. It's just kind of that long-term plan that—

And I think you guys will get there too. I think I would give you guys some grace. You're newly married. You've combined 2 adult lives.

She's still in grad school.

I mean, there's, yeah, I mean—

So she's been hustling. You've been hustling. Now you're married and she's going, wait, I thought marriage was gonna be like fun and you're giving me like a running regimen for a marathon all of a sudden. So I think there needs to be some vision cast about, hey, where do you wanna end up 5 years from now? Great, we both say we wanna be debt-free with savings in the bank and own a home. Great, now it's just about what's the best path to get there that's surefire? And we know that's the Ramsey plan. So it might take, you know, walking her through Financial Peace University. Hey, Friday nights we're gonna watch a new lesson and we're gonna talk about it. We're gonna do our budget and check in and also dream.

So romantic, George.

Get some popcorn, get some takeout.

Exciting Friday night. She really is gonna be like, is this marriage to ISIS good for me?

Listen, I don't care what's happening with the Housewives. I just don't care.

Oh my gosh.

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Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell, here with Rachel Cruze, taking your calls at 888-825-5225. Lynn is in Peoria, Illinois. What's going on, Lynn?

Well, my question is, should I pay off my daughter's house? Wow.

Whoa, that's exciting.

Yeah.

What brought this about?

Well, I moved in with my daughter and, um, she's a disabled veteran, so her income is, uh, full, um, VA disability and full Social Security disability, which comes to about, um, somewhere around $70,000.

Okay.

And I'm on Social Security and a pension and my income's about $30,000. She owes $104,000 on her house, and I have $100,500 in a 3% savings account. Not sure what to do with it. And I thought it would save a lot of money to pay off her house, and she would then be paying me at least maybe $2,000 a month, and it would be— I'd have recovered my basic money within 4 years. And, uh, it just—

So this is like a loan, like a 0% loan is really what you're talking about?

Well, she's willing to pay interest too. We both live easily within our budgets. Um, I have almost no bills. Um, basically—

So if that's the case, why doesn't she just pay her own mortgage or put extra onto it and pay it off in 4 or 5 years?

Well, she has been Putting some extra towards it, but I just thought that, um, without putting extra towards it, it's gonna, you know, more than double the cost by— in interest. And why should the bank get it? Why shouldn't I get it?

Oh, so you want to become the bank, right? Do you— is this all the retirement money you have, this $100K?

Yes.

Well, that scares me too. What if you need it? And it's locked up and she's only paying you $2,000 a month. And all of a sudden—

I tried to think of, you know, what's the worst that can happen and what would I need it for? I mean, I have supplementary Medicare and I'm very healthy. In fact, I was just at the doctor. Everything is great.

Lynn, I would not do this. I would not do this.

No?

No, for multiple reasons. The highest being you, you being your daughter's bank. From a mathematical perspective, I can see how you can sort of make it work, but relationally, that's going to be a disaster.

Well, we've had some experience with that because when she, um, wasn't on disability and she at that time lived with my house, um, We just worked things out fine and I helped her get her act together.

Yeah, you just changed the relationship from mom to daughter to now lender and borrower. And there's no way around it. I mean, can this come out totally fine? I mean, sure, but I don't think we would have jobs if that was the case. There's a disaster that happens that's looming there. And so keeping things separate, where financially, she is doing what she's doing, you're doing what you're doing. And what scares me, Lynn, is you have $100,000 to your name, which is amazing. So, well done. I mean, that's a great savings. But what are you gonna do for a house, right? You're gonna pay off a home that's in her name. You have nothing else to your name. And what if you wanna move out? What if she wants you to move out in a year and a half or 2 years? You know, what does life look like? It just starts to really limit options. And it puts a strain on a relationship because there's not much safeguarding you in that. Now, if you had a million dollars, and you're like, listen, I'm gonna write a $104,000 check and just pay off my daughter's mortgage.

She's a disabled veteran. I mean, I would be like, all day, yes. What a blessing. What a blessing. But it's not a blessing when you become the bank.

Well, I guess I just think that we're in a, you know, an unusual situation because I'm close with all my kids. My other kids think it might be a good idea.

We want to keep it close. That's the issue. And if she has to evict her lender, that's about as awkward as it gets.

Yeah, I guess because we have some history in, in having mingled finances, um, I just think it'll Go, okay.

Okay, well, I don't know. I don't think we can convince you otherwise, so.

I'll tell you, I would not do this to my own mother.

But that's what you're basing it on is just the—

Well, there's the relational aspect, there's the financial aspect.

And decades of, you know, decades of hearing personal experiences from people. And Lynn, I'm gonna say, when you owe family money, regardless of how you slice it, it changes the relationship. It just, it becomes odd when you mingle finances and family. And again, if it is a gift and there's no strings attached, that's one thing. But when you start to wait for a payment from your daughter, and, you know, things that can go sideways, and you're gonna spend all of your— like, I wouldn't even do this for you, Lynn. I mean, I don't think it's smart.

This is all the money to your name.

Yeah, I don't think it's smart in your financial situation, let alone, adding in the idea of mingling debt and all of that with your daughter. I think that she can, um, I think if you have a, if you're set up well in life and you want to help her and you want to write a $30,000 check to help get the mortgage down for your daughter, that's a beautiful thing.

Because currently you're not paying any rent?

No, no, she pays all the bills.

And has there ever been any talk of 'Cause you said the finances have been mingled. Are you paying for anything as part of this arrangement?

I just pay for my supplementary Medicare and that's it.

But no utilities, groceries?

Do you care for her from like a physical standpoint with her disability? Or is she able to, like, are you a caretaker from like a physical sense for her? I don't know the extent of her disability.

Yeah, just somewhat. We just help each other out.

Okay.

I mean, I've— my life has been intermingled with all my children forever because I homeschool my kids.

If it's working for you, then just keep doing it. But I would not make it worse by becoming the lender.

I think Lynn's gonna do it. Lynn's gonna do it, which is great. And I'm glad you called in, Lynn. I really pray it all works out. And I pray in 4 years you recoup your money. nothing else happens, that you stay healthy, and everything goes according to plan. I really do. I pray that that is the case, because that's what she's going to do. So, all good prayers and vibes and all the things that people send people's way.

I'm picturing Lynn's daughter calls in a year from now and says, hey, so—

This is what can happen.

I'm getting married, and my mom was my lender, but she's also my tenant, and I have to kick her out.

And Gary, my fiancé—

And she has no money because she gave it all to me to pay off the mortgage, but I owe her. So now she's demanding a lump sum in order for me to move out, and I don't have that.

But it's in my name. And Gary, the fiancé, what's he gonna do? You know?

I would much rather a hard conversation with Lynn now than the harder conversation with the daughter later.

Listen, it is what it is. I'm pretty sure Lynn has made up her mind. And she may have great relationships. It may be, you know, I don't know, George. You win some, you lose some on this show.

I love my mom so much that I would not take a dollar from her in debt. No, no, I would not.

No, keep it separate.

Because I want her to come over and make me grape leaves and baklava and not say, where's my money? Where's my money? That's not going to be a fun conversation.

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Hi, thanks for having me on.

Absolutely. How can Rachel and I help?

Uh, so I've been having, uh, some big issues with money. Uh, about 10 months ago, I fell and broke my hip. Haven't been able to work. Uh, I am on disability and I make about $1,500 a month off of that. And working was to, you know, help supplement that. Um, recently my daughter has had some issues with mental health. Um, right now looking at roughly $400,000 in debt, um, from mental health stays in different facilities and things like that. And I'm just trying to figure out if I need to file bankruptcy or Try to pay it off little by little. Um, she's 14, so there's still another 4 years of hospital stays and other things coming our way, and it's just going to be more and more and more.

Wow. Gosh, Jonathan, I'm so sorry. Oh, that's so hard. Are you, are you married?

I am not. I've got a fiancée. Um, she's been taken the last 10 months to take care of me for the hip. I've had some setbacks with it and probably gonna have to have another surgery with it. Wow.

So total income right now is $1,500?

Uh, for me. Um, for her, it's a little bit more. Um, she's about $2,000 a month.

Um, and that's her working part-time?

Uh, yes.

Okay, so total $3,500. And what are your bills every month right now, including your minimum debt payments?

Uh, right now, uh, bills altogether, rent, vehicles, um, all that, it's about $3,500. I, I've got nothing left in the tank.

So just barely breaking even every month?

Yeah.

What other debt do you have outside of the $400,000?

Uh, I've got about $50,000 or so in credit card, um, from trying to keep our heads afloat from Not bringing any income in. Uh, cars are broken down, things have broken in the house that just need fixed.

Do you have car loans as well?

Uh, about $10,000.

Okay, so you got $60,000 between the credit cards and the car loans plus the $400.

Yeah. Yeah, man.

And nothing with, um, her hospital stays insurance? doesn't step in at any point in what you guys have done?

No, unfortunately, because it's mental health, they didn't even really want to give her her diagnosis, but they finally did. And it's one of those things where, because altogether I've got 4 children, she can't even come over to my house right now because of the other 3 kids being there and the risk that she poses. So where is she?

I haven't been able to see her in almost 2 years. Does she stay with her mom or is she in a facility during that time when she came home?

She was in a facility, just got kicked out of it. She was supposed to be there for about 4 months. She was there for a little over 2 weeks. Wow.

So is she with her mom right now or is she staying with you?

Yes, she actually just got home last weekend.

So what are the doctors saying at this point? Is the best path?

Basically, they just keep trying to get her into facilities and things like that. This last one was $60,000 up front.

For the 2-week stay?

Yeah. And with our custody agreement, I owe about 70% of anything that she incurs over $400. Wow.

Well, is she on medications right now? Is any— is— are things under control in any way, or is it still just in flux?

It's still just in flux. Um, the medications seem to help, but then things go downhill. We're trying out different things, and it's just been a whole series of events.

Well, that— I'm trying— what I'm trying to do is get a handle on what the future looks like for medical bills, because if we can sort of know what's coming down the pike it helps to manage. But if it's just this unlimited black hole that we're going to just spend hundreds of thousands of dollars, it's going to be hard to climb out.

Yeah.

Is this straight up medical debt?

Yeah.

Who's the debt through?

It's from all the different hospitals that she's had stays at. She's had 7 stays in the last 8 months.

Okay. Have you been up to date on the payments for these or are collectors coming after you?

Collectors are coming after because I just don't have anything left in the tank.

Well, I'm just, I can't imagine what you guys are walking through. That's so difficult and so heartbreaking to see your child suffer in that kind of way. But I'm just thinking moving forward, Jonathan, there's a couple of things that could be possibilities. Medical debt is one that can be very much negotiated. And so what that looks like going forward, probably not anytime soon, but if there was a way somehow of working on the side, working from home, having any amount of money that you can present to them once it's in collections that they may know, like, they're not going to get anything from you, you don't have anything, right? But if you have a little bit of something, it might be kind of a carrot to dangle. Now, $400,000, that's kind of, you know, it's obviously up there. So that's one route that I'm thinking of. Also, when you guys are choosing, and I want to be careful even asking this because I don't want to come off offensive by any means, but when you're choosing these facilities, are you in such an urgent mode that you're like, sure, this one, just put her in and we need to make sure she's safe?

Or have you guys done, you and her mom, done levels of research and talked to practitioners and talked to places of different options, right? And I know we want the best care for our kids, but when I hear $60,000 for 2 weeks, I'm like, oh man, I wonder what other options are out there. Do you feel like you have the bandwidth? to do that research and have kind of that— those facts on your side?

Um, yes, we've— her mom is actually in the medical field, and we've done lots and lots of research into the facilities and things like that.

Um, were any of them nonprofits?

Uh, no, because there's nothing near us that unfortunately will be a nonprofit. Uh, This one we actually had to send her to Wisconsin for, uh, because unfortunately while she was in her psychiatrist's office, she ate 23 extra-strength Benadryls.

Oh my goodness.

Wow.

Well, I would be looking into, and it sounds like you've been doing this, the homework of looking into every financial assistance program available through these providers, because with your income, my guess is they're going to go, all right, he can't pay the The income's not gonna be there to pay, or it goes to collections and you end up settling for 10 to 30% of the total balance, which means you're not on the hook for $400 grand now. You're on the hook for $40 to $60. You see what I'm saying?

Yeah.

So that is a sort of best case scenario we can hope for down the line. Yeah.

And I, and I wonder for you long-term, Jonathan, $1,500 a month, cuz how, how old are you?

I'm 33.

I, uh, okay.

I got an autoimmune disease. That's why I'm on disability. Okay.

Well, I'm just wondering, for the sustainability of your life, and obviously, everything with your daughter is like a whole other level, but I'm just talking about just you and your fiancé, to sustain somewhat of a manageable life, your income, it's gonna have to come up. And I don't know if that's you and your fiancé getting married, and she works full-time, and she's the main breadwinner because of what you, you know, what you're dealing with personally. Or if there's things that, you know, even call centers, I'm like, if there's anything making $22 an hour, you know, and working 30 hours a week to bring in something just to sustain your life, right? And then beyond that, obviously, caring for your daughter. But I would be looking at some options in that scenario, just from a career standpoint, because you are still so young. You're 33. And I would want, You, you not to, to struggle and write inch by inch for the rest of your life either. And so—

Because even if they are willing to settle with collections for 10% of the balance, you still need to come up with $40,000.

Yeah.

And that's gonna take really upping the income. That's, that's the key variable here that we can control because there's so much out of your control. But man, I, I hate that you're going through this. This sounds like it's not gonna be an easy fight, but we are rooting for you, man. 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, CRM, and more together in one place. More than 44,000 businesses run on 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. And right now you can try NetSuite Next for free. If your revenue is at least 7 figures, go to netsuite.ai/ramsey. That's netsuite.ai/ramsey. Zaden is in Salt Lake City up next.

What's going on, Zaden?

Hi, guys! I am calling today, I guess, basically to call you and ask you to talk me out of taking out student loans.

OK, let's see how good our persuasive sales pitch is here.

We've been 50/50 so far on the show today. I think so.

Can't always bat 1,000.

We'll see what we can do.

So what happened that you ran out of money here?

So I worked a summer job that I thought was going to cover my tuition and everything I needed this, this year as well, as long as I took a part-time job to start the fall. And so far I've— I just started my junior year. I'm 20 years old and I've cash flowed college all the way up till now. All the only debt I have is on a car. I own about— I owe about $11,000 on the car and I, I'm, I'm underwater. So it's not helpful, but, um, I, this morning, I just, I've, I've run out of money and I've been struggling to find a part-time job since I got back from my summer job. I haven't found— the only job I found, I'm working 5 hours a week as an assistant for a travel agency. And so I'm just not making enough to cover my expenses. I've been in interviews where the only thing that's held people back, they've like handed me the compensation package, they're about to hire me, and then I tell them my school schedule and they're like, we just can't work around that. And so I'm like at the point where I don't have enough money to cover what I need.

And I'm like, student loans are about the only thing I can see.

Are you living on campus?

I live with my parents. Okay.

And is there any financial help from them?

No, they, they make a lot of money, like almost $300,000 a year, but they have probably close to half a million dollars in consumer debt and they can't afford anything. So Oh, wow.

So how much is tuition a year or per semester, I should ask?

Per semester. So I'm on a half tuition scholarship. My tuition for this semester was about $2,000. Books was about another $200.

So $2,000. Okay.

So that's the gap is $2,000.

I already paid the tuition for this semester. I don't have money for like to pay my car payment, to pay my insurance.

Okay, how much is all that per month? How much would you need per month to get by, like, as a college student, to scrape by?

About $1,000.

$1,000. Okay. Man, I'm like, I feel like somewhere you can make $300 a week. You know?

That's the ticket. I mean, can you wait tables?

I've applied for server jobs and not even gotten Like, and I tried calling them and they've been like, they just aren't, they have an open application, but they're not—

I'm a little shocked because I, I know the service, yeah, the service industry though is struggling. Like, they're looking for people. So have you walked in?

And that's what I have experience. Before I took off from my summer job, I was working in restaurants as a cook and I worked as a manager for a minute and I just can't find anything.

Yeah. Uh, have you gone in person to these places or just applied online?

Restaurants and talked to them.

And how many have you tried?

I've only gone in person about 5 different restaurants that I've gone to with my family when we've gone, but I—

Okay, I would hustle a little bit, Zaden. And I wonder too, I mean, Salt Lake, is there, I mean, I'm thinking of, is there a landscaping company you can pick up part-time on the weekends? Is there, I don't know.

I mean, just things in your neighborhood. If you live with your parents, man, there's people in my neighborhood making money, 'cause, you know, rich people are scared to leave, as Dave says.

I think $300 I think you can do this. Do Instacart.

The thing is, I'm 20 years old and Instacart, like, well, one, I actually live just north of Salt Lake in an area where it's— there's too many drivers. And I've tried Instacart, DoorDash. They won't— their waitlist is a year out.

Rachel's not buying it.

Really?

Zaden, I'm gonna encourage you to look at other side hustles too. It doesn't have to be one of the app side hustles where you need the car and all that. But right now, I think the gap is so little.

Go to Salt Lake City Airport and do Uber. I'm like, that place is packed all the time. I don't know.

The law says you have to be 25 to drive Uber.

Okay, well, do you? I guess so. I don't know.

I'm trying to think if I drove it. I think maybe that was a new thing because when I drove Uber, I don't think I was 25 yet. But all that to say, I think we need to cross that line.

I think we're trying to help you. And, and I don't think hitting up 5 restaurants is not— No, you, you'd be 18. Oh, to, to ride alone. Never mind, that says a rider.

Rachel's like, I'm gonna find the fine print on this one.

I am, I am. Okay, um, you gotta be 21. How old are you? 20?

20.

When's your birthday?

When's your birthday?

Next July.

All right, we got some time.

Okay, I just, I just feel like there's a rich person that needs their you know, trees trimmed or something. And then snow in Salt Lake. Yeah, shovel sidewalks. I don't know, I just feel like—

Just use AI, make a little flyer. It's like, here's my services.

For $300 a week, I think you can do— I, I just believe in you.

What are you studying in school?

I'm in software engineering.

Okay, so you're, you're a techie guy.

All right, tech. Talk to him about tech stuff.

Well, I'm just wondering, stuff you can even do online for people if you're in software engineering.

Coding.

'Cause nobody cares if you're 20 or 30 doing that kind of stuff.

Yeah, that's something I've thought about. I just, I've struggled to find a market for it. Like, I've been reaching out. I posted something on my Instagram a couple weeks ago to see if people were interested in me building a website for them or something.

How many followers do you have on Instagram?

1,000.

Okay, so it probably went to 4 people. I think we need to do a little more active, proactive marketing You need to find the problems and go, hey, I can solve this for you. Here's what I charge.

Because, Zaden, I'll say this. If you called and you're like, I need $15,000 for this semester's tuition, I'd be like, okay, we've got an uphill battle here. $2,000? I just, I don't know. Or $1,000 a month is what you said you need. I don't know. I feel like we can, I feel like you can figure this out. Because would you take out student loans for your, Lifestyle? Would you use it for your car payment and everything?

I would mostly be using it to cover gas and stuff because I'm at a commuter school. It's— I pay about $200 to $300 a month in gas.

Okay, so that's one of the things on campus you can do, because I did that on when I was in college and made it helped with the tuition, $12 an hour in the publicity office writing up press releases or whatever. Is there any jobs on campus you can find?

I tried that too. It's, it's crazy. I applied like 2 weeks before school started. I I applied to every open job posting and even called a couple of the offices.

Are you athletic? Is there a sport you played in high school?

I ran cross-country. Okay.

I'm wondering if— because I know in our area people pay for college students to help train their little 9-year-olds and they pay $60 an hour for baseball or something, right? I'm like, I'm like, I don't know. I'm not a cross-country runner. Can you teach a kid how to Breathe properly and have the right, the correct form when they're running. I don't know. I don't know. I don't know. Maybe, maybe someone in Salt Lake probably knows.

All we're trying to say is the world is your oyster and you haven't explored enough. That's it. But you can close the gap without student loans. If you think student loans are going to be the answer, you're going to take it every time. But if you said, no student loans this week, I got to get $300 this week, what am I going to do? And you just go try 17 things. And at 20, you have the benefit of being able to do that. It's such a luxury to be young and live with your parents.

Yeah, you don't got a wife at home and kids and—

And you're living at home. That's right. No rent.

There you go.

This is the time.

But I'll tell you, I bet that car payment is putting a dent in his ability to save.

I bet you right there.

And at the time, it was like, well, it's a small car payment. I need a car. You gotta get a car.

Not a big deal. Now it's that $300 a week that's really chipping away.

Man. Well, we do have a side hustle quiz that I encourage you to check out. You can go to ramseysolutions.com/sidehustle or use the link in the description. That's for anybody out there, and it'll help you figure out which ones make sense for you based on how much time you have, what kind of skills you have, at-home jobs versus in-person jobs.

And I think more than ever, there's like the quirkiest jobs people find, side hustles. People that have called, and I wouldn't recommend this because I don't know that much about it, but like the baseball, remember that guy that called in and they have like, he has like $40,000 worth of baseball cards because it's like a hobby. And he like knows how to collect. I don't know. And I'm like—

I got 9-year-olds in my neighborhood that pick up dog poop. $20 a visit. $20 a visit. I'm telling you, they're booked up.

And I know Salt Lake. There's some, there's some nice areas, some big houses. There's some, there's some wealthy people in that area.

Dress nice and go to the door and say, hey, I live down the street. Um, here's my skill set. If you guys need any help, let me know.

Pressure wash a driveway, you know? I don't know. I think you can do it though. I really I really believe in you.

Thank you.

Okay, George, we hear from so many people that are trying to live out the Ramsey plan, right? They're getting out of debt and everything, but the hard thing is there's not many banks out there that actually support the way we teach people to handle money.

Yeah, most banks, they don't want you to win with money, so they charge a bunch of nuisance fees. There's all this fine print, and worst of all, they are pushing debt products at you nonstop.

Yes, but the good thing is that Fairwinds isn't like most banks.

They're not like the other guys!

They're not like the other guys! Yeah, they are not pushing debt, and they actually want you to win with the Baby Steps. What's great, too, is they created the Smart Bundle for Ramsey fans, which includes a high-yield savings account and no-monthly-fee checking.

Which is huge, because it's rare to have a checking account tied to a high-yield savings account. You can get all of that with Fairwinds, and for the nerds out there, you can have a 10 different high-yield savings accounts for different goals. So you got your emergency fund, the car upgrade fund, the vacation fund. The world is your oyster.

So beautiful. And check out the debit card, the new one, the Live Like No One Else debit card.

Oh, that's beautiful.

It's so beautiful.

That's a conversation starter.

It's so good. Well, and when you swipe or you tap, you know, every time you take it out of your wallet, you're remembering that you are living like no one else and you're being intentional with your money.

I've been using Fairwinds for months and months now. I love their features, the app, the customer service. It is all so good and so aligned with the Ramsey principles.

Absolutely. So y'all, we both bank at Fairwinds and we love their commitment to Ramsey values.

So check it out. You can get that smart bundle. We're gonna drop a link in the description, or you can go to fairwinds.org/ramsey today.

That's right. That's fairwinds.org/ramsey, insured by the NCUA.

Alright, Rachel, you know what time it is? It's Question of the Day time! Brought to you by Yrefi. Sometimes the hardest financial step is the one you've been avoiding. So if your private student loans are past due, Yrefi can help you explore low fixed-rate refinancing options and payment plans tailored to your circumstances. Go to yrefi.com/ramsey. May not be available in all states.

Today's question is from Adam in Vermont. I've been working on the debt snowball and recently started a new job. making $160,000 a year. I have $110,000 in student loans, $47,000 in IRS debt, and $36,000 in credit cards. I have been paying about $3,200 per month towards my debt using the debt snowball method, smallest to largest. At this pace, I won't be debt-free until 2033, which feels very far away. Is there a way to do this faster?

Wow.

Well, you got a new job making $160,000. I mean, call me crazy, George.

I will.

Quick math, but I'm like, if you— well, Vermont, I'm trying to figure out where he lives. I'm like, could you swing, make it, you know, acting like you make $60,000, throw $100,000 at this? I mean, I know it's after taxes and everything, but throw $100,000 at the student loan debt. You got $47,000, $36,000. I mean, man, 2 years possibly, right? If you live on $60,000, Yeah, there's a margin problem.

Is it gonna get you there faster?

Yes.

You are not throwing enough at the debt. You have a great income making $160,000.

He said he recently started it, so I'm gonna assume—

So let's reassess our debt snowball.

Yes, exactly.

Can we throw $5,000 a month? If we're bringing home $10,000, we live off $5,000 and send $5,000 to the debts, it's gonna be done a lot faster. So that's the math here, is just figuring out how much margin I can free up from cutting expenses down, increasing income, that might mean you're working overtime or side hustles on top of your $160,000 to clean this up in a reasonable amount of time. Because 2033, I mean, I don't know if the world's gonna still be rotating on its axis by then. So let's get a game plan.

Who knows?

That means short-term sacrifice versus the next 7 years of our lives.

Yeah, but I think 2.5 years, I bet you, I bet he could do this by, by 2030.

That's less than 4 years. Yeah. Yeah, I like this plan. I mean, $5,000 a month, he's done in just over 3 years.

Yeah.

So that's what I would be aiming for is no more than 3 years.

And then that means that he's never got, you know, that he doesn't get a raise in 3 years, which he probably will, right? And you throw all the extra at it, so maybe even faster than that, so.

Yeah, and the best way to do this, the EveryDollar budgeting app is now far more than just budgeting. We'll actually help you devise a plan to find more margin with personalized recommendations for your situation. So I wish you were on the line, Adam, I'd give it to you, But since you're not, reach out. If we can get access to your information, we'll send you one. But for everyone else, if you're like, I want margin, how do I get that? EveryDollar will help you find it so that you can make more progress on your goals and work the plan even faster. We'll drop a link in the description, as well. Judy is in South Bend, Indiana up next. What's going on, Judy?

Hi, guys! I wrote out a sentence. I'm saying, my husband and I have been married for 50 years.

Congratulations, Judy!

Wow, consecutively?

Yeah.

That's impressive.

You gotta ask each other.

It's a long time.

I've been in a marriage for 50 years. You know, that's good. Okay, that's—

you guys aren't even 50 years old yet.

No, no, we're not.

Um, we're retired. Okay, we have no debt. Okay, we're financially secure. We don't need to leave it to our kids. They're doing quite well. I enjoy going to the casino with my best friend a few times a month, and my husband does not like it, and we argue about it all the time. I just wanted to know what you had to say about that.

Okay. What does financially secure mean? How much money do you guys have? What's your net worth?

Probably $9 million.

Wow.

Okay, fantastic.

And you're not gonna leave any to your kids?

Well, we will, but— Oh, okay.

Oh, but you're saying like, yeah, they're doing well, which is amazing.

Yes, absolutely.

What is your yearly income? Like, what do you guys live off of?

About $120,000.

Oh, wow.

Judy, what's your— what's your friend's name that you like to go to the casino with? Will you drop her name, or is that too personal?

Um, Mary.

Mary. Judy and Mary. All right.

Love it.

What's the, what's the game of choice at the casino for you?

We play slots and we know that that's, you know— No, I'm not—

no judgment here.

No judgment.

Okay, how much do you spend in a given outing at the casino?

Uh, about $200.

And you do that how many times a month?

A couple times, maybe 2.

3, 5?

3. 2 to 3.

So have you ever spent more than $600 in a given month at the casino?

Yes.

OK. What is the most you've spent at the casino?

Probably $1,000.

OK. Was that discussed prior to going to the casino?

No.

I think this is the crux of the argument. It's not that you're going to the casino. It's that he doesn't know if you're going to go spend $200 or $1,000.

It doesn't matter. You have $9 million, though!

There is zero communication about this. It's not in any budget. It's just you willy-nilly going spending as much as you feel like, which you can financially.

But she's not spending like— I mean, I hear you, George. I hear you. But also, it's not about the dollar amounts, but ratios.

Yes. You guys are spending so little that your money— you're going to have $20 million sitting there and he's going to go, I guess that casino money wasn't really that big of a deal.

I don't think for him it's a— I think he just thinks it's stupid. Is that what he thinks? It's a waste?

Yeah.

You're throwing money down the drain.

So yeah, yeah, that's, that's, uh—

Does he have any hobbies?

Yeah.

What does he do that you think is stupid?

Is he a golfer?

Yeah, no, he fishes. Um, I don't think he does anything stupid, and if he did, I wouldn't care if he did it as long as it was, you know, safe and legal.

Sure, sure. What's he— is he actually getting the fish? Is he bringing it home and cooking it, or is he just No, no, he brings home the walleye a lot.

Judy, I am perfectly fine with you and Mary going to the casino and spending a couple hundred bucks a month.

Totally fine. So when I said 9, um, I, I meant like all our assets and everything.

Well, sure. Yeah, yeah, yeah, yeah, that's fair.

Yeah, your real estate, cash investments, all that.

I mean, how much cash do you guys have? I mean, yeah, to To live off of, cash-wise, investment-wise, what would that be? That does not include real estate.

Probably 3.

Okay, yeah. Listen, this is where the Ramsey personalities differ on this subject, which is fine. And Dave's out of town.

So it's George and I today. I'll pretend to be Dave.

Yeah, because George would side with Dave. They think it's— well, Well, here's the thing.

Dave hates losing money. So he does think it's dumb to do anything where you're almost guaranteed to lose money.

Right. But I would say, if you're having an experience and you're spending money, and again, it is reasonable, you— there's no, like, addiction that you're trying to, like, satisfy, right? Like, there's nothing big happening. It's not big numbers and you're having fun with it. I mean, that could be, you know, going to the mall and buying a couple shirts for $200, right? And instead of that, she's gonna go and play some slots. Listen, it doesn't bother me. Now, that doesn't matter that you didn't call to get my permission, but for you and your husband, where you guys have to come to is, yeah, I think you guys need to make a budget, honestly, and say, hey, for once a month, Here's an amount of money that's gonna be my fun money that I'm gonna enjoy. And again, you could use that money and go get your nails done or go get a massage or, I don't know, whatever.

He'll probably think that's stupid, too.

Yeah, and he could, totally.

Actually, I think it's stupid because we've never been on a budget and he's always wanted to be and I poo-poo it.

Oh, Judy, Judy, all right. Here's your in with him. Say you'll do a budget and you guys, and you have to agree. You get a vote in the budget, too. It's not just him making it and telling you what to do. You get a vote and a say, and hey, here's the amount of money per month that we spend, and here's where it's gonna go. And Judy needs a line item, Mary and I's day away, right? Or whatever it's gonna be. That's the line item. And then he gets a line item for some of his fun money. And yeah, call it a day. So maybe that's your in with him, is that now you'll do a budget.

How nice is his fishing boat?

Uh, he actually goes with his brother and he's got 3 of them. Oh, they're very serious.

That's intense. All right. Yeah, that's, that's a lot of money that's going down in value. But here's the— yeah, the key is you guys financially could spend double what you're doing right now per year and still never run out of money and likely never touch the principal.

That's right.

So this is not mathematical or financial, it's all emotional, and you guys need to get to the of why he's frustrated with this and come up with a compromise, and the budget is going to help. Hey guys, George Campbell here. There are a lot of things you probably shouldn't ignore: your check engine light, that weird smell in your fridge, the smoke detector that's been beeping for 6 days, And maybe most importantly, your phone bill. The things we ignore have a funny way of costing us the most. And your phone carrier is counting on you ignoring that overpriced bill month after month so they can keep charging you more and more. But that's not the case with Boost Mobile. You don't need to keep overpaying when you can pay just $25 a month for Boost Mobile's unlimited plan. And the best part is you can bring your phone, keep your number, and pay just $25 a month forever. That price will not go up. It is inflation-proof. There's no contracts, there's no hidden fees, there's no catch. And since most smartphones have an eSIM these days, you can switch from the comfort of your home just like I did.

So it's okay to notice when you're paying more than you should, but you shouldn't keep doing that. Stop overpaying for your phone service. Go to boostmobile.com/ramsey and make the switch today. That's boostmobile.com/ramsey. $25 forever requires customers to remain active on Boost Mobile Unlimited plan. Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell here with Rachel Cruze, taking your calls at 888-825-5225. Lisa is in Raleigh, North Carolina, up next. Lisa, how can we help today?

Hi, so I just wanted to see if I can get some advice or some information. We are thinking about paying off my parents' home and they are going to deed us the home right afterwards. I just want to see what your thoughts are on that and the tax implications.

What's causing them to ask you to pay off their home?

Oh, I don't think they're asking. They were just looking at, um, pretty much looking at their estate, how to finalize some of their estates. And we just— they were going to, um, they didn't want to do a will and all of that. Um, so we just thought, you know, free and clear, we'll just pay it off and you just deed it to us and we wouldn't have to worry about anything when they pass.

Why didn't they want to do a will?

Um, we just didn't. I mean, we just wanted the easiest way because, you know, we're pretty financially stable. It'd be the quickest and easiest way to do it, you know. And then it's done. We don't have to worry about it after they pass. It's in our name already.

I imagine they have other assets in their estate outside of this house, right? There's other accounts?

Uh, just bank accounts, and we're not too concerned about that. They can, you know, do what they will with that. I think it's just a little bit easier with the home to go ahead and, um, get it in our name. That way, you know, when they pass, we don't have to go through—

I think if it—

Lawyers and courts.

Yeah. I wanna say though, from a capital gain standpoint.

Yeah. Here's the big issue.

You don't get a step-up basis, right?

Yeah.

If they deed it to you while they're alive, it's one of the worst things you can do financially because it's considered a gift and not inheritance. And so the original cost basis would carry over. So if they paid $100,000 for this house and it's now worth $500,000, when you go to sell that house, You're going to owe on the difference.

You got to pay taxes on the $400,000.

But if they just pass away, you inherit the house, then you get a step-up in basis, meaning it's fair market value at the time of their death.

So it starts at $500,000. So if it goes up $100,000 over 5 years or whatever, right, then you sell it, you only have to pay taxes on that $100,000.

So basically you could sell it without any taxes if you inherit it within, let's say, 6 months after they pass. But if you get it deeded over to you, you're going to carry over what they paid for it as the basis.

And I would say even if you plan on keeping it, Lisa, you're, you're gonna have to pay those taxes over decades that they've owned this home.

Right. So would it make a difference if we got an appraisal right afterwards?

Um, it doesn't matter because if they deed it to you while they're alive, it's considered a gift. It's not an inheritance. So no, the, the cheapest, smartest way to do this is that they create a will And the home goes to you all when they pass.

Even with the mortgage still?

Yes.

Like if they haven't paid off the home?

Regardless of if you pay off the mortgage or not, the best way to do it is just inherit it.

It's the value of the home. So you'd rather have a value of $500,000 sitting with you after they've passed, as an example, than having a $500,000 asset, but it's really appraised at $100,000. So when it sells, you're paying taxes on $400,000. that you could have just avoided by not deeding it to you. And a will is pretty simple, Lisa. I mean, you may go through a little bit of probate and stuff, but it's not very complicated. You can go to Mama Bear Legal Forms, mamabearlegal.com, and create a state-specific will for them. And if it's a very simple estate and it's a primary home, a residence, some bank accounts, like what you're saying, it's really not difficult at all. You guys are actually creating, you guys are choosing the more difficult route.

And in some states, I'm not sure what North Carolina law is, but if you can set up a transfer on death, for that house, then it'll avoid probate. And same thing for any bank accounts.

There you go.

A bank account would be payable on death, POD. If you can set that up on the bank accounts, it avoids probate. And if there's anything that has a beneficiary designation, like life insurance or a retirement account, all of that can also avoid probate. So there's a lot of things you can do to keep it simple, but you still definitely need a will. And a simple online will that's state-specific will do the job. And we have a great partner with Mama Bear Legal Forms where you can do that very cheaply. Less than a couple hundred bucks and it's over. I did it in less than 15 minutes for my own parents just a couple weeks ago.

Yeah, no, I did. I used it with my daughter when she went off to college.

Good. So what's left on the mortgage?

Uh, about $50 grand.

And what's the house worth?

It's interesting. Um, probably about $200,000. I think they bought the house at about $140,000, $150,000.

Okay, so it hasn't appreciated much.

Okay, okay, that's fair.

That's a significant amount.

And why?

That's the reason why. Like, we, we talked to a couple of lawyers and CPAs, and they seem to think this was the best route. And I wasn't— honestly, we're not sure.

Well, are they not doing well financially? Are they struggling? Is that why you're looking to pay it off?

Well, it's not that. They're old. They're just living off Social Security. And this is just a burden that we were willing to take on, my husband and I. It wouldn't make a significant impact on us financially. So we thought this would just be quick and easy.

So you guys have an extra $50 grand cash laying around that you could set to this?

We do.

Oh yeah, I— then I would, Lisa. I'd just pay it off, but I wouldn't worry about it being deeded over. I would just create the will that upon their passing, you all get the house.

Gotcha.

And then look into that TOD, that transfer on death.

Okay, that, that sounds—

That's the simplest way to do it with the least— because here's the deal, I don't know how much you love paying taxes. I want to pay as little as I can legally. And so this is a good way to not have your parents' hard-earned money and their assets getting taxed to oblivion by the government because you just made one wrong move.

Yeah. How old are they?

Um, they're about 75, 80 years old.

Okay, okay, great. And they'll probably— will they be living in this home?

We're trying to— probably. I mean, we don't, we don't have any plans on doing anything with it. They're out of it.

Sure, sure. Yeah, so I mean, that could be another 10 years of it appreciating, right?

Right.

So, yeah, that's how I would do it.

I still wouldn't have it deeded over to you while they're alive. But if you want to pay it off to be nice— because I think the house is going to go to you either way, it sounds like.

Right, and you're absolutely right. We'd like to avoid the least amount of taxes possible.

Yeah. But if you didn't pay $50,000 to pay off their mortgage, would this house still be inherited by you?

Um, well, here's the concern. There's other parts to it. There's multiple siblings that my parents just doesn't feel comfortable.

Oh, um, do the siblings know about this arrangement?

Yes.

So they know.

So you feel a little bit more justified in the scenario if you're like, well, we've paid it off, so like we're the ones who paid it off, it helps. Yeah, yeah, yeah. So we kind of have like skin in the game in this asset of mom and dad's. Okay.

Oh boy, that adds a whole nother layer of tension.

Well, yeah, for sure. But also, it doesn't change the answer of what you would do from a will standpoint. But yes, that can, I can see how you're like, let us help it pay off the mortgage so that it creates less drama.

Sort of guarantee your spot in the will.

Well, that and like, it looks better to the siblings when they don't get the house, because at least they can be like, well, we paid for it. So, So yeah, I get that too.

Have they had the conversation with the other siblings about what they will or will not get?

Oh yeah, absolutely.

Okay, good. That's where the will is the most important because it just lays it out clearly and then it's their job to tell everybody who's involved in the will what's going to happen. It should not be a surprise after they pass and they're like, what? Lisa's getting the house and all? And now they're mad at you. It destroys the relationship. Which, it doesn't sound like there's a lot of function here.

No.

Mostly dysfunction. But please do this the right way.

Welcome to families, though, you know?

Welcome to families. You don't get to choose which ones are functional.

All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates, but when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions.

I'm your host, John Greenewald.

decisions.

Ramsey Trusted Agents aren't just experts who guide you through buying or selling. They're people you can trust to have your back from the first call to closing day. Find a Ramsey Trusted Agent near you at ramseysolutions.com/agent. That's ramseysolutions.com/agent. Ramsey is taking over an entire cruise ship. We are heading back out to the open seas. 7 nights in the Western Caribbean— Bahamas, Jamaica, Grand Cayman, Cozumel— for the Live Like No One Else cruise, March 14th through the 21st, 2027. And this is a full cruise takeover. It is only Ramsey fans and us personalities on the boat, and it was such a blast last year when we did this, and so we're doing it again.

So fun. I mean, honestly, and it was in— it's a nice ship.

Very nice.

Beautiful.

Now, you've been on a lot of cruises. This was like my first cruise as an adult, so I had no clue what to expect. Oh, yeah?

Okay, what'd you think?

I was blown away.

Yes!

And it's so nice, you don't have to think about, well, how much does that cost? You sort of just show up.

It's all there together, yes.

And it's there. It's like you prepay, You did it with cash.

I will say the Ramseys growing up, they were cruise people. I feel like you're either a cruise person or you're not. And all the memories we've made as a family on cruises, they are, they're so fun. And this is, and again, a nice ship because we've been on like big ones, really small, all the different types. This is the perfect size.

Happy medium.

Yes.

And all the content, I mean, it's us. We're all hanging out, all the Ramsey personalities, a little Smart Money Happy Hour.

That's right. We do live tapings of your favorite Ramsey shows on there, World's Largest Debt-Free new wealth-building teachings, new content from all of us personalities, which weirdly people want more of. I was like, I thought we were here to have a good time. And they're like, no, tell us more about Roth IRAs.

Oh my gosh, every session we did was like back down.

We all wanted to go. We had a ton of Q&As. Y'all could vacation.

You guys can hang out. But they, everyone wanted to learn. It was a great thing.

It was fun. So if you're Baby Step 4 and up, meaning you're debt-free with the emergency fund, mark the moment, celebrate, live a little. Look, have something to look forward to in the budget. So secure your cabin. They are moving fast. You can go to ramseysolutions.com. Or click the link in the show notes. All right. Molly is in Oklahoma City up next. What's going on, Molly?

Hi, thank you for taking my call. My husband and I are expecting our first baby this January.

Oh, congratulations!

Thank you. I would like to stay home for the first 1 to 2 years, but we would be losing about $500 to $600 a month.

Yes.

We have $10,000 in checking, $130,000 invested, and then our current take-home is $5,800, but if I quit, it would drop to $4,300. I was just seeing if it would be okay in our situation if I stayed home. My husband makes quarterly commission, which could make up for the shortfall, but we wouldn't be saving any money probably for 2 years.

So can you live off of $43,000— I'm sorry, $4,300 a month?

No, because we do— our biggest expense is our house. That's our only debt. And then we do tithe off of our gross amount, and then insurance.

So how much will you be— what's your deficit each month if you just went to his income?

Uh, $500 to $600 short a month.

Okay.

But since we have like $130,000 invested, like, is it okay to, you know, since it's such a short season, pull from that or use his commission check to make up for it?

Well, yeah, he could use the commission check for sure. I mean, he could just add that as income. Is your investment retirement? Is it like in 401s and Roth IRAs or is it in just index funds, mutual funds?

So $100,000 is in stocks and then the rest is in, uh, retirement and 401.

Okay. I mean—

We only have $10,000 in checking, but we'll throw everything else to that from now on.

Do you guys have consumer debt?

Uh, I don't. Our only debt is our house.

Okay, so no credit card debt, student loans, car loans?

No, no.

Nothing like that.

Okay. What's the mortgage payment every month?

It'll bump up to $2,000 next month.

Because of insurance or property taxes?

Property taxes. Got it.

Okay. So that is a little less than half of your take-home pay. That's the scarier part, is that this is just a big part of your financial world.

Yeah.

Yeah.

So you probably, you may not be able to afford to stay in the home and not work.

Even with that much saved up?

Yeah, because your current income, you guys can't support your lifestyle.

Even with you working full-time, it's still about a third of your take-home pay. And we recommend 25% of your after-tax monthly income going to mortgage. Anything above that makes it really hard to then save for college, pay extra on the mortgage, save up for vacation.

You'll have no wiggle room at all. In the budget.

Yeah.

So that's probably where I would be. Now, 2 years is a quick timeline, but yeah.

Now, if you want to sell off your non-retirement stocks, you said it was $30,000?

No, $100,000.

Well, $100,000 you said is retirement.

No, $100,000 in stocks.

Is that in single stocks?

I'm not sure, actually.

Okay.

I just know it's invested in stocks and it, my husband kind of did all that. Yeah.

What was the purpose of that investing?

Well, we really just— I mean, I've saved my whole life. I just have always had like this huge chunk just sitting in my checking not doing anything. So we just moved all of that to, um, stocks because without the baby and me working, we save about $1,500 a month. We live very frugal.

Yeah. So yeah, I mean, you, you absolutely could pull some of that money and say, hey, we're going to use $500 a month. But that, I don't want that to be your long-term mindset, Molly, because I think what can be hard is once you hold that baby in your home, you know, there's always a chance, which is beautiful and wonderful, that you're like, I just, I don't wanna go back to work. Nothing in me wants to go back to work, right?

Right.

And when you're used to kind of taking this funnel and it's dripping out, eventually that runs out. And so, the goal is to right-size lifestyle and income, so that you don't have to touch those investments. So if you guys did for a little bit, I wouldn't, I wouldn't be mad about it by any means. But, but you definitely have to justify the choices you guys have made in order for you to stay at home. And sometimes you can't have it all. Do you know what I mean?

Right.

That might mean you change where you live long-term.

Yep.

So that we can lower the mortgage.

And, you know, and even, I don't know, George, I mean, even in, you know, you market 2 years, which would be what? So, the baby will come in '27, '28, but like, the January of '29 is the marker of either, hey, if his income hasn't come up and she wants to stay home, we have to move at that point.

Yeah.

'Cause we can't sustain this long-term. You guys will just have to have a pretty like, solid stake in the ground before that, because we just see it enough that people save and they start to live off that savings. And eventually, that savings Runs out. It goes away.

And then it goes to credit cards.

And then it's like, oh my gosh, we got pregnant again. And in 18 months, we have baby number 2. We gotta upgrade the car. Well, let's dip into that. Like, right? Like, it just starts to kind of snowball if you're not used to living below what you're making from an income perspective at this age, especially, right? As a young adult.

Yeah, that's a hard decision. Wishing you guys the best. I know, but good luck.

I think you have some luck.

Yes, that's exciting though about the baby.

All right, let's go to Ashley in Bloomington, Indiana. What's going on, Ashley?

Hey guys, how are you?

Doing well. What's your question?

I'm calling because my child support is about to go down $488 a month because my ex-husband got a lower-income job. And I'm on Baby Step number 1 for like the 3rd time. And I have cut subscriptions, and I'm really trying to hone in on what else I can do besides getting another job because I have 3 children, 2 of them are disabled. It was really hard to find someone to watch the children. And part of that cost of having disabled children is that they go to therapy full-time. And I work from home, so I have to take them to therapy in the morning, come back home, work, take my oldest daughter to work because she doesn't drive because she has her own mental health issues that don't allow that. And then I work out of my car for 3 hours about a day. up the kids and go back home.

What's the gap you need to cover in your budget?

Well, I would like at least $500 to $700. Okay.

So if you can make an extra $700 between cutting expenses and increasing income, that would do it.

Right. But I can't increase my income because—

You're already maxed out.

The insurance the kids are on.

If that's the case, then what you're doing right now, you need to get that core income So if you're making $20 an hour, we need to get to $25 an hour.

Well, I can't make any more money though because my kids are on Medicaid, and if I make any more money, then they'll get kicked off Medicaid.

This is a rock and a hard place situation. So you're either gonna choose, we need to figure out how to make this work if we're gonna stay on Medicaid, or I need to make enough that we can get out of the system entirely to make this sustainable. But either way, there's gonna be sacrifice, Ashley. 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 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.

If you're enjoying the show, you're finding value in the conversations today, pass it along. Share the show with someone that you know, someone you love. It's one of the biggest ways you can help us grow. It's one of the best marketing engines we have is just you guys hitting the share button or word of mouth, telling people along the way, playing it in the background, creating some curiosity. All of that helps. So thank you for doing that. Stacy is in Springfield, Missouri, up next. What's going on, Stacy?

Hi, Dave. Thank you for taking my call.

I would love to be Dave. I appreciate that.

I am so sorry.

No, it's okay. I don't get it a lot, but when I do, it's an honor. That's George's biggest compliment.

I'm so sorry.

People do think Dave is my dad, which is hilarious. I'm like, nope, not Rachel's brother.

Oh, is this, is this John?

I'm George, and I got Rachel next to me here, who is Dave's daughter. So you do have like Ramsey DNA at the desk today.

Okay, okay, well, that's good.

We got you.

Um, my question is, my mom is 75, and, um, my— she has given pretty much all her money away to my siblings. And she is almost basically— she's past bankrupt. She's in the hole.

Oh gosh. So she didn't have money to give?

She had thousands of dollars to give, and she gave them, and then she went in debt to take care of them. So my— okay, so my question, um, so I now sit down every month with her and go over her budget. We've created a budget. We have mapped everything out. And I'm just curious if she needs to go back and start the Baby Steps, and that's gonna be the way that we get her out of debt. She's really making a lot of headway. And my other question is, she has a trust that is her beneficiary, and should we initiate a hotch— hotchpot clause on it? Because she's treating what my siblings have already received As inheritance.

So this is Rachel, by the way, Stacy. Uh, yeah, so did she— so, so what she's given to your siblings is going to count against their inheritance, basically?

Yes.

But what does she have left? Because you said she, she has no more money. Is it her home? What, what assets does she have?

Um, she does have her home. She still owes on it.

Um, how much, how much is it worth? If you sold it?

If she sold it, it would probably be worth $200,000.

Okay. And how much does she owe on it?

$75,000.

Okay. What else? What else, uh, assets does she have to her name? Any account, any, um, investments, retirement, anything?

She does have— she does have good retirement. Um, she has, um, a like $30,000, uh, annuity that she found that hadn't been liquidated.

$30,000. Okay.

Yes. She has good retirement. She also, she still receives, my dad is deceased, and she still receives part of his retirement and his military retirement.

Okay, how much is that per month?

$6,300.

Okay, gotcha. But really, she has $125,000 of equity and $30,000 Yes. Okay, that's her net worth, per se, without adding in all the debt.

So how much debt does she have?

Hang on, I've got that total right here. She has $145,000 in debt.

Just consumer debt?

Yes, a lot of it is consumer debt. She let my brother use her credit card 2 different credit cards that they maxed out. She took out a loan to remodel my brother's kitchen. She took out— and because she liquidated all— a lot of her investments, she is deep in debt due to her taxes.

Is she of sound mind?

She is, yes.

How much does she owe in taxes?

She owes about $23,000. Hmm, okay. Yeah, she, she about cried at the tax office.

Yeah, I bet.

It was very sad. I took her in and it was so sad.

Yeah.

So how can we help today? Because I can't solve years of family dysfunction in a call. I wish I could, but what can we specifically try to help with?

I know, I've been working on it all my life. So do I—

okay, well, she's not gonna have anything. All right, sorry, I'm sorry, I did not mean to interrupt you. You keep going.

She's externally processing.

No, so I mean, like, right, right now as it is, I mean, my mom does very little, and, and she does rep— she does understand that she did do a lot of this. And, um, so she lives off of what is left after she pays these debts. Which is very minimal. But my concern is, do I need to probably— do I need to just start with the smallest amount and start knocking that down? She's got one very close to being paid off. One credit card is just about done.

Yeah, I mean, I would pause everything, Stacy, and focus on the IRS debt because they can put a lien Okay. On your— I mean, yeah, there, I wouldn't mess with that. So, I would move that to the front. And so, how much does she have left after she pays minimum payments to stay current on everything? And after she pays her bills, like her mortgage and lights and everything, do you know how much margin is left that she can throw extra at this tax bill a month?

She pays extra— oh, well, she pays a little extra on every bill every month.

Okay, so I would not do that. I would take her down to all minimum payments.

Okay.

So do all minimum payments, and then anything extra after those minimum payments, I would throw at this tax bill.

Is she on a payment plan with the IRS?

Yes. Okay.

So out of the $6,300, do you know ballpark what extra she has per month to throw at this? Like $3,000 or $2,000?

No. When it— I mean, like, if you— well, I would have to break down her minimum payments. Yeah, because we've— she's— she wants to get out of debt, so she's been adding extra to each one, right? But if I came down to it, I would say she probably has somewhere around a grand or so. I don't know, like when it comes down to it, after she pays everything, she has like $200.

Okay, okay.

So, but if we go down to the minimums, I think— oh, I'm sorry.

Um, yeah, I could Yeah, maybe a grand, but that would be 2 years to pay off those tax bills, basically, if you put every— everything to that.

Well, she's paying— she's paying $1,000 to state, or $1,200 to state and $500 to— I'm sorry, $1,200 to federal and $500 to state.

For the tax payments?

Yes.

Okay. Wow. Well, are you the only sibling helping right now with her situation?

Um, yes, I have an older sibling who kind of helps, but she just moved back in with my mom, so I don't know that that's going to be help.

I mean, this is probably dysfunctional, Stacy, but did you go to your brother? Well, no, no. Did you go to your brother and say, hey, pay mom back? She's $145,000 in debt because of your kitchen renovation.

Yeah, um, I have talked to both my siblings and I have tried to have family meetings. Where we can sit down and go over, you know, this. And I plan to still have one of those.

But they're not budgeting.

They understand. My brother has no— there's no way he can afford to pay it off.

Well, the biggest thing is to stop the bleeding. Have you convinced your mom no more giving the kids anything?

Yes.

Close the credit cards.

Absolutely.

Have the credit cards been closed?

Yes, they are.

Have you frozen her credit? I would do that with all 3 bureaus because I don't trust these siblings as far as I can throw them, truthfully. Okay, so I would freeze her credit because this is bordering on elder abuse.

Well, and that is— and that is what I have told them.

And there's elder abuse— there's elder law attorneys that you can contact to see what your options are. But this is such a bad situation where they've leached off of your mom knowingly.

And the mom, and to her She let it happen. She let it happen. And so she's reaping the consequences, which is really sad at this age.

Just know there is no inheritance that will be going around. You'll be lucky if her estate can pay the debts.

I mean, I would almost would just cash out the $30,000 and take care of the IRS to get 'em off your back. You'll have $7,000 left and you just kind of start throwing at that smallest credit card. Because she can live off the $6,300 that's coming in. But man, that's— That's tough. I don't know. That's— yeah, but I think I'd get the IRS out.

Yeah, that would be A1. And A2 is making sure that none of these kids get another dime and she doesn't let that happen. People ask me all the time, George, what's your number one money-saving hack? I'm glad you asked. Nothing makes me happier than helping another frugal friend. So here's the hack. Get on a budget. Seriously, how are you supposed to save money if you don't know how much you're spending in the first place? And that's what makes the EveryDollar budgeting app a game changer. With EveryDollar, you'll get a clear picture of your spending, and from there, you can start making smart choices. I love that. From there, it's easy to see where you can get more intentional, cut back, and save more money. How much money are we talking? Well, the average EveryDollar budgeter frees up $395 in their very first budget. And if you ask me, I think you're way above average. So why are you still listening to me? Go download EveryDollar for free and start saving more money right now. Our scripture of the day, John 8:12. Jesus said, I am the light of the world. Whoever follows me will never walk in darkness, but will have the light of the world.

Martin Luther King said, you don't have to see the whole staircase, just take the first step. Alright, let's go out to Morgan in Tampa up next. What's going on, Morgan?

Hi! How are you guys?

We're doing great!

How can we help?

Good to hear it!

My question is, how do I navigate a super-large amount of debt with also keeping up with my expenses, my mom and my late father's expenses, as they 3 months after graduation, full-time employee. Wow!

That is a lot going on.

Yeah.

So tell us about why you're covering your parents' expenses.

So my mom, she's disabled and she can't work from the past 15 years. A close family friend was helping before I was. And then while I've been in school, I've just taken out a large sum of debt to help with those coverages for my mom. And then my late father, I'm covering his expenses that he's left behind. Everything was unexpected. And he has an apartment I'm trying to sell. It's just been stuck for like a year on the market. And so that would help a pretty good amount, but it's stagnant. Wow.

What other expenses are you covering for him?

Um, so he has, uh, my family's from Romania and he has a property over there. So I cover, uh, which is pretty low. It's like property taxes, his, um, apartment here in the States. And oh gosh, just a bunch of hidden fees like lawyer fees. There's, he was in collections. There's all kinds of, all kinds of fees.

And he's passed away. Is that what you said? Your late father?

Yeah, that's correct. So these are charges that have just stuck versus some that have just been wiped away.

Well, debt at death usually goes against the person's estate. So have you contacted a lawyer or anything to get this settled out? Because—

I don't want you paying debts you don't have to pay.

Yeah, yeah, yeah. You don't, you don't owe those. His estate will. So you do need to sell these properties. And even if the one in Romania is low, I probably would still sell it because you can't afford to keep all of this right now.

Oh, definitely.

So if you liquidate the property in Romania and if you like lowballed offer just to get this condo out of here, what would you walk away with? Do you know?

I've been working with the realtor and we've been going down and down on the prices. And I feel like my offer is pretty low. It's in a nice area. The problem is he has 2— or I have 2 stepsiblings that it would have to be split amongst us. And the amount of loans that I've had to take out, student loans— I should mention it's like $120,000 at like 17% interest rate. I haven't reconsolidated anything, so it's super large. And a lot of that comes from me trying to keep up with my mom and his expenses. So if I don't sell this apartment at like what it's worth, then it's—

Mm-hmm.

Like, not even covering how many, like, loans I had to take out to pay for this apartment. Does that make sense?

Okay. What would have happened if you didn't take out all this debt to cover the expenses?

It would be foreclosed by the bank. All properties would be taken.

Why have you taken on the burdens of the world onto your shoulders?

Yeah, you could have just let them have it.

Because you can't afford to do any of this, and now all the risk is on you, because Because those student loans, all that debt is in your name.

I thought, well, I mean, the apartment isn't worth nothing. I thought it would sell quickly and then I could help cover everything. I didn't think that I was going to be in such a big hole. And also, when I was in school taking these loans out to cover my expenses too, it just didn't dawn on me what 17% interest would do to that. And I also didn't understand that it was incurring while I was in school. I thought it would start 6, 7 months from now. Yeah, the majority is private and then there's some federal, too.

Well, a little bit of homework. You can go to yrefi.com/ramsey. That's our partner to help refinance these private student loans that are crushing you. They can likely get you much better terms. That's one thing you can do to get a little breathing room. But the overall thing is, you can't keep covering everybody's expenses as much as you want So mom is going to have to figure it out. Is she on disability? What is her income sources right now?

Disability. That's it.

And how much is that?

$800 a month.

That's it. Is there any survivor benefits from your late father?

No, they weren't together at the time, so it didn't apply.

And she's living with you?

What kind of disability does she have?

More like I'm living with her, and she's got a bunch of things. She broke her back like 10 years ago at a nursing home. Lupus, fibromyalgia, just like bone pain, that kind of thing. And I'm living with her, covering her expenses. And she's also a huge hoarder, which I've tried to mitigate her spending. But yeah.

Well, I think mitigate it, we need a stronger word. I think we need to remove her ability to spend if you're the one covering her expenses.

Yeah, you have to take over. It's almost like a parental—

Yeah, you're in charge of this business now and you need to make wise decisions.

She doesn't get any access to anything.

You're making sure her basic needs are covered and that's That's it.

Yeah, that's what I've been trying. It's—

Are you working, Morgan?

Harder. Yeah, I have a full-time job.

How much do you make?

$72,000 after taxes.

$72,000 after taxes. Okay.

And that's with working overtime, which hopefully I can keep.

And how much debt do you have total?

Um, so $193,000. And then if— I mean, if I take on my mom's house, which like the mortgage and stuff, it'd be like—

You don't want to take on her house. house.

You're gonna go into a vortex of debt.

Yeah, and it's not probably in a great state, a state of like cleanliness.

No, it's not.

Yeah, okay, so don't— okay, so, um, okay, so, because we have a few minutes, here's what I would do, um, Morgan. I would, um, I would probably move out of your mom's home, and I would go rent an apartment somewhere. I want you to, to have a, uh, You have to set up stability for yourself because everything around you is not stable. Your mom has $800 a month coming in. I think you need to kind of figure out, okay, what's the minimum that she needs to survive? Not her spending habits or anything. What does she need for her mortgage to be paid so she doesn't get foreclosed on? And reasonable food budget and all of it. And I would manage that on the side and help her then. And then, with your income, I would get this apartment sold. I would get the— and even if it's— I mean, I wouldn't take a loss, but even if it's like a— you only make $30,000 or something off of it, like, I mean, you need to simplify all of this pretty quickly. And out of that, then you're gonna have to work your way, yeah, out of this debt.

And it's gonna be a journey, for sure. But I think you've done really amazing things, Morgan. I think you've tried to be the hero for so many people. And I think you kind of have to take the cape off and say, I don't have the ability financially to carry all this, because you don't at all, at all.

And what this is going to turn into is just you going into more and more debt. Then you're unable to cover your own expenses, let alone someone else's.

You have to stay afloat yourself before you can help people.

What's the other $73,000 in debt? You said you had $120,000 in the student loans at 17%. What's the other $73,000?

Car, the rest of the student loans that are federal, my car, credit cards. Yeah, that's a big one. Okay.

What's left on the car loan?

$8,000, and then $15,000 in credit cards.

Are you still using the credit cards?

Yeah. Yeah, I am.

I would make a pact with yourself that you are done turning to debt to solve these problems, because it's not solving anything, even though if it's temporarily putting a Band-Aid on it for a couple of days, and then it's 26% APR, and you're not going to be able to climb out of that. The balloon— the balances are going to balloon on all of this, the student loans, the credit cards. So at $193,000, you're going to look up 6 months from now, it's going to be $220,000 while you're still taking on more So you've gotta decide, I'm done with debt. I'm done covering everyone's expenses. At some point, adults need to figure this out for themselves. And you can help your mom as much as you're able to and get the stepsiblings involved, but please stop trying to carry this on your own.

Yeah, hold on the line, Morgan, and Christian will pick up and we'll give you Financial Peace University. It's just the bulk of everything from budgeting, getting outta debt, and wealth building. And I want you to start that process.

That puts this hour of the Ramsey Show in the books. And remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.