Transcript of You Can't Borrow Your Way To A Better Life New

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Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studio, this is The Ramsey Show. I'm George Campbell, your host today. No co-host, just flying solo, no chaperones, so we're We're gonna have fun in the basement today. It's gonna be a good time. Kicking it off, we've got Jordan in Oklahoma City, and if you want to call in, the number's 888-825-5225. What's going on, Jordan? How can I help today?

Well, I feel like I've pretty much been drowning in debt my entire adult life, and I'm just sort of over it, and I want to take control.

Man, that is the best step right there. Too many people never get there, so I'm proud of you. How old are you?

28.

28, and you're sick and tired of being sick and tired already?

Yes, sir.

Man, okay, so where did this start? Was this like post-college in your adult life, or was this a long way before that with student loans?

Uh, no, I don't have any student loans. It was after college, just start getting started in the workforce and buying a house and having kids, and it all just kind of kept piling on and never went away.

Wow.

So how much do you make?

I make after taxes about $50,000 a year.

Okay.

And does your spouse work outside the home?

She does not.

Okay, so $50 grand is your take, take home. How much do you have in debt, uh, including the house?

About $220,000, $215,000.

Okay, let's separate the mortgage out for now. How much do you have in consumer debt, any non-mortgage debt?

Yeah, I've got probably about $45,000.

Okay, break that down for me. What kind of debts are those and what's the balances?

Uh, so our car—

we have one car, the debt on that's about $30,000 right now.

Okay, I've got 3 credit cards.

I've got one that's got about $9,200 One at about $2,000 and one at about $1,000.

And that's everything?

That's everything, yeah. The car and the 3 credit cards.

That'll do. Man, yeah, I feel it. You became an adult, you got a house, and you leveraged yourself a little bit to get there, driving a nice car and covering, I guess, the deficit of your bills on the credit cards. What made you turn to those?

Uh, not having any cash.

Yeah, and you have no cash right now? Anything in checking, savings?

Uh, I've got about $500 in the bank and I've got $800 in cash that's just sitting in a drawer that we don't touch. That's kind of our backup.

Okay, well, I'd love for you to just deposit that in a savings account and that'll get you to Baby Step 1. $1,000 starter emergency fund to cover those ankle biters, because I'm guessing along the way when you have nothing in the bank, every single little thing that comes up feels like an emergency and it brings you back a notch.

Pretty much, yeah. My paycheck's just about covering my bills and that's it.

Have you cut up the cards yet?

I haven't.

You want to do that with me right now, or is that, is that too scary?

Uh, it's scary because it's outside of that small amount of cash. That's really the only safety net we have because I do still have a little bit of credit left on the credit cards. One of them's got— I've got about $4,000 worth of credit to spend on it, so it's kind of my biggest safety net. I just hate going to it.

Man, that's frightening. That's like the mafia being like, "Yeah, we'll give you another $4,000 if you need it, bud. We're here for you at 28% APR." Correct.

Man.

Well, there's a few things I would do if I was in your shoes. Number one, I would sit down with my wife and say, "This is bad." I'm scared. I'm not leading our family well in this area. We sort of created this house of cards and we can do better. Have you had that conversation with her yet?

Yeah, we have that, that conversation frequently, and I know she wants to go to work. She wants to be able to work and to help out, but we've got 4 kids.

Goodness.

It's just a little unfeasible.

What are the ages?

Uh, 8, 5, 2 and a half, and 7 months.

Okay, so let's talk about this car. That is the glaring issue here. Most of your problems would be solved if we got rid of this car payment, right?

It would, it would definitely help. We've already gotten rid of one car just to free up that amount, so that's why we just left ourselves with one car.

What do you owe on it? I mean, you owe the $30,000.

What's it worth?

I'm probably upside down, and it was a 7-year loan at 10.5%, so I don't think I could sell it and make any money.

Well, even if you can't make profit, the goal is to figure out how much you're underwater and find the private party value on a site like Kelley Blue Book, and then see if we can actually get that amount for it. So let's say you owe $30,000, it's worth $25,000 private party. Well, now we at least know the facts that we're $5,000 underwater. We gotta come up with $5,000. That might be from savings that we work to save so that we can get rid of the car. That might be from your local credit union and a personal loan.— but it will get rid of your payment. Now, we obviously need another car to drive, so we need money on top of that to get you from A to B for now. What are you doing for work?

I'm in law enforcement.

OK. What does the trajectory look like for you in law enforcement to make more money? And can you do side gigs? Can you do security on the weekends at churches, for example?

Yeah, I try and do those when they come up. They're just a little few and far between. I— we're supposed to get, you know, yearly pay raises, which we're having troubles with at the moment. And I was trying to promote recently, and that's not going to happen.

So why is that?

I just didn't— I didn't make the number one spot on our promotional exam.

Hmm.

Well, side hustles are going to be your friend for now, but I would love to see you get your core income up so that we can get out of this debt faster. Because usually what we see is a debt-to-income income ratio of about 50%. So if someone makes $100 grand, they got $50 grand in debt, that tells me we can get out of this thing in 2 years. In your shoes, you got $45 grand in consumer debt making $50,000. So it's almost 100% debt-to-income ratio. And so I want you to have that urgency of we gotta figure this out. I need to do 7 side hustles. I might not, you know, see those kids at night. Bedtime might be a little difficult for a season, but just getting rid of that car payment's gonna allow you to breathe. What's the car payment every month?

Uh, it's $530 a month.

And what is your actual take-home pay? You said it's $50K a year as your take-home, so it's about $4K a month coming in?

Yeah, my paychecks, if I just work a straight 80 hours, are about $1,900 biweekly.

Okay, man. Are you doing any investing right now?

A little bit. I mean, I've got $50 in an ETF, and I'm, I'm trying to put a little bit into retirement as far as the future goes. But as far as you know, in and out investing. I haven't really touched on that. Between my, you know, my mortgage and my car payment, that's an entire paycheck.

Yeah, well, I'd encourage you to focus on this with some gazelle intensity, because when I was in my 20s, I had $40 grand in debt between student loans and credit cards, and I wanted to invest, and I was doing 14 good things at once, and I wasn't getting anywhere. So if you want to get serious about this, you called in saying, I'm sick and tired of being sick and tired. You've got to focus on this thing with a vengeance. No investing, nothing but working, throwing all the margin you can at the debt. Save up the $5,000, get rid of the car payment, and borrow a car if you have to. Find one on Facebook for $3,000, drive that thing till the wheels fall off, rinse and repeat until you are debt-free. And hang on the line, I'm gonna send you a copy of my book Breaking Free from Broke. It'll walk you through the whole process, and it's gonna hook you up with the EveryDollar premium app so you guys can sit down at night, make a plan for every dollar's going, so you can breathe again, so your conversations turn from stressful to dreamin'.

Wishin' you the best, man.

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Haley is up next in Washington, D.C. Haley, welcome to the show.

Hey, George, thanks for having me.

Absolutely. What's going on with you?

Um, yeah, I am currently, uh, 27. I live with my parents and I am trying to figure out how to afford moving out. I don't know if I can afford it, really.

OK, great question. Are you in the D.C. area proper?

I am, yes.

OK. What does rent cost around your area for a reasonable, let's say, one-bedroom, but let's also talk about maybe a two- or three-bedroom with roommates?

Mm-hmm. Yeah, one-bedroom, I found a reasonable one at $1,800-$1,900, outside in the metro area. I would say with roommates for a single person, I could get that down to $1,500, maybe $1,200.

OK, great. What are you making?

Before taxes, I make $89,000 a year gross. And then after taxes, it comes out to $4,000 a month.

Whoa!

I mean, after taxes and withholdings for insurance and stuff.

OK. Are you doing any investing right now?

I do have an investment retirement account. I've got $15,000 in that, about. And then I think I have another $5,000 in a Roth IRA.

Cool.

Way to go. Alright, what are you doing for work?

I work for the government.

Fantastic. Well, you've got a great salary. That helps. That tells me independence is in your near future. Do you have any debt? No debt.

I have a credit card that I pay off every month.

I do have a dog, so I'd consider owning a pet kind of.

Yeah, dogs are a form of future debt if you're not careful. I say that as an owner of 2 French Bulldogs who I've spent too much money on. So let's talk about this. You're 27, living with mom and dad, you're wanting to get out, you're bringing home a little over $4,000 a month.

Yeah.

So our parameter for all housing— this counts for rent, this is your mortgage— is about a quarter of your after-tax monthly income.

Yeah.

So that doesn't count like your investment contributions, your healthcare. We're just talking about after taxes. So that kind of helps you go, okay, that's probably probably more like $5,000 a month for you, right?

That's true, yeah.

So now we're looking at $1,250 is sort of what we're aiming for. Now if it's $1,300, nothing's on fire. It's just we want to have wiggle room to do the other Baby Steps and to live our life and to build wealth. So have you looked into living with other roommates? People who already have a place? Do you have friends in the area?

Yeah, I really think that's the solution. I don't have friends in the area, but I've also thought about maybe finding a place that has a couple bedrooms and then looking for roommates. For me, with a pet, it's been harder finding a place that is looking for a roommate with my pet.

Yeah, the pets can be more difficult.

The other way around could work.

But if you get the place first, here's the fear: you get the place and now you're looking for roommates for 6 months while you're fronting a $2,500 rent bill.

Yep.

So, that's where I wouldn't do this until you've got you know, we're doing Sisterhood of the Traveling Pants, we're doing a spit shake, we're all going to live here, we're all going to sign the lease. So that's where my homework would start to begin now is going, okay, can I start to join some of these Facebook groups, whatever the resources you have to go find roommates that are not, you know, um, that aren't going to ruin your life. I guess that's the word, the way to put it, because roommates can be a scary thing. And I know you'd prefer to live alone, but right now Spending $2,000 a month out of $4,000 does not make sense. Would you agree?

Yeah, absolutely. That's been the whole crazy part. I'm like, I can't do $2,000.

100%. And I say this as a guy who had roommates all the way up until I was married. And I feel like while women can have their issues, living with a bunch of dudes is difficult. And so it made me very excited to move out and live with my now wife. So that's the goal. I would do a budget. Have you ever done a budget where you lay it out in EveryDollar saying, "OK, here's my income, here's all my bills, here's what my bills might be when I'm on my own." That will give you so much peace to actually look at the facts versus just vibing, trying to go, "Do I feel like I could move out?" OK.

No, yes, I haven't done that before.

I've just, yeah, exactly, kind of, I figured it out.

Love it.

But I haven't projected future expenses yet.

Well, I'll hook you up with EveryDollar Premium. That's our budgeting tool that's going to help you map this income out. It'll connect to your bank accounts, all of the transactions. Questions will flow in. I'm telling you, you sound like someone who wants to do things the right way. You want to follow the process. You want to make sure that the facts make sense, that the i's are dotted, the t's are crossed. That's exactly what EveryDollar will help you do. Hang on the line. I will get you that budgeting app squared away. I think move-out date will be very soon. Probably by— let's see, we're currently in July. My guess is before the end of August, you are out of there. I would just have a little bit of urgency. Again, nothing's on fire, but it would be cool, especially in the fall. People tend to start moving as you head towards September. That's when I would aim for to get a place of your own. Congratulations! You've done really well. Reed is in Denver up next. Reed, welcome to The Ramsey Show!

Hi, George!

Thanks for taking my call.

Absolutely!

I have a question today about HSA investing.

Sweet!

"Um, I, uh, I have about $5,500 in my HSA and, um, my deductible for my family plan is $6,000. Um, the out-of-pocket maximum is $12,000. And I'm just trying to figure out at what point should I start investing some of that HSA funds in the market as opposed to just keeping it in cash?" Yeah, that's a great question.

I love that we're talking about this. And for those listening at home, they're like, "What is he saying?" It's a health savings account and you can access one if you have a high deductible health plan. It's a great way to save for medical expenses and there's some really cool features of it that I'll get into Reed with. He probably already knows because this guy knows his stuff. What Baby Step are you on? Do you know?

We're on Baby Steps 4, 5, and 6.

Great! Out of debt, you got the emergency fund, you're investing. Here's the great news. If you are in Baby Steps 1 through 3, the HSA is, "Let's just put as much as we need in there to cover the medical expenses that may come up during the year." Once you hit Baby Steps 4, 5, 6, Now we're in a different place. We can actually start contributing to this and investing some. The place I would max it out, no matter what, is once you hit Baby Step 7, which is when you've got that paid-for house. Right now, I love the idea of you guys having enough to cover at least your deductible, and maybe shoot for that out-of-pocket max. It might be a slower go, because likely you're not going to use all of that money in a given year, right?

Uh, no, not at this point.

OK, not a lot of health issues in the family? No, not right now.

No.

Praise God! OK, this is good news. So here's what I would do. I would invest most of that money. There's a threshold. So, for example, in my HSA here at Ramsey, the threshold is $1,000 in cash. Anything above that I can invest into mutual funds just like I could in an IRA. So that might be your plan, is to move as much over there as you can beyond the threshold and start investing to let that compound for you. OK. And $6,000 is a great marker. Again, if you want to slowly contribute to it, let's say you do, you know, $100, $200 a month, you'll end up hitting that out-of-pocket max sooner rather than later. And are you guys— do you have a home right now that you're working to pay off?

Yes.

Yeah, we've got about 8 years left on it.

Fantastic. And here's what I want to tell you, Reed. There's a really cool hack with the HSA that not a lot of people know about, and it's this. And here's what Dave Ramsey does as a great example. Dave Ramsey does not use his HSA. He does not use it to cover medical costs. He just leaves it sitting in there compounding, and he cash flows all the medical expenses from his checking account. Here's why that's great. It's going to compound, and at 65 it turns into a traditional IRA. So it's kind of a stealth IRA, and if you save your receipts, you can reimburse yourself at any time in your life. That's the current law, and you can actually take that money out against your HSA into your bank account. So that's what I've started doing with my family, is just cash flowing it. The tax advantages of the HSA are the best. There is no account like it. It's triple tax advantaged because the money is going in pre-tax, it's going to then grow tax-free, and you can withdraw it tax-free for qualified medical expenses. So I love that you're even utilizing this. Most people don't even know it exists.

And so again, this is only for people who have a high deductible health plan. Then you can access that HSA. And Reid, you're doing a fantastic Fantastic job, man. How old are you?

Well, I'm 46.

I mean, we've got 5 kids and we've spent years getting to this point.

You know, you have orthodontic work, which we've used the HSA on occasion for some of that. I know, you know, you could go with other routes, but we've needed to do that. And, and, you know, all the kids have gotten their wisdom teeth pulled, orthodontics are done. So at this point, I'm kind of looking and trying to figure out But what's the, the risk— the best way to manage risk but still get some investment, uh, growth and opportunity out of it?

It's a great question. I would, I would invest as much as you can, and it sounds like you guys are in a place where you could cash flow that if there was an emergency. You can use the emergency fund, and otherwise you can use the HSA if you need it. Great question. If you're waiting for the perfect interest rate before you buy a home or refinance, that moment may never come. That's why people should talk to Churchill Mortgage, because rates move every day, and when rates drop, buyers flood the market, which means more competition and higher home prices. Smart buyers know they can't time the market. They move with a strategy. Buy the home you can afford now and refinance later if rates improve. Churchill helps you understand what you can actually afford, not just what you qualify for. And with their Certified Homebuyer Program, you can get fully underwritten before you shop so you can make moves faster and make stronger offers. And right now, Churchill has a special offer only for the Ramsey audience. Go to churchillmortgage.com/ramseyoffer to learn more. That's a special website. Remember this, churchillmortgage.com/ramseyoffer. /ramseyoffer. This is a paid advertisement.

The Churchill Certified Homebuyer Program is available for qualifying borrowers on select loan types only. NMLS ID 1591, nmlsconsumeraccess.org, equal housing lender, 1749 Mallory Lane, Suite 100, Brentwood, Tennessee 37027. Bijou is in Long Island up next. Bijou, what's going on?

Yeah, how's it going, George? Thanks for taking my call.

Absolutely.

A lot of trust on running the show solo.

Appreciate that. I feel the same way. I can't believe they let me do it.

A long time ago— not a long time ago, about a year ago— I called in saying, uh, my brother, he, uh, he kind of— he had access to my mom's money He took it and, um, trying to say, hey, be good, give it back. And so she wants to take him off the will and put everything onto me. And, um, I don't know how to react to that.

Sorry, you're breaking up on us, Bijou. Can you speak directly in your phone?

Yeah, can you hear me better now?

Yes. So let me recap. You're brother had access to your mom's money. I don't know what that means, like access to her checking account, a credit card, and he made bad decisions, and now she's going, he can't be trusted, he's off the will?

Something like that. Um, we had an account with my brother in my name, and, uh, that was from my dad, and he just took it all. So that bothered her.

So he did like a prodigal son move, and instead when he came running back, mom went, well, he's out of the will. No party for him.

Yeah, kind of, yeah.

So she wants to take your brother off and give it all to you. Has she had this conversation with both of you?

Um, myself, from the both of us, because she was like, hey, what you did wasn't right. And it was never my money, so I couldn't really say anything. But he was like, kind of like, oh, they're both against me. And we don't know where he got the idea from, and because of that nasty attitude is why she's like, "You know what?

He doesn't deserve anything." Well, what you don't want here is this sort of triangulation where now you're the bad guy and he thinks that you're trying to connive your way into all of this money. That's not what's happening here. But it sounds like he can't take personal responsibility. He's not self-aware enough to go, "All right. I screwed the pooch. And if I can't manage this, they're not going to give me more inheritance to then manage." right?

Yeah, along that line. It's just the house. And because he's like, like a stubborn wall, my mom's like, this isn't getting anywhere, and just take them off, man.

Well, that puts you in a tough spot because either way, this relationship is soured. I don't know what it was like before this. It sounds like it wasn't great between you and your sibling, between your mom and him. But I don't want you to take this burden onto yourself of this is my fault and I feel guilty taking this money. That money is your mother's to do what she wants with.

Correct, yeah.

She could give it all to Salvation Army instead of a dime to any of you, and that's her prerogative, right?

Yeah, and that's why she feels like she wants to do it this way, because that was taken away from her.

What was taken away?

Like the ability to choose what she wants to do with my dad's life insurance money.

Mm.

So how much was actually spent? You said your dad passed, left this life insurance money, and you guys had access to it. I don't know how much that was, and he blew through it completely.

Um, because he's not talking to us, we don't know how much he spent. And, um, I'll tell you some numbers. Uh, my dad's life insurance money was $96,000, and, um, the account that my mom and dad had together was $40,000. So because he had, uh, gained access to those— and it wasn't like he did something shady, um, he— my mom asked him to close it, so that gave him access to the $40,000. And as I mentioned, we had our names on one account, so that's how we had access to $96,000.

Wow.

And it's gone?

Yeah, yeah, he emptied it out and won't give it back to my mom.

Emptied it out as in he spent it all or he moved it to his own account? Do we know what went on here?

Yeah, so I initially thought that he just moved it somewhere, probably better principal and stuff, but then when we tried to talk to him, he just, you know, gave us like a nasty attitude. So, and then one time he told my mom that he spent some of it, and because he has more kids than I do and more expenses, we believe he ended up spending it all. But there's no communication to know for sure.

So he's basically estranged at this point?

Yeah, pretty much. Yeah, strange for me. For my mom, because he still has stuff at her house, he'll come by and it's really, really tense between the two of them.

Yeah, I can see why she's taken him out of the will. I mean, he's not doing himself any favors here. I don't even know how he would expect to be left with anything at this point.

Yeah, when I called, Dave was like, just stay away from him. Yeah, take it as a loss. And that's, that's what I told my mom, but she, she's really like, no, this wasn't right. And she's— and he's still kind of treating her wrong.

Well, at this point, she's wanting to punish him, it sounds like. Yeah, yeah, that's her way, you know. There's a great line from an artist I love, Stephen Wilson Jr. Grief is only love that's got nowhere to go. And that's what's happening here. She's grieving the loss of her son relationally. And so this is like, you know, 5 stages of grief here. She's in anger mode and she's going, well, you're not getting the house because of how you treated us and the way you spent dad's life insurance money. I mean, you guys have been through a lot.

Yeah, that's a great way to look at it. I didn't think of grief as one of them. I just looked at like, oh, she's angry.

I mean, she, she lost her husband and now she's lost one of her sons, essentially.

Yeah.

And so she's going through a lot. And so I think the best thing you can do here is just to be compassionate, to be empathetic, and go, Mom, I'm happy to do whatever you want to with this money. I want to manage it well. I know there's a strange relationship here, but what I need you to do, Mom, is to have this conversation with him so that there are no surprises, so that I don't have to be the bearer of bad news after you pass one day going, oh yeah, Mom left it to me, bro.

And so, so during some of those times where they're like, you know, going past each other, because like I said, he still got stuff at the house, she said this to him and they just kind of yell at each other. So he knows it's coming.

Okay.

I just don't know what to do because we're acting like the money's gone. It's only the house that's on the, on the table.

What's the house worth?

A little over a million.

Wow.

Is it paid for?

New York homes. Yeah.

Yeah.

No mortgage. My money, they were really good. They paid off the house. Lord knows how many years ago.

Wow.

That's, that's a great legacy. So when you inherit the house, is there plans to stay in it? Are you gonna sell it? Do you know what you would do?

I tried to rent a house. I did really bad at it. So because of that, I don't want to go through that again. So I'd prefer just selling it. My wife said a suggestion of, why don't you give his kids the money? And I was like, I can, I can trust it to them. So that was a great idea from her. I just don't— because he's not gonna get it. I'm a little afraid of what's gonna happen. And we're not talking.

Well, you know, you give him an inch, he'll take a mile. So that's my fear.

Exactly.

You go, well, I gave the kids $10 grand each. And he goes, you have a million, dude. You know, you're so greedy. And so you just gotta be ready for whatever happens next.

And because of that bad attitude, no matter what we give him, my mom knows it would never be enough because he feels like he's been done wrong by us.

Yeah. And that's where I go, is it even worth it for you to step in and now sort of be like second dad to his kids. And I don't know your relationship with them, with your, you know, nephews and nieces. I'm sure you'd like to have a better one. It sounds like he wants to keep you away.

It was good until the problems happened.

Yeah, man, that's hard.

Like a year.

That's one of those like, we'll cross that bridge when we get there situations, which I don't know how old your mom is and what health she's in. Is this a ways away?

Um, so a little before my dad died, she had brain surgery because she had a glioblastoma.

Oh wow.

She's 82, so we don't, we don't really think she has that many years left.

Wow.

Are you married?

Yes.

Okay, I would at least get a game plan together with, with your spouse going, hey, when and if this happens, here's what we're going to do.

So, so my wife wants to stay far away from that house and property because of the bad juju.

Yeah.

And I don't blame her. That's why when she said give it to the kids, his kids, I was like, oh, good, good, good.

Well, I mean, you can use that money because here's the deal, I don't know his kids from Adam, and so it's up to you to manage this money well. And if you want to be generous with it in whatever way you want to, that's great, but I don't want you to feel any obligation to go, well, the kids deserve half, because you know what's gonna happen, right? Dad's gonna swoop in and take the money from the kids. Yeah, yeah, that's my money. Now you've created a rift between him and his own children. So that's my fear here, is you meddling at all with this family could cause chaos. As much as you want to do the nice thing, it could backfire. It's like in traffic when you're trying to let someone in traffic and then you end up causing a different traffic jam and everyone's beeping at you because you were just trying to be a nice guy. It's kind of like that with this situation. It's very sticky, man. I would tread with caution. And like Dave said, I would just try to remove myself as much as I can from this and just carry out your mom's wishes with wisdom.

Thanks for the call.

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Welcome back to The Ramsey Show. I'm George Campbell, Ramsey personality, co-host of Smart Money Happy Hour, taking your calls at 888-825-5225. I wanted to take a second and talk about investing for your kids. I've been getting a lot of questions about these brand new Trump accounts that just launched on the Fourth of July, and there's some confusion around it. There's some excitement around it. And I want to just clear the air, tell you what it is, what it isn't, and share a really cool loophole that could make your kid a multimillionaire. Now your ears are perked up here. So what is a Trump account? Well, it's not really all that political, so do not fear whether you're a Democrat, Republican, liberal, whatever you are. It's just a traditional IRA for your kids. That's nothing more than that. So any child under the age of 18 can have a Trump account, and children who are U.S.-born citizens between January 1st, 2025 and December 31st, 2028 qualify for $1,000 of government-funded starter deposit. So I had a kid in 2025, and lo and behold, I was as shocked as anyone that $1,000 actually showed up in a Trump account.

And here's the deal.

Deal.

It is invested in a low-cost index fund that is based on U.S. stocks, which is actually pretty awesome. You get to choose between a couple of those. Not a ton of flexibility, but I'm not mad about it. Here's the deal. This account is locked up until the kid turns 18. You can contribute up to $5,000 a year to this. Here's what I do like about it. You don't have to have earned income. My 3-year-old doesn't have to go get a job in order to contribute to this like he would with a custodial Roth IRA. So, here's the problem. There is no basis on that seed. So let's say you get that $1,000 at birth. I'm going to use our investment calculator to show you exactly what's happening here. So let's go age 0 to age 18, no monthly contributions, and I just leave the $1,000 invested. So the crew will pull that up. If you're watching on YouTube or Spotify, you can actually see this in action.— and let's go with a 10% rate of return. So I'm going to leave the $1,000 in there from birth. Great. My kid has $6,000 at the age of 18 sitting in a traditional IRA.

Now, here's what's interesting. If I just let that ride until, let's say, he's out of college to 23, that turns into $9,800. Not bad, right? You're going, "OK, almost $9,900." Now, that's all taxable if he were to convert it over. So here's the loophole that will make my kid a multimillionaire if I do I want to do it right, and I'm interested to try this out, to be the guinea pig. My kid, once he's graduated, he's filing his own taxes independently, can pay the taxes on that $9,900 to convert it to a Roth IRA. So at his tax bracket, at 23, could be 12%. So that's about $1,200 in taxes he would pay to now convert that $10,000 to Roth. Now let's see what happens. From the age of 23 to the age of 65, We've got $10,000 growing tax-free. The withdrawals are tax-free. $650,000. That was off of $1,000 from the seed that the government put in. So now picture you're investing $100 a month into this account. The numbers change dramatically and turn into millions. $3, $4, $5 million if you do it that way. So that is the one loophole I would say this account is good for.

But I will not be using it for anything else. I will not be using it for education.

And here's why.

The tax treatment on this thing is not great. You're using after-tax money and paying taxes on the way out. That's where I would go to the 529 plan if you want to invest for college specifically. The 529 plan is the winner here because it is after-tax money, but then it's going to grow tax-free, and the withdrawals are tax-free for college education. You really can't beat that. So we've got the Trump account. That one's going to win for seeding your kids' retirement. That really is more of a Baby Step 4, even 7, 7 item.

That's—

you're already investing 15% of your own income into your own retirement. You're putting money away for college. Do that before anything, because college is wildly expensive. Your kid has plenty of time to invest for their own retirement. I'm more worried about the kid turns 18 and mom and dad didn't have a plan, and now they want to go to the out-of-state school that's $300,000. Now let's move on to the other piece. You've got the 529 plan for education, you have the Trump account if you want to sort of precede your kid's retirement. Now what about everything in between?

Between.

For me, I got a 1- and 3-year-old. I want to be able to buy them their first car, pay for an awesome wedding, maybe even put a down payment on a house, or even buy them a house in cash, because Lord knows what it's going to cost my 1-year-old to buy a house at 25 or 30. Probably $1 million. So what I'm doing in that regard is investing in a taxable brokerage account. This is a non-retirement account. It's in my name, me and my wife's name, a joint brokerage account, so that it stays in my control. Here's what I like about this. I get to control the money. With the other accounts out there, you've heard of like an UTMA, an UGMA, the problem I have with those accounts is the child gets control at 18 or 21 depending on the state you're in. So picture that. Your kid at 18 or 21 has access to potentially hundreds of thousands of dollars that is not locked away in retirement. It is just money they can blow. That is a frightening scenario that I would like to avoid personally. So because of that, I do the brokerage account.

I'm investing in there separately for my kids to be able to cover those things. So that's the starter pack on investing for your kids. Start with the 529 plan for education. If you want to get kind of launch package adult gifts like cars, weddings, home down payment, I would personally do a, a parent taxable brokerage account that stays in your control. And the other piece is some people have K-12 expenses, and that's where an education savings account can shine. $529, because that one can be used for K-12 expenses. So the ESA can be a great option, but there's contribution limits and income limits on that. Versus the 529 plan, what's great about that, there's no income limits and there's essentially no contribution limit. So I love that account. And so if you need help with any of this, here's what you need to do. Work with a professional. Some of this stuff you're like, I think I maybe can do it on my own. You're liable to screw it up. And so working with a qualified investment professional is the key. And if you want to find one that you can trust, you can go to ramseysolutions.com and click on SmartVestor Pro.

These are investing pros that will guide you through all of this. And if you want more, like you want us to really nerd out on investing beyond just investing for your kids, because that's part of wealth planning legacy, we're going to be talking about this at a virtual event that Dave Ramsey and I have coming up called Investing Essentials. It's a two-night virtual event, September 1st and 2nd. We're going to walk through Dave's playbook for investing and wealth planning. We've done this, this might be the third time we've done it, and we focused on real estate investing for night 2. This time we're switching it up. Night 1 is going to be Investing 101, 201, 301, and we're going to pack real estate investing at the tail end of that. And night 2 is going to be all about wealth planning. We don't talk about this enough. We always tell you guys build wealth and then we don't really go further. We don't tell you how do you manage it? How do you use it? How do you spend it while you're alive in a smart way? How do you get How do you get the government's grubby hands off of it?

Because the money you worked so hard for, you don't want to pay 40% in estate taxes when you pass away. How do you make sure it doesn't destroy your kids by handing them over $5 million when you pass if you do it the Ramsey way? So we're going to be talking about all of that at Investing Essentials. You can sign up today. Tickets are $199 and it is worth it. That is hours and hours of content from Dave Ramsey and I live, virtual event September 1st and 2nd. Go to ramseysolutions.com/events or click the link in the show notes if you're listening on podcast or YouTube. A good caveat here: a lot of people call and they say, "Well, George, I don't know if I want to invest for college for my kid, because what if they don't go?" That problem doesn't happen as often as this scenario: "Hey, my kid's 18 and we realized it's going to cost money to go to college and we don't have any." Yikes! Oh, and by the way, they've already chosen University of Iowa and it's $70,000 a year and student loans are the only option. This is where most families find themselves versus, yeah, we, uh, we have so much money in the college account, the kids didn't end up going.

The good news is you can change the beneficiary on a 529 at any time to anyone in the general family. We're talking nieces, nephews, you know, your, your brother's daughter, whatever it is. You can change the beneficiary. And now with SECURE Act 2.0, you can actually move a portion of that over to a Roth IRA if they don't use it. As long as the account's been open for 15 years, you can move over up to the max of a Roth IRA for the year. This year it's $7,500, up to a lifetime limit of $35,000. Think about that. Your kid doesn't use it at 22. You now have a retirement account set up for them to the tune of $35,000 growing for the next 40 years. If you want to leave an inheritance to your children's children, you want to do it the right way, there was a little primer for you. I hope you can join us for Investing Ascension. Essentials, go to ramseysolutions.com/events.

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$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. I'm your host today, Ridin' Solo. Give me a call at 888-825-5225, and I'll do my best to give you the right next step for your life and your money. Stephanie joins us in Boise, Idaho, up next. What's going on, Stephanie?

Hey, how's it going? Thanks for having me on the show.

Absolutely.

A lot of people around here that are just tired of me saying, "Oh, well, Dave Ramsey, and Dave this, and Dave that." Are you using it as a cuss word, or are they just tired Are you talking about the principles or what? They're just tired of me saying, "I can't go with you to the restaurant. I can't go here. I can't do that." Yeah.

Dave is a pretty good excuse. I'll give you that.

Yeah.

So what's going on financially?

That mug.

Well, we are debt-free. It's been 2 years now and we haven't really moved the bar. Dave says that you can go gazelle intense. And, uh, when you're debt-free, you don't have to go as hard. And we took full advantage of that. And just looking back, wow, we did a lot to get here, and we're not really excited about continuing to the point where we can own our own home someday. Like, it's just— it just seems kind of impossible for us. The headlines— my husband works for Christian, uh, non-for-profit organization, and it just, uh—

so you're feeling hopeless even? So you worked really hard to become debt-free and you thought thought, oh my gosh, we're basically going to be living like billionaires once we're debt-free. And here you are going, we can't even afford a home still, even without debt payments. That's where you're at?

Yeah, I wouldn't say I expected to be living like a, a millionaire, and I still don't. But the American dream is to own a home, and here we are.

How old are you guys?

We're in our early 40s.

So early 40s, living near Boise, and you want to buy a home. What is it? What do homes around you cost? A reasonable home that you go, here's one that we want to buy.

Housing, I think on average for a starter home is around $350,000. Okay. I would say.

And what do you guys make?

So a month, about $5,300. A year is $64,000.

Okay.

Are both of you working outside? Okay, you're staying home with the kids. So he's making $64,000 working for the Christian nonprofit. You guys are debt-free. Do you have an emergency fund?

Yes, sir.

How much is in there?

We have our basic, um, $1,000. Um, if we needed to, we have another $1,000 that we keep, um, so that we could possibly go to, um, continue our membership at the local gym.

Okay, so you guys are in Baby Step 3.

You're now—

you're working on a 3- to 6-month emergency fund to stack on top of that starter $1,000. So what does a full emergency fund look like for you guys? Probably with one income, you might want to lean towards 6 months. So what is a month of expenses for you?

Uh, our month of expenses, um, well, um, with water, sewer, trash, and, and power and gas plus rent.

And, um, if I looked at your bank account, how much left that bank account in a given month?

How much is left over?

How much left your bank account? Was it $4,000 in expenses and you had $1,000 left over?

Oh no.

No, no, I mean, we would, we would, we would probably have, uh, $500 left.

Okay, even without the debt payments?

Oh, without any debt payments, that's correct.

It sounds like you guys haven't done like a detailed EveryDollar budget where you could tell me here's what's going on with every single dollar coming in, here's where it's going out.

We have a budget and we do our very best to stay by it. We're not You know, you're a Valley Victorian student. We don't have— we don't use the Everyday app. We probably should. We could probably cut things out like Disney Plus, um, or—

well, that's what I was going to tell you. I just want to know before we get to, yeah, woe is me, I will never own a home, I just want to know how much margin we're working with so we can get some accurate facts and figures here. Is it going to take you 10 years to save up for a house, or could it be 3 if we got intentional? I think that's what's missing right now is you're sort of post-debt-free fog. You're tired. It's hard to stay gazelle intense through Baby Step 3. It's far less exciting to stack cash and savings than it is to pay off debt and, you know, get rid of the student loans and credit cards. And so that is a very normal thing you're feeling. I want to encourage you that you're not crazy, Stephanie.

Thanks.

You're not alone. Now, you guys make $64,000. That's not a bad income. And a $300,000 home home, not a crazy home you guys are looking at. So now what we need to do is go, how much— what must be true for us to get in that home? How much do we need to actually have saved up? And the first thing you need to do is work on this emergency fund. So before you go doomscrolling Zillow, we need to go, how do we get $20,000 in that bank account for a never-go-into-debt-again insurance plan? That's what that emergency fund is. So if you can put away $500 it's gonna take you a wild amount of time to save up $20,000. Agreed?

I agree. And I'm willing to put in some effort here. Like, if I need to get some kind of job— it kind of seems impossible as a stay-at-home mom.

So the kids are down, you're saying you'd be willing to go do a side hustle? Absolutely. And you guys tag team and go, "All right, I'm out for the night doing Instacart." Yeah.

Is he willing to make some sacrifices to Yeah, but I would rather be the one doing that. I think it's really important that dad's around for the kids.

Sure. So that's where I would make a game plan with your husband and go, "Hey, we've been doing great. We got debt-free. Awesome. We're still a little bit sloppy with our money. We could do better to tighten things up. So this weekend, a budget audit party is going to happen. You're going to use EveryDollar and I'm going to give it to you for free. Would that convince you to use it?" use it.

Sure.

The problem with free is you go, "I didn't pay anything for it, so who cares?" I need you to act like you paid $100 for this thing, and you have to use it.

OK. I have a hard time with the sinking funds. Sorry to interrupt.

It's all good. You have a hard time with sinking funds, like saving up over time?

Yeah. There seems to always be something that I forget to add into the sinking funds. Things are constantly changing with prices going up.

Well, we can help with that. Once you're in EveryDollar Premium, you can actually access a free one-on-one coaching call with an EveryDollar pro on our team. I want you to get on there and talk to Nate. He's going to say, "Alright, Stephanie. Let's actually look at your budget. Let's see where the sinking funds are. Let me help you set these up and help you understand how to handle variable expenses." So that's all part of it. So hang on the line, I'm gonna gift that to you to help you get out of this fog. Because when I'm in a fog, sometimes I just need to look at the facts. Sometimes it's just all emotions and exhaustion. And when you look at the paper, you go, oh, we have like $2,000 we could actually throw if we got serious. That's $24,000 a year. That's $50,000 in 2 years. That sounds like a down payment on a home in Boise. That's where I want you guys to get to. Put it on paper, make the goal, make it real, make it visceral, and you guys will be homeowners in no time. Business owners know it costs money to make the phone ring.

Maybe it's advertising, maybe it's referrals, maybe it's years of earning trust. But when that call goes unanswered, all that work can disappear in a hurry. And that's why today's episode is brought to you by QWO, spelled Q-U-O, the business phone system built so you never miss a call. With QWO, you and your team share one business number so you can reply faster and stay on top of every customer conversation. QWO works from your phone or computer, logs calls, summarizes conversations, and gives you next steps. Nothing gets missed and every customer gets a response. And here's what I really like. QWO's built-in AI agent can answer questions, handle after-hours calls, and even help book appointments. So you're not losing leads just because your team is offline. You didn't start a business to spend your days playing phone tag and digging through texts. QWO helps make sure you don't ghost the customers you've worked so hard to attract. Money is on the line, so always say hello. With Quo. Try Quo for free, plus get 20% off your first 6 months when you go to quo.com/ramsey. That's quo.com/ramsey. Steven is in Dayton up next. Steven, welcome to Ramsey The Yeager Show.

Thank you, George. How are you doing?

I'm doing great, man. How can I help today?

Good, good. Hey, I am 18 and I've kind of been in the cattle business here for like 2 years. Got in back in '24 when there was pretty good profit in it. And now if you've bought hamburger recently, you know what beef's like.

Mm-hmm. And I grilled out for the 4th. I'll tell you, that was an expensive party.

Yeah, thanks for buying it. Oh yeah, so back, um, in '24, I was wanting to get into it. I was only 16, and my dad, um, got an operating loan for me. I bought 200 head of baby calves, uh, like 2 days old, fed them milk, and took them up to 15 months, sold them for a good profit. And I'm on my second batch now, and, um, it's costing a whole lot more obviously now. Get baby calves went from cost $100,000 to fill a barn to $250,000 to fill a barn now.

What was the cause of that? I'm not in the loop on the economics of cattle.

Shortage of cattle in the United States and consumers just keep eating beef and it's crazy.

Just too much demand, not enough supply. Economics 101. Okay.

Yep.

All right.

So now the numbers are tight and But my real question is, I'm selling these cattle in October and making a pretty good profit on them. And I could buy another group then for this high cost, $120,000— well, $250,000 or so to fill. And that would be on borrowed money. I would make quite a bit more money than if I went this other route. But another opportunity came up where I could custom feed for a a fella and have zero overhead. He would buy the calves, he'd deliver the feed, but I wouldn't make near as much money. I would simply be making a barn payment, not much more. And wondered what your thoughts on that was.

Man, I'll tell you, this is definitely the first call I've taken on, can I borrow money to buy my own cows? Mm-hmm. I look at it this way. If this was real estate, we would go, no, Don't leverage yourself to your eyeballs going to buy houses, hoping to flip them, right?

Right. Right.

I understand that's a very different scenario. These are living organisms, but still the principle applies that leveraging yourself for anything, especially business, is very risky, especially as you know, something as volatile as cattle, farming, ranching, whatever it may be. So the, the question I want to, to give to you as an 18-year-old who has a very bright future ahead of him, I don't even know if you had a childhood. I think you just like came out of the womb going, "All right, Mom, I'm gonna start milking those cows over there." But what does it look like 5 years from now for 23-year-old Stephen to be completely debt-free running this business to where every single piece of profit comes home to him instead of out to a lender?

Well, that'd be pretty awesome, obviously.

So what must be true? It probably means going slower, right?

Um, yes, right.

Moving at the speed of cash.

Yeah, a 10-year— well, but you see, calves cost $1,500 apiece.

Okay, how much money do you have? You said you made a pretty penny off that first batch.

I made about $60,000 off that first batch.

Where did that go?

Invested into the next group.

Okay, so you have some now?

Yes, I have a group now I'll sell in October. My question is whether I should buy another group in October Uber and, um, and probably make around the same amount of profit, or if I should custom feed for this fella, and I would be making about $35,000 a year doing that versus about $60,000 buying them myself and taking the risk for the same amount of effort. Um, considerably more effort doing it if I own them. Okay, I have to mix all the feed and everything. They deliver feed.

Um, so it's an easier task, but you're cutting your pay in half.

That's correct. But also, it would simply make my barn payment— my barn payment's like $28,000, so it would simply make my barn payment not a whole lot more.

Um, yeah, I want to see you— I mean, you're so talented, I think you can thrive and make good money doing this. The question is, if you split the difference, when— okay, with the cash that I have on hand from the profit, how much can I buy? Like, do you need a barn full at a time, or can you go, all right, I got $60 grand, I'm gonna take that $60 $40,000 divided by 1,500, that's $40.

Well, but 40 head, the profit on 40 head wouldn't near make the barn payment.

What's the barn payment?

It's like $28,000 a year.

Hmm.

Are you doing any work outside of this, or is this your full-time gig?

I work, I work about 30 hours a week, um, make about $50,000 a year at that, um, doing actually a herdsman cattle management for this company. I'd be custom feeding before.

That's if you move to the custom feeding.

That's—

no, I do that now.

Okay, so you're making $50 grand on top of any profit.

I'm thinking about my barn here going ahead and being one of their, one of their growers instead of what I'm already doing, what my dad's been doing all his life.

Um, well, it sounds like your dad was, was going into debt and it worked out for him.

That's correct.

At the time. But the times have changed. Now you're talking more zeros on the end, more risk. I mean, all you need is one mad cow disease spread and all of a sudden you're screwed.

Yeah, right.

So that, that's my fear with you leveraging yourself, especially at 18. And so this is, this is your homework, is you know this business a thousand times better than I do. You sit down and say, okay, how— what's the best path for me to scale this thing completely debt-free with the cash that I have on hand? And that might mean year Year 1, you made $20,000 profit. Year 2, you had $40,000 in profit. You doubled what you could buy. Year 3, you scaled up to $80,000. And so over time, think about where you'll be at 21 if you do this completely debt-free versus, well, I made some money, but then I had to pay back the loan. So it's really not as sexy as it seems once you actually do the math on this and factor in the risk, which is kind of hard to factor in on paper.

Mm-hmm, right. Yeah, risk is super hard to factor. That's the problem. Is there's no doubt if I, if I borrow the money and, and do it all myself, my own cows, um, there's more profit because the guy that I'm growing them for, he's gotta— I mean, he's gotta own them, he's got to make some money on them too.

Yeah.

So what would give you more— definitely, what would give you more peace? Could you do the custom feed, make $35,000 a year on top of your job? Is that what would happen?

And then, like, then eventually I'd like to get back into buying them myself if I could stack up enough cash for that.

Exactly. And so that's where I'm going. What can you do now to stack up enough cash to where you could have $100 grand or $200 grand in cash to basically now restart this business completely debt-free, where you're on top of it instead of behind it.

Uh-huh.

That's the key.

But if I was going to keep doing what I had been doing, I would get there faster.

Well, that's the problem. I mean, you can get rich quick all day long until you lose it all. Everyone's a genius at the blackjack table until they get a bad hand. And so that's, that's my fear for you, especially at 18. I mean, like, the risk meter hasn't really developed yet, 'cause you don't have like a family, I'm guessing, that's relying on this.

Right, I live at home, yep.

Exactly, and so there are risks you can take. I would not do that with debt. I'm gonna place a bet on Stephen instead of on this pile of debt to get these calves. And so I want you to go, I know I could make more money faster, but is it worth the risk? 'Cause I don't want you calling back in going, "I took out a loan for $200,000 and it didn't work out. Now what do I do?" Mm-hmm.

Yeah, right.

That's a much scarier scenario, and it's the ones we get on the show. If everything worked out perfectly, The Ramsey Show would not exist. This show only exists because everybody's plans didn't go to plan.

Right. Yep.

So as an 18-year-old, whatever it is, for any 18-year-old watching out there, there is so much you could do to make so much money so fast. The question is, is it worth your peace? Is it worth your sanity? Is it worth the risk? And that's so much harder to factor on paper than using your iPhone calculator to go, I can make a quarter million dollars in the next 2 years. It's okay if you go slower. No one's forcing you to make money. You seem to live a pretty simple life. Like you don't have a crazy lifestyle. You don't have debt in any other area.

That's the point.

No, I don't.

Just these, this cattle project.

So you're living at home.

I mean, it's all about the lifestyle. Lifestyle. I want to be at home, eventually raise a family at home, and that's how I was raised. It's just, just been awesome for my dad and his family, and I'd like to do the same thing. And I just—

I love it. Well, here's the deal. Do the math on if I just work for someone else full-time, even extra, and just stacked up cash living at home with almost no bills, how much could I save in 12 months? And in 18 months, in 24 months, and move at the speed of cash, and your life will be so much better. Hang on the line, I'm gonna send you Dave's book, Build a Business You Love. We're gonna walk through this whole process and show you how to scale this thing the right way. Appreciate the call. A lot of banks are happy to hold your money, but Fairwinds Credit Union helps you make progress. Most people spend years focusing on their financial goals and never stop to ask whether their bank is helping them get there or just holding on to their money. The real goal is building an emergency fund, paying cash for your next car, saving for a home, looking at your finances and actually feeling some peace. That's why I love Fairwinds. Their Smart Bundle gives you up to 10 free high-yield savings accounts to help you stay organized as you save for different goals.

Plus early direct deposit and no monthly fees. And you get support from real people who want to help you win with money. You can even get the Ramsey Debt Is Normal, Be Weird debit card, which is linked to your free Fairwinds Spend Smart checking to tell the world you think differently about money. So look, if you're working the Baby Steps, your bank should be helping you move toward financial freedom, not just park your cash. Go to fairwinds.org/ramsey to open your Smart Bundle and start making progress today. That's fairwinds.org/ramsey, insured by the NCUA. Rosanna's in Chattanooga up next. What's going on, Rosanna?

Oh well, my husband told me I should call you. Um, he put you up to this? Well, I wanted to do it, but I wasn't gonna do it because I wasn't sure if he's gonna be okay with having our financial information on YouTube for the whole world.

Too late now, Rosanna. Anna, we're too— we're too invested in this.

He told me to call you, so then I figured I guess it's good. Um, but yeah, he thinks I spend too much on groceries, and he thinks maybe we should sell our house because he thinks that's why we're broke, is because we bought a house. We did do 100% financing. Well, we did like, uh, my dad paid for the property with cash and he put it in our name, so then when we wanted to get a mortgage, we could do refinance from cash. Cash, um, which my dad did it that way for us to help us out.

So he paid for it in cash. Do you owe on it, or was it a gift for you guys?

Well, we were supposed to pay him back, but he wanted— that was the deal, that we're going to get a mortgage then, um, to— and give him. But he said if you can't— so we still owe him about $30,000 because when we went to do the refinance from cash, then they didn't give us all the money that he had paid for it.

Well, sure, they're not going to give you 100% of the home equity.

Right, right.

So we still owe him about $30,000.

Okay, so you got $40,000 in— I'll call it a mortgage to your dad. Yeah, that sounds fun. Okay, what else?

And, uh, we have about $12,000 in credit card debt.

Okay.

And about $1,100 in medical debt, which is— that's our smallest debt in our debt snowball right now.

So I'm trying to make extra payments on that.

Okay.

And I owe my aunt about $3,000 because she helped us out after we had a baby. She was like a maid for us.

So I'm still paying on that.

And that's pretty much it. Besides mortgage.

Okay, so I'm gonna call that about $16,000 in consumer debt and then this sort of mortgage thing to your dad.

Yep.

So did you guys get financing?

Yes, yes, we did.

We—

our mortgage, the balance on it is like $135,794 on the mortgage.

Yeah. Okay, I'm confused. You owe your dad $40,000? $30,000.

Yeah, $30,000 we still owe him, but after we got the mortgage.

On top of $135,000 that you owe the lender, you owe Dad $30,000?

Yes.

That feels like a lot of money going out the door. What do you guys make? What's the household income?

Uh, it's between $4,400 to $5,700 a month. Months.

Okay, it's variable. Do you both work outside the home?

Uh, no, I'm a stay-at-home mom. I homeschool children. Um, okay, I am trying to get— I did all the, like, the initial stuff to get signed up to be— do legal transcription, but I didn't actually— I haven't actually started doing that yet, but I'm, I'm hoping I can make a little extra money that way.

Okay, well, I'm worried. I mean, I feel like AI's got that one covered at this point. They're going to take take that, all those, uh, you know, voices and turn them into text. So hopefully you can make some money. But if you can find something to do, that'll help. The income isn't necessarily the problem here. You guys can knock out, you know, making $5,700 a month, we can knock out $16,000 in debt within a year easily. But he's saying, back to the original question, he thinks you're overspending on groceries and therefore we need to sell the house. That was a far jump.

Well, well, he thinks the house and the groceries are the two reasons why we're broke, I guess.

I think he needs to look in the mirror and go, I think me and you are the reason we're broke, honey. The house ain't got nothing to do with it. The house is an inanimate object. It's an amoral being. So yes, decisions were made. What is this house worth?

Uh, around $175,000.

Okay, so you pretty much owe 100%. You barely got any equity in this thing.

Okay.

Right. Well, do you like the house?

Oh yeah, it's perfect.

Okay. I mean, I don't think— what's the house payment? Between the house payment and what the payment you're making your dad, what does that add up to?

Well, my dad, we're not currently making payments to him. He said, you know, we should pay him when we can. So we're feeling pretty broke right now, so we haven't been making payments on that.

So he's fine to get paid down the line, and that's just kind of a personal loan. So what's the mortgage payment?

Yeah, the mortgage payment is, uh, $1,340.59.

Okay, so that's, you know, that's not a far cry from our 25% parameter. You know, we say 25% of your, your after-tax income going towards the mortgage, so that's $5,200 in take-home pay covers you. You said you make $5,700 on a high month, $4,400 on a low month, so we'll call that good. The house payment is not the thing causing you you guys to be broke. I think we don't have a lot of unity here about what we're doing with the money. And so your husband just sees the grocery bills and goes, oh my gosh, you're spending like you're in Congress with these groceries.

Yeah.

What do you spend a month on groceries?

Well, I like— I mean, it'd be good to have at least $2,000 a month. And when we have 8 people, I—

you got 6 kids?

Yeah.

Good Goodness, that's a lot of mouths to feed. How many bedrooms is this house?

Uh, it's 3 bedrooms.

Wow, you got them stacked to the ceiling on these bunk beds. Oh yeah, you got 3 kids to each, to each room, and then you got your own?

Yeah, well, I— yeah, we have one, we only have one girl, the others are boys, and the 2 other 2 bedrooms are— the master bedroom is a nice size, but the other 2 are really Okay, I was just intrigued.

Just the visual of that was, was, uh, shocking. Okay, so you got 8 mouths to feed, so $2,000 in today's world doesn't sound absurd. Uh, where are you shopping for groceries?

Well, I mostly end up doing Walmart because that's the best thing that's close by me. Um, I like to— we garden a lot, and I like to try to buy my food direct from the farmer, like, if I can, or from You know, but that often ends up being more expensive, so I don't always— I can't always do that.

Yeah, well, I think you guys tonight or this weekend sit down and actually make a budget. Does he actually see an EveryDollar budget where he can see every single line item to see where every dollar is going?

Well, I make one. I have a budget. I use it all the time, but he doesn't really want to bother looking at it.

But it's your little secret. It's just your personal thing. And if you said, hey, you can look at the budget. He doesn't care.

Yeah, I try to show it to him, but he's just, he's just like, oh, whatever. He doesn't— yeah, he doesn't want to pay attention to it. He says math makes his brain freeze up, and so he can't— he doesn't—

well, I think there's a compromise here. I think he's just feeling the emotions of he's going to work and then a third of, or almost a half of his income is gone to Walmart, right? So mathematically speaking, This is a problem that half your income is going to groceries on top of the mortgage, on top of, on top of, on top of, and then there's the debt payments. And so you guys need to break this cycle and go, alright, there's gonna be a season where things— it's gonna be PB&Js all around, kids, because mom and dad need to clean up some medical debt. We got to pay back Aunt Sally. We got to cut up these credit cards. So there's gonna be a season of pain, but I want you guys to not look at each other as the villain. Villains. I want you guys to look forward to the future and go, this is why we're doing this. Here's what the future holds if we do this the right way. And then we don't have to sell the house all because— because that's not going to fix the issue. You're still going to have $2,000 in grocery bills if you sell the house.

And we're going to have to pay at least— I mean, to rent a house for a family this size is going to cost more than $1,300 a month.

Yeah, I mean, I'm telling you, the mortgage is not the issue. That is not what's on fire here. There's just a lack of community, and he's coming home exhausted, and you're exhausted and taking care of 6 kids. I can't imagine— both of you are— you're carrying some burdens here, and I don't want you to make yourselves the enemies. But I do think we need to look in the mirror and go, it's not the grocery store's fault. Don't blame this on Walmart. Let's blame this on a lack of being on the same page. We gotta look at the budget. He's got to look at it. And at the same time he's looking at it, you I go, yeah, I could probably trim that down to $1,300 if I got a little more intentional and just wasn't just shopping till I drop like Supermarket Sweep. So there is a solution here, and I'm going to hook you up with EveryDollar Premium. That is our budgeting app. It's going to connect your bank account, give you a customized plan, personalized recommendations. So hang on the line, Emily's going to pick up, and that will be my gift to you to hopefully solve the crisis.

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The Ramsey Show question of the day is brought to you by Yrefi. Missed private student loan payments can keep your budget stuck in neutral, but Yrefi helps borrowers explore low fixed-rate refinancing and payments based on what you can forward so you can start moving forward again. Visit yrefy.com/ramsey. That's the letter Y, R-E-F-Y, dot com slash Ramsey. May not be available in all states. Today's question comes from Carson in New York. I've become addicted to buying adult fidget toys and mystery boxes, which can cost anywhere from $20 to $70 each. My wife and I are in Baby Step 2. Is it okay to splurge once in a while and buy one just for the fun One of it— well, this one wasn't on my bingo card today. Adult fidget toys and mystery boxes. OK. This feels like a big old dopamine loop. It's addictive. It's no different than the guys ripping up the Pokémon packs trying to get a good one in there. That is worrisome on its own, but let alone we're in Baby Step 2 trying to pay off consumer debt. Therefore, I would challenge you to set Can I go 6 months without this?

And if you can't, that tells me there's a deeper issue here. Now, if you said, hey, George, I'm going to put $20 for fun money, that's the only joy I'm going to get during this debt payoff journey, and I'm going to spend no more than $20 on these mystery boxes, I'll allow it. You get a green light from me. But if this is going to become an issue and you're going to be tempted and it's going to be impulsive and you're going to go, well, this could be even better and this is once in a lifetime and it's a rare box that tells me there's a deeper issue here. We got to cut this thing down. Because here's the deal, there was MIT research done, and they used fMRI scans to study the brain during purchase, and they found that the reward center, the same region activated by drugs like cocaine, it lights up. And so mystery boxes with these unpredictable rewards, which is kind of where society's going these days, it's making everything more exciting when you don't know know what you're going to get. It's designed to make that hit even stronger. And so that is a huge issue.

So if you can actually dial it into $20 a month and you guys agree, you and your, your spouse, that this is it, this is my only fun money, nothing else in the budget, then go for it. But I think you'll find that once you cut it out, you're going to be more focused on the debt-free journey, less impulsive, less tempted. And so I would personally take your debit card information out, you know, make it more difficult, add friction back into your life to stop you from making these purchases. And one day I hope you get to just have $500 of fun money because it's such a small part of your world. But right now, part of the reason we are where we are in this debt payoff journey is likely due to these dopamine loops of spending. So that's one man's take. I don't know where you're at. If you were on the phone, I could probably get to the bottom of it, but person, I would attempt to cut it out for a couple of months, at least, and maybe slowly introduce it back in. Andrew is in Charleston, South Carolina up next.

Andrew, welcome to The Ramsey Show!

Thank you, George! How are you? I'm doing great! How can I help? My wife and I are in Baby Step 2. We just bought our first house just about a year ago, and we are trying to figure out if we should be tackling our debt or if we should save up a larger emergency fund other than the $1,000 before we start tackling our debt, or if we should try and split the difference between the two.

Wow. How much debt do you guys have?

Uh, we have— I have $26,000 in student loans and she has $42,000 in student loans. And we have a loan, a deferred interest loan for a crawl space encapsulation. Crawl space encapsulation.

Okay, how much is that?

That is $11,000.

Okay, and you said it's deferred interest? Yes. Okay, what does that mean?

Right now it is interest-free during a probation period. 2 years, the interest would hit For the full balance?

Correct. Okay, this is like going to Best Buy and buying the washer-dryer, and if you don't pay it off perfectly to a tee, they backcharge you all the interest. Correct. All right, so total we have a good $79,000 in consumer debt? Uh, yes. All right, what's the household income?

Uh, we make about $135 a year. Take-home per month is around $9,000. $9,000.

Are you guys doing any investing right now?

We actually just stopped all our savings and investing. Good.

To actually do the Ramsey plan? You're like, all right, we're gonna go for it. Fantastic. So you got $1,000, you're starting this debt snowball process, you're making $135,000, $9K take-home.. And you want to know, should we have a beefier emergency fund because we're homeowners and there's going to be emergencies that come up and we don't want to go back into debt to cover it? Yes.

And we've actually just gotten some news from family that my wife's grandmother's health is deteriorating quicker than we were expecting. Uh, and she is in Uruguay, so we are trying to at least bare bones plan for that expense.

Wow, what's that gonna cost?

Uh, round trip, last time we looked, was around $3,000. Oof, man.

I mean, that's a, that's a very personal thing, so I can't tell you one way or another, but I would, I would tread with caution here, um, to drop 3 grand to be there for the funeral. Again, I don't know the relationship relationship. If you have to do this and it's a big deal to, to your wife and the family, then you can do it. But know that going into debt is not an option, right? So there's going to be sacrifices made there. Because right now, looking at this, the income and the debt, it's going to be tight. And you could do this in 2 years or less if you guys got serious. And part of this is this deal of home ownership being expensive. Is this house Is it in good shape or is it like there's 17 things that need to be fixed?

No, it's in good shape. Uh, the crawl space was really the big thing that we wanted to get taken care of because of some moisture problems, especially in the area. Okay.

Well, how about this? Let's split the difference. I'm not going to tell you to save nothing for this house. What I'm going to have you do is create a sinking fund in your EveryDollar budget called Home Repair and Maintenance. Maintenance. And every month, you might put in, let's say, $200. So that by the end of the year, you've got $2,400 in there ready to tackle any home emergencies, plus your $1,000. OK. And then, whatever comes up in the meantime, or if it's not enough, that's when we go, "All right, pause the debt snowball. We've got to stack up cash. We're going to work our butts off, sell some things to cover the emergency, and then move forward." OK. But I wouldn't just pause the debt snowball and go stack up $20,000. Because you want to do Baby Step 3 before 2, right? The beauty of Baby Step 1, 2, 3 is that Baby Step 1 forces you to be a little bit scared, to kind of stay on your toes, to go, we are not safe. $1,000, goodness gracious, what if life happens? Yeah, that's gonna put some fuel to get out of this debt faster.

Because what I've seen is, Andrew, people get $20 grand saved up and they get a little bit comfortable They go, "We'll get rid of the debt. We don't need gazelle intensity. I mean, we're, you know, something comes up, we're going to be okay." I like that fueling you. It's what actually causes people to get out of debt. And I think the same will be true for you guys. But you're thinking through this very logically. Now, if we could go back in time with a magic wand and a time machine, I would say maybe we shouldn't buy a house when we have $80,000 in consumer debt. But what's done is done. So the best move forward is to at least attack this debt as fast as possible. You guys make great incomes and it tells me you're true The trajectory for your careers is also great. So what is the next move up? How do we make $150,000, $160,000 to get rid of this debt even faster so that we can have the emergency fund so that when something like this comes up where there's, you know, a health scare in the family or even a death, that we can just cover it.

And on top of the grief, we don't always, we don't also have the debt payment. So that's the beauty of the Ramsey plan. Baby Step 1, $1,000 starter emergency fund. Fund. Baby Step 2, pay off all of your consumer debt, non-mortgage debt, using the debt snowball method— smallest to largest balance, ignoring the interest rate. Then we get to Baby Step 3, 3 to 6 months of expenses in a fully funded emergency fund. Now we can start building for the future instead of paying for the past with Baby Step 4, invest 15% of your income into retirement. I love that you guys pause that. That's the goal— pause it to zero to create as much margin and momentum as possible to get out of debt in a reasonable amount of time instead of it taking 6 years. Then we can focus on kids' college savings if you have them. Then we can pay off the house, and beautifully we can live and give like no one else and just build wealth to oblivion, leaving an awesome legacy. That's the plan. There's a reason it is in that order, because too many people are doing 19 things at once wondering why they're not making progress.

So I'm wishing you guys the best, Andrew, on this debt pay journey. Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell taking your calls at 888-825-5225. Matthew is in Buffalo, New York, up up next. Matthew, welcome to the show. Hey George, how you doing? I'm doing great, man.

How are you? Not too bad. So my question for you is, do we sell the farm to live debt-free?

Um, wow, that's a big one. Whose farm?

Who's we? So it's, um, my wife and I, um, we're in our early 30s. We just welcomed our fourth kid. Congrats! Thank you. We both have jobs. Um, I work full-time, she works part-time, but it's close to full-time hours. And we have a lot of equity in obviously the farm and a piece of land and then all the farm equipment and assets. We're currently on Baby Step 2. We've been doing the Baby Steps for at least probably about the last year here. Shout out to my brother and his wife for getting us bought in.

They're on Baby Step 5.

That's awesome. Afford. And I don't know if I'm trying to be too perfect with my financials now, but I'm just in the mood to get rid of everything. And going through the numbers, I figure I have around $800,000 in equity if we sold everything, and that would allow my wife to be a stay-at-home mom and just live off of my income. But I don't know if we just waited out these next 2-3 years and kind just get through everything, or do we just make the lifestyle change and rip the Band-Aid off right now?

How much debt do you guys have?

So we have $20,000 left on her student loans, and then the only other debt is going to be our mortgage on our house, and then we do have some debt on a piece of land. So to break down— separate from the farm? No, that is the farm's paying for the land. Oh, I know Dave tries to keep business away from personal, but it's hard because because the farm is our house in a way too, but we have a separate piece of land that just the farm pays for. Okay.

And are you guys working? Is the farm your income or are you guys doing other full-time jobs? No, other full-time jobs.

The farm just pays for farm stuff and then basically this piece of land, it doesn't really contribute. You're just sort of breaking even with this farm. Well, the farm makes between, I would say, $20,000 to $30,000 a year. Every year, and that goes to pay the debt for that piece of land. So I figure in 3, 3 years that land will be paid.

Okay, so it's servicing the debt but no more. It's not like you're making a bunch of profit. I lost you, Matthew. I think we lost your line. It was a juicy call. We'll see if we can get you back. I'll leave you here live, but I want to address this. You're in your 30s, Baby Step 2. $20,000 in student loans. The rest is sort of this land and mortgage. You got $800 grand equity. I don't know what the house is worth. That's the, the next question mark. If this thing is worth, you know, $1.2 million or if it's worth $900,000 and what the, what this would do for you. 'Cause it sounds like he has two competing goals here. One is love this house, love this farm, love doing this life. And also I would love for my wife to be be home. So there's sort of a, a struggle of priorities, if you will, to figure out which one is more important to you. And here's my parameter for this: if you guys can be debt-free within a couple years, and then your income can support her staying home at that point, then I think we don't need to sell the farm.

If you love— if your dream is she stays at home and we keep the farm, there's going to be some deeper, deeper sacrifices there. But, uh, if you guys are making great money on your own and you can support it, then I fully support you guys, uh, keeping the farm. I would say the farm is more of a, like, last-ditch effort, break in case of emergency, we have run out of options, there's some urgency to this happening, and we don't mind letting go of this sort of dream of living on the farm. That's where I might do that. So let's see if we have him back on the line. Matthew, are you with this.

Yeah, sorry, I'm not sure what happened there.

It's all good. Did you hear anything I said?

I, I did. So the equity in the house is 8 or $500,000, being conservative with all my numbers. Okay. So the house, the house with the barns and all that, I would say $500,000. If we sold the land, we'd have at least another $100,000 in equity. So I figure we'd have $800,000 to basically go out and buy a house, and then the wife could—

you said $500,000 plus $600,000. That's $600,000.

Yes, because then $200,000 in just the farm equipment and stuff like that. Oh, if you sold all the equipment on top of—

okay, so that's not really equity in the land, it's just more we could liquidate these assets that are sort of tied to it. So you could walk away with $800,000. Would you look to buy a place in cash at that point?

Yes, correct. That's the only option I would do is total cash.

So now how much do you make?

I make $120,000 a year. Great.

So now the question becomes, can she stay home if you have no mortgage payment and you make $120 grand a year? Yes. Ding, ding, ding. So that's one option. Let's explore that. Now let's explore the other option, which is we stay on the farm if you guys love it, we pay everything off. How long would that take?

Um, it would take— well, her student loans will be paid off by the end of the year. And then the land— so then for the family, the only thing left you would have is the mortgage. And then— How much is that? Um, $3,000 a month.

And what does she make?

Taxes, insurance, um, around $70,000 a year. Okay, well, here's the issue we have is we have—

Oh God, I'm just— I'm looking at the, the mortgage here going, okay, it's not really producing income. $3,000 a month, you're talking about needing $12,000 to be about a quarter of your take-home pay, and just your income alone, you're not taking home $12,000. It's gonna be more like $8,000.

Yeah, so that's— yes, exactly, 100% is basically by the time you take the taxes and the insurance and stuff, that's what makes the mortgage payment go up, which is why it's kind of either sell it all or you just keep going with how things are. And the problem is, is right now Um, we do have the 4 kids in daycare.

Um, and like you'd get that money back, right? Yep. You'll get a $10,000 raise once you get those kids out of daycare. That'll be nice. More than that.

But yeah, I guess the hard part is, is do you just kind of take away the whole lifestyle and just go for something totally different?

But you know, are you guys going to live in the big city? Is this like a reverse Hallmark movie? What's going to happen?

No, we would just live— instead of having 60 acres, you'd have 5 or 10 acres, and you just don't have all the toys and all the craziness that comes on with this lifestyle.

Well, what does she want to do?

Oh, that's a trick question. She really does want to stay home. She says she just wants me to be less stressed and whatever will make life comfortable for everybody.

Are you stressed now because it's a lot of upkeep to keep up this farm, work full-time, all of that?

Yeah, I would say—

It's not her student loan payments that's causing the stress is what I'm getting at.

No, no, money is— for the first time in our life, money is not really the concern. We have— we're strict on the budget. We were not— nobody's knocking on the door. And like I said, in 3 years, we'll have all the debt wiped away besides the mortgage. So it's one of those, you just kind of stick to the plan and just stick to the process and just kind of let it take its course. Or do you just kind of go full throttle and just wipe it all out and kind of move forward in a different direction?

Well, I'm leaning towards selling the farm. It sounds like her goal is peace in your household instead staying home. I didn't hear anywhere in there that she dreamt of living, you know, this— the farmer lifestyle. So I would have a deep conversation with her. Maybe you two go on a date and decide once and for all which decision are we going to make peace with.

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 to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com.

You know, one of the hardest parts about building wealth is that you always feel like you're behind. If I talk to a 45-year-old, they're always going, "Man, I wish I knew this stuff at 25." If I talk to a 25-year-old, they're going, "I feel like I'm behind." And I always go, "Compared to who?" And that's where they, they get kind of stumped. They just go, "I don't know. I just, I look at everyone else and I think they're doing better." So I wanna talk about what better looks like, how to actually manage it, how to actually track it. 'Cause some people are looking at the wrong things. The wrong thing. They're looking at their credit score hoping that goes up, thinking, well, that's gonna mean I'm doing great with money. It means absolutely nothing except you're great at managing your debt. You can be great at managing debt and have nothing to show for it, your net worth. So that's the scary part. So what is the number you should focus on to know if you're doing well financially, if you're growing, if you're moving the right direction? It's your net worth. So let's talk about this.

How does your net worth compare to the average American? I have the data to show you guys so you can know where you stand. Again, this is not a moral judgment. You're not a bad person if you have a lower net worth than the average. You're not better than anyone if you have higher than the average. This is just to help you guys know kind of where you stand. Am I even in the right ballpark? And on top of the national data, which, spoiler alert, is the suck bar, I'm going to give you the Ramsey target, the sort of George-approved— if you're doing this number at this age if you're my age, you're doing great. Keep it up. Gold star. So I asked our Ramsey audience to drop their numbers in the comment section a couple of days ago, and they delivered. So I'm going to get to their average net worth. I compiled it all like a nerd that I am. I've got the average, the median age, the median net worth. I'm going to compare it to the national data. But first I want to talk about what net worth is because people get confused and they think, well, it's the amount you have in your bank account.

No, it is what you own minus what you owe. It's assets minus liabilities. So think your cash, your retirement accounts, your home equity, your vehicles minus the debts. So I'm gonna pull up our net worth calculator here. It's a free tool on our site. I'm gonna drop a link in the description of this episode, the show notes. If you jump down to there, we'll have a link to the net worth calculator. Here's the challenge for you. Go use this and then tell me in the comments where you ended up and what your age is. And that'll be a fun sort of round 2 of this. So for this example, we've got our assets and liabilities. Let's say we've got a couple here, you know, Rick and Jen. They have a home that is worth $400,000. In their checking accounts, they have $5,000. Savings, let's say they've got their starter emergency fund, $1,000. Retirement accounts, they got $22,000. Cars, they've got $20,000 in cars. Other assets, we'll leave that one blank. So we got $448,000 on the plus side. We're not done yet. Now we move on to the liabilities, which is going to subtract from that.

So what is the mortgage? Well, they owe $350,000 on the mortgage. In credit card debt, they've got $10,000. In personal loans, they got another $5,000. They've got $50,000 in student loans, and they owe $10,000 on their car. Now let's add this up. Calculate net worth, $23,000. So this just goes to show you that it's not all about what you have. It's all about what you owe as well. And so a couple, let's say they make $120 grand, you're going, wow, they're doing pretty well for themselves. They got $20 grand to their name when you actually do the accounting math on this. So whether you have a negative net worth, positive net worth, I'm going to show you the data here so that you know where you stack up And another spoiler alert, Ramsey listeners stacked way higher than the national average, so good for you guys. So I'm going to look at my cheat sheet here. We're going to put the graphic up on the screen in a moment, but let's start with the age bracket under 35 years old. We're going to go with the median here because the average is not super accurate, and here's why.

The average is take all the numbers and divide them into each other, and you've got your average. Problem with that is rich people ruin the averages. If Dave Ramsey walks into a Waffle House, the average net worth of everyone in that Waffle House just went up by $100,000. So that's not really a great metric to know how we're doing financially. So the median is the number that I like to use. That's square in the middle. We're not dividing anything, we're just going to go up the list smallest to largest and cut it at the middle. That's the median. So under 35, the national median net worth, drum roll please, $39,000. Alright, that tells me that we're doing something. We're at least in the positive, America. That's good. Good news. Now let's move on to age 35 to 44. If you're in that age bracket, the national median net worth, $135,000. Great, we're at 6 figures. That's good news. Now let's move on to the age 45 to 54 age bracket. Hopefully at this point you've been working for, you know, 20, 30 years. The median net worth nationally, $247,000. Here's where it gets wild. You think as we get older, we're heading to retirement, we're gonna retire millionaires.

I wish that were the case. Age 55 to 64, we move up to a $365,000 median net worth. And finally, 65 to 74, for those boomers out there, that's Dave Ramsey, $410,000 median net worth is where we stand. Now if you look at the averages, it's a little more hopeful. $1.79 million is the average, but again, that is skewed by the ultra-wealthy ruining the numbers for the rest of us. So that's where America stands. Under 35 is $39,000, all the way up to 65 to 74, we're at $410,000. So let me give you the Ramsey targets for that. We're gonna put this graph up for you. If you're under 35, instead of $39,000, I think it'd be great to have $100,000 by the time you hit your early 30s. $100,000 in net worth, not necessarily what's in your bank account, but retirement, your home equity, all of that. 35 to 44, a great number to hit is $400,000 to $500,000 of net worth by the time you are in your 40s. That's an awesome goal to have because that tells me just based off compound growth, you're going to retire a millionaire plus. Now, 45 to 54, instead of a $247,000 net worth.

What if you started approaching Baby Steps Millionaire status? $750,000 to $1 million would be fantastic. And here's where I get that number. 49 years old was the average number for our Baby Steps Millionaires. When we did the millionaire study, over 10,000 of them, 49 was the average age that they hit that millionaire net worth. And then 55 to 64, you're heading into retirement years. I would love for you to have a net worth of $1.5 to $2 million by the time you hit 60. That'd be pretty cool. Hopefully by then you've got a paid-for house if you followed the Ramsey plan for 15+ years. You've been stacking that nest egg, and a bunch of that's going to be your retirement. And then 65 to 74, let's shoot for the stars here. $2.5 million+ net worth at retirement and in your 60s and into your 70s. And I hope these numbers are low for where you guys end up. I hope that if you're listening to this show, you're going, that's not going to I'm not going to be the median. I'm not going to be average. The good news is, the Ramsey listeners showed up.

Here's the numbers for the Ramsey listeners. Pretty wild. I had over 100 comments here. The median age for people who submitted was about 39 years old. The median net worth for those people was $600,000. If you remember, that age bracket, 35 to 44, the median was $135,000 nationally. Nationally. And our Ramsey listeners, the ones that submitted, were $600,000. So almost 4.5 times the national median for that age. So well done, guys. And we got multiple commenters who were in their early 40s who all said $800,000 net worth as a married couple. That's pretty interesting because that tells me they're going to be Baby Steps millionaires by the time they hit 49. It's almost like the data is accurate. It's pretty cool. So a couple reminders here. Your Income has something to do with your net worth, but not as much as you think, because the stats show— this is from Goldman Sachs— 40% of people making $500,000 or more are paycheck to paycheck. Makes sense. They're leveraged up to their eyeballs. They drive the nicest cars, have the nicest homes, and they can afford all their giant payments, but it's not moving them forward when it comes to their net worth.

And remember this: the composition matters. You don't want 90% of your net worth to be in your home. You want to be building wealth that you can actually use. And what we found in our millionaire study is that about a third of their net worth was in their home, and about two-thirds was their retirement. And of course, you've got cash and cars and, you know, watches and jewelry and that stuff in there, but the bulk of it is going to be your home, and the huge bulk is going to be that nest egg. So net worth, it's a GPS coordinate. It's not a grade on how you are as a person, but it's a good thing to be tracking to know if you're moving in the right direction. And I hope that all of you listening to the show end up Baby Steps Millionaires by following this. So if you want to see how your net worth compares to the average American, check out our net worth calculator. Plug in your numbers. We'll drop a link in the show notes if you're listening on podcast or YouTube. Hey guys, George Campbell here. You ever feel like you make good money and still have nothing to show for it?

You run into Target for one thing and somehow walk out $87 later with toothpaste and emotional support Handles? Just me? Okay. Well, that's the problem. Most people don't pay attention to how they spend their money, so it does whatever it wants. And that's why we created EveryDollar. It's a budgeting app that helps you create a simple plan for your money. EveryDollar's simple, it's clear, and it helps track where your money's actually going. Plus, you get daily lessons, to-dos, and reminders along the way. It's like having a money coach in your pocket. Your money's been freelancing long enough. It's time to give EveryDollar a full-time job. Go download EveryDollar for free on the App Store or Google Play. Google Play. Buying or selling your home is a high-stakes deal because if it's a bad one, it could cost you tens of thousands. You don't want to overpay for your next house or sell your current home for less than it's worth, and a lot of people do that because they're not working with a the pro. And that's why Ramsey Trusted connects you with vetted real estate agents who have the experience to guide you step by step to make smart decisions strategically instead of making expensive mistakes.

And connecting is easy. You can compare agent profiles, interview your top choices, and pick the one you like. So you can find a local trusted, uh, agent who has your best interest at heart for free. Just go to ramsaysolutions.com/agent or click the link in the description if you're listening on YouTube or podcast. Barbara is up next in Salt Lake City.

Barbara, welcome to The Ramsey Show. Hi, thank you so much for having me. I despise the reason for my call, but I'm grateful to be on.

That's a great setup.

I am a widow. My husband and I were having the time of our lives, and in 2021, he passed away unexpectedly. And, um, I just want to know if I'm going to be okay financially.

Actually. Wow, I'm so sorry, Barbara.

How old are you? I am almost 59. Oh my goodness.

How old was he when he passed?

Um, my age. Wow. My age. He's— yeah, it was unexpected, and our kids were a little older. We were having the time of our lives. We're Texans, but, um, we had tragedy in Texas, and that's what brought us to Utah. We owned our own big truck, and Bill was run off the road hauling a tanker of fuel, and he lived, but we lost everything. And so we were at the tail end of a recovery period when he died.

Wow, I'm so sorry. What's been going on the last 5 years now? What's this new chapter look like for you?

Ah, we had a child in school still. He was between— it was the summer between his sophomore and junior year, and then our oldest son was a very young adult. So I just chose to just stay, take a step of faith and stay in a part-time job. I was in a very low-paying ministry position, but I just thought, this kid just lost his good dad. I don't want him functionally to turn around and lose his good mom. So we lived on my husband's FERS, my small paycheck and then my son's Social Security. And then as soon as he was at the tail end of his senior year, I went back to work and I nanny right now. I bring home $3,200 a month and I also get— and I don't know exactly what it is from the U.S. Office of Personnel Management. I get $600 dropped in my account every month. And Um, I'm struggling. I, I can keep to a budget like nobody's business, but I just feel so dense since Bill's passed. You know, I've been with less than nothing. Like, we lost home, cars, but I wasn't alone.

I mean, that was just tragedy after tragedy.

Well, and from 2018 till last, uh, last fall, my family has all passed away except for my siblings' children and my two children. I met at 55. I was the oldest person in my family.

Wow, that's not how you picture it. I'm so sorry for all that, all that grief. Well, let's try to look at the numbers and, and give you some hope here. You have $3,800 coming in every month. Do you have any debts?

I have $6,000 in medical bills, and I'm just paid off Um, I kind of froze with all the income tax stuff after Bill died, and I made some really foolish moves. I filed the first year and then I froze. And so just this past December, I filed for 2022, 2023, and 2024.

Okay, so you're catching up on taxes. Do you know how much you owe in back taxes?

Um, right around $2,000 because I just have been hitting it hard since December.

Good. Okay. So $2,000 to the IRS, $6,000 in medical. Anything else? Nope. Okay. Do you have a mortgage?

No. When, uh, I took the life insurance, he had just bumped our life insurance up shortly before he passed. Otherwise I'd probably be homeless right now. Wow. Um, so great.

Caution to everyone watching out there to get term life insurance and make sure you have enough, 10 to 12 times your income. How much did he have?

Uh, I don't remember, but after paying my home off, um, right now— and this is another— this is where I feel so inept— I have stuck the money in CDs. So they've been sitting kind of— and the first year I didn't even put them in a CD. So I have some money, but it's doing anything. Um, how much are we talking? Total of $236,000, and then a paid-off home, and I own a car. But right before he died, he told me, babe, I feel like God's impressing on me to pay off your car. And so, sorry, I have a paid-off vehicle. And then I also, I have no maintenance, no gas I have to buy. My employers love me and I do them. And they, after negotiating everything, they surprised me with like, "Guess what? We want to provide your transportation and your gas." Wow, that's awesome.

That's fantastic. Okay, so here's some good news. You have a couple hundred thousand. We can do better with that than CDs. We could invest that into the market, into some good, you know, growth stock mutual funds, index funds, and you'll likely see that over the next 10 years grow at a rate of about 10-12%. So you could end up with half a million bucks at 67 if you just invest it and don't add anything to it. Now you have some debt to pay off, so I want to make that the priority to get rid of that. $8,000 gets you completely debt-free, right?

Correct.

Do you have anything in savings right now? Well, I just have the CDs.

I have—

I normally set around $4,000 or $5,000 in savings.

That I just— Okay. Yeah. I would, in your shoes, keep a liquid emergency fund of 6 months of expenses. Okay. So does it— what do you think your expenses are in a given month? $3,000 or so? Um, no, the full $38,000.

And that probably could be shaved some. Okay. But I have a child that has just hit crisis after crisis since his father's passing. And Um, I am not— we're close. I don't have mama's boys, that's disgusting, but I really do feel that this one child needs some support right now. Financial support? Very little financial, but, um, he's back in my home and just not able to contribute. He had a great savings and just zero debt his whole life and taken for $105,000. So he came back pretty bankrupt and broke in like all the ways.

Wow.

Yeah, but he's a good man. I think he's gonna be okay.

Wow. Well, let's get you a game plan before I run out of time here. So step 1, we need to be doing a budget to figure out where every single one of these dollars is going and see if we can squeeze some money out to pay off these debts. Step number 2, let's figure out when this CD is maturing to get this money out of there and instead park it in a high-yield savings account. So that's liquid, there's no penalties. And our friends at Fairwinds, they've got a great smart bundle that includes one. So you can go to fairwinds.org/ramsey and open one of those up and put at least $20,000 in there for your full emergency fund. That's like true emergency— is it necessary, unexpected, urgent? Then you'll still have, out of that $236,000, you're still gonna have $216,000 $216, right? Yes. So let's say you were able to then invest 15% of your income. Let's call that $625 a month, right? From 59 to 67, you got your $216. You'll have over half a million dollars at that stage and Social Security, correct?

And so now on this 16%, what if I did this? So 2— one of the CDs is for $133,000.

It matures September this year. Okay, so once that one matures, take the $20 grand out of that and put the rest into a good investment. Reach out to a SmartVestor Pro. Go to RamseySolutions.com. I want them to make a whole plan for you to see a runway to retirement. Hey, George Campbell here. So you're thinking about buying or selling your home. It's exciting, but there's a lot to think about, and all those decisions can feel overwhelming. Well, here's the good news: you don't have to tackle the process alone. Ramsey's Real Estate Home Base is the place to find all of your free tools and resources for help to get prepared to buy or sell sell your home with confidence. You'll find calculators, start-to-finish guides, a podcast, and even an in-depth video course hosted by yours truly. What's not to love? So if you're ready to take the next steps toward your home goals, go to ramseysolutions.com/real-estate. That's ramseysolutions.com/real-estate. Our scripture of the day, Ecclesiastes 5:3: For a dream comes with much business, and a fool's voice with many words. Les Brown said, too many of us are not living our dreams because we are living our fears.

Andrew joins us in Salt Lake City up next. Andrew, what's going on? Hey George, thanks for—

thanks for having me on.

I appreciate it. Absolutely.

Yeah. So just getting into it, I'm 25. My girlfriend and I recently became parents about 8 weeks ago. We have a little baby girl. And right now she's staying at home, taking care of her. And we're blessed to be living with her mom rent-free. And right now I feel like I could be more aggressive paying off debt, but as a new I find myself wanting kind of like a bigger safety net just because I feel like every financial decision falls on me. Like I'm third now in the pecking order. And so am I providing my family with like a wise safety net or am I sacrificing progress because I'm afraid of like all the unknowns of what could happen?

That's a great question. And becoming a father will definitely make you take stock in all of this and you sort of bow up up as the provider and it's sort of is your identity of, am I providing or not? And that's how you sort of judge yourself. And then the picture of debt and savings in there, you know, financially providing is a big part of that. But what I don't want you to do is have a false sense of security that a savings balance gives you while debt is eating away at your family in the background. Uh-huh. So it's sort of this, on the accounting sheet, the debt is really, you don't have as much as you think when you owe all these debtors. So how much debt do you you guys have?

Yeah, myself, I have about $5,700 on a credit card and then a car loan for around $18,000. Um, she has some school loans that aren't really like a, like a priority right now. Like we have, we have some time. That's like about $5,000. So overall we have about $25,000, $26,000, $27,000, $28,000, $29,000. Okay.

What do you mean you have time on the student loans?

Um, we, we haven't really talked about it, and honestly, like, so we, we are married, and I feel like when it comes to, like, I, I do kind of just put the load on my shoulders with, with the finances, and she doesn't really, you know, she's hands-off and kind of just, you know, I, it's really me. And so I, I, we probably need to have a conversation there, but, um, like, it's not something that's like, I don't know, like she doesn't owe it right now, or yeah, but she's told me $5,000. Like, she's just unsure about it.

Okay, well, the reason I ask is I want all of this debt to become a priority, and if that's the lowest debt in the debt snowball, once you guys are married, which is that on the table now? Is this happening this weekend?

It's definitely on the table. Um, we skipped some steps, have, you know, we, we were dating for 2 years, then had a kid, and marriage was on, you know, the, on the table, and it still is, but it's just—

I mean, she's the one, right? You guys are, you're all in, all 3 of you?

100%. Yeah.

Okay, then I'm gonna go full, full Dave Ramsey and say just go to the courthouse and get legally married, and we can do a party later on. Yeah. Because that's going to protect you guys and give you the unity that you need to get the finances in order and not have this weird, she's Venmoing me and I'm paying the bills and who's getting the diapers this month. That's, that's not gonna work. So step one is, let's talk about how we get legally married so that we can move forward with our life together now that we're parents. And then step two is, all right, how much do you make, Andrew?

Yeah. Um, I work on commissions. My base salary, I bring home around $4,000 a month, but I average around $5,000 a month. So like $60,000 a year.

Great. And I'm assuming you have very little bills if you're living with her mom. Yeah.

Yeah. Um, fixed right now is about $1,400. What's that? A month. Uh, my, my fixed monthly bills, uh, our, our monthly bills is $1,400.

So you're telling me at the end of the month there's $4,600 sitting there, or $3,600?

So I, I put, I put a lot of it into savings, and then I, I'm kind of in like a cycle of how we've been going about spending money. I have just given her my credit card, and I got— I don't want to like be the overlord of like, hey, let me know when you're spending this. Like, she just just uses the credit card, and I kind of— I try and pay off the credit card as much as I can each month.

That hasn't worked out, has it? No, no, not at all. So let's, let's try a different routine. I get that you don't want to be the overlord, but we also don't want to spend money we don't have. And so starting today, we're cutting up the cards. You have a debit card with your local bank? Yeah. Okay, we're going to start using that with money we actually have so that we can get out of the cycle. Because you're not going to get out of debt while we're still going into it, especially when you're giving somebody you're not married to a line of credit that is on your shoulders. There's a lot of risk there. And I'm sure she's trustworthy, but there's also just sort of this like handoff into oblivion, and neither of you really know what's going on. So we're going to make a budget, you know, tonight going, all right, here's all the bills coming in, here's the income we have. And as soon as we're married, we're combining our whole life and our banks, and you're gonna have access to a debit card, one joint checking account, one high-yield savings account. And how much do you have in savings right now?

Um, right now in a high-yield savings, I have about $14,000. Um, I have Baby Step 1, I have $1,000 emergency, and then I have $1,400 in Robinhood. So around $16,000. So like, I, I could pay off the credit card today, but like, I'm worried of bringing, like, I could go full Dave Ramsey, bring my savings down to $1,000. And why don't you?

You have almost, you have very little risk in your life, living with mom with almost no bills. If anyone can do this, it's you.

Yeah. And I guess I've, it's probably like a personal thing. I tend to do things like with the fire at my back and I, you know, tend to stress. Um, But like, I recently had a job change, which was a promotion, but I saw a dip of about $20,000 in commission. Like 2025, I cleared $100,000, around $102,000 take-home. Wow. And, and this year I'm around $70,000. So a bit of like chasing the title because I want to grow, but then realizing like, like I, I could focus a lot on like my career growth and that's still the goal, but like I want to, I don't know, like I'm stressed about making more money providing, but then like, you know, and that's where all like it— because it was hard to save up all of this money. And I—

that's the hard part. It's, it's really easy to go into debt, and I don't want you to get comfortable with your $14 grand going, well, we're okay if something happened, so I don't need to go full throttle. I think going down to $1,000, knocking out the credit card and almost the car loan— I mean, within a month you're just down to her student loan. Yeah. So here's what I want you to do. You're 25 years old. Think about where you guys were do you want to be 12 months from now? Do you still want to be in the cycle? Do you still want to be living with mom with a 1-year-old, or do you want to be independent, living in your own place, renting somewhere, saving up a down payment while your wife stays at home? Is that the goal? That's 100% the goal.

I want to keep her at home.

So now it's, what is the best and fastest path to do that? It is this plan. It is $1,000 starter emergency fund, getting out of debt using the debt snowball, smallest to largest balance. I wish I could say Andrew's the exception to the rule for the first time in Ramsey history, but you're not. So I would go down to $1,000, and if you do have an emergency come up, then we can address that. We can use the cash flow from the next paycheck, we can sell stuff, we can hustle for a moment, pause the debt snowball, and then hit play again once we are out of that storm. But I think part of what has caused this, this issue is this sort of paralysis, and I I wanna do some Robinhood investing over here and I wanna save and now there's a baby on the way, but I wanna grow in my career. These are all good things to wanna build wealth, to get outta debt, to be a good dad, to provide, to have a stay-at-home wife. But right now we have to sort of build a foundation and clean up this mess so that you have the mental runway, the financial runway, the emotional runway to be the provider that you wanna be.

So I love the motive. This is one of the best whys, possible to do this plan, to be Gazelle Intense, to make deep, deep sacrifices is because there's a baby in the world. There's a woman you love. There's this family that you want to see flourish and thrive. And currently, if we stay the path of just, I'll keep my savings, eventually get out of debt, eventually do this, you're going to find yourself in a very similar place 6 months from now, 12 months from now. So be aggressive, make the sacrifices needed. And I wish you guys the best, and congrats on the wedding. If you get married this weekend, you call me back, I'll send you a real nice wedding gift. That's my promise to you. That puts this hour of The Ramsey Show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.