Transcript of Your Debt Should Make You Uncomfortable

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show where we help people build wealth, do work that they love, and create amazing relationships. I'm Rachel Cruze hosting at this hour with my good friend, the best selling author, Jade Warshaw, and we are taking your calls, America, about your life and your money. So give us a call at triple 8-825-5225. And starting us off, this show is Nick in Detroit. Hey, Nick.

Welcome to the show.

Hey. Thank you for having me.

Absolutely. We're good. How can we help?

My question is my question is, I'm 21. I'm in college. I pay for my education with my dad. And I've got baby steps 1 done, and I have no debt. I need to pay $3,000 per semester so that I don't go out of college with student loan debt.

And would it be more beneficial for me to any additional money that I don't make to put it into steps 3? I don't feel like I can be gazelle intense with that. Or would it be more beneficial to take 15% of my income and put it into a mutual funds for something further down the line?

Okay. So you're you have extra money. I just wanna make sure I'm understanding your question. And you're asking if you should be using it to cash flow college or do something else with it?

Mainly to I I won't me and my dad who got it covered, I think, 3,000. Mhmm. But should I put it towards the 3 to 3 to 6 month emergency fund, which is baby step 3? Or should I just put it to a mutual fund and be able to gross money on it over time?

If it's the 3,000 that you're using for your college, I just throw it in a high yield. Like, if you get ahead, like, say

Mhmm.

You've paid for the upcoming semester and you've also got 3,000 set aside for the coming, you know, the next semester even after that, I just throw it in a high yield. I would not invest it because the horizon is so short. Is that what you're asking? I wanna make sure I understand.

Mhmm. Yeah. So you would just instead of investing it because I'm able to, you'd say just save it in a high yield and then just put it to the next.

Yeah. For sure. How many more years do you have left, Nick? How many more semesters?

I only have 1 more. So 3 more semesters total. Next semester and then senior year.

Oh, okay. Okay. I gotcha. Yeah. And and, honestly, Nick, I in in that state, when you're in something like college and you are cash flowing it, which is so great, I still would recommend, yeah, not even investing really at that point because just having liquid cash in case something happens, it's always a smart idea.

And even after college, right, you graduate college, and if you move, to take a job somewhere, moving expenses and moving costs, like, there's just a lot of reasons to have money liquid at at your age. And then once you graduate, you get settled, you get your 1st job, then you can really dive into investing. And at that point for you, you'll be at 15% automatically, which is so great. For some people, they have to wait a few years to start investing. So, so I wouldn't I honestly wouldn't rush into it.

And I think, it it can feel like it goes against, this idea of compound interest because we celebrate that so much of how great

it is.

And the earlier you start, the better off you're gonna be, like, all of that. But you'll catch up. Like, if you start all of this at 23, you will be fine financially. So I think it's more important to have as much money, just cash available, for these big transitions is the smartest thing. The way to go.

And then would you would you also recommend me taking that out of that investment and then putting it back or just leave it there from here on out just save the money?

Yeah. So there is money invested right now?

Mhmm. Yeah.

I would probably $1,000.

How much? 2,000. Yeah.

I would just Yeah. Give me

this year. Mhmm.

Sure. I would leave that. I would only touch that money if you needed it to get through school, to without debts. But I think it sounds like you already have a plan on the other end to do that.

Mhmm. Okay. Thank you so much. That provides a lot of clarity.

Perfect. Thanks, Nick, for the call. Alright. Up next, we have Jay in Anchorage, Alaska. Hey, Jay.

Welcome to the show.

Hello. Merry Christmas. Thank you for taking my call.

Merry Christmas. Absolutely. How can we help?

Yeah. So I just received a promotion at work, and the new compensation package makes me ineligible to contribute to the company 401 k plan. So they've offered a different plan, pretax dollars, a small match, but it's unqualified. And I'm curious what your thoughts are on qualified plans and if this is the right

Yeah. What I'm curious why you're not able to contribute to the 4 0 1 k because you chose a different package for a benefit for your benefits?

The the they have told me that if the compensation exceeds a certain amount, the plan is not able to be contributed to.

Oh, gotcha. Okay. So you are you a very high earner?

Evidently so.

Okay.

So I can't yeah. So I can't contribute to the 401 k anymore.

So explain to us what your options are again.

Sure. So they've offered a different retirement plan, pretax dollars, a small company match, but it's unqualified, so it's unfunded. That gives me pause, and I'm curious what your thoughts are on those types of plans and should I contribute?

What are they invested in? Do you know?

It the rate of return is based on a specific bond fund. I don't have that in front of me. Okay. Recently in the last year, it's about 5%.

That's not very good.

That's what I thought.

I I mean, if if I were you, my guess is you're not able to just do a traditional Roth IRA. But I might start with backdoor Roth IRA, and I might ask a smart investor pro what might what other better options there are. Because I wouldn't wanna be investing primarily in bond funds.

No. And considering it's, you know, is it pre or post tax?

It is pretax.

It's pretax. Okay. So yeah. So I would probably I think you're gonna be better off, and, again, talk to a smart investor pro. But when you actually look at everything, I mean, even from index funds to mutual funds, you'll get a better rate of return Mhmm.

Just doing something like that even though you'll have to pay capital gains when you take pull the money out. Mhmm. That's still still a budget. Growth rate. Yeah.

Absolutely. But, yeah, how much how much do you make a year?

So the new compensation package base is 165 with potential up to 2.50.

Okay. I think you'll still qualify for a traditional Roth IRA at that range. So I would definitely be funding that. You can fund up to $7,000 and that. That might change in 2025.

But, I would do that a 100%, and then I would probably just look

at index funds or mutual funds beyond that.

It's not retirement and you're not getting that match. Beyond that. It's not retirement, and you're not getting that match. But I I how much are they matching? What percentage?

It is 50% of the first 6%. 50%

of the first 6. Okay.

It's interesting way.

Okay. It's hard because it's free money Mhmm. Coming from the company. Right? But, again, your rate of return, I just think that you could

5% is I think you could still

I think you'll end up yeah. I think you'll end up better just doing it on your own versus putting money into this.

That was my thought, but I was just looking for a second opinion. Thanks for all your info.

Yeah. Absolutely, Jay. Thanks for calling. Yeah. I would do that.

But then, definitely, you know, sitting down with the SmartVestor Pro, is always what we're gonna recommend. I always, yeah, hate giving blanket investing advice, you know, in a 3 minute call because there are some ins and outs, and different employers are offering different things. I mean, the amount of changes that's occurred with retirement funds within companies

Mhmm.

In America, even over the last 10 years. You know, companies offering now Roth 401 ks is up by 20% versus what they were offering even 5 years ago. So

But good on him for looking deeper and seeing what those investments are and what their track record have been as opposed to just saying this looks good. I'll check the box.

Right? Yes. Absolutely. Yeah. Digging into that and and looking at those numbers.

But, yeah. So, yeah, I would get with the SmartVestor Pro, Jay. Double check all of that. But that that's my that's my that's my knee jerk reaction for sure is, because when you when you look at all of these and and the older people get, there are financial advisors out there that start to recommend more conservative funds

That's true.

Like bonds and

all of that. That's true.

But but still, I think even then, you know, it it's advice you wanna look at because to because I think on the flip side, when you're still in, quote unquote, riskier, which isn't mutual funds aren't even that risky, you're still gonna get a better rate of return. You know, I'm just never a fan of bonds is what I'm trying to say. Even even as you get older, I just don't think that it's worth, like, yeah, the the limited growth. So thanks again for the call, Jay. This is the Ramsey Show.

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Alright. Today's question comes from Carissa in North Dakota. She says, should a couple getting married have guests pay for their plate at the wedding to help with costs? I'm afraid we won't get enough money in wedding gifts to pay for the reception. Oh, so it's you.

You're the 1 that wants to charge. She was asking for a friend at first.

I know. Right. Right. Should a couple, aka, should we? No.

No. You should not. I was like, I don't think so. Do you? Listen.

I think that's kinda tacky. There's a difference between wedding guests to pay? So bad. I think that's like

There's a difference between tacky and hacky. Yeah. This is tacky. This is not

a this is not a money hack.

Uh-uh. Here's the thing. Like, you have to set your budget based on what you can afford to spend on the wedding. Not at don't treat it as an investment and say, well, I'm gonna get, if I spend this, I'll get the money back in gifts. Right?

Right. Because that's what she's saying. She's saying, I'm afraid we won't get enough money in wedding gifts to pay for the reception. Well, that means you're basing it off of future money that you don't have now.

That's right.

So you've gotta set the budget of what you can afford based on what you can afford today and let the gifts be the gifts. Like, you can't.

Yeah. No. No. It's not good. No.

No. Having guests pay for their plate at the wedding. No.

Yeah. That's a hard pass.

And it's different if it's, like, your birthday dinner and y'all are all going out to you know, to to for a big dinner and everyone covers their their meals. Right? Like, it's that kind of thing. But there is a an etiquette. I feel like when you invite someone to your wedding, to celebrate you, their their presence is the gift.

It's not them having to fund Yeah. Fund it.

Yeah. Otherwise, just do something less expensive that you can afford, and that way there's no, like, awkward

You know, there's there are trends, and we've talked about this. I think George Campbell and I debated this a little bit, of people asking instead of a wedding gift to Venmo money to the bride and groom so that they can help pay for their honeymoon and, like, that kind

of stuff. I I I have a problem with it. Me

too, Jay.

I think that's a little weird too.

I have a problem with I'm like, let people give you out of the now don't get me wrong. Like, a baby registry. Let let let's let's break this down. If somebody's having a baby and they make a baby registry, like, buy them buy them something off the registry.

Yeah. Totally.

Don't just go off it. Like, they've said, here's what I'd like. Yes. So follow the registry. Yes.

That I'm with. But when people just want money and they're telling you don't get me anything, just give me money, I'm kinda like

And if they want to do that because some people, they will just give money for a wedding gift. Mhmm. And that's their choice. Yeah. And that's their choice and that's great.

But the but, like, forcing people into a lane of how they're gonna be generous to help you I also feels like I don't know why. It just feels off to me.

I think the digital quality of it, and I I might found feel old fashioned. I also think the digital quality of it, like, Venmo me. I'm like, can I can I give you a nice crisp 2 crisp $100 bills and

a card? And then you get to decide what you And then

you decide what you do. Like, don't put don't put Cash App. Like, that is so not it. A QR code.

Is there

a such an hey. I don't know. Maybe we're just, like

Am I just, like, a Gen Xer? Is that

what the problem is? No. Because I'm a millennial, and I still

think it's yeah.

Maybe it's the Gen Zers. Maybe they all think it's okay. Maybe I don't know. Maybe it is. No.

No more. I don't know. Eve is a the audience. Gen Z'er. I would you put a Venmo would you put a put a QR code?

Yes or no? At your at your wedding reception. She says yes.

What does the audience say? Venmo or let them get you a gift? Oh, good. Okay. Everyone say that.

Okay. Okay. Good. Good. I'm glad we're

all on the same page.

All old together.

We'll just we'll

we'll blame Gen z. Like, I feel like we do too often. Too often. Alright. Alright.

Well, let's head to the phones. We have Hannah in Saint George, Utah. Hey, Hannah. Welcome to the show.

Hi. Thank you for taking my call.

Absolutely. How can we help?

So my husband and I are on baby step 1, and I'm wondering where I should put that emergency fund when it comes to, like, my bank account. So right now, we have 10% that goes to our church, and then we do 10% of our income into savings. I'm wondering if that emergency money goes with my savings, or should I put it in a different account?

Okay. So in your mind, what's the difference between savings and emergency fund?

Emergency fund, I wouldn't touch. Whereas, like, savings is, oh, I didn't know I needed an oil change, and I didn't budget for that. So it would come out of savings.

And is this your starter emergency fund, like, your $1,000, or are you talking about 3 to 6 months? Okay. So

be starter.

Okay. So the way we would teach is, if you're in baby step 1, $1,000 saved, and then everything else that you have, money saved, would go towards baby step 2, which is paying off your debt. And to answer your question, that $1,000, I would not keep it in my normal checking account, because you might accidentally spend it. I would put it in a separate savings account. Still keep it very liquid.

Right? It should be something that you can get to if there's an emergency. Don't put it in a CD, or don't put it in something that you can't get to. But I do think that there's value in getting it out of your normal checking account, into a savings account. Not maybe I I don't like when there's a debit card attached to it.

I like when it's just Oh, yeah. Yeah. There and if you need it, you transfer over, whatever. But just

high yield savings account, Anna. I would go ahead and open that and put your $1,000 in. I wouldn't do right now the 10%. I mean, the 10% for giving. But we really we don't talk about percentages for savings until baby step 4.

That's right. And so this, like, oh, we're gonna put 10% of our income for savings and do an emergency fund. I would put it all together, and I would not worry about the percentage. I would find whatever money I had in my budget and get that $1,000 as quickly as possible. So you may be able to do it, you know, depending on what you guys make and what your budget is this month.

Right? And it may be 25% of your take home pay, and it and it and it fills up your emergency fund, that way. But I would not look at percentages for saving right now. I would get that $1,000 as quickly as possible. Then once you guys are completely debt free, then you bump it up to 3 to 6 months of expenses using that same high yield savings account.

That's that $1,000 will then kinda be that springboard into the fully funded emergency fund. How much yeah.

Hannah, what do you have now combined?

Combined income or

just savings? Savings and what you were calling emergency fund?

So currently, the emergency fund is at, like, 140 and the savings is about 300.

Okay. How much do you guys make a year?

My husband makes about 55 to 60,000 a year.

Okay. So, yeah, to Rachel's point, combine all that together and just at this point, you have $440 in your emergency fund. And so you've got another, you know, 550 to go. And then baby step 1 for you is complete, and then it's moving on to baby step 2.

And, Hannah, you would have you could use that $1,000 if something came up that you weren't expecting because that's kinda how we qualify an emergency. Mhmm. It's when it's urgent and it's unexpected. So you you know, if something comes up and you're like, I have to do it now. Right?

It's not like, oh, something comes up and I could fix it in 6 months. Right? That wouldn't be the emergency fund. This is like, oh, this has to happen today. And, also, Hannah, in your checking account, we always say to have a buffer in that as well, so that you're not you know, there there may be enough of a buffer in your checking out to cover some small expenses that come up because you're gonna have a miscellaneous category in your budget, ideally.

So there will be things that come up throughout the month that you don't expect. But, ideally, it's coming out of the budget there. You're not having touched the emergency fund. The emergency fund's only when it's kinda big expenses, that you're like, oh gosh. Couple $100, and it's you know, we may have to dip into that.

But I always like having a cushion jade in my checking. And depending on where you are in the baby steps you know, if you're in baby step 1 through 3, you know, it may be a couple $100 in there as padding. Mhmm. And maybe you bump that up more as you get into baby steps 4, 5, 6, and 7. But I do, Hannah, want you to have a buffer in your checking that's not emergency fund driven or, savings driven, but it's more lifestyle driven, if you will Mhmm.

Just so that you don't go into the red in your checking. So I hope that helps. Thanks for the call. We have 2 more segments coming up this hour. Give us a call at triple 8-825-5225.

I'm Rachel Cruze hosting with Jade Warshaw, and we'll be back.

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Really, the best way to make the most of your money is by sticking to a budget, creating a budget and sticking to it. I mean, it's probably the most powerful tool from a tactical standpoint when this comes to, gaining control of your money, knowing where your income's going, knowing where margin is so that you can pay off debt and save and all of it. There's just something proactive about telling your income what to do. And if you've not downloaded EveryDollar, make sure to check that out. This is our budgeting app, and you can actually download it for free, create your first budget, and really get in this habit and this rhythm of your life of budgeting.

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Alright. Going to the phones, we have Austin in Nashville. Hey, Austin. Welcome to the show.

Hi.

Hello. Hello. How can we help?

So I am a full time college student. I'm graduating next week, and I'm currently on step 1. I'm just having trouble racking my head around paying off all of this debt that I have.

How much?

So I have I don't have any student loans to to start out with. I have about, $15,000 in car loans and credit cards.

Okay. And what's your degree in? And do you have a job? Like, do you have a job lined up?

But I don't have a degree. I'm I have a diploma for graphic design.

Got it. Graphic design. And do you have a job lined up for graphic design?

I have recently, I've just looked at the job market, and I've I've decided that's maybe not something I want to pursue.

Interesting. Okay. What do you wanna pursue?

I've

been looking more into, becoming a mechanic.

Okay. Well, just generally speaking, just from talking to you briefly, I think you're more overwhelmed by that and not having a clear prospect to pay off the debt than probably the debt itself. Because I thought you were gonna say, oh, I've got, you know, 50 or $60,000 of student loans. $15,000, we can make that happen. You just need a job.

Any job. Really. So are you working at all right now? And if so, what are you doing and what are you earning?

I am. I currently work at, like, FedEx Warehousing. K. Just moving boxes around. And I I was doing part time.

I should be going full time here, and I projected to make about 35.

Okay. That's great. You said 35?

Yes, ma'am.

Okay. Cool. And then what's your living situation like?

Currently living with parents.

Okay. So there's no money are you paying them rent or anything or you're pretty much kinda square there?

Just helping around or helping around the house. Okay. Cool.

So I

think for you, the biggest thing is let's, once you graduate next week, let's move from full time to from part time to full time so you can get that full paycheck. And in this phase, it's good that you're not really paying rent because you can put the full force of your income on this debt. How much of it of the 15,000, how much of it is the car versus the credit card?

Credit card, it's bear in mind, it's just 500. I'm mainly worried about the car.

Okay. So okay. So we're 14,000. What's the car worth?

About 9 right now.

Okay. Yeah. I think with this, I think you can buckle down and pay this off, but you're gonna be working like a madman.

Yeah. Are you able to pick up shifts coming up here? I mean, we're 2 weeks from Christmas, and you're working at FedEx. Are you able to do, you know, overtime?

Yes, ma'am.

Okay. I mean, I would, Austin. Honestly, like, you're in a great position. Like, see Kids. Seasonally just to, like all the way.

I mean, like, I I would tell them I will work as many hours as you will give me. And then another thing to think about, Austin, the the ratio of card debt to your income, it's right on the line. We always say, we wanna know more than 50% of your annual take home pay

Mhmm.

Or

your annual income. And and so that you know, your 35 is kinda what you're projected at right now and 14. Yeah. You're just kind of on that line. And I think it's 1 of those questions even though you are upside down on it.

I probably, in your case, would just pay it off, but always be thinking through, with debt, what is worth it? Because you wanna, you know, calculate how many hours and how much money it's gonna take to pay this car off versus if you're like, you know what? It's worth is it 9 private sale or 9 to a dealership for a trade in? Did you look online?

9 private.

Okay. Mhmm. I mean yeah. Yeah. Point, you'd probably keep it.

You'd probably break even. But, but just, yeah, in the future, it's just a good, mental exercise even for people listening or watching, especially with car debt to say, okay. How how many hours extra am I gonna have to work to keep this car versus if I sold it, took out a loan for the difference, maybe a couple thousand more just to buy a beater, and, you know, how significantly you'll get out so much faster. But, again, Austin, in your case, it's kind of a breakeven from that point. So, yeah, I would just be working extra.

And then at the same time, Austin, be looking for a full time job of something that you want. And you're in a great, I don't know, I think FedEx, UPS, a lot of those places that it's great employment. So if you are there for for, you know, longer than maybe you're expecting, I think that's okay. But, also, know your next step into the job market is not gonna be the perfect job. It's not gonna be the thing that, like, you know, you've always wished for in the dream job.

You're right out of college. So remember, kinda just, like, take what you're gonna get type thing as well.

And I think for you, I love what Rachel said, and I wanna take it even a step further. With your car, you decide. You say, you know what? I'm tired of being in debt. I want this thing paid off in 6 months.

And when you say that, then reverse engineer it and say, okay, what does that mean for me job wise? How much do I have to work to make that happen? Right? And that way, you're you're the 1 in the driver's seat and you're the 1 that's in control of this, as opposed to, I make this and it's going to take me x amount of months making this money. Does that make sense?

So kind of run it back, and that's gonna force you to work probably harder than you've ever worked before. And as far as the graphic design to mechanic thing, I think that you I don't know what your plans are are, but I I feel like you kinda put that on hold for a second because you've just spent money on an education. You just spent some time on an education. Work for a while, get this mess cleaned up, and then during that time, research what it looks like to become a mechanic as Ken Coleman would say, like, get in that proximity, follow some people around, but don't just jump and make that choice before you've done

Mhmm.

Detailed research. So

Yeah. Where, where are you graduating from, Austin? Is it an online school or

it's a local, it's a, tech school in Tennessee.

Oh, okay. Okay. Gotcha. Yeah. Well, I hope that helps, Austin, just, in the sense of just some encouragement that you're you're in a great line of work with FedEx right now from a seasonal perspective.

Yeah. So so take the take advantage of that overtime, and and and this plan hopefully will lower that stress. And Jade's right to map out a specific timeline of, okay, you know, September of next year, where am I gonna be, if I if I start paying this stuff off? And I would pay the credit card off, like, by by New Year. I mean, yeah, I mean, like, it's $500 too, and we talk to me, Boston, all the time, yeah, all the time who are doing, extra side gigs.

And, Jade, when we talk about this on the EveryDollar webinars, and I and we ask them, like, hey. How much what do you do for a side gig, a side hustle, and how much are you making? Some of them aren't making 2,000. Right? I mean, just for extra side hustles.

Like so there is ways to get this thing paid off in 6 months. Yeah. It's very, very doable, Austin. So I think that will, really propel you into some motivation to to pay this off.

Yeah. The moral of the story for me is of all the types of callers that call in that have debt to pay off, if you are single, if you do not have children, and if you are still living at home, you are in the best because you've got time. Like, time is at your disposal. You know, you don't know true tiredness yet. So, like, you can really get in there and get get tired.

Working.

And for

all of you graduating, you know, now we're in May, live like a broke college student until this debt's paid off.

That's right.

Keep that lifestyle because I think the problem is is when you get your first job and you're getting a salary, you know, this career, you're thinking, oh my gosh. I'm a grown up now. And you and your expectations of life suddenly kinda creep up of what that lifestyle looks like. But if you stay low on lifestyle while you get this cleaned up, I would rather be doing that at 21, 22, 23 Facts. Than 31, 32, 33.

So

That's right.

You got it, Austin. Thanks for the call.

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Welcome back to the Ramsay show. We are in the holiday spirits, Jade. We are in the middle of, I don't know, still shopping. I think I'm pretty much done. I have nothing wrapped.

Oh, man. But Santa at our house doesn't wrap gifts. He just pulls the gifts out of the bag, and they just are there under the tree, not wrapped. So that's always convenient for Santa.

So what goes does anything go under your

tree ahead of time? Gifts that mom and dad buy. Like, we'll buy, you know

I see.

Like, 1 or 2 things that we'll wrap. But, but they unwrap a lot of gifts from, like, parents grandparents.

Mhmm.

There's a lot of unwrapping happening there, which is great. But yeah. So

That's a good idea. I might, take you up on that.

Yeah. That was my Santa growing up. Childhood never rapped either. So that was the same Santa, I think, that visits our house too. It doesn't rap.

That's a

good idea. Okay. But I but we're still going through our lists of gifts for, like, we draw names on both sides of the family. Smart. All the things.

So where, where are you at with all of the Jay?

Listen. For me, like, me, myself, because I'm not in debt. I have purchased gifts for the kids, and my husband and I have done that. I've not fully finished, with my husband. But this time of year, you know, this is the time of year where it really becomes a hot button topic because obviously, we're a financial show.

We want people to make their way to peace. And I said it last year, but posted it this year. A very, like, controversial statement. Controversial as I like to say.

And I think I was on with you.

You were.

Right? So before we talk about it, let's show you the clip so you see where we're coming from. Roll tape. You don't have to buy gifts for adults. They're grown.

They have their own money, their own job. If they want a new blender, they can go buy it. They do not need you to go buy them slippers. Like, they can buy their own slippers. I said what I said.

Rachel, I said what I said. Okay.

And I and I actually when you were saying it last year, I remember it and being like, it is so true. Like, if aunt Linda needs something, like, let's get it. Yeah. She's fine. Like, let aunt Linda especially if you are getting out of debt, you're on a tight budget.

And it's been a hard and it's been a hard year or 2, you guys, like, with inflation. So, I mean, it's people are just getting the necessities paid, and there's not a lot of room. And so it was this guilt free reality that adults can take care of adults. Right? That's what you're saying.

Did did you get hate from it?

I got so much hate. And here's the thing. Don't don't don't misunderstand. Like, the reason we're talking about it is not, like, to try to qualify it because, like, I'm drinking water. I'm fine.

It's for you guys. Because there are so many people, Rachel. A, always read the caption because you need to see more. And I did explain. I was like, here's what I'm trying to say to you.

It yes. I'm not saying adults can't have gifts. I'm not saying it's not nice to receive a gift. I'm just saying I'm not

acting up on your Instagram right now.

I'm just saying that if you're in this situation, I'm giving you permission to back away from the spending because we don't need them. You know what I'm saying? Like, I will get by if you don't buy me a precious moments figurine.

You know

what I'm saying? I will get by if you don't buy me lotion from Bath and Body Works. I don't need your $15 gift. Thank you.

It's 10,800,000.

10 point yes. 10,800,000 of you, not all of you, but a lot of you were concerned with Jade. This sounds a little like Grinchy. This sounds like a little Scrooge. And it it's not that.

It's for people who are struggling with debt. I used to be 1 of those people and I was the person who continued to buy gifts on credit cards. And when you're broke, and I'm gonna I'm gonna say this lightly because I think people will know what I mean. When you're broke, you buy broke people gifts. You know what I'm saying?

Uh-huh. Like, you you go to the dollar store and you rack up and you buy like 10 and $20 gifts. But I'm like, you can't afford it. And that $10 gift is not breaking them free. That's right.

You're okay without it.

Yes.

But it is causing stress for you because now before you know it, you spent 2 or $300 that probably you should have put towards a collections bill. Or probably that you should have put towards paying off your car. And that's what this whole thing is about. It's about changing our behavior and not feeling pressured to spend our money. That's right.

You know, and some of you are like, well, Jade, I don't feel pressured to spend. Like, it's my love language. I love giving gifts. And if that's you, fine. You don't feel the pressure.

But now, let's just look at look at what is it wise for us to do? Like, is it wise for me to spend in this type of way? And I'm not saying don't participate.

Mhmm.

I think Christmas is great. It's the the most wonderful time of year. I think there's a way that you can participate and here's what I would say, Rachel. And this was in the caption if you had read it. Okay?

In the caption, I was like, make a very short, very prioritized list. Yes. I would start with kids. Like nieces, nephews, your own children. Right?

Sure. And buy for them first and use cash. No problem. I'm not mad at that. And then, if you have some adults like VIP only

Yes. Yes.

I would say they're next. For most of us, it's our mom and dad, or maybe it's like our sister and brother. But I would not get too crazy with this. If you're shipping packages across the US, it's expensive. Totally.

You can't afford that. Yes. Somebody needed to tell you that you couldn't afford it and it's not out of shade. It's really out of love because I don't want you to be further in debt. And I think that most of us don't do this, but we probably should, Rachel.

When the holidays start, like, when Halloween ends, right, we need to stop and go, okay. What was it about last year's holiday season that went well, and what was it that didn't go well?

Yes.

And kinda set that intention ahead of time. And most of us will go, man, I was so, like, overextended. Or man, I overspent and it really didn't have the effect I thought it was gonna have. What? Right?

Yes.

And we can go back and say, you know what? I made all those freaking side dishes and spent all that money. And we would have probably, like, half of it didn't even get eaten. Right? And you can see the ways that you spent your money that didn't make a huge impact.

And I think, it's the same way with Christmas. There's so many gifts and it's like, you know, the kids probably would have been just as happy. Like, I could have cut back a little bit and they would have still been happy. Absolutely. For sure.

For sure.

So there's some moderation that has to be going on here, Rachel.

And I think that's the yeah. And I think the level of discipline and planning, some people just don't they don't do, and it's a little bit on a whim. And that's where people get in trouble with money is because it's so emotional, and all of these emotions are driving your decisions. And, usually, when that's the case, when our logic isn't doing it and it's our emotions, we do tend to overspend. We make spontaneous decisions that probably are not great in the long run because in the moment it feels good, it feels right.

And then you look back after logic has set in Mhmm. With maybe a level of regret of realizing, oh my gosh. And and this is the reality too, Jade, is that, you know, we're, again, we're not, like, the Grinch stole Christmas kinda people, but 28% of Americans are still paying for Christmas last year. I heard a

stat that said 49%.

Oh my

gosh. Oh, wow. Any, like, any level of that. So there's obviously a clear boundary issue that we're having that that that we're not able to afford. And so to your point, the kids are the priority.

Christmas and the Christmas spirit and all this stuff. Right? It's the kids. The adults are gonna be okay. Right?

So prioritizing that. And then even within your kids, right, of your family, if if it's gonna look different, than last year, because maybe this year is the first time you are doing it on a budget Mhmm. Talk about it. Communicate it. Talk about the different Christmas may look a little different this year.

Yeah. And then even thinking through the motivation too of why you're buying everything in the first place. That's always a big question for me because even for kids, like, I this was probably 2 years ago, Jade. Everyone, like, the on social media, on Instagram, they were just posting, like, Christmas Eve, like, merry you know, Christmas Eve.

You know?

And it's just, like, a picture of, like, their tree and, like Oh,

and all the gifts.

The gifts and stuff. And I was like, oh, I was just flipping through. I was like, oh, that's kinda sweet. So I did it. As we're going to bed.

Like, we had our lamps on.

And it

was just a pretty little picture, so I just you know? And then we had our gifts out from yeah. We had our gifts out. And so I took the picture and just captured merry Christmas, and I got so many comments on my minimalist Christmas. Oh,

they're like, Rachel, where's the

Oh, whatever. It's so refreshing. It's just a minimalist Christmas at the cruises. And I was like This is regular. I thought we, like, I thought we were doing I

thought we, like, had a

great Christmas. But then as I looked through, I'm like, oh, no. From what people really feel hard to make. And, again, it is not bad. If you have the money and this is where you're choosing to spend, that is totally fine.

Yeah. No. No. You're grown.

You're grown.

And we're also the moms. You and I both talked about this yesterday during a break when we did the show yesterday. I also had 3 trash bags full of crap that our kids just don't use in the playroom and in the closets in their room. I'm like, so then it's just stuff just ends up building up. And that's the consumerism where I'm like, I'm not gonna buy you stuff just to buy you stuff either.

So

That's such a good point. I think you're right. At the end of the day, everybody's grown. You can spend your money on what you wanna spend your money on. I mean, that's the that's the cold hard fact.

But if you want our advice and if you're a person who's trying to get out of the debt, the point is you have permission to back away. Like, you don't have to opt in to all of the things that the holidays want you to opt in. And we're just trying to give you that out. That's really what it amounts to.

I'm gonna end with a with a hater comment, Jade. You ready?

Let me

If buying slippers hurts your wallet, you have other problems. This is very financial illiterate advice. So I would say, yes. If slippers hurt your wallet, you have other problems is exactly what we're saying. Yes.

Yep. It does. So then we we gotta dig into that, why that is. Alright. Well, Jade

It's been real.

Great segment. Thanks for giving us the Christmas spirit. We appreciate it. Thanks to all all the guys in the booth, and thank you, America. This is the Ramsay show.

We'll be back.

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Live from the headquarters of Ramsey Solutions, it's the Ramsey Show where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruze hosting this hour with best selling author, Jade Borshaw, and we are taking your calls on life and money. So give us a call at triple 8, 8255-225225. We are here to chat with you. Alright.

Starting us off this hour is Allison in Philadelphia. Hi, Allison. Welcome to the show.

Hello. Hello. How are you guys today?

We're doing great. Thanks for calling. How can we help?

Well, okay. I'm just gonna be quick about this. My husband passed away.

Oh, I'm sorry. And,

yes. You know, he you know what? You had to love him or you had to hate him. It was 1 or the other. My my my question is, he hid everything from me.

The day he died, I found out we had a sheriff sale also on that day for our my home, and I had absolutely no clue. He he hid up all the paperwork, everything. Sent me to the store. Sent me to Atlantic City. You know, like like, we had nothing wrong.

And, so I'm in a pickle. I'm not really sure, what I should do about this.

Holy smokes. Okay. So When

when did I Surprise. Yeah. When did all this happen, Allison?

September 17th. I also moved my father, into my home 6 weeks prior to that. He was, in Colorado. He's been there 56 years. I just moved him back here, and then this happened.

So

Man, I'm I'm so sorry. Okay. I mean, it's it would be so difficult to be grieving the loss of your husband and then at the same time uncovering this other reality that you had no idea was happening, financially speaking.

Yeah. I felt like I got hit by a 2 by 4,

you know, but

he's knocked that on the to the ground.

Definitely. Sin.

Yeah. My and I have my 3 year old grandson. Lives with me and 2 of my adult daughters, because it's very expensive here. You know? The taxes are really my taxes are $10.

I don't even have a quarter of an acre. You know? It's just really, expensive.

Yes. Okay. So walk okay. So walk us through, you may have said at the beginning of the call, but, what what's the state right now of where you are financially? After you've uncovered everything, what's where are you?

Well, I got a little bit of life insurance.

K. How

much? Can, 200,000. Okay. I believe, he was in arrears for 86,000. He was in a bankruptcy for 3 years to save the home when he was in the hospital couple years ago.

Mhmm. And that was fine. He was paying $37100 into the bankruptcy and 24 to our regular mortgage.

Okay.

And I guess he just ran out of money and never told me.

So what does that leave you what are you after everything's kind of come out in the wash, what does that leave you with and what are you still trying to sort out?

Well, I have I don't believe that I owe what they're saying I owe. I understand there's interest and all that, but they they kind of put us in that position. It's a it's a servicer that has been taken to court many times and, had to pay out 1,000,000 of dollars for wrongfully taking people's homes. And, this is what I was battling for a few years before I stumbled on that when he was in the hospital. Okay.

So I just wanted to know what is the bottom line. Like, what can I pay to get it out of foreclosure and then possibly just keeping the mortgage and paying that off? I don't I don't even know what I have to think.

How far behind are you?

Well, he stopped paying that mortgage, or the the more the mortgage and the bankruptcy in January.

Oh, okay. So it's about to be 12 months of no payments.

Right.

And have you had contact with anybody about this, or is this you just looking at, you know, the statements that come in the mail or whatever?

I I get physically ill opening those statements because of what happened 5 years ago. They actually told me they couldn't talk to me because I wasn't on the mortgage, but I was on the mortgage.

So it

made me behind even more time.

And you're sure that you're on it at this 0,

I'm positive. Okay. I got my own paperwork hidden. It was hidden in the closet.

Okay. So when you you're gonna have to call them up and you're gonna have to find out what's going on with this, and it's not gonna be fun and I know that you're dreading it. You probably have a pit in your stomach now, but you're gonna have to go, okay. Where are we in this process? Is there anything that I can do to pull it back from foreclosure?

What what would I have to pay? And then once you find that out, you have to look at your own finances and go, can I even pay this? And then there's part of this. I don't know if you wanna hear this, but what you're describing sounds like absolute like H E double hockey sticks. Like, do you want the house?

Or do you want to find a way to to sell it, let the bank sell it, and move on with your life?

My my what I would like to do is at least keep it so that I can sell it. Because I have it's worth 620, and I owe what they say I owe is 3.20. My mortgage was for 3.40, 3.15 years ago.

So you owe 3.20. It's worth 6.20 for usually, it would be like, okay. Can I once I can get back on track with the payments, let's come up with a payment plan so we're back on track? And then, at at that point, you're paying the mortgage and then you can decide if if you wanna sell it or not. The question is, let's pretend, I mean, let's pretend like I'm the servicer and I say, alright, Allison, you're gonna have to pay a payment and a half for the next 2 years.

Let's just I don't know what they'll tell you. Could you even do that? Yeah.

So, are you are you making an income, Allison, right now?

No. I'm not because of my I was, taking care of my uncle who passed away last Christmas. He he was dropped off at my grandson's birthday party, and they're saying, here you go. You get to take care of him. But I took care of him for 2 years, so I didn't work.

Allison, there's a lot of you taking care of people, including your own children, your grown children right now, which, and I'm not defaulting you, but there there is something to understand, Allison, that you have to take care of yourself first and foremost. Right? And that's not a selfish idea. You can't take care of people while you're drowning. Right?

You have to get yourself in a very stable position. And so, so he had this life insurance. Did he have any retirement? I mean, I'm assuming with all the floor foreclosure stuff, he like

Yes. Yes. It was it was it's in stock.

Okay. How much is that?

A year, I'll get $20 a year for 6, years. And it was 1.17, and I guess I don't know how well that works. But I get $20 every September for 6 years, then I can roll it back into it or, you know, use it or whatever.

Was he working before he passed?

Yes.

Okay. What was he bringing in at the time?

He was making, about $11 a month.

Okay. And and then yep. And you have a 200,000 in life insurance. How old are you?

I am 58.

58. Okay.

If I before we get off, I wanna set you up with a coach to help you go through all of this because I think that there's a lot to go through. You probably with this all said and done, you probably have the money, but I don't know. It's hard to know because it sounds like there's a

lot of secrets and a lot of skeletons and a lot of closets. And you have to determine

what Jade was saying earlier too, Allison, that with this house,

you got you were, you know, essentially should have been be able to make these payments on, you know, a $150,000 income is what he's bringing in around that. And Right. You and to supplement that, you don't have that. And so I don't want this house holding on to this house, I don't want you to drain everything just to keep the house, to Jade's point earlier. So, yeah, if you if you hold on the line, Emily's gonna pick up, and we are going to set you up with a financial coach because getting all of this and from a legal perspective

Yes.

The contacts that you need and all of it and they're gonna be able to ask even more questions, Allison, than we can on in 6 minutes here on a 1 call in the segment, because there's probably other things there as you start pulling a string to really figure out and get yourself, like, in a position of all knowledge to start making wise decisions with all of the information possible. So hold on the line, and we will give that to you as our gift, and we are so sorry that that is what you're up against. It's terrible.

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Welcome back to the Ramsey Show. Up next, we have Katie calling us from Dallas, Texas. Hi, Katie. Welcome to the show.

Hi. Hello. So glad to be here.

Well, thanks for calling. How can we help?

I have a big problem. Well, I don't know if it's too big. But my question is, how do I tackle my debt while establishing an emergency fund and investing at the same time?

Well, I can see how you're overwhelmed with that because that is overwhelming trying to do all of that, at the same time. Why what what's causing you what's the motivation in trying just to to get it all done? Do you feel like you're behind on investing? You don't feel like you have enough savings? There's a lot of debt?

What what what's causing you to do this?

So I've held on to this, large amount of, money in my savings account. I started saving since I was 16. And, I just I'm exhausted of seeing it just sitting there. I wanna do something with it. My frustration is I'm not knowledgeable in investing and I don't even know where to start.

I don't know.

Yeah. How much is it?

It's $47,230.

Okay. And that's just sitting in savings. And then how much debt do you have?

I have $24,516

in debt. Okay.

Well, the good news is, we'll give you a plan so that you feel like you're going in a direction and you feel confident about what that direction is. Also, the good news is you're gonna be out of debt basically today if you follow our plans by tonight.

Oh, my goodness.

So

That's exciting to hear.

It is. Listen, you've done a wonderful job saving and it sounds like you weren't really sure what direction to go so you kinda just try to do everything. And the way we teach kind of narrows it down and you do 1 thing at a time for a period of time, and then you kinda are freed up to do more. But for you, the first step, and you've already covered it, we always say the first baby step is you just need a $1,000 saved. You got that.

So check that 1 off the list. The next step is we take any additional savings that we have or we work really hard to pay off our consumer debt. And for you, you have the money to do that. So that would be baby step 2, pay off consumer debt. That would get the green check.

That's right. And, Katie, what is the 24,000? What kind of debt is it?

1 credit card in the amount of 6563.

Mhmm.

Another credit card in 6783, and my car that is 11170.

Okay. So, yeah, so part of this paying off debt for most people that call the show, Katie, I would say 9 out of 10 of them don't have money to pay off these credit cards and this car, so we're gonna be talking to them about working extra, sacrificing lifestyle, all of it. But your position is completely flipped because you you have that cash. So like what Jade was saying is that's a big green check light. But, also, Katie, we wanna establish new habits so that we don't get back into this place of debt again.

So what were you using the credit cards for, the the 2?

Just spending. K. Yeah. Monthly spending. I'm I I have a problem of I like seeing the money there.

I like feeling secure. I like feeling safe. My problem is just letting go of that money.

Listen. I think for personalities like you, when we reframe what security and safe is, I think they thrive even more. Because if you're a person who loves being secure, being safe, you're going to love a debt free life because debt really does equal risk. Because using credit cards, that's a form of debt. It equals risk.

Because for most of us, we go about our life. Right? You put yeah. Maybe you put shopping on the credit card, maybe you take out a car loan. But if you were to lose your job, suddenly, you feel the risk of that because you go, oh my gosh, I don't have the income I used to have coming in, and I have this car payment due, I have to pay the credit card off, and suddenly, we feel the risk of that weight that we've been carrying in debt.

Right? So if you're a person who says, no, I love security, then paying off your debt truly is ultimate security, and then turning around and saving up 3 to 6 months, which is the next step, baby step 3, having that 3 to 6 months of cash sitting there that's actually your money. It's not money that you owe to credit cards or car notes. That is the ultimate form of security because then you can say, no matter what happens, I'm prepared for a storm. If I lose my job, I know I have the money to keep everything going for the next 6 months.

If, an emergency comes up, you know, the water heater goes out or something happens with HVAC, I have the money that I can cover it.

Yeah. And the and the 3 to 6 months too, Katie, is enough to to what Jade's saying when these big things come up to cover with cash, but it's also not so much that you're getting frustrated that you're not making a lot on return. Right? So it is that perfect medium. Are you single, married kids?

What what's, like, your life status?

I am married. I have 1 baby.

Okay. So, since you like security, Katie, I would go more the 6 month emergency route versus the 3 month.

Yep.

So I would stick with that 6 months. Do you know from an operating budget perspective, how much money you guys need per month just to keep kinda where you're at? And I and I'm thinking, you know, mortgage payments, utilities, gas in the car, food, all of that. What what's kind of a what would you guess to keep you guys afloat for a month? How much money?

For

him and me, myself together?

Yeah. As a household.

I wanna say roughly 6,000.

Okay. So the good news is you have that, even after you pay off the debt. I mean, that still leaves you with a little over 20,000. So you could effectively say, okay. Now I've got my 3 to 6 months.

And then to answer your further question about like, do I invest this? What do I do? That 3 to 6 months, you just keep it in a high yield savings account. It's there. Like we said, it's just that fully funded emergency fund for when you need it.

And then above that, technically, and and I know I'm not gonna dig into this too much right now.

Mhmm.

But it sounds like after that, your household is debt free, your household has 3 to 6 months of expenses. Now, you could start to invest in the way that we'd say to do that is really just taking 15% of y'all's combined income every single month and putting it towards, yeah, your 401 k, your Roth IRA, that sort of thing. And it just becomes a kinda set and forget rhythm for you to invest.

Yeah. And when you're talking about you didn't know much about investing, a great place to start, Katie, a Roth IRA is a great option. You and your husband both can open it up. You can both put $7,000 in, and that grows tax free. And within that Roth IRA, you'll invest in mutual funds.

And I would sit down with a SmartVestor pro to to kinda get all this started. And then do you and your husband both have, retirement benefits at work, like 401 k's or a 403 b?

I do not. I believe he does.

Okay. So yeah. So, I would, you know, use that 15% to fund 2 Roth IRAs, go up to the match with his 401 k. And how much do you guys, household income wise, are you making a year?

I'll say 60,000.

Okay. Okay. Are you guys working together with your money? Are you guys, have a combined, checking account?

He said, you know, no. We don't.

Okay. I think that's something you need to work towards.

What's he say about what's he say about all this? Does he wanna does he feel out of control money wise? Is he feeling, like, a little bit like, oh gosh. Are we on track? Have you guys been talking about it and that's why you called, or is this just you on your own feeling it and you don't know where he's at?

With finances, it's kind of, you earn your money. You make your money. We share the mortgage, so you just sell me the money, and we're okay with that. Okay. Alright.

So My money's my money and

Yeah. How long have you

guys how

long have you all been married?

5 years.

Okay. How are you feeling about that? Do you like how that is, or would you rather say, hey. We're a team in this, and altogether, we're, like, working towards our future together with investing, and we we know what's going on.

We're okay with working together. I'm sure he'd be okay with that too. Okay.

Good. I think you should work towards it. I mean, the truth is, for a couple of reasons, a, just practically, when both people are working together to accomplish 1 goal, you go faster. And there's not much confusion. It's this is what we're working towards, and we're all pushing towards that same thing.

And then there's just the the relational spiritual side of you're married, and so you're 1 in all of these other areas. And so Yep.

Sorry, Jade. Does he have debt, Katie? Do you even know? Yes.

Yes.

How much does he have?

Too much for me to handle.

Oh, okay. Interesting. So is that why you like it separate because his feels overwhelming to you?

Yes.

Okay.

We don't we really I don't wanna hear about, who? That's it's hard to say. His financial struggle.

No. You're good. Katie, do you would you care to stay on the line and we can we're we have to go to a break right now, but I'd love to Okay. Keep talking, if that's okay. Do you you are you okay if we hold you over to

the next

break? Yes.

Okay. Thanks, Katie. Okay. Katie, you stay on the line. We have a hard break right now, but, we'll be back and unpack some more of this because I think this is a great I do too.

Yeah, to be able to help her and for you all. This is where a lot of people are in America, from a financial perspective. So we'll be back.

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Hey, guys. It's Rachel Cruz. And guess what? It's my favorite time of year. The lights, the music, the decorations, I mean, I love it all.

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Download the Every Dollar app for free today. Go download it today. Welcome back to the Ramsey Show. We have Katie on the line from Dallas from the last segment, and Katie was telling us she has $47,000 saved, $24,000 in debt, which was car and credit cards. And she was wondering initially when she called in about, how to invest and how to pay off debt and not just let that money sit there because she wants to make progress.

And as we kinda were digging in to to the numbers in her situation, kind of unpacking, the relational side of money, and marriage and money is so closely related. When you are married, working together with your spouse and being on the same team is a crucial part. But, also, we know on the other end, it's 1 of the leading causes of fights and tension and divorce and conflict and, when you're not on the same page and when and when you live kinda separate lives financially. And as we were unpacking with Katie a little bit, that's what we've kinda started to discover is, where they are from a relational standpoint when it comes to their money. Katie, is that a good overview?

Would you change any of that or add anything?

Oh, gosh. That was unexpected. Yes. You've definitely unpacked it.

We unpacked it. Yeah. So before we were, getting off the call, we just kind of asked, and and I feel like you it kind of struck some emotion in you, of knowing that you guys don't work together, but yet he has a lot of debt. And you said it was just too much debt for you to even want to handle or to face. Is that right?

Yeah. My parents, they they they got divorced because of money. So that's a

bit of fear.

Kind of the background. My husband, he's he has let some a few credit cards go to collections, recently as soon as my daughter was born. He just he's been underwater for what feels like a long time, probably 2 years already.

Mhmm.

And if I mentioned this, you're gonna say, sell it.

Well, tell us.

The truck. It's the truck. He has 11,000 left on it, but it's these monthly payments of $600 that he he wants to be free from.

Okay. What other debt does he have? What's the the credit cards in collections? What are what are those amount to? Do you know?

I I wanna say roughly, it's 7,000.

Okay. Anything else?

Now you've opened my eyes. Not no. Not that I know of. Maybe I need to have a discussion with them.

I I think so because don't get me wrong. I I I hate debt and I don't like any amount or form of debt. But I was, again, expecting for you to say, like, he's got $200,000 of debt. Like, I was expecting something way more astronomical. And when you told us, hey, yeah, he's got $18,000 of debt, I kinda just was like, oh, okay.

Cool. Like, we can pay that off. And he's working. Right?

Yes. He is. Okay. Let me dig deeper. I just it just came in.

So he has we have this watercraft boat. K. It is under both of our names, but he takes financial responsibility for it, and the balance is 11,000.

Okay. So there's another 11 k. What

else? So Anything else?

Aside from his trucks, the car, and a few credit cards, there is nothing else.

So truck and a car?

Sorry. The the truck and the boat.

Okay. Truck and the boat. So we're 28,000. How much how much is

the boat worth? Do you know?

No idea.

Okay. Okay.

We we

haven't looked into it. It's very precious. Okay.

And what haven't even.

And does he have any money saved in his name?

No.

No. Okay. So, okay. So, Katie, I think what this starts to open up and what you're feeling and correct me if I'm wrong, but it is touching every security, insecurity part of your story and in your life. Like, you've done everything you can to stock money away, even taking out credit cards and and spending over here.

But just knowing the safety of money has been a lifeline for you and probably coming out of a lot of pain from your parents' experience, and you've done everything to safeguard yourself, right, against I would say against debt, but what's funny is you've taken on some debt. Right? So there is still a level of risk there, but you've padded yourself with the savings, and it's kinda become your lifeline. And you're gripping onto that and letting go of that is 1 of the scariest things for you to do. Would that be correct?

Yes.

Yeah. Which is very understandable, Katie. Very understandable. And so I want you to as much as you can, because with money, emotions drive so much of this. And the more logical we can get, the safer I think you're gonna feel with some of these decisions.

And 1 of the first steps, I would do is sit down with him because I don't know his I'm not on the phone with him, and I can't ask him these questions. I don't know where he's at. If he is at a place, Katie, that he's like, I'm so overwhelmed. I'm so mad at myself. Right?

He's probably not feeling great about himself, and it's like, I wanna change. I wanna turn this around. That's that's 1 scenario. A scenario would have a red flag and cause you to pump the brakes a little bit on all of this if he's like, I don't care. I don't care, Katie.

I'm gonna do what I want. And we get those calls too with some guys that are like, well, he wants to buy the truck. He doesn't care. He's gonna buy it, and we're we're you know, we can't make the payment, but he doesn't care. Right?

So, like, that is a character issue if it's that. Would you say it's kinda the first scenario or

the second?

I'm pretty sure he will call the show tomorrow. No. No. Not March. March.

Okay. He will

call the show tomorrow. Good.

Yeah. But so he's more of on the fur on that first, you know, scenario, you would say.

He's all for it.

Okay. Okay. So, Katie, okay, I I just I wanna encourage you that you're this is all good. Right? Like, I I know you feel overwhelmed, and we're gonna walk you through a very clear plan right now.

So the first thing I want you to do is you guys together tonight, you can open a bottle of wine if you need, like, just a good

sip of something.

Order a pizza.

Whatever you gotta do to relax and say, okay. Together, we're gonna look at everything. We're getting out our, pay stub stubs. We're we're gonna know exactly because When I asked you how much money you guys make a year, you said, I think around 6 like, I want you to know to the dollar, here's what we make combined. Here's every debt.

We're gonna write it out, and we're gonna know everything here. And we're going to, tonight, shake hands and say, we are now a team. Together, no longer are we roommates Venmo ing each other for the mortgage. No. Screw all of that.

No. We are 1. Our income when our income hits our new checking account that we're gonna open on Monday morning, when our income hits that account together, we are working as a team. Because when you do that, Katie, not only from an emotional perspective does it create so much unity and so much of a more beautiful marriage because you see yourselves as 1, which is what you do when you choose to get married to live life with another person. You're you're living that out on a tactical sense with your money.

So that's such a beautiful part of it. And then together tactically, as you start to trust each other in this, you're gonna have this cleaned up, Katie. I would sell the boat immediately. But then by Monday, you guys can take this 47,000, and this is gonna scare you. But I would pay off all I would keep a 1,000 and and and you would have you have, I think, 42,000.

If you if you don't count the boat, because I want that sold. Right. You're gonna pay off everything else. K? And so you're gonna have $5,000 left.

And you guys together are gonna have a goal, I would say, to save up, probably, I don't know, 26, 27,000 for an emergency fund.

Mhmm.

And you're gonna that's your next goal together, Katie, is to work to to buff up that emergency fund. Okay? And that's gonna take you guys, you know, maybe the next 8, 9 months, 10 months to do all of that, for that emergency fund. But together, that's gonna be your goal for 2025, together doing this. Getting rid of the payments.

We're done with payments, and now you're gonna have your full income to be putting towards this emergency fund.

What a say less.

What'd you say?

5000 less.

Yeah.

I would have 5,000 less. So I'm paying off my 2 credit cards. Yes. I'm paying off my car. Yes.

Selling the boat.

Mhmm.

And you suggested paying off the truck?

Yes. Mhmm.

Oh gosh. That's scary.

Is it scary because of what's gonna be left? The 5,000? Or it's scary that you're paying off his debt?

That's scary.

You know what might make it less scary? If I were you, I'd calculate up all the monthly payments. I'd calculate what you're paying in car payments, what you're paying in credit card payments, what he's paying in credit card payments, what he's paying in boat payments, and what you're paying in truck payments. Add up all of that money, and when you see that that you're gonna have that that every single month, I think that's gonna make you feel less scared because that's a lot that's a hefty chunk.

You have a lot of your income, Katie, leaving, and a lot of it's gonna be coming back to you. And you'll be able to build this emergency fund up back very, very quickly. And then beyond that, you can start investing. Hold on. Stay on the line, Katie, and, Emily's gonna pick up, and we're gonna put you guys through Financial Peace University.

It's our 9 lesson course and give you every dollar premium. So when you guys start looking at numbers today, you can start building out your first budgets. Thanks for the call, Katie. We're cheering you guys on.

Hey, guys. Dave Ramsey here. I'm coming to a city near you with doctor John Deloney on the money and relationships tour. This is a brand new event where you, the audience, will get to vote live from your seats and choose the things you want me and John to talk about. You'll be picking from over 20 topics that impact your life, like saving for the future, leaving a legacy, money stress in marriage, and so much more.

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Alright. Christmas is almost here. And if you are still buying gifts for people on your list, buy them a gift that actually will create change, kind of a positive gift that they can use beyond Christmas. And we have almost 30% off some of our best selling products in the Ramsey store. If you go to ramseysolutions.com/store, you can check it out there.

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So, again, give a gift that can create some change in people's lives that that you love. Alright. We're gonna go to John in Midland, Texas. Hey, John. Welcome to the show.

Hi, guys. Thanks for taking my call.

Absolutely. How can we help?

Well, so I'm an hourly employee and I have an irregular income, and so I've really kind of been struggling with a budget in the past. And I found out the other day that with my employer, I can set my paycheck to go into different accounts. So would it be a bad idea to basically set up to where I'm, like, a salary employee? Like, I have $2,000 or whatever, every paycheck go into, like, my my working account, my my daily account, and then everything extra goes into, like, a high yield for a house? Or do you have any other advice for something like that?

So in essence, you're saying you don't need all of the money that you're being paid? And so Yeah. You wanna throw it towards another goal. That's really the the question. It's not really the difficulty of budgeting it.

Right?

Yes. I I guess whenever I just look at my whole paycheck

Uh-huh.

With it being different month to month

Mhmm. I

don't know why. It just doesn't click with like, okay, I have this random amount of money left over.

Mhmm.

And so I I guess that's kind of what I'm trying to overcome.

Okay. So just again to clarify, are you having trouble budgeting? Like, are you are you ever finding that you don't have enough money?

Uh-uh. No. Okay. Cool.

No. Then yeah.

I live very frugally.

I love that. Essentially, you're saying, I'm budge I'm I have enough money for the line items in my budget, but I have an overage. And for you to overage, you feel like you're at the point that you wanna save for a down payment.

Yes.

And so then at that point, for for Rachel and I to to decipher is whether you're at that point financially, if that is really the best move for you or not.

Okay.

So our first questions would be, do you have any debt?

No. I actually paid off all my debt in September.

Okay. Nice.

So I'm completely debt free. Cool. I make about $100,000 a year.

Okay.

Part of paying off my debt was I got a large settlement from my previous employer for a sale. So I have about 60,000 of that left over in savings. Okay. Some of that is gonna be taxes, though.

Okay.

And then, you know, I'm contributing right now 10% to retirement because I am trying to save for a house.

Okay.

So that's kind of where I'm at.

Okay. So the 60 per the 60,000 you got, you know, you set the taxes aside, that's fine. What portion of that would you consider a 3 to 6 month emergency fund?

Probably I mean, really probably 15 would be 15? Generous.

Okay.

So That'd be that'd be more towards 6,000 or 6 months, I mean.

Okay. So I'd set aside what you would consider 6 months of expenses, and that's kind of separate. And then aside from that, yeah, you could consider the rest. This is my working pile of debt payment money.

Mhmm.

And then, for you, and just to clarify for anybody listening, so technically, you're on baby step 3 b and step 4. And what you're doing is totally fine. If you say, I'm not ready to go all in on 15% investing like we'd say, because you're saving for a down payment. That's totally fine. How long do you think it'll take you to save up the down payment that you want?

Well, I'm just trying to save up big, I guess. I know that in August, I'll be getting a retention bonus as well. K. So that should be about half of your salary. So between that and then another $1500 a month or so going into savings, I I would assume by the end of next year, I will be in a comfortable spot to do, you know, 30 or 40% down on a home.

Okay. Great. I I love that plan. I think that that sounds wonderful. The only thing that I would caution you about, and this is something that you I if I were in your shoes, I'd work it into the plan now.

When you have that Okay. House, like, once you buy the house, your expenses are gonna go up is my guess. Right? I don't know what you're Sure. What you're doing now.

Are you renting?

I am. I am renting right now.

Okay. So calculate okay. Is is my payment gonna go up or down? Does that affect my emergency fund? Does that affect what I would need to make things sustainable over 3 to 6 months?

Do you see what I'm saying?

Okay. Yes. Yes, ma'am.

And that's that's basically it. Congrats. Yeah.

I mean, you've done a fabulous job, John. I mean, that's incredible. I mean, yeah, I think that that's exactly right. And if you wanna make it easy, and make it that automatic transfer to a money market account or a high yield savings account to save for that down payment, I would say, yeah. Absolutely.

You know, there's always, you know, I I don't feel this with you. That's why I just wanna say it out loud that there is something when you're starting something new, you all that are listening and watching, and you're starting to build new habits, I do think being as hands on as possible and going through the motions is really important. And so some people just wanna automate it their whole life and be like, oh, I don't wanna have to, like, feel anything. It's just gonna happen. There is something about stepping in and saying, no.

No. No. I'm gonna transfer the money myself, so I'm practicing and seeing this happen. And there's something about taking control in this discipline over your actions, which is a big part of winning with money long term. But, John, I think you you have some of these disciplines already in place.

It's not like you're trying to change something big from your habits. It's more of a tactical change. And so doing something automatic at that point, I think, is great. Right? When you can

Yeah.

When you have stuff that just automatically comes out because you know, yeah, we're we're paying for electricity or we're paying for cable, like

Yes.

And it's just coming and it's making my life easier in that way. That's a benefit for sure, and that would be the same with savings. So if you do wanna create an automatic, you know, transfer and and knowing that that high yield savings, you can get to that money for some reason, right, if you lose the job or, like, whatever it is.

You know? You can

get to that money. But yeah. But that's great, John. How old are you?

I'm 25. Okay.

Way to go. And what do you do for a living?

I'm a lease manager. I work for an oil and gas company out here.

Okay. Okay. That's great. I know it's always encouraging to talk to people in their when they're young and in their twenties, and you're and you're making, yeah, I mean, incredible money doing it. So and handling it really well.

So that's, incredible, John. Good luck to you. I think that that's yep. That's amazing.

Way to

go. I liked what you said about the automating because I think that's

Yes.

Very, very important.

Yes. For sure. Alright. Let's see. We got, oh, this is a fun Instagram handle.

Okay. You

ready for this? Yeah. Jacuzzi 101.

Okay. You like

a good time. At what point should my adult's children's finances be none of my business?

Oh,

I'm gonna go with at the point they're adults. So probably now since they're adult children. Yeah. I mean, let's think about this. If they're in your home, like, if you have adult children that live in your home, I would say that it's some of your business because they're still in your living space.

Right? But if they don't live with you, if they are out on their own and in their life or in their marriage, I'd say that it's none of your business unless they ask for your help.

That's right. Yeah. This is always a a tricky 1 because you hear parents still wanting to be involved in their kids' decision making. And and probably some of it out of a good heart. Right?

Of course. Seeing kids maybe making mistakes or making decisions that you wouldn't make, and you want to still be the parent in that way and intervene. But I feel like the the more life I've lived, Jade, the more successful relationships I see with parents and adult children happen when they start to become more peers. Yeah. Right?

When you step into adulthood and your parents actually see you as in fellow adult and, they're still not trying to parent you That's for you. Or lecture you, and they see you as a peer. Usually, from the people that I've seen in my life that have great relationships with their parents, it's because of that. There's kind of this mutual respect.

Mhmm.

And the ones where there's usually tension when it's like, oh, god. My dad's still telling me how to load the truck or my dad you know what I mean? Or my mom is still critiquing this or that or, like, you know, whatever it is. Mhmm. That's usually relationally when there's some some tension.

So I'd say none of your business.

Yeah. But that goes both ways because a lot of times kids try to get into the parents'

business too. Yes. That's so true.

I like the way my mom and dad handle their money.

You know what

I mean? People call in with that all the time.

So And if they don't ask, not much you can do to change other people. You really can't. Really can't. Well, thanks to all the guys in the booth for making this a great hour. Jade, thank you as always Always.

For being a great co host. Thanks everyone out in the lobby at Ramsey Solutions, and thank you, America. We'll see you on the Ramsey Network app, podcast, and YouTube. Make sure you guys download the app, so we'll see you next.

What up? What up? It's doctor John Deloney from the doctor John Deloney show with some amazing news. The latest episode of United States of Anxiety is available right now exclusively on the Ramsey network app. This docuseries follows real people from my show as they embark on a 90 day journey to transform their lives, and I personally walk alongside them every step of the way.

Okay. Now, here's a sneak peek of what the new episode is all about, and don't forget to click the link in the show notes to download the app. What's up, Kelsey?

So I've lived with crippling anxiety for as long as I can remember. How do I stop it from constantly

coming up in different areas of my life? What does crippling anxiety mean?

Paint me a What does crippling anxiety mean? Paint me

a picture of that. Alright. So you're ready to jump in?

I'm ready to

jump in. Then we're gonna check-in

with Kelsey 30 days,

60 days,

90 days.

I cannot even function because I am just crying. My mom left us when I was 4.

I truly felt like for a while I had no family.

She's experiencing things that really hurt a long time ago. Tell me about this boy.

He triggered me a lot.

Scared of losing Paul, scared of doing the wrong thing, scared of not being enough.

It just feels like it would be exhausting to be Kelsey. It is. Whenever somebody's playing whack a mole with their anxiety, when it just keeps moving, that tells me the underlying system's not okay.

How do I get my inner child out of this relationship? Because I feel like she's running the show.

1 of 2 people that's supposed to never leave took off.

How is this how is this burden?

A burden. That's right. To the 1 person who should carry all of it. Did you ever tell that little girl that it wasn't her fault?

I don't know what to do.

Do you either have to choose to let this guy love you, or you gotta choose to let this guy go?