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Normal is broken. Common sense is weird. So we're here to help you transform your life and your money. From the Ramsey Network here in the Fairwinds Credit Union studio, this is The Ramsey Show. I'm Jade Warshott. Next to me, my good buddy George Campbell, taking calls about, again, your life and your money. If you want to get on the phone, the number is 888-825-5225. So call us. The lines are open. Let's go to Brittany in Minneapolis, Minnesota. Brittany, how can we help today?

Hey, thanks for taking my call. So yeah, I guess my question is, at what point does a bad spending habit turn into an addiction? And at what point does that kind of addiction need to, you know, like, how do you decide to take away access to money? When? That kind of thing. I have background if you want it.

Well, yeah, tell us a little bit about what it looks like. It sounds like you're starting to think this is an addiction. So tell us what you're noticing and how long it's been going on.

Yeah, so I have been married to my husband for about 4 years now. And this, you know, the whole time that we've been married, it's been pretty difficult to stick to a budget. We've paid off, or I've paid off about $25,000 in debt, fully funded emergency fund, but the majority of that has just been me. Whenever we try to get on a budget, he ends up impulse purchasing things that we don't need, especially like games, technology. Yeah, that kind of stuff.

What kind of money is he spending on games and technology?

Um, you know, the individual items can range anywhere from like $10, $20 to $100. Overall, over the last few years, it's been thousands, um, probably if we added it all up.

When you say thousands, and I need specifics, because if you say he spent $2,000 in the last 4 years, I'm like, okay, big deal. But if you say like every month he's spending like $1,000 on this thing, or he's spending $800 and we just don't have it. Tell us like month to month what that looks like.

Yeah, month to month, um, we're probably looking at a couple, um, hundred dollars and sometimes more, sometimes less. And I know that doesn't sound super crazy, but, um, it's, you know, probably more than that actually, maybe like $300 to $400.

But $300, $400 on games? How much do you guys earn?

We are now taking home about $5,540 a month. Um, and that, that could go up soon in the future. Um, for a while he did not have a job. Um, he's had a few months where he was unemployed and we were just living off of my income and that doesn't really leave us any, um, room in our budget for any fun spending. And he was still spending it at that point.

Um, he's working full-time now.

Yeah, he is working full-time. He just started his new job. Um, it's $2,000 a month plus commission. We don't know what that commission is going to look like quite yet.

What kind of job is this?

Um, he's doing, uh, marketing.

Okay.

Sales. Yeah.

Is that what he was doing before? Like, is he in a career field or is he just, just hopping from whatever to whatever?

He's been doing sales pretty consistently. This is a new type of sale for him previously. It was more like technology sales.

Okay.

And do you guys have kids?

We do not, but we are hoping to. I'm wanting to wait until we have a house and we're trying to save up for that right now.

I mean, it sounds like you're trying to save up for that right now. I don't think he has any aspirations to do this.

I wonder. I'm not convinced yet. And I want, I want you to convince me. So of the $5,540 you'd make in a month, there's no more debt. He's not going into debt to do the spending. He's just saying, hey, there's money there. I'd like to have it. I'm curious, do you guys have, now that you've got the emergency fund, and I realize he wasn't helpful up to this point, but now that you have the emergency fund and you're kind of on Baby Step 4, 5, and 6, do you have allotted fun money for each other in the budget?

We do. Yep. I set that at $180 a month for each of us.

And what did he say to that when you said it?

Um, he said that that sounded good. And, um, honestly, there's, there's been some communication stuff in the past and just some frustrations on my end. And I requested that he took at least 1 or 2 months to just, you know, not make any purchases like that, any games, technology, especially since, you know, there's just so much that he can't play at all, can't use at all. And he agrees. And then— 2 days later, you know, he makes a purchase like that.

Even with the $180, you didn't want him to buy those sorts of things or beyond the $180? Because what I'm trying to get to is what— let me just ask a clear question. So of the $180, now that that's on the budget, how much over the $180 is he spending consistently?

Um, about probably like, it depends on the month, but anywhere from $100 to like $300 above.

Okay. And let me just ask this question. Is it that, cuz you're right, he's going over the budget, you guys shook on it, he's not sticking to it. I'm sensing 2 things. I'm sensing he's not really involved in the money period. And he, for whatever reason, he doesn't care about it the same way you do. So it's aligning on that. And then the other thing I'm sensing is, and this is neither here nor there, but Brittany, I just don't think you like the things that he spends his money on. I think in your mind it's kind of silly. At least that's the way it sounds. And it's kind of like, why are you spending money on that? Why wouldn't you? Kind of feels childish to you, maybe. I don't know. But I think those are two things going on.

I don't mind that kind of stuff. It's just the volume and the broken promises. There's been times that we've gone into the red, had to pull from savings in order to cover deficits like that. Never any debt, but yeah. And, um, and really it's, it's, it's a lot about the language that he uses. Um, like he says that, you know, he makes purchases on impulse and his brain just turns off. He doesn't even think about it until afterwards. And then he realizes what he's done. And it's just like, you know, no thoughts in the moment. He does have addictive tendencies. He's had, you know, other things, not substance.

Has he ever been diagnosed or treated? By a professional?

No, he is diagnosed with ADHD and anxiety. And I think that's a large part of the financial—

Well, it sounds like you are tired of being the mom because right now you do have a kid and it's your husband and it's a problem. And you're starting to resent him for it, understandably, because you're like, how long do I have to be the adult in this relationship while he just frolics over here? And I want to own a home and have kids. And he has no intentions of building a future with me. Is that accurate?

It's, it's definitely felt like that. I do believe him when he says that he wants those things. I just, you know, I'm concerned because he says that he wants it, and then like I said, he says his brain turns off.

But is his therapist giving him any tools? Like, is he, is he being given tools that he can use to combat the ADHD in those moments where he's wanting to spend? And to his point, oh, my brain just shuts off, I don't even realize Is his therapist helping him? Because what I do feel like is in a situation like this, if he's been working with the same therapist and he doesn't feel like he has tools, maybe he needs somebody else to help him through this.

And you guys should go together.

Yes.

Because yeah, you can limit access. That's just a bandaid on a much deeper problem, which is a marriage that is miles and miles apart. You guys need to get aligned on your goals, your values, and a byproduct of that will be Aligning on the budget and living this out.

I agree.

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Alrighty, let's head back to the phone lines where we've got Jay in Daytona Beach, Florida. Hi Jay, how can George and I help out today?

Hey guys, thank you so much for everything you guys do. I appreciate you guys helping out today.

You're welcome.

I'm just gonna start with my question and then you guys could just ask any questions you have as well. Um, I was just wondering, in my situation, what would you guys do? Would you move back in with my— I'm thinking about moving back in with my father. Um, or would you stay in my situation in Florida? Right. I have 3 kids. Uh, I'm with— I live with my girlfriend. We've lived together for 5 years. We basically commingled everything. I know you guys are super against that. Um, I'm definitely looking forward to marrying and I need to take that step for sure. It's just, it's been a lot. These past— well, this past year, we have 3 kids underneath 2.

Ooh.

We just had twins and we're by ourselves out here in Florida. We moved out here in January thinking that my girlfriend's mother would be here and would be a lot of help and stuff like that, but things just always don't work out like that. I was just thinking, in my situation, do I keep on fighting and risk exhaustion in order to get a house out here by ourselves? Or do I move back home, get reset, and kind of get a little bit of help with the kids, with my parents, and save money?

Is—

is—

explain what the problem is. I mean, obviously you have 2 kids, you're sleep deprived, that's taking a toll on you. But what's the other side? of this? Is income low? Give us some insight as to what's making it feel so stressful beyond the kids.

I'm not sure if income— you guys could probably judge that better than me. I make— take-home is about $3,600 a month. I work 50 hours a week. I work at Amazon, get paid $22 an hour. My girlfriend is at home taking care of the kids, of course.

And what are you guys paying for rent?

Rent here, we don't pay bad. Our monthly expenses are about $2,200. That's not including groceries and everything. If it is including groceries, it would be about, give or take, about $2,800.

But you said you're not paying rent?

I am paying rent.

How much of that is rent? How much of the $2,200 is rent?

Rent is about $1,300, $1,300 a month.

Okay. So a third of your income is more than a third of your income is going towards rent. So you're gonna feel the pinch there. Obviously, you know, your girlfriend, she's not working, so you're feeling a pinch there. What else is going on? Is it just robbing Peter to pay Paul, paycheck to paycheck? You're just tired of barely keeping your head above water.

I'm actually not paycheck to paycheck. I actually— not because I— not me, but because of you guys. You guys actually set me up in a situation where we have like everything paid. We have extra money. I have a gap about like $800 a month I kind of put away.

Where is that going currently?

Right now we are putting that away.

In like a high-yield savings account?

No, we're, uh, I'm pretty much— I'm trying to get debt-free by the end of the year. I got about $2,000 left on my, uh, student loans.

Um, and that's it? You'll have no more debt?

All my debt. Yeah, that's all my debt.

Oh, that's incredible.

So why move to Florida? What's in— or I'm sorry, why move back in with the parents? What's that getting— what's that giving you?

That's my problem. Um, we've been in 2 apartments ever since we've been in Florida. Um, They're both— they look very well. We toured them. And then once we get here, about 3 to 6 months after, we start seeing roaches coming out of the wall. And man, it's been a roller coaster just because my wife, she was pregnant with twins as soon as we— when, uh, when we came down, we had to move again.

Oh.

After we got our first apartment, we stayed there 3 months and then had to move. And I made it all happen. We're by ourselves. Um, we just keep, we keep pushing and pushing. I'm just, I'm wondering if—

So roaches keep being the problem? Roaches keep continuing to be the problem? Like you move into a place, there's roaches, we move again, there's roaches?

Yeah. I mean, like I said, I, I can't say every place has roaches. Maybe it's the price, but the past, uh, the last apartment was actually more expensive and it had a better rating. And, um, And I, I had the same problem there, but I was just one— I was a, I was a maintenance man for 4 years, so I do know how to maintain— not maintain, of course you can't maintain roaches, but I tried my best to kind of—

Not in an apartment building. I mean, yeah.

Have you, have you let them know about it? Are they doing anything to remedy it?

Yeah. Yes, I have.

Because I don't want you moving across the country just because of roaches.

Yeah.

Yes. Yeah.

I feel like this is choosing the right places and making sure that maintenance is dealing with it. To George's point, I think there's more to this and I'm trying to get there. You moving across the country to George's point to avoid roaches doesn't feel right. Is it that, hey, we can move back into the parents, we're not paying anything, we can stack up money. Like, what's the goal here? We're trying to help you with your goals.

Are you getting like full free childcare and she's gonna go to work full-time and you're gonna reduce your expenses and now we're gonna save up $50 grand in a year? Like, gimme the real game plan.

Yes, I, I feel like if we do move, um, we will have that, but there's also negatives on that side as well. Like you guys said, there's 2 sides to each situation. I know my dad's, uh, house up north in Massachusetts is very toxic as well, and it, it could be worse for us as well. So I just, I don't know which one—

Let's not do that. We're trading a roach problem for another problem. And so I think the real problem here, Jay, is You're realizing you need more income to support your growing family. Agreed?

Yes.

And $45K is a solid income, but man, you got a lot of mouths to feed. And so we gotta up that. So that means here, what if we could solve this by finding you a real career where you're making a good salary, you've doubled your income, you're doing work that you enjoy, and you have enough margin to hit your goals. And maybe eventually we'll get a house, but that's not gonna solve your problems right now.

Yes, I would, I would, I would love that.

So have you ever worked a salary job?

I have not. I have not. I know Amazon pays for school as well. So whatever you guys— I'm here to listen, whatever you guys have.

I think we can set you up with Ken Coleman's book, Find the Work You're Wired to Do. I think that's a great place for you to start. It'll just get your wheels turning on what you're good at, what fires you up, what you're passionate about. And so you'll take an assessment that's part of that. And then after you get the results from the assessment, the book will walk you through what different opportunities there are. We'll also send you the book From Paycheck to Purpose, which is just gonna help you. All of that is going to help you figure out what you're wired to do and figure out how to actually put yourself out there in the job market. And I think, George, I think you're exactly right. I think getting your income up is going to be the key to this. Then you can start looking at some nicer places, um, that maybe hopefully don't have a roach problem. I mean, you are in Florida. They, Those palmetto bugs.

That's what I, that's what I mean.

Yeah. What, what's keeping you in Florida specifically?

Really nothing.

I mean, 'cause it was her mom, but we now realize she's not much help. So why don't we just go to a cheaper cost of living area? Yeah. Not move in with dad and increase our income.

That's what, that's what the problem, because we came from Kansas City, Kansas City, Missouri, and it was amazing.

Yes. I mean, like, what's wrong with that?

Like I said, like the, uh, the rent was super cheap over there and No roaches. I had it. Yeah. Yeah. We literally—

Your wife's home anyways, so we don't need the help with childcare as much. She's not going to work full-time. That would be a good temporary solution, but getting free childcare from family is probably not a sustainable solution to the problem. I love the idea of you guys moving to a cheaper cost living area, plus increasing your income. I think that solves it all without putting yourselves in a toxic situation.

Yeah.

It's usually if someone's living, moving back in with their family and parents with 3 kids, I'm like, how soon can we get you out?

Yes. And it better be like the most Brady Bunch looking situation ever that you can, tolerate each other. It's kumbaya. You're doing it for a limited period of time. But if you're telling me, if the first words out of your mouth is, well, that's toxic, then that's—

Well, once we can afford a house, we'll move out of here. Well, then it's going to be 10 years.

Yeah.

You've got to figure out how to live independently and not codependently, especially when you're married. By the way, you got to get married, dude. You've had 3 kids with this woman.

Yes.

It's time. You don't need to be in a different financial place. You are committed to her. You're committed to these kids. Let's go ahead and get married.

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Hi guys. Thanks so much for taking my call.

Yeah. Welcome to the show.

Thanks. I'm a huge fan and I'm actually calling on behalf of my parents this time. So they, my mom has retired and she invested all of her pension in a fixed annuity and she didn't really know what it was. And so, It was about $450,000 about 5 years ago. And so she's paying huge amounts in fees. The money's not growing. And she thought it was an investment. She thought when she went to meet with them, it was an investment firm. And instead, it's a life insurance company. And so I think they've only just realized that this isn't— we've only just realized that this isn't an investment. Um, company. And again, like the money's not growing. So we're just trying to figure out if there's a way that we can like switch up these investments. They're 2-year contracts, fixed, uh, fixed contracts. Um, but she's like locked in for like 12 years paying fees. Um, and so it's just a bummer because like she retired, you know, 30 years as a nurse.

Um, and is that all of her income?

Uh, yeah, it's basically all of my mom's income.

So what's the guaranteed payment?

The guaranteed payment, uh, is 87.5% at the end of the, the contract value. The minimum guaranteed contract value is 87.5% of the premium.

And have you checked to find out what the surrender charge is for her to surrender it early?

Yeah, surrender charge is 11%.

Of $450,000.

Yes.

So, I mean, you can't stay in this though. I mean, there is something to be— there is what we call stupid tax around here. And stupid tax is what takes place when you make a choice without having all the information and then you learn all the information and you learn later, oh gosh, that was a stupid choice. I wish I hadn't have done that. And so there is, I'm just, Preparing you and preparing her hearts that, gosh, you are going to pay for this. But if you move the money into a better invested account, you're going to make up for that stupid tax and then some as she keeps that money invested for a 15-year term and longer in good solid investments. Okay.

The good news is—

That's what I thought, but I was like, I'm going to call in and ask.

I know it's not going to be fun. We're ripping this bandaid off. But the good news is if she had just invested that into an index fund, I mean, the S&P 500 is up, Almost 13% this year on $450 grand, that would've paid for her surrender fee already.

Yeah.

And so if you can help her understand that as well, does she understand this? Because I want to make sure she's only making financial moves from now on out of a place of strength and confidence and not just, well, a guy told me.

Right. Because even you, Krystal, you can't be the next person who told her to do something that she doesn't understand. Otherwise you're keeping that cycle going. She's got to make sure she understands it.

And if the market goes down, she's going to go, pull the money out, it went down, you told me it wouldn't. We're like, no, Mom, that's not how this works. But she was sold this annuity probably because they preyed on her fears of market volatility, right? That's how these things get pitched. Yeah, they go, oh, you don't want to deal with the market volatility? I got you. How about a guaranteed payment for life? And they go, sign me up, I don't care how much it costs. This guy said I can't lose money.

Yeah, that's exactly how it went.

The problem is she's probably making what, 5% or less on this? The returns on these annuities?

Oh, it's like right now it's like the return is negative right now on these particular annuities.

What are the— how is that even possible?

I do not know. Oh my gosh.

Is it a fixed annuity?

Yeah, it's a fixed annuity.

Okay.

Wow.

Well, I would be working with an actual credible financial advisor and not an insurance Agent. So I would connect with them to actually get into the details of what this policy is, how it's structured, what the fees are, and then we can figure out what's the cleanest way out of this with the least amount of damage.

Right. Okay.

So I would be contacting a SmartVestor Pro. If you jump on ramseysolutions.com, click on SmartVestor Pro, have them look into her actual policy and figure out the best way to get out of it based on all the fine print that she unfortunately signed up for.

Sorry, Crystal, that you're going through that. Thanks for the call, and don't worry, a SmartVestor Pro is going to help you. All right, let's get to Kristen— or I'm sorry, Kirsten, who's in Dallas, Texas. Hi, Kirsten, how can we help?

Hey, y'all, thank y'all so much for taking my call. I'm excited to talk to y'all.

For sure, how can we help?

So my husband and I are, uh, on Baby Step 7. We were kind of like newly on Baby Step 7 and water under the bridge, but we kind of did it backwards or kind of like mismatched. So we're here now and I am trying to look ahead. We've had these goals of like getting all of our things paid off, and now I want to really focus in on the future. And one of my questions is, if we have a goal that is like 10, years away. Would it be better to go ahead and just throw that in a high yield or in a brokerage and kind of have that earmarked inside of our brokerage?

You said the savings goal is 10 years away?

Yeah. So specifically vehicles for our kids who are right now 4 and 6 months old. Oh, okay. Fun. So we want to be able to Get them. We, I said my city is Dallas, but we're actually out in the oil field. And so like, you know, a Corolla or a Camry is not super safe out here with the kind of traffic we have. Um, so really just trying to get a good nest egg for a larger, probably like a truck.

So you're saying like 12 years from now, that 4-year-old, we want to be able to buy a truck, a used truck in cash?

Absolutely.

Like, well, how much is this? $20,000?

If that, I mean, maybe even less. And that would be just to probably have in high school, maybe first year in college, depending if they go to a big city and they need something that's not a gas guzzler.

I love that idea.

And then we'll sort of go from there.

I think that's 100%. I mean, honestly, Kirsten, that's what Sam and I do. We have a brokerage account that we set money aside for the kids. Exactly. Things like that. And I would definitely do that. I mean, you guys are in Baby Step 7. You've got this incredible margin. You're free to invest beyond the 15% into retirement. You're free to invest into brokerage accounts for kids, family, whatever it is that you're doing next, those different savings goals. That makes a lot of sense. If she was saying that the horizon was 5 years, 3 years—

If it was a 14-year-old, it'd be a different story. But anything beyond 5-year time horizon, I'm very comfortable investing into Index funds in a taxable brokerage account. It's exactly what I do, Kirsten. So I've got a 3-year-old and 1-year-old, so similar ages as you, and I've started investing into this account. I call it like a launch gifts account because I want to help them launch into adulthood well. And that means a cash car, paying for a reasonable wedding, maybe even a down payment or an all-cash house one day. That'd be pretty cool because who knows what houses will cost 20 years from now when your 24-year-old is out there looking for a home. I know. So These are great things to do instead of leaving millions of dollars when your kid is 68 and you're 90. Pretty cool to say, I helped them launch into adulthood well, and now they're debt-free living their best life all the way up until retirement.

So how much do you plan on putting aside every month, Kirsten? Let's do some fun math.

Honestly, we are looking right now at a, right now at like maybe $500 into the brokerage we have. And that's like after our sinking funds, funding all of our retirement funding their 529s. And so I'm kind of trying to see if I can pick from our sinking funds. Those are going into high-yield savings. If I can kind of pull from those and then throw into the brokerage and earmark them a little bit different on our budget.

Yeah.

Just because it is such a far goal.

I mean, gosh, if you started at zero today and you just threw $500 a month in there for 12 years at a 10 to 11% rate of return, I mean, that's $148,000. That's just sitting there. And so it's really fun to look at those numbers. Gosh, what would it be if you made it $700,000? All of those things are so important. And to George's point, you start with the car. If you want to keep going, now you're looking at weddings.

Now you're thinking about funding things like, I mean, you'll have a couple hundred grand in there to start covering all of this stuff. You guys are going to be parents of the year. Way to go, leaving a legacy.

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Well, if you're new to The Ramsey Show, you'll hear us talk a lot about the Baby Steps because they are the framework that we use to answer just about every question about money. And if you want to learn more about that, you can click the link below. Let's go to John, who's in Milwaukee, Wisconsin. Hey, John, how can George and I help out today?

Hey, I have a Pretty decent-sized question if you want to bear with me.

For sure.

So I restore houses for a living. My wife and I are 30 years old and we've been married 1 year and have a 6-month-old baby named Thomas. And we are currently living in an apartment for $2,000 a month. And my wife works full-time and makes $60,000 a year after taxes.

Okay.

So we have a rental property, which is only a rental because we were unable to sell it this winter and we needed the money out of it to buy the next flip. So now we're actually in a situation where we have more debt than we intended to have, and we're a little bit, a little bit fatter than we want to be, as you say. So—

So how many mortgages do you have right now?

Just one, technically, but I owe my father— On the rental? Right. So we have a mortgage on the rental for $2,100, and that's covered by the $3,100 payment that the tenants make. And my father is kind enough to have Purchased in cash this home that I'm working on currently to live in with my wife come February when our apartment lease ends. So my question is a few things, but one of them is definitely, do I just try and sell the rental this upcoming season when the tenants move out, pay off that mortgage and take the $100,000 and so in change equity we have to give to my father. And then come February when the house is lendable, take out a mortgage for $150,000 and just pay that down. But then that would kind of leave me in a situation where I'm unable to get lending for a new project to kind of continue my job or my part in this.

So you're just a solo practitioner here. You're just buying You know, fixer-uppers, fixing them and then selling them. But you're doing it by being leveraged.

Yeah, but we have— we don't have the cash to purchase it all and do the renovations. So we're just— it's our 3rd year doing it and it's our 3rd house. So the first house, we cleared $200 grand, did great, paid off a bunch of debt and put all of that into what is now the rental property.

I mean, I love that you're— I love that you're thinking about ways to earn money. I think I love that you're thinking about ways to build wealth. What I don't like about this is currently you've leveraged debt to do it and you've put your personal residence and your family kind of in the thick of this risk. And now that's, I mean, that's the problem you're, you're calling with today. So I would, I would, the rental that you have now, it's got how much? $100 and what? Equity in it?

Probably $150,000, maybe $120,000 after taxes.

Okay. And how much do you owe your dad for the primary residence that you're going to be moving into?

About $250,000, probably $300,000 after the rest of the renovation.

Yeah. I mean, I would do that. I, because you got to put your family first, right? You've got this baby, you've got this new marriage, and right now it's a house of cards. Literally, there's, there's so much stress on the marriage. I would sell the rental. I would take the $150,000, like you said, I'd put it towards the house and I'd do a traditional mortgage on the rest, 15-year fixed rate conventional rate mortgage, just like that. And then can we slow down a little bit and do the next flip in cash? Is there a way that we can do this without leveraging debt?

And that's the thing is like, do I just stop? Do I just stop flipping for myself and maybe just go find back doors? Go become a contractor. Right. And try and do other people's properties.

Are you qualified to be a general contractor?

I do have my general contracting license in Wisconsin, and I am a business owner with the state of Wisconsin. Okay.

I mean, you can make good money doing that.

I could knock, go buy— I mean, I definitely am not opposed to it. I've never done it before. So it would be a learning curve just to do the sales thing. Because for me, it's easy. I just show up on my own. I work, you know, 14, 16-hour days. And then every 2 years I get paid.

But the con is, the con is everything's got to go just as planned because, you know, you're leveraged to your eyeballs on this debt.

The risk is all on you and you don't have income until the project's done and the thing's sold and it all works out perfectly.

And that's kind of killing me. is because all— and we bought this house for $400,000. It's going to be worth $800,000 and I'll have spent a year on it. I mean, I'll make whatever, $400,000 in equity this year, but I can't make a monthly payment.

Exactly.

It's such a weird feeling.

So to get out of that cycle, you're going to have to pause and find other income to stack cash to then get your first flip in cash. That's the goal.

And that's, and that's what I think is like, Just sell the flip, get my dad out of this.

Pay off your own house.

Pay off my own mortgage. And then do I just go put on a hard hat on a road crew for 2 years, pay this mortgage off?

Why does it have to be a road crew? Can't you be a general contractor doing renovations?

Yeah, but I mean, just for something super stable, like I could just have a 9 to 5 for $40 an hour.

Sure.

I mean, if you're qualified, you can just stack all that cash.

Could you learn to live off of just your wife's income? When you have this new mortgage?

Yeah, but she would love to not be away from this baby.

Yeah, she doesn't want to keep—

She wants to stay home. So we're gonna have to find a way for you to be the breadwinner.

The thing is like, right, and if we do pay off $150,000 mortgage, then we're debt-free in a basically $850,000 house.

Yeah, I love that.

But, but with like no income.

So then it's like, do I just But no, because you're gonna go out and do general contract work or construction work. I, I think the plan is simple. I think it's just different than what you were thinking. I think you guys had this whole idea of flipping houses and that's how we're gonna make money. And then life started happening and you started feeling, oh gosh, this is what it feels like to be married. This is what it feels like to have a new level of responsibility. We need that stability. We don't want this risk in our life. So the homework is simple for you. Uh, step one. Yeah. As soon as the, the lease is up with these renters, we're gonna put the rental house on the market. We're gonna take that equity. We're going to pay back dad and we are going to get a mortgage for the remaining amount. And then you're gonna pick up stable work, working as a general contractor, working construction. And the idea is if we get this mortgage paid off quickly, now your wife has, you all have both earned the right for her to stay home and you're working construction.

And over time you save up money for the next flip. And I like that for you. I think that's a really stable way for you guys to go about this dream. And by the way, that's what we would tell anybody in real estate. You know, I think that obviously there's a lot out there teaching people how to do real estate leveraging debt. And I mean, gosh, this whole place was built on Dave doing that the wrong way.

Attempting that.

And learning from that. And so don't get me wrong, there's plenty of people who do leverage debt, but around here, our identity is we We value peace and we value a debt-free lifestyle. And it sounds like you do too, John. It sounds like that's going to be what's going to give you guys the ultimate peace.

Yes. And people will think you're crazy trying to save up and pay cash. They're going to, dude, just leverage it. I think they're crazy for not having no financial peace. And then life happens and you want your wife to be able to stay home and you go, I can't. I mean, everything is riding on this flip and the leverage working out. You're going to be so stressed out trying to make this all work. It's just not going to be worth it. So yes, it'll take a little beat to save up and do it cash. And this might be 3 years from now, you're basically restarting this flip business.

And I think there's something to be said too, George, for what your mindset is when you're single. Like when you're single, you're like, I'll try it. I'll take on the debt. I'll, you know, it's like you're, anything could happen.

Right.

And then you get married and it's like the risk level goes down a little bit more. And then you have that first kid and it's like, dude, I can't be out in these streets just—

I gotta get formula and diapers and stuff.

You want that stability. And so that's—

When you're a young single man, you're like, I could live off Lean Cuisines and in a sleeping bag in a car for a while if I had to.

I can make it happen. But once that baby enters the picture, it's like, hold up. And then your wife, she's looking at you like you're crazy because you are. To leverage your own house? No.

But you couldn't pay me enough to do it.

You certainly couldn't pay me enough to do it. This is the Ramsey Show.

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Welcome back to The Ramsey Show here in the Fairwinds Credit Union studio. Sarah is in Vancouver, Canada. Hey Sarah, how can George and I help today?

Hi, hi Jade, um, thank you for taking my call.

Yes, ma'am.

Um, so I am pursuing a midlife career change. Um, I applied to a very competitive program in speech-language pathology, um, last fall, and then I just found out, um, in July that I got accepted. Nice! Congrats! Yeah, yeah, it's exciting. Um, the only thing is I just got onto the Ramsey program in February of this year, and I didn't get really intentional about it until May. But since then, I've started to get cold feet about the amount of debt that I'd be taking on to do this program. So because I was accepted so late, I only had one month Until classes started, and I don't actually live right in Vancouver. It's about an hour and a half commute each way. So I actually deferred to next year, but now I'm questioning whether it's actually the wisest choice for me at this stage of my life.

How much is it going to cost?

The tuition itself is, is actually really reasonable. It's only about $15,000 for the entire 2-year master's program. But the real cost is that I wouldn't be able to work for 2 years. And Vancouver is very expensive.

So—

And you're single?

Yes, I am. Yeah.

Okay.

I'm 46 years old. Yeah.

Well, there was something that caused you to pursue this to begin with, knowing— I mean, you knew all of that when you kind of took this on. What changed? Is it just the Well, yeah.

So prior to listening to the show and getting onto the Ramsey Baby Steps, I didn't have a budget and I had just kind of accepted my debt payments as just a regular part of life. And then since then, I took on a second job in the summer. I paid down $6,000 in debt. And now I'm actually pretty angry when I think about all the debt payments that I've put out over the years that could have gone towards investments instead.

How much do you have left? How much debt do you have left?

I have about $12,000 left to pay off.

Okay. And you've already deferred the program till next year. When next year would it begin?

September.

September. So I'm kind of viewing this as you have until September to pay off the $12,000 plus pay Plus save up, I'm guessing, $7,000. I mean, how much do you have to put down upfront to start this, or this, this speech pathology program?

Um, yeah, so the first, um, term would be, uh, yeah, about $7,000. That's just the tuition, but then there's the cost of living. Um, that's the bigger concern.

And you're not able to do any work?

No. Yeah, it's a really intensive program.

Do they not allow it, or is it just you just sort of going, hey, I'm going to be doing schoolwork 12 hours a day?

Oh yeah. So there's like 9 classes that you take at once. They're not all full credit, but they basically tell you don't expect to have much of a life or work during the program.

What?

What?

I mean, 9 classes, is that 9 hours? Let's— I want to dig more into this to find out if that's really the facts, if it's a suggestion, if it's just kind of a— do you know how sometimes it can be exaggerated? It's like, man, you're not going to have a life. And it's like, okay, well, what does that mean?

I would love to dig deeper on that. Can you work as a server 3 hours a night?

Yes.

Yeah, I'm not sure yet because I haven't started. But yeah, I'm thinking maybe I could do like, I don't know, 10 hours on the weekend or something.

What do you do now for work?

I'm not sure. I work in insurance.

How much do you make?

I make $74,000 gross, but I only net about $46,000 after tax and my pension and union dues come out.

Okay.

And it would likely be similar if you were a speech path, you'd make a little bit more.

Uh, I'd actually make quite a bit more. So that's one of the incentives. So I'd make starting out $100 grand, but it can easily go up to about $140,000. And it also opens a lot of other doors for where I could live.

And you're sure about that, that it's like guaranteed $100,000 as soon as you graduate? Because I'm not seeing that in my research. I'm seeing closer to $85,000 to $90,000.

Okay.

But that's just a guy Googling. All right. I'm just saying, I just don't want you to get starry-eyed and go, man, I'm only making a couple grand more than I was. And there's still Canadian taxes. And so is, is there a path where you could pay off your debt, And cover your expenses for the year in a savings account as a buffer? What would that look like if you live very frugally, you worked your tail off over the next 11 months, could you knock out the $12,000 and then save up another, let's say, I don't know, $40,000, $30,000?

I'm on a really good track to knock out the debt. And I'm trying to pick up a second job. I had one over the summer. I'm trying to pick up another side hustle right now.

What about a roommate?

Yeah.

Are you in a one-bedroom apartment?

I am. Yeah. So I would need to move to do that.

Would you need to move for school anyways, or is it close by?

I would. Yes. Yeah. No, I need to move. It's not really a doable commute.

Because I'm just trying to think through if you could sort of map out what your expenses would be once you're in this program and said, hey, it's going to be $4,000. It's going to take 24 months. All right. There, that gives me my number. And part of it, you might be able to cash flow. Part of it might need to come from some savings, but I would not do this if it's going to require you to go into debt.

And I'd add to that. I want to go back and find out what caused you to choose this specifically. You kind of said you're like, I just did a midlife career change. What stemmed that? And why did we land on speech pathology specifically? Because I want to make sure that if you're doing this, it's because you know that you know you want to do this, especially If you're not even going to get the benefit of the career, of the income boost that George was talking about. Like if you don't, if we do this and we're only seeing a $10,000 bump, do you still care about it to that extent? Like I would do some soul searching on that. That'd be part of my homework for you.

Yeah.

The other part of my homework for you. So we're going to do some soul searching to figure out why, why do we choose this? And do we still, are we still locked in on it? I think the second part of that homework is let's go and research and find out, is it possible for me to work or is that just something that people are saying with quotes around it? Uh, then I'm gonna do some math. I'm gonna actually get out the numbers and do what George is saying and saying, can I save up? Can I save up what I'm gonna need to supplement my income to some extent if I do this program? And let's actually run some numbers out this weekend and, and lock yourself in a room and do that. And then I'm going to start researching a roommate and figuring out, is it worth it when I move? Can I find somebody that we can both share the rent together? And is that going to cause a big enough impact for me to do that? And I think if you get your head around those 4 things, you're going to walk out with some real clarity around this.

Yeah, those are great questions. So my background is in linguistics and speech pathology is Like, it's a natural next step in the progression of that field. But to be honest with you, I'm glad you brought that up. I was debating between either that or becoming a teacher.

Oh, well, that's something else that you can weigh out. Listen, I want you to go back to the drawing board and I want you to weigh all of that out. this weekend. That's part of your soul searching to make sure, hey, is it, is it this or is it a teacher? Can I go somewhere and be a professor of linguistics and, and kill it? And will that make me feel fulfilled? But, um, I think if you do those 4 things—

We just gave you plenty of homework, so we're prepping you for school already.

For sure.

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Well, George, you have a knack of explaining topics that some people think are a little bit top shelf, and you have a knack of bringing them down To the bottom shelf to where all of us can understand it and feel confident about it.

I appreciate that. I do. I attempt to make the boring interesting and the complex simple.

Yeah, you do.

And I've got one for you today that we get a lot of questions on. We throw a lot of verbiage out around on the show, and you see it on social media too. People are always throwing around words like S&P 500 and index and weighted, and you're like, what does this mean? So I wanted to just take a minute to talk about this and give you a snapshot. So the S&P 500, when we say that, what is it? Well, S&P stands for Standard& Poor's. They're a financial data company, and essentially their team is selecting which companies are making it to this 500 list. Think like Forbes 500. So it's essentially the largest 500 US companies, and it's weighted, meaning Apple and Meta and all the Amazon, those are gonna have more weight to them than a smaller company.

Right.

So they're not all equal. When you look at, when you're buying a share of the S&P 500, you're not buying equal shares of all 500 companies.

Right.

So that is an index. And what that means is those 500 companies are the benchmark for the US stock market. So when we talk about the US stock market, we're generally talking about the S&P 500 as a whole. Now, those aren't all the companies. There's thousands of companies on the US stock market, the New York Stock Exchange, for example. And so the average return of the S&P 500, all 500 companies, and that swaps of what companies are making it, as technology changes in healthcare, has been around 10 to 12%. And I actually pulled the numbers for you because people go, where are you getting 10 to 12% from? That's the next big question.

I know, that's the number one question.

I'm only getting 5%. And I'm like, what are you invested in? Oh, well, I'm in a bunch of bonds and target date funds and CDs. I'm like, well, yeah, no wonder you're not getting the returns of the stock market because you're not invested in the stock market. So we're talking about equities here versus bonds. So the average returns from the inception, this is the biggest piece of data we have. The beginning, yeah. 1926 has been 10.5%. And from 1951 to today, 11.5%. 1976 to today, that's 50 years, 12.1%. 2001 to 2026, that's a 25-year gap, 9%. Obviously we had the dot-com bubble in there in 2008. From 2016 to 2026, 15%. And since 2021, the last 5 years, 14.8% return on average. That's pretty incredible.

You can't go wrong.

So when you're talking about beating inflation, which 2, 3, 4, 5, 6%, you want to make sure that you're at least beating that so that your investments are compounding, meaning your money is making more money. That new pile of money also made 10%. The next new pile of money also made 10% because we're reinvesting any dividends that come through those accounts. And so all of that is what causes compound growth to occur. So when we punch in the numbers using our investment calculator, and you can use it here as an example, if you say we're going to invest $150 a month. Now, most people can find that if they try. They go, where are you getting that? I mean, that's really not a lot of money considering we recommend 15% of your income and the average household salary is $80,000. So $150 a month from age 25 to 65.

Okay. So 40 years.

Let's see what 10% would become if you got an average rate of 10% rate of return.

So starting with zero, 40 years to grow, calculate that. Yep. $1.2 million.

Not too shabby. Now you might be saying $1.2 million's not enough. Okay, invest more, work longer. Like there's, there's variables we can control here. And what's really nice is people get scared of the market. I'm more scared of not being invested heavily enough and being in a CD or a high-yield savings making nothing.

Absolutely.

And so since 1928, here's the good news. The S&P 500 has had 72 years where it was up and only 26 years where it was down. So 3 out of 4 years on average, it's gonna be up. You made money.

And then when you think about the years that it was down, my next mind goes to, okay, well, when it was down, how quickly did it recover? Because it's faster than you might think.

Yes. It's not gonna take 5, 6 years. Now, barring some Great Depression or 2008 crisis, it's likely recovering within a couple of years. It's back to record highs.

That's right.

So that's why we always tell people, don't jump off the roller coaster.

Stay locked in.

actually lose money unless you pulled the money out while it was down. If you just left it in, which I hope people do, you're going to be okay. And also, you're not pulling out all of your retirement at once to live. If you have $1 million, you might pull off $50,000 that year.

That's right.

So some good teachings here to let you know that it is wise to invest for the future. It is unwise to stay on the sidelines worrying about the market, worrying about the economy, even in the midst of the chaos of this year. the stock market has hit record highs.

Yeah.

Even with the wars and whatever, the economy and the politics, the US stock market just simply doesn't care. It's always going to come back. And so it will always recover. Don't try and predict the dips and pull out all your funds. And here's the quote, time in the market beats timing the market.

Every time.

That's it. And when we talk about mutual funds versus index funds, they're very similar. It's a giant group of stocks in one fund, And when we say mutual funds, we're generally talking about actively managed mutual funds, which means financial advisors, that there's a team of advisors who are actually choosing manually which companies are going to make it to the list versus just, hey, the top 500, that's what the list is.

Right. Because they're hoping to beat the S&P 500. They're thinking, hey, we think we can beat this 10 or 11%. That's the goal. And if we can move this around the right way, we can make it happen.

So if you can make 13 or 14%, then even then it's worth it to, even if there's a, you know, assets under management fee to get these mutual funds, it can be worth it. And if all of this has sparked your interest in investing, I'm very glad. And if you want more info, it's always worth working with a pro so that you can be confident in the decisions you're making. Now you stay in the driver's seat, but at least you have a professional kind of holding your hand so that you don't screw it up.

Yeah.

There's a lot of zeros on the end here and they do so much more than helping you choose a fund. You want someone in your corner who's walking through tax planning strategy, insurance planning, cash flow planning, debt payoff strategies. All of that matters in your wealth-building journey. So if you want to get connected with a SmartVestor Pro, you can jump on ramseysolutions.com. And I hope that was your nerdy little teaching on S&P 500 for the day.

I thought that was great. Well done. If I had one of those like applause buttons, I would push it, but we don't really do stuff like that anymore.

No.

All right.

I don't get much applause.

Very good, George. All right, let's go to Jason who's in St. Paul, Minnesota. Minnesota. I almost said St. Paul, Minneapolis. That would be wrong.

I don't think that's a place. Minnesota.

My bad, Jason. I almost got it wrong. Good to have you on the show.

Thank you.

How can we help?

I just have a question. I've recently started my own business. It's doing fairly well, but for the last 25 years, I've been a union pipefitter and just Working through, knowing that they got a good retirement. And in the meantime, I had been buying, buying and fixing rental properties. And so now my new business, I'm not putting into my pension. And I, I don't know if I should start my own retirement fund or if I should just work on paying off the mortgages on the rental properties because all the rental properties have mortgages.

How many rental properties total do you have?

I have 4 single-family homes and 1 commercial building.

Okay. And have you put anything in traditional retirement accounts?

Nope. I have nothing in traditional. My wife has, I think, $100,000 or so in a 401.

Wow.

And what is—

But she hasn't been—

What is the total value of the single property, the single families and the commercial? Like, what's the— The equity you have in all of that?

The equity is probably around $1 million maybe. And then my own home is probably another $400,000.

Yeah. I mean, I love diversification. I would love for you to have some money invested. And so that would be something really important to me. I would at least be investing 15% off of your gross every single month. into a 401, a Roth IRA, making that a priority. And then in the meantime, if you do want to start to systematically pay some of these off, maybe you can sell a couple in order to pay a few off, the ones that aren't maybe cash flowing as well. And that way we can start finding a better cash position here and start investing more of that money. How old are you?

Uh, 44. Yeah.

Do you have any consumer debt?

Um, not really. Uh, we don't really run credit cards other than—

No car loans, no student loans, none of that?

Well, my wife has a business. She runs her own business and she has a car loan.

Okay, I would make sure to get rid of it. I mean, that's tied to her name. She signed for it. So I'd get rid of your consumer debt, make sure you guys have an emergency fund, and you have access to a Roth IRA outside of any employer. And if you wanted to set your own up, you can look into something called a solo 401 if it's just you or you and your wife in this business, and you can have way higher contribution limits in that regard. So you can look into that with a financial advisor when you're ready.

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I also love the holidays, but if you're like me, sometimes those two don't mix well because 6 promo codes and a commercial later, it's so easy to convince yourself that you need just one more scented candle or a waffle maker shaped like a Christmas tree and some flannel pajamas.

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Well, if you're sick and tired of working so hard but having nothing to show for it, I've got news for you. That, my friends, is normal, and normal is broke. But the good news is you don't have to live that way. Our EveryDollar budget app helps you find extra money every month, and it builds you a personalized plan to beat debt and build wealth. In just 15 minutes, you'll find thousands in hidden margin, and you'll actually feel like you got a raise. So don't live normal when you can live like no one else. Start EveryDollar for free in the App Store or Google Play today. Let's go to Naya, who's in St. Louis, Missouri. Welcome to the show, Naya. How can we help?

Hi, so I'm nervous, so sorry in advance, but Um, just a little background. I'm 38. I have no savings, no retirement, and I never— it never really was important to me until I started having kids a couple years ago. So now I've been thinking about their future, my future, and I'm really worried about my retirement because I have nothing in retirement. I found you guys about a month and a half ago, around the same time I got my new job.

Good.

So, um, I have a lot of debt also, and listening to you guys, you say don't contribute to your 401 while you're paying off debt. But in my case, since I have nothing in retirement, that scares me a little to not be contributing anything. So my question is, should I be contributing since I'm starting so late? to my 401 while I'm trying to pay down my debt?

I mean, it's a fair question, and you're not the only one that feels that way. So I, I want to start by validating that. You're looking at, you're looking at your life and you're looking at, okay, if I'm retiring in my 60s, do I have enough time? That's the question that you want to answer. And the, the answer is you do have time, but all of that is going to depend on how quickly we get the debt paid off. So how much debt do you have, and how much are you earning from your job at this point?

My debt, so like with my credit cards and loans, that is $62,534.

Okay.

I take home like a little over $2,500 every 2 weeks.

Okay, so around $5,000 a month.

Mm-hmm.

Can you list out those debts for us? Because we're gonna try to help you find a way to pay off— pay them off fastest and like what's— what to tackle first and kind of help you find some breathing room really quickly.

So I have, um, 2 Navy Federal credit cards. One of them is $9,913. The other one is $3,144.

Okay.

Um, I have a personal loan, $959. I have a Capital One card for $5,734. Um, a Credit One card for $1,958 and a Credit One for $2,123. And then my car, I owe $38,700.

Goodness gracious.

Wow, that car. There's a—

What kind of car is this?

It's a, um, hybrid Sorento.

When did you get it?

I got it about a year ago, and I know I shouldn't have, but I, I know I need a car. And—

Well, the good news is we all need a car. We all don't need a $38,000 car when we're making $60 grand.

Facts.

I know.

And how much is it worth today?

Um, I looked it up on Kelley Blue Book because I was like, I need to get rid of it. And it's worth like $31,000 almost with private sale. Okay.

Okay. So we're about $7,000 upside down, which means you've got to come up with $7,000 plus a little bit more to get you another car. That's, if I were in your shoes, Nya, that would be my number one goal. Because if you can knock out this $38,000 debt and knock it down to maybe a $7,000 or $10,000 debt, that is a huge win.

It's like 2/3 of your debt. How much is the payment on that?

It's $723.73.

Plus the hefty insurance. So if you threw all of that towards your debts instead, you'd be debt-free so much faster considering you'd only have like, what, $23K left? Now you're investing by your 40th birthday.

I know.

Because you told me— I'm just reiterating your stated goals. You want to retire with dignity. You don't want to live with debt the rest of your life.

And let's, let's run that back. Let's rewind that back even further because I think a lot of people, including yourself, you kind of get hung up on the paying off the debt first and you want to go ahead and invest. But what happens, Nya, is if you don't pay off this debt and you begin investing, well, now you have to invest even more because you're going to enter into retirement with debt payments. And nothing is worse than having to pull out of your hard-earned retirement money and use that money to pay debt payments. That, that is I can't imagine anything worse. You want to take that money and live your life and enjoy. And so part of entering into retirement is making sure I have as little expenses as possible. That means no debt. That means almost no mortgage. If no mortgage is what I'd love for you. So all of that is super important to be ready for retirement. It's not just a nest egg amount. And so to George's point, if we get rid of this car, you're going to be investing by your 40th birthday. You're making Uh, how much? Uh, $5,000 a month.

Let's pretend—

That's your take-home, right?

Mm-hmm. That's my take-home.

Fantastic.

Let's pretend, let's just run some quick numbers here just to see what that looks like. Let's pretend—

So it's probably more like $80K gross salary.

No, it's $40.50 an hour.

Okay. That's $80 grand. So 15% of that, once you get to Baby Step 4, once you're outta debt, you've got the emergency fund. That's $12,000 a year you'd be investing. $1,000 a month. Are you tracking with me?

Mm-hmm.

So I'm pulling up our investment calculator right now to show you this. You can watch this back on YouTube, but if you start from $0 and you put in $1,000 a month for 25 years, so from your 40th birthday to your 65th birthday, if you just do $1,000, you never get a raise, you just continue that at a return rate of 11%, which if you just heard the last segment, we talked about the S&P 500. You would have $1.5 million.

It's not too late.

So I don't know who told you it's too late. I think that's the, the negative Nancy inside of Nya telling her it's too late. You're 38. What are you doing? Get your act together. But there's a 58 that we'll probably talk to today who's saying it's too late for me. There's a 28-year-old who's going to call in saying it's too late for me. So we all wish we knew this stuff sooner. The best thing you can do is start planting the tree today.

And part of that— and I— we made all of that argument so that you can understand how important it is for you to get rid of this car, because that is really the crux of you being able to start investing at 40, which is what George calculated. If you don't pay off this car, that's adding months, maybe even another year onto this journey, which is another year that you're not investing.

Okay, so I need to get rid of the car first.

Yes, ma'am. So what I would do is— your, is your credit tanked or is it all right?

Um, it's like 600-something, but I already tried to get like a loan for the difference from my bank and they wouldn't give it to me.

If they won't give it to you, what I would do is it would be my number one goal to stack up $7,000 as fast as I can. And then once I get the $7,000, I'm gonna stack up another $3,000. So I'm looking at $10,000. I'm going to sell off this car and then I'm going to take $3,000 and I'm going to buy like the most beater, beater car that I can find. And it's just going to be temporary. And then you're going to have all this money freed up to start tackling this debt. And then you're going to have more and more payments freed up that if you do need to upgrade cars slightly, you can say for 2 months, I'm going to save up this, you know, extra $1,000 a month I've just saved. And I'm going to go to a $5,000 car. Do you see what I'm saying? That's how this works. That's how my husband and I did it. That's how millions of people do it. That's how you get out of the car payment cycle. And Nya, if you can get out of the car payment cycle, you have completely moved from middle class to wealthy.

Car payments is what keep people middle class. It's what keeps people broke because they're sacri— I mean, you're sacrificing almost $1,000 a month in car that you can't afford.

It could have been invested.

That's your investing money.

Are you single?

Um, I am single. I do have a boyfriend, but—

Okay, but there's no like child support or anything coming in for the kids on top of your income?

No, but well, we live together, so he helps with the kids.

Okay. And does he have a vehicle that's reliable?

Um, he does, yes.

Okay, so you can feel, at least for the time being, somewhat confident in saying, you know what, I'm gonna go down to like a $3,000 to $5,000 beater. Uh, there's another car in the household that will help us get around if we need it, if I have to go a super long distance. But the name of the game here is deep sacrifice. If you sacrifice deeply for a short period of time, you will come out winning. I mean, we ran the numbers. This is not us guessing. This is actual mathematical facts. You are going to win if you do what we teach.

If you've listened to this show for 5 minutes, you have heard us say everybody needs a will, but you keep finding reasons to wait because the decisions can be hard. Like who gets your stuff, who takes care of your kids. But here's the problem. Avoiding the questions don't make them go away. It just means the people you love will have to guess at the worst possible time. And that's why Mama Bear Legal Forms is worth the 20 minutes it takes to complete your will online. It's built by real attorneys and tailored to your state, so you know it'll hold up. And the step-by-step process means you don't need a law degree to get this right. In fact, it's the exact process I used with my own family. Mama and Papa Camel recently visited me here at the Ramsey headquarters, and I helped them update their will And even arrange for a notary to meet them in the lobby to knock it out and get it done. So if you don't have a will, don't wait. Go to mamabearlegalforms.com and use promo code Ramsey for 20% off. That's mamabearlegalforms.com, promo code Ramsey for 20% off.

Alrighty. Our question of the day is brought to you by Ask Ramsey. Ask Ramsey is your free AI money tool that provides personalized money answers based on Ramsey principles. So visit ramseysolutions.com/askramsey.

All right. Today's question comes from Gary in West Virginia. I'm curious about your views on using credit cards only at a gas pump. I've stopped using mine everywhere else, but I'm scared of card skimmers at gas pumps. If someone steals my card info at the pump, they can't get my money if I use a credit card, and I could report the fraudulent charge without having my actual money depleted. What are your thoughts on this habit? Oh, Gary, we got thoughts.

Yeah, I got thoughts.

Okay. Well, there's a lot of ways around this if you're truly scared of card skimmers. And number one is just to use your tap to pay. That solves it because it encrypts your card information. Nothing is passed through. They're not going to steal your card. When you use a tap to pay. You could do prepaid gift cards if you wanted to. You can have a separate debit card that you just use for gas and you load it up with your gas budget.

There's so many ways besides a credit card.

I just simply wouldn't continue using the card at the gas pump out of fear of fraudulent transactions. Because you can make that case anywhere. Well, my card could be used fraudulently anywhere. Well, number one, you've got zero liability protection. If your card has Visa or MasterCard on it, that debit card, You're protected. And so make sure you're banking with a quality bank that will actually give you the money back quickly and help you out with this versus make you the villain. And be aware of where you're at, your surroundings, and all of that on top of Apple Pay. I sleep well at night.

Have you ever had your card skimmed at a gas station?

No.

Me neither.

Been pumping gas all my life now.

All my life. You know what, I kind of stopped pumping gas when I got married. Sam usually does that.

As a gentleman should. Yeah, that's a rule in our house.

It had been a long time, and I found myself at a gas station, and I was like, I have to remember how to do this. I haven't done it in a long time.

Come on, gentlemen, step it up, guys.

That's what we're talking about.

Use debit when you do it. Yes, like a real man.

Tap it. Let's go to Michael, who's in Milwaukee, Wisconsin. Hey, Michael, you're on the line.

Hey there. I wanted to run this by you. So I'm 38. I have 3 kids, 13, 12, and 9. We're a single-income family. My wife and I are a single-income family. I currently make about $270,000 a year doing IT. The division of my company that I work for is wrapping down— wrapping up. So in the early part of 2028, I won't have a job anymore. When we're done with that, I'll be in Baby Step number 6. And recently I've been getting the call of the void to, you know, go into full-time ministry work. But it's a bit intimidating and scary to go from the income I have to like, I don't know, $85,000 or $90,000 in ministry work. And I just wanted to get your thoughts, opinions. How should I think about this? And am I missing something?

Interesting. My question is, if this job wasn't going to be winding down for you, would you still be considering moving on?

Sort of, yes. Kind of. By taking this job and seeing them through the wind-down, there's retention bonuses that get me zoomed through some of the baby steps. steps like 4 and 5 to 6. So that kind of put me in a position to where this is feasible, if that makes sense.

Yes. I mean, when you say it's zooming you through 4 and 5, that's kind of an interesting statement because 4 and 5 are ongoing. It's not kind of like, uh, I'm done with Baby Step 4.

I guess I was thinking more about, I guess I was maybe not 4, but maybe, uh, maybe Baby Step 5, like my kids' college will be all set.

It'll be all set. What about the house? How far will you be into your mortgage?

Um, well, I have— our mortgage right now is about $175,000, and we'll have probably $70,000 or $80,000 in cash by the end of the— I mean, not counting our emergency fund, but like we'll have about $70,000 to $80,000 in cash. So we could try to put that towards the mortgage or just, you know, save it, those kinds of things. Okay.

So when you talk about ministry, what are we talking here? What's the end goal? What's your title role?

I'd be a pastor at a church. It's our local church.

Lead pastor?

I'd be a pastor there. No, I'd be just a staff pastor.

And they make $90,000 a year?

This role would. Wow.

So you know that for a fact? It's not like a—

Yeah.

Okay. I'm just shocked. I don't think many pastors are making that kind of money, let alone staff pastor versus lead.

I mean, it sounds like it's a larger ministry. Listen, I'm never going to— if you tell me what your passion in life is and you want to go after it, I'm not going to stop you. Obviously, I'm going to look at the financials and help you find the smartest way to do it. And I think only you know if you want to become a pastor or not, going from IT to making that jump. That's— it feels like a completely different way of life. And I mean, I can't knock you. I changed careers too. So if that sounds like what you want to do, cool. Let's see if the numbers work. I mean, when you make this change, you said you'll have an additional $80,000 saved. That's on top of your emergency fund. So you could essentially take that, knock the mortgage down to $90,000.

Yeah.

Okay. And then now you're making $90,000 single income and you've got a $90,000 mortgage and we're chunking away at that.

True. I think the big things I worry about is like, so a lot of our— I mean, we didn't really, as we made more money through the years, we didn't do the lifestyle creep thing. And we've been doing Ramsey, uh, I mean, since it came in a big box in the mail. So we've been doing Ramsey for a very long time. But ultimately, like what that's led to is money's just been pretty, uh, free-flowing in terms of we don't, you know, we, we don't spend extravagantly. If we want to go on a vacation, we just get up and go.

Yeah.

And so it's almost a little, and you know what, We have about $550,000 in retirement. I have like no concept or bearing of if that's enough or not. I just know what I've been doing. Uh, 38.

Oh.

And so, you know, part of me is also like, my kids are teenagers, you know, am I going to be giving up a lot of freedom? Am I going to be giving up a lot of experiences with them?

I mean, true enough, you're not going to have the margin you used to have.

I mean, vacations will look different.

It'll look different. It's going to take you longer to save up to do the vacations that you once did. So there is a reality to I, I think I heard you say, were you making $270,000?

Yes.

Okay. Yeah. There's a huge reality to going from $270,000 to $90,000, and you are going to feel it. There's no ifs, ands, or buts about it. If I were you, one of the exercises I would do is I would get together with my wife this weekend and I would do a mock budget. And then to go to the next extent, I wouldn't just do the mock budget. I would challenge yourselves to live on it next month and say, okay, November, Let's see what it feels like to live on $90,000. And if you're like, oh my gosh, I don't like it, you might make a different choice. And maybe you can kind of be, you know, maybe there's an option where you can be part-time on staff and you can do some IT work. So I don't necessarily, and I don't want to try to tell you what to do career-wise, but I would say don't paint yourself into a corner just yet. There may be an option where you can do a little of both. Maybe you can volunteer time. Maybe you can work part-time as a pastor. I just wonder if there's more to it than that.

But ultimately that's between you and your wife. Numbers-wise—

If you go, hey, we can live off 5 to 6 grand take-home pay instead of 15, then sure, green light. If this is what you want to do and it lights you up, you guys have done a great job financially by following the principles. And one of the benefits and byproducts of that is you have options. And so you've done a wonderful job. It's just a question mark of, is your whole family okay to change their lifestyle as well?

Yeah. What's your wife say?

She's all for it. And the kids are a little bit less, I think. Of course, at their age, they don't—

Sure. They'll be okay.

They're seeing like, well, now flights become road trips. I don't want to do that.

That's right. Well, I mean, to your point, obviously money's not everything. Money doesn't equate to happiness, especially career happiness, but it does buy you options. And those are the things that you're used to. You're just used to the niceties that come with having that extra margin. And it will be, I mean, it'll be a change. I won't lie to you.

But I don't think it's going to be just suffering for the next 20 years either. So I think we can have a clear picture if we just all live on that budget and get some clarity on, okay, 2028, is that role actually going to be available when I leave that IT job? Can I do IT consulting on the side? Can this be part-time and I keep the IT job? Those are all the things I'd explore before making a final decision.

But this is part of the live like no one else so later you can live like no one else. And I think a lot of times we say that statement and we view it as, I'm taking the vacation, I'm putting the pool in, I'm buying the Versace, like whatever the thing is. But in this case for him, it's the opportunity to pursue a career path that pays less money now.

Taking a 200% pay cut. Yes.

And he's earned the right to do that financially on paper. And so to that I say, congratulations.

Good on you, man.

Welcome back to The Ramsey Show here in the Fairwinds Credit Union studio. Hey guys, we love hearing from you. Um, your questions are exactly what make The Ramsey Show happen. There is no show without you, so we're really, really grateful, and we want you to keep calling in. I know you can use Ask Ramsey, but we want to give you advice too. So call in, give us a call. The number is 888-825-5225. Um, or you can submit your question using the link that's in the description. We'll drop that down there. So make sure you give us a call. I personally would love to talk to you. I don't know about George here.

I can't. I'm not going to plead the Fifth.

Let's see if Jonathan will talk to us. Jonathan's in Hartford, Connecticut. Hey, Jonathan, you're on the line.

Hey, how are you guys?

Doing all right. How can we help?

So I know that you guys are big supporters of Roth contributions, and so for the past year and a half, I've been doing entirely Roth. Recently, I landed a job that places me in a higher tax bracket. So I'm wondering if Roth is still the move or if it would be beneficial for me to switch over to traditional.

I mean, I'm going to tell you all day, Roth is always the move because I'm thinking about long-term planning. I mean, if you think about when you get down the road to retirement age, if you have Roth, you're not going to have those required minimum distributions. So if you have money that you don't need to touch, it can continue to grow. You don't have to pull it out, which is fabulous. Then when you think about your heirs, money that you might leave to the next generation, they're going to be able to pull out that money and they're not paying taxes on it because you've already paid the tax bill, which is fabulous, and it's growing tax-free. So that's kind of where I lie with it. I know that for you, you're thinking, well, gosh, maybe if I do traditional, I can lower my, taxable income for the year. But I think the long— the better-term play for you is, is Roth.

Gotcha.

How much are you making?

Well, that's still— well, that— I'm making around gross $18,000 a month.

Goodness gracious. What are you doing?

I'm an aerospace technician, so I build jet engines.

How old are you?

19.

Whoa, hold the phone.

Look at this.

How did you do this? Are you just a prodigy?

He's like Sheldon.

No, no, I went to trade school for high school, so I was lucky enough to get into a program that had an aviation maintenance class. So I did that for about 5 years. I got my A&P certification, and everything has just kind of fallen into place perfectly.

Way to go, man.

Slow clap.

I mean, I would say luck is like 7% of this. You have worked your tail off. to get here. They don't just hand 19-year-olds $18K a month for fun. You really know what you're doing.

Thank you.

Congrats.

So let's talk through this. So you're saying, should I switch over to Roth because my effective tax rate right now is crazy high and later on it will likely be lower? Is that sort of the bet you're making?

Right, because I was thinking about the possibility of early retirement Like early 50s. And so my biggest concern right now is paying more in taxes right now than I would be paying once I retire. Yeah.

And there are a lot of variables and we, again, I wish we had a crystal ball and we knew exactly what tax rates would do and what age you're gonna retire and how much income you're gonna have and what you're gonna live off of. There are a lot of variables there. I don't think you're gonna shoot yourself in the foot if you go traditional right now with your high income, but there's also an assumption that your income's gonna go down. And what if it doesn't? What if it stays high and now we're trying to figure out when to do these Roth conversions later in life, which is going to add a different stressor? Good problem to have, let's be honest. But still, to Jade's point, there is something nice about just going, all right, it's tax-free. I don't have to worry about conversions. If something were to happen, my heirs will inherit this and not have to pay taxes on this. And so there's a nice piece of the puzzle where you just go all Roth and don't think about it, even though you could lower your taxable income slightly. It might save you a couple grand.

I mean, have you done the math on your effective tax rate?

I have not.

Okay. I would figure that out first. I mean, you might find that it's kind of a wash when you look at the future variables. Right now you're making over $200 grand a year, which is amazing, but it might be right on the bubble of what it's going to be in the future with variable tax rates. So I would, if you want to connect with a SmartVestor Pro and crunch some real numbers on this, they can help with all the math on what could be and what is currently and how much you'd actually save in taxes. But I wouldn't worry about it right now at 19. I would see where your income goes, and if it's like, I'm going to be making half a million dollars for the next 20 years, then I would consider switching over to traditional.

And then there's part of it too, I mean, you're making so much that you're kind of right up against it. But in the calendar year, you would be able to max out a full Roth 401. You'd be able to max out a Roth IRA, and you'd still have some money left over that if you wanted to put some money in a traditional IRA, you could do that too. And it's just another place that you could go because you've got the money in the year that's going to cover all of those accounts because you're doing so well.

Do you have any debt?

I don't have any debt.

Way to go. And I'm guessing you have some money saved.

Yeah, I've got about $60,000 right now.

Fantastic. Yeah, where's all the money going right now? As a young 19-year-old, how are you spending $18,000 a month?

I don't spend any of it. I pretty much invest everything I make aside from rent and groceries. So I'm doing a Roth 401 right now that is entirely maxed out. My Roth IRA is maxed out. And I'm left with about $7,500 a month that I put into a personal brokerage. Yeah.

Very good.

Fantastic. Love that for you. Listen, I don't think it gets any better than that. I don't know. I have no notes for us.

You can just stay living like this. No debt. Keep the income up. I mean, you'll have the ability to be work optional probably by your late 20s at this point.

Yeah. Which is why I like the brokerage account for you too, because you'll have some money you can get to if you need it. But I think this guy is so smart. He's going to go from one thing to another.

He'll be work optional, but he'll definitely be controlling And one note for him, because he's making such incredible income, his income is too high to contribute to a Roth IRA. Yeah. So you'll need to do something called a backdoor Roth IRA. And so for everyone listening out there, uh, it looks like currently it's about $153,000 to $168,000 for singles. Uh, it phases out the ability to do that. So you, what you do is you contribute to a traditional IRA. So you just fund it with $7,500. Don't invest it yet. Then you convert it once the money settles over to Roth IRA. Then you can invest the money. And there's a form you just fill out at tax time. I think it's Form 8606. Don't quote me on that, Jade.

I think you're correct. I will quote you.

You just do that saying it's a non-deductible contribution to that IRA.

Love that.

That's it. But it's that simple. And this man is gonna be, I mean, we'll all be working for him one day.

I know. Our whole universe was in a hot, dense state. I won't keep going, but I'm just saying that cat was smart. All right.

That's right.

Let's go to our Ramsey Baby Steps community. for a question. Let's see. Jamie from the Ramsey Baby Steps community says, what's the easiest expense you've ever cut from your budget, George? Wow.

Well, if I cut it, it was there for a reason.

I don't think it's ever easy to cut. No one likes to trim the budget.

Probably it was an expense of my wife's. Probably something I was like, hey.

For sure.

I'm thinking about cutting this. I mean, probably a gym membership for me because I wasn't using it. So that one was a super easy one. I was like, what are we doing here?

Yeah.

It was an aspirational membership. You have some of those in your life? Like I'll become this kind of person if I just pay for this membership.

I do. I recently started taking piano lessons and I'm classical piano.

Wow.

And I've taken a couple weeks off. I don't know if I'll go back.

You're not itching to get to those old ivories?

I mean, I like it, but it's like every time I walk by my piano, I'm like, it's reminding me that I haven't practiced.

Oh, so you're in the guilt phase of the journey.

Yes, and then I'm thinking it's on my budget. I could just remove it.

Just cut it, and that's, uh, maybe a nail salon visit.

Who knows?

I know, I do my own nails now.

Maybe you can switch over. Let someone else do it.

That's true.

You work your butt off for your money, but your money's never going to return the favor if all you do is hope for the best. If you're ready to learn how to make your money work for you, check out the SmartVestor program. SmartVestor can help you find advisors who specialize in retirement planning, charitable giving, advanced investing strategies, and more.

Whatever your goals, your pro will take the time to understand your situation and help you achieve them. SmartVestor is a trusted advisor network. to explain your options so you never have to invest in anything you don't understand.

Head to ramseysolutions.com/smartvester to get connected. Ramsey Solutions is a paid, non-client promoter of participating pros.

Learn more at ramseysolutions.com/smartvester. Alrighty, George, you know, it's about that time. We've got a cruise vacation coming up, the Live Like No One Else.

I'm already packing my bags. Every day I pack one more thing. That way I'm not stressed when the cruise comes.

So you're packing one thing a day until March 14th through 21st, 2027.

I'm a heavy packer.

Wow.

A lot of toiletries.

It's called a sinking fund for packing. But if you've worked hard to get out of debt, the question then becomes, what do I do with the freedom I've created? Well, George is taking his freedom and he's going on the Live Like No One Else cruise along with myself. Rachel Cruz, Dr. John Delony, Dave Ramsey himself, and hopefully you. We're gonna unpack what comes next on the Live Like No One Else Cruise, which is a week-long getaway where you're gonna have an incredible vacation. You're gonna hear brand new teachings again from the entire team. We're gonna be talking about setting new goals after beating debt. We'll talk about ways to continue building wealth. We'll talk about creating a legacy that lasts well beyond you. Plus, you'll get to experience live show tapings. We'll do the world's largest this debt-free scream, and you'll have time with all the Ramsey personalities if that's your bag.

That's right. We'll hang. We'll do, we also do a bunch of fun Q&As and some pop-up experiences. I think me and you are, I think we got roped into karaoke.

What? See, these are the things they don't tell me. No one tells Jay anything. I don't know. Listen, I'll be there.

We gotta figure out our duet.

I get knocked down.

There we go.

I always go for Chumbawamba. That's the best one.

Give me something that isn't technically singing.

All right.

Then I can nail it.

Yeah. But you know, More Than Words is, that's our thing.

That is. Oh, those harmonies.

Well, anyway, if you're on Baby Step 4 or beyond, join us March 14th through 21st, 2027. Book your cabin at ramseysolutions.com/events. We're almost sold out, so get on there and, and get yours locked down. All right, let's go to Chad, who's in Houston, Texas. Hey, Chad, uh, how can we help?

How are you doing?

Doing good.

Hey, I just have a question. I'm, I'm in my 40s, approaching 50s. I just decided to get serious on this thing. Baby step 1 is done. Baby step 2 is in the process. The last 3 months we've knocked out $20,000 of our consumer debt. But, um, I think I can skip, uh, ahead and like close out baby step 4, but I just don't know if that's what I should do because—

What do you mean close it out?

Like be done with all my debt and—

Oh, baby step 2. I heard you say 4.

Yeah, sorry, 2. I meant 2, not 4.

Got it. Okay, so you're saying you wanna— you would just wanna be done with the debt payoff journey?

Right.

What's left to go?

Well, I have the high potential to— oh no, to go is roughly 50 minus, um, the land and the house.

Okay, what's the land?

It's 150. The 50 is $20,000 of a personal loan and $23,000 on a car, and the rest is small credit cards.

Okay.

And what's your game plan currently?

Well, I've been doing the debt snowball. Um, I currently have like $8,000 left on the credit cards, and I'm eating them up quickly.

Good.

I want to pay off the car, personal loan, What's your household income? $130,000 to $150,000. It varies. Okay.

Is that just you?

Me and my wife. Okay.

You both are working full-time?

Yes.

All right. So based on this, if you just continued on, how long would it take you to become completely debt-free, consumer?

Consumer debt, if I don't add the land into the picture, Uh, 28.

So it's going to take you over a year?

Yeah.

Okay.

I've been aggressive, but I can get even more aggressive. I could be done in another 3 months if I just really got aggressive.

Yeah, where's that money coming from?

I own land. I run cattle.

Okay, how much land do you own?

I have 25 acres.

Okay, so you're saying you would sell off some of it?

Um, what I had in my mind is we've been building a house on the property that we already have a home on, but selling everything— cattle, all the land, the house, home, everything— and get aggressive in that.

But you're not doing that just to pay off the debt?

Yeah, because that would bring far more than the debt you have.

No, I want to, um, possibly buy— well, not possibly— buy something smaller and really attack my retirement because I've only got like $30K between our 2 retirements right now.

How old are you guys?

I'm in my late 40s. My wife is in her early 40s.

Okay, so I'll call you 45 combined. Um, tell us, okay, so the land, how much is the 25 acres of land worth?

Uh, roughly right now, $300,000.

And then how much is your mortgage? You said you have a home.

On the property? What's that? I owe $124,000 on the mortgage and the tax roll is at $175,000. They, they have my other home that I'm building, been building cash money, um, on the tax roll at $240,000.

And what about the land itself that you owe money on?

The land I owe $98,000 on and it's at like $300,000.

So it sounds like I'm trying to separate the debt journey with this dream or letting go of the dream. It sounds like you just want out from this land and cattle and the whole— the house is just too much. You want to simplify your life.

We want to simplify. I mean, I've always raised cows and all that, but my end goal is take care of my family.

So if you were debt-free, would you still do this is what I'm trying to get at.

Would I still run cattle?

Would you, would you sell off the land and the house and all that if you were debt-free today?

Um, no, not if I was debt-free.

Okay, so let's see if we can find a way to preserve the, the life that you enjoy doing, but also get you debt-free and make sure that you're ready for retirement. Because I think that we can do this without selling off everything that you own. Which, by the way, how much is the cattle worth?

I probably got $80,000 in cattle.

Okay, so I'm looking at this. You, you said you have $30,000 in, in retirement. That's all you have. Uh, I, I just want to run back the numbers and make sure there's nothing else. $20,000 personal loans, $23,000 in a car, and $8,000 on credit cards. That's the only consumer debt?

That's it.

Okay, and you're making a good living, so why can't we attack this debt? And then from there on, why can't we go ahead and start doing our Baby Step 4? We're investing 15% of your income. You have a great income. You guys are making $150,000. If we run those numbers, I know you're going to have enough to retire with plenty of dignity. And then in the meantime, we're just walking the baby steps like anybody else would. We're going to be intentional about throwing extra on the mortgage and extra about throwing extra on the land because combined, it's not unreasonable. $124,000 that you owe on the mortgage and $98,000 that you owe on this land. Is there any other debt?

No, that's it. I own my car outright, my truck. I own all my farm equipment outright, all of that. This is it.

I mean, you can't go out and buy something cheaper than that.

No, I need— like, I've been building the house out of cash. I need about $130,000 more to finish the house, so I've just been doing it slowly.

Yeah.

So I guess you could—

And you've already got a place to live, right? There's no rush on that.

No.

Yeah, I don't think there's anything on fire. I just, I think you just need a methodical plan of what we're going to do next, what comes after that, what comes after that. And I think that if you're willing to take each baby step, there's no reason that you have to sell all the cattle, sell all the land, sell all the this and that. If you want to, that's fine.

I'd rather sell—

you don't need to.

I would sell the car if you're looking to make a sacrifice somewhere to speed this up. What's that car worth?

The car is only worth about $20,000. We have a large family. We've started over, so we have 3 grown kids, but we have 3 small kids, and we also are foster parents, so we have 6 kids in the home.

6 kids. So when you do your EveryDollar— when you do your EveryDollar budget, how much margin do you see left?

Um, right now I'm at about $2,000 in margin. Okay.

Because I'm looking at your $50,000. I mean, if, if you put $4,000 a month towards the debts, that's $48,000 in a year.

Yeah.

And you said you'd be debt-free by about a year from now. So how is the math working on that? Is $2,000 going to the debts and you're saying you have an extra $2,000 to throw at it?

No, that's the $2,000 that I'm throwing at the debts right now. Okay.

Because that's going to take a couple of years at that point. So that's where I would do the math and go, listen, if I can't do this in under 2 years or so, then something's gotta give. And that's where I'd start making sacrifices. But the home and the land, all of that would be the last thing I give up as a last ditch effort.

Yeah.

If you're up against a wall, which you're not.

Maybe we sell off some of the cattle first and, and use that to pay off this debt.

John Deloney might be willing to buy some. Listen guys, I've heard just about every excuse for why folks think they can't get ahead with money. So let's go ahead and settle this right now. You get the final say. on what happens with your money. That's why you have to start telling your money where to go so you can stop wondering where it went. So if you're gonna start winning with money, you have to get on a budget. And the easiest way to get started and stick to it is with the EveryDollar budget app. It'll help you make a plan for every single dollar coming in and every single dollar going out every single month.

And guess what? It's free.

It's free.

So, no excuses.

Download EveryDollar in the App Store or Google Play today.

Well, if you're new to the show, you may not know that we have a studio here on campus We have 2 giant buildings and we have several studios here that we broadcast, uh, the show from. And inside the lobby, you can actually come and watch the show right on the glass. We have folks here every day that we're filming, and we actually have a debt-free stage that people come so that they can stand on the stage and actually do their debt-free scream and tell their story. And that's one of my most favorite things that we do around here. And so today, We have Aaron and Sarah all the way from Arizona to do their debt-free scream. Guys, welcome. I'm so glad you're here.

Great. Thank you.

Thanks for having us.

Yeah.

Good to be here.

Absolutely. And I hear that you guys are kind of special because not only are you here to do your debt-free scream, but you used SmartDollar, which is one of our favorite products to, like, accomplish all of this.

So your employer took that on as a financial wellness benefit to hand over to the employees, and you guys jumped into that? Is that what happened?

Yep, yep.

So I work for U-Haul, and a couple years ago, I got an email and they said, hey, we offer these services. Go ahead and take it out.

And I said, okay, sure.

I've never heard of Dave Ramsey, really. I mean, I've heard the name, but I didn't really know what he talked about. This was really your first introduction to the Ramsey Plan, the videos, the budget, all of that.

Yeah.

It was baked in and got you guys fired up? Yep, yep.

Wow.

We got all signed up and we started figuring out how to use every dollar as the budget and watching all the videos and all the informationals on SmartDollar.

And here we are. Bada bing, bada boom.

Yeah. And so, how much debt are we talking about? How much did you pay off?

We paid off—

$101,000.

Mm-hmm.

In 5 years. In 5 years? Less than that. Wow.

Incredible.

Well, I won't get into your income since you've told us that you're basically part of the team here, right?

All the U-Haul coworkers are watching. I was like, who are all these people in the lobby? It's the SmartDollar team. They're so excited.

Oh, that's so exciting.

That's fantastic. So, what kind of debt was the $101,000? Mostly student loans and car loans.

Ah. Yep. And one AC loan.

An AC loan? Wow, I love that.

Yep.

The old HVAC will get you. It will, especially in Arizona.

So, you're at work, you get the SmartDollar benefit, and you're like ready to go. I mean, gosh, Sarah, you're kind of like, what are you talking about? What is this?

How did he present this to you?

He came home from work one day and was just like, hey, they have this cool new program, this cool thing. We should check it out. We both had actually just finished school. And so we weren't making a lot. We were in our new entry jobs. And so it was kind of a perfect opportunity for us to be like, OK, let's get our lives on the straight, right path, get it all together. So it actually just Ended up working really well together. Wow.

Yeah.

And so—

It's good timing.

Yeah, it was good timing. And so, what did that look like for you guys? Was this working extra hours? What was— what did that process look like?

Yeah.

I mean, Sarah was the biggest proponent of it. It wasn't hard to get her sold on it. I basically made everything to keep us afloat, and she worked part-time, and then she even picked up some extra hobbies and some side gigs. To really help push us to the point where we were hitting all of our goals ahead of time and to be able to pay off. And I'll let you talk a little bit about that. Yeah, tell us about that. Because everyone goes, OK, what side hustles are— I'm not going to go drive Uber. What kind of stuff were you doing? And what were you getting paid for these?

It was actually a tender mercy blessing that I kind of fell into. At our church, I performed a special musical number. And one of the members of the congregation came up and like, hey, my daughter wants to learn violin. Will you teach her?

Wow.

And then it's kind of turned into just kind of a word-of-mouth thing. And so I built kind of a little studio off to the side. And then I work part-time as a behavior therapist. And yeah, and then we just had some survey opportunities that we did too. And so just kind of random eclectic things around all over the place that kind of just gave us that extra push to finish it out. Yeah, I love that. You're using the skills that you have. You're accessing people who are around you. That's, that's how it happens. Violin lessons.

That's the real deal. That's fantastic. So this was over a 5-year journey. Now that's longer than the traditional, you know, 18 to 24 months. How did you guys maintain the momentum along the journey? I mean, 5 years of sacrifice is a long time. Yeah, it was definitely a grind. Um, you know, little things always come up and some big things. Uh, we had most of our kids during that time. Wow. And we cash flowed all of them. We didn't have to go into any debt for that. But mostly, it was just staying focused. We had each other.

We had our friends, and family, and our community that really helped us. When we had to go down the budget and decide what to cut, you know, it wasn't too hard because we had other people who really supported us.

We started doing babysitting swaps with other couples.

Oh, wow.

Genius. So, no one had to pay for babysitters.

Yeah, exactly.

You guys take it on one night, they take it on another night.

Yep.

Life hack. Having that community, that's a big part of this. It is a huge—

Yep.

So, you had supporters. It wasn't just you guys kind of in your lonely room making this happen. You had cheerleaders.

Yeah.

Were there any naysayers, people who just didn't get it? I mean, we got a couple questions here and there on like, oh, you know. But for the most part, everyone was pretty supportive, which was really good on our end.

That's great.

What was the hardest part of that 5-year journey? Do you remember a moment or a thing you had to sacrifice or cut?

Yeah.

That still sticks with you? Left a scar? Well, the biggest moment is the AC loan. It was the smallest loan that we had taken out, but it was the one that made us really realize, like, this is not how we want to live. Like, we already had 2 car payments.

We were trying to pay off student loan, and then our AC goes out.

And in Arizona, that's a necessity.

Yeah.

This is when it always happens. And we're like, we can't afford this. And what do we do here? And it was, it was really scary.

And so, we were like, you know what? We need to get really intentional with this.

Let's start. Let's put the hard work in.

And let's make a new life of something that we would actually be proud about. And it's come down to this. Yeah.

That's really cool. So, the timing of— you had the benefit there that you could kind of go through FPU, you know, use that benefit. But the AC is what really triggered you into like, we need to like pop into action and actually do this.

Like, we're grown adults and we can't cover this emergency. Like, what's going on?

Exactly.

We can do better.

Yeah. And so that really aligned our gazelle intensity.

So before, we were kind of following the steps, but then we were like, we have to step it up and we need to make this happen.

I love that. Having that clear why is so important. So what next? What's on the docket for you guys?

Next is the house.

I think we want to get our forever home. So start saving up for a down payment on that and then really be able to invest and be prepared in the future. We both did some missionary work when we were younger, and we'd like to continue to do that in the future. And it's just things like that that help keep us focused.

I love that. Well, you guys are rock stars. Tell us about your kids. You said you had babies during this time? Yeah, so when we started the process, our oldest was just a couple months old. She's 6 now. And then, we have a 5-year-old and a 3-year-old. Wow. Well, they're never gonna— experience the stress of debt. They have—

They probably won't remember the sacrifice, but they will reap the benefits of your sacrifice for the rest of their lives. That's the whole life. For sure.

Yeah.

And it's really nice that we did it while they were young.

Yes.

Because they don't need a whole lot to be entertained at this point. Most of the time, they played more with the box that the toy came in than the actual toy. And yeah, it's really nice to be able to set that foundation while they're this young so that we can have more fun in the future when they're older.

Absolutely. Well, well done. You guys are absolute rock stars. I mean, you're the epitome of what it looks like to walk the steps and do it the right way. And so, you've earned this moment to count it down. And let's do that. We've got Aaron and Sarah from Arizona. They paid off $101,000 in 5 years. Count it down. Let's hear your debt-free scream.

3, 3, 2, 1. We're debt-free!

Yeah! That's what I'm talking about! I mean, that's what I'm talking about.

I just, I can't think of an HR benefit that leads to that kind of life change. That's incredible.

Yes, it's like, yeah, you got your PTO and this and that, but this is life-changing.

Well, what's interesting is that, you know, it's one of those things where you could never make an account, you can never log in, you can never watch the videos, you can never make a budget, and that's fine.

Yeah.

And people will do that. But if you just decide, you know what, I'm actually gonna engage with this thing. I'm actually gonna see what's inside of this.

Yeah.

And you watch those videos, you do the budget. It's hard to not experience some behavior change. The gears start clicking. You go, how soon could we become debt-free?

Exactly.

Is this actually possible? Well, they told us the average is 24 months. I mean, it took us a little bit longer, but—

That's okay. It's worth it.

5 years is gonna pass. So you decide, you wanna be debt-free paying off 6 figures? Or do you want to be just right where you are, still struggling to pay the bills?

And that's the thing. He felt— they felt the discomfort. We don't want to live like this. And they didn't ignore it. They said, there's something that we can do about this. We can actually change our life. And I think that's the thing. If you're feeling paycheck to paycheck, if you're feeling up against it, the stress and burden of debt, you don't have to continue that way. You can change your life just like Sarah and Aaron did.

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All right, your Ramsey Show scripture and quote of the day. Psalm 100, verse 4: Enter his gates with thanksgiving and his courts with praise. Give thanks to him and praise his name. Well, Ieni said, be thankful for what you have. Your life is someone else's fairy tale. I know, that's right. I like that. All right, let's go to Lauren, who's in Lubbock, Texas. Hey, Lauren. Uh, you're on the line. Welcome to the show.

Hi, what's up? Hi, it's so good to talk to you guys. Um, so my husband and I are wondering how we can encourage his grandparents to contribute to our daughter's 529 instead of a Trump account.

Oh, what's the conversation been like with them?

Well, it started with You know, you guys should get a Trump account. And we're like, well, we will. We'll— we've listened to George say take the free money. So we're, we're doing that. We're going to take the free money from the Trump account. And we have a 529 already set up that we're contributing to. Um, the agreement was we would all, you know, discuss this separately, even though my husband and I had already done that. And so today I get a text from his grandmother saying, can we have your daughter's social? Oh my God.

Oh boy.

And I said— she said, we want to open an account for her. I said, what type of account? And the reply was, it's the Trump account. No need to punish the baby for us, like for her not having it. She said, we don't want— don't want to hear from friends when she's in high school that they have an account and then she comes home and asks why she doesn't, which is— that's the worst.

It's not a LaBooboo, it's an investment account. I don't think it's— people are going to be, you know, jealous here.

I think that's the weird thing for me. The, the statements that are surrounding this are what's making it very strange.

But can't you just say, hey, I appreciate that, I'll open the account on my own and send you a link to contribute? Yeah, it's that simple.

Yeah. And well, I guess Is— should we be, um, trying to get them to contribute more to the 529 than to the Trump account though? Or if they really are set on it being the Trump account, should we just let them?

I mean, it's their generosity, so they get to call the shots on how they want to give. And I'm— look, these are 2 good things, right? We just have separate goals here. The 529 plan is for their education, which is obviously coming up sooner, right? That's 18 to 22 versus the Trump account is an investment account that we're considering retirement. Now, the compound growth from however old your kids are to 60+ is incredible. So there are benefits there, but you also have a much sooner goal of we got to pay for college, and that's going to be— could be hundreds of thousands of dollars, right?

Right. And I guess she said that she should have close to $500,000 whenever she graduated. Like through the Trump account. I don't know if that's her considering—

I don't think it'll be at graduation.

It's—

the stat was that at retirement, if you take the free $1,000 and you just let it ride all the way to 60, it could be half a million dollars.

Gotcha.

So that may be what they were talking about. So they might have saw a stat and, you know, personally I do it all. I'm funding the 529 plan. Nobody in my family wants— my parents give to that. Those are the only people that are willing to. I tried to pull out the QR code at the kid's birthday party. Nobody was excited about that. They wanted to give the toys. That's just how people are. So I would take it and say, that's very generous. We'll open the Trump account. You can donate there. And maybe you can explain, hey, listen, the goal of education is coming up a whole lot sooner. Because how old are your kids?

She's 9 months.

9 months. Bless it. This baby has some incredible parents and grandparents. She's already set up for retirement. She's set up for college. So I would just kind of map it out and go, okay, we might have to fund college. I mean, are they giving a whole lot to this? How much are they donating?

I would imagine so. Yeah.

Are they going to max out a Trump account every year for your kids?

It wouldn't surprise me.

So they got some money. We're talking $5,000 per child is the max contribution currently.

Yeah. They could do that.

I mean, let 'em.

It's not a horrible thing. I mean, I understand that you have a preference and you're thinking 529 first, but the truth is this baby is young enough. You have enough time to make sure there's plenty of money in a 529 if the kid even goes to college.

Mm-hmm.

So I would let, if somebody is being generous, generous, don't block the blessing. Even though if they're saying some weird side comments on the side, mm-hmm, just say thank you and move on. And I, I really don't think there's— I think it's a good problem to have.

Yes, that's where I'm kind of like, if that's our biggest argument as a family, we're pretty functional.

Yeah, we're doing all right.

So it's a good reminder when we talk about the Trump account, it's a new investment account they launched on Independence Day of this year. And if your child was born 2025, '26, '27, or '28, you get free $1,000 seed money from the government, which is pretty cool.

Yeah.

And then Michael Dell of Dell Computers, him and his wife have donated $250 to any kid who didn't get the $1,000 if they live in certain income zip codes. My daughter— my son actually got it. My daughter, she got the $250.

Wow.

And I got the $1,000 for my son. And so compound growth from, you know, age 1 or age 3 to age 60 is pretty mind-blowing, even if you don't contribute another dime. So it's a pretty cool, you know, it's a little bit gimmicky from the government, but I'll take it.

It's free money.

When you're letting— you don't need earned income like you do with a custodial Roth IRA.

That's right.

So I'm all for it. I've maxed my kids out for the year because I want to see them retire multimillionaires and have as much impact as they can.

Yep.

And with that, they will. Let's go to Amber, who's in Atlanta, Georgia. Hey Amber, how can George and I help out?

Hi, uh, how are you guys today?

We're doing good. How about you?

Good. Um, I'm calling because my husband and I, we bought our home about 2 years ago and our mortgage was about 25% of our take-home pay. But over the last 2 years, each year when the property tax assessments have come in, they have risen our mortgage and escrow payment by about now a total of $1,000 a month. So it's—

Wow.

Getting— cutting into the margins. And I was just wondering, like, do we need to move or are there other ways to go about fixing this problem, I guess?

So it's gone up $1,000. So now what percentage of your take-home pay is it?

About 30. Okay.

Okay. Nothing on fire, but it is frustrating. And property taxes and insurance will always go up over time. Do you know why it went up so significantly?

Uh, I think they, they've looked at other houses around ours, uh, that have sold for a lot more than our house would sell for. Our house is not renovated. We haven't put any money into it. So I know if we were to sell it, We would not get even close to what they're valuing it for, but everyone's flipping and selling houses around us for probably $300,000 to $400,000 more than we would probably get. So I think they're just upping everyone's values.

Okay. And yeah, $1,000 is a, that's a big squeeze to feel over a short period of time relatively. I mean, 2 years is not that long. I mean, that's a big jump. So the question is, what Baby Step are you guys on? Because how you experience this is going to be different in Baby Step 2 versus Baby Step 6, right?

Right. So I am all about the Baby Steps, but my husband is— I just got him on board with budgeting. And so this is kind of where I'm discovering it. I'm a stay-at-home mom, so I used to kind of— he would say, this is how much you have to spend for kids and food and all that. And he was covering the rest of it. And his mindset was just save as much as possible always. So we're in a decent spot. We have about $16,000 in debt between windows that we got a couple years ago and student loans. But we have enough money to pay it off today. He just doesn't— he's not there yet.

How much do you have in savings total?

Between cash and an investment account that that is in his name from his dad and regular savings, we have about $112,000.

Well, what's the cash?

Uh, $80,000. $80,000.

And then do you have like stocks, like single stocks?

Yeah. Um, I'm not sure what the, what the, the investment account, what it's in. I think it might be stocks.

Well, to answer your question, I would not move. Uh, you 25% up to 30% is not drastic enough to make that move. If you're feeling the squeeze, my guess is it's likely because of this debt. And I would, I would reach over and I would take from that $80,000 and I would pay off the debt today. And you're going to feel like you got a raise when you do that. You're going to feel like you have breathing room. That combined with working a budget is going to be life-changing for you. Now you do need to get on the same page with your money. It does sound like he's kind of doing his thing and you're doing your thing, and it hasn't all come together yet. But if you start working together, I think that you guys can make that headway. Well guys, thanks for hanging out with us today. Thanks for everybody in the booth. And remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.