Living a No-Debt Lifestyle Will Give You Peace
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Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I'm your host, Jade Warshaw, joined by George Campbell.

Author of Breaking Free from Broke. It's good to be with you today, George. It's been a while, Jade. It's going to be a fun show. We're taking your calls. Give us a call. The number is 888-825-5225. And we are here to give you the hookup. We'll chop it up with you. Let's go straight to the phone lines where we've got Terrell in Berkeley, California. What's going on, Terrell? Hey, how you doing? Doing good. Did I get your name right? Yes, Terrell is the name. Let's go. How can we help?

I'm just calling for a little bit of advice on buying a car. Right now, I've been saving some money to buy a car, and I just want to make the best decision of either buying a used car or one that is pre-owned. And I'm actually in the motion of trying to own a house, and I've been buying used cars for approximately a couple of years now to save money.

And so I won't have a big overhead on cars or paying a car note. So I just try to see exactly what's the right decision to make. So you've been in the process. You've currently bought used cars. Have you been purchasing them in cash? Yes, cash. Good. That's very, very good. So are you considering, it sounds like you're considering two things, either continuing to do that or possibly buying a brand new car or taking on a car note?

Yes, yes. So what's driving you to upgrading car? No pun intended. Actually, my car just broke down after four years, and I'm just tired of the fact of, you know, having to spend money on mechanical issues with buying a used car, and I just want to buy something that's

uh more prolonged uh buying a vehicle that i know that i can trust for a couple of years so that i don't have to worry about any car issues yeah in the past how much have you spent on a used vehicle like what's your vehicle worth now or when you bought it my vehicle that i bought was twenty two hundred dollars okay it lasted me four years wow just a couple of mechanical uh problems that's some pretty good listen that's not bad at all um how much money do you have right now

in cash um in cash um actually i saved up around 80 000 yes do you have any debt score no no debt always uh i always watch you guys show about learning not to uh get in debt i have no debt at all what do you earn a year i might earn approximately uh this year i made 94 000 doing what what's your job

I actually do sewer maintenance. Okay. Listen, Terrell, I'm proud of you. You've been buying cash cars. You've been staying out of debt. You've managed to save $80,000. Here's the thing. When we tell people to buy cars in cash, it is a way of life, right? You draw that line in the sand. You say, I'm not borrowing money anymore. However, the idea of driving a hoopty for life is not really it, is it, George? Like, we want you to slowly but surely upgrade your car with cash automatically.

I don't want you driving a $2,200 car when you're making $94,000 a year and you have no debt. Like it's time to move and own up. Time to upgrade. That doesn't mean go to the nearest dealership and find the shiniest, newest car on the lot. That's right. So what's your net worth right now?

My net worth in all in all total, I will say that it's around the $80,000 mark or plus. Okay. I'd rather us focus on that as the scoreboard instead of your credit score because you're about to – I'm sure you said you had a great credit score, right?

Yes. And you know what? The dealership, the salesperson is like, I'm about to get Terrell with this car payment. I know, right? Can't wait. I'm going to tell him how great of a job he did with his debt management score. So I'm going to ignore the credit score and we're going to look at your income and also tell you that the time to buy a new car, brand new, is when you're a net worth millionaire. Exactly. Because you buy a $40,000 car, bro, that's half of your net worth right now. That hurts my brain. Yeah.

So there's a time and a place to do it. Excuse me. I've seen a car approximately for about $15,000. And I was going to put half of the payment down and try to slowly either make payments on that. But you have $15,000. You have $15,000 cash money that you can go into that dealership. You can buy a $15,000 or $20,000 car, walk out, own it free and clear.

and not owe anybody anything. Because here's, I don't think you realize how well you're set up, Terrell. George just outlined it. You're in a situation that you don't need anything from anybody.

And credit scores are for people who think they need something from somebody. Like credit cards are designed for people who think I can't do this myself. I've got to borrow the money. You've already completely just bashed through that. You cut out the middleman. You already cut that out. Exactly. And so at this point, the only thing that you have to do is continue to live the life you're living. And when you start thinking about the time to buy real estate, start putting aside the same money, the same way you started saving that 80,000 is the same thing you're going to do when it's time to buy a house.

And that's really, Terrell, you've already knocked out one of the two kingpins of the no credit lifestyle. The car, because so many people think you can't buy a car in cash and continue to buy cars in cash. You've already crushed that. Like you got it. And the next thing is the house. And so for you, that's after you get through this car thing, the house is your next big goal. And you'll save that down payment and you'll be able

to buy that with a zero credit score as well. So in your situation, it's better to have a zero credit score, no credit score, right? Which means you're not messing around with debt at all than to try to play this game. And maybe if I take out a little bit on my car and pay that for a while, or maybe if I pick up this little credit card here, it's a game that you have already decided I'm not playing. Like you've already changed the game in your life. So don't go back and try to play a loser's game because you're already a winner. Fair enough? Okay. Yes, that's fair enough. What kind of car are you looking at?

I was looking at a Honda Accord. Yes. Okay. This guy. This guy. Like low maintenance Honda Accord or Toyota Camry. Listen, come on with the Camry. There we go. These are the reliable cars we're talking about. That thing will outlive me.

And so I'm going to go with one of those. You can find them for 15 or 20 grand. You're going to walk in there. You don't have to walk in with a briefcase of cash. You just say, hey, I'm looking for the out-the-door price. That's what you asked for. And then you're going to get a pre-purchase inspection to make sure there's no mechanical issues. And what happened right there is someone else paid the depreciation on that vehicle for you when you buy a used car. Mm-hmm.

Someone else took the hit because they paid $38,000 MSRP and Terrell got it for $15,000. Come on. That's a deal because new cars depreciate much faster than used cars. They go down in value, Terrell. Get this, 60% in the first five years.

Okay. And so by buying used, you're being a really smart consumer. And one day you'll be driving a brand new car when you got a million dollar net worth. And if you want an Accord, you just walk on the lot and you choose that Accord. If you want something fancier, you've earned the right to do it. And so this is going to help you build wealth by making these decisions now. Terrell, how old are you? Yes, sir. I'm 33. Come on. 33 years old. Killing it. Killing it.

I'm proud of you. Very, very good. And it's so hard living in the Bay Area due to the fact that, you know, the cost of living is so high. We have a lot of high interest rates of buying vehicles and buying homes. So that's why I've just been really just...

trying to save as much money as possible because my first goal was to buy a home. Yeah. And, you know, that's why I've been buying used vehicles to try to keep saving up to buy a home. You're doing everything right. You're doing everything right. Keep doing that. Stay out of debt. Practice life staying out of debt. You know,

You're doing the right thing. You've saved up the money to buy a much nicer car in cash, and that's what ultimately we want for you. You're not driving a hoopty for life. Yes. You're upgrading, and with your income, you can definitely easily afford to pay $15,000, $20,000 for a used car. And he's not trying to impress anyone. He's impressing future Terrell. I like that. This is The Ramsey Show.

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You are listening to The Ramsey Show. I'm your host, Jade Warshaw. Next to me is George Camel, host of the YouTube show, The George Camel Show. Also, author of the book Breaking Free from Broke, which is out now in the wild, George. It's been so fun to see it arrive at people's homes and the reviews have been just wonderful. People are changing their lives, Jade. Yes, they are. From 17 to 51, cutting up credit cards, ditching the credit score. I love it. Very encouraging. You love to see it.

Love it. So if you haven't gotten a copy, be sure to get your copy. I've got mine. Let's take a call. Let's go to Molly, who's in Boston, Massachusetts. What's going on, Molly?

Hi, thanks for having me. So my husband passed away four years ago. Sorry about that. And thank you. So I have benefits from his death. So I live very comfortably on the income that I have. However, I'm getting a couple one-time payments. Okay.

that I don't quite know what to do with it. It's a substantial amount of money. And I don't know, like I lost a lot of money in the crash in 2008 through my 401k and stuff. So I'm a little leery to do that. Well, you only lost it if you pulled it out. Did you pull it out? I did. Okay.

Okay. We'll consider that as we move forward, but keep talking. Okay. So, like I said, I live comfortably on what I have. When I take vacations, I prepay my credit card with my guesstimated, you know, what it's going to cost so that I don't actually incur debt. But I feel it's safer than using my debit card and you can't rent a car with, you know, a debit card. Okay. We'll talk about that too. Okay. Okay.

Okay. So I have these two lump sums coming in and I don't really know what to do with them. And my bank offers a 5.5% interest on CDs. So I've considered like every two weeks putting in a substantial amount of money so that

How much are these single payments going to be? And how many of them do you think you'll get? The total for the two are $555,000. Okay, $555,000. Wow. And you're getting it two times. Okay. No, that'll be one time. That's the total of the two. Oh, got it. Okay. So they'll give you $225,000 for one and $225,000 for the other or whatever. Or whatever it is, $275,000. Okay. Okay.

So let me ask you a few questions now just to put it all together. So do you have any other debt? Like, do you have any debt on the books? Do you have a mortgage? Can you tell me a little bit more about your financial situation as far as income and debt? Okay. So I, I did purchase a house last May and I,

I purchased it for $429,000. I put $115,000 down on it. Okay. So my mortgage payment now is $2,500 a month. Okay. No other debt. No other debt. Cars paid for? I'm driving a 16-year-old truck. Okay. Now, other than this $555,000 that's coming, do you have any other money saved?

I do not, just because I just bought the house and had to furnish it and everything. But my monthly income is $7,200. Okay, so you bring about $7,200 home every month. And what about children? Out of the house. Okay. Okay.

Okay, so George, jump in at any time. So I'm looking at this situation and I'm filtering it through our teaching here at Ramsey. I don't know how familiar you are with it, but we view everything through seven baby steps. And these baby steps are what we feel are the fastest path to wealth with the most amount of peace, least amount of stress. All right. So that's everything I'm talking to you is going to be through that.

So with you, it's great because... I just recalculated because I actually bring in $7,400 a month. Oh, excellent. Love it. Love the increase. Okay.

So with you, because you don't have any debt, that's excellent. It's kind of jumping us to the third baby step, which is making sure you have three to six months saved. So if it were me and I woke up in your shoes, that would be my first thing that I'm going to gun for. I'd think, okay, what do I need? What would constitute six months of expenses for me? And I would work at getting those saved. When are you getting that first payment? Within a couple months. Okay. So between now and then, I'm going to use my income and I'm going to start to build up

That.

that three to six months of savings. So that's thing one that I'm focused on is how can I get six months of savings? Thing number two that I'm going to focus on in your case, just because I think everybody needs a budget, is I'm going to start a budget. The budget we recommend here is every dollar. And you're going to want that going forward. Now that you've got this house, you've just got this new life in front of you with new expenses and new money and a new relational situation. It's just a whole new life for you. And having a budget is going to give you a lot of peace

month to month of how you're spending your money and

Okay. So that's thing one and thing two. Now I'm looking at this money and George is going to talk to you more about the investing side of things because I think that's worth noting. But as we've talked about saving and budgeting, I want to go back to what you said earlier about your credit card and it being safe versus a debit card. If I were you, I would think really seriously about cutting up my credit cards and deciding that I'm going to live a debt-free lifestyle.

Because for you, it's easier than ever. And you don't need the credit card. You don't need it. You've got money in the bank. And so as far as, you're worried more about safety, it sounds like. Yeah, I've had my debit card compromised several times, and I found that it's easier if that happens when you're traveling to have your credit card, because it's not your real money. It's their money. And I found that it gets resolved a lot quicker.

lot quicker and you know so that just makes me nervous because if I'm traveling and I'm using my debit card and it gets compromised then I'm stuck. I've never I can vouch for this I visited I've traveled to over 92 countries I've never had a problem with them restoring the money to a debit card account George

George, you just talked about this. The protections are exactly the same as long as you call and say... If your debit card has a Visa or MasterCard logo, you're covered under the zero liability policy. And there's even a federal law. The Electronic Fund Transfer Act protects debit cards in cases of fraud as long as you report it within 60 days. And so on top of that, renting a car...

every single major rental car company has their own debit card policy. And so there may be a slightly bigger hold on your checking account, which you have the buffer for, but you'll have no problem doing that.

Yeah, those companies definitely make it a little harder, but you can still do it. It will reduce your risk as well as give you more peace when you just use your own money now. And I talk about this in my new book, Molly. So I'm going to send you a copy because I cover how to rent a car without a credit score, why you should ditch the credit card, and even the CDs and why I'm not a big fan of the certificates of deposit you mentioned. Right.

What's going to happen there is it's going to lock that money up. And if you withdraw it before it matures, the maturity date, you're going to have to pay a penalty of losing some of the interest. And so you can actually, that rate you mentioned is what I'm getting right now in my high yield savings account, which is completely liquid. There's no penalties if I take the money out. So I would encourage you just as you paused and decide what's next to put the money in a high yield savings account.

That's what I would do. And that's what I do as well. So I think that that kind of gives you some just lifestyle changes to consider, cutting up the credit cards, living a cash lifestyle. That's good to consider. And then finally, if I'm you, as this money is rolling in, the way we teach the baby steps, let me just roll through them real quick so you get the context. Number one is for people who are first starting out, they just get $1,000 saved. Number two is for people who have consumer debt. They pay off all of their debt except the house.

Number three is where you're technically at, which is saving three to six months of expenses. Then from there on, people do four, five, and six simultaneously. So because I know you're going to have six months saved up quickly, let's talk about those real quick. Baby step four is you're investing 15% of your income every single month. So I want to make sure that we start that habit for you.

And then if you have kids that are going to college, baby step five, you can do this at the same time. You can start setting some money aside for college if it makes sense. And then finally, baby step six, you can start putting extra money towards your house. So putting that in context for you, if I'm you, I'm going to start putting that 15% aside like on auto pay coming out of my check.

every month. And I'm going to start looking at when this $555,000 comes, how I can start paying my home off. And that's an emotional decision, but it is a wonderful one to make. And you'll still have over 200 grand left over to max out retirement, to give more, to enjoy life and spend more, and to upgrade that 16-year-old truck, Molly. It's time. It is time. So hang on the line. We're going to send you a copy of Breaking Free from Broke. It'll walk you through all of the stuff we talked about and hopefully help you have a new paradigm around it.

I love it. Man, what a blessing to have life insurance. Not fun, but man, it changes things. Absolutely. This is The Ramsey Show. ♪

You are listening to The Ramsey Show. I'm Jade Warshaw, joined by George Camel. And I just want to thank you guys so much for tuning into the show week after week. Thank you for hanging out with us on YouTube or whatever podcast service you use. Thank you for sharing the show with the folks around you. And we want you to continue doing that. Wherever you consume the show, we would love if you took a moment to like the show or subscribe to the show. It means a lot to us when you do that. Even when you just send a link through a text,

to a friend of one of your favorite episodes that means a lot not only for us but also to the person that you're sharing it with there's so much great information on the show so when you share it it not only helps that person but it helps us more and more people see the show and the algorithm and it is just a wonderful chain of events that takes place so if you've been doing it keep

doing it if you've never done it before just take a second it's free it takes two seconds of your time and the result of it is massive it's a great return on investment george as the the financial folks would say that's right uh so thank you so much for doing that it means a lot to us and let's head over to the phone lines where we got molly in new orleans louisiana what's going on molly hi everyone how are y'all we're doing good how are you

I've been better. We're in a bit of a sticky situation and I'm calling to kind of get y'all's advice on how we should address a pretty big financial situation. Our dishwasher busted, flooded us, and we are down to the slab and the stud. Yikes. And yeah, it's not ideal. I'm six months pregnant and I have two small children. Oh no. Oh no.

Not exactly a convenient time. Right. A big problem we've run into is insurance is denying our claim. So it's looking like we're going to have to pay for this entire renovation out of pocket. Oh, so this isn't just a dishwasher. You have to replace flooring? Oh, yeah. I mean, it floors, it ruins cabinets. Walls? A little bit, yeah. We're going to have to replace some drywall, some insulation. What's the price tag?

So I'm waiting for my full estimate because I went and I picked, um, like materials today to go pick out flooring and things like that. Um, but on cabinets and then the demolition alone is 17,000 and that's not having, you know, that's not anything to do with floors, my countertop, et cetera. Um, where we are fortunate is that, um, we do have money saved from, uh,

saved and invested that my husband inherited after his mother had passed away. Um,

But we're looking, I guess, for the best way to use that money in order to pay for it, because we really don't want to have to take out a personal loan or go into any sort of debt to find. Well, that's off the table. So let's let's let's look at this as though debt is doesn't even exist in the world. And I like to look at situations that way because it then takes it off the table and it frees my mind to be very creative in my approach to.

So from this moment on, there's no such thing as debt. We don't even, it doesn't even exist in the world. So let's talk about like that. You mentioned that there's some money that you have, but you also mentioned that it was invested. Can you tell me more about that? I can tell you, I guess generally, my husband tends to be the one to run the investment side of things. But from him, we do have, he said there's 59,000 in a high yield savings account. Good.

It's $53,000 invested in stocks and bonds. Specific ones I can't speak to personally at this time. I just don't know. Look, the $59,000 is where I'm at right now. That high-yield savings account just covered this renovation, didn't it? Listen, I know it did. There's another $11,000 he said in a, he said it's called a money market account. It's still like a cash savings account. Okay. So listen, the good news is you guys have the cash to cash flow this.

And that's really comforting and good for you guys for making sure that that safety net is in place. I'm just curious, do you have any other debt that we should know about that plays a role in this? Not really. I mean, we have a mortgage. Fine.

And then we only have, we were completely debt free until about the last year. We have about 5,000 in credit cards and that was three out of four family members wound up in the hospital at some point. So very sudden, random, unforeseen circumstances that happened. Aside from that, both cars are paid off. Good. Okay. So 5,000 clears all of your consumer debt.

Yeah. Let's do that today. Love it. We're clearing that debt out today. I love that you still have extra money left to get this kitchen fixed and to repair these damages. I don't think you're going off the wall. I don't know that you have to spend, you know, every dime that you have. But what I do want you to get from this and what I'm my takeaway from this situation, Molly, is you guys have done a good job. You've kind of played patty cake with

your finances in a way that it's like, oh, we can take out some debt for this. Maybe we can consider it for this. Because I have a feeling that if you hadn't called in, you guys might have taken out a personal loan to cover something that you can pay cash for and cash flow throughout your life and your situation. And so my takeaway from this would be,

Coming off of this call, I would have you and your husband really get on a good budget because that's what's going to inform your lifestyle from here on out. And I think when you have a good budget, it's giving you like this snapshot of what your entire financial situation looks like. So when something comes up like family members getting ill, you're not going, oh, I'm not sure if we have the money for it. So let's just use the credit card or something, you know, like a catastrophe pops up like with this disaster.

dishwasher, you're not thinking, oh, our only option might be to get out a personal loan. You've got all your finances in one place. And of course, the budget we recommend is every dollar because you can see everything about your finances in that one app. And it just kind of gives you that peace of mind to go. In your case, you would look at that and go, oh my gosh, we're doing far better than what I realized. And we can pay cash. We don't have to go into debt.

or stress or monthly payments in order to deal with something honestly as big as a dishwasher flood in the house. I love that you guys have $59,000, really $62,000 saved. It's amazing. That saved the bacon today. And Molly, a few things to consider. Number one, you may want to consider appealing the claim denial with insurance if you feel like you have good reason to believe it should be covered.

Is that the case? And that's been my battle the last two weeks. I think the next step is seeking out some legal advice, which is, you know, an avenue that we're willing to explore. I feel it was definitely a premature denial of our claim. And then I fought back and fought back and fought back. They kind of sent someone out, I think, to appease me, maybe, you know, and

let someone come take a look. So I had someone in my house, but then, you know, there's still maintaining a denial.

Which, maybe I'm in denial. Maybe I'm just not willing to accept that. Well, if the appliance was old, it wasn't maintained properly, there was negligence, you know, there's a lot of things that would cause the denial. But I'm just, if it takes a month of fighting to make that $25,000 needed for renovations, I'm fighting it. So that's one angle. The second is to make sure you get multiple bids on this. Don't just take the first bid from the first buyer.

guy who says they can fix it. So I'd get multiple bids. I would try to negotiate and say, hey, we can pay upfront with cash if you're able to give us a discount and see what they say. Yeah. And a lot of times you'll get 4% off, which adds up when it's $25,000 work. Listen, wait, I might go against that, George. What's that? With cash? Are you talking about with the contractors? Well, with whatever the bid is.

That's true, but I would never pay a contractor up front. Well, when the work is done, but I'm saying like some people will go on payments or something like that. Oh, you're saying no payment plan. I got you. Yes. Hey, we'll write you a check when this is done. Okay. Yeah. Because I was about to say when the guy comes in. When they swipe a card, there's fees involved that they have to pay. And so if that's a 3% fee and you say, can I get a 3% discount if I just write you a check?

Just simple things like that can save you money. So I'd get multiple bids and do your best to just lower this cost. Because I know it's a stressful time. You're six months pregnant. You got two kids running around like crazy. And I'd also get more details on this investing side, what your husband's doing. You should have some clarity and understanding of everything going on with your financial picture. I definitely agree with that. Listen. Not fun. That water is one of the most insidious things

that can happen in your home. It is just the worst, especially in her situation. Six months pregnant, two kids on the way. I felt her pain. I just want to say not today, Satan. Not today. I know that's right, George. But thankfully, they had the safety net of an emergency fund. That's huge. A fully, fully, fully funded emergency fund. That's what you need when life storms hit. This is The Ramsey Show.

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This is The Ramsey Show. I am Jade Warshaw, your host, joined by George Camel, your other host. George wrote the book Breaking Free from Broke.

I wrote the book, Money's Not a Math Problem. And so listen, just two authors sitting in chairs talking about- Doing the dang thing. Just doing the dang thing, George. That's what I'm talking about. So how has it been? Tell me a little bit about the journey here of this book here. Well, writing a book is one of the hardest things I think I've ever had to do, especially when it lives in the world of Total Money Makeover.

And what's been really encouraging, though, is people going like, this is, Dave Ramsey said, this is financial peace for the next generation. Reviews are saying, this is like total money makeover, but written for 2024 with me in mind, all of the objections, all of the struggles I've been dealing with the last few years with inflation and the housing market. And what do we do now? And credit scores and credit cards. There's so many more traps than there was even 10 years ago. And so I covered all in this book to help you have this paradigm shift and go, I don't need to play this game.

Building wealth and living a life I want to live is so much simpler than I thought. I just got to ditch this money matrix that's been created for me. Money matrix. The reviews have been awesome. Your book hit the bestseller list, Jade. Congratulations. I did not even know that that was possible, George. Love will find a way. You have a...

what I'm gonna call full-sized book. And I have the miniature version. - A quick read. - Which is a quick read. And I didn't know it was possible, but here we stand in the national bestseller category. - Booyah. - Yes. - I love it. - Very cool. - That means people are getting helped. - That's right. And that's what we're here to do, help you guys, help you with your money situations, your relationship situations, mental health situations, career situations,

All of that is directly connected in your life. So that's what we talk about on the show, your life and your money. So you can give us a call. The number is 888-825-5225. And we will do exactly that. And let's do it now. Going to Taylor in Washington, D.C. What's going on, Taylor?

Yes. So first, congratulations to you both on your new book releases. Gracias. And claps to that. I am calling because I'm in a little bit of a situation to where currently I own my home. I also have an investment property. The investment property is doing well in terms of

just the equity aspect. So at the moment, it has about $150,000 worth of equity that's in it. However, I'm really not making anything off of it too much. I find that I'm actually putting out money. So like, for example, 2023, I probably spent $2,000, $2,500, something like that, just kind of doing repairs that...

maybe the rent wasn't able to cover. And so I'm in this little mix of understanding that real estate is the best

I have a home with my husband that we own, still have a mortgage on, of course. How much? And so the idea was to acquire more properties in a sense. But now I'm starting to have this idea of do I offload the property at $140,000, $150,000 where I will be able to get that equity and possibly just pay off my student loans where I currently have about $80,000 because I ended up

I'm getting my MBA. And obviously, as a result, you know, like a lot of other people racked up a lot of debt with that. What other debt do you have? I only have about $15,000 in revolving debt, which includes my car note, credit cards, things like that. What about your husband? I'm just not sure of which way to go. What about your husband? What debt does he have?

My husband probably has about $10,000 worth of debt, and that also includes vehicles and credit cards. Okay, so he has $10,000 in cars and credit cards. He doesn't have student loan debt? He does. I'm sorry. Yes, he does. He's less than mine, so I think he's $40,000. He's about $40,000 now. Okay, so $40,000 in student loan from him. Okay, so there's a lot here, Taylor. I'm not going to lie to you. This is a tangled web. You got $150,000 in just consumer debt. Yeah. Yeah.

So what is the investment property worth? Right now, it is the worst. I could probably get like 360 at the minimum. The high would be 380. And I owe 199,000. Okay. And you're thinking after fees, you'd walk away with about 130? Yeah.

Yes, yeah. Yeah, take about, yeah. After all of the credits and things like that, at least. You guys have any money in the bank right now in savings? Yes, we do. We have about four months worth of our living expenses. How much is that? We are, it's about $40,000 in our, yeah. Do you guys have stocks, like single stocks or single?

Single investments? I do, but it's not much in there. I only have about $6,000 in my single stocks and obviously not including 401k or anything like that. And do you have a brokerage or anything else that we should know about? No, that's probably it for the most part. And what's the household income? Combined, we are about $240,000. Good job. Okay, good.

And okay, so I know, George, I'm looking at these numbers and I'm just seeing a situation that's so complex that doesn't have to be complex. It looks like when you just said all of that, it was just even a lot to say. Like to list all that out was a lot to say. We had to take a deep breath at the end. We had to like wipe the sweat off of our brow. I think that there's a way to really simplify this. And in my mind, it does start with selling that rental because it's going to give you the cash you need to get a hold of your life.

and to simplify your life. And then, and only then, you'll be able to do the thing that you want to do, which is purchase real estate, and you'll be able to do it the right way. So I kind of feel like, have you ever seen on the movies where the guy like clears the table off and he like just uses his hands to like knock everything off like I did with the microphone? And then you got like the clear slate. I feel like that's what we have to do with this is just knock everything off the table and start over. And I think that

Selling this real estate is the way to do that. You're going to clear, like you said, about 130. And then we've also got 40,000 saved on our debt. And I think, or saved in a savings account. If you take that money, you can be debt-free immediately. With most of your emergency fund on top of that. Yeah. Because you're going to have like 176. If you include the stocks, if you sell those too, that 176 is going to clear your debt and leave you with a fully funded emergency fund.

How good would that feel? It would feel great. Now, it's a little intimidating. So we are in our early 40s. So it's like it also is like feeling like starting over with rebuilding. What are you rebuilding? You're clearing the deck here in the best way possible. You got no payments and you make 240. I think you're going to be okay. You're not rebuilding. Right now, you're 400 pounds. And you're out of shape. You're shedding the weight.

And what we're doing right here, when you do this, you're going to be 160 and lean. Like that's what we're doing for you. Because right now you're overweight. It's stressful. It's heavy. It's a lot to carry. And by you doing this, it's literally getting you financially fit is what we're doing. And when you're able to be fit, then it's like, okay, I can move better. I can think better.

clearer and you're going to be able to do what you want to do ultimately which it sounds like you guys are interested in real estate but now you're cleared up to be able to do it the right way which is ultimately paying cash for it after you've paid off your home so there's a there's a a right there's a right and a wrong way to do certain things and there's a better and a best way to do things and we're trying to tell you the right better best way to get where you want to go

Fair enough. Fair enough. Thank you, guys. I don't think you're going to regret this decision. I don't think so either. But I do think and it's worth noting while you're on the line. I do think there's a certain meeting of the minds that you and your husband are going to have to come to. And I do. You know, when you get off this call tonight, you guys get home and you're having dinner and you talk about this. What what does that conversation look like to you?

We'll probably both be on different chapters. That's what I thought. Is he going to want to hang on to the debt? Yeah, and that's what made it hard a little bit to move forward with decision making of trying to find that alignment. I feel like slowly we're getting there, but it's like each of us presenting our case.

And so it's like you said, trying to have that meeting of the minds and find like that mutual decision. Well, here's what I would suggest. I wouldn't suggest you going straight away tonight and be like, I was on the radio and these two blockheads told me to do that. I would suggest you taking a moment to get your head around what we've just said, because what we told you a lot and there is an emotional component to that. And there is an emotional like it's just a lot. So I would recommend.

recommend you taking a moment to get your head around it, figuring out how you feel about it. That way you're presenting your case, not George and I's case. Because if it's not real to you and if you don't have a genuine connection to it, it's not going to go over well. And I think that's important to know, George. Yeah. You guys make $240,000. There is no reason to play with debt anymore. You're too successful. You're too smart. You know too much to stay broke. It's time.

It's time. The time is now. This is The Ramsey Show. ♪

Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I'm your host, Jade Warshaw. I am joined by George Camel today, one of my favorite co-hosts of all time, author of the book Breaking Free from Broke. We're taking your calls. The number's 888-825-5225. So give us a call, and we would be happy to help you out with whatever the concerns you have about your life.

But George, I have to say I'm really excited because we have just recently announced a new event here at Ramsey Solutions. It's a big one. Brand new, new content, new talks. Total money makeover weekend. That's it. Like I was waiting for like cheers and like...

cannons and total money makeover weekend. I'm really excited because it's really total money. Makeover is the book that started really all of this hoopla, the baby steps, all of that. And so we're creating a live event weekend around that. It's May 10th and 11th. And as George said, it's all the personalities like we'll all be there. The goat himself, Dave Ramsey will be there and we're all going to do all new content on YouTube.

really the same money concepts that we've taught for 30 years around here. So if you're, you know, new to the Ramsey way of life, this is a great event for you. If you've been hanging out with us for the last 20 years, this is a great event for you. Give me some pep in your step. Yeah, it's like a rally. It's been a while.

You know, reminder of what you're doing this all for. That's right. That's right. So it's here. It's here now. Early bird tickets start at just $99, but they're for a limited time. So make sure that you get your tickets now. You can do that at ramseysolutions.com slash events. But I'm looking forward to it.

forward. It's going to be a different format than a lot of our other events. There's Q&A sessions. Yeah, this is a two-day event, Friday and Saturday. We got Smart Money Happy Hour Live with Rachel Cruz and I on Friday night and musical experiences. So it's a whole weekend in Nashville. Make plans to be here. That's right. Get your lodging and transportation in the budget and

Come hang out with us. Lodging. I like that. Lodging. Yes. Again, go to ramseysolutions.com slash events in order to get your early bird tickets. I'll see you there. All right. Let's go to Spokane, Washington, the city I was born in, to talk to Isaiah. What's going on, Isaiah? Hi. How y'all doing? Doing good. What's going on in Spokane?

I am here in Spokane training to be a missionary pilot mechanic. I'm in my second year. So my question is, is I have some money in a 529 college plan from my great-grandma. It's about $31,000. I've paid for school the last two years out of my personal savings, and my wife and I

are making enough to where we could probably pay for school for the next three years of the program. My question is, should I keep the money in the 529 or roll it over into some other investments that way it isn't locked up and we have access to it to whether that be reimburse what we spent on school so far or to just make sure we have the funds to remain out of debt moving forward.

I would definitely use the 529 to pay for college because if you wait and try to use it after the fact, whether you have loans or things like that, there's limits on you using that money to pay off student loans or anything like that. So if the money is earmarked for education, which it is in a 529, I would use that money and then you use your personal income and cash flow to do whatever baby step you're on. And if it happens to be investing,

then you would use it there. Does that make sense? Yes. So if I've already spent some of my personal money for the 529 plan, can that come back in to reimburse what I've spent, or does it have to be current and future money?

college expenses. What you spent, let's see, you're asking if you can use the 529 to reimburse what you've already spent. I believe you can. Well, you'll have to look into it because they're different by state. Okay. And George, it looks like George might be looking at that right now. Yeah, I know you can do that against, like, if you get a scholarship, you can then take that withdrawal against the scholarship with no fees or penalties. But as far as just going, hey, I paid tuition last year. Can I take the money out now? I'm not sure about that based on the

And I know that if it was a student loan, like if you're like, hey, I have a student loan, I think you can only do like 10,000 out of a 529 to cover a student loan per year. So there's some stipulations around that, which is another reason why from here on forward, I would just use...

That money to pay for education. Now you're in that that just frees up your income to do life, you know, do life on a daily and monthly basis with your wife. So you've got thirty one thousand in the five twenty nine. Is that going to cover everything that you need?

Yes. I mean, for the last two years, it's only been about $5,000 a semester, which we've covered. And moving forward, I've gotten a lot of really good scholarships and stuff. So even if I were to take it against the scholarship, I could definitely use that money. This year, I had about $18,000 in scholarships I got. So what you mentioned, you can use a scholarship...

take the money out in place of that. So yeah, we could definitely use the funds. And then whatever's left, you know, if it can roll over to different family members. So if you're a

wife has further education if you guys end up having children depending on the state you should be able to roll it towards different family members as well and the good news is over time I believe a 529 by the time you're in your 60s it becomes just part of your retirement if I'm not mistaken but there's some flexibility there the point is when money is earmarked for a certain purpose it's

especially when it's invested money, you definitely want to use it for the purpose that is earmarked for, um, cause it's better off is, was there any other part of that that you had questions or concerns about? Um,

No. The only question is, is like if I were to roll it out or take it out for school, that would free up some of our savings money. Absolutely. Should I just keep getting to just grow the savings or should we start investing? As a missionary pilot, I'm only going to be able to fly for missionary aviation until I'm about 63 years old.

um, in that field because they kind of cut you off before you get too old. Um, flying, flying isn't the easiest. Uh, so I was wondering if I should start investing sooner, um, knowing that I won't have to save as much for college because we'll be using that plan. Um, yeah, I mean, that would be a good idea. If you've got no debt, emergency fund, you're able to cashflow all of your program, uh, a hundred percent, then you can begin investing now.

But just make sure, do the math on all this and make sure you're not going to get to year three and go, oh gosh, more expensive than we thought. So figure out all of the expenses needed, whether that's housing and textbooks and who knows what else is involved here. Is your wife working? Yes, she works full time as a nanny. So that is one nice. Okay. And you don't have any debt? No debt. Perfect. Will you be making money while in school? No.

So I work a little bit. My school is 40 hours a week and then homework on top of that. So it's not the most friendly to work as well, but I try to pick up stuff here and there. Okay. So that's the part to think about is you may have a reduction in income. And so I don't want you guys to, you know, use up all that emergency fund because you're in school. Yeah. And I'd be, I'd be working now with whatever money you have left over to build a separate emergency fund and

Like, you've got this 529 money. What other money do you have? We have about $5,000, $6,000 in savings. And then our monthly expenses, we don't pay rent or utilities or cars or phone bills or anything. Our parents have blessed us with all of that. So our monthly expense is about $1,500 a month. So that's around that four-month savings.

Listen, if I'm you, if I'm you, I'm going to stock up that emergency fund in six months. I'm going to make sure I'm on an every dollar budget so I know what the plan is and I know what we're working towards. And for you, it's getting six months saved and eventually you'll be investing 15% of your income every month into investments in retirement. This is The Ramsey Show.

Buying your first home is a big deal and sets the stage for your financial success. So work with a mortgage advisor you trust, not just some random website. Churchill Mortgage is Ramsey trusted because they help you avoid hidden traps and expertly guide you through every step. Learn more at churchillmortgage.com. This is a paid advertisement.

NMLS ID 1591. NMLS ConsumerAccess.org. Equal Housing Lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. You're listening to The Ramsey Show. I'm Jade Warshaw. This is George Camel, host of the YouTube show, The George Camel Show. George, how's that show going, by the way? It's honestly bonkers, Jade. I don't know. You know, January is always a big month for all of our shows, but ours in particular has gone zoom-zoom, as our friend Dave would say. And so...

Right now, I don't know what's going on, but we had a really strong episode with Dave. It was millionaires and cars getting coffee with Dave and I in a Tesla. And we went to his barn. There was behind the scenes. He made me a cup of coffee from a fancy coffee machine. And we had a great conversation. Was the coffee good, though? It was good. Yeah. I got no complaints. That felt like it wasn't that good. Well...

I don't want to dog Dave. You know, I got very bougie with my coffee, but it was a great cup. So we enjoy it. You can go check it out on YouTube. Just search George Camel with a K on YouTube, and you'll see all the stuff we're up to. Love it. All right, let's take your call. By the way, you can give us a call. The number is 888-825-5225, and we'll answer your questions. So let's go to James in Cleveland, Ohio. What's going on, James? Hey, how's it going? Thanks for taking my call. You're welcome. How can we help?

So I make about $80,000 a year. I have about $85,000 in consumer debt spread out between a car payment, a personal loan, and some credit cards. Okay. Can you tell us how it spreads out, just so we know? Yeah, so I have $43,000 on a...

a 2021 truck, $24,000 on a personal loan, and then the rest is credit card. Okay, thank you. Back in September, I started working with this company that is supposed to negotiate with these credit card companies and the personal loan company to help bring the balance back. These debt settlement relief companies? Yes, yes, exactly. Oh, wow.

And so just recently finding you guys, I'm coming to the horrible realization that this was a bad idea. And to the point where most of these accounts are defaulted or not going to work with me personally. So I don't really know where to go from there in the baby steps. I have $1,000 fund saved. But as far as like tackling the debt, the truck itself is the only thing that's

active, if you will. Is it upside down? No. So we're selling the truck, first off. That's what I'm doing. Because a guy who's making $80,000 probably shouldn't have a car that's more than half of his...

That's kind of just a rule of thumb that we go by around here. And I mean, yours is just a little above, but considering your debt, if I woke up in your shoes, the first thing I would do is sell that car. And I love, so many people call in James that are upside down in their vehicles and it kind of puts a wrench in the plan. I mean, they're still able to do it, but because you're not upside down, if you sold that car today, what would you get? It would be real close regardless. But I, I,

My question with that would be, is I travel for work and my vehicle is like my lifeline. Every six weeks to three months, I'm going to a different part of the country. I build retail stores for a living. So, I mean, having a vehicle with a warranty was kind of why I went with a new vehicle when I purchased it in the first place. So you're hauling things in the truck because of your work, like it's a work truck?

Yes. So you're saying that there's no way that you could have half the truck, have a $23,000 truck do the same thing? No, I guess that's not the case. Yeah, because I'm not, listen, I'm not telling you that you have to get a $2,000 truck. I'm just saying I think there's a significant downgrade that you can do

In this situation. And I'm saying that that's what we're working up to. Thing one here is we're paying off your debt. That's what we've got. That's that's the house that's on fire. That's what we've got to be focused on. And part of that, the reason that your house is on fire is because you've got a forty three thousand dollar truck.

So if we can knock that down for the time being, if we can knock that down for the time being to far less expensive, that is going to get you where you want to go. And then the time's going to come where you can upgrade slowly to get back to a $40,000 truck. Sure. So would I attack the truck, get rid of the truck and then start working on this debt that's now going to collections and stop working with this?

Yes. Stop giving them money. So what these companies do, James, and now you know this, is they'll intentionally tell you, hey, stop paying all payments on this. Let it tank. And then we'll try to negotiate the payment to make it lower, which in turn just implodes your financial life and really doesn't solve the problem. And by the way, you could have done that yourself.

Yeah. And so these companies are a borderline scam and I hate them with a burning passion. But yeah, we need to get rid of this truck and downgrade for now, which is going to free up a payment. You said how much is the payment on this truck?

It is $835. Oh, Lordy. Listen, James, $835. Do you know that's so much money? That is so, so much money. You're going to be able to make such great headway. Before you sell the truck, obviously, you're going to need to set aside some cash that you can get a car in cash.

And again, remember, this is just short term. Like I understand everything you said about your your truck being your livelihood in many ways. But this is just such a short term sacrifice because with eight hundred thirty five dollars saved up or, you know, saved in your budget every month, you're going to be able to pay off ten thousand eleven thousand dollars in credit cards. Lickety split. You're going to be able to pay off that twenty four thousand dollar loan. Lickety split, because I know that's not the only money that you'll be able to free up to put towards this debt.

Yeah, sure. Absolutely. And James, the other issue with using this truck for work, a new expensive truck, is that you are destroying the value by taking this thing on the road like that. And so you need to get out of this thing while you can and you're not underwater. He's lucky he's not already with the miles. You'd put another 10, 20, 30, 40,000 miles on this thing and that value is just going to drop like a rock. Mm hmm.

So that's, that's, that's your homework coming out of here. Your homework is a, we tell everybody to get on a budget. So make sure you pull up an every dollar budget. That's just going to help you. That's your roadmap going forward. And then number two, you're going to start saving up a little bit of cash so that as soon as possible, you can sell this car and have some cash to get just an, just in the meantime, because once you sell that car, it's going to take you a year to get out of this debt or less, eight, eight,

I'm going to say eight to 12 months to pay this off if you get after it. Fair enough. And yeah, and I'm not entirely alone here. I do have a fiance and two children at home. I have a seven year old and a one year old. So it makes it a little difficult for my fiance to, you know, help in the income endeavor. As of now, we don't really have strong support system around that.

but as well i don't think she should help you yet because you're not married yet so until you get married i do even though you might be living together financially keep it separate and this is your debt until you guys do get married because her credit card debt is in total with that 85 okay okay so thank you for the clarification for right now when do you guys get married 12 years so oh you've been together 12 years but when do you get married

Yeah, good question. Listen, James, you just flipped the entire script on us right here. You just done ticked off the wrong jade. No,

I'm not mad. I just wish I had this information sooner. Listen, number one, get married and stop playing. If you've been together 12 years, you got two kids together. This is the woman. And if it's not a real wedding and it's just not in the table. OK, I get that. But literally just get the piece of paper because this is for legal protection for both of you. And if you guys want to do the party later, that's fine. But get the piece of paper so that you can combine your money and it's safe for both of you.

Like just talk and be like, listen, girl, we've been together all this time. Come down to the courthouse with me. Let's get this paper signed. You don't even have to tell anyone. All right. That can be your little secret until it's, this is just to keep you safe under the law of combining your things together. Because if something happens, you want to show that you were legally married. There's financial and legal protections with marriage. That's right. So that's a one. You got some work to do, James. Yeah.

James, thanks for telling us. He just entered the fire by telling us last minute. 12 years. Listen, get a Costco pizza and a Costco cake and we'll celebrate later. Listen, they don't even have to tell anybody. Just go get the dat gum certificate. Don't tell anyone. And then when you can pretend like, oh, we set a date and we're getting married. Like nobody knows. At this point, they forgot.

I mean, they're like 12. It's been 12 years. Everybody around them thinks that they're married. Yeah, that's crazy. Listen, if you're listening, I don't care if you've been dating for eight years or 24 years. If you don't have that piece of paper and something goes wrong, you are not protected. Get married. Get the piece of paper so that if something goes awry, the law is on your side to make sure you get your cut. Come on, ladies. This is the Ramsey Show.

You're listening to The Ramsey Show. I'm your host, Jade Warshaw. Your other host is George Camel with a K. Don't get it twisted. And we're taking your calls all afternoon long. The number is 888-825-5225. And we're coming, George, around the pipe to my favorite time of year. Not true. Tax season. It's a whole season, Jade. Like we got birthday month, but it's tax season. Season. Yes. I don't.

historically loved taxis in Georgia. I'm not going to lie about that. It feels stressful. It feels like, all right, like I got to start. You know, people are sending me papers in the mail. They're emailing me papers. I got to download the PDF and send it to my, you know. Well, at least you're tech savvy and young. You know, my mom, I got to show her how to get the PDFs downloaded and printed. It's a whole situation. The PFD? The PFD. Okay.

No, I get it. I mean, when I schedule my tax appointment, it might as well be scheduling a colonoscopy. That's how it feels. Like I'm just preparing my heart. It feels that. I don't feel like we have to feel that way. I feel like that's kind of just the stigma of taxes, but I feel like it can actually be simpler. Oh, well, I like my tax. I got a tax pro and I've enjoyed working with them. So I'm like, I get to see them again this year. This will be fun. Get to catch up.

But, you know, with the stigma, Jay, there's a lot of myths out there. And I released a video on my YouTube channel called Five Tax Myths Broke People Believe. And not just broke people, a lot of people believe these. And so I want to cover them real quick, the SparkNotes version. And then people can go watch the full version with all the funny memes and clips that we put in there and jokes. But this one's less jokes. You ready for it? I'm ready. Myth number one, a tax refund is reason to celebrate.

You've seen people bragging and the commercials are all like, woo! I'm going to Disney with my tax refund. Yikes. Here's what this really is. It's an interest-free loan you gave to Uncle Sam. Ooh! Yikes. Because that means you overpaid your taxes all year long and they're just giving you your money back. So wait a minute. You're telling me that I loaned the government money and they didn't even pay me interest on it? Zero percent is what you got. And then I have to file something in order to get my money back? Just to figure that out.

That's a problem. So think about it. What could you do with that money instead if you had it all year long? If you had $2,400 refund, that's $200 every month that you could have been using to budget. George, listen, I know folks out here who are getting like $8,000 refunds. That hurts my brain.

They are giving the government way too much. We already do that enough with taxes. Can we do a poll on that? I want to know what folks are getting. Put in the comments. Put in the chats. What is an average or a normal tax return amount for you? I just want people to see the amounts that they're letting the government borrow. That'll be fun to see. So the goal here is to get it to as close to zero as possible.

Yes. That's you don't want to give too much. You don't want to owe too much. And you can just go on your W-4 and like change like they've made it easier to change your withholding. Yeah. So work with your HR team and you can adjust that form. And myth number two, it's bad to be in a higher tax bracket. Mo money, mo problems.

People are always scared of making more money, Jade, because they're like, well, I might push me into the 22% tax bracket. I'm like, you don't, that's not how- It doesn't even work like that. It doesn't. And I walk through this visually in this YouTube video. We're not going to do it here, but tax rates are marginal. It's not your whole amount that's taxed at, yes. Thank you, George. This first portion of your income is taxed at 10%.

This next portion is taxed at 12% and it stair steps up. Yes. And so if you make an extra $2,000, you're not going to be just jumping into wildly more taxes. Help the people. You got to think about the effective tax rate instead of marginal. I'll walk through it in the video. Good. Myth number three. You've heard this one. Keeping debt around is good for the write-off. Yeah, bro. I keep my house payment for the tax write-off.

You've heard people tell, don't pay off your house. You'll lose the mortgage interest deduction. The numbers on how many people actually itemize, which by the way is the only way you can get the interest deduction, is so abysmally low. Yeah. Most people take the standard deduction. Exactly. And you don't think about what you've been paying all year in interest for the benefit and joy and blessing of getting a little bit back. And then there's just the piece, right? Can we just...

The peace of not having debt. So don't spend a dollar to save a quarter. That's bad math. That's stupidity. And don't spend money to make money. You've seen the people are like, I'm going to buy a G wagon for $240,000 and write it off like a life hack. No, no one thinks you're cool. Myth number four, you have to pay by tax day. And if you can't, don't even bother paying at all. You missed it. You missed the boat. That's a lie. That's a lie. Do you know what musical that's from?

I don't want to embarrass myself. Dreamgirls, but keep going. I was going to say Dreamgirls, which would have been embarrassing. So that's why I didn't do it. So yeah, you have options here. Don't ignore taxes just because you can't pay by tax day. You got to file anyways. Right. It's just you filing the paperwork, right? Yes. And you can file an extension for the payment.

But this is you got to pay as much as you can and get on a payment plan. And if you do owe the IRS money, put it to the very top of your debt snowball. Oh, good one, George. That goes to the front of the list because they can screw up your life and garnish wages and take you to court. It's not you don't want to do that. Pay your taxes. Please don't mess around with these IRS folks. OK, keep going. Last myth. You're not smart enough to do your own taxes. Hey, hey, I have felt that.

In times past, I have felt that, George. Well, they got all these forms and they ask you a billion questions. And so here's the deal. It's become a lot easier. And this one depends. Some people, it's wise to do it yourself if you feel comfortable. And some people, it's worth working with a pro. So online tax software can be great if you've got one to two sources of income. You don't have a bunch of non-retirement investing going on. You're taking the standard deduction. You don't have any major life changes like moves or marriage or whatever. Yeah.

Babies. Online tax software is great. And we actually have one called Ramsey Smart Tax. There it is. That is wonderfully easy to use. It guides you through the whole process. There's no gimmicks. There's one price you pay, one flat fee, and there's not this surprise at the end of, oh, you have one extra form? We're going to get you at this one like the other guys do. Yeah. So they make it super simple, upfront,

Pricing. I love that. But if I, like literally me, if I'm looking, I'm going, listen, I can't do my taxes. I got a small business. We just had a baby. His income is like that. Then...

you're looking for a pro. And we've got a whole network of Ramsey trusted tax pros all over the country who are ready to help you with that, that you can trust. They're not, they want, they have the heart of a teacher. They want to actually educate you. And so those two are great options. So you can go check that out. RamseySolutions.com slash tax. Our team created just an entire hub. Number one, there's a few questions you can select. It's going to show you the best option for you. Should you file online? Which version should you

work with a pro, and it'll give you the next steps. There's also a great guide to taxes and some great checklists, like prep checklists. I print this out every year from this website. So that you make sure you're having all the paperwork for your tax. All my ducks in a row. Cause there's always one I forget. I'm like, oh yeah, I need the 1099I for the interest income from the high yield. All of that is right there in the checklist. So you know, you're ready to go when you meet with the pro or you're filing online. I suddenly have less stress.

George? That's the goal. That is the goal. So, ramsaysolutions.com slash tax. You know too much now to fall for these myths, y'all. And happy tax filing. I like to get mine done as soon as possible, truthfully. I am already there. Listen, last night, as we were getting ready for bed, I was... Because Sam's mom is an accountant. She's done our taxes forever. Bless her heart. And so, I was like, did you send your mom the tax...

stuff. And he was like, yeah, I'm like, did you send her our giving statement? The giving statement, you know, you at church, you give your tithe that that checklist. I now too, I'm going to go download that checklist just to make sure because there's always one or two things that slip your mind. And so it's nice to have that checklist to remember all those, like you said, 1099

It's great. All those little things. So go to ramsaysolutions.com slash tax. You'll see my face. You'll see Dave's face. We're smiling. We're happy. And it says you shouldn't have to doubt your tax service. So we've got all kinds of options. We'll walk you through. Should you work with a pro? Should you file? And at the bottom, you'll see the free tax guide. You'll see the personal checklist, even a self-employed checklist.

Yeah, that can be stressful for those that are self-employed. Listen, I want to roll back, though, George, to that myth number one about the refund being a reason to celebrate. I feel like people y'all don't give yourself enough credit because a lot of people just view it as, hey, hey, money. This is this is how I save for vacation every year. Listen, it's easy. My tax refund comes and that's our trip to Disney. I really want to bust that myth up.

Because you could literally keep that money in your account and have a better rate. You could put it in HSA, HYSA for 12 months and have a better rate of return than letting the government hold it for a year because you don't think you can save money for a vacation yourself.

Well, too many people are complaining they don't have margin in their money right now with inflation. And I'm like, well, you have margin. You just are giving it to the government all year and then you're getting it at the end of the year. So change your withholding. It's January. This is a good time to be looking at that. Reset. Whatever you've been getting over the past, you know, look back on years past, whatever you've been getting, take that number and divide it by 12. Like George said, that's the amount of money you could be having back in your budget.

every single month. Think about that, man. With inflation, that's groceries, that's gas money. You just gave yourself a raise. Okay. I love it. Significant. There it is. We ate our vegetables, Jade. We taught the people about taxes. You did a great job. Are you happy, James? I hope so. James is never happy. This is The Ramsey Show.

You're listening to The Ramsey Show. I'm your host, Jade Warshaw. This is your other host, George Camel with a K. Your producer, James Childs. He just told us we did a good job, and that rarely happens. You know how rare that is? I mean, he said a good job. You guys are gaslighting me so bad right now. It's like the dad who's never said he's proud of you, and then finally 20 years in, he gives you a handshake and he says, take care, buddy. Yeah, not a hug, a handshake.

Okay. I'm kidding. He pulls a quarter from behind his ear and says, go buy yourself something nice. Don't spend it all in one place, kid. I love it. He's the best. The guys in the booth are the best guys ever. And the gal. And gal. Yes, Eboo. Listen, they're really the ones that make this show happen. Let's be clear about that. I can't imagine being on the front lines of screening the phones for this show. They whisper all the answers into our ear pieces. That would be amazing. Give

Give us a call. The number is 888-825-5225. We're just having a good time. And let's go straight to the phone lines where we've got Mark from New York City, New York. What's going on, Mark?

Hi, Jayden, George. Thank you so much for taking my call. You guys are my heroes. Wow. That's awesome. We're glad you're here. You've got to set your sights higher, but I really appreciate that. I appreciate your time. So I'm in a unique, my wife and I are in a unique situation. We have about 1.6 in a brokerage account, 43. Woo-hoo!

Um, we have about a quarter million in, um, uh, retirement. I also have, I'm about 17 years in the public, um, retirement system, pension system in my job. Um, we have, we owe about two 60 on our primary and around one 13 on our rental property. Okay. And really what it comes down to is, um,

After listening to you guys, I wonder if I should use the brokerage account to pay off the two properties and become truly debt-free.

We have no debt. Cars are paid off. No credit card debt. It's just such a big decision. I'd like to get some advice. You just need somebody to kind of push you. It's like jumping out of an airplane. You just need the guy on your back to just jump, and then you go. You know what we're going to say. The question is, what's holding you back? Like $373 million out of your $1.6 million, you're still going to have $1.2 million sitting in that brokerage account.

And that's what my advisor is saying. However, I got this money initially from my grandmother when she passed away as an internist. I feel like I'm the steward of this money. Absolutely. And I just don't want to do anything wrong with it. Pretty much, we've basically quintupled the money. And I know this is a great problem to have. I just...

I'm so afraid of making the wrong decision. Listen, the good news for you is we teach grandma's way of handling money. Like that's our whole thing here. I never met a grandma that liked debt. Me neither.

I think your grandma, if you, if you talk to her now and you said, listen, grandma, I took that money. I paid off all my debt. My family's living debt free. We're millionaires. We've got paid for real estate. Our own home is paid for. I think she'd probably, I don't, I don't know the woman, but my guess is she would be so very proud of you. I guess the only, well, thank you. But, um, I guess the other thing would be opportunity costs with that money.

still invested, would it outstrip the, would it make more than it's as an investment rather than, or is this more of just a emotional decision rather than a purely numbers decision? Also the tax liability on selling those investments, I'm wondering if that would be an issue as well. Well, are these going to be long-term capital gains?

Yes. Okay. And you're not selling all of it. And so do the math on what you would owe in taxes. And we're going to set that aside as well. But again, you're still going to have over a million dollars sitting here. That money is going to continue to grow. Do you need to touch that money for any other reason?

No, no. We've used it in the past to get down payment on our current home and things of that nature. But like I said before, I really try to keep hands off of it as much as possible. Okay. Well, play it out. Think about this, too. You have two mortgage payments right now. Take those mortgage payments and plug them into investment calculator. You're 43. Let's say for the next 20 years, you start to invest that much more into that same account. That's going to change the numbers for you.

That's, I'm guessing, a few thousand dollars you're now investing that you weren't before, correct? Yes, absolutely. I mean, it would definitely free up cash flow that, you know, in a way that we've never seen before. That's for sure. And every, if you get, let's say, a 10% average annual return in this account, if it's invested well, that money is going to double every seven years. So 1.2 turns into 2.4, turns into 3.6, and you're still going to be, you know, what, in your 60s at that point?

Correct. And that's if you do nothing else. That's if you just leave it alone and you don't put another dime in there. So you're going to be okay. So I'm less worried about opportunity costs in the future, and I'm more concerned about Mark right now. At 43 years old and the freedom and options he gets to have with his family with no payments in the world. It does sound very enticing. Maybe it is. I mean, I called up because I wanted an answer from people that I respect and trust, and to be honest, I probably...

I've gotten the answer that I expected. So what are you going to do, Mark? The question is, what are you going to do? I'm going to do it. I'm going to make the call and pay it all off. We always joke, if you regret it, Mark, you can always go get more debt. You can take out against that all those equity in your homes and get HELOCs up to your eyeballs. That's right.

I was going to mention that we have a low interest rate, but I know how that goes over on your show. I keep that to myself. Mark, my favorite interest rate is zero, and that's what I have on my house. And that's what you're about to have. Yeah.

Rich people earn interest. They don't pay it. Exactly. And you are a rich person. And your grandma left a beautiful legacy, and I think she would want you to solve for freedom. And this is what freedom looks like, man. The world is your oyster with no mortgage payment. You guys have done so well. 43 years old, net worth. I'm guessing we hadn't even heard the full picture. Man. With what the properties are worth, plus the millions in these accounts. Yeah.

Excellent. The way he's going to be able to give, save and spend for the next 40 years is mind boggling. That's exciting. It's so hard. You know, he's a math guy. Like he's all into numbers. They're the hardest to remind about peace. Well, when it comes to emotion, I can get people to look at the math. But when people are mathematical, it's hard to get them to look at emotion. It's so hard.

To go, what would that feel like? And they go, well, I don't know, because on paper, it's a low interest rate. I can make a spread if I invested it. Yeah. And they're losing brain calories and sleep over this. And I'm going, I got peace and no payments, man. Try it out. See how you like it. I hear that. Let's ask Dennis. Let's help him out. He's in White Plains. I think we can help him right quick. What's going on, Dennis?

Well, it's not White Plains. It's West Plains. West Plains. Sorry about that. I got my glasses on. She was in a New York state of mind for a second. I was. I was. How can we help? Well, I see all this stuff and hear everything about the high-yield interest rates for the high-yield savings accounts. And I've been looking and trying to figure them out, and there's so many names I haven't seen.

anywhere before. I am looking for some guidelines on what to look for in them in order to know I'm picking something that's going to work for me. That's a good question. I love that. So is this where you're parking your three to six months of expenses or are you using it for another reason? Well, it's four to three to six months and for taxes at the end of the year. Okay. So that kind of short-term savings costs. Well,

Well, I'll tell you, there are a million out there and we don't have one that we've partnered with. I can tell you one I personally use and Jade can do the same and Rachel Cruz can do the same. But what you want to look for here is one that has low fees to no fees. So no monthly maintenance fees, no ongoing expenses and one that you have easy access to. And so a high yield savings account is not like a CD. You can access that. It's liquid at any time. You can transfer it to your checking account. So those are the important things you want to look at. And of course, the interest rate. That's right.

So what do you use, Jade, right now? Listen, I love an online account. I love Ally. There's not a lot of fees associated. Like you said, the money is totally liquid. I don't attach it to any debit card or credit cards or any checks or anything like that because I don't want easy access to it. But at the same time, it's there if I need to pull it out. Exactly. I use one called Marcus. Again, we don't have any affiliation with these, but...

I tried to find one that's also not tied to credit card companies and gross debt products. And, you know, that's hard to do in the banking world. But Ally and Marcus are ones that I've heard people have great experiences with. So just open one, Dennis, and set it and forget it. Set it and forget it. Ron Papil, baby. I love it. This is The Ramsey Show.

Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and build amazing relationships. I'm your host, Jade Warshaw. Your other host is George Campbell with a K. Give us a call. We'd love to hear from you.

help you sort through your issues with your money, your relationships, your career. The number is 888-825-5225. We're here to help. All right, George, I say without further ado, we go straight to these phone lines. We've got Mo in Columbus, Ohio. Hello. Hi, how are you doing, Mo?

Good. I'm doing well. I'm calling. I recently got a job promotion and I've been listening to the show for about four months now. And I have some debt. I don't have really any guidance when it comes to money. I've cut off contact.

majority with my father after some money issues. And I'm just trying to set myself up for success. And I'm wondering how best to go about it. Cause I'm still new to from what I've listened to kind of trying to follow the steps. Okay. So kind of help us understand what you're trying to sort through. Is it debt? Is it, tell us more. Yeah.

Um, so it's debt and then, um, like retirement plans. Um, I have a little bit of student loans, a car payment. Um, I currently rent, um, and, um, we'll be moving in May. Um,

to where it's more affordable. After college, I got a job and I had to move out of my father's house and found the cheapest place that I could. But I I've kind of been money hungry and like excited to start saving. I just I don't really know the best way to go about things. OK, so OK, good. So let's find out what are you earning? What do you earn every month? What do you bring home?

So I was earning $62,500 a year. And two weeks ago, I found out that I'll be getting promoted and I will start traveling for work and my new salary will be $78,000. Okay. So it was a decent bump. That's awesome. And so each month, what do you see? What does your check look like? So I've only gotten like...

the first since the first of the year. So, but my new is it's pretty close to four with the new salary. Okay, great. So you got 4,000 bucks a month to work with. Are you currently taking anything out of your check for retirement?

Um, currently my company matches 6%, so like dollar for dollar up to 6%. Okay. So that's what I have put in. And in one year I've generated like $10,000. Okay, cool. Um, 6%. Okay, good. Now, um, I just want to kind of know, are you, are you also using a budget? Is that part of your life at this point? I have somewhat of a budget, but as I, with the pay increase and I also in the spring, we'll have a little bit of a second form of income. Um,

Not exactly sure kind of what that budget should look like. I have like a general idea based on like my old income. But sticking to that was hard because I've had $10,000 of medical expenses. Why I was finishing my last semester of college and all of 2023, which I have no medical debt. That's all paid off, which has kind of prevented me from like being where I want to. Okay. So...

You're new to listening to us. Obviously, we filter everything through these seven baby steps, but...

All of that is contingent. It all rests on a budget. Like it's, that's the foundation of all of this. So we've just found over the years that people who win with money have budgets and they have a good budget that they follow every single month. And it really is that roadmap to get them to their financial destination. That's where it all starts. So the first things first is I do want you coming out of here. And I want you hooked up with a budget that you're doing every single month. And that's through every dollar, but,

The next thing here is we're walking through those baby steps. And like I said, your budget's going to inform and show you how much money you have to put towards each baby step. I have a $1,000 nest egg. Sweet. Which I think is like, I don't know which step that is. That's baby step one. So that's just sitting in a savings account? Sorry, say that again? Is that in a savings account, the $1,000? Yes.

Yeah, it's in like a money market account. Excellent. So that is baby step one, just getting $1,000 saved. It's just getting a safety net there between you and life. And then essentially your own baby step two, which is paying off all of your debt except your mortgage. So that's the phase that you're at right now. And I want to come back to the fact that you're putting away 6% into your retirement. And we teach that in order for you to pay off debt quickly, you need as much money as

to throw at it as possible, right? All your extra money is what you're throwing at your debt. You're making minimum payments on everything just to satisfy that, but all extra money goes to your smallest debt.

and you need extra money. And so right now you're giving away some of your extra money in retirement, which I think was a good natured choice. Like you're thinking, okay, I'm trying to be responsible. Let me do retirement. But there is a right method and a right order to go about paying off debt and building wealth ultimately. And the first step is paying off debt. So if I were in your shoes, I would temporarily, very temporarily pause investing so I can have that 6% back.

in my month to month money. - That's 400 bucks a month for you. That's really gonna help speed up the debt payoff. - Yeah, that makes sense. - So how much total debt do you have? You said student loans, what's left on the student loans?

So when I graduated, I worked two or three jobs through college. So I graduated with $16,000, and that's now down to $12,671. Right. My junior year of college, my car broke down, and I had no hope. So I had to buy a car to be able to transport myself. It didn't go crazy, but with the car market, it was a 2018 Ford Fusion, and it was $17,500, and I have that down to $6,500. Okay, good.

All right. And then you said something about credit cards. You have credit card debt? I have $1,700 on a credit card. So my thought would be go lowest to highest from what I understood in a credit card. And then...

My car payment has a 5.1% interest and my student loans only have like a 2.7 something percent interest. So I'm assuming I would pay the car percent off first and clear that $6,500 next. Well, the way that we found is the best way is by balance. So we list those debts in order by balance, not necessarily by interest rate. So in this case, the student loan, is it just one giant student loan for $12,000 or is it built into a lot of little mini ones?

It's three. They're either each, I think about 4,000 a piece. I don't remember exactly. So in that case, those would be next. You would do the credit card, then you would make your minimum payment.

on student loan, which satisfies all those three mini ones. And then the extra money, you would look and say, hey, I want it to go on this mini $4,000 one. And you kind of have to, you either have to call it in. Some websites, they have it in there where you can actually delineate that. But some websites, they don't want you to do that. So sometimes you have to call it in. But technically those student loans would come next. It sounds like, and then the car. But with your income, with the raise, which by the way, congratulations,

Listen, my girl is moving. You got 20 grand in debt. You make 78 now. Way to go. We can clean this thing up fast. I mean, basic math says...

If you can throw five grand a month for four months, you're done. Four grand a month for five months. Yeah. This thing's done. And you're about to free up 400 bucks a month by pausing investing. You'll be back to investing in no time. And when you do, it's going to be 15%, not six. So it's going to be sweet. But follow the plan. It works. I followed it. Jade followed it. We believe in it that much. That's right. Way to go. I'm proud of you, Mo. This is The Ramsey Show.

You are listening to The Ramsey Show. Thank you for listening to The Ramsey Show, by the way. We value it so much when you take the time to like, subscribe our show, when you log in, when you watch it on YouTube, wherever you watch or listen to podcasts. We appreciate it. I'm Jade Warshaw. This is George.

Camel, our Ramsey Show question of the day is brought to you by Neighborly, your hub for home services. Mr. Appliance is a Neighborly brand that can make your appliances, make sure that your appliances are running properly in the new year. For appliance parts, repair, and service, find a Mr. Appliance near you at neighborly.com slash Ramsey. Today's question comes from Emily in Connecticut. My husband and I earn $106,000 annually, and our only debt is our $200,000 mortgage.

Hmm.

I am the one who oversees our finances and wants to become financially stable, but my religion also says to let my husband be the spiritual leader of our house. How should I go about this? I want to save a full emergency fund, but at the same time, want to be generous. Interesting. A lot of layers to this tiramisu. Ooh.

Layers. Listen. One is just the financial. What is the right amount for our emergency fund? Right. Two is the how should we give and from where? And then three is this upbringing of abundance for scarcity that they're dealing with. Listen, I have a couple of thoughts, George. One.

Let's think about the giving part because I love that the... I almost said the dad. The husband wants to be generous. I love that. But kind of the way I think of it as is when you get paid, it sounds like they're tithers. If you're a Christian person, a lot of folks...

practice a 10% giving. I hear 10% in church, I think, okay, tithe. Yeah. That's what they're doing. And my guess is, if you wanted to really get technical here, whenever you earn your income, you're probably giving 10% of that income and then whatever is left, that's what you're using to run your household financially, whether it's

part of your budget, you know, groceries or whatever, or it's setting aside for savings. So whatever is in their savings, they probably have already tithed from that money. And my thought would be like, listen, if he wants to give more, then let that be from your month to month income. Like if he's like, listen, I don't want to give 10%. I want to give 15%. Great. Like I love generosity, but I wouldn't say that you have to drain your savings to

Yeah.

But if it's my wife and she says, I feel more safe with six, we're going to have a six-month emergency fund. Okay, listen. So he needs to also understand where she's coming from. And I don't buy this whole like, well, I grew up never seeing $10,000, so that's plenty. Like that's a really weird way to think about wealth and money. Well, he might be like, listen, $10,000 is a lot. Like some people...

And it's also not as much as it used to be. It's not as much as it used to be, but if you've never had to, like, I can somewhat relate to this a little bit. If you've never seen $10,000 the first time you see it and get it, you're like, I am just, you're like Hulk status. Like, you can't believe what you've done. But I think that he needs to go ahead and let that wear off and realize that $10,000 is...

Good, but start really thinking about it in lines of what could happen. If your AC goes out and you live in South Florida anyway, you're easily spending five to $7,000 on a new AC. So that money can dry up liquid, liquidy split. If you were to lose your job,

and your income how long the purpose of that is to sustain you if the worst happens and for most of us the worst happening is we lose our job right and it's can you really cause your household to move forward for six months with ten thousand dollars for most of us you know the answer is no and you need a

Especially with what it looks like their situation is. Well, the ultimate question was, I want to save a full emergency fund, but at the same time want to be generous. I don't see those things as going against each other. No, not at all. You can do both. And this idea of should never feel too comfortable. Well, the more wealth you have, the more you're able to give. And so I don't see it as, oh, well, we hit 10,000. I don't want to be comfortable. We need to start giving money. That's fine if you want to be more generous, but don't conflate the emergency fund with giving. And I think they both need to

Have a come to Jesus meeting, no pun intended, and go, here's how I'm feeling. We need to meet in the middle here. We're going to have a 20,000 emergency fund. We're going to set up a separate account for giving. And you need to go to therapy for whatever happened in your past. Own your past, change your future. I feel like he wants his giving to feel like a sacrifice. Like he wants to feel it. And it feels like for him, that's like, it's got to come out of savings. But I don't know about all that. Because then the HVAC goes out and you go, well...

That's not good. We just gave away a thousand bucks we needed for that. So separate them out. I kind of also want to talk about this. We probably should avoid it, but I'm the one who oversees our finances. Oh, yeah. That's thing one. And want to become financially stable. But my religion also says to let my husband be the spiritual leader. It's interesting because she said she's the one who oversees the finances, but he's a spiritual leader. It just sounds like they've got some conversations that need to take place because, you

You know, I mean, you guys are a partnership. Like there's in any partnership, there usually is one person that kind of like has the final word or it's like,

This is it. You know what I mean? Like Dave's the boss here. You know what I mean? But there's plenty of people that speak into the things that go on. And I just think that- Too many people see that as, well, I don't get a vote because they're the leader. It's like, no, you need to be speaking into finances just as much. Because if you don't have a vote, it's going to cause resentment. It's going to cause financial infidelity. So read some books on this whole spiritual leader thing, because I think there's a lot of misunderstanding around what that means.

what that really means when I was growing up they used to say the guy is the head but the woman is the neck and I'm like oh that's good because think about it because I'm like the head ain't doing nothing with the neck without the neck who's the rest of the body it's just a weird George we're just talking about the head and the neck okay sorry I thought we're gonna go this analogy broke down quickly it did it did that's let's move on all right let's go to the phone lines where we've got Joshua in Chicago Illinois what's going on Joshua

Hi, how are you guys doing? We're doing good. How are you? I've been better. I'm sorry to hear that. How can we help? Is there anything we can do to help?

Um, yeah, I, I had a couple of questions for you guys. Um, I know I've kind of reviewed your guys' website and I like to watch your guys' YouTube videos. Um, and I know Mr. Ramsey, he typically recommends with having debt that you pay off the smallest amount first and you kind of snowball, um, and you make your minimum payments on your larger amounts while you throw as much as you can at your smaller amounts. Um,

I'm currently 24, um, still living at home at the moment. So I don't really have too many expenses, but I got about $2,600 in credit card debt and then $6,500 in student loans. Um, and the, my kind of issue right now is my one credit card, um, payment. Um, the interest rate on it is very high and I'm getting, um,

kind of knock down on it in the sense that I'll make a payment and it's not really making a dent in it if I'm putting all of my money towards the smaller amounts. What's the smallest dent you have right now? About $400. And how much are you putting on it? About $100 a month, roughly. Extra? Yes. Okay. What do you make? Currently, I make $16 an hour. For how many hours do you work? About 40 hours a week. And what do you do?

I'm an automotive technician. I work for a dealership. Okay. Is this a long-term play for you? Like, are you in the industry that you want to be in?

Uh, no, I'm actually exploring different avenues. I just actually went today and signed up to join the electrical, um, union here in Chicago. Um, so it's, but that could take a few months to hear anything about that. And that's kind of a longer term process. So I'm trying to, before I, if I do switch over, um, careers, um, the opportunity does

I'm trying to get this paid off as soon as possible. Yeah. And the issue here, the issue here is not the debt snowball, whether it works or whether it doesn't, because it does work. The issue here is we don't have enough money going towards it. And so we've got to find something where you're making more money. And until then, we're supplementing the job that you already have with more work. You're working 60. I mean, you work from home. You don't have any kids. You don't have a wife. No bills. You're going hard in the paint, my friend.

until you get this done because yeah, throwing $100 a month, it is going to barely move the needle. You need to pay this off in one month. Like you need to get you an Uber cart, an Instacart, all of it and pay this off in one month and you're going to see this go out of your life lickety split. This is The Ramsey Show.

You're listening to The Ramsey Show. Thank you for listening to The Ramsey Show. I'm Jade Warshaw. This is George Campbell. George Campbell, host of The George Campbell Show on YouTube. Also, author of Breaking Free from Broke, his new book that is out now that I predict George will make.

and become a bestseller. We'll know tomorrow, Jade. You'll know tomorrow? Yeah. The bestseller list will come out tomorrow. Either way, I'm proud of the work we did and the feedback and the impact it's having is really what matters. I love that. But the list is a fun way to celebrate. And so congrats on you becoming an author in the last few months. Listen. This is a really fun year for us. It's a fun year. It's a fun job. I think that we're very, very lucky and blessed for what we get to do. I pinch myself every day that we get to do this. Awesome. I bet Whitney pinches you. Don't pinch me. You're stronger than me.

me no i'll let whitney pinch you she's that's her job all right let's go to the phone lines where we've got luke in chicago illinois what's going on luke hi there how's it going doing good how are you i'm doing well doing well um hope you guys are doing well yeah how can we help you to

Yeah, just wanted to give you guys a call. I've got some debt and also got some money tied up in some investment accounts. Just wanted to see or get some advice based on my income. What should I be doing attacking that debt or kind of continue investing into retirement? Cool. Tell us some numbers. How much debt do you have? So I have $20,000 on a car.

I'm currently making more than double payments on that. So I'm paying $1,100 a month on that car. And I have $3,200 in student loans. And then I have $8,000 tied up in a Roth IRA. Okay. Well, that's not debt. You said tied up. You mean you've invested $8,000? Yes. Okay. You kind of said it like something bad happened. Okay, good. I'm glad you got some money in a Roth IRA. So you only have the car loan and the student loan. That's it.

Correct. Okay. What's your income? My gross income is $87,000. Cool. And what do you see every month? What do you bring home every month from that? Well, it kind of depends from month to month. I'm in a commission-based position. My monthly take-home on my base salary is $4,000. Then my commission check is anywhere from $2,000 to $4,000. Okay. Cool, cool, cool. All right. And what's your living situation? Are you renting? No.

Do you have roommates? Tell us more about that. Yeah, I'm renting. I have two roommates in a three bedroom apartment. I currently pay $13.30 a month in rent. Okay. So the question here, what's your actual question for us?

I just wanted to see kind of, you know, if you guys were to put yourselves in my shoes, would you go ahead and kind of attack that student loans and pay it off in full rather than continuing to contribute to that Roth IRA and then kind of working on that car as well? Yeah.

Kind of wanted to get your guys' thoughts on that. Yeah. Well, you're doing a lot of good things. You're just doing them all at once. And so it's harder to make progress. And what I found was when I started this financial journey, when I paused investing and I just went all in on debt payoff, I felt so much progress and motivation and it happened faster.

And then when I got back to investing, it wasn't just a measly, you know, 3% or 5%. It was 15%. And that allowed me to build wealth with so much peace and confidence, just focusing on one thing at a time. And so that's what I'd recommend to you. How much are you investing right now? Right now, in that Roth IRA, I'm putting about $500 a month into it. Okay. So think about that. You said you're doubling your car payment, which is an extra $550. If you paused investing, you could triple the car payment and pay it off even faster.

Right. And if you attack the smallest debt first, that student loan, is that broken up into multiple or is that just one? That's just one. Okay. So that's technically your smallest debt, right? Yes. So what if you made a minimum payment on the car loan and you took all the margin you could muster up, you paused investing, how much extra could you throw at that student loan? $1,500? I could probably, yeah. $2,000? Honestly, I could...

Yeah. So think about that. It's gone in a month and a half. You just knocked out that student loan. You freed up that payment. Now we apply that to the car loan along with that extra fifteen hundred or two thousand. Boom. This thing's rolling, man. You're debt free in like, what, eight months? That's amazing. Yeah. And in March, you don't have student loans anymore. That's great. That would be sweet. And then before the end of the year, you're back to investing. And instead of five hundred bucks a month, it's going to be way more than that.

Right. And so that's what we would encourage. That's how we've personally done it. And I don't think you'll regret it that way. How old are you?

I'm 22. Okay. Dude, you have so much time. Yeah. It's amazing. Way to go on that income too at 22. That's a good job. Well, and when you look at the math on it, Jade, you know, 15% of 87 grand, that's $13,000 a year. Yeah. So he would be investing over $1,000 a month instead of 500. Wow. So he just over doubled the savings rate, which we know is the key to building wealth. Absolutely. Wow. How does that hit you, Luke?

That's awesome. That's awesome. Thank you guys so much. Awesome. Come on, man. Ooh, thank you for the call. I love calls like that. I put a pep in my step. I'm excited for him. I know, me too. I never want to go back into debt, but there's like an excitement when you're like, get the plan. You're like, this is going to work. I know, I know. It's an adrenaline rush. We did a live stream, gosh, two weeks ago. It was the Break the Cycle live stream. You can still go on YouTube and watch it.

but it was just motivation around breaking that paycheck to paycheck cycle. Just like we helped Luke do getting your money, figuring out how to pay off your debt, finding margin in your budget. And I was looking through the comments just to see if people were enjoying the live stream. And one person put the way you talk about debt. I get so excited. I wish I had debt to pay. I'm like, no, you don't, but be careful. We get the sentiment. It's so funny. Let's take another call. We've got Carter in Austin, Texas. What's going on, Carter? Are you there?

Carter. I don't know. Okay, there he is. What's going on? How can we help? Well, I just heard about the baby steps from my old youth minister, and I don't feel 100% convinced that my wife's 100% in on it and whatnot. Is she happy with the current financial plan? She likes being able to

Go out on weekends and doing things like that, I guess. So she thinks the sacrifice is not going to be worth it? I don't know. I don't think that she sees the long-term effect that it's causing right now, I guess. Is it out of hand? Tell us more about your situation so we can see where you guys fit on this spectrum. How much debt do you guys have?

I ran the numbers like 20 minutes ago, actually. It's $49,250.49. Yes, ma'am. $32,300 is with her with $29,963 of student loans. And on my side, it's a vehicle loan, the major one of the vehicle loan of $12,000. Okay, let me just clarify that. So you said she's got a student loan and it's $32,000?

$29,963. Okay, $29,000. Okay. And then you've got the car. What is yours? $11,862. And then what else do you have? And then I've got a credit card for $732. I don't know where, like insurance or whatnot, how that would be, but at one point- That's not a debt.

All it was is showed up. So what else? You mentioned your car loan, you got a student loan, and then the credit card, but there's more here. Medical, $4,200 in medical bills. $4,200? Yes, ma'am. And then we took out personal loans for, let's see,

$2,300 or something like that. Okay. And I think that that's it. I didn't know that the insurance thing was it. It just showed up on my credit thing. What do you got? Does she know about all these debts and the amounts? Not fully. Okay. There's the problem. Yeah. She needs to be made aware because I can feel you realize the stress of all these payments. I mean, your head's spinning just trying to lay them out for us. Are you the one that pays the bills every month?

I'd do my best, yes ma'am. I think that's the issue. Bring her into this. Yeah, you're the only one who's seen the full scope and you're the one who's paying that bill every month online and she hasn't felt that. Let's get them FPU. Can we do that? Yes, go ahead. Okay, we're going to gift you guys Financial Peace University, Carter, and you're going to watch these nine video lessons with her. That's her only commitment right now and that'll get you on the same page, speaking the same language, getting you guys fired up and really showing you why you're too, you guys are too smart to be this broke.

You can be so successful and wealthy at this young age with this bright young marriage and see it squandered in the payment sucks. So hang on the line. We'll gift you one year of Financial Peace University, my friend. But watch it. Convince her. You're listening to The Ramsey Show. Scripture quote of the day. Each one should test their own actions. Then they can take pride in themselves alone without comparing themselves to someone else. For each one should carry their own load. That's Galatians 6, verse 4 through 5. Then we've got this from Paul McCartney.

I don't work at being ordinary. Listen, I don't either, Paul. Spoken like a beetle. I don't work at being ordinary. We want to be extraordinary. Love it. Love it. Let's go to the phone lines. Jonathan, another one from Boston, Massachusetts. That's your area, George. What's going on, Jonathan? Hi, guys. Thank you so much for taking my call. So I have to be on the air today. Awesome. We're glad you're here. How can we help?

So I'm calling. I'm 22 years old. I've been working in construction, and I make a little over $60,000 a year before taxes. And so right now, I still live at home with my parents, and they're very...

No.

And so I'm just trying to decide if I should, you know, on a single income and often on 60,000, it's kind of impossible to find anything. So should I just deploy most of that into a taxable? I've already maxed out my Roth IRA for 2024. And I do contribute to my 401k. So I'm wondering, you know, instead of just having all that cash sitting in a high yield savings, should I stop really saving for a house and prioritize moving that cash to my taxable brokerage?

I see. You're saying, hey, if this isn't going to happen for another, you know, four or five years, as I continue to save, should I just invest it for the longer term and then pull it out later on?

Yes, yeah. Because, you know, the only way I think I could afford a house here is, you know, if I maybe have a career change, something that makes a lot more money. So I'm kind of like torn exactly, you know, what I should do because all my family's in Massachusetts. So I don't really want to move out of the area. But at the same time, you know, having money, even though it's in a high yield savings, it still feels kind of like I'm missing out on money.

potential opportunity. Well, right now, man, I remember saving up for our house and our high yield savings account was making 2% and we were doing jumping jacks at that rate. And so we are at record highs right now. I mean, I'm making five and a half percent in the high yield savings account. It blows my mind. And so that's a great option that's going to keep your money safe. And

And the problem with investing it is if you're going to pull this money out in the next three years, well, you could see a dip. All it takes is one stupid election and all of a sudden everyone freaks out and the market's down 18% or it's up 20%. But that's going to change your heart rate. And so if this is truly a long-term play, four or five years plus, then I'm fine with you investing in a taxable brokerage account into an index fund or something. But if this is three years out and you think you're going to do this sooner, the high yield is a great option with some great rates right now.

And I might also go, all right, I'm going to go rent for a year or two. I'm going to go get a condo outside of town. That's what I'm thinking. So look at all of the options. I mean, you don't need a huge single family home for just Jonathan right now, right?

Yeah, no, no, for sure. So I've been considering apartments. It's just crazy. Even outside, even outside the city, like I live outside the city. It's still almost... What area are we talking? It's still over 2,000. You're talking like outside Boston, so near like Lowell, Massachusetts. Okay, North Shore. Near like Drake and Mass.

Yep, exactly. North Shore. Yeah, yeah, yeah. Well, I think you're going to find much cheaper prices as you go further out from the city. And so I would be looking at condos and apartments. It's still a great way to get an asset and build wealth and create a forced savings plan. How much are you looking to spend? Like, what are you looking? Are we talking $300,000, $400,000 for a condo? Yeah. Yeah.

Yeah, yeah, I was doing the math, and it seems like, I mean, doing it, adding it into, like, how much house I can afford, what I was getting was about, it was showing, like, just over 200, like, 225,000 I could afford. Okay. So I was looking at condos and low, it still seems like most are, you know, just around the $300,000 range, and that's even before, you know, your broker fees, closing costs, everything like that.

Yeah. Well, think about this. Your income's going to go up, and I would encourage you to find ways to do that. You're making $60K at 22, which is awesome. You're an impressive dude. You've worked so hard. You're living on less than you make. You got no expenses. You could pretty much stack up all of that cash. I mean, could you save up $30,000 a year at this point? $40,000 a year? Yeah, yeah. Doing some side hustles too? Yeah, for sure. That's it.

Yeah, yeah, for sure. I do some side hustles, and I also, you know, I always like work during the weekend, try to pick up like extra hours here and there. Like I said, you know, I'm in a very fortunate situation where, you know, my parents don't charge me rent. I'm able to save like a lot of that money. Now's the time. I'd probably do this for another year or two, and if you need to go rent and just kind of get out of the nest, that's great too, but I think you'll be a homeowner within two years, man.

You got like $150 to put down on a $225 or $300. That mortgage is going to be real reasonable. 25% of your take-home pay, and you're in a great spot. I love it. Love our Boston callers. We had several of those this morning, or this morning, this afternoon. It's because I'm on, Jade. It's because you're on, and they know that you're here. Bostonian.

No, that's good. That is great. So, George, you know, I find that with these conversations, there's so much like with the way the housing market is, there's like, should I go? Should I not go? Is it time? Is it not time? Should I stay or should I buy a home now? I like it. Yes. That's the ticket. I'm trying to think who sings that song. James, tell us. The Verve? The Clash. The Clash. There we go. I know it's something. I'm like, it's the something. I'm so punk. But, you know, these conversations, I feel like that's what everybody's...

where everybody's at right now. It's like, I've got this money. It's going to take me a while longer to get the money I truly need for the down payment I want or for the payment to be what I want it to be. Do I just sit on that money or do I invest it? And I think the argument that you laid out is really important. When you have a lump sum of money that you are emotionally connected to because this is your future, like this is your house, this is that potential mortgage, to invest it, if it's not going to be long-term, you're going to be just...

on edge the entire time. You're going to be logging in all the time to see like, what's the market doing? And like you said, if the market crashes, you are going to have a heart attack. So that money is truly best kept. We've seen a lot of that lately, Jade. I mean, it wasn't long ago where we had the market was down 18% for the year. Yeah, that's right. But then,

We've had a great year so far this year. And so, but when you're ready to make that home purchase, you don't want to be like, oh gosh, I can't do it. Yeah. Because my hundred grand turned into 85. Oh, so painful. That's too stressful. But the longer you keep the money in there, the better chance that money has grown and it's going to be a wise move. So that's-

But that's a rare situation that someone has no debt and 100 grand sitting there at 22. Absolutely. What a rock star. Most people have debt up to their eyeballs, Jade. And they're like, well, I got to get a house because my parents are pressuring me and the housing market's crazy. And then they call us again going, I think we need to sell the house. We made a mistake. You know, in a situation like this guy too, it is worth noting that

It doesn't hurt to have some rental history going into buying a home, especially with a zero credit score. It's a great caveat. And I would say to somebody like Jonathan, it's great when your parents say you can live here rent free, but it doesn't hurt to set up some situation where you're paying them rent so that you can show I've been paying rent for, you know, I have a renting history.

basically is what they're gonna ask for, especially if you go in with a zero credit score. - You do that manual underwriting, they need to see that you've made some kind of rent payment. - That's right. - Even if it's not market rent of 1200 bucks. - That's right. - If you've made a regular payment on the first of the month to your parents for 500 bucks,

that is going to change the game when it comes to getting approved for a no score loan. It's actually very, very important. So in his case, or if you're in that case, you can either look at paying your parents or in this case, it could be worth it to get out on your own, find some roommates so that you're establishing that trade line, which is really, really important.

That's big time. It is big time. I have a whole chapter in my new book, Jade, on home ownership and mortgages. And I walk through with a lot of empathy because I feel for those out there. Man, it's different. You're right. Wages have not kept up with the housing market. It used to be twice your salary could get you a home. Now it's six times your salary is what it takes to get a home. And so it is harder than it was before. That's right. But don't let that discourage you. Renting is smart. It's buying patience. It's not a sin. It's not a waste of money.

I'm so sick of these myths that we're telling young people. And guess what? It's coming from you, parents, because you want what's best for your kid. And you go, well, you got to get in the game in the housing market. Your kid can't afford it. And if you can't afford it, it's a burden. It's not a blessing. It's a burden instead of a blessing. That's exactly right. So you got to do it the right way. Here's our parameter for this. 15-year fixed rate mortgage is the only one you want to go with. 25% of your take-home pay going towards the mortgage and have a solid down payment.

If you do it that way, you'll buy a house with peace. Yeah. How much down payment, George, for those asking? 5% to 10% is okay for first-time homeowners, but I think 20% is a great goal to have to avoid that pesky private mortgage insurance, which protects the lender, not you. That's right. Usually insurance is great because it protects you. Not in this case. Ooh, I love it. Another hour in the books, hosting with the great George Campbell. Thanks for being here with me today. Thanks, Jade. Thanks to the guys in the booth. Thanks, James. Appreciate you. You're welcome. This is The Ramsey Show.

Oh, shit.

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