Winning With Money Is More About Hope Than Math
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Brought to you by the EveryDollar app. Start budgeting for free today. Live from the headquarters of Ramsey Solutions, it's the Ramsey Show. We help people build wealth, do work that you love.

and create actual amazing relationships. Ken Coleman, Ramsey personality, number one best-selling author, and host of the new Ramsey Network's big hit called Front Row Seat. Oh, some long-form interviews with world changers. You've got to be checking him out. He's my co-host today. Open phones at 888-825-5225. Rachel is in Nashville. Hi, Rachel. How are you?

I'm good. How are you? Better than I deserve. What's up?

I have a very complex payment situation that I need advice for. So we started, we took your class, my husband and I, back in September, October. It completely changed our life. We've been rapidly paying off debt, building up savings. However, in the month of October, I work for a very large company, and

And there was a payroll error where they accidentally paid me $50,000, $48,000 to be exact, gross payment in error. I told them before it hit my bank account, but unfortunately it was too far gone at that point. After taxes, I received net $28,000, approximately $10,000.

$3,300 of that was my paycheck. And again, I told them before I hit my account, but they took so long to correct the error and get me my debt repayment letter. Now we're now 10 months in the future. And because it crossed tax year, they're asking for gross repayment, which is requiring me to come up with an extra approximately $23,000 in

of my own. And I've already been taxed on this because it was taxed in my 2024 tax return as well, which was additional money out of my pocket. They're offering to allow me to repay it in full, which would be the full 48, which I

Net $3,300 of it is mine that I would have to repay back, and I'm not sure how I'm going to get that back in the future. But they also are giving me an option to deduct 15% from my paycheck until the debt is paid, and I'm not sure what to do. We have the money to come up. Let me stop. If I understood you right, you don't owe $4,800. You owe $4,800 minus $3,300. Okay.

Well, net gross, $48,000. No, I'm talking about that's the gross because the taxes were taken out on this, and you should have gotten a ridiculous tax refund this year. We did not. So because it wasn't corrected, it got charged as income to us. I know. Yeah. And so the net of taxes, the taxes that were taken out on this, should have created a huge tax refund for you.

We haven't received it yet. I was under the impression we wouldn't get that until we filed next year for... It was last year.

Correct. No, you're filing on the extra $48,000. It's not 48. It's 48 minus 33, correct? $3,300. Well, my gross paycheck is $5,700. $3,300 is my net. But you received $28,000 is what you actually got paid. That was the net of taxes. Net of taxes. But there's $23,000 in taxes withheld on it. Correct. Correct.

Yes, sir. And you should get that back if it was last year or when you filed this year's tax returns. Have you not filed taxes for 24 yet? That is the tax return that we were taxed on. It filed for an extension, but we were taxed on income. You have not filed taxes for 24 yet. Is that right? Correct. We did, sir. We have filed for 24. Well, you should be getting $23,000 back.

I wasn't, so I'm not sure how that works. Well, here's how it works, okay? You paid $23,000 on that one check more in taxes than you should have. Yes, sir. And so you don't have taxes on that, so you should get all of that back.

Immediately. In 24? When you file on 24 as a tax refund. When you file and you have overpaid your taxes, when you file your tax return, you get a tax refund. You know that. Yes, sir. We still have that money, though, because they didn't submit the debt letter to me until last week. So it's been almost 10 months. But you've only got the 28. Correct. It's just sitting there. They're asking for gross repayment. Yeah. I understand. Okay. Okay.

Well, number one, you don't pay more than what you actually owe. And what you actually owe is the total amount, including taxes, that they overpaid you. And you should get all of your tax money back from the IRS on that amount without any trouble when you file your tax return. And the other amount, the amount that was net, is sitting in your bank account. So you can give them that now, correct? Correct.

Yes. Okay. And then you'll have to repay them the taxes when the tax money comes. You need a tax professional, I think. I don't think you know what you're doing on your taxes. Okay. Thank you. Do you have, I guess, we have an accountant that does our taxes. Yeah, but if he can't tell you, you're getting the, see, if there's 48, they overpaid you by $48,000. Is that correct? Total. Total.

They overpaid me by $43,000. $43,000. Okay, I'm sorry. So $43,000, but that netted into your bank account $28,000 too much, correct? Well, if you take out the $3,300 for mine, that's how much I received in total. I'm talking about just forget what you're due. What I'm trying to get to is the amount that they gave you that was too much.

It was 43 too much net of taxes. What was that 43? It would be around 24. Yeah, that sounds right. That sounds right. Okay, and so there's another 19 laying out there. You've got around 24 in your bank account right now, correct? Correct. Okay, so you can give them the 24. You owe them the other 19, but the IRS should be giving you the other 19 back.

Because you shouldn't be paying taxes on that. So you have to file an amended return, and they have to file an amended W-2. The company has to file an amended W-2 saying you were not due, you know, so that you pay taxes only on your proper amount, and that means that you get the entire refund back on the overpayment.

Okay. But if they've submitted your income to the IRS as including this overpayment, then that's going to screw the thing up. They need to submit your income as not including this overpayment so you can get all the tax back from the IRS. So this is a two-check deal. You write them the check for the money you've got, and then when you get the money back from the IRS, if your CPA doesn't know how to do that, get a new CPA because this is not rocket science here. And so then, wow, what a weird deal.

Oh, man. Yeah. But, no, you don't – that $19,000 in too much taxes that you have paid should come back to you once they submit the corrected W-4 or W-2 to reflect that you did not get that kind of income in 24.

Yeah, a little irritated here at a big company that has all the resources in the world to fix this, and they didn't fix it quickly. Hate that for her, but it's fixable. Well, and then they're being, you know, like, we're going to give you options for you to repay this. Right, they're the one that messed up. I've never done one that big, but we have overpaid people, you know, $3,000 or $4,000 or something, and you know what we do? Eat it.

Just keep the money. We're so stupid we did this. We're going to pay the stupid tax, and we're going to fix it. And somebody in accounting gets their butt chewed. Hello. Wow. Robin is in Iowa. Hey, Robin, welcome to the Ramsey Show. Hi. Hi. What's up?

So I have, I'm separated from my seem to be ex-husband. He took one of our vehicles. I took the other and he's not been making the payments on his vehicle. So it will be charged off at the end of the month. And I am looking for guidance on, do I take this large payment or do I let it hit our credit? You're on it as well.

I am. Why is he not making the payment? He says he cannot afford it and that the car needs to go back. Yeah, well, that's called a repossession. And he's going to get sued, and so are you. Yes, yes. It's not an inconvenience.

No, I'm aware of that, and that's where I'm sitting is, well, I've had the other vehicle, which is broke down, so I've been saving to try to fix it. So his car, the car that he's driving, what does it take to bring it current? Right now, it'd take $2,200 to bring it back up to where it is. What is owed on it total? What's owed on it total? $28,000. And what's it worth? Probably closer to about $17,000 to $20,000 at this point.

Okay. And do you have any money? Do I have money? I have money that I could get it caught up. How much money do you have? That's what I'm asking. I have about $5,000. That's all the money in the world that you have is $5,000? Yes. And I do not have a job currently. I lost my job in May. Wow. Okay. And...

So that in the divorce, there's not going to be any things. Is there a home in the divorce? No. Okay. So you're just going to split up these dumb debts is all you're going to split up because you don't have any money to split up. Pretty much. Yeah. Let it go. Let it go. Yeah. Let it go. Just let the Jeep go and I should just. You can't afford to catch it up. You can't afford to catch it up. You don't have a job and you have $5,000 to your name. You have to survive.

And you're going to have to deal with repo. Your credit's going to get dinged, and they're going to come after you and come after him for the deficit. When they do, and it'll probably be close to a year before you hear from them, be sure you've got some money saved up. And let's pretend that the...

that the deficit that they sell the car, you have 28,000 owed on it and they sell it for 18,000. So there's a $10,000 deficit. I'm just making this up. And they come and they say, you need to pay the $10,000 hole that the car didn't cover. You say, well, it was, that was awarded to my husband in the divorce. Yeah. But you signed on the note. Yeah, I know. But so I'll give you $3,000 to let my name go off of it and you chase him for the rest. And that's how you negotiate this.

Okay. But get ready for that. That's going to come in about a year, and your credit's going to be messed up. But whoop-de-doop-dee, you've got bigger problems than credit messed up. So how's the job hunt going? Yeah.

I've been putting in about three resumes a day. I haven't limited it to my area per se. I've actually put in for anywhere, decided let the universe decide where I go, I guess. No, no, no, no, no, no. So what is your... You don't like the universe. Yeah, I got to tell you, it's a horrible strategy because people who trust the universe tend to be unemployed for a long time. What is your field of expertise?

I'm an environmental biologist. Oh, good. What were you making before? $66,000. Just give me the quick 10-second version. What does an environmental biologist do? Forgive me. My last position, I was doing environmental permitting and compliance work. Private company or government?

It was a private company. Okay. There's two things you have to do. Number one, I love that you have got a pretty specific field and you know that world better than Dave and I, and I would absolutely be reaching out and connecting in that field and looking for opportunities. But in your current situation, three resumes a day, while I appreciate this and I don't want you to feel like I'm beating up on you, I'm not, but you might as well be playing the slots or the lottery.

Submitting three resumes a day feels like activity and good activity, but it's not. And a resume without a connection is absolutely worthless. So here's what you have to do. There's what I would call a short term strategy and then long term. I'd like to see you have a long term strategy of getting back in your field or at least leveraging the skill set and experience that you have.

to maybe cross another industry. And I believe that's transferable. However, right now you're working at Walmart, Target. Don't just assume I got to go drive and deliver food, but that I'm not looking down on that either. But right now you're looking at trying to make 15 to 20 to $22 an hour doing anything. Forget about skill. Forget about experience.

But you need to get money in the door right now for two reasons. Number one, you have a really tough financial situation and you need money. Secondly, you need momentum. You're going through a divorce and you've been laid off. And that is the equivalent of losing a loved one. We know this from psychology studies. And I believe very much in you just staying active.

One for money, but two, keep some momentum. So right now, you're taking anything and everything. And we're not sending resumes. We're showing up at these places going, here's what I've done, and I can take the night shift at Walmart.

I'm overqualified, yes, but here's my story. And right now, people want people that they can trust. You've got character. You've got a good background. But this is an urgency thing, Robin, like right now. Yeah, you need the Walmart job by two of those by the weekend. Yeah.

And we're going to send you a copy of Ken's book called The Proximity Principle, which is what he's referring to, which is get yourself in proximity and get your resumes in proximity to people that work there that you know. Just filling out applications is a complete waste of time in the digital world. That's right. At Ramsey, we hired 121 people last year. We had over 23,000 applications. That's right.

The chances of you getting out of that application pile are almost zero if you didn't have someone that you knew here or something very, very special that you did to set yourself aside. But people just jumping on LinkedIn and whatever other thing that's out there and just zip recruiter and just

filling out bazillion applications and feeling like, well, I can't get a job. Well, it's because you're jumping in a pile of 23,000 for 140 jobs. So you've got to say, hey, my daughter plays soccer. My aunt coaches over here, and she works over there at that company. And, hey, would you put in a good word for me? And that's what Ken teaches, and that will get you the job or at least get you the interview. You won't even get an interview with what you're doing. That's right.

Exactly right. So, yeah, go get some money short term and then go be looking for the bigger thing and put all this other mess in the rearview mirror. I'm sorry you're going through all this, kiddo. I'd let that car go and deal with it later when...

when you're in a much better place to deal with it. And you don't have to settle the whole deficit. You just settle your part and let them chase him for his part since he didn't bother to take care of business here. Two quick things to not just Robin, but to our larger audience who are in a situation like Robin. I want to make sure you hear something first. The reason what Dave is saying is so true and why we're hitting this point is here's what happens when you submit resumes, you feel like you're doing something productive.

And then that makes your expectation rise where it should not rise. And then you get ghosted and then you're spiraling because you've already lost. You've gone through a loss emotionally of losing a job. And now the frustration piles on top and you can quickly get into a really depressive state. And that pauses everything. The second thing, if you're in the position like Robin, Robin needs to take, and Robin, I know you're listening. You need to take your current job description of the job you just lost,

and get it in front of you and begin to look at it. And if you have to write down what the core skill sets you have that you exhibited in that last job, then talk about the experience that you have and write that down. And here's what happens, folks that are listening and watching. You can take a job like she has and find something

crossover experience and skill set that can work in other places. And that'll help you see more. And what that does is it widens your search. And then you use the proximity principle and you begin to say, hey, I have this skill set and this experience. While I've been in this field, I can actually go over here and you watch what happens. Opportunities that you never even thought of before begin to present themselves. So hope that helps a lot of people. This is a strategic play. And if you do it that way, opportunities show up on your front door.

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Sticking to a budget is hard enough and inflation, George, it isn't helping us. Yep. In fact, 54% of Americans say it's a challenge to save on groceries without sacrificing quality. But Aldi makes it easy. Aldi's private label, it is delicious food with incredible prices that you can stay within your budget. Yeah, and Aldi has the lowest prices of any national grocery store, which is really impressive.

And with all the money you saved, you're going to be making more progress toward your financial goals. Yes, which is what we want for you guys. So stop overpaying and start shopping at Aldi. Find a store near you today at Aldi.us. That's A-L-D-I dot U-S. Alec is in Canada. Hi, Alec. Welcome to The Ramsey Show. Hey, Dave. Hey, Ken. I'm a huge fan of both of you guys, so I just want to thank you for taking my call. Thanks. How can I help?

So I'm probably going to get in some trouble for asking you guys this, but my question is, how would you feel about me taking out student loans to invest into a guaranteed investment certificate, even though my post-secondary education is fully paid for? I thought you said you were a huge fan. See, I am. It's the what if, Dave. It's like...

You're like a huge fan of bears, so you go in the cage and poke them? I mean, what is the – I don't understand at all, Alec. I'm going to see the balance of my time to the gentleman from Tennessee to my left on this one. I've heard this a time or two. Yeah, how about no, don't do that. All right, all right. John's in Jackson, Mississippi. Hey, John, how are you? I'm doing great. How are you doing, Dave? Better than I deserve. What's up?

I'm trying to convince my wife, and I think I'm there, that we are in a more or less let the good times roll situation. The complication being there's a bit of an age gap. I'm 39 and she's 59.

Okay. So she's got 250K in a Roth, Social Security's on the horizon. She'll have a small state pension. She worked 12 years for the state. That's at 65. We've got 77K in a stock market fund that we just have. I've got my own 160K of retirement savings in accounts. We've got about 50K in savings, just normal savings. Anyway.

And the only thing we owe is our house at 80K, and it's probably worth about twice that on a bad day, I would hope. So, you know, we're not going to have that traditional retirement of each being, you know, like 60 years old. And so in lieu of that, maybe we could just spend some money and just have a better life now for the next, you know, 25, 30 years. Hold on a second. Hold on, hold on, hold on. Real quick. How much do you make?

I make about $80,000. You make $80,000. And you're planning to work until what age? Well, and I don't want to sound particularly crass, but we're both only children, and our parents have what I would say are sizable estates. So when I don't have to work anymore, it's probably about when I'll stop. That's about where I am on that. So 55, 60, somewhere in there.

And you're contributing to a 401k? Yes, I do matching and then a little extra. And is she working? No, she's been basically retired, semi-retired since she lost her job about five years ago. Okay. So her 250 is there, and that's it. Well, I don't know what you mean by let the good times roll exactly, but I can tell you what I would do in your situation. I can answer that, okay? Sure.

Um, no, you are not financially independent, not close even. Okay. Uh, you're not where you don't have to work anymore and you don't have to worry about money and you're going to sit around like some trust fund baby and wait on the parents to die. No, I'm not going to do that. That's not a high quality life. It's not a life full of dignity, uh, purpose or anything else. And so I'm going to find something that I do for a living, uh,

that has some purpose to it that I enjoy and that I can make some money at, and that's what you should be doing with your life until you can't anymore, not until you don't have to anymore. So I'm 64. The building I'm sitting in is worth $600 million, and I still work, okay? So that's just this building. And so the...

And it affords me a very good life. I can do anything I want to do. And I want you to be able to do anything you want to do. But I also don't want you to think that doing nothing is good for you mentally, mental health-wise, spiritually, or anything else because it's not. So if I'm in your shoes, I'm taking the 77 out of the stock market and paying off the house today.

and I'm going to be putting 15 to 20 percent of your income into your 401k. And if you want to use, you know, $10,000 or $15,000 or $20,000 or something out of that, $250 of hers and go on a cruise or something, if that's let the good times roll, sure, absolutely. But if you're talking about trying to burn through $250,000 of her money just because she hit $59,500 in the next 24 months and you call that let the good times roll, no, I'm going to call that irresponsible.

Not that. I just want to be clear. I'm just talking about like, hey, we go out to the nice restaurant maybe every month versus every third month. I think you can afford to do that with what I'm talking about. You don't have a house payment anymore with what I just laid out.

And you do a budget, and the budget includes a nice entertainment budget, a nice travel budget, a nice furniture upgrade for her budget, a nice whatever budget. All of that is fine, but it also includes putting 15% of your income away and a plan to work. And honestly, I think she would be better off if she did something.

Your two only children, she's sitting at home on her butt. I mean, I'm sorry, but is there not something she wants to do? You don't have to work to have meaning. That's not the thing. My wife doesn't work today and hasn't since our first child was born. Doesn't work outside the home, I should say, because she does work. So anyway, I think you guys lay your hand to all of that and

But am I signing you up for a 24-hour-a-day Mardi Gras? No. That's unfulfilling. It's not a quality life. It is if you're 18 years old, but it's not for normal grown adults. And so that's what I would do. I would systematically be saving, systematically be giving, systematically be enjoying. And if you leave her $250 alone, it'll double every seven years.

Yeah, the only thing that sticks out, and in no way, Jacob, do I think you're saying this, but I'm just going to throw this out there because I think this is a slippery slope, that when we are waiting on parents to die to inherit this life-changing money, I think that's a, I'm going to call it a slippery slope. And I just think we've got to be very careful about that because that's really tricky. And I'll tell you this, as we sit down with our financial advisor, Stacey and I, every January,

And they're talking to us, Dave, like, hey, you could live to be 90. Like, we're starting to see life expectancy. And so this idea of like, I'm just going to try to scrape along and then hope the parents, you know, kick the bucket. And again, I know you're not saying that, but I do think that that can get into a really weird, tricky mindset, Dave, is what I was feeling there. Our estate plan is set up that if one of our kids does that, they're out of the will.

They can't. They don't have that as an option. Yeah. To squander and just wait. To sit and wait on me to die. That's not a plan. Yeah. So I'll take you out of the will and then you'll have a need to work. That'll be good for you. Okay. We'll help you fix that. And, you know, and so that's the way it's set up. And, you know, you're not allowed to just sit and wait on us to die because we may live a long,

I think you are. I see you like 99 with a cane. Still on here going, shout in the car. That's it. Well, you know what's funny about this? The calls will be the same 30 years from now. Yeah, they were 30 years ago. I can tell you that. It's pretty much the same thing. Don't do a student loan. Don't do a credit card debt. Don't borrow on your student loan to invest it in a certificate of savings. I think a lot of people will be here for 94-year-old Dave getting irritated. I don't know, man. That's going to be next level. I know what happens when people old quit making sense and they don't quit. Yeah.

That's not a good thing. We've witnessed that up close lately, and I don't think I want that anymore. So I'm pretty much ensured that these people over there, the booth people, are going to take me off the air is what's going to happen. It makes me think of you and I are both friends with the legendary Art Linkletter. Yeah. And Art once said, he said this many times, but one of my favorite things he said was his favorite people to ever interview were young people and old people. Young people because they don't know what they're saying, and old people because they don't care. Yeah.

You know, I interviewed Art on this show. He was 78, and he did 148 speaking engagements that year.

And I said, why in the world are you doing that? He said, because I'm on the Council for the Aging. Yeah. And some of the data, and this was 20 years ago, some of the data we found is that if you don't keep your brain active, it's a muscle. It atrophies just like any other muscle. And he goes, so I'm doing it just to keep my brain active, just so that I, you know, it's either that or do crossword puzzles. So, you know, I got to do something to keep the thing moving.

Buying or selling a home is a big deal, and with all the clickbait headlines and confusing stuff out there on Tic Tac, it's tough to know what's actually really happening in the real estate world. Hey, we're here to make the latest trends easy to understand. Last month, home prices went up slightly again. Now our median house price is around $440,000 nationally, and we just hit over a million homes for sale. That's the highest inventory since 2019.

Not enough to meet buyer demand, though. Prices are still going up. Average 15-year fixed rate, slightly under 6% right now. If you want to learn more about housing market trends and get ready to buy, get the free tools to help you buy or sell with confidence, we'll teach you, we'll help you. It's all free. Go to ramseysolutions.com slash market or click the link in the show notes. Our question of the day is brought to you by YRefi. YRefi works with borrowers who have defaulted private solutions.

student loans, even when other lenders have said no. With a lower payment, low fixed rate, you can refi this, get a clear path forward, get out of this debt. Visit yrefi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Might not be in all states. Today's question comes from Evan in Washington, D.C. I'm 35 years old, single with no kids. I make about $350,000 a year.

I have a $750,000 net worth, and my only debt is my car payment and a $750,000 mortgage. I have $250,000 in my emergency fund and about $250,000 in retirement. The country club I'd like to join has a $20,000 initiation fee and then $500 per month after that. I golf about twice a week. Is it wise for me to make a purchase like this?

At this point in my life with my financial situation. Yeah. Yeah. Yeah, you can afford that. Yeah. No question. But $250,000 emergency fund is asinine. It's too much. Pay off your car today. Yeah, that's right. Get that emergency fund down to three to six months of expenses and invest that money into some kind of good growth stock mutual fund with your financial planning firm. Yeah. I agree. But you can afford a $20,000 initiation fee with those numbers and $500 a month with those numbers. Yeah. Easily. Easily.

And if it's a nice place, send an email to Dave and I. We will consider joining you for 18. Well, give it a consideration. A consideration. I don't want to speak for Dave at his busy calendar. Jacob is in West Palm Beach. Hey, Jacob, what's up? Hey, Uncle Dave. How's it going? Better than I deserve, man. How can I help? Not much. I'm just trying to see if it's a foolish idea for me to purchase a used boat.

No, you ought to get it, I guess. I'm kidding. What's the situation? What's it cost?

Yeah, so they're asking $16,000. I could probably talk them down a little bit from there. I do have $13,000 currently stashed away in cash. I make a salary of $70,000 a year. I am debt-free, have no debt. I invest 13% of my income into my 401K, and every year I track and max out my Roth IRA. So I don't have really any— Do you have an emergency fund? Yeah.

Yes. Currently, that's just tied up in my money market account, which I could pull at any time. I'm sorry. How much is in your emergency fund? $38,000. Okay. All right. And you have 13 saved towards a boat that they're asking 16 for? Yes, sir. So if you settle on 14, how are you going to cover it? So, well, I'll just wait another month and keep doing it, or I could pull out, I guess, from the savings account as well. Oh, okay. I'm sorry. How much is in the savings account?

Savings account is just $5,000. So you have $38,000 in an emergency fund, $5,000 in savings, and $13,000 in the boat fund. Is that right? Yes, sir. Okay. All right. I'd offer $13,000. Yeah, yeah, definitely. And see what you can get the boat for. But yes, you can afford the boat.

Even you think even with storage, having to pay storage fees since I don't have a house, I'm living in a condo. So I'd have to find a place that'd be roughly 300 a month. If you don't want to, it's OK. Oh, OK. Well, I just really wanted to see if you thought I could afford it reasonably with my income. And I mean, well, I mean, what is it? What's your car worth? I have a Toyota Tacoma. It's probably worth 30 grand. And you make what? Seventy thousand dollars.

Okay, one rule of thumb is not have more than half of your annual income tied up in things with motors and wheels, and you're probably getting ready to break that or pretty close. So that makes it a little bit questionable. You're going to have a lot tied up because the Tacoma's going down in value like a rock, and so is the boat.

So you got a lot tied up and things going the wrong way, but you can do it, but you're just, you know, be aware that you're pushing the edge. You know, more toys, you ain't getting room for toys. And, you know, I don't know what these storage fees are. You need to look at that and see if you can actually afford that part. But the numbers you gave me, you have saved up for the boat and Ken's right. If you bought it for 13, I think, you know, that puts you right on track. I think he gave us about 300 a month on storage, Dave. So he said that. Yeah. I missed it. And so with that,

He needs to look at his budget and go, how much does that tax his other operating expenses? It's $3,600 a year. Yeah. So, you know, it's doable based on the numbers he gave us. Is it the best decision? Yeah. Not on the rule of thumb that we have. You're on the top side of everything here. You're not on the bottom side. It's not a slam dunk like the country club guy. But the...

What's a boat like that going to depreciate? Is there a rate? They all go down like crazy. Anything does. I mean, there's no such thing. Anything with a motor or with wheels.

If it's got a battery and wheels like Rachel's car, it goes down and down. It doesn't matter if it's got a motor. You know what I'm saying? They just all go. It's just a black hole for money. I will tell you this. The joke is always there's two best days in a boat owner's life, the day they buy it and the day they sell it. Is that true? Yeah.

Well, I don't know. I've never sold one other than to buy another one. So I've always had a boat my whole life. Isn't that really? Okay, so this is a fun question for you. If you reach the end of your use of a boat and you're sick and tired of it and it's a bother, then it's a great thing. Like anything, you have a little celebration when you finally get the stupid thing sold. But you have so much financial margin and freedom that there's, my point is, I don't know if that's true for someone who's in good financial situation. Yeah, but I mean, emotionally, the thing could just be in the way.

If you're done with it. Oh, I see. If you're done with it. I don't want this thing anymore, whatever it is. But you've yet to reach this moment.

On a boat? Yeah. No, I've got, I like boat. I've got Mastercrafts and we're skiers and so, and wakeboarders and surfers and all that stuff, barefooters and all that. We do all this stuff. And so, yeah, we love our Mastercrafts. They're world's best ski boat as far as I'm concerned. I'll just give them an ad right here. There you go. There we go. Give them a mention. Yeah, that's, but that was when I was a kid and we were skiing and beginning to ski tournaments and stuff in my teenage years. If you had a Mastercraft, you were...

You were the dog. Status. You were the big... It was the best boat. I mean, because it's... When you're slalom skiing in those days, and today, if you got a 190, it's a zero wake, and it gets you out of the water so fast, it's unbelievable. You're not dragging around back there and drowning and everything else. And so it's just...

And so that's what I always wanted. It became a goal. I mean, like I was a teenager. I'm back there going someday I'm going to get some money. Sure. What am I going to get? Some people wanted to get a car. Some people wanted to get a Tacoma. Dave wanted to get a Mastercraft. So that was that was the thing. So it's a little different for me. But yeah, it makes sure you're going to use a stupid thing. And because you're going to be you're going to be putting a fair chunk of your life into it, sir. And so make sure you're getting good use of it. Toys are not against the rules.

The only rules we have are rules that cause you to become wealthier so that you can enjoy your life more. That's the only rules we have. And when you make $50,000 a year and you have a $50,000 truck payment and you have a boat and two sea dues and you wonder why you're broke, I can show you. It's in your driveway. It's why you're broke. You wonder why your kid's college fund isn't funded. It's in your driveway because you're buying a bunch of crap you can't afford to impress somebody at a stoplight that don't even know you.

And so, ooh, cool truck. Yeah, well, that's about what you get for $70,000. So no, no, you don't put money in stuff like that. And you live like no one else. You drive like no one else so that later you can live like no one else and drive like no one else. The reason we can afford those master crafts is because...

You know, we didn't for a long time. And we saved and invested and saved and invested, just like we teach here on the air. So you live like no one else, so later you can live and give like no one else. Speaking of, I, along with the other personalities...

have been at the other end of you giving us a wonderful time, dragging us on the back of that boat. And you have thrown me in places. It's such a joy. My body is contorted in places. It's such a joy to launch Ken Coleman. At a high rate of speed. Launch him on a tube. Can you just see Ken flying through the air with the greatest of ease? Limbs everywhere. Terror until you land in the water. Blisters. It's a great tube launch. No skin on my knees. Great tube launch. Dave gives like no one else, folks. I'm telling you, man. That's right.

He does. I'm generous that way. Switching banks can be a hassle, and I totally get that. But when Winston and I opened up our Fairwinds account, we were shocked by how quick and easy it was. It just took a few minutes online. We didn't have to block off an entire afternoon or track down paperwork. And the next day, we got a personal call from a Fairwinds specialist just checking in. I couldn't believe it when I answered my phone. And I was talking to them. I was like, y'all are the nicest people.

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Hello. Hi, what's up? So my husband and I both work. We are doing everything right financially, at least according to everything I've read and seen and done. But he still insists that we can't afford a baby, and I wanted nothing more forever. And I just don't see how his math is working. I just don't see how he can...

I think that when we're doing so well. So do you have debt? I mean, technically, you know, we have a car that we're almost done paying off. It's got, I think, like $900 left to pay off. And we bought a house about a year ago. How much is your house payment? I know we pay $2,400 a month. I think it's just under, but we like to round it up. Okay. All right. And then I do have student loans. How much are your student loans?

About $40,000. They keep going up because I'm on an income-based repayment plan, and I've been working for... So you're not paying off your student loans, so they're going up. Okay. Yeah. I've been working towards the public service loan forgiveness program for those. No, it doesn't work. You've got to pay off the student loan. 1% of the people survive the public service program. It's a complete scam. So what's your household income?

He makes $70,000-ish. I don't know what my yearly salary is because I changed dollars about a year ago, but I make about $20 an hour. Okay, which is about $30. So you make about $100,000 a year. All right. And your vision of having a baby involves you quitting work? Most likely, only because I do have a disability, and we think that once I have a baby, I'll probably have to go on disability. But we're not sure. We're trying to figure that out.

So having a child will aggravate your disability and make it worse? Yes and no. I don't know if you've ever heard of EDS or POTS. It's essentially a connective tissue disorder. So I'll be in and out of... To make sure everything's good, I'll be, you know, not in the hospital a lot, in the outpatient a lot. I'll be going to the doctor quite a bit and then just...

because it's a connective tissue disorder where everything's loose. Pregnancy makes everything looser, so there will be a period of time where I'll be in kind of recovery, getting everything to tighten back up so that I can function as normal again. Okay, and all of that, of course, involves medical bills. Yes. We've got pretty good insurance, so I'm not super worried about the bills part of it. So is he really worried about the money, or is he worried about you?

It's both. I mean, I know it's both. He said as much, but we're both pretty confident that because I've got a really good team of doctors, a lot of my disability is, I don't want to say in remission because it never goes away, but I'm pretty well managed for what I have. Have you two sat down and gone line by line through the budget?

Because the way you led the question off, you basically said, I don't think his numbers are matching what I'm seeing. So I'm curious, have you gone line by line through your budget based on you losing $30,000? What expense is it that he thinks is going to break you all?

Yeah. So we've gone line by line. The reason I think that it's coming across different is because, for example, he likes to have like a minimum $2,000 buffer in our

in our checking account every month. We have an over $10,000 emergency expense and a share certificate plus our regular savings for like saving up for things. He wants to have all of the funds saved up for, you know, me being out on medical and initial baby expenses. He wants to have that all saved up beforehand. And I grew up in poverty and I'm sitting here, he's got 17 kids.

0.5 K in investment accounts. You know, we've got all this money stashed away places and he just doesn't like to touch it because he wants to have it just in case he wants to have, well, he's trying to make sure he takes care of a wife who's going to struggle medically and a baby.

You know, I think this guy's loving you well. The way he knows how to love is to have some money to make sure that the family is okay. So his motivation is really pure. He's not, you know, you didn't tell me he's got a million dollars. You told me he's got 17,000. It's not like you've got cash stacked in the spare bedroom to the walls, okay? It's 17 grand. So I have a quick question. Has he revealed to you an amount of money that if you were to get to that, then he would feel comfortable?

Sort of. He tasked me with coming up with a number of like, when we have a baby, you know, if we're getting ready to do this, how much do we need? Yeah, you're not the one that needs a number. He's the one that does. He needs to come up with a number.

Right. The reason he asked me to do it is because he's like, I don't really know what it's going to cost for us to have a baby, and I don't know how much your work is going to let you have a baby. So give him what he doesn't know and then put pressure on him in a positive way. The answer to your question is I think you guys can afford to have a baby, but I think the way you're going to get on the same page about this is that the two of you lay out a game plan because your husband is a planner. He is a nerd. Mm-hmm.

He's a wonderful husband, but he's a nerd. And he is going to be fretting and worried about his wife and his child, and it's going to offset some of the joy of having a child if there's not a plan.

So the two of you sit down and work your way through a plan and what exactly those dollars are. Reallocate some of the dollars you've got and put some new dollars towards it. Get the questions answered about what it's going to cost, the questions answered about what time you're going to be off, questions answered of whether you're going to quit and what disability is going to look like. All of those things. Get all of that laid out. And that shouldn't take – you could do all of this in less than a month.

and figure out the plan, and then it might take you a couple months to fill in the gaps with the cash to do the plan. But one of the plans needs to be, you know, after you do this, after you have a baby, you've got to have a plan to get this stupid student loan paid off because your plan that you have right now sucks.

It's horrible. You're going to be in debt the rest of your life with the plan you've got right now. So that's a side issue. But you guys have got to start laying that stuff out and go, okay, we're going to get rid of all these debts, the last little bit on the car. We're going to actually start paying off the student loans after the baby comes. And I'm fine with that. We never tell people, I mean virtually never, to avoid children based on cost. We always say have babies. The best thing in life is babies. Babies are awesome.

They're the best thing out there. And the only thing better than babies is grandbabies. Yeah. That's the only thing better. So, yeah, get you some. But, you know, he's laid out what makes him feel like a good dad and a good husband. So help him get there. And when you do that, I think all of a sudden a baby's going to be back in the discussion.

We know a bunch of you have been trying to get your friends and family on the Ramsey plan, and it's hard to get them to understand all this stuff, so we're going to help you. We built the Ramsey 101, the first level class that you can take. It's a playlist, and you can help them completely for free. It's an easy-to-share playlist. It covers the basics for someone who's just getting started with Ramsey. What are the baby steps, how to pay off debt using the debt snowball, how to build an emergency fund, how to get the spouse on board. Click the link.

In the top of the show notes, an open Ramsey 101 playlist on YouTube. Text it, DM it, send it to a group chat. Say something like, just thought this might help. Not like you're stupid. Don't do that. If you're listening on radio, we've got the playlist featured at the top of our YouTube channel. One share, one step could change everything for one person. Aaron is in Jacksonville, Florida. Hi, Aaron. How are you? Good. How are you? Better than I deserve. What's up?

So me and my dad, we run a painting business here in Florida, and the plan from the start was always for me to take it over. I'm 26 years old. He's about 60 years old now. But he also pastors a church here in Florida, and so the plan's always been for me to start and take over the business. He's going to hand it off to me. He's going to retire, but...

that the last six or seven years now he's been doing just like shady things as i get older i'm realizing the things that he does are just not ethical and me and my wife are just getting to the point of like should i move on should i just take over the business and hopefully it all will just work out but the shady things he does are just like taking payments from customers to his own personal venmo account and sometimes even to his own bank account

and sometimes won't even tell me if I bring it up to him, he'll just blow it off, say, "It's our account. This Venmo's our account. If you need anything, we'll pull it out of there." And I can't get him to put it into our joint account through Fairwinds. So the big question is if I should move on. - So, wait a minute, are you one of the owners now? - Yeah, I'm the VP of the company. - Yeah, and you're one of the owners.

Yes. Okay. And so he's taking money that is your money. Yeah, our company, our painting company. Yeah, I know. But he took it and put it in his personal account, which half of that money was yours. Some portion of that money is yours, right? Yeah. Not like if I need it, it's like mine. Whether I need it or not, it's mine. Yeah. Yeah.

Is that what you're saying? Yeah, it's his personal demo account, so it's not really my money. I don't think he sees it as shady. I think he just really sucks at bookkeeping. Yeah. It's irrelevant to him which account it goes in because it's his money as far as he's concerned. And he left out the part where he was ripping you off. Right? I don't think he even realizes it, does he?

No, he'll deflect it and just try to blow it under the rug. That's not what I mean. I don't think he realizes he's stealing from you. That's why he deflects it. As far as he's concerned, it's my money. If I put it in this account, if I put it in that account, it's still my money. But that's not true because you're one of the owners. You get paid out of the profits, right? Mm-hmm. And so this affects profits. Yeah, 100%. Yeah. So you've had a discussion that was that blunt? I don't think so. You don't sound like that guy.

I have a couple of times, and he just says, what's the big deal? What do you want to do? I'm like, can we try to get it to work? The big deal is I want you to put the freaking money that's my money in this account that's ours. That's the big deal. But it doesn't sound like that coming from you. It would from me. Yeah, this is a clear cut for me. I think you need to move on. I don't think he's going to change anything.

And it feels like to me, you already resent him. And this is just a mess. And I don't see him getting out of this deal anytime soon either. So then it comes down to if he's not going to change, how much longer are you willing to put up with this? And I don't think you're going to like any of those answers. So if it were me, I would say, dad, love you. I want out of ownership. I'm willing to stay if you transfer all of it to me within three months. Yeah, exactly.

If you're not willing to do that, I think I need to go out on my own. I think this thing's run its course. Yeah. Yeah. Will he do that? Will he turn it over to you now? I don't think so. I think he needs the income. He's a pastor, but it doesn't support his... Yeah.

He's bivocational. This is a slush fund for him. This also has tax implications that I would not sleep well at night. I've never been a fan of people doing that and treating their business like it's a personal account. A lot of small business people do this, and that's dangerous. And the IRS loves to weaponize and make an example out of people. And I'm not saying that's going to happen, but for all those reasons, Dave, you're being very generous here. I wouldn't even give him the—I'd just be done.

I don't think I'd give him an ultimatum because I don't think it's going to matter. And I think it prolongs your decision. Well, what it does do is it gives dad the choice. Fair.

You let him have the dignity of choice and you can choose. You can add. I'm through working together. This you putting money aside and other things I'm not OK with and the other stuff you're doing. I'm not OK with. I love you. I want to continue to be your son, but I can't work here anymore. If you want to turn this over to me, fine. If not, I'm going to go out on my own. And, you know, it just sounds like that. Yeah.

Yeah, there's no reason to burn the bridge and no reason to burn the relationship. And so don't be yelling and calling him a crook and running out the door or something. That's not valuable. There's no need to do all that. So, man, I'm sorry. That's a hard situation to be in. Dave is in Chattanooga. Hi, Dave. Welcome to The Ramsey Show.

Hey, guys. Thanks for taking my call. I am looking at long-term care insurance, and I see a couple different options out there. One, this is something I should be looking at, is that that's one question. And number two, what should I be looking for? And basically what I'm looking at, I'm just trying to understand the numbers and what makes sense. Okay. How old are you? 48. You don't need long-term care insurance. Okay. The statistical use of nursing home stay prior to age 60 is very, very close to zero.

And so I would not, we don't recommend long-term care insurance until you turn 60. And then the reason you would do it is this. If you have a mid-range net worth, meaning let's say you've got $500,000 or $700,000, 57, well, I'm sorry, 75% of the ladies outlive their husbands.

So the normal scenario is 64, 65 years old, whatever, 69 years old, dad gets something and goes into the nursing home, stays three years, burns through 350 grand, cracks and scrambles the nest egg, leaves mom broke when he dies. That's who needs nursing home insurance, long-term care insurance. You also, when you're buying that at 60 years old or older, want to buy an in-home care feature.

that it will ensure someone to do in-home care as well as a traditional nursing home. None of it covers more than three years now. You can't hardly find it. It's all a three-year policy. But the statistics, again, the stats are the average nursing home stays about 2.7 years. And so very few people go over three years. It's very, very unusual.

And so if you do, you can get into some other messes, but you can't get coverage for more than three years hardly these days. So basically, nursing home's $100,000, so you're buying $300,000 worth of coverage. It costs you about $5,000, $4,000, something like that per year, and that gets you set up. Now, if you're worth $10 million, you don't need long-term care insurance. You hire full-time help and turn your home into a nursing home.

Or you write a check and self-insure if someone does need to go into memory care or something like that, and you just write the check and you're better off to self-insure through it. Because, again, your exposure is about $300,000. That's about what the average out-of-pocket is going to be. And you can absorb that if you have $10 million. But we strongly recommend mid-range and down to no money.

under a million dollar net worth down to no money, that you get long-term care insurance once you turn 60. It is a major deal. It's a big hole in people's thing. And I see a lot of widows left with no money because daddy used up the money in the nursing home. And they had a pretty good little nest egg, a couple hundred grand or 400 grand or something, and it just gets cracked and scrambled. Yeah.

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Um, okay. So I have received a 30K buyout from my former employer. I have an $18,000 car loan left to pay off. I have $5,000 in medical bills. Um, I'm just wondering what actionable steps can I do to set myself up in the future for financial success? Got the new job? No. What were you making before?

Before, I was making like $50K a year. Okay. And when will you start the new job making $50K? That is something I'm not sure of. It's a lot of wants that I want to do. I want to start a new business. I want to invest. I want to go to school. I want to go to college for... No, you need to get a job. Mm-hmm. I'll get a job. The job funds all of those want-tos. Yeah. You don't have enough money to do all that. You only got $30K. You didn't get $3 million. Yeah.

Okay. Okay. Well, that is definitely an out. Let me help you with this. If you get a job this week making $50,000, the $30,000 is free money, and you can use it to pay off your debts. And you'll be debt-free making $50,000. You'll be in a lot better position than you were four months ago before the voluntary buyout, right? Yes. And then you can take, since you don't have any payments now, you can start saving up money to go to school, saving up money to start a business.

Instead of just pouring out what I have now and then that would just be a risk. Well, the problem is you don't have anything to eat with, honey. When you pour out the $30,000, there's nothing left. You don't have any money to eat with. Right, right. You've got to have food money. That was my worry. Yeah, yeah. You need to go get a job yesterday. When did all this go down? This has been an ongoing situation since last year. Yeah, when did you get the check? When did they cut you loose? Like...

like three days ago. Oh, good. Okay, good. So it's fairly fresh. What were you doing? I was an automotive worker at one of the plants and they were basically very, they wasn't consistent. So I could have stayed. I think my race

would have been like 36, but because of the inconsistency, one day it's me working, some days not, it just, it wasn't guaranteed. Gotcha. I'm sorry. What did you say you were doing? Automotive what? Worker. She's in Detroit. Yeah, I was, yeah. Oh, you're, okay, you're on the assembly line, like putting cars together. Um, we were the plant that sent the parts to the assembly line. Gotcha, okay. So, so you know a lot of people in that industry, I'm guessing?

Um, not really. I just kind of stayed to myself and worked and went home. Okay. Again, Dave said it and he's right. The best way for you to come out of this thing unscathed is you've got to get employed quickly.

And you know enough people. You've got enough experience. You're looking at anywhere in the Detroit area. You've got to get back to work quickly. Vanessa, I'm not trying to be tacky, but I don't want you to think $30,000 is a lot of money because you're going to find out how quickly it's going to go away if you don't get back to work. It's not much money. You did not get much of a buyout here.

And so you didn't hit the lottery. I know it may be more money than you've seen in one check. I understand that. And I'm not trying to be talking down to you or something. But the way you're acting and emotionally is that this is a lot more money than it is. And you really have a pretty serious problem. You're unemployed.

And you need to get that problem solved as fast as possible. Hang on. We'll send you a copy of Ken's book, Proximity Principle, which will help you with that process. Candice is in Washington, D.C. Hey, Candice, how are you? I'm good. How are you? Better than I deserve. What's up?

Hi. Okay. So my husband and I are, we have done all your steps. We are debt free. We have money in our emergency account. And now we are in the thinking of investing stage and investing in like the stock market scares us. Like, cause it's not a world we know nothing of anything about.

So my husband wants to invest in precious metals like gold, and I want to invest in a beachfront property or a lake property we can use as a rental. So my question is, what do you think is the better investment? At your stage, neither one.

Okay. Right now, you need to just be doing your 401ks and Roth IRAs and some good growth stock mutual funds. And I know you said the stock market scares you and it scares you not because it's scary, but because you just don't know anything. So it's time to get into, it's time to learn and start learning a little bit about how a mutual fund works. Okay.

What a mutual fund is, is multiple people put money in it. That way they mutually fund it. That's where the name comes from. And what the fund buys tells you what kind of mutual fund it is. If they buy growth stocks with the money that people have mutually funded, then it's a growth stock mutual fund. And you hear people say that phrase a lot, I'm sure. Mm-hmm.

And that's what we teach people and what I personally have put, Ken's personally put, our families have put our retirement into mutual funds. And a mutual fund is 90 to 200 different stocks of America's best and brightest companies. And so when you open up your mutual fund information brochure, you're going to see companies like

like Exxon or Apple or Home Depot or Coca-Cola or McDonald's or something like that, and you're going to go, oh, 20 years from now, this group of stocks is going to be worth a lot more than it is today because for the last 100 years or so, the stock market has averaged a little over 11% per year in the group of stocks going up in value.

And so that's what I would do. If you're out of debt, you've got your emergency fund, I'd start putting 15% of my income into 401Ks and Roth IRAs and good growth stock mutual funds. I'd sit down with a...

With the Smart Investor Pro, you can find one that we recommend at RamseySolutions.com. We're not in the investment business, but these are the people that will help you do that and have the heart of a teacher, and they'll finish teaching you the lesson that I just started teaching you. Gold absolutely sucks.

You're going to really screw up putting your money in gold. Your husband doesn't know anything about that either, or he wouldn't be suggesting it. Gold has a horrible track record. Over the last 70 years, gold has an average annual return of 2%. You'd be better off putting your money in a freaking fruit jar.

So no, just because you've been watching too much, reading too much crap on the internet. If you think gold is a good investment. No, it's not an investment. It's a good way to lose your butt. And so no, you don't need to do that. And no, you don't need a beachfront rental that you're going to borrow money to go do. You just got out of that.

So, no, you're going to be putting 15% of your income aside in good growth stock mutual funds, and that is the shortest direction to your first million to $5 million in net worth. I think that advice is a little fuzzy, Dave. I think you should clarify that a little bit, just as a casual observer. Could you be any more clear? I don't think that's possible. You know, I think it's fun to remember that when you're investing, when you do anything that's new...

There's two kinds of fear. There's fear that is good for you. Don't touch a hot stove. Don't stand in front of an 18-wheeler that's coming at you at 80 miles an hour. That's fear that keeps you from getting hurt, right? You need good fear. The other fear is fear of something I don't know how to do, but it's false evidence appearing real, F-E-A-R. And that's you holding the seat of

of your five-year-old while they learn to balance a bicycle for the first time. In their minds, they're getting ready to die. In your mind, they're going to be balancing and giggling within the next hour, and they will probably scrape a knee in the interim, and they will not die from it. Instead, they will have a life of freedom because they can now pedal and balance and learn something that they didn't know before. That's a good fear that you work your way through with knowledge.

and with practice, and that's investing. And that's investing in the stock market. The stock market is not scary at all. It's not unstable, and it's not even that risky when you learn how to do it properly like we're talking about. Not buying single stocks. We're not day trading. We're not doing some stupid butt thing you heard on TikTok. We're just putting money in your 401k, baby. It's kind of boring. Well, graduation does not come with a GPS. A lot of students are walking into the real world with what's known as no clue GPS.

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Fabulous for graduates. Get a copy today at ramseysolutions.com/store. If you're watching on YouTube or podcast, click the old link in the description. Noah in Seattle. How are you, Noah? I'm good. How are you doing? Better than I deserve. How can I help? Hey, so I'll jump into it really quick.

Sorry, this is super surreal talking to you. So me and my wife got married about a year and a half ago. And before that, two years before we got married, she got into a car accident and she didn't have active car insurance. Oh, wow.

And so she has a judgment, which is $80,000, about $83,000 to be exact. And we didn't know about this judgment until six months into our marriage. Like there was nothing on the record. There was nothing. Oh, no, wait a minute. She knew she got sued. She had moved, so she hadn't gotten any papers or anything. She wasn't served at all. So...

Six months into our marriage, we got a paper saying we have this judgment. We had to pay it. And it's to an insurance company, I assume. Yeah. Who is the insurance company? It's through a processing. I want to say collections, but collections isn't what it is. No, but there's a judgment probably with the people she hit. It's their insurance paid the bill, and then they came after her.

Yeah, correct, correct. So who was the insurance company? Do you know? I'm not sure. I can look at the paper. How old is your wife? She's 21 now. She was 18 when it happened. Okay. So she just had no clue. Yeah. Okay. And you guys are, she's 21 and you're what? 20. And what's your household income today, hon? $75,000. Okay. And I'm assuming you don't have piles of money anywhere.

No, we're on baby step two. And I just wanted to know, this was our biggest and last debt to work on. And I just wanted to know if... Your best route is, I would take a run at it myself, I think. If not, I would probably spend $1,000 on an attorney and let them take a run at it. And your best route is to try to do a lump sum settlement.

And try to get this insurance company to say, okay, I got a 21-year-old kid, just got married. She's got no money. You ain't getting nothing. Yeah. Good luck with your $80,000 judgment. And this is how the conversation sounds. I mean, once they get a clear picture that this is not a multimillionaire that they have sued, this is a broke person that has no money, that's brand new, married, and

21 years old. Okay. Once they get that picture in their head, they're going to soften up quite a bit. You follow me? Because they don't think they're going to get their money. Once they understand what they're dealing with, they don't think they're going to get their money. And that's what I want them to think. I want them to think they're not going to get their money. And then offer them, you know, $20,000 to settle the whole thing. And then just go borrow that. Okay. I would rather you have $20,000 on a credit card than $80,000 to a car insurance company.

Okay. My father-in-law said that what we should do is do bankruptcy, but I don't like that. Absolutely not. You're not bankrupt. Okay. That's dumb. No. Okay. Where was he? Where was this genius when all this was going on? When he could take care of his daughter and find out what the flip's going on. So, no, we don't need his advice, I promise you. He means well, but he doesn't have a clue how this works. So, I think...

Um, how, how confident do you, are you that you can walk into this phone call with this lawyer on the other side with a bit of a swagger and do this deal? Or do you need to hire an attorney to do it for you? I'm pretty sure I could do it. I'm,

I could do it. Okay. Well, you understand you're going to paint the picture of you married this girl. You're not liable. Okay. Under no circumstances. You know, so you can't get money from me and I don't have any either. And I just married her. She's 21. She's got no money. Yeah. And she was 18 when this happened and she had no money. That's why she didn't have any stinking car insurance.

And so I've talked to the bank. The bank will loan us $20,000 on a credit card. If you'll take that as settlement in full, I'll give it to you. We'll take that and then take payments. No, we won't do that. The only thing I'll do with you is a lump sum. I want you out of my life. And then you just begin to negotiate and find out the number and then see if you can borrow that much money because you can cut this at least in half. And I don't mind you borrowing because you're already in debt. We're just changing the name of the debt.

from $80,000 car insurance to $20,000 or $30,000 credit union loan or whatever it is, right? Okay. We're reducing the total debt by this maneuver. And then you got that item and your debt snowball and you make $75,000 a year and you go knock it out. Okay. But you're not bankrupt. And so don't do that. You could threaten that if you want to threaten that. Just go, well, my father-in-law told me to file bankruptcy, but I thought I'd call you guys and see if we could work something out. You know, that's kind of, you follow the swagger here, right? Yeah.

Yeah. And if you feel like you're out of sorts, if you feel like they're beating you up in the conversation and you're getting, it's going to take about three of these phone calls that are very unpleasant conversations. You're not going to find understanding, compassionate, pastoral humans on the other side of this. Okay? Yeah. These are ambulance chasing lawyers, literally. They literally chase ambulances for real. Okay? And so this is, you know, and they work for a car insurance company. God almighty. Yeah.

What a horrible law job. And you got your law degree, and this is the only thing you can do, which means you're not much of a lawyer.

So, yeah, this is who you got to deal with. And it's going to be nasty. And you got to and you got to just go, no, no, no, no. I guess I have to do what my father-in-law said and file bankruptcy. I don't know. No. If you can come up with a settlement number on a lump sum, I'll go down to credit union, see if I can borrow it to help her out because I just married her. But no, no, no. What part of no don't you understand? It's a complete freaking sentence. No, no. This is how it's going to go. You follow me, Noah?

Yeah, I follow you. I don't want you to think that you're going to make one phone call and they're going to go, oh, we completely understand. We'll take 23. If they do that, I'll fall out of my seat. That's true. Stick to the script. And I would go so far as to what Dave has told you, type that out or write it out. And when you're on the phone, because they've done this before and they will try to manipulate your emotions. And I'm telling you to stick to the script.

Give them no. No matter what they say. No information. It's like a politician running for office. No matter what you ask them, they say the same thing. Give us a current address on you. No. What's her social security number? No. What's yours? No. Where does she work? No. I'm not talking about any of that. We're not writing a biography on my wife, honey. We're trying to settle this. Yeah. I'd repeat the same line over and over until they realized, this is a kid that I'm not going to crack. And then they don't want to play.

You know, the only thing I can say yes to is bankruptcy. And then you get what's known as a zero. Yeah. So 20,000. Let's start from zero and go up. Where are we going from there? I can file bankruptcy for a thousand bucks. So, you know, I'll give you a thousand bucks. So she's going to file bankruptcy. Let's start from there. If we got to come on, dude, let's figure this out. It just occurred to me, Dave, I would really enjoy doing that once or twice.

On behalf of someone else. Do you know what I mean? Just kind of call up and go and just play the game too. Cause we got no emotion in it. We're really fun to mess with those people. I used to, but we used to actually do that as part of our counseling here. Yeah. And I quit doing it because, um, we would get it all fixed and the consumer didn't have any, the person that was in debt didn't have any blood in it.

And so then they go screw it up the next month and not follow through on it. Right, right, right. But if they put it together, they don't screw it up. You would never do this, but it would absolutely melt YouTube if we did it live, though. Thoroughly enjoyed it. Could you imagine if we did that live, folks? Just beat the snot out of American Express for a hobby. Oh, yeah.

I'm Noah's Uncle Dave, and I've taken over this negotiation. I'm Mrs. Savage. I work for American Express. You changed your name to Savage? It would melt you, too. I had one lady. Her name was, she named herself Mrs. Baskerville, as in the hounds of. Oh.

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Ramsey Solutions is a paid, non-client promoter of participating pros. Learn more at RamseySolutions.com. Janet is in Augusta. Hi, Janet. How are you? I'm fine. How are you? Better than I deserve. What's up? Well, I've got a little bit of a dilemma. I'll be turning 71 next month, and I am in debt with student loans that equal to red at $100,000, a little over. Wow.

How in the world do you get $100,000 in student loans at 71? Tell me this story. Well, I started back in 99 when I started with these student loans, and they have just ballooned out from under me. And I've been listening to you, and I know that I need to work out a way to get out of debt before I leave this earth. So I'm looking for some guidance. What were you studying? It was in your 50s, right?

Yeah, I was in my 50s. I started going to college late in life. Went and got a BS degree, and then I went on and got my master's degree. In what? In business. Business administration. All right. And then you did not end up making a bunch of money as a result, or...?

I haven't made enough to overcome that, that's for sure. I've been paying on them, but it's just not enough to make a difference. Do you have any money? Very little. What do you have? Less than $50,000. Okay. And are you still working? Yes, I'm still working. I've got two jobs. What do you make? I've got one that I just started.

And I'm not sure what I'm going to make per year, but it's probably around $35,000. And I teach part-time, and I'm making right at $20,000 with that. Okay. How's your health? It's good. What is the job you just took that you think you're going to make $35,000? It's a remote job selling cars. Okay. Did you do anything with that business degree and master's?

specifically in the business world, some type of leadership or management role? Yes. I was a dean for three or four colleges once I finished that, but I haven't been able to get back into that field. Okay. So you went and got education and then basically used that education in higher education. Correct. What's the most money you ever made? $90,000. Good for you. Yeah. All right. Okay.

Well, there's no secret to this. It's just math. Okay. And that's what, that's what my brain is sitting here crunching. I'm trying to figure out, um, because we have, how do we find a hundred thousand dollars out of a $55,000 income with 71 years old? If you found, if you found, if you lived on 35 and put 20 a year on a hundred, you'd be done in five years, you'd be 76. Okay. Okay. And so, um, the problem is we have a pretty, pretty good sized hole, uh,

and a medium to small shovel. Yeah. And so that's what's bothering me mathematically. And I'm sure you've already thought these things, but I'm poking around with Ken. Is there any chance you get back into some kind of dean's role, even if it was temporary and made that kind of money for two years?

I have actually been trying. I'm trying to do it at the same time trying not to have to relocate to do it. Yeah, I think you're going to have to relocate if you want to get rid of the student loan. To that end, what is your living situation? Do you rent or do you own your home? We own. Wait, wait, wait. We buried the lead here. Who's we? We.

Where's he? He's disabled. What does he make on his disability? Right around $1,400 a month. Does he have any money? No, sir. Okay. So we don't have any money. What's our house worth? Our house is worth about $245,000. What do you owe on it? I read it $100,000.

And before we think relocation, I'm just digging here. The teaching job, is that a part-time teaching job in a local public school system? What is that? No, she says online, didn't you? No, she's selling cars. It's online part-time. Oh, it is. Oh, it's online. Everything I'm doing is online. I'm trying to stay steady. I heard that. I got that. I heard you were selling cars. I didn't catch the teaching thing. But let me ask you this. If you were to teach locally and it wasn't online,

What do you think your salary could be in the school system, whether it be private or public? Local community college. Yeah, local, whatever. What could you make? I would think we would probably be looking at about $50,000 or $60,000. Yeah. Yeah, I think you're going to be doing that. We've got to get your income up at least for a couple of years so you can knock this thing out. Otherwise, it dies with you. Yeah. Here's my recommendation, okay? I think you need to try to get full-time in some type of education role locally. Okay.

then I would be trying to make an additional $30,000 doing online teaching. Now, this is going to work you to the bone, but again— For two years, and you can be clear. Then you can get through this. But you have the best income potential because of your stellar education background. Yeah, and you just live on beans and rice, and for two years we throw $50,000 at this. But you've got to go make the extra $50,000 right now. Yeah.

and not over and above what you're making, but enough that you've got 50K margin in your all's numbers. And do that for two years, and you'll be 73 and be clear. And this thing doesn't stay with you up into your 90s, hovering around, wondering when they're going to come do something to you. And that's what's scaring me for you. This whole thing scares me.

And so the lesson for those of you out there is twofold. One is if you're going to go back to school at any age or go to school at any age, pay for it or don't go. The other one is that if you're going to go make 90 and you owe 100, you need to get it paid off real fast so that you're not sitting here eight years later or five years later after she last made 90. And so for those of you listening, that doesn't help Janet at

But that, you know, part of listening to this show is figuring out what you can learn from it so that you're not 71 and having this exact conversation. This is an unpleasant conversation. She's in a pickle. Is the house on the table, Dave, or no? I don't think so. I don't want it to be. I don't think so because the student loan dies with her. Right. And he gets to keep the house. Yeah. And so, no, I'm not going to sell the house to clear it at 71. Okay.

But I would do a lot of things to try to get my income up for a 24-month period of time and just to spend the last two decades or whatever of my life without freaking Sally Mae circling me like a buzzard. Connor is in Nashville. Hey, Connor, how are you? How's it going, sir? Better than I deserve. What's up? So I have a Jeep Wrangler, and I'm trying to find a way to get rid of the payment. I owe about $17,000 on it. Mm-hmm.

Okay. What's it worth? It's about, well, right now it's inoperable, so it's only worth about three grand. Why is it inoperable? The aluminum on the block cracked. Oof. I'm clueless about that, but what's that going to cost to repair that? It's a whole engine. He blew the engine. How'd you blow the engine? Hey, I didn't know. How did you blow the engine on a Dan Gum Jeep Wrangler? You know, I have to ask Christa that question. No, I'm asking you. You were jacking some four-wheeling.

You're running some R's, buddy. What does that mean? And then you hit the creek, and the creek was cold, and the engine was hot. I'm completely lost right now. I have no idea what these things are saying, James. I love this terminology. Did you mess this engine up yourself? Yeah. I don't believe so. Okay. All right. How many miles on this car? 130,000. Okay. 9,000 is what it's going to cost to fix it? Yes, sir. That's a new engine. The car's not worth a new engine.

So you need to go to a salvage yard and buy a used engine out of a wrecked Jeep. That's probably about three grand. Probably going to take you about a grand to get it in. What do you make? About 48 a year, sir. Okay. Yeah, you're going to be working a lot of overtime to clean this mess up. What are you driving right now? My GMC Sierra. What's it worth? I want to say about 10 grand. Okay. All right. Yeah, the problem is that...

I mean, this Jeep fixed is probably worth $12,000, right?

Yes, sir. Okay. And so it's worth salvage right now. And if you spend four on it, you can make it worth 12 again. And so you need to scratch up the four and fix it that way and then sell it. And that's how you get the most out of it. That's your repair. But no one buying that Jeep is going to be expecting a brand-new engine in that Jeep from Jeep, from Chrysler. No, thank you. They're going to be buying...

You know, they're buying a used Jeep. It's probably on its last run. It's a 130,000-mile Jeep, and you put a 40,000-mile engine in it from a junkyard, and that's perfectly acceptable in that situation. If I was buying that Jeep, I wouldn't think anything about that. That wouldn't bother me a bit. Yes, sir. And so, yeah, you scratch up the money. You start talking to your mechanic about hunting down a bargain on a 40,000 or 50,000-mile salvage engine out of a junkyard, and then what's it going to take to install it? It's probably at least a grand.

change it out, and you need the cheapest mechanic in the world to change it out. This is not some retail thing. It's certainly not the dealer. Sir, I'm the cheapest mechanic in the world. I'll do it. Okay. So you can pull the engine? Yes, sir. I have the pulley in the garage. All right. How'd you blow it then? You know. I'm the one that checked it. I checked underneath, you know, where the valves are on them deep engines down on the left side. It expanded too much and cracked right there when it cooled off.

Yeah, but I mean, what did you do that, I mean, you think the engine just was flawed? Because a 130,000-mile engine shouldn't blow in that car. Honestly, I'm not sure if it was flawed. That's what I've been thinking because that's my daily driver. I don't take the GMC to work until I've started having to. But you weren't screwing off mudding or something? No, sir. Okay. Because that's how you blow those engines. I mean, because they're not that great an engine to start with, and they won't handle high R's.

And you run high R's through that thing and then hit it into a temperature change. It'll blow it in a heartbeat. Yeah.

All right. Yeah. Wow. This is great. I thought I was sitting in on a mechanic show on Saturday morning. Remember those guys? Well, those guys are still around. Yeah. They've got to be in every local market. There's got to be a mechanic show in every local radio market. No, no, no. There was a big, there was a famous one that was nationally done. I don't know. Back when I was first doing talk radio. They were great. I'm afraid to ask this one. Ask quickly and we'll move on. Okay. Are high R's RPMs? Yes, sir. Yes, sir.

Okay. Yes, sir. Thank you. Audience members are clapping for me. They know how clueless I am. There's like real men out there going, oh, he got it right. It's not a masculine thing. It's just a mechanic thing. I'm joking. You can be masculine and not be a mechanic. High R's. I don't know what he was saying. I'm glad I got that one. But, you know, Daniel's got a Wrangler that he bought when he was 16. Yeah.

And then I ran it for a while while he was in college and gave it back to him as a graduation present. Is that the green one? That's the green one, yeah. I told him the other day, if he ever gets tired of it, that's a good-looking Jeep. It's a good-looking Jeep. The engines are crap. It's a little four-cylinder piece of crap. Nothing. I didn't know that you knew engines like this, Dave. Well, I don't. You're a renaissance man. Yeah, there's that. Anyway, open phones at 888-825-5225. You probably just learned everything I know. Matt is in Raleigh. Hey, Matt, what's up?

Hey, how you doing, Dave? Better than I deserve. How can I help? Well, my wife and I took financial peace when we were engaged. We've been married almost a year now. We're in pretty good standings, really. We're on step 3B. Oh, good. We're considering a pretty substantial life change, actually, of getting out of our rental house. We pay a decent amount of money. It's a nice place, but we don't really need it at the moment. How much do you pay?

With utilities, it's probably about $2,100. Okay. It's just two of you? Yeah. Okay. I mean, it's like a little three-bed, two-bath house on .7 acre. Yeah. Like, it's a nice place, but... It's more place than you need for a rental. Yeah. While you're trying to save up money for a house, it's too much, right? Right. Yeah, I got you. So, I've been blessed with great-in-laws. They have a finished basement, and we...

For them, they've allowed us, they've pretty much agreed to let us come down there for a year or two, move in, just help us pocket a lot of money that we can. In this time period, I would like to know, should I continue contributing to my retirement or not? Up to you. The more you put in the retirement, the longer you're in your mother-in-law's basement.

That was the same thing I had in mind. I've heard you say like up to three years. Yeah, being out of retirement, but not being in your mother-in-law's basement. I didn't say that. So, hey, you guys do what you want to do. I will tell you that Sharon and I would move to a cheap one-bedroom apartment and continue our autonomy there.

And that would slow down our house payment save up. You've done very, very well so far. I feel very confident you'll be able to buy a home doing that without losing your autonomy. I'll just leave it at that or privacy or whatever else we want to call it. And that's not to say that your in-laws aren't wonderful people. You've prefaced this with they're wonderful people. Most of them are wonderful people at a distance.

I couldn't agree more. I got nothing to add to this. I just don't think it's healthy. It's not bad, but it just doesn't— I know. There's a difference between healthy and negative. You have it in your head as it's going to be one thing, and it usually turns out to be something else. That's the problem. That's what I mean by the healthy part. It's not negative. It doesn't mean anybody's ugly to each other, but it just at some point gets to be old because it's not natural. Maybe I'll say it that way. Well, it's like, yeah.

It's just, yeah. Short-term, okay. Very short-term. Like emergency. Yeah, this is not an emergency. This is just a money play. And so I personally wouldn't do it. I'm not mad at you guys if you do it. But if you do it, I would shorten it as short as I can make it. And that makes the shorter time you're there, the better the probability is you get out of this with everybody's relationship intact.

And so, you know, get in and out. And that means, yeah, I would stop my retirement and go crazy on saving for a down payment. Personally, no.

Dave and Sharon, we moved into too big a thing when we first got married. I went back and visited my old elementary school principal, told her where I was living, and she said, you're a fool. Get out of there. You're spending too much. You need to go rent something cheap. And I listened to her, and I went and cut my rent in half. We moved into a one-bedroom and bought our first house a year later. And that's even when we were broke and doing stuff wrong.

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and have your back from the first call all the way to closing day. To find a Ramsey-trusted agent near you, visit ramseysolutions.com slash agent. ramseysolutions.com slash agent. Hey guys, I love summer.

But do you ever notice how fast money can get out of hand this time of year? You know how it is. You want to make all these great memories. It's so easy to just put your brain in beach mode and swipe that credit card. But then you end the summer saying, where the heck did all this debt come from?

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Our team's hosting a free budget trainings, several of them this month. That's why it's trainings with an S. You'll learn step-by-step how to make and stick to a budget using every dollar. Plus, you can get your biggest budgeting questions answered live at the Q&A. The Q&A might be the most fun of the whole thing. Spots are limited. Sign up for free at everydollar.com slash webinar. Darla is in Tulsa. Hey, Darla, how are you?

Great. How are you, Dave? Better than I deserve. What's up? It's a pleasure to speak with you. I started following you, my husband and I started following you in 2005. We got totally out of debt, started investing and saving, and we're both retired now and living with a million-dollar net worth. Way to go! Enjoying life. Proud of you. You've been a blessing to us.

Good work. How can we help today? Okay, my question today is I want to try to encourage my granddaughter who just graduated high school. She's working. She's going to start college in the fall. She's been taking some classes already, but basically wanting to help her get on a savings plan. And I'm thinking of doing some kind of math with her, you know, can show us where to get saved.

My husband and I are matching that. You're breaking up. Can you speak direct into your phone? Yes. We're wanting to get our granddaughter on a savings plan to help encourage her. She's 18. Okay. How many grandkids do you have? How many grandkids do you have? Two. And how old is the other one? Eight. Okay. All right.

Well, the only reason people save, the only reason people delay pleasure is for a greater good. So there has to be a target, a goal, an inspiring goal, a dream that is dreamed in high definition. So what is it this 18-year-old is saving for other than to please her grandmother? Well, she's going to be responsible for some of her own college expenses. Okay. I know that. All right.

She'd like to have a nicer car. Okay. Other than that, we haven't really... Okay, I would define the goal and then show her how you matching will help her get to the goal faster.

But that needs to have a very concrete thing. If it's just throwing money into an account into eternity, it doesn't feel like it's attached to anything. It has no motivation to it. So if you say, okay, honey, you got a better car. So what's your car now? It's a $2,000 car. What do we want? We want a $10,000 car. So we need $8,000. Okay. If I'm matching, that means you need $4,000. How much can you save a month? Oh, I can save 200 bucks a month. Okay. How quick are we going to get to $4,000 then?

Right? Because every time you save $200, I'm going to put $200 with it after you get to the goal. I'm not matching you until you get to the goal. But when you get to the $4,000, I'm making these numbers up. They may be different.

Sure. But whatever it is, honey, you save as quick as you get to $4,000, and I'm going to coach you and help you look at your budget so you can get there. No spending. We're saving for a better car. We're saving for a better car. We're working for something big. We live like no one else, so later we can live like no one else. No discipline seems pleasant at the time, but it yields a harvest of righteousness. And, honey, the reason I'm teaching you to do this is the key character quality of people who are able to build wealth are those who are able to delay pleasure for a greater good. That's called saving. Mm-hmm.

Yeah. Okay. I want you to build this muscle, and I'm going to help you. Okay. And only pay it, don't pay it month to month. No, because it just builds up in an account, and then she's going to come over and want to buy a car half the price. Right. And quit early on the deal. I was wondering how I could keep, you know, an eye. Yeah, I want her to play through.

Yeah. Whatever it is. I don't care what we're, but let's set a target with an actual dollar amount and then we can back into how many months it's going to take to get there. And then you get to ride alongside her and coach her and go, when you get there and you ring the bell, I'm doubling it. And we're going to go out and pick out a car, baby. Okay. Or whatever the thing, whatever the thing is. Yeah, I can see how that would work.

would make quite a difference than just doing it month to month. Yeah, but the month to month is coaching and cheerleading. Yeah. And you earn the right to do that with the amount of money you're putting towards the doubling. Mm-hmm, okay. So this is a matching gift. And go ahead and put an exact amount on it. It's not more than this. It's not less than this. Mm-hmm, mm-hmm.

Okay, once we agree, in my example, it was $4,000 because we're trying to get to $8,000. But that was an example. I don't know what the numbers are. But whatever the number is, that's the number you agree to. And if she comes up, you know, $500 short of that, she needs to keep working. And if she comes up $500 ahead of that, that means she's got an extra $500, not I match an extra $500 because we set a deal and stick to that. And then that enables you to do it for the next one too because it doesn't get out of control here.

But the whole time, the important thing is not the $4,000 match. The important thing is teaching her the principle, and she gets the dignity of delaying pleasure for a greater good, which is a sign of emotional maturity, whether you're 58 or 18. Somebody that can put off, you know, can endure pain for a greater good.

That's a big deal. It's hard to find people do that. It is. And I think I would only... It's great advice. I'd only add that what I love about what Dave is telling you to do here is you're going to find out...

what your granddaughter really values about savings. And there are some people, we hear debt-free screams all the time where somebody may take longer. They had a six month or maybe a year they fell off. They got started in the baby steps and they fall off and then they realize, oh, that was stupid. I need to get back on. Everybody learns at their own pace. And by giving her this big goal that she's got and then saying, if you hit it, I match it.

Even if she struggles and falls off, but eventually gets back on, I just think it's the power of focus. It's a powerful thing. And if she falls off, fine. But this allows her to learn the process so that when she finally gets there, it's so much more valuable. It sticks longer. Paris is in Orlando, Florida. Hi, Paris. How are you? I'm good. How are you? Better than I deserve. What's up?

Okay, so I have a $895, I think it's $45 car payment. Good Lord. And yes, I am currently on baby step two. And my issue is my car is giving me issues. It's giving me trouble. It's starting to get, you know, break down. And I was thinking about trading it in. However, I am upside down.

What kind of car is it? What's wrong with it?

Well, I think the transmission is slipping. The car's three years old? Yes. The issue is my job requires me to drive a lot. So I have about 145,000 miles on it already. Yeah, but that Kia transmission would go longer than 145,000 miles. Theoretically. That's not a piece of junk car. That car should run. No, it's not. Okay.

So I was thinking about trading it in. No, you don't need to trade it in. You got a mess. You've been trading in enough. That's how we got in this mess. So you owe what on the car total? A little over $25,000. Okay. And it's worth what? $25,300. What's it worth? The last offer I got was $10,000. Okay. And what do you make? A little over $100,000. Okay. Are you single? Yes. Okay. How much would it cost to fix a transmission if that's the full issue?

I don't know. A rebuilt one will be $7,500. Okay. No, you don't need, I mean, if you need to get rid of the car, first thing we do is get it paid off because you have a ridiculous car payment and you're ridiculously upside down. So, no, I think if anything, you've got to fix the transmission and keep driving it a while if it blows out on you. You don't have a choice. You're stuck in this thing. You're so far into it. And you've got a crummy interest rate too, don't you?

No, it's not too bad. It's like 4%. Okay, not as bad as I thought. All right. You got a horrible car payment. I know that. Yeah. You have identified the problem, and it is your cars. So don't trade again and make it worse. We need to clear this. And so, you know, $25,000 in debt, $100,000 income, no food, no eating out, no going on vacation, sell so much stuff the cat's hiding.

Our scripture of the day, Galatians 1.10, am I now trying to win the approval of human beings or of God? Or am I trying to please people? If I were still trying to please people, I would not be a servant of Christ. Ronald Reagan says, I've been criticized for going over the heads of Congress. So what's the fuss? A lot of things go over their heads. You can see him doing it with a head tilt and a little wink. Oh.

It's classic. Classic Ronald Reagan. He might be the funniest president we've ever had. Oh, I'm going to go ahead and say absolutely. Of course, we don't have any footage of Andrew Jackson. I bet that dude was funny. When he wasn't mad, yeah. Yeah, right. Joshua was in Lexington, Kentucky. Hey, Joshua, how are you? Hey, I'm good. How are you all doing? Better than I deserve. What's up?

My question is about tax brackets. So me and my wife, we make about $80,000, maybe close to $90,000 a year together. I've seen a tax bracket the other day that showed if you make above $97,000,

It would put you in like the 22%. So I'm wondering if I can kind of control my hours and how much I work. I was wondering if we get close to that, should I kind of aim for just below that? Would that save money? No, that's not how it works. These are what are called marginal tax brackets.

The first so many thousands of dollars has zero. The next so many thousands is at whatever percent. The next so many thousand is another percent. And so if you make a little bit over, if you have a bracket creep here and you go over the bracket, it's only the amount of money that goes over the bracket that is at 22, not the whole thing. Okay. So if you make $1,000 over, only the thousand is taxed at 22. Everything else is taxed like it was previously. Okay.

Okay. So never slow down working because of tax brackets. The best thing that can happen to you ever in our current system is to make so much money that you have the highest tax bill you've ever had because that means you made the most money you've ever made. Yeah. Okay. That makes sense. Because we don't have 100% tax bracket yet.

I'm glad you said that. It's not out of the realm of reality. Well, in the current land we live in, I think we're okay. But, you know, you never know when the socialists are in trouble or in power. So they put the rest of the capitalists in trouble. All right. Stephen is in Nashville. Hey, Stephen, what's up? Hey, how are you doing, Dave? Thanks for taking my call. Sure. Okay. I have a quick question for you, hopefully pretty easy. My father-in-law and mother-in-law...

So when he was younger, his dad went through and they had some type of investment account that they contributed to pretty much from when he was a little kid all the way up until he was 18 and a little bit on. And he didn't get access to that money until he was about 25. But he

He got access to that money and then was able to pretty much almost pay cash for a house because it had been invested for so long, and everybody just kind of pitched in as they went. So this last Christmas, they came to me and they said, hey, I want to do something similar. I don't really know what my dad did, but we want to do something similar for your kid, so their grandchild.

And I don't know. They pretty much just told me whatever you can come up with, both sets of grandparents and us as parents and some of the other immediate family want to contribute to it. He's a year old right now. So if we do that for, you know, 17 years or so, hopefully it'll be a pretty hefty sum there. So one, I want to ask about what investment should I be looking for? How should I set that up? And then two, when it comes down the road, I really don't want to, you know,

Give an 18-year-old, you know, if it's half a million dollars or something crazy at that point, how do I make sure that that is not accessing maybe like 25 and then the tax implications and all that? Okay, cool. Good question. All right. If it's saved for college only or for education only, we, of course, would use an ESA, an educational savings account, or something along those lines. But I don't think that's the goal here.

So you can sit down, you can go to RamseySolutions.com and click on SmartVestor Pro. Find a SmartVestor in your area that you like and sit down with them and they'll help you get that account open and explain to you everything about how it works exactly. The basic principle is this. A child under 18 cannot do contract law in any state in the United States. They cannot contract for something. So they can't open a bank account.

If you open a kid bank account or a kid investment account, it's called an UTMA, a Uniform Transfer to Minors Act, UTMA. And so anytime someone says, my kid has a bank account, they don't. The kid has an UTMA, and the UTMA is in the kid's name, but there is a custodian of the account. That would be you. Okay. The person that's in charge of the money until they turn 21. Okay.

Okay. At 21, you lose 100% control of it, technically speaking. Okay? And the income is taxed at their rate, and unless this thing ends up with a million dollars in it or something, there's not going to be enough income that it creates to be taxable. So you're probably going to have no taxes on the account because the income it creates is not ever going to be enough to really do anything. Okay.

You know, that's the, it's a very simple thing. You're opening an investment account, and I would just put it in growth stock mutual funds. I'd pick out, what I'd do is pick out one good growth stock mutual fund that's got a long track record and just open the account. Most of those require $1,000 to $2,500 to start them, and then you can just throw money in whenever you want, or you can systematically have it withdrawn from your checking account and go in there.

Uh, that is actually what we ended up doing, Steven, because, uh, the, the, uh, you know, the, the, the current college savings programs weren't available when our kids were little. So we simply saved money in our kids' names. And the weird thing was by the time they ended up going to college, we didn't need the money for them to do that. So I just wrote the checks for college and then I was able to hand them that account after they got married.

Yeah, I'm a farmer, so if he wants to use that money for college, follow me. I want him to be able to do that, but at the same time, so that was my other question. So if I use the specific one for education and he ends up not going to college, what happens to that money? It's going to be taxable. The income on it will be taxable, not the amounts put in, but the income that will be taxable at that point.

And so, you know, that's what we're looking for is that, you know. So I think probably the Atma is the best plan. Now, at 21, it's his technically. And so I ran into this moral dilemma of if there's $200,000 in their name and they're doing cocaine, how am I going to keep them from getting this money at 21? And basically, I just made the decision as a parent I would steal it. Okay. Completely illegal.

Okay, you can't do that. It's illegal. Okay, but you can get sued by the kid and every friend the kid ever had and all that. But before I give my kid the money to overdose on cocaine, I'll just steal it and I'll suffer the consequences. The only other thing you could do is put it into a trust. I would not do that.

That's what I had heard from other people which trust, and I've always been listening to you for a while, and you usually say it's not the route to go. It's just too much crap. It's just too much trouble to deal with. This is a simple account. It's a mutual fund account. It's got the kid's name on it. You're the custodian. If you want to move the money from the mutual fund to a different mutual fund while the kid's going, you're in charge of the money until he turns 21. Then it's his.

And I'll give you, you know, the way I didn't have trouble with my kids was I didn't surprise them at 21 and go, hey, here's a couple hundred G. No, we didn't do that because that's how you, you know, they hit the lotto and they lose their dadgum minds. So instead, you know, we start talking about these are your mutual funds when they were 11.

And what you do with mutual funds is you do smart things like you go to college or you buy a house or you do something like that. This is not really money to spend. It's money for your future. And here's how it grew. And we looked at the statements together when they were 12 and 14. By the time they were 15, they could calculate the value of the account.

And so you just teach them as they go and don't surprise them. And then you have a better result by handing it to them when they're 21. Good show today, Ken. Guys in the booth, booth boys, good job. That puts us out of the Ramsey show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, you guys, I was shocked to learn that 88% of you out there are sharing the

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