You Can Still Escape the Debt Spiral Before It’s Too Late
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This is the Ramsey Show, where America hangs out to have a conversation about life, specifically your money, your profession, and your relationships. 888-825-5225 is the phone number to jump in. We'd love to hear from you. 888-825-5225. Joining me today is Dr. John Deloney. I'm Ken Coleman. We're excited to be together to help you out. Let's get it going with Michaela in Raleigh, North Carolina. Michaela, how can we help today?

Good afternoon. Thank you so much for allowing me to receive your wisdom today. Oh boy. Well, don't thank us too soon. That is you. We haven't even dispensed of it yet, but I like how optimistic you are. What's going on? So I have both a money and a relationship question all in one. In January, my father-in-law sadly passed away and left behind my mother-in-law. They were married 52 years and he handled all of the finances.

So on his deathbed, my father-in-law asked my husband to take care of his mom and take care of the rental property, which is going to be basically her income going forward. All great. We didn't realize until a couple months in that the property was left very poorly maintained.

There were some back taxes on it. We had been no insurance on the property. HOA is very high. So after we looked at all the numbers, we realized this is never going to be a truly income producing property where she can actually receive income from it. And the only reason it has been lately is because it was not maintained well. So it's been a point of contention because it makes sense to sell it and get her something else that's more sustainable.

income producing for her, but she doesn't understand all of that. And she's very scared right now. And my husband just wants to leave everything as is. Um, and she thinks that we're kind of stealing her money right now, which is not the case. We're just trying to back pay ourselves from all the expense we had to put into the rental property. So my question is because the death is still so recent, do we just leave everything alone for right now?

Or should we pursue selling it and buying something that would actually be income producing for her, for her to live off of? And if so, at what time does that make sense to do that? Well, do you guys have the actual authority to sell the house on her behalf? We do. It's been changed over to our names. How old is she? She's 74. Okay. And how recent was the passing? It was in January, two months ago. Is anything on fire right now? No. I would wait.

I would wait six months to a year if nothing's on fire. Okay. Cause you're right. Every decision that you make relationally is going to be seen through a pair of glasses that are just covered in hurt right now. Hurt and fear. Okay. And it's going to, I can hop, but tell me if I'm wrong, it's going to be a, a series of, think of it this way. She has leaned on a pillar for her entire married life and that pillar is gone.

And the person, she may love him, trust him, think he's a good man, but she wiped your husband's booty, right? That's in her mind. And so there's going to be a level of trust establishment made through a bunch of teeny tiny consistent showing up over the next six months, over the next year. Very transparent. By the way, data is going to help, but it's not going to solve the fear problem right now. Right now it's just all, she lost a lung and a leg and two chambers of her heart, right? Right.

And so she's going to have to slowly realize that she can lean on him now. My question is, let's go back. You said you guys are trying to get back what you put into it. I'm paraphrasing what I heard. Explain what we're talking about. Did you guys personally put money into this to try to fix this property up? Your money? Yeah.

We had to. When we got it, it was about to be put on auction because the taxes hadn't been paid on it in two years, and we didn't know that. No, I understand you had to. I'm not questioning that. I'm saying how much. I wanted to know if it was your money, so you answered that. How much did you put into it?

So we've put in about $3,400 for taxes. We've put in another almost $3,400 for an insurance policy. We spent $800 on a home warranty. The HOA has been about $450 a month. There was some extra HOA that we had to pay on that that was unpaid. We've had to fix two broken windows, change out the washing machine, and the

The HVAC unit needed some work as well, which amounted to about $1,500. So it's- So I got you guys approaching what? $10,000 or $15,000. I got you at around $12,000. Is that roughly, is that about right? It's definitely been over $10,000. Okay. So the other question then with John, what John asked is right. I think he's right, and I agree with your partner on that, to wait to sell the house.

Is that 15? Let's just say it's 15. Let's say 12 to 15 is what you guys personally put in. Do you need that right away? Are you guys okay not getting that right away? Well, we're okay. But that was my question. My husband wants everything to be run by books, so pull the money from the rental income, but then nothing's going to my mother-in-law, and she doesn't understand all the expenses associated with it. So that's where we're having a point of contention of how do we move forward with this on the money aspect of things.

No, no, I get it. And that's why I'm bringing us to this point. And I think it comes back to John's advice. Would you also put that in the same bucket? Because right now, they do need to explain it to her. Absolutely. And you need to explain it to her as if she's a fourth grader. So there's some responsibility on you all. And by the way, that's not you, your husband. There's the relationship. You want to maintain the sweet daughter-in-law relationship. So Hubs has got to step up, sit with mom, and I'll defer to John on the appropriate timeline. Okay.

But it needs to be explained to her as though she's a fourth grader and say, mom, this is all about you. We put our money into this so that you have this. We have two options going forward.

It's not going to generate enough income, and you've got to explain it to her and show it to her at the appropriate time. That's right now. I think that's okay, too, but I didn't know what you were going to say on that. That's math, right? Yeah. As close to writing it down with a crayon as you can. This is funny. I was on the phone with a 50-year-old earlier today.

who's entering into slow down it's getting really old this is getting personal here I don't know where you're going but here's the thing this 50 year old's heading in to buy a house it's not it's not an age thing but heading in to buy a house and I gave that exact wisdom I said listen don't feel ashamed to ask the the mortgage company to explain this to you as though you're a high school student that's the exact language I used

And so a 74 year old, he may have said for the last 30 years, I got it. I'm taking care of it. Sitting down and saying, okay, mom, let me just show you this. There were two windows that had to be broke. I mean, it had to be fixed. Here's the exact cost. This house was about to be taken. Dad was sick and he didn't realize the taxes. We're not going to ever pin him as though he's a bad guy.

Because immediately then she's got to defend him. We're not going to get into that. Hey, we had to pay these back taxes. They were $3,500. And here's the receipt for it. And she might go, no, none of that's right. Mom, it's right. It's right.

And if you think in that conversation she can get to, oh, well, then we just need to pull this out of this rental income. Great. If you don't and you've got 15 grand and it's not going to burn a hole through your family, pay the 15 grand and we'll figure this thing out in six months or a year when the smoke lifts on this deal. Okay. Yeah, because what you're building towards, Michaela, if I heard you correct, is that you and your husband believe this thing needs to be sold. Correct? It's the best move for her.

That's what I heard. We do. We've had a lot of difficulties working with the HOA company, and that's never going to go away. So I think if we could get a different property that's going to produce more income for her long term. We get it. What we're saying is explain the math now. Don't talk about selling the house six months, two years, what John is saying. But we're going to build to that, and we've got to build trust with her in explaining. And I would even show her receipts on the windows. Absolutely. Just walk her through it. Go, Mom, we did this. We'll settle it later.

We just want to grieve with you. I like that approach. But then when the time is right, you got to cast vision the same way you did on this numbers thing. Thanks for the call. So sorry for your loss. This is The Ramsey Show. Rachel, do you ever get these sketchy text messages that are like, hey, you need to update your address and verify so we can get you the package you didn't order? Yes, I have. George, sketchy and never trust them. And that's why we recommend Delete Me. They help with that. Yeah, they do. Delete Me actually goes in and removes your information.

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Hey, how are you doing, guys? Thanks for taking my call. Sure, what's going on? I have a question. Education and career call. Basically, I was offered a job for about $150K total comp, but I was also offered a full scholarship to a top 20, top 25 business school. So my question is, should I quit my job to go to business school? What would be the reason for going to business school? What's on the other side of that?

So I want to do a transition from account management to product management. And all the roles that I've seen and all the roles that I'm looking for are requiring that MBA. Okay. And you're currently in account management, making $150,000. Did I understand that correct? Total comp, yes. Say that again? Total comp is $150,000. Oh, your total comp. What does that include? Right.

So, 114 is the base, and then the remainder would be their comp paid out over our issues. Okay. All right. So, how are we paying for business school? With a full scholarship. Full scholarship. Are you going to be able to work and maintain your current job while you're going to business school, or is this an all-in, I'm absolutely quitting because I have to? Yeah, it's a full-time program, so I would have to quit. How are you paying the bills?

Unfortunately, it's been my wife, so she will continue working. We've talked about how the finances will look. It will be a lot less, of course, because I won't have the income, but the main trade-off that we're considering is the salary after business. Sure. All right, let's talk about the current situation first. Do you guys have any debt? No, no consumer debt. And what's her income? You're going to go from combined income of what to what?

Okay. You've crunched these numbers, and you guys are not going to be struggling, just a little bit tighter. True or false? True.

We won't be struggling. We'll be tighter. We do have our funds already that we have secured, and we also have some money that we have available in investments that we're willing to move around if necessary throughout the semester. Okay, so a couple things here I'm hearing. We don't want you using the emergency fund just to pad the income. Emergency fund is for emergencies only.

And then I get nervous when I hear you talk about moving around investments. What does that mean? Well, we... So...

But what we did, we said we will be able to afford this change in income based on our expenses. Travis, let me recontextualize this. When you call the Ramsey Show and say you're struggling, people, when they call us, they don't know how they're going to pay rent or they don't have food. Gotcha. So when you say you're struggling, does that mean you don't know how you're going to pay your light bill and you may have to sell some stock to pay your light bill? Or are you saying we're not going to be able to go out to eat for two years while you knock out business school?

Well, no, I didn't say that I was struggling. No, he said they won't struggle. He said it would be tight. Ah, okay. Tighter. I thought he said he was going to struggle, too. No, no. All right. If I heard you right, Travis, you didn't say you guys will be struggling to make it paycheck to paycheck, correct? Correct.

Correct. I don't, I don't foresee us going to struggle based on what we've calculated, but it will be tight because we're cutting our income by half. All right. Well, that's okay. I mean, that again, I calculated a move like this. It doesn't scare me. I just don't want you touching retirement accounts. If these are, if these investments are non-retirement and it's supplemental, then that's the only scenario by which we would be okay with that. But really we want you to cut, cut, cut and not be struggling where you go backwards financially. Yeah.

What do you think, and let me take a change to the way I just asked that. Not what do you think and not what do you hope. When you have sat down with some people in your field or you've sat down with one of the executives at the company where you work, and it's a rare thing because MBA programs, especially executive MBA programs, but two-year laser-focused MBA programs are cash cows for universities. They used to be big time and it's leveled off.

For you to get a full scholarship to a top 20 NBA program tells me you've got some kind of special, you've got something going for you that is unique because they just don't hand those out. I know some hotshot people making good money that went to NBA programs and they had to pay full freight.

So something special has happened for you. So when you sit down and talk to somebody on the other end of this thing, what do you think you're going to make? What leverage is this going to give you besides just a job? Because I promise you in 10 years, I promise you in 10 years, we are going to be in a place culturally and economically where you have to have crossed this particular, you have to have checked this box to come work for us. Nobody's going to care.

But I do know, and I trust you, and I know this to be true, there are jobs that still have that, we won't even interview you unless you've checked this box. So fair. What are you going to be making on the other end of this deal?

You mean from just like a value add outside of salary? No, no. Just what are you going to make? You make $125,000 now, $150,000 now. When you walk across the stage with an MBA from a top 20 program and you circle back to be a project manager at some of these firms that you're working at now, are they going to pay you $300,000? Are they going to pay you $450,000? What's the ceiling for you then?

That wouldn't be out the gate. So what I'm anticipating is when I first, like my first role out of the MBA program would be about the same salary I'm making now. But what I'm confident about is that my earning potential will be higher. Right now I don't have that MBA or that master's program. So the role that I'm at is I'm shorter at my max. Where does that confidence come from?

the confidence for the... That your long-term potential is higher. Because I've talked to a lot of students on the front end of grad school, man. They're like, no, no, no. When I get out, I'm going to make $140,000. And then I say, just go look at the market. And they're like, oh, man, $75,000. So what makes you confident? Well, in the...

The first year out, that's just based off the school stats and what I've seen, what I've researched from the entry, not the entry jobs, but the jobs that they have recruiting for. They're looking at around 150 is the average. So it could be less, it could be more when I first get out. So there's a chance that I would have less opportunities

of a salary when I first get out of business school. Okay. But I'm looking at that three to five years afterwards and being able to earn the income potential to get a more senior role, which I'll be more qualified for. Okay. And also being able to transition industries a little bit. Sure. So how long is the program? Two years. Okay. Yeah, you know, look, I

I challenge the process naturally when I hear someone say, I have to have an MBA. But I think John addressed it correctly. There are, in fact, I believe that you've done research and that some of the jobs that you want to be able to get into are requiring or certainly recommending that. So I'm not going to dispute it. But I really, John just touched on something that I wanted to jump on.

I'd like to see you get less information online and put in your head that this is going to pay off, and I want you talking to people that are where you want to be five years from now. I'd really prefer that. I wrote an entire book on that, The Proximity Principle, and I think having lunch or coffee with some men or women that are where you want to be down the line is

and getting their opinion to me far more important than what any business school puts on their website because here's here's what the what the that's a marketing tool that a school is going to put on their website here's a couple of things they can factor in not always but sometimes one they may give you the average salary of those people who got jobs and they don't address the folks who didn't get jobs the other thing they may do is say here's the average salary what that doesn't

What that doesn't paint is I could right now put on a piece of paper, the average graduates from my PhD program make X. But because I work not as a day-to-day therapist, but because I'm working where I work now and I've got two best-selling books under my belt, I would drag that average way out of whack.

And so it would say, man, the average graduate makes this much money. Holy smokes. And you go do that. And that would not be representative of what most people make. That's number one. Here's number two. I heard a little inkling of this. If you're bored at your job or you just done where you work before you take two years off. And by the way, I'm, I'm as pro higher ed as anybody in this building, right? I'm as pro go get a free MBA. If you can get that, that's a great credential, but

If you're just bored at your job, you're done with it. If you're already pulling 125, 150, I think you've got the skills to go be a project manager somewhere right now. And so it's worth at least having one or two conversations with real people out in the field, my brother. But yeah, all things considered, if y'all can float it for two years, go get that free credential from a top 20 school. This is the key. You guys got to be all in on the sacrifice. And you said it was a sacrifice. Be all in on it. No concerts, no restaurants. You can do this.

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Well, Dave Ramsey and Dr. John Deloney, my co-hosts today, are going to be heading out on the road, several cities. We've got Louisville on April 21, Durham April 23, Atlanta April 25, Phoenix May 5, Fort Worth May 7, Kansas City on May 9. It's the Money and Relationships Tour. Dave and John are going to be out there taking your questions. A little bit different format, John. Give us a little bit of a preview of this event. The best way I would...

suggested it's going to be stuff people haven't heard before. The principles will be the same, but the stories will be different. The interactions will be different. If you ever wonder...

man, what do these guys talk about when the microphones are off and what our fearless leader, James edits out of the show. That will be live. It will, like I said, I've said a few times with Dave, I don't usually get nervous on these big events. I just think they're fun. I'm kind of puckered up about this one. This one's going to be fun and we're going to throw it out to the audience. So we'll have the big screens and these beautiful theaters across the country. And we'll have a number of topics that the audience can vote on in real time and say, we want to get your take on this.

We want to get your take on what's happening here. And in a very polished world where AI is just synthesizing everything and making everything clickbaity, this will be a way to interact with Dave, with me, in a way that most people don't ever get the opportunity to do that. And it will all be live and live.

I like having fun at Dave's expense sometimes on stage. Yeah. And so we're going to have a blast. Boy, that might be interesting. Yes. He likes control. He does. He signs my paychecks. It's going to be fun. And you are out of control. So this is going to be a great combination. Yeah, I'm looking forward to it. By the way, no matter how many times the audience asks, please don't tell them what hair product I use. I'd like to keep that in mind.

That's a secret. I appreciate that. George, on the other hand, has his hair product tattooed on his chest. So I'll share that one. It's true. It's absolutely true. And Dave doesn't need hair products. George is like my grandmother. He gets his hair done once every three months and just stays that way. That's exactly right. He has that little helmet that comes over. Yeah. Yeah. And Dave, his hair product is largely an Armor All product. And so...

Oh, man. Hey, if you want to get your ticket, go to RamseySolutions.com slash tour. That's RamseySolutions.com slash tour. If you're tuning in via YouTube or podcast, the link to get the tickets to the Money and Relationship Tour with Dr. John and Dave are in the show notes, which, by the way, so many other great things are in the show notes. Everything we mention here on the show are in the show notes. James, our producer, likes to call them a treasure trove, the show notes.

All right. 888-825-5225. Alexis is joining us now in Salt Lake City. Alexis, how can we help? Hi, thank you so much for taking my call. First of all, I'm in not a bit of a pickle, a big pickle. In 2022, I had to go on short-term disability for some kidney illnesses and so on. I was on that for three to six months and had to end up quitting. And

And in that time frame, my grandfather ended up getting a blood cancer. Oh, no. So I ended up moving. I know. So I ended up moving from California to Utah to help take care of him. He did beat it. He's in remission. Awesome. So that's great. And yeah, and then he actually got colon cancer, but he's in remission from that now, too. My goodness. But in...

I know. And in that time frame, my grandmother ended up getting sick and I had to become her full-time caretaker and she went to the hospice and unfortunately passed away. Oh, my. You have been through it, haven't you? Sorry if I got a little bit. No, you're okay. You're okay. Hey, listen, that's tough stuff. This is a lot all in a row. That's right. Can I ask you a question to kind of circle out a little bit? Yes, for sure. Who told you that you were the...

one person who had to take all of this on by yourself? I didn't take it on all by myself. My grandparents are basically my parents. My parents are not helpful. They have their own problems with drugs and alcohol, so that's not been a helpful situation. I had an uncle who

I've lived with and have had a great relationship, um, has stepped in and that's, um, my uncle, that's his father who was my grandfather. So they've helped out financially and so on. But I was the main person who moved here and was with them 24 seven and things like that. So how have you eaten and paid your bills since then? Credit cards. Okay. How much have you racked up? Um,

I've racked up about $42,000. $42,000? Yeah, $42,000. Okay, do you have any other debt? No, it's just in credit cards. Okay, and are you working right now? No, I'm not. What about your kidney disease? What's the status of your health and your ability to work? Because if I understood you correctly, you stopped working because of the kidney issues, correct? Correct.

Yes. So I'm in the midst of getting diagnosed with lupus, so they're trying to figure out that. And I also have rheumatoid arthritis, and there's a couple other autoimmune disease that I'm trying to figure out. Are you able to work? Not at this current time, no. I'm in the midst of going to doctor's appointments myself. So we've already got $43,000 in debt. Doesn't sound like we have any kind of diagnosis or treatment plan in place right now. What do you anticipate going

The timeline being that you get some type of diagnosis plus treatment and any sense of when you might be able to go to work and how are you going to stay alive financially? What do you know?

I'm hoping in the next six months I can get treatment for the diagnosis. I have been diagnosed with rheumatoid arthritis. I have tested positive for lupus, but it's a symptom-based disease, so we're trying to limit what is and what's not. Any sense from your doctors as to when you would be able to work?

No, not really. The waiting time to get into specialists is pretty hard. I've been on the waiting list to get into neurologists and different rheumatologists, different GPs. So what's the plan as of right now to be able to fund your life?

As of right now, what I'm looking at is trying different things. I'm trying to see if I can do some part-time marketing. I'm also looking to see if I can do some part-time dog watching or dog sitting just to bring in some type of money. I'm hoping in the next six months I can get a diagnosis and get some semblance of my life back. Well, the diagnosis, it's going to be a confirmation, but it won't be a magic wand.

No, I know that. But I think part of, I think an answer would help. Absolutely. Like not knowing, not being able to trust your own body is a terrifying proposition. No question. And so is it okay if Ken and I love you in a way that we tell you the truth that probably nobody has? Is that okay? Okay. When it was about caring for you, somewhere along the way, you got the story that you're not worth caring about. But when it came to caring for other people,

You packed up and moved across the country and you made it happen because that's who you are. You're way, way stronger and way tougher than you, than your body allows you to believe you are and the stories you've been told by people all around you your whole life. And so here's me and Ken telling you, or I won't speak for you, Ken. Here's me telling you, I love you. The greatest gift you could give as a caretaker for somebody else is to make sure you're okay. And right now your body is revolting for a number of different reasons, right?

But I'm going to suggest that one of the main reasons is it knows you're not safe because it doesn't have groceries. It doesn't have a roof. It doesn't have a friend that you can go laugh with or weep with. And so this is going to sound counterintuitive, but not kind of hoping that

I would really love you to see for nobody else, but just Alexis, you to find two part-time jobs that you can do, even if it's uncomfortable, even if it's a little bit painful and begin to show your body. I can, and that goes counter to everything. And I don't want to minimize your pain. I know you're in a ton of pain. And like you said, that not knowing there's no name to this dragon that keeps burning down how you feel every day. Like, man, that is haunting. I get that.

And it may be that when you get these diagnostics, you can go file for SSI and go through that whole complex place. But I don't see a path forward without – you've got to make some money. I agree with you, John, wholeheartedly. Alexis, real quick here, what we've got to do is you've got to come up with a baseline of what I need to make.

to be able to just survive, take care of myself. And then I know the 43,000 or 44 seems insurmountable. It's actually not. It's not. Don't file for bankruptcy. Please don't sign up for one of these dumb credit things. Just get yourself above water by working the two jobs or whatever. I couldn't agree more with you, John. And that means care about you as much as you care about these other people in your life. You've got what it takes, Alexis, but you got to fight right now or this is going to get way worse. So fight.

You know, one of the first things I discovered working in the financial world is how absolutely devastating it is when the breadwinner of a family dies and there's too little life insurance or none at all. Grieving families are suddenly left behind scrambling to pay bills and trying to make ends meet.

I also discovered that there are a lot of ripoffs in the life insurance world, like that whole life crap posing as an investment opportunity. What you need is level term life insurance, usually 10 to 12 times your income, which is the smartest, most affordable way to protect yourself.

Thank you.

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All right, folks, are you staying on track with the baby steps? If you'd like, you should take a quiz to check your progress and receive a personalized plan just for you. All you got to do is head to the show notes, click on the link titled, Are You On Track With The Baby Steps? Complete the quiz. This is a great tool just to see where you stand. It shows you the mile markers, if you will, and it's really encouraging, not discouraging, but it'll create a customized plan, as I said, that you can use to get your baby steps done.

To kind of give you that momentum that you need to make it through. So do check that out. Can I, can I, you and I were talking off air. If you are watching the news right now and it feels like the world economy is melting down and people are playing roulette with your retirement funds and your this and your that, you literally, you can send a note to your congressman, you can call, you can write an email saying,

but you can't participate in what's happening at that level. What you can do is look in the freaking mirror and say, as for me and my house, how are we doing? Right. And if you don't know where you and your house are, this little tool, staying on track with the baby steps and receiving a plan, that's a thing you can channel all of this excess energy, anger, rage, celebration, whatever you're feeling right now, walking around your house, walking around the neighborhood. And this is the pot talking to the kettle here, man.

walking around and just being exasperated literally helps nobody, helps nothing, and it just assures you that you're going to have a stroke or an aneurysm. By clicking on something as simple as, all right, as for me and my house, how's our money right now? What's the honest truth? Where are we? And

into things you can actually do something about. You can actually control and getting off the social media train. This is actually a thing, a Xanax for a family. And you know what? It's not a Xanax. It's not a way to numb out. It's a recipe for what do you do next when it feels like everything's on fire around you, right? Go check this out. Go in the show notes, click on the link. Are you on track with baby steps? And give yourself something to do with all of this excess going on in our houses right now.

Well, speaking of what's going on right now, let's just go back to last week when we saw the volatility in the stock market or any time over the last few decades that you've listened or watched the show. We have a lot of new people, John, that are coming all the time. So for the newbies, had you talked to us or called us last week and said, what do I do with my 401k? I'm watching it plummet because of the stock market. We would have said what, John?

Nothing. We would have said, sit. You can only get hurt if you try to get off the roller coaster in the middle of the ride. Ride the roller coaster. Enjoy it. You're going to end up... And then we came back Monday and it went down even further. And then it came out Tuesday. It's all coming down. It's even further. And as I look at it right this moment, as I look at his rugged, handsome face, it's up 2,400 points. The biggest rally in five years. So we had the... What was it? The biggest...

The biggest fall off. One of the top five all time, and now here we go. So just the point here is trust us. We have a method to our madness, and this is why you hold long-term. Oh, by the way, and if you don't agree with us, there's this guy named Warren Buffett who says the same thing. So point made here, don't ever let the headlines dictate your financial decisions. But I do want to acknowledge –

I'm feeling it. I'm feeling the chaos. And it was our mutual friend, a manager that we share out here, who was like, man, I know a guy and he said you should just control what you can control. And I looked at him and was like, well played, dude. He's just reading my own book back to me. You're right. I can't even think about that. I can make sure me and my family are on track. And that's what I can control right now.

So here we go. Here we go on the roller coaster. Today it's up. Whee! And tomorrow, ah! Yeah, who knows? Who knows? All right, let's go to Daniel who's waiting on us in New York. Daniel, how can we help? Hey, thank you so much for taking my call. Sure, what's going on? I have a lot of different areas of debt. And honestly, I'm a young guy. I'm 23 years old. I'm graduating with a master's. I'm over $100,000 in student debt.

I have a car that has $13,000 in debt and I have about $8,000 in credit card debt. And I'm just trying to figure out the fastest way to get out of debt.

I'm on baby step two and I think I could pull it off in less than five years, but I just wanted to hear your advice. Yeah. Well, first of all, glad that you acknowledge the baby steps and that you're on baby step two. And that's the answer to the question. The fastest way to get out of debt based on millions and millions and millions and millions and millions of dollars, uh,

by a lot of people using the Ramsey plan, that's the best way to do it. So you're already in Baby Step 2. What have you accomplished so far? What have you paid off so far? Or are you just now beginning Baby Step 2 with the first target being the $8,000? I'm going to start making about $75,000 come May. That's pre-tax. So I figured that'd be like $60,000 after taxes, and I'd have no rents.

and very minimal cost of living. Okay, so my point is you have not. My question was have you started already or is this brand new as soon as you start getting paid? Brand new. Okay, so we're going to start with the $8,000. That's the smallest debt that you have, correct? Correct.

Yes. Okay. So your minimum payment on those credit cards, we're going to go minimum payments on everything else, but we're going to go above and beyond the minimum payment on the 8K. So the car and the $100,000 student loan were just minimum payments on those. Okay. But you're going to put every extra nickel that you have towards the 8K. What do you anticipate the payoff of the $8,000? How long will it take you to pay off the credit cards?

Paying in two months, three months. That's huge. What's your combined payments on those credit cards? Minimum. Probably like $200. Okay, great. So you're walking through this debt snowball. So once you pay off the 8K, you're going to take that $200 and you're adding that to everything extra that you've been pouring in. And so now we're going after the car.

And so that's how you do it. Every extra cent you've got above and beyond that car payment plus the $200 that you've been making in minimum payments, and you're going to knock that car out. And then the big boy is the only one left, and that's going to take some time. Let me ask you a question about that $100K. Did you consolidate it all into one big lump, or is that 10 different loans, one at $900 and one at $62,000? $62,000.

Right now, there are five different loans. Okay, so here's what we're going to do. We're going to take all of those loans, and we're going to look at them individually. Yep. And whatever is the smallest, you're going to pay that one off first. Would you recommend consolidating them? Please, God, don't do that. No, no, no. What are your amounts? Right now, there's two that are $20,000, one that's $50,000, and another one that's $30,000, and then there's a really small one. What's the really small one?

It's probably like $2,000. Okay, so we're going to reverse what I – we're going to – We're going to put that one at the bottom. We're going to amend what I said. The very first debt you're going to pay off is the $2,000 small student loan. Then we move to the 8K, and I guess I should ask the same question there. I'm glad you did that, John. Is the 8K the total of credit cards, or is it just one credit card for $8,000?

One credit card. Okay, great. So that's the line. $2,000 student loan, $8,000 on the credit cards, then the $13,000 on the car, and then we've got a $20,000, a $20,000, a $30,000, and a $50,000. How old are you, Daniel? 23. 23? What are you going to be doing making $75,000? Building skyscrapers. Building what?

Skyscrapers. Oh, geez. Oh, see, I misunderstood that question. I was like, he's not going to be doing anything. No living. All right, here's my challenge to you. Do you have kids? No. Are you married? No. Find two other jobs to do in addition to building skyscrapers. And two or three other guys to live with to minimize any kind of living expenses. And if you're living at home...

just sit down with your mom and dad and make a plan. I'm going to get out of here at 25 and I'm going to have knocked out X, Y, and Z of all this stuff. But sit down with a plan. Otherwise, you're still going to be treated like you're a middle schooler. But here's the deal. You're in your early 20s. You have no responsibilities. I don't want you to have a life, no comedy shows, no going out to eat, no coffee that you're buying. You're drinking that free swill on site. You are every nickel.

And after two years, I don't want you just to have paid off this one loan in the $8,000. I want you to be through the car too. Just go berserker mode, dude. You've got nothing holding you back. Okay? And last thing, if you get online and you look at Instagram, they're going to tell you to take the highest interest rate. That's a recipe for disaster. You're going to get $2,000 into this $50,000 and you're just going to quit. Just follow the plan, follow the plan, and work like you've never worked before, my man.

You've got this, Daniel. You started off the call. How do I do it? Well, you're already planning to do it, so now just walk those steps out. You'll get there faster than you possibly imagined because of one fabulous word, momentum. Good hour, Dr. John Deloney. I'm Ken Coleman. This is The Ramsey Show.

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This is the Ramsey Show, where America hangs out to talk about their money, their profession, and their relationships. Alongside Dr. John Maloney, I'm Ken Coleman. We're so excited that you've joined us. 888-825-5225 is the phone number. 888-825-5225. We'll kick it off with Tim in Orlando. Tim, how can we help today?

Good afternoon. Thank you for taking my call. I just had a question. I wanted some help on determining how do you figure out if you're a candidate for long-term health care? Let me flip that on you. What are you thinking when you're thinking about calling us on long-term health care? What's your position? What are you thinking? What are the circumstances?

Well, my wife and I just retired this past June. And we're not sure at what point do you, are you comfortable with, or would we be comfortable with being self-sufficient as far as self-insuring? That's the answer. And then...

Oh, sorry. I didn't hear you. Yeah, that's it. That is the factor. So I was curious. I didn't know if you were going to give me some kind of health situation or some health history. But the bottom line is that if you can self-insure because of your investment portfolio, your retirement position, then you wouldn't need it.

It would be a general answer. All right. So what's your situation? Explain it to us. Well, as far as health, we're both very healthy. I am 60. My wife is 57. And we live a pretty active life.

And as far as financing and stuff, we probably have about $1.7 million in stocks and bonds and stuff like that. Not including our house, which is probably valued at about $300,000. And, you know, we probably have about $3,000 in cash just in the local bank. We are debt-free. We don't own, we don't owe anything on anything.

Yeah. John, I, in that situation, I mean, I don't think you have a huge, I mean, your net worth is going to continue to grow. You said you're 60? Yes. And you have how much in retirement accounts? About 1.7 million. Excuse me. I don't know what happened. I just all of a sudden, like, got choked. So the federal government, again, that may just disqualify what I'm about to say, but their estimation is about three and a quarter. Yeah.

That the average American needs about $325,000 after retirement. Okay. And I say not after retirement, but to handle a crisis. Most people, about 80% of people, won't live in a long-term care facility beyond five years, and about 20% will.

Okay. And so I'll tell you, my dad was a policeman. My mom was a teacher and then a professor, and they're not wealthy. About 10 years ago, they're in their early, they're in their mid-70s now. About 10 years ago for Christmas, they bought the kids, they got long-term care insurance for themselves. And that was one of the greatest gifts they've ever given us.

But they didn't have $1.7 million sitting in a retirement account. And at the time, they didn't have a paid for $300,000 house. And so if push comes to shove, I love the idea that y'all are healthy. You go get checked up with doctors. All that presents that well. For Ken and I, our whole life is, our whole job depends on everything was going just great and then the wheels fell off, right? Yeah.

And so I want to always hold that, that y'all doing everything right and life happens. It happens to all of us. And you guys are in a pretty good position. And assuming that we can get through the next few weeks, months, years, decades with the last 80 to 100 years being similar to the next 10 to 20 years, you can expect-ish that that 1.7 becomes 3.4 by the time you're 67. Yeah.

And then that 3.4 becomes 6.8 by the time you're 75-ish, 74-ish.

I agree, Tim. I think you can self-insure, but run the numbers on it. And it comes down to your tolerance for risk. But based on the numbers you've given us and the amount of time you spend and all that, I think you guys would be fine. I don't think it's a must for you. But I also would say in your financial position, you can afford it too. Right. And that's, for me, the thing I might –

I'm just trying to project myself. If I got $1.7 million in retirement accounts and a paid for house and I'm 60,

I would probably let health insurance expire at 65 or 67, like whatever age you have that set to expire. But if you have an extra, off the top of my head, I'm making up a number and you may roll your eyes. I don't know how much monthly long-term care insurance costs, whether it's $300 or $800. But if that's a payment you can stomach for the next decade and it's just going to let you have a little more peace in retirement, man, I'd throw that out the window. You might spend that on fishing gear and coffee in retirement, right? That's right.

Okay. Yeah. And as far as like our health insurance, I'm a retired teacher. So our health insurance, we pay about $350 maybe a month to cover my wife and I for the rest of our life. Amazing. That's phenomenal. Hold on. Can we double click on that? You're a teacher? What did your wife do? Yeah.

She was in property management. And so, yeah, I taught elementary and she was in property management. What's the most you guys ever made combined income?

Probably around, oh, maybe about $170. Yeah, very cool. Good for you. Congratulations, guys. Yeah, and I mean, we just got to the point where we doubled down on our house payment. When we bought our last house, we did a very short mortgage, and we just doubled up on everything. That's awesome, man. Congrats. So when you called us and started this call, which way were you leaning? Were you going to buy it, or were you leaning against not getting it?

Well, we weren't really sure. We had just started to check into it probably the last two weeks. We talked to like one of our financial advisors. She gave us some options to go. And I guess one of the questions that I wanted to ask you guys is some of the people that we had talked to had recommended like a life insurance policy with the writer. And then some of them were like strictly life insurance. And when we got thinking about it, some of the policies,

So basically, like, if you didn't use them for long-term health care, you had no money at the end of the policy. You basically paid into it, but you have nothing. Yeah, you're talking about whole life. You're talking about whole life. Yes. Yeah, we're very anti that. So run from that as fast as you can.

Okay, and that's what I wanted to ask you because one of the policies worked like you could either pay a chunk of $50,000 right up front. No, no, no, no, don't do that. Don't do that. Don't do that. No, you already know the answer to that. You shot it in the foot as soon as you were telling us. You were like, I'll get nothing out of it at the end. Yeah, don't do that. So my last question for me is did you run some numbers on the cost because I think John brought it up and I think it's a fun exercise. What would it cost you to get the long-term?

health care, emergency care service. I mean, insurance, excuse me. We have not run the numbers. I mean, we just, like I said, we just started looking into it and we've had a couple people quote us different numbers. One of them, you know, was about five grand a year and

And then, again, one of them said, you know, you could pay a lump sum of $50,000 and never pay again in the rest of your life. But then they tried to tell us the advantage to that was... No, Tim, we keep going back. Tim, Tim, stop talking about that. We already told you. I'm talking about long-term care insurance. Look into it. See what the cost is. You and your wife sit down and talk about it like John said. This is not a retirement vehicle.

Yeah. This is you hedging risk. You don't want a check back. If you don't use this at the end, this is you putting this on the table. Just in case this happens, go to Ramsey solutions.com and go to Ramsey trusted page. And you can talk to our friends at Xander about long-term care insurance, and they're going to tell you the truth. And they're going to be honest with you too. I trust with my family. You can trust them too. As an investor in a person of faith, when your mutual funds and ETFs put your money into the dark side, you might feel a disturbance. Well,

Well, good news. Timothy Plan offers investments for people who want to be intentional about where their money goes. As the pioneering force in biblically responsible investing, Timothy Plan entered the investment space to offer clean alternatives to secular funds that invest in stuff you'd never willingly expose your family to. And for more than 30 years, Timothy Plan has offered mutual funds and ETFs that won't contradict your values or sabotage your faith. So...

Thank you.

You know what's crazy to me? Two things. One, that we're already down to the wire on the tax deadline. And two, statistically speaking, most people haven't filed yet. And if that's you, I'm not trying to shame you or anything, but just know that taxes don't have to be stressful. Ramsey SmartTax is a 100% accurate software that makes filing simple and easy and

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It makes a huge difference. And if you're watching your friends and your family and your neighbors losing their mind over what to do economically, and you keep thinking, I've got a plan, just simply go in and leave a five-star review, hit the subscribe button. It kicks the show up in the algorithm for the

technocratic overlords and it tells the computers that more people want to consume the show and it puts out in front of more people it's a way to help your community it costs nothing to do this so take a second subscribe leave reviews share an episode with a buddy it makes such a difference for everybody thank you so much all right let's go to Rebecca in Chattanooga Rebecca how can we help today

Hi, thank you so much for taking my call today. So I am in Baby Steps 7, and thanks to your program, I'm a Baby Steps millionaire. Nice. And I'm about to, thank you. What's your net worth? And I'm about to, um...

Well, depending on the market, about $2 million. Good for you. Depending on the market. Yeah. It was 1.1 yesterday, 2.1 today. I haven't looked in about six weeks. Oh, well, let's back up big time today. Continue that trend. It has a lot of ground to gain. That's right. My buddy who's my SmartVestor Pro texted me and he said, hey, just...

don't look and that's good for me no I'm not looking I've got 8 to 13 more years of work so I'm good for you so the reason I'm

I'm calling today is that I'm about to purchase a new vehicle. I'm allowed to do as a millionaire. Yes, you are. And I'm going to write a check for it. And of course, now they're offering me a prepaid service package. And I know how we feel about extended warranty and I definitely would not get one of those. But then when they talked about this prepaid service package, I thought, of

Of course, my antenna goes up, and I immediately think this is how they're going to try to make their money off of me. But I just wanted to get your take on that. Your gut is right. Pass. They're not your friend. If I had a hard pass, I'd say, no, thanks, guys. And just talk to them about how much money you have in the bank and that you'll take care of your issues with the car when it arises. Thank you guys very much. They will make you feel so dumb, like you're the dumbest person who ever lived. You're a multimillionaire, and they're going to make you feel like you're dumber than a box of hair.

and they're going to tell you. But you've got to get the oil changed anyway, and you can just do it now, and you can do it for $9. Yeah, that's why I told her to flex. With your last caller and the prepaid life insurance, I thought, hmm, that's probably a lot like a prepaid service plan. Listen, here's the deal. I love these kinds of things, and I think you take a really strong stance because John's right. They're going to try to talk you into it. But if you lead out with the flex, you know what?

I've worked really hard to be a multi-millionaire, and I'm good. So I don't need the service plan.

I just take care of things as they come because I've got cash, but I do appreciate that your leaders want you to give me this option. Just call it all out. Put it on the table. And that's my little pitch there is how I would do that. And by the way, they immediately go, oh, Rebecca is not to be played with. Here's a similar one. I bought a new car, I think two years ago, and the person said, hey, here's, he handed me a piece of paper and it said, hey, here's the estimated repair costs over

over the next x number of years you want to buy one of these prepaid warranties and i looked up and i said oh man my bad um if you're already telling me that this car that you're selling me new is going to be broken in two years i'm going to go ahead and walk right and it's like no no hold on if you're telling me right now that the engine's going to fail and that you think this is going to happen like i need to know that now because i thought i thought about a new car from a reputable place and dude it ended well played sir immediately i like that yeah

There you go, Rebecca. You got some options there, but the answer is hard pass. And for everyone listening, here's the honest truth for Rebecca. She's got eight years left. She's a multimillionaire. She clearly knows what she's doing. And if you, let's just be honest about the math. If you, every three months, went to the local dealership and you prepaid, you gave them $2,000 and you got lifetime free oil changes. And they amortize that out over eight years. Like if you come here, it's going to pay for itself 10 times.

A, the chance that you still have that car in eight years, that somebody in your life hasn't had something that you've got to hop up and move. There's so many factors over the next eight years that it's just not worth playing the gamble, especially when you've got $2 million to say, man, I want to get my oil changed where I want, when I want, and I'm going to move on. Thank you. Love it. Let's go to Kristen, who is joining us in Phoenix. Kristen, how can we help?

Hi, thank you so much for taking my call. So my current situation is I recently turned 30. I lost my job four months ago. And right now I'm living with friends on EBT and have state insurance.

And I'm also in $42,000 a day. And so I've been actively on the hunt for a job, but I just haven't had any luck. And so obviously it's just been like a really dark and heavy place to be because at 30, I literally lost everything and I have nothing going for me. Not true. Not true. Not true. I'll call that one out. The other ones are true, but I'll call that one out. Okay. Thank you. Well,

In the meantime, I've kind of revisited this dream that I've had on my heart for seven years, which is to start a nonprofit. And so I was like, well, the market's so bad. Let me just maybe go after my dreams. And so as I've been looking for work, I've also been taking steps towards a nonprofit and I've just been getting green light after green light and after green light, which doesn't make sense because I always thought when I started this nonprofit, I would be stable and a hundred percent out of debt. Well, um,

This is kind of where I'm at right now. My dilemma, which is why I'm calling you is I have a chance to receive $5,000 from someone who believes in me and I could take that $5,000 and it could cover my basic needs for about three months. And so do I use that $5,000 to go into creation mode and pursue this dream or do I stay in like survival mode and wait until I get mad at it? And yeah, how much is the debt? Yeah.

42,000. Yeah. A couple things. I understand that you're down. We have limited time here, so I'm going to do less emotional loving on you, and I'm going to do some financial loving on you, if that's okay. All right. So, number one, I understand that you...

have not had the luck that you feel like you would have liked to have had getting a job. But you, there are plenty of jobs, plural, that you can go get. And it starts today when you hang up. I don't care if you're walking dogs.

You are delivering pizzas. You are stocking shelves at a big box store. This is at this point right now. This is not about the career or the passion, the dreams. This is fighting to survive. And I don't know how you've been surviving. And so today we start fighting. So it's two, three jobs.

and we start getting some momentum while we're looking for some stability and we keep working the fact i'm going to give you a copy of my book the proximity principle and i want you to read it we'll give you whatever format you want but you have got to start making progress so we work any job that we can take three jobs and we begin to work the debt snowball we're also going to get you uh

let's see, let's do a total money makeover. We'll give you that too, as well. Financial Peace University. Financial Peace University. We're going to load you up. Christian, just give her everything she needs. All right. You need momentum. Now here's the deal. Okay. I would not take the $5,000 because that $5,000, you just say, hold that. There's a, there's a day. There's a day in the future where,

where I'm going to be able to take this gift and put it towards the actual launch of the organization. This is not $5,000 to keep you afloat for three months. That is a horrible, horrible idea. And that's the Christian, by the way, that John checked at the start of the phone call. I want to give it to John really quick here to kind of give you kind of a pep talk. But right now, that's what you need to do.

Now, John will tell you about what you need to feel. What you need to do is don't even think about this nonprofit right now. No, exactly. Listen, you've backed yourself into a corner. The way you phrased it is, do I just keep surviving or do I go follow my passion and dreams? That's a false dichotomy. We're not just going to hunker down and look at the floor and walk around. It's not that or sunshine and rainbows. Nonprofits are really, really tough.

Okay. Yeah. So here's what we're gonna do. Like what Ken said, we're going to go get a bunch of tiny wins and we're going to make $13 an hour, $11 an hour. And we're going to keep showing up. And then four months later, you're going to stand six inches taller. You've got this, Kristen, you got this. And don't ever say again that you don't have anything to contribute. Not true.

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And right now, you can download the CFO's Guide to AI and Machine Learning at netsuite.com slash Ramsey. That's free at netsuite.com slash Ramsey. Are you sick and tired of being sick and tired? You can take control of your money and your relationships. And it starts with just one night. Join me and Dr. John Deloney live in a city near you on the Money and Relationships Tour. We're covering the real-life stuff that matters.

so you can break the cycles that have left you stuck. It's coming up fast, so get your tickets for Louisville, Durham, Atlanta, Phoenix, Fort Worth, or Kansas City at ramseysolutions.com slash tour today. Let's go to Jack in Sacramento, California. Jack, how can we help you? Hey guys, thanks for taking my call. I really appreciate it. So I was wondering if

I should get a consolidation loan for my father. Um, he's, he has about 50,000 in debt. It's probably about 35,000 in credit cards, uh, about 10,000 in a personal loan and probably 5,000 on a car. Um, so,

So he's making the minimum payments on all of his stuff, and he's just barely making it by. So, Jack, number one, if your dad called us and asked us if he should do a consolidation loan, we would say no.

So we would definitely tell you not to get involved in any kind of consolidation loan or helping your own father out on his loans. This is a no, no, no, no, no with exclamation points. And I want to say, man, you're a good son. What's happened to bring you to this point? Well, I'm kind of almost worrying about myself because he's getting older. He's about to turn 65 and

I'm worried that when he gets to the point where he can't work anymore, he's going to just barely be able to cover his own payments and I'm going to have to start paying for his...

where he lives and all that type of stuff. I get that worry. That's a legitimate, that's a legitimate concern, a legitimate you looking into the crystal ball. If things are going to continue as they have been in the past, right? That a trope that gets thrown around is the best predict prediction of future behavior is past behavior, right? You see this thing, this, this slow moving train coming right at you, right? Yep. So let me ask you this. Has your dad ever listened to you?

Well, I mean, I'm a pretty new listener. No, no, no. Has your dad, has your dad ever listened to you? Yeah, I would say, yeah. He thinks I, I think he definitely respects my opinion. Okay. So if you sat down and said, dad, I love you. Here's what I see coming in your life. You've got to get a job or you got to get a second job. Like we've got to make some changes here. What would he say to you?

I mean, that would definitely be tough, just him being an older guy. It is. But hey, if we're playing big boy money, if you're ready to put $50,000 down or you're ready to co-sign on a loan with a guy that has a history of not paying stuff back, then you're ready to do big boy stuff. What stops you from having that, what I would call a more honest, because here's what you know, and I know this, but you especially know this. You're going to get this consolidation loan. You're going to co-sign your life away to it.

And he's going to continue. Nothing will have changed in his life. Yeah. Except for how much he would have to pay. At least that's what I think. No, the amount of money he's going to have to pay is still going to be there.

Well, yeah. So I have kind of talked to him about it, about all this stuff. And we've talked with each other about how we could try and figure it out. And he knows he needs to make a lifestyle change. He's definitely living above his means. Yeah, let's pause there. Hold on. No, no, no, no, no. I'm jumping in here because you're still trying to talk us into this, and that's not going to happen.

And I get what you're trying to do. I think John's right. You got a great heart, but you called and said, what should we do here? You just said dad's living above his means. So he's clearly spending more than he's bringing in. What income is he bringing in and in what form? How much? So he's a real estate agent. He probably makes about 40,000 a year. And he, he took his social security, his,

early, which ended up backfiring a little bit because then after he took that, he made too much income to where now they're basically taking those social security payments back. They're not paying him. What's his total debt burden again? $50,000. Okay. So a real estate agent, and he's been doing it long enough to know how to sell houses, true or false?

True.

$50,000 in debt, dad, in the grand scheme of things is not a lot for somebody who can sell some houses and knock that out pretty quick. But there's something going on with him for a lack of urgency. The fact that he's being irresponsible, again, not your problems to fix. But I think this has got to be a real honest, but very respectful conversation. And if he will listen to you, you can show him our plan and say, Hey, I've just started listening to these Ramsey folks and,

and here's the debt snowball, and I'll help you with the budget. I'll lean in every way I can, Pop, but you've got to make these changes or else I'm going to get stuck with this, and I don't want to get stuck with this. Here's what we're going to give you, Jack. I'm going to hook you up with two.

two different codes so that you can watch all nine of the Financial Peace University lessons digitally, and you can send him one. He can watch it on his own. Okay. I'm going to send you that. But here's something important that I want you to hear me say. What you are trying to do is respectable and loving. You've got ulterior motives like we all do. You don't want to get stuck with this down the road, right? But you also, you've been watching your dad hurt for a while. Fair? Fair. Okay. Okay.

This will end with the destruction of your relationship with your father. And here's why. When you co-sign on a loan with your dad, it's the same thing I tell parents to not co-sign on student loans. If you can't afford it, you can't afford it. But what you end up doing is you put a transaction between two people that should be ride or die together, a father and a son.

And there's going to come a moment when he doesn't come through in a certain month and he can't make that payment and you're going to get the bill. And here's what's going to happen. You're going to get enraged as you should. And then you're going to begin to resent him. And that's not his fault. You signed the loan.

And so the greatest gift you can give him is a son who's always in his corner. And by putting a bank between the two of you, you're setting up your relationship for failure. So saying, dad, I love you. I just ran into these guys. This thing's amazing. Because here's what your dad needs to do. If he's only making 40 grand as a real estate agent, he's got to go to Walmart and start throwing boxes.

He has got to go sit in a drive-thru from 8 p.m. until 2 a.m. serving coffee or takeout or whatever. He's got to go make some more money. And by the way, he can do that doing, quote-unquote, less sophisticated tasks, whatever crap that is. He can go make more than $40,000, but he's just got to get on the horn. Yeah, he does not have to sell a lot of houses to pay off –

uh this 50 000 in debt and the 40 grand he's barely doing anything at all so this is a car or two he may have to sell a house and move down to a condo he's got to make some grown-up dad decisions but dude i want to honor your heart man and i know you see this thing coming and you're already doing the math being like dude i'm gonna have to pay for this but i get it it's tough tough tough i want to get to our ramsey show question of the day which is brought to you by why refi why refi offers a different approach to paying off your default to private student loans

They do it with a low fixed rate for less stress. Go to Yrefy.com slash Ramsey. That's the letter Y, R-E-F-Y.com slash Ramsey. It may not be available in all states. Today's question comes from Madison in Kansas. Madison writes, I'm married. I love my husband, but we have made bad decisions over the last 20 years. We're looking at $125,000 in debt, not including our mortgage. Together, we earn $150,000 a year.

He's not interested in looking at our financial situation, but at least he let me handle our finances. Oh, my gosh. Yeah. I don't want to talk about it, but I'll let you carry this anchor around all by yourself. Is it possible to become debt-free without your spouse being on board? Here we go. I feel like a gazelle with an anchor. Well, that's clothed in a financial question, but John, I'll keep it with you because that is a marriage question.

Tough one there. Mathematically, theoretically, I guess, if he just quits spending money, so that's just me being honest. If he truly does let her do the planning. If he stops spending one penny and you took full control, theoretically, mathematically, yes, it'll burn your marriage to the ground. I think this is a situation, Madison, where you set your husband, y'all sit down for dinner, you sit down for breakfast somewhere, you sit down for lunch somewhere, not when you're fighting about money, not when it's time to do a budget, and you say, I am scared to death.

People give me a hard time on the internets about saying this line I'm about to say, but I think it applies here. Husband, I can't breathe. I don't feel safe in this house when it comes to our money, and I can't keep carrying all this by myself. Will you look at this with me? And if he looks at you and says, nope, don't care, then Madison, you got bigger issues in your marriage because it's not about money. It's about your husband saying, I don't care how safe you feel or not. It's on you.

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ramseysolutions.com slash store. So don't wait. Pre-order now. If you have a very simple tax situation, like you haven't had any major life changes or big investments, we want you to check out Ramsey Smart Tax. This is the tax software that Dave is in full approval of. It's what the Ramsey team uses because we trust it to help us get every penny we're owed. It's 100% accurate tax software that saves you up to 80% compared to other popular softwares in the industry. It's powered by TaxSlayer.

I'm sure you've heard of TaxSlayer, been in the tax industry for 50 years, and we doctored it up the Ramsey way to help you file right. So better get on it. Filing early means getting the best deals and getting tax stress off your shoulders. Go to RamseySolutions.com slash SmartTax. That's RamseySolutions.com slash SmartTax. Terrence is up in Atlanta. Terrence, how can we help today?

How you doing, sir? Good. I have a $1,200 car note. Oh, my goodness. Where's my Tums at? What is it? It's a G2 Kia Stinger. A what? Did you say a Kia? Stinger. Stinger. Yeah, the twin turbo, the sports car Kia. Wow. I've not heard of this model. Terrence, how much did that set you back?

It was around like $60,000. I had another car to add on to it. No, you didn't. Did you roll negative equity into it? Yes. And I needed something reliable because I traveled back and forth to Tennessee to see my kids. Bro, you did not need a Stinger. A reliable would have been a $10,000 camera. You bought a Stinger, dude. Yeah.

Yes. Yes, I bought a stinger. It was a bad decision. We love you. We're just having fun with you. I know it was a bad decision. By listening to the show, I knew it was a bad decision. So how can we help? Well, I have that, and I also have $2,000 a month child support. I was trying to figure out how can I get rid of the stinger. So the first of every month, you open your eyes, and you're already 3,200 down. Yeah.

Yes, I make $10,000 a month, well, $125,000 a year without overtime. Is that the only debt you have is the car? Yes, I paid off all, I started listening to Dave Ramsey a couple of years ago then last

October, I paid off all my credit cards. Okay. So how much? Let's walk through this. Okay, go ahead. I do have one credit card that I would use only to go on the Sky Club and get a rental card. And that was another question that I had to ask y'all about that too. What do you do about when you need a rental card? Do I just use my debit card? Yeah, that's what John and I do. That's what I use.

That's what John and I do. You don't need the credit card, so cut the credit card out because it's going to remove the temptation. But let's dive into this car real quick, okay? Because we've got negative equity. So what you owe a total of how much? Oh, like $57,000. So $57,000. And what is the stinger worth if you sold it private seller today? Probably $30,000. $30,000. Oh, boy, that's a bath. That hurts. That is a bath right there.

Yeah, because the thing was, I don't mind paying for it, but by the time I get around to paying bills and I see that $1,200 note, I'm like, whoo. No, I get that. Listen, I have indigestion, and it's not even my payment. I've got hemorrhoids now. Our bodies are falling apart on your behalf, Terrence. Oh, boy.

I can explain the first one. I can't explain the second one. I can't either. I don't know how that works. Just my insides want out. Okay, so let's walk through this here, John. So, see, the $57,000 also involves the negative equity, correct? I think I'm done with the negative equity part of it. All right, so we owe $57,000. I think I'm on the – yes. All right, so – I had the car for two years now. All right, how much – so you make – you have $2,000 a month in child support. You bring home $10,000 after tax.

No, that's before taxes. All right, so what's your actual bring home? My salary is pending. What's your bring home? I bring home like $5,200 after taxes and child support. Oh, after. Okay, child support. $5,200 after child support. Oh, okay, good. All right, so what I'm trying to get at is how much, John, I want to get to quickly, how much could you...

How much could you, if you just pay the bills, just your basic bills and your child support and this car payment, how much money left over do you have that we could put towards saving to get a, I'm thinking about a $10,000 car, something that's dependable, maybe $7,500 if I find myself a higher mile Honda or Toyota that'll get you back and forth to Tennessee. How much money could you put away each month right now? I could probably put away probably

$1,400 a month. Okay. Because after you check, I'm rolling around $1,300 after everything. Okay. So what I'd like to see him do, John, is I'd like to see him save as much money. Let's get a $5,000, $6,000, $7,000 car, and let's sell this Stinger. And now we're at least, you know, we're now working on $30,000 worth

I don't know, $27,000 roughly is what we're working on. Here's the other side of that. If you take that $1,200 a month payment, you take that $1,300 extra, and you go through your budget with a magnifying glass, and you stop going out for a season, and let's say you can scrounge up $3,000 that includes this $1,200. You can pay this thing off. Okay. I have completely became a cheapo.

I became a cheapskate. So chicken salad sandwiches, like I really just tried to, I really cut back just to figure out was it me or was it just a lifestyle or anything? And everybody been looking at me crazy like, hey, you want to go? I'm like, nope. Good, good, good, good. Can't go nowhere when I got this, okay? A principle that we live by here is things with wheels should not cost more than 50% of your income.

So you're right there on the bubble here. So if you want to just suck it up for 20 months and throw $3,000 a month at this, you could. Or like Ken said, you're going to suck it up for 10 months, throw $3,000 a month, get that 30 down to where it's just bottoming out, and then you try to sell it on the market.

Yeah, that's another option. I gave you what I would do. I like what John's saying, too. Well, I'm doing what Ken would do. I would get rid of this thing out of my life. Yeah, I want to get rid of it, man, because before I got this finger, I was driving a 2012 Buick LaCrosse, which I didn't have no problem driving. Dude, that's a car of a ladies' man. Listen, Terrence, I think very few guys could pull off a Buick LaCrosse like you could. I just got a sense you got enough swag. Man, I love that car. We'll get you another one. I got

I got hit in a half-speed chase, and they told me. I love that car. Tell me that you weren't being chased. No, no, no. I was sitting in traffic and got hit by a police officer. Oh, man. What's a decent Buick LaCrosse going to set you back? Probably not. Well, I bought that one in 2018 for $10,000. When I went to looking after the wreck, they went up to like $16,000. Yeah. They're pretty. Yeah. Listen, I'm going to challenge you to get somewhere. Try $7,500.

I think you get something dependable. A car maker that's very dependable, you know the ones that just, they're going to run forever. I'd take my chances on that. I'd do less cash right now because you've got to get out of this deal. And here's the words we use, Terrence. This isn't an accusation. This is us having some fun. But you're going to pay about $30,000 in stupid tax. Okay. And if you just know that every time you send that check, it's just I'm paying stupid tax, write it in the little thing on the bottom of the check.

Stupid tax. Or when you're making online payment, just put stupid tax. And by the time this 10 months is up and you've thrown $3,000 a month and you haven't been on a date, you haven't been to a restaurant, you haven't seen a concert, you will never do this again. Never. I'm one of the ones that learn real fast. Well, you were kind of with us last time and then you borrowed money again. Are we done done?

I'm done. Good. That's amazing. I'm done because I got a daughter who's about to go to college. So I want to have the money. I have the nest egg. I did the baby steps.

So I cut the credit cards off. I love it. Well, this is super intense. You've got to be super intense to do that $3,000 a month. You can do it. You've got overtime options is what you let that slip out. You let that slip out. So I'd be getting overtime. I'd be working weekends. And to John's point, if we can sock $3,000 at a minimum away towards this, the 27, get yourself another Buick, my man. And people are going to watch you work like crazy over the next –

10 months to a year, and they're going to think you're going to roll in there with a G3 or a G-Wagon. Listen, you're going to roll in with a Buick, let them know I'm opting out of the game, and I solve for peace, not for a cool, shiny, depreciating asset. But, I mean, he likes it. He likes that lacrosse. I think he can find himself a nice lacrosse. Dude, a guy who is in on a Buick lacrosse, that's marriage material right there. There it is. There it is.