You Don’t Need a Shortcut—You Need a Strategy
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Brought to you by the EveryDollar app. Start budgeting for free today. This is the Ramsey Show, where America shows up to have a conversation about their money, about their profession, and about their relationships.

The phone number is 888-825-5225. 888-825-5225. Alongside George Camel, I'm Ken Coleman. George is going to help you keep more of that money. And I'm going to help you make more of that money that you want to make. That's right.

That's the combination today. You ready to go? I'm stoked. You got a very... Elated. No jacket today. No bomber jacket. You went with a traditional option. I saw you were ready to go sailing, so I thought, let's keep it cash. I do have a summer vibe about me today. Summer can is my favorite version. I'm here for it. Jeremy starts us off in Lexington, South Carolina. Jeremy, how can we help today?

Hey, how's it going? Long-time listener, first-time caller. Oh, we love those. Welcome aboard. So it's absolutely a pleasure to get on the line here. So my wife and I are in a bit of a situation. Both of us have student debt, student loans. We have a credit card, and my dad has a parent plus loan.

Now, the education system hasn't really told us what to do for a Parent PLUS loan, but we have been educated now. So basically we're wondering if we can use a mortgage loan from buying my dad's property that he was going to give to us anyway to pay off mine, my wife's student loans, in addition to the Parent PLUS loan that is on his credit plus a credit card.

How much total debt do you have? Total debt is around, including the credit card, would probably be $110,000. $110,000. That's both student loans and the credit card, but not including the Parent PLUS loan, which is in your dad's name. Including the Parent PLUS loan, plus the mortgage that is on the current place that I have right now, which is only about $23,000. So you have a home right now?

No. So... This is your dad's place? Yeah, I'm basically renting it from him. The mortgage is all still in his name that I'm just paying it directly. This feels all out of sorts. Okay, so the $23,000 left on the mortgage, you're living there, you're essentially paying rent, which covers the mortgage, but you're paying it directly to the mortgage company? Yes. I mean, because it's only $460 a month. Okay. You can't rent for that. And you're saying your dad wants to now sell you the house, you would then take on a bigger mortgage...

In order to do so? So, no, he's not going to get any profit from this. Okay. So explain to me how the mortgage goes down. He was already going to give it to me, the land of five acres and the house. When he passes? No, already. That's a terrible idea. So he was already going to give it to me, but now we have this debt that we need to consolidate. Why do you need to consolidate it?

Because, well, the credit card interest is out the roof. I mean, again, it's only $10,000, but the student loans, you know, he makes double what I make. I make about $53,000. He makes six figures. So on the Parent PLUS loan, we've agreed that I'd pay that back. Okay.

That was an agreement we made in high school when I was young and dumb. Why not just keep the current situation? You have basically low rent. Use your income and your wife's income. Okay. How much total do you guys make? She makes $45,000 a year, and I make $53,000. Okay. So about $100,000 a year. How quickly can we pay off $110,000? That becomes the equation, right? Yeah.

Yep. I mean, we're looking at seven years, but... No. No. That's crazy. Your rent is $400 and it's going to take you seven years to pay off $100,000? Well, it's the student loans, too.

So that's what we would pay to pay them off or move the money around. But in the long term of having an income-driven student loan repayment plan is stretching that out to 20, 30 years. Well, yeah, income-driven repayment plan would do that to you. But if you're doing the debt snowball method that we teach and you're aggressively attacking the debt, not just making minimum payments, you would knock this thing out in probably closer to three or four years at this rate.

Okay. And I would tell you, get your income up, get your expenses down, because making $100,000 with as low rent as you guys have, you should be able to throw a few thousand dollars a month at this debt. Okay. So think about that. Could you throw $4,000 a month at the debt if you really got tight? Yeah. Okay, well think about the math on that. That's almost $50,000 a year. You said you have $110,000 total. This thing's done in a little over two years. Correct. Correct.

So where did this 10-year plan come from? And what the scheming of dad's going to give me, the house, and I'm going to do a consolidation loan? It feels like it's become too complex because it feels like they're trying to find a shortcut. Yes. Well, the shortcut right now is he's expecting the Parent PLUS loan repayment to be like $500 a month.

And on top of what we're already paying for our student loans, that's kind of a new thing of we're adding this $500 a month. Yeah, but how does that – I get what you're trying to say, but how does that give you the case to go, well, let's do this really convoluted thing and try to figure this out? He signed up for this. He's a grown man. Yeah. Okay, then.

I guess I want to make sure— It was more or less having the leverage of the land and putting it in our name. But, George, why is that a terrible— Here's what I want you to do. I want you to give George a minute or two here to explain why that's a really bad idea. He started down that path, and I just want you to hear him out. Okay. So I'm confused as to—you're trying to move one debt to another debt and essentially say, hey, we're going to take on a mortgage instead of paying all these debts off separately, right? Yeah.

Yes, a single payment a month. And that's going to solve the problems how? Less stress and, I mean, we can't get taxes from, we can't put an expense or get tax breaks from these student loans or credit card interest. So now you're doing this for a mortgage interest tax break? I mean, it's an additional benefit. Do you guys itemize your deductions when you file your taxes? Yes.

Yes, because I have a business as well. The interest on this, I mean, it's not even going to be enough to warrant the tax break. I feel like everything you're doing is for a different reason than what you originally told me. I think we need one clear goal, and if you're calling this show, that goal should be to be completely debt-free. Yeah, that's the goal, and as fast as we can get that. The other part is, if your dad gives you this house now, then it's going to move the step up in basis, right?

So what did he buy the house for originally? So it's a double wide, which means it has a title. So it's going down in value every day. Yes. Don't do this. Why are we doing it? This just makes no sense. And by the way, even if it did make sense, the amount of savings is going to be next to nothing. Am I right, George? Yeah. Quick calculation. So Jeremy, this idea that I'm lowering stress by come up with one payment is not true. The stress is from the total debt and the money saved on this is not going to be worth it.

I would not take a mortgage out on something going down in value. Not a double wide. Jeremy, that's like a country song. This is bad news. You should be trying to get out of this situation, not stick yourself in it further and further and further. No more deals with dad. No more scheming. No more moving one debt to another. Just pay off your freaking debts. You sign the dotted line. You guys have a solid income. Get the income up, expenses down. Get out of this debt in two years. And that's the only solution I would be pursuing at this point.

Hey, George Camel here. Listen, we need to talk specifically about Mama Bear Legal Forms. Allow me to paint you a picture. You plan a vacation. You make a budget. You book the Airbnb. You build a spreadsheet of activities because you're that person. You fire up the Maps app and boom, trip of a lifetime.

So here's the question. If you plan that carefully for a one-week getaway, why are you just winging it when it comes to your will? Not having a will in place is like dropping your family off at a foreign airport with no map, no translator, and no clue what happens next. So when you pass away, sure, your family will be grieving, but they're also overwhelmed, stuck in court, and letting the government decide what happens to everything you worked so hard for, all because you didn't leave clear instructions.

So the good news is you can fix this in 20 minutes with Mama Bear legal forms. I used them for my own will, and it was fast, simple, and gave me and my family peace of mind. There's no stuffy lawyer's office, no drama, just a few clicks, and your family's protected. Listen, a will is too important to ignore. It's how you love your people well, even after you've yeed your last haw, as we say in the South.

So go to MamaBearLegalForms.com and handle this tonight. Use the promo code Ramsey and you'll save 20%. That's MamaBearLegalForms.com, promo code Ramsey. All right, Dale is on the line in Augusta, Maine. Dale, how can we help?

Well, thank you for taking my call. I have a question that I just don't know how to answer it. If I were unable to get out of a contract that is over $16,000 for window replacements, would I be better off to go forward with the replacement contract?

installation or pay the 30% fee required if I don't follow through. Wow. What caused you to back out now? Well, it was just a really stupid idea that we signed on the dotted line or I signed on the dotted line.

Because it was a, they, somebody put a flyer in my window. My house is 160 years old. We need windows. We don't need fabulous windows, but we need seven windows replacement. So I called them. They came to the house. The man was amazing. He did a great presentation. And at the end of it,

When was this? Okay, and when did you sign the contract? So it's already been like 10 days since you signed the contract?

Yes, and what I did was, the first thing I did was call an attorney, and the second thing I did was call the Dave Ramsey Show. Now, I might be out of it, but it's not all completed yet. What do you mean? The lawyer helped you start the process? Yes, I'm 70 this year, so I called Senior Plus, and they turned me on to a...

a free attorney like they just give you advice and he looked over the contract and he's working on um getting them to do a rescission like we're waiting to um have the finance company get returned the 30 they pull so it's not finalized yet have you already made some type of deposit

They pulled it. When I signed the contract, it had a 30% condition if you didn't go through with it. And that gave them, they thought, the right to pull 30% of that $16,000. Did they have access to your bank account? No, they didn't.

The deal is this. They tell you an exorbitant amount, then they cut it down, and then when you say no, it's, well, we can finance it at like 5% for 15 years, and now you have a payment of $130 a month. Is that what you did? Yes. So you financed it, and you've so far financed 30%.

Correct. Is that what I'm getting at? Have you made any payments, though? That's what I'm trying to understand. No, no payments. The payments come after the windows are installed. Right. And so let me, I'm sorry to interrupt, but I'm just trying to help us get to the bottom of this. So I understand you signed a contract and it would include a payment plan, but that doesn't actually start happening until the windows are installed. Correct. That I understand. But do they currently have your bank account

to where it's like an auto draft? Do they have any access to your accounts? No, but what you're doing when you sign that is you're signing a loan. They partner with a finance company, and they did get the almost $5,000 loan.

So essentially you're $5,000 in debt. Oh, from the finance company. They gave the window company the five grand. So now you've got two people to deal with, the finance company and the window company. Yes. So you need to be checking both of those contracts that you signed to figure out if there's a way out. I don't know that there's a way out. You signed the dotted line multiple times at this point. Do you have any money? I think so, because—

Well, not much. I got a call from the finance company saying the contractor has asked them to cancel. Have they ordered materials yet?

No, I told them no. I didn't want the window. See, that's what I was thinking. Because that'll give you leverage. If they haven't ordered materials yet, they may be willing to reduce that and help you get out of it. There may still be a fee, a stupid tax, but... The window company's easy, because you just go, look, I don't want the windows.

But the problem is, is there's already been this financial transaction of $5,000 that you have to put in to rewind. That, to me, is the sticky part. The question is, did the financing company give the $5,000 to the window company? Sounds like they did. Yeah.

And if the window company hasn't used that to purchase materials or pay for labor, that's where I'm going. You might be able to get some or all of it back. But again, that's going to be between you and the attorney and the contracts. You know, us bozos in here can't help much, but I'm hoping because you haven't gone that far into it yet, there may be some resolution.

Me too. And that's where the contract will stipulate all of that. There's no way to go, well, we're going to rip up the contract. That's just not going to happen. And so it all depends on what the contract says are your rights to cancel, what the fees are if you should cancel. And worst case, you're on the hook for this debt at least.

For five. Yeah. And hopefully you put a stop to it goes no more than five. And then I'm the guy that goes, well, if I made this dumb decision and the window company's got $5,000 of my money, I'm going, I want $5,000 worth of windows. Because you still need windows, right? Because you still need windows. And so if you can't get out of this loan...

Pay the $5,000 off quickly, but get you some windows. I don't know how much $5,000 gets you these days. I'd hope a lot. It's probably a window and a half, knowing this world. Seven windows for $16,000? That feels insane. And they're two feet by four. They're standard-sized windows. I'm in the wrong business. I could be out here charging over $2,000 per window.

You know, you're pretty smart. Yeah. I mean, is there anyone else involved here? Are you alone? Single? No, I am happily married and he's just a big supporter of me. He set to the whole thing and we both agree. I wish he wasn't a supporter of you right now. I wish he called this out. He just sat there and went, yeah, sounds like a good deal, honey. You go for it.

Yeah, that's my man. Oh, my goodness. But here's the good thing that came out of it. I've been listening to you guys for just a few months and we are now on board with the baby steps and we're both like almost 70.

Good for you. Hey, I got to jump in real quick. Can I tell you something? Because I'm trying to think all the way through this deal. If you can't get out of the $5,000, like they're going, we're not giving you that back. You got two options. You eat it or you get windows. But I'm looking at this online. You got to double check all this stuff. But the average cost to replace a single window, according to 1,000 homeowners, is $554. That sounds more like it.

That's what I've been told now. So let's go ahead and if we can't get the $5,000 back, get you $5,000 worth of windows. But it's better than $16,000, yes? Yes. $5,000 is better than $16,000. So, George, I'm just going worst case scenario here. I'm just wondering, hey, can you pay a $500 fee and say, hey, listen, here's $500 for your troubles. Get me out of this thing. Give me the money back.

And get out of the financing deal. Yeah. That's probably a best case scenario. Okay. But I would keep working with that attorney to figure out what's going on in this contract. What are your state laws? What rights do you have as the consumer? That's why he is. Does this window. That's why you broke down the state laws. Does this window replacement. Is this a local company? They got a local shop? Hmm.

How'd you find them? I know. They're a national pink flyer in my door. Yeah. I wonder if you could call your sales guy back, who was such a wonderful gentleman when he was pitching you. I did. He told me. What did he tell you?

Oh, he's a gem. Yeah, he goes from being Prince Charming to Clint Eastwood just that fast, George. Yikes. And this is why. You got a flyer in my door, I'm never doing business with you.

Get them flyers out of here. Don't knock on my door. I'll report you to the HOA. I'm not scared. Would you? Yeah, 100%. Pretty snippy email. I don't answer the door. I don't look at flyers. I toss them right in the trash. What if I come knock on your door tonight? You can pound sand and kick rocks. Text me first. Even if I got an apple pie or something? I'm standing there smiling. Even more suspicious. Me? Yeah. You know I can't have gluten. You trying to kill me?

What's up guys, it's Jade. And let me tell you, when my husband and I had $280,000 of student loan debt, we were not sitting around waiting on the government to bail us out. We did the hard work to pay it off ourselves. So if you're still holding out hope that forgiveness is coming, that's like you waiting for your landlord to start paying your rent. Any

to happen. If you really want those student loans gone, you need a plan. And for some of you, refinancing might be part of the plan. So I recommend Laurel Road. With Laurel Road, you can get an initial rate quote in less than five minutes. And if you have a more complex situation, you can set up 30 minutes to talk to a real actual human being to find out if refinancing is right for you. Ramsey's advice is clear.

Get out of debt as fast as possible. And a lower rate or a shorter term can make that possible. Laurel Road has low competitive rates and they even offer interest rate discounts. So stop waiting on the maybes and the some days and start taking action today. Go to laurelroad.com slash Ramsey to get a free rate quote or schedule a free 30 minute consultation. That's laurelroad.com slash Ramsey.

Hey, I want to say thanks to all of you that have shared the show recently or a long time ago. We're just seeing the growth of the show. And we're so grateful because you are the reason we do the show. And when you share it or you subscribe or you follow, however you're participating and consuming the show, that the algorithm rewards that. And we're so grateful. And so we want to reward you, the audience.

by making it even easier with the Ramsey 101 playlist on YouTube. So this playlist, Ramsey 101 is what it's called, is filled with classic Ramsey content like the baby steps, how to pay off debt with the debt snowball, how to build an emergency fund, some of the real basics, and so much more, of course. So all you got to do to access this, and by the way, this is something that you can now share online.

If somebody's kicking the tires or you're telling them about what you're doing, they're like, how can I? Hey, boom, I'm going to go right to the Ramsey 101 playlist and I can get you the fundamentals so they're not searching. It's a great way to lift them. And you do that by clicking on the link at the top of the show notes to open the Ramsey 101 playlist. You can text it, DM it, send it in a group chat. All

All the way. So it's also featured at the top of our YouTube channel. So there you go. So question is, who would you share it with? George, I put Jade on the spot the other day when I talked about this.

Who would you share the Ramsey 101 playlist? You got somebody right now? My heart goes to the haters. Because they know me. They know my job. They're coming at you. Say, hey, maybe this will change your mind. Yeah. So maybe to a family member. Knock yourself out with the old Ramsey 101 vault. Yeah. I'm looking at it right now. 12 videos. I am too. It really sums up the entire ethos of Ramsey. Because you never know what to share.

A clip of Ken, a clip of John, a crazy call from the show. This really will center you, give you a foundation. Core stuff. All right, let's go to Zach in Phoenix, Arizona. Zach, how can we help today? Hey, sorry, my alarm just went off. Can you guys hear me okay? Yeah. You just waking up? Did you make it on time or are we just getting out of bed? What's the alarm for?

I have so many different alarms, I can't even tell you. I need an alarm to tell me what my alarms are for. Well, can I just say I'm a little alarmed that another alarm is going to go off while we're talking to you. Yeah, I don't want to be alarmist, but you should do something about that. Yeah. I'm so glad I got you two because I love a good dad joke. Yes. I'm a little nervous, but they say I have a face for radio, so here we go. Well, so do we, so join the club. Thank you.

Here's my situation. So unfortunately, my dad passed away recently in April. Oh, I'm so sorry. And thank you. That's no fun. No will or trust left behind. So that's no fun either. I have a brother and sister who,

Both adults, my brother's in his early 30s, sister in her mid-40s that we were left behind, and a stepbrother as well who's in his mid-20s. Stepbrother wasn't adopted, so the heirs are just me and my two biological siblings. My dad wasn't married. My two siblings want to do one thing with the estate, and I want to do another. They want to...

Keep the house and all in my brother's name. It's got about 308 K and equity on it and 103 K left on the mortgage. And I personally just would prefer to be bought out. And if, you know, they're reluctantly agreeing to the terms, but it's creating a lot of friction. And I'm just wondering if what I'm wanting is ethically sound or not.

George, I don't hear anything unethical. Yeah, what part makes you feel like it's unethical? I guess just knowing that I'm not helping keep the house, I suppose, with my share. And we all know that my dad would want to keep the house, and his goals were kind of unrealistic. He wanted all of us to live in it together, like all of us adults, and I have my own little family. So what would your share be?

If they were to buy you. And they've agreed to do this? Yeah.

You know, it's kind of making my sister and brother look at me different. Who cares? I mean, that's just part of the process, especially since your dad didn't have any plan in place. And so it's got to go through probate court. This is the it's not a litigious thing where you're angry at your siblings. Just this is the process to go through this. They they don't like it. But you can reduce the friction by taking the high road.

Yeah. Don't engage. Don't engage in a debate about it. Just go, here's my reasons. I'll say it one time. You can ask me any questions about my reasons. I'm not looking for any stress or tension with you guys on this. I just want, I just want my clean cut and I'm out.

And they may not like it. They'll get over it. And it's also the least amount of damage because you're saying they're going to want to keep the house. So it's only going to strain the relationships further if you try to force the sale with some kind of partition action in court to do this. Now they're really going to not like you. And so if they want to keep the house and you say, hey, I don't want any part of this house. You can buy me out. They're going to have to – does he have the cash to do it? Is he going to refinance? What's his plan to buy you out? I think refinance is the plan.

And can he afford this on his own? I think so. So I have $103,000 left on mortgage. It should probably double. And what about sister's share? Because she's not living there?

She's going to donate her share to my brother. Oh, wow. Wow. This guy must be some all-American, you know, hero. What's the story? Your dad leaves him the house. Your sister's going, hey, take my share. What's this guy got on you? Or is he just, like, super charismatic? No. No.

Yeah.

Is your brother the oldest? I know that my dad's intentions weren't to leave it all to one person. Ideally, he would want all of us living in it, but that's just not practical. So the brother is just kind of going, he's flexing. There's no will, there's no nothing, there's no real agreement other than he's saying, this is what I want to do. I'm asking. Because I was like, to have a conversation like that,

"Hey, I want to keep the house. Can we all try to keep it together?" versus just saying, "Hey, here's what's going to happen. I'm going to take over everything." It kind of left a bad taste in my mouth, and I was like, "Okay, well, I don't even want to try to co-own this house." Well, I am more confident than ever, George and Zach, that this is absolutely not anywhere close to unethical, but it's actually very wise.

What your brother is doing is absolutely unhealthy. There's not a positive motive behind this. This is pure selfish, pure power play. I don't know what your sister's deal is, but he's got some type of real intimidation or hold on her. It's the whole thing is nuts.

And I think it's great that you're trying to get out of it. Don't you, George? Yeah. Do you have any different thoughts? Well, no, it's not going to hold up in probate court for him to be like, this is just going to be mine. Oh, I know. I can't wait for that. I can't wait for that conversation. So they're going to go, no, all three are the heirs. And here's what that means. Either you force the sale or he needs to buy you out.

That's the only option. Yeah, and you just sit over there and smile. And that's not you being a jerk. Yeah, he goes, okay, I'm going to refinance. Now I have a $200,000 mortgage. Hopefully he can afford it. And if not, that's his problem. That's exactly right. And it's up to him if he needs to sell the house later on down the road if he can't afford the upkeep.

So you're not doing anything wrong. I would not let him make you feel bad about this. You're not being a terrible brother. You're just doing what was not said because dad didn't have a will or estate. And this is the mess that you're left with. And I'm sorry for that. On top of grieving your father's loss, you also now have this strained relationship to deal with. And you know what? One other thing I'd say, and George, correct me if you disagree with this.

I wouldn't let him manipulate you between this end of this phone call and probate court. You're owed your share of it. You get to decide. Don't just kind of walk away from this and give him. I feel like he's done that to your sister. She's already capitulated. I would hold firm, man. What's yours is yours. You be a man. You stand up to him. He'll walk away.

All right, Dave, you have some strong opinions. Possibly, yeah. I think so. Okay, because you really prefer credit unions over big banks. Well, credit unions, for one thing, are non-profit, which means that the members, the customers, own the credit unions.

The credit union. So any profits that the credit union makes goes back into customer pricing. So you get better interest rate on savings, cheaper checking, and so on, that kind of thing. But what's more important than that, though, is the fact that the customer is the owner changes the spirit on the credit union. So I find very few credit unions that aren't very customer-centric. Well, and I think we have found one that is incredible, and that's Fairwinds.

They are an incredible credit union that is really out with the heart to help the customer. They're the right kind of people with the right kind of values. And they've done a really, really good job with customer service. And the deals that they're offering, the Ramsey Tribe is incredible. Yeah, absolutely. And I love it. The things that we teach, they so line up with. And you're right, their customer service is unbelievable. Winston and I just signed up and we got an account. And I'm not kidding, it took less than five minutes.

It was so user friendly, like the step by step approach was unbelievable. And then the next day, my phone rings and it says Fairwinds on my phone. So I answered it and talked to someone there and they said, yeah, they give calls to every new customer. And so again, they just really care about your experience. And I

I so, so appreciate that. Plus, anything that you can do at a traditional branch, you can do with them at fairwinds.org or on their app. And you'll have free access to over 33,000 ATMs. Hey, you guys know how much I hate banks in general. And so for me to do this is a big deal. Talk to our friends at Fairwinds and check out the combined checking and savings bundle that they created just for the Ramsey tribe.

You guys are just incredible. Yeah, you guys, it's so easy to join Fairwinds no matter where you live. So go to fairwinds.org slash Ramsey. Fairwinds is federally insured by NCUA. Buying or selling your home is a big deal. A lot of decisions involved.

And the clickbait headlines and confusing data can make you a little bit uncertain. And that's why we're in the trends for you. And we're breaking it down, just giving you an idea, meaning home prices went up slightly last month and more homes are on the market.

than have been since 2019. So to learn more about housing market trends and get free tools to help you buy or sell with confidence, go to ramseysolutions.com slash market. That's ramseysolutions.com slash market. Or you can always click on the link in the show notes in the podcast app that you are listening to us or on YouTube. Travis is up next in Raleigh, North Carolina. Travis, how can we help?

Hey, how are you? We're doing well. How are you today? Doing well. Good. What's up? So I have some questions. I went through a divorce in the last year and a half. I'm 33. I have two children, and I have split custody of them, 50-50. I don't have any child support or alimony.

So basically my biggest expenses are my rent and my childcare cost. Basically my question is I'm trying to start building for retirement because I'm basically starting over in life and trying to invest into my future essentially. Do you have any debt at all?

I do not. After the divorce, I had a good little bit, about $6,000, but I hit it hard and paid off all my credit cards. What kind of savings do you have? Currently, I have $1,000 in my emergency fund, and I just opened up a Roth IRA in the last year. I've only got about $1,400 in there.

What's your income? I have no truck payment. Good. So what's your income? I currently make approximately $85,000 a year. And what do you do? I'm an HVAC technician. Okay. What's a financial path forward look like for you as far as growth in that role? Is there a path to six figures? In your area, based on your expertise, what's that look like for you as far as potential growth?

I'm on the pretty high end already. All right. So you have no debt. You're making $85,000. You've just started what we would call Baby Step 2. I mean, excuse me, Baby Step 1, you have the $1,000 emergency fund, and you just knocked out your credit card debt. So you're really in Baby Step 3, which is to get to three to six months. Am I understanding that correct? Yes.

Yep, that's correct. Okay. Well, George, walk him through what that's going to look like for him as far as saving for retirement. Yeah, I love that you're excited to build wealth for the future, but right now— Hold on. I think he's— You have more information? You got a correction here, Travis? I'm sorry? It sounded like you were about to say something else, like—

Oh, yes. My goal, I would like to retire by roughly 62 because it's a labor-intensive job, and I can't see myself crawling under houses and attics at 62 years old. All right, perfect. Okay. All right, George has got it punched in. I'm pretty determined. I crunched your numbers in. I know your future. So here's the deal. Right now is not the time to be investing because if you have a $1,200 emergency, you're going back into debt.

And so right now, what we need to do is take that amazing income and stack as much of it away as possible into that emergency fund until we get to that three to six month mark. And for you, having been punched in the face like that with a divorce, I'd want to lean towards six months. So what does a full month of expenses take for you to live currently? Is it $4,000, $3,000? $4,000.

I spent about $800 in child care, and my rent is $1,700. And then food, utilities, insurance? Yeah. So are we talking $3,500? I also put it...

Yeah, probably. And then I also put away, I started investing into my 401k through work because they match 4%. Okay. But here's what I'm asking you to do, and I think it's going to get you there a whole lot faster, even to your wealth goal, is to pause all investing right now, even the match, until you have this emergency fund saved up. So you need about 20 grand before you go, okay, now I'm ready to start building wealth. Because we're still kind of building some foundation here. We're not ready to build for the future quite yet. You're on the cusp. Yeah.

But you do this for another, let's say six months. Could you really sock away, you know, three grand a month for six months to get to that 20 grand mark?

Yeah, I just have to keep hitting it hard. Exactly. Working more overtime. So now's not the time to let your foot off the gas. You'll get there. You'll get back to enjoying life a little bit more, eating out, saving up for vacations and upgrading car and all that stuff. But right now you're in baby step three, which is a slog. It's a grind, man. It's not the fun baby step. Baby step two, at least you're paying off debt. You're seeing some progress. Baby step three, you're just stacking and stacking and stacking.

But six months from now, let's say before the end of the year, you're going to be back to investing. But instead of a measly 4%, you're going to be up to 15% of $85,000, which is over $12,000 a year. So run those. This is fun. Can I crunch the numbers for you? Oh, I love when you do this, George. When do you turn 34? In October. Okay. He had to think about it. I got nervous. He did. I know. I wasn't sure where that was going. So from 34, you said you have $1,400 total in retirement right now?

Correct. Okay. So from 34 to 62, let's say you never get a raise. You make $85,000 until you're 62, but you invest 15%. It's a little over a thousand bucks a month. You ready for your grand total? You're looking at about $2 million in that one account. How's that? How's that? Yes. At 60, at 60 what? That's at 62. That was your stated goal. Travis, at 62, George has got you right at $2 million. If you do exactly what he said, how's, how's that feel?

That would be amazing. It's like you won a game show. But here's what it takes. Consistency. That's why you need this emergency fund, because having that in place means you're never going into debt again. You can consistently invest and have margin for the future. That's the purpose of getting out of debt, too, to have that margin. And my guess is you're good at your job if you're getting paid $85,000, right? Oh, absolutely. So it's probably going to go up over time. It's not a far stretch to say you could be making six figures a few years from now doing this.

Yeah, I believe so. And therefore, that 15% grows as your income grows, which means you're going to have even more than $2 million if you do this stuff. And that's not including getting your home paid off. Do you have a home right now? No, I rent. Do you want to be a homeowner someday? Yes, eventually I do. Right now I'm just trying to rebuild my...

Wealth.

to be a homeowner and start building some equity as you build wealth through your 401k. So I feel good about this. I know it feels like you got knocked down. You'll never get back up again. But man, you were 33. That's right. And Travis, those numbers go up pretty substantially if you're doing some side hustle work because of your HVAC experience.

You can put more money in that calculator that George is walking through. And by the way, that's at RamseySolutions.com, the investment calculator. And you can see how those numbers go up. So if the goal is 62, then you can always make more money.

And through doing more work and put more in, and then you get that compound effect. So if that's the goal, then you've got to get... That $85,000 also includes a lot of overtime. Well, good for you, though. You've got kiddos, man. Welcome to life. Oh, yeah. You're the sole provider now, yeah? I love it. Atta boy. I won't do anything for my kids. I know. But I also would encourage you...

that you don't have to limit yourself to the only way I make more money is overtime. I think you have a lot more skill and experience than you're giving yourself credit for. And you're still a young guy. And I mean, young guy. So let's be looking for opportunities.

to make six figures. What would have to happen? And let's not just assume that I've got to work 60 hours a week to get there. You've got some skill. You've got experience. Make relationships and connections happen all over the place, and you'd be surprised where you are 10 years from now, but that's going to allow you to get to the point at 62 where you can walk away. ♪

And walk away with comfort. That's the goal. Not just walk away in order to shut down. Not just survive. We want you thriving. That's exactly right. Thanks for the call, Travis. Good stuff, George. A few things get me more excited than you. Punching numbers and the investment calculator. I love it. It's nerdery meets hope. We need some music to support that and a big reveal. Some calculator music? Yeah, and a drum roll. I'll work on that. All right.

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This is the Ramsey Show, where America hangs out to have a conversation about their money, their profession, and their relationships. The phone number to jump in is 888-825-5225. Alongside George Kimmel, I'm Ken Coleman. Thrilled to be with you all. And Lizzie is with us in Toronto. Lizzie, how are you and how can we help?

Hi, thank you. So just a backstory. I'm Lizzie, 25-year-old mom of two under the age of three. I'm unemployed and I have a fiancé that works six days a week, extensive hours. He makes around 150k a year. But when he's home, he thinks because he brings in all the financial resources

support that all he has to do is be on his phone and do nothing around the house. And I'm at my wit's end and I'm ready to leave. But because I feel like I'm in a prison where I have no family, I have no resources of getting out and showing him that I'm not going to stay somewhere where you're begging me to get a job, but I still have to hold all the manpower in the house. Yeah. Well, yeah. So, um,

This is a simple solution, but it's going to be difficult. It's going to be hard to do, but it's pretty simple.

You're going to have to to you're doing a lot on your own. It sounds like anyway, he's bringing in all the income. This relationship is sounds like it's non-existent. Whatever exists is certainly unhealthy. So it's the fiance. Are they his kids? Are they somebody else's kids? What's the story there? No, no, they're our kids. OK, so you want out, correct? Yeah.

Yeah, because I just think this person is not willing to change anything, except there's nothing wrong with him, or he's not doing anything wrong. I agree. So you should get out. You guys aren't married anyway. So what I would say is you need to figure out what to do based on him not being around. You have to treat it like he's not around.

Period. No money. Now, you're in a situation where you are in a prison because he's paying for all the bills. You have no income. So the simple steps are, and I say simple, I'm not saying this is going to be easy, but the simple steps are you've got to figure out who would watch the kids when I'm working full time. Can I do full time work from a remote situation?

And still be able to watch the kids. I think that's probably highly unlikely, but you'll know the answer to that. So the answer is no. Let's assume it's no. Then you've got to come up with a situation where you go, what, how much money would I need to make to not only take care of me and the kids, but also be able to pay for the child care above and beyond the basics you're tracking with me so far. Correct?

Yeah. Okay. So it's time for you to get out there and, and, and, you know, shake the tree and you got to find work and you got to say, I'm moving forward on my own. If he, once I leave, uh, gets the wake up call that he desperately needs to get great news, let's repair the relationship at that point. But you've got to go and you're a mama bear. And so the question is what experience, what skillset do you have in the workplace? Yeah.

So I'm in business management. I just finished studying business management in 2024. And before that, I did aesthetics and spa management. Okay. So what do you think you could make? And I'm not holding you to this. This is just so that we can begin to get our brains working. What do you think the income opportunity is for you in your economy there in Toronto or nearby? I think there's...

Maybe minimum $50,000 a year. Okay. Can you live on $50,000 a year comfortably? Um...

Probably not unless it's paycheck to paycheck. Like it would be paycheck to paycheck if it's 50K. I want to bring George in real quick because he's really, really good here at coaching. She knows the professional side of things. And by the way, I'm going to give you a copy of my book, Find the Work You're Wired to Do. It's got an assessment in it that I want you to take, and it's really going to help you from an ideation standpoint.

And you really need to take it. That's my gift to you. But I want George to come in here because as you're looking for professional opportunities, realistically, you may have to work two jobs in the early days to be able to afford child care. And George, I want you to walk her through what she needs to be doing even now in building an actual budget. They're also his kids too. So I think...

I get it, but you said he does nothing. You said he does nothing, so I'm assuming he's not going to help you. If he helps you, great. No, I think he would. Like, he's...

He's okay with his responsibility. He knows his financial responsibilities. I think it's the household responsibilities he doesn't want to take accountability for because I'm not working. So he thinks, I don't have to do it. I don't like this idea that you're not working. I have a stay-at-home wife. I would rather be here because it is chaos at the house. She's exhausted.

And so the idea that he thinks you're not working is already disrespectful. He doesn't value you. He doesn't value what you're bringing to this family and raising these children. And so I don't know what's going on behind that, if that's from how he grew up or what it is. But you need to have a very direct conversation with him where he doesn't shut down. It's so gentle.

It's generational because his mom was also his dad and wife. And his dad probably didn't value his wife. Yeah, he saw his dad. And he goes, this is normal. The man works and the wife just is a leech and she just sits at home all day. It's insane. And so you're not crazy to think this is not okay. And you deserve to be valued and respected in the household. And so you have three options. Yeah.

the same is not an option, right? Staying where you're at. So we either have to deal with the problem at hand and see if he's willing to change and turn

turn course here, or you leave and start a life on your own. And that's either going to be you as a single mom working three jobs trying to find childcare. I don't know what that next step is for you. I hope this can be resolved and that he can remain a part of these kids' lives and support them. I don't know what the laws in Canada are as far as, you know, you guys aren't married, but there's probably some common law here that says he's going to have to

child support and spousal support. And to that end, so Lizzie... Canadian child benefit. So hold on a second. I want to give it back to George because you jumped in when I was setting him up. And so whatever... Sorry, sorry, sorry. No, no, you're great. No, no, I'm not chastising you. I want you to hear this part from George. Whatever you think he's going to do to support the kids financially, that, George, becomes a part of this new budget. I want you to walk her through. I think she's got to create...

a pre-budget, which will help her determine what she's going to have to earn based on whatever he's going to do to support, but she's on her own. That's where I'm trying to take this. Yeah, I would create just a fake budget on your own of what a new life would look like and how you would be able to support this and what custody would look like if he has the kids half the week. I don't know what that would end up being if that's the next step, but that's the kind of parts you need to map out on paper to put some facts because right now it's just a lot of emotion and that's hard to grapple with.

as far as taking a next step. So walk her through that, George, real quick from rent, the four walls to some other things. Yeah, so I would start researching, hey, what would it look like to live on my own? What would that cost? What is rent in this area? Obviously, the kids are really young, so they'd likely need to be in some type of daycare or you're working some sort of very flexible remote job where you can take care of them. That's going to be difficult too. And so then map it all out. Food, utilities, transportation costs, all of that. Insurance on my own. What would all that cost?

and then go, what do I need to make in order to make that happen? What jobs are out there that pay that with my skill set and time? So you're kind of reverse engineering it. But there's so much going on here where I'm like, he wants her to get a job for what? They don't need the income. He just thinks she's lazy.

And so I think they should swap roles for a day. Let him take care of the kids for 24 hours and see if he's a shell of a human at the end of it. I could tell you, I remember we had three kids under the age of three. And I remember one of the first times that Stacey went out for like maybe 90 minutes. I thought I was going to absolutely implode.

Statistics show that half of Americans don't have enough life insurance, or they don't have any at all. I don't understand this, John. Why don't people want to take care of their family? They think they're going to die or something? Well, I used to be one of those guys. I didn't even think about it. And one of my buddies said, hey, the only reason to not have life insurance is if you hate your wife and kids.

And I immediately went and got term life insurance. That's a gut punch. And you're telling me, and for decades, Dave, I've sat across people who've lost a spouse. They've lost somebody important to them. Me too. And they don't know what to do next. Me too. I mean, you're going to have a crisis here. And, you know, you got two options while you're sitting and talking to a young widow. She's concerned about how she's going to invest all this money properly and not mess this up. Or she's concerned how she's going to eat tomorrow.

That's exactly right. These are the two options. Take care of your dadgum family, man. Term life insurance can replace income, pay off debts, cover funeral expenses, so your family can actually...

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Katie is up in Tallahassee. Katie, how can we help?

Hey guys, how are you today? Good, what are you doing? Not much. So I just have a little financial question. So I've been working for a successful flower shop for the last 10 years and the owners want to retire and I'd love to purchase the business. But the problem I'm having is getting approved for an SBA loan. And it's very frustrating because I'm 42, I'm debt free minus the home that I'm currently living in along with my rental property, which I have about $150,000 in equity.

I have an 830 credit score. You know, I have seven credit cards with $70,000 available to me. Like, I feel like I'm doing great, yet even with all that, I can't get approved for an SBA loan without a guarantor. And I honestly don't have anyone in my life that would be able to be a guarantor for a $180,000 loan. So my question is...

So if I have all this going for me and I can't be approved without a guarantor, what are other directions that I can go in order to, you know, purchase a business? How long have you been working for them? Ten years. Great relationship? Yes, sir. Okay. What's the price? It's going to be $180,000. Okay. Okay.

Yeah, George, you can walk her through that, but it's a very – in fact, I like that price point. Yeah, I was scared it was going to be like a seven-figure deal here. So number one, I hate to say it. I'm kind of glad you didn't get approved for the loan because I don't recommend any business owner take on debt to start or fund or purchase a business. There is another way to do this that I think makes sense for both parties, and that's something called a structured payout.

So you guys agree it's $180,000 and you pay them $5,000 a month out of the profits of the business. That's $60,000 a year. They get their full $180,000 within three years. See how that works? That seems a lot better. Exactly. And then you're not taking on actual debt. And so there's no guarantee here, but it's saying, hey, I'm going to pay you this percentage or this amount of the profits until we hit this purchase price.

I honestly never thought about doing that without a loan. The options are out there. Yeah, well, debt is so normalized. We all just go, well, we'll all just try to get loans for everything. But this really protects you and it gives them some peace that they're actually going to get their money within a reasonable amount of time.

And so I would talk to them and explain the situation. Say, listen, I can't get a loan out. I want to take over this business. Would you do a structured payout? I would have an attorney draw it up to make sure that both parties agree to all the terms involved. And then within that three years, you would then become a full owner over that time. And I would only add to what George said by don't feel pressure. Don't overcommit on what that amount is every month. You've got to really make sure you've got your eyes on the books.

Before you would agree to anything or even propose anything, you need to really understand the books. So, for instance, right now, as it stands, do you have any sense of what the net profit is on a monthly basis?

Yes. So she has actually given me all access to the books. So because it is a floral shop, you know, February, we're taking in $50,000 versus March, which is 30. So, you know, and obviously when you have the bigger months, you set aside the money for the smaller months. So right now, gross, like last year, the business made $330,000 and she's taking home, you know, $15,000 a month. And that's after all utilities as after all.

You know, employees are paid, supplies, everything. So it's a very good business and she's making wonderful money. So I can definitely do the five a month. That would not be a problem. And, you know, my husband works. I don't have any bills. So even if I have to cut back on what I take home, it's going to be fine because I don't have any I don't have anything to put in. What would be an ideal number just just for our conversation? What would be an ideal number to where you pay yourself a really nice chunk and you're paying a chunk to the owners?

I've thought about that and I'm not sure. Um, I do have some Ross that I want to invest in. Um, you know, I am on baby step number five, so I think it would really depend on, you know, what I take, what, what I could take would depend on actually, you know, what I invest in and what I personally could put in my account for me. Um,

So I've thought about it, but I haven't thought about it. It's really just, you know, what's happening in my life at the time. My son's on a church mission, so I pay $500 a month, you know, for him for the next five months. So, you know, at the end of the year, my prices are going to be different. I would love to take home, you know, $25,000, $3,000. That would be way more than enough than I would ever need. I'd just, you know, shove it into savings. Okay. So you're saying ideal, if you could pay yourself $2,500 a month, you said that would be ideal? Yeah.

That would be more than I would need. Oh my gosh. And she's been paying herself 15,000 a month.

Right. Right. So, yeah. So, you know what I would, so my guidance, I could say to my daughter's college and, you know. Yeah. But I want, I want to bring George in on this opinion here, George. I'll go out. I want to be conservative if I'm her. Yeah. And if the paying herself 2,500 would be more than she needs. And the previous owner has been paying 15. I would want to pay. I would want Katie to pay herself as little as absolute possible for

so that we pay the 180 price point off so much faster. And I would also say, George, and I'm also being very conservative here, Katie, and I just want to see what George's take is. I'd also not invest in the business much at all, if any, until I pay the 180. Do you agree? Or is that too conservative? I want to be real conservative. If there's major things that have to be done, like light things to, I don't know what kind of the renovations that need to happen or branding, you know, I don't know what the flower shop

stated is no i mean it's you know it's it's an established business everything's running great um the only thing i would do is put my van as a company van because it does need to be replaced but other than that there's nothing major that i can see in the future that i mean you know it's established it has everything it needs just supplies monthly type of thing right are there any retained earnings i would love to do is i'm sorry are there any retained earnings in the business um what do you mean like are there any savings for future investment do they put any money aside

And would you need to have that? I would. I would have a separate savings account, you know, for the business, for emergencies. But I don't think she has that now. I just think it, you know, she pays us. She's very lax. She just kind of pays us. She goes. Yeah, it's a good situation. I'm very, you know, I want my account, my account, my account. And you know that this business will continue at this revenue pace even if you took over. Clients won't be leaving. Customers won't be leaving if they're like, whoa, what happened to ownership? Yeah.

Yeah. Yeah. I've been there for 10 years, so I know the clients. And looking at the profit and loss statements, it just keeps going up every year. Okay. Well, Katie, I'm super pumped for you. Yeah, this sounds like a great deal, honestly. I'm going to just say this one more time. I would be super conservative on spending. I'd be very aggressive in pouring every nickel of profit you can towards the 180. And when that gets you there where you're free and clear –

Now you can invest and grow this thing, pay yourself more. And I just think you've got yourself a really great business. So I would definitely do it this way. I'm curious, what are your other big seasons besides February for Valentine's Day? Is there a...

Is Christmas big? What do you got going on? I'm just curious what the seasonal dips and rises are. Yeah, so we have Valentine's Day and then Mother's Day. Mother's Day is actually more profitable than Valentine's. So Mother's Day, we can bring in about $60,000. Wow.

Yeah, and then Valentine's brings in about $45,000 to $55,000. Unfortunately, we have a lot of deaths at the beginning of the year. Everyone holds on for the holidays, so we actually are major into funerals, which is all throughout the year. But normally the cheapest month income is about $20,000. That's fantastic. That's amazing. It looks like you know this business inside and out. It's really great. And maybe you kind of let them hang on with the business for the first year.

to just make sure there's no bumps in the road as part of the deal. Yeah, so the owner actually, obviously over 10 years we've become really close, and she has actually offered to stay with me when I purchased it, to stay with me for about four or five months and be my employee just so she's my backup. And if I have any questions and she can just kind of coach me. And she'll take a big pay cut for that?

Yeah, she'll make what I make, and she's giving me a month free. Wow, I like this deal. Yeah, I'd still have an attorney draw it up just to make sure it's not like a handshake agreement, but this sounds like a best-case scenario for all parties, and I love that you're not doing it with debt anymore. Thank God you got denied. You're going to do it a much smarter way. Fun fact, Katie, my very first job, 14 years of age, working for Anderson's Greenhouse, still there in Newport News, Virginia, and I was the laborer.

who got the poinsettia plants prepared and ready to go big christmas business on poinsettias so and i bet you were busy you need to get into that business there's another big boom in december everybody likes those fresh red plants especially george

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 save 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. All right, let's go to Martin in Lubbock, Texas. Martin, how can we help today?

Hey, man. I appreciate answering my call. I enjoy listening to you guys. Thank you. I'm calling about insurance. I'm a 65-year-old rancher that is a

puts insurance about a step above the IRS. And I'm to the point of trying to decide if I want to self-insure, not my vehicles so much, but our home and our outbuildings on our ranch and...

Just kind of want your idea about it. I've been thinking about this for quite a while. Well, my guess is you're thinking about it because you've got, you think the right amount of cash, right amount of money to be able to do this, or is this just an idea only? Well, I can replace it myself. Yeah, run the numbers. Yeah, run the numbers out for us.

Well, the house I'm going to say is probably what they have a value to 780,000. And then I've got two barns that about 150,000 a piece. I can build them cheaper than that, but that's what it would cost if I had them built because I built them years ago or we did. A couple other buildings run probably about $50,000. So whatever that comes out to, yeah.

A million or so dollars, maybe, let's say a tornado came through, which has happened before. But I have not made a claim on my home ever. Not a hail claim. What does your insurance cost total per year? I don't know very much. Per year, I'm grasping about $9,600 a year.

Okay. Versus if let's just play out the worst case scenario and you just ran the numbers. So if I'm understanding you right, you're telling me you got that cash set aside where you could replace all those buildings, home included. But why? So here's my, and this is an honest question. Why does the $9,600 bother you so much? Yeah. Cause instead of using up all that cash. How much cash do you have? Like how much do you have liquid? That's fair.

Liquid cash, if you're in... It's not a trick question. No, I'm going to say, let's say 2.5. Okay. And then, of course, I've got investments that I can't just... That's liquid that I can't just get out immediately. Yeah, it would take some work to liquefy it, if you will. I just don't see what would possibly bother you so much, given that that's your financial position, why $9,600 a year...

Yeah, you put that $2 million in a savings account, it's going to make enough to pay for your insurance 10 times over. And so I'll tell you, Dave Ramsey has insurance on all his properties. He can very well self-insure if he wants to. But for the bargain, it's worth the peace of mind knowing he doesn't have to burn his own cash for the $800 a month that you're paying toward insurance. And the other piece is for liability coverage, exposure to lawsuits. Right.

No, I've been told that a bunch. If I were you, Martin, here's the bottom line. If I were you, I would pay that insurance with a smile on my face, given your position. You're worth several million dollars, and you've got to pay the tax man on top of paying taxes already. Yeah, put all your angst towards the IRS. That I'm all for. But not the insurance man. In this case, the insurance is a really smart financial move for you.

Very smart. That's peace of mind. I would go to bed every night going, taxes. But then I'd go, insurance. Am I right, George? Well, it sounds like you've been burning some brain calories just thinking about this. It's living rent-free in your head, just thinking about it. He says the insurance man is just barely above the IRS guy. And I thought there was a deeper story here.

It wasn't. It wasn't. It's just that when you do cars and you do tractors and you do crop insurance, it seems like that's all I do is insure. I get it. And one thing you can do is see if you can raise your deductible, which could lower your premium. So you can still dig into your insurance and say, hey, where can I do better to lower what I'm paying since I can take on more risk?

So I would work with a good insurance broker. Do you have one that you trust? Yeah, I do. I do. I've known him for years, and so I can't really – I don't know if I'd put him with the IRS, but he's a good guy. You know what this really is, Martin? Don't make me feel good, okay? Yeah, well, you know, Martin, I think I've figured out what's going on with you. You just – you're so tight you squeak when you walk.

And you pretty well, the idea of you paying anyone. So the idea of paying insurance is not even about the insurance. You just got stuck at pain. And so the forced, the forced payment is what gives you hives. Yeah. Yeah.

It's what just aggravates me. I get it, brother. But man, the flip side of that is that it allows you to keep that cash and that $2.5 million can grow and grow and grow. And so you're just going to have to play some type of mental game here to get over it. And I thought that was what was going on with you.

And I get it. I get it. I'd shed a tear and then wipe it with a $100 bill and move on with my day. Oh, no, that's a flex. That's how you do it. I like that one. I want to be Martin when I grow up, though. I mean, this man's figured it out. Who doesn't want out? This guy's got it. I want to be a rancher. He's got dirt. He's got buildings on the dirt. He's got millions in the bank. And he's calling us griping about insurance.

That's how it is, Martin. That's how a true American is. Life is good, friend. You've done well. He would have been pouring tea into the harbor if he was a little older. Guarantee you. He would have been throwing it over the ship. Let's go to Isabella in your neck of the woods, George, the Boston area. Isabella, how can we help? Hi. So I have kind of a weird one, or maybe it's not, but I'm trying to figure out if my husband and I should file bankruptcy. Okay.

Yeah, that's weird. What's going on? What's causing you to even go with this, like, napalm solution? So we're both 21. We got married in April, so just married. Is this how you're celebrating? With bankruptcy? Yeah. Okay. Yeah, it's super fun. What did you two do? Did you do this together, or did you bring this mess into the marriage?

So technically it was right before we got married. Long story short, my husband's father was trying to sell their childhood home and we are kind of in a weird home situation right now. We're living with my parents and an in-law and it's not super ideal. Holy smokes.

Yeah. And he ended up, my husband taking an $80,000 loan out, a home equity loan on that property for his name to be on the deed and us for it.

His father had like $30,000 in credit card debt and needed us to pay that off, which looking back now is not a great idea. I'm looking for any good ideas so far in this relationship. This sounds like a reality TV show. I live with my parents and an in-law and everybody's got debt and we split the house up, half ownership. It's just a reality TV show. So he can't even sell the house because he only owns half.

So we tried to, so we had to move out because it got really hostile. Not to go too into it, but we didn't know this until after. Yeah, his dad has a history of domestic violence and a whole thing, which I didn't know about until after this was done. That would have been good information. Oh boy. So now you are paying a payment on a place you don't even live while paying another payment to rent somewhere else?

Yeah, so fortunately, we only pay like $400 because we're technically living with my parents, so they've been nice in helping us with all this. But we're pretty much at a crossroads of his father refuses to sell the home unless my husband takes his name off the deed and basically gives him all the rights, which who knows what he's going to do and if he actually sells it because we're pretty sure he's renting it out. And we're kind of in a really weird spot.

Yeah, well, bankruptcy is not going to solve this. This is a relational issue, potentially attorney issue, to get out of this mess. What's your total debt between the two of you? It's $80,000 for the home equity and then about $6,000 in credit card debt. And what's the total income between the two of you? I can't work. I had to leave my job last year of health issues, and so it's just my husband working, unfortunately. It's the hard part with all of this.

Oh, my goodness. Well, we're going to need to get the income up, the expenses down, and clean up this mess, and hopefully we can get out of this home equity loan situation if the house can be sold. But bankruptcy is not the option here. Exactly. Exactly.

All right, it's time for my personal favorite segment on The Ramsey Show. Strong words. It's when George talks nerdy. I love when you talk nerdy, George. So, without any further ado, talk nerdy to me. Guess what today's is about. I don't know. Should I guess? Yeah.

It involves? It's either real estate or IRS. Oh, it's about taxes. Withholding? How'd you know? Well, I mean, if it's about taxes. We got to talk about how do you know when it's time to change your tax withholdings? Oh, okay. This is the age-old question. I'm going to try to be polite because, you know, I hate taxes. Well, this is going to really fill your cup.

Oh, I thought you were going to say burn my biscuits. That too. Okay. Here we go. Here's the stat. Or steam my broccoli. As of April 25th, over 90 million people got a refund from the IRS this year. And you would think, wow, what a nice thing. Your refund or tax bill reveals how accurate your tax withholdings or quarterly payments were throughout the year. So the goal, a lot of people don't know this, is not to get a refund, not to owe a bunch of money, but to break even.

Got that? Yeah, got it. Because a big tax refund means you're withholding too much. The government held on to your money at 0% interest and then gave it back to you come tax time. So most people, they submit their W-4 form, they set it, they forget it, but then life changes and so should your withholdings. And the amount taken out depends on two things, what you make and what's on that W-4 form. So how does this work, tax withholding? Well, everyone who works pays income tax. In certain states, you might also pay a separate income tax.

So when you start a new job, you have a major life change, you could get married, you got to fill out a W-4 form. And that tells your employer how much to take out of your paycheck for taxes. So how do you determine this withholding amount? There's two ways. Number one, you can divide up last year's taxes. So look up what you owed last year divided by 12. That's how much more needs to be withheld each month.

And then you can do a mock tax return. I know that's what you like to do on the weekends, Ken, just to stay sharp. Well, you know, my morning coffee on a Saturday morning around, you know, mid-March, I like to start tinkering with that. Like you used to do a mock trial. Remember those back in school? This will be no surprise to you. That was one of my favorite things from high school. You would have been a great trial lawyer. You know, it's been said before.

Okay. Well, instead of the trial, try a tax return. You can do this with any online tax software. It's free. It'll tell you exactly what you owe. You divide that amount by 26 if you get paid every two weeks or 24 if you get paid twice a month. It's like we get paid twice a month here at Ramsey, so that's what we would do. Now, let me ask a question. When you do that...

Can you get mock arrested if you mess it up? That's a good question. I don't... I think you're... I get a little nervous about doing my own tax return. It's like maritime law. I know, but I'm saying if you fill it out wrong, do you get some type of warning that says...

You can fudge the numbers with a fake tax return because you're not actually submitting anything. All right. I thought it was a dumb question. I don't think the government's watching at that point. Okay. So here's how to update your withholding. You should update your W-4 when something major happens that affects your finances and your tax bill. So let's say you buy a home, you get married, you have a baby. That could change things. And so if you change that on W-4, your withholding will stay accurate. That's what you want. Okay.

And then look at your tax refund or your tax bill. No major life changes last year, but you still got a big refund. It is time to adjust and then check and change that W-4. So it's that simple, and it's really easy to do. If you have an employer, just email HR, walk up to them and say, hey, I got to change my W-4, and they will help you out with that. And if you've got questions, you can contact a Ramsey-trusted tax pro at ramsaysolutions.com slash taxresources.com.

We are here for you. And that is George talking nerdy. They don't teach you this stuff in school. No, they don't. They should. Our high school curriculum, I actually teach on the W-4 form. Yeah. And I say, what's a W-4 form for? Oh.

The kids love it. They eat it up. They laugh at that? They eat up a little alliteration. I mean, there's no wonder you're so popular to the next generation. Is that true? I've seen it with my own eyes. When we have student groups come here to Ramsey Solutions and you walk out, I feel like the Beatles are here.

It is scary because they're all six foot seven. I don't know what they're feeding kids these days, but they're all towering over me like with their Snapchats out trying to take selfies and I get very scared. What do you think it is that makes you appeal to these youngsters? I think it's that I'm not intimidating.

whereas you, you've got a real Clint Eastwood vibe to you. Not true. You know what I mean? Not true, but I get what you're saying about you. I'm the least intimidating man you could meet. I think you're very funny. And I don't take myself seriously. I'm self-deprecating. That's what kids want. They want someone with a guard down who's quick to make fun of themselves. That's good. All right, let's go to Vanessa in Naples, Florida. Vanessa, how can we help?

Hi, John and George. Thank you guys so much for honoring me with your time. I'm currently in the process where I'm listing my home and we're looking to have about $620,000 in equity. My mom's my realtor and she's kind of suggesting us to purchase a

I'm confused. Explain to me how it's better to buy a more expensive home, tax-wise? Sure.

She was saying because of the amount of equity and profit we're making on the home, she was explaining that if we purchase a home too inexpensive, we're going to have to pay capital gains on the difference. I don't understand that. I don't either. So how much did you purchase the house for? So I purchased the home back in 2020 for $325,000. We only owe about $275,000 right now. Okay, so the home was purchased for $325,000. What are you going to sell it for? Mm-hmm.

$895,000. $895,000. And you guys are married? Filing jointly? I'm currently filing jointly with my husband, but I purchased a home prior to our marriage. Okay. But if you're married filing jointly, you should have $500,000 worth of tax-free growth, correct? Correct. That was my understanding. So you'll only owe capital gains on the $70,000 above that?

Okay. Which should be long-term capital gains. And so that's why we're confused as to why she would recommend that. And I'm going to tell you point blank, you should go with your gut and what you want to do. Yeah, I don't understand what the new house has to do with your capital gains taxes on this sale. Yeah.

Right. I don't think it has anything to do with it. So what's that? I'm not an expert on this end. Well, first of all, we're not tax experts either, but I think she's got that confused. But here's the point. I still think we're focusing on the wrong thing. Whether mom's right or me and George are right on the capital gains thing is not the issue. It's not what we should be discussing. What we should be discussing is.

Is that she's recommending you buy a more expensive house. Oh, by the way, she's going to make more the more the house costs. What's her commission on this? Sorry, Mom. Is she giving you a deal? Right. So, no, she said if we do a discount, it may not attract the buyer's agent. So she's charging me the full thing. Yeah. So, again, let me come back to the core thing.

You want to have more cash as you move into the next house for your financial goals. You want to be more frugal on this next purchase. And I agree with you because first of all, it makes total sense. Second, it's what you want to do. Don't do what mom is telling you to do. You're a big girl.

Yeah, we currently have a 10-month-old, so my long-term goal is to kind of take a step back from work because my husband's a firefighter and we're living alone out here, so he's starting to get a little burnt out. So I'm hoping to, you know, kind of be able to take a step back, take care of the kids. Great. So what are you going to tell mom?

In our emergency fund. Great. I'll know that we'll list and I'll purchase the home that my husband and I decide. And my husband's on board. He agrees with getting the best home for the least amount of money. Okay. Well, your mom is wrong on multiple accounts. So there's our answer.

Okay. She's wrong. I really appreciate you guys. Yeah, absolutely. Thanks for calling. But listen, you're right. She's wrong. Bless her heart. Be respectful. Tell her how it's going to be and you do what you want to do on this. One final question, Vanessa. What's your household income? Mm-hmm.

So I currently make 90 and my husband makes 65, so we're a little under 150. Okay. So you would be at a 15% long-term capital gains rate, which means 15% of that extra 70, you're looking at like a $10,000 tax. Mm-hmm.

And that doesn't change regardless of what happens next. Once you sell this home, that's what you owe. It has nothing to do with the next purchase. I'm confused. Maybe I'm too dumb to understand, but I don't know what your next house purchase has to do with this and how buying a more expensive one is going to offset the taxes. Yeah. But I would talk to a tax pro and say, thanks, mom. I'm going to handle this one. I make the decisions. Yeah. And congratulations on where you guys are and the decisions you're making for your family. Yeah. As well as your finances. Amazing equity in this home.

Way to go, Vanessa. Sorry, Mom. Don't give advice to somebody else.

you can connect with a Ramsey-trusted insurance pro who will only get you what you need at the best price. Go to ramseysolutions.com slash insurance, ramseysolutions.com slash insurance.

This is the Ramsey Show, where America hangs out to have a conversation about their money, their profession, and their relationships alongside the incomparable George Camel. I'm Ken Coleman. 888-825-5225 is the number. 888-825-5225 is how you can jump in. And Lindsey's here in Columbia, South Carolina. Lindsey, hello. Hi.

Hey, how are you guys? Well, we're having a lot of fun. How can we help? Oh, that's good. Well, mine's kind of different. I'm calling more because of relationship advice. That's my favorite thing. My favorite part. I'm not kidding you. I love this.

What's going on? Well, I've been going back and forth, and I just figured I'd come ask the experts. I've been with my long-term boyfriend for six years, but we've been long distance. We were together in college, and now he's in another state and about seven hours away. And I...

I am a graduate student. I'm also working full-time as a speech-language pathologist. And he also graduated a year after me, but he is unemployed for the last six months. He's 24 with 25 soon, and I'm 25 currently. And he does not have a driver's license. He doesn't have a car. He has been unemployed. He just does not know what he wants to do with his degree. Is he living with his parents? Yes.

He was living with siblings, and now he's living with his grandparents. Lovely. And why does he not have a driver's license?

Well, I think it's because, well, from what I have been told, it's been access to a car in order to, I guess, do the test and get what he needs. And he doesn't have the best home life situation. It sounds like you don't believe that. It's just because I feel like if you really want something, you'll make it happen. I just, I'm not. But do you think he's lying to you?

I don't think he's lying. I know his family dynamic and the children have kind of like raised themselves and there has not been any role models like, you know, adult wise. So kind of having to maneuver life without a role model. He's a first generation and, you know,

You know, I'm not trying to make excuses, but this is just the face of the matter, and it's just we're not in the same face of life. So I'm just kind of like looking forward. I graduate next year, and I've got a $20,000 raise that's going to come soon, and he's got debt, and I don't have any. Lindsay, I'm going to cut to the chase. You don't respect this guy. Why are you with him? Because, I mean, I love who he is. I mean— Who is he? He is—

Like, he's my best friend, and he actually became in his relationship with God in the last year or two. And so he's just shown me a lot of improvement as a person. But an aspect of just like the driving ambition, I'm just not seeing what I would like to see. And it just makes me pessimistic. So what's your question for us? You said you called the experts. What's your question? Okay.

As far as what you've seen from people who are much older than me, I know how, you know, money, financial things like this can break relationships. I have, my parents have been divorced and I just don't want to follow the same footsteps. I want to look back and be like, you know, I made the right decision and like, you know, love can't pay

Pay the bills. Love isn't necessarily the only foundation to have. No, I get it. Listen, I totally get you. Here's what I'm trying to do. I want you to identify what it is that you're asking us. And I think I know. What is your question for us? I think you're, here's what I think. Let me try to help you. I think you think that you should break up with this guy, but you're not sure and you wanted to get our opinion.

Right. Like, I just didn't know if it's too soon considering like our age to break up because I feel like I'm being impatient. No, I actually am old enough to be your dad. So can I be your show dad? Please, because I don't have one. Oh, bless your heart. That's okay. I'm going to be your dad on this. If you were my daughter, I would say, trust your instincts. It's okay for you to love him.

You have loved him. You can still love him and not be with him. And I don't think he is in a place in his life where he can be the level of boyfriend that you deserve at this stage in your life. You're not a 16 year old girl anymore. Yeah. And I think you have to love him enough to let him go for now and

And in letting him go, we're going to find out if he has the grit to continue to grow from his faith conversion and what's going on inside of him spiritually. Yay for that. But he's still got to step out into the real world and overcome the junk that he dealt with growing up. Seems like his siblings have on some level.

And so you need to be his friend right now, not his girlfriend. That's my dad advice. And move forward as though he is somebody that you have loved, you love on some level, but you are not ready to choose to love him as a fiance or a husband because he's not in a place to be that for you.

Correct. I agree. George, agree or disagree? 100%. And I think you're only going to get increasingly resentful if you hang on to this relationship knowing in your gut that it's not going to work. It's not going to work. If you feel like a babysitter in this relationship, you're stuck in this dynamic, you have very different values and goals, he won't take responsibility, you're not seeing any real effort or improvement, then staying means you're not being true to your own values, goals, and well-being. You're causing yourself harm and him harm.

I agree. So I think we're not here to tell you what you need to do. You need to decide that for yourself. But by the way you're talking, it tells me that you're just looking for permission because you're fed up. And that's an OK thing to be fed up with someone's behavior. By the way, while I'm thinking about it, Lindsay and George, and again, playing the dad role here, I'd go, if he loves you so much, why isn't he living in the same area as you, finding a job, being around you?

Right. Homeboy is, you know, you don't have to answer it. I'm just telling you, I'm not criticizing him, but I'm saying that tells me, and I'm actually, this may sound odd to you, Lindsay, but I'm actually giving him some grace. I don't think he's capable of doing that because if he was, he would have. Yeah. And so he's not where you are.

trying to woo you and be the best boyfriend he can be. He's off trying to lick his wounds. And that's what I think he needs to do. He needs to heal and he needs to come back out of the cave. And I just think for right now, it's time to let him go, which I already explained in detail. So, yeah, I'm so sorry. It doesn't make it easier. I really, I appreciate it. I really, truly do. Thank you guys. Listen, Lindsay, you're worth a man who can be

what you need him to be. Yeah. Mm-hmm. And I think that's what needs to be your bumper sticker today. Mm-hmm. You hear me? That's a good one. Yes. Because, sweetheart, I know that that's hard maybe sometimes for you to believe because your own father's not in the picture, and that breaks my heart as well. You don't have a good picture of what this is supposed to look like. Yeah.

But you're crushing it, kiddo. You're crushing it. Thank you so much. You are on the path. Thank you, guys. Yeah, you bet. We're rooting for you, Lindsay. Favorite caller of the day. Thank you, guys. Right there. Lindsay's my fave. I don't mind saying it. I don't care who knows. Dang. I'm right next to you, man. I said caller. Okay. Not co-host.

You work your butt off for your money, but your money's never going to return the favor if all you do is hope for the best. If you're ready to learn how to make your money work for you, check out the SmartVestor program. SmartVestor can help you find advisors who specialize in retirement planning, charitable giving, advanced investing strategies, and more. Whatever your goals, your pro will take the time to explain your options so you never have to invest in anything you don't understand.

Head to RamseySolutions.com slash SmartVestor to get connected. Ramsey Solutions is a paid, non-client promoter of participating pros. Learn more at RamseySolutions.com slash SmartVestor. Chase is up next in Minneapolis. Chase, how can we help today?

Just because of that?

Yeah, kind of the way they've navigated it. They made a campaign initially to raise some of the funds, and the remodel is going to cost more than they expected. So they're looking to do a loan right now, $2 million. They're debt-free otherwise before this. And so we're not big proponents of debt.

Yeah, you know, this is tricky because you get to decide where you go to church and why you go to church there. So I'm not sure what you want us to weigh in on because there are a lot of churches in America that use debt like a lot of people use debt for home mortgages. So, you know, we at Ramsey Solutions don't think that mortgages are evil. You wanting to leave the church over this is your prerogative.

If you're asking me, would I leave a church if they decided to take a loan out to do some remodeling? I probably wouldn't leave over that singular issue. If they were dishonest in how they communicated to the church body about it, and there was something squirrely in how they communicated it, and the church body and the church leadership weren't in congruence with,

And there was something squirrely like that, then I can see that. That's the best I can do, George, is try to weigh in that way. Yeah, I understand your frustration because they're debt-free currently. And you know that, hey, my tithe money partially is going to go toward paying off this debt that we didn't really need to take on. Is that part of what's going on here? Yeah.

That is. They are going to be putting it to a member vote, you know, and so it's going to be, you know, majority rules on the vote. Obviously, we know that majority Americans don't view debt the same way, you know, Ramsey followers do. But so they're going to be putting it to a vote. I guess the biggest question is, how do I navigate, you know, my conversations with others? You know, as far as, you know, I personally think there's a poor decision, you know, and I think that that's what, you know, what I really felt led to share with others.

Have you talked to the leadership about this? Have you voiced your concerns? I have. Privately? I have, yes. And what have they said?

Some of the governing board is against the debt as well. That's why they're putting it to the members. But also, they believe that this remodel is essential to get more people in the door, essentially. What if you offered a solution where you said, hey, what if we did this at the speed of cash and we did a campaign to raise the funds instead of take on the debt and then work on paying it off? Yeah.

Yeah, and I think that would be, you know, that'd be the ideal. That's my opinion on it. But they are putting it to a vote here in a few weeks. And the vote is, do we take the $2 million loan or not? And then obviously, if not, they'll explore other options where, you know, I'd love to have that conversation there. Yeah, I think you push on it. Let's see how this all plays out. Well, let me say this. I don't think it's your job to be the campaign manager against it. Again, it's your prerogative.

But I believe that we've got to be very careful in the church. I think there's a higher standard here to not gossip, to not turn into some type of agent. I wouldn't be picketing outside. Yeah. So when you asked the question a few minutes earlier that I want to address, you said, what do I do when people discuss it? And when people discuss it and you're brought into the conversation, they say, which way are you going to vote? You can go, as for me and my house, we're anti-debt and we think we would rather have the church save this money up over time.

And we do the renovation when we can pay cash. That's our position on it. That's because where we are personally, this is what the Bible says about debt. You can say everything you want to, but you've got to stop short of gossip. You've got to stop short of running the leadership down. Because if it bothers you that much and you can't be a healthy member of that church, then you should walk. If it bothers you that much, then yes, you should leave.

And again, that's your prerogative. I don't criticize that. But should that be the very single issue? For me, no, it wouldn't be. But I honor yours. If that's a thing for you, then be that way. But you can certainly vote. You need to voice your opinion and vote. But, you know, after that, I'm just telling you, if you think the only church you're going to go to is— Yeah, but you going to a debt-free church may be more difficult than you think it is. Yeah. Yeah.

Yeah, I don't want you church hopping for the next 20 years because you disagree with a financial decision they made at one point. And so it's going to be exhausting. But I think the question to ask yourself is, can I still worship here, serve here, trust the leadership here, even if I disagree? And at some point, if there's a pattern of disagreement that bothers you spiritually, I think that's your sign to leave.

All right. Thanks for the call, Chase. I want to transition to we took a call a little bit earlier, a young lady who in a long distance relationship of the longtime boyfriend. She's young, like 24, 25, but they started dating when they were 16 ish. He's now living seven hours away, living with siblings, George, and not working, doesn't have a driver's license. And she cited a lack of ambition. But when you pressed her, she said, I love him.

And you said, why are you still with him? Because you could tell she was almost looking for permission to break up. And she responded to you, I love who he is. And he's apparently growing spiritually, but certainly stuck financially, professionally in every way. And so you said that reminded you of a recent social media reel and the team. Yes.

It gets to the heart of us. So take it away. This is a clip of Professor Scott Galloway interviewed by Lewis House. Okay, talking about this issue. So it's a minute long, and I think this hits the heart of what's going on in a lot of frustrating relationships in America today. So let's play the clip. Let's check it out. My young. Metaphorically, women are getting taller every day.

They're killing it. Financially, education, intelligence, opportunities, resources. Women are killing it. And it's amazing. We shouldn't do anything that gets in the way of that. The question is, how do we lift up men? Who wants more economically and emotionally viable men? Women. Why are men not doing as well in today's society? And why are...

versus women continue to thrive, which is a great thing. But why aren't men thriving equally or at the same pace? So I'm parroting Richard Reeve's great work of Boys to Men.

There's a lot of reasons. Biologically, men mature later. Their prefrontal cortex is literally 18 to 24 months behind the girls. So a senior, two seniors applying to college, a boy and a girl, 17 year old boy and girl. Essentially, the girl is competing against a 15 year old. Oh, my gosh. So they think about they think about school. What are the behaviors?

We promote in school. You organized, you're a pleaser, sit still. Basically, education is set up for girls. I couldn't do it. And there's a lot of shame when boys, you know, just... Man, it's so challenging. My 13-year-old, the idea of my 13-year-old sitting in still... There was a part before that that I think we missed, but he talks about what women are looking for in a man, what's attractive. And he talks about kindness, intelligence. And the most important one was a man's ability to signal future provision.

And that's, I think, at the heart of our friend Lindsay's call is she was seeing she was reading the tea leaves going, this guy's not going to be able to protect me. Yeah. You know, from a primal level of just physically, but financially, can you protect me and provide? Or because I know some some females in our audience would go, I don't like the way that sounds. So let me and I'm not disagreeing with you. Some women would see it that way. Other women would say, I don't see any possibility of an effective partner.

Exactly. You know, to actually contribute. That's the lack of ambition which bleeds into the professional, the financial. Yeah. I think that's, I think it's absolutely true. And by the way, that doesn't make a woman needy or weak.

That would be, to me, very normal. If this was a business partnership, I want to know that you're going to be able to handle some weight. You and I are both girl dads. Yes. And we both want our daughters to seek men that can be providing, protecting, adding in, partnering.

so that it is a true partnership and not one just completely relying on the other. Yeah, no one's signing up to be the babysitter and parent for the rest of their life. They want a true partner. And so you've got to signal those things through your ambition, through your personal and professional growth. I thought that was very interesting what he said. I think that's true. I'm not sure my prefrontal cortex is finished. We'll get there. I'll work on it during the break. I'm hoping. ♪

All right, the Ramsey Show question of the day is brought to you by Y-Refi. Defaulted private student loans can feel like a wall that you're never going to be able to get over, but Y-Refi can help you climb it. They'll work with you to explore a payment plan tailored to your situation. Go to Y-Refi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. It may not be available in all states.

Let's get to the question. It comes from Alex in California. I'm 16 years old, and I'm very interested in personal finance. As an avid watcher of your show and a researcher of personal finance advice, I realize how important it is to have a good financial future, which includes planning for retirement.

Currently, I'm investing $2,500 a month into index funds. However, I keep coming across articles and content from Ramsey advocating for actively managed mutual funds instead. I don't understand the benefit of investing in something with much higher fees. Can you please explain what I'm missing or what I am wrong on? Wow. I'm still confused. 16 years old and they're investing $2,500 a month. Way to go, Alex.

I assume this is real. I don't know if the team is trolling me, but that's a pretty insane 16-year-old who's crushing it. I don't know if they're even in school at this point. They probably are running a business full-time. You know, it's funny to me that you're that surprised by this. I absolutely am buying this. I think that a 16-year-old who may have a great side business or something, they're really crushing it.

And they got no expenses. And he's essentially probably investing almost everything you bring. Yeah. This kid sounds like a young George Camel. I wish. I wish. I mean, I was a knucklehead up until yesterday. So I'm just really impressed with this guy. But OK, let's talk about what he's after here. So we're talking about index funds versus mutual funds, which...

Both are giant baskets of stocks, like 90 to 200 stocks in one fund. He's hung up on the fees, it sounds like. Hung up on the fees, which I understand. If you just look at it on paper, you're going, well, index funds are designed to be passive and they just match what the market is doing. An actively managed mutual fund, on the other hand, there is a team of professionals managing the fund, choosing which funds go in, which should come out of it, which means they can be a little more expensive because there's fees involved.

These people need to make a living. And so face value index funds are cheaper most of the time, but fees are not everything. Performance matters more. So you're not just going to choose a car because of fuel economy alone. You've got to look at all the other factors. And so we do recommend actively managed mutual funds, especially in retirement accounts, but we're not anti-index funds by any stretch. I'll use those outside of retirement all day. Dave Ramsey will do the same.

But with a retirement account, you don't have to deal with turnover, and therefore it's not as expensive as you might imagine. And the goal here with the actively managed mutual fund is to beat the market. So if the index is here, just call it a flat line foundation, the goal of the mutual fund is to slightly beat it by a few percentage points.

And so that's what you want to look for is a mutual fund with a long-term track record, a great team of pros that have been doing this over a period of time. And I just looked up the stats just to see what are the actual stats on this. Oh, is this a little extra talk nerdy? This is a little bonus for you. Over the past decade, an annual average 27% of actively managed funds benchmarked to the S&P 500 beat it.

So over one in four mutual funds beat it. Very nice, George. Nice pull. You can flip it, right? And go, well, 73% of index funds beat the mutual funds. Right. Sure. And the goal here is not to have them fight and be competitive. It's to go, okay, well, if one in four beat it, let's try to find that one in four because that one to 2% over a long period of time really adds up. Hmm.

So that's the purpose behind it. And if you get 1% or 2% or 3% more, it will more than justify the fees. So it's a very nerdy discussion to have. The key here is savings rate.

Are you putting money away into some type of fund over a consistent long period of time? And so if we're arguing over, will you have 2.1 or 2.2 million? I'm happy to have that argument. The truth is America is retiring broke because they're not investing at all or falling for investment traps. So I'm a fan of index funds. I'm a fan of mutual funds. Both have validity and have their place. And for a 16-year-old...

you know, it sounds like he's going to be a multi-multi-millionaire, maybe with his own show one day. He's on his way. By the way, it makes me think, I want to recommend to our audience, you're hearing George talk about this, answer this question, you're going, man, I wish I just had a better grasp of investing. And we recently created the Ramsey Investing Hub. This is fabulous. Has a ton of tools and information that will help you understand investing and then actually be able to invest. It's at ramsaysolutions.com slash investing.

ramsaysolutions.com slash investing, or of course it's in the show notes. And this is the Ramsey Investing Hub. Team's done a great job on this, by the way, of kind of taking all of the basic principles that we teach.

and putting them right there so you can kind of peruse through. And it's fabulous. Investment calculator, investment guides, all kinds of tools. Well, I tell you what, I love that investment calculator. Love a hub. That's really good, George. Love the Ramsey Investing Hub. Doesn't get enough love. Amy is in Los Angeles, California. Amy, how can we help today?

Hi, hello. Thank you for taking my call. Sure. I just started listening to you guys this year, and I have learned so much. Great. My question is, are we doing the right thing by having all of our money in the same brokerage firm? So my husband, we've got some retirement in there, and then we have some regular money. I've always been taught, don't put all of your eggs in one basket. That's right. It's the right thing. Who told you that?

You know what? Just growing up, I can tell you exactly. Exactly. No, I think it's great advice. And we agree with that, especially when it comes to investing, George. Yeah, well, you're talking about a brokerage firm. You're not talking about what is the asset that's in these accounts? What are you investing in?

As far as the mutual funds and all of that, the breakdown of that. Yeah, when we say you don't want all your eggs in one basket, that doesn't mean it can't be with a single firm. We're just saying don't invest in a single stock. Did you mean fund or did you mean firm? It's a firm. It's a firm. It's a very large brokerage firm. But they've got you invested. Are you diversified within them? Exactly. Yes, we are. Okay. Then you're fine. You're fine.

Yeah, let's say you have all your money with Vanguard or whoever. That's not the issue. The issue is when you have all of your money in Tesla and Elon got in a fight with Trump and now Tesla stock is down 16% and that's your entire nest egg. That's from the headlines. That's what we're avoiding here. Yeah. So when you say you're investing in a fund, is it mostly equities versus bonds?

You know what? I'm not so sure. Equities. Explain that to me. That's stocks. So that would be stocks versus bonds. Oh, oh, oh, oh. Okay, so we have mutual funds, and then we have some of it in tax-free bonds because we had to pay a lot of tax last year. And we did have it in a credit union. And then my husband, after we paid all the taxes, he put it in tax-free bonds. Okay. And then a good part of it is in a 60-40 mutual funds bonds. Okay.

So there's three parts to this whole equation in the brokerage firm. How old are you two? I'm 59 and he's 64. He is retired. Okay.

So depending on who you talk to and what financial advisor you're working with, they tend to say, hey, over time you want to switch to more conservative investments, meaning moving your money out of stocks and equities and into bonds. And Dave Ramsey himself disagrees with this asset allocation theory for a simple reason. What got you here is what's going to keep you there. And so if you move all your money to bonds, while the market gets 23% returns, you're going to get a 6% return.

And be saying, well, I didn't get a return on my money. Yeah, because you basically left the market. And so we advocate for being more heavily in equities because over time, we've seen that that's going to be your best bet to keep your wealth and grow it instead of just maintain it. Do you work with a financial advisor now?

We do. He does. I'm new. I come from a family of spenders and my husband's always been smarter with money than I have. So, I mean, I'm lucky that we are where we are today because of him. It's just that now I'm learning more and getting more involved. And so I'm just I'm questioning him. So we kind of go back and forth. I love that you ask all of the questions.

Okay. And if they're unwilling to answer or they get defensive, they don't have the heart of a teacher. It might be time to find a new financial advisor. But I love that you're digging in and learning this stuff. It's never too late. But I want you to understand what you're investing in and why. That's the key. So you may have a little homework to do. What is your net worth? Or what's the total nest egg?

For both of us, it's $2.2 million. Woo! And that's including everything. But that's not, the $1.6 is in the brokerage firm and then, you know, based on our house and what we have in the bank and everything. Yeah. You guys are doing great. You know. You've done well. We just want to keep it up. You've done well. We just want to keep it up. Yeah, you will. Can I ask one more quick question? You guys. We've got 10 seconds. We've got 10 seconds.

Okay, investing. Would it help me to do your class on investing, the one that you just advertised? Yes, because it's free and it'll really help you out. It's awesome. You love the free stuff, don't you, Amy? The answer is yes, we all do. Check it out.

Okay, you guys, remember the four walls of a budget. Food, utilities, shelter, and transportation. Right now, I want to focus on food because inflation is driving up the cost of groceries and we're all feeling it. But all these shoppers can save up to 36% on an average shopping trip, which adds up to be about $4,000 a year for a family of four.

$4,000. Aldi has what you need at prices that won't bust your budget. From bread and milk to organic produce, fresh meat, and affordable must-haves. So stop paying more and start shopping smarter at Aldi, where you'll save with the lowest prices of any national grocery store. Find a store near you today at Aldi.us. That's A-L-D-I dot U-S. ♪♪

Our scripture of the day comes from Jeremiah 32, 17. Oh, sovereign Lord, you've made the heavens and the earth by your great power and outstretched arm. Nothing is too hard for you. Our quote of the day from Warren Buffett. It's not necessary to do extraordinary things to get extraordinary results. What do you think about old Warren starting to downshift? Did you see that? Yeah. Announced a new CEO. I mean, the dude's like in his 90s now. He's the oracle.

So I feel like it's time. And one of his best buddies passed away, sadly. I know. Old Charlie Munger. You know, that's right. Charlie's a legend. What's the one from Sesame Street? Waldorf and Statler? Is that it? Sesame Street? You mean Bert and Ernie? Nope. The old guys in the balcony. That's on Sesame Street. That's the Muppets. I always mix it up. I'm here. I'm trying to follow you. Yeah. You said Sesame Street. And I thought, well, the most famous Sesame Street buddies were Bert and Ernie.

But you're talking about the two old dudes in the Muppets. Statler and Waldorf from the Muppets. To me, that is Warren Buffett and Charlie. I love that. It's like they're peanut butter and jelly. You know, you have a very popular segment on your YouTube channel, Millionaires in Cars. That's right, getting coffee. Getting coffee. And you should get Warren Buffett. Could we get him? I think if you really tried...

If somebody knows Warren, somebody out there in Nebraska. You'd have to go to him. We go to Omaha. You go to Omaha, but what's he doing in Omaha?

I don't know. If he's retiring, he's got time. Drinking Coca-Cola? Being an old man? And you sticking him in a rental car would be really funny. I would very much enjoy that. All right. That's my new bucket list goal. Yeah. Is to do that segment with Warren. Did you ever get any pushback from basically ripping off Seinfeld with the comedians in cars? No, people have said they're coming after you. I'm like, Seinfeld did that Netflix show years ago. It has long since been off the air. I don't think Netflix is dealing with my little YouTube channel. That's fair. Yeah.

Do they have the rights to anything filmed in a car? What's carpool karaoke coming after us next? All right, kids, you know, listen, relax. You got your dander up. All right. Sorry. You're starting to get really hot. It's just funny. Yeah, I'm a big Seinfeld fan. That's where it came from. I thought we could we should do a financial segment in a car. I like it. With millionaires instead of comedians. I didn't know that that was going to hit a nerf. All right. You stop shouting at me. We got to get to Jordan. You hit it. Jordan is in Panama City, Florida. Jordan, how can we help?

Hello. I am calling because I'm an educator, and I make about $50,000.

I'm in debt right now, so I have about $30K in credit card debt and also personal loans as well. I have three personal loans currently, and I'm trying to figure out what would be the best course of action on my income to be able to kind of reduce some of this debt. I also have a daughter. I'm a single parent.

So I have to take care of all the household expenses, you know, her extracurricular activities, her sports that she plays, things like that. So, and I'm trying to not have to work for three jobs, you know, trying to make

Okay, let's start with where you are currently with your current income, because I certainly understand your heart there to try not to take on more, because now you've got to have somebody watch her, and that's tough.

So with George, the budget guru here, the first question I have for you is with your current income and your current workload, are you budgeting to a point that you actually have some margin each month after all of your basic expenses?

It's very minimal because, like I said, I do have – even though it's not like a ton, ton of credit card debt, it's over like nine different credit cards, so they all have different monthly payments. So that kind of makes it a little bit more challenging on the credit card. What happened that got us into all this debt? Where did you spend all this money on, personal loans and credit cards?

Well, what happened was I was living in a – I hadn't always been living in Florida. I was living to where Elk's at. It was slightly higher cost of living and still in the same position, but I wasn't even making $20 an hour to try to survive. So at that point, I was just in survival mode. So I was getting more credit and equating that to more money, but that's not more money. That's just more debt. Okay. So have you taken a turn? Have you borrowed a dime in the last year?

When did all this stop? No. It's been, how long? Three years now? Three years since you've had this debt, or took out this debt, and now you're trying to clean up the mess. Correct. Okay. And you have how much in personal loans? You said you have $30,000 in credit card debt.

But it sounds like there's more. Yeah, I'm not 100% sure of the exact amount. I think it's closer to that $30K. It's three different personal loans, so three different payments. So that's about $9.95 a month just to repay those. We're going to have some homework to do. You're going to go to annualcreditreport.com. You can pull your credit reports for free, and that's going to give you a real accurate picture of where you stand today, how much debt you owe and to who. Okay.

Then what you're going to do is list all of these debts out from smallest to largest. Nine credit cards. We're going to list out the smallest one first, then go all the way up. And you're going to make minimum payments on all of these debts. But on that little one, you're going to attack it with a vengeance. So it's going to get paid off fast and it's going to free up a payment faster.

That's called the debt snowball method. That is the only way and best way to get out of debt once and for all in my book. And so in the baby steps that we teach, baby step one is $1,000 starter emergency fund. Do you have $1,000 right now? No. How soon could you get $1,000? Next paycheck?

Well, because we do get a couple different checks at the end of the year, I could probably take out $1,000 from that because we get multiple paychecks at one time to finish paying out. But what about your next paycheck? How much is that going to be? I take home about $2,000, but we get four of them to pay out our contract, so it'll be about $8,000 that I'll get. Okay. And what are your total monthly expenses? Like Ken mentioned, what do you actually need to run your household for one month? Um...

Approximately $2,000 because my mortgage is about $14,000 and some change. What was the total per month?

It's about $1,445. No, I'm saying what's the total expenses per month? Is it $3,000, $4,000, $5,000 per month to cover everything? No, about $2,000 because I don't have a car payment. No, that can't be right because you said your mortgage is $1,400. You told us that your debt payment on the credit cards alone is $900. Oh, I thought you were talking about just in the house. Food, utility, shelter, transportation, minimum debt payments, insurance, all of that combined to cover you for one month.

That's about $3,500. Okay, and you're bringing in probably around $4,200 or so? You said you make $50K take home? Yeah, it's right under $42K. It's actually about $41K. Okay, so here's what that means, though. You said you spend $3,500 a month, and you bring in $4,100, which means you should have $600 extra per month, right? Yeah.

It just depends. It varies by month. Jordan, hear me clearly. This needs to become mathematically sound. Where you go, I know exactly where every dollar is going. I know exactly where every dollar is coming in. So far, you've been floating through life. Is that true? You've been in survival mode, living paycheck to paycheck for too long. Correct. And so going forward, you need to know exactly what's happening with your money because you work too hard to be this broke.

Yeah. So I'm going to hook you up with EveryDollar Premium. It's our budgeting app, and you're going to lay out your income. That take-home pay from each paycheck is going to be listed under income for the month of June. Then underneath that, list every single expense. Everything has a line item. Everything has a home. Every dollar has a job. And that's going to show you how much is left over. And with that amount left over, you're going to put that away in a savings account. Do you have one of those? I do. Okay, good. Which means within two paychecks or three paychecks, you'll have $1,000 in that savings account, correct? Yes. Okay.

Which means it's not maybe going to happen. It's going to happen. I'm putting $600 away no matter what, and I'll figure out the rest. That's the kind of attitude you're going to need to get out of this debt on top of getting your income up.

So better job is what we're looking to in the long term, short term. If you have to pick up a second job, that's fine. But you've got to get to a point. Let's let's work off of George's numbers where you should have a surplus of six hundred dollars a month. OK, now, if we can go make an additional fifteen hundred, let's just or let's just say fourteen hundred. Let's round that up to two grand. You start putting that towards debt.

That's $24,000 of debt paid off in 12 months. I just want you to catch a vision for that. It doesn't mean you're going to have to do that forever, but you may have to do that for a short season because you're a single mama, but you can do it. We believe in you.

Hey, you guys, I was shocked to learn that 88% of you out there are sharing the Ramsey show. I mean, that is so incredible. Thank you so much. And I want to tell you that we're making it even easier to share. So this June, we have pulled together the brand new Ramsey 101 YouTube playlist. And

a quick start collection of how to get started walking the Ramsey Plan. Now, this playlist is perfect for that one person in your life who needs help winning with money and just doesn't know where to start. So here's what's inside. What the baby steps are and why they actually work, how the debt snowball helps you pay off debt fast, and how to build wealth and invest for the future, and so much more.

So here's what you need to do. Click the link at the top of the show notes. It'll take you straight to the YouTube playlist. Copy it. Text it. Send it in a group chat. Just say, hey, I thought this might help. Because one playlist shared at the right time could be the turning point. One share. One playlist.

One step could change everything for that one person in your life. So click the link, share The Ramsey Show, and let's help someone out there start winning with money.