Your Debt Should Make You Uncomfortable
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Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Rachel Cruz, hosting this hour with my good friend and best-selling author, Jade Warshaw, and we are taking your calls, America, about your life and your money. So give us a call at 888-825-5225. And starting us off, this show is Nick in Detroit.

Hey, Nick, welcome to the show. Hey, thank you for having me. Absolutely. How can we help? My question is, I'm 21. I'm in college. I paid for my education with my dad and I've got baby steps one done and I have no debt.

I need to pay $3,000 per semester so that I don't go out of college with student loan debt. And would it be more beneficial for me to any additional money that I don't make to put it into step three? I don't feel like I can be gazelle intense with that. Or would it be more beneficial to take 15% of my income and put it into mutual funds for something further down the line? Okay, so you have extra money. I just want to make sure I'm understanding your question. And you're asking if you should be using it to cash flow college or do something else with it.

Mainly to, I won't, me and my dad have got to cover that and think 3000. Should I put it towards the three to three to six month emergency fund, which is baby step three, or should I just put it to a mutual fund and be able to,

gross money on it over time. If it's the $3,000 that you're using for your college, I just throw it in a high yield. Like if you get ahead, like say you've paid for the upcoming semester and you've also got $3,000 set aside for the coming, you know, the next semester, even after that, I just throw it in a high yield. I would not invest it because the horizon is so short. Is that what you're asking? I want to make sure I understand.

Yeah. So you would just, instead of investing it, cause I'm able to, you'd say just save it in a high yield and then just put it to the next. Yeah, for sure. How many more years do you have left, Nick? How many more semesters? Uh, I only have one more. So three more semesters total next semester and then senior year. Oh, okay. Okay. I gotcha. Yeah. And honestly, Nick, I, and in that state, when you're in something like college and you are cash flowing out, which is so great, um,

I still would recommend not even investing really at that point because just having liquid cash in case something happens, it's always a smart idea. And even after college, right? You graduate college and if you move...

to take a job somewhere, moving expenses and moving costs. There's just a lot of reasons to have money liquid at your age. And then once you graduate, you get settled, you get your first job, then you can really dive into investing. And at that point for you, you'll be at 15% automatically, which is so great. For some people, they have to wait a few years to start investing. So I honestly wouldn't rush into it. And I think it can feel like it goes against

uh this idea of compound interest because we celebrate that so much of how great it is and the earlier you start the better off you're going to be like all of that but you'll catch up like if you start all of this at 23 you will be fine financially so i think it's more important to have as much money just cash available um for these big transitions is the smartest thing the way to go and now would you would you also recommend me taking that out of that investment and then putting it back or just leave it there and

from here on out just save the money yeah so there is money invested right now yeah i would probably how much two thousand yeah i would just this year sure i would leave that i would only touch that money if you needed it to get through school um without debts but i think it sounds like you already have a plan on the other end to do that

Okay, thank you so much That provides a lot of clarity Perfect, thanks Nick Up next we have Jay in Anchorage Alaska Hey Jay, welcome to the show

Hello. Merry Christmas. Thank you for taking my call. Merry Christmas. Absolutely. How can we help? Yeah. So I just received a promotion at work and the new compensation package makes me ineligible to contribute to the company 401k plan. So they've offered a different plan, pre-tax dollars, a small match, but it's unqualified. And I'm curious what your thoughts are on unqualified plans and if this is the right plan.

Yeah. I'm curious why you're not able to contribute to the 401k because you chose a different package for a benefit for your benefits. They have told me that if the compensation exceeds a certain amount, the plan is not able to be contributed to. Oh, gotcha. Okay. So you, are you a very high earner? Um, evidently so. So I can't, yeah. So I can't contribute to the 401k anymore. So explain to us what your options are again.

Sure. So they've offered a different retirement plan, pre-tax dollars, a small company match, but it's unqualified. So it's unfunded. That gives me pause. And I'm curious what your thoughts are on those types of plans and should I contribute? What are they invested in? Do you know? The rate of return is based on a specific bond fund. I don't have that in front of me. Recently in the last year, it was about 5%.

That's not very good. That's what I thought. I mean, if I were you, my guess is you're not able to just do a traditional Roth IRA, but I might start with backdoor Roth IRA and I might ask a smart investor pro what other better options there are because I wouldn't want to be investing primarily in bond funds. No, and considering it's, you know, is it pre or post tax? Yeah.

It is pre-tax. It's pre-tax. Okay. So yeah, so I would probably, I think you're going to be better off. And again, talk to a smart investor pro, but when you actually look at everything, I mean, even from index funds to mutual funds, you'll get a better rate of return just doing something like that, even though you'll have to pay capital gains when you take all the money out. That still feels like a better growth rate. Yeah, absolutely. But yeah, how much, how much do you make a year?

So the new compensation package base is $165,000 with a potential up to $250,000. Okay. I think you'll still qualify for a traditional Roth IRA at that range. So I would definitely be funding that. You can fund up to $7,000 and that. That might change in 2025. But I would do that 100%. And then I would probably just look at index funds or mutual funds beyond that. It's not retirement and you're not getting that match. But how much are they matching? What percentage?

It is 50% of the first 6%. 50% of the first 6%. Okay. Interesting way. Okay. It's hard because it's free money coming from the company, right? But again, your rate of return, I just think that you could... 5% is... I think you could still... High yield savings. Yeah, I think you'll end up better just doing it on your own versus putting money into this.

That was my thought, but I was just looking for a second opinion. Thanks for all your info. Yeah, absolutely, Jay. Thanks for calling. Yeah, I would do that. But then definitely, you know, sitting down with a smart investor pro is always what we're going to recommend. I always hate giving blanket investing advice, you know, in a three-minute call because there are some ins and outs and different employers are offering different things. I mean, the amount of changes that's occurred with retirement funds within companies in America, even over the last 10 years, you know,

You know, companies offering now Roth 401k is up by 20% versus what they were offering even five years ago. But good on him for looking deeper and seeing what those investments are and what their track record have been, as opposed to just saying, this looks good, I'll check the box, right? Yes, absolutely. Yeah, digging into that and looking at those numbers. But yeah.

Yeah. So, yeah, I would get with the SmartVestor Pro J, double check all of that. But that's my knee-jerk reaction for sure is because when you look at all of these and the older people get, there are financial advisors out there that start to recommend more conservative funds. That's true. Like bonds and all of that. That's true. But still, I think even then, you know, it's advice you want to look at because it's

Because I think on the flip side When you're still in quote unquote riskier Which mutual funds aren't even that risky You're still going to get a better rate of return You know I'm just never a fan of bonds Is what I'm trying to say Even as you get older I just don't think that it's worth The limited growth So thanks again for the call Jay This is The Ramsey Show

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So go to whyrefi.com slash Ramsey. That's whyrefi.com slash Ramsey may not be available in all states. All right. Today's question comes from Carissa in North Dakota. She says, should a couple getting married have guests pay for their plate at the wedding to help with costs? I'm afraid we won't get enough money in wedding gifts to pay for the reception.

Oh, so it's you. You're the one that wants to charge. She was asking for a friend at first. I know, right, right. Should a couple, aka should we? No. No. You should not. I was like, I don't think so. Do you? Listen. I think that's kind of tacky. There's a difference between- To ask for your wedding guest to pay? I think that's like, huh? There's a difference between tacky and hacky. Yes. This is tacky. This is not a money hack. Uh-uh. That-

Here's the thing. Like you have to set your budget based on what you can afford to spend on the wedding. Not at, don't treat it as an investment and say, well, I'm going to get, if I spend this, I'll get the money back in gifts. Right. Right. Because that's what she's saying. She's saying, I'm afraid we won't get enough money in wedding gifts to pay for the reception. Well,

That means you're basing it off of future money that you don't have now. That's right. So you've got to set the budget of what you can afford based on what you can afford today and let the gifts be the gifts like you can't.

yeah no no no no no having guests pay for their plate at the wedding no yeah that's a hard pass and it's different if it's like your birthday dinner and y'all are all going out to you know to for a big dinner and everyone covers their their meal right like it's that kind of thing but there is a an etiquette i feel like when you invite someone to your wedding

to celebrate you. Their presence is the gift, not them having to fund it. Yeah, otherwise just do something less expensive that you can afford and that way there's no awkward...

You know, there's, there are trends and we've talked about this. I think George Campbell and I debated this a little bit of people asking instead of a wedding gift to Venmo money to the bride and groom so that they can help pay for their honeymoon and like that kind of stuff. I have a problem with it. I think that's a little weird too. I have a problem with, I'm like, let people give you out of the, now don't get me wrong. Like a baby registry. Let's, let's, let's break this down. If somebody is having a baby and they,

make a baby registry like buy him something off the registry yeah like don't just go off like they've said here's what I'd like yes so follow the registry yes that I'm with but when people just want money and they're telling you don't get me anything just give me money I'm kind of like

And if they want to do that, because some people, they will just give money for a wedding gift. And that's their choice. Yeah. And that's their choice. And that's great. But the, but like forcing people into a lane of how they're going to be generous to help you. I also like, I don't know why it just feels off. I think the digital quality of it. And I might feel old fashioned. I also think the digital quality of it, like Venmo me. I'm like, can I, can I give you a nice crisp,

Two crisp hundred dollar bills and a card. And then you get to decide what to get. And then you decide what you do. Like don't put...

don't put cash app like that is so not it a qr code hey i don't know maybe we're just like am i just like a gen xer is that what the problem is no because i'm a millennial and i still okay yeah maybe it's the gen zers maybe they all think it's okay maybe i don't know maybe it is no no more i don't know even the audience is a gen zer would you put a venmo would you put a qr code

Yes or no? At your wedding reception? She says yes. What does the audience say? Venmo or let them get you a gift? Oh, good. Okay. Everyone say no. No to Venmo. Okay. Okay. Okay. Good. Good. I'm glad we're all on the same page. We're all old together. We'll blame Gen Z. Like I feel like we do too often. Too often. All right. All right. Well, let's head to the phones. We have Hannah in St. George, Utah. Hey, Hannah. Welcome to the show.

Hi, thank you for taking my call. Absolutely. How can we help?

So my husband and I are on baby step one, and I'm wondering where I should put that emergency fund when it comes to like my bank account. So right now we have 10% that goes to our church, and then we do 10% of our income into savings. I'm wondering if that emergency money goes with my savings, or should I put it in a different account? Yeah.

Okay, so in your mind, what's the difference between savings and emergency fund?

Emergency fund I wouldn't touch, whereas like savings is, oh, I didn't know I needed an oil change and I didn't budget for that. So I'm out of savings. And is this your starter emergency fund, like your thousand dollars? Or are you talking about three to six months? OK, so the starter. OK, so the way we would teach is if you're in baby step one.

$1,000 saved and then everything else that you have money saved would go towards baby step two, which is paying off your debt. And to answer your question, that $1,000, I would not keep it in my normal checking account because you might accidentally spend it. I would put it in a separate savings account. Still keep it very liquid, right? It should be something that you can get to if there's an emergency. Don't put it in a CD or don't put it in something that you can't get to. But I do think that there's value in getting it out of your normal checking account and

into a savings account, not maybe, I don't like when there's a debit card attached to it. I like when it's just there and if you need to e-transfer over, whatever. Yeah, a good high yield savings account, Hannah, I would go ahead and open that and put your $1,000. And I wouldn't do right now the 10%. I mean, the 10% for giving, but we really, we don't talk about percentages for savings until maybe step four. That's right.

And so this like, oh, we're going to put 10% of our income for savings and do an emergency fund. I would put it all together and I would not worry about the percentage. I would find whatever money I had in my budget and get that thousand dollars as quickly as possible. So you may be able to do it, you know, depending on what you guys make and what your budget is this month. Right. And it may be,

25% of your take-home pay And it fills up your emergency fund That way But I would not look at percentages For saving right now I would get that $1,000 as quickly as possible Then once you guys are completely debt-free Then you bump it up to 3-6 months of expenses Using that same high-yield savings account That $1,000 will then kind of be That springboard into The fully-funded emergency fund Hannah, what do you have now? Combined

Combined income or just in the savings account? Savings and what you were calling emergency fund. So currently the emergency fund is at like $140,000 and the savings is about $300,000. Okay. How much do you guys make a year? My husband makes about $55,000 to $60,000 a year. Okay. Okay.

So, yeah, to Rachel's point, combine all that together. And just at this point, you have $440 in your emergency fund. And so you've got another, you know, $550 to go. And then baby step one for you is complete. And then it's moving on to baby step two. And Hannah, you would have, you could use that $1,000 if something came up that you weren't expecting. Because that's kind of how we qualify an emergency. It's when it's urgent, you know,

And it's unexpected So you know something comes up and you're like I have to do it now right it's not like oh Something comes up and I could fix it in six months Right that wouldn't be the emergency fund this is like Oh this has to happen today And also Hannah in your checking Account we always Say to have a buffer in that as well So that you're not You know there may be enough of a Buffer and you're checking out to cover some small Expenses that come up because you're going to have a miscellaneous Category in your budget

So there will be things that come up throughout the month that you don't expect. Um,

but ideally it's coming out of the budget there. You're not having to touch the emergency fund. The emergency funds only when it's kind of big expenses that you're like, Oh gosh, a couple hundred bucks. And it's, you know, we may have to dip into that, but I always like having a cushion Jade in my checking. And depending on where you are in the baby steps, you know, if you're in baby step one through three, you know, it may be a couple of hundred bucks in there as padding. And maybe you bump that up more as you get into baby steps, four, five, six, and seven. But again,

I do, Hannah, want you to have a buffer in your checking that's not emergency fund driven or savings driven, but it's more lifestyle driven, if you will, just so that you don't go into the red in your checking. So I hope that helps. Thanks for the call. We have two more segments coming up this hour. Give us a call at 888-825-5225. I'm Rachel Cruz hosting with Jade Warshaw, and we'll be back.

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Fieldofgreens.com slash Ramsey. Really the best way to make the most of your money is by sticking to a budget, creating a budget and sticking to it. I mean, it's probably the most powerful tool from a tactical standpoint when this comes to gaining control of your money, knowing where your income's going, knowing where margin is so that you can pay off debt and save and all of it. There's just something proactive about it.

about telling your income what to do. And if you've not downloaded EveryDollar, make sure to check that out. This is our budgeting app. And you can actually download it for free, create your first budget, and really get in this habit and this rhythm of your life of budgeting. And do this regardless of where you are financially. Those of you, you know, like the last caller who's working to save up $1,000, all the way to those of you on Baby Step 7 that the house is paid for, everything's done.

tracking your monthly expenses is so important because it just gives you this gauge of where your money's going financially. And it just gives you a sense of control. There's so much in life that we can't control. So when you can find these things that you can actually get in a rhythm and be proactive with, that is your income and that is a budget. So download EveryDollar for free in the App Store or Google Play, or you can click the link in the description if you're

watching or listening on YouTube or podcast, we'll put a link down there, but go and download EveryDollar. All right, going to the phones. We have Austin in Nashville. Hey, Austin, welcome to the show. Hi. Hello, hello. How can we help? So I am a full-time college student. I'm graduating next week and I'm currently on step one. I'm just having trouble racking my head around paying off all of the debt that I have. How much? How much?

So I have, I don't have any student loans to start out with. I have about $15,000 in car loans and credit cards. Okay. And what's your degree in and do you have a job? Like, do you have a job lined up? I don't have a degree. I have a diploma for graphic design. Got it. Graphic design. And do you have a job lined up for graphic design?

Um, I have recently, I've just looked at the job market and I decided that's maybe not something I want to pursue. Interesting. Okay. What do you want to pursue? Um, I've been looking more into becoming a mechanic.

Okay. Well, just generally speaking, just from talking to you briefly, I think you're more overwhelmed by that and not having a clear prospect to pay off the debt than probably the debt itself. Because I thought you were going to say, oh, I've got, you know, 50 or $60,000 of student loans, $15,000. We can make that happen. You just need a job, any job, really. So are you working at all right now? And if so, what are you doing and what are you earning?

Um, I am. I currently work at like FedEx warehousing, just moving boxes around. And I, I was doing part time, I should be going full time here and I'm projected to make about 35. Okay, that's great. You said 35? Yes, ma'am. Okay, cool. And then what's your living situation like?

I'm currently living with parents. Okay so there's no money are you paying them rent or anything or you're pretty much kind of square there? Just helping around or helping around the house. So I think for you the biggest thing is let's once you graduate next week let's move from full-time to from part-time to full-time so you can get that full paycheck and in this phase it

It's good that you're not really paying rent because you can put the full force of your income on this debt. How much of it, of the $15,000, how much of it is the car versus the credit card? Credit card, it's very minor. It's just $500. I'm mainly worried about the car. Okay, so we're $14,000. What's the car worth? About $9,000 right now. Okay. Okay.

Yeah, I think with this, I think you can buckle down and pay this off, but you're going to be working like a madman. Yeah, are you able to pick up shifts coming up here? I mean, we're two weeks from Christmas, and you're working at FedEx. Are you able to do overtime? Yes, ma'am. Okay, I mean, I would, Austin, honestly. You're in a great position. No kids? Seasonally, just to like...

All the way. I mean, like I would tell them I will work as many hours as you will give me. And then another thing to think about is the ratio of car debt to your income. It's right on the line. We always say we want to know more than 50 percent of your annual take home pay or your annual income. And and so that, you know, you're 35 is kind of what you're projected at right now. And 14. Yeah, you're just kind of on that line.

and I think it's one of those questions, even though you are upside down on it. I probably, in your case, would just pay it off, but always be thinking through with debt, what is worth it? Because you want to, you know, calculate how many hours and how much money it's going to take to pay this car off versus if you're like, you know what, it's worth, is it nine private sale or nine to a dealership for a trade-in? Did you look online? Um,

Nine private. Okay. I mean, yeah, you're probably break even. But just yeah, in the future, it's just a good mental exercise, even for people listening or watching, especially with car debt to say, okay, how many hours extra am I going to have to work to keep this car versus if I sold it, took out a loan for the difference, maybe a couple thousand more just to buy a beater and

and how significantly you'll get out so much faster. But again, Austin, in your case, it's kind of a break even from that point. So yeah, I would just be working extra and then at the same time, Austin, be looking for a full-time job of something that you want. And you're in a great, I don't know, I think FedEx, UPS, a lot of those places, it's great employment. So if you were there for longer than maybe you're expecting, I think that's okay. But also know your next job

step into the job market is not going to be the perfect job it's not going to be the thing that like you know you've always wished for in the dream job you're right out of college so remember kind of just like take what you're going to get yeah that's right as well and i think for you uh i love what rachel said and i want to take it even a step further with your car you decide you say you know what i'm tired of being in debt i want this thing paid off in six months

And when you say that, then reverse engineer it and say, okay, what does that mean for me job-wise? How much do I have to work to make that happen? Right? And that way you're the one in the driver's seat and you're the one that's in control of this as opposed to I make this and it's going to take me X amount of months making this money. Does that make sense? So kind of run it back and that's going to force you to work probably harder than you've ever worked before. And as far as the...

graphic design to mechanic thing, I think that you, I don't know what your plans are, but I feel like you kind of put that on hold for a second because you've just spent money on an education. You've just spent time on an education, work for a while, get this mess cleaned up. And then during that time, research what it looks like to become a mechanic, as Ken Coleman would say, like get in that proximity, follow some people around, but don't just jump and make that choice before you've done detailed research. So.

Yeah, where are you graduating from, Austin? Is it an online school or? It's a local, it's a tech school in Tennessee. Oh, okay, okay, gotcha.

Yeah. Well, I hope that helps, Austin, just in the sense of just some encouragement that you're in a great line of work with FedEx right now from a seasonal perspective. So take advantage of that overtime. And this plan hopefully will lower that stress. And Jade's right to map out a specific timeline of, okay, you know, September of next year, where am I going to be if I start paying this stuff off? And I would pay the credit card off like...

by new year. I mean, yeah, I mean like it's 500 bucks too. And we talk to people Austin all the time. Yeah. All the time who are doing extra side gigs and Jade when we talk about this on the every dollar webinars and I and we ask them like hey how much what do you do for a side gig a side hustle and how much are you making some of

them are making $2,000, right? I mean, just for extra side hustles. So there is ways to get this thing paid off in six months. It's very, very doable, Austin. So I think that will really propel you into some motivation to pay this off. Yeah. The moral of the story for me is of all the types of callers that call in that have debt to pay off, if you are single,

If you do not have children and if you are still living at home, you are in the best because you've got time. Like, yeah, time is at your disposal. You know, you don't know true tiredness yet. So like you can really get in there and get get tired. Yes. And for all of you graduating, you know, now we're in May. Live like a broke college student until this debt's paid off. That's right. That lifestyle, because I think the problem is.

is when you get your first job and you're getting a salary, you know, this career, you're thinking, oh my gosh, I'm a grownup now. And you, and your expectations of life suddenly kind of creep up of what that lifestyle looks like. But if you stay low on lifestyle while you get this cleaned up, I would rather be doing that at 21, 22, 23 than 31, 32, 33. I know that's right. You got it, Austin. Thanks for the call.

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Welcome back to The Ramsey Show. We are in...

The holiday spirits, Jade. We are in the middle of, I don't know, still shopping. I think I'm pretty much done. I have nothing wrapped. Oh, man. But Santa at our house doesn't wrap gifts. He just pulls the gifts out of the bag and they just are there under the tree, not wrapped.

So that's always convenient for Santa. So what goes, does anything go under your tree ahead of time? Gifts that mom and dad buy, like we'll buy, you know. I see. Like one or two things that we'll wrap. Okay. But they unwrap a lot of gifts from like parents, grandparents. There's a lot of unwrapping happening there, which is great. But yeah, so. That's a good idea. I might take you up on that. Yeah, that was my Santa growing up. Childhood never wrapped either. So funny.

That was the same Santa I think that visits our house, too. It doesn't wrap. That's a good idea. Which is nice. But we're still going through our lists of gifts for like we draw names on both sides of the family. Smart. All the things. So where are you at with all of it, Jay? Listen, for me, like me myself, because I'm not in debt, I have purchased gifts for the kids. And my husband and I have done that. I've not fully finished all.

with my husband. But this time of year, you know, this is the time of year where it really becomes a hot button topic because obviously we're a financial show. We want people to make their way to peace and

And I said it last year, but posted it this year. A very controversial statement. Controversious, I like to say. And I think I was on with you. You were. Right? So before we talk about it, let's show you the clip so you see where we're coming from. Roll tape. You don't have to buy gifts for adults. They're grown. They have their own money, their own job. If they want a new blender, they can go buy it. They do not need you to go buy them slippers. Like they can buy.

and buy their own slippers. I said what I said. Rachel, I said what I said. Okay, and I actually, when you were saying it last year, I remember it and being like, that is so true. Like if Aunt Linda needs something, like she can get it. Yeah, she's fine. Like Aunt Linda, especially if you are getting out of debt

you're on a tight budget and it's been hard and it's been a hard year or two, you guys like with inflation and stuff. I mean, it's just, people are just getting the necessities paid and there's not a lot of room. And so it was this guilt-free reality that adults can take care of adults. That's what you're saying. Did you get hate from it? I got so much hate. And here's the thing. Don't, don't, don't misunderstand. Like the reason we're talking about it is not like to try to qualify it. Cause like I'm drinking water. I'm fine.

It's for you guys because there are so many people, Rachel, A, always read the caption because you need to see more. And I did explain. I was like, here's what I'm trying to say to you. Yes, I'm not saying adults can't have gifts. I'm not saying it's not nice to receive a gift. I'm just saying. I'm going to look it up on your Instagram right now. I'm just saying that if you're in this situation, I'm giving you permission to back away from the spending because we don't need them.

You know what I'm saying? Like, I will get by if you don't buy me a Precious Moments figurine. You know what I'm saying? I will get by if you don't buy me lotion from Bath & Body Works. I don't need your $15 gift. Thank you. It got 10.8 million. Yes, 10.8 million of you. Not all of you, but a lot of you were concerned with Jade. This sounds a little, like, grinchy. This sounds like a little Scrooge. It's not that.

It's for people who are struggling with debt. I used to be one of those people. And I was the person who continued to buy gifts on credit cards. And when you're broke, and I'm going to say this lightly because I think people will know what I mean. When you're broke, you buy broke people gifts.

You know what I'm saying? Like you, you go to the dollar store and you rack up and you buy like 10 and $20 gifts, but I'm like, you can't afford it. And that $10 gift is not breaking them free. They're okay without it. But it is causing stress for you because now, before you know it, you spent two or $300 that probably you should have put towards a

a collections bill, or probably that you should have put towards paying off your car. And that's what this whole thing is about. It's about changing our behavior and not feeling pressured to spend our money. That's right. You know, and some of you are like, well, Jade, I don't feel pressured to spend. Like it's my love language. I love giving gifts. And if that's you, fine, you don't feel the pressure. But now let's just look at that.

look at what is it wise for us to do? Like, is it wise for me to spend in this type of way? And I'm not saying don't participate. I think Christmas is great. It's the most wonderful time of year. I think there's a way that you can participate. And here's what I would say, Rachel. And this was in the caption, if you had read it, okay? In the caption, I was like, make a very short,

Very prioritized list. I would start with kids like nieces, nephews, your own children, right? Sure. And buy for them first and use cash. No problem. I'm not mad at that. And then if you have some adults like VIP only. Yes. I would say they're next for most of us. It's our mom and dad, or maybe it's like our sister and brother, but I would not get too crazy with this. If you're shipping packages online,

across the u.s it's expensive totally you can't afford that yes somebody needed to tell you that you couldn't afford it and it's not out of shade it's really out of love because i don't want you to be further in debt and i think that most of us don't do this but we probably should rachel when the holidays start like when halloween ends right we need to stop and go okay

What was it about last year's holiday season that went well? And what was it that didn't go well? Yes. And kind of set that intention ahead of time. And most of us will go, man, I was so like overextended or man, I overspent and it really didn't have the effect I thought it was going to have. Right. Yes. And we can go back and say, you know what? I made all those freaking side dishes and spent all that money and

And we would have probably like half of it didn't even get eaten. Right. And you can see the ways that you spent your money that didn't make a huge impact.

And I think it's the same way with Christmas. There's so many gifts and it's like, you know, the kids probably would have been just as happy. Like I could have cut back a little bit and they would have still been happy. Absolutely. For sure. For sure. So there's some moderation that has to be going on here, Rachel. And I think that's the, yeah. And I think the level of discipline and planning, some people just don't, they don't do. And it's a little bit on a whelm. And that's where people get in trouble with money is because it's so emotional that

And all of these emotions are driving your decisions. And usually when that's the case, when our logic isn't doing it, it's our emotions. We do tend to overspend. We make spontaneous decisions that probably are not great in the long run because in the moment it feels good. It feels right. And we're not going to be able to do it.

And then you look back after logic is set in with maybe a level of regret of realizing, oh my gosh. And this is the reality too, Jade, is that, you know, we're, again, we're not like the Grinch stole Christmas kind of people. But 28% of Americans are still paying for Christmas last year. I heard a stat that said 49%.

Oh, wow.

If it's going to look different than last year, because maybe this year is the first time you are doing it on a budget, talk about it. Communicate it. Talk about the difference. Christmas may look a little different this year. And then even thinking through the motivation, too, of why you're buying everything in the first place. That's always a big question for me. Because even for kids, like I...

This was probably two years ago, Jade. Everyone on social media, on Instagram, they were just posting Christmas Eve. And there's just a picture of their tree and the gifts and stuff. And I was like, oh, that's kind of sweet. So I did it as we were going to bed. We had our lamps on. And it was just a pretty little picture. And we had our gifts out from Christmas.

Yeah, we had our gifts out. And so I took the picture and just captioned Merry Christmas. And I got so many comments on my minimalist Christmas. They're like, Rachel, where's the gifts? They're like, oh, whatever. So refreshing. It's just a minimalist Christmas at the Cruises. And I was like, oh, I thought we like...

I thought we were doing, I thought we like had a great Christmas. But then as I looked through, I'm like, oh no, from what people, the amount. People go hard in the paint. And again, it is not bad. If you have the money and this is where you're choosing to spend it, that is totally fine. Yeah, nobody's, you're grown. You're grown. And we're also the moms. You and I both talked about this yesterday during a break when we did the show yesterday. I also had three trash bags full of crap.

that our kids just don't use in the playroom and in the closets in the room. I'm like, so then it's just stuff just ends up building up. And that's the consumerism where I'm like, I'm not going to buy you stuff just to buy you stuff either. So that's such a good point. I think you're right. At the end of the day, everybody's grown. You can spend your money on what you want to spend your money on. I mean, that's the that's the cold hard fact.

But if you want our advice and if you're a person who's trying to get out of the debt, the point is you have permission to back away. Like you don't have to opt in to all of the things that the holidays want you to opt in. And we're just trying to give you that out. That's really what it amounts to. I'm going to end with a with a hater comment, Jade. You ready? If buying slippers hurts your wallet, you have other problems. This is very financial illiterate advice.

So I would say yes. If slippers hurt your wallet, you have other problems. Is exactly what we're saying. Yes. Yeah, it does. So then we got to dig into that. Why that is. All right. Well, Jade. It's been real. Great segment. Thanks for giving us the Christmas spirit. We appreciate it. Thanks to all the guys in the booth. And thank you, America. This is the Ramsey Show. We'll be back.

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Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz, hosting this hour with bestselling author Jade Warshaw, and we are taking your calls on life and money. So give us a call at 888-825-5225. We are here to chat with you.

All right, starting us off this hour is Allison in Philadelphia. Hi, Allison. Welcome to the show. Hello. How are you guys today? We're doing great. Thanks for calling. How can we help? Well, okay. I'm just going to be quick about this. My husband passed away. I'm sorry. Yes. You know what? You had to love him or you had to hate him. It was one or the other. My question is...

He hid everything from me. The day he died, I found out we had a sheriff's sale also on that day for my home. And I had absolutely no clue. He hid all the paperwork, everything. Sent me to the store, sent me to Atlantic City. Like we had nothing wrong. And so I'm in a pickle. I'm not really sure what I should do about this.

Holy smokes. Okay, so you're... Surprise. Yeah, when did all this happen, Allison? September 17th. I also moved my father into my home six weeks prior to that. He was in Colorado. He's been there 56 years. I just moved him back here, and then this happened, so... Man, I'm so sorry. Okay, I mean, it would be so difficult to be grieving the loss of your husband, and then at the same time,

And uncovering this other reality that you had no idea was happening, financially speaking. Yeah, I felt like I got hit by a two by four. He's knocked out on to the ground. Yeah. And I have my three year old grandson lives with me and two of my adult daughters because it's very expensive here. You know, the taxes are really my taxes are 10 grand. I don't even have a quarter of an acre. You know, it's just really expensive.

Expensive. Yes. Okay, so walk us through. You may have said at the beginning of the call, but what's the state right now of where you are financially? After you've uncovered everything, where are you? Well, I got a little bit of life insurance. Okay, how much? $200,000. Okay. I believe he was in the rears for $86,000.

And he was in a bankruptcy for three years to save the home when he was in the hospital a couple of years ago. And that was fine. He was paying thirty seven hundred dollars into the bankruptcy and twenty four to a regular mortgage. And I guess he just ran out of money and never told me.

So what does that leave you? What are you after everything's kind of come out in the wash? What does that leave you with? And what are you still trying to sort out? Well, I have, I don't believe that I owe what they're saying. I know. I understand there's interest in all that. Um, but they, they kind of put us in that position. It's a cop. It's a servicer that has been taken to court many times and, uh, had to pay out millions of dollars for wrongfully taking people's homes. And, um,

This is what I was battling for a few years before I stumbled on that when he was in the hospital. So I just wanted to know what is the bottom line? Like, what can I pay to get it out of foreclosure and then possibly just keeping the mortgage and paying that off? I don't even know what I think. How far behind are you?

Well, he stopped paying that mortgage or the mortgage and the bankruptcy in January. Oh, okay. So it's about to be 12 months of no payments. Right. And have you had contact with anybody about this or is this you just looking at...

you know, the statements that come in the mail or whatever? I get physically ill opening those statements because of what happened five years ago. They actually told me they couldn't talk to me because I wasn't on the mortgage, but I was on the mortgage. So they made me behind even more time. And you're sure that you're on it at this point? Oh, I'm positive. I got my own paperwork hidden. It was hidden in the closet. Okay. So when you, you're going to have to call them up and you're going to have to find out

what's going on with this and it's not going to be fun and i know that you're dreading it you probably have a pit in your stomach now but you're going to have to go okay where are we in this process is there anything that i can do to pull it back from foreclosure what what would i have to pay and then once you find that out you have to look at your own finances and go can i even pay this and then there's part of this i don't know if you want to hear this but what you're describing sounds like absolute like he double hockey sticks like i

Do you want the house or do you want to find a way to sell it, let the bank sell it and move on with your life? What I would like to do is at least keep it so that I can sell it because I have it's worth $620,000 and I owe what they say I owe is $320,000. My mortgage was for $340,000 315 years ago. So you owe $320,000, it's worth $620,000.

For usually it would be like, OK, can I once I can get back on track with the payments, let's come up with a payment plan. So we're back on track. And then at that point, you're paying the mortgage and then you can decide if you want to sell it or not. The question is, let's pretend I mean, let's pretend like I'm the servicer and I say, all right, Allison, you're going to have to pay a payment and a half for the next two years. Let's just I don't know what they'll tell you. Could you even do that? Yeah. Are you are you making an income, Allison, right now?

No, I'm not, because I was taking care of my uncle who passed away last Christmas. He was dropped off at my grandson's birthday party, and they're saying, here you go. You get to take care of him. I took care of him for two years, so I didn't work. Allison, there's a lot of you taking care of people, including your own children, your grown children right now, which, and I'm not defaulting you, but there is something to...

Alison, that you have to take care of yourself first and foremost, right? And that's not a selfish idea. You can't take care of people while you're drowning, right? You have to get yourself in a very stable position. And so he had this life insurance. Did he have any retirement? I mean, I'm assuming with all the foreclosure stuff, he like... Yes. Yes. It's in stock. Okay. How much is that? Once a year, I'll get 20 grand a year for six years. And it was 117. Okay.

And I guess I don't know how well that works, but I get 20 grand every September for six years and I can roll it back into it or, you know, use it or whatever. Was he working before he passed? Yes. OK. What was he bringing in at the time? He was making about 11 grand a month. OK. And and then. Yep. And you have a 200000 in life insurance. How old are you?

I am 58. Before we get off, I want to set you up with a coach to help you go through all of this because I think that there's a lot to go through. You probably, with this all said and done, you probably have the money possibly to keep this house, but I don't know. It's hard to know because it sounds like there's a lot of secrets and a lot of skeletons and a lot of closets. And you have to determine what Jade was saying earlier too, Allison, that with this house, you were, you know,

should have been be able to make these payments on, you know, $150,000 income is what he's bringing in around that. And you, and to supplement that you don't have that. And so I don't want this house holding onto this house. I don't want you to drain everything just to keep the house to Jade's point earlier. So, um, yeah, if you, if you hold on the line, um, uh, Emily's going to pick up and we are going to set you up with a financial coach because, um,

Getting all of this and from a legal perspective, the contacts that you need and all of it, and they're going to be able to ask even more questions, Allison, than we can in six minutes here on one call in the segment.

because there's probably other things there as you start pulling a string to really figure out and get yourself in a position of all knowledge to start making wise decisions with all of the information possible. So hold on the line and we will give that to you as our gift. And we are so sorry that that is what you're up against. It's terrible.

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right now get up to 30 off best sellers and life-changing gifts that won't break the holiday budget ramsey solutions.com slash store welcome back to the ramsey show up next we have katie calling us from dallas texas hi katie welcome to the show hi hello so glad to be here well thanks for calling how can we help

I have a big problem. Well, I don't know if it's too big, but my question is, how do I tackle my debt while establishing an emergency fund and investing at the same time? Well, I can see how you're overwhelmed with that because that is overwhelming trying to do all of that at the same time. What's causing you? What's the motivation in trying just to get it all done? Do you feel like you're behind on investing? You don't feel like you have enough savings? There's a lot of debt?

What's causing you to do this? So I've held on to this large amount of money in my savings account. I started saving since I was 16. And I just, I'm exhausted of seeing it just sitting there. I want to do something with it. My frustration is I'm not knowledgeable in investing and I don't even know where to start. I don't know. Yeah. How much is it?

It's $47,230. Okay, and that's just sitting in savings. And then how much debt do you have? I have $24,516 in debt. Okay. Well, the good news is,

we'll give you a plan so that you feel like you're going in a direction and you feel confident about what that direction is. Also, the good news is you're going to be out of debt basically today if you follow our plans. Bye tonight. Oh my goodness. That's exciting to hear. It is. Listen, you've done a wonderful job saving and

It sounds like you weren't really sure what direction to go. So you kind of just try to do everything. And the way we teach kind of narrows it down and you do one thing at a time for a period of time. And then you kind of are freed up to do more. But for you, the first step, and you've already covered it. We always say the first baby step is you just need $1,000 saved. You got that. So check that one off the list. The next step is we take...

any additional savings that we have or we work really hard to pay off our consumer debt. And for you, you have the money to do that. So that would be baby step two, pay off consumer debt. That would get the green check. That's right. And Katie, what is the $24,000? What kind of debt is it? One credit card in the amount of $65,000, $63,000. Another credit card in $67,000, $83,000. And my car, that is $11,170. Okay. Okay.

So yeah, so part of this paying off debt for most people that call the show, Katie, I would say nine out of 10 of them don't have money to pay off these credit cards in this car. So we're going to be talking to them about working extra, sacrificing lifestyle, all of it. But your position is completely flipped because you have that cash. So like what Jade was saying is that's a big green check light.

But also, Katie, we want to establish new habits so that we don't get back into this place of debt again. So what were you using the credit cards for the two? Just spending, monthly spending. I have a problem of I like seeing the money there. I like feeling secure. I like feeling safe.

My problem is just letting go of that money. Listen, I think for personalities like you, when we reframe what security and safe is, I think they thrive even more because if you're a person who loves being secure, being safe, you're going to love a debt-free life because debt really does equal risk.

because using credit cards, that's a form of debt. It equals risk because for most of us, we go about our life, right? You put, maybe you put shopping on the credit card, maybe you take out a car loan, but if you were to lose your job, suddenly you feel the risk of that because you go, oh my gosh, I don't have the income I used to have coming in and I have this car payment due, I have to pay the credit card off and suddenly we feel the risk of,

that weight that we've been carrying in debt, right? So if you're a person who says, no, I love security, then paying off your debt truly is ultimate security. And then turning around and saving up three to six months, which is the next step, baby step three, having that three to six months of cash sitting there, that's actually your money,

It's not money that you owe to credit cards or car notes. That is the ultimate form of security because then you can say, no matter what happens, I'm prepared for a storm. If I lose my job, I know I have the money to keep everything going for the next six months. If an emergency comes up, you know, the water heater goes out or something happens with HVAC, I have the money that I can cover it. Yeah. And the three to six months too, Katie, is enough to what Jade's saying when these big things come up to cover with cash.

But it's also not so much that you're getting frustrated that you're not making a lot on return. Right. So it is that perfect medium. Are you single married kids? What's like your life status?

I am married. I have one baby. Okay. So since you like security, Katie, I would go more the six month emergency route versus the three month. Yep. So I would stick with that six months. Do you know from an operating budget perspective how much money you guys need per month just to keep kind of where you're at? And I'm thinking, you know, mortgage payments, utilities, gas in the car, food, all of that. What's kind of a what would you guess to keep you guys afloat for a month? How much money?

For him and me, myself together? Yeah, as a household. I want to say roughly 6,000. Okay. So the good news is you have that.

Even after you pay off the debt, I mean, that still leaves you with a little over $20,000. So you could effectively say, okay, now I've got my three to six months. And then to answer your further question about like, do I invest this? What do I do? That three to six months, you just keep it in a high yield savings account. It's there. Like we said, it's just that fully funded emergency fund for when you need it. And then above that, technically, and I know I'm not going to dig into this too much right now, but

It sounds like after that, your household is debt free. Your household has three to six months of expenses. Now you could start to invest in the way that we'd say to do that is really just taking 15% of y'all's combined income every single month and putting it towards, yeah, your 401k, your Roth IRA, that sort of thing. And it just becomes a kind of set and forget rhythm thing.

for you to invest. Yeah. And when you're talking about you didn't know much about investing, a great place to start, Katie, a Roth IRA is a great option. You and your husband both can open it up. You can both put $7,000 in and that grows tax free. And within that Roth IRA, you'll invest in mutual funds. And I would sit down with a smart investor pro to kind of get all this started. And then do you and your husband both have retirement benefits at work like 401ks or a 403b?

I do not. I believe he does. Okay. So yeah, so I would use that 15% to fund two Roth IRAs, go up to the match with his 401k. And how much do you guys household income wise are you making a year? I'll say $60,000. Okay. Are you guys working together with your money? Or you guys have a combined...

uh checking account no we don't i think that's something you need to work towards what's he saying about what's he say about all this does he want to does he feel out of control money wise is he feeling like a little bit like oh gosh are we on track have you guys been talking about it and that's why you called or is this just you on your own feeling it and you don't know where he's at

With finances, it's kind of you earn your money, you make your money. We share the mortgage, so you just sell me the money and we're okay with that. Okay. All right. My money is my money. How long have you been married? Five years. Okay. How are you feeling about that? Do you like how that is or would you rather say, hey, we're a team in this and all together we're like working towards our future together with investing and we know what's going on?

We're okay with working together.

I'm sure he'd be okay with that too. Good. I think you should work towards it. I mean, the truth is for a couple of reasons, a just practically when both people are working together to accomplish one goal, you go faster and there's not much confusion. It's, this is what we're working towards and we're all pushing towards that same thing. And then there's just the, the relational spiritual side of you're married. And so you're one in all of these other areas. And so, yeah, sorry, Jay, does he have debt, Katie? Yeah.

Do you even know? Yes. How much does he have? Too much for me to handle. Oh, okay. Interesting. So is that why you like it separate? Because his feels overwhelming to you? Yes. Okay. We don't, we really, I don't want to hear about, um,

That's hard to say. His financial struggle. No, you're good. Katie, do you care to stay on the line? We have to go to a break right now, but I'd love to keep talking if that's okay. Are you okay if we hold you over to the next break? Yes. Okay, thanks, Katie. Katie, you stay on the line. We have a hard break right now, but we'll be back and unpack some more of this because I think this is a great to be able to help her and for you all. This is where a lot of people are in America from a financial perspective. So we'll be back.

This show is sponsored by BetterHelp.

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Welcome back to The Ramsey Show. We have Katie on the line from Dallas from the last segment. And Katie was telling us she has $47,000 saved, $24,000 in debt, which was car and credit cards. And she was wondering initially when she called in about how to invest and how to pay off debt, not just let that money sit there because she wants to make progress. And as we kind of were digging into that,

to the numbers in her situation, kind of unpacking the relational side of money. And marriage and money is so closely related. When you are married, working together with your spouse and being on the same team is a crucial part. But also we know on the other end, it's one of the leading causes of fights and tension and divorce and conflict. And when you're not on the same page and when you live kind of separate lives financially. And as we were unpacking with Katie a little bit, that's what we've kind of started to discover is

where they are from a relational standpoint when it comes to their money. Katie, is that a good overview? Would you change any of that or add anything?

Oh, gosh, that was unexpected. Yes, you've definitely unpacked it. We unpacked it. Yeah. So before we were getting off the call, we just kind of asked and I feel like you it kind of struck some emotion in you of knowing that you guys don't work together, but yet he has a lot of debt. And you said it was just too much debt for you to even want to handle or to face. Is that right? Yeah.

Yeah, my parents, they got divorced because of money. So that's a big fear. That's kind of the background. My husband, he has let a few credit cards go to collections recently, as soon as my daughter was born. He's been underwater for what feels like a long time, probably two years already. Mm-hmm.

And if I mention this, you're going to say sell it. Well, tell us. The truck. It's the truck. He has $11,000 left on it, but it's these monthly payments of $600 that he wants to be free from. Okay. What other debt does he have?

What's the credit cards and collections? What are those amount to? Do you know? I want to say roughly it's $7,000. Okay. Anything else?

Now you've opened my eyes. No, not that I know of. Maybe I need to have a discussion with him. I think so, because don't get me wrong. I hate debt and I don't like any amount or form of debt. But I was, again, expecting for you to say like he's got $200,000. I was expecting something way more astronomical. And when you told us, hey, yeah, he's got $18,000 of debt. I kind of just was like, oh, OK, cool. Like we can pay that off.

And he's working, right? Yes, he is. Okay, let me dig deeper. It just came in. So we have this watercraft boat. It is under both of our names, but he takes financial responsibility for it. And the balance is $11,000. Okay, so there's another $11,000. What else? Anything else?

Um, aside from his truck, the car and a few credit cards, there is nothing else. So a truck and a car? Uh, sorry, the, the truck and the boat. Okay. Truck and the boat. So we're 28,000. How much, how much is the boat worth? Do you know? No idea. Okay. Okay. We haven't looked into it. It's very precious. Okay. And does he have any money saved in his name? No. No. Okay. Okay.

So, okay, so Katie, I think what this starts to open up and what you're feeling, and correct me if I'm wrong, but it is touching every security, insecurity part of your story and in your life. Like you've done everything you can to stock money away, even money.

taking out credit cards and spending over here, but just knowing the safety of money has been a lifeline for you and probably coming out of a lot of pain from your parents' experience. And you've done everything to safeguard yourself, right? Against, I would say against debt, but what's funny is you've taken on some debt, right? So there is still a level of risk there, but you've padded yourself with the savings and it's kind of become your lifeline and you're gripping onto that and letting go of that, right?

is one of the scariest things for you to do. Would that be correct? Yes. Yeah. Which is very understandable, Katie. Very understandable. And so I want you to, as much as you can, because with money, emotions drive so much of this. And the more logical we can get...

the safer I think you're going to feel with some of these decisions. And one of the first steps I would do is sit down with him because I don't know his, I'm not on the phone with him and I can't ask him these questions. I don't know where he's at. If he is at a place, Katie, that he's like, I'm so overwhelmed. I'm so mad at myself, right? He's probably not feeling great about himself. And it's like, I want to change. I want to turn this around. That's one scenario.

a scenario i would have a red flag and cause you to pump the brakes a little bit on all of this if he's like i don't care i don't care katie i'm gonna do what i want and we get those calls too with some guys that are like well he wants to buy the truck he doesn't care he's gonna buy it and we're you know we can't make the payment but he doesn't care right so like that is a character issue if it's that would you say it's kind of the first scenario or the second

I'm pretty sure he will call the show tomorrow. No, not tomorrow. Tomorrow's Saturday. Okay, good. Yeah, but so he's more on that first scenario, you would say. He's all for it. Okay, okay. So, Katie, okay, I want to encourage you that this is all good, right? I know you feel overwhelmed, and we're going to walk you through a very clear plan right now. So the first thing I want you to do is you guys together tonight –

You can open a bottle of wine if you need like just a good sip of something. Order a pizza. Whatever you got to do to relax and say, okay, together, we're going to look at everything. We're getting out our pay stubs. We're going to know exactly because when I asked you how much money you guys make a year, you said, I think around six. Like I want you to know to the dollar. Here's what we make combined. Here's every debt. We're going to write it out and we're going to know everything here. And we're going to tonight.

Shake hands and say, we are now a team. Together, no longer are we roommates Venmo-ing each other for the mortgage. No, screw all of that. No, we are one. When our income hits our new checking account that we're going to open on Monday morning, when our income hits that account together, we are working as a team. Because when you do that, Katie, not only from an emotional perspective, defensively,

is it creates so much unity and so much of a more beautiful marriage because you see yourselves as one, which is what you do when you choose to get married, to live life with another person. You're living that out on a tactical sense with your money. So that's such a beautiful part of it. And then together tactically, as you start to trust each other in this, you're going to have this cleaned up, Katie. I would sell the boat immediately. But then by Monday, you guys can take this $47,000.

And this is going to scare you. But I would pay off all of that. I would keep $1,000. And you would have, I think, $42,000. If you don't count the boat, because I want that sold, you're going to pay off everything else. And so you're going to have $5,000 left. And you guys together are going to have a goal, I would say, to save up probably, I don't know, $26,000, $27,000 for an emergency fund. And that's your next goal together, Katie, is to work to buff up that emergency fund. Okay? Yeah.

And that's going to take you guys, you know, maybe the next eight, nine months, 10 months to do all of that for that emergency fund. But together, that's going to be your goal for 2025. Together doing this. Getting rid of the payments. We're done with payments. And now you're going to have your full income to be putting towards this emergency fund. What say you? 5,000 left. What'd you say? 5,000 left. Yeah. I would have 5,000 left. So I'm paying off my two credit cards. Yes. Okay.

I'm paying off my car. Yes. Selling the boat. Mm-hmm. And you suggested paying off the truck? Yes. Mm-hmm. Oh, gosh. That's scary. Is it scary because of what's going to be left? The $5,000? Or it's scary that you're paying off his debt? That's scary. Yeah.

You know what might make it less scary if I were you? I'd calculate up all the monthly payments. I'd calculate what you're paying in car payments, what you're paying in credit card payments, what he's paying in credit card payments, what he's paying in boat payments, and what you're paying in truck payments. Add up all that money.

And when you see that, that you're going to have that back every single month, I think that's going to make you feel less scared. Because that's a hefty chunk. You have a lot of your income, Katie, leaving. And a lot of it's going to be coming back to you. And you'll be able to build this emergency fund up back very, very quickly. And then beyond that, you can start investing. Hold on. Stay on the line, Katie. And Emily's going to pick up. And we're going to put you guys through Financial Peace University. It's our nine-lesson course and give you every dollar premium. So when you guys start looking at numbers today, you can start building out your first budgets.

Thanks for the call, Katie. We're cheering you guys on. Hey, guys. Dave Ramsey here. I'm coming to a city near you with Dr. John Deloney on the Money and Relationships Tour. This is a brand-new event where you, the audience, will get to vote live for

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All right. We're going to go to John in Midland, Texas. Hey, John, welcome to the show. Hi, guys. Thanks for taking my call. Absolutely. How can we help?

Well, so I'm an hourly employee and I have an irregular income. And so I've really kind of been struggling with a budget in the past. And I found out the other day that with my employer, I can set my paycheck to go into different accounts. So would it be a bad idea to basically...

set up to where I'm like a salary employee, like I have $2,000 or whatever, every paycheck go into like my working account, my daily account, and then everything extra goes into like a high yield for a house? Or do you have any other advice for something like that? So in essence, you're saying you don't need all of the money that you're being paid. And so you want to throw it towards another goal. That's really the question. It's not really the difficulty of budgeting it, right?

Yes. I guess whenever I just look at my whole paycheck with it being different month to month, I don't know why it just doesn't click with like, OK, I have this random amount of money left over. And so I guess that's kind of what I'm trying to overcome. OK, so just again to clarify, are you having trouble budgeting? Like, are you are you ever finding that you don't have enough money?

No. Okay, cool. I live very frugally. I love that. Essentially, you're saying I have enough money for the line items in my budget, but I have an overage. And for you, the overage, you feel like you're at the point that you want to save for a down payment. Yes. And so then at that point, for Rachel and I to decipher is whether you're at that point financially, if that is really the best move for you or not. Okay. So our first questions would be, do you have any debt?

No, I actually paid off all my debt in September. Okay, nice. So I'm completely debt free. Cool. I make about $100,000 a year. Okay. Part

Part of paying off my debt was I got a large settlement from my previous employer for a sale. So I have about $60,000 of that left over in savings. Okay. Some of that is going to be taxes, though. Okay. And then, you know, I'm contributing right now 10% to retirement because I am trying to save for a house. Okay.

So that's kind of where I'm at. Okay. So the 60,000 you got, you know, you set the taxes aside. That's fine. What portion of that would you consider a three to six month emergency fund? Probably two.

I mean, really, probably 15 would be generous. Okay. So that'd be more towards 6,000 or six months, I mean. Okay. So I'd set aside what you would consider six months of expenses, and that's kind of separate. And then aside from that, yeah, you could consider the rest. This is my working pile of debt payment money.

Um, and then for you, and just to clarify for anybody listening, so technically you're on baby step three B and step four, and what you're doing is totally fine. If you say I'm not ready to go all in on 15% investing, like we'd say, because you're saving for a down payment, that's totally fine. Um, how long do you think it'll take you to save up the down payment that you want? Um, well, I'm just trying to,

Save up big, I guess. I know that in August I'll be getting a retention bonus as well. So that should be about half a year's salary. So between that and then another $1,500 a month or so going into savings, I would assume by the end of next year,

I will be in a comfortable spot to do, you know, 30 or 40% down on a home. Okay, great. I love that plan. I think that that sounds wonderful. The only thing that I would caution you about, and this is something that you, if I were in your shoes, I'd work it into the plan now. When you have that house, like once you buy the house, your expenses are going to go up is my guess, right? I don't know what you're doing now. Are you renting? No.

I am. I am renting right now. Okay. So calculate, okay, is my payment going to go up or down? Does that affect my emergency fund? Does that affect what I would need to make things sustainable over three to six months? Do you see what I'm saying? Okay. Yes. Yes, ma'am. And that's basically it. Congrats. Yeah. I mean, you've done a fabulous job, John. I mean, it's...

Incredible. I mean, yeah, I think that that's exactly right. And if you want to make it easy and make it that automatic transfer to a money market account or a high yield savings account to save for that down payment, I would say, yeah, absolutely. You know, there's always...

You know, I don't feel this with you. That's why I just want to say it out loud that there is something when you're starting something new, you all that are listening and watching and you're starting to build new habits. I do think being as hands on as possible and going through the motions is really important. And so some people just want to automate it their whole life and be like, oh, I don't want to have to like feel anything. It's just going to happen.

There is something about stepping in and saying, no, no, no, I'm going to transfer the money myself. So I'm practicing and seeing this happen. And there's something about taking control in this discipline over your actions, which is a big part of winning with money long term.

But john, I think you you have some of these disciplines already in place It's not like you're trying to change something big from your habits. It's more of a tactical change And so doing something automatic at that point I think is great right when you can yeah when you have stuff that just automatically comes out because you know Yeah, we're paying for electricity or paying for cable like yes, and it's just coming and it's making my life easier in that way Uh, that's a benefit for sure and that would be the same with savings so if you do want to

create an automatic transfer and knowing that that high yield savings, you can get to that money for some reason, right? If you lose the job or like whatever it is, you can get to that money. But yeah, but that's great, John. How old are you? I'm 25. Oh, way to go. And what do you do for a living?

I'm a lease manager. I work for an oil and gas company out here. Okay, okay. That's great. I know it's always encouraging to talk to people when they're young and in their 20s. And you're making, yeah, I mean, incredible money doing it. And handling it really well. So that's incredible, John. Good luck to you. I think that that's, yeah, that's amazing. Way to go. I liked what you said about the automating because I think that's very, very important. Yes, for sure.

um all right let's see we got uh oh this is a fun instagram handle okay ready for this yeah jacuzzi 101 okay you like a good time at what point should my adults children's finances be none of my business i'm gonna go with at the point they're adults so probably now since they're adult children yeah um

I mean, let's think about this. If they're in your home, like if you have adult children that live in your home, I would say that it's some of your business because they're still in your living space. Right. But if they don't live with you, if they are out on their own and in their life or in their marriage, I'd say that it's none of your business unless they ask for your help. That's right. Yeah. This is always a tricky one because you hear, uh,

Parents still wanting to be involved in their kids' decision-making. And probably some of it out of a good heart. Of course. Seeing...

Kids may be making mistakes or making decisions that you wouldn't make and you want to still be the parent in that way and intervene. But I feel like the more life I've lived, Jade, the more successful relationships I see with parents and adult children happen when they start to become more peers. Yeah. Right. When you step into adulthood and your parents actually see you as a fellow adult and you

They're still not trying to parent you or lecture you. And they see you as a peer. Usually from the people that I've seen in my life that have great relationships with their parents, it's because of that. There's kind of this mutual respect. Mm-hmm.

And the ones where there's usually tension when it's like, oh God, my dad's still telling me how to load the truck or my dad, you know what I mean? Or my mom is still critiquing this or that or like, you know, whatever it is. That's usually relationally when there's some, some tension. So I'd say none of your business. But that goes both ways because a lot of times kids try to get into the parents. That's so true. Yes. That's so true. I don't like the way my mom and dad handle their money. You know what I mean? People call in with that all the time. So, and if they don't ask,

Not much you can do to change other people. You really can't. Really can't. Well, thanks to all the guys in the booth for making this a great hour. Jade, thank you as always. Always. Being a great co-host. Thanks to everyone out in the lobby at Ramsey Solutions. And thank you, America. We'll see you on the Ramsey Network app, podcast, and YouTube. Make sure you guys download the app. So we'll see you next.

What up, what up? It's Dr. John Deloney from the Dr. John Deloney Show with some amazing news. The latest episode of United States of Anxiety is available right now exclusively on the Ramsey Network app.

This docuseries follows real people from my show as they embark on a 90-day journey to transform their lives, and I personally walk alongside them every step of the way. Okay, now, here's a sneak peek of what the new episode is all about. And don't forget to click the link in the show notes to download the app.

What's up, Kelsey? So I've lived with crippling anxiety for as long as I can remember. How do I stop it from constantly coming up in different areas of my life? What does crippling anxiety mean? Paint me a picture of that. All right, so you're ready to jump in? I'm ready to jump in. We're going to check in with Kelsey 30 days, 60 days, 90 days. I cannot even function because I'm just crying.

My mom left us when I was four. I truly felt like for a while I had no family. She's experiencing things that really hurt a long time ago. Tell me about this boy. He triggers me a lot.

Scared of losing Paul, scared of doing the wrong thing, scared of not being enough. It just feels like it would be exhausting to be Kelsey. It is. Whenever somebody's playing whack-a-mole with their anxiety, when it just keeps moving, that tells me the underlying system's not okay. How do I get my inner child out of this relationship? Because I feel like she's running the show. One of two people that's supposed to never leave took off. How is this burden? You're burdened, that's right. To the one person.

Who should carry it? All of it. Did you ever tell that little girl that it wasn't her fault? I don't know what to do. You either have to choose to let this guy love you or you got to choose to let this guy go.