Your Emergency Fund Is A Force Field Between You And Life
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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 George Campbell, joined by Jade Warshaw this hour. The number to call is 888-825-5225. Don't be scared. You jump in, we'll talk about your life and your money. That's all we want to do is help you take the right next step and maybe talk you off a ledge if you're about to do something stupid. That's always a fun call.

The preventative medicine versus the emergency surgery. All right, let's kick it off with Maria in Denver, Colorado. What's going on, Maria?

Hi, thanks for taking my call. So I purchased a home from a meth addict and I'm now $33,000 in debt because I had to do remediations on the home after I closed. And I'm just curious how I should best pay this off and salvage my credit. I did receive a settlement from the owner after discovering this problem, but, um,

I still have probably $80,000 in repairs to make to the home. I'm just curious how I can pay it down and salvage my credit. So how much total debt do you have outside of a mortgage? For $32,000, I don't have any other debt outside of my mortgage. How many cards is that across? Across three cards. How much money are you bringing in every month? I'm bringing in about $4,000. No, probably $3,000.

$5,500. $5,500. And then what portion of that is your mortgage payment? $2,800. Yipes. All right. We got troubles. We got troubles. So tell me a little bit more about this. Did you call it a remediation?

Yeah, so they had to rip out the kitchen, all the doors, all the lighting, anything porous, anything wood. So I basically bought the home and then they stripped it. I found out two days after closing that she had a joint problem. Did none of this come up in the inspection? That's my question. No, yeah, none of it came up in the inspection. So how did it come up?

I received a police report that I had requested two days after closing. I had received every other police report and they had some police activity at this property because I did my due diligence and I looked through it, but I didn't receive the one report that had the previous owner handing over the meth to the police at her home saying she had a problem until two days after closing. I don't know what happened to that one report that held it up, but I

Every other report was about a dog or about. So she was cooking meth in the house. No, no, not cooking, just doing this. Even at that level, you still have to remediate. Oh, my goodness. And you said there's still $80,000 of repairs. Is this related to that? Or this is just other repairs that you were planning on doing? Related. They stripped the home after I purchased it. And so I couldn't.

really go back and take... I couldn't, like, undo the loan. Essentially, I sued her, and I got... Thankfully, I got about $60,000 back. But still, there's... So what happened to that? Yeah, what happened to that $60,000? So I have that, and that's my question is, how do I...

pay down, like do I pay it on one month's sum? Because I'm just worried that if I pay off my debt in one month's sum, it's going to crash my credit more. I would not be conservative with your credit right now. Me neither. You've got bigger problems and bigger fish to fry. I would knock out all the credit card debt today, the rest becomes your emergency fund, and then we cash flow the rest of the repairs. Okay. And so just make the rest of the repairs as...

On cash. As you're able to. On cash? Yeah. Okay. But leave three to six months of expenses in there for actual emergencies, which is not known repairs. Okay. Because we want to avoid you going further into debt. I don't know why you're concerned about the credit at this point. You're not going to go take out more debt, are you? No, but it just... And you've got... Listen, you've got a home. You're going to make a mortgage payment every single month. You're going to be just fine. The credit score will settle itself. Yeah. And you're not planning on taking out more credit.

So... No, okay. You're right, you're right. That's the only point of having a good credit score is so you can access more debt. Yeah, well, I do want to... I was planning to start, like...

buying other homes and you know no no no we're done buying homes right now we need to focus on our problems today and we can become real estate moguls down the line when you have a paid for property and money in the bank to pay cash well here's the thing maria we're not in in hear us when we say we're not the point of we're not intentionally trying to tank your credit

However, George and I both know that when you set down the path of paying off debt, you're also simultaneously saying, not only am I paying off this debt, but I'm not going to borrow money in the future. Otherwise, what's the point of paying off debt just so you can get more and pay it off again? That doesn't really make sense. So there's kind of this assumption that if you're paying off your debt, if you're working this hard to do that, if you're taking this lump sum and you're being diligent in that way, you kind of have to

think about the future and go, okay, well, if I've done all this work, then in the future, I'm going to pay cash the same way you're going to pay cash for these other remediations that have to take place in the same way, you know, in the future, if you do choose to buy real estate, you'll save up and pay cash for it. Even though that sounds like a mountain load of cash, it's just good to kind of draw that line in the sand.

Okay, well, that's great. Then that makes my solution easy. Just pay it down and work with the remaining cash. Well, I'm equally as worried, Maria, about this mortgage. It's 51% of your take-home pay. Oh, yeah. Well, I have two roommates. Okay. So I'm not paying it all myself. No.

But go ahead, George. Well, I'm just there's there's a lot going on here now with the roommate situation. Yeah. Are they chipping in? Yeah. I want to know. Can we have some clarity? So you own the house. Are they chipping in at all for any other repairs? Tell us. You're the landlord. So it's on you. Oh, I guess that's true. But are you increasing the rent to help cover some of this or what's the deal there?

No, rent is staying the same with them. They are helping with the repairs by helping come in and actually do the repairs. So their time, they're paying you with their time. Right. And that's fine. So that's been helpful. And then also my mortgage lender offered two years free refinancing. So hopefully...

If all goes well, you know, not predicting the future, but if all goes well, I'll be able to refinance. So if the rates drop, they're saying we were not going to charge you to refinance. Exactly. Okay. The only thing that makes me worried about this situation is when people own homes, but they can't afford their rent on their own. So they have roommates. I always like a situation where you can...

You can float the rent on your own and you can do the mortgage on your own. You don't need the roommates for it to, you know, in order for it to not be dangerous for you. And I don't like the fact that this would be dangerous for you if something happened with the roommates. That's that's my only red flag on this.

Well, I can definitely float the rent myself. So what I told you, the mortgage, I guess I should clarify that also includes utilities, insurance, all of the things bundled. I have no car debt. I have no other debt. My monthly expenses include cell phone, my cell phone.

And that's more or less that outside of food. So I can definitely flow the rent on my own. Well, I'd focus on just knocking out this credit card debt today. Cut up the cards. Don't look back. Use the rest of the emergency fund and cash flow the rest of these repairs. Do not go into debt ever again. I'm sorry you're going through this. That's crazy. Goodness gracious. These inspectors. That's crazy. Should I just go become an inspector? Looks good, guys. I don't understand how that was missed. Wow. All right. This is The Ramsey Show.

Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. The number to call is 888-825-5225. Well, it's time for our long running segment, Jade. And by long running, you mean this is the third time? Third time. Okay. It's long for me, you know.

So it's called Pick a Side. And this is where we have two people on the line and we have to help them kind of settle a debate. And you and I, at the end of it, have to pick a side after we hear them out and hear their case. I enjoy this thoroughly. I'd pitch Judge George for the name of this segment. They didn't like that. Judge George? And I wanted a little gavel. Oh. Just a little baby gavel. Then I'm going to pitch Judge Jade. Oh, dang. That's so much cooler. All

All right. I give up. Here we go. Let's see what Jennifer and Joe have to say in Denver, Colorado. What's going on, guys? Hi. Yeah, I'm ready to buy a new car, and my husband thinks I'm fine with the one that I have. Wow. All right. Joe, what do you have to say for yourself? Well, I do agree that she needs a new car. She just wants to spend way too much on a new car. What does she want to spend? What does she want to spend?

$50,000. Okay. That's a lot of money. And that's the most you guys have ever spent on anything outside of a house, I'm guessing? Yes. Okay. Where are you guys at financially? We're on baby step seven. Paid for house, no debt, love it. And what's your net worth? It would be what our house is worth. Yeah, $600,000. Plus retirement? $700,000. So not quite a million? No. Okay. All right. And what's the household income? $1,000,000.

$150,000 approximately. Last year we did $150,000. And how much cash do you guys have in the bank? We have our emergency fund right now of $10,000. And I got $10,000 in my business account. So $10,000 and $10,000, if you were to buy this car, A, were you thinking of getting something brand spanking new? And two, how were you going to pay for it?

I would want to save up for it. Okay. And I don't necessarily want something new. It's just what I want just came out. So I want to wait a couple of years until I can buy one a couple of years old. What kind of car is it? Can you tell us? It's the Toyota Grand Highlander. Highlander. Where's John Deloney when we need him? That's what he ended up getting. I need like a picture of a Highlander. I don't really know what that is. I'm going to Google it.

They're beautiful. Really great cars. Okay, so what is the car you're currently driving? I have a 2007 Acura MDX, and it's getting close to 200,000 miles on it. Oh, she's just getting started. That's a nice little ride, though. The MDX is invincible. Okay, love that. And what is he driving? I'm curious. I have a 2004 GMC pickup truck.

And then we also have a 2020 Transit Connect van. I'm self-employed, and so I use that van for work. Cool. Okay. Might be time for both of you to upgrade. I know, right? Baby step seven, living like no one else. I know, that's right. So I'm guessing you guys have a sizable margin in your budget now to save up. How much could you throw every single month just to kind of a side savings account?

Oh, I think we could have it saved in six months. Wow. Yes. Yeah. That's pretty impressive. It's pretty simple. So, yeah, I mean, we could save $5,000, $6,000 a month. That's great. Okay. So tell us, Joe, why, tell us what you would do if it were your choice. Obviously, we know Jennifer wants this $50,000 Toyota Highlander, slightly used. In your book, what's something a little bit more reasonable?

30, 35,000. Maybe not the Grand Highlander, but the regular Highlander. That's what I'm looking at. This one I'm looking at is like 30,000 2023 Highlander LE. Is that not the one? No, I want the Grand Highlander. You want the big boy. They just came out in 2024. Okay. Joe, I'm curious. Where'd you get that 35 number from? Just your heart?

Oh, yeah, just my heart. I mean, I look on Craigslist and you can find the regular Highlanders. Yeah, I see one. 30,000 miles for 30,000 or so. Yeah, I see what's going on here. Okay, interesting. All right, we have a lot of information here.

I feel like, you know, we've been doing Dave Ramsey's Baby Steps for a long time. I feel like I've been living like nobody else. When do I, we're on Baby Step 7. When do I get to live like nobody else? Listen, I feel that. So tell me, when was the last time you did an activity that you would call a live like no one else, the latter, that you've done? Like at least a couple of grand. Yeah. Where you're like, we dropped some money on this. We went to the Dominican, yeah. Okay. When was that?

Last month. Nice. Okay. So you guys are enjoying life. Yes. So we would say you've driven like no one else. Now it's time to drive like no one else. You've driven the hoopty Dave car. Now it's time to drive the Dave car. You know what I'm saying? I've made up my mind. I know how I'm going to vote.

It I got in a car accident a couple months ago. So it's dinged up on the side. Listen, you keep playing. Tell us more. She's really playing it up. All these stupid little things don't work on it anymore. Like you cannot reset my clock. You can't tell what time it is in there. Jennifer, I call those special features.

My seatbelt doesn't go back. Listen, I got my phone in the car. I got my Apple Watch in the car. I know what time it is. It's fine. That's not a big deal. But I'm with you. Okay, can I vote? I know what my vote is. Are we casting votes? I think we're casting votes. Are you guys ready to hear the verdict? Let's say it on three. All right. The name of the person that we think is right. Yeah, say the name of the person you think is right on three. One, two, three. Jennifer. Yay!

Jennifer, you just won a brand new Toyota Highlander. That'd be fantastic. And a dinette set from Broy Hill. What do you think? Are you shocked?

No. I'm shocked. Of course Joe is shocked. Here's the thing, because I know this, we bought my wife a new-to-us car. It was a slightly used luxury car, and it hurt my soul, Joe, to write that check. But I also knew this is part of living the plan. It's part of the plan. And I have a hard time letting go and writing a big check like that, but when you pay for it in cash, you go, oh my gosh, that was a lot. And then you go,

This is paid for. This is amazing. This is a huge blessing, and it's why we lived like this for so many years. And so I think you guys are doing the right thing. Just so you know, the parameters here, you don't want all things with motors and wheels to be more than half of your annual income. So that's where I'm going, all right, $150K is your income. Everything you own should be $75K. Listen, Joe, you could turn around and get yourself a $50,000 car and be all right. Now, what is this Transit Connect worth? About $20,000, I guess. Okay.

Yeah. So even the 20 plus the 50 for hers, that would be 70. You still got some wiggle room there. Not too much. Not too much. And, you know, maybe you wait three years and you get the Highlander, but I think you go for it in two years from now and you get a two-year-old Grand Highlander. And if you can't wait that long, then just go for a normal Highlander and you can always upgrade later. Nothing says you have to drive this car for the next 20 years, which is kind of how you guys have been living. Right. Yeah.

I feel like Joe's really disappointed in us. He was waiting. No, you shouldn't spend more than $30,000.

But I think that will help you guys to go, okay, half of our income shouldn't be tied up in these things. That means we do need to scale back because this transit plus the car Joe's going to get plus the car Jennifer's going to get, it's going to add up to be a large part of our world. And then once you hit millionaire status, you can go buy that brand new car. And here's why. It's not a fundamentalist thing. It's just that too much of your world would be tied up in a depreciating asset. But when you have a million dollar net worth, you can stomach that hit on depreciation a little easier. Right.

And so you guys will be there in no time. How old are you two? I'm 45. And I'm 56. Oh, my goodness. You got so much time to live and drive like no one else. And you know what, Joe? I think it should be time for you to upgrade after. What is your dream car, Joe? It's a $30,000 car. We know that. It's the one he's got. I actually love my truck. He wants another GMC pickup. No, he wants to keep the one he has. I like the one I got.

That's amazing. It's got an eight foot bed. It's got the diesel and I'm good. Thank you, Joe. They don't make those eight foot beds anymore. All these new pavement princesses out here got the tiniest little beds. I'm like, what are we even buying pickup trucks for anymore? So then, Joe, real quick, tell us if you could spend $30,000 on anything, not a vehicle, what is your thing? Like, what's your live like no one else thing? I would do a boat. Hey, OK. There we go. Now we got it.

Joe's in the boat. Thank you guys so much for the call and for letting us have some fun. Excited for you guys to make that cash purchase of that beautiful new-to-you car very, very soon. More of your calls coming up. 888-825-5225. This is The Ramsey Show.

You know, it doesn't take a degree in statistics to realize this one stinks. 93% of undergraduate private student loans are co-signed. So when you're delinquent and drowning, mom or papa or uncle Joe is stuck in that financial stress a long time.

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or go to YRefi.com slash Ramsey. That's 844-2RAMSEY, or the letter Y, then R-E-F-Y dot com slash Ramsey. YRefi is not licensed by the California Department of Financial Protection and Innovation. YRefi is not authorized by the New York State Department of Financial Services to service any New York loans. Funding may not be available in all states.

Welcome back to The Ramsey Show. I'm George Camel, joined by Jade Warshaw this hour. The number to call is 888-825-5225. Springfield, Illinois is where we're heading next. Levi joins us there. Welcome to The Ramsey Show, Levi. Are you with us, Levi? We were so close to getting Levi on the air. Well, we'll try to get you back, Levi. I don't know what happened, but if we can't, I'm sorry, and call back later, my friend. We're going to go to Taylor up next in Eau Claire, Wisconsin. Taylor, welcome to the show.

Thank you. Oh my gosh. Okay. So my husband and I put in an offer on a house, which was accepted right away. We had seven days to turn in the earnest money. And on day five, we decided to not do it. So we told our realtor right away and we never paid the earnest money. Long story short,

We got married last August. We're now pregnant with a baby in July. And we found out last month that my husband, who's in the military, is deploying this fall for about a year. So the reason that we jumped on this house is because we got scared, tried to make a decision. It would be easier for me to live by myself for a year. And then after signing it, we were like, this is not a good idea. This is not the house we want. So we canceled.

So you signed the offer saying that you would, and the offer said that you would pay the earnest money within seven days. Yes. Yes.

What does the contract say about getting out of this? Because generally there's, you know, a few ways you could legally back out of this and get your earnest money back or not have to pay. Home inspection contingency, appraisal contingency, financing contingency. Is any of that in the contract? It is, but none of that applies to this situation. And, I mean, it was just us backing out of it. Our realtor isn't being very helpful, which we feel like is because obviously she's not...

I think you are on the hook for it, though, Taylor. If you make an offer, because literally my husband and I were just in this situation a couple weeks back. If you make an offer and you work with the agent to say, here's what we're offering, da-da-da-da-da, they send you the paperwork, you sign it, you're saying, when you sign it, you're saying, I'm going to pay the earnest money within...

this many days this is what's going to happen next and this was what's going to happen next you're kind of you signing on the dotted line is committing to the offer in many ways in all the ways so there's part of me that thinks that you're on the hook for this and you just the fact that you didn't pay the earnest money doesn't mean that it wasn't due it just meant that you didn't say what you said you were going to do if the contract said that you would provide the money within seven to ten or five to ten business days or whatever it was five to seven days

What would you do about the $5,000 though? Because it was originally three and now they want more money. Why are they wanting more? Because they are mad about lost time and they refuse to sign the contract, the new one where we said we're canceling and not paying. So they're losing time because they won't sign anything.

That's up in the air. I feel like that's debatable. I mean, they could probably fight it in court and fight for that lost time and put a dollar value on that. I would see if you can just settle with them for the three and go, listen, here's all we can do. I got a baby on the way. My husband's about to be deployed. We're in a crazy situation. I hate that this happened. Didn't want it to go down like this. Here's your three. I don't know if there's a legal way you can get out of this without you fighting it. And I don't think you guys have the money or time to go to court and fight this.

That's the thing. Listen, I hate that this happened, Taylor, but I tell people all the time, like, that earnest money, if you buy the house, it goes towards the down payment. But if you don't, that's money up front that you're spending that obviously you have the propensity to lose and that... I call it skin in the game money. Yeah. This shows I'm really serious about...

you know buying this house and so the other thing you could do which has its own risks of going through with the home inspection and the appraisal and financing and then having one of those things cause an issue to where you back out but it sounds like these people are angry enough that they're not going to be happy if you back out later on and waste even more of their time yeah okay it

It's tough. So that's a road you could go down, but I'm telling you, you could still end up paying and it still could be messy. If it were me, I'd take the contract and I would ask around and I'd ask a couple of different real estate agents. I'd say like, am I on the hook for this? Am I on the hook for this? And see if you can get some free counsel from other agents. If you say that yours is not helping out much, which never use them again, by the way. Yeah. And maybe contact a real estate attorney and just do a free consult and say, here's my situation. Do you think I have any...

a case here to even fight this or what should I do? Mm-hmm.

Yeah, we're just concerned. We don't want this to go on any longer because obviously they're mad about last time and we tried to cancel as soon as possible, but it went on way longer because they're fighting it. We're a little confused why they wouldn't just want to put their house back on the market, but they can't do that until this is done. So they're losing time on their own. So this is causing them to hang in the balance here until they get the situation sorted with you guys. Yeah. Yeah. I mean, you guys, you have the $3,000.

How much do you guys have in cash? About 15. Okay. Yeah. I'm going to label this under kind of a stupid tax and we learn from the mistake and we move on and go, that hurt. Let's not make decisions out of desperation again because this is the kind of stuff that will happen. Okay. So are you guys going to rent for the foreseeable future while your husband's deployed?

And why can't you stay where you're at right now?

I can. It's just, it's, we're about 25 minutes out from town. So there's not a lot here for me and I feel kind of alone. You don't have any family nearby? No. And the daycares are far, like, like,

groceries, you know, everything is far away. So I just wanted like convenience for myself because it's going to be hard enough. But yeah, we're not really willing to pay for it anymore. Yeah. Well, if you did move closer to town, you might need to, you know, compromise and settle and go, all right, this rental is good enough for this season that I'm in so that I can be closer to civilization as I raise this baby while my husband is deployed. I mean, that's a lot.

Yeah. So I feel for you. But, you know, adding to the chaos of becoming a homeowner, I don't know that it's worth it right now. Yeah. Yeah.

Especially when you guys have 15 grand to your name. I had to take care of it by myself. I just wanted something closer to town so that at least it was easier for me for running errands. Yeah. Now that's reasonable. And I hope you guys get this real estate situation sorted out. But, you know, I would have some other people look at the contract, get some other opinions. But I think at the end of the day, you just settle with them and go, we can do three. We can't do the full five. And if they want to waste their time coming at you for that, I don't know if they have a case, first of all, but...

They might have a case, but the question, like you said, is it worth the brain calories and time calories to go after someone in, you know, Judge George court? It's for sure. You'll be lucky to even make it to a Judge George court. You know. But it'd be some small claim situation right there. But I'm so sorry, Taylor. Sheesh, I hate that this is happening to you.

Yeah, it was a dumb mistake we made, but we kind of panicked. Well, we always say on this show, no one makes good decisions when they're panicked or drunk. That's right. But you can always go back and try to settle it and see if they'll take something. I mean, I would personally have some pity on a...

a soon to be mom, husband's getting deployed, serving our country. I'm going to go like, I don't know, George, because when you're on the other side of it and you've got timelines, like, you know, she was super sweet, but I'm thinking about when Sam and I were moving here, you have a timeline. It's all business. And I'm like, don't mess around and make an offer because it's,

Time is money when it comes to this stuff. And I was trying to understand what she was saying, but I think that I think the seller, I think they have to have this deal closed and wrapped tight before they can

legally accept another offer? Is that what was going on there? Is that why they were saying that they were losing time? I think right now it's contingent and they can't make it live and active again until this situation is sorted because this offer is still halfway out there. I see. That's the issue. Just remember when buying a house, I always say, George, you need that stacked deck and down payment. We know five to 20% earnest money that can be up to one to 3% of the purchase price. It's a lot of money. Also the

Keep in mind closing costs if you're going to be the buyer, 2% to 5%. And then the K. Stuff adds up. Keep in mind. And then you got moving costs. Appraisals. The repairs. Inspections. Moving costs, like you said. Home ownership is no joke. So for those of you excited about it, make sure you got your ducks in a row before you jump into this. This is The Ramsey Show.

I've been doing this show for over 30 years, and some of the saddest calls I have taken are from situations that are completely preventable. Yeah, and what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible, are people that call in and their spouse has passed away suddenly, and they don't have life insurance. When you have to think through how am I going to pay my bills...

I'm going to eat next week. Yeah, in the middle of all that grief. Like it's just, it is, it's terrible. So life insurance is the one thing, especially as a mom with three little kids that I'm like so big on for people to get because it's inexpensive. Zander is the place that Winston and I actually get all of our life insurance. And it doesn't cost much because Zander shops among a gazillion different companies. It doesn't cost much. You just have to admit that someday you're not going to be here.

You've got to say it out loud, and you've got to say, I'm going to say I love you to my family by taking care of them and taking the time to put this stuff in place. The cost of stinking pizza. To get a free quote, call 800-356-4282. That's 800-356-4282, or go to zander.com. This is The Ramsey Show. I'm George Campbell, joined by Jade Warshaw.

We've got a fun event coming up this May 10th and 11th. It's called Total Money Makeover Weekend, a brand new event where in one weekend you'll get a crash course on everything we teach about money. And no matter where you're at in your financial journey, the baby steps, this will light a fire under you like nothing else. It's going to be interactive, lots of Q&As. We are coming up with some really fun, different talks, Jade, than we've ever done before. Trying to spice it up. Is that what I heard you working on this morning? Yes.

Okay. For those of you listening, I heard some crazy, hilarious things, George.

We're just workshopping. Okay. We're trying out some stuff. These people are in for a treat. I like it. It's going to be a blast. Every single Ramsey personality will be on the stage. It's a two-day event, Friday and Saturday, May 10th and 11th. We've got Smart Money Happy Hour on Friday night live. Nice. We love a live audience for that with Rachel and I. So don't wait to get your tickets to Platinum. Plus, tickets are almost sold out. A handful left. Early bird pricing ends on Friday.

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RamseySolutions.com slash Vince is the place to go. All right, let's go back to Levi in Springfield. Let's see if we can get him on the air. Levi, are you with us? I am. Thanks for taking my call. You left me on read, bro. I got nervous. How can we help? How are you guys? Doing good. How are you? Oh, not too bad. I have a little bit of an issue, though. Okay. So my wife and I, we've been working through Baby Step No. 2, and we've been making pretty good progress.

And I just recently discovered that my identity had been stolen. Oh, and I guess I'm just looking for some guidance on how to navigate that. How bad is it? Um, I'm not really sure. Hopefully not too bad yet. Um,

I checked my credit report and there was nothing on there that shouldn't be. I've been keeping an eye on my bank accounts and everything seems okay there. What happened was they opened up a credit card in my name and then just a couple days ago I got three phone bills sent to me for numbers that I do not own. So...

Man, that stinks. And I've been in your exact shoes, Levi. This is back in 2013. I had identity theft. They opened up two cell phone accounts, AT&T, Verizon, racked up $1,700 on both, never paid a dime, using my social security number and an old address. Oh, shoot. Is it similar to you? Yeah, my social security number, but they're using my current address. That's why I'm getting all the notices. Man. So have you frozen your credit yet? No.

I just did that today. Okay, that's good, that's good. And did you have a fraud alert placed on all of your credit accounts?

No, because I haven't been able to speak with AT&T yet. It's impossible to speak with a human being with them, I guess. Anyway, I filed a police report yesterday, and I want to keep trying to contact AT&T through to them. But the credit card company put a fraud alert on my credit report. Okay, and they reversed the charges. You want anything on any of that?

Nope, there were no charges on the card. I caught it in time. Okay, that's good. Have you filed a report with the Federal Trade Commission yet on their website, FTC? No, I have not. Okay, I would do that as well. And you already have the police report, so you're going to need that as you submit it to different creditors and credit bureaus. You might need that. Okay. And outside of that, make sure you're checking all of your accounts regularly. Make sure you have a freeze on all three accounts with all three bureaus.

Okay. And then beyond that, you want to get any account records from all these. If there's a debt collector involved or AT&T, get every record you can get. That's the thing. What if AT&T doesn't cooperate with me on this? What steps do I need to take? Well, I mean, if you have a police report and you have the FTC report, that should be enough to get them to go, oh, this wasn't him. I mean, I don't know how they give you issue or cause you to don't ever pay a dime for any of these accounts.

Gotcha. Even if it goes to collections. Yeah, I wasn't. This is not your deal. Yeah, I wasn't planning on paying anything. And then did you already connect or talk to your bank? No, I haven't spoke to my bank yet. Okay. That'd be my next move when I get off the phone with us. Let them know that this has happened because who knows what else they have, but I would probably get a new account set up with a new card attached. Debit card, do everything. Yeah.

Okay. And also contact your utility providers and let them know. Do I need to contact the Office of Social Security? If you suspect that they have either your Social Security card, if you suspect that they have your driver's license, I'd contact Social Security. I'd contact the DMV. And maybe even, you know, if you think they might have your passport. Like, only you can suspect what you think is going on here and how you think they got your information. And so...

Yeah, I would contact them on their website and see if you can get a replacement. Okay. Yeah, I know they don't have my physical cards, but I don't think you can open up a phone...

line without a social security number so that's just why i assume they had it they have an office of the inspector general and i'll send you that we'll send you the blog post that outlines all the steps you need to take i would also update your main passwords and usernames okay and uh for the future id theft protection is super important to have we have it on every single team member here at ramsey and ours is through our friends at zander so it's a it's like an insurance it's not technically an insurance product but that will help with all the

restoration services that you need to get your life back. And it's super cheap. Like before I came here, I think I paid like 12 bucks a month. Now it's, I think it's like seven bucks a month. Yeah. For me and my husband. Yeah. Levi will make sure to send you that, the article that outlines all these steps, but man, the truth is it's just going to take some time and effort to get all this sorted out, but you're going to be okay. Yeah. I think that don't lose sleep over it.

Having that ID theft protection is going to be really important going forward because a lot of times once your ID is stolen once, it's kind of like that information is out there and it's likely that it can happen again. So having somebody who's monitoring it all the time is a big, big deal. Yeah. And we'll hook you up with our friends at Zander as well and see what they can do about it after the fact to help you clean this up, man. So sorry you're going through this.

Ooh, be sure. Hey, one other thing, be sure to monitor your tax return to make sure that they're not trying to get their, their paws at that because that is a pain in the, you know what to go through. Yeah. Thanks for the call, Levi. Appreciate it, man.

And for everyone listening out there, if you want to check out that blog article that I wrote, it's called What to Do If Your Identity is Stolen. It's on the Ramsey Solutions website, and we will put a link in the description and show notes wherever you're listening, so you can just scroll down there and click, and we'll make sure that Levi gets that as well. But be sure to check out Zander's ID Theft Protection. It really is a great way to make sure you're covered, your family's covered. Again, it's like I'm seeing here on their website, individual protection.

$675 a month, $75 a year for a whole family. It's $145 a year, $1290 a month. And it has saved my bacon one or two times when that does happen. It's one of those things like home insurance. You hope you don't have to use it.

But goodness, when it's there and this lady at Zander's handling everything for me and I just submit all the paperwork, it just gave me a little bit of peace and confidence as I went along my business. I've never had my identity stolen. I've had a debit card. You know, like somebody gets your debit card number and tries to buy Xboxes, which is what happened to Sam and I one Christmas Eve. But other than that, like never the extreme of like, they've got my social and they've got my... Well, it's almost like a home invasion. It's just such a...

Invasion of your own privacy. Yeah. I mean, they're stealing from you at the most personal level. Yeah. And the truth is this happens so often that like rarely are you going to get that. I wanted these people to like go to jail. And they're like, it doesn't work like that. You want to see him taken away in handcuffs. I went full detective. I was like, I'm going to find out who these people are. My wife was like, please don't. Don't do that. You don't know what you're doing. You're not John Wick. All right. This is not going to be some Liam Neeson level, you know, revenge story. I'm learning that.

learning that about you George that you really do like to get to the bottom of things I'm thinking about another story you told me I'm a nice guy until I'm not a nice guy

But truly, it is not a fun thing to deal with. And so you want to make sure, you know, with one of these ID theft protection services, what they're offering is, number one, real-time identity monitoring, instant alerts, the recovery work for every type of identity theft, and what's really cool, recovery of up to a million dollars in stolen funds. Wow. That's partially what's covered with identity theft protection. So be sure to check it out at RamseySolutions.com. You can find our identity theft protection help from our friends at Zander.

That puts this hour of The Ramsey Show in the books. Thank you to my co-host, Jade Warshaw, all the folks in the booth. We got Skyler, Ben, Austin, Zach, Nathan, Bobby, all hanging out back there, keeping the show afloat. And you, America, thank you so much for listening. We appreciate it. We'll be back before you know it.

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 George Campbell, joined by Jade Warshaw. It's your show, America, so call us up at 888-825-5225. We'll talk about your life and your money, and we'll tell you the truth, even if it hurts your feelings a little bit, because we care that deeply. Brandon kicks us off in Fort Wayne, Indiana. Brandon, welcome to the show. Hey.

Hey, George, a big fan of yours. Thank you. I appreciate you guys having me on the show. Absolutely. Came across your book, and it's changed the way my wife and I view money. That's so cool to hear. That's the basis of our question. Ultimately, our question is whether or not we should go down to one car to pay off our debt. Wow.

We have three cars. One of them is a sports car, just a fun toy that's automatically sold. But my wife and I are trying to decide, should we go down to one car to be out of debt as soon as the car sells? Or would that not be smart to do that? Do you have kids? Yeah, we have a one-year-old. Okay. And I'm a full-time student. Okay.

Okay. And my wife works full time. Okay. So, and I'm guessing proximity, my mind goes to proximity because when, when my husband and I were getting out of debt, we went down to a one car family and we did it because my sister-in-law, my sister went down to a one car family and they did it with two kids. So we figured, okay, we can do this. But I do think proximity matters. Like, uh,

her being able to drop you off at school, you know, on her way to work, those sorts of things. Do you see a world where that could take place? Yeah. It'd definitely be kind of hard, but she makes her own schedule. And my parents have three cars and there's a chance that we might be able to borrow one of their cars for a month. Ooh. What would happen in that month? So...

We literally just started the process. So all we have is her student loans. But we have about $10,000 set aside that we haven't put towards it yet. So you have $10,000 cash. How much in total debt?

uh 28 student loans and between the two cars um based off a kelly blue book we could get 25 so 2500 thousand 25 000 for the sports car plus the other car that you're planning on selling great correct so between that plus your cash you have 35k you knock out the student loans you have seven left over right we go purchase a five thousand dollar car yeah i love this plan

I think it's solid. Okay. Yeah, it's just a little nerve-wracking, you know, having a kid going down to one car. But even if, like my question was, even if, like, there's a chance we could borrow the car from my parents, but even if not, you think it's still smart? I think it's really... For you to drive the $5,000 car for a while? Uh...

Sorry, you're breaking up on us, Brandon. I'm sorry. Just to go down to one car until we can... I mean, you could survive that for a few weeks, depending on how strong your marriage is. I think I could probably make it one week before it starts to tear us apart. Really?

And my wife works here, by the way. Let me tell you, I'm just being honest. I think that people don't consider it. And I think that they would be shocked. My husband and I were a one car family for 10 years. We started years. Yes. We sold our car in 20, 2009, Sam, when we were getting out of debt and we stuck to one car and then we had two kids and we still had one car. And when we moved here, when I joined Ramsey, we bought our second car. Wow. Yeah.

So it can be done. It just requires coordination. And it's one of those things that when you first start out, it's uncomfortable because you're not used to it. But once you figure out your rhythms and your routines, it's like, yeah. Matter of fact, I got to the point where I was like, we don't need a second car. And here's an idea. I mean, you can role play this for the next week. You guys only use one car. See how it goes. Yeah.

As you get the other two listed and just live like that and see how it goes and if it works out, keep doing it. But either way, I'd get that $5,000 card and just have it for now until you upgrade a little bit later with cash. You're going to see savings on insurance too, which is great. A lot of savings. But all the cars are paid off?

Yeah, all the cards are paid off. The only debt we have is the student loans. What's the payments on the student loans? $260,000. It's between like five different student loans. It comes out to like $267,000, I think, a month. Oh, nice. So that's great. That's over $3,000 that you can put towards your savings goals as you free up the payment. So I think this is a no-brainer.

Okay. I appreciate it. Yeah, you got it, man. That's a fun call. I did not know Jade was a one-car family. One-car family for 10 years. Wow. Yeah. That's crazy. I mean, even Whitney working at Ramsey, I rarely get to commute with her. Our schedules are just all over the place. And now with a baby, it's like, well, you got to go home. I got to record. But you guys work in the same place, George. And I could get rides from people, but I feel too guilty being like, hey, man, can I get a ride again? You drive me home after work.

Listen, I would take Uber. Like every once in a while on the weekend, we might have an issue and it's like, oh, I'll just get an Uber. And I remember my friend Fred would be like, why are you Ubering? Just call, like, we'll drive you. Like, we'll pick you up. I'm like, no, it's, I don't want to burden anybody else with it. See, that's my thing. We never viewed it as a burden. It was just like, all right, yeah, I'll just grab an Uber. That's why we need John Deloney to be like, you're not a burden to your friends. Text him at 3 a.m. Ask for the ride to the airport. I'm like, bro.

No, you hit a certain point. I feel like once you hit like 37, you can't ask people to help you move anymore. Thank you. And you cannot like hit your ride. Unless you're baby step two, then I might help you move if you're in baby step two. But once you're out of that, just hire a mover. Yeah, there's levels to that because I'm not moving stairs like an apartment. No, I'll help you put some things in a box.

Well, George, when a friend breaks something, I'm like, oh, gosh. But if the mover does it, I'm getting that money back. Yeah. You can like, yeah, get funky. You know, when my buddy Joe helps me move and he breaks something, I'm like, well, that's free. He was helping for free. Right. Charge the guy. Yeah. That part's stressful.

Yeah, you have to pay them with something. Even if you're an adult, you have to have drinks or pizza or like there's got to be some form of payment. You can't just say, come help me move. Absolutely. Well, I was just reading a Consumer Reports article, which I'm a paying member now, Jade. That's how you know I'm getting old. George, you're different. I'm getting old. I'm next step. AARP is up next.

But they have a great article because we've been telling people the $5,000 car exists. Yeah, it does. And Consumer Reports had an article from February 14th, best used cars and SUVs for less than $5,000. There you go. And you wouldn't be shocked to hear the brands on here. Can you guess them? Toyota. Yep. Nissan. Nope. Ford. Nope. I was hoping you'd hit the major two. Rhymes with Rhonda. Hyundai. Honda. Honda. There we go.

Toyota and Honda took the top, definitely. And Lexus was on there, too. And guess what? These cars are 20-year-old cars. I believe that. You know, it's an 06 Accord. It's the 04 Lexus ES. But you see these on the road. 04 Avalon. 05 Camry. These are invincible cars. Yeah, they're still on the road. These cars will outlive me. 100%. RAV4, a 2001 Tacoma. You see a guy in a 2001 Toyota Tacoma? Yeah.

He's going places. He's got work to do. You see a guy in the brand new F-250, that thing doesn't have a scratch on it, Jade. That guy's hauling mulch once a year from Lowe's. That's about the only thing he's doing with that. You never see old Volkswagens. You never see old Volvos. You ever see a Saturn on the road? Never! My guy is still holding on. If you have a Saturn...

I'm sorry. It's usually like in a Taco Bell drive-thru at 3 a.m. Like this man has seen some things if he's driving a Saturn around at 3 a.m. Oh, man. And he's in for some things if he's at Taco Bell. Listen, these cars exist. Are they 20 years old? Yes. Do they have 148,000 miles? Yes. Will they still go another 100,000? Yes. Dang right. So don't tell me that they don't exist. Just tell me you don't want to drive it. This is The Ramsey Show.

So here's a quick math refresher. There are only 24 hours in a day, so your business needs to streamline tasks that are time suckers and focus on activities that make money. So to reduce headaches as they scale, smart businesses use NetSuite by Oracle.

the number one cloud financial system. NetSuite helps you improve efficiency by bringing all your major business processes into one platform. So join the more than 37,000 smart businesses like Ramsey Solutions that have done the math and graduated to NetSuite. And right now, you can download NetSuite's KPI checklist absolutely free at netsuite.com slash Ramsey. That's netsuite.com slash Ramsey.

Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Friendly reminder, you can always visit us here at The Ramsey Solutions worldwide headquarters, just south of Nashville, Tennessee. If you're ever vacationing or you just want a fun trip, come through. We're just about a half hour south of downtown Nashville. We do the show on the glass live. You can hang out for all three hours. There's a museum timeline wall, the Baker Street Cafe with free baked goods and coffee. We have a lot of great food.

bookstore, a lot of fun. So make a visit. We just met a family with custom cricket shirts they made. And the girl's shirt said, we're on our way to Disney. Mom made us stop here. That's so funny. Which is for the funniest shirt of the day. Well, it's worth noting because sometimes, especially if you watch the show on YouTube, it looks like we're like

sitting in our chairs really fast and putting in our in-ears. It's because we go out in the lobby and meet everybody and shake hands. And all the personalities do that, Dave included. So it's a fun time. We'll sign things, take pictures, just hang out for a moment. And it's always a good time. So make a trip to Nashville and stop by and see us. Why don't you?

It's time for our question of the day. Jade, what do we have? All right. Today's question comes from Brandon in Georgia. He says, I will graduate college debt-free this semester. Because of an internship, I will likely receive a full-time job offer of $70,000 a year at a reputable company with a lot of room to move up. That's good. How does someone who leaves college debt-free with a decent income manage their money when it's their first time on salary?

I don't have to pay rent. I don't want to have to pay. I don't want to. Thank you. I don't want to have to pay rent or get a car with debt while also having to save money for retirement at the same time. My biggest fear is wasting money renting before I feel I'm financially capable to take on buying or mortgaging a home. What's your advice? I love this. I think this guy is just now getting started. He's got a nice career set up for himself. The first step is,

Is to get on a budget like that's numero uno. If you don't have an every dollar budget, you need to down one today. The free version is amazing, but the premium version is even better. So I'd say that that'd be his first thing. He says, I don't want to have to pay rent or get a car with debt. So my next piece of advice is don't.

Over here, we just say that we live a debt-free lifestyle and we draw a line in the sand and we don't borrow money. So for you, the next thing is to probably use that great income to start saving up for a car. And to answer your question about renting, I would rent for the time being. I'd get a couple of roommates, get a couple of guys and just get used to

living that adult lifestyle right you're getting up you're going to work every morning you're saving up for a car you're on a budget start getting your your your confidence built that you can live on what you make and then at the right time I would look at buying a home I'd make sure that I have the right down payment in an area that's right for you with your job and I would not look at renting as a negative because I feel like here you're kind of feeling that renting is a negative and I it's

It's not, it's just buying you time until you can afford to buy a house the right way. And that's truly what it is, George. - Yeah, I'm just exhausted by this narrative that society and parents are telling young people, which is renting is a sin, it's a waste of money, you better get in a home as soon as possible. And I get the heart behind it, it's well meaning. But then it creates this and it means people would jump out of college at 22 and they're like, "I need to buy a house even though I'm not ready." Now, luckily our friend Brandon has no debt making 70K a year.

That blows my mind. I wasn't making half of that when I got my first job out of college. I know. And I moved to Nashville and what do you do? You get some roommates, you get some side hustles. And so I think that's a smart move. Be ready for the first month deposit last month, rent, whatever that is, uh,

be ready for that financially. So I would just save up a bunch of cash and maybe work part time so that when you graduate, even before that first paycheck hits, you're ready to make the move and go rent somewhere with some roommates. - And renting, George, to your point, it does get a bad stigma and it's not a bad thing. My husband and I rented for over 10 years before we bought a house and our situation was different. We were trying to pay off almost half a million dollars of debt,

But in many ways, I can liken it to what's going on right now because the housing market is so expensive that people feel like, quote, I'm never going to be able to buy a house. And I'm like,

you will be able to, instead of it taking three years or four years, it could take six or seven or seven or eight or eight or nine or 10. Like there is part of this that I just want people to feel encouraged that just because a journey takes longer doesn't mean you won't make it to the finish line and doesn't mean it's not worth it to rent until you get there. Amen. Amen.

And last thing I'll say, Brandon, if you're listening, and I hope you are, is when you go from making nothing to making $70,000, the life hack is to keep living like you make nothing.

keep living on less than you make. If you can learn to live off of 20 grand when you make 70, you're going to be unbelievably wealthy. But for most people, they just fill in the gap. They make 70, we're just gonna spend to 70. Or they spend 80. That's the American story right there. And so if you can avoid that, avoid lifestyle creep, avoid the comparison culture and lifestyle, you're gonna be just fine, my friend. So great question. Love that. For any young person that's listening, someone about to graduate,

send them this call. It could change everything. All right, let's get to the phone lines. Philadelphia is up next. Angela joins us there. Welcome, Angela.

Hi, how are you? Doing well. Thank you for having me on the show. Absolutely. What's going on today? My question is around student loans and emergency funds. So I'm older. I have a pretty decent salary. I contribute to my 401ks. I have brokerage accounts. And my issue is my mentality around...

I'm dumping all of my emergency fund into my student loan. So I have exactly the amount to pay off my student loan and my emergency fund, but I am terrified to start over again. How old are you? 41. And how much do you have in student loans? $50,000. $50,000? Let me tell you what's terrifying. Having $50,000 in student loans decades after you graduated? When did you graduate?

So this is from grad school, and so that would be like 10 years ago. Ooh, girl. Listen, I have two ways that I like explaining this. One is just math. It's really just the math for me because if you think that you have to... On a balance sheet. Yeah, if you say that you have $50,000 and that's what's keeping you warm at night, the math would differ, and it would disagree with you because technically...

that you owe that whether you admit it or not you owe it to I know you know so there's that piece of it I I also yeah but I'm worried about um like if something were to happen with my house where I literally need like five thousand dollars for something or so how much do you make every month um about seven I probably bring home about seven and is it just you yes it's just me okay and how much was your student loan payment

So last year, I really, after like just really getting into my finances and just making sure that I'm like doing what I'm supposed to do, I really, I upped the payment. So right now my student loan payment is actually, this isn't something I chose. It's $1,500 a month because I paid for that. So I really am trying to knock it out, but I'm like, do I just stay

say this three to five year course that they have me on. Angela, the whole point that I'm trying to make to you is you make $7,000 a month. It's just you. Your student loan payment alone that you've chosen to pay is $1,500. Which means next month you free up $1,500. How quickly could you save up $5,000 and get that cushion back under you that you want? Yeah, that's fair. Yep, that's fair. You'd save it so quickly. Plus, I'm guessing there's probably, if you wanted to get...

really intense. I know there's more margins somewhere in the $7,000 that you could stack that up even faster. Right now you're living in the way I like to describe this. It's like the student loan house, like on the on the inside, it's like modern and beautiful and the payments not that much. And, you know, you've got 50,000 saved and you just think that there's like this beautiful landscape in front of you. But the minute you open up the door, you're like,

on a cliff and like, be like, it's just your one false move is in your phone off a cliff and the sun is burning you up and it's just like doomsday out there. And as long as you stay in the house, you're fine. But your body knows that you're in danger and that you're on this cliff. And as John Deloney says all the time, your body keeps the score. And so I really do think that there's a toll that we pay mentally and psychologically and physically inside of our bodies for having this debt.

Yeah, and it is definitely more of a mental toll because I've worked so hard. I'm like, oh, I could just pay this off. But also it's like, but then you will have nothing. No, I think that's a lie that your brain is telling yourself. You will have something. You'll have your income back and you'll have savings, the same savings that you had in a matter of a few short months if you get after it. You'll be there. You stack up the money you're putting toward the payment in an emergency fund with your amazing income. And how much do you have in the brokerage account?

Well, I have a 401k, but I think my brokerage has about $80,000 right now. Oh, my goodness. You're good. You're fine. This is paranoia if you don't pay this off today. We're so proud of you. This is The Ramsey Show.

So here's a quick math refresher. There are only 24 hours in a day, so your business needs to streamline tasks that are time suckers and focus on activities that make money. So to reduce headaches as they scale, smart businesses use NetSuite by Oracle.

the number one cloud financial system. NetSuite helps you improve efficiency by bringing all your major business processes into one platform. So join the more than 37,000 smart businesses like Ramsey Solutions that have done the math and graduated to NetSuite. And right now, you can download NetSuite's KPI checklist absolutely free at netsuite.com slash Ramsey. That's netsuite.com slash Ramsey.

This is The Ramsey Show. If you like what you hear, please consider subscribing, leaving a review, or hitting the follow button, sharing it with a friend, maybe a text, a link, whatever it is, we appreciate it. You guys are the best marketing plan we have out there, and we so appreciate the millions of you that listen faithfully every week.

and you tell your friends about it and they add it to their repertoire of podcasts or shows or YouTube. And all of a sudden, you know, life change starts happening and they start getting excited about what could be with their money situation. And it all could start with you. So thank you guys so much for sharing the show. Dakota is up next in Phoenix, Arizona. Dakota, what is happening?

Hey guys, thank you for having me on. So I have about $60,000 worth of debt and I was hoping to get some guidance from you guys on where I should go next. Okay, what kind of debt is this? So I have two car loans, a car for myself and my wife that total just about $30,000 and I have a

a business that my business partner walked out on, so I'm owing him the rest of that money, uh, debt as well. So $30,000 to him. Like a buyout from the business? Exactly. Yes. That's 30 K. What's the arrangement for that 30 K? Um, so I, I work in an industry that the monthly income varies just a little bit. So I have the leeway to pay me their 500 or $2,000 a month. Obviously I'm trying to get it done as quick as possible, but it's hard to with the varying income.

Interesting. So what do you bring in every month? Not just you, but your wife as well. So we bring in anywhere from $6,000 to $8,000 a month. Okay. And these cars, so you said together they're worth $30,000. Can you split them out for me so I can...

Yes, I have a Toyota Tacoma 2019 that's $20,000. And then she just got a new, not new, but it's a used Hyundai Elantra. It's a 2019 as well. I think there's $14,000 on that. Okay. So $34,000 between the two? If you were to sell the $20,000 car, would it bring anything? No.

Or are you upside down? I have like $10,000 in equity in it right now. Okay. I might consider getting out of one of these car notes, especially since you could get something for one of them. Yeah, and my only hesitation about doing that is I live in Arizona, but I work in California, and I just want to make sure that I have reliable transportation to get there. Well, you said if you sold it, it'd bring $10,000? Yes. So that's what you would net? So it's worth $30,000, you owe $20,000?

Yeah, that's private. I'd probably get a little bit less selling it to a dealership. So there's some money there to get a reliable vehicle. And if, I mean, think about it, your wife's vehicle is only $4,000 more. So if you were to, if you were really up against it, you guys could switch for a little while until you get right side up on this debt. Yeah, luckily she works from home, but I feel bad leaving her out here without a car. My parents aren't exactly... No, you'd be getting a $10,000 car. Oh, oh, I got you. Yeah. Okay, that makes a lot more sense. Yeah. What kind of business are you in?

I own a tattoo shop. Okay. And you travel for that? Yeah, yeah. So the shop, luckily, it pays for itself. The shop, I mean, so the shop itself has a savings as well, but I just don't want to touch that just in case something does happen. I know I have to replace the floor soon and all that. I've never really had this much debt in my life, so I'm a little bit anxious, to say the least. And you have no savings for yourself? No.

We have a personal savings of somewhere around $3,000 or $4,000. Okay. But I've literally emptied my bank account. I mean, I have some other investments, like somewhere around $8,000 with a precious metal that I have vaulted with the company, but that's about it. Well, I'm getting rid of that. Yeah, I'd probably dump the precious metal and take $3,000 from your pile in savings and go get yourself a reliable car with cash after you sell yours. And what's your payment on that?

My monthly payment on my truck is $600 a month, probably $800 total with insurance. So you'll free up that money as soon as you sell this thing. Yeah. Which is going to add a whole bunch to your income every month, which will help you get rid of the business debt and get rid of her car loan, and so you can see how this thing snowballs. Yeah. Yeah, I'm just so anxious not to have, like, that security net, you know, because that's all the cash I have. I don't want to touch the business. Security net? You've got $64,000 in debt. That makes me anxious.

Yeah, that too. Not a piddly savings account. Yeah, yeah, true. So I'm getting rid of the precious metals. I'm cashing out on that. You'll be lucky to get, I mean, precious metals aren't a great quote investment. So you'll be lucky to get out of that what you put into it. What'd you say it was? 8,000? Yeah. Listen, you take that money, you take 3,000 and you're, I mean, you're almost out of this car note with your wife. You sell your car, you take that 10,000, buy yourself something in cash. Yeah.

This is happening really quickly with the cars. And then you've got, you're on the hook for $30,000. And then with that, you freed up $600 from your car note. How much is her car note? I think it's like $270 a month. Okay. So you said with insurance, $670. So you've got an extra $1,000 that you're going to bring to the table relatively soon to pay off this $30,000. Okay.

That's not bad. So I would set an aggressive goal that scares you just a little bit where you're like, all right, by this date, I will be completely debt free if I just commit to this plan. Okay. What do you think a reasonable like four or five months like that intense? Once you have a 30K left for the business debt, then go, all right, I can put, you know, 4K a month towards this and be done in seven and a half months. And so it depends on when you make your budget using every dollar that will show you exactly how much margin you should have if you follow the budget.

Okay, cool. So it's going to be, you know, a few months where you're like, we can't go out to eat. We got to cut some subscriptions. We got to sell things laying around that have been collecting dust. Some old tattoo shop equipment we no longer use. And let the fact that you only have $1,000 saved be the thing that just lights the fire under your butt to keep going intensely at this, right? Like you said, it makes you feel like you're out there to only have $1,000 saved. And it should. It should make you feel like, holy moly, I got to get my life together. Yeah.

Yeah, no doubt. And you're a tattoo artist, I assume? Yes, that's correct. So can you make any extra side money?

Oh, no. I mean, I'm sure once I get the business, you know, or I get rid of the car payment, one or the other, I'll be able to throw some extra income from the business towards that loan as well. But could you open, let's say, Sunday afternoons? I'm going to do some extra hours. Oh, yeah, yeah. Right now I'm working five days a week, but I try to come home as often as I can and see my wife. I'll look at this year maybe five days every two weeks because of the split between the business partner and all that. You know, I was supposed to be two weeks on, two weeks off.

Yeah, I'd figure out a way to create a more stable life where you're not having to travel as much. Yeah, yeah. That should be part of this getting financial stability is how do I just change my lifestyle? Yeah, what does it look like to do tattoos in your area? I mean, I'm so sorry. Go ahead. That's okay.

I mean, we stay pretty busy as a shop. I make $150 an hour and I typically do two tats each day. But obviously with economic slowing, things have kind of taken a little step back, unfortunately. Nobody has stimulus checks anymore, so it's not as busy as it was. Yeah, I see what you're saying. So for me, that looks like understanding, okay, how long am I going to let myself be in a situation where I'm not

making enough to make a living and what can you do in the meantime to fill in that gap? Are you investing at all right now? My precious metals were the only investment that I really had.

Okay. I would pause all investing until you get this debt cleaned up. Once you have the debt cleaned up, then we have to build a fully funded emergency fund of three to six months of expenses. So if your expenses are $4,000 a month, let's call it six months, you need 24 grand in that account so that you have a force field between you and life. And then you never have to touch debt again.

Yeah, because I know the shop has at least like four or five months where I can operate just on savings alone. And then, yeah, just my personal stuff. I maybe have like one or two months between everything I have. But, yeah, okay. Yeah, the similarities between your personal life and business are strong. Where do you go? All right, if I can run this thing debt-free with a pile of money in the bank to protect me, it's going to be a lot more peaceful. I still have questions because he's got the shop, but he's traveling. Yeah.

Is he just traveling to do individual tattoos for singular clients? Dakota, tell me if I'm wrong, but you're going to the other shop to do tattoos? No, when I'm out in Arizona, it's just spending time with my wife. And then when I go back home, I work. So the shop is not near your wife. So there's the problem. We need to move your family to where your work is. That's what we need to be looking at in the future. How far away are they? It's about four hours. Goodness gracious. Why not just start a tattoo shop? Can you start a shop right by your house?

Oh, man. Dude, time to build some new clientele. This is not a life that's sustainable, man. Thanks for the call. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw.

Reminder that we've got some great shows on the Ramsey Network when you're done with this one. So check them out at our website, RamseySolutions.com. We've got the Rachel Cruz show, Ken Coleman show, Dr. John Deloney show. I've got a Smart Money Happy Hour with Rachel Cruz. That's a fun one. We're recording right after we're done with this show. So that'll be a good time. And then a YouTube channel that I launched.

less than a year ago that's gone gangbuster. So check it all out. We have no shortage of content. You can't point at us and go, those Ramsey people, just not enough. No, it's a wide variety. Hours a day. And Jade will soon one day, hopefully, have a show. One day. I can't wait to see what it is. Listen, I got a gleam in my eye. Just let me be a guest. That's all I ask for. Of course. Hey, I'm going to be on your show coming up. Remember the little people.

That's right. Jade has made an appearance on the George Campbell YouTube channel. People loved it. Right, right. All right, let's go to the phone lines. Frederick joins us in San Diego. What's going on, Frederick?

Hi, guys. Thanks for having me. I purchased a home in 2021 for $500,000 with a 2.5 interest rate, and it's now appreciated to $750,000. I'm thinking about selling it and getting a bigger home because my family's growing. Okay. How many bedrooms is your current home?

It's three bed and two and a half baths. And we have our second child actually due this week, probably today or tomorrow, actually. Whoa, that's exciting. Yeah. Yeah, very exciting. And just thinking about getting into a four bedroom. My wife and I are hybrid workers, so things are getting a little cramped here and our backyard's a little small. So just think about taking that equity, rolling it into a house a little bit more north and getting more house. Okay.

What would that do? Have you ran the numbers out as far as monthly payment and what percentage of your monthly payment it might be? So looking at the houses, if we're to do a $750,000 house, roll the equity in, we still owe right around the same. But the interest rates being like 6.5% to 7.5% now, my monthly payment would go up maybe like $300. Okay. Is that a 30-year or a 15-year?

That's a 30. I know you guys love 15. Aha! Got him. Well, what would it look like, since you guys are making this move anyways, to move to that 15 year? What percentage of your income would that be, of your take-home pay? Oh, man, I haven't done the math, to be honest, on a 15. It'd probably be almost. I'd crunch it. And it's not to be a rule follower. I think the goal should not just be to upgrade a home, but to be completely debt-free and own that home outright.

And the fastest way to do that and the cheaper way to do that is with a 15-year. Not in payment, but as far as what you'll pay in interest, the interest rate will likely be lower. And so I think long-term, you'll be grateful you did that. As long as you guys are in a good financial spot, do you have no debt with an emergency fund? We have an emergency fund, but we do have two cars. Oh. Uh-oh, this equation is getting worse and worse, Frederick. Are you regretting the call? No.

No, I really do think that, you know, what George and I are saying, we just want to set you up for success financially. So I would look into paying off these cars before we make that move and get under an even more stable financial footing. And then I would not upgrade house unless I was also willing to

upgrade to a 15-year fixed rate mortgage, which for you is, let's be honest, that's going to feel very, it's going to feel like whiplash because you're used to having that lower mortgage monthly payment. You're looking at the monthly payment and we're all about, like you said, George, paying this thing off in the long haul. When we look at a car, we never go, well, what's the lowest payment? That's broke people talk. People go, well, what is the total cost of the car and can I afford it? And so obviously we don't yell at you for the 15-year fixed mortgage, but I think

You know, looking at what it would take to get rid of these cars and what's in your emergency fund, that would be a good first step. So how much are the car loans total? So we have two vehicles. I think total we owe right around $65,000. And what's your household income? I make $100,000 and my wife makes right around $90,000. Awesome. So we have a great income. But we got a lot of car, man. That's a lot of payment. Is that $1,000 a month in payments at least? Yeah.

Yeah, we're pretty much right there. The other caveat to this I was thinking is I could rent out my house and then just rent out. No, I don't think so.

That's a lot of risk and stress in my book, taking on two mortgages and hoping that it all works out perfectly. We've taken that call where it doesn't work out perfectly. And so that's why we steer people away from that one. What does it look like for you guys? I'm just looking at what you said. You have a $500,000 house. It's three bedroom, two and a half bath. And you're about to have your second child? Correct. Okay. So one bedroom is for you. Your two kids share a bedroom and you've got a bedroom that's an office. Correct.

Is that the plan right now? But my wife also works from home too. Okay, so then that means somebody's in the living room or someone's in the... Working in the laundry room? Yeah, exactly. I personally, and this is, you know, you're a grown man, you'll go away and do what you feel. But I personally would not...

I've had two 15-year fixed rate mortgages, and I'm astonished how quickly you paid off because of how much of the payment is going towards the principal as opposed to interest every month. And I think that you'll just be blown away if you do that for the first time. Likely six figures less in interest on the 15-year versus the 30-year when you crunch the numbers. And that will make you want to throw up seeing how much money you're throwing away to the lender to bless them.

So that's another reason I'd look at that. But Frederick, you told me a 15 year man, that'd be tight. And I'm going, well, if you freed up the thousand dollars from the car payments, that 15 year payment wouldn't seem so scary, would it?

No, no, definitely probably way more reasonable. And that's where I go like, I think you guys can do the 50. You make 190. I think it's reasonable to do that 50 in a year, but we need to get rid of these cars. And if that means we got to sell them and downgrade for now, I mean, if you have enough equity and you can have some net profit out of this, it might not be a bad idea. How much do you have in the emergency fund? We have right around three months worth. So I think we have close to 20, 20,000 right now. Okay.

What do you think you'd get for these cars? You think you'd get 65 or 70 or 75?

Uh, well, so we would probably be under on the cars because it was, uh, and we purchased them brand new. That was the... They'd appreciate the fastest when they're brand new. Yeah. Okay. Well, I mean, with our parameters, there's nothing wrong with keeping these cars, but I think it's holding you back from that next step, which you told me you urgently want to get into a house and you got the new baby. To me, the baby trumps the fancy car and therefore I might still consider selling those cars and purchasing something with cash.

Even if you can get what you put into it and you use 19 out of your 20 in savings to go get you two cheaper cars, you both work at home, not a ton of travel happening, that might be the move so that you can get into that house faster. I think so. And honestly, like I'm just looking at numbers. If you're looking at a $700,000 house, that's what you're looking at, right? And you're putting the 250 down that you're getting from the sale of the other house. You're rolling it all over, right? Yeah.

Yep. Okay. 15 year fixed rate. I don't know what your mortgage rates, you know, I don't know what the rates are and everything taxes and everything, but I'm looking at Tennessee 6.7, 6.7% mortgage rate, taxes, fees. It puts you at 4,900 a month. And I'm looking at what you said. One 90 K is your gross. Yeah. What's your current mortgage? Uh, current mortgage. I'm paying 3,300 a month. It would go up to about 4,100 on a 30 year.

Right around, I think it was at $3,900 was going to be the... And this puts you at $4,900. It's worth $1,000 more. And that's exactly what your car payments are, if not a little less. And so I think this is very doable, but we just have to trade in paying lenders for these cars into let's build equity and get this house paid off. That's the trade-off, and that's a worthy trade-off. Okay. All right. Thank you, guys. Absolutely. Thanks for the call, man.

I hope you do it because I'm excited. I get excited when I see people trade in the payments they were making. We say, you know, if you want to do interest right, wealthy people earn interest, broke people pay interest. That's a big difference. And so when you get rid of those payments, you free up a thousand dollars. For most people, it's more than that when you add up all of the debt payments in their life. And instead you use that to build wealth and pay off the house and invest.

the numbers start to just boggle your mind. Boggle the mind. Yeah, that's so true. And if you don't believe me, go into RamseySolutions.com, use our free investment calculator, and add up what your debt payments are. And put that as the monthly contribution. And do that from your age up through 62, 65. Oh, mind's blown. 8% to 10% return. Thank me later. You'll be like, oh my gosh, let's pay off the debt today, honey. We could be bajillionaires. Yeah.

It's so worth it. I'm just thinking about owning a house in 15 years as opposed to 30. Absolutely. You know? Don't give yourself wiggle. That's what we hear. Well, you got to give yourself wiggle room. Uh-uh. We got the emergency fund. Get out of here with that wiggle room. Miss me with that. This is The Ramsey Show.

Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Jade Warshaw. This is your show, America. Give us a call at 888-825-5225. You can't text us. You can't tweet us. You can't X us. You can't TikTok us. You got to call the number with your handy dandy phone.

It still makes calls, I found out. It does. Still do it. It's not just an internet. Although I'll be honest, I don't like when I get calls now. Unless it's from my mom or my wife or grandma, I don't pick up. Yeah, don't call me. And definitely don't call me and then text me, call me after you've called me. Wow. I don't like that. I didn't know Jade felt that way, but now we know. 888-825-5225. Malaysia kicks us off in San Antonio. What's going on, Malaysia?

What kind of debt do you have? Can you list it out for us?

Um, so about 40,000 in credit cards, um, 20,000 in student loans, which, um, haven't kicked in yet cause I'm still currently in school. Okay. Um, so I haven't started paying on those yet. When do you graduate? Um, he, uh, next 2025. Okay. Keep going. And then, um, he has a truck. We're both small business owners, so he has a truck that he uses. He does general contracting. That's 35,000. He just got, um,

six months ago. And then we have a Mazda that we're about to finish paying off. That's 2000 left on that. I have a Jeep that's 25,000. And then with his business, um, he kind of fell behind in paying the taxes. So from 2022, he owes the IRS about 5,000. Yeah.

That and then this past year, he is going to have to pay taxes, you know, at the end of the year because he didn't pay throughout the year. And then with what is it? The

We made too much to qualify for MediAid, so we have to pay for health insurance. And then the max out-of-pocket for the delivery is going to end up costing us about $9,000. Okay, that's your max out-of-pocket. Okay, good. So we got well over $100,000. Yeah. Okay. Go ahead, George. I'm getting rid of every car on this list. Okay, that's what I'm looking at. Except for that one that you got $2,000 paid off. I don't believe that he needs a $35,000 truck to do general contract work. No way.

Do you agree or disagree, Malaysia? I do agree. He was actually using the Mazda prior, so that's why we ended up getting the Jeep is because the Mazda is like...

Okay, but he didn't need to spend $35,000. Let's be honest about that. And he didn't need to go $35,000 into debt. Yeah. So some of this we can clean up, some of it we have to crawl out of. What did you spend $40,000 on with the credit cards?

Um, that was accrued over years. Um, just like a bunch of different things. I used to have a RV and I ended up putting in down payment on the credit cards and then I sold the RV, but then I still came off the credit cards. And then when we got engaged, we bought the ring with credit cards. Girl. Just a bunch of stuff. I know. Can we both agree that your life is stressful and that you guys work too hard to live this insanity? Yeah.

Yes, absolutely. What are you earning? What are the two of you earning? Tell me yours and tell me his, please. So my business, I just started like maybe less than a year, like maybe six to eight months ago. So I'm trying to still figure out the numbers. No, no, no, no, no, no. That's an excuse. What have you been earning on average when you take all the average months together and average them out? What would you say that you earn? What are you paying yourself?

Um, maybe like $2,000 a month. Okay. And what about your husband? Um, his varies as well. It's just, it's hard to say because you don't say it. No, it's not. What did he make last month? Um, so it's been slow because it's like winter time still, but we're starting, it's starting to warm up and pick up a little bit more. Um, Neither of you should be running a business if you don't know how much you made last month.

Last month he made about $5,000. Here's what I think is going on. And I'm just going to call a spade a spade. I'm glad you called. We want to help you. But when I ask somebody how much their business made and they go, ah, it's because in that moment you're realizing I'm...

this is part-time or this is a hobby because you're realizing in that moment that although you're passionate about it, it's not making enough to sustain your household. And I think with your business, as much as you love it and as much as it's a passion, right now you're making $24,000 a year before taxes, right?

And so it's not a business yet. It's something that you're good at and it's something you love. But as long as you're making $2,000 a month, you got to have a full-time job on top of that. Right now, this is the side hustle and you've got to add another job. What are you going to school for? So it's like multidisciplinary studies, which is focusing in business, communication, and health. And what's that going to do for you as far as your career? Well, because I have my business and I feel like

it's a good backing towards me being in business myself. Like I've been learning a lot more, um, taking the classes that I have been taking and then the communication behind it because I'm like, you know, the person running everything I'm learning about. But why was now the time to go get, go into student loan debt to get this degree?

I had started that prior. I've been like doing that along the way and I'm just kind of like, I want to finish and get my degree because I went to get my associates and I was like, well, I just want to finish and get my bachelor's. So what's the plan? You told me you graduate in 2025. What's the plan to pay for school from now until then for the next year? Just like

I don't know. Just kind of... Yeah, you do. That's what got us here. Hey, I got to call this out. You got to stop saying you don't know because you do know you just don't want to say. You know that you were planning on taking out student loans the same way that you knew that your pay wasn't enough to qualify as a full-time job in the same way that you know that your husband's pay is not enough to qualify as a full-time job. Don't say you don't know because we can't solve the problem unless we are willing to look at it and go, this is the problem. Say it out loud and then you know.

The problem right now is debt and not only debt, but you guys have not decided to stop going into debt yet because you've still decided I'm going to take on debt to go, you know, to finish my education. So let's just be honest about it. We're not mad at you. We just want to be honest because we can't help you unless we're honest. And the same thing with your income. You guys have got to bring in more money because here's the thing. If you choose to keep borrowing money, that income better be on it.

Because who's going to make the payments? Right? So what we want is to get you to a point where you're not borrowing money, you're paying off your existing debt, and you're using your income that is increasing over time in order to do that. When does the baby do? Okay.

Okay. Right now, we're in stork mode. We've got to save up cash because you guys have none of it, and we need to make sure that we can cash flow all these medical expenses so we don't go further into debt. In the meantime, I'm looking into selling all these cars and getting whatever we can get with cash to get us by until then. I want this baby to grow up in a debt-free home that is not filled with chaos.

And I don't know that I can say that right now because it feels like your life is going to be chaos unless we make some drastic changes. Yeah. And start paying your taxes, quarterly estimated payments to the IRS. There's no need for this to be a surprise every single April that we're going to be $5,000 in debt to the IRS. We don't want that. Thanks for the call, Malaysia. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw.

Let's face it, guys. Taxes are confusing and they're no fun. And if you buy into some of the tax service ads out there, you'll believe you'll never get a grasp on taxes and you shouldn't even try. Or maybe even worse, they suck you into offers that won't help you win with money. But we think you deserve the truth around here. So here's today's tax tip. Are you ready? A tax refund is not a bonus. It's not?

Sorry to burst your tax bubble there, Jade. It's a refund, meaning it was your money all along and you earned that money. You just happened to loan it to Uncle Sam interest free because of your generosity. Wow. So if you get a big tax refund, sure, you can have some fun with it and spend it and go on a vacation and buy stuff you don't need. Or you could, I don't know.

Make sure that you advance your financial journey. There you go. And apply it to your next baby step. That's the smart thing to do. So here's what you need to do. Adjust your paycheck withholdings if you keep getting these big refunds so this doesn't happen again. You want to get as close to zero. So people that are like, I owed $7. I'm like, that's a win. Let's celebrate. Yeah. I got a refund of $4. That's great. That's a win. Let's celebrate.

That means you're doing it right. So if you haven't already filed, make sure you work with a service you can trust. If you've got a complicated tax situation, get a Ramsey Trusted Tax Pro on your side. And if you're comfortable filing on your own with the software out there, check out Ramsey Smart Tax. It's not like the other guys, Jade. It's low upfront pricing, no hidden fees, no agendas. We're not going to bait and switch you at the end because you had an extra form. Right.

It's exactly what we say it's going to do, and it's exactly how much you think you were going to pay. So go to ramseysolutions.com slash tax, and we can help you figure out what situation is best for you. That's ramseysolutions.com slash tax. That's a lot of money on the table for some people. That is. Have you gotten your taxes done yet? No.

Yeah, everything's turned in and just waiting to hear that magic number. Did we make it? Did we do it? That's right. Think about it, though. Think about the tax returns you've gotten in the past and divide it by 12. And essentially, that's the money that you would receive back into your monthly flow, which is... So if you get a six grand refund, that just means you need 500 bucks back in your life every month that the government hung on to. That's a raise. Especially when everyone's feeling like money's tight. But you're cheering about your refund. I don't think people realize that it's...

their money all along. I think they think it's the government giving them some gift. It reminds me of that old commercial. It's my money and I want it now. Yeah, good job, George. Is that J.G. Wentworth? J.G. Wentworth. I love it. I think they're still around. Good for them. That's so good. Holding it down. Good job, George. J.G.? All right, Matthew's up next in Raleigh, North Carolina. Matthew, how can we help you today?

Yeah, I'm Matthew Davis. A pleasure to talk to you all online. So I'm 43 years old. I've been working in law enforcement for the last 20 years. My wife, I'm married and have a wife and two kids. I have a 12-year-old daughter and a 6-year-old daughter. I'm completely debt-free and have been for the last six months, including my house. That's awesome. Wow.

So my question is, with pension plans, I got about eight and a half years to I can fully retire. And my pension will be at least $5,500 a month at my current pace right now. It'll probably be higher than that. Okay. But so...

How does that factor into my retirement, like my 401k? Because I'm currently saving a substantial amount of money because basically after I paid off all my debt, I just kicked it into overdrive with savings and everything. What's your nest egg? So currently I have, my wife has 200 and 401k.

I have $135,000 in my 401k. Okay. Roth IRA, she has $13,500. I have about $8,000 in my Roth. Okay. We have $75,000 in just savings accounts. Okay. So is the question, you said in eight years, you'll be able to retire from law enforcement. So that puts you at 51%?

Yeah, it should be 51, 52. And what's the plan after that when you stop law enforcement? To go get another job. Okay. Something that I don't have to work nights and weekends and that'll be more on my schedule. But, you know, I plan to keep working until I'm at least 60, 60, between 60 and 65. What's your household used to earning?

My wife currently makes about 93. My base is 94. I work a substantial amount of extra duty. Last year we made $247,000. Okay. Awesome. And what's that translate to monthly?

I don't know that number. So it varies because some months I work more off duty than other months. What's a round number? Like 15 grand a month ends up in your bank account or what? Yeah, that sounds about right. Okay. So what's your, we got a good financial snapshot here. So what's your overarching question?

So my overarching question is like, I feel like I have to keep working 80 hours a week in order to keep living the lifestyle that we're living. And it's not just like,

I like to keep saving at the rate, and I don't know if the saving at the same rate that I'm saving at currently is completely necessary with the pension plan that I do have, or if I'm just kind of working extra just to build a nest egg and

I'm losing out on time with my family a little bit. Well, I would crunch the numbers using, you know, we have an investment calculator on our website and go, all right, I got, we have this much in our 401ks and IRAs. If we contribute this much per month, even at a very conservative, you know, average return of let's say 8%, how much would we have by 51 or 65 or whenever you plan to keep working? And that will help you get a full picture of

Pension plus this amount on investments. If we pulled this percentage off each year, we could live off of this. But it sounds like you guys have a pretty hefty lifestyle, even with your hefty income. How far are you from paying your home off? You said it's paid off? Yeah, my house is paid off. So I'm wondering where all this 15 grand is going every month.

Basically into savings. Like I'm putting $23,000 a year into my 401k. My wife's putting $19,000 in her 401k. We're maxing out our Roth. And then $247,000 sounds like a lot, but when you have taxes that come out of that, you know, so there's a lot of taxes that come involved.

That's true. Our monthly spending is about $2,500 a month just in bills. Like as far as cell phones, groceries, power, taxes, insurance, stuff like that. Have you looked? Can you tell me what percentage of your income is going every month towards investing? My guess is about 20-something percent.

It's about 28 to 30%. Okay, here's the thing. We would call that you're on baby step seven. And at baby step seven, you're allowed to jump up your retirement to whatever percentage rate you see fit, whatever feels right. And if you're feeling like, oh my gosh, we're up against it. We're not living life. I've got to work 80 hours a week in order to make this thing happen. That's a sign to pull back.

Like you've done an excellent job. You have no debt. Your home is paid for. You know, you've got great benefits from your work. I think that maybe in your mind, it's like we're playing catch up and we've got to go, go, go, go, go. But you have the ability to pull your foot off the pedal on this a little bit.

Yeah, that's my problem. It's like I don't know when to pull the foot off the pedal because I know it's like they say you need to have like 10 times into your retirement accounts or whatever else. But with the way it factors with my pension, I don't know how that works out. Well, I mean, you have your pension plus you'll have your nest eggs when that time comes, because here's the thing. You're not stopping working at 51. You're just not going to be in law enforcement.

when you're 51. So you're still going to have an income. That's still money that you have the ability to put 15 plus percentage of away in retirement. And, you know, a good rule of thumb, I think that you should work with an investment professional. But a good rule of thumb, George, is if you can live off the interest that your nest egg is generating, plus your pension, plus your Social Security, obviously you could account for

at some point in there, but that's a good place to start. So if you retire and by the time you retire, you've got $700,000, you've been making a 10% rate of return, you have to ask yourself, okay, that's $70,000 a year plus my pension, plus my wife's, if she has anything, and then plus your social security. So that's just a very broad way to look at it, but work with an investment professional and get yourself some peace of mind.

That's the key. Okay, that sounds great. Don't freak out about it, man. You're on the right track. It may be time to dial back a little bit and enjoy the fruits of your labor. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw, and we've got a special guest on the debt-free stage. Jaden joins us from Frederick, Maryland. How are you, Jaden? I'm so good. I'm so excited to be here. Thanks for making the trip. Yeah, it's quite a trip. I'm excited. And you're here because you're debt-free, and we're celebrating. I am.

Yes, it's been a few months. So luckily I've had a little bit of an experience with it, but yeah, it feels so good. It's still fresh. It's still fresh. It is still fresh. We can hear it in your voice. You're still excited. I know, I'm so excited. It's crazy to be here. You know, on the other side of it, you look

For so long, you just wait, you work really hard, and yeah, it's here. And you made it through. It's very difficult to get on the debt-free stage. We get thousands of applications a year, and we only take the best. So you are the best, apparently. I wasn't at first. You made it the second time. The reason why I'm here is pretty intense. Yeah, I made it the second time. Well, how much have you paid off? I paid off just under $132,000. Wow. All student loans. Let's go.

Thank you. That's amazing. How long did that take? Just under 15 months. Whoa. Wow. Okay. What was your range of income during that time? I started at $41,500, which was crazy. And almost all of them were private student loans through Sally Mae. So I looked at the amount that I was going to be paying and I was like, oh my gosh, there's no way I can do it. Called the people who I knew were good with money. They had been through financial peace and yeah, then eventually, sorry.

I'm going through the whole story already, but. Wow. So you started at 41? Did you get your income up from 41? Yes. 112,000. That's an approximate. Yeah. Wow. What'd you study? Um.

I have a bachelor's degree in international relations and Spanish and a minor in history. So liberal arts. I'm working on studying for my LSAT to go to law school for free. So that is cool. Yes. What are you doing now for work? I'm a legal assistant. I do paralegal work. Okay. So you're in the legal field. That's exciting. Good field. And you paid off all of those loans in 15 months. Are the numbers adding up for me?

Okay, so there is one small detail. So I was living with my uncle and my aunt who had previously went through financial peace.

And they actually gifted me $19,500 to pay off my federal loans. That's awesome. Amazing. Yeah, they were more than helpful. I can't even express how thankful I am. That's awesome. And the rest was just hustle and grind? How'd you do it? Yeah, I served. I went to work during the day. I work for an intellectual property firm. So it's a lot of overtime if you get in applications that are urgent. And then so I was able to boost my income that way.

And then I just worked like crazy serving. I worked six days a week at a restaurant and I doubled on weekends. So it was a lot. So you're saying that if you work extra, you can get out of debt? Yeah, that's the key, believe it or not. That and a little self-discipline. Man, tell everybody because a lot of people think it's impossible to pay off student loans. $132,000 at that. I know, I know. I looked at it whenever I first started. So I was watching the shows for a bit once I had talked to my

uncle Todd and my aunt Liz. And, um, yeah, I just, I don't, I couldn't find anyone who was in the same boat as me who had so many private student loans. My monthly minimums were almost $2,000. I know about that. I know it's nice to hear your story. Yeah. It was, um, it was really intense and single paying it off by myself. And, you know, um, I actually graduated a year early. So all my friends were still in school, which

was great. I mean, it's cool to go visit them and stuff, but at the same time I was working all the time. So I'm seeing them live their lives. I'm an adult now. Yes. I know it hit really hard. So how old are you? I'm 23. So 23 years old. You utilize the resources at your disposal, your aunt and uncle. They're like, Hey, we're here for you. You get two jobs, two jobs working overtime. Yeah. Wow. Yeah. To push it to six figures. And that helped you knock this out quickly. You were intense. So what got you on this Ramsey plan?

So I was at school. Again, yeah, I was just, I was so stressed. I was shaking literally because I was so scared of that number. $2,000 a month. How was I going to afford rent and groceries and that? And then I'm saving for a lot, you know, like it's just impossible. So I called them. I knew that they had done a plan. I didn't really know any of the details. I've heard Dave's name before, but that was about it. Yeah. Yeah. And I knew they were good with money. Gave them a call. I said, hey,

This is the situation I'm in. And they were so helpful. I love it. Yeah, day one, we pretty much broke it down. I moved...

from Pittsburgh to Maryland, Frederick. And I just worked. That was pretty much it. They were like, you got this girl. So they just showed you the Ramsey plan and you were like, all right, fine, I'll do this. Yeah, yeah. You're smart. They're good with money. I'll trust them. Yeah. So the question we get, I know the question I get all the time is how do you stay motivated? And so I'm sure so many people want to know how, Jaden, did you stay motivated? Like you said, all your friends are out here living their best life. Like, what did you do? I think...

The main thing was just the two of them. My friends, honestly, were really helpful too. Even though they were living their lives, they said, they were like, girl, you are amazing. You should totally do this. They weren't doing it, which is totally fine. Everyone moves to their own

at their own pace. But yeah, they were so, everyone was so nice and helpful. And honestly, I think a lot of it is just self-discipline. Like you really just have to, I think when you see those numbers and you're terrified and that's your only option, that's exactly what it is. It's your only option. I don't know. I would have literally just, you can't even bankrupt student loans. So there was nothing else I could do.

- And then you see the numbers working for you and you see the progress. - Yes. - You get excited. There's light at the end of the tunnel and it's not an oncoming train. - Right. - That's exciting. - Yes. Initially I thought, whenever I was going to undergrad, I had always thought, I was like, this will be fine. I'm gonna go straight through to law school. I'm gonna come out, attorneys make good money, I'll be fine.

A, not all attorneys make a ton of money. B, life didn't happen as planned per usual. You know, this should have been expected, but it wasn't. So you said you had to make some sacrifices. What were some of the biggest no's you had to make on this journey as a young girl who's like, I want to live my life in YOLO too? Yeah. So my friends went on spring break trips. It sounds so silly saying it out loud now. It's not though, because it's life. Yeah, it really is. They were going on trips to Nashville.

and to the beach and my family was taking trips together and every single even if we went on a family trip and it was covered it was still that's money that's being taken away from paying towards the loans because you're not working during that time so

And I would say other than that, I think it was really challenging just not seeing. I saw my aunt and uncle a lot, which was great, but you're not seeing your family, like my household family a lot. Wow. And you survived to tell the tale. Yeah. I sure did. Here I am. And now you'll be the one who's like, guys, want to go on this trip? And they're like, we're broke. Well, now they'll be coming to you to figure out how to pay off their debt.

Some of them already have been asking me about it. So it's been great. Yeah, it's been amazing. You're going to inspire a lot of people, including millions listening, who are like, I'm a young single girl with student loans. I could be like Jaden. Yeah, you can totally do this. You just have to work really hard. That's awesome. And it will be over. Yeah, it will be over before you know it. Did you have some cheerleaders along this journey? My aunt and my uncle were really my biggest cheerleaders. They sound amazing. They were... Seriously, I could not have been more blessed. But my friends, my family, I...

People say that they have a lot of naysayers, people calling you crazy. I luckily did not run into that at all. That's awesome. Yes. Yeah. So it was amazing. It was great. You're different. There are grown people who make more money than you do, who they keep their loans around forever. They start out low when they work themselves up to $132K. And you just said, not me. No. Not me. No.

Oh, love it. Thank you. Thank you. It's really exciting. 23, making six figures, bright future ahead of you. We're so proud of you. Can you tell us quick, how do you go to law school for free? Because that's your plan. Yeah. You pre-decided this is what's going to happen. Well, yeah. So initially that wasn't the plan. Luckily after going through everything, absolutely. So I'm studying for my LSAT right now and

if you get a high enough score on your LSAT basically it's about that there's other softer factors as well you have to take into account but um yeah just schools just throw the full ride at you because they want the person who's a brilliant prodigy I wouldn't say they throw it at you but yeah yeah you definitely you can get into law school I think you're I feel like you're the type of person who will just do it because you're so focused you're so determined it's what got you out of debt and it's what's going to get you through law school debt free yeah you just have to be I love it very

Very impressive. We've got every dollar premium for you a whole year and we're going to give you another one to gift to someone else to get their journey started because we know getting a plan for every one of those dollars is the key. Spend less, make more, throw it at the debt, do what you got to do and bada bing, bada boom, you'll become debt free like Jaden.

All right, the moment we've been waiting for. It's Jaden from Frederick, Maryland. $132,000 in student loans paid off in 15 months, making $41,000 all the way up to $112,000 with the side hustles and serving six days a week. Doubles on the weekends. Count it down, Jaden. Let's hear a debt-free scream. Three, two, one. I agree! Woo! Yeah!

Love that three vibrato in there. Yeah, she had a little tone going on. Jaden, Jaden, you need to get on the road. I think that she is amazing. I mean, she's one of those people you just have a little pep in your step after hanging out with her. She attracts people who want to grow in life. Yeah.

And she didn't have any naysayers because she doesn't surround herself with naysayers. That's right. She's got the right people around her. You got to do the same thing, America. Get the right inputs. Get the right people around you. Stay focused. Do whatever it takes. Whether you're 21 or 61, this plan works every time you work it. This is The Ramsey Show.

Our scripture of the day comes from Psalms 37, 3 and 4. Trust in the Lord and do good. Dwell in the land and enjoy safe pasture. Take delight in the Lord and he will give you the desires of your heart.

Reba McIntyre said, be different, stand out, and work your butt off. I like that. Little Reba. Little Reba. It worked out for her. Listen, she never ages. How does that happen? I know. We just saw a photo with Zach in the booth had a photo. He ran into Reba somewhere. She looks just like she did 20 years ago. I don't know how that happens. She's a survivor. We know that.

All right. Let's get to the phone lines. Maxwell joins us all the way in Australia. Let's do this thing. What's going on, Maxwell? Good morning, guys. How are you? Hi, Jade. Hi, George. Hey, thank you so much for calling. We needed an accent today, and this one's brilliant. G'day. I've never heard another Aussie online, so I thought let's be the first. Yeah, people, we don't get a ton of calls from Australia. We get a lot of Canadians, but I prefer you.

I want your advice because today is a really good day for crypto and I also have a bit of gold. Okay. I have about $4,500 in crypto today and I have about $4,000 Australian in gold which comes out to about 1.4 ounces. I am in a little bit of debt. I am paying off my debt. I do make about $75,000 a year but I just want to know what should I do with the gold? Should I maintain it?

until 2030, keep it in my bank and then trade it in or what do you guys suggest with all my assets? I do have a bit of a retirement fund but not much. Why did you get the gold in the first place? What was the goal of that? I inherited it actually. Oh, very cool. Okay, so this is from family? Yeah, yeah. Okay. From my pop. How much debt do you have? Roughly two and a half thousand which I am paying off. I'm working to pay it off.

Yeah. So that shouldn't be, I mean, that's like a paycheck for you, isn't it? Okay. So end of April. What kind of debt is it? Yeah.

So I've got about $1,100 on a credit card and have another debt to my employer who bought me a work PC and I'm just paying him back out of my paychecks. But I haven't actually deducted anything yet, so I still owe them roughly $1,500, but I'm expecting to pay them back by tax time this year. So the question is, should you sell the gold, the Bitcoin to get out of debt faster? Yeah.

Well, the Bitcoin, I don't want to touch for now, but for the gold, do you guys think I should be selling it to get out of debt or should I keep it to 2030? No, I don't know why 2030. I would just sell it now. Sell as much as you need to to get out of debt. And you also don't have an emergency fund, it sounds like. No, not really, unfortunately. So I'd sell all the gold. To be honest, Maxwell, even if you didn't have the debt, the advice would be the same.

Yeah. Well, yeah. I mean, I'm not a big fan of the gold. Well, it just it doesn't really make sense in any plan except for some sort of apocalyptic paranoia where gold becomes a bartering system. And, you know, we've heard it's a hedge against inflation. And when times get scary in the economy, gold will go up in value. But again, in scary times, no one's going out to buy gold to live their life. They got to turn that into money.

So true. So I don't know. I'm just, it's not that I'm anti-gold. It's fine if you want to own some for fun, but I wouldn't use it as part of my investing plan. You're better off investing in the stock market. Is there an equivalent with your job? Here we have the 401k. Do you have an equivalent of that in Australia that's kind of associated with your employer that goes into your retirement? No, but since listening to the show, I've Googled it. And, you know, as an Australian, I can invest in that. But I've heard Dave been talking about mutual funds.

So potentially if I do sell the gold, pay off the debt, I can just chip into a mutual fund because the return rate looks better than the stocks that I'm looking at. I'm looking at like Apple. Exactly, yeah. What you're doing with a mutual fund is you're just buying a basket of stocks, which will help you diversify and avoid being too risky for

having one stock. If that company goes down or up in value, all of that's too volatile. So if I were you, I'm selling all the gold, I'm getting rid of all the debt, and I'm going to stockpile an emergency fund with all my future paychecks. If you're gung-ho on keeping the crypto, I can't talk you off that ledge, then you can hang on to it. But build that emergency fund as fast as possible, three to six months of your expenses. So do you know how much money it would be to run your household for one month? Yeah.

I pay so much rent where I live. I pay like $1,000 every two weeks just on my rent. So I need to kind of figure out a game plan because I'm not in a stable, like if I was to lose my job today, my emergency fund, like I'd probably be a bit screwed. Are you single? So that's why I need kind of a bit of, yes, thank God. Okay. I mean, you could look into getting a roommate to help offset these costs right now if rent is crazy over there.

It's a studio. I live like 600 meters from the Harbour Bridge, so the studio is like super expensive. But, you know, I'm definitely touching base with what I need to do to stay afloat. I'm looking at maybe a different job, different, like maybe starting a business. Is it necessary for you to live in such a high rent area for your job? If you move further away, could you find rent that's, you know, $1,200? Yeah.

The thing is, Sydney is crazy. It's crazy. And I really do love the freedom of having my own apartment. Unfortunately, it is so expensive. But I'm looking at jobs that might take me back out to the Northern Territory where you don't have to pay rent. You just earn like 100 plus K a year. And you're pretty much just taken care of. And you have to just work, work, work. But you still make absolute bank. Interesting. So I'm looking at probably doing that. Yeah.

Yeah. Yeah. Mining industry. In many ways, I think that there's a lot of differences between where you live versus where we live, obviously. But the baby steps, I think...

remain the same for you and the idea of keeping a thousand dollars set aside by the time you get this debt paid off and then like george said working to save up that three to six months of expenses in your case i'd probably veer towards six months because you're the only one bringing in income and then after that if you can find a way to invest 15 of your income into mutual funds like what you talked about growth growth and income aggressive growth and international is what we say here and

So that's what I would do. And I think for you, the same way if someone from the States called in and said, hey, you know, I'm paying $2,000 in rent and it's too expensive, we would tell them, look someplace less expensive, consider a roommate, find other ways to bring in more income. So in many ways, you know, the equation is exactly the same, even though some of their particulars may be a little different. Yeah, even keeping your household expenses to, you know, 25% of your take-home pay going towards the rent. Yeah.

That's going to help you not get too sideways where you go, oh my gosh, no wonder I can't save for the future and do all these things. 50% of my take-home pay is going to rent. And so that's where I go. I know you want the beauty of having a place to yourself. You want the beauty of living close to the city. You want the beauty of this and that. But at some point, we have to make some sacrifices in a different direction if we want...

You know, we can't have it all. You can't have the cake and eat it too. And so I think you've got to sit down and decide what's really important to you. And luckily, you don't have much debt and this thing's going to be gone within a month or two, but it's the next, you know, five years we have to look at to go, is this sustainable?

That's why I've come on board with the baby steps because it's so easy to kind of be mean to yourself and push yourself. But if you just slow down, like you said, Jay, I do want to get this debt and then I do want to put that $1,000 away and then I do want to have that six months back up because that stability. I've now, since gaining crypto, I've gained so much financial understanding but also since watching the Ramsey show, like,

You guys have helped a lot, so thank you. I kind of feel like, okay, stop being mean and just slow down and get the job done. You know what I mean? That's right. That's right. Yeah, you got to kick your own butt. They got to stop doing 17 things at once and just focus on one thing at a time, get their ducks in a row, build a foundation. So even with you, I'm not mad if you want to put more money into crypto, but I would wait until you've already put 15% into your retirement plan. Then with any fund money beyond that, go ahead and put it in crypto.

And I hope it works out for you. So I think you're on a good path. And regardless of where you are in the world, I love that these steps are so simple. Yeah. They just work. It's get out of debt, stay out of debt. Have a fund for the emergencies for the future and save for retirement. And usually I might get a little bent out of shape for somebody that has gold and crypto, but with that accent. I know. He's so charming. You can't get mad at him. He's too dang charming. He got me.

Oh, that was fun. I love that these baby steps work everywhere. That's great. It's amazing how it works. This has been The Ramsey Show. I'm George Camel. That's Jade Warshaw. Thank you to all the folks in the booth that kept the show afloat despite ourselves and you, America. Thank you for listening. Until next time, spend wisely, save intentionally, and give generously.

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