Stop Stepping Over Dollars To Pick Up Nickels 02:05:23

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 Ramsey personality George Campbell, joined by the one and only Dr. John Deloney. And this is your show, America. We want to help you take the right next step in your life.

In your life, in your money, in your relationships, in your mental health, we are here for you. Give us a call at 888-825-5225. Fran joins us in New York City to kick us off. Fran, welcome to the show.

Hi, thank you. When my husband and I got married, we combined everything and I took care of pretty much everything financial, paying the bills, ordering things, whatever. And the only thing that he did was he was in charge of the investments. And that worked really well for 50 years.

And then he passed away. I'm smart enough to know the things I don't know. And I don't know anything about investing. And I need help. How do I find someone who can help me without ripping me off? That's a great question. And I'm so sorry for your loss. How recently did he pass? About eight months ago. Can I just say, as our new friend, Fran...

The heaviness of this season, I know it's extra, extra heavy. I'm sorry. Thank you. I hate it for you. So you guys were married 50 years? 50 years and eight days. Wow. Well, what an amazing legacy and journey you guys have been on together. And I'm guessing over 50 years of investing, you've got quite the nest egg.

Um, it's probably just a little shy of 2 million. Awesome. Do you know what it's invested in? What kinds of accounts, where they're located? You know, what kind of paper trail do you have? Oh, I have, I have all of the paper trail and, and, um, we've, we've had, you know, some IRAs, some Roths, some investment accounts. It's a whole variety of things. Um,

He worked for New York City, and they happened to have an incredible 401k plan. And from that alone, I transferred over into my name, Little Shy of a Million, just from that.

So you've got access to all the accounts, you know where they are, you know the account numbers, all of that is in your possession. Yep. Right. It's everything that was only in his name from work or wherever has been transferred to me. So the good news is it's already being invested in things. You don't have to go and choose all of these from scratch. Is your question more, how do I handle this going forward? Do I need to change any of the investments? I don't know where to get started.

Okay, well, I have, as I said, I have all different kinds. And, you know, he liked to not put his eggs all in one basket, as it were. So we have a bunch of little IRA accounts. What I want to do is consolidate everything.

And a lot of the things that he did invest in in terms of his non IRA things is just regular investment accounts are things that I was not happy with. And I know I want to change all of that because he had a different philosophy than I do. And, you know.

Well, I think at this stage of the game, you want to manage all of the risks that you can. You do want to be well diversified. We don't want you investing in single stocks and unproven investments. Sticking to mutual funds and index funds is going to be your best bet. And so when it comes to how to move forward, I work with a professional. It's the same reason I don't handle, you know, the electrician work around the house. I'm not capable. And even if I could watch some DIY videos, I'd probably screw it up and hurt myself. Cool.

And that's the case for most with investing, right? So we call these people SmartVestor Pros. Through a SmartVestor Pro program that we have at Ramsey, we can connect you with investing pros that can help you take that right next step and give you guidance when it comes to investing. And I've got one. Dave Ramsey has one. And the key here is you want someone with the heart of a teacher. Like you said, you're scared of getting ripped off. You don't want to walk in somewhere and you hand them a bunch of money and they go, and it's gone.

What would you do with this money? You've worked so hard, you and your husband, to build this legacy in nest egg. And I totally understand that you want to make sure you're wise with it going forward.

Well, I've spoken to a number of financial advisors, and they all pretty much say the same thing, where fiduciaries were going to invest in diversified products that align to your risk level, you

And surprisingly, not one of them has said, just give me your money. I'll take care of it. And if we do, okay, fine. If not, oh, well, oddly, no one has said that to me. Well, they all like to keep their jobs and not have the SEC breathing down their necks. So it makes sense.

But I've got a great blog. I'm going to make sure our team sends it to you. And it's called Questions to Ask a Financial Advisor at Your First Meeting. So make sure when we hang up, I'll make sure our team sends you that link. We can also put it in the show notes for today's show if all of you listeners out there want to check that out. But it's really asking about their investing philosophy, asking them how they're going to get paid.

How will you measure and evaluate performance? Those types of questions are the wise ones to ask and just vibing them out. Do I want to work with this person? Is this someone I trust? Is this someone that I get a good vibe with? And those are some great steps to take. And you can connect with a smart investor pro at Ramsey solutions.com. Here's the one thing. I think the reason I use the smart investor pro besides the fact that they've been vetted is it's an orientation to a problem.

Most of the time when I call a plumber, I'm asking a plumber to tell me what's wrong and how much it's going to cost them to fix it. When you go see a financial advisor out of a book, what you're doing is you're saying, I want to invest. And they're going to say, well, what are your goals? Like a personal trainer. And you're going to say, I want $5 million. Or in your case, I want to make sure I'm comfortable and have enabled to pay my bills for the rest of my life. Great. When you sit down with a smart investor pro, they are a teacher first.

You won't leave that room not knowing exactly what you're doing and why you're doing it and how it all works. And that is different than just, oh, you just trust me. We'll put it in here and we'll take care of it for you. Oh, it didn't work. It's different. It is, I am going to co-pilot this thing with you. I am an expert, but I am also a teacher.

Here's what's funny about SmartVestor Pros. I have a 20-year... Nope, 30-year friendship with my SmartVestor Pro. We were friends before he ever got into this business and before I ever started letting him keep my money. After I hired him, I said... He said, Hey, I'm going to walk you through how this works. And I go, I honestly don't care. I trust you. Like, just make it work. And he said...

that's not what I do. What I do is I will teach you. So either we don't work together. I was like, are you kidding me, dude? Like you're my friend for 30 years. He goes, either I teach you how this works or we don't work together. And I was like, all right, teach me how this works. And so that's their orientation. And I really appreciate that you're going to walk into that office, not knowing up from down, you're going to walk out an expert in your own situation, which I think is awesome. That's a great reminder. You call the shots here. They don't choose it for you. They recommend, and then you get to decide. Yeah.

And it's all on you. So if someone's making, they're saying, hey, just trust me, I'm going to do it. No, you got to figure out exactly what they're doing, why, and you call the shot. Thank you so much for the call, Fran. So sorry for your loss. We'll connect you with that blog article.

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This is The Ramsey Show. I'm George Camel, joined by Dr. John Deloney. If you want to talk about your life, your money, your relationships, your emotional well-being, your mental health, we are here for you this hour. The number to call is 888-825-5225. Rachel is up next in Ohio. Rachel, welcome to the show. Hi. Thank you for having me. Absolutely. How can we help today?

So I am currently a stay-at-home mom. I am looking to get back into the workforce. However, right out of high school, I went right into the Air Force because I didn't know what I wanted to do. Wasn't able to get my GI Bill because I got injured. So I've been kind of going from job to job to job trying to figure out what I want to do.

Um, the job that I really liked doing was being a bank teller. So I kind of want to get into that. However, I know that I have to have a good credit score, um, cause I do a credit check in order to get a job. So I was wondering if in that case, do you guys still say to close all your credit cards? How would you go about that? Uh, needing a good credit score in order to get a job.

Great question. Well, number one, I actually talk about this in my new book, Breaking Free from Broke, the whole section on credit scores, because I've dug into this, because this is a question we get a lot. People like to push back and go, I can't get rid of the credit cards. I got to keep my score because of jobs. They do a credit check.

But the caveat here is what they're looking for is a mismanagement of money. They're looking for a bad or low score. I have yet to see someone who says, hey, they did the credit check and I had no score and I didn't get the job. What they're really looking for is someone to make sure that you don't have delinquencies, that you're a person of integrity when it comes to money. And so I would just talk to them and say, hey, listen, you're going to do the credit check. You're welcome to do that. Here's what's probably going to happen. It's going to come up as indeterminable. Here's why. I don't have any debt.

And that's a principle I live by, and I would love to work here, and I think I'd be a great fit. I'm a person of integrity and character who just lives a debt-free lifestyle. Have you tried that? I haven't tried that, no, but that sounds...

That sounds like a good solution. That's my guess. Now, someone could prove me wrong out there where they go, nope, I didn't have a credit score. And they said, we can't give you the job because it's some sort of bureaucracy, stupid policy. But in most cases, what I found is the credit check just exists to see if you have a terrible score, which you don't.

Now, I am currently on baby step two, so we are paying off the credit cards, which we'll have the credit cards completely paid off by the end of January and then head to the car. Oh, so you already have a credit score. And the student loans. Yeah. So this is not even a problem. This is a hypothetical. Yeah, it's just a bad credit score, and I've had issues with...

I've lost the job opportunity because it was bad in the past, but we are working towards eliminating that completely through the baby steps. Great. Well, here's what will happen. As you pay off your debt, the score is going to get better, and then it will disappear. After about six to 12 months with no open accounts, we're talking no credit card accounts open, nothing, the credit score will become indeterminable.

Okay. So you can also pull your credit report for free at annualcreditreport.com. And that will show you all of the accounts you have open out there because maybe one you forgot about. You might, oh gosh, I didn't realize that was still open. I got to go close that. But yeah, this is a, you're going to be okay. And again, to your point, the low credit score can hurt you. The no score I found is not an issue. Whether you're renting an apartment, cars, you name it. They're looking for bad money management.

Okay, perfect. Thank you so much. Yeah, I hope that helps, Rachel. Thank you so much. Let's move on to Landon in Jackson, Tennessee. What is going on with you, Landon? How can we help today? Hey, what's up, guys? I appreciate y'all taking my call. Sure. How can John and I help?

So my wife and I are 26 and we are wanting to start doing small, small, small flips. And I'm just, you know, basically in my small town, you can get a small property for about 50 to a hundred thousand bucks and flip it for 250. And so we're wanting to start doing small flips like that, but it honestly just kind of terrifies me. But basically what I'm asking is,

What I guess what is my net worth need to be at in order to be safe in doing that? And also, you know, make sense. So you want to get into house flipping because you could five extra money very easily in this town.

Well, I mean, not necessarily because I want to 5X my money. I love real estate. I'm a realtor. That's what I do in this career. And it's just, you know, something that I grew up watching my parents do. And I'm not a fan at all of the current TikTok trend of finance, refinance, buy it over and over and over. So do you have the money to do these flips in cash? I'll be cash debt free. Okay. How much do you have right now? I want to add to my belt as far as my portfolio goes. So how much do you have in cash?

Uh, in liquid cash, about 300 grand. Awesome. Way to go. What are you making from being a realtor every year?

This year I did about $450,000 in commissions. Oh, my goodness. You're crushing it, dude. And this is in Jackson? You're talking this is small-town real estate? I'm about 45 minutes outside of Jackson. It's a small town outside of Jackson. That's pretty impressive. I'm going to Jackson. Yeah. I think you make sure you're investing in your retirement and you're holding off the appropriate taxes if you are 1099 doing this. Yeah.

Or if you're under a broker, they'll send you a W-2. You'll be fine. But all that, yeah, dude, buy a house for $50,000 and pay for the reno in cash. It's going to be 3X as expensive as you think it's going to be. And probably take three times as long. Yeah. And just as long as you and your wife have a good plan to stay married after the reno, then, yeah, knock it out. I mean, I don't think there's a magic number. I think the number is don't get yourself in trouble.

And if you're buying a $50,000 property and you're going to put $50,000 into it and you have that in cash and you're going to sell it for $250,000, it's going to look a great deal. Do you have your primary home paid off? I do. Wow. Yeah. That's amazing. Go for it, man. What's your net worth?

Awesome. Yeah, if you're doing it with cash, which is rare these days because it's so countercultural as to everything you've seen on TikTok, you are doing it the right way with a whole lot less risk. And so the key is paying cash for the property, cash flowing all the renovations, and making sure on the front end that you're getting a deal. That's the key.

that's where you're making your money is on the front end, on top of some on the back end if you do it the right way. But, you know, make sure you're doing your due diligence of what this project is going to take because, like John said, you get into this thing and you realize, oh, my gosh, this is going to be 50 grand more than I thought, and the contractor dropped out. I've got to find a new subcontractor for the project. All of that stuff is going to add some stress and headaches. So just be prepared for that. But you told me you love it. You love this stuff. So start small and go from there and learn along the way. For sure.

For sure. Okay, cool. Appreciate you. Yeah, proud of you, man. John, that was not how I thought that call was going to go. See? Usually. Judger. I had some prejudice. And here's why. Most of the people that are younger that call into the show are broke up to their eyeballs. And they saw the TikTok of the guy who's like, dude, you don't even need your own money to get into real estate investing and buy my course and I'll show you how. And all of a sudden they call the show and go, hey, I'm out $2,000 for this course.

And I made a terrible financial decision on this property. Or they watch HGTV and they watch Chip Gaines run a saw. And you're like, I can do that. Forgetting that he's like an artisanal craftsman. Yeah, my favorite is when they're like, I'll just do all the repairs myself. Exactly. That's a dangerous, dangerous scenario to be in. So do not recommend that at all.

All right, John, we got a lot going on in the RamseySolutions.com store right now. And one of those things is the $12 sale where you can get bestselling books, Total Money Makeover, Baby Steps Millionaires, your book, Own Your Past, Change Your Future, just $12. And many of John's Questions for Humans conversations cards are as low as $10 right now. And the Christmas edition is back. These sold out early last year. So...

Don't be angry. I told you, you're going to miss out. So go check it all out, ramsaysolutions.com slash store. While you're there, you're going to see a whole bunch of new stuff as well that's really exciting. Rachel Cruz launched her first ever illustrated kids book called I'm Glad For What I Have. Our friend Jade Warshaw just dropped her new book. It's a quick read called Money's Not A Math Problem. We're so excited about that launch.

And of course, I'd be remiss to not mention that I've got a book on presale. My very first book called Breaking Free from Broke is on preorder right now in the Ramsey Solutions store. You can get all of that at ramseysolutions.com slash store. I've been loving, someone sent me a message, John. They said, I bought 10 Total Money Makeover audiobooks because they're on sale and I'm going to gift it to people in the Ramsey Baby Steps community to help them on the journey. That's cool. I was like, that's the kind of generosity we need around here.

I like it. It's fantastic. So get the gift for everyone in your life. And if you've lived these principles out, go pay it forward. RamseySolutions.com slash store is the place to go. We'll be right back. Are you working the baby steps? One of the smartest and most impactful changes you can make is to ditch your cash value life insurance plan, if you have one, and replace it with a term life policy. Listen, the only thing a cash value policy is good for is overcharging you

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Welcome back to The Ramsey Show. I'm George Camel, joined by Dr. John Deloney. We want to help you, America, take the right next step with your money and your life. So if you've got a question, give us a call at 888-825-5255.

5-2-2-5. And John, we found that most money questions usually intersect with some level of relationships and mental health, and it just gets messy and intertwined real quick. And so as we dig in, I love that you're here to help people really unpack the other pieces, not just the numbers on paper, but...

How do I deal with that in-law that's pressuring me to go on the trip? And how do I deal with the brother that's estranged but now wants the money because he feels like he deserves? All of that gets intertwined. Yeah, there's always a relational aspect or an emotional health aspect. Money's scary. And especially nowadays when it's so expensive just to exist, right? It's just expensive to exist.

And you either have people denying that. It's like, just don't eat avocado toast, which is nonsense. And the other side of it is just elect the right person and all this goes away. And it's like, that's nonsense. And so there's an emotional component to all of this. Right. And so, yeah. If you've got emotional, relational stuff going on in your life, give us a call too. 888-825-5225.

Well, John, let's get to our question of the day brought to you by Neighborly, your hub for home services. With 19 service brands nationwide, Neighborly's provider network has trusted local service pros to handle multiple different services in and around your home. Visit Neighborly.com slash Ramsey to find and schedule service today. Just buzzing through this question real quick. It's fantastic.

It feels like a common core math equation. It does. Today's question comes from Alex in Virginia. I'm just going to tell you up front, Alex, buy the car. Just buy the car. All right, here's your question.

Would you recommend buying an electric vehicle like a Tesla just to take advantage of tax credits? Our gross household income for 2023 will be $230,000. Our tax liability would be $9,000. We will get $2,000 as a child tax credit. That leaves us with a $7,000 tax liability. This is the only year where I can take advantage of federal tax credits of $7,500 for electric vehicle purchase.

I have no other debt but mortgage, $190,000 balance. I already have a decent functioning car. I hate the fact that federal government is taking taxes from responsible folks like us and giving it as a credit to people who will probably go in debt to buy overpriced EVs. Here's a pro tip, Alex. Get out of other people's heads and stop buying.

making up stories about why other people are doing whatever it is they're doing. And as I tell my seven-year-old daughter, you deal with you. If you want a new Tesla, you have the money, and you've got cash, go buy it. George drives one. Rachel Cruz drives one. I will drive one one day. I'll buy a truck first. It's coming for all of us. But I'll get one. I've been in both Rachel's and George's. They're awesome. And I'm not going to buy...

anywhere between $40,000 and $80,000, depending on the model, on top of the $7,500 credit, just to show those people who I made up stories about. You see what I'm saying? You're just causing yourself a bunch of angst. If you want a Tesla, get a Tesla. You could also donate money.

that you might get back in return. You could just give it, be a person of generosity, or you could sit down with a tax professional and work some of this stuff out. All I have to say is, no, I would not buy it, George, just for the tax credit.

Would I recommend someone buying a car that they want if they can afford it? Absolutely. Well, and then the ending was funny because he's wanting to stick it to the man, to the government, for giving the credits to those who get the overpriced EVs by buying an overpriced EV. Yeah, he'll show them. That'll show them. And then you're going to pay sales tax on that vehicle to the tune of the tax credit that you just got back, which then goes to the government anyways. Okay. Yeah.

This is make the math math, John. It's not mathin'. But yeah, to his point, he makes 230K and he's got no debt but the mortgage. So the parameter around knowing if the car purchase is wise is number one, are you doing it for the right reason? Are you doing it as a flex? Or do you just want to enjoy the vehicle and you're paying for it with cash?

And the total amount of all of your vehicles, everything with motors and wheels, doesn't add up to more than half of your annual income. So if all your cars are going to add up to over $115,000, yes, it's a terrible financial decision for you right now. But I don't think that's going to be the case. Get the Tesla because you want the Tesla. Don't do it for the tax credits. Don't do it to stick it to the man. End of story. Ta-da! Can we move on, John? Can we move on?

Tax credits, man. They'll get you. Stepping over dollars to pick up nickels. That's what Americans are great at. We'll show them. All right. Elena is in San Diego. Elena, welcome to The Ramsey Show. Hi, George. Hi, John. Can you hear me okay? Yes. How can we help? Okay. Well, thanks for having me. I am...

I started paying off debt, my husband and I, we started Dave Ramsey, we're on Baby Step 2 about a year ago. And we're posed with this question, if we should sell our house to pay off the rest of our debt or most of it. So some history and historical information here. My mom has a rental property and she lives with us.

her tenants are going to be leaving in the next three to four months. And she said, why don't we move to my house and you guys can pay less. You just cover the mortgage and it's significantly less. And then you can either rent your house or sell it. Um, and so my husband wants to sell the house cause he's done with my gazelle intensity. And I'm wondering if we should just rent it or if we should just sell it and get on the other side of his debt.

A lot of layers to this financial tiramisu. Let's break this down. No, it's good. It's good. So there's a relational component because that piece, you just dropped a little bomb right there of my husband is done with my gazelle intensity. And the other piece of this is it sounds like it's about to get real messy, moving into moms, but we don't actually own it. We're just paying her the mortgage amount. We get to keep ours and now we're landlords, but we still have the debt. Right.

And so this, I don't know that it's just on paper, this is looking like a rose. I would walk carefully either way. But how much debt do you guys have? So we've paid about $140. We still have about $340. Is that non-mortgage debt? That's student loans. $340 in student loans? Good God, who's the surgeon? Anesthesiologist? Give me good news. You're an attorney? Yeah.

But still, did you go to private school? No, I sat on interest with these low payments. So they ballooned. It's probably more than you took out. Over $100,000 more in interest. Is this why your husband's done with this program? So we've gotten into this and it's been a good year. But I mean, I can just keep going. But he's like, he's ready to be done with that. What's your household income?

So our household income is about $190,000, $200,000. Is that with both of you working? That's with both of us. Okay. So what are you on track to pay off your debt by right now? Shooting for three years. Did you have a big year just because you had a couple of great cases or is this typical? No, I sold everything. You sold your practice? Yes.

I sold, no. So I'm in-house. I don't have a practice, but I sold, we sold our car and we sold a bunch of furniture. We sold just all kinds of things. And then I do real estate on the side. Okay. And let's talk about the mortgage. What is your mortgage payment every month compared to your take-home pay? Mortgage right now is about $2,800. Okay. And what is your take-home pay?

Take-home pay a month is about $11,500. Okay. That's net. So the mortgage is not killing you guys. It's about 25%, which is great. That's in our parameters, which tells me you've got, you know, of course you have huge payments. What are your minimum payments every month right now? So right now, based on, you know, whatever income-driven repayment type that they have,

That's the problem. I would get out of this plan unless you guys are shoveling so much on top of it that you're actually solving the interest problem. And so I wouldn't sell the house quite yet. I don't know that I move in with mom and do all of these maneuvers. In three years, you'll be debt-free and you can make different decisions and do it at a place of peace instead of fear.

So that would be my goal for you. Yeah, if you think he's frustrated with the baby steps, move in with his mom and pay her mortgage. They're going to set your marriage on fire. Don't do that. Thanks for the call, Elena. This is The Ramsey Show. ♪

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This is The Ramsey Show. I'm George Campbell, joined by Dr. John DeLone. It's your show, America, so give us a call at 888-825-5225. Lila joins us down the road in Nashville, Tennessee. Up next, Lila, what's going on? Hi, George. Hey, John. Happy holidays. Thank you so much for taking my call. What up? What's up?

Oh my gosh. Okay. So I'm 20. I recently discovered your show through a repost on TikTok and I was immediately hooked. Boom. I took the assessment on, yeah, I took the assessment on the Ramsey website and found out that I'm on step four, but my boyfriend and I are living paycheck to paycheck and just making things work by the grace of God. To cut a long story short, I graduated high school with an associate's degree, debt free. And

And I'm a dependent of a veteran, so I received benefits. And I came to live in Nashville to go to school here, enrolled at Belmont, but with only three semesters left, a miscalculation by the Veterans Association suspended my benefits, and I was forced to take a leave of absence from the school. So,

And that was paying for my housing. So now I'm working full-time, making just under $16,000 a year to cover my basic needs. And I'm transferring to MTSU for in-state tuition. And I'm planning on scholarships and the Pell Grant and paying the rest out of pocket to avoid student loans.

I also have no credit history and no idea how or when I should start to do that. I'm worried about weathering the economic storm that the housing market is facing, and I just need some trustworthy advice on how I can set myself up for some success given my circumstances. And our pet's heads are falling off. It feels like it's all coming down, Lila. Are you doing okay? You're a neighbor. Yeah, I'm just...

It feels like a lot. I was actually thinking about coming down, but I thought maybe I'll give it a call and first try. All right, so I'm going to give you some very, very, very specific advice, but George is going to talk to you in a broader picture. And the only reason I can give this to you is because I've been on the inside, okay? Okay.

When I was a dean of students at Belmont in particular, they had a program, and I don't know if it's still there, where they took care of the other part of a veteran's, whatever a veteran needed, they took care of it.

Right. Yeah, I had that, but the VA miscalculated my benefits and said instead of the two years that I was supposed to be allotted, they said that I only had six months left and that I don't have any benefits left. Have you applied for a recalculation? Yeah, I did, but the process just takes so long. And Gwen from the VA office at Belmont said that I should just kind of give up. Really? Yeah.

I've never heard that before. I trust the person. I don't know who's running it now, but I trust that person. I've just never heard that. Yeah. Oh, no. She's wicked smart. She knows what she's talking about. That's why I was like, damn, this sucks. Yeah, that does suck because it's one of the best programs I've ever seen in the United States that they have at Belmont. They really take care of veterans. Yeah.

I was so grateful that I was able to come and have a whole year at Belmont. And the only reason I chose to come to Belmont was because I was so lucky that they have that yellow ribbon program. Yeah, it's astounding. But once my benefits were suspended, there was just nothing I could really do about it other than, you know, find a cheaper education. All right, so we're going to pick, we're going to, I'm going to pass it over to George. I'm going to tell you two things. One, I respectfully would challenge you to not give up.

I also respectfully challenge you to take a breath. You're going to be all right. If you're making, and I'm going to say something that's going to offend people. If you're making $16,000 in Nashville, Tennessee, you're making a choice to make $16,000. I took my daughter to breakfast the other day and at the McDonald's, it was starting at $20 an hour.

So if you make 16 grand, you woke up today and decided I'm only going to make 16 grand. And unfortunately for you, I see the signs and I talk to people because this is my town too. And this applies to everybody. You might have to get uncomfortable. You might have to get a couple of jobs for six months while you figure out this VA stuff. And the VA doesn't have a great track record of always just dotting all their I's and crossing their T's.

But I would not just bail on a world-class education that they're going to take care of you the way Belmont takes care of their veterans and just sit in my house and be like, ah, it's all coming down. It's not. It's a mess, but it's not all coming down.

Right. So one of the problems you're having right now, it's an income problem. It doesn't sound like you have extravagant bills. You're living a super luxurious life. You don't have a bunch of debt payments. You told me you're debt free. We're beans and rice. And you have an emergency fund in place already? Yeah. And I've got six months, more than six months worth of savings. Wonderful. Dude, you gotta cheer up. You have a I'll never go into debt again fund is what that is. That's debt insurance.

Because you're not going to have a car repair that tanks you. Yeah, I had fear instilled in me as a child to never go into debt. Good. Well, that's good at least. That's a good kind of fear. But there is a sort of scarcity mindset right now of, I don't know how we're going to pay next month's bills. You're going to be okay. We need a path out with long-term income increasing. Let's talk about this boyfriend situation. Are you guys splitting the bills? How is this working?

Yeah, so we live together in a two-bed, two-bath with... Or two-bed, two-and-a-half bath with a roommate, and we split it three ways, $800 each. Okay, and you don't have any finances combined, right? No. Okay, good. Let's keep it separate. Okay.

We need to increase your income because right now, do you know your monthly expenses off the top of your head? What it takes to run your life? Yeah. So I pay $900 in rent and utilities and then I've been...

Oh, no. Delete the app. What are you doing, Lila? Those apps exist to take your money, not make you money. I know. These little micro-investing apps will take your spare change and make you a millionaire. I never realized they took it out.

In the year 3000, you're going to have a million dollars in that account. I'm ditching that. You need to be investing 15% of a solid income into a solid retirement plan. That's going to be your path to building wealth and getting out of the cycle. So your A1 right now is to get a job that pays 15 bucks an hour, 20 bucks an hour, 25 bucks an hour. That would change your world, wouldn't it?

To double your income? Right now I work as a stagehand for IATSE, and when work is good, it's good, but right now it's the holidays. You need stable work. A lot of it. Yeah. So I'll get a retail job before doing seasonal work where there might be work, there might not be, and so hospitality is always bumping. They're always looking for solid people. You sound like a rock star, so I have full faith that you're going to find a great job and make great money doing it. Yeah, but...

Lila, tell me if I'm wrong. George, she sounds like a rock star that is trying to play all the instruments on stage at the same time. Those, you don't like, one-man bands are rarely good. Yeah, they're always, yeah, the one-man bands are just a little bit like, like, like a little bit, like, like, what are you doing over there? It's pretty good. Right? So, hey, are you going to marry this guy? Yes. When?

Well, the thing is, he's a VA dependent, and he is going to school completely for free because both of his parents are... This is the longest answer for a date I've ever heard. What's the date? Okay, if he loses his dependency status, then if we get married, he loses his education benefits. So after he gets a degree. And what were you studying? That sounds romantic. So lovely. I'm studying...

I... Oh, my God. Don't make fun of me. I'm studying music business and minoring in tourism and hospitality. I don't think that's bad. It's fine. I'm not mocking you at all, man. Do you have a career goal? Like, what do you want to do? Not what degree you're getting. I want to...

I have a very clear dream. I want to bring sustainability to music festivals and stop wasting so much for events. And I want to have a green music festival. Okay. That sounds fantastic. That's a very clear goal.

So I would also, in the meantime, start to get connected with people who work on music festivals. There's a lot of that going on in this town. And I go get a job at the Ryman and at Brooklyn Bowl and work all day making money and then work all into the night working in the music industry around artists and sound guys and doorman and all those people.

Seven days a week. Tell your boyfriend you'll see him after you graduate when y'all get married. Right. But just get after it. Only make $16,000. You're in Nashville, freaking Tennessee, one of the hottest economies on planet Earth. Don't choose to make $16,000. And don't give up on this VA stuff. Call them and call them and call them.

I just wouldn't walk away from Belmont right now. Keep fighting, Lyle. I'm going to send you two great resources. One is our friend Ken Coleman's book, The Proximity Principle. The other is Dr. John Deloney's newest book, Building a Non-Anxious Life. I think both of those will be of service to you in the season that you find yourself in. So hang on the line. Our friend Ibu is going to pick up. She's going to make sure that we send you those two books. That puts this hour of The Ramsey Show in the books. 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 my good friend, Dr. John Deloney, and we are here for you to give you some...

Cassandra kicks us off in Tucson, Arizona. Cassandra, what's going on? Hi, how are you? We're doing well. How can we help?

So my husband and I, we started a rental car business through Turo. Not sure if you're familiar with that or not. I'm very familiar. Yes. I can almost guess where this is all going. Yeah. So we financed three vehicles that are now completely underwater. And in Tucson, it's become pretty saturated. Yeah.

So we're not doing as well as we had started off doing because we started off doing really great. Now, since probably January, it started to kind of taper off and then the cars got into some accidents and then there was no income from this business. So now we're personally backing it when we have like no money to back it. And so now it's racking up credit cards and my husband's

second job that he has is having to fork out the money to pay for things when in reality that money should be going towards the credit cards because he's when he contracts work out he has to put on a card and then get it reimbursed so now we're not being able to reimburse what he put on the card because now we have to pay car payments and insurance before George digs into the math here

I just need to ask you before we start talking, are you willing to change your entire posture on this deal? I want out. Okay. Is that what you mean? Well, I want out. I know you want out, but the way you're talking about it is all of these things are happening to you. Everything was perfect and then all these things happened to us. And what both George and I and any of my colleagues here would say is when you leverage your

your soul, when you leverage a business that you can't cover, you are at the whims of the cosmos as to what happens. And so I've never seen somebody successfully victim their way out of a problem like this. I've only seen people say, well, that was dumb. We did something that looked good on the back of a napkin at a Mexican food restaurant, a good one, by the way, in Arizona, and it didn't work. And so...

We're going to have to both get two jobs or three jobs because we have three cars that we can't afford. We have five cars, actually. And we're going to have to figure this out. And we will never, ever, ever, ever do this again. I've never seen somebody just be like, well, then this happened and this should be going to this. And this is the only way out is you have to change your posture, which is we gambled. We put it all on red 17 and it landed on black 29. We lost it.

And now we got to pick up the pieces and go from here. Does that make sense? Do you get what I'm saying? No, right. I get it. I'm only telling you that because I love you, but there's just no way to slump your shoulders through this. Y'all are going to have to say we did it. And now it's time to come out swinging the other way. Okay. You ready? Yeah. All right. Lay it out for us. What is your current income if we take Turo away? Without Turo, it's about $94,000. Okay. And what's the total debt load? It's about $110,000. How much of that is the car's?

$29,000 on one, $38,000 on another, and $20,000 on another. Okay. And do you know what all of those are worth? Yeah. One's worth $19,000, one's worth $21,000, and one is worth $19,000, $20,000, and $12,000. Okay. Do you guys have any money, liquid cash? No.

I have $1,000 in my emergency fund. Okay. And do you guys have car loans on your own personal vehicles? No, those are paid off. We did our debt-free scream a few years back, and now here we are again. Oh, no. Not the debt-free alum. I know. I am completely ashamed.

Well, you're going to get out of this and one day it'll be a funny story you tell your kids. That's right. But right now there's a lot of pain and fear as to how we're going to get out of this ditch. Yeah. The good news is you guys have a good income and without Turo, which I assume was taking up some time, could you guys pick up more work, more jobs? He cannot. He's already tapped out. What is he doing?

He's an executive chef, and then he's also a contractor for a company, and he travels quite frequently for that one. Is that doing similar chef contracting or what? It's different. It's a little bit different. It's for like he's working with chefs for that job. So still in the same field. What about you? What are you doing? I'm an administrative assistant for him at his executive chef job. What do you make?

Me, I make about $16,000, I think. I'm confused. Why would you work for him when you can go make double or triple that elsewhere? We have three kids and no help, so I need that flexibility. Okay, so you're staying at home with the kids while doing this administrative work for him part-time. Yeah. That makes more sense. Okay, I was worried. I was like, eww.

You need to find a different job. Okay. Yeah. All right. So if we can clear $100,000 here and we can pay off, you know, $50,000, $60,000 a year living off nothing, this becomes a solvable problem to just pay this all off. The other way to approach it is can we find the difference, you know, go to the credit union and go, hey, I need a difference for this loan so that I can get out from under this bad underwater car situation. Then you have a smaller amount of debt to pay off. Okay. Okay.

but you're not keeping these cars anyways. And so I like the idea of getting out as soon as you can from these underwater vehicles. But the only real way to do it is to come up with the difference. And you either need to do that through savings and cash, or you need to go get a small loan from the credit unions to cover it. Okay. Or if he travels a lot, maybe you sell one of your paid off cars and he can Uber to and from the airport. And I know your first thought is, well, we can't do that, but here's the deal.

You're going to have to either just make peace with you're going to be paying this off for four or five years or something has to be different because the math is not going to change.

Right. So somebody at your local church will watch your kids for a discounted rate or you get a job at a local daycare center where they pay you 32 grand a year as a assistant administrator and your kids go for free or none of this is what you want, but this is what is. This is just choosing reality here. Or y'all make peace with it or you sell his car and you pay off the difference between two of these underwaters and now you're down to just one of the cars and

And you see what I'm saying? You begin to knock it out real quick. There is not a path forward without discomfort. And the question is, which discomfort are you going to choose? The day-to-day discomfort of not doing much of anything for the next five years or a really uncomfortable right now with the opportunity to get free in the next 12 to 18 months. And then we're going to save up some money down the road and never do this again.

Thanks so much for the call, Cassandra. Sorry you guys are going through this. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. The number to call if you want to jump in with your question about money, mental health, relationships, we are here for you at 888-825-5225. Well, John, as I do, I got myself into hot water on the internet recently.

Thanks to a video that we posted on YouTube shorts, you know, Instagram reels and TikTok and all that. And the video was simple. We get a lot of flack about telling people, hey, go get a used car. Avoid the car payment. There's used cars that aren't $30,000 because that's the big argument is why would I buy used, John, when I can just go get a new car for the same price, if not cheaper than a used car. That hurts my brain.

And so I did a video and I just pulled up, you know, the auto trader website and went, here's a used car, $5,000 in my area. It's possible. And I want to play it for the viewers and for you and get your take on this. Do we have that video?

So I got a lot of flack on the Ramsey Show for telling people that they should be buying used cars instead of new cars. And they say to me, well, George, used cars are just as expensive as new cars, and you can't find used cars under $15,000, $20,000. And then I just look at something called facts and data and go, nope, here's a car for $5,000. And I looked in my area, and there's a 2008 Honda Accord EXL for $4,999.

Now, is it the sexiest car known to man? No, but it's under 150,000 miles. It's got leather. It's got all the sunroof, all the features a boy could want, and it's going to get you from A to B without something called a car payment. There it is, John. I did not know that it was going to be that controversial. It reminded me of, there's no jobs in this town. Yeah, not unless you want to work 40 hours a week.

That's what it felt like. So the one thing I got roasted for was saying under 150,000 miles because it had 149,127 miles. The truck that I drive has 198,000 miles. John, that's a death trap.

You're so brave. You're the Bear Grylls of car drivers. You're so brave. You're so brave. So, yeah, one guy at least was honest in the comments and said, you are correct. This car will last well over 300,000 miles if serviced regularly.

He who laughs last owns this car. So there you go. That's part of it is people are going, if the car has over 100,000 miles, I have to throw it away and get a new one, John. It's like the iPhone came out. Mine's two years old. It's trash. Time to upgrade. I think there is some, I'll say ancient merit to that. I think with the cars our parents drove, there was an understanding that once it crosses 100,000 miles, you need to start looking, right? I don't think that's the case anymore.

I tried to get my Corolla to not live, and it wouldn't not live. You can't kill those. My old Tundra that I drive now, back from a couple of centuries ago, won't go. It's just going to drive for eternity, right? So it comes down to you set it in there. Is it the sexiest car alive? No.

And have we wrapped our heads around this as an identity? It's madhouse. Well, when all of your friends are driving, you know, brand new cars with leases on them and luxury vehicles and you roll up in the 08 Accord, it's not exactly turning heads, at least not for the right reasons.

But you know what? It's really nice, John, is you don't have a car payment weighing that car down. It just drives differently when you don't owe $700 a month as a flex on your friends who honestly you need better friends if that's the environment you're in.

But here's some stats that I, this is all from my new book, Breaking Free from Broke John. I did a whole chapter on car loans, unpacking this, but I broke down the actual stats on this. Average transaction price of a new car, over 48 grand. Used car, almost 33 grand. Now let me remind you, the average household income in America is $71,000. So most people have multiple cars,

With multiple loans on them, that is now outweighing their income. And then they're wondering why they're broke because they're sending $1,200 to Ford Motor Company every month to the lending office, wondering, well, inflation, John, it's just a real problem for me. And then they're wondering why they're anxious and stressed.

Because Ford Motor Company owns them with, by the way, a depreciating asset, a car that's worth less money every day you drive it. Oh, yeah. And interest rates are at record highs. The average loan terms keep getting extended out. We're almost at 70 months now. Average payments are now over 700 bucks for new cars. And so here's the crazy stat. Consumers with monthly payments of $1,000 or more is now at an all-time high of over 17%.

One out of five people have a monthly payment on one car of over $1,000. It's insane. And the other thing I got in the comments, John, were, well, good luck buying a $5,000 car. You're going to need to put $5,000 into it in repairs tomorrow because that thing's going to break down. I'm like, you know what your new car is the moment you drive it off the lot? It's a used car that's going to have problems because you're driving it and you don't drive like Jeff Gordon. So the other piece of the equation that's interesting is insurance is more expensive on newer cars.

Who would have thunk it? It's going to cost more to replace the car that costs $50,000 versus your $8,000 car. So you're going to save money on insurance. You can afford the repairs when you cash flow the $5,000 car and then you don't have a payment to worry about. And then you upgrade over time. We're not saying drive the 2008 Accord with the bumper hanging off for the next five years or 10 years. Just upgrade as you have the cash. Also, I was coming out of my...

back field the other day and I was laughing about something that my son was doing and I wasn't paying attention. And George and my truck that I love, I just raked it down our fence. Just all the way down. Sounds like a you problem. It is very much a me problem. It's not beautiful. But these repairs that everybody talks about,

I'm not repairing an old truck. Nope. Right? And so if I was a brand new Lexus, you're right. I would take it to a dealer and have them look at it and repair it and it would be a million dollars. I'm not going to repair it. So even that argument...

If it's a Honda, Toyota, the engine's not falling out, right? And in fact, a number of cars now will last. And you choose to do things differently with your money when it's your car. You don't have to get it fixed because that's just what I have to do.

I just don't get it fixed. And so is it beautiful? Nope. Does it get me where I need to go every time? Yep. Right. Who cares? Who cares? Who cares? Who cares? Well, a lot of the decisions we make around cars are a reflection of who we're trying to be. It's more about the brand association than it is about utility. And so that's become a problem because now we're like, well, my buddies all have the truck, so I got to outdo them with an even bigger truck. And that truck has a thousand dollar payment on it. They

that you couldn't afford. And people with car loans often have other types of debt too. It's not just the car loan. They've got their student loans hanging around. They've got the credit card balance that's been hanging around. There's personal loans, medical debt, maybe on top of a mortgage that's too big. So all of this just compounds and adds more stress. And as you've seen from this hour, John, cars are underwater all over America right now.

What they paid for it is now not, it's not what it's worth. And the loan is still 40K, but the car is only worth 25. What do I do? You just don't have that problem when you have it paid off. You want to get real controversial? Hit me. When I got my first job as a high school teacher, I drove a car that didn't have an air conditioner in Houston. So I had to wear an undershirt.

and hang up my dress shirt that I wore. - Air it out? - No, I just hung it up in the back seat and when I got there, I would then put it on. That way it wouldn't get wrinkled when I got there. Here's what I'm telling you. Was that ideal? No, it was awful. It was awful. But it was mine.

And I wasn't willing at the time to sell my soul for this idea. I can't do it. I can't. That word, the phrase I can't is not true. It's I won't. I won't do it. That's fine. You're going to go into debt and sell your soul because you won't? Fine. But there are people all over the place figuring it out. Figuring it out. You can. You can deal with it.

Well, if you guys want to learn more about this, I have a whole chapter in my new book called Breaking Free from Broke on Car Loans where I unpack what I call Carmageddon, John, which is the disaster and crisis we find ourselves in. I unpack how depreciation works on these cars. I unpack the logic of if you just invested that car payment, you could be so wealthy it would blow your mind to where you're going to go, I'm never having a car payment again. And then I also show people how to buy a car the right way, the tactical steps to

to go buy a car with cash, with peace, with confidence, because nobody wants to get screwed on a deal. And so there's a right way to do it, to do your research, to negotiate all the different ways you can buy a car in today's world. I walk you guys through that in this book, and I hope it helps people avoid the trap

of car loans and the myth that you'll always have a car payment. No, you won't. Not if you just get out of the cycle once and for all by paying cash for that car and upgrading over time. So if you want to check out that book, it's on presale right now at ramseysolutions.com slash store. It's called Breaking Free from Broke. This is The Ramsey Show. We'll be right back.

Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. This is your show, America, so give us a call at 888-825-5225. We'd be happy to attempt to give you the right next step in your money life, your relational life, your emotional life. We are here for you. Shekinah joins us up next in Portland, Oregon. Shekinah, welcome to the show. Hi. Hey, how you doing?

Good. How are you? We're doing well. How can we help today? So I just was wondering if you guys could help me and my husband. We're just trying to figure out how to stay in our budget and also save money, but also pay off debt at the same time. Anything else you want to do?

No, that's it. Just pay off debt, save, live, spend, go on vacation. Okay. And get a pony. It's a common problem. Yes. Okay. So tell us about your financial state. Is this the first time you guys have gotten on the same page with money? Your first time budgeting? How new are you to all this? Um,

I started budgeting probably like two months after we got married. I got one of those like budget planners where you have like the separated money. Oh, you went like super nerd on this. Yeah. That's fun. Where is he in all this? Is he like, okay, you do that. That's fine. But I'm going to do what I want with money. No, actually, he doesn't really spend money that much. Wonderful. You married well. We just pay the bills.

Yes, he's a pretty awesome guy. I love him a lot. So is the problem, as the great Taylor Swift asks, you? I honestly don't know. Well, if it's not him, there's only one other person. Yeah, well...

Yeah, I don't know. So what do you think is the problem right now? You said, how do I stay within my budget? Tells me you're not staying within the budget. You're overspending. You're not living on less than you make. What do you attribute that to? Is it, do you have too many bills? Is it all the debt payments? What would help you get out of this cycle?

I think it might be the debt payments and also I'm thinking maybe either our budget is too high or... Well, the budget is not aspirational. The budget is just reality. So what does your take-home pay every month? So my husband brings home $4,720 before tax, but after tax it's about $3,500 to $3,700 a month. Okay. And are you working outside the home?

No, I'm a stay-at-home mom. How many kids? We have one, and then we have another one due in March. Woo! Partay! Well, now's the time to get your money right. Yeah. You've got another line item in the budget coming. Okay, so we're trying to make this all work off $3,700, $3,500. Yeah. That's tight.

Yeah. To live in Portland? It could be a little more than that. We actually live in Woodland, Washington. Okay. But he works in Rainier, Oregon, and so the Oregon taxes, he has to pay those. Ouchie. So how much debt do you guys have total? All together, it's about $13,620. And what kind of debt is that?

It's car loan and then we just went $2,000 in debt because we were offered a house last minute and we needed something bigger because what we were staying in was getting pretty tight. Hold on. You had to? I'm confused here. What was the second debt? It's $2,000 and it was towards the deposit, first and last month's deposit for our new house that we just moved into. You're renting this house? Yes. What's the rent?

$1,200. Okay. So, you know, it's high compared to your take-home pay. It's not the thing that's crushing you guys. And it doesn't sound like a ton of debt comparatively to your income. So if you were able to throw, let's say, $1,000 a month at this debt, it would be gone in less than a year, right? A little over $1,000? Yeah. Yes. Are you able to do that right now or do you need more margin?

Um, so we're able, we think that we'll be able to pay off that $2,000 by the end of January. Okay. That's what we're trying to do. And then we're just trying to figure out how to put toward more money toward our car debt. Because right now that monthly payment is $257,000.

Okay. Because we bought a used car from a dealership. So it was a higher price used car, but my husband has good credit, so we were able to get a lower finance payment. Okay. Well, we're going to work the debt snowball. Do you guys have $1,000 in the bank right now?

No, that's what we're struggling to get right now. Okay, that needs to be your A1. We're making minimum payments on the debts. We're not eating out. We're not doing anything except for getting that thousand bucks. And because you guys have a baby coming, I would pause debt payoff and just stack up as much cash as you can until baby and you are home safe.

Okay. So I'm actually, I know it sounds weird, but I'm telling you to pause the baby steps for a few months until we get through this, we call it stork mode, and we get you and baby home. How much could you save up in the next four months? I think in the next four months, we could probably save about... You did nothing but save. Yeah, we could probably save about $3,000 to $4,000. Good. Okay.

So that'll give you four grand that you'll have in there. And we'll get to the debt. As soon as that's done and you guys are healthy and safe, we can use the $3,000 of the $4,000 and start attacking that debt.

Okay. I think your problem right now is you're trying to do a lot at once. You're pregnant. There's a lot of emotions going on and you guys are scared because you got another baby coming and life's already tough. And the key is the budgeting method that you use makes all the difference. So what are you using right now to budget? So right now we have a budget for our food, rent. But how are you doing the budget every week or every month?

On paper? We budget, yeah, well, I do it in my notes on my phone, but I budget for food, gas, and tithes for our church. Okay. We're going to hook you up, John and I, with an app called EveryDollar to where you both, you and your husband, can log in and see this, have visibility, and I'm even going to give you the premium version for a year so that the transactions come through automatically, connecting to your bank. There's a paycheck planning tool so that you know you've got all the bills covered before the month is over. Okay.

If you're willing to use it, I'll give it to you. Yes, we will definitely use it. Awesome. I also think you're, what does your husband do for a living? He is a CNC journeyman, machinist. Okay. Man, that sounds like a pretty compressed salary for that level of skill. Yeah, he's looking, he actually, me and him just talked last night and he's wanting to look into going into engineering. Would that require more schooling? Yeah.

He said it would, and I told him it wouldn't be a good idea if he did because he already has a degree in college. What's the degree in? He has one in English, I believe. I don't remember what his other degree is. And then I have my music degree. And they're both going unused right now.

Yeah. Yeah, there's not a lot of English majors that become engineers. But also, I'll say I went and got another degree because it was right for me and my family, and it has transformed the entire Deloney family tree. Okay? So just because you already have a degree doesn't mean you need to go back and get education. You don't need new education. You often need to go get new education. You just have to be intelligent about what you're doing and how you're doing it. Okay? Yeah.

Yeah. And that means paying cash, not going into debt and having a goal in mind of what that career is on the other side. Yeah. And I told him, I don't want, I think it's funny that you guys are telling me this because last night I was telling him like, I think we should save as much as we can first before we try to pay off our debt because then we'll just keep going into more debt. It's true, but something has to give.

Either he has to work this job full time and then go to a local Walmart and throw boxes until three in the morning to help you guys. You can't have him home all the time. You can't have him not trying to get more education so he can further his career. You can't have him not doing this and not doing that and not doing this. Or you can't not go get a job and put your kids in daycare. You can't have all these things we're not going to do.

And then drown under this debt and be so sick to your stomach all the time because about this money issue. So you either have to make some short-term sacrifices that'll be brutal and will cause one or both of you to have very different lives so that you can be free on the back end or you're just going to choose misery ongoing. It's just going to be tough, tough, tough, tough. Hang on the line. We're going to give to you every dollar premium. Thanks for the call, Shekinah.

Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. Hey, if you enjoy this show, do us a quick favor. It is free and it won't take you much time. And that is, if you like the show, consider hitting the subscribe button, the follow button, leaving a review, sharing it with your friend, texting it to the family group chat, and just let them know, hey, I'm here to help you.

I've been enjoying the show. I think you guys would enjoy it as well. And I've been loving seeing the Spotify rap, John. Amazon Music has named us one of the top podcasts of the year. And so it's an honor. And we don't take it lightly that you guys decide to spend so much of your time hanging out with us and being inspired by the callers and sometimes avoiding some of the mistakes they make. We so appreciate that. All of the many, many thousands of listeners out there. We appreciate you guys.

Let's go to the phones. Tina joins us in Jacksonville, Florida. Tina, what's going on? Hey, thank you for having me on the call. So we were just starting the program, my husband and I, and I threw a very bad series of mistakes with car trade, car trade, car trade, and now in serious negative equity.

And my husband and I talked about it and we are willing to do whatever it has to take to, you know, we're going to sell the car. We found a dealership that's willing to buy it, but we've got to cover the negative equity. So I tried to take out a signature loan through my credit union and we were declined. So now it's like, what do I do? What's my next step? Do I try to divvy it up amongst credit cards? Do I just bite the bullet and pay off this car?

Do I try and take a home equity loan? Where do I go? Well, any option that involves moving the debt to other debt, I hate that I have to tell you this, is not going to solve your problem. Think about it like this. You have a bullet wound in your foot. Shooting any other part of your body will not fix that bullet wound in your foot.

You got it? So here's the options you have that don't involve debt. Number one is you guys save up the difference that you owe and then sell it so you can cover the full amount that's owed. Or you said you got declined at that credit union. Have you tried others? Did they tell you the reason? Is it due to your credit score? Credit score. Okay, so your credit score is shot because of, was there delinquent payments? No, overutilization.

Okay. With our house and all of our credit, we're about half a million in debt. Oh my goodness. How much consumer debt do you guys have? I'm sorry? How much consumer debt do you have outside of the mortgage? We have $127,000 in credit cards. $127,000 in credit cards? Yeah, $127,000 in credit cards. What did you put on these cards?

Stuff for the house, helping out our kids, vacations that we shouldn't have gone on. What's the interest rate on these? The majority of them, you know, they vary between 12 and 18 percent. What about this situation? I'm asking you this not to beat you up, but I really want to know where your psychology is. You're half a million dollars in debt.

The fact that you're considering trying to clean up some of your debt issues with more debt, like at what point does it stop for you? It has to stop. Right. Because we want to retire in five years and we know it's not possible. Right. If we don't change. And so I'm willing to, you know, do whatever it takes. Well,

What's your household income? I've been listening to a couple of the shows, and Dave had said, take out a personal loan to pay off the equity, sell that car, get a beater car, lower your debt, total debt. So that's what I thought we could do, but it doesn't seem like. And I don't trust my own decisions, clearly, because if I did, I wouldn't be here. So what is your household income?

Monthly, we bring in about $13,000. Okay, good.

And what is your total minimum payments on all of the debt that you have, consumer debt? Total minimum payments is monthly, I'm going to go grab it, about $4,700. Okay. Are you able to put an extra $1,000, $2,000, $3,000, $4,000 on top of that to pay it off? That's what we were going to do, starting with the smallest first. Okay.

Good. But considering I owe almost $80,000 on this car, we thought we could get rid of it, and that would take a huge chunk out. How much upside down are you? About $22,000. And are you sure of that? Because you said the dealership said they'd buy it for this amount. Well, the dealership's going to lowball you comparatively to a private party sale. No.

So I haven't tried private party. The car, the balance we owe is about $80,000. And when I go through Kelley Blue Book, it's between $55,000 and $60,000 is the value. And the car dealership is offering us $58,000 because it's a 2023 with really low miles on it.

Okay. Well, we want to get as much for this car as we can to shrink that gap. Do you guys have any money in the bank? Just $1,000. Okay. Do you have anything in your home you could sell? Yeah.

We've thought about that. So we're just getting started, and we can start selling off. What's the house worth? I just started making my list of things that I could get rid of. I'm talking tools, guitars, motorcycles. You guys sound like you bought some stuff with those credit cards. Jet skis, everything. No, nothing tangible that's worth anything more than household goods.

Well, I'm at the point now I'm willing to sell my wedding set if that would get us out of debt. What is the house worth? The house is worth, if we go by Zillow, because I don't have the comps, but if we go by Zillow, it's worth about $424. And what do you owe on the mortgage? $273. Okay. And what was your total consumer debt load? I had cut you off. What's the total of all the consumer debt combined?

Of everything is not including the house. Not including. 233. Okay. This might be. The car and student loans and credit cards. This might be one of those situations where you make the ultimate sacrifice of selling the house. You'll clear about 150, maybe 130 after fees, and that gets you down to $100,000 in debt.

But also, $20,000 of that, you sell that car, and that knocks off another $80,000 off the total. And what happens then is you're going to have to rent for a while. It may be a long time. How old are you, hon? At least you can get out of this. I'm 59. Okay. When my mom went back to school, she got her tenured professor job at the age of 57. She just retired in her mid-70s.

that may that's not may that's 100 what you're looking at okay you're gonna have to go find a job and you're just gonna have to work and scratch and claw consider selling the house even if it's just let's sprint and get this 20 000 bucks to get rid of this car let's just do that let's go ahead and list it private sale just to see what happens to i there's something the fact that a dealership would offer you more than kelly blue book doesn't doesn't

register with me, but I don't know enough about the car or anything like that. It doesn't sound right, but maybe, maybe. And then you and your husband have to decide, are we going to get one, two or three or four jobs? Do we want this? No, I don't see a picture. We all retire in five years. I just don't. And so I think the quicker you can, you can grieve that and say, we wanted this to be the case, but it's not going to be, let's shoot for 75 instead of 65. Then you're going to, it's going to give you a little gas in the tank. Yeah.

And y'all just got to knock this thing out, like item by item by item. It will not be how you drew it up. And you have to, you have to commit to taking debt off the table. It can never be an option for you ever, ever, ever. Agreed. I'm so sorry. I'm sorry. You got to learn this lesson this way, Tina.

We're going to send you Financial Peace University. It sounds like you're new to our gang. We're going to send it to you. We're going to send you for a year the premium version of every dollar. It's going to help you and your husband get aligned to do something y'all have never done before, which is make a budget and make money decisions together. That puts this hour of The Ramsey Show in the books. I'm George Camel. He's John Deloney. I want to thank all the folks in the booth keeping the show afloat and you, America. Thank you so much for listening. 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 my good pal, Dr. John Deloney, and we are here to serve you, America. Give us a call at 888-825-5225, and we'll talk about your life and your money. Ashley is going to kick us off in Denver this hour. Ashley, welcome to the show. Thank you. Absolutely. How can we help?

This question is mostly about my daughter and we're trying to figure out how to help her.

She is 20 years old, and she lives in a different state than us, mostly just because it's pretty expensive here. But she's really struggling. We're talking debt up the wazoo, and we're having some issues with some drugs, as well as making some poor choices where we have

been in jail for short periods of time. And we just don't know what to do. We want to help her. I mean, she calls me every week to talk. But I know giving her money financially is not a smart thing because it won't get used appropriately. Is she asking for money on these calls? She's mentioned it. And at this point, she stopped asking because...

We don't have it to give her. We're still working through Ramsey's baby steps ourselves. And I said, honey, we just, that's, we don't have that kind of money. And two, if you really look at your finances, you will find the money. It's just about how you budget. What is she doing right now? Is she in school? Is she working? No.

Um, she was in school for a year and she dropped out saying it wasn't for her, which is fine. Not everybody needs a four year college degree. I, I believe that wholeheartedly. Um, but she's working on a farm now and she loves it. Is she still actively using? Yes. Okay. Um,

Unfortunately, and I wish I could give you different news, any sort of life change or behavior change or relationship change will have to come on the back end of her choosing to not be using anymore. Yeah. I know what she was using was legal in Colorado, but it's not really legal everywhere, and she just doesn't want to give it up. Okay. And I think it's causing some behaviors. Yeah, well, yeah, of course. So...

The only way I've seen people have effective relationships moving forward is that y'all meet somehow in person, whether she comes home to visit you for the holidays or you fly out there, you drive out there, and you take her out. And I say this all the time and people kind of roll their eyes. The reason I tell people to take somebody that they love when they have to have a difficult conversation to breakfast is twofold. Number one, it changes the environment.

if you have a conversation in your house the same old house that you got in trouble at when you were a kid or what it just changes the the dynamic and there's a lot of literature about the psychological shift when you're in a different environment that's number one number two if you wait till dinner you get these marathon conversations that don't end until 10 or 11 or 12 at night

If you start at breakfast, the sun is up. It's eight in the morning. It's nine in the morning. It's 10 in the morning. And we can talk for a while and it's still sunshine outside. It still feels like there's some optimism and hope. Okay. But I think you have the conversation and say, me and your dad have decided we can help in this way or that way. That might be, she can come live with you while she goes to rehab. She can, um,

stay with she she can keep working on this farm and y'all will support x y or z if she wants to whatever y'all decide but it only comes on the back of she goes through some sort of treatment program or goes to meet with a group and then she gets to hold all of the relational cards and so the way you phrase it is we don't work well without you being whole and well

And you get to choose whether you want to be whole or well and with us or not. It will break our heart if you choose something else, but you get to do that because you're an adult. And that way she can't say they kicked me out. They don't love me. I did this thing and they drew a line. No, you chose it. And I'm so heartbroken. We'll be right here when you get back. We love you, love you, love you, love you.

Yeah. That's the only way I've ever seen that be successful. And then you and your husband have to grieve and weep bitterly because one of the people you love more than anything on planet earth is an adult and adults have access to poor decisions. And it's heartbreaking to see adults that we love making decisions that we know are destroying their lives.

Yeah. I know it looks like she may be going back to jail and we've talked about this, like she'll lose everything. We've talked about going out there and getting a storage unit and helping her pack it up just because we're like, what do we do? Like we can't not sit, like we don't have control over that part, but talking with her and just saying, we will pay for a storage unit for this many months. But after that,

It sounds like you are more, you're more stressed about this than she is. What has the conversation been like on her side? Because it doesn't sound like she really wants to change her life at this point. Anytime she's gotten into trouble, she'll call me really upset. What does in trouble mean? Financially? With the cops? With the cops. Financially. After she got out of jail, she called me and said, I don't know what to do.

And contrary to popular belief or what your friends might tell you, telling her, if you're sober, come home right now. I'll come get you. I'll get you a flight. You can't bring drugs into my house and you can't come into my house if you're not of sound body and mind. But if you're sober, come home. That's okay. Okay.

I don't think that's enabling. I think that's love and that's connection. Okay. It's connection with boundaries, connection with accountability. And then she gets to make a choice. Yeah. I know she decided to leave at one point because we said we weren't going to allow the drugs in our house. And I didn't care if they were legal or illegal on this date. Sure. It wasn't happening. And so she made a hard, difficult choice. She did. And it's, she, it's not gotten better. It's gotten worse. Yeah. Everything has. Yeah.

And it breaks my heart as a parent myself. You can't change another adult. No. And it feels powerless, huh? It does feel powerless. I mean, we've talked about trying to help her get out of debt by saying you can live here for free. Meals are free, obviously, like room and board. This is not a debt issue, hon. You have to get a job. This is not a debt issue. You're trying to find a thing that you can fix for her, but none of this stuff improves until she's sober. Yeah.

And right now, I don't think she's willing to be. I've told her that she's tried to negotiate different things with us so she can come home. And I'm like, it always just feels wrong. And as a parent, she won't understand this because she's on the other side of it. But as a parent, the idea that I'd have to tell my kid, no, you can't come home unless dot, dot, dot. They'll never know how hard that is. I think you're doing the right thing.

So sorry you're going through this, Ash. I hate it for you. We're going to send you a copy of Dr. John Deloney's Own Your Past, Change Your Future, so you can heal and grieve and navigate this wild journey that you're on. So sorry you're going through it. Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. John, we've got a lot going on around here, and one of those things is the presale for my new book, Breaking Free from Broke. Did you see the actual—this is the real one, John. We got it?

The other day. It feels just right. Is it everything you hoped and dreamed for? Well, number one, it's got you on the cover. That's really all I care about. That's what America needs right now. Usually. We need healing, John. They only put my face on it. So you got your whole B-O-D-Y on here, which is impressive. I'm not going to lie. The further you zoom out from my face, the better it looks. So I want it as small as it could be on the cover.

I agree.

It has that kind of investigative feel with tons of research, with tons of humor. And by the end, you're going to have the ick. You're going to want to shower and you're going to want to break free from this toxic matrix that we've all found ourselves in. As you listen to the calls on the show, you know exactly what I'm talking about. We are stuck in this cycle of debt because we have fallen for a system designed to keep us broke. And I will show you a clear path to break free from

And have more margin, more options, more joy than ever before. And it's on sale right now for $20 at ramseysolutions.com. And we'll throw in $100 in free bonus items like the e-book, audio book, a free talk on video, an exclusive online event, and so much more. So I appreciate everyone who's checked it out so far, John. When does it actually hit the streets? It hits the streets January 16th.

is the pub date. And so pre-order before then, and you'll get all of those goodies. This is the book I wish I had that, you know, everything you wish you knew about money. This is money 201, 301, 101. And it's conversational because I don't know how to write. So I wrote like a fifth grader. It's very easy to read and conversational. All right, let's get to the calls. Cameron joins us in my hometown, Boston, Massachusetts. What's going on, Cameron?

Hey guys, thanks for taking my call. Thank you for having the accent I was hoping you would have. I'm just going to say that. Oh, God. I just wanted to start off by saying thank you for motivating me. As of now, I'm through Baby Step 1, and as of yesterday, I have paid off $5,000 out of $6,000 of my credit card debt. Way to go, man. Dude. How does it feel? Yeah, it feels great. What credit card is it? What's that? What credit card is it?

It was Capital One. Oh, man. Are you going to miss it? Yep. Nope, because I cut it up.

Amen, man. I'm proud of you. How can we help today? You're going to have to use cash at your Harvard boss. Did I do it right? John just offended all people groups right there somehow. I love that. So the reason for my call today, guys, is I'm 26 and I'm still living at home. I moved back in to help me out with finances and stuff. I still have a good bit of debt and

And I have a savings account, which would help me pay off my truck a little bit. But I'm also keeping it around because it's basically like six months of an emergency fund. So basically where I'm at today is I don't know if I want to sacrifice that to dig into my truck or keep it around for a house because I'm obviously really trying to save up for a house. And I don't want to see that money just go away.

But you're seeing that money just go every month when you make a payment on a depreciating asset. I understand. It's just whether you want it to go today or later, but it's going. Okay.

Okay.

with peace and you're going to get there. It may take, you know, a few years longer than you wanted it to, but right now that money's spoken for because it's got, you know, Ford Motor Company's name on it because you owe on this truck. So how much do you have in savings?

So after paying the credit cards off, I have about $10,000 left in my emergency fund. Okay. And six months of expenses is around $8,000. So I have the $1,000 emergency fund, and then I have that other savings account with $10,000 in it. So you got $11,000 to your name, and what's left on your debt? You got $1,000 on credit card. What else? I owe $32,000 on the truck. What do you make? How much money do you make?

This year I'm going to bring home about $65,000. Dude, that is a lot of truck for a guy with your income. It is a lot of truck. Do you need the truck for work? So I got into the electrical union, so it was a little bit of an impulse buy. I'm not going to lie. Can it be an impulse sell like this weekend? I know it would be tough to part ways with, but I guess I could sacrifice that. Are there not more trucks out there?

There are definitely more trucks out there. So could you downgrade and truck and do it with cash? I could. I could. What if? What would that truck sell for if you got the most you could for it? So the dealer would probably lowball me at like $26, but I could put it up on Facebook and probably get $30. Okay. And you have the money aside. Could you get a cheap truck right now to beat around in and then upgrade later? Yes, I could. This gets you out of debt completely, right? Or do you have more debt?

No, that's it. Just the $32,000 on the truck. Bro, you're free! Dude, I would be free tomorrow instead of trying to arduously pay this thing off. It's going to take you a while to pay off $32,000. And it's just going to continue to be worth less and less and less and less. Which is also going to delay you from buying a house, which you told us is your dream. Yeah, absolutely. So do you want a house or do you want a sweet truck that's going down in value every day? I really would like a house. And if you meet somebody...

And she goes outside and sees this truck. You're like, yeah, that's right. This is my truck. And right now you have to take her to your mom's house. Not that cool. So what if you just bit the bullet, sold the truck, you're debt free, worked really hard to get your own place by the age of 30, you're a total, I mean, your life is so transformed. You wouldn't even recognize it. Yeah, that would be, that would be nice. Um,

So if I sell the truck and still, you know, if I only get $30,000 for it, it's obviously okay to dip into the savings and pay the... Cover the difference, yep.

Yeah, you're free, man. That leaves you with $8,000, and you need a car still. So you're going to get something that will get you around for maybe $7,000, leaving you with $1,000. But now look at where you're at. You've got no debt. You have all your income to your name, and now we can restock this emergency fund up to six months. Then we can start working on that home down payment, and we'll get another $30,000, $40,000, $50,000 over time. And when you don't have debt weighing you down, you're going to get there faster. You get to be your own bank, dude.

Yeah, that sounds great to me. Are you a good electrician? That wasn't rhetorical. Are you a good electrician? No, I'm an apprentice. But someone's paying you $65,000 a year to do this. Yeah, I'm still working my way, but I'm getting better and better every day. I'm learning. Yeah.

Dude, you're my favorite person to talk to today. You're awesome. He admits, I'm not good at my job, but I get paid $65,000. People ask me, are you good at the radio? I go, no, not great, not great. No, I am good at my job. I just don't know everything. Obviously, every day I learn stuff, so it's good to... That's good. Well, I say that to say this. Nobody's hiring you because of your truck. They're hiring Cameron because they trust him to do the electrical work needed to be done.

Absolutely. And so the truck is for Cameron to feel good about himself. And I want you to feel good about yourself aside from a thing that you own. Yeah. Are you dating anybody, Cameron? I am. I've been with my girlfriend for six years and we're mutually working hard to, you know, save up for this house. Okay, I want to challenge you, okay? Will you do a 90-day challenge? Sure. You can have a couple days off for Christmas. Here's my 90-day challenge. You get done with your apprentice work and you're exhausted...

You high five your mom, you give your girlfriend a shout, and then you go deliver pizzas in that cold winter. Or you go bartend or you go work security. You go do something for 90 days on top of your apprentice job. And in three months, you're going to be so tired you can't see straight and you will have completely transformed your financial life.

in unfathomable, fathomable ways. People underestimate how much they can radically change your life in three months. Go for it. Game on. Go. I'm George Campbell, joined by Dr. John Deloney. This is The Ramsey Show. It's a free call at 888-825-5225.

It is that time of the year, folks. In a few weeks, we are going to be doing a special giving edition of The Ramsey Show, and we want to hear stories from you about how you have given generously this season. Maybe you tipped that waitress $100. You bought Thanksgiving dinner for a family who couldn't afford it. Maybe you blessed someone in need by giving them a car. Or maybe you've been on the receiving end of generosity and had your life changed by it. We want to hear from you. We want to hear your stories. We want to inspire others with it.

So here's what you need to do. Go to ramseysolutions.com slash ask and put giving in the subject line, and our team will be reaching out and sourcing some of the best stories and sharing them on the show. We do this every year at Christmas. It's one of our most popular shows, and it's happening on December 18th. I'll be on with our good friend Dave Ramsey, and we'll be sharing those stories. So start sending them in today, and let's celebrate living like no one else so you can give like no one else. ramseysolutions.com slash ask.

Iris joins us in North Dakota. Iris, welcome to the show. Hi, thank you for taking my call. Absolutely. How can John and I help? Okay, so recently I had searched on YouTube on how to get out of debt because I'm a little bit deep in. One of the major ones is I owe to the IRS, and I was just wondering if it was smart or not to dip into my 401k to pay for that. Do you have any other debt?

Yes. Credit card, personal loans, and my car. Okay. Well, I'll answer your question, and that's the short answer, and the answer is no. Do not pull from your 401k to pay off the IRS. How much do you owe them? Ten grand, a little bit under ten grand. Okay. And have you been in contact with them? Are you on some kind of payment plan? Where does it stand?

Um, recently I logged back into my IRS account and I started making payments. Um, as soon as I get like some cash, I would just put it in there and try to pay it off. Um, but I read through some information that that would be like the first one to pay off. Um,

Correct. Aside of my other debt. Yeah, so you want to make minimum payments on all of your debts, but the IRS debt goes to the top of what we call the debt snowball. So we usually say, hey, list all your debts, smallest to largest, attack the little one with a vengeance. Once you knock that one out, move on to the next smallest debt. But IRS debt is different because the IRS can royally screw up your life.

and they can garnish your wages. And so we put that at the very top of the list. That is your A1 is to get rid of this debt. You do nothing else. You don't save, you don't invest, you don't buy things, you pay off the IRS. So how quickly could you do that if you got really intense and just focused on that?

Well, that's been my plan because I recently found you guys and I did started to do the no bond, the baby steps. Um, I did, I just recently did a baby step number one and I saved a thousand dollars. And in the meantime, I have been paying little by little cause I have two jobs. Like I work nonstop and, um, I get cash tips. So any cash that I get, I deposit it and then pay the IRS. Um,

So what's your income? Well, it depends because, you know, as a server, it varies. But last year I made $70,000. Awesome. I did serving, I work in a school, and I do like bride share on the weekends. So if you went all out, you were working nonstop, all of these jobs, how quickly could you pay off the $10,000 while making minimum payments and just covering your basic bills, food, shelter, utility, transportation?

Could you do this in four months?

Five months? I believe I can. My friends think that I'm going crazy because I've been reading the Ramsey books and Rachel Cruz, and I put a lot of stuff on sale, and people are questioning my sanity. You know who's insane? I'm fine. I'm just trying to come up with the money and get out of this hole that I'm in before I can continue working.

With my savings and paying everything off. Hey, Iris, you know who's crazy? Your broke friends.

Oh my God. Your friends are broke. I have my friends buy some of my stuff and she's like, are you okay? Like your house, like you worked so hard for it. I'm like, but you don't understand my situation because everything that I have, most of it is on credit cards. Yes. I've learned. Welcome to the gang, Iris. Or the cult as some call us. Welcome. This is a great sign. You know what you are? You're free. You're heading straight to freedom.

Yes. I'm so proud of you. That's how I feel. I feel so calm, but at the same time, I just feel like I need to keep going and going and going. So do not dip into my 401k. Can I give you a great quote that will inspire you, Iris? Yeah, of course. It's the first quote of my new book, Breaking Free from Broke. This is how it opens. It's a C.S. Lewis quote. When the whole world is running toward a cliff, he who is running in the opposite direction appears to have lost his mind.

That's you. You're going against the grain. You're going against what culture is doing, against what your broke friends are doing. And it looks like you've lost your mind. But instead, you were running away from the cliff instead of towards it. So we are so proud of you. You're doing all the right things. But we've got to aggressively get this IRS debt out of off our back. What's the rest of your debt? What's the total?

The total, $48,663, and that includes my car payment or my car and a personal loan. What's the car worth and what do you owe on it? I owe $13,000 on it. Okay. And I think I bought it for $23,000. Okay. Okay.

Well, we'll keep the car. I was seeing if that was the ankle biter we could get rid of, but it's not that much of your world. I would just aggressively pay it off in the debt snowball, and I think you're going to be out of debt. I mean, you've got a total of $10K plus the $48K. You've got $58K in debt. You make $70K. That's how much I made last year, and this year I haven't done much of the ride share, but I've been picking it up on the weekends because that's when it gets the busiest. What do you want to do long term? Yeah.

I'm not sure yet. I had future plans because I had planned on getting my husband here from another country, and I did, but things didn't work out. So that left me in a little bit of debt, and I counted on his. Where is he? Like on his income. He's here now, but I'm not counting on his support financially. That's one thing that I had in mind.

but because he was going to help me pay off like what like one of the personal debts was that I I took it alone to get him here you know he is here but we're separated now so now I'm left with that and um and I just need to get out of this by myself sorry to hear that Iris that that definitely throws a wrench in your plans

Oh yeah, it's okay. I mean, I've always been alone, so I know I can do this, but I know I've been really financially irresponsible. And honestly, I've never sat down and thought about all the debt that can accumulate within the years and the interest and all the payments. Like whenever I sat down and I wrote all these down in paper, that's when I'm like, oh my God, where is all my money going?

Your money is making other people rich. That's the best reality check. I had to cancel on my trips and I was supposed to go on a trip for Christmas and I had to cancel that. February I had another trip to go to Mexico for a campaign and I had to cancel that. I just have to say no to a lot of things, but I know that in the future it's going to be worth it because I'm going to be free and

all my hard work is going to pay off. Absolutely. It's awesome. We were going to give you some resources, Iris. Number one is Every Dollar Premium, and that's going to help you. You said, hey, I put this on paper. I'm going to help you put it digitally so you can carry it around in the palm of your hand on your phone and make a plan. And I'm also going to give you a copy of our friend Ken Coleman's book, From Paycheck to Purpose, which is going to help you figure out what that

next step is for your career journey because I think that's what you need. You need something stable that you can dig into for the next 20, 30, 40 years that you love to do, that you get paid well to do as you build wealth. So hang on the line. Austin, get her the Get Clear Assessment too. Boom. We're hooking you up, Iris. Use it. Call us back. Let us know if we can help in any other way and we'll celebrate your debt-free scream when you get there. This is The Ramsey Show. ♪

This is The Ramsey Show. Our scripture of the day comes from Proverbs 16, 24. Gracious words are a honeycomb, sweet to the soul and healing to the bones. Mark Twain once said, never argue with stupid people. They will drag you down to their level and then beat you with experience. One of my favorite quotes, John. It reminds me every time I jump into the YouTube comment section, I go, this was a mistake. Should have listened to Twain on that one. I think we'd all be a little better off if we listened to Twain.

Agreed. In life. He was the original tweeter. I mean, the man just spoke in tweets. But it's one of those reminders that, like, we're not doing anything new. We're finding bigger ways to blow holes in the ship and sink it faster, but human nature is human nature. Yeah, and that was before he had social media. It would have been a dark time for Twain to be around today. No way. He would have beat the cancellation. Let's get to the calls. I need some hope, John. Let's see if Cooper can provide that in Olympia, Washington. Cooper, what is going on?

Hey, how's it going? I appreciate you taking the call. Absolutely. What's going on with you? Oh, I've got hopefully a simple question you can answer. So I'm 21 years old and I'm trying to figure out if I'm currently renting out a house. I'm trying to figure out if now's a good time to start looking at purchasing my own home or it'd be better to increase my savings and whether I invest the stuff I have now to maybe further my down payment. I'm kind of a little bit lost because I got a new job and so I'm a

looking for what's the next step. Okay. Give us a little bit of your financial picture. Do you have any debt? I'm debt-free. I've got roughly like $25,000 in my savings account, and then I've got $31,000 in a CD loan that I'll be pulling out in January. And is that $25,000, is that your emergency fund?

Uh, no, that's, that's savings. That's everything I've got in the bank. Okay. So do you have a separate emergency fund? I do not have a separate emergency fund. Okay. Let's call that your emergency fund. Is that about six months of expenses for you? Um, no, that's, it's 25,000 and I spend roughly, uh,

Let's see, $3,000 a month. So about $20,000. So $18,000. Okay. So let's call $20,000 your emergency fund, and we're not going to touch that. That's not going to be part of this home buying process. So outside of $20,000, you have the other $5,000 plus the $31,000?

Yep, and then I have $12,000 inside of a Roth, a Vanguard Roth IRA that I started two years ago. But now that with my new job, I have the option to use a Roth as my deferred comp. And so I've just been putting all my money into that rather than my Vanguard Roth. And I didn't know if that was something that I should...

pull out and use for that because I'm not so sure certain how much 12 grand over a long period of time is going to help out. I mean, it would turn into a whole lot if you left it alone. I definitely would not unplug the growth and tap into that. I know there are some people say, hey, you can dip into your Roth and take out the contributions without penalty. I wouldn't do that in your shoes.

You're a young guy. You've got plenty of time for compound growth to do its thing. I would use future income and current savings for this home purchase. And you'll get there. What's your income? Yeah, so it works a little different. So right now I'm making like roughly $89,000, but I have step pace over the next five years. I get a pretty significant increase. And by roughly year five, I'm on year one right now. Okay. Year five, roughly will be probably $115,000. Awesome.

So we're going to call it 90 for now. How much can you save making 90 with no debt if you just focus on saving up for that down payment? How much could you save in a year? I'm bringing home roughly about $2,000 into my savings each month, so $24,000. Okay. And that's before overtime. I could bump that numbers up with overtime for sure. Awesome. So if we take your $36,000, we add $24,000 over the next year, that brings you to a total of $60,000 you have for a down payment.

Yeah. So what is your home? The parameter that will help you with this to figure out the math on it is you want to have the mortgage payment be no more than a quarter of your after-tax income on a 15-year fixed. And you can use our mortgage calculator on our website to start crunching the numbers. And what that does, it helps you figure out what kind of home budget should I be looking for and what kind of down payment do I need to accomplish that goal?

I see. Okay. And then, you know, as far as over this next, you know, the year that I'm going to be going to be working, saving up for that down payment, you know, what should I be doing with my money? Because, you know, I'm renting right now. And so that's...

No, Cooper. Cooper, my money right now is in a savings account. Is it? And you know how much sleep I lose? Zero. It's in a high-yield savings account. You know who else is? George.

Okay. You gotta unbelieve this narrative that renting is- Get off TikTok, dude. You're burning money. Renting shows patience. It shows responsibility as you get your financial house in order.

Because you know what's really burning money? When you can't afford the mortgage because it's 60% of your take-home pay because you bit off more than you can chew before you're ready. And those are the calls we get on this show. And the air conditioner goes out or the hot water heater goes out or whatever, whatever. So I will tell you what I did as to how I got a huge down payment saved and how we paid off our house early. We put the money in a high-yield savings account. And I'll tell you, at the time, it was a 2% interest rate on savings accounts. And my wife and I were freaking out. We were like, we are making money hand over fist with this thing.

And now it's 4% or 5%. And so you can make some decent money just holding money in a savings account. Don't invest it. Don't put it in a CD, locking your money away with penalties if you take it out early. Just put it in a high-yield savings account and be patient and sign the lease for another year as you continue to rent and save up more money.

Okay. Ideally, I want you to put 20% down. I think for a young guy making really good money who's debt-free, you should be able to put 20% down, avoid that PMI, private mortgage insurance, and keep that payment to no more than a quarter of your take-home pay. Hey, Cooper, are you the first guy in your gang to make this kind of money? Yeah. Yeah, I am. Okay. What about your family? I would say my parents are...

They definitely didn't start where I was at. Okay. You know, they're the retirement age now. And so maybe the last two years they were getting roughly what I am now. So let's, let's round up and say you're making a hundred grand.

There's this perception with people who don't have a hundred grand that all of their problems would be solved with a hundred grand. And if they had a hundred grand, they could buy any car they wanted, any house they wanted. And what are you doing? You make a hundred grand. You're renting. You're going to drive a used truck. You idiot. You make a hundred grand. If you want to be a millionaire, you got to slow down.

And you have to change. You have to not take money advice from broke people or from people who don't know what they're talking about on the internet. If you will rent for 12 months and you will dump all this money after you pay your debts off into a high yield savings account and just be patient. This is just the slow pain of getting in shape. It's every day. You're going to wake up in a year and you will have transformed your entire financial picture.

Okay. Don't listen to anybody. Be slow and boring, dude. Slow and boring. Are you investing right now as well? Yeah. How much? What percentage? Initially, I started working in high school and I was

That's when I was putting all my money into that Vanguard Roth. And then, you know, from high school to essentially this last February where I got this new job, I just basically been, you know, working 80 hours a week trying to boost my savings account as much as I can. And so I was putting all my money into that Vanguard Roth. But now that I've got my new job, I'm just putting in $700 into my savings.

457B. Okay. I say that because it could... If you're really jonesing to get a house, you can pause investing for a short time so that you have an extra $700 to put towards the savings goal. Yeah. If that's going to be a difference... When you say short period of time...

I'm talking a year or two. How long is that? Yeah, no longer than a year or two. If it's going to be longer than two years to get this house, I would continue investing. And you can split the difference. Maybe you do $200 or $300. But if you're really jonesing for a house, which I would caution to have patience and do it when you're ready, that's an option to speed this process up because you're already working your tail off, man. You're crushing it. I'm proud of you. You're doing the right things. Just don't get distracted.

and be the tortoise, not the hare. That puts this hour of the Ramsey Show in the books. My thanks to Dr. John Deloney, all the folks in the booth keeping the lights on and the audio going, and you, America. Thanks for listening. We'll be back before you know it.

Hey folks, Dave Ramsey here. You know, budgeting doesn't have to be boring. You just need a budgeting app that's made with you in mind. And that's EveryDollar. The EveryDollar app has helped millions of people work the baby steps and take the stress out of planning and managing their money. Start budgeting with EveryDollar for free right now. Just go to ramseysolutions.com slash EveryDollar and download the app today. That's ramseysolutions.com slash EveryDollar.