Early Money Decisions Shape Your Financial Future

25:52What are you doing for rent and all of that? Yeah, no, right now I'm living at home Which probably doesn't help the spending Yeah, well, it's fine I mean, you're in college which is I think that's totally appropriate. So what do you have to pay for? What are the things that you're responsible for? Right now it's just my phone and gas. Phone and gas, okay. And what are you making every month? Naturally it varies, but it's usually about two grand a month. Okay. Because if I'm you, I have very little motivation to even go work when my only two things I need to survive is covering a phone bill and gas.

26:29And because you're a full-time college student. So you're in college, which I don't think is bad. Yeah, that's great. You're in college. You're doing well in your classes. You're going to graduate on time. So I think the best thing for you, Gabe, honestly right now is to work on your habits. And you need to start creating some new financial routines. And so you can do this. You can even automate some of this. I don't always recommend that for people because I kind of like people's behavior to change because they're actually the ones doing it. But for you, I would almost say, yeah, make it a goal where you save half of that.

27:01What if you saved$1 ,000 a month? Because how much does your phone and gas cost? Not much. It usually shakes out to around$300,$400. Okay. So, yeah, what if you gave yourself$600 to spend on how you want and then save half of your income? And you do that for the next, golly, six months? You'd have$6 ,000 when you graduate. that'll help you upgrade a car and actually start moving. But you can even go in and automate some of this. Like you can set up some systems in place with online banking and that kind of thing. And when your paycheck hits. It's like pay yourself first. Yeah, absolutely. I'd be giving some too.

27:40I think there's a practice of generosity in there. Give, you know, it's however how much you want, but even 200 bucks a month. Practice that part. Practice the saving part. And then you can still enjoy some of it. So I think you're in a good spot. I think it's just the habits and the routines month to month that you need to change. And when you kind of get those in place, you start to be disciplined. You start to know what you're doing. You're telling your money what to do. And then when you graduate and you get your first job, those habits just go in from a$2 ,000 a month to maybe a$5 ,000,$6 ,000 a month salary.

28:12And, you know, you've changed the way that you handle your money. Literally, your behavior changes. Okay. I was exactly like you, Gabe. I'm looking back at when I was— You were not that much of a spender. No, but when I was living at home, I was working at the Apple store. Yeah. And every paycheck would just go to like gear and just spend. I wasn't saving any of it. Well, because there's no urgency. Exactly. I was living at home. So it makes sense. And so I just, I remember feeling that way, Gabe. And what unlocked it for me was getting out of the house. I moved across the country, started fresh, finished school.

28:43And that sort of put a new pep in my step to go, listen, mom's not going to save you with her home cooked meals. I don't think he should move out though. Do you? No, no. I'm saying once he graduates, though, he needs to just go ahead and find an actual job. Don't stick around home saying, well, I could save up for a house faster. And then all of a sudden you spent 500 bucks on DoorDash. Yes, that's right. That's right. Yeah. So when you graduate, you need to move out. That needs to be a big goal. Create some problems for yourself because we are wired to solve problems. And right now you just don't have many, which is not a bad thing.

29:11But if you want to accomplish your financial goals, you kind of need to have some mojo. Yeah. And right now it's hard to have that when mom is folding the laundry. True. Gabe what kind of car do you have right now Well right now I don't have anything I'm driving my dad's For DoorDash How does he feel about that He feels fine about it Because he does it part time too So you know He doesn't really mind Well I would make that a goal then You said that but I would reiterate And if you saved $1000 a month Gabe I mean you could have a$6000 car in six months. You know what I mean? Do you have a high-yield savings account, Gabe?

29:55Yeah, I do. I'm shopping around for another one because I'm not a fan of the one I have. Perfect. We got just the one for you. Go to fairwinds.org slash Ramsey. They just created a new bundle for our fans. It's got a great high-yield savings account, so you can actually attach your checking and savings and then start to automate that$1 ,000 a month to just go straight from checking into that high-yield savings. And like Rachel said, if you automate that, you'll just pretend the$1 ,000 never existed. So pretend you make$1 ,000 a month, and now we have to live off of that. That helped retrain my brain as well.

30:28Okay. Yeah, make sure to check that out. And you'll get the Ramsey debit card with that bundle. Oh, yeah. And it says, debt is normal, be weird. You're not deeply in debt, Gabe, but at least you kind of get that reminder. It's a good reminder. Yeah, every time you see it. Especially as you enter adulthood, it's so easy to be tempted to take out the car loan, open the credit card, go into debt. take out the person alone, whatever it is. And so this will help you avoid that temptation. Yep, for sure. This is very natural. You're 20. You're not weird. You're just 20. Yep, just put some disciplines and new habits in place.

30:59I think you're going to be fine. But George Camel is spender. What can I say? Left to my own devices with Mama Camel cooking at home. Unbelievable. I'm spending every$16 an hour I make.

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32:18Our question of the day is brought to you by Y-Refi. When life happens and those private student loans go into default, Y-Refi offers real responsibilities, not judgment. Y-Refi will help you explore low fixed rate based loans on your unique situation, based on your unique situation. So go to Y-Refi.com slash Ramsey. That's the letter Y-R-E-F-Y.com slash Ramsey. May not be available in all states. Today's question comes from Mason in Michigan. Is Dave's stance to only buy a cell phone in cash, or is he okay with putting it on an installment plan with a cell phone provider over two or three years?

32:58Couldn't tell you Dave's stance. I could guess Dave's stance, but we can give you George and Rachel's stance at least. I don't want to put words in the guy's mouth. He's not here to defend himself. But the simple answer is yes, only buy a cell phone in cash. An installment plan is effectively debt because you have to finish paying off the phone before you actually own it. And you're also locked into this contract for two or three years. So if anything happens, you want to switch, you want to change phones, well, you're kind of stuck in these handcuffs with that cell phone provider. And so I always recommend buying a phone in cash.

33:31And if you can't afford the brand new iPhone 16 Pro Max with 512 gigabytes, then don't buy it. You can buy a used phone. In fact, I just sold a used phone online. Oh, you did? Within a day. I got great money for it. And you were laughing at some guy's phone in the lobby. It was like an iPhone 6. It was so vintage. It had the one lonely little lens. We were taking pictures. I never even noticed that stuff. George is like the Apple guy. And he's like, hey, is that the iPhone model 4? This is from a former Apple Store employee. I know. As you can tell. And the guy in the lobby with the phone, he's doing great.

34:06He's thriving. He's living a great life. Thriving. He's fine. So you can buy a cheaper phone if you need to. All is going to be okay. I feel like these installment plans also have caused like cell phone inflation. Because the cell phone company is like, we can charge whatever. They'll just put it on payments. So it's part of the problem and it causes you to get into a cycle where it's like a gateway drug to other payments. If you're okay with this payment, why not buy now, pay later? Right. They promise 0 % too. Well, and the thing always is when you get stuck in a system where you're locked in and you cannot get out, that's not fun.

34:38Like that's not what you want to do. So that's essentially what debt is and essentially what these kind of plans are. That's the simplest answer. Good question. I hope he's buying an iPhone. Don't be an Android guy. Oh, come on, George. I'm not an elitist. Such a judgmental. Do you know I had an Android? Did you? Yeah, I had a BlackBerry. This is back in 2007 or something, but it was a BlackBerry. That doesn't count, does it? And then an Android. That's not an Android. No, then an Android. I'm giving you my cell phone. I was a Nokia user and then a Blackberry and then an Android for two years.

35:16And I swear I would never get an iPhone. I don't know why. I didn't like them. I didn't like the people that had them. There we go. That's the real answer. That was in like 2010. And now you've changed. Now you are that person. Now I'm that person. And I've been that person. I kid. I like to upset the Android people with their green bubbles. I don't need you in the group chat. All right. That's all I'm saying. All right. So true. Let's go to Lauren. in Kansas City. Hi, Lauren. Welcome to the show. Well, hello, everybody. Hello. How can we help? Okay. So my question is, should I take money out of my savings to start a small business to hopefully, you know, make more money to save more money?

35:53Because at this point, I think I'm on baby step six. I just own a three bedroom condo technically in Branson, Missouri, and I'm trying to pay that off as quickly as possible. But I'm literally working 80 hours a week to try to get ahead and I'm killing myself. Oh, girl. What are you doing for work and what do you make? Well, I am a property manager at a Choice Hotel and, well, I make 20 an hour, but so that's not even 40 grand a year. And my front desk agent at the Hilton and that's 16 an hour. So I probably make about 34 a year if I'm lucky after taxes. And you're legitimately working two full-time jobs?

36:32Yes. That's exhausting. Right now I'm at the Choice Hotel, and then I leave here at 2.30 to work 3 to 11. What does the growth track look like in the hospitality world where you can make 75K a year? Well, you're wanting to start a small business is what I think. You want to leave this industry completely? Maybe not completely. I want to do the – if the business got busy enough, I would leave the hotel business. But if not, I just want to add extra income. Sure. Because I'm more passionate about events and entertainment and mainly party planning. So pitch us your small business idea. How much is it going to cost and what's it going to be?

37:10Okay, so I want to rent out photo backdrops, you know, like the florals, like the pretty stuff people stand in front of to take pictures at, like, bridal showers, baby showers, weddings, Mother's Day. And I do have a couple of connections, like, with the Hilton and the convention center in town. Because there's a lot of weddings and events there. Have you done these before, Lauren? Yeah. I have but it's just like I have two backdrops that I own personally okay and I've written them out a handful of times and how expensive how much money can you make by doing that like if an event rents out one of your backdrops how much are you making well depending on the backdrop I mean a hundred well two hundred dollars for the most basic one and like up to four hundred dollars depending on how fancy the backdrop is but my issue is only have two and they're not fancy So if I invested in more backdrops, it's going to cost me anywhere from$3 ,000 to$5 ,000 just to have a handful of backdrops.

38:06Okay. And how much do you have in your savings? $30 ,000. $30 ,000. Nice. Are you single kids? Yes. No children. No man. Yeah. So is$25 ,000 a good emergency fund for you? Do you feel comfortable with that? It feels like a lot. Oh, yeah. Yeah. For sure. And I was just trying to, because I only owe$54 ,000 on my condo. So I was trying to just, you know, get up to$60 ,000, pay it completely off. And then, you know, my$5 ,000 would be my emergency fund. But it was like, should I try to do the side gig or the side project business to make more money quicker without killing myself? How much of this can you do on your own without hiring other people?

38:49Because you're kind of stuck trading your time, right? You've got to bring the backdrop, set up the backdrop, break down the backdrop. You've got to keep it local to where it's drivable, right? Exactly. For the most part, I can do it all by myself. Now, in addition to the backdrop, I also do balloon arches, and those can be anywhere from$100 to$300, depending on how much time it takes and how many balloons it takes. Yeah. Well, I mean, if you had a great backdrop, Lauren, and you could charge$600 and you did one of those a week, I don't know how many parties are out there. That's$2 ,400 a month.

39:28It'll be more popular during special events and holidays, like Christmas, New Year's Eve. Sure, sure. Because ideally you could get to the place where this replaces the front desk job that you're making$30 for. And if you could do this instead, maybe still keep the other one, but replace at least one of these so that you're just working a few hours versus till 11 every night, you know, at the front desk. That seems worth it to me. And it seems like it's been somewhat proven out, the fact that you're - You've got connections. You've done this before. You've made money. So I would, yeah, if you're going to spend cash on this and go with a small investment up front with three to five grand, I would go for it and see where you can take this thing and see how you might end up needing to hire someone out because you're working and can't be at every single event in all places at one time.

40:15But maybe you pay them, you know, 15, 20 bucks an hour to go set it up and break it down and you still make profit. And that way you don't have to be everywhere. Yeah, exactly. And it doesn't take long. I mean, they're heavy and kind of annoying, but it literally takes me like not even 30 minutes to set it up and, you know, get it in place and then 30 minutes to break it down and put it in my car. I'd also drive a Prius. I was going to say, I feel like you're going to need a pretty big car to carry all these backdrops. So what I don't want you to do is go, I had to finance a$50 ,000 van to transport the backdrops.

40:50So just be smart about it. I think my car has been paid off for nine years, so I'm going to let it, you know, die on me. Lauren, you've been very smart. You don't have any consumer debt. You have a lot of savings. You're taking your time. You're working to pay off the condom. I mean, you're doing your gut so far is correct what you've been doing. So yeah, I trust you. Maybe I'd say I'd work on saving up and cash flowing a SUV or van so that you can use it for business and increase your income that way too. Yeah. Cause I also wanted to like, not just do the backdrop, but you know, make it pretty, you know, purchase a few, um, like benches, which I have a couple, but they're like fold up benches.

41:31I can fit in the Prius. I can't get couches and stuff. Yeah. That's a lot. Too much traffic to the top. For sure. Just go slow and be smart about it. Use profits to reinvest in the business and start to grow this thing and see where it goes. Yeah. I'm for it. People love a balloon arch these days, Lauren. Ladies love a balloon arch. You're in a great business. The men could do without them.

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42:57it.

43:02Welcome back to the Ramsey show in the Fairwinds Credit Union studio. I'm Rachel Cruz with George Camel, and we're taking your calls at 888-825-5225. Up next, we have Emma in Minneapolis. Hi, Emma. Welcome to the show. Hi. Thank you so much. Absolutely. How can we help today? So I am a senior in high school. I'm freshly 18 years old. And I got into my dream college, and I don't know how to tell my parents. Wow. I thought there was going to be something bad that happened. This is good. So give us the context of why this is bad news for your parents. um so my dream school for my whole life has been um university of northwesternst paul whole life since you were zero years old you're like this is on my my dream pinterest board is that that's a private is that a private school yes it's private and christian yep how much is that tuition?

44:05It's about$38 ,000 a year. Okay. Okay. So what have you and your parents talked about when it comes to college? So I've known for a very long time that my parents were not going to help us, were not going to help me with college. I'm the oldest of six kids and we live on just my dad's income. Okay. And so they don't want me to go there because they don't want me to go into student loan debt, which I understand. Yeah. 100%. What I haven't told them. I think you have probably 99 % of people listening to this saying, yep, we agree with your parents. We are. And so you've not told them Because you're going to go And you're going to go take on Essentially over four years $160 ,000 What I haven't told them is that I got Yeah What I haven't told them is that I got a Partial ride scholarship Oh well that's great Okay so how much does that cover It covers about$44 ,000 over all four years.

45:22Okay. So you're down to like, you'll owe$120 ,000 or something? What's the number? It's$11 ,000 a year for all four years, so I'm down to like$105 ,000. Okay. And how much do you have saved? I actually do not have a savings account. I have been helping my parents with the bills and stuff. I work for the family. So they're struggling financially? Yes. Okay. Oh, wow. And you're working part-time, and that money that you're working for is going to the household? Yes. Was this something you're doing out of kindness, or was it like a, hey, if you're going to live under a roof, you've got to help around because times are tough?

46:09No, it's kindness. Okay. And they're taking your money?

46:19Yes and no. So I contribute. I help pay for groceries and stuff. And I am aware that some of the money that I'm paying them, they're putting in a savings account for me. I just don't know how much that is. So we can get some clarity on that. We've got to know if it's$1 ,000 or$10 ,000. I think if my math is right, it should be around$8 ,000. And what if it's zero? What if they spent it all?

46:56I don't know. Yeah. Well, I hate to say it. I mean, I know there's, you know, people are in different circumstances financially, but asking an 18-year-old to help provide for the family, that's tough for me. so I would hope that they just took the money and put it in a savings account but I would ask them tonight because it is October and if you're a senior in high school you're starting to get early it's what you're doing you're getting college you've sent out college applications you're getting the letters in you're figuring out your next steps and you do that around this time and so for you Emma to know going into the next nine months of what you have to work with and staying within that.

47:41So I want to be really kind because I really appreciate the dream school. I know that you've thought about it and all of it, but there is a sign of maturity, Emma, that when you choose to live within your means, you don't get to do everything you want. And that's a true sign of an adult. And we talk to people on the show that are 45 that don't even grasp that. and so I would implore you that your friends Rachel and George can tell you in the real world when you go out to get a job majority of people don't care what's on your diploma they really don't some to some care that you have a four-year degree I mean that's I think a great thing to have you know so I think that's great but people don't care and they don't you know the name of the school and all of that it is a it is not usually a sign that you're going to be successful and get a job that's going to then carry you throughout your adulthood.

48:43And going$120 ,000 or$105 ,000, I think it's going to end up being a little bit more than that after room and board and everything. What are you studying? I was planning on double majoring in pastoral ministry and communications. Emma. Emma, we just talked to a worship pastor who's making$58 ,000 a year. And he's been doing it a long time. That's a successful worship leader. It would take you like seven to eight years to pay this off. No. No. Please. Please. Please no. What do you want to do on the other side of this? Tell me the job. Like if I could just do this job, it would be a dream. Summer camp director.

49:31Okay. Love it. I love the clarity there. Here's the good news. I don't think you need a communication degree or even a pastoral studies degree to be a summer camp director. You know what you need? Experience at a summer camp where you work your way into a directing role. That you can do for free. So this is actually great news. This gives me so much hope for you that we can avoid a crisis. Because here's what, let me play this out, and you can go watch the Borrowed Future documentary we did on the student loan crisis. I think it'll help you understand some of what we're talking about. my fear for you is that you can never be a summer camp director because there is no summer camp director job that pays enough to cover the payments on the student loans that you end up taking out so you're gonna have to go get a job you're gonna have to end up being you know an administrative assistant or something i mean which is not bad but you're not going to get to do what you want to do in life because you're gonna have bills to pay for years for for years and years and years and years for a christian private education that you didn't need you don't you don't need it um Now, would it be a great time going to the school?

50:32I think so. But is it worth 120 grand for the price to have this experience? I don't think it is at this point. Now, if you had a full ride and you were like, I just want to do this for fun, I'd go, good for you. Go for it. But I just, I got into my dream school, Emma, when I was 18 and it was 50 grand a year for four years at going to a film school. And I said, I don't think I can stomach 200 grand in student loan debt to maybe be a film director one day. And I think that was the Lord saying, please don't do this young man. Yeah. Your future is going to be bright without that. When you look at scripture, Emma, every time debt is mentioned, it's in a negative fashion.

51:07Now it's not a sin. If you end up going, you're going to get to heaven with student loans. You're fine, right? It's not a sin. but every time it's mentioned, it is negative. It's a curse. You are a slave to the lender. It is not wise. Go read Proverbs. Go read Proverbs. What God has set before you and before you make this mistake, Emma, please listen to your parents. They're giving you good wisdom and figure out how much is in that account because I think you can go to a community college even for a little bit if you need to.

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53:27I'm George Campbell, joined by Rachel Cruz. This is the Ramsey Show. Open phones at 888-825-5225. We're heading to Tampa next to talk to Corey. How can we help, Corey? Hi there. Thank you for taking my call. Sure. What's going on? I'm contemplating selling my small business to accept a job that would increase my total income to try and get out of this debt that we're in as quick as possible, and I'm just trying to make sure that I'm doing the right thing. Okay. How much debt are you in? Right around$100 ,000 before my mortgage. Okay. And what kind of debt is the$100 ,000? Let's see. We got$35 ,000 is allocated towards the small business.

54:14It's a food truck. So that was a startup loan from friends and family members, about$30 ,000 in student loans,$10 ,000 to fix the AC, and then about $22 ,000 in, or no,$25 ,000 in vehicles. Okay. And what is this business worth if you were to sell it? I would estimate around$42 ,000 to just sell the trailer. And then I also have a truck that I bought to use with the business that I could potentially let go as well. What's that worth? It's worth right around$13 ,000, and I owe$18 ,500 on it. Okay, so you're about$5 ,000 underwater on that. Okay, so you would get$55 ,000 essentially for selling this business?

55:09Correct. And you'd need another$5 ,000 to get out of the underwater loan, and you're about$100 ,000 in debt. So this gets you out of debt twice as fast. And what's the household income now? Right now, my wife just got a promotion. She makes$67 before bonuses with potential$12 ,000 in bonuses. I make about$550 at a part-time job a week. And then the trailer, we really don't take a paycheck from it. I just, whatever profits at the end of the month, I throw at debts, which is averaging between, you know,$2 ,000 and$3 ,500 a month. Okay. So, all together, you guys make about$100 ,000 a year? Roughly.

55:55It's not including the trailer in any way, shape, or form, seeing as how I don't take a paycheck from it. It's closer to, like,$85 ,000 to$90 ,000. And what's the new job, Corey, that you're looking at? I would be taking a chef position at the part-time job now, which would get me up to$73 ,000 guaranteed with a potential$12 ,000 bonus as well. Amazing. For the food truck itself, is it something you would go back to doing? If you were completely debt-free, would you still keep doing this, or are you getting burned out? Well, I kind of burned out on it. I've been doing it for about two and a half, three years, working seven days a week, you know, 70, 80, 90 hour weeks.

56:44And just it was never supposed to be the end all be all. It was supposed to be a stepping stone towards a brick and mortar location. And it's just looking like the reality of it puts it, you know, five, six, seven years down the road. And I just don't think that I could put my family through that hardship. Yeah, totally. That's mature of you. Yeah, and I think you're listening to your gut, and I think you're seeing kind of the tea leaves of what's happening, which I think is really smart, Corey, really, really smart, especially when you talk about the food industry. We've gotten calls of people that want to go straight to the brick and mortar and take out a massive loan, and the food industry is one of the highest ones that, you know, the highest parts of small businesses that goes up, and it goes down, and it closes more than any other industry.

57:33yeah uh it's just a and as you experience with the food truck it is just a it's a tough it's a tough world to be in it's a lot of work a lot of work and again not always with the guarantee that it's going to be successful so um being a chef somewhere i think sounds like the perfect next stepping stone you're gonna get a 50 grand raise while getting rid of half of your debt and you're still doing the thing you love you're still able to you know be in that world of of cooking and food and hopefully innovating. Yeah. I mean, like to me, this is kind of a no brainer, honestly, because I don't know, you kind of get to still live your dream, but not have to deal with owning anything right now.

58:10Right. So yes, I would. I would do it. I'd try to get top dollar for your trailer and the truck. And do you have anything in savings? We have right around 2000 in our emergency savings. and then I have about$2 ,000 cash that just kind of floats around for expenditures. Okay. You may want to wait another paycheck or two, get that$5 ,000 difference that you're underwater on so that you have the money to actually get rid of the note on that truck. Okay. And that way you're not having to take out another loan to clean this up. And then I'd take that new job, man, and I would clean this mess up. I mean, you'll be making, what,$150K household at that point?

58:49Roundabouts, yeah. And so you're$50K in debt? 24 of it's not guaranteed. So there is a little bit of a fluctuation on it. Sure. And then we're just - Making about 150 with 50K left to pay off, that's going to get knocked out real quick versus your situation now, which is we make 80-90 with 100 to pay off. The math ain't mathin' on that one. So we do need some drastic changes. You're willing to do it. You're burnt out on this. And guess what? Later on down the road, you may decide to do this dream again, but you're going to do it with cash with more experience while making more money. And so I don't want you to, I know it's, it's hard to grieve something that you put your heart and soul into, and I can tell you're passionate about it, but there's also wisdom and going, now's not the time.

59:31Yeah. And, you know, we've, we've just found Dave Ramsey and your whole system a few months ago, and we have made considerable progress towards our debt. We always live in all of our debts from three years previous. We haven't gone into any debt in the last three years. We were just paying minimums, and then we read Total Money Makeover, and we've started trying to get out of this debt. We're still struggling with the budget somewhat. I feel like there's still more room for cutting some expenses, but it's just been a little bit of a struggle. Yeah, and just to give you some hope, and I mean, you guys have just been doing this a couple of months, and even with the budget, we say it usually takes about three to four months to really get in the cycle of doing it, and it actually be correct that you can live on.

1:00:20So you guys are just starting out. And the fact that you're so gung-ho about it, I'm like, you're going to make great progress. And the budget is easier to do when you have less debt, more income. The numbers will start to give you some hope instead of go, oh my gosh, how are we going to fix this puzzle? And so we're wishing you the best, Corey. Appreciate the call. Yeah, and you know what? Hold on the line, Corey. Christian will pick up and we'll give you every dollar premium for a year on us. And this is our budgeting app that hopefully will help give this a little bit more organized. It's a very, it's a great app because it's very fine-tuned.

1:00:51Like you get to see all the caters. Yes. All right. Let's go to Kathy in Boston. How can we help Kathy? Hi. Hey, what's your question? Okay. I'm 67 years old and I'd like to retire in three years and I do have money in stocks and bonds and mutuals and I'm not sure if I should keep it there or if I should maybe switch to annuities or IRA CDs. I didn't know the best way to go. Well, I mean, switching to annuities and IRA CDs, you're talking about really lowering your ability to make any money. And so you're just sort of preserving what is. And, you know, if you're 67, there's a good chance you live to 87 if you're in good health, right?

1:01:33Yes. And so I want to see your money grow beyond the rate of inflation. So what is your money in and how much? I have approximately$215 ,000, and that would be like Stocks, Bonds, Mutual, because I have it in three different places that kind of manage it. Okay. What else? I do have, I get, have social security. Okay. And then I work and I work. Okay. So what's your plan to actually retire? How will you cover your expenses in retirement? What are your monthly expenses? is? Oh, let's see. Maybe$1 ,600 a month. I mean,$2 ,000 would be way overkill. Okay. And what's your Social Security payment going to be?

1:02:26$2 ,100 after tax. Okay. So that's enough to cover the baseline bills for now without more inflation. And I would leave your money invested in the market. I wouldn't go to search for a 4 % return when what we've seen in the market. I just checked my 401k last year, Kathy, 37 % return when I just left it in and didn't touch it and left it in the overall market and gross stock mutual funds versus those less risky but lower return things like those CDs and annuities. So I would stay on your plan. This is The Ramsey Show.

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1:04:43welcome back going to the phones we have sarah in riverside california hi sarah welcome to the show hi thank you for having me absolutely how can we help so i have some guilt and pride around using child support money so i was in an evasive relationship and by the grace of God, I was able to leave when my son was about three weeks old. Oh my gosh, Sarah. I met my now husband when my son was six months old and he's now 12. My husband and I had sat and talked and said, we don't want any money. We don't want anything. We want nothing to do with him. Well, the judge made the decision that it's not our choice and it's not our money.

1:05:27It's for our son. So we were just putting all that money in an account. we had some debt and in 2021 I lost my job and we needed four walls so we dipped into that account and as of January of 2025 we are officially done with baby step two we are completely debt free oh congratulations thank you it's very exciting I'm really happy to be there but I have about$4 ,000 from that child support money that we said we'd never use and I'm wondering if I should just pay it back like a debt and just keep going like if we were on baby step two or I mean the connotation of the child support money in the first place just killed me and I don't know what to do about it so so this this guilt Sarah I'm just double checking that the facts are correct.

1:06:25You didn't use this money immorally. It was more of a conviction that you personally had with it because of who it came from. And you just, the thought of using it just feels gross and you had to use it at one point. But from a legal standpoint, you use it exactly how anyone else would use it, right? To help run the household because you're taking care of a child and that other parent is helping with that, correct? Exactly. Yeah. And what was the court order? How much and for how long? It was, originally it was until he was 18 and it was supposed to be$430. The only money that I've actually seen from that is the COVID money.

1:07:08I was able to get his COVID check. I didn't know that it was coming. My husband adopted our son when he was four years old. Everything finalized. So that's when the child support stopped. But there's so much arrears that, I mean, I will still randomly get like a$12 check. Okay, so it's over essentially. You're not getting future payments. You just have this kind of savings sitting here and you feel like, I don't want to touch this money because it feels weird. Yeah, how much is in that account? In the account right now is$2 ,000 and I used four of it. Four of it. And what are you going to do with it eventually?

1:07:46Are you going to give it to him when he's 18? or help pay for a car when he's 16 or college or what do you think? That's what we were thinking, just a car or something like that. Like I said, my husband's been around since my son was six months old. So my son doesn't know. He doesn't know any different as of right now. And eventually we're going to tell him. I mean, we have to tell him, but we're just not there yet. He's not emotionally mature enough to be there yet. Sure. Okay. um so what i'll speak to i'll speak to the money side of it sarah from the sense that no this is not a debt that you need to pay i mean you're you use the money essentially how the system works and you know you use it exactly appropriately and i know that doesn't sit well with you because of who it's coming from and that that totally makes sense to me but i think kind of the the quote unquote debt going forward which is not a debt but is to say okay how can we best set up my son to have a life where he, from a financial standpoint, understands, um, understands money, doesn't have to walk through this debt-free journey.

1:08:50And we're setting him up in order to do that. And that looks like things like maybe college or, um, helping with his first car, you know, whatever that may look like for you guys. And for me, um, I wouldn't, I wouldn't, I wouldn't hold onto that emotional$4 ,000 anymore because, um, I, I think you, I think you need to release that. But I think going forward, the motivation now is to pass a great legacy onto your son, right? Regardless of$4 ,000 or not. So I totally understand how that can feel like, oh my gosh, we use this money and it feels so gross. And I hate it because I don't, he's a terrible person.

1:09:24But you know, you guys were in a pinch at the time and that's what that money's for is to help take care of your son. And that's what you guys did. So I would let go of that because emotionally I think it is holding on to you so deeply. Yeah. So in the filing cabinet of your brain, we need to refile this instead of child support money from an abusive, awful relationship. This is changing my family tree money to set up my child for a better life than the one I experienced. Yeah, and Sarah too, you know, give yourself a little bit of grace. You know, if this was a$60 ,000, you know, thing or something and you're like, oh my gosh, you were supposed to use it for a down payment on a house.

1:10:00You know what I mean? like a mag like I feel like like a like a lot of this magnitude and weight from a dollar standpoint I feel like we could go at it a different way because I could see you know the more money it is the more weight it feels right so um yeah so with this 4 ,000 yeah I I want you I want you to release it for you Sarah again it's not about the dollars at that point to me it's it's that emotional attachment that's still there to him and I I want that I want that release from you you know so um whatever that looks like yeah i would have a goal for this money instead of letting it just sit there it's only going to make you know reopen the wound so i would put it in a 529 plan for college i would put it toward in a savings account for a car fund one day because that day is going to come and these things cost money and this is it's part of the deal and you know there's a shared burden because that person was a parent and this is what the court ordered and so i would it's hard to just say release the guilt sarah you're doing great but that's the truth of it.

1:10:55It's that hard and it's that simple to just go, all right, it happened, that was the past, and I'm going to make a better future for my kid now. And it sounds like you guys are thriving and this child is so lucky to have you two. Yeah, he's definitely blessed. My husband is literally a godsend and he took him on like his own. And like I said, nobody knows. There's a couple people like family knows, but he doesn't know. And my husband stepped up in more ways than I could ever even pray for. Well, and give yourself to so much credit, Sarah, because we talked to so many people on this show and women specifically that are in a situation and they don't feel like there's a way out.

1:11:36And whether from it's financial type abuse where a husband's withholding and not allowing. Controlling. Yes, to physical, emotional. I mean, you can fill in the gaps. The spectrum is wide. And to break that cycle is so, so difficult. And as Dr. John Deloney says, who works with, you know, so many people in this area, says that it's rare to have someone actually break it. So when you do, it is a – Something to be celebrated. It's an applause. I mean, it really is, Sarah. So, I mean, I just commend you for that. I know that was 12 years ago, but that is – that's incredible. Absolutely incredible.

1:12:10Yeah, George, when we, you know, think about part of the baby steps and what she said, I loved because, yeah, it's baby step. You know, they're past baby step two. they're moving on for that fully funded emergency fund and so forth and there there is something so freeing from the sense of yes the dollars and cents are there right we're being wise with our actual tactical money that's you know very important but it's so much bigger than that it is like the place where money sits in our lives the value of which we give it and when you are out of debt you have that emergency fund it's you don't have to be obsessed with it you don't have to stress about it because you're setting yourself up so well and what that speaks to your kids and a household is everything.

1:12:49Like to me, that is, that's part of family change, changing the family tree. It's not just from a, from a monetary standpoint, but from an emotional standpoint, that money doesn't have to be a stress point in our lives because we have control over it. Yeah. And there's a lot of belief there. People think there's some sort of like financial DNA that you're born with because of the environment and place and parents, but we're proving it with Sarah that you can break chains. You might be the first one in your family to become debt-free, to create a better life for your kid, for your kid to go to college debt-free, for you to have a home that you own free and clear, for you to become a millionaire.

1:13:21And it's something you get to choose, and it's a daily choice, and it's one of the hardest patterns to break because of all the shame and guilt from the past and your belief system is so tied up. And you talk about this in Know Yourself, Know Your Money, the different money classrooms you grew up in, it really shapes you, and you have to really try to break all of the bad stuff to get to the good stuff. Totally, yeah. Yeah, and as parents, you know, whatever you can do, you know, we always say more is caught than taught. But from again, that standpoint of money, we're going to get in control of our money because yes, from a monetary standpoint, we need to know where our money's going.

1:13:54We want to be debt-free. We want to start, you know, investing and letting the math work for us, like all of that. But more importantly, realizing that money's a tool. It is a tool to create a life that you love. Like that's what it is. It is not good. It is not bad. It doesn't have morals. And so how can that lesson and where money is placed in your life and in your heart and your identity. What your kids see, that speaks louder than words. This is The Ramsey Show.

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1:15:47Welcome back to The Ramsey Show. One of the best ways to spread the word we have found is not just and marketing, George. It is word of mouth. It's you guys sharing the show on your social media, sending clips to your friends and your family, and just really getting the word out that way. So we really, really do appreciate it. So make sure you do that. Leave a review, subscribe to our channels, podcasts, YouTube. And yeah, we really, we really appreciate it. The show, it's grown so much, which we're so thankful for. And it's a lot because of you guys. And we want to help give content into the world that is positive and instructional and inspirational.

1:16:27So that is what this show is all about. And it's your show. So give us a call at 888-825-5225. Up next, we have Elise in Little Rock. Hey, Elise, welcome to the show. Hello. We bought a property three years ago and the property owners committed fraud. they withheld the fact that the well runs dry about half of the year oh gosh feels like a problem it will cost 24 000 to drill a new well or 30 000 to bring in city water my husband wants to spend our emergency fund on the well but i don't think it's an emergency because we've lived with it for three years we spend about 80 a month on laundry um and we're debt free besides the mortgage.

1:17:17My husband works full time and makes$60 ,000 a year. The other option is we could buy an old well drilling rig for$4 ,800, but we don't know if there's any major issues with it. And then we could buy a brand new well drilling rig for$22 ,000. We have$11 ,000 $11 ,000 in our emergency fund, but once it's fully funded, it will be$18 ,000. So you don't have the money to cover this anyways, even with the emergency fund, if you did the$24K or$30K option. That's right. And nothing in the, was there a lawsuit because of the fraud, anything legally that they had to pay you guys because they didn't disclose it?

1:18:09we are still in the process but we um do not believe that we will probably win the case we don't believe we will get um the money to cover it why um because we believe that she is doesn't have the money to pay us back for it okay um okay so how long at least would it take you guys to save up the extra$13 ,000 to make this a possibility for a$24 ,000 fix? We have saved about$11 ,000 in the last four or five months. Okay. So it'll take us another six months probably. Okay, to do that. And you don't want to do that? That's not... Because you're good with how you guys are functioning now? Because, I mean, I guess if the well runs dry, do you guys have water?

1:19:03I mean, like, what does life look like on the... Is this a little house on the prairie? How does this work? Well, I do laundry at the laundromat. I can only do one load of dishes a day. Lisa, it kind of sounds miserable. Is it? It is very miserable. Okay, yeah. I would probably save up and get this. I would categorize this as an emergency. Yeah, this is kind of a necessity. You know, your four walls, food, shelter, utilities, transformation. It's not life or death, but it's pretty close. well i'm worried that if we spend our emergency fund on this another emergency will pop up and then we have no money well that i mean that's always a risk most emergencies for the most part you're able to get by with a couple of thousand dollars so maybe you guys save 28 000 have 4 000 left over just for a little bit of cushion and that'll be a few extra months right so maybe you you give yourself a deadline and say, okay, but in eight months, we're going to, we're going to fix this well issue, do it and, and still have some, some cash left over and then keep saving.

1:20:06Cause sometimes when stuff comes up, I mean, just like this, this is a great example, you know, yes, we would consider this emergency or people have, you know, a tire, you know, goes flat or you can fix that for more than less than, less than$4 ,000. But yeah, but like a roof or heating and air, things that are like really, really, really expensive. Usually you can buy some time and be able to save month to month. That's what I'm wondering. Is there a temporary fix? Let's say you bought the used rig. Do you guys know how to do this yourselves or will you still pay someone to actually do the work?

1:20:36We could do it ourselves. Wow. If you feel capable. Are you guys, like, do you know how to, like, is that something that's like, oh yeah, that's a totally possibility. And your husband's like, yep, for sure. It just seems complicated. Yes, we could for sure do it. And we have a friend that has actually built a well drilling system in the past. Okay. Then I feel like you go this route for now. Yeah, why wouldn't you do that route? It just makes me nervous to buy something that we're not positive would work. And why wouldn't it work? Just because it's a used old, I mean, it's a 1980 truck that has an old well drilling rig that hasn't worked.

1:21:16Can you test it somehow? Yes. Or have someone inspect it? Are there other ones out there that you guys can rent for a month? We cannot. I've looked everywhere. There's no well drilling rigs for rent. You'd have to buy either a new or you'd have to find a used one somewhere. And most of them aren't big enough because we are drilling through rock. And most of them, most of the ones that you would buy for$20 ,000 would drill through sand or gravel, not solid rock. Okay. I feel like George and I are probably not the... Beyond our pay grade, talk about drilling wells. I know. But if I was in your shoes and I felt comfortable and capable, I would inspect it, make sure it's mechanically sound, and buy the used one because that's what you can afford right now.

1:22:06And later on, if that buys you time even to save up$24 ,000 to do it officially or get the city water, I would do that down the line. But for now, I'm willing to drop$5 ,000 to see if we can fix this problem and remedy it, even for a year. And it's only$2 ,400, right? You said$4 ,800 for the used one? There's a used one for$4 ,800. Talk them down to four. Negotiate them down and see if you can get this thing going. Because there ain't, I mean, there's not a lot of buyers because apparently there's not a lot of ones out there. And maybe you can sell it once you're done with it and make some money back out of it, right?

1:22:41Yeah, we've also thought about using it around here locally because there's only one well-drilling company. Hey, you got a new business on your hands. Yeah, there you go. Yeah, well, I hope that helps, Elise. So, yeah, maybe do that if you feel capable. I don't know why I didn't have that as an option. It's impressive. Yeah. Elise and her husband. Well, my first thought was if I would just go drill myself. I mean, George with his tools. I'm sure there's a YouTube video out there. With his tools, George could figure it out. Honestly, I think your husband Winston could figure it out. How to drill him well.

1:23:13I'd call Winston. Yeah, you two together. I just feel like it would work. That would be a TV show. I feel like it would work. I know. So great. Okay. Up next, we have Andy in Miami. Hey, Andy. Welcome to the show. Hi, Rachel. Hi, George. Huge fan here. Thanks. How can we help? So I currently work for a bank, and you guys may not like it, but I underwrite commercial real estate loans. We can still be friends, Andy. Thank you. Thank you. At least not personal loans or residential mortgages. There you go. See? um so work from home setup base salary is around 113 plus some other little perks 20k bonus they'll give me 2 000 for my 401k just because every year and about a thousand towards my hsa fully remote love my bosses they love me about four years in um and then i got a message from a recruiter on LinkedIn about a trade finance type job.

1:24:15Sounded interesting, but very, very far away. Geographically, about an hour to 80 minutes each way per day. Miami, road rage capital of the world. So I was like, all right, I'll tell this guy I'm open. He's going to say 120. I'm going to say thanks, bye. He says 150 to 180 plus 20 % bonus. So my interest was peaked there, and I'm just kind of weighing the pros and cons. of... Where are you guys financially? Do you guys have a lot of debt? We are recently on baby step three. I just finished FPU at church co-leading it two weeks ago. And you've got a spouse? Have a spouse, two kids. This is a move.

1:25:00May not be done with the children. Yeah. Mother-in-law who's been a huge help is about two miles away. Oh man, that's tough. That's a big life change. Unless you plan on moving. I wouldn't do the hour commute. It's not worth the money. That's two hours in the car. I try to make more doing what you're doing now and stay put. Have the peace. You've set your life up to have peace. I don't know if I would do it for the money. That would be tough. Thanks for the call, Andy. Thanks to you, America, for listening. Thanks to everyone in the booth. My co-host, George Camel. This is The Ramsey Show.

1:26:06Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm George Camel, joined by my friend Rachel Cruz this hour. 888-825-5225 is the number to call to join the conversation. Andy is down the road in Nashville. What's going on, Andy? Hey, not a whole lot. How are you guys doing today? Doing great. What's your question today? Awesome. So my question is, I recently purchased a home, and I've accumulated quite a bit in debt, which I know you guys practice against. so to try and mitigate this debt i'm thinking what i'll do is i've got a house on the property and a shop house on the property what i'm really looking to do is to move into the shop house and rent out the bigger house but um seems like some of the people i've got that are close to me have have advised against this and um you know i'm just i wanted to ask the pros and they listen to the show.

1:27:08So I'm excited to hear what you guys have to say. Okay. So give us some numbers, Andy. How much are you in debt? I bought the house for$250 ,000. Okay. I got about$30 ,000 down. So I've got about$220 ,000 roughly. Is that your only debt? Is just the house? Yeah. So actually, I sold both vehicles that I had at the time, and now I'm driving around in beaters. So, yeah, that's my only debt. Okay. It sounded like you had racked up some consumer debt, but it's just the mortgage? It's just my mortgage, yes, sir. Okay. And how much do you make a year? Roughly$130 ,000 a year. Okay. And is the mortgage payment overwhelming to you, or you're just wanting to do this just to get the house paid off as quickly as possible?

1:28:03So, I make the house payment in less than a week, but the main motivator for why I'm doing what I'm doing or thinking of doing what I'm doing is because I'm a truck driver and I just don't make it home a lot. I'm only home about two days a week, so I'm trying to... Oh, okay. Yeah, I've comped some similar properties in the area that are being rented. And, you know, I could basically come out even if I rented that and stayed in the shophouse. I could have my bills paid for for free, basically. How much is your payment a month? It's around$1 ,500 a month. Okay. Are you married? I'm not. We're getting there.

1:28:52Okay. Does she want to live in the house once you get there? She, so we live in the house currently, and she doesn't want to move out into the shop house, even though I think it's nice enough for us. I don't think that it's up to her standards necessarily. Yeah, I mean, you're not making it sound super enticing. I'll say that. You say shop house. It doesn't sound like a place where a person should live. Well, it's like an apartment. If you could imagine a little studio apartment, it's something of the nature of that. But it's beyond livable. It's nice, in my opinion. Okay. Well, and she's the girlfriend.

1:29:31She's living there for free, I'm assuming. Yes, ma 'am. Okay. So I wouldn't want to live in the shop house. So if I was living with my boyfriend and he's like, you got to go to the shop house because I'm renting this out, I'd probably be like, great. I'm going to go rent an apartment. Yeah. Right? She needs to do what she needs to do. There's some relational risk here. I don't want to make the decision based on the girlfriend. If it was your wife, I'd be like, Andy, Andy, Andy. But it's the girlfriend. She doesn't have any skin in the game. It just feels like the juice isn't worth the squeeze on this.

1:30:07You don't need to do it. Nothing's on fire. You have a great income and a very reasonable mortgage. Why not just continue on? What's the actual financial problem? Well, as far as the financial problem goes, it's just the fact that I've signed a 30-year note on this house, and I'm thinking of all the interest that I'm going to pay. So pay it off early. Well, I thought about doubling up the payments when I live in the shop house, and then we could see each other more as well, because I'm only home two days a week right now. Could you double the payments now while still living in the main house? i probably could yeah the only downside i would think is that if are you wanting this house long term andy like do you see like it'll probably be with you for a while i just i always it feels a little weird to have people living in a house or two you know two or three different families or people um and then you go back and move back into it does that make sense like i don't know it's um it just doesn't feel like any of this was intentional it's just sort of like well i could do this and your family's steering you against it why what is their big qualm with this move they're steering me against it because they know that i can afford it as is and no one in my family has ever rented out a property before but the way i look at it from a financial standpoint is if I live in the shop house, double or triple up on payment, I can have a, I can turn a 30 year mortgage into a, you know, a three or four or five year mortgage.

1:31:45Sure. And, and then I can be off the road at that point as well. So for me, it's making sense from a lot of different angles. Yeah. I'm not mad at it. I mean, I don't think it's necessary. I don't think like what George said, I don't think this is an urgent move that I, if you had called and I would have been like, oh, you have a shop house? Great. You should live in that to rent out your main house. That would not have been my advice to you anyways. But if you want to do it, that's, I mean, that's up to you and you'll make extra payments and, but you're just got people living in there and then the, something's going to leak and break.

1:32:18And then we calling you on the road. You're going to have to, you know, figure out, okay, I got to get a plumber down. I mean, there's legit. It's not hassle free. It's not just easy money. Right. And I think a lot of people think having a rental, there's like, it's passive income is what everyone says and it's it's there's a level of a responsibility you have that you have to be on call you have to be willing to to work with these people whoever's going to live in there um but but one thing i do like andy is that you're not desperate because then you can actually probably go through a an actual you'll take worse tenants make worse decisions process and get some good tenants and you know what i mean like you're not in a rush so i would never suggest you do it I don't think you need to, but if you want to, then do it.

1:32:59I don't think it's going to break you, but I don't think it's going to be the sweet, sweet free money that you're envisioning either. Okay. So do you have savings in the bank? Do you have an emergency fund? Yes, sir. How much? I've got roughly$35 ,000. Good. You've done really well. Yeah, Andy, well done. I'm proud of you, man. Seriously. Thank you. I just think I would set a goal for myself where I still get to live in my own house, and then I make extra payments. And so figure out a way to do that, and I think you'll cut your mortgage in half or more just on your own volition without ever becoming a landlord.

1:33:37Okay. That would be my goal. You're all giving me a... That's great. And once you're married, if she's working, she'll add to it too. She'll help knock down that mortgage if you guys are both working. I don't know how she's going to like that idea. Of her working in the future? Is she working now? She is a gym coach for little girls, and they actually went to the Junior Olympics this year. That's sweet. That was really nice. I'd love for her to follow her dreams. Do you think I can make the team? Well, you could try. I think she'd be happy to work with you. She likes anybody. She's good with people.

1:34:14That's sweet. She sounds like a keeper, man. Best of luck to you with this decision. It's not an easy one. I wouldn't take it lightly, but I think you have a good game plan here of just figuring out how to do this without becoming a landlord for now. Good luck.

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1:35:57welcome back to the ramsey show i'm george camel joined by rachel cruz open phones at 888-825-5225 well rachel we got a lot of questions about investing the social media world young people all they want to hear is about how to build wealth and it can be overwhelming it's great great conversation to have but there's so much noise out there it can be overwhelming I mean, you can get sort of paralyzed, a paralysis analysis. That's right. And a lot of people end up doing nothing because they're scared of doing something but doing it incorrectly. And so I want to set them free today with some teaching on this, on kind of the primer for building wealth.

1:36:34And research has shown that a lack of confidence in making these decisions, it's a primary reason why people don't invest. So we just need to bring them some literacy and some hope that it's way easier than they think. So here's what we're going to call it, keep it simple stupid. You ever heard of that, the KISS method? KISS, yes. That's what they call it back in my day. So investing is a long game. You're not trying to time the market and buy single stocks. You don't need to be a prodigy. And everyone is a first-time investor the first time they invest. That's right. So it's okay. But before, there is a prerequisite.

1:37:02If you know the Ramsey plan, you've got to be in the right spot in the Ramsey baby steps. So we've got baby step one, start our emergency fund. Baby step two, paying off all the consumer debt. Baby step three, fully funded emergency fund. Then comes baby step four. Investing. Make sure you knock those first three out. Otherwise, it's going to be much harder to invest. You're going to add a lot of risk and stress into your life. But once you're there. And even those who are investing now and still have consumer debt, when you're paying off debt, we would even say to pause investing too. So truly, those first three steps are just like one at a time.

1:37:36You're doing nothing else but those. But then you get to babysit four and you get to start investing. You start building for the future instead of paying for the past. Yep, that's right. So this is where it gets exciting. Yeah. So the first thing to really think through is what are your goals? What are you wanting to invest for? Are you investing for retirement, knowing I'm not going to see this till I'm 60 years old and I'm putting money away because I'm going to, you know, I want to retire at 60 and be able to cash everything out and be great or not cash everything out, but, you know, live off those investments.

1:38:02months um is it that you want to maybe open up an index fund or a mutual fund and put some money in month to month because you're looking out in the future and you're like yeah we'll probably be putting a down payment on a house maybe in four to five years I don't know but I want to be able to get to that money without penalty um so you know I'm doing that is it kids college are you investing for kids college in a 529 so again mapping out why you're investing and kind of what those goals are will help really take a really broad subject and narrow it down for you to know what lane you're wanting to invest in.

1:38:37And that why will keep you focused and eye on the prize instead of sort of getting a little starry eyed or pulling your money out when you go, oh, no, this is for this purpose. Yeah, because just so you'll know, we define investing as five years or later, right, or longer. That's investing for us. Savings is more short term. You're saving for something in the next month, two, three, four years. But when you're talking five years or more, that's where you're like, okay, we can start thinking about this investing idea. That's because there's less risk for you to lose money in the short term versus long term.

1:39:06We know you're going to make it if you do it the right way. So the next step, once you've decided on your investing goals, you've got to figure out how much you're going to invest. And your goals will determine this. But we recommend at Baby Step 4, putting away 15 % of your gross household income into tax-advantaged retirement accounts. So simply put, this would be I've got a Roth 401k at work. I'm going to put 15 % of my income. My spouse will put 15 % of their income. Together, that's 15 % of household income. Yes. That's a question we get a lot. Wait, do I do 7.5 and she does? Oh, yeah. Nope, because 15 % of yours and 15 % of hers becomes 15 % of ours of the total.

1:39:45So that makes it real simple. I love that 15%. Don't overthink it. You don't need to do more at this point. You don't need to do any less. Keep it there and don't stop. Yes. And then also understand your investing vehicles. So you were just saying that, George. So when you think about retirement, you guys do some research and figure out, okay, at my workplace, do they offer a 401k or a 403b? These are great investing vehicles to be in. Or is there even a Roth option within it? because Roth means that it's after-tax dollars and the growth is tax-free when you take it out, which is huge. So if you ever see Roth, jump on that train.

1:40:22Love that Roth. That's a good one. Or maybe, you know, you're doing a Roth IRA, you know, which is another great place to put your money. A really simple investment, honestly. And anyone can do that with earned income. So that's a good clarifying point. You're like, my employer doesn't have an IRA. That's outside of your employer. That's right. So 401k, 403b, those are employer retirement plans. plans, the IRA, anyone can do if they have earned income. It's up to, I think,$7 ,000 this year in 2024 that you can put in. So they limit it. But again, that's another one. And so, you guys, you can sit down with somebody, a SmartVestor Pro or someone to open up, you know, especially like something like a Roth or mutual funds or other things.

1:41:01But, you know, you can also go to Vanguard and say, okay, you know, looking into options. I mean, like there's ways to do this, but just know when you open up an account, which again, if you sit down with a professional, which we recommend, they're going to help you with this. You actually have to invest the money because that's a mistake people make. They open up these accounts and they may put money in the account, but then they don't go and take that and actually invest it. You need to buy funds with it. That's right. There's an extra step there. So just remember that. It's just like a shell.

1:41:28You have a shell, but now you need to put some stuff in there to allow it to grow. That's right. So that's where it comes into choosing different types of investments. We've all heard of stocks and bonds. Our favorite of these is mutual funds or even index funds. The word fund is the key here. a fund is going to hold a giant basket of those stocks, which helps you diversify. And it doesn't put all of your eggs in one basket. And we may be beating a dead horse, as they would say, George. But again, we're getting very simple here with this. Just so we want you guys to know this. Yeah, George does.

1:41:58He loves horses. Don't ever sell the horse. Alive or dead. I wouldn't touch one. Oh, my gosh. Is within these accounts, your 401k at work, a Roth IRA, you're investing in mutual funds within that account. So just to be clear on that. Yes. And so the next step would be picking an investment strategy. And we've mentioned that good growth stock mutual funds, that's the way to go to invest for the long term, consistent growth. You're spreading that out among a lot of different companies. And even then, we recommend four different types of funds. And so we'll tell you more about that. I'll give you a great resource to check out.

1:42:32But the key here is diversification. That is why we do this. That's right. And then next, that'll be opening the account, kind of what we were saying earlier. So you're going to go and talk to your employer at work, you know, and then you're going to do, remember this formula, Roth. No, wait, match. Hold on. Oh, no, I just messed it up. I messed it up, George. Roth. Nope. Match. Start with the match. Thank you, my gosh. Match beats Roth beats traditional. We got there. Oh, Lord. Five words. On my soul. Match beats Roth beats traditional. So remember that formula because that's going to help guide you to say, okay, what should I do first?

1:43:09So again, go up to your match and your 401k. If there is one. If there is one. And so say it's 4%. Well, you have 15 % you got to invest in. So you're going to put that. So that means you have 9 % of your income left to invest. That's when you're going to go over to a Roth IRA fund up to that. 11%. If you max that out. Yes. Good Lord. It's okay. The cookie is messing with her. It's, I mean, I get an Americano. I get a chocolate chip cookie and I go downhill. That's right. 11 % left. Go to your Roth. and if you max it out and you have more percentages left, go back to your 401k. But the beautiful thing would be a Roth 401k.

1:43:45That's what we have at Ramsey. And so for a long time, that's what I was doing. It's just Roth 401k, all 15%. We've got good mutual fund options. That's the key. Hey, should I do all 15 % of the 401k? Yeah, if you've got good options and low fees and it's a Roth, go for it. Yes. So it's simple. Match beats Roth beats traditional. And again, this is regardless of the employer match. You are doing 15%. You don't do less because your employer has a match or they give you free money. Even if they give you a free 4%, you still do 15%. Yeah, that's right. So the next step, the final step here is working with a pro to start investing, to keep learning.

1:44:19Rachel and I both have a smart investor pro in our corner, as we call them. And the key here is you want someone in your corner who can educate you, who has the heart of a teacher, who can maybe help you avoid jumping off the ledge when the market's crazy, help you understand the trends that are happening, and give you a full plan, not just with choosing a fund, but what about estate planning and tax strategy and kids college and making sure you have a holistic plan? Yeah. Cause in our world today, I mean, there's some stuff, I mean, Vanguard's a great example that you can do on your own, right?

1:44:47I mean, very much so. But even if you do that, you guys having somebody in your corner, and this is what Winston I do. We meet every January with ours to look at everything. They're looking at your entire financial life. And so I think that's so, so important that you're not doing this on your own because if you're making big decisions to have somebody that's yeah, from the tax standpoint, all of it, just they're seeing your entire financial picture, I think is really, really important. Get that third party in there. So if you want to learn more, we've got a great article that we'll put in the show notes in the description that explains it all.

1:45:15It's called How to Start Investing, and it's on the Ramsey Solutions site. So go to the show notes, click the link in the description, and it's all free. We just want to help you guys build wealth with peace and confidence. I'm going to go drink more coffee, George. She needs it. This is The Ramsey Show.

1:45:44Hey, George Camel here. So you're thinking about buying or selling your home. It's exciting, but there's a lot to think about, and all those decisions can feel overwhelming. Well, here's the good news. You don't have to tackle the process alone. Ramsey's Real Estate Homebase is the place to find all of your free tools and resources for help to get prepared to buy or sell your home with confidence. You'll find calculators, start to finish guides, a podcast, and even an in-depth video course hosted by yours truly. What's not to love? So if you're ready to take the next steps toward your home goals, go to RamseySolutions.com slash real estate.

1:46:16That's RamseySolutions.com slash real estate.

1:46:34Welcome back to The Ramsey Show. I'm George Camel, joined by Rachel Cruz. And in the Ramsey Solutions lobby on the debt-free stage, we've got some new friends, Nicholas and Devaney. Welcome, guys. Hi. Hi. Thank you for having us. Absolutely. Where are you guys from? So we're from Calera, Alabama, which is about 30 miles south of Birmingham. Wonderful. And all the way here to your debt-free scream. How much did you guys pay off? We paid off$232 ,200. Wow. Wow. And how long did that take? Four years. Nice. Wonderful. And what was the range of income during that time? We started at$82 ,000 and then up to$163 ,000.

1:47:13Whoa. That's incredible. What was the big jump? Well, our buddy Ken Coleman would be proud. I took full advantage of the great resignation during COVID. Nice. So we didn't have that big of a shovel or not as big as we would like and so i just went job searching and in less than a week uh i found a job and it doubled my salary oh my gosh are you a one-income family um sort of sort of when we paid off the house and she can go deeper into in a minute but when we paid off the house uh she wasn't the happiest at her job and and i said you know what i'm paying off we're paying off the house a day you can put in your two weeks oh my gosh okay so the 238 was the house well it was credit cards car loans student loans and then everything and the house congratulations you guys that's incredible okay so four years ago you guys had some credit cards you had the mortgage you were living normal what happened to get you on this ramsey journey well if you uh if you look back at it, that's right when COVID first hit.

1:48:21And, you know, we had friends, family, you know, we just kind of saw people, you know, struggling. And then, you know, you turn on the TV, you see people losing their jobs, losing their livelihoods. And we thought we were safe, but we just kind of said, what if, you know, and then we dug deeper into our finances and we were like, wow, we're in a mess. and so we started chipping away at the credit cards we did side hustles she was making she started making like hair bows for little girls selling those I did DoorDash for a while and we started selling stuff just around the house and Rachel you'll relate to this any old kids toys that we could find that were in one piece yeah we put on Facebook marketplace good for y 'all Um, so we just, we just made it happen and did whatever we could, uh, to get out.

1:49:14Dang. Wow. So there's sort of a pandemic panic and you guys went where we could be just like those guys three seconds from now. Let's get our affairs in order here. Yeah. And I, prior to COVID, I was working from home anyway. So like I was safe, but I always think the worst thing is going to happen. So I'm like, what if I lose my job? What if we both lose our jobs? Sure. Sure. And so we're like, we need to, we need to get out. Isn't it amazing how you can carry that risk of debt for so long? And until something really shakes it, like a pandemic or something, do you realize, oh my gosh, it is risk.

1:49:45Like these car loans, like all this debt that we're carrying, it is a level of risk that so many people are used to. But the moment you start saying, wow, this really is a part of our lives that we want out, it's incredible. Absolutely. And she's, you know, I'm the saver, so it wasn't hard for me to get on board. And she's the spender. And so, you know, she's the one where it's like every day in Amazon boxes. Totally. The Amazon van lives at our house. Stephanie, how was this for you, this four years? Was it hard? Was it once you got on board and you guys were working together, you were seeing the progress, it was good.

1:50:19But, like, how did it feel overall? Yeah, I mean, it was definitely a little different at first, especially because right around that time our daughter was born. And I had my first daughter. And, of course, I wanted her to have all the cute girl things and all stuff like that. So it was definitely hard at first. And then I stopped. I was like, okay, like she doesn't need this. And then I started, like Nick said, I started making bows and stuff for girls' hairs. And she did not like them at all. She wouldn't keep one on her head. So I was like, okay, there's no point to buy this stuff. So I definitely got there.

1:50:53It took a little bit. But once I started, then I was like, oh, like this is great. Oh my gosh. Did you guys know about Ramsey and the baby steps at this point? How did you find out about this? So I just, when the pandemic first hit, you know, I pretty much just Googled, you know, getting out of debt and how to, you know, how to clean up this stuff. And then I bought the Total Money Makeover, read it in one weekend, I think. And then we just kind of just snowballed from there. Literally. That's amazing. That's incredible. Yeah. Wow. So great. Okay. So what would you say to a young family that's listening and they have the car loans and the credit cards and they're just normal living life, but they're feeling like, oh my gosh, we want to change.

1:51:36What would you say the key of getting out of debt is? Yeah. I mean, I think for us, I mean, you look at us, we're in our thirties and we did this, you know, we, we hear people all the time, younger people, it's harder to live these days. You can't buy a house. You can't do this, but there are also hundreds of thousands of dollars in debt. And it's like, well, control what you can control. And so, I mean, I mean, Rachel, you know, you were born the year your parents filed for bankruptcy. George, you went from negative net worth to a millionaire in 10 years. You look at us, we both grew up in less than ideal situations.

1:52:09Her parents got divorced when she was young. My parents got divorced when I was young. My dad passed away when I was eight years old and he didn't have any life insurance. And so I was raised by a single mother, no help, just trying to figure it out. So if we can do it, anybody can do it. So good. That's inspiring. And it's just the belief you can. Yeah, absolutely. And that's it, is to believe that you can. That's incredible, you guys. And in your early 30s, on your way, in baby step seven, what's the house worth? So, Will, we bought in January 2018, right before the housing market just went bonkers.

1:52:45Good time to buy. So, I mean, we paid less than$200 ,000 for our house, about$190 ,000. And there's homes in our neighborhood selling for over$300 ,000 now. Wonderful. That's incredible. And so you got that paid off and you've been investing in retirement? Yeah. Yep. Yep. So now we're doing 15%. We're still trying to save up for the kids college and all that. And we're also cash flowing in international adoption right now, too. So this is not our complete family. That's great. Yeah, we were hoping the adoption would be finalized when we came here, but it just kind of, you know, worked out this way.

1:53:24But, yeah, so we're doing that, saving up for the kids' college, investing. And, you know, we were at a negative net worth, a significant negative net worth four years ago. And now we're on the path to be multimillionaires. That's unbelievable. That's so fun. And when you have the margin to do things like you guys get to just cash flow this adoption with joy in your face instead of stress because you've also got payments. So I love what when you turn money from an obstacle into a tool, it's amazing how your life changes. And I'm so proud of you guys for being a living, breathing picture of that.

1:53:54Yeah, absolutely. And I told her, you know, she stuck with me these past four years, you know, and I know it wasn't the easiest thing. So when we paid off the house, I said, you know, you just pick anywhere on the map and we'll go there for a trip. So where are you going to go? We don't even know yet. I'll bring a map out. Rachel's going to throw a dart. Yeah, we've talked about, you know, Europe and, you know, going or going on a cruise or whatever. We don't know. We'll probably go on a couple trips, one with the kids and one with just us, too. Love it. I know. And you have the kids with you.

1:54:28Yeah, bring them up. What are their names and ages? So Brantley is our oldest. He's seven. And then Cambry is four. Oh, precious. Look how cute. Well, I hope they've been practicing for the debt-free screen. And y 'all are all color-coded. With the lavender outfits. They look fantastic for those of you that can't see them. Get a family photo after this. That is wonderful. Here we go. guys. We've got Nicholas and Devaney and Brantley and Cambry. $232 ,000 paid off in four years. House and everything making$82 up to$163. Count it down. Let's hear a debt-free scream. Alright, Cambry, you ready? You ready to lead us off?

1:55:07Alright, go ahead. In the mic. We're debt-free!

1:55:17That might win the award for cutest debt-free scream I've ever seen. Oh my gosh, I just teared up. I was like, oh my gosh. What a performance. And we've got a special gift for you guys. Two every dollar premium gift cards for a one year subscription. You can use one. You can renew with that. You can give it away to a friend to get them started on the journey. And George, and just hearing their stories of even the change that they've made from their childhood to now, what these kids are going to experience. It's absolutely incredible. In four years. Beyond the finances. Early 30s. No mortgage. It's incredible.

1:55:46In four years. Well done, you guys. Well done. It's possible for you, America. Are you willing to make those kinds of sacrifices for four years? I can do just about anything for that amount of time, and I know you can too. It is worth it. Look at that couple. Look at that journey. This is The Ramsey Show.

1:56:47Hey, do you ever feel like you're doing everything right with money, but still stuck? store today.

1:57:06Our scripture of the day, Psalms 3721. The wicked borrows but does not pay back, but the righteous is generous and gives. Benjamin Franklin said, creditors have better memories than debtors. Oh. Huh. Some old school financial wisdom. Yeah, Ben Franklin. He was doing well for himself, I feel like. Benjamin Franklin. You know, the teeth, the leg. I don't know what else he had. I don't know what else he had going on, but he could afford it. The what? I don't know. Did he have wooden teeth or something? That was George Washington. Oh, dang it. Wasn't that George Washington? Guys, I'm not a historian.

1:57:41Listen, I'm not a geographer. I heard. I hate to call you out, George. George what'd you hear don't kill me but that you didn't know who Margaret Thatcher was oh yeah yeah Ken told me that and I thought oh no George the Iron Lady I didn't know this was stuff I'm well then Ken called me out for not knowing what a chain gang is in football I was like why would I don't know what that is thank you and you know football sort of I'm like guys I was busy I don't know having a life is that a thing that is it's the people who move the giant markers oh but they call him a chain gang they had to have a cool name because it's not a very cool job i don't know guys this is why i stick to money questions i embarrass myself when i talk about historians and politicians and sports i stay away from it all i'll leave that to ken colman well the latest fact history wise then we'll get to the phones but casso yes found out he died in 1972 died in 1973 and rachel was like i thought he was with leonardo da vinci i thought he was part of the Amazon's had no idea.

1:58:40Wow. He just died in the 70s. Picasso. I was like, what? I thought all those guys were back with assisting chap. I don't know. I don't know. I'll just Google it if I need to know it. But until then, it doesn't sit in my brain. Sorry. In the 70s. Picasso. I mean, crazy. Anyways, that's my fact. That just blew my mind. All right. Timeless. Timeless. All right. Let's get to the phones. We're better served there, Rachel, than talking about anything else. about 401ks. Let's see if we can help Timothy in Los Angeles. What's going on, Timothy? Hey guys, can you hear me? Yes. Loud and clear. Okay. Awesome.

1:59:18Well, I tried to describe my situation. So, um, I got out of college in 2021 and, uh, just got married and I had my associates went to work for the past two years and I'm currently making$20 an hour. It comes out to about, uh, like 37 grand a year after taxes and everything. Uh, we had a, we have one, a one-year-old daughter and, um, we didn't really have any debt, but then my wife's car broke down and we decided to buy her a car last year. It was like$20 ,000 cash value. Um, and then, uh, that car broke down And our warranty covered us to get a brand new engine on it. So we had that. And then I decided to start a business last July.

2:00:10And I'm generating through that business after, like in profit, I'm bringing in about half of my income that I make at my day job. Now, we did have about$8 ,000 in debt because of that. starting the whole business and everything and then uh we just used our taxes to pay that back like substantially so now we only have about two grand in debt total um yeah well well besides the car the car is like we still are like twenty thousand dollars in the car so uh and yeah is your you have the only um income in the family right now yes i my wife's a stay-at-home mom and And the final thing was I was planning on going back to college this fall.

2:01:03And I get financial aid, so it'll probably be just as much as I'm making on my day job. But the only thing is we just got news and we're expecting twins. Whoa. Congratulations. Thank you. Wow. A lot going on here. Yeah, this is the thing. we live in a small studio in the back house of her mother's house. So it's already me, her, and our one-year-old daughter. Now we're expecting twins. And previously we were pre-qualified to get a house. We actually live in Bakersfield. We were pre-qualified to get a house for about$150 ,000. But now, you know, with the car, we don't even know what we're going to do.

2:01:52Do you have any money in savings? We have nothing. We just started budgeting. I just started getting plugged in with the Ramsey show about two weeks ago, three weeks ago. Well, there's an order for you to become a homeowner, and it's when you're debt-free with a fully funded emergency fund of three to six months of expenses, and you have a solid down payment. But until then, I'm not going to get pre-qualified. Are you guys paying rent right now, Timothy? No, her family, yeah, we're living there for free. Okay. Yeah. The big question is, can you afford to continue living in California off a$40 ,000 salary?

2:02:30Well, I mean, I'm not sure. Like I said, I live in Bakersfield, so it's a little bit lower living expenses in L.A. But what would it cost you to go rent somewhere that could fit your family right now with the twins? Well, small would be like$800 a month. And then a little bit bigger would be somewhere along to$1 ,300 a month. This business you started, so you made$14 ,000 last year because you made half of what you make normally. Yes. So, well, actually, I just started last July. So now I'm averaging about$400 in sales a week, and take-home is$300 a week. Okay. Yeah, after input and all that stuff.

2:03:16Okay. So about$15 ,000 in take-home from this business. Yeah. Do you see it scaling? It's growing substantially. It is. Okay. It's scaling really fast. So the reality, Timothy, I think is you're going to have two jobs. You're going to have this job that you're growing, which is awesome. And hopefully it just skyrockets. I mean, that would be the hope. And your day job. And you're going to be working both of those, I think, for a period of time until the car's paid off and this$2 ,000 loan until you guys get a good emergency fund. Well, no, you know what? There's twins in the picture. So we're, we're pausing everything.

2:03:49So honestly, I would just stockpile cash at this point until the babies are here. Um, and it's probably a high, is it twins high risk? I mean like they're, you know, so I just, I would be, yeah. So all that to say, I would just be saving a crap ton. And once I would just be putting so much away, honestly, I mean like that's, that's going to be your best bet right now. And then once the twins are here and everyone's good, then I would look at paying off this$2 ,000 business loan, paying off the car. I mean, the car is a lot of your world. Yeah. How much did you - What's the car worth? Well, see, it was$20 ,000 cash value, right?

2:04:29Well, the engine busted and they put a brand new, right off the assembly line, a revised version of the engine. And it was about$17 ,000 engine. But I went to see if we can - Yeah, but I went to go see the – I mean, I did an online little quote, and it only came out to like$10 ,000 or something. So I don't know if I did it wrong or maybe we should actually go into a dealer to see what the price should be. But I mean, after all that, my wife and I, we're willing to do what it takes to sell a car, but we're like – Is it a quality, reliable car for the family, and it fits all the kids? Yeah, it's a nice car.

2:05:11It's a Jeep Grand Cherokee EcoDiesel, and it's a really nice car. Okay. Well, for now, I would work to just pay that off in the dead snowball. Once the twins are here, get the emergency fund in place, then you can think about going back to school and making sure you can cash flow that. But I don't think now is the time. No. Do you think that if I were able to grow the business large – because I grow, sell, and deliver microgreens, So I'm only spending about 12 hours a week doing all the labor. You're saying if I did this full-time, it could replace my income? Yes. That kind of thing. Right now, with your situation, it feels risky.

2:05:51If you can get the boat close to the dock later on and you're like, oh my goodness, I could totally see how if I did this full-time, I could make more than I'm making in my – because right now you're making your full-time salary plus the side money. If you jump to the side stuff, you're just going to replace your original income. Yeah, yeah. You're still better off right now financially with your situation, and I would work to go rent a place. Really, your goal is, can I make$6 ,200 take home to afford the$1 ,300 a month in rent? And I would make the jump to go rent at that place. Okay. Hope that helps, Timothy.

2:06:26You got the road ahead of you, man. The twins alone, on top of the one-year-old, it's about to be a party. Yep. So wishing you guys the best in that. Also, what a sweet blessing. That's exciting. That puts this hour of The Ramsey Show in the books. I'm George Camel, joined by Rachel Cruz this hour. Thank you to all the folks in the booth keeping the show going this hour. And you, America, will be back before you know it.