No Matter Your Income, You Have To Know Where Your Money Is Going

13:25Rachel Cruze:It's a BMW. And I just don't want him to buy a cheaper car. Well, I don't care about that.

13:31Dave Ramsey:I do want him to buy a cheaper car if he can't afford it. But in this case, he can afford the Beamer. Go get it. Yeah, I definitely would buy this car. You can tell him I said so.

13:41Rachel Cruze:I don't want him in two years to say, oh, I should have bought it. Well, you know what? And now this one we bought, we're getting rid of and we're buying it.

13:50Dave Ramsey:Yeah, that's not the reason he should buy it. Yeah. I disagree. The reason he should buy it is the amount of money is irrelevant because you guys have done such a good job and you should enjoy your life.

13:58Rachel Cruze:Yeah. Because he could buy the Ford and then in two years regret it and go buy the Beamer. Nothing would, I mean, like, that's fine, right? Like, that's not the thing. The issue I would have with him is what is going on within you? That's the fascinating thing about money is we always say, you know, take control of your money. Do a budget. You be the one to control your money. And we do that because so many people, they're not in control. And it's like they have no clue where it's going. And on one end, we see that. And then on the other end, people take the extreme of take control. And it's such control that it almost becomes an idol.

14:29Rachel Cruze:This level of like, I don't want to let go. And that stress and anxiety, that's not freedom either, right? So you have to find that balance. And it's hard because we see this a lot. I feel like if people that have worked the plan and paid off their house and they don't want to go on vacation because they're so fearful. Oh, God, am I going to mess this up? Is this okay? And that's in much bondage, right? I mean, from an emotional sense.

14:51Dave Ramsey:Live like no one else so that later you can live and give like no one else. So make sure your generosity is where it should be. Make sure your investing is where it should be. Make sure if you're going to consume or blow some money on something that it's an amount of money that does not affect your life. and it's a small enough ratio, small enough percentage of that. And so you don't have to think about it, and you're there. You've worked your tail off. You guys have worked your tails off for 40 years. You've earned the right to do this, not because of their hard work, but because of the results of your hard work.

15:28Dave Ramsey:If you worked your whole life, if you worked really hard and saved no money and had no money, then you haven't earned the right to buy the Beamer. But you have the pile of money. as a result of your hard work. And so you should enjoy the fruits of your labor at this point. That's how we ought to do it. Good question. Tyson's in Boise, Idaho. Hey, Tyson, what's up?

15:51Rachel Cruze:Hey, guys, thanks for taking my call today. Sure. First time calling in.

15:55Dave Ramsey:Well, we're honored.

15:56Rachel Cruze:How can we help? A couple things. So I've always kind of lived, my wife and I have lived, Dave Ramsey adjacent is kind of like my affectionate way of saying it.

16:06Dave Ramsey:That means you were right part of the time.

16:09Rachel Cruze:We have six months of savings, like emergency fund. We put 18 to 19 % of our annual income into retirement. That includes 401k and maxing out Roths for each of us each year. We have a small amount, about$5 ,000 each, in our twins, the five-year-old twins college accounts. So we're doing some stuff. My one question is we have$19 ,000 worth of truck debt. The truck isn't upside down. It's a nice Toyota Tundra just looking for some advice. Should we borrow from ourselves and our Roth? No. Or should we just continue down the path of paying this thing off in six to eight months? Don't you have money saved in an emergency fund?

16:54Rachel Cruze:We do, and I guess there's trepidation on should we pull the money out of our six-month fund just to pay that down.

17:01Dave Ramsey:Yes. Seems like a dumb question. You should pay your truck off today or you should sell it, one of the two. okay one of the one of the two um i paid off today and then then i would take the six months

17:12Rachel Cruze:and rebuild my emergency fund that's enough and then we're working to pay off our house after

17:17Dave Ramsey:that so we're exactly there man we're super close exactly yeah it's pretty simple and don't buy another truck dude unless you have the money and you write the check no more debt the key to building wealth is not having stupid truck payments and i like and i drove my truck today hey, I like a good truck. There's nothing wrong with that.

17:36Rachel Cruze:You parked it kind of sideways.

17:37Dave Ramsey:Well, that's because nobody can hit the door on the new Raptor.

17:40Rachel Cruze:Well, my Tesla is literally parked right next to you at the charger station. I thought his parking job did not.

17:44Dave Ramsey:You people that charge cars can hit other people's doors. I know about you people. So I park it where you can't get to my Raptor and mess it up. So don't mess up my truck. Well, you're the one picking on my parking style. But anyway.

18:00Rachel Cruze:James knows.

18:02Dave Ramsey:It's intentional. It's not because I don't know how to park. OK, so let's keep you people off my truck. But anyway, the yeah, I want you to get a truck, Tyson. I want your truck to get you. And truck payments are when you folks, when you sign a car payment agreement and you say, I want a car payment right under that. It says I am committed to being in the middle class the rest of my life. Car payments are the mantra, the motto of the middle class. you're always gonna have a car payment you might as well have a big one just get what you want life's too short gotta have an airbag on the passenger side that's not my mother-in-law we got everybody's got a saying about a car they always you know it's not safe my little babies are all gonna die because the car is four years old oh shut up car payments are basically signing up and saying yeah i want to be in the middle class what are

19:05Rachel Cruze:you taking from age 25 to 65 if you didn't have a 700 car payment every month you just invested it you'd have 4.4 million oh at 65 hope you like the car there you go there's your four million

19:15Dave Ramsey:i just broke your middle class thing and turned you into upper class you be upper class now

19:50Rachel Cruze:Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family.

19:57Dave Ramsey:and then a curveball hits. You know, we hear it all the time. A car accident, a cancer diagnosis, a heart attack, and suddenly everything changes.

20:06Rachel Cruze:Yeah, and that's why you've always said that having term life insurance from Xander is essential because it protects your family if the worst happens.

20:13Dave Ramsey:Yeah, that's right. You need 10 to 12 times your income in coverage. No gimmicks, no whole life junk, just straightforward term life protection. But there's another piece that people often overlook, and that's long-term disability insurance.

20:30Rachel Cruze:Yeah, it's important to understand the difference between them. Life insurance steps in when you die. Disability insurance steps in while you're alive but can't work.

20:38Dave Ramsey:So it replaces a large part of your income so the bills still get paid while you get back on your feet. Now, if your employer gives you free disability insurance, great, take it. If it's discounted there at a better price, take it. But if not, Xander can help you find the right plan. whether you're single or married it's not optional if you're going to be out of work for a while then you need to make sure the money's still showing up and that's why zander is our go-to they make it super simple to get the right coverage at the best price no pressure no upselling i've trusted jeff zander and zander insurance for over 25 years and so has my family so don't wait it's fast it's easy and it could make all the difference go to zander.com or call 800-356-4282 Protect yourself, protect your income, protect your family.

21:38Dave Ramsey:You ever wanted to see the person calling on this show instead of just hearing them? You ever want to see the show done live? We do it on the glass every day, Monday through Friday from 1 to 4. and you can stop by Ramsey Solutions anytime. We have free coffee and wonderful homemade cookies.

21:56Rachel Cruze:Wonderful audience today.

21:57Dave Ramsey:And we've always got...

21:58Rachel Cruze:Beautiful people.

21:58Dave Ramsey:50 to 200 folks out here hanging out with us. And so if you ever want to do that, we'd love to have you come by. Oh, and by the way, we're taking the Ramsey Show on the road. We're going to do a little tour this fall. So you can experience the live Q &A. You can be part of the live Q &A. You could do raw confessions, crowd debates, a local debt-free scream. It's all happening live and we're going to do two of them in the fall. It's the first time we've ever done this. And we launched it about three or four days ago, and it's almost sold out. There's just a handful of tickets, so you probably don't even need to do this ad, but we're going to tell you about it, and you can finish off the last few tickets if you want.

22:36Dave Ramsey:Rachel, Ken, and George will be doing the show in Chicago on September 30th. And tickets are a whole$39, and there's only about 300 or 400 seats a night. So that's why it just disappeared. It evaporated in just a couple days. You can't get in. And so you may be able to get tickets to either one of these by the time you hear this, so check. But they're going really – they're just about going. Jade, John, and George will take the stage in Orlando a couple days later, October the 2nd. So you can't feel this kind of hope through the headphones. You've got to be there. Click the link in the show notes and get signed up or go to RamseySolutions.com slash events.

23:17Dave Ramsey:Again, September 30th in Chicago, October 2nd in Orlando. Colin is in Michigan. Hey, Colin, how are you?

23:25Rachel Cruze:Hey, good, Dave. How are you?

23:26Dave Ramsey:Better than I deserve. What's up?

23:28Rachel Cruze:Hey, I got a quick question for you. So I'm a junior in college, and I have about$85 ,000 in my 529 account. I was wondering if I should be using that just for tuition and material costs or if I could be using it for my living expenses as well.

23:44Dave Ramsey:I think you can use it for your living expenses as well, as far as the on-campus housing and that kind of thing. You'd need to check that because I'm not positive doing that off the top of my head. Have you gotten any scholarships?

23:57Rachel Cruze:Yes. So my scholarships cover about 50 % of the cost. The only other cost I pay is about$3 ,500 in tuition every semester.

24:07Dave Ramsey:You can remove the value of your scholarships from your 529 without penalty.

24:14Rachel Cruze:Oh, okay, really?

24:15Dave Ramsey:And then you could use that for living expenses for sure. Okay. Or anything you want to use it for, for that matter.

24:22Rachel Cruze:Yeah, how much per semester are you getting in scholarships, Colin? About$3 ,500. Okay. I'm just thinking, because you have how much in the 529? 85 ,000. 85 or 83. Yeah.

24:34Dave Ramsey:So you've gotten$7 ,000 a year for two or three years, right?

24:38Rachel Cruze:Yep, that's correct.

24:39Dave Ramsey:Okay. So, I mean, you pull probably 25 out of it without any trouble at all. You've just got to be able, in the case of an audit, you've got to be able to document the amount, the value of the scholarship. Okay? Okay. And so sometimes scholarships are not an actual dollar amount. They're just a thing that they're giving you. and you need to put a value on that thing if you get something like that. Like if you've got free housing or something, that kind of a thing. But, yeah, you can pull that much out. So I know that can be done. As far as the remaining money, can it actually be used for living expenses?

25:13Dave Ramsey:I'm not 100 % sure, but I feel like there's something in it.

25:17Rachel Cruze:I'm reading that you can use it for qualified room and board,

25:19Dave Ramsey:including on-campus housing and off-campus rent. Qualified, okay, qualified room and board.

25:24Rachel Cruze:You can roll over$35 ,000 of it when the account's been open for 15 years into your Roth IRA. Yes, I did know that. Okay, yeah. So that passed, which is great. So yeah, so if you, which you'll be close to that-ish with the$24 ,000.

25:38Dave Ramsey:There's a bunch of stipulations on that. That's under Biden's Secure Act, and it's not great.

25:42Rachel Cruze:Oh, really? I've heard people starting to do, okay.

25:44Dave Ramsey:It's very difficult. You can do it. Well, I would do it.

25:47Rachel Cruze:Then I would look into it and then sit there. I'd clean it out. But he's not going to be able to clean it out. He's got$83 ,000, 20-something in scholarships. It's$50 ,000. He's not going to live on$50 ,000 in two years.

25:58Dave Ramsey:Probably not, yeah. So I would look. The other thing you can do is you actually can. You can hold it. It can be used for your kids someday. How great is that, though? It can be used for your spouse someday. It could be used for.

26:10Rachel Cruze:Would you keep it in or would you try to roll it to a rock?

26:13Dave Ramsey:Once you realize how hard it is to roll, I might keep it for a while.

26:17Rachel Cruze:And just wait for.

26:18Dave Ramsey:Well, I mean, during the 15 years, you've got to wait anyway.

26:20Rachel Cruze:Yeah, yeah, yeah.

26:20Dave Ramsey:A lot of your life's going to happen, then you could decide. Sure, sure. More intelligently, but you don't have to decide that today. Yeah. You have to leave it in there for that period of time. Or be penalized. Unless his parents opened it when he was two and he's 19.

26:35Rachel Cruze:It could be open for 15 years. Correct? Isn't it when you start the 529?

26:41Dave Ramsey:I don't know. Okay. I don't know. I had it under the impression after you finished school that the 15 years started. And so you were up in your 30s before you could do it.

26:50Rachel Cruze:I don't know. Some options, Colin. But at least use it for living expenses.

26:53Dave Ramsey:The main thing I would do is I'd get the scholarship money out and I'd use it for living expenses. And then let's see what's left. What's left, hopefully, will be negligible and it won't matter. And that would be good. You've done a great job, by the way. That's awesome. Way to go, Colin. Yeah. All right. Matt's in Greenville, South Carolina. Hey, Matt. Hey, how's it going? Better than I deserve. What's up?

27:17Rachel Cruze:well Dave I guess I'm just struggling with a career problem because I got married in 2014 and ever since then I've only been making 40 ,000 a year in the different jobs I've had up through this point and I'm trying to figure out a way to grow in a career and it just seems like all I'm doing is working and exhausting myself coming home tired and I'm just and I feel just so spent like I just don't know what to do anymore what do you do I'm a package delivery driver

27:48Dave Ramsey:Oh, okay Yeah, that's hard work So you're putting in 40 hours And you working for like Ups Or you working for Amazon or what? FedEx FedEx, the other one Okay, left one out, sorry Okay So what are you making? Like 60 or 70? No, I'm making 40 Oh, you said 40 Really? I thought FedEx drivers did better than that Okay I wish Okay Okay.

28:16All right.

28:17Dave Ramsey:Well, it comes down to a couple of things. Obviously, what you've done is you took a job because you're a responsible person so that you could pay your bills to eat and feed your family, right? Yes, absolutely. That's your first big deal. Get people to do that sometimes is hard. And then the second, once you've got that covered, then the second thing to do is, okay, ask the question that you're asking. So you're doing all the things in the right order, and the question is, okay, now how do I move careers into something that I can make$140 ,000? What's that look like? And then you start asking yourself, okay, what are those careers?

28:56Dave Ramsey:What are the things I'm good at? What are my natural bents? What training might I need to get that I haven't had to move into that area? you know, but there's probably something you've dreamed about doing, maybe opening your own business. I mean, I don't know. But I know guys running pressure washing companies that are making 100K. Okay. And obviously that's not rocket science. Right, yeah. You don't have to go back and get the pressure washing degree, right? No. So you run down to Home Depot, buy one, and knock on somebody's door, and here we go. and so um you know so i i but you've but you've got to lean into it and you got to be aggressive and ambitious and all those kinds of things and you have all of that because you're asking this question that's what that tells me if you weren't asking us questions where we'd really have a

29:45Rachel Cruze:problem is there anything matt in your head that you've always thought about or kind of dream about

29:50Dave Ramsey:an ideal career i could do this and make 150 000 a year what would it be well honestly to tell you

29:57Rachel Cruze:the truth, I would love to, you know, teach people how to get out of debt because I mean, my wife and I have been debt free and we have an emergency fund. We've been following you for the last 10 years and, um, we're just, we've just been struggling to save for a house. But I mean, we, and the fact that there, that we've been only made this much money and we've been able to get this far, I mean, tells me that, you know, I can do this and I could teach other people. So helping people is a big thing. Yeah. Well, Ken Coleman talks about, um, find the work you're wired to do. And there's elements of people where there's like kind of this natural thing that comes out of them.

30:32Rachel Cruze:Right. So for you, it's helping people and it may be in the avenue of money. It could be something else that you realize. Oh, my gosh, I'm really good at that. But if you hang on the line, Matt, we'll send you Ken's book. And there's an assessment at the at the end of the book, which you can take. It's a code and you can log in. And it's an incredible assessment that asks you all these questions and it kind of pairs down some things just to get the juices flowing, if you will, right? Just to kind of give you some ideas.

30:59Dave Ramsey:It'll help give you some guidance in what direction you could go. And if you want to learn to be a Ramsey coach, we have a Ramsey coach certification program. You can check that out online, too. Some of those coaches make good money. Some of them don't do much coaching. So there's always that option, too.

31:30Dave Ramsey:If you want to win with money, you've got to make good choices, and that includes where you shop for groceries, which is why I'm excited about Aldi. You'll find everything you need at Aldi, from the same high-quality meat and seafood you find behind the butcher counter to fresh organic fruits and vegetables delivered to stores daily. Daily, Aldi proves low prices don't mean low quality. No gimmicks, no membership fees, just real savings. Listen, a family of four can save nearly$4 ,000 a year shopping at Aldi. That's real money back in your pocket. So stop paying more and start shopping at Aldi for the lowest prices of any national grocery chain.

32:15Dave Ramsey:Find a store near you today at aldi.us. That's A-L-D-I dot U-S. Savings based on regional analysis of Aldi versus select competitors.

32:26Rachel Cruze:Prices may vary by location, product availability, and the market.

32:38Dave Ramsey:Our question of the day is sponsored by Y-Refi. You didn't take out private student loans hoping to default, but life happens. Y-Refi won't shame you. They'll help you explore a real plan to get back on track. Head to YRefi.com slash Ramsey. Find out more. That's the letter Y-R-E-F-Y dot com slash Ramsey. Not in all states.

33:00Rachel Cruze:Today's question comes from Cameron in Kansas. My wife and I are on Baby Steps 4, 5, and 6. We were both raised by hardcore Ramsey followers except my dad, who became a little Ramsey-ish once he hit Baby Steps 7. He opened up a credit card in my name when I went to college so I could easily buy a house one day. The card lives in his basement and is only used once a month for the family television subscription bill, which is paid off every month. I've never seen the card. My wife and I don't care about having good credit. Should I ask my dad to cancel the card so my credit score disappears or just leave it alone since it's not hurting anything?

33:39Rachel Cruze:Oh, I would get rid of it.

33:41Dave Ramsey:This is gross.

33:42Rachel Cruze:I would get rid of it, Cameron.

33:43Dave Ramsey:I mean, I'm not worried about the credit thing. It's your violation of your boundaries. You're like an adult and stuff. My card lives in my dad's basement. That's whacked. Yeah. How about you chop up the card and close the account like a grown man and your dad doesn't interfere in a grown man's life. If he wants to do something with his life, he can go do something with his life, but he shouldn't be doing this with his grown son. I would no more do something like that to one of my children than fly to the moon, even if I was right. You know, and in this case, he's both things, a boundary violator and not right.

34:23Dave Ramsey:And wrong. So, yeah. No, yeah, you should definitely call him and go, dude, we're not doing this anymore. Chop, chop, chop. Close, close, close. And pay for your cable bill with something else.

34:32Rachel Cruze:Yeah, that's a good point. Because, I mean, with all this stuff, it's like, whatever. but it is the boundary violation that your dad has a financial string attached to you, basically, that he's kind of in charge of. It's weird. Weird.

34:47Dave Ramsey:Yeah. Yeah, it's way out of control. All right. In Virginia, it is, is it LARF? Is that right? Yes, sir. Hi, Dave. Hey, what's up? Hey, thanks for taking my call today.

34:59Rachel Cruze:Sure. My wife and I are both 26 years old. We're completely out of debt, and we're currently on baby step number four.

35:08Dave Ramsey:Good.

35:10Rachel Cruze:My question for you is we're trying to figure out how aggressive we need to be with purchasing our first home. So we currently rent here in northern Virginia, just outside of D.C., and our rent is pretty expensive, but we have good jobs out here, so we stick around. but I know that you say during steps baby step one two and three you need to be like a gazelle with some fire underneath you and we've definitely done that but now that we're on baby step number four we're not quite sure how much of our income to put towards our our first home

35:46Dave Ramsey:well obviously the more you put towards it the more the down payment is and the smaller the debt is. So as much as we can do and still accomplish some of these other things, we call this baby step three B. You may have heard us talk about that when you're between baby step three, where you finished your get out of debt plan, accept your house, you're now saving for a house and you've got your emergency fund in place. So that's after baby step three, in other words, but before we start baby step four, some people put everything they can scrape together towards of down payment to build up a big one very quick and delay starting baby step four, 15 % of your income going into retirement for two or three years to pile up a big old pile of cash for a down payment.

36:30Dave Ramsey:That's the one end of the extreme. The other end of the extreme is to put all 15 % away into retirement and do as much down payment as you can do above that. Anywhere in between is okay. Sometimes people do 10 % for retirement and then load their down payment fund as quick as they can. Anywhere in there is all we want to do. I do not want to delay starting retirement more than about three, maybe four years.

36:57Rachel Cruze:And the lowest amount of a down payment we recommend is 5%. But if you can do more, obviously, that's better. So what's your household income? So our household income gross is about$160 ,000 a year. Good.

37:13Dave Ramsey:Very good. Okay.

37:15Rachel Cruze:So we currently are putting about$1 ,000 a month into a high-yield savings account to save up for our down payment. Ideally, we would like about$100 ,000, so we can do about 20 % on our first home is what our goal is. You're not going to get there at$1 ,000 a month. Right, which is, you know, we're trying to figure out, you know, should we cut out certain things in our life to help us get there sooner? Have you started the retirement savings? We are. We have about 15 % of our income is going towards retirement. How much is that per month? Do you know what that would be cash-wise if you put it back in your paycheck?

37:55Rachel Cruze:I'm not sure. $2 ,000. I would imagine it's somewhere around$2 ,000 to$2 ,500.

38:03Dave Ramsey:Yeah. I would look at stopping my retirement temporarily and throwing all of that in the down payment because that starts to be$36 ,000 a year. That puts you in a house in three years at your$100 ,000 goal, and then you start your retirement. Okay. You're not going to get there at$12 ,000 a year.

38:22Rachel Cruze:And you guys are 24. Is that what you said? 26. 26, okay.

38:27Dave Ramsey:So you'll be 29 and buying a house with$100 ,000 down. Start your retirement then. You'll be multimillionaires.

38:34Rachel Cruze:That sounds lovely.

38:36Dave Ramsey:Yeah. I just don't think the 12 is – that sounds like a 10-year plan. That's not a plan, right?

38:43Rachel Cruze:Yeah, I mean, that's kind of where we're headed at, too, when we really looked at it. We're not sure how long it's going to take us to get there, especially with housing only going up.

38:54Dave Ramsey:Exactly, exactly. So, yeah, I think 36 months of saving and delaying your retirement, I just said three to four years, and doing 100 % of your game plan on the down payment fund instead of be funding retirement temporarily is what I would do because I'd be wanting to get into a house. And I think you are too. So, yeah, that makes a lot of sense with the math in your situation. Now, sometimes folks can do both and still get there and get to their good, strong down payment. And that's a 20 % down is what he's aiming at. And that, by the way, if you put down 20 % on a Fannie Mae, a standard conventional mortgage, which is the least expensive mortgage of the conforming mortgages, and if you put down 20%, you avoid PMI, private mortgage insurance, which is about$75 a month per 100 ,000 borrowed.

39:45Dave Ramsey:And so it's$300 a month for a$400 ,000 mortgage if you don't put down 20%. That's a lot. Again, that's$3 ,600 a year. That starts to be almost 1 % of your mortgage amount that you're paying out in insurance. And all private mortgage insurance is, folks, is insurance that the mortgage company requires you to buy for them in the event they have to foreclose on you and they lose money on the house because you didn't put it on a big payment down payment then uh then this insurance covers the difference and they don't require that if you put down 20 because they've got the margin they know with that loan to value ratio that they're safe and they're not if they did have to foreclose they're not going to lose money but when you're north of 80 on the loan to value if you don't put down at least 20%, then they're going to require that.

40:40Dave Ramsey:And it's expensive and it's useless. It's basically foreclosure insurance for the mortgage company, but you have to pay for it. That's why it's aggravating. And so, yeah, I love to see people put down 20 % because of that. But again, first time homebuyers, Rachel's right, we don't yell at you for putting down 5%, but you're paying a premium when you do that.

41:02Rachel Cruze:Right. Right. Well, and I mean, it's kind of that like tension of the market's not going down. Right. And so if you have to wait another three, four or five years to save the 20 percent, could you get in earlier from a cheaper standpoint? Like it's kind of a little bit of that game you kind of have to play.

41:19Dave Ramsey:By the way, just as a side note, if you did take out a mortgage that has MIP, mortgage insurance premium on FHA or PMI, when you do get it paid down to that ratio, you can request they stop it. You have the right to stop paying for the insurance once it gets down to there. If you're doing it based on the fact that the value has gone up and now I've got 20 percent equity, not just paid it down to 80 percent, you may have to pay for an appraisal. but a$400 or$500 appraisal is nothing compared to the cost of PMI.

41:53Rachel Cruze:That's a good point.

41:53Dave Ramsey:And so, you know, that's not a big deal. Now, don't just go get any appraisal. You've got to get one that's approved by your mortgage company because they're the ones who have to accept it in order to drop the PMI. So you can get out of this. It's not forever, but you've just kind of got to be thoughtful about how you're doing it and not just assume you're going to have it forever because you don't want it forever. It's too stinking expensive.

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44:03Dave Ramsey:from the headquarters of Ramsey solutions. It's the Ramsey show. Welcome back. Rachel Cruz Ramsey personality is my cohost today. Number one, bestselling author and my daughter, Joe is with us in North Carolina. Hi, Joe. How are you? Good. How are you guys doing? Better than I deserve. What's up?

44:24Rachel Cruze:So I'm looking to transition from my full-time job to doing my side business full-time, and I'm just wondering how to set myself up financially when I'm ready to make that move.

44:37Dave Ramsey:Well, the best way to do it is to raise the income of the side business to where it's within reach of your day job. Okay. In other words, we always say pull the boat up really close to the dock before you, so you can step into the boat instead of having to leap and hope you hit the boat. Okay. Meaning, so what is your income on your side business now?

45:03Rachel Cruze:Right now it's only about$1 ,000 a month. Okay. Working weekends.

45:07Dave Ramsey:Working weekends only?

45:10Rachel Cruze:Yeah, it's basically just Saturdays.

45:12Dave Ramsey:What do you do?

45:13Rachel Cruze:Mobile mechanic.

45:15Dave Ramsey:Oh, good. Okay. Cool. And so you got the truck and the tools and so forth?

45:23Rachel Cruze:Yes.

45:24Dave Ramsey:Okay, that's neat. And what do you make on your day job?

45:31Rachel Cruze:Around 93 a year, depending on overtime, before everything. Okay.

45:37Dave Ramsey:So jumping from 93 to 12 is not a plan. That's too scary. And there's two reasons it's too scary. Number one, if you had a big old savings account, you'd burn through it to cover the difference. Number two, you don't have proof that this business will scale. All you've got is a thousand dollars a month worth of proof. And I want more proof than that before I bet the farm on it, so to speak. So what can we do to add more hours and more income to the mobile business to get it to gosh let's get it to 60 ,000 from 12 ,000 yeah it would basically be a time issue yeah um

46:20Rachel Cruze:because like i've had work coming in but i can't even get to it all because i just don't have the time for you know why um just because they only want to do it during work hours a lot of the times but i don't have time during the week after my full-time job and so like that's So I push on Saturday just because my schedule for the day, you know, I'm out of the house early and then home later.

46:47Dave Ramsey:So you're working more than 40 at your day job?

46:51Rachel Cruze:A lot of the times, yeah.

46:53Dave Ramsey:Because if you're working 40, you do have time.

46:55Rachel Cruze:Can you pull back on your main job, Adam, and start supplementing some of those hours? Maybe like twice, like two nights a week? Yeah, I might be able to. It's just it's not predictable. So getting everything scheduled, like if I had a job scheduled, then that day at work something happens and I'm unable to make it, you know?

47:14Dave Ramsey:For your full-time job, you mean? What do you do during the day?

47:18Rachel Cruze:I'm a diesel mechanic.

47:20Dave Ramsey:So why would you have to stay after?

47:23Rachel Cruze:What was that?

47:25Dave Ramsey:What do you mean if something happens during the day? Well, what happened during the day?

47:29Rachel Cruze:Like if I'm on a job and it doesn't go as planned, you know, and then it ends up turning into a later, takes longer than it should. You know what I mean? And you have to stay there and finish that job. You can't just like. You can't roll it.

47:42Dave Ramsey:You can't roll it till the next morning.

47:44Rachel Cruze:No. And then there's also emergencies, emergency call outs as well that happen.

47:49Dave Ramsey:How much of that job going over what is supposed to an emergency do you really have?

47:59Rachel Cruze:It depends.

48:04I know.

48:06Dave Ramsey:But how much do you really have?

48:08Rachel Cruze:For time?

48:09Dave Ramsey:No. How often does that really happen? Or how often are you just electing to stay late?

48:15Rachel Cruze:No, no, I don't elect. I would like 40 hours is fine for me. That's why I'm trying to do the side business, because I don't need all the, you know, money's good, but it's not like I don't need all the hours and stuff like that. Like, we're in a pretty good spot where we don't need all that extra income. I want to say, you know, it's bad.

48:37Dave Ramsey:So how much mobile business are you turning away?

48:42Rachel Cruze:It probably ends up being one or two jobs a week just because I tell them I'm out a couple weeks. Which is how much?

48:52Dave Ramsey:How much is a job worth on average?

48:55Rachel Cruze:uh be like three to five hundred depending some or more but yeah roughly around there so a thousand bucks a week possibly you're turning away so close to four thousand dollars is what you could be doing on a minimum yeah yeah because i kind of did the math well that's good

49:09Dave Ramsey:out that way yeah i want you to start taking those jobs and booking them even if you and just tell them if something blows up at work i may have to push you a day but i'm gonna otherwise if i'm I'm going to be there Tuesday, but if I get blown up Tuesday, I'm going to move it to Wednesday and we'll get to you. Okay, I want you to start. I want you to pick up some stuff, a couple of those jobs a night, a couple during the weeknights, and get this up to$3 ,000 anyway. Have you got any savings?

49:36Rachel Cruze:Yeah, I have. Me and my wife have about$120 in 401ks, and then we've got about another$20 just in regular savings.

49:45Dave Ramsey:You haven't got enough to do this. Okay. That's what I was wondering.

49:48Rachel Cruze:I was wondering if I should open another savings account and kind of put a bunch of money in there.

49:52Dave Ramsey:Yeah. Yeah, because you're not going to be able to get. I'd like for somebody making 94 to get their income to 60 to 70 before they make the leap. And you're not going to be able to do that in the situation you're in. But maybe we can get you up to 36 or 40 or something and have a good healthy savings account. Those would be the two things I would do. I would not make this leap with any amount of savings in the bank. When I only have a thousand dollar income.

50:21Rachel Cruze:Yeah, exactly.

50:22Dave Ramsey:Because you have not proven the business idea is scalable. You think it is, but you have not proven it. And your family's counting on you to prove it.

50:32Rachel Cruze:For what, six months consistently? Yeah. That it's coming in and then make the jump.

50:37Dave Ramsey:Yeah. I mean, if you can get another$2 ,000 a week, that gets you to$36 ,000 by beefing up your Saturday a little bit tighter, working more hours, you're going to burn some candle oil here. Okay? You're going to burn the candle at both ends in order to get this thing going. That's the price you're going to pay to do this. Otherwise, you're going to take a leap of faith, which is called stupidity.

51:02Rachel Cruze:Well, and again, it's this, the whole working to and trying to get this going. Again, it's for six months. So you think about that.

51:10Dave Ramsey:I mean, by February, you should be, yeah, for six months and do it.

51:14Rachel Cruze:And then make it a leap.

51:16Dave Ramsey:Your kids are whining. Your wife's whining because they never see you. And, honey, that's the price we pay to get this other business up and running enough that we can trust it for me to walk out of this other one.

51:26Rachel Cruze:Yeah.

51:27Dave Ramsey:And I think you can do it. I think what you're doing is marketable in a world where. Oh, my gosh. Convenience. Convenience and luxury items. Convenience items and luxury items, and you're both, are at a premium. And they're the types of businesses that are doing the best. And so I think you're in the right place.

51:50Rachel Cruze:The mobile grooming of dogs, the mechanics that come to your house. He's the mechanic. I know. Exactly. That's what I'm saying. I'm like the convenience world out there is just growing and growing. And people are willing to pay for it.

52:01Dave Ramsey:But I am not betting your family's future on that when you've only made$12 ,000 a year. I would not do that. That's bad business acumen. So we want more social proof, more proof in the marketplace that we can actually turn this into money. And if you could get it up to$36 ,000 and hold it there for six months and be about to collapse because all you do is work all the time, I'd be ready to try it. Especially if you had some savings. And if your wife has a good income, we'd be able to ask about that.

52:52Hey, you guys.

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53:37Rachel Cruze:It's a nationwide health cost-sharing ministry. It's Christians helping other Christians with their medical bills. With CHM, you get to choose your providers. There are no networks, no surprise bills, and no insurance headaches. Whether you're just starting out as a family or you're looking for something that fits your budget better, CHM is where your faith and finances agree. Programs start at just$98 a month. So go to chministries.org slash budget to learn more and take the leap of faith today. That's chministries.org slash budget.

54:33it.

54:34Dave Ramsey:Denise is with us in Memphis. Hi, Denise, how are you?

54:38Rachel Cruze:Doing okay.

54:39Dave Ramsey:Good. How can we help?

54:41Rachel Cruze:um i'm trying to figure out is there ever a point where you're actually saving too much no

54:50Rachel Cruze:well the bible may have i'm messing with you i'm messing with you that's fun okay so why do you think you're saving too much well we have seven kids and it just seems like things are super super tight and my husband's very anxious about money.

55:09Dave Ramsey:Okay well are the kids eating?

55:14Rachel Cruze:Yes. Okay what is super tight? It's just sometimes we dip down into the savings and then we dip back out and it's just.

55:26Dave Ramsey:In order to do what?

55:28Rachel Cruze:In order to just do general living.

55:30Dave Ramsey:Well, what's general living?

55:33Rachel Cruze:Like food. Well, insurance, groceries.

55:36Dave Ramsey:So you're saving so much that you're not budgeting properly for groceries?

55:41Rachel Cruze:Well, no, we're budgeting for groceries. I'm just saying that it seems like there's...

55:46Dave Ramsey:If you're budgeting properly, you would never dip into savings for groceries unless you were overspending on groceries.

55:53Rachel Cruze:Yeah, it just, we don't have any, it feels like we don't have any breathing room. Any margin in your budget?

56:02Dave Ramsey:Yeah. It feels like it. How much do you guys make a year?

56:06Rachel Cruze:$150 ,000. Okay.

56:09Dave Ramsey:Well, that's enough to feed seven kids. Yeah. Okay. So you shouldn't have a problem. Where do you think the overspending is occurring?

56:19Rachel Cruze:Well, we're doing like 10.5 % into the 401K,$3 ,500 in the HSA. And then we're doing an additional 15K in the Roth. I honestly think that insurance and groceries is just eating our lunch lately. How much are you spending on groceries? So it's OK. Groceries plus what we pay to the school, I would say about one thousand five hundred. Are they in private paid to the school? No, no, no, no. It just costs us$100 every week for all five kids to eat at school.

57:01Dave Ramsey:For lunch?

57:02Rachel Cruze:Yes. Okay.

57:05Dave Ramsey:All right. And that would be, but that's not killing you on$100. So, okay, do you have a house debt?

57:13Rachel Cruze:No.

57:14Dave Ramsey:And you don't owe anything on your home?

57:16Rachel Cruze:No, sir.

57:17Dave Ramsey:And you don't owe any of the debt?

57:19Rachel Cruze:No. Okay. And we have a lot in savings. We kind of did everything opposite of everyone. We paid everything off first and then we had kids. And so we have a sizable retirement fund and it just feels very strange to still be in a situation where my husband is getting upset about money when we're supposed to be doing that well on paper. That makes sense. Yeah. Are you guys funding, you're giving out dollar amounts for your savings. Yeah. Is that, what percentage-wise is that coming out?

57:56Dave Ramsey:She said 10.5 plus 15 ,000 or 15%.

58:01Rachel Cruze:Yeah, for the Roth, no, 15 ,000 for the Roth plus the 3 ,500 for the HSA a year.

58:07Dave Ramsey:A year. Yeah, that'd be right. Okay. That's$18 ,000 out of 150.

58:14Rachel Cruze:Yeah. That's not causing you a problem. That's not causing you a problem.

58:18Dave Ramsey:You know what? You guys are not doing a detailed every-dollar budget that the two of you sit down and agree to before the month begins. You're throwing money in savings and hoping you can live with what's left over, and when chaos hits, you dip back into the savings.

58:36Rachel Cruze:Yeah, and usually by the next month, savings is pretty much where it was before, but it's just my husband's just very stressed.

58:45Dave Ramsey:Yeah, I heard that three times. But you know why he's stressed? Because he doesn't have a plan. Not because of the money. So if you will start the month before the month begins, get the every dollar budget, download it. We'll give you the premium upgrade for free. And the two of you, both of you sit down and go, okay, here's what insurance costs. That comes out of this. Here's what lights cost. Here's what water costs. Here's what the school lunches cost. Here's what the grocery store costs. And then we save money. I think you're going to find you have enough to do all of it.

59:24Rachel Cruze:Because you guys are bringing home what? What's hitting your account, Denise, every month? $9 ,000-ish?

59:29Dave Ramsey:$10 ,000.

59:29Rachel Cruze:$8 ,641. Something's wrong.

59:32Dave Ramsey:What is coming out of that check? That's only$100 ,000.

59:37Rachel Cruze:There's a little bit of savings for a trip that him and my daughter want to do. He's coming out of his check? No, no, no, afterwards. His check, just insurance cost and then the 10.5 % for Roth and the$3 ,500 for the HSA. That's$18 ,000.

59:56Dave Ramsey:We're$50 ,000 down.

59:57Rachel Cruze:Yeah, it was like$120 ,000 after taxes. So, yeah, I mean, it should be around$10 ,000.

1:00:02Dave Ramsey:No, it's like$100 ,000 after taxes. Yeah. And so, yeah, you got something coming out of your check that's screwing up, too. Are you guys getting a large tax refund?

1:00:14Rachel Cruze:Um, we do. And I throw that into the emergency fund or into the, um,

1:00:20Dave Ramsey:Yeah, but that's not what, no, we don't need a tax refund. That's a savings account with the IRS that pays no interest and they give it to you once a year. Santa Claus does not live in Washington, D.C. You need to adjust your W-2s and get the proper amount coming home so that there's no tax refund. That will help your cash flow because you're not bringing home enough. There's something wrong with your home coming home.

1:00:39Rachel Cruze:I honestly feel like if we took home the amount that we get in the tax refund every year, I feel like it would be pretty much spot on.

1:00:52Dave Ramsey:You have a feeling, but you don't know because you all don't live on a budget. You guys have got to do a written, detailed plan. You're chaotic, and he's saving money on one side, and you're over here trying to keep the family held together with duct tape and bailing wire on the other side because you don't have a freaking plan. You need a plan. Before the month begins, every dollar needs to be addressed, and I want to know why I make$150 ,000 and I'm only getting home with$100 ,000 because the numbers you're giving me don't add up to that. So you guys got to get into this stuff and learn where your freaking money is going, then make the proper amount come home and quit hoping that an IRS tax refund bails you out of your lack of organization and planning skills.

1:01:38Dave Ramsey:So you have to manage this like it matters. If you don't make these dollars behave, they are not going to behave, and your husband is going to remain stressed out, and you're going to remain feeling like, well, we should be able to do this, but it's all that savings, and it's not all that savings. The savings is not the math problem. You've given us the numbers. It's not there. So I know where the money is going. It's going to chaos and disorganization. That's where it's going. If you guys will give every dollar an assignment every month for the rest of your life, like your life depended on it, and the two of you agree to it, you're going to have all of this angst removed from your position, the anxiety you're feeling, and the anxiety he's feeling.

1:02:21Dave Ramsey:But you're not going to get rid of it by just tossing these numbers up in the air and trying to juggle them. You're throwing them around like you're a circus act. And you've got to set them down, make them everyone behave. behave. I can hear it. I've done this for 30 years. I can hear it in the process. You're even discussing it with me. So you can do this. You have the money to be okay. And I've given you the antidote. Now, the only question is whether you're going to do it or not. So go to EveryDollar. We're going to give you the EveryDollar. Help them download that, Kelly, and get it the premium version, and we'll pay for it.

1:02:53Dave Ramsey:Give it to her as a gift. Because, honey, you can do this. It's very doable. It's very doable. And please don't ever say we can't be responsible because we have a large family i don't think she did she didn't she didn't she didn't but i get that all the time i hear yeah dave you can't do the david ramsey plan if you have a large family and then we have people that have eight kids stand up here and do a debt free screen so they do it all the time it's a matter of fact it's the only way you can be responsible with a large family is to be responsible and work a plan it's the only you don't have an option.

1:03:27Dave Ramsey:It's like when you have seven kids, you don't have an option of one of them being a brat. They have to behave. So large families, the kids, they don't have, none of them are confused that they're the center of the world. But if you got one or two, one of them can get confused about that. So, you know, it goes with the territory. It's a wonderful part of having a large family, but you have to be organized. You know the thing large families can do? They can take pictures quickly. They're efficient. They're organized. They line up. They line up and little ducks. And then we take a picture real quick.

1:04:31Dave Ramsey:If you're tired of living paycheck to paycheck and feeling like you can't get ahead like a rat in a wheel, join one of our free every dollar trainings. There are new trainings every week this month and they're all hosted by one of the Ramsey personalities. Rachel wins your next one.

1:04:48Rachel Cruze:It is Monday.

1:04:49Dave Ramsey:Oh, there we go.

1:04:50Rachel Cruze:Monday at noon.

1:04:51Dave Ramsey:Going to show you how to stick to a budget. And most people are finding between$5 ,000 and$10 ,000 worth of margin using every dollar. So that jump starts your get out of debt plan. You really start building wealth. And you can ask questions during the live Q &A. Sign up for free. Did I mention it's free? At RamseySolutions.com slash webinar. Is the Q &A interesting, Rachel?

1:05:14Rachel Cruze:Yeah, it's fun. Yeah, we can do a couple of live questions. And it's usually about someone's situation or something in every dollar that they're like, OK, well, how do I do this or that? And yeah, so it's very helpful.

1:05:24Dave Ramsey:How's that function? Yeah. OK, cool. All right. Adam is with us in Springfield. Hi, Adam. Welcome to the Ramsey Show.

1:05:33Rachel Cruze:Hi, Dave. Thanks for taking my call. Sure. I have a couple of questions. I grew up in a landscape family. I was family owned. I took over part of my dad's business and my family grew. I sold it. And now I'm starting from scratch. And so we're about$5 ,000 of monthly income. Good. We take home. Good.

1:06:02Rachel Cruze:My wife and I, we, when I was young, my father helped me buy a farm. and my wife and I sold it to buy a home and incurred a lot of capital gains tax. Our company was running a lot of old trucks to get around the tax. We did a$179 and bought a new work truck to replace those before we sold the business. Now we're$61 ,000 in debt for that truck, and I know it's stupid. It's crazy. I didn't – no excuses. we're selling that home and buying another property borrowing$295 ,000 and we have$180 ,000 that we have coming back to us from that home we're selling and I don't know what steps we should do because

1:06:55Dave Ramsey:what price range truck do you need to operate the business it's not the one you have

1:07:03Rachel Cruze:i don't i don't know exactly so i we ran all cash trucks for our first couple of years yeah they're like five to ten thousand dollar trucks yeah and we still have a couple of those old trucks sitting around oh and they were posted but i've started listening to your stuff just in the past week and my father used to listen to you years ago when i was a kid but i started I listened to you recently, and I started thinking, I wonder if I should sell that new truck and just pay their repair fees on these old trucks and use them. Yep. Yep.

1:07:38Dave Ramsey:So in business, whatever equipment we need, whether it's me with a microphone or you with a weed eater, whatever equipment we need to operate the business is a valid investment to cause the business to run. And the valid investment is I need the minimum reasonable amount to do the job. And I'll give you an example. We do a lot of stuff with technology where you're doing stuff with trucks, trailers, and mowers, right? But with technology, there's always something that's ten times more expensive that's fancy. Kind of like a truck. Okay? And so we have a saying around Ramsey. we're always looking for MF, minimal functional.

1:08:29Dave Ramsey:What's the minimal thing we can buy that's functional and gets the job done? Because the only reason to buy a computer is if it makes me more than it costs, not because somebody's going to think I have a fancy computer. The only reason for you to buy a truck is that the truck gets the work done. What's the cheapest truck that will get the work done? because anything past that is a luxury item, and you ought to take your luxury items home. You shouldn't have those at work. Yes, sir. So, yes, I would definitely sell this truck. I'd beef those two old ones up, get them going. And then you're probably going to need to buy a little bit better truck later on for cash to get rid of one of those junkers because they're going to start to be unreliable, which means they're not getting the job done.

1:09:18Dave Ramsey:You can't miss a job because of a stupid breakdown.

1:09:22Rachel Cruze:Yeah, that's what happened. We had three trucks, and we had like one and a half of them in the shop at a time. We spent$30 ,000 on repairs last year, and that's where I thought, oh, a new truck will make sense with a five-year warranty,$100 ,000.

1:09:32Dave Ramsey:Yeah, no, it doesn't. But moving up out of a$5 ,000 truck into a$15 ,000 might make sense because of reliability issues only. But again, all we're trying to do here, we're not trying to impress anybody. We're not trying to have a nice truck. All we're trying to do is get the job done. And so when the old ones are too junky to get the job done, then they're too old to get the job done. When the new one's like six times too fancy to get the job done, then it was ridiculous. And you've already determined that. And so really, it's almost like you need to sell all of them and buy two$15 ,000 ones.

1:10:12Dave Ramsey:All I'm trying to do is run the business and keep my overhead down.

1:10:17Rachel Cruze:Yeah, I understand that.

1:10:18Dave Ramsey:There's nothing else motivating me here.

1:10:20Rachel Cruze:How many trucks do you need, Adam, for where you guys are right now?

1:10:22Dave Ramsey:If they're all running. So right now, only one.

1:10:28Rachel Cruze:You only need one. I'm a little operator.

1:10:30Dave Ramsey:You know what? You said you had three junkers?

1:10:35Rachel Cruze:Two junkers.

1:10:36Dave Ramsey:Two?

1:10:36Rachel Cruze:Yeah.

1:10:36Dave Ramsey:Okay, and they'll bring five or six grand apiece, right, if they're repaired?

1:10:41Rachel Cruze:They're pretty old. I think one is probably$4 ,500. The other one is going to be like$3 ,000.

1:10:46Dave Ramsey:Okay, all right. So you get$8 ,000 there. You sell the truck you're in, put a little money with it from the sale of the house, and get about a$15 ,000 truck, and let's go get our work done. But systematically look at that thing, and before it wears out, start saving up the money to buy its replacement. Or before you buy the number two truck, because the business is growing, save up and buy a used truck. But we're not trying to make a luxury statement. We're not trying to impress anybody with our truck. I don't even know what my landscaper drives. I couldn't care less. All I want to know is the yard get cut.

1:11:20Dave Ramsey:You know, I mean, come on. So, you know, that's all that matters is did you do the job? And if you didn't show up, then I start caring what you drive because something broke, I guess. But anyway, minimal functional, minimal functional that will get the job done. And that's how you run business. Everything else is just those of us that are entrepreneurs overspending and using our business as an excuse. and um so that's a really really good question especially from a new listener adam thank you very much and i think you kind of got a good plan here and it sounds like you're going to do very well you've gotten you got your head dialed in and you had good training from your dad on the business side of things it sounds like and so yeah that's good i think you're going to go in a great direction there judson's in michigan hey judson what's up hey dave uh it's great to talk

1:12:09Rachel Cruze:with you. I feel like I've grown up on your stuff. My parents have been long-time listeners out of Southern California. They moved to Michigan in 98. I am actually in the midst of selling my home and moving to the great state of Tennessee where you reside. That being said, I don't actually have a place for me to move my family to. My wife's a horse trainer, so I am stuck in

1:12:38Dave Ramsey:a situation where I'm trying to figure out land value. You have a place to move your family to. You don't have a place to move the horses to.

1:12:49Rachel Cruze:Yes, both. Right.

1:12:51Dave Ramsey:Well, I mean, I can end up in a rental situation. No, you could end up in a family home, and the horses are somewhere else. Yes. Yeah, but horse trainers get confused about what family is. Horses aren't family. They're a business. That's true.

1:13:09Rachel Cruze:You and George Campbell with the horses.

1:13:14Dave Ramsey:I didn't say sell the horses. I just said, yeah, go ahead. I'm sorry. Right quick. What's your question? If I want to stay married, I will keep the horses. Yeah, I didn't say get rid of them. I just don't know. I don't know if you have to own the land that they're sitting on.

1:13:30Rachel Cruze:I'd like to. Yeah, I know you'd like to. We're managers of a decent-sized property right now. We're looking to move to Tennessee, and I'm not seeing prices match value.

1:13:44Dave Ramsey:So it puts me in the situation where my dad is willing to co-sign with me on a— Yeah, that part where you're a longtime listener, you and your dad, and you want to co-sign. Not a chance, dude. Not a chance. You're buying something you can't afford because you're trying to do something you shouldn't be doing. You guys have got to think through this a little more clearly. Thank you.

1:14:40Dave Ramsey:Michael's in Raleigh. Hey, Michael, how are you? I'm doing well, Dave. How are you? Better than I deserve. What's up?

1:14:49Rachel Cruze:So, me and my wife are on baby step two. We started out with around$101 ,000 in debt, and we are down to about$50 ,000. Way to go. Yeah. How long did that take? We had about$49 ,000 in cash savings that we dumped at half of it. Oh, so it took 10 minutes.

1:15:14Rachel Cruze:But it was actually a little less than$49 ,000, probably about$46 ,000 or so.

1:15:20Dave Ramsey:What is the remaining debt on?

1:15:23Rachel Cruze:So the remaining debt is$46 ,000 in student loans, and then we have$4 ,000 on a personal loan. Okay, good.

1:15:31Dave Ramsey:All right. And what's your household income, sir?

1:15:35Rachel Cruze:It's about$150 ,000.

1:15:37Dave Ramsey:Good, good. Excellent. Okay.

1:15:40Rachel Cruze:Nice. And that's part of my question because I work full-time. My wife stays at home with our kids. I'm in engineering. I started a side business to help assist with the debt. But the problem with that is in working as much as I'm around 120 without the side business. And I'm able to throw most of the money from the side business at the debt to try to pay it off quicker. But the problem with that is there's days where I don't even hardly get to see my son. And it's like an emotional thing for me. And I'm wondering how to navigate that, the sacrifice of not seeing him. How old is he? He's just working.

1:16:25Rachel Cruze:He's five, so he just started school. So a lot of times when I get off work, I go straight, and I just cut grass. I just cut grass like crazy. How much are you making on that, on the side hustle?

1:16:36Dave Ramsey:$30. You said$120 and$30, right? About$30.

1:16:40Rachel Cruze:Yeah,$30. The$150 is the total. Oh, it's total. I'm sorry. I got you.

1:16:44Dave Ramsey:I got you. Yeah. But how long have you been doing this? This is our first year doing it. It just kind of skyrocketed. No, I mean, how long have you – because what you told me a while ago was you just pulled the money out of savings and threw it at the debt, and you really haven't paid off any debt much except that.

1:17:05Rachel Cruze:Yeah, well, I've been doing this about three weeks, but it's been – because this is new because –

1:17:12Dave Ramsey:Okay.

1:17:14Rachel Cruze:Our son just started school, so I was at home with him, but now that he's in school, I don't even hardly see him due to working in the evenings as well, basically. All right. So I was home with them during the day.

1:17:26Dave Ramsey:Yeah, well, you have$50 ,000 in debt. You're making$30 ,000 a year extra to throw at it, right? Yeah. Okay. What do you owe on your car?

1:17:40Rachel Cruze:Nothing. We have no car payments. Student loans and personal loans.

1:17:43Dave Ramsey:I know, but I'm just checking. What are they worth?

1:17:48Rachel Cruze:About$50 ,000 in cars. We own a Jeep Wrangler and a Tundra. But they're paid for.

1:17:58Okay.

1:17:59Rachel Cruze:And the Tundra's for work.

1:18:01Dave Ramsey:We paid the Jeep off with the lump sum. Yeah, what's the Tundra worth? Probably about$12 ,000. So the other car, the Jeep, is worth$38 ,000.

1:18:17Rachel Cruze:No, I'm sorry. I got the math wrong. It's worth about Kelly Blue Book, like$25 ,000 to$28 ,000, somewhere around there.

1:18:26Dave Ramsey:All right. Well, what I'm fishing for is, is there a way to short-circuit and do this sooner than a year? Number one, you know, Raleigh, North Carolina, you can live on a lot less than$120 ,000 a year. So your budget's not tightened down enough yet. And you quit eating out, quit going on vacation, live on nothing, beans and rice, rice and beans. You've only been doing this three whole weeks. So it's not like you've really stretched out there yet. Okay. So, yeah, but I think you crank your budget on down tight, tight, tight, tight, because the more you crank it down, the faster you get out of debt.

1:19:01Dave Ramsey:Agreed? So I'd love to see a situation where you could see your way to being done in a year without selling the cars. If I can't, I'm probably selling her car so I can be done in a year, so I can see my son, because I want to be done in a year. You can do anything for a year. Yeah, I was going to say, Michael, I feel like you guys could throw$3 ,000 to$4 ,000 at this, get it$40 ,000, and then all your stuff on top of it.

1:19:25Rachel Cruze:You guys could do this in a year.

1:19:27Dave Ramsey:Yeah.

1:19:30Rachel Cruze:That's what I'm projecting, and I'm still going hard at it. It's just –

1:19:35Dave Ramsey:Honey, you're not still doing anything. You've been doing it a whole three weeks. Yeah. It's not like you've been doing this for two years, okay? I mean, it's a whole three weeks. Now, the thing is, anytime you're going to win at something, you're going to pay a price to winning at it. What you are doing is you are investing some time now so that you have the rest of your whole life to have all the time in the world. So today what I do with my kids or my grandkids is anything I want, anywhere in the world I want, because I can both afford the time and the money. Because decades ago I paid a price.

1:20:14Rachel Cruze:But when I was five,

1:20:17Dave Ramsey:bye-bye, Dad. When you were five, I was probably gone. Your mother was about a single mom.

1:20:22Rachel Cruze:Yeah, yeah.

1:20:23Dave Ramsey:And you lived through it. You had something to tell your counselor later.

1:20:29Rachel Cruze:Abandonment was not one of the issues. It's good.

1:20:31Dave Ramsey:I mean, when I'm home, I'm home, too, by the way. I turn off stupid television.

1:20:35Rachel Cruze:Yeah.

1:20:36Dave Ramsey:Okay? Don't tell me I'm spending quality time with the family and Netflix is on. that's that's not the that's the definition of not quality time with the family so anyway it's three whole weeks you're going to be fine i think it's worth the price you're paying and i think when you look back on it at the end of a decade at the end of two decades at the end of three decades you're going to say is the best year of investment i ever made in my son was for me to get my family back to square where we could eat again and get away from this garbage and this mess so we can breathe. And now we're able to do anything.

1:21:11Dave Ramsey:We're living like no one else so that later we can live like no one else. We work like no one else so that later we can work like no one else. We drive a piece of crap so that later on I can drive anything I want to drive.

1:21:24Rachel Cruze:Yeah, because Michael, if you had called us three weeks ago before you guys paid off the car, I'd probably tell you just to sell the car.

1:21:29Dave Ramsey:Yeah, I think I might still.

1:21:30Rachel Cruze:And put the extra money towards this debt. So I would, yeah, drive a crappy car so that you can be home.

1:21:36Dave Ramsey:I would let you I keep the trunder you're using it to pull the lawnmowers I'd let her drive a

1:21:41Rachel Cruze:crappy car right now and you guys save after that and you guys can upgrade in car but it's kind of

1:21:46Dave Ramsey:but I'm gonna I'm gonna take everything out of this budget in the name of every time I take a dollar out it's a dollar sooner I get to not be doing this think about how much you make an hour

1:21:57Rachel Cruze:and if you can save that that's one less hour you have to work right you kind of multiply that in

1:22:02Dave Ramsey:your head yeah that'll make you cut life I'm cutting this I'm cutting that I'm cutting this I'm cutting that. And I don't really care what other people think. But you're, you know, yes, you're a good dad. You love your kid. You want to see your kid. That's a good thing. You should. That means you're a good daddy. And we need good daddies in America today. There's not enough of them. So thank you for being that guy. But, you know, for a short period of time, you can turn the heat up for the good of your family's long play. And you ask how to deal with the emotions. That's how I dealt with the emotions.

1:22:37Dave Ramsey:When we started Ramsey, I came into work at 7 a.m. I got home at 11. I never saw a kid for two years. I mean, I was there on birthdays. I was there on some weekends and all Sundays. I did take Sundays off. But I worked like a maniac to get this thing up and running. And today, this thing allows our whole family, generationally, to do whatever we want to do.

1:23:02Rachel Cruze:And I'm not a child psychologist, too, but I'm like, you don't really remember five years old. You know what I mean? I think it's harder to be away when you have kids.

1:23:08Dave Ramsey:Well, it's harder on him than it is a kid.

1:23:10Rachel Cruze:That's right. That's true. That's true. Yeah.

1:23:12Dave Ramsey:So I relate to his feelings. I'm glad you have those feelings. It means you're a good man. But don't treat it like it's – don't let the drama of those feelings override the actual facts of the situation, which are that as a great man, a great husband, a great dad, you are pouring on the coals to get your family on a solid foundation. So you don't have to deal with it ever again.

1:23:37Rachel Cruze:And if your wife is able to do something too to bring in some income, right? I mean, like all of you guys as a team together, how can we pay this off as fast as possible?

1:23:45Dave Ramsey:Now that he started school, maybe there's something she can do. That's not a bad plan at all. Anything we can do like this to shorten the time of the pain and then the pain becomes more and more and more worth it because then you never have to do it again as long as you stay on these principles and don't go take out another truck payment or something. That's it.

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1:25:07Dave Ramsey:Welcome back to the Ramsey Show. Rachel Cruz, Ramsey personality, number one bestselling author. My daughter is my co-host today. Brady is in Mobile. Hi, Brady. How are you? Good. How are you guys doing? Better than I deserve. What's up? Awesome. Thank you all for taking the call. I'm a huge fan and have been for a few years.

1:25:26Rachel Cruze:Thank you. So I have a two-part question, but if we can, I'll ask the first part, and then if you feel we have time, maybe we can get to the second part. Okay. So I'll set the stage. So my wife and I, when we got married, we started traveling in the oil field working and started out making$20 an hour or whatever and, you know, have moved to this job, moved to that job all over the country about eight times. We're 27 now when we started when we were about 19. And in that, you know, comes moving and keeping, and we have kids, we have two children. So we've been keeping them away from, you know, other families as well, not on purpose, but just the nature of the job, traveling with work.

1:26:07So I have in-laws that are sometimes seem a little bitter about that.

1:26:12Rachel Cruze:But the first overall question, I guess, is at what point, because I can stay home and make 50, 60, maybe 70 ,000 a year doing what I do. But if I travel like I am now, I'm making about 200 ,000 right now. So, you know, obviously a significant difference. And the question is, where is that fine line with greed? Of just chasing money to chase money, just make more money to make more money. Is that what you're saying? yes ma 'am yeah um and i'm wondering where that where that switch is because you know like the caller before i have you know i'm feel like i'm as good a father as any or i definitely try to be and uh right now i'm going from home about four days a week and they're actually we just moved last year and uh so they're staying at home and i'm traveling back and forth you know every three or four days yeah that's a hard lifestyle to sustain for a long period of time with a family In general, right?

1:27:06Dave Ramsey:How old are the kiddos? Four and six months. Okay. And your wife is at home and you are traveling, and that affects the in-laws how?

1:27:18Rachel Cruze:So, and I apologize, I got a little confused in there. So for up until December of last year, we were traveling and we were on the road, and we just moved back home nine months ago.

1:27:28Dave Ramsey:Okay. So for the last nine months, the in-laws, if they want to see the kids, just get up and come over there.

1:27:34Rachel Cruze:Correct. Yes, sir.

1:27:35Dave Ramsey:Okay. So they've been able to do that, I hope? They have. Okay. Cool. And if you were traveling, you were in another city, you were there for weeks on end, were you not, before December?

1:27:46Rachel Cruze:Yes, sir. Correct.

1:27:47Dave Ramsey:So if you're in XYZ City for four... With the family. Yeah. If you're in XYZ City for four or five weeks with the family, the in-laws could come there. Right. I agree. Yeah. So I think the in-laws, they have their own issues.

1:28:02Rachel Cruze:Yeah.

1:28:02Dave Ramsey:They have their own issues.

1:28:03Rachel Cruze:I don't think his question was about the in-laws.

1:28:04Dave Ramsey:Well, they have accused him of being greedy. I think that's between the lines.

1:28:08Rachel Cruze:Oh, is that what it is? Not verbally, but, you know, it's one of those things you can't pinpoint. Gotcha. Yeah.

1:28:15Dave Ramsey:We don't get to see it. It's not convenient for us to come see the kids when we want to the way we want to because of the way you work, so we're going to run down the way you work. Yeah. Exactly. Yes, sir. That's what I heard. Oh.

1:28:27Rachel Cruze:I was reading between the lines.

1:28:29Dave Ramsey:Okay. Okay. So the thing you've got to go back to is this. Rachel and I did a book on parenting, and one of the things we said were to teach kids is contentment, because godliness with contentment is great gain. And a lot of people get really confused about the subject of contentment. They think ambition and contentment are on the same line, and ambition is on one end and contentment is on the other. I beg to differ. I'm highly ambitious, and I'm very content. They're not on the same spectrum. They're not one end of the line or the other end. They're different lines. And so you can be a good dad, you can be a great dad, and be working your tail end off.

1:29:19Dave Ramsey:As a matter of fact, generally, great dads do that. And so, you know, greed is not an amount of money. It is a state of your heart and why you're chasing the money. If you're saying for a couple of years I'm going to burn the oil so that I don't have to the rest of my life, burn the oil, that's a good metaphor for you. But I'm going to turn up the heat. No, we don't want to do that either over there. Right, right. Whatever it is. We're going to work really hard for a couple years so that we can make different choices later. That's paying a price to win. That's going in the weight room and lifting weights so during the football game I can actually knock someone over.

1:30:07Dave Ramsey:Okay. I'm paying a price here to win. There's an amount of work that has to be done to lay a foundation to go somewhere. If that's what you're doing, that's ambition. That is not greed. Greed is unbridled ambition for the wrong reasons. where you think more money is going to make you happy. You think more money is the end all. You think money is a God that you're worshiping. Instead, you can say, I want some more money, not because I want more money, but because of what it does for me and my family. I want to change my family tree. I don't want these kids to have to worry about food or shoes. Or college.

1:30:43Dave Ramsey:Or college or the first car or whatever it is. I mean, we're going to get in a position that we can make choices and money don't cause us to. I used to work for a guy who said, I want to make enough money that I can read the menu left to right instead of starting with the price, right, on the right side. Most people read the menu from the price over and then decide what they're going to get. He goes, I'm going to read what I want to read and then order, and then I'll figure out what it costs. But because it's not going to make a difference. So that's what you're all about there, Brady. And, you know, the other thing I've found in coaching people all these years, people that ask a question like you asked about greed are never greedy people.

1:31:28Dave Ramsey:Greedy people would never ask the question because it doesn't occur to them that their worldview is skewed and screwed up. Instead, you're actually weighing out my values. I'm spending a lot of time. I'm gone four days. I got littles and this is bothering me. Well, a guy that asks that question is not a greedy person by definition. Okay? Yes, sir. And so greed is not going to be your issue. Now, do you want to adjust some of your goals and your values and say, okay, I'm going to work on my career to where in the next 18, 24 months I can be home and make 100 instead of being on the road and making 200 or instead of coming home and making 50?

1:32:11Right.

1:32:12Dave Ramsey:I don't know what that looks like or how you do that, but I'm going to start to have that goal where I can come home and make.

1:32:18Rachel Cruze:Yeah, I was going to say being gone three to four days a week, that's hard with little ones.

1:32:22Dave Ramsey:And so unless you see an end to it very quickly, say I'm going to do it for one more year. And then I'm going to take and then I'm by then I'm going to have a landing pad or I can come back home and I'm going to cut my income in half. But I'm going to be home.

1:32:34Rachel Cruze:Yeah. And you guys are still so young, Brady, that there's there's an off ramp. Like maybe you guys take a season and you're off the road and then the kids hit middle school and you're like, you know what, I'm going to shift back on and turn it back up and do this new thing for two to three years. And then you're done. Like, do you know what I mean? Like sometimes we make decisions that feels like forever and it's not. It's not at all. I mean, I've done that with my career. I pulled back some after the third kid. And you know what I mean? Like you can make adjustments as life comes. And I don't know.

1:33:04Rachel Cruze:There's a level of that flexibility that I don't want you to feel like you're stuck. You're not. And you make a decision. you're not stuck. And you're not greedy. No.

1:33:12Dave Ramsey:A hundred percent chance you're not greedy. Okay. So just because somebody's a travel agent for guilt trips, that doesn't mean you're greedy. Okay. So you're, but I would have, I would have a plan.

1:33:25Rachel Cruze:Yeah, have a plan about it. That's right.

1:33:27Dave Ramsey:Where it starts to bother you and bother me is if it's in perpetuation, if it's forever and ever. Let's have a plan where we're not doing this a whole life. We're doing this for a period of time to never have to do it again. That kind of thing.

1:33:55Dave Ramsey:You work your butt off for your money, but your money's never going to return the favor if all you do is hope for the best. If you're ready to learn how to make your money work for you, check out the SmartVestor program. SmartVestor can help you find advisors who specialize in retirement planning, charitable giving, advanced investing strategies, and more. Whatever your goals, your pro will take the time to explain your options so you never have to invest in anything you don't understand. Head to RamseySolutions.com slash SmartVestor to get connected. Ramsey Solutions is a paid, non-client promoter of participating pros.

1:34:32Rachel Cruze:Learn more at RamseySolutions.com slash SmartVestor.

1:34:52Dave Ramsey:buying or selling a home in the middle of all the drama that is the real estate market right now requires that you don't participate in the drama but instead you understand that facts are your friends. So the facts are that we are now sitting at a 5.8 % interest rate for a 15-year fixed. That's a fact. It's down a little. It's a fact that house prices have stayed almost identical for the last three months. The median household, the median house price in America today is about $440 ,000. And that's what it has been for that period of time. It's not moved much at all. That's a fact. The fact is that we have over a million houses on the market right now, the largest inventory since 2019 in the last few months, and yet demand is still higher than inventory, which is causing prices to hold and continue to go up in many areas.

1:35:55Dave Ramsey:John is in California. Hey, John, how are you? I'm great, Dave. How are you guys doing? Better than we deserve. How can we help?

1:36:04Rachel Cruze:Well, I'll give you a little background. My wife and I are both retired, and we're struggling and trying to decide what we would like to do with what we've accumulated over our lifetime, and specifically your viewpoint in regards to IRA conversions to Roth. just to give you a few numbers we got about half a million dollars in liquid mutual funds and bank account and we've got about four million dollars in ira accounts um one million of that is already in a roth and three million is in a traditional ira and i've been looking at a bunch of numbers and reading a bunch of things, and what I'm trying to decide on is, is it better for us to try to do some conversions between now and when we reach R &D at age 73, which is about seven years from now, or just let our traditional IRA grow?

1:37:13Rachel Cruze:And my concern is that if I just let it grow during our lifetime, the R &Ds are going to be six-digit numbers. This is not money we need to live on. We live in our means on just fixed income and have been able to accumulate a lot and not spend anything. And so now I just don't want to make a mistake with what we've been blessed to accumulate. So I'm curious what your viewpoints are about paying what I calculated to be about$1.2 or$3 million over the next five or six years doing step conversions to Roth or just letting our three adult children inherit multi-millions in a traditional IRA someday.

1:38:03Rachel Cruze:Honestly, the answer to your question, I stumbled into backwards.

1:38:08Dave Ramsey:I did not. I was not smart enough to do it on purpose, but I accidentally did a brilliant thing, to be very clear. And the brilliant thing was that early on, I converted everything to Roth. You and I are the same age. I'm getting ready to be 65. Okay? And everything is in Roth. And the reason that ends up, I did it just because I wanted the tax-free growth. That's the only reason. and I did it. And so I started converting stuff many years ago, and anytime anything popped up that was traditional, I immediately made it into Roth. Now, the result is exactly what you're facing, and you've analyzed this very well.

1:38:46Dave Ramsey:You've done a good job. You have two problems with the traditional that are mammoth. Problem number one is the RMDs, the required minimum distribution is what that stands for. For those of you that don't know, John does. And that means at 73, they require you to begin to distribute traditional because they are bent on getting their taxes. And so they make you take that that has never been taxed yet and that is not tax-free and begin to distribute it. And as you said, with$3 million, it's going to be over$100 ,000. And so that$100 ,000 comes out, it's 100 % taxable, and so it's going to be reduced by 37 % or whatever, whatever the number is, 30%, whatever it ends up being, depending on what your other incomes are.

1:39:33Dave Ramsey:But that's problem number one, is you're forced into RMDs. You do not have RMDs, as John knows, on Roth. And so I don't have any required minimum distributions facing me when I hit 73. The second problem is that the traditional IRA or traditional 401k, When it becomes an inherited IRA, naming your child as the beneficiary, it goes to them or your wife, and then later your child as a secondary beneficiary, however that works out. When they get that money under the Biden Secure Act, they are now required to liquidate that fund and pay taxes on all of it over a 10-year period of time. So$300 ,000 a year on$3 million.

1:40:24Dave Ramsey:Oh, by the way, it's not going to be$3 million. It's going to be$9 million because you're going to live a while. Okay? And you're not touching it. Yeah, I'm on the same page. That's exactly what I'm concerned about. Those are the two problems. And so that makes me – it's pay me now, pay me a lot more later is the equation. And so I'm going to start working out of this pretty quickly. I'm going to use a substantial part of that$500K in mutual funds and after-tax investments over there, and I'm going to use that and move as much of the$3 million as I can this year.

1:41:02Rachel Cruze:Right.

1:41:03Dave Ramsey:And then I'm going to use the$3 million. What's left, I'm going to pay taxes out of it as I do it each year. And it's going to be a lesser amount when the smoke clears because of the stinking taxes. and then it's going to grow completely tax-free from then on, not be subject to RMDs. You're back in control of your nest egg. The stinking government's not got their meat hooks in you, and they don't get to hook your kid in the next generation when you leave it to them. So you leave in a Roth IRA, tax-free. They can cash it out the day you die, and they pay no taxes on it. Because here's the thing.

1:41:44Dave Ramsey:You're sitting on$4 million. There's$3 million in this thing. And if it's in good mutual funds, by the time you hit RMDs, it's going to be$6 million. It will have doubled. And seven years later, when you're 80, and if you're in good health, your probability of living to 80 from 65 is very high statistically. Okay? So then that$6 million is going to be$12 million. And if it's all sitting there, hasn't paid taxes on it yet except for the RMD portion, it's going to be substantial taxes. in terms of dollars. So it sucks right now, but it's going to triple suck later. I would do it. Yeah, you're telling me what I was hoping you were going to tell me.

1:42:30Rachel Cruze:My wife isn't on the same page because she doesn't get excited about paying.

1:42:35Dave Ramsey:Well, you want to pay taxes on$12 million or$3 million? Yeah, that's a good way of putting it. It's just a matter of when you're going to do it. somebody's going to do it someday. And if you guys don't use this money and it's invested at an average of 10%, it's going to double every seven years. And so you're going to get hammered. Like the last caller changing the family tree in the next generation. You already have changed your family tree, by the way. You guys have done great. I assume you started with nothing.

1:43:05Rachel Cruze:Yeah, we're everyday millionaires. Long-time listeners, first-time caller for you. But my wife's a retired teacher, and I'm a retired CPA. Love it. We've been doing this for a long, long time.

1:43:16Dave Ramsey:Two of the top five categories of people who become millionaires, teachers and accountants. Yeah, didn't inherit anything. Yeah, you did it. You did it. You guys are incredible. You've done a good analysis on it, John. You did have your facts straight. You know what you're talking about. You're just trying to think it through. And if I woke up in your shoes, I would use the majority of that 500 today, and that would move about two million of the three out, and then the other million that's laying there, I'm going to chunk it out over about three years and just take the hit, take the pain, and then be done with it.

1:43:48Rachel Cruze:Is there a limit for how much you can convert per year?

1:43:51Dave Ramsey:Nope.

1:43:52Rachel Cruze:You just got to do it all, but the taxes are all due.

1:43:55Dave Ramsey:And he's got so much, he's going to have bracket creep anyway. He's going to max it out every year anyway. So there's no way to avoid his bracket creep. So there's no way to stage it, actually, that makes sense. So I'm just going to rip the Band-Aid off. And it sucks. But welcome to tax law.

1:44:39Rachel Cruze:Hey, 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 ramsaysolutions.com slash real estate.

1:45:11Rachel Cruze:That's ramsaysolutions.com slash real estate.

1:45:29Dave Ramsey:In the lobby of Ramsey Solutions, you can watch this show be broadcast every day. We're on the glass from one to four central. Also in the lobby is the debt-free stage. Brian is on it. Hey, Brian, how are you? I'm good, Dave. How are you? Better than I deserve, sir. Where do you live? I live in Martinsburg, West Virginia. Cool. Welcome to Nashville. And how much debt have you paid off, sir? About$44 ,000. Cool. How long did that take? Two years. Good for you. And your range of income during that two years? It went from$80 ,000 to approximately$139 ,000. Wow. What do you do for a living?

1:46:03Rachel Cruze:I am a program analyst as a federal contractor assisting DHS. Wow.

1:46:11Dave Ramsey:Okay, cool. In Martinsburg, West Virginia?

1:46:13Rachel Cruze:Yeah, it's about an hour and a half west of D.C. Okay. Yeah. Nice. Okay, got you.

1:46:18Dave Ramsey:All right. Very cool. It's a pretty area, too. It's very nice. Love it. Very cool. So what kind of debt was the$44K?

1:46:25Rachel Cruze:About$30 ,000 with student loans, and then about$14 ,000 with credit cards. Good for you. How old are you? I am going to be 37 on Saturday.

1:46:34Dave Ramsey:Good for you. Nice. Happy birthday. Thank you. All right. Neat, neat, neat. Well, way to go, man. Thank you. So what gets you started on this whole Ramsey thing two years ago?

1:46:45Rachel Cruze:Well, about three years ago, I closed on a house. I basically drained my savings account, kind of wanted to keep up with the Joneses, was not up with the Ramsey stuff at that point. and that really acted as a forcing function because as soon as I closed on the house, I was renting it out to someone. They ended up not paying the rent, being late on the rent very consistently. So when they finally moved out after a couple months, it was the real deal. It was do or die. I didn't have any margin for error. So I needed a solution. I knew that you were the guy when it came to personal finance. So I started Googling you and I just started breathing Ramsey, waking up, listening to it, hitting the shower, listening to Ramsey show, doing laundry, listening to Ramsey, you know, in the car, just living it and just making that a cornerstone of

1:47:39Dave Ramsey:my life. Very cool. Very cool. That's neat. So you got everything you needed to know just off of YouTube binging.

1:47:45Rachel Cruze:Uh, well, Spotify binging, but yeah,

1:47:50Dave Ramsey:excuse me, wrong ad. Yeah. Same thing. Yeah. Binging, nevertheless. Yeah. So no book or no FPU class, just straight up Spotify. Just straight up Spotify. I like it. Good for you. That's awesome.

1:48:03Rachel Cruze:Okay. What was the biggest thing that helped you through that journey? Would you say that you did that you were like, if you went out of debt, this is what you got to do. Right. Well, really, it was just about finding a plan and limiting the extraneous expenses. Like, you know, maybe you got to stay in from the restaurant. more nights per week. Maybe you've got to go with a beater car. I've got a 20-year-old Hyundai Elantra that I still roll with. It's got 139 ,000 miles on it, but I have no intent to trade it in because it still works for me. So just being mindful of just the day-to-day, those small decisions, and just limiting those pennies that you're throwing into the ether if you're not aware

1:48:48Dave Ramsey:of it and thinking about it. So, um, it's amazing how much that all adds up. Absolutely. Yeah. I mean, it adds up to 44 ,000 in two years.

1:48:57Rachel Cruze:I mean, yeah, absolutely. Um, and you know, I mean the, the student loans, I probably started out with 35 ,000 student loans when I graduated college, I only paid off maybe like 5 ,000 of that before I hit the Ramsey plan. So like when I got gazelle intense, like there was nothing that was going to stop me. I was throwing like 2000 a month at, that you know my credit cards and my student loans and that was just like what i did that was like the biggest thing in my life going on at that moment and i'm so glad it's all behind me because it was so worth it just buckling down like that you had an oh crap moment and you went

1:49:32Dave Ramsey:all in exactly how long how many months were you in before you kind of started going okay i'm no longer afraid. I'm now getting excited. This is going to work.

1:49:48Rachel Cruze:Yeah. Um, I would say it was probably like after that year mark, after I was a year into it and I saw, you know, I saw my student loans probably hit, uh, cause you know, two years ago it was probably at like$30 ,000 when I saw them hit like 14 ,000, maybe like a year ago, I was like, okay, I can see the end in sight. And like this is actually going to work.

1:50:12Dave Ramsey:Yeah. You know? Yeah.

1:50:14Rachel Cruze:And I'm going to be free.

1:50:15Dave Ramsey:Yeah. The math was telling you before that, but the emotions kicked in when you hit about the halfway point. Oh, absolutely. Yeah. Yeah. That makes sense. So great.

1:50:23Rachel Cruze:What was the hardest part of the two years for you?

1:50:26Dave Ramsey:Hmm.

1:50:27Rachel Cruze:The hardest part of those two years, uh, I would just say like just resisting the temptation to live like, you know, everyone else. Yeah. Just like, you know, friends want to pull you out like, Hey, come on out with us. Or, you know, uh, Hey, you want to go on this vacation or, you know, um, just different things or, you know, different, you know, there's always like ads online that are tempting you to buy stuff. You don't need subscriptions you don't need. So just saying no to all that. Um, and, and saying no to like some of the flashy stuff in 21st century America was, you know, it was just tough to like, you know, stay the course and, and stay tough.

1:51:06Rachel Cruze:Um, but it got easier over time, you know, as you get that practice under your belt, you know, it just becomes like momentum. Yeah. More normal. Yeah. You're used to it. Yeah.

1:51:15Dave Ramsey:It's almost now when somebody looks at it and rolls their eyes or looks at you and smirks, you kind of smirk to yourself and go, you have no idea. Right. I got, I got this.

1:51:23Rachel Cruze:Exactly.

1:51:24Dave Ramsey:I got this. I'm done. Yeah. Yeah. You truly had an, I've had it moment. You really did. Absolutely. And it was, it started out fear-based and it ended joy-based. That's cool. Absolutely. I couldn't be more thankful. I mean, you guys have changed my life. Seriously. You changed your life. We just proud of you, man. Proud of you. Congratulations. Thank you.

1:51:42Rachel Cruze:Were there people in your life cheering you on during it? Did people know what you were doing or did you kind of keep it on the down low? I was kind of selective about who I told, you know, I would tell people at church, you know, they were cheering me on, you know, big Ramsey fans told my family, my immediate family, mom and dad. They were definitely cheering me on and stuff. Um, you know, um, not a whole lot of skepticism out there, um, from the people that I knew. Um, but you know, I did recognize that this was my kind of deal. This was my thing to focus on. So I wasn't really that chatty about who I shared it with.

1:52:17Rachel Cruze:I just kind of buckled down and it was just kind of like full steam ahead. Like this has to be my focus because I was just so sick and tired of doing things the old way. Like, you know, the quality of life that I have right now, just what, two months after paying off all my debt, like it's immeasurably better than it was before I paid off all my debt. Amen. You know? So good. Because financially and would you say emotionally, do you feel like you've shifted feeling like, oh my gosh, I don't owe anyone anything? It's a huge weight off my back. Yeah. I mean, I feel like I can, I mean, I don't want to say do anything, but like the options in my life are so much greater.

1:52:51Rachel Cruze:Like, you know, I was working, let's see, I was working like two side hustles and I was renting out a room in my tiny townhouse while I was paying down this debt. Now I just live with my new cat, kind of bought him as a gift after I got out of this debt. A debt-free cat. Yeah, exactly. Roommate exchange. Yeah, exactly. I was able to drop one of my freelance clients. I do some writing on the side. You know, so now I've got like just the one freelance client, live with my cat, you know, just live by my house by myself in my little townhouse. And like it's all worked out. So awesome. Yeah, it's it's great.

1:53:25Rachel Cruze:It's just like so much less stress, so much less to worry about. And, you know, the Ramsey way just like really helped me focus on like what's important and how to live a more fulfilling life.

1:53:36Dave Ramsey:So praise God, man. I'm proud of you. Yeah. Awesome. Thank you. Very well done. Very well done. And I'm sure your parents are proud of you since they were cheering you on and watched you do this whole thing. Very cool.

1:53:47Rachel Cruze:Definitely. My dad's an accountant, so he's definitely proud. For sure. For sure.

1:53:50Dave Ramsey:He got it dialed in immediately. Yeah, I like it. Yes, sir. Brian from West Virginia,$44 ,000 paid off in two years, making$80 ,000 all the way up to$139 ,000, busting it to get out. Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt free! Yeah!

1:54:16Dave Ramsey:Yeah! You know, Rachel, when a young single guy like that does this stuff, it is, in a sense, it's harder for them because there's no one to hold them accountable. In another sense, it's easier for them because they don't have to talk somebody else into it. They just go do it.

1:54:35Rachel Cruze:That's right. That's right. Yeah, yeah, yeah.

1:54:36Dave Ramsey:And so you got a little bit of advantage, a little bit of disadvantage when you're going at it, but he dialed it in, went for it, went straight down the line, boom, boom, boom.

1:54:44Rachel Cruze:Well, it's just no crap. He's just like, just going to do it. Two years, be done.

1:54:47Dave Ramsey:Just, just matter of fact, just do it. Matter of fact, that's how it works. So well done, sir. Well done.

1:55:30Dave Ramsey:Our scripture of the day, James 1, 2, and 3. Consider it pure joy, my brothers and sisters, whenever you face trials of many kinds, because you know that the testing of your faith produces perseverance. Benjamin Franklin said the Constitution only gives people the right to pursue happiness. You have to catch it yourself. Ethan is in Texas. Hey, Ethan, what's up? How you doing, Dave? Better than I deserve. How can I help?

1:56:00Rachel Cruze:So I'm 23, and I'm working as a security officer in the oil field, making about$8.74 a week after tax. and I just I struggle with a few things primarily saving money because I'm just not used to it this is the most I've ever made and it's more than I could make in town I actually work pretty far outside of town I have to drive and you know most I can make back there is 15, 16 an hour but I'm not really content with the where I'm at you know I've gone pretty much as high as I can they want me to be a supervisor now but it comes with a$10 an hour pay cut. Well, that's a great promotion.

1:56:40Dave Ramsey:Jeez.

1:56:42Rachel Cruze:Yeah, our site supervisors, they make the same as everybody else, and it's different for every site. So while I'm at, I get paid at$74, but if I go be a supervisor, they cut it dramatically. But I'm making pretty good money, you know, for someone my age, I think, and I just struggle with saving it. You know, I have some debt from when I was 18. I didn't know about interest rates. Got some credit cards with 30 % interest. And I've been paying those off following your snowball, man.

1:57:13Dave Ramsey:How much is your car payment?

1:57:15Rachel Cruze:My car payment, I actually own my car. It's old Lincoln my grandfather gave me. But I have to make a lot of repairs on it. You know, just this month I've probably spent$2 ,000 buying parts.

1:57:27Dave Ramsey:Did you say you had housing furnished?

1:57:31Rachel Cruze:yes my uncle has been gracious enough to let me come up here and live with him so i have pretty much zero bills besides gas car insurance and my phone okay all right so the problem is

1:57:43Dave Ramsey:you're not telling your money what to go where to go instead you're wondering where it went

1:57:48Rachel Cruze:yeah pretty much yeah so being able to control because it's probably what around three grand ish a month yeah just about three thousand is what you're bringing home before after tax after taxes yes after tax and after i pay everything it's three thousand ninety six okay after i pay everything i have to okay when you say pay everything you have to meaning your phone insurance all of that yeah if you're everything i that i need to okay you know exist yeah so yeah so the remaining ethan is again you just need a pretty detailed budget to know exactly where that money's going to go and what it's going to do.

1:58:27Rachel Cruze:How much credit card debt do you have left to pay off? That's another issue is I've paid it off, everything I can find. But a lot of it's been sold off to collection agencies. And I end up not finding out about it until they finally send me a court order suing me because I never get any calls or letters or anything about it. So I think it's around$4 ,000 total. I have three left I know of, but there's a lot that I just don't know who holds the debt. Have you pulled your credit report? Do you know what's outstanding? No, I haven't. Okay, so I would do that.

1:59:03Dave Ramsey:That'll give you some insight into who currently owns it and how to get in touch with them and begin to get balances on those things and settle them. You could probably settle them for what you originally owed real easily.

1:59:14Rachel Cruze:Yeah, I've done that several times with the ones I've had.

1:59:17Dave Ramsey:Good.

1:59:17Rachel Cruze:I think I sold one of those$3 ,000 down to, I think,$800. So that's working out for me.

1:59:23Dave Ramsey:Yeah, so you know how to do that. That's good. Okay, so basically, unless you're giving a lot of money away, you're spending a lot of money on food. I mean, on fun.

1:59:35Rachel Cruze:Yeah, I have a habit to buy and sell guitars. You know, I buy them a lot. You know, I spend$1 ,000 here. Usually I make a profit, but sometimes I sit around for months at a time, and I end up letting them go for a loss. Some I make profit on, some I don't. And then, yeah, food as well.

1:59:51Dave Ramsey:I think we found the hole in the bucket. Yeah.

1:59:55Rachel Cruze:How many guitars do you currently have right now that you're wanting to sell? Right now that I'm selling, I have six.

2:00:01Dave Ramsey:Okay. So that'll help. Did you say guitars or cars? Guitars.

2:00:07Rachel Cruze:Guitars.

2:00:07Dave Ramsey:Oh. Music.

2:00:09Rachel Cruze:Yeah, I'm a player, so I buy, sell, fix them up, and then flip them. It's just they're hard to get rid of sometimes.

2:00:15Dave Ramsey:Yeah. That's the hole in the bucket, okay? Because you're losing more money than you're making on that, and that's eating up what would have been savings. Because you're not paying attention to it. You're paying attention to the guitar but not the business of flipping. So if you're going to buy and sell more than one a year, you're going to have to start treating it like it's a business and being very detailed about what you pay for it versus what you spend on it versus what you sell it for. And you need to make a profit every time. Okay. And otherwise, you've got to quit screwing with this because it's just become an expensive hobby.

2:00:52Dave Ramsey:And, you know, guitars are fine. There's nothing wrong with them. They're not evil, but they're not an investment. So it's just a small business idea as it is right now. You with me? Are you there? Yes, I am. I'll just listen. Okay. Yeah, I mean, you've identified where the money's going because you've got$3 ,000 a month you can't account for, and we just found it. I think it's leaning against the wall.

2:01:15Rachel Cruze:Yeah, it's definitely been an issue that I've noticed.

2:01:19Dave Ramsey:I think we put you on every dollar, get you on the budget, we'll give it to you, and you start spending every dollar on the app before the month begins. Here's how much I'm going to have for gasoline. Here's what my phone costs. Here's what I'm going to have for food. Here's what I'm going to have for fun and entertainment. Here's what I'm going to spend on guitars. Here's what I'm going to put in savings. And then execute that.

2:01:43Rachel Cruze:And then the more you pull out of that budget to throw out this debt to get it paid off when you see it, when you finally pull your credit report, no. That extra margin goes toward the debt. It doesn't go to guitars. It goes and sell those guitars. That'll bring in some cash. That'll be paid off some of this debt, too.

2:01:58Dave Ramsey:You probably got$4 ,000 worth of guitars laying there to sell. So, yeah. Yeah. Keep something cool. Keep one or two that's cool to play. I'm good with that. I ain't got an issue with that. That's not killing you. But this exercise of not being intentional and treating it like a business and paying close attention to every dollar, that's what's eating your lunch. Eric is with us in Chicago. Hi, Eric. How are you? Hi, Dave. Thanks for having me on. Sure. What's up?

2:02:25Rachel Cruze:So my father passed away this year, and he left my mother and I with a substantial amount of money. So he left us with$12 million. I received$4.1 million in cash, and the rest went to my mother. Wow. Currently, my money,$4.1 million, is sitting in a money market account, which is making 4.59 % interest. So I'm making about$14 to$16K a month off of interest with that. And my question is, I want to buy a house, and I don't know how much I should spend on a house. What do you make of your... Well, right now I'm not working. Why? I have a hard time with work. It's hard for me to keep a job. I have ADHD.

2:03:17Rachel Cruze:So I felt like I haven't found my calling either. So it's just hard for me. I'm still trying to figure that out. How old are you? I'm 38. Okay. Yeah, so I have that. So right now, you know, it's just the income I'm getting is just from the money market. and then, you know, so I want to buy that house, and I don't know how to invest that money.

2:03:39Dave Ramsey:If this money allows you to not deal with your ADHD and your career issues as a result, this money has become a curse, not a blessing. You have got to deal with those things for your own sake and for your own dignity. Becoming a trust fund baby and saying this because I couldn't work because of ADHD is not going to be good for your mental health long term. Yeah. So I would prefer you pretend like this money doesn't exist and go earn a living, sir, for your sake. I think you'll feel better about you. The thing is, I also want to know how I should invest this money. You just drove right past that, didn't you?

2:04:23Dave Ramsey:You don't have any intention of doing what I just said, do you? No, I do.

2:04:28Rachel Cruze:I just want to invest it as well so I can make money off of it also. Okay.

2:04:32Dave Ramsey:I think that's good. I think that part's good. And I think buying a house is good and paying cash for a house. So you're in Chicago. I would spend less than a million dollars. I'd probably spend$700 ,000 on a property and move in cash and move in it. And I would sit down with a SmartVestor Pro, and I would invest the rest in some good mutual funds, and I wouldn't touch it. And I would go see a therapist and a doctor if you need some medication, depending on what's going on with your ADHD. I don't know. But get yourself to where you can work and hold a job and build a career. You will like you better.

2:05:12Dave Ramsey:You'll be more fun. That puts us our The Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to finish.

2:05:22Rachel Cruze:Up next, we are headed out to Chicago and Orlando for The Ramsey Show Live. Yep, you heard me right. We are taking this show to you. This is going to be everything you love about The Ramsey Show, except you get to be a part of it. Part of what, George? The Ramsey Show Live, Ken. That's what I'm telling them about. Ramsey Show Live in here? Nope, we're doing it on the road. You're going to Chicago with me and Rachel Cruz September 30th. Are you free? The Windy City. I like it that time of year. You know what else I like, George? I like the deep dish. Okay, maybe we'll have some deep dish. You mind if I finish the promo?

2:05:55Rachel Cruze:Is that okay with you? Okay, okay. Appreciate that. Questions and answers, real conversations, and I'm sure a few surprises here and there. George, are you in here talking about TRS Live? I am, Jade. I'm trying to talk about it. Nice. So that means it's actually happening, right? It's happening. If I could tell the people, I think it could actually come to fruition. Listen, just tell me when and where. You don't know? Okay, we're going to Orlando. You're going to join Dr. John Deloney and I October 2nd. Yes. Okay, great. I'm going to go pack now. Thanks, George. Please do that. Go. Pack. Hey, George, speaking of packing, is this like sweater weather or is it not that cold yet in Chicago?

2:06:32Rachel Cruze:What is happening? Can I please just get to how they buy the tickets? Jeez, I thought it was a good question. Okay. This is not an arena tour. This is a one-night-only event in Chicago and Orlando. General admission is only$39, plus there's a VIP experience if you're bougie like that. But here's the thing. There's only 300 seats available, so get your tickets now at ramsysolutions.com slash events. Hey, how come you get to go to both cities? I just go where they tell me, man. Hey, have you been there the entire time? Maybe. Okay. And also, are you reading a children's book? I'm expanding my mind, George.

2:07:09Rachel Cruze:That's how we got those PhDs. Yeah. That's probably where you got that jacket. Okay. See you on the road, John.