The Decisions You Make Now Shape Your Success

25:08So that's what I do, Mary, because you see emergency fund and you're like, well, there's$100 ,000 in there, but that's earmarked for five different things. Right. So I would separate it with different titles like vacation fund, car replacement, emergency fund. That helps keep it clean. Now, for people, I will say this for people who they're just a little trigger happy, it's easy for them to go over and get that money. You might put it in a separate institution. I've heard of people doing that. Yours truly. I can't look at it. I can't see it. Save you from yourself. Yes. It's like how people used to put the credit card in the ice block.

25:42I'd be in there like chiseling it out in the middle of the night. So I need to make sure it's... It's a breaking case of emergency. Yeah, keep it away from me. I don't want to see it. Are you self-aware, Mary? Where do you fall on the spectrum? Oh, we're very self-aware. We use every dollar to track our expenses. And, you know, like I said, we're kind of future planning where we are like about two to three months out for that, for, you know, building up that emergency fund fully and then moving into the next baby step. So we are very much aware of it. We have our monthly budget meetings where we go over the budget and make any changes to it.

26:14How do we clone you guys? You're amazing. I know. Well, Mary, I don't think we really have to worry about you much. I think that she's got it in the bag. She's got this figured out. But she's right in that there are a lot of ways to do it. It can be confusing, the mechanics of a sinking fund and where to move it from. But I do like the idea of automating your savings. Yes. Because leaving it up to me to remember or have the discipline, not going to leave it up to chance. So all of my stuff is automated. And do it, automate it for payday, by the way. If you're going to automate things, do it the day the money comes in.

26:42Don't let it be the last thing you do. Just let it happen automatically. Automate smart. Yeah. It's similar like your 401k. I'm glad that it just is gone before it hits my bank account. I never even think I had the money to begin with. Because if you can learn to live on that smaller amount, you're going to be just fine in this life. I know, that's right. That's a great question, Mary. Thank you for that. Yeah. All right. Mike is in Charlotte, North Carolina. Hey, Mike. Hey, how are you? Thanks so much for taking my call. Absolutely. And thanks for what you do to help folks, including other members of my family and ourselves.

27:13So my question is, what amount of an emergency fund do you recommend for folks to have in retirement? Oh, fun. I love that question. Are you in retirement now? Yes, six weeks into it. Congratulations. How old are you guys? Oh, thank you. We're both 60. Fantastic. All right. So how much do you have currently in the emergency fund? So right now, currently it's about$96 ,000. The threshold had been$35 ,000. But when I lost my job and received a severance, we put that in the emergency fund as opposed to putting it in our investments. Because our plan is, I have a pension from a previous career. And that we plan to, our plans for retirement I think are pretty reasonable.

27:57We just want to be able to live the way that we have now. Big grandiose plans or anything. The$96 ,000, how many months of expenses is that for you guys? What does that equate to? Our cash flow is roughly$90 ,000 a year. Sorry, you broke up on us, Mike. Speak directly on your phone. I'm sorry. Sorry, yeah, sorry. Our cash flow is about$90 ,000 a year, and my pension is$60 ,000 a year, so we'd probably take about$30 ,000 out of that a year. And my thought is I would like to having to pull from our investments once I've used all of my severance. And if we could keep, you know, if that extends it instead of having$35 ,000 in the emergency fund, if we draw that down to$20 ,000, you know, it probably would allow me to not have to pull anything out of investments for an additional six months.

28:46I love that. Yeah, and there's a couple schools of thought here. In the financial planning world, it's generally recommended to have one to two years of expenses if you can to stomach a downturn in the market so that you're not pulling out$90 ,000 when the stock market is down 20%. That kind of, that really hurts the nest egg more. And so if you can have one year, you're doing great. If you can have two years because you want to be super conservative, you're doing even better to have 200 grand there. And then some people say, hey, every January, take as much out of investments as you need for that year, and then don't touch the investments the rest of the year.

29:20You now have your expenses sitting there in a high yield savings account.

29:28Sorry, you keep breaking up on us, Mike. I'm so sorry. That's all good. A lot of our expenses are what I would say optional. So we're completely debt-free. So, you know, when the market would be down, we would not take as much out. You can shrink your spending down to half of that as an example. Yeah, exactly. Yeah, that's great. We're blessed to be able to do that. That's the key. That's the key to a great retirement is having flexibility. I'm so proud of you guys. Can I ask what your net worth is? yeah we're right at 2.2 million fantastic how much of that is your nest egg yeah i think uh 1.5 and you have a 60 000 year pension i was yeah it's you know i was a oh man he was just getting the good part he was well either way they've done a fantastic job and i i love the questions around that um what would you say george to the person who's like Like, oh man, what you're saying, George, that's new to me.

30:23I was just doing the typical baby steps and I had three to six months put aside. For most people, if you have a sizable nest egg to where you can stomach the market downturn, you're like, cool, I can do six months. You're going to be okay. But for someone who's going, I don't want to have to rob the portfolio at the worst moment, or I can't shrink my spending, it is wise to have at least a year. So personally, when I retire, your boy's going to have two years. Oh, you're going to have stacks on every side, George. I just believe it. I'm going, I'm ready for anything, baby.

31:23Hey guys, it's Rachel Cruz. When it comes to life insurance, most people fall into one of two camps. The ones who make a plan to protect their family and the ones who hope everything will just work out. But hope isn't a financial plan. When you get married or have kids, your money decisions aren't just about you anymore. Your income helps keep the lights on, pay the mortgage and put food on the table. And if something happens to you, Will your family have protection or uncertainty? Well, at Ramsey, we recommend term life insurance that 10 to 12 times your income with a 15 to 20 year term for the years that your kids are at home and your mortgage is still being paid off.

32:03That's why Winston and I have our term life coverage through Zander Insurance. They're an independent broker who works for you, shopping all the top companies to find the most competitive prices on coverage you need. Get instant quotes online in just minutes at Xander.com or call 800-356-4282 to get your family protected with term life insurance. That's Xander.com or 800-356-4282.

32:48All righty, today's question of the day is brought to you by Y-Refi. One financial mistake doesn't have to decline or define the rest of your life. If you've fallen behind on your private student loans, Y-Refi can help you explore low fixed rate refinancing options and affordable repayment plans. Go to Y-Refi.com slash Ramsey. Remember, that's the letter Y-R-E-F-Y dot com slash Ramsey, and it may not be available in all states. Today's question comes from Diana in Maine. When my husband and I co-signed our daughter student loans, this is a strong start, she promised us she would make the payments.

33:24The loan is due now and she refuses to pay anything on it. We've worked hard our whole lives and are debt free. Are you? That's my extra commentary I'm throwing there. I like it. We recently started saving for retirement, which will be in 10 years. We've already paid 60 grand on her loans and the balance is 75 grand. We know that we should never have signed for her, but they would not allow her to sign because she had no payment history. She's 17. of course what can my husband and i do we've always had a wonderful relationship but this has caused a huge wedge between us why is the i wonder why the wedge is between the well they uh expected her to pay they co-signed going fine we'll sign it so that you can go to school but you're gonna pay maybe that was a conversation oh she's saying the wedge between them and the daughter and not the husband and wife maybe all of them at this point maybe because someone probably was like we probably shouldn't do this and one spouse like no we should it's her future.

34:16It's an investment. That's how it usually sounds. Oh, this is brutal. And it's the number one reason I hate parent plus loans is because of the relationship killer. It's not even the financial aspect. It is. I love my daughter too much for this to cause a wedge. So the truth is I'm going to pay the stupid tax and pay the extra 15 grand. Oh, the balance is 75. They paid 60 on it already. Chances of her paying slim to none at this point. And if she does, she's going to resent you forever. So this is sort of a$75 ,000 remaining stupid tax. It might mean you retire in 10.5 or 11 years instead of 10.

34:53And that's a hard pill to swallow. But that's what I would personally do as a parent if I was in this situation. I'd love to know, and it's not in here, I would love to know how successful the daughter is at this point. Was she able to get out of college and land a great job? Is she just choosing not to? Or is she really on a struggle bus? There's so many ways this could land. But George, I'm with situation. Is she able to make the payments? That's one thing. Or is she trying to like buy a house and she's doing great, but she's like, this is not a priority. This is mom and dad's problem. Yes. But they started, it was saying she promised us.

35:25When a 17 year old promises you something, I'm going to take that with a big old grain of salt. But here's the thing that again, and that's such a good point because most people are like, I'll pay off my student loans eventually in 30 to 40 years. And that may have been her thought. Like, yes, I said I would pay them back. I just didn't say I was going to pay them back in the next two to three years. Yeah. Can I, you know. And what teenager understands the actual amount of 135 grand plus interest. You don't. Especially in a parent plus loan where the interest is even higher. So by the time she graduates and is actually paying this balance is ballooned.

35:59She's going, whoa, whoa, I didn't sign up for this. And that's why I'm going to take a hard stance. And this is a hot take. But this is the parent's fault. Even though she's not doing something, you had. You made a deal with a 17-year-old about thousands and thousands of dollars, and you were depending on a 17-year-old to make good on thousands of dollars of promises. I find that to be a parenting issue more so than it is the 17-year-old's issue who is now probably in her 20s. But it's up to them. Here's the two paths. They can pursue her and go, no, you said you would. It's only going to hurt things.

36:33She's never showing up for Thanksgiving ever again. You won't have a relationship with your grandkids. Is that worth it? Is that worth$75 ,000 more to you? That's really what's on the line here. And for me in my house, I just, I can't, my daughter's three. I cannot imagine losing that relationship over a mistake that I made. Yeah, you got to preserve the relationship. This is a suck it up buttercup situation, unfortunately, Diana. But you guys will be okay. You will live to tell the tale. I hope so. Hopefully it's a warning sign for any other parent who's in that situation. Ought to be. All right, Elizabeth in Orlando, Florida is up next.

37:07Hi, Elizabeth. Hi, Jane and George. Thanks for taking my call. Before my question, I wanted to clear up something from a recent caller. They said the Catholic Church in the area required couples to have a baby before marriage prep, and as a practicing Catholic, I just wanted to reassure you this is not the case. they may postpone a wedding during an active pregnancy because they don't want people making a lifelong covenant under financial and emotional stress of an active pregnancy. But it's about clarity. Thank you. I was on that call and I literally said, this makes no sense. And you just cleared it up for me.

37:41So I appreciate that, Elizabeth. I felt like I needed a backstory. I'm sorry, Elizabeth. Thank you for clearing that up. This was like a week ago, I feel like. So, you know, Jade was neither here nor there. That's okay. I believe you. But a lot of people heard that call and were also confused and sent me messages similar to Elizabeth saying, yeah, that's not how it works. Got you, got you. Okay, well, thank you for that, Elizabeth. How can we help today? Yeah, speaking of clarity, my actual question for you is about my own future. I'm heading to college this fall on a 100 % full-ride scholarship, and I earned my full AA through dual enrollment.

38:15I'm very excited. I'm majoring in animal well-being and conservation and considering adding mathematics. I'm debt-free and my expenses are covered, so I have the freedom to choose. I know it's early and I don't need to decide today, but I want to be intentional about choosing internships. My dilemma is between pursuing my passion for animals or leaning into the math side, which can lead to more lucrative careers. Do you like math? How would you discern? Yeah. Okay, so they're both interests and loves of yours. Yes. Okay. So fast forward five years from now, what are you doing if I waved a magic wand, regardless of the income?

38:57Are you like a park ranger? I'm not entirely sure yet, but like possibly canine trainer. Okay. Oh, wow. That's cool. So that's more of an entrepreneurial endeavor where you could start your own canine training business and you can make great money doing that. If you're like the Cesar Millan of canine training, you got customers for days. So now the question is, what is required for me to be a canine trainer? Do you need a degree for that?

39:32No, I'm just getting it because I like to learn. Great. So you're a lifelong learner. You're getting a full ride. And it's free. So if it's free, enjoy it. Explore all your favorite classes. Learn as much as you can. and know that regardless of what you choose, it may not even be relevant to the career you end up having. And that's okay. But for the mathematics side, I almost, if you have the free education and you know that's something you're also interested in, I feel like that's something you would need a degree in order to pursue a career in. If someone was going to hire you for a role that was tied to that field, they're going to go, do you have a degree tied to it?

40:08Yeah. So what would you do with mathematics? I have heard mathematics. I just heard it's very flexible, like a data scientist or aerospace engineer, I guess. You're saying you could do a lot with that degree? Yes. Okay. I got you. Yeah, I mean, are you really good at math? Are you like a savant? I think so. I need to practice it more, but I really liked my pre-calculus course. Wow. Listen, if you love pre-calc, God bless you. We need people like that out there. So maybe we ought to set you up with Ken Coleman, his book, Find the Work You're Wired to Do. Inside of it, there's an assessment that you can do to assess your skills and what you're interested in, all of these different factors.

40:55And then it helps you take the results and do something with them. So we'll make sure to set you up with that. And I think because at the end of the day, you are the captain of your course here. And George and I in five minutes probably don't know which one you truly are better suited for. And it doesn't sound like there's a wrong answer here. I think you just need to decide. And as long as you're not going into debt over it, it's not a money question, right? You're not going into debt over it. The money part of it is just how are you going to make the most money over the course of your career?

41:28And I would wager to say that you're the secret sauce in that. if you decide to start a canine training business and you're the one that's over that and you have a lot of intensity in developing that and you're smart in your business plan, you're probably gonna make tons of money. And same thing with mathematics. If you pursue a degree and go into a career path where there's a lot of upside, I think that you'll do fabulous in that. I always lean towards utility. So what I would probably do, and it's kind of what I did, is use the major that I think has the most ROI, but then take classes or minor, do concentrations in the stuff that's more of the passion.

42:00That's what I did. I got a communication degree because I knew that's a broader field. And I minored in like philosophy and worship leadership because I was into those things. But I knew I'm not going to teach philosophy, which is, you know, there's not a whole lot of people hiring philosophers these days, Jade. Yes, that's true. But you do quote philosophy in your book. I still love it. I love a good Aristotle quote. What can I say? Look at you, George.

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43:51Hey, everybody. Welcome back to The Ramsey Show. in the Fair One's Credit Union studio. George and I are going to continue to take your calls. Remember, if you ever want to get in, the number's 888-825-5225. Andrew is in Fort Worth, Texas. Hi, Andrew. How can we help? Hi, how are you? Whoa. Man, I tell you what, these cell towers need to come along with it. Can we hear you loud and clear? Hello? Yeah, I can hear you. There we go. So this is my situation. My parents followed Dave Ramsey and became debt-free and instilled that in me, and I graduated with a master's degree without taking any student loans.

44:28Wow. I recently just got my first job paying$100 ,000 a year roughly, and I have a wedding coming up that I'm trying to plan in about a year and a half where I need to save up for that and then moving out into an apartment. Yes. I've been getting pressure from in-laws and friends about why I don't have a credit card, and they bring up, if you use it as a debit card, You know, you can only really get the benefits. So I was asking for some guidance about how, like, if that's really true, can I use a credit card like a debit card and still get the benefits out of it without the risk? What are the benefits that you're looking for?

45:08Well, I guess just better rates for mortgage since, you know, that's the one thing that I will have to do I can't really get out of. It's unlikely that I'm going to save enough money to buy a house cash, so I won't need to take out a mortgage. So if the credit score would help in making it easier or getting a better interest rate on that. Okay. So now we've tied. I need the credit card to get the credit score to get the mortgage. Yes. Right? Okay. What if we could skip the middleman and go straight to mortgage without a credit score? Would you then need a credit card? Well, no. See, I've talked to my mom as well, and I know it's possible not to.

45:47I guess really my contention is how do I weigh what's better or not? Tell us why it's better. Here's a question I have for you. I'm just going to repeat this back to you. Tell me why it's better to play the game to get the credit score mortgage versus why it's better to get the manual underwritten mortgage. You tell me why one's better than the other.

46:16well well i guess from what i hear it's better to use the credit card money since you know you can you can get other benefits while you oh see now it's about more than that's what other benefits okay that's what we're trying to get to points so the what you're really you're not really talking about the mortgage because we've established you could do it either way and you can't really tell me and i don't think anybody could for that matter specifically speaking about a mortgage, why it's better to have a credit score mortgage or a zero score mortgage. There really is no advantage to a credit score mortgage because if you do a credit score mortgage, then you have to play the credit game.

46:52And once you introduce the credit game into your life, now you're introducing risk into your life. And so that's the disadvantage right there. If you do a manual underwritten score, a zero score loan, that means you have no debt, therefore no risk associated with debt. So that's a no brainer. Now, let's go back to what you're really talking about, which is, but Jade and George, if I open up a credit card, then now I can have access to some points. And George is kind of an expert on how those points come about and how they're actually used and whatnot. Yeah, I'm going to send you a copy of my book, Breaking Free from Broke, Andrew.

47:26I wrote extensively about this in the credit cards chapter and the credit score chapter to kind of dispel a lot of these myths. Because everything you've said so far is, well, I heard and I'm getting pressure and they just want me to. and clearly these people care about you, but they've also never known a different way. This is all they know. And as someone who's lived without a credit card for 13 years now, purchased multiple homes without a credit score, and I'm not special. They didn't give me it because I'm George Camel. They gave it to me because I had a strong down payment, zero debt to income ratio, did a 15-year mortgage.

47:57And if you do it the Ramsey way, 15-year mortgage, at least 10 % down, you're going to get just as good as a rate as the next guy who's got a great credit score. Okay. Now on the reward side, let's say you could have got 2%. Every study shows that if you use a credit card, you psychologically can't use it like a debit card. You're using someone else's money and paying it back later. And that triggers something in your brain to go, I could spend a little more. And that turns into 12 to 20 % or more that people spend, which negates any 2 % cash back you could have gotten. So my theory, and no one's taken me up on this challenge, use a debit card the next 12 months and see if you spent less than you did on your credit card the 12 months previous.

48:41I think everyone who did that would save way more than anything they could have gotten in rewards. Yeah, let me tell you the problem here. The problem that I hear is twofold. Number one, and this is not me getting on you, Andrew. I'm going to say this is the general problem. Number one is you've got FOMO. You're hearing people talk about this idea of what you can do with points and you feel like you're missing out. So you better explore it is what you're feeling. However, yeah, a little bit. Yeah. But the other problem is you're doing more due diligence exploring one side of the equation and you're not doing the same due diligence exploring the side of equation of the equation that George and I are talking about.

49:18So you're over here, you know, you're looking at American Express. You're looking at Capital One. You're thinking about what you could do with the money. you're talking to all friends. All these friends agree on one side of the equation. You need to do your due diligence on the side that George and I are talking about. And that's the only way you're going to be able to see this in a balanced way. And I promise you, just by facts, just by data, you're going to go, oh, wait, George was right. Jade was right. But that's the challenge that I have for you. We're just two people you've talked to. Keep going down this thread and see what else that you can find, because I think you're going to find that we're right.

49:53The only thing you're missing out on. The only thing FOMO that's going on is debt and risk. That's the only thing you're missing out on. All right. That makes sense. I have a follow-up question at this time. Sure. I recently, I don't have a credit card yet, so this is all me doing research, but in doing that, a bank that I have offers a smart card, which is like a credit card, but the balance is whatever you have in your bank. Yeah, it's a secure credit card. I mean, you're one step better off than just a normal credit card. But at that point, just use a debit card. Again, what's the point? And let's, okay, let's take it a step further because now we're having a broader conversation.

50:35So what we're teaching, in a moment, obviously, we're talking about a mortgage or we're talking about a credit score, no credit score. But let's talk about it over the course of your life. What we're talking about is deciding what your financial philosophy is for your life. So you can be a person who says, you know what? And a lot of people are like this. They go, you know what? I don't mind debt occasionally. I don't mind leveraging it for things like vehicles. I don't mind leveraging it and my credit score to buy a house. And if you choose to be that person, we love you. We will shake your hand and we'll just go, he's not a Ramsey guy.

51:05And that's fine. But then there's people who say, you know what? I think I just don't like owing people money. I think I just like being a person who is self-sustainable. I like being able to use my money. the borrower is the slave to the lender and so I don't like feeling like I'm a slave I don't like that when I temporary even if it's temporary right and so those are the people who go you know I'm just drawing a line in the sand and I don't borrow money and because of that because I don't borrow money I don't need a credit score and because of that I buy my cars over time in cash and because of that I manual underwrite if I want to buy a home and so that's kind of the that's really the debate we're having is who do you want to be financially as a man in your marriage in society and that's something you're gonna have to take some time to think about yeah and you know this idea that well just pay it off every month i wish it was easy as that because half the people don't and now we're 1.7 trillion dollars in credit card debt we're zero dollars in debit card debt last time i checked so show you right i wish i could you know give humanity the benefit of the doubt They have proven me right every time.

52:12Yeah.

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53:58Kevin is in Houston, Texas. Kevin, you're up next. How can we help? Hey there. Thanks for having me. Yeah. My question is regarding buying a house that is far away from my work versus renting an apartment that is close to it. For some context, I am currently living with my parents. I have no car payment. It's fully paid off. I have no credit card debt or anything. I keep most of my savings in a high-yield savings account, and I'm currently maxing out my Roth IRA as well as my 401k. The apartment, my commute to work is currently about two hours a day. It's about 45 minutes in the morning and then maybe like an hour to an hour 10 afternoon just depends on traffic.

54:43If I were to get an apartment, obviously it is kind of like throwing money down the drain, but it would shorten the commute to about like 10 to 15 minutes each way. I mean, you're throwing your life down the drain by spending all that time in the car. But that's you living at your parents' house, right? That is true, yes. Okay, what would rent cost near your work? It's about 1.5. What do you mean? Like$1 ,500? $1 ,500 a month. Okay. Yes, sir. I was like, man, where are you living, dude? That's crazy. Okay, so$1 ,500 a month, and what do you take home every month? Kind of after taxes, but before your other deductions and investing and all that.

55:24After? I'm a contractor. I make$85 an hour. I'm not sure how the calculations work. You're making like$170 ,000 a year? Gross, yeah. Good job. Go rent, dude. That's such a small part of your world. And I think being on your own, having the independence, getting your life back is only going to, number one, increase your quality of life. And number two, make you more focused at work, better at your job, and move you forward. Now, tell us about why you were thinking about buying far away. What was the mindset around that? I just want to understand. So I'm currently living with my parents. We're kind of near the medical center in like, I guess, central Houston.

56:04I work out in the refinery area. And so buying a house closer to that is probably not very ideal is what I was getting word from just from like my coworkers as well as my parents in general. The house location that I was kind of searching around for was still kind of within the general Houston city area, just outside the inner loop so that it's not as expensive. Have you ever lived alone? Will this be your first time living on your own? Yes. After college, yes. But I mean, yeah, I did live alone during college, yeah. Okay, but on campus? Yeah. Okay. So my advice to you would be, I think eventually you do need to buy something.

56:46I think that that's great for wealth building. I think that that's great for stability, all of those things. But I do like the idea because the fact is you work where you work, right? So let's rent something in that area. In the time that you're renting, two things are going to occur. Number one, you're going to be able to save up more money for your down payment. That's thing number one. But thing number two is you're going to learn the area and you're going to be there for yourself. You won't have to take anybody else's word for what's a good area to buy, what neighborhood do you like, what neighborhood do you find yourself attracted to, right?

57:19You're going to learn all of that. And that's really, really good research because obviously, you know, buying a house is a huge investment and you do want to buy in the right location. It's like they used to say location, location, location. And one of those locations is what do you enjoy? It's got to be someplace that you like, not just what your friend said or what your brother said or what your grandma said. Right. So this is a win win for you by renting close to work, no matter how you slice it. Okay. How old are you? I'm currently 24. Okay. So there's also, If you don't need a house, there's nothing wrong with just renting because it makes more sense for your life.

57:56Because as expensive, quote unquote, as renting is, man, it's expensive to be a homeowner. To maintain a three or four bedroom home that you're not even using and paying the extra property taxes, the utility bills, the maintenance, the repair, all of that's going to add up. And so I don't want you to think that renting is just a binary waste of money. You're just buying yourself time. And you're really, it's a lifestyle choice in your early 20s. So maybe until you meet someone and go, you know what? I think I'm going to get married. Because guess what? That person is probably not going to like the house you chose anyways.

58:30You chose wrong in 24. That's true. I mean, I'll piggyback on that. I'm not saying that I would directly wait until you meet someone. Because who knows? You might not meet somebody until you're 48. But... You got 24 more years, Kevin. I'm not putting that evil on you. I'm just simply saying you never know. However, I agree with George wholeheartedly. And there's also what if your career shifts? Like if this is one of your first big jobs out of college, who's to say, you know. You could get an offer tomorrow and move. Now you've got a house. Yes. You're tied down to that and it's going to be expensive to get out of it with all the fees.

59:03And so that is something to factor in as well of who knows how long. If this is your long term career and you know that you're not going anywhere, then settle down. But I wouldn't just rush into it because you feel like renting is a waste of money. That's not a good motive. Yes, there is no rush. But I would not have a two-hour commute. No, thank you. No, thank you. All right, Meg is in Minneapolis, Minnesota. What up, Meg? Hi. Hi, yeah. Thank you so much for taking my call. My husband and I are looking for advice if we should fix our current car or for about the same amount of money, get a slightly newer car.

59:37Tell us more. okay so we have i love this car we got about two years ago it is a ford expedition um it's a 2020 it's starting to have issues with its transmission it's still drivable but obviously we don't want the transmission to blow up my husband's done some research and the repair on the transmission could be anywhere from five to eight grand to totally replace the transmission it would be nine to 11 grand. So when we start hitting those numbers, we're wondering, do we just get a new car? The other bit of information is that that same model of car, my husband did some research in the 2023 version and newer has supposedly fixed this issue that is common with the transmission.

1:00:25Is the Expedition, the 2020 Expedition, is it paid off? Yes. Yep. We bought with cash. Awesome. What's it worth if you don't do this repair? Let's say you sold it as much as you could get for it to get this other car? Yeah, I would guess between like 20 to 22 grand is what we could probably get. Okay. And how much do you have saved for this other car? We could probably put about comfortably 10 grand towards it. If we needed to do more, we could, but we wouldn't want to spend more than like 10 grand in cash towards either the repair or a new car. I mean, if you're either going to spend 10 grand getting a new transmission in this car or getting spending 10 grand, getting a revised newer version of a vehicle, I feel like that's a no brainer.

1:01:13Um, I feel like it's a no brainer because if you're telling me it's like the Escalades, uh, the version before this past one, they had, they have so many issues and it's like, it's one thing on top of another. And if you know that you just know that this is just one thing in a long list of recalls that are going to happen. So if you know that, I feel, I mean, George, what do you think? I think it's a no brainer. I would get some real numbers on what you could actually get for this car and what that 2023 expedition is actually going to cost you all in, out the door. That way you have some real facts and figures to know if you can even do this right now, or if we have to keep driving it for the time being and get an actual estimate for the transmission issue as well.

1:01:52And once you have a couple of bids on that, you actually know what your car is currently worth without the repairs, know what the new car is going to cost you, then I think you can move forward with a lot of confidence. But I'm with Jade. I'd probably just go to the upgrade car. You're doing it in cash. Okay. Yeah. And if you have Christian Brothers near you, they're all over the country. I would recommend going in there. Here in Nashville, in the Franklin area, we have Christian Brothers Automotive. And by the way, if you're even looking to buy a used vehicle, you can bring it over there and have the mechanic look at it and make sure that it's in good shape so you feel good about the purchase.

1:02:29Pre-purchase inspection. Yes, sir. I always recommend that. Yes. Please do it. And they'll let you do it. So just bring it over there. And then they also have like fabulous warranties. So if you have that in your area, I would check it out. It's the only place that I use and it's the only place Sam and I take our vehicles. What about you, GK? Yeah. I mean, I got a Tesla, so I'm in a different world. You're in a different world. They really kept it in their world. You've got to go to Tesla. Oh, I didn't think about that. It's like you've got an iPhone, you've got to go to the Apple store. That's right.

1:02:57They're built into the ecosystem. That's how they get you. But luckily, very little things to repair. Yeah. But is it more expensive because everything's so electronic? I don't know. It's not bad, actually. Anytime there has been an electronic issue, it's like$200,$300. You're not going to have a$5 ,000 issue. Can the computer just shut down while you're driving on the road? It could, but I think that's an overblown paranoia. Is it? Unless you're Dave. Yeah, Dave would be riding with me and that's when it would happen. We get a good laugh at it. But people want to know.

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1:05:21All righty, George, a little discussion time here because we get calls and emails and DMs all the time about side hustles. People are trying to increase their income for many reasons. Number one, the price of living is just higher these days. And so people are trying to close that gap. Maybe you're on the baby steps and you're trying to pay off some debt. Maybe you're trying to save up some cash for the first time and people immediately default to, well, can I do a side hustle? So let's talk about that because we have some ideas for you guys. But I also want to start out the conversation by saying, if you do have an income issue, if your budget is not balancing and you're in the red, or if you do need to make more money in order to pay off debt or do some of the things that we talked about, there are two methods that you can approach this from.

1:06:08Number one, and I want to talk about this first, for some of us, it's a core income issue, meaning the job that you work day to day that you spend most of your time at, you're just not making enough money. And so you need to be able to identify, is this a core income issue or is this a situation where my core income is good? I could just really use some supplemental income to go faster. And if that's the case, then yes, side hustling is for you. Side hustling is what I would call a limited time only deal, right? You're not doing this for life. It's not the key to unlock all of your money problems.

1:06:40It's a way to speed things up. So that being said, side hustling, George. I side hustled. We've both done it. You did it. What was your favorite? Oh, gosh. My favorite, I think, was doing the thing that I was doing full time, but on the side. So consulting. So I was doing marketing consulting, helping people launch podcasts and books, building websites. So I took my sort of marketing creative tech brain and put it to good use. and that was the most money I made because I could charge 25, 30 bucks an hour. It's an extension of a real job. Exactly, versus doing Uber and Lyft, which I also did, you know, back in the day they didn't have Instacart and DoorDash.

1:07:16I feel like I'm back in my day, we didn't have these doors, but that was the most lucrative was kind of doing the consulting freelancing thing if you have a skill that translates. Yeah, I love that. So for Sam and I, I fell into the first category Sam and I did where it was, we had a core income issue, So we had to work really hard on our core income. But in the meantime, we did side hustle. We walked dogs and I did baking and sold baked goods. What was the weirdest one you did? The weirdest one I did was I worked at a vinyl tent and lettering installation place. So if you go down the road and you see one of those big box trucks that has like all my sons moving on the side, I used to install the vinyl lettering.

1:07:58Do you still know how to do it? Yes. Yes. Yes, I probably could try my hand at it. And let me tell you, that's hard work. Like your finger, your knuckles get ashy. That's a manual labor. You're up there on ladders. Yeah. Wow. Did a lot. I did one that was the Nielsen people meter. So Nielsen ratings, they use everyday people and they'll pay you as they listen to all the media you're listening to. They claim it only turns on when you have like radio, TV. That's so interesting. And so I'd get a check for like, you know, 10 or 20 bucks a month for just carrying a beeper around with me essentially.

1:08:31and I was like, all right. Isn't that so crazy how they monitor that? But the truth is there's so many side hustles out there. Now I will tell you, I believe the ones that are the most lucrative, if it's not attached to your normal job, like what George was saying, the ones that are most lucrative are the ones that are service-based, I believe. If you get your butt off the couch and do something someone else doesn't wanna do, you will make the most money. Yeah, if you mow someone's lawn, if you will plant their hedges, if you will babysit their children, if you will watch over their grandparents, right all of these kind of like care and service based if you will cook their meals like clean the house right all of these very service based wash their car yes that is where the money that's where the munion is that as the kids would say not uh you know i hear these like well you can do surveys from home and what are the things i can do from home the problem is the ones from home are so saturated there's too many people that want to do it and not enough work so you know mystery shopping is another one i hear about and that's not going to make you enough money to pay off some debt so Yeah, the key is you can really mess yourself up and take a lower hourly rate by doing stuff that feels more comfortable or by doing things that you have an interest in.

1:09:40This is not about interest. This is about you making money. So there is a side hustle article that I wrote. It's on RamseySolutions.com. We'll put it in the show notes. And it's got so many ideas in there for you guys. 44 ideas. 44. That's a lot. For you to skim through. That's a lot. That's a lot of ideas. That's legit. But this is what you need, guys. This is how you need to get the old train running and get this money going. That's right. And hey, drop a comment on this episode, wherever you're watching, listening, Spotify, YouTube. If you're doing side hustles or you have, let us know what you do, what you did, and how much you made either per month or per hour.

1:10:16Yes. Because I don't want to gatekeep. Give everybody the ideas. Some of them may not apply to you, but the key is be resourceful. Get creative. What's something people aren't doing that people would pay you for? Love that. And other side note, guys, now's not the time to be thinking, oh, this is how I'm going to start my next business. We need to make money fast. And a good call out. This is no shade on multi-level marketing. This is not the time to sell essential oils. No, it's not. That is not a money-making scheme. It costs you money to get into it. And if you look at the disclosures, most people don't make a dime from it.

1:10:49And so not shade to anyone who does this, but this is not a side hustle that I recommend for people to get started. We want you to make money fast. Mo money. All right. That ends that topic. Let's go to Josh, who's in Dallas, Texas. Hey, Josh, how can we help? Hey, guys, how's it going? My wife and I, we make about$400 ,000 together. Excellent. And we've been paying off our, we had a lot of student loans together. We had a lot of credit card debts and vehicle debt, but we've paid all the vehicle debt off, paid all the student loans off. and we thought we paid all the credit card debt off but we just found out we are pregnant and we'll be having a baby in November Wow First one?

1:11:36And so second one Awesome It's actually a seven year split between us Wow, okay Yeah, so nice gap But yeah, we have been trying to do a high yield savings because after she has the baby she wants to take a year off and we just found out that she has about$40 ,000 in credit card debt. Whoa. How did you find that out? We found out? Did she not know? Yes. She knew. I guess she didn't realize how bad it had gotten. It had been kind of snowballing. I had been paying the bills out of my account, and so I guess I just really wasn't paying attention to it because she was spending money and stuff. Do you guys have separate accounts?

1:12:22We have one main bill account and then separate checking accounts. Did you know she had the credit card? Yes. The way I do is I put money on the credit card and I pay it off each month. And I don't think she's, obviously she hasn't been doing that. So when you said earlier, we paid off the student loans, we paid off the car, we paid off the, was that a joint effort or was this something that was in your name or how did that come about? As a joint effort, yes. We definitely got together on that. We were paying off student loans. She was paying the minimum, paying the student loan, and then I was paying extra to try to knock it out.

1:13:00Are you feeling blindsided by this? What is your emotion here? I'm having a hard time telling. I was blindsided about it about a month ago. And then we're working on it now. Definitely just have a team mentality to kind of get it knocked out. We got half of the$40 ,000 set aside on a 0 % interest balance transfer. And then the other$20 ,000 still on the 29 % interest. Okay. Okay. But I have$20 ,000 in the high yield savings because I kind of feel worried about that time after she takes off for baby. Is there any money that, is there any other money saved that's non-retirement besides the$20 ,000?

1:13:48I have$10 ,000 in just our bill account, but our bills are around$8 ,500 a month. Right. So that would not be extra money. Here's what I think needs to happen. I think that you guys have an incredible income and you have the means to get this paid off before November. Now, that might mean that how much of the$400 ,000 is her income? Let me ask that question. $90 ,000. $90 ,000. Okay. So you guys can live off of your income for a year without needing to have it all in savings? Yes. Okay. If I'm in your shoes, I'm knocking out the credit cards with all the muster I can muster up and then save up as much as you can.

1:14:29and with your income, you're going to be okay to cash flow any kind of medical expenses that come out of this. But I would work to get this thing cleaned up fast, sock up an emergency fund of another 10 to 20 grand before baby comes in November. Right. And the core of this is you now need to combine incomes. She wanted that money saved because that was her portion of the income. But if you guys use your money as yours, ours and us, then it doesn't matter anymore.

1:15:24You know, George, people always want to know working here at Ramsey, how did Dave build this place? How did he build up hundreds of millions of dollars in real estate? How did he create this Scrooge McDuck fortune? So he's going to actually be walking through it at an event we have here called Investing Essentials. It's a two-night virtual event, September 1st and 2nd. You're part of it. That's right. Dave and I are going to walk through the playbook for investing, wealth planning, including how he thinks about real estate, when he buys, when he walks away. He's going to cover the basics of investing if you're new.

1:15:59And then we've got all new content on night two about wealth planning. So think inheritance, taxes, how to keep the government's grubby hands off your money as you built the wealth, how to not destroy your kids, how to leave a legacy, how to think about all of this. And so we're going to walk through it in layman's terms because it is some heady stuff. And so the meetings have been fun. It's deeper than we've ever gone on this stuff. Is it for everyone though? Do you feel like people at all walks of investing life? Yeah, I mean, it's definitely targeted to the Baby Step 4 Plus crowd. So if you're out of debt with the emergency fund and you want to dig into this stuff and get it right, especially over the long haul, wealth planning, wealth building, that's a 20-, 30-, 40-year journey for a lot of people.

1:16:39So that's who it's for. Now we get people who are in the earlier Baby Steps because they want to know about it and be prepared, but that's kind of who it's aimed at. You're going to get the most out of it if you're there. So tickets start at$199. Two nights. We're talking four hours of deep dive content. It is live. Get yours today, RamseySolutions.com slash events, or click the link in the show notes if you're listening on podcast or YouTube. Yeah, that's the biggest point. It's live. I love that. And it's virtual. So it doesn't matter where you are. You can tune in and you can catch the replay if you can't make it during that exact segment from, you know, 7 to 9 p.m.

1:17:11or whatever. So it'll be fun. Excellent. All right. Sarah is in Washington, D.C. Hey, Sarah. Hi, Tate and George. My husband and I are in baby step two. We make a household income of$210 ,000. I have$240 ,000 in student loans. We're projected to pay it off in about two to three years if things go well. However, I have a scalable education business that I would like to invest in so that I can help accelerate the debt payoff. So how do I do that? Is it OK to? I just heard Jade saying that, you know, business is not the time. Well, it depends. It depends on how we're looking at this. Can you scale it without spending seventy thousand dollars?

1:18:03Right. And that's the biggest thing. So what does it take to scale it? Yeah, I thought of hiring a recruiter because it's like an education business. So we need more clients and students and per client and student, we can get after taxes and all that. It could be$1 ,500 per student. What does it make now? What's the profit that you take home from the business as it stands? Yeah, it's$1 ,500 per student. And how many students? like per year what are you actually making from this business at the end of the day so so that's the thing it's it's it's based on how much work i put into it how much advertising i do how much right but today i tell today we've had we've had just 12 students and we've made 25 000 i love that for the year or for just over since we've been in business since we opened in um two years ago Okay.

1:19:02So tell me, give me an average on a month. How much money do you take from this as profit on a month to month basis? So that's the thing. It's hard to say, you know, per month because it's only whenever, you know, people hear about us and they want to take our, they want to go through our program and then they pay for it. So it's hard to say per month. But that's why I hope to have a recruiter pay them so that they can, you know, so I can tell them, hey, the expectation is two students per month. And you would have to pay a recruiter how much per year? Or how much? Yeah, sure. I saw on one of those freelancing companies, I found somebody, she would be about$500 per month.

1:19:44Here's what I'm going to say to this. I think that you do have an idea here. But my problem is you haven't proven it out enough on your own. And I actually do think that if you invested the right amount of time and effort, you probably could recruit students on your own. I don't know that you do need to pay a recruiter. That's my first thought. My second thought is to go back to what you said earlier, which is if you had a business that was already generating a regular amount of income and it didn't cost much to kind of ramp it up to the next level, I might say, yeah, go ahead and do it. But similar to what George and I were saying earlier, when you're paying off debt, you just need money and you need it fast and you need to get guaranteed, right?

1:20:32And so that's the phase that I think you guys are at right now. I don't think you can make the gamble of paying someone 500 really, really important dollars that you need to pay off debt for speculation, because truly that's what it is. There's no guarantee that that recruiter is going to turn up exactly what you want and exactly what you need because you've never tried it. um so i am a little if you're gonna do it i would put them on commission and say hey for every student you recruit i'll give you 200 bucks and that way you're not out this money they can still go win they have a lot of incentive but i feel like your core income is the the money maker here can you work overtime and make because you said you're basically made 12 grand a year doing this if you split your 25 over two years so the question is can you make 12 grand just in working harder at your jobs, working more at your jobs.

1:21:22Yeah. Yeah. I definitely could. It's just, you know, I worked so hard to build the business, but to have it like sitting there for two to three years and just not do anything. And it's a lot of licensure, accreditation. But Sarah, even if you had one student and that was making you$1 ,500 a month and you just kept recycling to make sure you always had one student, that's better than a lot of side hustles. So if you said, Hey, I'm going to get to like my goal is two students that I always no matter what month of the year I always have two students in the hopper I feel like you could do that on your own and I mean that's word of mouth right there and that's enough to really move the needle because you're bringing in three thousand extra dollars a month unless I have my numbers wrong yeah no you're right it's just I'm at the phase of like just being tired of you know advertising on my own so I kind of wanted to just bring somebody in to do that while I work my full-time job and hopefully have that income coming in.

1:22:23You could try it for one month and go, hey, I'm okay risking 500 bucks right now to see if there's actual ROI there. Because my fear is they go, I couldn't get anybody and you still owe me the money. I loved your idea, George, of putting those people on commission. I can tell you with Sam and I, the reason that we were able to scale a business while we were doing debt is because of the payment structure. Everything was commissioned. So we didn't have to shell out a lot of our own money. Everything was agent-based, commission-based work. And we did, here's the thing, we did a lot of the work by ourselves.

1:22:58We weren't at the stage where we could pay people to do things. We can do that now, but we couldn't then. Your HR, accounting, marketing, sales. No, you have to be everybody. Wear every single hat. And so that's why I'm challenging you, because I do think that you probably, if you keep it, if you keep the bar reasonable and say, okay, my goal is one or two and start there, I don't think it'll feel as unmanageable. I think right now you're thinking about a grand scheme. I want as many students as I can get. And there's nothing wrong with that. But today you just need a one or two. And then once you get one or two, you're going to feel the confidence to go, well, I could get one more.

1:23:35And it's going to build organically in that way. I would also deputize the students that have gone through. That's your best marketing right there. Are they leaving testimonials, reviews? If they refer someone to you, you can write them a check as a bonus. And so there's a lot of things you can do with the customers you already have to scale. Yeah, I love that. And if you haven't already, maybe you have. I would utilize AI. Jump on and figure out what is it that you need to be doing? Because a lot of the jobs out there, the blueprint is right there on the internet for us all to learn. So I think there's probably a lot more that you can do if you just do some research around what it takes to find your customer.

1:24:17And I would treat it like a job. Set aside, hey, every Saturday from 12 to 2, I'm working on the business. Yeah. I got to go to my part-time job doing this, creating the social media posts, doing the marketing, reaching out, whatever it is. And if you just set aside that time, kind of like you're budgeting your time. Yes. Say, I'm not going to work on this more than five hours a week because I don't want to burn out. as much as I get from that is what I'm putting into it. Yeah, I love that. And that hourly rate is probably pretty good. Exactly. You're getting a couple of students out of it. And that's the thing.

1:24:43That's why I think it is worth continuing to go down that well, because just like George and I were talking about, your time is the most valuable thing that you have in this. Now is not the time to be wasting, you know, your time on an$8 an hour,$12 an hour deal when you can be really making some real money like she can. So that's what we're headed for. Find the side hustles that really are going to give you the biggest ROI and really help you pay down that debt. And in your case, your income is already pretty sweet.

1:25:22All righty, welcome back to the Ramsey Show. We're here in the Fair Ones Credit Union studio, continuing to take calls about your life and your money. And we have Ashlyn who's on the line in Lincoln, Nebraska. What's up Ashlyn? How can George and I help? Hey George. Hey Jade. How are you guys doing? Excellent. How are you? Good. I'm doing great. So my question is, is it ever okay to drain my emergency fund to buy a helps. Why is it so urgent that you must drain your emergency savings and not use a down payment like we would teach you to do? Okay, so I just, I listen to you guys every day and I know it sounds silly asking this question, but I just hear about how real estate's only going to go up and I just feel as everybody does around my age, feel behind comparing to everybody else and I just want to get in it as soon as possible.

1:26:21How old are you? 20. 20? I was hoping for a number after the two. I thought for sure you were going to be 48 talking about I'm behind. Behind who? The 18 year olds. Who are you following on Instagram? Well, my friends back home, they're very entrepreneurial oriented and I am not. So they have their own little businesses and I just feel kind of left behind there. Okay. What do you do for work? So I work full time at an investments firm and then I also have a side hustle that I work probably 10 to 15 hours every other week. Wow. What do you make doing all that? so full-time at my office job i make 24 an hour and then my side hustle pays 25 plus commission wow 25 an hour plus commission yeah wow how many hours a week do you do that side hustle um 10 to 15 like every other week and kind of however many events i want to pick up but i've been kind of facing burnout recently okay so i've kind of laid back a little bit so So maybe like$500,$600 a month?

1:27:34Is that what it's bringing in? I calculated it before I called, and I thought it was about$15 ,000 last year. Oh, awesome. So over a grand a month on average. On top of your$50 grand that you're making. Yes. So what, like$6 ,000 a month? Is that what you're bringing home? Where are you at every month? I would say average, I would put it around$3 ,500 a month. Okay. So let's go back to this house conversation for a second. Are you telling us that, I mean, and you can shoot us straight, are you telling us that really the only reason you're thinking about buying a house and doing it at the detriment of draining your emergency fund is because your friends are doing it?

1:28:21No, my friends aren't doing it. I have four older sisters and I see them going and living their life and I feel behind compared to them as well. So let's talk about that. I want to get started in the right direction. Let's talk about that because this is, you're talking about money, but this doesn't feel like a money call to me. And you've got older sisters, so I'll be your older sister from another mother. Can I be Unc? Yeah, you can be Unc. And I'll be Auntie. And let me just, I'm 42 years old. George, how old are you? I'm 37. Okay. I want you to know, because let me just say it like this. I get comparison.

1:29:02Comparison, it just feels it's just part of the human experience. But as much as we can do to mitigate it, it's really going to be helpful for us. Okay. And what I really want you to take away from this is the following. Life is a race, but it's not a competitive race. Okay. And the problem right now is you're viewing it as a competitive race. You're looking at the runner next to you, which is your sisters, your friends, and you're going, oh my gosh, they're further down the track than I am. And you're trying to run and catch up with them. But that's not the way the course is designed. It is really you doing your personal best on your race.

1:29:38That's all it is. Because the courses are not the same. My course is not the same as George's course. There's different obstacles. One's a 5k, one's a marathon. Man, yes. And his is in the mud, but mine was on a straight shot. His is by the beach, but mine is in the snow, right? It's very different. And so if you start comparing, you are going to be bamboozled every single time. And so what you've really got to do is lock in and go, what do I have in front of me? And what is my course? Where am I trying to get? And can I do it as efficiently and with as good an attitude as I possibly can? That is your goal.

1:30:15But as long as you start looking at, do you see what I'm saying? And so you're 20, your sisters are older. so you can't even compare it by age, right? So let's lock in and go, okay, what's true is you've got a nice job. Making 50K at 20 years old is great. You've got a great side hustle. It doesn't sound like you have debt, do you? No, no, no. Fabulous. You're way ahead of most of the country, regardless of age. If we were comparing, if we really were comparing, I'd be like, well, dang, Ashlyn's got her life way more together than I had when I was at 20. I had$460 ,000 of debt when I was 20. So I think the goal here is to move from impulsive to intentional, from this like FOMO to JOMO is what I call it, the joy of missing out.

1:31:01Now, and listen, I'm doing my own thing. I don't need to worry about being behind or missing out. And the median age of homebuyers these days is 40. So if you do it before 40, you are above average, Ashlyn. Wow. How does that hit you? That is really crazy. That is. And you're going to get there. I like to stay ahead of the curve. You are ahead of the curve. So let's set a realistic goal that doesn't involve robbing your emergency fund to go, okay, my next step is a down payment. What is it going to cost to get a place that I like in Lincoln, Nebraska by 25? Now we can actually put some numbers on this.

1:31:34Go, okay, it's going to be$350 ,000. I need$50 ,000 down. I can save$2 ,000 a month. It's going to take me 25 months to have a down payment. Booyah. So that's the kind of stuff that will move you away from just emotions to actual facts to habits. And then you're actually going to get to where you want to go. Because you could get to 25 and go, well, now I'm behind in a different way. Now I want a bigger house. Now I want to get married. Now I want kids. Whatever the thing is, you're always going to feel behind if you're looking at the person in front of you. Yeah. How many sisters do you have?

1:32:06I have four. Four? And you're the youngest? Yes. Listen. You just love your sisters. You're looking up to them. They're doing all these wonderful things. And that's great. They're kind of setting the path and they're, you know, setting the course of what quote unquote normal looks like. And I totally understand that. I was the youngest for a really long time until my younger brother came along. And so I totally get it. But I cannot stress to you enough that you're doing such a fabulous job to have to be 20 years old, no debt, no student loans. You are killing it. The fact that you're even thinking about real estate, you're so far ahead of the game.

1:32:42that fact that you even have an emergency fund saved, again, so far ahead of the game. You're really doing well. How much do you have saved, by the way? I only have$10 ,000 saved right now. Don't say only. Say, girl, I got$10 ,000 saved. At 20 years old, I'm debt-free with$10 ,000 in my name. I have a positive net worth. Yes, put some respect on your own name. Way to go. Way to go. And your career is going to grow. Your income is going to grow. So it's easy to think, well, this pace, it's going to take forever. You don't know. Five years from now, you're going to be in a different place. When I started this plan, Jade, I was 40 grand in debt back in 2013.

1:33:20And within 10 years, I went from negative net worth to millionaire as a W-2 employee. And I never thought I'd get there. People overestimate what they can accomplish in a year. They underestimate what they can accomplish in a decade. And that's going to be Ashlyn's story. Oh, listen. And we didn't plug your numbers into an investment calculator, but you should, Ashlyn. You should go to RamseySolutions.com and use the investment calculator. because if you start investing 15 % of your money, which you could start doing, by the way, by the time you're Georgianized age, old age, you're going to have so many millions of dollars.

1:33:48It's going to make your head spin. She's going to be a rich auntie. You, my dear, are successful. A rich auntie.

1:34:10Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com.

1:34:57You know, George, on here we talk a lot about budgeting. It's a core practice in order to do the things that we teach and to do them well. It underpins the entire Ramsey plan. That's right. if you don't budget, we can't help you. What are you doing? What are you even doing? And the best budgeting tool out there is EveryDollar. And the truth is it's more than just a budgeting tool. It started out as just a budget, but now in there, there is the full Ramsey plan. It teaches you, it helps you, it guides you, it mentors you. It really is a really, really amazing app. And it really is helping folks.

1:35:26Matter of fact, we got a fan quote. Somebody sent in this message. They said, you know what? EveryDollar is excellent. It really helped me get my personal finances in order. And now that I'm married, my wife and I use it together out of our joint account. It really helps us maintain a common vision and set of goals. So honestly, that's really great for us to hear. We know that it works because we all use it. I've been using it since inception. It's a marriage improvement tool. Look at that. Honestly. I mean, common vision and set of goals. He maybe, maybe use chat GBT to write that. It sounds very well worded.

1:35:59I'm impressed, but it's true nevertheless. All right, let's go to Tyler in Lubbock, Texas. this. Hi Tyler, you're on the line. Hey, how are y 'all? Doing good. How can we help? So I'm on a tree service business here. It's going great, doing well. Got several employees that's growing. Already done as much this year up to this point as we did all of last year. Wow, congrats. So I had a gentleman approach me this week about purchasing his lawn care and Christmas-like business. And I'm contemplating whether that should be something I should add to my business. Who is this person that's selling it?

1:36:51It's someone from my hometown. We don't know each other super well, but we're from the same place. Anyway, we've met to go over all the financials and everything. Why is he selling it? He's moved. He's an older gentleman, and he's actually moved to be closer to family. Okay. He's able to manage it from afar, but he just doesn't necessarily want to. So why you? Why did he single you out and go, this guy might want to buy my business? Well, I'm pretty well known in the area for my tree service business. I'm certainly well known in my community, and I think I was just top of mind to reach out to.

1:37:38And, you know, he wants to sell it to somebody that, you know, he does want to sell or finance it, so he wants it to be the right fit, you know. How much is the business going to cost?

1:37:53About$200 ,000. I'm not 100 % sure if that's going to include all the equipment just yet. So I think probably a safer bet would be like$250 ,000 for all the equipment. What's the net profit every year? About 40%. 40 % of that? Mm-hmm. Okay. So is the plan that you would take the business and whatever profits you would make, you know, take a salary and whatever's above that, you would pay him until you've paid back the$250 ,000? Is that the deal? That's kind of how I presented it to him. He says he takes out$60 ,000 per year to pay himself. So, yeah. So minus that, paying him back as quickly as possible, yes.

1:38:42How many employees does it take to run just the lawn care and Christmas lights? Currently, he has three full-times. And then he has not been, he's been in the business working himself maybe like 20, 30 % of the time. But as of the last year, he hasn't been working in the business at all. Are they separate P &Ls or does he run them together? All together, yeah. What does your tree service business make net profit every year?

1:39:18Net 175 for this year. Because I'm just wondering, if you're going to put your time into something, it may be worth just scaling the tree service business versus getting into this deal. I'd also want to know separately what the lawn care does versus the Christmas lights, because that to me, they're two very different. I can understand, you know, well, if you're getting this service from me, I can do this for you too. I understand how it happened that way, but I'd really want to know how much are you making on the Christmas lights versus what you're making on the lawn care to decide which is the better business and if they really need to be paired together or if you can.

1:39:51There could be a weak link here. Right. So in my business, I've successfully fully delegated it. I'm only managing and leading. I have a salesperson. I have the delivery team completely built out. I have an administration person. So I'm working in my business 15 to 20 hours per week. And I found that that is the correct move right now. And how much are you taking home from that? I pay myself$60 ,000. Okay. So you're making$60 ,000 working 15 to 20 hours a week. And you're saying, I could go work 15 to 20 hours a week on this other business. And make some money. Obviously, you've got to pay him back and agree on a percentage there.

1:40:36it doesn't sound like a terrible move. I would do a lot of due diligence and I would also never go into debt quote unquote for this. So if you want to do a sweat equity deal, like we talked about where he gets, let's say 20 % of the profits until the 200 K is paid back. And I'd want to know what the timeframe is because there's part of this where you can't necessarily assume everything's going to go right back to the way it was. There might be people who are like, well, I did the service because I just like Bob or whatever the guy's name was. And so there might be some drop off simply because Bob no longer owns the business.

1:41:09So I'd really be thoughtful to George's point on what are their terms? How quickly does this need to be paid back and at what percentage? And that's under the assumption that you're making a certain amount of profit, right? So there's all, and I, you already know all this. I can tell we're just reiterating it more so for the people listening, because I think you know this. And again, I'd really want to know, tell me separately how the Christmas lights are doing versus the lawn care because, and can I trim one off if one of them I find is really siphoning money from the other? Or if one is a real headache and the other one's super easy and higher margin.

1:41:42And the other thing is just making sure you have a good transition plan of how are we going to roll this out to customers so we don't lose them? What length of time is this going to take? Is this a six-month process to fully turn over the business? And he kind of stays in it to guide you through the process because there's going to be some learning curve with a new business. It's been run a very different way than you run your tree service business. And then are we gonna move this into our tree service business to be one bigger business or is it gonna be two separate ones? And a final thing, here's another factor to write on your list is how does this affect your ability to scale your original tree service business at the rate that you really were intending to?

1:42:20Is this taking the place of that? How are they running alongside each other? Could it hurt the business by taking your attention away from it? Well, to answer your first question was the Christmas lights have just been done for 2025, and that was only about$10 ,000 of that amount. So that's pretty new, right? This would be a very symbiotic business to what I'm doing already. The lawn service part, yeah. You know, I could present this lawn care slash lawn camping slash Christmas life offer to all my existing customers and, you know, probably instantly increase conservatively that customer base by 30%.

1:43:01And what intrigues me about it is tree work is generally one-off, pretty high profit, but I'm also missing a lot of potential customers that don't meet my minimum, right? Right. So the addition of this lawn care would add contract recurring revenue, right? Mm-hmm. Yeah, I can see that. It'll stabilize the business in a lot of ways. Yeah, it'll give me the ability to do these lower margin, higher volume type tree jobs. I don't think it's a bad, I mean, let me just go out on a limb here and say, I don't think, George, you're supposed to laugh at my pun. Thank you. Sorry, it took me a second. Thank you.

1:43:47I don't think this is a bad deal in theory. I just think you need to really dot your I's and cross your T's and really ask a lot of good questions. Don't rush it. I think it has the potential to be exactly what you're saying, which is a nice boost to your business and really help you grow over time. I think you've just got to play it out and make sure, to George's point, no debt. That's the key. I'm going to send you a copy of Dave's book, Build a Business You Love, Tyler. I think it's going to give you a lot of confidence and clarity about how to do this the right way and how to scale it properly.

1:44:50Hey guys, Rachel Cruz here, and I love summer. There is more fun on the calendar, more time with your people, and way more chances to make memories. But you know what else there's more of? Spending. Oh, between the extra groceries and gas and camp fees and family trips, it all starts to add up so fast. And before you know it, money stress starts to steal the fun out of everything. And that is why I love the EveryDollar Budget app. Because it helps you plan your money, track your spending, and find more margin in your budget so that you can put extra cash towards the goals that matter most. Enjoy your summer without the money stress.

1:45:30Download the EveryDollar app in the App Store or Google Play and start for free today.

1:45:50Guys, you probably heard us talk about our free AI tool that's built and trained on Ramsey principles. It's called Ask Ramsey. And today we're going to break down one of the questions that we received this week. So every week we kind of get questions that begin to trend. And the question this week is, I have cut back on retirement savings and spending to pay towards credit card debt. What else can I do to pay off$20 ,000 in credit card debt? So this person is clearly not really doing things in Ramsey order because we would tell you that if you have debt, you do need to pause retirement and pause everything else to get paying things off.

1:46:30Yeah, cut back tells me there's still something going toward it. We need a full stop. So pausing all retirement contributions, even the match. I know it sounds crazy because we're not talking about math here. We're talking about behavior, momentum, and that's what happens. When you pause that match, you're a little bit angry and you freed up some margin. Now you're a dangerous man with some money in your pocket. Yeah. And number one, if anybody with credit card debt, yeah, you have to cut up the credit card. You can't simultaneously solve a problem while simultaneously creating the problem. You got to cut it out.

1:46:59Switch to debit. Yes. Don't add to the balance. and like George said, yeah, pause retirement contributions. And then there's just month to month things you can do like stop going out to eat, cut back on subscriptions. That's all entertainment luxury. Yes. And then what we've been talking about, I feel like we've talked about this all hour long is side hustling, guys. Finding extra income, whether that's a side hustle, taking on extra overtime at your current job. Even$300 a month, guys, could really shorten your timeline. So picking them out and focus on it and say, I want to make X amount extra dollars every month.

1:47:30and then start selling stuff. I mean, Facebook Marketplace, I list a lot of stuff on there. Stuff that I pay too much money for that hurts my soul to sell at a deep discount. But then I realize, oh, I can go buy it at a deep discount from Facebook Marketplace later when I'm not broke. In today's society, maximalism, like everybody's just got the most of everything. You're telling me there's not something? And you would think something won't sell. I dare you. Put it on Facebook. Somebody will take it. I once sold a pair of used bath mats. I will tell that story all day long on Facebook Marketplace.

1:48:02They weren't even very big. They were turquoise squared used bath mats, and those jokers sold. So don't tell me. Somebody needed it more than you, Jade. Wow. Well, hey, check out Ask Ramsey. It's going to walk you through more examples of how to get rid of this debt. It can calculate a payoff timeline for you. It's basically like us, but way smarter. So check it out. Ask your specific questions today. Go to RamseySolutions.com or click the link in the description if you're on podcast or YouTube. Right on. All right. Alex is in Tampa, Florida. Hey, Alex, how can we help today? Hi, Jade. Hi, George.

1:48:34How are you guys doing today? Excellent. What's up? Awesome. Awesome. I want to ask. I'm 23 years old. I've just completed Baby Step 3, and I'm currently working on Baby Steps 4 and 3B. My question is, how should I be allocating my Roth IRA? What types of mutual funds would you guys recommend? and how do I balance investing 15 % for my retirement while also saving for a down payment on my first help? Love it. And George, this is your love language right here. Especially at this age, I'm just impressed by it. The way Alex is talking, I'm like, this guy's going to be okay. So in 3B, you can invest anywhere from 0 % to 15%.

1:49:12You sound like a guy who really wants to invest. So maybe some people go, you're already at 15%. You want to keep it there, and then you want to save up a down payment on top of that. Is that what I'm hearing? Correct, sir. How long will it take to save up a down payment at your current income and margin? I guess the question is, what should my down payment be? I kind of heard that Dave says if you have 20%, you can get rid of that mortgage insurance. That's kind of the minimum. Yeah, I mean, just based on house prices, putting 20 % down could still leave you with too much of a mortgage. And so that's like a good starting point, depending on, I don't know what homes are in the Tampa area.

1:49:49I imagine they're not cheap. What are you thinking that it would cost you to buy a home? Right now, the way we're looking for a starter house, somewhere between$400 ,000 or$500 ,000. Okay. And what's your income? I'm making around$6 ,500 a month net, and that's going up as I grow my book of business. Fantastic. Are you solo, single? I have a girlfriend who I live with, hopefully getting married soon. That's the plan. So if you put down 20%, if you go at the rate that you're going and you save up$80 ,000 and put down 20%, your payment is still going to be upwards with everything included, HOA, home insurance, property tax, principles and interest, somewhere around$3 ,200, which is really half of your income.

1:50:31So you're probably going to have to put down more like 40 % or even 45 % depending on how long this takes you. Could you set aside$3 ,000 or$4 ,000 a month with your current margin and income? I definitely could. I guess the question would be, should I take away some of that 15 % for retirement? Or should I live on rice and beans so that I can save up that money? I mean, I don't think anything's on fire. I think if you, let's say you guys got engaged and then you were married and you rented for a while, for a year while continuing to save, I think that would put some urgency on it once you're at that phase.

1:51:08But for right now, if you can throw$3 ,000 a month, that's$36 ,000 a year,$72 ,000 after two years. over$100 ,000 after three years. So that puts you at, what, like 26 with six figures for a down payment? Correct. And my girlfriend's thinking about the same amount of money net as I am. Oh, boom. Excellent. So once you're married and combined incomes, now that$3 ,200 becomes a reasonable mortgage as long as you guys are both going to keep those jobs. Yeah, and just keep it in a high-yield savings account. But I also heard you mention earlier you were wondering how to allocate the money in your Roth IRA funds.

1:51:41Did I hear that? Yeah, that's correct. I currently have$3 ,000 in there. It's just sitting in the money market fund. I guess I'm just figuring out how I want to allocate it. I know the best thing to do is to do something, but I'm really just, you know, want to make the right decision. And then as that 15 % comes in, how am I going to keep dollar cost averaging across that portfolio? I love it. Well, one way to do it is just automate the investment. So automate whatever the amount is beyond your 401k. If you have a Roth or a match, I would do that first with your employer. But if you have the leftover money in that 15%, go to the Roth IRA, automate it.

1:52:15We recommend four types of mutual funds split across basically large cap, mid cap, small cap, and international. And that'll help diversify. Some people go all in on the small cap. They want the aggressive growth. Well, that's a roller coaster. It is. That's a roll of the dice. Some people go all in on the large cap. And so if you look at like an S &P 500 index fund, it's mostly large cap companies with some mid cap. So that's a great start. If you do nothing else, a broad-based index fund will do the trick. But splitting across those four mutual fund types will definitely add to the diversity.

1:52:46Because we saw this when the U.S. market went down, the international market went up. And so it helps just balance the portfolio over the long term. So if you're doing it that way, I mean, you can't go wrong with an index fund. But if you split it across those four mutual funds, you might find yourself sometimes beating the market or at least being a little more balanced over the long haul. What you don't want to do is single stocks, target date funds, or bonds. Those are the ones to avoid. Yes, I love that. I think we covered it. That was great. And you know what? I'm going to send him a free ticket to Investing Essentials.

1:53:17There you go, George. Boom. Okay. Alex, hang on the line. We're going to get you a virtual ticket to that event. It's September 1st and 2nd. Dave Ramsey and I are going to walk through his wealth building playbook, talking about investing in real estate as well, wealth planning for the long haul. I think that's going to give you a lot of confidence as you move forward. I love it. I love it. I love it. All right. All this talk about money, George. Let's go to a question that we have from our Ramsey Baby Steps community over there on Facebook. If you haven't checked it out and you want some extra support, we have a really great active group of folks.

1:53:48I go in there for fun. That's my entertainment on the weekend. Just reading up on the posts in there, the drama, the joy, the celebration, the wins. It's better than Netflix. 100%. Wow. So we have Jackson, who is from the Ramsey Baby Steps community. and he says, okay, George, if banks are FDIC insured up to$250 ,000, where do you put the rest of your money? Should you split it into multiple bank accounts with no more than 250 ,000 in each? Very good question. This is a fun question. Yeah, it's a good note that if you have your money with an FDIC insured bank or if it's credit union, that's the NCUA, that's that equivalent of that, you're insured up to 250 ,000.

1:54:26If the bank goes under, the government says, we got you. So the good news is if you're married and you've got a joint account, that doubles. So now you're at$500 ,000, which is a good problem to have if you're sitting there with$500 ,000 in cash and savings. So yes, you can open a different high yield savings account with a different bank. Fairwinds is a great one if you want to add one to the mix to get more. But the key is you want to make sure that it's per, let me see here, it's per$250 ,000 per account. So that's a good... You could have multiple accounts under the same bank umbrella. Yes.

1:55:01So categories would be single accounts versus joint accounts, business accounts. So you want to have that different account type. And splitting across different banks, if you get to that point, is a great option if you're not married. The real question is why you got so much money tied up in a bank? I wouldn't hang on to it for too long. Invest that money.

1:55:37We'll be right back.

1:55:57duck. Get the books, assessments, and more that have helped millions take control of their money, get out of debt, and finally breathe again. Deals change daily, and once they're gone, they're gone. Visit RamseySolutions.com slash store before these deals disappear.

1:56:25our ramsay show scripture and quote of the day hebrews 6 11 and we desire that each one of you show the same diligence to the full assurance of hope until the very end lilly tomlin said the road to success is always under construction. Sounds like 65. All right. I know it. That's an interstate for everyone that's wondering. What does that mean? The age of 65? No, 65, Highway 65. I feel like there's always something going on and they need to widen it by where I live. All right. Chris is in Eugene, Oregon. Chris, how can we help? Yes, I was wondering about the step two and if I should go ahead, I owe$1 ,200 on a credit card.

1:57:11Would I go ahead and pay that off with Baby Step 1? How much do you currently have in cash? I have about$1 ,000 in extra saved up. Over the$1 ,000? That would be my, no. You have$1 ,000 total? Yes. Okay, so we'll call that Baby Step 1. And let's call that baby step one. And you need to keep that money. That's the first foundational step that we teach. You need to have that money. That is your emergency fund for things that come up that are completely unexpected, completely necessary, and really have a time factor on it that need to be done. Very urgent. The credit cards, although they're urgent and they're important, it's not an emergency.

1:57:56I'd rather you use your month-to-month cash to pay those off. How much money do you bring in every month? I am on disability and I get about, well,$4 ,000 a month. Okay. And how much, what is it, when you look at your budget, if you have an every dollar budget, how much margin do you have after you've paid for all the things that fall into your cost of living? I haven't done that yet. Okay. I'm doing this without, I'm on your website looking at the books now, but I've already established an emergency fund. Fantastic. Well, we'll spare you the research. We're going to hook you up with our EveryDollar budgeting app, the premium version.

1:58:39You can connect your bank to it. It's got all the paycheck planning features. And once you do that and see that margin, that'll give you the real math of how long it's going to take to pay off your$1 ,200 in credit card debt. Do you just have one credit card or are there multiple debts? No, I have one other credit card that's at almost$9 ,000, and I have a car payment. Okay, what's left on the car? About three years. What's the balance? I'm not sure my wife is taking care of that, but both of our names are on the car. Does your wife bring in income, Chris? Yes. How much is that? I'm not sure. Okay.

1:59:23Do you guys have separate finances? Yes, we do. Is that for an intended reason? Um...

1:59:35The reason I ask is because this plan is a whole lot easier and a whole lot more fun when you have combined shared income, shared goals. You're going to knock this debt out so much faster if you bring in her income into the mix. So she just paid off one of our big personal loans, but she did want to start doing. she asked me about an app to use, and that's where I was looking at the financial planner. Okay. Yeah, I want to reiterate what George said. We can help you today, but when we try to solve problems around here, we try to solve them at the root. Whenever we do surface level stuff, they kind of pop up in new ways over and over again.

2:00:23So solving this problem of debt at the root would cause you to also have to look at how you handle money in your marriage at the root. And so that's why George went to that. In the meantime, I would love just for your own awareness, at the very least, I would love for you to at least find out what does your wife earn? Like what's her month to month income? What's her financial life look like? And I think that that would probably be the first step in that discovery in your marriage is you should, at the very least, you should both know what each other earns. So I would start there. And if she has debts, do you know her whole financial picture on that side?

2:01:02Not everything, but I do have some idea. She's more likely to go to a cash checking place when she runs into trouble. Okay. That's a scary habit for sure. How long have you guys been married? oh how much 10 years 10 years um like 20 oh 20 wow okay well i say that because on a call today a guy called in and said hey we found out my wife has 40 grand in credit card debt that i didn't know about and so that's where things like this can pop up so as you're trying to clean up a mess you realize oh we got a whole other mess over here so if you guys can combine your lives, look at all the debts, do the debt snowball together, combining incomes, combining everything, this whole process is going to be so much easier and it's going to strengthen your marriage.

2:01:53Yeah. And I want to say this. I don't want it to sound like a lecture by any means. I just want the best for you. And part of marriage, and I think you know this, Chris, part of the reason that we say yes to another individual is because we want to build something together. that's one of the joys of marriage is you kind of get to lock arms and plan a vision for your future and that's really exciting and then as you take steps towards what that vision is it becomes more and more exciting and to george's point you gain more in intimacy and in trust and all of these wonderful kind of things these deposits get made into your marriage as you go down that line and i would really love for you to experience that side of marriage with your spouse so that's kind of why we're really, really pushing on that.

2:02:40On your question today, which is, here's my list of debts. What can I do? I think the best place for you to start today is with the baby steps. And the truth is, your wife may never want to combine money. And I would hate for that to stop you from doing the baby steps, because the truth is you could do it today. It's just going to take longer. And you've got baby step one locked in, but baby step two, we want you to do that, obviously paying off all of your consumer debt, everything but the mortgage, and you're going to list them smallest to largest. We call that the debt snowball. And that's what you're going to do, smallest to largest by balance.

2:03:17And you're going to take any extra money that you have after your minimum expenses are paid, after all of your minimums are paid, and you're going to put that margin on the smallest debt until you can pay it off. Now, you mentioned being on disability. Does that preclude you from really doing any work of any sort? Or do you think that there's things that you could do to pick up some extra income? I could probably help out some friends or something like that, but if it has to do with a W-2, I could lose my disability. It's military-related. Okay. And do you feel really confident? Because here's the thing that you have to balance with this, and I bring this up to everybody who's on disability.

2:03:57If you feel completely confident that there's no way in this world that you could earn more than$4 ,000 a month and your current state of health, then I will support you. But if you think, I would hate for you to not go and be your fullest self because you're afraid to lose. Because if you go and be your fullest self and you lose it, it's because you're out earning it. And that's actually a positive. It's a good problem to have. Now we're bringing in six grand a month instead of four. So that's why we ask. But I do think, for an example, if you bring in four grand and your expenses are, say,$2 ,800, covers everything, that means you should have$1 ,200 in margin and boom, you just knocked out that first credit card.

2:04:37Now you free up that payment. Now we can apply all of the margin plus that new payment that you freed up to the next smallest debt. So that's how the debt snowball works. It builds on itself. You get the momentum and that is the key. That's how millions have actually gotten out of debt. And it's as simple as that. And it's as hard as that because you've got to create the margin. That's no easy task. And that's where all the side hustles and the things that we've been talking about for the last couple of hours fall into play. But then as most of you know, and I'll go ahead and go through it because we haven't done it this show.

2:05:04After you've paid off all of your debt in baby step two, now we're going on to baby step three. We're building up three to six months of expenses still at intensity, right? We're still going fast through here. From there, once that's completed, we do the next three steps together simultaneously. Four, five, and six happen together. Number four is you're investing 15 % of your gross income every single month into good growth stock mutual funds. George talked about it in the previous call. At the same time, if you have children, you're going to put extra money at your discretion towards 529s to help pay for their kids' college fund.

2:05:36And then any extra money above that, yeah, we want to start putting extra payments, extra monetary amount on the mortgage. And once that's done, we're in baby step seven, the house is paid off, kids' college is funded. Now we're just living and giving, guys. We can invest more than 15%. We can really build wealth. We can really enjoy life. Take that vacation. Have a good time. All right, guys. All right, George, that puts this hour in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.