"We're In $580k Of Debt At This Point"

28:44We took care of the credit card debt when my husband started listing to Dave Ramsey. Good. So no car loan, no lease, no student loan, none of that? No. I didn't go to college, neither did he, and he paid his car off with cash. Good for you guys. How much do you guys make a year? A year? Let me see. Just ballpark. $45 ,000. $45 ,000 a year? Okay. Okay. And is he just working? Are you home? Yeah, I'm a stay-at-home mom and he's working. Okay. Esmeralda, yeah, I mean, it doesn't bother. No, I mean, because that's all you guys are praising. You're basically doing flights. You're going to stay with family, right?

29:27You're not going to have hotel costs or anything. No, we're staying with family. Yeah. What does the birthday consist of? Right now, we're paying, like, a car rental. Okay. And I was going to purchase a mini bounce house for her with a ball pit and cars parking. So when we drive to the airport, we can leave the car parked there because we don't have family out here that could drive us. Sure, sure. Yeah, I mean, I would. And that came up to$1 ,000. Okay, so I would put this in the umbrella of like we're going to go see family versus making it a first birthday kind of thing. because that almost is going to add more expenses from the emotional side.

30:13We could easily climb to two grand out of just, let's just have fun and let's get the bounce house. I would just say we want to visit our family. So either you can do that now with these plane tickets. You've bought them already. And so go enjoy yourselves. Stay on a strict budget or just say let's pause and maybe go this summer when we feel like we have more savings in the bank.

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32:20the ramsey show question of the day is sponsored by why refi if defaulted private student loans have taken over your life why refi can help you breathe again with a low fixed rate plan that fits your budget. Visit yrefi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Not available in all states. Today's question comes from Kathy in Utah. I'm 70 years old and considering buying a house with a 15-year loan. If I pass away before the term of the loan is completed, what happens to the debt? I'm not married and don't have kids. Why shouldn't I borrow $500 ,000 knowing I may die before it's paid off.

33:02Well, that's the spirit, Kathy. I mean, one, just integrity, I guess. That's a good start, character. But the point of your question, if I pass away before the term's completed, what happens to the debt? Well, your estate, quote unquote, would pay for it, which is any assets that you own, the lender would go after those first to try to pay down the debt as much as they could. And then I guess they would just take on the debt and move on. Because that is the understanding that when you die, your debt does not necessarily die with you to a point it does, but they will, yes, factor in all the assets you have.

33:43So if you did die with credit card debt, car loan, all the things, then you technically have owed that money. So if you have any money to your name or any assets, yes, they are going to deplete those in order to pay the debt. And then whatever's remaining will go to family of your estate. But again, you're not married. The bank owns the house, so they'll sell the house for what they can get for it, use that money to pay off the mortgage. And so - Yeah, that's what they would do. The bank just got a free house. So I think they might have got the better end of the deal. But - Yeah. But also, Kathy, what if you keep living?

34:19I mean, you're renting at 70. I don't know anything else about your financial situation. Do you have a million dollars in cash? Are you broke? We have no idea. But buying a house, knowing that you could live another 20 or 30 years is a good bet. And so if you are in a financial spot to do it, I would do it. All right. Let's head to Dorothy in Manchester, New Hampshire. Hi, Dorothy. Hi, how are you? Hi, we're doing great. How can we help today? I need to know if I should do an additional$20 ,000 on a HELOC to pay off my car, which is at 12%, and I owe$23 ,000, and I have one credit card at$1 ,800 at 18%.

35:08but my HELOC is currently, I have$20 ,000 out on it because I had to have an emergency furnace, and it's only 6%. But long story short, I went through a bad divorce. I was homeless. Oh, my gosh. I'm sorry. Lost everything. My ex stole all of our joint bank account, left me with$3. And I worked for the government for 20 years, and I had to retire, move out of town. But the new job that I have is lower pay. But since 2019, I've been trying to rebuild. And like I said, I got a house. Well, I bought a condo before the housing market. I have$100 ,000 in equity. I bought it for$162 ,000. It's worth now over$262 ,000.

36:09How much are you making now, Dorothy, with your job? $27 an hour. Okay. And what does that come out to, like per month? What are you bringing home? Like$3 ,000? $4 ,200. Okay. $4 ,200, okay. Yep, yep. And that's enough to cover all your bills and cover the minimum debt payments? um what i have is my loan is 1 223 my hoa is 300 my car payment is 464 insurance is 250 my lights are 100 heat 100 um tv internet 128 yes my phone is 45 so what what margin do you have left after all of that um i've been making all my payments and i've been also making my $157 HELOC and I've been putting$30 a week toward my principal of my mortgage every week because$30 is a cup of coffee or whatever and that's all that I have is just that credit card and my car payment.

37:18Okay, so what I would say Dorothy the secret of getting out of debt is not moving debt around and trying to get a better interest rate, the secret is you So honestly, you kind of getting into this next year, which you've already made incredible progress. Like the story you told us at the beginning of the call of, you know, being homeless. I mean, like, man, you're still standing with shelter is a miracle. You have made huge strides. So, no, I would not. I was driving four hours to work and back. Yeah. Yeah. That's a long time. So what I would say is the magic of getting out of debt, if there is, quote unquote, it's you.

37:54So you deciding, hey, I'm going to cut where I can. I may even take on an extra job. You have the work ethic. And I'm going to clean this debt up. When you move it around interest rate wise, over the long term, if you had this for 15, 16 years, then yeah, we could probably talk about it. But you can actually, you know, the short term life of this debt, because you're going to pay it off so quickly, I wouldn't fool with it. I wouldn't fool moving it around. And I think it kind of gives this false sense of security of, oh gosh, it just feels better. that all my debt's in one place or that it's a better interest rate here and there.

38:28But again, that's not going to solve you getting out of debt. It's going to be you. It didn't change any of the behavior. We just moved it around and put it in a different junk closet. And the other thing is you're moving from unsecured debt to a secured debt. That home is collateral. So it puts you at even further risk. And so like Rachel said, the solution is you. And that means we got to get on a written plan. We got to get on a budget. We're going to save up $1 ,000 starter emergency fund to stop those ankle biter emergencies. You have that in place. Do you have any other savings? No. Okay.

38:58What is the car worth? You owe$23 on it. It's brand new. It's a 2025. Wow. Well, that might be something you could sell for a pretty penny. Yes, 100%. Could you sell it for almost what you got for it? Actually, I got it three months ago. So, yeah, I probably could. What I'm seeing is that clears your debt journey in half. Yeah, because, see, then I could put everything of that car payment and so forth toward the emergency of the HELOC for my furnace and stuff. You'll still need another car to drive. So you'll need to save up a little bit of money. The new job that I have, yeah. The new job that I have, I live two minutes away versus four hours because, like I said, I was driving from Vermont to Portland, Maine every single day working my eight hours and going back home.

39:58Gosh, well, that's not a sustaining life, so I'm so glad that it's close. So you're saying you could go without a car for a short season? i could actually go with i don't even fill my car maybe once a month maybe once and a half and i'm just curious what caused you what caused you to buy it um because of fact justy i wanted to have a forever car where i pay this off and that would be it gotcha because i don't believe in leasing or anything like that and um you know where i only had just my credit card but then that was it the furnace happened up well let me tell you an 8 year old 10 year old Honda Civic that'll last you another 10 years while you save on the side and then you could upgrade that's a real forever car I think that'll last you I wouldn't put the pressure on your next car to be a forever car I really wouldn't I think that that causes this debt and this$500 payment a month it's easy to justify when you go well I'm gonna pay it off and I'll have it forever that's how we make bad decisions financially and then when you're in the tactical side of your month and you're like oh crap look at all this money going and look at how much debt now I've accumulated.

41:03So, um, so yeah, I would try to get out of this car, Dorothy, for sure. And, and it's bumping up against, we have a rule that, you know, you should, your cars should not be, um, more than half of your annual take-home pay. And it's, and yours is, yours is there. So$25 ,000 car making 50 grand. Yeah. You're right on that edge. So if I were you, I would, yep. I'd get rid of it. Go buy something new used if you need it, but maybe for a season, like you said, if you really can go without it for a few months, save that car payment. You free up 500 bucks, throw another thousand on top of that. You'll be debt free in 18 months.

41:38100%. Yeah. Yeah. There's some, there's some moves you can make here, Dorothy, to really change it, but I wouldn't move the debt around in the HELOC. I would make some big changes like what you're talking about. And I know you can because you have in your life and you're incredible. So we are cheering you on.

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43:28Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm Rachel Cruz, hosting this hour with best-selling author and my co-host of Smart Money Happy Hour, George Camel. Honored to be here. We are here to take your calls. It's a little different than Smart Money Happy Hour. Different vibe. Yeah. We don't take calls on Smart Money, so the vibe is generally a little more positive and upbeat because people aren't going through crisis on that show. But we are. That's why we're here, though, for this show to help you with your problems, to celebrate the victories. So give us a call at 888-825-5225.

44:02All right. To kick us off this hour in Salt Lake City, we have Phil. Hi, Phil. Welcome to the show. Hi. Thanks for having me. Absolutely. How can we help today? Well, it's recently come to my attention that my oldest brother has been stealing money from my parents. Oh, gosh. What started off as borrowing gas money has turned into lying his way into a massive car loan in my mom's name, stealing credit cards without my parents' knowledge. And so my parents have more than$100 ,000 in debt now, and that's not even including their mortgage. They're both almost in their 70s. My mom's on disability. My dad has$40 ,000 in his 401k, and they think that's a lot.

44:45And I just don't see a way that he's ever going to be able to retire. And I understand that me and my wife are not financially responsible for them, but I'm trying to walk through this with them. But I'm no expert. And every time I learn more about their financial situation, I see less and less of a solution other than bankruptcy. And so what should I tell them to do? Yeah. So two different paths. I mean, if you're going to go like full on, he has stolen. Did he did he forge signatures like for the car loan? How did that happen? so if from what i could gather it seems like he's lying to my mom on what she is signing and then gets her to sign something without her reading what it actually is well crap because i was gonna say took this to court they're like ma 'am that's your signature right and she's like yeah but i just didn't read the document and that's her fault i mean to a degree i mean do you know i'm saying like there's a level of responsibility that she did not take i mean it's really elder abuse is what this is that's probably your best case exactly is fraud Yeah, if they would take legal action, that's what it would be.

45:51But I'm scared for, I don't know. Yeah, I mean, first I would freeze their credit yesterday so that no more accounts can be opened. Yeah, I already did that. I already did all that. I would also contact every lender on that credit report and say, hey, this was fraud. This is elder abuse. This guy took out all of these loans without the permission. You know, he basically coaxed them into it. And so then we go from there. I mean, do they still have contact with this brother? uh do they know about this they they know about it um my mom just had a stroke last week so this is all adding to it so my god this dude is like the scumburger of all scumburgers to this to his own parents yeah and yeah and and we're trying to find him right now he's he's been on crystal meth before so i'm not shocked if this is uh having that involved again um so uh we're trying to find him and figure that out because he has the truck he has there's also an rv that has 250 000 on it that i think is in his dad's name that's it's a whole ordeal so i just and i'm worried that my parents aren't going to file any kind of charges yeah they may not it's hard to yeah how do you do that to your firstborn son you know i get that so well i think they need to understand if they don't pursue this then they might just be on the hook with this for the rest of their life yeah that's the scary part and so and it's a loan phil right so the problem is too if yeah so if he stops paying and that truck gets repoed and all that's in your mom's name i mean it'll all be on her they're gonna come after her for it is he even making the payments uh he's not made a single payment no so i mean are there have they repoed this i guess you don't even know he he does still uh he does still have the truck not for long i mean yeah i don't know i don't know how long he's gonna have it for but like i'd call the repo man myself on it yeah and if you can find him so he's he disappeared well yeah he turned off all of his location services once he figured out that i knew you're on to him have you filed a police report i believe i told my mom that she needs to.

48:03I don't know that she has yet. I actually found his location this morning through his daughter. And so I'm trying to figure out what I need to do. So the hard position you're in, and correct me if I'm wrong, it sounds like you are doing all the proactive work in this situation. You're worrying about your parents. You're trying to find your brother. You're telling your parents what they should do. You're kind of the one heading up all of this and none of this is your issue. I understand it's your parents and you love them. So like, I'm just saying from a top tier perspective, the hard place that's going to happen for you, Phil, is you're going to have a wonderful, logical game plan because you're a smart, reasonable person.

48:45And you're going to say, mom and dad, you need to do A, B, C, and D. Brother, they're coming after you for these charge and this and this and this is going to happen. You're going to have a plan laid out of what should be happening. And in any common sense scenario. And the problem is, if they choose not to move forward, that's their fault. So, you know, that's their decision. It's not yours. And you can't make them do something or even convince them to change their minds. So, I think it's going to be a discouraging situation for you, Phil, here in the next few months, because I think you're going to realize my parents are probably naive because he's been on drugs and still are signing papers for him, right I mean like I would be going through a you know going through like oh my gosh so detailed if if that was me but uh they need to be as angry as we are and they're not and they're just like well I guess it is what it is like what is their response right now what's their attitude well I mean my mom feels horrible that she didn't see this coming sort of thing but she doesn't really have the health to to take this on and my dad has not done anything financial in the their entire marriage.

49:56He just doesn't know anything about it. He doesn't want to know anything about it. And I'm like, I know that I'm going to have to, you know, that eventually most of the time they sign off their finances to their children to take care of them. But I'm like, they haven't done that for me yet. So I can't, I can't do anything about it. So your dad is just sitting there. Well, I don't know. I don't know that my dad even knows to the extent of what, how much debt he has. He just goes to work, makes a paycheck and comes home. That's all he ever does. Yeah. Yeah. My mom has always handled the finances.

50:30And now she's she's learned about some of this stuff in the past and hasn't told my dad about it. And now it's blown up to way more than I thought it would ever be. Yeah. How much debt are they in personally, besides all the stuff that your brother brought in? I would say not including their mortgage. They probably have anywhere from like 15 to 20 ,000. And that's a car loan and various credit cards. Okay. And how much are they making a year? I don't know exactly. Yeah. But my guess would be anywhere from like 60 to 70 ,000 because it's just my dad and my mom is on disability. Doesn't get much from that.

51:08Yeah. If you're going to be involved, you're going to have to get financial power of attorney to actually make any moves. And that might be wise based on how things have been going with your dad not being involved, mom had the stroke. I think now's the time to have some really hard conversations about the future. Yeah. So I think Phil, I mean, cause I, I, I feel that burden right in the sense of like, you, you see what's going on and they don't. So I almost would just have a meeting, sit them both down and tell them, Hey, this is exactly what the situation is. I need to know numbers that I want to be able to help you and let's make a game plan.

51:38And then it would be up to them to be the ones executing it unless they want your help in doing so. But, um, I mean, I would give a latch, you know, a last ditch effort to try to do what I can to help them see and know what's going on. But unless they give you the power to do something, they're going to have to be the ones that, you know, make those decisions. And I don't know if they will. And that's hard. It's very, very hard.

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53:55All right, let's head to Dave in Charlotte, North Carolina. Hi, Dave. Welcome to the show. Hi, thanks for taking my call. Yes, absolutely. How can we help today? So my wife and I are planning on retiring between three and five years. And I just feel with our total portfolio that we're house heavy. We always had planned on downsizing once we retired. But I'm wondering if you think we should do that now and then invest that extra money. Okay. Yeah. How much is the house worth? $650. Okay. And how much mortgage do you have left on it? It's paid off. It's paid off. Okay. And how much do you guys have in retirement?

54:41Well, it's$650 right now. $650. Okay. And how old will you guys be in five years? I will be 67. She'll be 65. Okay. What's your game plan currently to retire? Because the house obviously is not going to produce income in retirement. It's great to have it paid off, and I'm proud of you guys for doing that. But what's your current game plan, regardless of what happens with the house?

55:09Where we're going to get our funds from? Yeah. Well, from the 650, which will grow, plus I have a small pension and then our Social Security. Okay. So between pension, Social Security, and then on top of that, you'll dip whatever else you need, you can dip into that retirement nest egg. Right. Okay. And you're saying, do you have too much tied up in the house? Are you guys wanting to downsize anyways? Yeah, we always planned on downsizing, and then maybe we could clear$600 on this, and I know I can find something for$400, so that gives us$200 ,000. To throw in there. That would give me some cushion, and so I would be doing that if you're going, hey, I don't know that we can make it for the rest of our life with this nest egg plus the pension and Social Security.

55:57I think it would be wise to sell, use any profits to invest to then create a little mini nest egg on its own. Do it now versus wait until we retire? I mean, you can wait. You'll – either way, the house is appreciating, right, as time goes on. Your nest egg is appreciating, and so it's okay to wait. This is not – I wouldn't say this is on fire, but the sooner you do it, the more – the less variables you'll have. You'll kind of have more on paper to know when you can retire. Sure. Okay, great. That makes sense. Yeah. Dave, how much will you guys be getting in a month with your pension and Social Security?

56:36At that point,$4 ,000,$52 ,000,$62 ,000, about$7 ,000. Okay. And how much do you guys need to live off of per month? I think we figured$84 ,000, so that would be about that. Okay. Yeah, yeah, yeah. Well, that's great. Yeah, I was going to say because, you know, when you do just the quick math, Let's say you added$200 ,000 to that. That would be$850 ,000. And you just think every seven years it doubles if you don't touch it, which you guys will be retiring in five years. So it's a little less than that. But, I mean, you'll have upwards over a million for sure by the time you guys hit retirement age.

57:13And that and a paid off house. If you're taking out, you know, your$18 ,000 a year to float the difference, you're talking 1 % of your nest egg. And so it's going to grow in perpetuity. You know, the balance will continue to grow. Yeah, you guys will be good. I'm not concerned about that at all with your current plan. Right. And if you love the house, you could probably stay in it and still make this work. There just might be a few sacrifices down the line, but I think you guys will figure that out. The pension and Social Security, that's awesome. For sure. Absolutely. Thanks, Dave, for the call.

57:45And well done. Well done. I mean, yeah, right there. Baby Steps millionaires, you know, they did it. You can retire. It's awesome. With a paid-for house and some money in the bank. So great. All right, let's head to Isabel in Spokane, Washington. Hi, Isabel. Hi, guys. Hello. How can we help today? My question for you guys is I'm on baby step number two, and I have about$6 ,900 in credit card debt and$9 ,000 on my car loan. And I'm wondering if I should take all of my investments in stocks, which total to be about$6 ,800 and pay off my credit card, knowing that I don't have any retirement at this moment.

58:28What are the stocks? Are they in like a 401k or your Roth or is it just single stocks out there, the 6 ,800? Just single stocks that total up to 6 ,800. Okay. Yes, I would. I would cash those out because how old are you? I'm 25. Okay. Yeah, you have plenty of time for retirement and the $6 ,800 is going to be better spent value-wise by getting you out of a hole financially and helping pay off this debt. And then you'll be building up an emergency fund. And then, Isabel, you'll start investing 15 % of your income, which I think you're going to be able to do here in the next 18 months, two years.

59:05What's left on the car loan? Just under$9 ,000. Okay. What do you make? $16 ,000. I make roughly$63 ,000 a year. Amazing. Yeah, so after you cash this out, you'll have to pay some taxes on some of it. But, you know, let's say you, you know, could pay it off and you're around$10 ,000. You know, you can make it a goal to pay off that$10 ,000 in, golly, five months. Yeah. You know, four months. Get aggressive. Get an extra job. Pay it off. Then build up an emergency fund. Are you single? I am. Okay, yeah. So I would just do a three-month emergency fund. whatever your expenses are just multiply it by three and just say yep that's my emergency fund and then when you start investing is about if you start investing by the time you're 27 28 um it's going to be it's going to be unbelievable let's say um let's say pretend that yeah george is getting his calculator for us so let's just say you stayed at 60 63 000 a year isabel which you won't your income will grow over time so you're making an amazing income right now that's going to be, what is it?

1:00:17$6 ,000. That's$9 ,400 a year,$787 per month is what you would be investing. Let's say by Christmas. If you can get through this plan, get rid of all the debt, get the emergency fund, then you can begin investing. You have zero in retirement, right? Correct. All right. Get ready for this. Let's go. Should we go 26 to 60? When do you turn 26? In August. Perfect. Okay. So you'll be 26. So 26 to 66, you would have$5 million. and that's based on a 10 % return which is what we've seen in the stock market for the last several decades okay so you'll have 5 million bucks Isabel you'll be great and if you want to retire at 62 you'll have 3.3 million and that's if your income doesn't go up that's if you never get a raise that's crazy like that's so wild and then you're going to you know maybe meet someone you're going to double the income you know what I mean you just keep it going as life goes Get a house, get the house paid off, invest even more.

1:01:15So you're going to be a multimillionaire if you stop playing the game of a broken financial system, which is I got to get a credit card to get a credit score. Whoops, I carried a credit card balance. Well, I guess I need a nice car. I have a big girl job now. I got a payment to go along with that. If you can just put blinders on and not care what anyone else thinks about your financial plan, you will be unbelievably wealthy. Awesome. Well, thank you, guys. Absolutely. Well done. And yeah, that's always an encouraging call when you get someone in their early 20s and you're like, look. You still have so much time.

1:01:47You have so much time. I mean, seriously, like it is wild. And not that, you know, those of you in your, you know, 60s and 70s, like start now, right? If you've not started, like there's always the point to start. But especially young people out there in your 20s, man, the idea of compound interest is insane. Like the amount of money that actually went to principal. Does it say that, George? It shows you how much she contributed. So we'll go with our example, 26 to 66. So a 40 year period of you investing, that's$787 a month. In that, she would contribute$377 ,000. That's how much of her own dollars went in there.

1:02:23And the growth was$4.6 million on top of that. So that's what's crazy. So the earlier you start, I mean, honestly, it is wild, but it does. Over 90 % of that nest egg was her just investing and leaving it alone. Yes. And George, you know what? It's the consistency. Month after month, regardless, we are doing this. We're not letting up. It is just a rhythm of life now when you get to that point. It's just part of it. You don't stop. And in that, you know, you don't get caught up, I don't think, in all the lifestyle creep and all the things. You know what I mean? Like, there's so many things that can take you off this plan that look shiny and fun and exciting.

1:03:00And you can still have a great life while doing this. but it's just having the maturity to say, you know what, I'm going to put some things in place to assure that when I am in my 60s, I'm taken care of and by me, not by the government or waiting on something else that you do it and you have the power. Everyone out there, you have the power to do it.

1:03:32Thank you.

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1:04:56the fun of uh doing a live show is your co-host may spontaneously uh jump in the uh control room and make faces and all of it and then you say you know what actually get in the studio Oh, you're telling my secret. Welcome, our special guest and correspondent, Ken Coleman. Yes, to be here for this segment. And it's actually a perfect segment for you because something hit the news recently that we were going to talk about. In the news. Yes. CBSnews.com reports that Trump has floated a 10 % credit card interest rate cap. So here's what this could mean for consumers. So Trump came out and basically was like, hey.

1:05:37On Truth Social. So this was not like an executive order. This is just him on social media making a post. And he's saying credit card companies should just max their interest rates at 10 percent because now we can go – I mean, as high as 36 percent, right? So it's in the 20s. I mean, like – I think it averages 25 percent APR right now. Yeah, so it is pretty wild where it is. All right. So here's what this could do. Vanderbilt Research found that a 10 percent cap would save Americans$100 billion a year in interest. I mean, think about that. The nation is$1.2 trillion in credit card debt. That's wild.

1:06:11So 10 % means the credit card companies will only make$120 million off consumers this year from the interest alone. That's not swipe fees. That's not annual fees. So let's do the math. You've got a$5 ,000 balance. You'd pay about$42 a month in interest at 10%. But at 24%, which is close to the average,$100 a month. So that really would help a lot of Americans who are struggling with this credit card debt. Yeah, but the reality is— Go to reality now. But reality is he can't do that. You can't just truth it into existence, nor should he. This is when presidents decide in free market economies to start doing things like this and forcing free markets to do things.

1:06:54You get Venezuela, you get Cuba. So everybody just needs to understand this all sounds good until you look at the constitutionality of it. Is it a free market policy? That's first point. But I'll tell you what came to mind when I first saw this. As you guys know, I play a lot of pickleball, play for three hours tonight. Thankfully, my knees are in good shape. But the knee analogy came to mind when I heard this. If someone has a torn meniscus, you can get away with not having surgery, and you might put a knee brace on. And the knee brace is somewhat helpful. So, George, you just laid out beautifully how 10 % at a cap would be very helpful.

1:07:34I don't want to gloss over people that are hurting right now. I don't want to be insensitive. Yeah. So it's like a knee brace. Yeah. But here's the thing. The meniscus isn't going to heal. The knee brace just helps a little bit. It doesn't solve the problem. And this doesn't solve the problem, which is Americans have a taste for debt. And it's not going to solve the problems. The debt snowball solves the problem. The baby steps solve the problem. Lowering your interest rate doesn't solve the problem. How many times do we get a call? Should I move my debt around? And we so for that reason, this feels like politics to me.

1:08:10And he has every right to tweet or truth or whatever he wants to do. It's I think it's posturing. And I did this when Biden was president. I don't care who the party is. I'm going to call strikes. I'm going to call balls. And this isn't going to solve the credit debt problem. Yeah, it's just not a good reminder. This is for one year. So this cap would exist for one year. So then what? It's not law. It's not even executive order. He can't do that. It would have to be Congress rewriting federal law. There'd have to be a bill in place. Everyone has to agree. Which I'm for that if Congress does it.

1:08:40And we're talking about banks, which make billions and billions of dollars. They're going to find a way to get their money. Well, what they'll do is raise annual fees. They'll fee you to death. Yes. And they'll make their money elsewhere. Banks are not like, oh, you're right. You know what? That would help people 10%. We didn't even think about that. Thank you, Trump. You're so right, Rachel. You know, they make so much money. They have the best lobbyists in the world. Do you think that legislation is going to pass? No. And of course, here's the best part. JP Morgan, CFO, is saying, this is going to hurt people, guys.

1:09:11We can't do this. It's going to hurt people who need credit the most. Because what this means is tighter lending. These credit card companies aren't going to lend to the subprime borrowers. And so he's saying it's going to actually hurt everyone. Oh, you two are going to love this one. You're going to love this one. I saw this on Twitter. Yeah. By the way, I refuse to call it X. Thank you. somebody came out the day that this was this came out i saw this they were like well what people don't realize is is if they lower that interest rate how where do you think all the points come from it comes which is right by the way yes the point system is built on people who aren't paying their debt off and every month they're paying 22 and that's where the miles and what's going to happen they're going to slash rewards that's devalue your points guys the banks are smarter than you there's no free lunch you've ever heard that phrase yeah yes there's no free lunch yeah The only way to make this better is to pay off the debt, like we preach.

1:10:03Is to get rid of it. It's so true. Here's a fun fact. Credit card rates are protected under federal law. It's called National Bank Act. It's locked in by a Supreme Court ruling from 1978. And what this does, the ruling, this is crazy. It lets banks charge whatever rate is allowed in the state they're based in. So guess where credit card companies go? Delaware and South Dakota, where there are no rate caps. So they can just go. It's like a loophole where they go. Interesting. We can charge 36 percent. So Delaware and South Dakota are the only two states in the country where there are no caps. No rate caps.

1:10:35And that's where all of the credit cards— And the president can't override that without Congress rewriting federal law. And so there's no bill right now, which means it's just a thought. And the reason that passed in the 70s was, what, to give the free market and the banks to be able to have a free market economy? Do you know what he means? I do know what you mean. The reason I'm pausing is I don't want to misspeak. Yeah, yeah, yeah. Because I'd have to see— We'll have to look in. The historian. I always assume Ken honestly has any answer to any history. He's on history about that. Any legislation, I'm like.

1:11:05Well, in theory, I can say that this is where lobbying comes in. And the big banks convinced Congress. And, you know, I mean, that's why we call it lobbying. Okay, so here's another dumb question. If that is just platforming, if Trump really cannot do that by law to go in and do it, what causes him to come into the headlines and to throw it out there just to stir the pot? Same thing when he says and winks, winks and says he might run for a third term. He says whatever he wants to say. Well, I know. But he's a showman. And so that's part of it. But I'm just saying, was there something else stirring that he's like?

1:11:36Yeah. Yeah. The midterms. Going to be. The midterms. For the votes. OK. Let me tell you this. The number one buzzword in politics in America today. You guys know what it is? Tell us, Ken. Affordability. Oh, yeah. Both sides of the aisle. It is going to be the issue in the midterms. and and so presidents do this i don't begrudge him for it but that's why he did it sure by the way it was probably three in the morning he probably just had a filet-o-fish sandwich you know brought to him by secret service the guy never sleeps yeah you know what i mean he's a nine hour and so he just gets on truth and he's like oh this is a good idea yeah let's stir some things up let's just see what happens what should be anyway this sounds good yeah and you know and i will say from my seat.

1:12:18The banks do screw people. But also, we have chosen as a country, as a consumer base to get into this amount of debt. Nobody tortures you and forces you to sign for the car loan or the credit card or whatever. We as adults, if you're over 18, have chosen to put your signature on something. That's true. I don't begrudge the banks. You know why? The banks are just like the guy in the kiosk in the mall where I'm walking by with my wife. He's like, hey! And you have every right to just pass by And I can ignore him or I can stop and get sucked into it and then let the whole spiel sell me on whatever it is he's selling.

1:12:54Now Ken's got a new face lotion all of a sudden. Right. There you go. I want to say this. I'm with you. A new key chain. But I'm validating your point. Banks aren't bad. Banks are in the business of making money. Yeah, but they do pry on people. They know the tactics. I agree. But I'm saying we, let's get some personal responsibility. Right, right. Which is, yeah, what I was saying. By the way, Trump threw out the 50-year mortgage, too. So he's just throwing stuff out there. Just to see what sticks. What was the math on that one that you did? It would be like a million dollars in interest or something.

1:13:24What was it? Yeah, well, you essentially never pay it off. The principal doesn't go down until you're 41 years into the mortgage. You're just paying interest. That's when more is going to principal and interest. 41 years into a 50-year mortgage. It's crazy. So, yeah, folks, I would say don't get your financial advice from presidents and or banks. Take away, I would pay my credit cards off today and cut them up. Versus waiting and hoping that maybe the rates will go down and so I'll hang on. The banks, they don't care about your financial piece. No. And that's fine. They make money off you. The politicians, they're not going to solve your debt problem.

1:13:57And the system is designed to keep you dependent on lenders and on lawmakers. So the best part is you don't have to be dependent. You can break free from the system and just say, I'm going to use my own money. What's in your wallet, George? A debit card. I thought you were going to say cash. And cash. It won't fit. Ken, thanks for jumping in last minute. You guys are the best. Thanks. Thank you.

1:14:21Thank you.

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1:17:03A little Sharon Ramsey snuck out there. Help ya. Rachel. Just a little help. Oh, you know, you can't take the accent out of the girl. You just can't take, well, or the girl. Whatever they say. Yeah, whatever that saying is. All right. Let's head to, is it Ali? Would you go Ali? Or Ali. Or Ali. In New York, New York. Yes. Hi, Ali. Welcome to the show. Thank you. Thank you for taking my call. Absolutely. How can we help today? I just have a simple question. I run a limiting company here in New York, and I have a lot of independent contractors. They work with me. They have their own vehicles. So I have right now only one driver that drives my car, which lowers my expenses.

1:17:50But the question I wanted to ask is, if it's okay for me to buy another vehicle and hire another driver, which is going to obviously add another car payment and the insurance and the driver's pay on my payroll. So that's the question I want to ask is, should I keep using the independent contractors or, you know, buy another vehicle and hire my own driver? Yeah, well, if you're going to go through the avenue of debt, oh, yeah, I would say, yeah, no. I would say you're not financially ready to do that because from a financial perspective, even with small business, we always say move at the speed of cash.

1:18:29if you have the cash in order to do it, if you have enough revenue, profits coming in that you know, okay, yes, I have the ability to pay someone full time, save up for a car, like all of this is gonna be streamlined, then yes, I would. Until then, I would not. But I think that could be a great, you know, next milestone for you. Because I do know, you know, the car service, you know, world in New York, I know it's, there's a lot of need out there, right? There's a lot of people that use car services. So I do think that your ability to make money is there. And I just wonder if you make it more of a goal than like an urgent implementing something quickly.

1:19:06Yeah, I mean, because I was doing the math, it's going to add at least, you know, 10 grand on my, you know, monthly, including the, you know, driver's pay and the car payment and the insurance. So$10 ,000 monthly is going to add. That's the expense for you? For one adding, yeah, because the vehicles we use is a Cadillac Escalade SUV. We provide a lot of high-end business executives. And we did around$1.1 million last year. Is that top line? Gross? Yeah, that was the top, yes. What do you take home from the business? Approximately$350 to$400. Oh, amazing. Okay, Ollie, hit me straight. Couldn't you save up and buy one of these in cash?

1:19:54maybe buy one used, get a deal, and then it's pure cash flow? Yeah, I mean, the one thing I think the only option I'm going to have to go to, as you just said, maybe I have to save money to buy the car because if I buy a used vehicle, what's going to happen is they won't give us the warranty, which is 150 ,000 mile warranty we normally get when we get a new vehicle. Because, you know, we run these cars for a long time. We put a lot of mileage on it. So if I buy a used one, it's not going to have that warranty. Sure, but you could self-insure at this point with the business. I mean, you can create your own warranty fund and put$500 a month into a pot and go, all right, we're going to cover maintenance and repairs with this money instead of paying the fees for the warranty.

1:20:42Because what you're doing is you're destroying these vehicles by using them for business, which means you're likely underwater on that car pretty quickly. You owe$60 ,000. The car is now worth$40 ,000. Because you already have 100 ,000 miles on it, whatever it is. And so it's actually putting you at more risk by buying those cars with a loan. And so I would encourage you, get a deal, buy one used. They're still nice cars. Even a five-year-old Escalade, I'm not going to go, well, it's not a 2025, so I'm not going to ride in this vehicle. You know, it's about the service you provide. It's clean, smells good, right?

1:21:15I mean, it's all that. And so if you run this, do you have any debt tied to the business right now? Yeah, right now the only debt I have is, you know, we have two brand new vehicles. It's close to$130 ,000. Okay. How quickly could you pay that off? I can pay that off, I would say, within six or eight months. Cool. Amazing. Think about that, though. If you got rid of all the debt and then you began to cash flow any future vehicles, run the numbers on that. And not only will I think you're going to go, oh, my gosh, this is amazing. Yes, it's going to take a little bit of delayed gratification right now and sacrifice.

1:21:54But the long term is you survive in this business 10 years from now because everyone else is over leveraged underwater on their car loans. And you're going, sweet. I got six Escalades paid for in cash. And what's crazy, Ollie, is George and I, we were in New York City, March of 2020, literally the day they were shutting down Broadway, all of it, because we were there for a media thing right when COVID hit. But so my thing is, too, you know, whether it's, you know, something like that. I mean, who knows what could happen where everything just stops, right? Business for you guys in 2020 through 21 probably just ended, right?

1:22:25I mean, it just was done. And so there's still a level of, yeah, a level of risk that you carry when you carry debt. And especially since yours is so dependent upon, you know, other people and even, you know, I don't know if it's just execs that you guys, you know, do this car service for or other people. But there's something to be said that if for some reason business just stops when you don't have debt, you have a lot of peace. A lot of peace. Thanks for the call, Ollie. I hope that helps. All right. Let's head to Ethan in Columbia, South Carolina. Hi, Ethan. Welcome to the show. Hi, guys. How's it going?

1:22:58We're doing well. How can we help today? Well, it's kind of a compound question, but I'll keep it brief. My fiance and I are going to get married in June. Yay. Congratulations. Thank you. Thank you. It's been a long time coming, about a two-year engagement. Oh, good. Yeah. So we have our honeymoon paid for. We have our wedding paid for. Just a couple of expenses here and there. But we're wondering, should we rent first? Should we buy first? We have an opportunity to live with family, but I'll explain more of that in a bit. Okay. Yeah, my kind of go-to answer usually, Ethan, is if you guys are not, neither of you are homeowners right now.

1:23:38Is that right? Correct. Okay. So yeah, starting off like that, I would definitely just rent, rent for a year, get settled, get an apartment, like just kind of just, you know, have that, save some money. And then when you look up and say, okay, we do have enough to put a down payment, you know, which is 5 % for first time home buyers is what we recommend on a 15 year fixed rate. And mortgage, you know, it may take you longer than a year to save, depending on where you guys are financially, you know, what you guys can put away. So I would not buy a home until you have that, till you're financially ready.

1:24:10So in the meantime, I would be renting. But even if you were financially ready, there is still part of me, George, that I'm like, you know. Still wise. Yeah, just rent for a year. I'm curious, Ethan. I see the word debt on my screen. How much debt do you guys have? I did the math while I was on hold. It's right at$89 ,000. Oh, I didn't realize that. $36 ,000 of that is student loans for me. $30 ,000 is student loans for her and then$23 ,000 on a vehicle I used. Okay, what's going to be your household income once you guys are married? per month or total total per year total per year i currently bring homes around 70 or 70 she's about to graduate from nursing school so it's kind of hard to guess but i'd say probably around 60 to 70 good we all make a good income yep so that you have a great goal while you're renting which is clean up the mess yes aggressively pay off your consumer debt which means we're not going to do any investing.

1:25:07We're not going to live the like crazy newlywed life and go get a bunch of stuff and go on all of these crazy trips. No, we're living on$40 ,000 a year. Tell yourself that and then throw that, throw that a hundred at this debt and get it paid off. You know, I mean, you guys could clean this up in one year, Ethan, which is so amazing. And then beyond that built, you know, building up an emergency funds and then saving up for that down payment, which again, you guys have a great income. So you're going to be able to do that. Don't get tempted because everyone goes, well, you're married now. You need a house.

1:25:36You need a house. Go buy a house. They don't pay your bills. They don't know your stress levels. And it's going to add anxiety and stress to a newlywed's life if you do it before you're ready.

1:26:15Welcome back to The Ramsey Show in the Fairwinds Credit Union Studio. I am Rachel Cruz, hosting this hour with my good friend, best-selling author George Camel. And we co-host another podcast, Ramsey Network show, called Smart Money Happy Hour. So make sure to check it out. All right, give us a call. at 888-825-5225. And we're here to answer your money questions and any questions about life. You know, sometimes money definitely is integrated into our relationships and our jobs and careers and all the things. So we are here for you. All right, let's go to the phones. We're going to go to Chicago starting us off and Brooke is on the line.

1:26:56Hi, Brooke. Hi, thank you so much for taking my call. Absolutely. How can we help today? So my husband and I found ourselves in sort of a unique situation last year. He had just graduated from dental school and we moved to a small town in South Carolina where he worked as an associate dentist at a practice that essentially was committing insurance fraud, drilling on things that didn't need to be done. So after about a month or two there, we reassessed our options and realized the best bet was to move back to Chicago where I'm from, to live with my parents while we finished out our lease on our townhome there.

1:27:34So the original goal when moving here was to try to pay off as much as our student loans as possible. I'm a physical therapist. He's a dentist. We both combined have about$600 ,000 in student loans. Wow. Over the past year. Wow. Yeah, correct. Oh, my gosh. Okay. Okay. So over the past year, we were able to pay off, I think, moving here. I think I had approximately$140 ,000 in student loans. We were able to kind of wipe that out. So now it's been a year living here. We've been with my parents. He still has his$420 ,000 in student loans. And so I guess the next step, like, I'm just calling in to get some wisdom on, you know, we've stayed.

1:28:18We're still in a good relationship with my parents. But should we continue to live with them, saving up for potentially a down payment on a home? Should we be looking more into renting for the time being? How much are you guys making a year? So his, he's a percentage of production. So his is approximately, I would say probably$140 ,000. $140 ,000? Since he's an associate dentist, yeah. Okay. And what about you? And I make approximately$90 ,000. Okay. And do you think... Oh, sorry. Well, yeah, so you guys living with your parents, you basically, if you lived on nothing, then you should be able to pay off this in two years.

1:29:02Correct. Okay. With his, you mean for his G loans? Well, yeah, you guys are, yeah, I mean, at$250 ,000, if you guys each live, if you lived on$50 ,000 a year, which is plenty because you don't have rent or you're not paying utilities and stuff, I'm assuming, you got$200 ,000. Do you still have debt? on top of his 420? So next month, we will have paid off my SGA loans. Okay, so yours is done. So the 420 is left. Yeah. So if you guys had two years where you put$200 ,000 a year, that's 400 ,000. And then, you know, you're working a side gig or whatever. You guys are making 20 ,000 extra in those two years.

1:29:39You guys could have this paid off. I would be busting it. I would make it my goal to get out of there as soon as possible. I'll say it that way. Don't let this be a hammock where you go, well, we're comfortable. Let's go on a vacation. Let's get a nice car. We have no expenses. This is great. No, no. You see where I'm going with this? Because that's the real situations we hear from when people go, I'm living with, this really happened. They were living with parents to pay off their$10 ,000 in debt. I asked them, how much debt do you have now? $40 ,000 in debt. They went into debt while living with family because they got comfortable.

1:30:10And Mike, I guess we're trying to move out, I guess, as soon as possible. So we're looking maybe in the next few months here to try to move out. And what does rent cost? in your area? It's about$3 ,000 a month. Okay. So you'll be, you know,$40 ,000. It'll slow you down by, you know, $36 ,000 a year, essentially. It would. And he accumulates about$2 ,500 to$3 ,000 a month in interest on his loans as well. Oh, my God. That's your rent right there. So that's worth noting. Yeah. Yeah. Yeah. I would be busting it to make$300 ,000 this year and throw every penny at the debt. and maybe you guys get on a game plan with your family and go, hey, here's our timeline.

1:30:51Here's what we're doing. Keep us accountable. Check in with us. And there's a part of me, Brooke, too, that I, you know, for the good of just you guys in general, I do think there's a gift in living with them right now while you're paying it off. But I think having an end date that kind of makes you uncomfortable and forces you guys out. So, I mean, this sounds crazy, but what if you did November of this year, right? And you got pretty much a good calendar year. And you're throwing so much at the debt, but then you're saying, you know what? A year from now, we're going to be living in our own place.

1:31:23We're going to finish paying off this debt. It may take us an extra couple of months because we're living on our own. But there's something about that growing up and being out on your own as a married couple that I don't know. I think it's good. There's something about having an end date for me would be really helpful. So it's not this ongoing idea that you're living there. And I would, and again, I think I would, and I would shorten the timeline in a sense just to get you guys out, right? You're both adults. You both are smart people. You're a physical therapist. He's a dentist, right? Like you are capable adults and you'll be able to pay this off.

1:31:52And there's something about two capable adults not living at home. That's good for you guys. But for a season, I think it's okay right now. I just have an end date. Does that make sense? Yeah. So if we set the end date, let's say of November, do you think it's important to, because what we've been doing for the past year is doing that, like putting all our money towards my student loans. We knocked them out. That's great. but now we have like nothing to ship for it other than like no debt on my part is it smart to kind of be saving money on the side as well just so that way if by november we're looking to buy a home like no no brooke i need you to put the idea of buying a home on hard pause right now we have a huge mountain in front of us you guys will be homeowners and you will retire multi millionaires but right now for the next probably two or three or four years you have a mortgage right now.

1:32:41It's creating a foundation. Of$220 ,000. The amount of interest you pay is more than most people's mortgage. Yeah. So let's focus on knocking out all debt. Yes, all focused on this. Then you get an emergency fund of six months. Then we begin saving up the down payment. And so you might crunch the numbers and go, okay, in Chicago, that's a$700 ,000 home. We might need to downgrade to a townhome that's$600 ,000 in the suburbs, whatever. You guys can figure out the plan, but do not let this home get in the way of this financial foundation that you're building. Yeah. How old are you guys, Brooke? 27.

1:33:1627. Okay. Yeah. So, I mean, if you guys are debt-free by 30, you do some saving and you guys are, you know, homeowners by 32, that's a great plan. So, and you have plenty of time, you guys have time and you make an incredible income. Like you're going to be able to make some big strides. And that's if all of your income stays the same for the next five years, which it's not. It's going to go up over time. So it's going to fast forward your plan. I think you're going to get to all of these things faster, but you have to do it in the right order, which is the baby steps. So you want a thousand dollar emergency fund, go ahead and get out of all your consumer debt, build up that emergency fund, and then be saving up for that down payment.

1:33:54Have you guys, have you guys read the Total Money Makeover? My husband has, he's having me reading it right now. Oh, well, there you go. I was going to give you a copy, but you don't need, I'll give, let me give you George's, George's book, Breaking Free of Broke. There's more jokes in there. I think you'll enjoy it. Yeah, yeah. It's a, it's a great one. And read the student loans chapter. It'll light a fire. Yeah. And it just kind of solidifies broke, like just the way our generation does money. It kind of just like pokes a hole in all these, you know, industries to show you that you don't have to be normal.

1:34:22You don't have to be normal. So I want it to solidify where you guys are. I don't want you going backwards in your progress. Continue to move forward. You have a great income. You guys are smart, but get rid of this$420 ,000 loan in two years. Do it. Make a crazy goal and do it.

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1:35:50up next we have samantha in phoenix arizona hi samantha welcome to the show hi thank you for taking the time to speak with me yes absolutely how can we help So my husband and I are on baby step seven, and we're trying to figure out what to do next. So we are out of debt. We've got$3 ,000 in savings. We're contributing to our 401k and our Roth IRA way. And so we're just, and we own a home.

1:36:20That's amazing. What's your house worth? When we bought it, we bought it for$150 ,000, and right now it's worth about$400 ,000. Oh, my gosh. And it's paid off? Yeah, we pay it off. How old are you guys? 28 and 29. Oh, my gosh, Samantha. Who raised you? This is crazy. I grew up listening to Dave Ramsey on the car ride home. Financial peace, baby. And you guys were like, all right, let's just live this out. So you guys got married. You were debt-free or close to it. You were able to get a house faster and pay it off fast. What do you guys make a year? um between the two of us we make about 200 uh before taxes okay good for you guys said you owed how much in savings 30 000 30 000 okay awesome and you're asking what's next yeah um i also have a secondary question that might play into this um i have a house i inherited as well on top of this um and so we're debating selling it and investing it in another house to kind of be like our, you know, rent our current house and invest in a nicer house to live in versus sell it, sit on the money, put it into like stocks or something.

1:37:33Like we're not really sure what to do with it at this point. Yeah. When do you guys want to upgrade houses? Do you know? We're looking to do it sooner than later. We are putting that home on the market because it's not making us anything and we're unable to rent it comfortably due to the location and manage it well. So we want to have a rental in the same city that we're in so we can manage it. What do you think you would net from that? Probably$400 ,000 as well. Wow, that's incredible. So you would take that$400 ,000 and get a different house in cash and then you would keep your current one and rent it?

1:38:09Yes. Is that feasible? Yeah. You can get the house you want for that$400 ,000 in your area. our dream house would probably be a little more so we'd have a mortgage about 200 and then we pay that off in about a year to two years that's our goal okay yeah well i think that's yeah so you ask what's next i think that would be the next step right so probably for the next two to three years when it comes from everything from selling the houses closing finding the new one all that you know so i'd say you guys have like a house goal uh here for the next three years of buying something And if you take a small mortgage, paying it off quickly, all of it.

1:38:47So that would be. You'll be back in baby step six for a bit and then back to seven. And then you reassess your goals. And that's really when the world's your oyster and you guys get to dream. Do we want to get another home? Do we want to get into real estate? Do we want to give more? Go on these trips? It just sort of scales up everything. It scales up your spending. It scales up your giving. And it scales up your investing. Yeah. So to George's point too, you know, doing all of those things is going to be really important. And Samantha, you know, when you guys are in Baby Step 7 and you're going to be settled there for a while once you have this new home and it's paid off is to up your giving and find some things that you guys are excited about.

1:39:24And I think, you know, this is one area that Winston and I really kind of had on autopilot for a few years and probably because we were having babies and all of that. I don't know. We were giving and doing, you know, mathematically what we were supposed to. But it just kind of didn't get as exciting. And so we've switched up even how we give. And it is so fun. It has brought the joy back for me in the last year or two of like, oh my gosh. So get creative in your giving. Find things that you really are passionate about. Do some fun stuff with that money. I mean, genuinely, it is some of the most fun you can have with money.

1:39:57And we say it all the time, but it really is true. And then be saving, continuing to invest, and even maybe have some big savings goals for things that maybe you want, and then enjoy some of it. And so doing the giving, saving, spending formula, all three things need to be happening. And yeah, and that's what's kind of crazy is like there's not a lot of people say this when they finish the baby steps. They want like baby step eight. OK, what do I keep doing? You know, so I'm like, you tell me. I don't get to decide your life for you. Yeah. Yeah. We've done some travel and we've done some things.

1:40:29So we could have more saved. But I mean, we've been kind of enjoying life a little. And you guys have kids. No, we don't. OK. We don't want to be their place before we do that. Okay, cool. Well, here's what I'll tell you. No, go now, Samantha. Have kids. Yeah, don't wait for the big house. What I want to tell you is that - Babies are small. It's okay for your dreams to change. You may go, you know what? I want to stay home. And you guys have the flexibility to do that without it being, you know, adding any financial stress to your life. And so I would sit down and do a dream date with your husband this weekend and go, hey, let's both put a goal for each category on paper of what we want to do next year.

1:41:06Here's my giving goal. here's my investing saving goal here's my spending thing i want to do rachel's vote is have babies earlier and we're having kids next year it's going to be awesome you never regret we do one of us is going to be a stay at home with the kids um so we want to be comfortable with that like one income yeah i think you guys are great right i mean you have no debt you're choosing the house thing i'll say that if the if the getting into this new house That's the caveat, is does that put a damper on your plan for one of you to stay home? I don't want you to be like, well, once that house is paid off, then maybe we'll start thinking about having kids.

1:41:41I would put the kids as the priority before upgrading the home. The child will survive in this home that you have now. That's true. Okay. And then if we were to, say, sell this house in the next month and then we decide not to buy a home, would you guys let that money sit in a high-yield interest account or would you? invest or how much of that would you save? I would go high yield because you're talking about like a one or two year goal, right? This money's not going to sit there for more than one or two years. And that's where I go, hey, the market, it's been great the last few years. Who knows what 2026 or 27 is going to bring if it's negative 20 % and now you're on the cusp of trying to buy this home.

1:42:22And so the high yield savings account just gives you some stability. It'll grow at, you know, three and a half percent right now, but that's kind of more guaranteed than the market, which is going to fluctuate more drastically. So if I had a one or two year goal, I'm going to park it in high yield savings. And if you want a great option, you can check out Fairwinds. You can go to fairwinds.org slash Ramsey. They have an awesome smart bundle for you. Up next, we have James in Ohio. Hi, James. Hi, guys. Thank you for taking my call. Absolutely. How can we help?

1:42:52So my wife and I just last year purchased our first home. And it's a little bit of a fixer upper. Well within what we can afford. But I did jump the gun a little bit. And looking back in hindsight, I kind of regret it. Just because we still have a little bit of debt. Just a little under$20 ,000 total. $12 ,000 of that is on my wife's car. $5 ,000 in a student loan of hers. And just under$2 ,000 in the credit card debt. How much do you guys make a year? Last year, I grossed about$80 ,000. And she, her about 20. Okay, perfect. All right. Well, why don't y 'all just, you know, pay this off in five months?

1:43:39That's the goal ultimately. But essentially my question was, is I'm driving a car that I bought for$5 ,000 cash. And we still owe about 12 on hers. And I know it's well under 50 % of our income, you know, wheels and motors. but what I wanted to do was sell the car and get another cheap car just to pay that debt off because I'm so tired of making that payment. And what she disagrees with, she thinks we should just keep it and pay it off. What's the car worth? Probably about one or two less than I owe on it. And how much do you have in savings? So I pause on the baby steps because my house is in desperate need of a roof.

1:44:25So I have$10 ,000 in savings earmarked for that. Now, I think that my dad and I, because I'm going to do it myself, can probably do it for about$6 ,000. Right. But I don't know what we're going to uncover when we rip the shingles off, you know, open Pandora's box. Wow. Yeah, I don't— Whether it's going to be replaced or anything. I'm not looking to sell her car right now. I know. We're on her team. I think you guys will pay it off. If you can pay it off in five months, it's not worth selling. because now you've got to turn around and use savings to buy a$5 ,000 car or a$3 ,000 car, which could lead to more issues.

1:44:57Which are going to upgrade sooner anyways. So, no, yeah, I think it's doable. It's not that desperate. Yeah, and I think you guys need to tighten this up, James. I mean, you guys have kind of, I understand that the whole house situation has kind of put you guys in a different position, but, I mean, get back on track. And you guys can get all this cleaned up really fast, really, really fast. Just be on the same team with it. But no, we would probably not sell her wife's car.

1:46:02Thank you.

1:46:19If you ever hear a money question and you want some guidance like you would on the show, then we have a spot for you. So, I mean, I feel like this show, George, it's sometimes hard to get on the line. It's always all the lines are usually always booked up. So if you're like, man, I really wanted to ask this question. Well, we've got a free tool for you. Here's your chance. Yes. If you go on our website, you can ask your money question and get an answer to your situation. 24-7. It's pretty crazy. So AI, love it, hate it. Well, we're using it for our advantage. So we actually, our Ramsey team went in and like did all their magic.

1:46:57And the Ramsey AI is here. It's built on the Ramsey principles, custom built. So it stays in the guardrail. It's not random financial advice. It really is through Ramsey Solutions and what we teach. So you can ask your question at RamseySolutions.com. Or if you're watching on YouTube or podcast, you can click the link in the description. So you guys check that out. I dare you all to go test it out right now and see how close it is to what we would say on the show. That'll be a fun experiment. It's great. Yeah, we're trying to help as many people as possible. If you can't get on the show or slide into our DMs with your question and we don't get back to you, whatever the thing is, you have the ability to ask a question about your money, and we want to help you do that.

1:47:37All right, let's go to Kurt in Calgary in Canada. Hey, Kurt. How fun. Hello. Hello. Welcome to the show. We love to bring on people who have absolutely killed it when it comes to money just to hear their story and honestly to kind of set up the idea like this can happen. Like you can actually start with nothing. It's possible. Here's what it looks like. Yes, and build a positive net worth and one over a million dollars. So, Kurt, thank you again for coming on. And what is your net worth? Just north of two million Canadian. Wow. And how old are you? I just turned 45 not too long ago. Well, that's wild.

1:48:24Are you married? I am. Fantastic. Okay, tell us the mix of this$2 million. Break it down for us. Oh, goodness. Probably a quarter of it is retirement. 10 % is my kid's college fund. I've got about a quarter of it in corporate assets for the businesses that my wife and I run. and some cash on hand, some, you know, probably a third of it is my house, our house. Yeah, just a bunch of places. I love it. And you guys have been following this plan for how long now? So you'll have to forgive me. I didn't know Ramsey and the Baby Steps existed until maybe four or five years ago. You were smart before you found us.

1:49:12Did great. That's impressive. Well, smart and stupid. I won't lie. We took on what I would call a soul-crushing amount of debt, but we worked our way most of the way through it, and all we have left is the mortgage. Wow. What's your household income? Just right around$200 ,000. Okay. What was your best year and worst year of income during this journey? Well, the worst year would have been when we first got married. I was still a university student, and my wife made$33 ,000. um and uh but once i graduated during household income sort of started around 70 or 80 000 uh we kind of averaged around 100 110 most of the time only only in the last few years has it really um moved upward that's awesome and did you guys inherit any of this 2 million uh you know my my wife's mother gave her part of her when my my wife's grandmother passed away My mother-in-law gave us$5 ,000 to go on a trip for fun.

1:50:16So safe to say it did not mathematically cause you to become millionaires. No. Because that's a big myth we hear all the time. Well, you got to inherit money to be a millionaire. Must be nice. Not at all. That's not your story. And what are your careers? So my wife is a bookkeeper and I'm an engineer. Oh, yes. Which? That's about right up the alley of our study on millionaires. Number one career choice. Yep. in the millionaire study over 10 000 of them was engineer what do you attribute that to kurt is that you know you're a process driven guy and you just went okay i'll just follow the process uh well i attribute it to my wife um as any sane man should um no we it was always you know we we live within our means and um apart from a few decisions along the way you don't buy something if you can't pay for it.

1:51:12Okay. So y 'all have always been very averse to debt, you would say? Well, yes and no. My mentor retired earlier than planned and he sold the business to myself and my current business partner. And we weren't quite ready to purchase that outright. And so we had to finance the purchase of the company. Oh, that's right. That But consumer debt when it comes to clothes and vacation. Cars. Credit cards. Cars. We financed one, and I hated it. Yeah. Yeah. After about two years, I just couldn't stomach it anymore. And so we got rid of that as soon as we could. Wow. What are you guys driving today as real-life millionaires?

1:51:57Give me a year, make, model. My car is a 2013 Volvo C30, just a little hatchback with over 100 ,000 miles on it. My wife, she gets the new car. We bought her a new car just a couple years ago. As it should be. A tree fell on our last one. Oh, my goodness. Yeah, it was just unfortunate timing. But, no, she has a 2023 Volkswagen Tiguan. Nice. Very great. And paid for in cash. Paid for. No, nothing. That's amazing. So she's got a three-year-old car. You've got a 12-year-old car. And we found in the millionaire study, the average millionaire drives a four-year-old car with 41 ,000 miles on it. And the top brands were Toyota and Honda.

1:52:44Yeah. Which is pretty wild. So you guys are square in the middle of that. And you guys have four-year degrees, both of you or more? Both of us, yeah. Okay. Were you guys super smart? What were your GPAs? Do you remember? uh i'll just say i finished my g i finished my my degree with a gpa of around 3.7 uh my wife's was higher she's a smart cookie this is impressive i know that is impressive that's amazing well kurt what would you say to someone that's listening maybe it's a newlywed couple when i'm still in school maybe they're starting off just like you and your wife did you know how would you say what are the principles that you would tell people this is what you have to do if you want to start building real wealth?

1:53:27Live on less than you make. Make it do, use it up, do without. Those were the guiding principles that we live by. Wait, say it again. Use it up? What'd you say? Use it up. Use it up. So if you've got something, use it. Don't waste. Yeah, don't be wasteful. Do without, meaning that if it's not absolutely necessary, don't do it. and yeah use it up, do without and make it do. So repair as needed and make what you have last. Take care of what you have so that you don't have to keep going and buying new things. That's old school. That's definitely like a grandma, grandpa principle right there. You know, coming out of like a Great Depression like we're not going to get new stuff.

1:54:09That's crazy. This works just fine. We'll fix it up. Well, I love it because you can get in the habit if something just kind of is off a little bit like, ah, we'll just get a new one. Nah, we'll just get a new one. Get one on Amazon. It'll be here in two hours. Yeah, and you end up, you do, you end up spending so much doing that. Okay, so Kurt, would you say now where you guys are, are you enjoying your money? Do you feel like you guys are having fun? Not yet because we still have a mortgage. And so that, you know, the fun is coming when that's done and gone. Yeah. But, you know, right now we're still working the process.

1:54:41and but for me it's the it's the peace that comes from you know it's like we've got six months of an emergency fund so that if you know because we're both we're both self-employed if our income is variable it's like you know what that's okay we've got we've got comfort and peace yes absolutely yeah that um that padding is very real between you and life i mean there is something that does give a lot of oh you can sleep at night the stress is down because if something happens we're going to be okay. We have this money set aside. So how much longer until the house is paid off? Five years. Okay. Yeah.

1:55:18The goal is debt-free by 50. The ripe age of 50. And by then you'll probably be worth closer to 3 million. Maybe closer to 3.5. If things keep trending the way they are, yeah, maybe. Yeah. I could see that happening. Well done, Kurt. Thanks for the inspiration. Yeah. You guys are awesome. Thanks for calling in. Always your stories. Yeah. definitely kind of give a boost to people out there to see real life people doing real life stuff. So thanks.

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1:57:20Our scripture of the day is from 1 Timothy 6, 5-7. This is one of my favorites, George. But godliness with contentment is great gain. For we have brought nothing into the world and we can take nothing out of it. Beautiful. Bob Marley said, spend life with who makes you happy, not who you want to have to impress. Oh. That's pretty good. But yeah, the godliness with contentment is great gain. That is, that's big. You brought nothing into the world. You can't, I saw someone. I couldn't I couldn't quite live with this philosophy because it's a little bit too YOLO for me but it was like on Instagram was a meme and it was this woman she was like at the beach like had a drink or something she was like you know no one uh basically like in the graveyard you're not gonna you don't care if you're the tannest or the the have the best skin skinniest biggest bank account like she listed all these things that we worry about she's like go enjoy your life like eat the pizza you know take the trip do the thing and I thought you know it's a little bit of that.

1:58:22And you are a very experiences over things person. Yes. Which is wise. The data bears this out. So it's one of the best ways to spend money is on experiences with people you love. Yes. We've heard that. Arthur Brooks talks about that a lot. And there is something to that. Rachel's using that to justify every next trip. She's like, Winston, it's science. We have to go. We have to go. This is where we should spend our money. I'm telling you, it's what everyone remembers. It's the fun, big meal. It's the whole, you know, at my house, we had all the personalities and their spouses. We had the best time.

1:58:50You guys were so generous. You have a great Like dinner, I don't know, all of it. There's something about, yeah. You could have bought a purse, but instead you said, you know what? Let's have a great meal with friends. And I can't take the purse with me into the next life, but I'll take the memories. You could be in your Costco casket in there with you, but what good's that going to do? It's not going to do good for anyone. So I love it. Yep. Godliness with contentment. Great gain. You didn't bring anything to the world. You can't take anything out. All right. Let's go to the phones and we're going to go to Hunter in Fresno, California.

1:59:19Hi, Hunter. Hi. Hello, hello. Welcome to the show. How can we help today? So my wife and I, we are a little bit of, we just got married about a year ago.

1:59:35We started off really good financially. We're making a little over$100 ,000. um well we kind of added racked up some debt uh we bought a new truck um so now we're i have about fifty thousand dollars on that and then we also that's a nice truck it it's it is a nice truck um but we also got a camper um how much is that we're about twenty $20 ,000 is what we still owe on it. Okay. What other debt? So other than that, the only other debt is we just bought a house about a month ago. And so now we added that$2 ,800 payment onto our monthly payments. And what's your monthly take-home pay? Monthly take-home pay, it kind of ranges.

2:00:31It ranges anywhere from – it can be anywhere from$5 ,000 to roughly about, I would say, about$9 ,000,$10 ,000. Whoa. Okay. Well, that would be more than$100 ,000 if you're fairly consistently getting, you know,$8 ,000,$9 ,000 a month take home. Well, yeah. I mean, this past two months, we've only been taking in about$5 ,000. But a couple months prior, we were – How are you guys doing 5 in, Hunter? Yeah, your mortgage is over half your take-home pay in many months. And you've got a camper loan or payment in the truck. What's the truck payment? So the truck payment is$1 ,300. Oh, my gosh. And what's the camper payment?

2:01:13$1 ,000. So you've got$2 ,300 going to toys that are going down in value every day. Yep. So, okay, but my thing is if you make$5 ,000 a month, that's$5 ,100 just in payments. How are you guys making your light bill and food? Like, do you guys have savings? We do. We have roughly about$20 ,000 in our savings account. Okay. And you're just going to be draining that a little bit at a time to live off of. Right. Well, so that's right now. The reason it fluctuates is I'm currently in school. and so with my construction business you know there's sometimes you know I'll get a job and I can work around school and I do great and then there's other times it's you know school gets caught up and I don't have as much time to work.

2:02:10Yeah but you bought a camper. Yeah it feels like a bad time to buy a$50 ,000 truck and a camper that you probably don't have time to use. Hunter do you just feel crazy like do you feel like what did we do? I yeah what does your wife think about all this let's make a let's yeah is she like hey we got to get out of this situation or she like it's fine he's got it under control uh both I guess she uh so she I mean you could tell she gets um uh nervous or frustrated every now and then from it But she's also – she realizes that we're not – I guess we're not at the end of the road yet. We can still come out of this.

2:02:55And so she's a little bit more comfortable with that. Okay. So, yeah, we're definitely – I mean, you're like probably nine to ten months away of having nothing, though. You know what I mean? I mean, like I think y 'all don't, it doesn't feel this, I don't feel an urgency necessarily. And so that$20 ,000 is going to go really quick because the months you do make the$5 ,000, you're already$100 underwater, right? So you take that$100, and then you got to, you know, you guys are probably going out to eat. You're stressed with school. So you're, you know, you're doing this. And I mean, you guys probably are not on a very strict budget, are you?

2:03:34Right now, we actually, past couple months, we have gone to a strict budget. Um, we don't really eat out maybe once every couple months. Oh, Hunter. But recently we have not been eating out. Really? If I looked at your bank account statement. Okay, overnight, over two months, over 60 days, you don't eat out except for once. Out of 60 days. Yes, ma 'am. Yes, ma 'am. All right, I'm going to take your word for it, Hunter. I feel like you're an honest man. I will tell you what I would do if I was in your shoes as a newlywed. I just feel like a Starbucks run is probably in there somewhere. Maybe for her at least.

2:04:05A quick Chick-fil-A nugget, you know? You guys need some vices right now. This is crazy. Okay. Okay, let's make a plan. Make a plan for Hunter. Luckily, Chick-fil-A is like 30 minutes away from you. Okay, that works. Okay, fine. That's fine. So I'm Hunter. I'm a newlywed. Been married a year. I have a cool, great income. What are you going to do, George? I am selling the truck and camper tomorrow. Like, I'm taking pictures tonight. I'm listing it tomorrow. And your construction ego just plummets in front of everyone. And any amount you're underwater on, you're going to use that$20 ,000 in savings to cover it and get yourself a beater car.

2:04:34Oh, okay. It's working now. Wow. And then what's freed up, George? How much money you got? You just got a$2 ,300 a month raise, my man. So those$5 ,000 months turned in to$7 ,200. Now we can breathe. Oh my gosh, George, what a plan. This is great. This is a solvable problem. Then what are we going to do? Then we need an emergency fund because you likely will deplete that$20 ,000 to cover the underwater difference, plus getting you a beater car. And so now our job is to really build some financial stability once we don't have debt to get three to six months of expenses. How does that sound, Hunter?

2:05:09It'll make it sound a lot easier than what it is. I feel like you're not willing to sell this truck or the camper. Tell me why. The camper, I'm actually, the camper, I would get rid of it in a heartbeat. But? Probably hard to sell. I talked to my wife about selling it. What was that? Yeah, I said, and they can be tough to sell. Well, they're tough to sell, and it actually came from her parents, and so she's a little bit more stuck to it. than I am. Don't have attachments to campers. We got to get attachments to healthy financial foundations. That's what we're looking for here. Or Hunter, you guys can, here's the deal.

2:05:45You know, you called the show. I feel like we're giving a little tough love, but the truth is you can stay in this cycle. You guys can stay with campers and trucks and payments. You can live in a truck and a camper, which will be your future. No, but this is normal, Hunter. This is normal. And you guys could go on for years and years and years. And then what's going to happen is you're going to have a baby. Something's going to happen. One of you is going to want to stay home. You guys are going to be in your early thirties. The roof is going to be leaking and you have no money. And you look back and think, what have we been doing?

2:06:13We've been working our butts off for seven years and we can't even do what we want with our life. Why? Because in our early twenties, we just, you know, our mid twenties, we didn't make decisions. These are, these aren't hard decisions. It's hard for the ego. The ego hates it, but I'm telling you that you guys can stay normal. But you called the show, and the show is far from normal. We are all about getting out of debt, making deep, deep sacrifices, Hunter, in order for you guys to get ahead. In the future, you guys can get a great truck and a camper. But when you can afford it, you can't afford it.

2:06:43You can't, you don't have the money for this stuff. And then you rushed into a house and all of it. So say it out loud, own it, and go, hey, babe, I'm sorry I screwed up. Yep. All right. What a great show, you guys. Thanks to everyone in the booth. Thank you, George. And remember, there's ultimately one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.