You Can't Build Wealth While Buried In Payments

12:08Rachel Cruze:So I don't really know what to do there.

12:11Dave Ramsey:Your damage to your credit report is going to stay there. The only thing we can do is limit the damage by settling your portion of the deficit. Okay? Yeah. And so what it amounts to is after you finish what I'm going to tell you to do, and it's going to take you a little bit of effort, but after you finish this, it will show that you have been repoed, because you have, and that you settled the deficit. So it's like a bad debt that you settled.

12:40Rachel Cruze:Right.

12:41Dave Ramsey:Which is better than just a bad debt. Like way better. Okay. Yeah. As far as your credit bureau goes. All right. Not that worried about your credit. I don't want you doing this kind of stuff again. And hopefully you stay away from your mother when it comes to financial transactions. Yeah.

12:56Rachel Cruze:I've definitely learned my lesson.

12:58Dave Ramsey:Yeah. So do you have any contact with the company that is trying to collect the deficit?

13:05Rachel Cruze:They've sent me some letters, but other than that, no.

13:08Dave Ramsey:Perfect. Okay. Pull that letter out. It's got a phone number on it. Call them. Will do. Let me give you some real clear information. Their job is a game. Their job is to screw with you when you get on the phone. Your job is first you give them no information except that phone number, which you could block if you need to later. And then you tell them the truth. Okay. I was 18 years old. My mother asked me to co-sign this. I had no idea I was doing it, and your company let me to be taken advantage of. I'm considering suing you. Okay. In other words, we're going to start with the offense instead of a defense.

14:00Dave Ramsey:But I think I'm not going to. I think it would be cheaper if, as a 21-year-old who's broke and you can't get anything from me because I don't have anything, it might be cheaper for both of us if we just settled my portion of this. You can chase her for whatever you want to chase her for. But I want to settle my portion of the$10 ,000. I have$1 ,000 I'll give you for that. Gotcha. Okay. You're probably going to be able to pull that off at about six conversations putting up with abusive, moronic individuals on the other end of the phone, and you'll probably be able to negotiate that for$2 ,000 or less.

14:44Dave Ramsey:My portion of this settled, remember this phrase, settled in full. And I've, A, got to have that in writing. B, you will not have electronic access to my personal checking account. I will wire you the money or send you a prepaid$1 ,000 debit card. Okay? Okay. Because if they have access to your checking account, they're scum, they'll clean you out. They lie. The collections business is filthy. All right? And they lie, so you have to have it in writing. An email is fine. Okay? Do not give them your Social Security number. Do not give them their place of employment. Do not give them anything that will make it easier for them to collect this debt.

15:34Dave Ramsey:And every time they start being abusive, say, okay, you have five seconds to stop that, or you're going to get a dial tone. You want to hear a click? Stop that. Click. Okay. And just hang up on them and call them back the next day. Last moron I talked to over there started abuse. Don't try that, or I'll give you the click. Instead, let's have a conversation. And you just got to have this aggressive, abrasive approach. You don't have to be mean or nasty or cuss them or yell at them. It doesn't do any good. They're going to try that with you because they know if they can get you afraid or angry, you will be irrational and give them money.

16:13Dave Ramsey:So their goal is to try to get your pulse rate up when they got you on the phone. You following this? It's a game. It's a game. and you're going to be cool like you're playing a hand of texas hold 'em okay just chill all right and if you feel your pulse rate going up just hang up do it another day okay take two breaths don't drink two cups of coffee before you call them you know what i'm saying this is this is a real you've got to play this all the way through you're 21 years old and you've been screwed

16:42Rachel Cruze:and i'm trying to help you walk through this all right hunter do you have money do you have anything saved i don't i just started a new job as a truck driver i just got my cdl i'm like within i'm in my first week of being by myself as a truck driver okay good you'll have a thousand dollars pretty

16:57Dave Ramsey:quick then yep so you can offer him a thousand dollars by the end of the month and what percentage of a cosign though is his technically it's what's called joint and serval he's technically liable

17:09Rachel Cruze:for the whole thing right that's what i was assuming but but if they if they think they can still get some out of her they'll take less from him you know that that's the point and besides that i kind of want to turn them loose on her for doing this do you have relationship with her hunter do you know where she is uh yeah i talk to her all the time i just don't give her money or anything

17:31Dave Ramsey:like that anymore and there's no chance she's going to get this settled and get it off your

17:34Rachel Cruze:that's what i'm wondering if like where she is in this process at all she's broken out of control

17:38Dave Ramsey:and has been for a long time.

17:39Rachel Cruze:Yeah, she works at a fast food restaurant, and she's behind on her rent and all sorts of stuff. She don't have money at all. Oh, man, I'm so sorry, Hunter.

17:50Dave Ramsey:Yeah, but I'm asking you to do something that's over your pay grade, but I think you can do it. I think you're sharp. All right. And listen, what you do, go back and listen to this episode and write this stuff down. in writing no information be tough hang up no access to your checking account okay and that's the that's the process you deal with so you're stonewalling you're building a wall around you and then you're just throwing offers over the wall and until they pick one of them up you just

18:22Rachel Cruze:keep throwing offers well and the positive thing is that it's been in collections for what two years

18:27Dave Ramsey:he said so at this point they have and if they look down and saw your age they think they've got zero probability of collecting this because statistically they do yeah statistically the

18:37Rachel Cruze:chance he has no money right now so yeah the truth is yeah there is none no but i don't want

18:42Dave Ramsey:i'm starting i don't want him to be hassling the truck driving company him lose his jobs because they found out where he works right and they'll do that it's illegal but they do it all the time so you know you've got to just set up these walls and and the reason i know these people are scum in this case is because they took the co-signature of an 18 year old for his mother who was broken didn't pay bills this is how you know this company is scum but it's probably is it that company still though even if it isn't they bought that paper and they know what they bought they know what it is exactly what they bought they know what kind of paper they got into and so you know not all collectors are scum all credit card collectors are 100 of them but and you know all subprime people misbehave and break federal law pretty regularly.

19:28Dave Ramsey:There's like a hometown collections company in your small town that's trying to collect medical bills or something. They're probably okay. Most of them don't violate the law every day. But there's the Federal Fair Debt Collections Practices Act that gives clear understanding what you're allowed to do, not allowed to do. None of that has entered into this conversation yet.

19:46Rachel Cruze:But he's walking into

19:49Dave Ramsey:a haunted house and stuff's going to jump out around every corner. Thank you.

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22:07Dave Ramsey:if you're tired of living paycheck to paycheck and feeling like you can't get ahead join one of our free every dollar trainings there's new trainings every week this month and they're all hosted by one of the Ramsey personalities, either George Camel, Jade Walshaw, or Rachel Cruz. Rachel, when are you doing the next one?

22:25Rachel Cruze:I'll have to look at my schedule. I'm only looking a day at a time right now. It's back to school week, so my mind is mush. Probably next week, though. Yeah, I bet. It's usually like once a week or every other week. We all kind of switch off.

22:35Dave Ramsey:That's about right, because there's three of you.

22:37Rachel Cruze:I could have made it up, but I'm being honest.

22:39Dave Ramsey:Well, it's okay. It's going to be soon. There it is. One of you will be on there every time we do it. So they show you how to stick to a budget and find an average of$9 ,560 of new money margin laying around to throw at this stuff. There's just it's kind of like cleaning out the corners. There's stuff in there.

22:56Rachel Cruze:Well, and what's great about it is the digital coaching part when with the new EveryDollar, which you're signing up for and going through this process, they're able to see. I mean, via the digital world, which is amazing. It's like, oh, hey, here's this, this, this, this. It's like, I mean, I mean, those five things. You've got$9 ,000. It's up to 16 recommendations. Like, it's incredible. And then you get to adjust it and say, okay, if I take this recommendation, how much am I willing to put, you know, how much am I really willing to do within it and all of it? And it calculates it for you and shows you your progress.

23:26Rachel Cruze:I mean, it really is phenomenal. They've done a great job.

23:28Dave Ramsey:There's 16 things you can do to ratchet your way through the baby steps.

23:31Rachel Cruze:I mean, seriously. Yeah, it's incredible.

23:33Dave Ramsey:Now, ask us any question also during the live Q &A. Sign up for free for the free every dollar training. It's free. Did I mention that? At RamseySolutions.com slash webinar. Joy's in Pittsburgh. Hey, Joy, what's up?

23:46Rachel Cruze:Hi, I'm doing good. How about you?

23:49Dave Ramsey:Better than I deserve. How can we help?

23:51Rachel Cruze:That's great. I am calling because I'm a newlywed. My husband and I were married in January. However, unfortunately, recently we've been having some marital troubles. He's currently in inpatient rehab. I discovered his alcoholism back in June. And so right now I don't know when he's coming home. My biggest hope and my heart's desire is he gets his head on straight and he does everything he needs to do. But I was curious to get your advice on how to change our philosophy for our marital finances when that time does come that he does come home. I would normally take that perspective. I know you often advocate that what's his is mine, what's mine is his.

24:39Rachel Cruze:No, you don't do it in this case. It's all in ours bucket.

24:41Dave Ramsey:Yeah, you don't do it in this case.

24:41Rachel Cruze:Yeah, that's what I anticipate. Not for a while. In those early stages of recovery.

24:46Dave Ramsey:Not for a while. Yeah. Are you doing Al-Anon?

24:49Rachel Cruze:I am, yeah. Good.

24:50Dave Ramsey:Okay. And so you've got somebody in your corner talking to you about dealing with an addict in your home. And so what you've got to do in the overall picture, and I'm not a coach, or I'm not a PhD in counseling like Dr. John Deloney, but for 30 years we've helped people with financial problems, and 100 % of addicts have financial problems, so I've worked with a lot of it, okay, a lot, more than I've learned, more than I want to learn. So here's a couple things that people in that world say all the time. As long as he is dealing with an addiction, he's a manipulative liar.

25:27Rachel Cruze:Yes, he is.

25:28Dave Ramsey:Okay, and until we get the addiction in the rearview mirror, or the bulk of it in the rearview mirror, depending on your view of addictions, he can't be trusted. And so he can't handle money. I know. He doesn't get to handle any of the money. Okay. But he does get the information. He does get the dignity of speaking into it. You go over it with him. You show him what you're doing. You say, this is what our money came in, and here's what we're doing with our money. Here's the budget. He can participate in that. But he doesn't have access to the money.

26:05Dave Ramsey:period because i for his sake because it'll it's one because if he has no money it's going to be to buy alcohol okay he doesn't get any money um he he's you're taking care of him but you have you know he can have he can see that what the balance is he can look at the everything with you, help you make the decisions. And then as trust is rebuilt, then obviously he rebuilds in several areas of your lives. He can be trusted over time and trust is earned with time. There's a direct correlation. And so I came home from rehab and she doesn't trust me. She shouldn't. Okay. It was six years ago I came home from rehab and I've been dry.

26:53Dave Ramsey:She should. you see the difference and so yeah that he's been you know you get you get your 10 year coin your five year coin whatever then yeah and game on so um we want to walk with him and help him but also we want to cut off the supply uh and that means he just doesn't have access to money in the near term but he again does have the full dignity as a partner in your marriage of speaking into it having an opinion none of that's invalid unless he's drunk his brain still works okay and so it just gets drunk sometimes so but uh but if he's sober sitting at your kitchen table and y 'all are looking at this and he has an opinion about what we ought to do with our money that's valid but as far i'm just talking about physical access to any funds you know take him off checking account okay it all goes into your name and you handle it until we get some comfort here all right and uh and you can guys can establish some stuff you can talk about it with the counselors you can talk about it with alan on he can talk about it with his sponsor he can talk about it with his counselor uh he can talk about it with whatever follow-up he's got with rehab on when is appropriate to begin to you know let him back in and rejoin in more of a uh more of a a healed marriage money situation.

28:20Dave Ramsey:Does that all sound fair?

28:23Rachel Cruze:Yeah, that completely makes sense to me. Particularly right now, he's been in a pivot career-wise, so even the last few months I've been the only income. So that's definitely where a lot of tension has been for us in terms of that. How long did y 'all date before you got married? We were dating for a couple years, but I'm pretty sure that he just, 90 % of the drinking was when I was asleep or didn't know about it. Wow, complete closet guy. He's really good at hiding that. Yeah, he's very closet guy. So I'm pretty sure I don't know a sober version of my husband because I don't know. How's he been doing in rehab?

29:03Rachel Cruze:It sounds like he's improved. There was a bunch of drama a couple weeks ago with him trying to leave, but he ended up going back. So I think now that he went back, it sounds like he's more focused, but it's early to know.

29:19Dave Ramsey:You sound very solid and confident in how to process this and where the boundaries go. You sound pretty strong.

29:29Rachel Cruze:Yeah, we're going to do, I've talked to him with the boundaries. I'm like, we'll do marriage counseling, but it's going to be when he gets 90 days, 100 days sober, or whatever it is. Because they have a really good family programming at the rehab barat. So they've talked through the boundaries and empowered us a lot on that side. Yeah. Yeah. Well, as strong as we are in our messaging with married couples, that you're one and you work together, you both have a say, all the things. There's always the asterisk of addiction, abuse. You know, we always have an asterisk. And this is it, Troy. This is the perfect example of it.

30:03Rachel Cruze:And so there is, yeah, a higher responsibility for you to protect yourself in it. Right. And if and if sadly, you know, it doesn't come to fruition and he doesn't choose a path of sobriety and and you have to make a harder call. Right. you will have more of the means and ability to be able to do that too. So there is this level of protecting your current state and then also the unknown of the future that's really, I mean, I'm assuming it's kind of left up to what he's choosing for his future, right? He's going to impact if you move forward or not, which is just so heartbreaking. I'm really sorry you're in this and I pray for him and that healing.

30:43Rachel Cruze:And I know there's some incredible facilities and we've talked to countless people who have overcome addiction and are sober and it's and it's beautiful and they end up coming on the other side even stronger and so that's my my prayer for you guys

30:57Dave Ramsey:two family members with a 10-year coin you know not a not immediate family but yeah but um and real proud of them they're heroes that's that's a hard one i was talking to an author that wrote a

31:08Rachel Cruze:book about 12 step and he said those 12 step meetings are more like church than church sometimes So it's powerful.

31:15Dave Ramsey:Hey, Joy, speaking of that, Henry Cloud has a great book that will help y 'all. Look up this and order it on Amazon right now. It's called Trust by Henry Cloud. How to lose it, how to reestablish it, and what are the steps. It's really, really good. It's a great book on trust. Henry Cloud.

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32:35Rachel Cruze:And the support you get from CHM goes beyond helping you pay for medical bills. Members become part of a family that prays for them when they have a medical event. Try getting that with COBRA. So if you're going through a job loss, life change, or just want to explore other options to save on health care, CHM might be perfect for you. CHM programs start as low as$98 a month. So find out more at chministries.org slash budget. That's chministries.org slash budget.

33:21Dave Ramsey:Today's question of the day is brought to you by Why Refi? If your private student loans are in default and you feel stuck, you're not out of options. Why Refi specializes in helping borrowers like you find real solutions with low fixed rate financing. Go to YRefy.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Not available in all states.

33:46Rachel Cruze:Today's question comes from Susie in Michigan. My husband and I have recently become debt free, including our house. My siblings know this and have started coaching their toddlers to call us big money. They encourage their children to say things like, hey, big money, we want to go to Disney so you can go and pay for, so can you go and pay for us? we thought it was a joke at first but now it happens all the time we've told them that we prefer to be called aunt and uncle but nothing changes for family gatherings it's assumed that we will host the celebrations at our house with no offers to contribute i don't mind having people over but i feel like this behavior is disrespectful how do we approach this some of my siblings are very frugal fragile fragile thank you i was gonna say frugal uh emotionally wise and blow things out of proportion.

34:34Rachel Cruze:They're fragile. I wish they were frugal. I wish the other word was true, but it's not.

34:42Dave Ramsey:If you're fragile and you send your kids in to say stupid things to adults, you better expect to have your little fragile broken.

34:50Rachel Cruze:Okay, we're probably going to have different approaches to this situation.

34:53Dave Ramsey:Yeah, it's not the kid's fault, but I'm probably going to sit down with sis and go, hey, your kid's being a brat. Stop it. Seriously.

35:02Rachel Cruze:Yeah, that's going to probably be our different approach.

35:07Dave Ramsey:Okay, Rachel, what's the nice version?

35:09Rachel Cruze:Yeah, I mean, I would sit down and say, hey, y 'all, I know this is funny and you think it's cute and all of it. But also, I don't want this to become a pattern of who we are in their lives, and it has been. And so we would love for them to stop calling us big money, asking for trips, all the things. We just want to be aunt and uncle. and okay that that would be the conversation point with the kids and then the other things family gatherings and stuff I would I would uh I don't feel like there needs to be a conversation around that I think you just put up your own boundaries and say sorry we can't host this time you know and you just say it's not convenient you just say no some of the times and and if not say okay yes we'll do this but we need um need you do this this yeah you need to bring dessert and you need to bring the meat I need yeah I need to delegate some of the responsibilities and I don't know I think that's fine but the whole kid thing yeah I mean I would I would not call I would not call my niece and nephew brats to my in-laws or to my sister and yeah Bill her husband I wouldn't be like you're what you wouldn't either don't you kind of act tough but you would not call your yeah I'm gonna go you know they need to stop that that's Brad

36:23Dave Ramsey:I might at least say they're bratty. It's bratty. That's being bratty. And you're teaching them this and you shouldn't. You know, yeah, I'm going to call it out. I mean, that's really ridiculous.

36:33Rachel Cruze:Yeah.

36:33Dave Ramsey:And it's really not funny.

36:36Rachel Cruze:Well, it's not. And the truth is, Susie.

36:38Dave Ramsey:It's the parents are being butts.

36:40Rachel Cruze:It's passive aggressive and a little jealous, probably.

36:43Dave Ramsey:What ticks me off is they're sending their kids to do their dirty work. They want to make this point and they're too cowardly to do it themselves. So they got their little brat kid doing it. I'm serious. That's the thing. That's just parents being wusses. And it's the parents. I'm like, this is not fair.

37:01Rachel Cruze:Yeah.

37:01Dave Ramsey:You know, and it's just wrong. And so don't send your kids to do your dirty work. If you want to say something, make a statement. But you don't have to send your four-year-old in. It's just silly. And it's not funny. It's passive-aggressive. All right. Will's in Kentucky. Hey, Will, what's up? Hey, guys. I appreciate you taking my call.

37:23Rachel Cruze:Sure.

37:23Dave Ramsey:How can I help?

37:25Rachel Cruze:So basically I'm 22 years old and I'm doing pretty decent for myself. And a couple of my really good friends are starting to get out of college. And I was wondering if it would be a good idea to allow them to move in to the next house I purchase with me without paying rent just to help them to save up for a down payment.

37:48Dave Ramsey:Probably not. Okay. I think it's okay. You're a very nice guy. I probably wouldn't do that. I don't think it's going to end well for you or them. The only way I would do it would be say something like, okay, here's how much the rent is, and for the first three months you get free rent. And, you know, I want you to put that towards your down payment, okay, or something like that. But it's just you live here free, and there's no set structure to it. This could go on a really long time, and it could turn the friendship sour.

38:24Rachel Cruze:okay so my original thoughts were to just have a set limit and basically ask for help around the house and then like the set time frame of how long they could stay there so still again uh you

38:34Dave Ramsey:don't think that's a good idea i i would have some money in the process because i think it was good for them and i don't think it keeps them from getting a house being a roommate is the cheapest way to live even if you're paying for it okay so for them it's still a bargain yeah it'd be a deal

38:51Rachel Cruze:for them just to live in the house and pay you know a low rent versus getting their own apartment right i mean it would be cheaper to live with you even if they paid rent but if you guys split the mortgage right by four or something that's probably gonna end up being way cheaper than them going getting a one bedroom somewhere so you're kind of giving them a deal for the circumstance

39:09Dave Ramsey:if that makes sense and if you want to like i said if you want to give them the first three months or something i'd do that but i i just think it sets a tone that you're probably not going to end this well. Okay. You know, we had a, I bought a, an investment property. My son moved into it when he came out of college and was one of my tenants. It was a, you know, multiple bedrooms. And so we moved some of his friends in with him that we knew. They were family friends, good guys. Matter of fact, a couple of them ended up coming to work here and we moved them all in, but they all paid rent they all paid rent and and we didn't charge them overcharge them and we didn't you know it wasn't free but they got they got a good deal um and but it was just good to keep the relationship lines really really clear it doesn't get blurred and um you're a very generous guy and i appreciate your heart on that i want you to keep that heart i don't want to destroy that that's not what's wrong with the picture what's wrong with the picture is i don't think um i mean My opinion is there's some unforeseen, unintended consequences of straight-up free that maybe you're not seeing that I think are going to go sideways on you.

40:23Dave Ramsey:That's why I'm bringing this up. But I really want you to keep that heart of generosity. It's pretty incredible. Brad's in Arkansas. Hi, Brad. How are you?

40:31Rachel Cruze:I'm all right. How about you, Dave?

40:33Dave Ramsey:Better than I deserve. What's up?

40:35Rachel Cruze:So I have a kind of unique question. I have about$40 ,000 in unsecured and credit card and personal loans. But my dad passed away, and before my dad passed away, he gave, I'm an only child, he gave his house to his older brother. And his older brother wants me to now take over the house, but I have to take the remaining debt and pay him off because he completely paid it off from the mortgage company whenever my dad died. But he now wants me to take that over.

41:22Dave Ramsey:Sounds like you're broke. Yeah. You're taking over a house doesn't sound like a good idea. Okay.

41:29Rachel Cruze:Well, like I said, I didn't know if I took the equity from the house because the house is just the house itself is probably half a million dollars. But I don't even know. He's going to give you a half a million dollar house. Well, it was my dad's. No, I'm saying it's not anymore.

41:50Dave Ramsey:It's your dad's brother. Your uncle owns the house.

41:53Rachel Cruze:Yes.

41:54Dave Ramsey:Okay. And he's going to give you a half a million dollar house.

41:58Rachel Cruze:Yes. How much is owed on it? How much is owed on it? $90 ,000.

42:03Dave Ramsey:Okay. Well, if you took it and put it on the market the next day and never moved into it, that's okay.

42:09Rachel Cruze:Well, that's the condition is I can't. I have to take a loan over.

42:13Dave Ramsey:You can't afford it. You're broke.

42:14Rachel Cruze:He won't give it to me. Would he give you this deal in 12 months if you got yourself in a position? Potentially, but he's, I mean, he's very well off financially. but I think he's trying to expedite the deal because he removed the home insurance on the house because he said he doesn't really need to add to what he owes on it.

42:41Dave Ramsey:Okay, honey, you don't need to take the house over right now. You've got$40 ,000 in debt and no money. It's not a good deal for you today. If you can do the deal later after you get yourself cleaned up, it'll be okay. but he's not really thinking about you, he's thinking about himself.

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44:18Dave Ramsey:Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Rachel Cruz, Ramsey personality, number one best-selling author, co-host of the Smart Money Happy Hour hit on the Ramsey Network. And my daughter, she's my co-host today. Phone number here is 888-825-5225. Michael is in Phoenix. Hi, Michael. Welcome to the Ramsey Show.

44:49Rachel Cruze:How are you doing today, sir?

44:51Dave Ramsey:Better than I deserve. How can I help?

44:54Rachel Cruze:Wonderful. I have a gentleman in my church. About a year ago, he co-signed for a car for a friend of his girlfriend. And I didn't know about it, but two weeks ago he came to me because they asked him, because they were behind on their rent, to take out a cash loan on the car at a cash one place. And so he gave them that cash, and they're not paying on it. And so it's coming out of his account. And so just trying to figure out the best way. I've helped him to break off contact with them because they were using him, obviously. But I just don't know the best way to get him out and away from them with the co-signing of the loan, whether to get it repoed or just let it go dormant.

45:40Rachel Cruze:I don't know how to break up that relationship.

45:43Dave Ramsey:How come he's not able to emotionally handle that? He has special needs. Oh. So they're taking advantage of him.

45:54Rachel Cruze:Oh, my gosh. Wow. That's horrible.

45:57Dave Ramsey:Now, are they, did you say they are, he's in your church. Did you say they are too? No, they are not. I didn't know about this. He's been attending for almost a year.

46:08Rachel Cruze:I see. But I didn't know about this until two weeks ago until they started to get, try and get cash from him. Yeah. Wow. How does he know them? What's the relationship with him? He met the guy like three years ago, and everything was fine. I believe he's also a little bit autistic. And so they were good friends. But a year ago, the gentleman got married. And when he did that, the girlfriend asked if he could co-sign for a car because I don't know the whole situation in there, but he did. And so he co-signed for her car.

46:44Dave Ramsey:and uh and then for the friend's wife's car not his wife yes okay yeah all right so oh my these guys are um well i yeah is there anyone else the guy you're the guy you're trying to

46:59Rachel Cruze:help is there anyone else in his life um there's parents but i don't know he doesn't really he

47:05Dave Ramsey:hasn't told them i told him to tell them yeah but he doesn't want to tell them to worry them Yeah, no, he's ashamed. That's not, you're not worried about worrying him a bit. Yeah, somehow the biggest thing that you can do is to stop the bleeding, so to speak, and make him promise you that he won't do anything else with them without first talking to you. He did, yeah. Yeah, and then hold him to that. I mean, you need to circle back on that periodically because he may not.

47:36Rachel Cruze:Well, we're actually, because they're trying to come after him, we actually are working on getting a police injunction so that they can't be around him. Yeah, a restraining order. Because he's a very nice guy. Yeah. Exactly.

47:46Dave Ramsey:Because if they hang around him, it will happen again because he's a nice guy. Yeah. So. Wow. Okay. He just doesn't have the capacity to say no. Yeah. That's different than being nice. Right. All right. All right. And so he's got a co-signature on this car. And what is the car being paid or do we know?

48:11Rachel Cruze:I spoke with the with the girlfriend and she said if I did not allow them to continue communicating with him and him to give him more money, they would quit paying on it. They've already quit paying on the they did not make the first payment on the cash loan that they had said that they were going to pay off for him. And so that came out of his account. And so he's struggling financially.

48:31Dave Ramsey:He's got to shut his account down so nothing else can come out of it. Okay. Shut his account down.

48:39Rachel Cruze:You keep saying girlfriend. Is it his wife?

48:41Dave Ramsey:No, it's the girlfriend of the friend.

48:43Rachel Cruze:Yeah, but the friend got married, I thought he said.

48:45Dave Ramsey:I'm sorry. I'm not 100 % sure. I think it's his wife, but it might be his girlfriend. I'm not sure. There's a couple of con artists on the other side of this equation. So we're putting a restraining order in place, and you're going to shut down his account. the only other thing I think I might do is if you have an attorney in the church that will help pro bono I think I would go to both of these companies the cash company and the car loan company and say this guy is of diminished capacity and you had him sign something he's not legally bound to it and you need to release him or I'm going to make you the poster child of people who abuse special needs people and let the attorney get him off of these two loans.

49:31Dave Ramsey:And then I don't care if the car gets repoed. The cash is gone. He's not going to be able to do anything about that. And he needs to set up his account where they can't get into it anymore. But the attorney needs to get in touch with both of them and say, listen, this guy goes to church with us. He's diminished capacity. He doesn't have the ability to sign this stuff. He can't be held legally liable. And if you guys don't let him loose, I'm going to make you wish I would let you loose. That's the attorney's script. Okay. And pretty simple because people that bottom feed on stuff like this, they're generally pretty cowardly if someone knowledgeable comes at them.

50:09Rachel Cruze:Is he severely autistic, Michael? No. Okay. I'm just wondering how easy it is to get...

50:19Rachel Cruze:Sure, sure. I just wonder how hard it is legally to get that.

50:24Dave Ramsey:It doesn't matter. I'm not doing it. I'm just threatening it.

50:28Rachel Cruze:Okay.

50:30Dave Ramsey:We're not going to go to court and have him declared incompetent over a couple of little baby loans. We're not bothering with that. But we are going to let these guys know that they are morally bankrupt, ethically bankrupt, and we're going to make them wish they hadn't done this if they don't let this guy go. Yeah. So this is called a threat. Yeah. So worst case scenario. Just ignore it. Just ignore it. And if it screws up his credit, good. He can't do it again. Right. Right. So just don't make any payments on it. Let it get reposed. No. Let it all implode. And by the way, if the repo man ever gets in touch with you, tell him where the car is.

51:05Dave Ramsey:Tell him to go get it. Right. Exactly. I'll give you the address. I sure hope you don't go to 1234 Main Street. That's where the car is. I sure hope you don't go over there. Right. Okay.

51:17Rachel Cruze:Please don't go to this city with this address.

51:22Dave Ramsey:I don't think I know where it is, but the last time I saw it is over there. I sure hope you don't find it. Yeah, right. It was there at 10 o 'clock this morning. Here's a picture. How much is it all, Michael, total with both loans,

51:36Rachel Cruze:with the cosine of the car and the amount of cash that they got? What did it all total? There's still$16 ,000, just under$16 ,000 on the car,

51:45Dave Ramsey:and then$2 ,000 in cash. The car has a value, though, so that's not going to be the deficit after the repo. The bad news is this guy's got his credit dinged up. The good news is he won't be able to do it again because his credit's dinged up. Right. He won't be able to co-sign. It'll work out to his favor, I hope. And hopefully we can start to – you're being –

52:07Rachel Cruze:You're very kind, Michael, of helping. You're a good human to do that. To be discipling him and helping him through this, number one,

52:12Dave Ramsey:but also giving him some tools for discernment that are not readily available to him. And if you can help him with that, it'll also help him to build boundaries. Hey, you know, even all of us that are not special needs, we need those tools. And sometimes we have to build those tools. So that's not that unusual.

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54:04Rachel Cruze:NMLS ConsumerAccess.org. Equal Housing Lender.

54:23Dave Ramsey:Did you know that twice, that two-thirds of Americans die without a will? Like seven out of ten. When you die without a will, you're inviting the court, the lawyers, and the public into the most personal part of your life, and they're going to tell you what to do. Well, they're going to tell your family what to do. You'll be dead. But you need a will. Billionaire industrialist Howard Hughes, known as one of the richest men in the world, died in April of 1976. His estate with no will wasn't settled until 1983. 600 people claimed rights to it. 22 legal cousins finally split up the fortune. It destroyed the whole thing.

55:06Dave Ramsey:Because he didn't have a will. You need a will.

55:09Rachel Cruze:Even if you don't have billions of dollars.

55:11Dave Ramsey:Even if you don't have$2.5 billion. You need a will. If you just have kids, don't let the state tell you where your kids go. You know? Make sure you're named a guardian, you have a will, and you've set up all this. So we want to challenge you to create your will in August in less than five minutes. You can find out if an online will works or if you need a full-on attorney to do it. ramsaysolutions.com slash will quiz it's free click the link in the show notes and we'll get you set up this is will month use the promo code and uh you can get an online will and get 25 off by doing all this but go check out the will quiz real quick and you need one by the way if you're breathing and you're over 18 jeff's in buffalo new york hi jeff how are you great thanks for having me on the show.

56:00Dave Ramsey:Sure. How can we help?

56:02Rachel Cruze:So my daughter's just graduated from college. We took some loans to get them through. We've got about 180 left on our mortgage. And I have three retirement accounts plus a brokerage account. And the brokerage account has about$200 ,000 in it. And my wife and I are talking about, should we just cash in the brokerage account, pay off the student loans, and take the rest of it and pay it against the mortgage.

56:31Dave Ramsey:How much student loan debt is there?

56:32Rachel Cruze:We don't have card... Pardon me?

56:34Dave Ramsey:How much student loan debt is there?

56:37Rachel Cruze:It's about 125. Between how many kids? Just one?

56:42Dave Ramsey:Two.

56:43Rachel Cruze:Two. Okay.

56:44Dave Ramsey:And these are like... Are these Parent Plus loans or are you... Yeah. Oh, okay. So you've got student loan debt with 200K in the bank. Yeah, pay that off by NIFAL. For sure. Are we? Yeah, by the time you get off the phone, it should be paid. Okay. Right now. Yeah, absolutely. You and your wife are right. I would do what you suggested instantaneously. And then I would make sure. Do you have any other accounts that are non-retirement?

57:14Rachel Cruze:No, we have the brokerage account, and then we have our savings account.

57:18Dave Ramsey:The savings. How much is in the savings account? Oh, the savings account is the$200. No, the brokerage is$200. How much is in the savings account?

57:25Rachel Cruze:The brokerage account is the$200. The savings account, it's about$5 ,000 or$6 ,000.

57:29Dave Ramsey:Okay. You need three to six months of expense. Do you have any loans other than the student loans, not counting your mortgage?

57:37Rachel Cruze:No. We have no credit card debt. We have no car loans.

57:41Dave Ramsey:Okay. All right. So, Jeff, I'm walking through the system that we teach that we've taught for 30 years that works every time. It's called the Baby Steps. The first step is to be debt-free other than your home. So$125 ,000 in student loans, that leaves$75 ,000 in the brokerage account. Okay. Now you're debt-free. That's baby step two. Baby step three is a fully funded emergency fund, which represents three to six months of household expenses. What's your household income, sir?

58:13Rachel Cruze:It's about$180 ,000.

58:15Dave Ramsey:Cool. What do you think your monthly expenses, if you just had to write checks and stay open, what would it take to stay open?

58:22Rachel Cruze:We're cash positive. I have a budget, and we keep track of that every month.

58:28Dave Ramsey:What's it take a month?

58:29Rachel Cruze:Yeah, how much does it take to pay mortgage bills? What's it take to stay open each month?

58:33Dave Ramsey:What's your burn rate?

58:34Rachel Cruze:Oh, it's about five and a half. It's actually$5 ,600.

58:38Dave Ramsey:Okay, so three to six months of that would be$20 ,000,$25 ,000. Yep. Okay, so with a$180 ,000 income, that's probably pretty cool. So let's call, if we call your emergency fund$25 ,000, it's only got five in it. You need to put 20 in it. Now we've used another 20 of your$200 ,000. We're down to 55. We're down to 55 that you're going to throw at the mortgage. Baby step three is putting 15, or four is putting 15 % of your income into retirement. If you're not, start putting that in the budget. Baby step number four is kids' college. Oh, wait, we just finished that. Baby step six is pay off the house as fast as you can, and that's the 55 going towards the 180.

59:16Dave Ramsey:and then whatever I can squeeze out of my budget going forward because you're cash positive. Instead of building up a brokerage account, I'm paying off the mortgage as fast as I can. Okay. That's how we execute this.

59:29Rachel Cruze:While funding 15 % of your income into retirement. So you are still investing while paying off the house. Okay.

59:37Dave Ramsey:Now, that's the outline of what we do. I'll send you a copy of the book, The Total Money Makeover, because you sound like you're open to actually doing it. That's pretty cool. So it'll show you how to do it. That's very cool. And the purpose of all that, Jeff, is what it does is it sets you up with no mortgage payment, making$180, no payments of any kind, your emergency fund's covered, you're systematically investing. There's nothing left to do then but become very wealthy and outrageously generous. And we call all of that living like no one else so that later you can live and give like no one else.

1:00:08Dave Ramsey:You've done a really good job. All we're doing is tweaking the flow of some of this cash and maximizing its potential. That's all we did in the last few minutes. So very cool. Yeah, student loans are gone. Boom. $25 ,000 emergency fund. Boom. $55 ,000 on the house. Or$25 ,000, but adding$20 ,000 to the emergency fund. $55 ,000 on the house. So now the house is down to$100 ,000 and a quarter. And here we go. Game on, baby. Game on. And you'll knock that out. You'll probably knock that out in a year, man. And you walk through the backyard without your shoes on. The grass feels different, man, when you've got no mortgage.

1:00:44Dave Ramsey:Life changes. It's so freaking weird. Jeremy's in Atlanta. Hi, Jeremy. How are you? Better than I deserve. Good. How can I help?

1:00:54Rachel Cruze:I've kind of accrued a lump sum of money over the years and savings, and I've kind of put it into high-yield savings, maybe bought a few CDs and stuff like that. But I don't have any retirement, but everything that I own is paid for.

1:01:12Dave Ramsey:Good.

1:01:12Rachel Cruze:And I don't really know what percentage to go.

1:01:15Dave Ramsey:So you're great at avoiding debt. You're great at saving. You're lousy at investing.

1:01:20Rachel Cruze:Yes. Scared, honestly.

1:01:22Dave Ramsey:That's fair. That's fair. Well, you know what's scared when you don't know how to do something is wisdom. You know, you get behind a car and you're 12 years old and they start the car and it's 400 horsepower. You should be scared.

1:01:36Rachel Cruze:Well, I know money in my bank account is good. It kind of scares me.

1:01:39Dave Ramsey:Yeah, yeah. How old are you, Jeremy?

1:01:41Rachel Cruze:I'm 38.

1:01:42Dave Ramsey:Okay. All right. So here's the thing. There's two kinds of fear. And yours is a wise fear. An unwise fear is I'm just have this general paranoia. And and we call that false evidence appearing real. But your fear is I don't know what this is and it's powerful. And so it's scary. That's a good fear. So how do we overcome that? We add knowledge to the equation. So if I woke up in your shoes, how much have you gotten all these accounts, by the way? um as of right now about 483 000 way to go man well done way to go most people are broken look at you that's so good it's gonna be so very very broke yeah it's gonna be so easy for you though all you've got to have is some knowledge so do you own a home uh yes okay the home did not come with a fdic guarantee that it would not go down in value did it no but you were very comfortable buying that you weren't scared investing in that piece of real estate and i'm making that point i knew it was going to be worth more ah historical data walking around since you're old enough that you've seen houses go up in value and you could believe they're going to continue to good analysis and that removed the fear so uh i'll give you an example i own a mutual fund that started in 1934.

1:03:06Dave Ramsey:It has averaged almost 12 % a year since 1934. It's only had 22 down years, and in the last 25 years, it's only had three down years. I'm pretty comfortable with that, like you're pretty comfortable buying a house. Follow me? But you got to add that knowledge to your bucket. So what I would tell you to do is sit down with a Ramsey SmartVestor Pro and click on RamseySolutions.com, sit down with them, and they have the heart of a teacher. Tell them when you call them, I'm not ready to invest. I want to learn because I'm scared. And they will be gentle, kind, and teach. And they will teach you and teach you and teach you until you are ready to purchase, not when they're ready to sell.

1:03:52Dave Ramsey:And then you'll be able to do some long-term investing the same way you bought that house.

1:04:02Thank you.

1:04:11Rachel Cruze:Switching banks can be a hassle, and I totally get that. But when Winston and I opened up our Fairwinds account, we were shocked by how quick and easy it was. It just took a few minutes online. We didn't have to block off an entire afternoon or track down paperwork. And the next day, we got a personal call from a Fairwinds specialist just checking in. I couldn't believe it when I answered my phone. And I was talking to them. I was like, y 'all are the nicest people. Now, if you're working hard to save money, get out of debt and build a future, you should have a bank that supports that, not fights it.

1:04:43Rachel Cruze:That's why I recommend Fairwinds. They created the smart checking and savings bundle specifically for Ramsey fans. Plus they have a great app and you have access to over 33 ,000 fee-free ATMs and more than 5 ,000 shared credit union branches across the country. So you can have access and withdraw your money just like you're used to, no matter where you live. Don't settle for a bank that slows down your progress. Make sure you choose one that helps build you up and helps you win with money. Visit fairwinds.org slash Ramsey and open your smart bundle today. fairwinds.org slash Ramsey. fairwinds.org slash Ramsey.

1:05:23Rachel Cruze:Fairwinds is federally insured by the NCUA.

1:05:41Dave Ramsey:Maddie is in Orange County, California. Hi, Maddie. How are you?

1:05:46Rachel Cruze:Hi, good. Thank you for taking my call.

1:05:48Dave Ramsey:Sure. What's up?

1:05:50Rachel Cruze:So my husband and I are in baby step two. We have about$100 ,000 in debt. And our question is, do we continue to pay off our minimum payments on all of our debts while we're trying to hack off our debt? Or do we pause on our minimum payments and use all of that money to knock out one debt at a time?

1:06:13Dave Ramsey:No, you make minimum payments and pay minimum payments on everything but the little one and attack the little one with what you can find beyond that. That does two things. One is it keeps them from chasing you and hassling you for being in default. and two is it keeps from destroying your credit.

1:06:30Rachel Cruze:Okay. Yeah, just to stay current so you guys don't get behind on them if you just stopped paying them. Yeah, which we're able to pay all of them right now. We were just thinking, you know, if the thought process is, you know, that we don't need a credit score, then we'll have that.

1:06:46Dave Ramsey:Yeah, you don't, but you're going to get yourself into a bunch of late fees and maybe even some legal fees where they come after you.

1:06:53Rachel Cruze:Yeah. What's all the debt in? What are the different types of debt? So we have$12 ,000 in student loans,$70 ,000 in car debt, which I just convinced my husband to sell the cars. That's great. $20 ,000 in credit card debt,$10 ,000 in personal debt, and then$35 ,000 in medical debt.

1:07:16Dave Ramsey:Okay, good for you. Well, you're attacking this, and what's your household income? my husband makes 120 a year okay all right and uh um yeah you get rid of the cars it's going to catapult you way forward in this uh and get you know just get some inexpensive cars for the time being and uh which don't fit in in orange county i understand whoopty doopty but uh we're still

1:07:43Rachel Cruze:gonna do it anyway was it just lifestyle creep maddie all the credit card debt and everything i'm sorry was it pretty much lifestyle creep would you say all the credit card debt or were you guys opening a business or what was causing no it's it's just not wise spending yeah and we actually had my husband had a lot of uh credit card debt before we got married and so okay

1:08:06Dave Ramsey:gotcha gotcha and you're both on this now and you're both attacking it and we're talking about this a lot and that's why that's why you start asking questions like this good good that's a good sign. I think you're on track. But no, the answer to your question is I would continue to pay minimum payments because of the late fees, the legal fees, all the other stuff. And yeah, I'm not worried about your credit. I'm not trying to build credit. But on the other hand, I'm not trying to destroy it either. We'll let it be what it is and pay everything on time, be current, and then attack the smallest.

1:08:40Dave Ramsey:But getting, I mean, you've probably got what, $1 ,200,$1 ,400 in car payments, right?

1:08:47Rachel Cruze:Yeah, we have$12 ,000 in car payments, and then we have a little over$1 ,400 in, I'm sorry,$1 ,200 in car payments and$1 ,400 in other minimum payments.

1:08:58Dave Ramsey:Yeah, so half of your payments are car payments, and 70 % of your debt is. So you only have$30 ,000 left to hit.

1:09:05Rachel Cruze:Which is so great, too, Maddie, because on the other end, always, the math, you think you guys don't have$3 ,000 a month freed up, right? It's not going to banks and, you know, your student loan debt and everything. It's going to be with you guys. So that's always the encouraging other end of the formula.

1:09:19Dave Ramsey:Look at how fun this is going to be off the back once you do all this crap that you've got to go through to clean up the mess. But Rachel's got a good point there. Tanya's in Arkansas. Hey, Tanya, welcome to the Ramsey Show.

1:09:31Rachel Cruze:Hello. Hi. Hi.

1:09:33Dave Ramsey:How can we help?

1:09:36Rachel Cruze:I have a son who graduated high school this year, and he's going to an expensive Christian college, and he doesn't quite have enough money to cover it. And I'm wondering if I should be generous and help him out until he can get a job and get settled, or if I should say, sorry, bud, you're on your own. how much is the how much is this college costing per semester per year let's see he he lacks about i think it's about seven thousand dollars um per semester um the college itself was like fifty thousand and he's gotten enough scholarships and stuff to cover most of it but there's just a little bit lacking

1:10:25Dave Ramsey:the number one thing that causes student loan debt is not the fact that people want to get an education it's the fact that they select a college they can't afford while there's colleges all over the place he could have afforded

1:10:42Rachel Cruze:right and he has said that after this first semester if um before getting a loan that he would come back to our town.

1:10:52Dave Ramsey:How's he going to pay for it? He's short. Well, I was going to help him. No, no, no, no, no, no. I mean, his plan is if after the first semester I have to get a loan, well, he's going to have to get a loan. He's short. What's his plan?

1:11:09Rachel Cruze:Oh, come back here to Conway to go to a state school, which would be, it would be covered.

1:11:13Dave Ramsey:No, he's already gone to the other place for a semester and couldn't afford it. How did he pay for that?

1:11:19Rachel Cruze:oh i am i was going to help him with this first semester oh so he knows that you've already made that commitment and then going forward he's expect he's going to try to

1:11:28Dave Ramsey:okay so seven thousand so if he's seven thousand short mom's going to cover it but he's going to

1:11:32Rachel Cruze:come home what well he has had well he let me see he's gotten um a five to nine he had about Let me think how much he has. He has$4 ,000 in it. It's not very much. And it doesn't completely cover the first semester. And so he was just going to go ahead and just use that and then go forward with what he's got. And I said, well, I'd like to help you. I'll do this much.

1:11:58Dave Ramsey:Tanya, if you don't pay for the school, you don't get to go. And he's short. So unless you give him the money, he's going to take a loan.

1:12:09Rachel Cruze:and what he's about to pay for one semester at this school probably could cover him the whole thing in arkansas right right so the best gift you can give him tanya honestly is sitting him down and laying out the facts of the situation and the reality of what she's living in and make a wiser choice is he starting this fall like coming up yeah he's already set to go and and pay for things this fall yeah cancel it okay i mean seriously stupid it is stupid because i'll be honest it is probably i'm going to just say it it's probably a school that you no one's ever really heard of it's going to do nothing for him in the job market right like it's there's nothing that is causing any any type of and i'm not against christian schools but the idea that

1:13:01Dave Ramsey:So how all the holy people go there and they don't go to the others is hogwash. Some of the people at Christian schools ain't real Christian, honey. We all know that. OK.

1:13:11Rachel Cruze:And that may not have been his own faith. I mean, it's just it is it's there's no marketplace value for most of these degrees because the school doesn't carry any level of credibility because majority of people don't even know where you could get to get a degree at another college that no one's really ever heard of either. But it's an in-state. But it's an in-state school. and you take in-state tuition and he gets it paid for because he sounds smart.

1:13:32Dave Ramsey:For what he's paying for this semester, he'd probably go all the way through Arkansas.

1:13:36Rachel Cruze:Yeah. He should cancel. So that's the gift you could give him, Tanya, honestly, to lay this out for him. So let me, how do I say this gently?

1:13:49Dave Ramsey:Your job as mom is not to go along with someone's dream, which is actually a nightmare in the making. your job as mom is to be stronger than that and speak more directly into this with more wisdom and more force i would beg you to be stronger with him he is not equipped to make this decision and we can tell because he's made a bad one and he is not just because he's tall and taller than he was and his voice is deep and he has some hair on his back doesn't mean he makes good decisions okay just because he looks like a man doesn't mean he's ready to make this decision so he needs his frontal lobe is he needs his parent in his life to say don't do this tanya

1:14:35Rachel Cruze:please please yeah be a voice be a voice yes she will please do it you can do it yes you can do it yes i hope you do and that's what's so hard about student loan debt it's these 18 year olds that have no idea he's going to a 50 000 a year school right do you know what i mean and there's no one No one told him this is a dumb idea. This is a stupid idea. Oh, man. Tanya, you can do this.

1:14:58Dave Ramsey:This is how we have$1.7 trillion in student loan, ladies and gentlemen. You give free money to 19-year-olds.

1:15:04Rachel Cruze:And not to Harvard. You know what I mean? Like a big school. It's probably, I mean, it's doing nothing. Certainly not to Harvard. It's going to do nothing.

1:15:10Dave Ramsey:Who would go there now?

1:15:11Rachel Cruze:Well, I'm just saying a school that people actually have heard of. It's like, wow, that's impressive. Yale? I don't know.

1:15:38Dave Ramsey:Brett's in Lincoln, Nebraska. Hi, Brett. How are you? Good. How are you doing today? Better than I deserve. What's up?

1:15:48Rachel Cruze:Well, thanks for taking my call, first off. Sure. Um, my, my wife and I have, um, a little over a hundred thousand dollars in credit card debt. Wow. Um, and I, and I'm in sales, um, and have a quite large commission that's coming in at the end of this month that will basically wipe out all that debt. Praise God. Wow. That's lucky. I mean, you worked hard for it, I know, but that's great.

1:16:13Dave Ramsey:Yeah. And then you're panicked that you might do it again. Right.

1:16:18Rachel Cruze:Yeah. Good. I hope you are. How do we, how do we, yeah, my wife and I are both on the same page in that. So obviously a change in our spending habits and lifestyle. But I'm curious how we should be thinking about our behavior and our spending when it comes to not using a credit card and using more cash or a debit card and how we should approach that.

1:16:41Dave Ramsey:Light two candles tonight after dinner, get all the credit cards out and have a plastic surgery party. A plasticctomy. Chop every single one of them up and then close every one of the accounts when you pay them off. That's step one.

1:16:59Rachel Cruze:Yeah, cut it off at the source. Just be done. Be done with it. Do you guys know the why? What caused the$100 ,000? Is it purely lifestyle? Is it that you guys just didn't have a budget? Because getting to the root of it and understanding the motivation and what caused it in the first place is going to help going forward. if you can identify that. Yeah, I think it's a combination of both, right? Like we had a budget, but we didn't really stick to it necessarily and monitor it on a weekly basis. And there were also some lifestyle choices and trying to keep up with the Joneses and just wanting nicer things above and beyond our paycheck.

1:17:40Dave Ramsey:Both of you can look at each other and say that in total. Both of you You're admitting this, right? Yeah. Okay. Yep, absolutely. Good, good. How old are you guys? 37 and 39. Perfect. And what's your household income, including your normal checks that you get?

1:17:59Rachel Cruze:So it's variable depending upon the commissions every year.

1:18:02Dave Ramsey:Sure, but, I mean, what do you average? What's your normal income?

1:18:07Rachel Cruze:My annual paycheck is$125 ,000 myself. myself my wife works part-time at our church and makes about 23 000 then how much do you usually get in these bonuses i know this is an unusually large one yeah i mean it's variable um anywhere collectively between i'd say like 300 000 to 600 000 okay depending upon the oh wow all right so So here's what I tried to do for a long time.

1:18:41Dave Ramsey:I was a little younger than you at the time when I figured it out about me was I'm an abundance person and I'm a really good salesperson. You're obviously a really good salesperson, and I'm an abundance person. When I put those two things together, what I fell prey to was I always just thought, well, if we need some money, I'll just go get some more money. and if I in other words I thought I could out earn my disorganization and stupidity and overspending and it found out I couldn't you can never make enough to beat that and that's where you are today you've discovered that I don't know if you fell prey to that exact emotion or not but I always thought I'll just go get some more money I can out earn my stupidity and um and sometimes someone that's very good at what you like you it's like I am they fall prey to that So you can't.

1:19:34Dave Ramsey:You have to build processes and systems into your life that causes both of you to be accountable. And that starts with a basic budget.

1:19:44Rachel Cruze:Yeah. I mean, I'm going to be honest with you, Brad. I'm a little bit shell-shocked that I'm like, you guys went$100 ,000 in debt making half a million dollars a year.

1:19:51Dave Ramsey:Like, I mean, that's pretty. That's a lot of spending. That's a lot of overspending.

1:19:56Rachel Cruze:That's a lot of spending. And I like to spend. But I'm like, oh, my gosh. So, I mean, if I were you guys, man, I mean, I would sit down and figure out how can we, I mean, I would drive such deep contentment and discipline so hard in this first year.

1:20:15Dave Ramsey:Swing the pendulum the other way.

1:20:16Rachel Cruze:Yes, make it a year goal and live on, God forbid,$200 ,000. You know what I mean? Like, seriously. Sure. Just to get to this idea of reality of like, okay, we are good, right? We make great income, and if we choose$250 or whatever.

1:20:32Dave Ramsey:Yeah, and you're in Lincoln, Nebraska, not Manhattan.

1:20:35Rachel Cruze:But honestly, to know that you, your wife, your marriage, your family, your friends, your life is good. You don't need all this stuff. And I know you feel that already, but there's something about actually living it out and making choices and being disciplined to know we have money in the bank. but we're still choosing to live so below our means to really get in this this process and this pattern and this and actually live it out and then you guys can start kind of loosening the reins more and more but um i mean if that's what i would do if i were you guys and i'm a spender but i would i would yeah i would try to live on half the income and just be disciplined in that because you guys have been so far the other way yeah i hope y 'all took great vacations and stuff.

1:21:16Rachel Cruze:You know what I mean?

1:21:16Dave Ramsey:Like, I hope there's like, there's a tremendous gun collection.

1:21:22Rachel Cruze:Yeah. Or tremendous purse collection.

1:21:24Dave Ramsey:I don't know.

1:21:25Rachel Cruze:But, but good for you guys. I mean, you're, obviously you're an incredible worker. I mean, that's, that's a phenomenal income, which is so great. And you guys can use that in such wisdom and discipline and contentment.

1:21:35Dave Ramsey:And here's the thing. You will like yourself better and each other better when you do that. Yes.

1:21:40Rachel Cruze:Yes.

1:21:41Dave Ramsey:Because you're more likable than some out of control spending freak.

1:21:44Rachel Cruze:It's going to feel really good.

1:21:46Dave Ramsey:Yeah.

1:21:46Rachel Cruze:It's going to, it's in a spiritual to discipline in it all. Like it's overall, I think it's going to be really, really healthy for you guys. So I'm, I'm, I'm excited for y 'all honestly, because it's, it's the kind of people like you, honestly, Brett, that you can bless your family. You can do some really amazing things in life because you have the tools to do it and you're going to be able to be extremely generous and the blessings you're going to be able to give to people above and beyond is, is incredible. and then you think about your kids' kids and the legacy. I mean, you guys are just set up to have a really rich, not in numbers wise, but just fulfillment and money can be a tool to help create that.

1:22:23Rachel Cruze:But it is not the thing that's gonna be the fulfilling factor. And you guys know this because it doesn't buy happiness. You don't, you're never gonna find a level of satisfaction because you will keep spending and keep spending and spend beyond$500 ,000 a year.

1:22:36Dave Ramsey:Yeah, there's a piece underlying this that she's talking about. godliness with contentment is great gain scripture says and so it's that peace that and when you're overspending it's kind of frenetic and kind of crazy and kind of wild yeah and there's this adrenaline rush and this dopamine hit from hitting the submit button on the cart on amazon and all that garbage and uh those people they they the the people that do the marketing on that stuff, understand that and take advantage of it. And so your anxiety level in the house is going to drop when you get control of this. Your relationships are going to improve when you get control of this.

1:23:18Dave Ramsey:You're probably going to experience physically feeling more peaceful when you get control of this. So there's so much more to it than the simple arithmetic or the sickening sense of I'm out of control and overspending like some kind of freaking addict or something. And so, yeah, you're really asking great questions. You're in a great place. And the phenomenal news is you get one shot here to clean it all up at once. Wow. Chop up those cards tonight. Get a debit card. You can go on the envelope system. I still carry cash in my pocket. And I buy most things with cash, but I'm really old school. I mean, I've got a redneck emergency see find in my wallet a thousand thousand bucks right all the time just uh just because i might need it and i never do but just because i might need it and um so yeah it just there's a different feeling when you're using money that you have and it's a sense of power a sense of control over it telling your money what to do instead of wondering where it went we're going to sign you up for the every dollar premium and get you involved in that and jump into one of these free webinars that the Ramsey personalities like Rachel are doing, showing you how to set that thing up and get it running.

1:24:34Dave Ramsey:It'll be valuable. You and your wife sit there and do it together and lay out every dollar before the month begins, where it's going to go, regardless of how big the commission check is. Every dollar needs a name. I don't care where it's going as long as you do it on purpose. Actually, I do care where it's going, but do it on purpose. And that'll get you there, and you'll see some real good movement in that. Wow. Big numbers. Yeah, I know.

1:24:59Rachel Cruze:Which I'm glad because they can get out of it, but also it magnifies.

1:25:04Dave Ramsey:It magnifies the absurdity.

1:25:06Rachel Cruze:Of what it is. Yeah, that's a great example. But Brett, we're cheering you guys on. Amen.

1:25:10Dave Ramsey:I'm proud of you. Get after it, dude.

1:25:32Dave Ramsey:I was sick and tired of being sick and tired. Bankrupt with a toddler and a brand new baby at home. Scared doesn't even begin to cover it. But I got mad enough to change. I started using God's and grandma's ways of handling money. That journey became the total money makeover. A plan everyday people can use to take control of their money. Millions have changed their lives following the plan in this book and found hope. Start your makeover today. at RamseySolutions.com slash store.

1:26:19Dave Ramsey:Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love and create actual amazing relationships. Rachel Cruz, number one bestselling author, Ramsey personality, host of the Rachel Cruz show. My daughter is my co-host today. Owen is with us in Canada. Hi, Owen. How are you?

1:26:45Rachel Cruze:Better than I deserve. How are you guys?

1:26:47Dave Ramsey:Just the same. How can I help?

1:26:49Rachel Cruze:So I'm wondering if I should sell my home and rent for a little while and then, like, save up some more just to make it a little more affordable on the month-to-month on my end.

1:27:03Dave Ramsey:Okay. What's not affordable?

1:27:08Rachel Cruze:Well, after I started listening to you guys, I realized, like, my mortgage payment is over 25 % of my monthly take-home.

1:27:17Dave Ramsey:What percentage is it?

1:27:21Rachel Cruze:It's probably about, like, well, 25 % would be$850, and it's currently$1 ,250.

1:27:29Dave Ramsey:Okay. All right. And how much other debt do you have, hon?

1:27:33Rachel Cruze:None.

1:27:34Dave Ramsey:Okay. What's your household income?

1:27:38Rachel Cruze:I clear$3 ,400 a month. Mm-hmm.

1:27:42Dave Ramsey:Okay. So, and then my, I don't know Canadian tax rates off the top of my head. I'm guessing you make, what,$60 ,000 a year? Yeah.

1:27:54Rachel Cruze:Yeah, that sounds right. Yeah.

1:27:55Dave Ramsey:Okay. All right. And.

1:27:58Rachel Cruze:You bring home$3 ,400, though.

1:28:00Dave Ramsey:Right.

1:28:01Rachel Cruze:Yeah, that's right. That's like, yeah, clear. Yeah.

1:28:07Dave Ramsey:And you don't have any other debt in your house. So the reason I'm hedging around and fumbling is the last thing I sell is the house, and I will sell the house if you can't afford it. I would tell you to do that because it's not a blessing to you. Yours is a little high, but it's borderline. And do you hate the house?

1:28:26Rachel Cruze:I don't hate the house. When I heard you guys say that a house should be a blessing, not more an inconvenience, it feels like an inconvenience from time to time.

1:28:38Dave Ramsey:Okay. Yeah. It feels like it owns you sometimes. You don't own it. Yeah.

1:28:42Rachel Cruze:Yeah.

1:28:44Dave Ramsey:What's the trajectory on your income? Is it going up fast?

1:28:48Rachel Cruze:It goes up a little bit year by year.

1:28:51Dave Ramsey:Slow. Okay.

1:28:53Rachel Cruze:Yeah, slow. Yeah. Is it just you, Owen? Or are you married, kids? Just me. Just you. Okay.

1:29:03Dave Ramsey:I'm okay if you want to hang out there and hang on to this thing and fight on through it it's not enough that it's um that it's completely holding you back it's not enough that you're drowning in it it's it's it is enough that it's uncomfortable and it is more than I would sign you up for if we were talking from scratch but selling a home moving all of that is a very emotionally and financially expensive thing to do and so it's the last thing i tell people to do before i tell them sell their car real quick i tell them to sell you know other stuff so fast i tell them take an extra job so fast that kind of thing and you know if you picked up some side hustle uh to add to the equation it probably would lighten us this load a little bit yeah because it's a couple hundred

1:29:48Rachel Cruze:bucks you know what i mean six seven hundred bucks a month that ideally you know you would have for margin in your budget. But yeah, I'm with you.

1:29:58Dave Ramsey:Rachel's in Sacramento. Hi, Rachel.

1:30:00Rachel Cruze:Hello.

1:30:01Dave Ramsey:How can we help?

1:30:03Rachel Cruze:You know what? I made a big mistake. I bought my daughter a car. Yes. I've made many, but this is huge. Last September, and it was contingent upon her getting herself together, her FICO high, all that good stuff, and then putting it in her name. It's almost a year she hasn't done that. She's getting fast-track tickets. That's like a toll bridge thing. And her insurance is not covered by anyone other than Mom. And I'm becoming inundated with this. And I feel like I'm ready to do something drastic just to pay off the car and just give it to her.

1:30:39Dave Ramsey:How much is the car?

1:30:42Rachel Cruze:$27 ,000 approximately. Is it in your name, Rachel? Yes, ma 'am. It is. Yes, ma 'am. And the loan's in your name, everything? Yes, ma 'am. Dummy me, yes.

1:30:52Dave Ramsey:So let me ask you, the agreement was that she was to arrange to get the car paid off and put it into her name, and she's been unable to do that because of her irresponsibility. Is that what you told me?

1:31:08Rachel Cruze:Absolutely, pretty much.

1:31:09Dave Ramsey:And how long ago? And that was a year ago.

1:31:11Rachel Cruze:Yes. And things have gotten a little bit haywire now because these tickets have come.

1:31:17Dave Ramsey:Registration is going to be more than expected. and I would just call her and have her. She lives in your area, I assume. Yes. Yeah, I think you need to sit down with her for a cup of coffee and say, honey, you know what, I love you, and I'm so sorry. I thought I was doing something nice for you, and this is a curse to you. It has really messed up your life, and I'm so sorry. Hey, we're going to fix it. We're going to sell that car.

1:31:45Rachel Cruze:Well, she has three children, my grands, so she has to have transportation. I don't care. I know.

1:31:50Dave Ramsey:She does not need a$27 ,000 car, and she's irresponsible, and she didn't follow through on what she said. Are you a multimillionaire?

1:31:59Rachel Cruze:Absolutely not. I'm going to start working for you guys and become one, though. How about that? That's another story.

1:32:04Dave Ramsey:Okay. Yeah. You don't have the money to throw around$27 ,000, do you?

1:32:10Rachel Cruze:No, but you know what? This is the crux of the question. I am 61. I'm going to get my Social Security early next year, even though that may not be the smartest thing to do. But I have a home. So I was either going to get a HELOC or take the lump sum from my employer. Sweet girl, you made a mistake.

1:32:29Dave Ramsey:Undo the mistake. Don't keep doing it. I know. What you did was not a blessing to your daughter.

1:32:37Rachel Cruze:To the grandchildren? You didn't help your daughter.

1:32:41Dave Ramsey:You hurt your daughter.

1:32:42Rachel Cruze:You put her in a situation where she can't afford a car.

1:32:48Dave Ramsey:Honey, she can't afford the car. No, she can't. She can't afford the tickets and the registration. You can't afford the car, Rachel. You can't afford the car. Nobody can afford the car. The car needs to go away. It's not a blessing. How is she going to transport the children? Honey, we might get a$5 ,000 car. Yeah, she's a single parent. Honey, she can get a$5 ,000 car. Single parents do it all the time. but you're not blessing her you're not blessing those kids you're putting those kids mom in a trap and she can't swim she's drowning because of you when she does stop it stop it quit rationalizing it it was a dumb butt idea quit doing it stop it okay love your daughter better okay sit down with her say i made a mistake honey we're selling this car And we're going to figure out a way to get you a little$5 ,000 car to cart those little kids around.

1:33:43Dave Ramsey:And get yourself up on your feet, kiddo. Because guess what? That's what you did. Right. You did the same thing. And nobody gave you a car you couldn't afford and drowned you in it. You're like somebody swimming and you hand them an anchor.

1:33:59Rachel Cruze:How do I sell a car that's being financed?

1:34:03Dave Ramsey:You sell it. Okay, now we're getting somewhere.

1:34:06Rachel Cruze:Yeah, go on Kelley Blue Book, Rachel. Okay? and put in all the information and see how much the car is worth. You owe$27 ,000. There's a good chance you're going to be underwater on this car. So the value of the car, let's pretend it's at$24 ,000, that you can sell it for$24 ,000. That means you have$3 ,000 that you have to find. So what you could do is go down, get a$8 ,000 loan from a credit union, give your daughter the$5 ,000. If you want to get her the$5 ,000 car,$3 ,000 for the difference and be done with it.

1:34:36Dave Ramsey:You pay off the$8 ,000 for your mistake.

1:34:39Rachel Cruze:And then you pay off the$8 ,000 of that loan.

1:34:42Dave Ramsey:Here's the thing. When you're trying to bless somebody and you do it wrong, you don't bless them, you curse them. And that's what you did. You didn't mean to, honey, but it's what you did. So you need to undo it.

1:35:04Rachel Cruze:What's up, guys? George Camel here. if you've been thinking about making a real difference in your community, this is your moment. People are drowning in money stress right now, and you can be the one who helps them by leading a Financial Peace University class. It's totally free for you, and we hook you up with all the tools and support you need. So if you're ready to help people ditch debt, save money, and actually sleep at night, go to fpu.com slash lead to learn more. That's fpu.com slash lead.

1:35:44Dave Ramsey:Thanks for joining us, America. Buying or selling real estate is a big deal in the middle of all the drama that we've got going on right now. And when you're facing drama, Dr. John Deloney has a good saying. He says, facts are your friends. Facts can help you pierce through all the hyperbole and the overstatement and the crazy stuff you see on Tic Tac and on Instagram. Facts are good for you. If you want to know what the latest facts are about the U.S. housing market trends, we can help you do that. Go to RamseySolutions.com slash market. You'll be able to find there what the median house prices actually are and what they're trending up or down, regardless of what someone told you that their neighbor sold their house for.

1:36:26Dave Ramsey:Yeah, that's not good information. How many houses are actually on the market? What are the real interest rates today? And we keep the website up to date and RamseySolutions.com slash market or click the link in the show notes. Malik is with us in Boston. Hi, Malik. How are you?

1:36:48Rachel Cruze:Hi, I'm doing well. How are you guys?

1:36:50Dave Ramsey:Better than we deserve. What's up?

1:36:52Rachel Cruze:Awesome. Thanks for taking my call today. So I make kind of a variable amount of money each month and trying to budget right now to kind of more aggressively pay off my student loans and just wanted some advice on that. What is the fluctuation usually? Like what's a high month, low month? Yeah. So last year I made about$65 ,000, and that was anywhere between like$2 ,500 a month to like upwards of$9 ,000.

1:37:29Dave Ramsey:Okay. Pretty good fluctuation. What do you do for a living?

1:37:32Rachel Cruze:Yeah. I'm an acupuncturist. So a lot of my income, I mean, essentially my entire income is based on the number of people I see in a given week or month. And then I also do some side jobs as well to supplement that. Okay. So what I would do, because I'm on a, my income is up and down too throughout the year, depending on work and everything too, highly commission based. So what Winston and I do in our budget, we have it prioritized of what has to be paid and then what we just like and enjoy. And so for you, you've got to figure out, you know, food, shelter, utilities, transportation, your four walls have to be covered every single month, right?

1:38:18Rachel Cruze:We're not going to get behind on those things.

1:38:20Dave Ramsey:And what does it take to do that? If it takes$2 ,100 to do that, the first$2 ,100 is gone before we even start talking.

1:38:26Rachel Cruze:Yep. And then everything else after that, prioritize different categories. So insurance would be one thing, you know, to make sure that that's paid. But just go down the list. And if you download our EveryDollar app, they give you a set number of categories. It's like up to 20 of different things that you probably spend money on throughout the month that you may even not realize. And so we just prioritize that. And then when the money comes in and we realize, OK, we have enough, you know, obviously to pay the essentials. And then anything extra then starts dropping into these other categories.

1:39:00Rachel Cruze:And then what I would do too for you as you're starting all of this is to have a, we call it the peaks and valleys funds. So have a separate kind of savings account or savings line within your savings to put some extra money aside. So when you do have a low month, you can pull from that to create somewhat of a consistent lifestyle, if that makes sense.

1:39:22Dave Ramsey:To even it out a little bit.

1:39:23Rachel Cruze:And then anything above and beyond that, because you do have debt, your expenses should be at a minimum. So you're going to be throwing anything extra you have at this debt to get it paid off.

1:39:34Dave Ramsey:So a big month equals big debt payments. A small month equals we lived and maybe paid some on the debt.

1:39:41Rachel Cruze:Right. Okay. Yeah. Essentially, it was kind of like, okay, I figured out how much my basic life requires. And then however much on top of that, I need to be able to keep some in order, like in case I have a low month. That's right. That's right. Just figuring out how much of that to put towards.

1:40:01Dave Ramsey:Not as much as your emotions feel like. It won't take much. Right. With what you're describing, if you had$1 ,000,$2 ,000 sitting over there, you'd even everything out.

1:40:11Rachel Cruze:Right. Right.

1:40:12Dave Ramsey:It's not a lot of money. So, yeah, all of that does that. So if you've ever done like a time management thing where you said, okay, I have a to-do list, and I'm going to force rank it from the most important thing to the least important thing, and then I'm going to do the to-do list in the order of most important to least important. If you've ever done that on like a yellow pad, this is the same concept, only you're just doing it with money.

1:40:38Rachel Cruze:Yeah, yeah, I like that. Okay.

1:40:44Dave Ramsey:That's exactly how you get at it, man. Congratulations. Hey, thanks for calling in. We appreciate you being with us. Naomi's in New York. Hi, Naomi. What's up?

1:40:53Rachel Cruze:Hi, thank God we're doing well. Good. um we've been away for the summer and we took a job in a camp my husband and i and we had our basics taken care of which was really nice and we managed to save up a good chunk based on our job we have 20 000 practically cash at this point um and wondering where we need to be putting it towards do you guys have debt we do okay how much debt do you guys have about 50 000 it's two cars and a small personal loan that has no interest on it. Okay. How much is each car? Do you owe on each car? We have$15 ,000 and$27 ,000. $15 ,000,$27 ,000. Okay, and the loan is?

1:41:43Dave Ramsey:$15 ,000 and$27 ,000.

1:41:44Rachel Cruze:It's like$4 ,000, yeah. Okay, and how much do you guys make a year? About$8 ,000 a month. Okay. Yeah, well, for sure the$50 ,000 is going to be thrown to pay off, or the$20 ,000 that you guys have saved.

1:41:59Dave Ramsey:It's going to go to your smallest debt.

1:42:01Rachel Cruze:Yep. So I'd throw it at the loan and then the$15 ,000 car, and those will be paid off, and then you guys just work to pay off the$27 ,000 car loan.

1:42:15Rachel Cruze:so theoretically it makes sense to us but we have we have it right now sitting like in a a high yield savings um that we could easily access and wondering if we should leave any there for things that come up like kids i mean we have three little ones you should be doing a budget

1:42:33Dave Ramsey:that includes line items for things to come up with kids so i'd leave a thousand dollars in there

1:42:40Rachel Cruze:and then throw everything else at the debt.

1:42:42Dave Ramsey:Yeah, but don't let kids' surprises be called an emergency. Kids equal surprises. And so you need to have a budget line items that include suddenly they lost their tennis shoe. Suddenly they forgot to tell me about the field trip. And it's always suddenly when they're seven. And so, yeah, you anticipate that as a wise parent and you have some of that budgeted in your monthly budget, we don't have an emergency fund and call an unannounced field trip an emergency. It's not. It was just a bad communication from a 7-year-old. Lost the paper on the way home thing. Yeah. So, yeah, that's what we're going to do there.

1:43:28Dave Ramsey:But it sounds a lot like, Naomi, that you guys don't have many hardcore processes or systems and systematizing this stuff with a good budget. It sounds very nerdy, but it's also very powerful. It will give you a sense of power over this money. And when you're running loose and hanging by the thread, you feel very, very vulnerable all the time. When you're making every dollar behave using the every dollar budget, you don't feel that way anymore. You feel power again. Even if you're trying to struggle through something, you're at least powerful because we know we got the lights paid. We know the kid's got food.

1:44:05Dave Ramsey:We know we're not going to get evicted. But we've got certain things we know. So a lot of those things that are when they're circling in your head with no system, they all equal some level of trust or stress and anxiety. And when you put them all down on paper and you go, oh, I got that, then that's released. And so your stress level goes way down as the chaos of disorganization goes down. And that's just not that's not just nerd speak. It's actually the real thing. It's really what happens. Yeah.

1:44:35Rachel Cruze:So instead of just randomly saving money. And just not really knowing, you know, what to do with it. Everything has a plan.

1:44:42Dave Ramsey:Yeah. Everything has a purpose. Everything has an execution on it, has a name associated with it. So when you get money from your paycheck, it's kind of boring because you'd already spent it on paper. You just have to dole it out according to the plan. There's no emotion left to it. There's no sense of, oh, God, this is a problem. You already had that back when you did the budget. So you got it all out of the way now. so you do the budget before the money comes in every single month let's get that 27 000 car paid off that thing's a boss you may even want to get rid of it

1:45:35Dave Ramsey:Hey, George Camel here. So you're thinking about buying or selling your home. It's exciting,

1:45:39Rachel Cruze:but there's a lot to think about and all those decisions can feel overwhelming. Well, here's the good news. You don't have to tackle the process alone. Ramsey's Real Estate Home

1:45:48Dave Ramsey:Base is the place to find all of your free tools and resources for help to get prepared to buy or sell your home with confidence.

1:45:54Rachel Cruze:You'll find calculators, start to finish guides, a podcast, and even an in-depth video course hosted by yours truly. What's not to love? So if you're ready to take the next steps toward your home goals, go to RamseySolutions.com slash real estate. That's RamseySolutions.com slash real estate.

1:46:29Dave Ramsey:Annie's in Los Angeles. Hi, Annie. How are you? or you better than i deserve how can we help um i appreciate you taking uh my call so here's my

1:46:41Rachel Cruze:question uh i am currently actively on baby step two quickly approaching and eagerly approaching baby step three however i have a daughter who is eight years old when she gets you know money for christmas for birthdays different events and things like that we have placed all of that money into her little savers account.

1:47:03Dave Ramsey:Good.

1:47:04Rachel Cruze:Now, typically what I would do is I would put it into like a six or nine month CD and then potentially roll it over CD to CD. Yeah, that or a high yield.

1:47:15Dave Ramsey:I mean, how much is in it?

1:47:16Rachel Cruze:So she has accumulated just over$10 ,000.

1:47:20Dave Ramsey:Good. Good for her.

1:47:21Rachel Cruze:Okay. Yeah. So what I, what my question is is that she's doing better than most adults out there. Exactly. So I just wanted to make sure that I'm doing the best for her money. And I've heard a lot of things and I don't necessarily want to take advice from people who are not well versed on like college funds and things like that. If you were in my shoes, what would you do with that? Would you keep it in the high yield or, you know, CDs, high yield savings accounts? Or would you look at alternative investment opportunities for her?

1:47:57Dave Ramsey:It depends on what you plan to use the money for, and that will answer your question. So I can tell you what we did, all right? We had a savings account in mutual funds for the kids' college that we were putting money into. That was their kids' college fund, and we were funding that. The miscellaneous savings account like you're talking about, we earmarked that for the kids to spend and to learn to spend wisely. and we told the kids when they were eight and six and whatever that they need to put money in that account because that was their buy a car account and i'm not buying you a car you have to buy your own car i did however agree to match it we had 401 dave you got a lot of money in this account you may not want to match this one but um you know rachel saved up i think uh five thousand or six $8 ,000,$8 ,000, and I matched it, and she got a little$16 ,000 Beamer, a little used Beamer.

1:48:56Dave Ramsey:And it was a cute little car, and it took her all the way through college, if I remember. But she paid for half of it with her miscellaneous account. So she threw babysitting money in there, dog-sitting money in there, whatever book sales she made at the back table selling Ramsey books at an event when she's 14 years old. All of that went in there, and anything she put in there was going to be doubled for her car. So it was kind of her car fund, and that's the way we brainwashed the kids that that's what it's for. If you're going to do that, a high-yield savings is fine. If you're going to send her to college with it, if you're going to make her pay part of her college with this money, you may want to put it in a mutual fund in a 523 or 529.

1:49:36Rachel Cruze:529, okay.

1:49:37Dave Ramsey:Yeah, it just depends on what do you want the money to be for. And here's the thing. The money really doesn't matter. It's a lot for an eight-year-old, but what matters is the lesson that the kid gets out of this. What muscle are they building in the financial world? Are they learning to save? Are they learning to work and save to hit a goal like buying a car? Are they learning to work and save to hit a goal like going to college, and I'm going to pay part of it, so I actually freaking go to class because I paid for it instead of championing in beer pong, right? It changes the equation when you've got skin in the game in these things, And the lesson is what's important, not the dollar amounts, because the dollar amounts aren't going to matter.

1:50:18Dave Ramsey:They're not enough to matter. Right. If she learns the smart stuff, she becomes a millionaire off the smart stuff, not the$10 ,000.

1:50:29Rachel Cruze:Yeah, exactly. And the savings part and contributing towards it is an activity that she enjoys.

1:50:38Dave Ramsey:Yeah, there you go.

1:50:39Rachel Cruze:It's great. Right now, her focus, and if I was to tell her, hey, this is going to be for your first car, you know, that wouldn't really have much impact to her at her state of where she is at eight. No, we told them real clearly.

1:50:53Dave Ramsey:Listen, it's very important. And we would show them cars at eight years old and go, this is what this car costs. Because if you don't start saving, you're going to have a nice bike.

1:51:01Rachel Cruze:Yeah, but I hear what you're also saying, Annie, that, I mean, is there anything in the near future that maybe she wants to save up and pay for, right? I mean, and I do think that that's what I mean, I have an eight year old. And that is one thing that we do is, hey, what is something you want? Caroline literally right now is saving for a mini trampoline because we're not buying a trampoline. So she's going to buy a little mini exercise trampoline. It's$40 on Amazon and she's working to save for that. So because so she's in it. So she's feeding June. She's taking our dog out. I mean, like she's got her little chores and it's motivated her.

1:51:37Rachel Cruze:and so that so i hear what you're saying annie that yes a car can feel it feels so far for an eight-year-old but that conversation that's so awesome that conversation information i learned on the radio is uh yeah but the car conversation really really amps up um in about in about 20 more minutes when they're well it's gonna be quick yeah but i mean 11 12 13 14 15 i mean they're yeah they're they're heading that way for sure for those of you out there listening do put a

1:52:06Dave Ramsey:limit on this i wasn't smart enough to do that rachel saved 8 000 her little brother had a head start on this because he had watched his two sisters do it and he's a savings maniac and um he about broke me so with the doubling thing so you do need to put a limit on it and i had to have a conversation we're not buying a new ferrari okay so um you know you didn't have that i know but i'm saying i had to have a conversation we're not spending that on a car it was unfair you're 16 years old is ridiculous.

1:52:35Rachel Cruze:To a degree, because you started this plan all of a sudden at the same time. So Denise got the short end of the stick. So she had to start. Yeah, she started when she was seven.

1:52:43Dave Ramsey:It was rough for her.

1:52:43Rachel Cruze:No, she was older than that. And then I had two years on her, and then Daniel had four years. So he had six years more of savings than Denise did. The three of you were so abused.

1:52:54Dave Ramsey:I'm just saying. Hey, hang on. We're going to send you a copy of the first best-selling book Rachel Cruz ever did with her dad. It's called Smart Money, Smart Kids. and it's about teaching parents how to teach kids. And so we'll send you a copy of that as our gift. We appreciate you calling in. Christopher's in Palm Springs.

1:53:12Rachel Cruze:You're going to do that right now?

1:53:13Dave Ramsey:Right now, do what?

1:53:14Rachel Cruze:Okay. You've got about 10 seconds.

1:53:17Dave Ramsey:No, we've got about four minutes. Christopher's in Palm Springs. Hi, Christopher, how are you?

1:53:22Rachel Cruze:Oh, we do. Hi, Dave and Rachel. I am very excited to speak with you today. I'm a teacher here in California and just wanted to get your thoughts on how much we should be spending maybe monthly or yearly on our classroom.

1:53:41Dave Ramsey:I have an unpopular stance on that, and you're a great guy and you're a wonderful teacher, and so you're not going to go with my stance. I wouldn't spend a dime on it. It's not your job. It's my stance. it's a school's job to furnish you the stuff to boot your classroom and the parents ought to get

1:54:00Rachel Cruze:together and furnish whatever you have an amazon wish list christopher that goes out to the parents

1:54:06Dave Ramsey:you know i i do not okay are you in an underserved community yes okay so it won't matter the parents aren't going to be able able or probably willing to help so i mean you've got to be real careful with this because you're doing this out of your love for the kids and your love of teaching, but you can break yourself with that budget, can't you?

1:54:30Rachel Cruze:Definitely. I've found myself spending thousands a year on it.

1:54:35Dave Ramsey:And really, that's the school board's job is to furnish you the stuff to teach the kids and or what parents can come around and assist you on it. And or contact a local church in the area and let them know you're in an underserved area and see if some see if one of the sunday school classes or one of the small groups will adopt your classroom or something um okay we the ramsey family foundation adopted the school the elementary school for four years that i went to when i was a kid and now it's in an underserved area and so we adopted it and even our team goes over there and works and helps and then we put money into the classrooms and all that it's really fun because it's nostalgic for me because where I went to the first grade and all that.

1:55:19Dave Ramsey:So it's kind of cool. But maybe you can find somebody like that to help at some degree, maybe not the whole school, but somebody to help your classroom. And it's just, I think it's blatantly unfair for a teacher to have to pay for this. I know. I just think it is. And you guys have got such wonderful hearts, and you're so giving to those kids. And thank you for that. But be real careful with that. It's a slippery slope.

1:55:43Rachel Cruze:It can continue.

1:55:43Dave Ramsey:You do not have a moral obligation at all to do that.

1:56:13This podcast

1:56:41Dave Ramsey:is brought to you by the Lord of the Rings. Warren Buffett said, someone's sitting in the shade today because someone planted a tree a long time ago. Adam's in Charleston, South Carolina. Hi, Adam. Welcome to the show.

1:56:56Rachel Cruze:Hey. Hey, Dave. How are you doing? Thank you.

1:56:59Dave Ramsey:Sure. How can we help?

1:57:02Rachel Cruze:Yeah. So, first of all, I appreciate you taking the call. It means a lot. So, I'm calling today because I'm in a very tight financial spot currently. um trying to navigate it the best i can uh basically where i'm at is i don't think i have an income problem um i do okay i'm active duty navy so it is a fixed um you know what do

1:57:28Dave Ramsey:you make really but uh 72 okay your wife work just about um uh no okay how many kids you got No,

1:57:40Rachel Cruze:two kids. Okay. Two little girls.

1:57:42Dave Ramsey:All right, 72 ,000, two little girls in Charleston, South Carolina. Gotcha.

1:57:47Rachel Cruze:Yes, sir. Yeah, a part of that is I'm going through a divorce, but I'm trying to basically budget for myself and budget for them and set them up for success. So like I said, it's kind of tight right now, but I'm trying to make it work. A lot of that, I would say about 4 ,000 of that is going out the door immediately to her. So with what I'm left over, I work with. And it pays the bills. It does what it needs to do. For like child support?

1:58:26Dave Ramsey:No, he's trying to support both households. Correct. That's not sustainable, brother.

1:58:33Rachel Cruze:I mean, because you're probably only bringing home 5 ,500 a month, right?

1:58:36Dave Ramsey:You're not going to be able to do that long term.

1:58:38Rachel Cruze:Yeah. Yeah, this isn't mathematically doable. Yeah.

1:58:44Dave Ramsey:It's a sweet sentiment, but it's not going to work.

1:58:48Rachel Cruze:Right.

1:58:49Dave Ramsey:Okay, so your ex-wife is going to be working.

1:58:58Rachel Cruze:That's the hope.

1:59:00Dave Ramsey:No. No, it's not an option. She's not going to be able to eat if she doesn't. Right. You don't make enough to support two households indefinitely, nor is that wise. That's what divorce brings to your ex-wife's life, a new job, regardless of who asked for it or who caused it. Right. So you'll be paying child support, which is a percentage of your income, according to South Carolina law. And you will do that because you're a good dad. And in addition to child support, you'll do some things here and there because you're a good dad and you love your daughters. But you cannot support two households, sir.

1:59:46Dave Ramsey:That's not sustainable.

1:59:48Rachel Cruze:Is that the expectation, Adam? What have you guys talked about? Well, yeah, I say unfortunately, but not really. Like, obviously, child support will never be an issue. No problem doing that. But when you're active duty, there is an instruction in place to protect service member and, you know, any immediate spouse. There is a set limit in place that you have to abide by, which, again, no problem, but it is a percentage of what I make. So regardless of if she works or not, that's what has to come out.

2:00:23Dave Ramsey:That's fine, but it's not 60 % of what you make. It's akin to child support.

2:00:33Dave Ramsey:We work with the military for 30 years. The military does not take 60 % of a dad's pay for his kids when there's a divorce. That's not true. You've gotten some bad information. Okay.

2:00:51Rachel Cruze:Yeah, how do I go about this, I guess? If I'm being told, like, by the military as a whole, this is what, I mean, I guess how do I navigate that?

2:01:02Dave Ramsey:You're being told by the military that they're going to take$4 ,000 of your$5 ,000 and give it to your kids.

2:01:08Rachel Cruze:Yeah, that's what I've been doing for the last eight months.

2:01:12Dave Ramsey:I understand you've been doing it, but you're saying someone at the military told you that. Correct. Okay, you need to go see your senior officer and have some discussions. You've got to learn what's going on.

2:01:22Rachel Cruze:Is there a law years in place, Adam? Like, where are you guys at in the divorce? So there's no official paperwork or anything yet. It's just a separation period, and we're getting to that point here in the next couple weeks. Okay, because a lawyer would know all the divorce law and everything, too.

2:01:44Dave Ramsey:And you can sit down with JAG, and they can walk you through it, too. But I'm going to my senior officer and find out. You need to learn about what's going on here, because I've been working in the military for 35 years. I've never heard this in my life. Now, they do require that you take care of your kids. I don't have any problem with that. But the child support numbers I've seen are more akin to what the state levies and what the state requires in most cases. And, you know, and you've got to do other things to make sure that, you know, for instance, if you've got a security clearance that's based on your credit, you've got to keep your bills paid and those kinds of things.

2:02:14Dave Ramsey:That kind of stuff will come up in this situation. But you may want to sit down at the JAG office. You for sure want to sit down with your senior officer. and I think you need to learn something about this because this, I might be wrong. Sometimes I gave out some wrong information last week on this show, but I don't think I'm wrong here. So I'm not wrong about this. I've never seen it, and I've worked with military stuff for 30 years. And we love the military, and we work. Thank you for your service, by the way. But no. All right. Jennifer's in New Jersey. Hey, Jennifer, what's up?

2:02:47Rachel Cruze:Hi. Thank you for taking my call.

2:02:49Dave Ramsey:Sure. How can we help?

2:02:50Rachel Cruze:I was wondering about the baby steps. We're trying to pay off some small debts, you know,$10 ,000 a year. I think they add up to like$50 ,000 or$60 ,000 in various small car loans and personal loans. But my husband and I have a disagreement. I think we should just work on paying off our mortgage for the next few months because I think that we can. And that would open up a huge amount of money to pay off. It's like$69 ,000. and the monthly payment is$3 ,700. So I feel like if we paid that off, it would open up all this money to be able to pay off all these other little debts.

2:03:29Dave Ramsey:So$109 ,000, you're 100 % debt-free house and everything.

2:03:34Rachel Cruze:$109 ,000? Oh, yes, yes. How much do you guys make a year? So my husband makes$190 ,000 and I make$150 ,000.

2:03:43Dave Ramsey:Oh, nice. So you should pay off all of this in a year.

2:03:49Rachel Cruze:Yes, I suppose.

2:03:49Dave Ramsey:Yeah, you should pay off$109 ,000 in one year. In which case this argument doesn't matter.

2:04:03Rachel Cruze:It doesn't matter because you're not going to be doing it long enough that the math matters in your argument.

2:04:09Dave Ramsey:Do it in one year. $8 ,000 a month. Yeah. Why can you not do that? You make$300 ,000.

2:04:19Rachel Cruze:I don't know. I don't either. I need to do the EveryDollar app. Yeah. I think it's pretty common. Like, you just don't know where your money goes.

2:04:30Dave Ramsey:I mean, but if I look at it and I go, okay, you make$300 ,000, I don't know, what was it,$15 ,000? $320 ,000, okay? And we take$109 ,000 from that. That only leaves you$200 ,000 to live on. Yeah. How in the world will you make it?

2:04:46Rachel Cruze:And you're in New Jersey, so you got a lot of taxes, but then that's still going to be, you know,$120.

2:04:52Dave Ramsey:You ain't going on vacation that year.

2:04:55Rachel Cruze:Right. And you're not going to eat out every night.

2:04:58Dave Ramsey:Right. And there's not going to be$1 ,000 bottles of wine on the equation. But, yeah, you're actually going to get out of debt. So, yeah, you do need to get on the every dollar budget because$300 and something thousand minus$109 equals$200 and something thousand to live on. Wah. go do it right seriously bust it bust it girl and if you the point two being if you're going to do this in one year you could do the mortgage first i don't care because you're gonna do the whole stinking thing in one year okay and then the 3500 a month being freed up it only matters for about three months so it doesn't matter because it changes the whole equation if you're going to drag this sucker out for four years then we could talk about your equation because it does kind of start to make sense then.

2:05:41Dave Ramsey:Not sure I would do it, but it starts to make sense. It's a fun argument at that point, but for one year, yeah, knock it out. That puts us our The Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

2:06:12We'll see you next time.