You'll Never Prosper When You're Tied Down With Payments

27:25Every account, every touchpoint, do a full audit on it. and I want to see a full list of every transaction for the last seven months or since he sold the house. And what we're trying to do is follow that 175 or that 150 around that extra equity around because we do know he bought two things, but he should have somewhere around 150 left, give or take. And yeah, find out where it went. That's a good thing, George. Go to the closing and see where that money went and then do an audit there. Find out for where it went from there, then find out where it went from there. And in every case, you'll see transactions and you can run them down.

27:57You're going to have to have power of attorney to do all that, though. And you're just going to have to run to ground. But the big thing is, is everybody is no longer in denial. We have a power of attorney and he is shut down and he's not allowed to do any more transactions at all. He does no access to any accounts because people are calling him up and he's giving people 500 bucks. And then y 'all are having to put 500 bucks over there to feed him. So they're stealing money from you is who they're stealing money from. So you've got to shut this funnel down for his sake. And he doesn't want you to.

28:28You don't want to admit that your dad is finally at that stage. But here we are. The longer you stay in denial, the more checks are going to be written to bad people. And so you guys have really got to shut this down hardcore fast just because he's getting screwed over if he hadn't already lost 150 grand. Yeah, I feel like we're getting more and more calls of people getting scammed out of hundreds of thousands of dollars because they're just, you know, they prey on the elderly. They prey on people who, you know, who mentally can't handle this and don't know if it's a scam. Colin in Jacksonville, Florida.

28:59Hey, Colin, what's up? Hey, Dave and George. Thanks first and foremost for everything you guys do. Really helpful content. Thank you. But to be direct and, yeah, of course, my question is this. My wife and I am almost certain we're on baby step seven. We're totally debt-free, including the mortgage. And to your guys' point, the peace of mind is amazing with that. But with that being said, we're in a two-bed, one-bath currently. It's myself, my wife, and a year-and-a-half-old daughter. I also work from home as well. So things are starting to feel a little cramped. And although need is a pretty strong word, I do think that we're inching toward a need for additional space.

29:36And so I'm kind of battling or going through the pros and cons of having another mortgage and upgrading the space versus kind of remaining cramped and having that piece every month of not having a mortgage today. What do you guys make? What do you make? We make about$225 ,000 as a household. So how much can you bank a year? Right now we're investing 15 % and saving about$6 ,000 a month. Okay. All right. And so what's your current home worth? It's worth$250 ,000. What's the target home? How much is the target home? $500 ,000. $500 ,000. $500 ,000. So you need$250 ,000. $500 ,000. Yeah. Yeah. Well, I mean, there's two ways to do it.

30:21One is take out a small mortgage, and two is we'll move in two and a half years, and we're going to save$100 ,000 a year because we don't borrow money anymore. That would be sharing's my only option because we don't borrow money for anything ever, even though that's uncomfortable, inconvenient, and all that. But if you want to go just a little bit in and kind of meet in the middle and knock off a mortgage in two or three years, you can do that. But it's emotionally very hard to go back in debt once you finally got out.

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32:10Our question of the day is sponsored by Why Refi? If other lenders won't help with defaulted private student loans, Why Refi might be right for you. They offer fixed-rate solutions that fit real life. Find out more at YRefy.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Not in all states. Today's question comes from Mark in England. We are retired, mortgage-free, and financially stable with no debt except our credit cards. We buy what we need on a credit card that gives us points, which we use to pay for clothes, food, etc. We then take that credit card debt and put it onto a long-term interest-free credit card for a period of 12 to 34 months, only paying the minimum balance each month.

32:52At the same time as the start of the 0 % deal, we put an equal amount into a savings account that pays us 7 % interest. At the end of the 0 % term, we pay it off from the savings and then keep the interest earned to pay for travel or a large cash purchase. We've been doing this for 10 years with no interest incurred. Cash back to us has been$6 ,000 plus$8 ,000 earned in interest from the savings. Why shouldn't we keep doing this? Because it's exhausting, number one. This is how you lost the Revolutionary War right here. zinger oh my god take that redcoats unbelievable the mental calories needed has got to be worth something your time is worth something and here's what's ridiculous we don't we do not know the dollar amounts but what it took to get you took i mean what could you what could we talk about 50 000 bucks and you run it through all of those ringers when you get done you got enough money to buy a biscuit.

33:50I mean, there's no money involved here. This is a, it's like a math riddle for a sixth grader and you fell for every bit of it. Um, I think you need a hobby. Really? This is like exhausting. So, uh, the problem with all this is, is you have set up a, a house of mirrors, a house of traps and you have figured out how to it no you know i'm trying to remember what what's the thing where the kid where the uh people um the the ninja thing where they go through all the um like american ninja warrior yeah like you're the american ninja or the english ninja warrior for credit cards so you've got this full obstacle course laid out and you know how to do it but if you miss one handhold you're in the water if you if you jump just wrong you're gonna turn your ankle and be on your head and so that's exactly what this is like a it's like an obstacle course it's like you did a treasure hunt with an obstacle course in your backyard and you're 12 years old um no uh and it's not worth the money if you actually add up the actual dollars that you're benefiting from all these gyrations it's so small it's it's almost makes you want to giggle Like really if you just gone and done like work or something while you spent all this money I mean all these calories on on this Chasing your tail all over the place and trying to somehow beat the credit card company You'd actually have some money So no no no And also mark let me tell you this and we have not done a study in the uk But we have done the largest study of millionaires ever done in north america We stayed 10 167 of them 89 % of them, 9 out of 10, are first generation rich, meaning they started with nothing and they became millionaires.

35:46The number of those self-made millionaires, starting from nothing, that became a millionaire working a system that remotely looks like yours is precisely zero. Out of 10 ,167, not one said they played the airline mile game, the high-yield savings versus repay old credit card in 30 days out and back -and-forth gyration game. And that's how I made my million dollars, Dave. Not one. Not uno. Not one. None. zero proof text that your system causes wealth building zero there's zero humans we have found that your system made rich zero none was i unclear i think that's as clear as mud right there dave well the key is the fallacy is that he wouldn't be financially stable without this you've become financially stable in spite of the credit card game you decided that we're not going to have a mortgage anymore well why would you do that when you can make a spread on that i mean you can you You know, reverse engineer this logic and just stay in debt the rest of your life if you think you can outsmart it.

37:02But clearly you value a debt-free life, and I think this credit card game is costing you more than you think. And here's a good test. For one year, use your own money and see if you don't save more than you have doing this credit card churning arbitrage gyration. Here it is. The number is actually on here. I got tired before the end of the email, but it's on here. Cash back to us has been$6 ,000 plus interest earned, plus$8 ,000 from the interest earned. So$14 ,000. Over 10 years. Oh, my God. Yeah, that's over a 10-year period. You made$1 ,400 a year doing this. It's worse than I thought. $1 ,400.

37:44I mean, dude, how hard is it to make$1 ,400 in England? You really have taken a lot of risk and played with a lot of bear traps, hoping not to get your arm ripped off by a bear trap in order to make$1 ,400 a year. And here's the other thing, George. A guy that writes us an email that says this, the chances of him not doing it anymore are zero. He's going to keep doing it. Yeah. He just wanted to, I guess, brag about how amazing Sharpie is. Well, or he wanted to be the subject of the latest Ramsey meme. I don't know. But it's a bad choice, dude. But part of the entertainment value of this show is you watch other people do something so stupid that you're entertained by it.

38:31And that's sometimes why people watch this show or listen to the show. Sometimes they do it to learn from what we're teaching here. And then other times it's just human beings are entertaining. It's entertainment value. I think you just fell in the second bucket. All right. Daniel's in New York. Hey, Daniel, how are you? Hey, Dave. How are you doing? Better than I deserve. What's up? So me and my wife are currently on baby step two, and we're strongly considering selling our car. The thing is, we have one unreliable car, and this car is kind of our, you know, put the kid in the car, make sure it's safe.

39:07Yeah, we're just wondering if we should sell it and maybe even potentially have my stay-at-home wife go work part-time. Okay. What do you make, sir? I make about$144 ,000. Okay. And how much do you owe on a good car? $29 ,000. Okay. All right. And the car that's not reliable is worth what? I'd say maybe$1 ,000. Okay. So probably somewhere between there is a reliable car, isn't there? Yeah. What could you sell the good one for? You owe$29 ,000 on it? I owe$29 ,000 on it. We could probably sell it for around$30 ,000,$31 ,000,$32 ,000. Okay. And do you have any money saved at all? So we have the emergency fund saved.

40:00The$1 ,000 starter emergency fund? That's correct. Okay, good. And what else?

40:09Well, that's about it, and then the rest we're just paying off debt right now. Good for you. Okay. So you have a$29 ,000 car debt. What other debt do you have? Just student loans. We have zero credit card debt. Student loans equate to about$70 ,000-ish,$75 ,000. Okay. All right. And so you've got$100 ,000 in debt, and you make$100 ,000. Yeah. And you live in New York City. Yeah, just very close, yeah. Okay. All right. Expensive area, though? Yeah. Yeah, so we're actually lucky because our parents own a house, and we're actually renting with them. So we're not paying as much as the normal person would pay here.

40:54Okay, that's good news. Well, here's the thing. If you guys can get out of debt and keep the car within two years, I'd be okay with you keeping it. I don't think you can. I think that'd be too tough. That'd be$50 ,000 a year on debt, and somebody's going to be making some more money, you or her one. What could she make working part-time? So she has an English degree, and before she became a stay-at-home mom, she was an English teacher. Yeah, why does she do tutoring for$45 an hour? We were thinking about that as well. Yeah, that's not even a part-time job. You're just doing that from home. I mean, she can tutor$45 an hour and work 10 hours a week, and all of a sudden now we've got some serious money coming in.

41:39Yeah, I'm going to do something like that for sure. and then you pick up what you can pick up and then if you can keep the car, fine, but I'm probably going to get rid of it and get me about a$10 ,000 paid for car.

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43:24Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. George Campbell, number one best-selling author, and Ramsey Personality is my co-host today. Rex is in Los Angeles. Hi, Rex. How are you? I'm good, thanks. Good. How can we help? Yeah, so we're not on the steps yet. My wife and I just started reading you and listening to your stuff. We've got a bunch of debt, a lot of credit card debt, some student loans we took over for my daughter. Others have a car loan, mortgage. we've also got a lot of money and investments and if we're going to do this should we just take that money and the investments and pay that stuff off or should we do the work to to pay that down out of my salary is that taking either way out to just pay it off that's the gist of the question yeah it's a good question that's a fair question um how much debt do you have not counting your home Uh, including the car loans, everything,$167 ,000.

44:29And how much in the brokerage account?

44:33Uh,$844 ,000. None of that is retirement? No, we have an additional 401k that's about$85 ,000. Okay. What was this account for? The brokerage account, half of it was when my dad died, we got an inheritance, and the other half is just investment, sort of just making money for retirement. Okay, good. Except it's not in a retirement account. Yeah. Yeah. Yeah. And what do you make a year? About 175. Good for you. And what do you owe on your home?

45:17776. Okay. All right. Well, Rex, the thing that we teach, and you guys have to decide as a couple if you're going to buy into that in order for the answer to your question to make sense, okay? The thing that we teach and believe and we've proven to be true over 30 years of doing this is that when someone can get out of debt and stay out of debt and live on a detailed plan that both spouses are in agreement to where the money's going, and you've done a great job saving money. I mean, you're millionaires. You've done a great job saving money. We've got lucky on some of it. Maybe. But, I mean, some of it was an inheritance.

45:59But overall, I mean, you've not done horrible or anything like that. I mean, you've done a good job. So now you've got to ask yourself the question of what is the shortest distance between where I am with money and where I want to be? And we have found that the people that build the most wealth are those that get out of debt, stay out of debt, and live with a plan. Okay? Because when you don't have any payments, all your money is not going to stupid card loans and so forth. You can do stuff with it. Now, if you can do that and commit to that, and you're both in agreement to that, and you get out the EveryDollar app or something like that, and you say, okay, this is our plan, and we're not going to buy anything else ever on debt because we believe the shortest distance between where we are and wealth is no debt.

46:48And so once we pay this debt off, we will never be in debt again ever for any reason. Not a big enough emergency, not a big enough need, not a big enough I got car fever, nothing unless I pay cash for it. I'm not doing it. If you're willing and able both of you to commit to that, then, yeah, writing a check and paying it all off is not cheating. The problem is if you don't have that level of commitment, like this pinky swear spit shake contract, right, that we're never doing it again, you'll do it again. And next time you won't have any savings because you will have paid off all your other mistakes with the savings.

47:26And I don't want you to not change your habits. So if your habits are permanently changing, you know, you can make a lot of money doing this. But if they're not permanently changing, it would be a vast mistake because, you know, the recidivism rate is crazy on this stuff. Yeah, I mean, honestly, we've already done this with the credit cards. The problem is we didn't get rid of the credit cards, so we just racked them back up again. Ta-da. I rest my case, counselor. Yes. Yeah, so that sort of leans toward trying to pay it off. You know, well, or, you know, you've, for your sake, it doesn't matter to Georgia and me, but for your sake, you two adults have to become convinced that we're never going back.

48:09Yeah, yeah. And there's going to be pain either way. To watch that money leave that brokerage account is going to be painful. To sacrifice for two, three years is going to be painful to pay it off. Yeah, and the fact that you did this thing with the credit cards tells you, you know, maybe we get on a strict budget and we aggressively attack the debt and pretend like the brokerage account is not there for five months or six months and let's prove it to ourselves that we're through. Yeah, yeah, okay. How old are you? 53. Okay. Well, it's time. And you picked up your daughter's student loans that she took out in her name or what?

48:46Yeah, when she got married, we just sort of just took those over for them. Yeah. Okay. Well, I would, you know, either way, I'm going to be out of debt very, very quickly with$175 ,000 income. But by quickly, I mean a matter of months. And so, you know, but you guys have to become convinced. you don't have to be in pain to never go back you just have to be committed to never go back it's not necessary that um i've got a friend who was a heroin addict and he went through rehab and it changed his life and he met god and him and jesus are best friends and man he don't he stays away from but his kids don't have to go through that to learn the lessons that he's learned they can observe someone else and go i don't want to do what my dad did and the dad can look at his kids and go i don't want you doing what i did you know that's and so you don't have to go through pain to learn it's not necessary it's a thorough teacher if you do but it's not like you have to i have to go down the gauntlet and be hit with straps and whips and stuff or whatever to to prove and no No, you don't have to.

50:04That's masochistic. We don't need to do that. But you do have to be committed to never going back because otherwise it's pointless. Yeah. And you're going to end up in worse condition. If you guys agree, we're going to cut up the cards and close all these accounts. We're going to freeze our credit. So it's much harder to go back into debt. Then I would say, all right, let's use these funds. You know, you might pay some capital gains taxes on the growth, but you're going to clear the decks and be in a different place by Christmas. And now you freed up all of those payments to now invest and give more and live life with a little more freedom and peace.

50:37And I'm beginning to start working down that mortgage at that point. And you need to start putting your excess savings when you get to baby step four in a retirement account, in a Roth, not in just a brokerage account. The amount of money you're losing there in taxes is incredible. so but that brokerage account is for you've maxed out all retirement options and we have nowhere else to go but non-retirement investing right but he's not got that problem with this income so no you you can you can get there so yeah i'm fine temporarily stop all investing all saving and for six months we're going to go at this thing hard we're going to open up an every dollar app both me and mom are going to get on it we're going to get the credit cards out have a plastic surgery party, light a candle.

51:21We're done. We're not doing this anymore. And we're 53 years old. We make too much money to be the stinking broke. I'm sitting here with car payments and I make 175 grand. That's just, God, that's got to be disgusting. So get disgusted in a reasonable way and permanently change your behavior. And then you got no problems.

52:00So

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53:31Top questions people have about wills. How do I know if I need a trust or if my estate is too complicated for an online will? If your estate is worth less than$1 million, getting a will online is probably a great option for you, by the way. Matter of fact, if your estate's worth less than$10 million, it's probably enough. You don't have any need for trust much until you get up above that, unless you've got special needs or something like that. Number two most often question, what do I need to start my will online? Making a will online or not involves a couple of decisions. Who do you want to get your stuff?

54:03Who do you want to take care of your kids? And who do you want to make decisions for you if you're incapacitated? Is an online will legally valid? Of course. By the way, wills are state specific. The laws that dictate estates are not federal law. They are state law. And so when you move, you need a new will. Because your state may have different laws than the old state where you lived. And so different levels, different kinds of notary, different numbers of witnesses, different things you can do or can't do in a will, all that kind of stuff. so why would I want an online will versus a traditional one?

54:39Less expensive, more convenient, takes about 20 minutes to set up if you go to Mama Bear Legal Forums. Go to RamseySolutions.com slash willsquiz. You can find out if an online will is right for you, and we'll work you through the whole process. Jamie's in Newark, New Jersey. Hi, Jamie. What's up? Hey, how's it going, Dave? Pleasure to speak with you. You too. How can we help? I try to be as brief as possible. I have a job on paper. It looks like the dream job. I work for a large pharmaceutical, biopharmaceutical company here in New Jersey, one of the top biopharmaceutical companies. I make good money.

55:15I make$46 an hour. There's unlimited overtime, pension, 401K. But when I started, we have a union here, and it's a big campus, so it's a pretty large facility on site. and because it was a union, I had to end up going to a department that I really didn't have a lot of experience in because I was low man on the senior totem pole. So I ended up in a place where I don't really have a lot of experience dealing with boilers and components, servicing different components that go to the boilers systems. And from day one, my manager, he never took any initiative to make sure that I got fully trained up, pairing me with other team members.

55:57Basically, I have no manager. All he does is come in in the morning and ask everybody if they want overtime. And he goes away. And I've tried to reach out to a lot of my coworkers, a lot of the older senior guys who've been here for years. But the environment is so toxic, I'm the only minority on the team. And I feel like since I've been here for almost two years now, I can tell that they are purposely excluding me from all of the serious jobs. The jobs that I do that they leave to me that nobody else wants to do, there's something that I can do in my sleep. And I can actually sleep at work. The job I have, like I said, everything on paper looks good.

56:37They have a building here with a couch on the third floor. A lot of times I'm in that building on the third floor sleeping. I'm in different buildings, looking at the computer. Like I actually have time to wait two hours. In the meantime, your soul is rotting. Yes, sir. That's an expensive soul tax you're paying. So have you been looking for something new? Yes, sir. I have an interview tomorrow for another large pharmaceutical company here in New Jersey, and I know what I don't want. And I guess I really answered my own question, but I know you deal with this type of thing on a daily basis, so I really wanted to get an expert like you, your opinion, because I know it holds a lot more weight than probably even my own opinion on this topic.

57:22Very few people are actually happy doing nothing or being underutilized. Most people, your spirit, your relationships, everything is invigorated by reaching for the stars. We are designed by our Creator to create and be productive. and when we're not doing that, it is a soul tax. It takes a tax on your soul, and so that's what you're discovering, and so this idea that if I got paid for doing nothing and sitting around doing nothing is somehow a wonderful thing, it's not really wonderful at all. It's really horrible. I agree. And so I agree with you that, yeah, but I don't think you have to, you know, you don't have to run out the door.

58:11They're not burning the building down. They're nobody in danger. They're not being mean to you. It could be racial. It could just be that they're just being union jerks, you know? And I don't care. It doesn't matter to me which one it is. I'm still getting out of there. I think it's a little bit of both. I remember one of my coworkers. Yeah, I'd say you're probably right. That's probably true. He made a remark about knuckle draggers. I hope they hire some more techs and they keep hiring these knuckle draggers. Yeah, but that's not a racial thing. That's just a caveman. Knuckle draggers is just a dumb person that doesn't know anything.

58:46It's just a caveman. So, you know, but either way, it doesn't matter. You've solved the problem. The riddle is I got to go. But what I don't have to do is go running out the door and make$20 an hour while I'm making$46 right now. So I'm going to sit here for a minute, no pun intended, and look for a job, right? Instead of sleeping on the couch, I'm going to be looking for a job.

59:12Right. That's what I've been doing today, the last couple of weeks. Every day I update my search. Yeah, and I don't know if you felt backward into being a boiler guy or if that was what you intended to do. What is it you really want to be 10 years from now? If you could do anything you wanted to do, what would you do? Validation, equipment validation, qualification. Okay, so you enjoy and you're good at working with your hands, and you can, in your mind, you can see how things work and how they're put together. Yes, sir. Very good. I like it. Well, Ken Coleman would like what you're saying. Mike Rowe would like what you're saying.

59:50I think you can make a lot of money, but you're not going to make a lot of money if you're dragging your knuckles, right? Exactly. And you're not going to come home energized. See, I come home from doing this. I'll do about five and a half hours on the microphone today, different podcasts and different things I've got to do inside the building today. And I'm 65 freaking years old, and I come home energized. because I'm doing stuff that matters, stuff that I care about, and I'm pushing the edge. I'm having to use every ounce of everything that I am to make sure I help you guys, give you the right answers, all that kind of crap.

1:00:24And so, yeah, hang on. We'll send you a copy of Ken Coleman's book, Finding the Work You're Wired to Do. But, George, life is just better when you're doing something that you have to reach for. It's just out of reach. It's funny because it's almost worse when you're paid well to do it because you go, well, I'm an idiot to leave this. No. You're an idiot to stay because if you're not treated well, you're undervalued, you're bored, there's no growth plan. Like Dave said, eventually your soul is going to pay the price for it. And so we believe that you can do the work you're wired to do and get paid well to do it.

1:00:54And naturally, you're going to grow in that area because you're going to see your enthusiasm and your talent, your excellence. So we're rooting for you, man, to get to that next thing. It's a pretty crazy world when you just show up and care and work hard all day long, and that makes you stand out. You don't even have to be that good. You just got to care, have brushed your teeth, and work hard all day long. Just showing up in good hygiene goes a long way. I mean, it's just, it's amazing. That's what I've done. It's the world. Well, it's working for you. Your hair is great. Thank you. Yeah. But the, uh, I wanted to say, I wish I could say the same, but it was too soon.

1:01:27Whoa! Too soon. All the hair jokes go all the way around the horn before they stop, huh? Okay. I like it. Seriously, though, the striving for excellence, the striving to reach a level you've never reached before is what gives life to you. And so anytime someone's just sitting and, listen, things are either growing or they're dying. There's no in between. And so this job, Jamie, that you got is going to get worse. It's not going to get better. It's dying. It's going off the cliff. They made it clear. Yeah. It's pretty ridiculous what he's describing, and I don't think he's being weird. I think he's probably got a pretty clear action of what's going on there.

1:02:12So, yeah, I set a goal that within six months to a year, I've got a better job making$52, doing something where the people respect me, I respect them, and we have to work really, really hard while we're there, and I come home with a callus on my hands because I've actually been turning a wrench all day, not sleeping on the third-floor couch. Yikes. Sheesh. That scares me. That's what's happening in pharmaceutical companies in America. Well, apparently the maintenance team in the building at the farm, he's working on the boiler. The union workers. Still, it's just the whole thing is, wow.

1:03:03Thank you.

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1:05:04In the lobby of Ramsey Solutions on the debt-free stage, Christopher and Brittany are with us. Hey, guys, how are you? Doing well, Dave. Welcome, welcome. Where do you all live? We're from Sacramento, California. Cool. Welcome to Nashville. Thank you. And how much debt have you guys paid off? We paid off about$412 ,000. All right. How long did that take? 28 months. 28? All right. Very good. And your range of income during that two and a half years? So we started at$215 ,000. We went up to$350 ,000. And now we've gone back down to$250 ,000 so I can be part-time and stay at home with our newest baby.

1:05:40Love it. What do you all do for a living? I do plumbing. So I work for a general contractor, plumbing contractor. I did HVAC 2 for about 20 years. Wow, cool. Yeah. And I'm a nurse, a nurse educator, and train new nurses. Gotcha. What kind of debt was the$412 ,000? Everything. Student loans, kids' braces, personal loans, timeshares, phones, taxes, all the things. Wow. Everything? Mortgage, too? Nope. Still got a mortgage. We're in California. We've got a little while. Good for you. That's our next goal. Now you're free, though. Yes, we feel free. $412 ,000 worth of normal. Yes. Wow. How long have y 'all been married?

1:06:19Gosh, what year is it? Almost a few years. Yeah, three and a half years. We started just before our wedding. so um we had some great days so you both brought crap into this yes yeah and so you've been married three and a half and you say all right job one we're cleaning up the mess yes yes not living like this you get a fresh start yeah we had a really hard time with a lot of car problems deaths in the family different things and it just pushed us to a point where we were like having to borrow our kids cars while we had one sitting in the driveway needing a new transmission and so we were just like trying to figure out how do we get out of this and change their life we make too much money to be this bro.

1:06:52Absolutely. What was the bulk of the 412? Student loans, probably about a hundred or so, some old stuff we had from previous marriages, another couple hundred. So it's a lot of money. Was it just like collecting, collecting to where you just went like, I'm in denial at this point? Yeah. It was like, what's another three grand for braces on top of that? Sure. Exactly. It was zero, you know, zero percent for braces. And so we didn't, you know, pay outright. And then when we were able to pay it off, it was just, I mean, trying to call to pay it off. They don't let you call and pay it off. I don't know if you know, it takes six to seven times to call and you know say we need to get your address to convince them to take your money yeah it was really rough the last month and a half i'll tell you they like you owing them money who knew who knew wow very cool you guys very cool so how did you get connected to the ramsey stuff so i learned about you back in 2009 when my youngest son was born he's 15 and um i mean we've heard we did fbu you know i talked to you on the show before i went to nursing school to talk about should I go to the Air Force student loans what do I do and then I became a single mom and so when I did that you know I said okay I'm gonna have to take student loans because I figured I knew better than you did you know we were Dave-ish for a while and then uh 28 months ago when we got our wedding and we both just said enough is enough and so we did a couple more FPUs at home downloaded every dollar and we have not done a month without every dollar for the last 29 months so wow that's incredible so it's been you've been aware for like 16 years but life kept happening.

1:08:16Yes. And so when you guys got married, you're like, I know just the guy. Yes, we did. We had spreadsheets of all the different debt we had and it was a long list. Scary. No more spreadsheets. I hope you've deleted the Excel. Yes. So Christopher, you knew when you were getting married, you were getting into this, right? Oh yeah. But I knew she was worth it. So correct answer. Yes. Not into this, all the debt mess, but into this, I'm going to go hardcore. Yes. Yeah. She worked her butts off. She worked her butt off to get a lot of the debt done. A lot of side hustles. Yeah, I bet. I bet. Well, congratulations, you guys.

1:08:48Thank you. We're very proud of you. How's it feel to be free? Yeah, it's a relief. So the main thing is we're just going to focus on not getting back into debt. And so it's just saving and saving. If we want to take a nice vacation, then either we have the cash to do it or we're not doing it. So we're definitely on the same page on that. I love it. I love it. Well, congratulations. All right. When someone says, how do you pay off$412 ,000 in 28 months? That's stinking impressive. Yeah. What do you tell them the key to getting out of debt is? Budgeting. Every dollar for 29 months. Every dollar.

1:09:26Making sure every dollar has a name. We logged our kids in. They have their own every dollar. And, you know, make sure that you know where your money's going and make sure that you understand the principles of it. So that way you don't ever do it again. Yeah. And we're teaching them to go through college debt free, too, because of you. Yeah. Two in college working three jobs each. you know, working their way through college and one about to go and they've all paid cash for their cars. And I'm impressed by them and how well they've done. Wow. Very cool. You really have changed your family tree.

1:09:51Yeah. We say more is caught than taught. And they've been watching mom and dad just hustle to get rid of this debt. It's like, well, there's work ethic right there. They're catching that for sure. What was the hardest thing to cut out of the budget or the biggest thing you guys cut to make this happen so quickly? We were talking about that last night. So I refused to give up kids sports for them because it was such a big thing for them. So we'd actually argue about golf and instead of doing like a big golf round we do a little golf round and we you know the grocery budget i hear people talk about how much they spend we're a family of eight and my budget's twelve hundred dollars so whoa that's pretty good well some of that that's for a great dane dog food oh yes yes we have the great dane puppies of course you do nothing can eat that's we have three oh my goodness they eat more than the kids wow that's incredible yeah very cool you guys very cool so the budget is the deal and eating and you're you must be cooking a lot from scratch as much as i can yeah which as a nurse you know how good that is right the nutritional values and everything else completely different so well way to go you guys way to go and you brought all of them with you to celebrate all right bring them up let's hear all the names and ages come on in guys have a big celebration here the family tree look at That way to me has changed.

1:11:04Brianna's 19. We have Peyton's 19. Memphis is about to be 18. Jackson's 15. Ava's 13. And we have Noah, who's eight months. Way to go, Noah. You did it, man. You joined the clan, buddy. I love it. So cute. Beautiful family. Very cool. All right. Christopher and Brittany and the gang from Sacramento, California. $412 ,000 paid off in just 28 months. and say we're working like crazy people, living daily on a budget, eating at home,$215 ,000, a$350 ,000 income. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free. Yeah.

1:11:49Love it. And the kids are going to school debt-free, and they're paying for their cars debt-free, and family tree's changed. That's impressive. And at this age, they saw the sacrifice. So they're going, yeah, I'd like to avoid that. Yeah, I think I'll avoid that. And yet they survived the sacrifice of mom and dad for two years. A lot of people say, well, you know, I don't want to affect the kids. Like, maybe it should affect the kids so they don't fall into the traps that we fell into. Yeah, well, they did it. I mean, they pulled it off. And here's the thing. What you saw, if you're watching them, and if you go back and watch this, you can pull it up on YouTube or Spotify where you can see the video, either one.

1:12:31And what you'll see is you see their body language, and it just says, I've had it. I'm not living like this anymore. They're just very resolute about that we're going to do this. We're not going to go back. We're never going to be there again. And life's too short. And they've got second marriages they're going into. and they finally just said, okay, that's it. We're pulling the plug on stupid. Let's clear the decks. Yep. That's a beautiful thing. And it's never too late. That's impressive. Yeah. And don't tell me if you've got a bunch of kids, you can't do it. Don't tell me if you live in California, you can't do it.

1:13:06They just proved you wrong. All these things, it's like hold my beer, right? So you can do it. You can do it. But it came down to, I mean, you can just tell looking at Brittany. Brittany put in some hours as a nurse. I mean, and look at these numbers. With the income dropping off, you can see that the number of hours she was working as a nurse to cause this to happen. And, oh, by the way, just had a baby. And, oh, by the way, you know, and there's every excuse in the world, but none of them mattered. They still went and paid off$412 ,000 in just 28 months. I mean, you blink and 28 months is going to go by.

1:13:41So the question is, do you still want to be in$400 ,000 of debt 28 months from now? or do you want to just decide that today's day one of a journey of 28 months? Yeah, but I mean, the madder you get, the deeper you cut. The more resolute you are, the deeper you cut, and then the faster you get out. And then the higher the probability is that you make it and you stay out. The faster you get out, the deeper you cut, the faster you get out, and the higher the probability is you get out to start with and then stay out. All of those things fit together in everything we've seen over the last 30 years in doing this, and they've got all of it.

1:14:14this family of winners right here. Very impressive.

1:14:58Hey, if you're a business owner or a leader in small business and you've got a question about running your business, about leadership, how to lead the team, manage the money, grow without going crazy, family business questions, I'll take your call personally. I do a top-rated podcast on small business and leadership called Entree Leadership. And you can call us. Here's the number. You can be part of that show, 844-944-1070, 844-944-1070. Or you can head over to EntreeLeadership.com slash ask and drop us a note there. We'll call and set you up as a caller on the Entree Leadership podcast. Ryan is with us.

1:15:42Ryan is in Charlotte, North Carolina. Hi, Ryan. How are you? Good. Good afternoon, Dave. Thanks for taking my call. Sure. What's up? So question is, is I am being told by my ex-wife that I should cash out my 401k to purchase a home. And the reason being is when we divorced about eight years ago or so, she basically took half my 401k and parlayed that into purchasing a home. five years later, sold that home for a good profit, and then bought another one. And so she's saying, hey, you need to get out of stock renting, and you should really put some of that money into real estate. I'm so confused.

1:16:30Why would anyone ask their ex-wife for financial advice? well i saw what uh i saw what she had done with uh no you didn't you saw what she said she did when she cashed out half of that 401k she got charged a 10 penalty plus her tax rate she borrowed this money at 35 interest by the time she flipped this house and made money she didn't even make money she's so full of crap she's a christmas turkey you know because i see that uh you know with the house that that was purchased and sold i mean you didn't see all the penalties and taxes she paid on the stupid withdrawal from the 401k that negated any profit that she made on the flip yeah that is true okay because this woman talks out of both sides of her head that's why she's called the ex-wife yeah although she is in the house and I'm still renting.

1:17:25So I got to, I got to get that. Yeah. And what she paid for it was a dear price. Yeah. And sadly is probably so mathematically challenged she doesn't even realize it. Yeah. And it's going to take her a lifetime just to catch up on retirement now. Yeah. So how much do you have in retirement? Me personally now about 85. And what do you make? 130. And how old are you? 50. Yeah. Okay. If you cash out your money, They're going to charge you a 10 % penalty and plus a 25 % tax rate. It's like saying, Dave, I want to borrow 35 % interest. I want to borrow money at 35 % interest to buy a house. Please don't do that.

1:18:06No, I agree. That does not put your face under the smart column in the dictionary. Okay, so no, don't do that. And be careful who you're listening to for financial advice in the future. um you know it's like watching some influencer on tic-tac and they're on there doing their thing and they look like all they're running is the highlight reel and you see a private jet that they rented and don't own and but buy i can teach you to buy real estate and i've got a jet yeah that i rented 10 minutes ago it's not even your own jet come on dude you know and and then you go buy a 3400 kit from them which is where they actually make their money so no just no no be careful who you're listening to for money advice.

1:18:48What you want to do is look at people that are understated and they're driving a Toyota and they don't have any flash or any bling and their lives are really solid and steady and predictable and sustainable and happy, high quality relationships. These are called mature individuals. They're not doing anything to impress others. They're living a life of quality. And if someone happens to notice, they probably wouldn't even notice. And these are called millionaires. And if you can find one of those and actually get them to admit it and then talk to you, they'll teach you the real stuff about money.

1:19:30It's hard stuff like live on less than you make, save and invest, be generous, live on a plan. Don't rob your 401k to get into a house, that kind of stuff. Yeah. Don't listen to your ex-wife for financial advice. Alexi is with us in Sacramento. Alexi, how are you? Hi, I'm good. How are you doing? Better than I deserve. What's up? So I recently discovered your podcast. I'm a new listener. And I recently started my career. I graduated college last year. So I've officially created a monthly budget, paying off my student loans and all of that. Good for you. But I was wondering, thank you, on the best approach and recommendations for all the extra money that I have.

1:20:15I recently learned about high yield savings accounts. So I was just wondering if that's the way to go or where to put my emergency funds or cash that I need like easy access to. I love it. You are thinking perfectly. A high yield savings account is what we recommend for any short term savings goals like that are happening in the next one to three, four years and your emergency fund. And that'll help it at least kind of keep up with inflation because right now the rates are about, you know, three and a half percent. And if you want a great one, we got a great partner with Fairwinds. And so if you go to fairwinds.org slash Ramsey, they have a smart bundle just for our fans that has a checking account and a savings account with a great rate.

1:20:52Yeah. So high yield savings is where you would start for something like George said, for your emergency fund, which should be three to six months of expenses. And of course, you're staying out of debt completely. So we're saving up and paying cash for things. And then beyond your emergency fund, anything you're wanting to do with money in the short term. Now, when you start thinking long term for retirement, then we're going to move towards mutual funds and some other things. But yeah, George is right. This new partner of ours, they've been with us for about a year and a half, and they just became the studio sponsor just about a month ago.

1:21:25And we spent a lot of time with the people behind the scenes are solid people and the product is solid. It's a good high yield savings account at Fairwinds Credit Union. So just look them up. Fair winds, like the winds are fair. All right, here we go. Riley's in Houston. Hey, Riley, what's up? Hi, Dave. I appreciate you taking my call. Sure. How can we help? Yeah, so I have a question in regards to paying off student loan debt. Currently, I have about$68 ,000 in total student loan debt. I do have quite a bit of savings. And I'm just curious on how to tackle this. Pay it in bulk, which I sort of have a feeling that you're going to say, or reinvest the savings to use the interest to make payments.

1:22:17Just kind of don't know what route to go. We would recommend the debt snowball method, which means you're going to knock out the smallest balance first. So how much do you have in savings? I have about$95 ,000. Dude, pay it all off today. Why have you waited? What's holding you back? Honestly, it's just that mental aspect of not having that much in savings. You don't. You have$68 ,000 in debt that you owe. So mentally, I would detach and go, I don't actually have 90-something thousand. I have$29 ,000 because I owe. I signed on the dotted line saying, I'll give you this money back. And, dude, you can be done today and not pay another dime in interest and be free.

1:23:05Hey, Riley, where'd the 95 come from? Just saving some work. And if you have 29 tomorrow and no debt, you can save even more. And that is recommended rather than trying to invest that 95 ,000? A hundred percent. The number of millionaires that we've interviewed in all of our research that said I borrowed money on my student loans and made the spread and caused me to be a millionaire is precisely zero. No one actually does what you're talking about to build wealth in the real world. It's all theory on TicTac. Okay, and this might have came at a great time because I was trying to do an application, an income-driven application online, and prior to submitting, I was hoping that I could get in for this call and try and just figure out the route because I know what my monthly payment would be at, but obviously it'd be in that payment for X amount of years.

1:24:05I wouldn't do income-driven anything. I'd get rid of the debt. All you're doing is kicking the can down the road, dragging this thing out longer. You've worked hard to save, and that's going to be painful to let go of that. But, man, it's going to set you free when you have those payments back in your life, back in your bank account. Well, and you've got this monkey off your back, and it's, in this case, a gorilla on your back. Yeah. Get him off. And you're going to feel funny. You feel like you lost 300 pounds. It'll be weird. And you'll stack up that savings again real quick with no payments.

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1:25:53Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm Dave Ramsey, your host. George Camel, Ramsey personality, number one best-selling author, is my co-host today. Catherine is with us in Phoenix, Arizona. Hi, Catherine. How are you? Good. I have a question on a, we have a variable life insurance, which we know now we should have never had. but probably eight years ago we took out to try to save my husband's business that we ended up having to sell it off to somebody else and so there's really nothing left in there the cash value that's left is like$4 ,800 I just didn't know like because we've kind of just been hesitating when then the people that have had it they've kind of just said leave it there Oh, I bet.

1:26:46I don't know. Who sold this to you? Who hates you that much? Actually, it was a close friend that when we first had our first baby that she told us. And, of course, because she sold it. So we just kind of— Of course, she's out of the business now, right? Yes. They usually last about two years, and then they're gone. Right. Yeah, so— We have, like, some term life also. Okay, so what does your husband make a year? What, 275. And how much term life does he have? The term life is about 800 ,000. Okay. All right, is he healthy? And then I have like 250. Yes and no, he's 60, but he has diabetes and has some issues.

1:27:36Diabetes is a big one when it comes to life insurance. and you guys have no money it sounds like you've been through hard times yes and you don't have any children left at home well I have a one 16 year old I do have a 16 year old so the concern today is if the 60 year old dies he leaves a wife and he makes what's your household income about 275 he makes 275 Yes. And do you work outside the home? No. Okay. And so you lose a$275 ,000 income if he dies today, and he leaves you$800 ,000. Right. Okay. Which is just over, you know, two and a half years of income. If that was invested at 10%, it would make you$80 ,000.

1:28:31So you're going to be short about$200 ,000 based on the way you're currently living. All right. So if he was young and in good shape, I would tell him to get$2.5 million on him, including the$800. So we'd back that out. So$1.5 or so, give or take. But he's not, and I suspect at 60 with the diabetes, it's going to be pretty expensive to get some term insurance. But the variable life insurance is not much in coverage, is it? It's not a very big policy, right? No, it was, when we first got it, it was like, he had$500 ,000, and mine was, but where we took out, it was probably, like I said, like probably eight years ago, it was like$70 ,000 we had in there.

1:29:23And we took all that out to try to save the business. But we put in, it's like$275 a month. Yeah, but I'm talking about the death benefit. If he dies, what do they write a check for? Oh, that's only$350 ,000. Yeah, yeah. And$275 ,000 a month for$350 ,000 even for a diabetic 60-year-old is ridiculous. Well, and then that's where we're like, we're just throwing that money away, I feel like. Yeah, so you can cancel that if you can afford to live on$800 ,000 if he dies tomorrow, okay? If you instead, another route you could go before you could cancel it, you could go to Sander Insurance, talk to them and see if they can make a market meaning if they can get a company to cover him and how expensive it will be and try to buy a million try to buy a million on him if you can i had some when i was in my late 50s and 60s and right around 60 years old just because swi sharon wants it i didn't need it but my wife wanted that instead of another diamond and so i did that and i but i'm in really good shape and don't have a single single medical issue And so, and I don't, I don't, I could lose some weight, but I don't meet the obesity markers.

1:30:38So I can get the, I can get the insurance. And so that's, that's the things that will fight you at that age. Now, so go to Xander, Xanderinsurance.com or call them and tell them you talk to us on the air. Well, I've looked at that. So that's what I wondered about that. See if you can get insurance to make you more comfortable. And then if you can, it's an instantaneous yes to cancel this. If not, do you want to keep the very, very, very expensive insurance? I probably don't. Okay. I'm probably going to take some of that$275 ,000 income and start banking it aggressively, knowing that I don't have enough insurance.

1:31:12Okay. That's what I wanted to know what to do about that. What were you going to do with the money you cashed out? Well, I wanted to know, like, I mean, because you hear all this stuff about putting stuff into gold. So I didn't know if that was something or where should we put it? But it's only like$4 ,800. Well, number one, I'd make sure you're out of debt. But number two, we don't buy any gold. Gold has not got a good track record long term as a return on investment. Instead, I would just buy good growth stock mutual funds with my investing. But y 'all need to be doing a lot more than that, making$2.75.

1:31:46$4 ,800 ain't going to save you. You know, not in this situation. So it's just, you know, a smart thing to do is not gold and go to some mutual funds. But, yeah, you need to be laying out a game plan where you're saving like$100 ,000 a year. And you do that for five years. Now you've got a half million dollars on top of that 800. Now we're starting to get there without insurance, without any more insurance. Starting to become self-insured. Than the original 800, yeah. But you've got to rebuild after the business failure, rebuild some net worth and some wealth for survival for you and the 16-year-old.

1:32:19And those are the routes to go. So, guys, just to recap, the life insurance world is polluted with bad products. There's really only one. All the people that are not in the insurance business, all of us that are financial people that run numbers and are math people, all the financial people say to buy term life insurance. The best deal on term life insurance is 15 to 20-year level term. It's a level premium, and you should have 10 to 12 times your income on you if you have a family counting on you for your income. So if you make$100 ,000, you need somewhere around$1 million,$2 million, something like that.

1:33:06And then if that 34-year-old wife of yours with three little kids is left behind and you don't have that$100 ,000 coming home, she could take that million invest it it'll create a hundred thousand in income perpetually until the kids are grown and gone and you can invest in you know we have replaced you so if you don't want to get too much have sleep with one eye open but if you're 34 and in good shape term life insurance costs that is like the cost of a pizza it's ridiculously inexpensive to make sure your family's taken care of ridiculously and i just read a letter to our staff meeting this morning, a 52-year-old that had life insurance on her, and they had just paid off a million dollars in debt four years ago, and they were on vacation.

1:33:52She had an aneurysm and was gone in six minutes and left another million behind in life insurance now because they'd done the stuff that we teach over and over. So it's just not very expensive if you go and do it right, but this investing inside of a life insurance policy, like these stupid variable life and whole life policies, are an absolute ripoff. Never do that.

1:34:42Many of you listen to The Ramsey Show because you're sick and tired of getting nowhere with your money. You work too hard to live paycheck to paycheck with no money in the bank. But here's the deal. Just listening to the show won't change that. If you want different results, you have to do something different. We've helped millions of people save money, ditch debt, and build wealth. And you can too. But you've got to have a game plan, and that begins with our get started assessment. Go to RamseySolutions.com slash start now, take the free quiz, and get your free step-by-step action plan. If you've had it with money stress and are ready to take control of your money for good, go to RamseySolutions.com slash start now.

1:35:34Well, as you've heard, the Fed has cut rates for the first time all year. 15-year fixed-rate mortgages have dropped to the lowest we've seen in 11 months. If you're financially ready, now is a great time to buy or sell. Buying an affordable home you love is possible if you work with a Ramsey-trusted real estate agent. We have vetted agents to be high-octane, high-protein, get-or-done people. And you can find one of these Ramsey-trusted local pros for free at RamseySolutions.com. slash agents. Time to do a real estate deal, boys and girls. I love it. Caleb's in Dallas. Hey, Caleb, what's up? All right.

1:36:12Thanks, Dave, for taking my call. Hey, George. So I'm on BabySep2. I've got roughly $65 ,000 in debt. I make somewhere between$80 ,000 and$85 ,000 a year. And my wife, she's in college at the moment. I'm going to get her nursing degree. When will she be finished? She will be finished this time next year. Oh, good. Okay. So she actually, it's a good thing. She was very blessed to be able to take advantage of her dad's GI Bill. And we also have, I believe it's called Chapter 32, maybe. um since we live in texas uh she's able to get money every month that's income on top of um wow so she's going to school debt free and getting paid right yeah so my question is i've got um a thrift incentive plan at work it's not a traditional retirement plan um but it is after tax.

1:37:23I am required to put in a minimum of 2 % in order to receive profit sharing. Historically, the last three years, first year that I was able to receive it, it was 10%. The next year was 12%. And then last year was 15 % of employee salary. I'm just wondering, should I continue to contribute that 2 % in order to get that profit sharing, because we're on track this year to get 15 % again. Normally, I wouldn't. Those numbers are a bit ridiculous, so I probably would. Right. Matter of fact, they're the most ridiculous numbers I think I've ever heard, in a good way. Right. I'm very blessed to be where I work, and I thought I was astounded by the—I've never seen a retirement plan that that works as well as this one does i haven't either and i've been doing this a long time but that's i mean you put in two you get 15 that's kind of crazy uh crazy good and so um i mean if you put in two and you're gonna get three i just pass for now but i mean and i tell you people that get matched three percent on your 401k i wouldn't I wouldn't do it.

1:38:45I would stop your 401k temporarily and work your baby step two. I always have said that for decades, and it's worked to get people out of debt. But that 2 % is not enough to bother with one way or another, and a 2 for 15 trade is probably a pretty good trade. What are you thinking, George? What am I missing? Are you aggressively looking to get out of this debt, making 80 to 85? How much can you throw at this thing per year or per month? So I am the first thing is I'm on track right now to get out of debt now, and since this past month has passed, a year and eight months. That's what I've calculated.

1:39:30That's without a nurse's income. Right, exactly. That'll speed up a year from now. It'll just really inject some life into your body. So you ought to be done a little over a year pretty quick or, you know, as soon as she gets that going. Now, what is she making income-wise from this program? So Chapter 32, the VA benefits, I think it depends on, you know, how often she's in class. But when she is in class full-time, it's like$1 ,200 to$1 ,500 a month. So why would she not be in class full-time? Well, some of this program doesn't, like the summertime, for instance, she doesn't have classes all day.

1:40:19She only has classes, you know, two to four hours out of the day. Versus right now, since she's full-fledged in the program, she's getting full-time student hours. Gotcha. Gotcha. Okay, so you've got another$15 ,000 or so coming in income from her while she's in school. Right, yes, sir. So you're making about$100 ,000 and you've got$65 ,000 in debt. Yeah, you need to be debt-free. Yeah, the year and eight months sounds really good, and if she passes her boards right quick and lands in a paying position right quick, then, yeah, I think you're going to be in really good shape, and it'll be sooner than a year and eight months.

1:40:57I like everything you're doing, Caleb. Sounds like you've got it dialed in. Keep it up, keep it up. I'm glad you're paying attention. George, you know, it keeps coming back to if you pay attention, you win. Yeah, if you know your numbers, you're actually looking at it. Those stupid interview questions we get sometimes, it's like, what's the largest problem Americans have with money? They want us to say student loans or credit card debt. And my answer is always not paying attention. Living in la-la land in denial. The biggest problem is they're just wandering along like Gomer Pyle on Valium, you know, and they just wake up at retirement.

1:41:28Shazam, I'm broke. You know, oh, my God. None of you people know what that is. Look it up on YouTube. Okay. Anyway, Christiana is with us in Chicago. Hi, Christiana. Hi, guys. Thanks for taking my call. Sure. So I have a question about baby steps six and seven. So my husband and I are fortunately there. Yay! Yeah, it's exciting. So my question is about the order of steps six and seven. So why do you recommend paying off the mortgage when the mortgage rate is like, let's say, 6.3 percent, but the market returns your money at 10 percent and then with compound interest, you know, because your math formula is very naive.

1:42:16OK, you left out risk. OK, and you left out the fact that you're psychologically, relationally and spiritually carrying around debt around your shoulders. and it affects your health, your relationships, your career choices, and everything else. And so what we have found is that the people that build wealth the fastest are the ones with a paid-off house. Okay. Because they're free. Okay. And nobody making them do anything. And so suddenly they start making better choices instead of trying to maximize their wealth building off the back of a mortgage spread. You're left off risk. 100 % of the foreclosures occur on a home with a mortgage.

1:42:57We did research. It was easy to do that research. Didn't take a big research team. Fairly quick. But, George, it took me a while, Christiana, to get to where, as a math nerd, I understood that the math formula that you're using, and I back then was using the same math formula, I couldn't figure out what was wrong with it. And I finally figured out that the more debt you carry, the more risk you carry. And the more risk you carry, you have to mathematically adjust for risk if you're going to use a sophisticated mathematical formula on something. And so I figured out that my math formula, and, Christiana, your math formula that you're using now is the same one, leaves out risk.

1:43:44And when you math adjust for risk, what you perceive to be a spread that you're making is neutralized. Yeah. Well, and what we find is, you know, someone loses a job tomorrow, there's risk there. Now you still got to make that mortgage payment. And so it just opens you up. And on top of that, you know, it's not apples to apples when you look at a mortgage payment with 6 % versus what you could make in the market. And by the way, if it's outside of retirement, you're paying taxes on that versus the mortgage. There's a fixed savings plan right there. You know, you're paying down that interest. Stress-related health problems are the number one killer in America.

1:44:19Hypertension, heart attack, so on. It's the number one killer. And they've gone up as the debt load in America has gone up. And so the statistics keep getting worse. And so people say, well, nutrition's worse and there's more obesity. Very true. But also there's more stress. And it's just strange. When we say financial peace, two words that don't go together, like airline service, what would it feel like to have your house paid off? It goes beyond the math. It's hard to quantify on paper, but no one regrets it. Nobody goes, man, I wish I had a mortgage again. That was fun. I'll do that to make a spread.

1:45:39Transcription by CastingWords helpful info on everything from life insurance, health insurance, identity theft protection, and more. And when you're ready to get the coverage you need, you can connect with a Ramsey trusted insurance pro who will only get you what you need at the best price. Go to RamseySolutions.com slash insurance, RamseySolutions.com slash insurance.

1:46:14Kyle and Anne-Marie are on the debt-free stage in the lobby of Ramsey Solutions. Hey, guys, what's up? Hey, Dave. Good to have y 'all. Welcome. Where do y 'all live? Macon, Georgia. All right, just down the road. Well, welcome to Nashville. And how much debt have you two paid off? About$140 ,000. Way to go, guys. And how long did that take? 18 months. Whoa, quick. And the range of income during that year and a half? About$150 ,000 to$160 ,000. Cool. What do you all do for a living? So I'm a software developer for a local credit union. And I'm a pre-K teacher. Awesome. Very cool. What kind of debt was this$140 ,000?

1:46:55A little bit of everything. We had two cars. We had a HELOC. Some student loan debt, for sure. What was the most of it? Student loans. Yeah. How much of the$140 ,000 was student loans? About$90 ,000. Okay. How old are you two? uh 36 and 35 so the student loans been around a while uh mine have been around for about three years hers maybe a little longer yeah mine about 10 okay all right yeah they've been around a while how long y 'all been married four years okay okay so you brought them into the marriage then yes we did now i'm getting a picture and then 18 months yeah out of four years so after you've been married a little while you look up and went something's got to give we yeah we we just kind of got to the end of a month and realize where is it all at like we have all this money and we don't know where it's at we have good paying jobs why do we why are we not building our savings account it doesn't make any why are we broke it just comes in and goes out comes in goes out this is not a fun life yeah then how'd you get connected to ramsey so i just started looking up just different you know financial what's the best way to you know help paste himself off and ramsey came up and i just got plugged in immediately and got every dollar set up and just started going at it and we sat down it took us about three months to get the budget really intact it takes it about three that's about right as soon as we did we uh we were just rolling rolling rolling what'd you figure out once you what once you got that budget dialed in where was the problem so the i mean it was definitely just the amount of payments that we had in every different category i mean we had what eighteen hundred two thousand dollars in payments of just stuff you needed a strategy and definitely eating out too yeah it was like we don't need to be going out this much we can just eat at home and um parties with parents and stuff and going out to eat with family was really big for me and we just had to tell them hey let's just do it at the house and have a potluck just until we're done with this journey and they supported us in it so it was oh very good very good very cool so i mean you guys leaned in hard wait did you sell something this is yes so yeah So July 23, no, 24, no, it was 23.

1:49:06July 23, we bought a van and put it on payments because we were like, we can afford this. It's payments. It's not too bad. It's not a big deal. And then in October when we finally started sticking in, we were like, man, this is crazy. You know, we actually need to figure something out. And so actually July of 24, so one year later exactly, we ended up selling the van for break even. Oh, wow. And we actually lost about$15 ,000 in that, which we called our stupid tax. Yeah. Yeah. Yeah. Because that's what the insurance paid out before we bought the van. And we should have just bought a car in cash, but we weren't that deep in with y 'all yet.

1:49:37Gotcha. Gotcha. See, this will be a great down payment. We can get a nice car now. Oh, yes. Oh, my goodness. That's the American way. Yeah. Yeah. Wow. Well, good for you guys. What do you tell people the key to getting out of debt, paying off$140 ,000 in 18 months, making$150 ,000? Definitely being on the same page. Yes. Being on the same page with each other and making sure that that budget is key above all else. What was the biggest budget fight? Like I said, wanting to give presents. You? Presents and going out to eat with family and stuff. So you're on my team. You're the spender. Yeah, probably a little bit.

1:50:13I'm definitely the nerd. Okay. Well, software engineer, of course. What am I thinking? Yeah, no question. Oh, man. Amazing, amazing, amazing. Well done, you guys. so um wow what do you tell people the key to getting out of debt is then i mean just sticking to the budget really the budget and being on the same team that's what i just yeah we don't and we don't live out of the bank account we live out of the budget so even if there's two thousand dollars in the bank account we don't have two thousand dollars we have whatever's left on that line item and that's what we've explained to people we're like that budget keeps you on track so you're not looking at what you have in that account at all you're looking at this is what i'm allowed to spend this is what i'm free to spend that i chose that i was going to spend i'm the boss of me yes and i'm the boss of that money and it doesn't need to direct amazon prime is not my boss oh yes wow what's next for you guys you're in your mid-30s no debt so we actually um we just listed our house this weekend whoa and we actually are uh gonna be selling it and moving up because we have a child on the way which is number three and um so we're just trying to move up into our next house and after that it's just figuring out where we want to go on vacation we want to go relax a little bit too yeah that's a good new problem to have yeah we're gonna go on vacation how are we gonna pay off this debt yeah i'm really proud of you guys way to go thank you very good work very good work so who was uh bragging on you who was cheering you on so both of our parents were very very helpful in the entire process and understanding of it all there were times where We had to tell them no to going out and stuff, but they were very understanding and helpful in the entire thing, and they are here.

1:51:50My handyman dad, it was like, oh, we can pay you in grandchildren kisses if you'll do this for us versus us having to pay somebody. Yeah. That worked out very well. I have not been bribed with that yet. I hope my kids are not listening now. So that's good, though. I love it. Oh, congratulations, you guys. Thank you. Very, very, very well done. Thank you. Um, were there people telling you you were weird? Well, everyone at his job, of course. Oh yeah. So because I work at a bank, well I work at the credit union, but I mean, yeah, there's, I mean, there's always talk going around of, oh, we have this new credit card offering and I'm just like, I'm good.

1:52:29I'm all right. I'm all right. I think, I think I'm set on that. Yeah. Yeah. Had enough of that. I'm pretty sure we're done with those things. Yeah. Well, congratulations, you guys. Very, very well done. And, uh, yeah, onward and upward. The third baby on the way. the house goes on the market here we go game on how's it feel to be completely free 140 thousand dollars off your back it's a blessing yeah it is it was it was it was all god guiding us the entire way but it is it is such a freeing feeling for sure yes what was the hardest thing about the whole process i mean for me it was it was just really just making sure that you know every time we sat down to budget that we were on the same page.

1:53:15That was really the biggest one. Towards the end, actually, I was the one that was like, come on, let's just cut those last subscriptions just for a month. He hates ads. And I was like, dude, we got to let this go. We can do it for that last month and then celebrate. So we watched ads for a few months. Brutal. To think the car was easier than the ads. Yeah, yeah. We watched ads like when we were kids. Yeah. You'll tell your kids one day, these are the sacrifices we made. That we made. We watched ads for three months. Yeah, that's great. Very cool. Well, congratulations, you guys. We're very proud of you.

1:53:51Did you bring the kiddos with you? We did. Bring them up here and introduce them. Ages and names. So Daniel is three. 24 hours ago, he decided to jump off of a playground and fracture his shin. So why not? Go Daniel. Yeah, he was being super brave. And this is Bella. She's one. All right, sweet Bella. So cute. All right. Yeah. Fun, yeah. All right, you guys. Kyle and Ann Marie, these kids don't even know what their parents have done to change their whole family tree. $140 ,000 paid off in 18 months, making$150 ,000 to$160 ,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free!

1:54:37Yeah!

1:54:43that's how it's done daniel yelled from his little stroller down there because he couldn't get up because of his bum leg but he was yelling oh good time to be debt free when you have an emergency like that and you just cash flow it changes an emergency into an inconvenience wow pretty cool hey that's a powerful couple right there what they pulled off in that short period of time and right after getting married, too. Yeah. I mean, they sat down, pushed through all the relational stuff, made it all happen. Very cool. Very cool. Proud of you guys.

1:55:46We'll be right back.

1:56:11Our scripture of the day, Proverbs 22, 1, a good name is to be chosen rather than great riches, and favor is better than silver or gold. Philip Fisher said the stock market is filled with individuals who know the price of everything and the value of nothing. Ooh-wee. Ryan is in Minneapolis. Hey, Ryan, how are you? I'm good. How are you? Better than I deserve. What's up? Thank you for taking my call. Sure. My wife and I are currently in baby step three and we'll be finished with that by the end of the year. We receive an annual bonus in March. it'll be roughly$15 ,000 take-home. Would it be better for us to take that 15 to fully fund our Roth IRA or to spread our contributions out throughout the year and use the bonus between steps four, five, and six?

1:57:02It doesn't matter much. Either one will be fine. The difference mathematically is what you might earn. If you do the 15 all in a lump sum in March, what would you have earned in March versus one twelfth of the month all the way around? And so, you know, let's say the average might be what you would earn on eight or ten thousand of that fifteen. So it might be a thousand dollars difference. It might be eight hundred dollars difference on a 10 or 12 percent year. Unless we had a crystal ball, we won't know for sure what the math is on that. But in general, the sooner you get money into the market, the better off you're going to be long-term.

1:57:42Right. But it's not, I mean, the difference, it's not like you're going to have millions of dollars more because you did 15 lump sum versus 15 one-twelfth of the time all the way around the horn, right? Right. But basically, for instance, in my case, okay, I fully fund my 401K for the whole year in January. Okay. I dump the whole thing in there, okay, Because I can, I own the company, and I can just bonus myself whatever I need to and make sure I've got enough to do that. So I just load the stinking thing up, and then I've got that, I don't know, let's call it$20 ,000 or$30 ,000 or whatever it is.

1:58:23It's working the entire year rather than one-twelfth working the entire year, two-twelfths working part of the year, three-twelfths working part of the year, four-twelfths working part of the year, and so on. You follow me? So the difference is what I would make on$30 ,000,$27 ,000,$28 ,000,$24 ,000,$23 ,000,$22 ,000, and so on, all the way around the horn. And so it's – George is right. A lump sum up on the front end is going to average more than doing it monthly. The second thing to enter into the conversation, because it's a good question, is you want to be sure if the steady monthly thing keeps you doing it because you're on autopilot versus jumping on and off the wagon with lump sums and you're not as predictable with it, sustainable with it that way, you'd be better off sticking with the one that keeps you doing it.

1:59:21And so I set up stuff early in my life, once I started understanding these principles, to trick myself into having discipline, like automatic 401ks or automatic draft on my checking account for Roth IRAs or those kinds of things back in the old days. So I automatically had debt. I went so far as in the old days when I started this stuff, there was no Internet, of course. And so there was no auto. There's very little auto draft on utilities and that kind of stuff. You used to have to write a check and send your electric bill through the mail. OK. And as soon as they set it up where they would take auto draft, I put all my utilities on auto draft so that I never missed a discount.

2:00:04and that's been, God, that's 25 or 30 years I've been doing that. So anything I can do to have autopilot, automatic discipline. Yeah, I like that mentality because if you're investing 15 % of your income forever, you've got to learn to live on 15 % less than you would have. And so it's sort of like that money was never there. And that's a good way to live because it keeps you in check. So I think that long-term discipline is key. But for this year, if you just wanted to fund them and be done with them and move on that's cool if you've you know if for 10 years you've always gotten a bonus in march of 15 grand and you want to just label that that's going to go towards our retirement and we're going to do less through the rest of the year fine i don't know you know but whatever you do trick yourself into being consistent and uh and when given the opportunity a lump sum early in the year will outperform a steady monthly investment because it's been in there longer there's a fancy name for that dollar cost averaging well that's what you're not doing yeah is dollar cost averaging when you put it all in there yeah you're missing out on that rj is with us in fort worth hey rj how are you hey dave how's it going better than i deserve how can we help hey so my question is um see honestly i'm in baby step two and i have like 12 000 in debt cdo school is 3 000 i don't know if i should go ahead and like what school back into what school CDL school.

2:01:29To get your CDL. Yeah. Just three grand to do that. I currently have my CDL B, but in order to increase my income, I need a CDL A. So should I go into more debt, like$3 ,000 more, to make more money, or should I wait until I pay off my debt completely? And once I'm done with baby steps, should I go in and cash flow at three grand? Where are you working? So you're not driving now? Yeah, yeah. I'm currently using my CDLB. I'm currently making money with my CDLB. Okay. What are you making doing that?

2:02:08About 54, 54 a year. And would you stay with the same company or change jobs? No, I definitely change jobs. I go to a higher-paying company. I'd probably make at least$70 ,000, maybe like$80 ,000 to$100 ,000. There's no limit. How quickly could you save up$3 ,000 making what you make now?

2:02:32Maybe like three or four months maybe if I really put my line to it. Yeah, and what I'd do is work six extra jobs and sell so much stuff the kids think they're next and scrape up$3 ,000 in cash in about a month. But no, I'm not going to borrow money to go do it. the secret to getting out of debt is to stop borrowing that's the first step you got to quit looking to debt to be your answer to be your savior every time you want to go do something you got to say that's not an option anymore i'm gonna take debt off the table it's not an option now how am i going to do this well it's a good thing to do i mean if you can spend three grand and up your income 25 grand i think you ought to do that that sounds pretty good but and so what that means is i'm gonna be working my tail end off man i'm gonna be working like all the time and go get me three grand because i mean right that's where money comes from is work and so go get you some that's what i would do and i'd be busting it man and at the workplace i'd be asking for overtime i'd be asking workplace to pay for it and and let them you know maybe they keep you on at 70 grand with a CDL, right?

2:03:40And so, yeah, there's nothing wrong with that. And there is a shortage of drivers right now, so that's not a bad thing at all to go get that license to be able to move some stuff around. Yeah, I'm definitely going to go get the money, but no, RJ, I'm not going to. I've never told someone in 30 years to go into debt on this show. Guess we're not starting today. Yeah. and um but if i were in your shoes i'd be wanting that three grand i'd be wanting it really really bad yeah some good roi on there i'd go get some i mean what do we got we can sell what about that motorcycle that four-wheeler that's out in the backyard oh why don't yeah well go sell it get your three grand you're getting ready to borrow money you know you're sitting on some junk back there somewhere probably that'll pay this thing so just figure out what what you can do and once Once I took debt off the table, George, I started seeing all kinds of creative options.

2:04:38Your imagination runs wild when it doesn't involve a lender. Yeah, when I can stay, you know, once I do anything to stay away from a bank or I can't do the thing, well, I want to do the thing, so I'm going to go find a way, but it's not going to be with a bank. Yeah, I just crunched some numbers here. I'm like, if you can go make$25 an hour driving for Amazon Flex, just drive packages after work, that's 120 hours. Okay, now I know what it's going to take to go get that license. 120 hours of extra side hustling. Five hours a day for 20 days. There you go. Ding. So there's the math on it. I might be tired.

2:05:15Oh, well, you might be. You sound like a young guy. I know, not him. He's got energy. He wasn't a whiner, but I mean, I've talked to a few people that whine. It's okay. You might miss the next series on Netflix. You're not going to die from hard work. Right before you die from hard work, you pass out. It's okay. That's how the Lord intended it. That puts us our other 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.

2:06:03Thank you.