Money Isn't the Problem—Your Behavior Is

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Me and Dr. John Deloney are coming

to a city near you on the Money and Relationships Tour. It's happening soon, so don't wait.
Get

your tickets at RamseySolutions.com slash tour.

From the Ramsey Network, this is The Ramsey Show,

where we help people build wealth,

do work that they love, and create amazing relationships.

I'm Ramsey Personality, George Camel, joined by the one and only Jade Warshaw.

We're taking your calls at 888-825-5225.

You jump in.

We'll talk about your life, your money, your relationships, whatever's going on.

Love it.

Let's do this.

Aaron is going to kick us off in Louisville, Kentucky.

What's going on, Aaron?

Not much.

How are y'all doing?

Do you want to go I love George's book. I just finished reading it.
Oh, thank you for that. It means the world.
So I am looking to, I'm planning to be married within a year from now and I'm working the baby steps. I'm having to rebuild my emergency fund right now cause I had to buy a car.
And so that kind of took a big hit, but I'm rebuilding my emergency fund and jumping back into the baby steps. But how should I plan financially to get married? Cause when, when I get get married my girlfriend is most likely not going to be working and so what should I put in place to take over her expenses like her insurance and and just factor in paying for another person why won't she be working uh well she's pregnant she's moving three hours from where she's at so it'll at least be like a month or so i think before she would get a job okay so you're saying that she's going to have this temporary time where she's job hunting and you want to be able to kind of float those expenses right but this is not until after you've gotten married right you said you're getting married a year from now yeah right are you engaged yet or not no not yet.
So we got some time. You're really thinking ahead here.
I would want her to get a job lined up. I mean, why can't she do that before you guys, you know, move in together after you're married? Well, the hope is that she will take on a position at our Christian school at my church, and that is a non-paying job.
It's a volunteer position. But she's had her heart set on that, and I think it'll be a good idea.
And I can support both of us. Can we, like, volunteer on the weekends and do the children's ministry on Sundays? I mean, we need to work.
Uh-huh. Well, I'll be out of debt before, probably a month or two before we get married, so we won't have debt.
She doesn't have it? have she's not bringing any into the relationship she's not ready to retire and be a volunteer full-time y'all are just getting your life started you got goals you like want to have a house one day right well yeah what's your income my income is right at 50 000 a year i just started a new though, so it's supposed to go up. To what? Like if you had to project it? I'm looking at, I've been told around 60 this year.
Okay. And how old are you? I'm 22.
Okay. Yeah.
To George's point, I like the fact that your wife has identified something that she's passionate enough about that she would do it for free, basically is what she's saying. However, like George said, you guys are just getting started.
This is the time to really get your feet wet and try things on that you're getting paid for to see if you like it, if you don't like it, to grow. And I agree with George.
I feel like if she wants to volunteer, there's a time and a place for volunteering, but there's also a time and place for going out and earning. And that's just my opinion.
You guys are going to do what you want to do. And that's our two cents about it.
Let's talk about the money a little bit more. So your biggest thing is you were concerned that there would be a period of time where she wouldn't be able to work.
George has kind of cleared that up and you have said said that you can cover all of you guys' bills with your paycheck, and you can be a one-paycheck household. Have you verified that with the EveryDollar budget? Yes.
Okay. Yeah.
So you've laid it all out and said, all right, we can cover all of her bills plus all of my bills, and we're going to rent for the foreseeable future as we save up a down payment. What would be your next goal once you guys are married? Once we're married, saving up for a house is the first big goal.
Okay. And you would be investing 15% of your income or are you going to do a baby step 3B and just go real intense for two years on the down payment? Plan to go real intense for the down payment.
Okay. Again, that's where her working is going to come into play because making 60K a year, covering all the bills,

you're not going to get very far in the down payment.

You might be able to save, I don't know,

a thousand bucks a month.

Have you kind of done the math

to see what you could really save up in a year?

Yeah, I should be able to put at least about

10,000 or so aside a year.

Okay.

Can I make a suggestion?

Here's another suggestion. We're brainstorming at this point because I'm going back to the wife, the wife working.
So this is the children's ministry, you said? The Christian school. Christian school.
Okay. It's a day school.
Yeah. Is it like K through whatever? It's K through high school.
Okay. All the way.
Question. Here's a thought.
Cause I'm thinking you guys thinking you guys you know you get married maybe you'll start to plan a family maybe that's the time for her to volunteer her services and maybe she can get free child care out of it and during this phase that's another part of it too but then maybe during this phase this is the phase that you guys are like hey that knowing that that phase is coming this is the phase where we're buckling down we're working we're saving up quickly so that we can get this house and all this stuff in order so that we can do that phase of life in that phase can look like that just an idea just me brainstorming from works the other side of the fence yeah i like that is she going to be bringing in any debt or any savings into the marriage uh no debt but hopefully at least about or six thousand dollars worth of savings that's her goal um she's putting money aside right now oh she's working right now yes who's paying for the wedding say that one more time who's paying for the wedding who's paying for it it's kind of a mix of her dad and us were throwing some money in.

We're keeping it low budget but thankfully because of her church we don't have to pay for a venue so it'll be there that's good okay yeah my only suggestions are the ones i gave plus just being really clear about really what's going on with the wedding who's paying what what you guys are paying setting that budget and then from there on i think you guys are good to go you'll be okay I just think it's going on with the wedding, who's paying what, what you guys are paying, setting that budget. And then from there on, I think you guys are good to go.
You'll be okay. I just think it's going to really expedite your progress on this home if she's working for at least the first year or two until you guys have a kid.
Okay. And did you already buy a ring? Yeah.
I've got it picked out, but I haven't paused to set the money aside from,

I'm getting my emergency fund built up before I actually put the money on the ring.

Okay.

Smart man.

Okay.

Okay, and can you tell us for just people curious out there,

what kind of ring is this?

How much are you planning on spending?

Well, she picked it out.

I didn't actually pick it out.

Even better, man.

She hates it. That's her problem what is it it's a thousand dollars okay there you go wonderful what kind of ring is that what kind of ring do you get for a thousand bucks it's rose gold it's uh diamonds it's got two bands on either side of the engagement part and it's i think it's called a halo set look at that um this guy knows rins i know i love it man congratulations has she been through financial peace like this though say again is she on board with this ramsey stuff has she been through financial peace university oh yes okay oh yeah she hasn't been through financial peace university but they taught the curriculum in her school in her high school Oh, the curriculum.
Okay. She hasn't been through Financial Peace University, but they taught the curriculum in her school,

in her high school.

Oh, the curriculum.

Okay, well, how about this?

As a premarital counseling wedding gift, I'm going to gift you guys Financial Peace University so you can go through it together and be aligned.

It sounds like you already are aligned, but that is the number one indicator

that you guys are going to kick off this marriage just going for it. Listen, they're aligned.
I don't think he was aligned with us, though. I think they're going to do their plan.
What do you think? What are the odds? He felt pretty sure that she's going to volunteer. It's going to be a harder road.
It's 10 grand a year toward a down payment. That's 20 grand after two years.
That's not getting you very much near Louisville, Kentucky. So that's why I'm like, we got to make some progress fast.
Agree. Then we can take the foot off the gas later on down the road.
I agree. This is The Ramsey Show.
Statistics show that half of Americans don't have enough life insurance, or they don't have any at all. I don't understand this, John.
Why don't people want to take care of their family? They think they're not going to die or something? Well, I used to be one of those guys. I didn't even think about it.
And one of my buddies said, hey, the only reason to not have life insurance is if you hate your wife and kids. And I immediately went and got term life insurance.
That's a gut punch. For decades, Dave, I've sat across people who've lost a spouse.
They've lost somebody important to them. Me too.
They don't know what to do next. Terrifying.
You're going to have a crisis here. You know, you got two options while you're sitting and talking to a young widow.
She's concerned about how she's going to invest all this money properly and not mess this up, or she's concerned how she's going to eat tomorrow. That's exactly right.
These are the two options. It's saying I love you to your family.
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888-825-5225.in is in toledo ohio up next what's going on dustin hello uh uh ramsey team um the question is would it be irresponsible to move from another state for a job that pays half as much tell us more yep uh so currently i'm 37 married to three kids we live in toledo ohio um we get some pretty lawn dragged out cold weather and gray weather up here okay uh we love florida we've been traveling there for uh quite a few years we go there times a year yeah and uh every time we drive home we ask ourselves why don't we live in here um so i uh we're currently on baby step four five six. Okay.
For career, I'm a full-time firefighter. I'm currently eight years into a 25-year pension.
Okay. My base pay is $95,000.
With overtime, I can make up to $110,000. Okay.
My wife works part-time. She makes about $12,000 to $15,15 at this time.
And if you were to move to Florida,

tell us exactly what that would mean. So obviously, does that mean your pay would go down from $110 to like $60, or what does that mean? Yep.
So unfortunately, there's a pretty big difference in pay between the two states. Okay.
Right now, it looks like I'd be getting hired in around 60 to 65. None of my pension would transfer over.
So the good news is I can get my certifications for a fire and my paramedic to transfer. So it would just be a process to get there.
But then I pretty much would be starting over into a new career field and down the state. What part of Florida is this? So we've looked all over.
We've kind of landed on, it's called St. John's County.
So like St. Augustine area, a little south of Jacksonville.
Okay. Okay.
There are some places that pay a little bit more, but then the cost of living is a lot, lot higher for those areas. That's right.
What about your wife? What type of work does she do? And is there any way she can maybe make up the difference on this? So she works in a, in an eye doctor's office. She's looking at if she can get any certification that would help for that area.
It looks like she could get a job and she would move into full-time at that point because we're forecasting this out to be about 24 months from now. So she would pick up the the full time, which would bring her up to about between 30 and 40.
So it definitely would still be a pay cut overall. What's your living situation now? Are you homeowners? Yeah, so we own our home.
We owe $85,000 currently on it, and it should bring about $300,000. and the idea is to put all of just fold all that into a another house of the same value or are you going to downgrade um it would be about the same value um we're watching them we've been watching markets very closely for the last year and they're trending in the right direction for that area um but i i would say 350 would be our max but hopefully more than that 280 to to 300 range would be where we'd be.
Listen, I'll be honest with you. I, I definitely think there's more to life than earning.
Um, and I, I have been guilty of saying the words, like if people don't like where they live, why don't they just move? Like it's your, it's a free world. It's your, it's your life, like move somewhere else.
so there's part of this that i i 100 understand and i think for you guys and and george feel free to chime in here for me it's you guys looking at your goals and saying here here's here's our values first off we value living in a place we love we value waking up in the morning and going oh i just love the way it looks out the window like those are, you've clearly said that that's a value of yours. Then the next step of that is looking at, yeah, your financial goals in a far out snapshot and going, how does this affect what we've set our goals are? And are we okay with that? Does this mean it's going to take us longer to pay off the house? Did we one day have goals of sending our kids to private school? And now that changes.
And really go through how this also affects whatever financial goals and values that you had and if you're okay with it that's fine but if you also go ah you know what dang it that does change us being able to pay for college or that does change and so I want you to play out those scenarios and make sure that you're 100% okay with what that can mean because it sounds sounds like you're 37, you're still young, you guys have not hit your earning potential, like your full earning potential yet. So I do think that if you were to make this move, you'll have plenty of opportunities to continue to grow your income.
And truthfully, you might decide, I don't want to be a firefighter anymore at some point, and you might move on to something else. Only time can tell.
What do you think, George? Well, there's a lot of good stuff in there, Jay, and I do agree

that I'm okay with you making this move. I just don't want it to be sort of settling and going,

well, I guess I make 60K now. And the thing is your expenses are not getting cut in half here,

but your income is. And so have you guys sat down to actually do the budget to see what life would

look like? Yep. We've ran all the numbers of what it would do with retirement and kind of

Thank you. And so have you guys sat down to actually do the budget to see what life would look like? Yep.
We've ran all the numbers of what it would do with retirement and kind of forecasting out. Originally, right now, with a 25-year pension, the plan was to retire at 55, maybe save for a flush of years, and then relocate down at that time.
That would put our kids in the early 30s and mid-20s. You're breaking up on us, Dustin.
And then the other sacrifice is your wife would have to work full-time for the foreseeable future to make this dream work. And so that's the balance we're talking about here is, is she okay with that? Your quality of life will probably increase.
You guys will enjoy living in Florida, but she's not going to have flexibility to just work part-time if she wants to. She's going to have to work full-time and hopefully find something making more than 30.
Because right now, retail, you could make 15 bucks an hour. That's 30 grand a year.
And so I want both of you to be working on your careers and also doing more research. You've landed on one place.
Can we land on three and start interviewing and seeing, hey, this place is offering 75, the quality of life there is going to be great, and maybe find a compromise? I understand. If we move forward with it, we would try to go into a stork mode.
I know cash would be the biggest advantage, it seems, when we make the move. Currently, right now, we save our 15% and we're putting a bunch extra on the house.
You would slow down how much you're putting on the house, keep investing 15%. So it wouldn't be quite a stork mode like you're talking about.
And you would roll all the money from your current home, all the proceeds into that next home. And then you got to know there's going to be closing costs.
There's going to be moving costs. And so see if you can maybe weave that into the negotiations with the job to see if they'll cover some of that, you know, relocation expenses.
And I might consider, you said you'd probably go tit for tat on the house. I might consider a downgrade if you can to make this less burdensome on you financially.
On these interest rates, that will increase your payment. So if you're at a three or four and now you're jumping to a six or seven.
It's a big jump. Yeah, that's a big jump.
All right, Jerry's up next in Durham, North Carolina. What's going on, Jerry? Hey, thanks for having me on.
Sure. How can we help? So my question is, is it a smart move to pause retirement for three years in order to pay off our mortgage faster? Or is paying the two to three more years on the mortgage worth the gain that the retirement funds would make in that time.
This feels like a common core math riddle, Jerry. The only answer here is do not pause investing.
And so 15% is what you're aiming at. And so pausing that in order to get the mortgage paid down quicker is going to hurt you in the long run when it comes to your retirement of what that compound growth for those three years would be at this stage of the game.
The only time we would tell you to pause investing is if you're in debt or you're trying to save up the emergency fund or down payment. But I think you got excited looking at the numbers of how much faster you could pay it off, right? That is exactly what happened.
We sat down and looked at our budget and saw how much money we could save and then how much more we could save by pausing the retirement investing. I was like, wow, we could pay our house off in about three or four years if we paused, but wasn't sure if that would be the right move or not.
Well, here's what I would do and what I have done. Instead of pausing investing, I go, okay, what is that number? Is it a thousand bucks, two thousand bucks every month that you would be throwing at the mortgage? You would be an extra thousand dollars a month.
Yeah. Okay.
So now here's the problem to solve. How do we make or create another thousand bucks a month without pausing investing? How do we cut enough expenses or add enough income to create that margin? If that's something we're excited about.
I also think there's something about this that because you're getting close, you're feeling like, I want to go faster. Because if you are, let's say, just an arbitrary amount, let's just pretend that you owed a certain amount on your mortgage, and it was going to take 10 years to pay off.
You wouldn't just suddenly be like, you know, for three years, I just want to save $1, dollars and invest it. You wouldn't feel the need to do that because it's not going to cause you to, it wouldn't have caused you to cross that finish line any sooner.
And so when you just kind of take that haste out of it, you realize, yeah, I wouldn't do that in any other circumstance. So I'm not going to do it right here either.
But have a little fun on a date night this weekend and go, okay, we're going to sit down and see what we could cut and how we could add without touching our investments, without touching the contributions. And I think you guys will get creative and find a way and hit your goal, my friend.
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Raquel is up next in Green Bay, Wisconsin. What's going on, Raquel? Okay, so just a little backstory.
I think my biggest problem is I don't have a problem spending money or saving money. I have a problem spending money.
I work really, really hard to save up the money I have. And while I am paying off my debts, I have it to like where I pay off the least amount because I am so afraid to lose my savings.
And my biggest question is how do I overcome that fear of losing my savings? Where do you think that comes from? It comes from somewhere. When I was growing up, we were very not well off.
We had housing insecurities. We had food insecurities.
So I'm always worried that I'm going to get back to that point. What do you think would cause you to get back to that point? What do you identify in your life that you go, if that falls out of place, I'm right back there? Well, for a while I felt pretty stable and then I had some health complications.
I had two surgeries in two years and that took away from my savings and I'm paying that off now. And I'm just, I guess, a health issue.
So it's your health. My job is very stable.
Okay. And you're walking through the baby steps now.
So obviously that's on a quest for you to find that peace or that stability you're looking for. What baby step are we talking about baby step three or are you talking about baby step? Like tell me more exactly about where you're at in the baby steps.
Well, to be honest, I just discovered your show about a week ago and the things you guys

have been saying i've always felt like well yeah i thought credit was stupid too and i don't want to i don't want to only put twenty thousand dollars down on a house i always told myself i have to save a hundred thousand dollars before i get a house that's the stability yeah the rest of my life uh-huh so you mentioned debt how much debt do you have right now i have ten thousand in medical debt.

Okay, and is that all?

Yes.

Cool, and how much is in savings in the last two years okay and um tell us about what's in savings yeah what george said i have 35 000 in savings oh my goodness okay and what's your income i about, so it's in between 60 and 70,000 a year. It's all, so my base pay is about 25, but we also, I'm a truck driver.
Okay. So per unit, I get like 10 cents per unit.
So if people are ordering a lot, then I get more money. Like during inflation, I get a little less because people are ordering a little less.
So you've got this $10,000 in medical debt. You've got plenty of money that you could pay it off today and still have $25,000 saved.
I think what could help with this, Dr. John would say like facts are our friends.
So I feel like what could help with this are a couple of thoughts. A, if health is really the thing that you think could knock you off your rocker, then for me, if I were in your shoes, I'd'd go I always want to have my out-of-pocket max for the year like I just always want to have

that saved I've had these back surgeries I'm a truck driver this stuff could crop up again

and so for me having that in place that should be the piece you need because you know hey no matter

what happens this year this is the max amount that it could cost me and I have that here it's ready

to go what do you think about something like that that makes makes sense. Yeah, I think that's it.
I do get, I do actually do that because the year prior, I did not have it. I had the minimum because I didn't want to spend a lot in healthcare because I'd never had health issues.
And then I got two back to back. And so like my next year when I did my healthcare, I was like, I I'm getting the best health care I can.
Yeah. The good news is you have a like there's there's a very good reason for why you were feeling some some fear.
And there's a really good reason about why that exists in you. The key is you can't let a good reason become a bad excuse.
Right. You can't let it become an excuse for you to do what you know is really the next right, smart thing with your money.
And that's where we're at right now. I mean, you clear out this $10,000 in medical debt, you're completely debt free.
Now you can actually move forward in life. Then you've got your $25,000 saved and you add a little bit more to that to make it the six months you need it to be, plus your deductible, whatever that is.
And now you're open to start building wealth. And I think that once she starts building wealth, george that's when she's really going to see a lot of this insecurity fade away well i don't think you realize how much of a chokehold this medical debt has had on you i mean it's like hanging on to past trauma so how old is the medical debt um it's just two years old okay how many times have you thought about it in the past two years probably every day it's living rent-free in your head scared it was going to happen again and then it did happen again so then it just like freaked me out i was like well there's a cost to paying off your debt with savings there's an even greater cost to letting it consume you man yeah i think the biggest thing is that because it happened one year and then the next year, almost like, I mean, within a couple months of each other, I was, I don't know.
Yeah, it's got a toe hold on me. You're right.
It's been two years. I would call and see if they'll settle and say, hey, I'll give you four or five grand to call it good today, paid in full.
And that'll make you feel a little bit better about letting go of less of your savings. But even if you pay the whole thing off in full, they go, nope, kick rocks, pound sand, you owe us 10 grand.
Just pay it off and be done with it and then stack up cash if you want. But the truth is you probably have already months and months of expenses in that 25K that's left over, right? What are your monthly expenses? Not a lot.
I am very frugal. Like I said, I listened to your show probably a week ago and I was like, yes, I got the cheapest.
I don't have a house. I rent.
Are your expenses three grand a month to cover everything? Oh yeah, absolutely. That would cover everything and more.
Okay. So 18 grand is six months of expenses.
So even if you were out of a job, you could float all of your bills for six months or more while you find another one. Yeah.
And the other thing is, do you have disability insurance through your employer or through your health insurance? I do, yes. Okay, that solves another fear.
Yeah, it does. If something were to happen to where you couldn't work, but you're still alive, the disability insurance would cover you.
Okay. So that's another facts for your friends.
Let's check off the box. We have our out-of-pocket max.
We have six months more of expenses. We have the right insurance in place, and we're doing all the right things.
And once you get this debt out of your life, you're going to be looking at the future instead of looking at the past. I think right now you've got a crick in your neck from looking back at this medical debt so much.
Yeah. I need another surgery for it.
And it's so true. What George and I are saying, it's so true.
If you can embrace this, you can finally go forward. And the moment you go forward, it's going to, this is going to be in your rear view so quickly.
Once you do this, and then you're able to move on to baby step four in a year's time, you're going to look back at this and go, oh my gosh, I was so stuck and I didn't even realize it because that 10 grand is going to feel like, why was I so up in arms about that? So I think it's just a matter of you pushing go. And now that George and I have kind of clarified that you're a lot safer than you think you are, then.
And this is you breaking the cycle. You paying off this final debt is you saying, I'm done.
We're not going back to that place where money was a problem. Money was a stressful point.
You're looking at the future going, I'm the kind of person who cash flows the emergencies that come my way and nothing's going to stop me. I think having your chin up high, having no debt and releasing yourself from the trauma of the past, the long past, which is your childhood and the past of the surgery and the health problems and what could be, I think you're letting it have too much control of your life.
I agree 100%. It's always in the back of my mind.
I hope that frees you, Raquel. Are you going to go pay it off today? Can you let America know you're doing it? Yeah.
I like it. That's a win.
That's a huge win. We are cheering you on.
And again, it's two years old, Jay. They might be willing to settle.
I bet. And they're getting minimum payments right now.
I bet they'd love four grand in their pocket instead. Yeah, I bet they would.
But, you know, George, I feel like we run into that time and time again where it's, you know, we talk about the three to six months of expenses and that's good. But I feel like the medical component is a part that people worry about.
And it's like, yeah, if you can just gather the numbers, because sometimes people think, oh, this happened. I had this huge medical bill and I never want that happening.
But it's like gather the numbers, gather the facts, and you can set yourself up to be prepared. No one knows everything that's going to happen in a day, right? But you can be prepared and know, hey, if I have something unexpected happen, if there's an emergency, yeah, I had the $5,000 to cover the ambulance.
Or yes, I have the worst happens. We've got the out-of-pocket max to cover our family if all of us fall off a cliff.
That's a good reminder. People are playing offense out there with their income, working hard, building wealth, but you got to play defense too.
And that's where insurance is. Nobody wants to talk about it, but it's one of these things you got to deal with and make sure that you are covered and don't wait until something happens to find out.
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Brentwood, Tennessee 37027. Welcome back to the show.

I'm here with Jade Warshaw.

I'm George Camel.

And it's time for one of America's favorite segments, Jade.

It's called Asking for a Friend.

What do we mean by that?

You tell me.

I will tell you.

Have you ever had one of those moments where something pops up and it's like,

I should know this.

And you don't want to admit that you don't know at this stage of being 41 years old in your life. So the societal colloquial saying is asking for a friend.
Yeah. But it's really for you.
Exactly. And so I feel that this is the type of subject that warrants the asking for a friend kind of preface.
What is a tax deduction, George? And what is the difference between that and a tax write-off? I'm asking for a friend because I know the answer. I literally just fell asleep.
That was so boring. Yes.
I'm kidding. We're going to make it fun.
Pay attention. Here we go.
So tax deduction versus write-off. This is one of the funniest things people mix up.
So the tax deduction, it's an expense that can lower your taxable income to reduce how much you pay in taxes. So you hear the word standard deduction, itemized deduction.
Standard is just the specified dollar amount you can subtract from your taxable income when you file your taxes. So the IRS decides this number every year and it depends on your filing status and in some cases your age and some other factors and you don't add to it you don't take anything from it yeah so the easy math is am i going to save more by going the standard deduction or by itemizing and most people in today's america are going to be better off doing the standard deduction it's a lot simpler yeah now itemized that could save you money if you have a lot of medical expenses charitable, state and local taxes, student loan interest, mortgage interest, home office expenses, you're self-employed.
You know, all of these things can affect which way you go here. But most people, standard deduction.
Next. Yes.
Next is, what is a tax refund? People get this one. They think it's free money jade the government blessed me i was

a good boy and santa decided to come early in april and give me some money it's really the

exact opposite it's it's the government returning back to you the money that you overpaid to them

throughout the year and george i think what makes it worse is so this is basically when you've set

the amount that's going to come out of your paycheck right you've set it too high and so at

the end of the year uncle sam says hey thanks for letting me hold your money you've given me too much

Thank you. when you've set the amount that's going to come out of your paycheck, right? You've set it too high.
And so at the end of the year, Uncle Sam says, hey, thanks for letting me hold your money. You've given me too much.
Here is it back. And by the way, I'm not going to pay you interest on you letting me borrow that money all this time.
Yeah, you made nothing. That could have been sitting in a high yield savings account, at least making you some money.
Or going towards your debt. Working to your goals and your debts.
So a tax refund, not a great thing. You want to aim for zero.
You didn't get anything. You didn't know anything.
Next, do I need to have all the money to pay my tax bill right away? I mean, ideally you have all the money, but if you don't pay as much as you can when you file and then set up a payment plan with the IRS. This is a big one.
People think, well, Jade, I don't have the money, so I'm just not going to file. Not filing can put you in jail.
Not being able to pay is okay. You can get on a payment plan with the IRS and put as much as you can toward the tax bill on tax day.
That's good. Okay.
What is a tax credit? Oh, you know what? When we go back, let's also talk about filing an extension. So if you're not ready to pay, a lot of people think, well, I filed the extension.
I don't have to pay. That's not the same thing.
You still have to do what George said. Even if you file an extension, you still have to either set up a payment plan or go ahead and pay the taxes.
You got to pay what you think you'll owe. That's right.
Even if you file the extension. That's right.
So that's just worth mentioning. Okay.
What is a tax credit? Okay. So earlier we talked about like a tax deduction.
A tax credit is different. This is when they lower your tax bill dollar for dollar by subtracting the amount of your credit from your actual tax bill.
So this is like, I know what my taxes are. I'm going to have to pay, you know, $2,000 and then something comes up that's a credit.
And it says, Hey, you've got this $500 tax credit. Now you don't have to pay 1500.
And is that the, it's kind of like, think of it at the end. It's like a coupon.
That's what I like. If this was a restaurant, the deduction restaurant the deduction is like hey all of the menu items we're going to lower the prices on great that's going to lower my total bill the credit is like saying hey your total bill was 100 bucks at the restaurant yeah we're going to subtract 20 bucks coupon code that's a coupon right there i like that love it next up how can i lower my tax bill well there's actually a lot of things you can do to lower your tax bill legally, like plan throughout the year for taxes.
That helps avoid this giant tax bill at the end. You know, quarterly estimated payments is a great way to do that.
Contributing to your retirement accounts on the traditional side, contributing to your HSA, that can actually lower your tax bill. And then look for ways to leverage tax credits, child tax credits, adoption credits, elderly, disabled, retirement savings, contributions credits.
There's all types and you can look into that or work with your tax pro to figure out which ones apply to you. And then lastly, like Jade mentioned, adjusting your withholding on your W-2 after you file.
That's right. And that's, yeah.
All right. Finally.
I think it's a W-4 form is what you use to adjust withholding. It was a typo.
That is a typo. You're not going to get me, guys.
Nice one. Trying to pull a fast one on old Georgie.
We would never. All right.
Next one is, what is adjusted gross income? You might see it written as AGI. And this is your total gross income from all the sources that you have it, minus certain adjustments from the form 1040.
And with that, I will close my eyes and take a siesta. Yeah.
If you mention a form followed by a number, the brain shuts down scientifically. I don't even know what I just said.
Like actually, I just listen to this when I go to sleep. I just listen to different IRS tax forms.
On the Calm app? Very calming. It's like watching the masters.
It's great. Lastly, how can I take advantage of deductions and credits? Well, one option, like I mentioned, connect with a tax pro who studies this stuff.
They know all the changes that happened this year and they can handle all this for you. That's what I do.
Or you can hand them all your documents and have that done. And if it's not hard to handle yourself, you've got a simple tax situation, you're a W-2 employee, not a lot of itemized deductions.
You can file with a tax software that's not going to charge you for all these extra forms. And that software is called Ramsey Smart Tax.
There's no hidden fees. Gives you all the major forms you need right off the bat.
We're not going to be sneaky about it. So go check it out, RamseySolutions.com slash Smart Tax to get started if you haven't yet, which we're just days away.
Yeah. George, I'm putting you in the hot seat.
Are you a standard deductor or an itemized deductor? I'm a standard guy. Really? It's never made sense because I'm a W-2 employee here.
Okay. I don't have a ton of side hustles these days.
I don't have a ton going on. I don't have mortgage.
I don't have a mortgage interest. You know, there's not a lot going on for me to really benefit from the itemized.
How about you? I'm on that itemized tip. Because you guys, you have a business as a family.
Yeah. Sam Warshaw.
There's a lot of things going on. Incorporated, LLC, Esquire.
I love it. I'm building my empire.
You're going to get there one day, Jake. I'm just kidding.
I'm being facetious. Riding on the back of Sam Warshaw.
I love it. Well, this is fun.
The big thing with taxes is it's not going to get easier if you delay it. So what I do every year, because I'm a nerd, I go, as soon as I can get an appointment, I'm there.
As soon as I get all my forms, I'm setting up the appointment. And what it does, it lets me know, hey, if I'm going to owe, it gives me time to prepare.
That's so good, George. To get that in the budget, to get the savings in place to cover it.
And if I get a refund, now I can plan. It's rare these days that I get a refund.
I try to make sure that I don't let any dollars. Uncle Sam's not great at managing other people's money.
No. And I feel like it's one of those things, kind of like what the last call was about.
The more you put something off, the bigger and the scarier it seems and the more of a, like, just implication in your life that it feels like. But if you just rip the bandaid off and go, I'm going to start on my taxes earlier than I've ever done it before.
Like let next year be the year that you're like in January, as soon as the forms come in. January 31st, that final form comes in.
I'm ready. I'm going.
I'm not going to put this off. My dad.
Okay. So my mom is my mother in law is a CPA.
And every year my dad calls her the night before tax day and is like help me i'm like every year the night before tax this is his routine and i'm like dad it can be much easier this is this is their time this is their super bowl yeah they need a hug maybe coffee more than a hug i don't know if they want to be touched right now they don't want to be touched right now they're they just need some space i think and some coffee so give them a gift card, a Red Bull, whatever it takes for your tax pros. But I do love Smart Tax because here's what I do.
This is my super nerdery. I use Ramsey Smart Tax first to give me an idea of what I'm going to owe.
And then I meet with my tax pro and I go, how close was it? And so it's a fun game I play. It's one of my only hobbies..
It's one of my only hobbies. It's a game.
I don't do pickleball like you, Jade, okay? I'm not out there going to the gym, going for a run. I'm out here trying to play the game with my tax pro.
This is you having a good time. I literally tell him ahead of time and say, okay, I think it's this much.
Let's see how close I get. Yeah.
And he goes, you need friends. Yeah, I agree.
I'll be your friend. Thank you.
For a little while. It's a sad game, but I enjoy playing it.
And you see my face plastered on SmartTax. They're smiling, telling you, it's going to be great.
It's going to be great. The more I tell myself that, the less I believe it.
It's going to be okay. But truly, don't be an ostrich with your head in the sand.
Get your taxes done. There's still time.
Yeah, you got time. Time is running out as you're listening to this.
RamseySolutions.com slash SmartTax. Thank me later.
That puts this hour of the Ramsey show in the books. Thank you to my co-host Jade Warshaw.
To all the folks in the booth keeping the show afloat, keeping the sound and video and the calls going. We appreciate you guys and you, America.
Thank you so much. We'll be back before you know.
It's's Holy Week in Jerusalem, and the city is restless. The people of Israel welcome Jesus as King, His followers ready for revolution.
But instead of taking the throne, Jesus turns the tables. Woe to you, scribes and Pharisees! How will you escape being condemned to hell? Experience Holy Week like never before.
What have you done? Now in theaters, The Chosen, Last Supper. Get your tickets now.
From the Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by best-selling author Warshaw, and we're taking your calls at 888-825-5225.
You jump in, we'll talk about what's going on in your life. James starts us off in Hartford, Connecticut.
What's going on, James? Nothing much. Thank you very much for taking my call.
I appreciate it. Absolutely.
So I'll just give a quick background. Nine years ago, I bought a two family with the idea of eventually one day down the road, my mother and father would move into the first floor.
They hadn't set themselves up for their future that well. So, you know, this is an opportunity for me to give them a home to rent potentially and be able to afford it and never be kicked out if potentially the owner sells the place.
So, cause I'll never do that. My father unfortunately passed away and I was able to get my mom in there.
But we're giving a discount to her of anywhere from 550 to $700 a month, every month. And although I still make a little bit, I mean, every month and I'm able to put it away.
It's not, it takes a long time to cover expenses. Like when the tenant upstairs moved out and left the place a mess and we had to take a lot of our own money to get it back up to a rentable unit.

So my, my wife was like, well, it's kind of like we're, you know, giving to her every month and we, we, we're And we were in a great place. You know, we're in four years.
We should have our house paid off. Awesome.
And then we work on paying off the two family at that time as well. But, you know, we're only we're only clearing about five hundred dollars a month.
And I know I have to do a new furnace. I have to get my mom's almost going to be 80 80 and I want to get the washer and dryer out of the basement.
So my wife was like, you know, you know, should we, we, we're, we're putting, you know, taking our 10% out and we give some to the church to, you know, to children in need kind of thing. All of respect, you know, splitting it out.
She's like, you know, maybe we should be taking some of that money. And I'm like, I, that doesn't feel right, but it is like, we are helping my mom out and not having her have to go to like a much smaller unit and like a retirement home and i just needed some wanted to hear your opinion because she's like i wonder what dave ramsey and and their and his friends would say about this so i said let me call today while i'm painting the basement while you're painting the basement i love that man well I'm glad you found out the hard way that this is not passive income like they told you on TikTok.
Facts. Buy a duplex.
It's amazing. They pay the mortgage for you.
And then real life is different. Well, I'll tell you this.
I am not the Jesus police, so I am not in charge of tithing at the pearly gates. But I will tell you that one man's opinion is this would not be considered part of your tithe by giving your mom a discount.
I think it's a justification to feel better about the situation and to alleviate some financial pain that you guys are feeling. I would say it's a generous thing to do, but it's not tithing in the biblical sense.
Yeah, I didn't think so either. Yeah, okay.
I think I'd agree with that as well. But what I'm hearing, what I'm hearing is that money is tighter than you'd like it to be with these rentals and with everything that's associated with them.
And so you're looking for areas to kind of recoup that. And in that way, I'd liken it to just a budget issue, right? When the budget feels tight and you're looking for line items to cut or places that you can pull from, but there's certain line items that are kind of like off limits.
Like we don't really want to touch, right, the emergency fund if we don't need to, if we're shifting things around, we don't really want to touch our giving or our tithe. So I feel like there's other areas in the budget that need to shift to cover this.
Does that make sense? I feel like you're looking in the wrong place because what I hear is I've got a rental that I owe on. I've got a home that I owe on.
There's still, even though you're doing some things really, really well, I do feel like there's debt that's surrounding this that's making some things feel uncomfortable. Like I love that you're able to house your mom, but you're also carrying a two family that has debt.
And as a result, now you have to make us generate a certain amount of profit in order to offset that. Right.
And so I think that's really where the problem lies. It's not whether or not housing your mom is, is tithe or not.
Yeah, it's definitely that the numbers are tighter than we'd like. And it's like, I feel like we're one big situation away from, you know, we're finally actually like being able to put, you know, that money away every month.
But like when the furnace goes and we need to, you know, move that other stuff, it's like, where's that money going to come from? And it's again, going to come from our, our budget. And it's, you know, it's, this wasn't the best investment, although it's doubled in price in the last, you know, nine years, that's great, but it's all just, you know, fake money.
It's not real money. It's what theoretically would happen.
And I'm not going to sell the house, so it means nothing to me. You know what I mean? Yeah.
Is there a world where you do sell this rental and you figure out something that's more sustainable for both you and mom? My wife would love to hear you say that. I'm glad I'm cheating on a McCall right now.
How much can your mom actually afford? I'm going to write her a letter. What is your mom's income? It's really only Social Security and a very, very small, like, $100.
It's not much. Is it $1,500? It's $2,000 a month.
Okay. Yeah, so that's where she's at.
But it's tight with other rentals out there. I mean, she'd never get anything close and it feels like a home to her, not just like a, you know, like a small one bedroom efficiency.
I feel like I have my mom in a home and you know, when we start out of, and you're charging her how much? Uh, only nine 50 and you could be charging what? 1600 bucks. 17.
I mean, it's two-bedroom, two-baths, one-car garage, back deck, you know, first floor. I mean, it could get anywhere from $1,600 to $1,700.
Okay. So half of your income is going toward rent, and that's heavily discounted thanks to your generosity.
Yeah, yeah. So it's a tight spot.
And she's okay. She's good.
I mean, she's still working at,

you know, 78 years old. Let's just pretend for a moment, because here's where my brain is going.

This might be a dead end. But if you sold that rental, what would it bring?

Oh, I could get, you know, probably at least $320,000. And I only owe $120,000.

So you'd get $320,000 on it. And then what do you owe on your personal residence? I'm just curious.
I think it's like $80,000. $80,000? Yeah.
Is there a world where you sold this rental, took some of the money and paid off your personal house, and then took the rest of the money and bought something, like you said, bought a condo or an apartment in cash for mom that's also an investment but now you're not having a monthly payment on it mom lives there comfortably and then when the time comes for mom to go to heaven now you sell this condo and you've still it's still been invested in real estate and you still make a spread is is have you considered a route like that oh my lord i know i hadn't holy cow like i wow that's like instead of having like a multi-family just like a single unit that would be like whoa listen i love you it's been fun i'm done oh my gosh i want to start singing a whole new world but i I won't. A whole new.
Yeah, unbelievable. Jay did it better.
Indescribable feeling. Indescribable.
Soaring, tumbling, freewheeling. We can keep going, James.
I love it. Oh, I love it.
Listen, the lights are on. I would present some of these options to your wife and say, hey, I want to alleviate the stress.
I know this has been a burden. It didn't work out as we planned.
Here's what we're going to need to do. And it might still take fixing up some things.
You need a sinking fund for any property you own. You need maintenance and repair.
Put it in savings. Have the money ready.
It's not a surprise when things go wrong. It's part of home ownership.
And so instead of making a surprise, add it as a line item in your budget. Mark it as a sinking fund in every dollar so that the future you doesn't resent present you.
Love that. But I love this plan.
I feel like there's some excitement just happening. The wheels are turning.
The wheels are in motion. Love it.
Best of luck, James. This is The Ramsey Show.
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Joseph is going to join us up next in Columbia, South Carolina. Joseph, how can we help? Hey, thanks for having me on, guys.
So my question is, I'm a disabled veteran and all my income is from disability. And I am not able to invest into a Roth IRA because of all my income not being taxable.
What do you recommend the best way for me to start Baby Step 4? I just finished 3 and I'm wanting to start 4 now. Well, thank you for your service and sacrifice.
How old are you? 28. Are you single? I am.
Okay. And what is your income? It's about $52,000 a year.
All right. And that's fixed? That's fixed, yeah.
Is there a cost of living adjustment every year? There is. It's like between four to five percent.
Okay. Great.
And do you have any debt currently? What's your financial picture looking like? At least I just finished baby step three,

so I have all of my debt-free, but my home.

I own a house.

How much is on the mortgage?

I owe 201.

House is worth 240.

Okay.

Great, and you can afford that mortgage comfortably. How much margin do you have every month to invest after all your expenses and bills are paid? About 50% of my income.
Wow. Way to go.
Less than half of my income is bills. So close to two grand a month or so? Mm-hmm.
Wonderful. About $2150, yeah.
Okay. Can I ask a little bit more about the nature of your disability? If there was something you wanted to do for work to earn an income, is there something you could do that doesn't affect your disability? No, there's not.
I'm just unable to work because of like PTSD. Got you.
Okay. Got you.

Hmm. No, there's not.
I'm just unable to work because of PTSD. Got you.
Okay, got you. Well, you always have the option of a taxable brokerage account to store money.
Now, it's not going to have the tax advantages of an IRA, but it's a great way to at least harness the compound growth that you would get by investing. Okay.
But if you did have earned income, like Jade's saying, by doing anything, that would give you the ability, even with part-time work, to contribute to a Roth IRA. So even if you made $7,000 a year of earned income, you could max out a Roth IRA for the year just by doing that.
And when I said employment, I'm thinking of things, okay, and again, only you know this, so I'm not trying to like creep into your mental or medical history. Now that you mention it, I think I'm able to make about $15,000.
I'm able to make up to federal poverty guidelines. In order to not lose this benefit.
Correct. Right.
So there's two ways we can approach this. I wanted to ask, because there's two ways.
It's A, how much can you make before you mess with the benefit? And B, with your PTSD, is there anything that you would want to do to make a living? And I'm thinking of things like it might not be the typical job that you show up for in person, right? It might be is more online-based or that doesn't require you showing up to an office building. So those were the kinds of things that I was thinking of.
Only you know your medical history and what you're really capable of, but those are the things that I'd be exploring. Now, when were you disabled? Do you have access to an ABLE account? I know there's age limits.
I believe it's 26. I'm sorry.
I'm not sure what you're asking. The ABLE accounts, Achieving a Better Life Experience is what they're called, and it's a special account for individuals that are disabled before age 26.
So I'm just trying to think through other options you might have access to. Yeah, I've never heard of that before, but I have had my disability for about six years now through the VA.
Okay. With what you're saying and based off of what we know about it and what we've heard you say, it feels like the right thing to do is pick something that you're making at least $7,000, $10,000, where you can then turn around and just throw that into a Roth IRA.
And if you make anything above that, or if you'd like to throw some of your disability in there, you're throwing that into a brokerage. So maybe like some at home, like remote work.
Yes, exactly. Like you could literally be a copy editor.
You know what I'm saying? That's something you're doing from home. It's requiring you reading, you're working at your own pace.
Like, and I don't know if that's even within your skill set, but you get what I'm saying. It's not the typical rules of the work environment that might not work for you.
And again, worst case, Joseph, that taxable brokerage account, I just crunched some numbers here to give you an idea. You said you're 28.
And to kind of create your own retirement account, let's say you invested that $2,100 until age 60, and we're going to assume a 10% rate of return. You would have $5.8 million sitting in that account.
Wow. Now, you would have capital gains tax as you start to withdraw the money from that, but only $800 grand was money you put in.
So $5 million of that was compound growth. And so I still want you to be investing, even if you don't get all the tax advantages that you could get through a retirement account.

And even if we lower it to, let's say, a 7% return,

still be $3 million.

Okay.

So the fact that you are living on less than you make

with so much margin to invest,

that's the key versus the exact vehicle you use.

And if I'm in your shoes,

I would be utilizing a financial pro, an advisor in your corner who can help you figure out what the right options are for you legally with a disability and what benefits you have. And so I would get in touch with one.
You can jump onto ramsysolutions.com, click on SmartVestor and get connected to someone who can help with that. But I'm sorry for what you've gone through, man.
That's a lot of sacrifice. But the good news

is you're going to be able to build some serious wealth with the margin you've created. Way to go.

All right. Jimmy is up next in Cleveland, Ohio.
How can we help today, Jimmy?

Hey, thank you for taking my call. So my situation may be a little bit unique.
I am

100% self-employed. And I recently just sold one of my businesses, the shares in that business.

I don to know if it's smart to maybe put a hold on step two and go to three. And the reason is, is my income and my, my job is very seasonal.
So when wintertime comes, the income definitely slows down. Um, like right now I'm bringing in pretty good money and I'm applying it to a lot of the debts, but I'm afraid I'm going to pay down my debts so fast that I'm not going to have any money come winter just to survive.
Well, if the work goes down in the winter, wouldn't you just pick up a different type of work? Kind of like a teacher in the summertime? With my line of work, that's impossible. The reason is because we do the jobs when the weather's good during the dry season, summertime.
But during the winter time, I handle the permitting

process. So the permitting process cannot stop.
So it's lining up the jobs. So you're still working

full time. It's just not, you're not in a season where you're harvesting.
There you go. Got it.
Okay. How much, you said you sold the shares.
How much did you make? I'm making right around $300,000, a little over $300,000, and I'm getting paid over five years. So I'm getting roughly $4,000, $4,500 a month out of that.
And then in the month of August coming up, I will be getting a full $40,000 on top of that. How much debt do you have? I have $90,000 in vehicles, $20,000 in recreational vehicle, and I owe on my house.
That's it. I owe $250 on the house, and we're definitely way ahead on the house.
I would sell these vehicles and toys and be done with this. Instead of hoping and what if the winter's rough, can you sell most of these and downgrade and pay cash? And come out ahead.
Not necessarily come out ahead, just get rid of the payments.

Um, and get rid of the payments.

I could.

I'm doing some homework tonight going, we're going to start listing this stuff and get

out of debt faster.

And if you want to keep one of the cars and pay it off aggressively, that's fine.

But I think you just found your shortcut out of this mess.

And I wouldn't switch the baby steps around.

I would focus on getting rid of the debt and then getting the emergency fund in place so you don't get too comfortable. This is The Ramsey Show.
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Okay, today's question comes from Beth in New Jersey.

My husband and I have followed the baby steps for 15 years.

We're on baby steps four and five with a paid off house.

Okay, we'll get back to that. We have three kids with the oldest starting high school next year.
We would love to go on an international vacation in 2026 while our kids still live at home. We are in the process of saving up $30,000 to pay cash for that trip.
My husband recently saw a clip with Dave ranting about people who take lavish vacations and how he thinks we are budgeting too much.

Should we vacation in the U.S. at a lower cost or is the international trip feasible as long as we're paying cash?

In other words, is it OK for us to start living like no one else?

All right. I love this question because there's many things to address.

All right. First off, you're in baby step six baby step six well seven if they have a paid off house yeah you're a baby step seven yeah that's the confusing part so four and five they're investing in saving for college but then they added they have a paid for house which puts them at the end at baby step seven so that's the confusing part but if they truly have a paid for house they're in baby step seven dave would have no problem with going on a paid for thirty thousand dollar vacation for you no my guess is he was addressing broke people going on lavish vacations that's right you aren't broke people you're not you're you've done excellent bravo and brava like that's really really good and i would say yes go and start living like no one else and pay cash and send us a postcard and call in and tell us all about it.
Sounds amazing. Yeah.
This is my new goal here. I love it.
Take me on an international vacation. Okay.
I love it. While our kids are still living at home.
That's the other important part is you're creating some special memories with these, let's see, starting, oldest is starting high school next year. They're still young enough that they like you probably.
This is a great, a great time to go. This is really good.
I imagine once they're older teenagers, I can't speak from experience, but I imagine they're just like, no, this is lame. Yeah.
You know? No, I mean, I want to go back to the Dave rant. I think I can be on, I can't speak for Dave, but we love when you guys are winning with money and we love to see you guys live like no one else not just in the the penny pinching live like no one else we love to see you guys get to the other side of living like no one else where you can buy the car and you can take the trip and you can you know upgrade the house or build the house all of that stuff like I feel like a lot of times people get caught in the baby step three Ramsey stuff the baby step two ramsey stuff and they forget about the baby step seven and baby step six ramsey stuff which is really really exciting and really really fun and uh yeah it's this it's the so that live like no one else so that later you can live and give like no one else and later is now for you guys you've been following the steps the steps for 15 years.
You get a paid for house. Go have fun on the trip.
And can we hang out on this for a little bit while? Okay. So earlier today.
I can't stop you. Earlier today, I was on Instagram live taking some questions.
And it came up the juxtaposition between living like the Joneses. And they use the two interchangeably.
It was like, hey, yeah, I have a problem with people living like the Jones, keeping up with the Joneses slash showing their income. And I was like, wait a minute, these are two different things.
And this is something to talk about. So yeah, the way we teach, there is a time where you are cutting back, you're scaling back, you are, you know, doing all these things so that you can pay off debt.
And when you do that, it shows, right? When you trade in the Lexus for the Camry, it shows. When you pick up a side hustle, it shows.
When you stop buying new clothes, like all of that, there is an exterior that we all see or the people around you see. And it's like, oh, it seems like they're cutting back.
on the other side of that, when you get to a certain point in the baby steps, four, five, and six and beyond, seven, then there's a part of it that now your money is kind of taking the shift. You have more of it.
You have more at your disposal anyway in margin. And I don't think it's a negative thing if those positive things now begin to show, oh, Bob is doing well.
It looks like he i saw on instagram he took a nice vacation with his kids or i saw you know steve bought a you know i said cool car i'm upset i don't know if you could say it the the motorcycles that go really fast anyway like a ducati or like but there's a word for it i didn't say i don't know if you can anyway i yep kelly just mouthed it yeah okay thank you you know i'm talking about they bought a new toy it's great but there's some folks who feel like it's a bad thing for it to show when you're doing well with money and i'm like why was it okay for it to show when we were struggle slices but it's not okay to show when we're doing well i think it's great I think that if you're winning here at Ramsey, this is one of the few places where you can be like, woohoo. Yeah.
We call it aspirational. Yes.
It's great. Share it.
Don't try. You don't have to try to hide that you're doing well.
You really don't. This should be something that you celebrate and truly it gives hopes to other people, the people who have the right attitude.
Now, if you're bragging about it and making others feel less than for it, that's different. Forget about that.
But the people that I know that have followed the plan, they're not that way. In fact, they're whispering when they're on the debt-free stage to go.
And by the way, we're baby steps millionaires. But I'm like, you don't have to whisper it.
Yeah, that's what I'm saying. I'm like, if you were loud and proud about getting out of debt and sacrificing and cutting back, you can be loud and proud about the fact that you're winning.
I think that's wonderful. Yeah.
And if other people experience shame because of it, that's on them. Let them.
Jade, thank you for freeing us all. You're welcome.
That's what you're here for. Lincoln is up next in Idaho Falls, Idaho.
What's going on, Lincoln? Hey, so I'm 30 years old. Run my own business.
We've been doing very well. We have paid off all of our debt.
My wife and I, um, we have about a hundred thousand saved, um, split between CDs, um, emergency funds. And then we are also saving for our daughter's college fund on that.
And we're just wondering, you know, keeping the emergency fund and all that,

we're looking at buying a house.

Do we take out a mortgage to buy our house,

even though we just became completely debt-free?

So you're saying consumer debt-free in Baby Step 2.

Now you're in Baby Step 3, maybe 3B, saving up for a down payment. What is this house going to cost? In our area, roughly $300,000.
So you can't pay cash today. You have $100,000, right? Exactly.
So you would have to take on a mortgage if this is going to happen in the next several years. Okay.
So what you're saying is, hey, we got out of consumer debt. I feel bad now taking on a mortgage because we're going, quote unquote, back into debt.
Exactly. Got it.
Okay. Is it you feel bad or you're wondering what we think about it? What you guys think about it.
We're projecting here in the next year we will be able to buy in cash whatever house we want. You could save up over 200 grand in a year? Yes.
Oh, well, that changes it. Yeah.
Our business has just exploded. Amazing.
Yay. That's great.
We don't, I mean, hear loud and clear. Like we don't have a problem with somebody taking on a mortgage for their home when it's done within the proper parameters.
And you may have heard us say that, right? We don't want the payment to be any more than 25% of your take home. We recommend a 15 year fixed rate mortgage.
And we recommend you putting, we would love if you could put 20% down on a first time home buy, right? That's kind of our parameters. But the number one way we love to see people buy a home is in cash.
100% down plan. Yeah.
Can't beat it. And so if you can do that and your time, your horizon on this is super short.
When is college coming? Well, so our daughter just turned one. And so we put 10,000 aside and the CDs for that just for her.
Okay. Oh, so the money is in CDs for her college right now? It's not in like a college savings account.
Okay. What I would do personally in your shoes, if you got a year, I'm going to go, let's really go for it and pay cash for this home and leave your emergency fund alone.
But any money outside of that, I would just throw it toward the house and you'll have plenty of time to save up and pay cash for college. Okay.
Okay. Way to go.
And then for the future, I would separate all of these out. Right now, it sounds like there's just like a bunch of piles of money.
I would have very specific accounts and goals for these things. So set up a 529 plan or an ESA for college.
We're going to put money there. Save money in an emergency fund, call it the emergency fund.
Save money for vacations, call it the vacation fund. And that will free you from the paralysis of, I feel bad for using this money for this when it really was for this.
But man, I love the 100% down plan. If you guys can do it within a year, I'm doing it.
If it was five years, we'd say, just take out a reasonable mortgage, that 15-year fix, knock it out fast. Either way, you're going to be fine.
But I love this stretch goal. Way to go, man.
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LaToya is up next in Morgantown, West Virginia. What's going on, LaToya? Hi.
Thanks for taking my call. Sure.
So I have a vehicle that I bought brand new last year. Regretted it just a moment after I left the lot.
And now we have alternate cars to drive, but this one has already depreciated so much. How do I get out of it without coming up with this dramatic difference from what has gone down already? Well, what'd you buy it for and what's it worth today? So it was $39 on the front sticker in the car lot.
I rolled over $7 from the previous car that I traded in. I wasn't aware of that.
It was not very detailed. It was not a thorough transaction.
And when I called to get more information about why everything was so high after I got home, they informed me that instead of the six they were giving me, they only gave me four and then all the taxes and fees. So the loan came out to 56.
Oh my God. 56? Yeah.
56. Oh.
Wow. And now, the vehicle is worth, according to Kelly Blue Book, about 24.
What? Is that private party? Yeah. Or is that trade-in? So, that's like to sell it outright.
But sell it outright private party, you're saying is 24? Because they'll list different ones. They'll list the trade-in value, and they'll list the private party value, and they'll list the retail value.
Okay, maybe it was the... I tried Carvana and I tried Kelly Blue Book, and they looked about very similar, mid-20s.
Okay. So it's maybe a private party.
What kind of car is this? Just so everyone knows not to do this. A Kia So.
Oh, the old Kia. So you're $25,000 upside down.
I am. What do you owe today? About 51, 52.
I've owned it for less than a year. Okay.
Well, here's the bad news.

The only way out of this is to cover the difference,

and that's either with money that you save up

or with a personal loan from a credit union.

What's the payment on this?

$9.80.

Ooh, mama.

Okay, so let's jewel this down even further with what George said

because a lot of people, when we say that, it's kind of a head tilt for them of like, I thought you guys were the no debt people. If you do this, if you say, well, let me take a loan for the 25, then your payment is going to go down significantly.
So that frees up some margin for you. And at the end of the day, yeah, it's better to owe 25 than to owe 51.
So that's kind of the thought behind it. You're're driving another vehicle right now or you said you have access to another vehicle um we're we have my husband and i both have an alternate vehicle oh so you're just not driving it because you don't want to drive the price down even further pretty much um so my grandfather co-signed with me so i don't want to trash his credit he cares a lot about it taking care of it um so i'm kind of just hanging on to it for the sake of not ruining his trust in me even more reason to get out of it because there's a co-signer on it right i i run for the hills immediately on this okay yeah okay so that's that i just didn't know if there was things that maybe i wasn't options that i wasn't aware of like i didn't even realize that I could do that with a personal end to cover the difference on it.
I've just kind of been very scatterbrained with this whole thing. Like I said, moments after I drove away, I was like, can I turn around? No, I think what you're asking is, that's a quandary that a lot of people find themselves in.
They're like, I hear what you guys are saying, like get out of the car payment, but how am i supposed to when the car is worth less

than what i owe on it and so what you're asking is a very normal question that we get all the time and yeah it can feel disorienting but that is what george said is exactly the solution and you're at the end of the day you're still you still have debt that you have to pay off but like i said 25 is better than 51 and now you're going to have more margin freed up so that you can pay that 25 off very, very quickly.

How much money do you make?

$95. and now you're going to have more margin freed up so that you can pay that 25 off very very quickly how much money do you make um 95 okay and is that just you or is that household it's it's household that's household income okay oh yeah that's that's a lot of car what does grandfather think about this because why why was he the co-signer? My credit.
So you reached out to grandpa and said, hey, he's good for the money. He'll sign.
No, not necessarily. He's just done it for a long time to kind of help me out.
I mean, that's just what he does. Super helpful.
And he didn't really give me much say. He's like, if you're good for the payment, then you're good.
And considering we'd done this route before and everything went fine, he had no issues trusting me. Oh, this wasn't the first time.
No. What's caused your, I mean, there's a part of this that we have to ask.
I mean, because typically if your credit is poor, right. And a lender says, this is so bad.
We're not going to give you the loan, which is really, I mean, I'm not trying to insult you Latoya, but it's really saying something if some of these lenders won't give you the money. So my question is what's happened in the background that's caused this to happen? Um, and our, what are we doing to change it? Um, so I have paid off the things that I owe other than my student loans.
So I don't have any debt. But the problem was that whenever, like I was 18 to 24, I had some silly things that completely trashed my credit, like, you know, that first cell phone that you get, those first credit cards.
And so by the time I've

gotten to a stable point in life where I'm paying everything, they don't trust me with it. So

everything that I have paid and I've paid timely has been under someone else. So it's not benefiting

me. So I paid off three cards under my grandfather, but that didn't help me a bit.
So are you done

with debt? I'm still almost.

I'm way closer than I was.

I'm still in baby step two.

Okay, but I'm saying like, this is it.

Are you done borrowing money?

We're not borrowing for cars.

Absolutely.

I would love to never borrow again.

Love that.

Okay, then I think.

Yeah, you said you have student loans still?

I do.

What's left on those?

We're working through those now. 50? Okay, And then does your husband have any debt in his name? No.
We've paid off his last personal loan, and our credit cards are all closed. Okay.
Good. Good.
All right. Yeah, I would go the personal loan route from the credit union, get that loan down, and then just debt snowball everything and try to increase your income to speed up this whole process.
If both of you can commit to doing something, get that income up another 10, 20, 30 grand. So really speed up the process and get you guys to a better place financially.
But Jay, this is one of the most common things we've been seeing the last few years is car prices have skyrocketed. And then you see, oh, the depreciation really hits.'s talk about it i mean loss of value one minute after you buy a car like the minute you drive it off if you buy shiny brand new car let's say you spend 35 000 it loses somewhere between nine to eleven percent of its value the very moment you drive it off so basically you're throwing consider driving off the off the lot and then open him opening up your wallet and pulling out thirty five hundred dollars and just throwing it out the window that's lit 100 of what you're doing when you do and then fast forward one year later so 12 months in in that same car sitting in your driveway has lost around twenty percent of the value maybe more and then and so that's a 7k loss.
That's a lot of money. That's a lot.
And then after five years, you can expect your new car to lose up to 60% of its value. After driving it around for five years, most cars lose about 10% of their value every single year after that, after that first year dip.
Yeah. And depending on the model and make, it can be way worse.
And some people go, well, Jay, that's not what happened with my car. Okay.
Maybe you had a make and model that's fared better. Sure.
But the principle is still there. This is not us making this up.
This is data out there from Edmonds and all kinds of, you know, outside folks that do the math on this. And even my own car, it was paid for in cash.
It's a 12 year old car and it still hurts my soul to see how much I could get for it today. It is minuscule.
Well, let's think about it like this. Okay.
And I don't know if this is the case with her, but the average new car term is 69 months. So if she was paying $980,000 for 69 months, think about- Almost six years.
But think about the opportunity costs on that investment-wise. Brutal.
$1,000 a month payments.

Y'all, this is becoming normal, and I don't like it one bit.

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Brutal.