Your Debt Should Make You Uncomfortable

live from the headquarters of Ramsey Solutions. It's the Ramsey show where we help people build wealth, do work that they love and create amazing relationships.
I'm Rachel Cruz hosting at this hour with my good friend, the bestselling author Jade Warshaw, and we are taking your calls, America, about your life and your money. So give us a call at 888-825-5225.
And starting us off, this show is Nick in Detroit. Hey, Nick, welcome to the show.
Hey, thank you for having me. Absolutely.
How can we help? My question is, my question is, I'm 21. I'm in college.
I paid for my education with my dad and I've got baby steps one done and I have no debt. I need to pay $3,000 per semester so that I don't go out of college with student loan debt.
And would it be more beneficial for me to any additional money that I don't make to put it into step three? I don't feel like I can be gazelle intense with that. Or would it be more beneficial to take 15% of my income and put it into mutual funds for something further down the line? Okay, so you have extra money.
I just want to make sure I'm understanding your question. And you're asking if you should be using it to cash flow college or do something else with it mainly to i won't me and my dad have got to cover that i think three thousand so should i put it towards the three to three to six month emergency fund which is baby step three or should i just put it to a mutual fund and be able to gross money on it over time if it's the three thousand that you're using for your college, I just throw it in a high yield.
Like if you get ahead, like say you've paid for the upcoming semester and you've also got $3,000 set aside for the coming, you know, the next semester, even after that, I just throw it in a high yield. I would not invest it because the horizon is so short.
Is that what you're asking? I want to make sure I understand. Yeah.
So you would just, instead of investing it because I horizon is so short is that what you're asking I want to make sure I understand yeah so you would just instead of investing it because I'm able to you'd say just save it in a high yield and then just put it to the next yeah for sure how many more years do you have left Nick how many more semesters I only have one more so three more semesters total next semester and then senior year oh okay okay I gotcha yeah and honestly, in that state, when you're in something like college and you are cash flowing out, which is so great, I still would recommend, yeah, not even investing really at that point because just having liquid cash in case something happens, it's always a smart idea. And even after college, you graduate college and if you move to to take a job somewhere moving expenses and moving

costs like there's just a lot of reasons to have money liquid at at your age and then once you graduate you get settled you get your first job then you can really dive into investing and at that point for you you'll be at 15 automatically which is so great for some people they have to wait a few years to start investing so um so i wouldn't i honestly wouldn't rush into it and i think it can feel like it goes against this idea of compound interest because we celebrate that so much of how great it is. And the earlier you start, the better off you're going to be, like all of that.
But you'll catch up. Like if you start all of this at 23, you will be fine financially.
So I think it's more important to have as much money just cash available for these big It's the smartest thing. The way to go.
And then would you also recommend me taking that out of that investment and then putting it back or just leave it there and from here on out just save the money? Yeah, so there is money invested right now? Mm-hmm. Yeah, about $2,000.
How much? $2,000? $2,000. Yeah, I would just...
Yeah, just this year. Sure, I would leave leave that i would only touch that money if you needed it to get through school um without debts but i think it sounds like you already have a plan on the other end to do that okay thank you so much that provides a lot of clarity perfect thanks nick for the call all right up next we have j in Anchorage, Alaska.
Hey, Jay. Welcome to the show.
Hello. Merry Christmas.
Thank you for taking my call. Merry Christmas.
Absolutely. How can we help? Yeah.
So I just received a promotion at work, and the new compensation package makes me ineligible to contribute to a company 401k plan. So they've offered a different plan, pre-tax dollars, a small match, but it's unqualified.
And I'm curious what your thoughts are on unqualified plans and if this is the right. Yeah.
I'm curious why you're not able to contribute to the 401k because you chose a different package for a benefit, for your benefits? No, they have told me that if the compensation exceeds a certain amount, the plan is not able to be contributed to. Oh, I gotcha.
Okay. So are you a very high earner? Evidently so.
Okay. So I can't, yeah, so I can't contribute to the 401k anymore.
So explain to us what your options are again. Sure.
So they've offered a different retirement plan, pre-tax dollars, a small company match, but it's unqualified, so it's unfunded. That gives me pause, and I'm curious what your thoughts are on those types of plans, and should I contribute? What are they invested in? Do you know? The rate of return is based on a specific bond fund.
I don't have that front of me recently in the last year is about five percent that's not very good um that's what i thought i i mean if if i were you my guess is you're not able to just do a traditional roth ira but i might start with backdoor roth ira and i might ask a smart investor pro what, what other better options there are, because I wouldn't want to be investing primarily in bond funds. No.
And considering it's, you know, is it pre or post tax? It is pre-tax. It's pre-tax.
Okay. So yeah.
So I would probably, I think you're going to be better off. And again, talk to a smart investor pro, but when you actually look at everything, I mean, even from index index funds to mutual funds you'll get a better rate of return just doing something like that even though you'll have to pay capital gains when you take pull the money out um that still feels like a better growth rate yeah absolutely um but yeah how much how much do you make a year so the new compensation package base is 165 with potential000.
Okay. I think you'll still qualify for a traditional Roth IRA at that range.
So I would definitely be funding that. You can fund up to $7,000 and that.
That might change in 2025. But I would do that 100%.
And then I would probably just look at index funds or mutual funds beyond that. It's not retirement and you're not getting that match.
But how much are they matching? What percentage? It is 50% of the first 6%. 50% of the first six.
Okay. That's an interesting way.
Okay. It's hard because it's free money coming from the company, right? But again, your rate of return, I just think that you could...
5% is... I think you could still...
High-'ll end up, yeah, I think you'll end up better just doing it on your own versus putting money into this. That was my thought, but I was just looking for a second opinion.
Yeah. For all your info.
Yeah, absolutely. Jay, thanks for calling.
Yeah, I would do that. But then definitely, you know, sitting down with a SmartVestor Pro is always what we're going to recommend.
I always, yeah, hate giving blanket investing advice, you know, in a three minute call, because there are some ins and outs and different employers are offering different things. I mean, the amount of changes that's occurred with retirement funds within companies in America, even over the last 10 years, you know, companies offering now Roth 401k is up by 20% versus what they were offering even five years ago.
But good on him for looking deeper and seeing what those investments are and what their track record have been, as opposed to just saying, this looks good, I'll check the box, right? Yes, absolutely. Yeah, digging into that and looking at those numbers.
But yeah, so yeah, I would get with the SmartVestor Pro-J, double check all of that. But that's my knee-jerk reaction for sure.
Because when you look at all of these, and the older people get, there are financial advisors out there that start to recommend more conservative funds. That's true.
Like bonds and all of that. That's true.
But still, I think even then, you know, it's advice you want to look at. Because I think on the flip side, when you're still in quote-unquote riskier which isn't mutual funds aren't even that risky you're still going to get a better rate of

return you know I'm just never a fan of bonds is what I'm trying to say even even as you get older

I just don't think that it's worth like yeah that the limited growth so thanks again for the call

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Today's question comes from Carissa in North Dakota. She says, should a couple getting married have guests pay for their plate at the wedding to help with costs? I'm afraid we won't get enough money in wedding gifts to pay for the reception.
Oh, so it's you. You're the one that wants to charge.
She was asking for a friend at first. I know, right, right.
Should a couple, aka should not i was like i don't think so do you listen i think that's kind of tacky there's a difference between wedding guests to pay i think that's like uh-huh there's a difference between tacky and hacky yes this is tacky this is not a this is not a money hack that here's the thing like you have to set your budget based on what you can afford to spend on the wedding not at don't treat it as an investment and say well i'm gonna get if i spend this i'll get the money back in gifts right right because that's what she's saying she's saying i'm afraid we won't get enough money gifts to pay for the reception. Well, that means you're basing it off of future money that you don't have now.
That's right. So you've got to set the budget of what you can afford based on what you can afford today and let the gifts be the gifts like you can't.
Yeah. No, no, no, no.
No, no. Having guests pay for their plate at the wedding.
No. Yeah.
That's a hard pass. And it's different if it's like your birthday dinner and y'all are all going out to, you know, to a big dinner and everyone covers their meal, right? Like it's that kind of thing.
But there is a, an etiquette. I feel like when you invite someone to your wedding to celebrate you, their, their presence is the gift.
It's not them them having to fund yeah fund it yeah otherwise just do something less expensive that you can afford and that way there's no like awkward you know there's there are trends and we've talked about this i think george camel and i debated this a little bit of people asking instead of a wedding gift to venmo money to the bride and groom so that they can help pay for their honeymoon and like that kind of stuff. I have a problem with it.
I think that's a little weird too. I have a problem with I'm like let people give you out of the now don't get me wrong like a baby registry let's let's let's break this down.
If somebody's having a baby and they make a baby registry like buy them buy them something off the registry. Yeah totally.
Don't just go off like they've said here's what I'd like yes so follow the registry yes that I'm with but when people just want money and they're telling you don't get me anything just give me money I'm kind of like and if they want to do that because some people they will just give money for a wedding gift because and that's their choice yeah and that's their choice and that's great but the but like forcing people into a lane of how they're going to be generous to help you I also feel like I don't know why it just feels off I think the digital quality of it and I might feel old-fashioned I also think the digital quality of it like Venmo me I'm like can I can I give you a nice crisp two crisp hundred dollar bills and a card and then you get to decide and then you decide what you do like don't put don't put cash app like that is so not it a qr code hey i don't know maybe we're just like am i just like a gen xer is that what the problem is no because i'm a millennial and i still think okay yeah maybe it's the gen zers maybe they all think it's okay maybe i don't know. Maybe it is.
I don't know. No more.
I don't know. I think the audience.
I think the audience. I think the audience.
I think the audience. I think the audience.
I think the audience. I think the audience.
I think the audience. I think the audience.
I think the audience. I think the audience.
I think the audience. I think the audience.
I think the audience. I think the audience.
I think the audience. I think the audience.
I think the audience. I think the audience.
I think the audience. I think the audience.
Would you put a QR code? Yes or no? At your wedding reception? She says yes. What does the audience say? Venmo or let them get you a gift? Oh, good.
Okay. Everyone say no.
No to Venmo. Okay.
Okay. Okay.
Okay. Good.
Good. Good.
I'm glad we're all on the same page. We're all old together.
We'll just, we'll blame Gen Z. Like I feel like we do too often, too often.
All right. All right.
Well, let's head to the phones. We have Hannah in St.
George, Utah. Hey, Hannah, welcome to the show.
Hi, thank you for taking my call. Absolutely.
How can we help? So my husband and I are on baby step one, and I'm wondering where I should put that

emergency fund when it comes to like my bank account.

So right now we have 10% that goes to our church, and then we do 10% of our income into

savings.

I'm wondering if that emergency money goes with my savings or should I put it in a different account? Okay. So in your mind, what's the difference between savings and emergency fund? Emergency fund, I wouldn't touch, whereas like savings is, oh, I didn't know I needed an oil change and I didn't budget for that.
So it would come out of savings. And is this your starter emergency fund, like your thousand dollars, or are you talking about three to six months? Okay.
So the way we would teach is if you're in baby step one, thousand dollars saved, and then everything else that you have money saved would go towards baby step two, which is paying off your debt. And to answer your question, that $1,000, I would not keep it in my normal checking account because you might accidentally spend it.
I would put it in a separate savings account. Still keep it very liquid, right? It should be something that you can get to if there's an emergency.
Don't put it in a CD or don't put it in something that you can't get to. But I do think that there's value in getting it out of your normal checking account into a savings account.
I don't like when there's a debit card attached to it. I like when it's just there and if you need it, you transfer over, whatever.
Yeah, a good high yield savings account, Hannah. I would go ahead and open that and put your $1,000.
And I wouldn't do right now the 10%. I mean, the 10% for giving.
But we don't talk about percentages for savings until maybe step four that's right and so this like oh we're gonna put 10% of our income for savings and do an emergency fund I would put it all together and I would not worry about the percentage I would find whatever money I had in my budget and get that thousand dollars as quickly as possible so you may be able to do it you know depending on what you guys make and what your budget is, this month, right? And it may be 25% of your take-home pay and it fills up your emergency funds that way. But I would not look at percentages for saving right now.
I would get that $1,000 as quickly as possible. Then once you guys are completely debt-free, then you bump it up to three to six months of expenses using that same high-yield savings account.
That $1,000 will then kind of be that springboard into the fully funded emergency fund. How much? Yeah, Hannah, what do you have now combined? Combined income or savings? Savings and what you were calling emergency fund.
So currently the emergency fund is at like 140 and the savings is about 300 okay how much does make a year um my husband makes about 55 to 60 thousand a year okay so yeah to rachel's point combine all that together and just at this point you have $440 in your emergency fund. And so you've got another, you know, $550 to go.
And then baby step one for you is complete. And then it's moving on to baby step two.
And Hannah, you would have, you could use that $1,000 if something came up that you weren't expecting, because that's kind of how we qualify an emergency. It's when it's urgent and it's unexpected.
So you know, something comes up and you're like, I have to do it now, right? It's not like, oh, something comes up and I could fix it in six months, right? That wouldn't be the emergency fund. This is like, oh, this has to happen today.
And also, Hannah, in your checking account, we always say to have a buffer in that as well so that you're not, you know, there may be enough of a buffer and you're checking out to cover some small expenses that come up because you're going to have a miscellaneous category in your budget ideally so there will be things that come up throughout the month that you don't expect but ideally it's coming out of the budget there you're not having touch the emergency fund the emergency funds only when it's kind of big expenses that you're like oh gosh a couple hundred bucks and it's you know we may have to dip into that but I always like having a cushion jade in my checking and depending on where you are in the baby steps you know if you're in baby step one through three you know it may be a couple hundred bucks in there as padding and maybe you bump that up more as you get into baby steps four five six and seven but I do Hannah want you to have a buffer in your checking. That's not emergency fund driven or savings driven, but it's more lifestyle driven, if you will,

just so that you don't go into the red in your checking. So I hope that helps.

Thanks for the call. We have two more segments coming up this hour.
Give us a call at 888-825-5225.

I'm Rachel Cruz hosting with Jade Warshaw, and we'll be back. I hate to admit this, but I don't always eat right.
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We'll put a link down there, but go and download Every Dollar. All right, going to the phones, we have Austin in Nashville.
Hey,

Austin, welcome to the show. Hi.
Hello, hello. How can we help? So I am a full-time college student.
I'm graduating next week, and I'm currently on step one. I'm just having trouble racking my around paying off all of this debt that I have.

How much?

So I have, I don't have any student loans to start out with. I have about $15,000 in car loans and credit cards.
Okay. And what's your degree in and do you have a job? Like, do you have a job lined up? I don't have a degree.
I have a diploma for graphic design. Got it.
Graphic design. And do you have a job lined up for graphic design? I have recently, I've just looked at the job market and I've decided that's maybe not something I want to pursue.
Interesting. Okay.
What do you want to pursue? I've been looking more into becoming a mechanic. Okay.
Well, just generally speaking, just from talking to you briefly, I think you're more overwhelmed by that and not having a clear prospect to pay off the debt than probably the debt itself. Because I thought you were going to say, oh, I've got, you know, $50,000 or $ dollars we can make that happen you just need a job any job really so are you working at all right now and if so what are you doing and what are you earning um I am uh I currently work at like FedEx warehousing just moving boxes around um and I I was doing part-time I should be going full-time here and I projected to make about 35.
Okay. That's great.
You said 35? Yes, ma'am. Okay, cool.
And then what's your living situation like? I'm currently living with parents. Okay.
So there's no money. Are you paying them rent or anything or are you pretty much kind of square there? Just helping around or helping around the house.
Okay, cool. So I think for you, the biggest thing is let's, once you graduate next week, let's move from full-time to, from part-time to full-time so you can get that full paycheck.
And in this phase, it's good that you're not really paying rent because you can put the full force of your income on this debt. How much of it, of the $15,000, how much of it is the car versus the credit card? Credit card, it's very minor.
It's just $500. I'm mainly worried about the car.
Okay. So, okay.
So we're $14,000. What's the car worth? About $9,000 right now.
Okay. Yeah.
I think with this, I think you can buckle down and pay this off, but you're going to be working like a madman yeah are you able to pick up shifts coming up here I mean we're two weeks from Christmas and you're working at FedEx are you able to do you know overtime yes okay I mean I would Austin honestly like you're in a great position like no kids seasonally just to like all the way I mean like I would tell them I will work as many hours as you will give me. And then another thing to think about is the ratio of car debt to your income.
It's right on the line. We always say we want to know more than 50 percent of your annual take-home pay or your annual income.
And so that, you know, you're 35 is kind of what you're projected at right now and 14. Yeah, you're just kind of on that line.
And I think it's one of those questions, even though you are upside down on it. I probably in your case would just pay it off, but always be thinking through with debt, what is worth it? Because you want to, you know, calculate how many hours and how much money it's going to take to pay this car off versus if you're like you know what it's worth is it nine private sale or nine to a dealership for a trade-in did you look online um nine private okay i mean yeah yeah you're probably break even but um but just yeah in the future it's just a good uh mental exercise even for people listening or watching especially with car debt to say okay okay, how many hours extra am I going to have to work to keep this car versus if I sold it, took out a loan for the difference, maybe a couple thousand more just to buy a beater and how significantly you'll get out so much faster.
But again, Austin, in your case, it's kind of a break even from that point. So yeah, I would just be working extra.
And then at the same time, Austin, be looking for a full time job of something that you want. And you're in a great, I don't know, I think FedEx, UPS, a lot of those places, it's great employment.
So if you are there for longer than maybe you're expecting, I think that's okay. But also know your next step into the job market is not going to be the perfect job it's not going to be the thing that like you know you've always wished for in the dream job you're right out of college so remember kind of just like take what you're going to get yeah that's right well and I think for you uh I love what Rachel said and I want to take it even a step further with your car you decide you say you know what I'm of being in debt.
I want this thing paid off in six months. And when you say that, then reverse engineered and say, okay, what does that mean for me job-wise? How much do I have to work to make that happen? Right? And that way you're the one in the driver's seat and you're the one that's in control of this as opposed to, I make this and it's going to take me X amount of months making this money.
Does that make sense? So kind of run it back and that's going to force you to work probably harder than you've ever worked before. And as far as the graphic design to mechanic thing, I think that you, I don't know what your plans are, but I feel like you kind of put that on hold for a second because you've just spent money on an education.
You've just spent time on an education. Work for a while, get this mess cleaned up.
And then during that time, research what it looks like to become a mechanic. As Ken Coleman would say, like get in that proximity, follow some people around, but don't just jump and make that choice before you've done detailed research.
So yeah, where, where are you graduating from,

Austin? Is it an online school or? It's a local, it's a tech school in Tennessee. Oh, okay.
Okay. Gotcha.
Yeah. Well, I hope that helps Austin just in the sense of just some encouragement that you're, you're in a great line of work with FedEx right now from a seasonal perspective.
So, So take advantage of that overtime.

And this plan hopefully will lower that stress. And Jade's right to map out a specific timeline of, okay, you know, September of next year, where am I going to be if I start paying this stuff off? And I would pay the credit card off like by New Year.
I mean, mean like it's 500 bucks too and we talk to people Austin so all the time yeah all the time who are doing um extra side gigs and Jade when we talk about this on the every dollar webinars and I and we ask them like hey how much what do you do for a side gig a side hustle and how much are you making some of them are making 2,000 right I mean just for extra side hustles like So there is ways to get this thing paid off in six months. It's very, very doable, Austin.
So I think that will really propel you into some motivation to pay this off. Yeah.
The moral of the story for me is of all the types of callers that call in that have debt to pay off. If you are single, if you do not have children, and if you are still living at home, you are in the best because you've got time.
Like time is at your disposal. You know, you don't know true tiredness yet.
So like you can really get in there and get get tired. Yes.
And for all of you graduating, you know, now we're in May, live like a broke college student until this debt's paid off. That's right.
Keep that lifestyle. Because I think the problem is, is when you get your first

job and you're getting a salary, you know, this career, you're thinking, oh my gosh,

I'm a grown up now. And you, and your expectations of life suddenly kind of creep up of what that

lifestyle looks like. But if you stay low on lifestyle while you get this cleaned up,

I would rather be doing that at 21, 22, 23 than 31, 32, 33. I know, that's right.
You got it, Austin. Thanks for the call.
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We are in

the holiday spirits, Jade. We are in the middle of, I don't know, still shopping.
I think I'm

pretty much done. I have nothing wrapped.

Oh, man. But Santa

at our house doesn't wrap gifts.

He just pulls the gifts out of the bag

and they just are there under the tree, not

wrapped. So that's always convenient

for Santa. So what goes

does anything go under your tree ahead of time?

Gifts that mom and dad buy.

We'll buy one or

two things that we'll wrap. But they unwrap a lot of gifts from like parents grandparents uh there's a lot of unwrapping happening there which is great but yeah so that's a good idea i might uh take you up on that yeah that was my santa growing up childhood never wrapped either so that was the same santa i think that visits our house too it doesn't wrap that's a good idea which is nice but I but we're still going through our lists of gifts for like we draw names on both sides of the family you know smart all the things so where uh where are you at with all of the Jay listen for me like me myself because I'm not in debt I have purchased gifts for the kids and my husband and I have done that I've not fully finished with my husband, but this time of year, you know, this is the time of year where it really becomes a hot button topic because obviously we're a financial show.
We want people to make their way to peace. And I said it last year, but posted it this year, a very like controversial statement, controversial as I like to say.
And I think I was on with you. You were.
Right? So before we talk about it, let's show you the clip so you see where we're coming from. Roll tape.
You don't have to buy gifts for adults. They're grown.
They have their own money, their own job. If they want a new blender, they can go buy it.
They do not need you to go buy them slippers. Like they can buy their own slippers.

I said what I said.

Rachel, I said what I said.

Okay, and I actually, when you were saying it last year,

I remember it and being like, that is so true.

Like if Aunt Linda needs something, like she can get it.

Yeah, she's fine.

Like Aunt Linda, especially if you are getting out of debt,

you're on a tight budget.

And it's been a hard year or two, you guys, like with inflation and stuff. I mean, it's just, people are just getting the necessities paid and there's not a lot of room.
And so it was this guilt free reality that adults can take care of adults. That's right.
Did you get hate from it? I got so much hate. And here's the thing.
Don't, don't, don't misunderstand. Like the reason we're talking about it is not like to try to qualify it because like I'm drinking water.
I'm fine. It's for you guys because there are so many people, Rachel, a always read the caption because you need to see more.
And I did explain. I was like, here's what I'm trying to say to you.
Yes, I'm not saying adults can't have gifts. I'm not saying it's not nice to receive a gift.
I'm just saying it up on your Instagram right now. I'm just saying that if you're in this situation, I'm giving you permission to back away from the spending because we don't need them.
You know what I'm saying? Like I will get by if you don't buy me a precious moments figuring, you know what I'm saying? I will get by if you don't buy me lotion from Bath and Body Works. I don't need your $15 gift.
Thank you. 10.8 million.
10 point. Yes.
10.8 million of you. Not all of you, but a lot of you were concerned with Jade.
This sounds a little like Grinchy. This sounds like a little Scrooge.
And it's not that it's for people who are struggling with debt. I used to be one of those people.
And I was the person who continued to buy gifts on credit cards. And when you're broke, and I'm going to say this lightly because I think people will know what I mean.
When you're broke, you buy broke people gifts. You know what I'm saying? Like you go to the dollar store and you rack up and you buy like $10 and $20 gifts.
But I'm like, you can't afford it. And that $10 gift is not breaking them free.
They're okay without it. But it is causing stress for you because now before you know it, you spent $200 or $300 that probably you should have put towards a collections bill or probably that you should have put towards paying off your car.
And that's what this whole thing is about. It's about changing our behavior and not feeling pressured to spend our money.
That's right. You know, and some of you are like, well, Jade, I don't feel pressured to spend.
Like like it's my love language. I love giving gifts.
And if that's you, fine. You don't feel the pressure.
But now let's just look at look at what is it wise for us to do? Like, is it wise for me to spend in this type of way? And I'm not saying don't participate. I think Christmas is great.
It's the most wonderful time of year. I think there's a way that you can participate.
And here's what I would say, Rachel. And this was in the caption if you had read it.
Okay. In the caption, I was like, make a very short, very prioritized list.
I would start with kids like nieces, nephews, your own children. Right.
Sure. And buy for them first and use cash.
No problem. I'm not mad at that.
And then if you have some adults like VIP only. Yes.
Yeah. I would say they for most of us.
It's our mom and dad, or maybe it's like our sister and brother, but I would not get too crazy with this. If you're shipping packages across the U S it's expensive.
Totally. You can't afford that.
Yes. Somebody needed to tell you that you couldn't afford it.
And it's not out of shade. It's really out of love because I don't want you to be further in debt.
And I think that most of us don't do this, but we probably should, Rachel, when the holidays start, like when Halloween ends, right, we need to stop and go, OK, what was it about last year's holiday season that went well? And what was it that didn't go well? Yes. And kind of set that intention ahead of time.
And most of us will go, man, I was so like overextended or man, I overspent and it really didn't have the effect I thought it was going to have. Right.
Yes. And we can go back and say, you know what? I made all those freaking side dishes and spent all that money.
And we would have probably like half of it didn't even get eaten. Right.
And you can see the ways that you spent your money that didn't make a huge impact. And I think's the same way with Christmas there's so many gifts and it's like you know the kids probably would have been just as happy like I could have cut back a little bit and they would have still been happy absolutely for sure for sure so there's some moderation that has to be going on here Rachel and I think that's the yeah and I think the level of discipline and planning some people just don't don't do.
And it's a little bit on a whelm. And that's where people get in trouble with money is because it's so emotional.
And all of these emotions are driving your decisions. And usually when that's the case, when our logic isn't doing it and it's our emotions, we do tend to overspend.
We make spontaneous decisions that probably are not great in the long run because in the moment it feels good it feels right and then you look back after logic is set in with maybe a level of regret of realizing oh my gosh and and this is the reality too jade is that you know we're again we're not like the grinch stole christmas kind of people but 28 of americans are still paying for christmas last year i heard a stat that said 49 oh my my gosh. Oh, wow.
Any level of that. So there's obviously a clear boundary issue that we're having that we're not able to afford.
And so to your point, the kids are the priority. Christmas and the Christmas spirit and all this stuff, right? It's the kids.
The adults are going to be okay, right? So prioritizing that. And then even within your kids, right, of your family if if it's going to look different um than last year because maybe this year is the first time you are doing it on a budget talk about it communicate it talk about the different Christmas may look a little different this year yeah um and then even thinking through the motivation too of why you're buying everything in the first place that's always a big question for me because even for kids like I this was probably two years ago Jade um everyone like the on social media on Instagram they were just posting like Christmas Eve like Merry Christmas you know oh yeah and there's just like a picture of like their tree and like oh and all the gifts and stuff and I was like oh I was just flipping through I was like well that's kind of sweet so I did it as we're going to bed like we had our lamps on and it was just a pretty little picture so I just you know and we had our gifts out from yeah we had our gifts out and so I took the picture and just captured Merry Christmas and I got so many comments on my minimalist Christmas oh they're like Rachel where's the gifts oh whatever so refreshing it's just a minimalist Christmas at the cruises and I was like this is regular I thought we like I thought were doing, I thought we like had a great Christmas.

But then I, as I looked through, I'm like, oh no, from what people, we amount. People go hard in the paint.
And again, it is not bad. If you have the money and this is where your choosing is, that is totally fine.
Yeah, nobody's, you're grown. You're grown.
And we're also the moms. You and I both talked about this yesterday during a break when we did the show yesterday.
I also had three trash bags full of crap that our kids just don't use in the playroom and in the

closets in the room I'm like so then it's just stuff just ends up building up and that's the consumerism where I'm like I'm not gonna buy you stuff just to buy you stuff either so that's such a good point I think you're right at the end of the day everybody's grown you can spend your money on what you want to spend your money on I mean that's's the cold, hard fact. But if you want our advice and if you're a person who's trying to get out of the debt, the point is you have permission to back away.
Like you don't have to opt into all of the things that the holidays want you to opt in. And we're just trying to give you that out.
That's really what it amounts to. I'm going to end with a with a hater comment, Jade.
You ready? If buying slippers hurts your wallet, you have other problems. This is very financial illiterate advice.
So I would say, yes, if slippers hurt your wallet, you have other problems. Is exactly what we're saying.
Yes. Yeah, it does.
So then we got to dig into that. Why that is.
All right. Well, Jade.
It's been real. Great segment.
Thanks for giving us the Christmas spirit. We appreciate it.
Thanks to all the guys in the booth. And thank you, America.
This is The Ramsey Show. We'll be back.
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That's nokbox.com slash Ramsey. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships.
I am Rachel Cruz, hosting this hour with bestselling author Jade Borshaw, and we are taking your calls on life and money. So give us a call at 888-825-5225.
We are here to chat with you. All right, starting us off this hour is Allison in Philadelphia.
Hi, Allison. Welcome to the show.
Hello. How are you guys today? We're doing great.
Thanks for calling. How can we help how can we help well okay i'm just gonna be quick about this my husband passed away and um yes you know he would you know what you had to love him or you had to hate him it was one or the other my my my question is he hid everything from me the day he died i found out we had a sheriff's sale also on that day for my home and i had absolutely no clue he he hid all the paperwork everything sent me to the store sent me to atlantic city you know like like we had nothing wrong and um so i'm in a pickle i'm not really sure uh what i should do about this holy smokes okay so Surprise.
Surprise. Yeah.
When did all this happen, Allison? September 17th. I also moved my father into my home six weeks prior to that.
He was in Colorado. He's been there 56 years.
I just moved him back here and then this happened. Man, I'm so sorry.
Okay, I mean, it would be so difficult to be grieving the loss of your husband and then at the same time uncovering this other reality that you had no idea was happening, financially speaking. Yeah, I felt like I got hit by a two-by-four.
He's knocked out onto the ground. Oh, Allison.
Yeah, and I have my three-year-old grandson lives with me and two of my adult daughters because it's very expensive here, you know. The taxes are really, my taxes are 10 grand.
I don't even have a quarter of an acre. You know, it's just really expensive.
Yes, okay, so walk us through. You may have said at the beginning of the call, but what's the state right now of where you are financially? After you've uncovered everything, where are you? Well, I got a little bit of life insurance.
Okay, how much? $200,000. I believe he was in the rears for $86,000.
He was in a bankruptcy for three years to save the home when he was in the hospital a couple years ago. And that was fine.
He was paying $3,700 into the bankruptcy and $24 to a regular mortgage. And I guess he just ran out of money and never

told me. So what does that leave you? What are you after everything's kind of come out in the wash? What does that leave you with? And what are you still trying to sort out? Well, I have, I don't believe that I owe what they're saying.
I know I understand there's interest in all that. but they kind of put us in that position.

It's a servicer that has been taken to court many times and had to pay out millions of dollars for wrongfully taking people's homes. And this is what I was battling for a few years before I stumbled on that when he was in the hospital.
So I just wanted to know what is the bottom line?

What can I pay to get it out of foreclosure?

And then possibly just keeping the mortgage and paying that off?

I don't even know what I think.

How far behind are you?

Well, he stopped paying the mortgage and the bankruptcy in January.

Oh, okay.

So it's about to be 12 months of no payments.

It's like... paying that mortgage or the mortgage and the bankruptcy in January.
Oh, okay. So it's about to be 12 months of no payments.
Right. And have you had contact with anybody about this or is this you just looking at, you know, the statements that come in the mail or whatever? I get physically ill opening those statements because of what happened five years ago.
They actually told me they couldn't talk to me because I wasn't on the mortgage, but I was on the mortgage. So they made me behind even more time.
And you're sure that you're on it at this point? Oh, I'm positive. I got my own paperwork hidden.
It was hidden in the closet. Okay.
So you're going to have to call them up and you're going to have to find out what's going on with this. And it's not going to be fun.
And I know that you're dreading it. You probably have a pit in your stomach now.
But you're going to have to go, OK, where are we in this process? Is there anything that I can do to pull it back from foreclosure? What what would I have to pay? And then once you find that out, you have to look at your own finances and go, can I even pay this? And then there's part of this. I don't know if you want to hear this, but what you're describing sounds like absolute like he double hockey sticks like i do you want the house or do you want to find a way to to sell it let the bank sell it and move on with your life my my what i would like to do is at least keep it so that i can sell it because i have it's worth $620 and I owe what they say I owe is $320.
My mortgage was for $340, $315 years ago. So you owe $320.
It's worth $620. Usually it would be like, okay, once I can get back on track with the payments, let's come up with a payment plan so we're back on track.
And then at that point, you're paying the mortgage and then you can decide if you want to sell it or not the question is let's pretend I mean let's pretend like I'm the servicer and I say all right uh Allison you're gonna have to pay a payment and a half for the next two years let's just I don't know what they'll tell you could you even do that yeah are you making an income Allison right now uh no I'm not because of my i was uh taking care of my uncle who passed away last christmas he was dropped off at my grandson's birthday party and they're saying here you go you get to take care of him i took care of him for two years so i didn't work allison there's a lot of you taking care of people including your own children your grown children right now which um and i'm not defaulting you there, there is something to understand, Allison, that you have to take care of yourself first and foremost, right? And that's not a selfish idea. You can't take care of people while you're drowning, right? You have to get yourself in a very stable position.
And so, um, so he had this life insurance. Did he have any retirement? I mean, I'm assuming with all the floor foreclosure stuff, Yes, yes.
It's in stock. Okay, how much is that?

Once a year, I'm assuming with all the floor foreclosure stuff, he like, yes. Yes.
It was, it was, it's in stock. Okay.
How much is that? The year I'll get 20 grand a year for six years. And it was 117.
And I guess, I don't know how well that works, but I get 20 grand every September for six years and I can roll it back into it or, you know, use it or whatever. Was he working before he passed? Yes.
Okay. What was he bringing in at the time? He was making about 11 grand a month.
Okay. And then, yep, and you have a $200,000 in life insurance.
How old are you? I am 58. 58, okay.
If I, before we get off, I want to set you up with a coach to help you go through all of this, because I think that there's a lot to go through. You probably, with this all said and done, you probably have the money, um, possibly to keep this house, but I don't know.
It's hard to know because it sounds like there's a lot of secrets and a lot of skeletons and a lot of closets. And you have to determine what Jade was saying earlier to Allison that with this house, you got you were, you know, essentially should have been be able to make these payments on, you know, $150,000 income is what he's bringing in around that.
And you in to supplement that you don't have that. And so I don't want this house holding on to this house I don't want you to drain everything just to keep the house, to Jade's point earlier.
So yeah, if you hold on the line, Emily's going to pick up. And we are going to set you up with a financial coach.
Because getting all of this, and from a legal perspective, the contacts that you need and all of it. And they're going to be able to ask even more questions, Allison, than we can in six minutes here on one call in the segment.

Because there's probably other things there as you start pulling a string to really figure out and get yourself in a position of all knowledge to start making wise decisions with all of the

information possible. So hold on the line and we will give that to you as our gift.
And we are so

sorry that that is what you're up against. It's terrible.
All right, Dave, you have some strong opinions. Possibly, yeah.
I think so. Okay, because you really prefer credit unions over big banks.
So why is that? Well, credit unions, for one thing, are non-profit, which means that the members, the customers, own the credit union. So any profits that the credit union makes goes back into customer pricing.
So you get better interest rate on savings, cheaper checking, and so on, that kind of thing. But what's more important than that, though, is the fact that the customer is the owner changes the spirit on the credit union.
So I find very few credit unions that aren't very customer-centric. Yes.
Well, and I think we have found one that is incredible, and that's Fairwinds. They are an incredible credit union that is really out with the heart to help the customer.
You know, that's why we're partnering with them, because they've got a scope to be able to handle the Ramsey audience, and they're the right kind of people with the right kind of values. And they've done a really, really good job with customer service, and the deals that they're offering, the Ramsey tribe is incredible.
Yeah, absolutely. And you're right, their customer service is unbelievable.
Winston and I just signed up, and we got an account. Yeah.
And I'm not kidding. It took less than five minutes.
It was so user-friendly. The step-by-step approach was unbelievable.
And then the next day, my phone rings and it says Fairwinds on my phone. So I answered it and talked to someone there.
And they said, yeah, they give calls to every new customer. And so again, they just really care about your experience.
And I so, so appreciate that. So again, you guys, I know it can be a pain to switch banks or to open up new accounts, but Fairwinds, again, they make it so easy.
Plus, anything that you can do at a traditional branch, you can do with them at fairwinds.org or on their app. And you'll have free access to over 33,000 ATMs.
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That's RamseySolutions.com slash SmartTax. Welcome back to the Ramsey Show

Up next we have Katie calling us from Dallas, Texas. Hi, Katie.
Welcome to the show. Hi.
Hello. So glad to be here.
Well, thanks for calling. How can we help? I have a big problem.
Well, I don't know if it's too big, but my question is, how do I tackle my debt while establishing an emergency fund and investing at the same time? Well, I can see how you're overwhelmed with that, because that is overwhelming, trying to do all of that at the same time. What's causing you? What's the motivation in trying just to get it all done? Do you feel like you're behind on investing? You don't feel like you have enough savings? There's a lot of debt.
What's causing you to do this? So I've held on to this large amount of money in my savings account. I started saving since I was 16.
And I'm exhausted of seeing it just sitting there. I want to do something with it.
My frustration is I'm not knowledgeable in investing, and I don't even know where to start. I don't know.
Yeah. How much is it? It's $47,230.
Okay. And that's just sitting in savings.
And then how much debt do you have? I have $24,516 in debt. Okay.
Well, the good news is we'll give you a plan so that you feel like you're going in a direction and you feel confident about what that direction is. Also, the good news is you're going to be out of debt basically today if you follow our plans by tonight.
Oh my goodness. That's exciting to hear.
It is. Listen, you've done a wonderful job saving and it sounds like you weren't really sure what direction to go.
So you kind of just try to do everything. And the way we teach kind of narrows it down and you do one thing at a time for a period of time and then you kind of are freed up to do more.
But for you, the first step, and you've already covered it, we always say the first baby step is you just need a thousand dollars saved you got that so check that one off the list the next step is we take any additional savings that we have or we work really hard to pay off our consumer debt and for you you have the money to do that so that would be baby step two pay off consumer debt get the green check that's right and katie what is the 24 000 what kind of debt is it um? One credit card in the amount of $65,000, $63,000. Another credit card in $67,000, $83,000.
And my car, that is $11,170. Okay.
So yeah, so part of this paying off debt, for most people that call the show, Katie, I would say 9 out of 10 of them don't have money to pay off these credit cards in this car so we're going to be talking to them about working extra sacrificing lifestyle all of it but your position is completely flipped because you you have that cash so like what jade was saying is that's a big green check light but also katie we want to establish new habits so that we don't get back into this place of debt again. So what were you using the credit cards for the two? Um,

yeah. establish new habits so that we don't get back into this place of debt again.
So what were you

using the credit cards for the two? Just spending. Monthly spending.
I have a problem of, I like seeing the money there. I like feeling secure.
I like feeling safe. My problem is just letting go of that money.

Listen, I think for personalities like you,

when we reframe what security... like feeling secure.
I like feeling safe. My problem is just letting go of that money.

Listen, I think for personalities like you, when we reframe what security and safe is,

I think they thrive even more. Because if you're a person who loves being secure, being safe,

you're going to love a debt-free life. Because debt really does equal risk.
Because using credit

cards, that's a form of debt. It equals risk.
Because for most of us, we go about You put, yeah, maybe you put shopping on the credit card. Maybe you take out a car loan, but if you were to lose your job, suddenly you feel the risk of that because you go, oh my gosh, I don't have the income I used to have coming in and I have this car payment due.
I have to pay the credit card off. And suddenly we feel the risk of that weight that we've been carrying in debt, right? So if you're a person who says, no, I love security, then paying off your debt truly is ultimate security.
And then turning around and saving up three to six months, which is the next step, baby step three, having that three to six months of cash sitting there, that's actually your money. It's not money that you owe to credit cards or car notes.
That is the ultimate form of security because then you can say, no matter what happens, I'm prepared for a storm. If I lose my job, I know I have the money to keep everything going for the next six months.
If an emergency comes up, you know, the water heater goes out or something happens with HVAC, I have the money that I can cover it. Yeah.
And the three to six months too, Katie, is enough to what Jade's saying when these big things come up to cover with cash. But it's also not so much that you're getting frustrated that you're not making a lot on return, right? So it is that perfect medium.
Are you single, married kids? What's like your life status? I am married. I have one baby.
Okay. So since you like security, Katie, I would go more the six-month emergency route versus the three-month.
Yep. So I would stick with that six months.
Do you know from an operating budget perspective how much money you guys need per month just to keep kind of where you're at? And I'm thinking, you know, mortgage payments, utilities, gas in the car, food, all of that. What would you guess to keep you guys afloat for a month? How much money? For him and me, myself together? Yeah, as a household.
I want to say roughly $6,000. Okay.
So the good news is you have that. Even after you pay off the debt, I mean, that still leaves you with a little over $20,000.
So you could effectively say, okay, now I've got my three to six months. And then to answer your further question about like, do I invest this? What do I do? That three to six months, you just keep it in a high yield savings account.
It's there. Like we said, it's just that fully funded emergency fund for when you need it.
And then above that, technically, and I know I'm not going to dig into this too much right now, but it sounds like after that your household is debt free, your household has three to six months of expenses. Now you could start to invest.
And the way that we'd say to do that is really just taking 15% of y'all's combined income every single month and putting it towards, yeah, your 401k, your Roth IRA, that sort of thing. And it just becomes a kind of set and forget rhythm for you to invest.
Yeah. And when you're talking about you didn't know much about investing, a great place to start, Katie, a Roth IRA is a great option.
You and your husband both can open it up. You can both put $7,000 in and that grows tax free.
And within that Roth IRA, you'll invest in mutual funds. And I would sit down with a SmartVestor Pro to kind of get all this started.
And then do you and your husband both have retirement benefits at work, like 401ks or a 403b?

I do not. I believe he does.

Okay. So yeah, so I would use that 15% to fund two Roth IRAs, go up to the match with his 401k.

And how much do you guys household income wise are you making a year um i'll say 60 000 okay okay are you guys working together with your money are you guys i have a combined uh checking account how'd you know no we don't i think that's something you need to work towards. What's he say about all this? Does he feel out of control money-wise? Is he feeling a little bit like, oh gosh, are we on track? Have you guys been talking about it and that's why you called? Or is this just you on your own feeling it and you don't know where he's at? With finances, it's kind of you earn your money, you make your money.
We share share the mortgage so you just tell me the money and we're okay with that okay all right yeah my money is my money and yeah how long have you guys how long have you been married uh five years okay how are you feeling about that do you like how that is or would you rather say, we're a team in this and all together. We're like working towards our future together with investing.
And we know what's going on. We're okay with working together.
I'm sure he'd be okay with that too. Good.
I think you should work towards it. I mean, the truth is for a couple of reasons.
A, just practically when both people are working together to accomplish one goal, you go faster and there's not much confusion. It's, this is what we're working towards and we're all pushing towards that same thing.
And then there's just the, the relational spiritual side of you're married. And so you're one in all of these other areas.
And so, yeah, sorry, Jade. Does he have debt, Katie? Do you even know? Yes.
How much does he have? Too much for me to handle. Oh.
Okay. Interesting.
So, is that why you like it separate? Because his feels overwhelming to you? Yes. Okay.
We don't, we really, I don't want to hear about, um, uh, who that's, uh, it's hard to say. His financial struggle.
No, you're good. Katie, do you, do you care to stay on the line and we can, we have to go to a break right now, but I'd love to keep talking if that's okay.
Do you, are you okay if we hold you over to the next break? Yes. Okay.
Thanks Katie. Okay.
Katie, you stay on the line. Um, we have.
We have a hard break right now, but we'll be back and unpack some more of this because I think this is a great, yeah, to be able to help her and for you all. This is where a lot of people are in America from a financial perspective.
So we'll be back. This show is sponsored by BetterHelp.
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We have Katie on the line from Dallas from the last segment, and Katie was telling us she has $47,000 saved, $24,000 in debt, which was car and credit cards. And she was wondering initially when she called in about how to invest and how to pay off debt, not just let that money sit there because she wants to make progress.
And as we kind of were digging into the numbers in her situation, kind of unpacking the relational side of money. And marriage and money is so closely related.
when you are married, working together with your spouse and being on the same team is a crucial part. But also we know on the other end, it's one of the leading causes of fights and tension and divorce and conflict.
And when you're not on the same page and when you live kind of separate lives financially, and as we were unpacking with Katie a little bit, that's what we've kind of started to discover is where they are from a relational standpoint when it comes to their money. Katie, is that a good overview? Would you change any of that or add anything? Oh, gosh, that was unexpected.
Yes, you've definitely unpacked it. We unpacked it.
Yeah, so before we were getting off the call, we just kind of asked, and I feel like it kind of struck some emotion in you um of knowing that you guys don't work together but yet he has a lot of debt and you said it was just too much debt for you to even want to handle or to face is that right yeah um my parents they they they got divorced because of money so So that's a big fear.

So that's kind of the background.

My husband, he has let a few credit cards go to collections recently as soon as my daughter was born.

He's been underwater for what feels like a long time,

probably two years already.

And if I mention this, you're going to say sell it. Well, tell us.
The truck. It's the truck.
He has $11,000 left on it, but it's these monthly payments of $600 that he wants to be free from. Okay.
What other debt does he have? What's the credit and collections what are what are those amount to do you know i i want to say roughly it's seven thousand okay anything else now you've opened my eyes not no not that i know maybe i need to have a discussion with him. I think so because don't get me wrong.
I, I, I hate debt and I don't like any amount or form of debt, but I was again, expecting for you to say like, he's got $200,000. I was expecting something way more astronomical.
And when you told us, Hey, yeah, he's got $18,000 of debt. I kind of just was like, Oh, okay, cool cool like we can pay that off and he's working right yes he is okay let me dig deeper i just it just came in um so he has we have this watercraft uh boat okay it is under both of our names uh but he takes financial responsibility for it and the balance is 11 000 okay so so there's another 11k what else anything else um aside from his truck the car and a few credit cards there is nothing else so a truck and a car uh sorry the the truck and the boat okay truck and the boat so we're 28,000 How much is the boat worth? Do you know? No idea.
Okay. Okay.

We have... The truck and the boat.
Okay, truck and the boat. So we're $28,000.
How much is the boat worth? Do you know? No idea. Okay, okay.
We haven't looked into it. It's very precious.
Okay. And does he have any money saved in his name? No.
No, okay. So, okay, so Katie, I think what this starts to open up and what you're feeling, and correct me if I'm wrong, but it is touching every security, insecurity part of your story and in your life.
You've done everything you can to stock money away, even taking out credit cards and spending over here, but just knowing the safety of money has been a lifeline for you and probably coming out of a lot of pain from your parents experience and you've done everything to safeguard yourself right um against i would say against debt but what's funny is you've taken on some debt right so there is still a level of risk there but you've padded yourself with the savings and it's kind of become your lifeline and you're gripping onto that and letting go of that is one of the scariest things for you to do.

Would that be correct?

Yes.

Yeah.

Which is very understandable, Katie.

Very understandable.

And so I want you to, as much as you can, because with money, emotions drive so much

of this.

And the more logical we can get, the safer I think you're going to feel with some of these decisions. And one of the first steps I would do is sit down with him because I don't know his, I'm not on the phone with him, and I can't ask him these questions.
I don't know where he's at. If he is at a place, Katie, that he's like, I'm so overwhelmed.
I'm so mad at myself, right? He's probably not feeling great about himself. And it's like, I want to change.
I want to turn this around. That's one scenario.
A scenario, I would have a red flag and cause you to pump the brakes a little bit on all of this. If he's like, I don't care.
I don't care, Katie. I'm going to do what I want.
And we get those calls too with some guys that are like, well, he wants to buy the truck. He doesn't care.
He's going to buy it we can't make the payment but he doesn't care right so like that is a character issue if it's that would you say it's kind of the first scenario or the second i'm pretty sure he will call the show tomorrow no not tomorrow okay good yeah but so he's more of on the first and on that first you know scenario you would say he's all for it okay okay so katie okay i i just i want to encourage you that you're this is all good right like i know you feel overwhelmed and we're going to walk you through a very clear plan right now um so the first thing i want you to do is you guys together tonight you can open a bottle of wine if you need like just a good sip of something or a pizza whatever you got to do to relax and say

okay together is you guys together tonight, you can open a bottle of wine if you need like a good sip of something. Order a pizza.
Whatever you got to do to relax and say, okay, together, we're going to look at everything. We're getting out our pay sub stubs.
We're going to know exactly, because when I asked you how much money you guys make a year, you said, I think around six, like I want you to know to the dollar, here's what we make combined. Here's every debt.
We're going to write it out and we're going to know everything here. And we're going to tonight shake hands and say, we are now a team.
Together, no longer are we roommates Venmo-ing each other for the mortgage. No.
Screw all of that. No.
We are one. Our income, when our income hits our new checking account that we're going to open on Monday morning, when our income hits that account together, we are working as a team.
Because when you do that, Katie, not only from an emotional perspective, does it create so much unity and so much of a more beautiful marriage because you see yourselves as one, which is what you do when you choose to get married to live life with another person. You're living that out on a tactical sense with your money.
So that's such a beautiful part of it and then together tactically as you start to trust each other in this you're gonna have this cleaned up katie i would sell the boat immediately but then by monday you guys can take this 47 000 and this is gonna scare you but i would pay off all i would keep a thousand and and you would have you have i think 42 000 if you if you don't count the boat because I want that sold right you're gonna pay off everything else okay and so you're gonna have five thousand dollars left and you guys together are gonna have a goal I would say to save up uh probably I don't know 26 27,000 for an emergency fund and you're gonna that's your next goal together Katie is to work to to buff up that emergency fund okay and that's going to take you guys you know maybe the next eight nine months ten months to do all of that um for that emergency fund but together that's going to be your goal for 2025 together doing this getting rid of the payments we're done with payments and now you're gonna have your full income to be putting towards this emergency fund.

What'd you say?

$5,000 left.

What'd you say?

$5,000 left.

Yeah.

I would have $5,000 left.

So I'm paying off my two credit cards.

Yes.

I'm paying off my car.

Yes.

Selling the boat.

Mm-hmm.

And you suggested paying off the truck? Yes. Mm-hmm.
Oh, gosh. That's scary.
Is it scary because of what's going to be left, the $5,000, or it's scary that you're paying off his debt? That's scary. You know what might make it less scary if I were you? I'd calculate up all the monthly payments.
I'd calculate what you're paying in car payments, what you're paying in credit card payments, what he's paying in credit card payments, what he's paying in boat payments, and what you're paying in truck payments. Add up all that money, and when you see that, that you're going to have that back every single month, I think that's going to make you feel less scared.
Because that's a hefty chunk. You have a lot of your income, Katie, leaving.
And a lot of it's going to be coming back to you. And you'll be able to build this emergency fund up back very, very quickly.
And then beyond that, you can start investing. Hold on.
Stay on the line, Katie. And Emily's going to pick up.
And we're going to put you guys through Financial Peace University. It's our nine-lesson course.
And give you every dollar premium. So when you guys start looking at numbers today, you can start building out your first budgets.
Thanks for the call, Katie. We're cheering you guys on.
Listen, guys, I've heard just about every excuse for why folks think they can't get ahead with money. So let's go ahead and settle this right now.
The truth is you get to decide what happens with your money. And if you want to start winning with you have to get on a budget.
The Every Dollar Budget app makes it easy for you to plan every dollar you've got coming in and every dollar going out plus it's free. So no more excuses.
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So again, give a gift that can create some change in people's lives that you love. All right, we're going to go to John in Midland, Texas.
Hey, John, welcome to the show. Hi, guys.
Thanks for taking my call. Absolutely.
How can we help?

Well, so I'm an hourly employee and I have an irregular income.

So I've really kind of been struggling with a budget in the past.

And I found out the other day that with my employer, I can set my paycheck to go into

different accounts.

So would it be a bad idea to basically set up to where I'm like a salary employee? Like I have $2,000 or whatever, every paycheck go into like my working account, my daily account, and then everything extra goes into like a high yield for a house? Or do you have any other advice for something like that? So in essence, you're saying you don't need all of the money that you're being paid. And so you want to throw it towards another goal.
That's really the question. It's not really the difficulty of budgeting it, right? Yes.
I guess whenever I just look at my whole paycheck, with it being different month to month, I don't know why it just doesn't click with like, okay, I have this random amount of money left over. And so I guess that's kind of what I'm trying to overcome.
Okay. So just again, to clarify, are you having trouble budgeting? Like, are you, are you ever finding that you don't have enough money? No.
Okay, cool. I live very frugally.
I love that. Essentially, you're saying I have enough money for the line items in my budget, but I have an overage.

And for you, the overage, you feel like you're at the point that you want to save for a down payment.

Yes.

And so then at that point, for Rachel and I to decipher is whether you're at that point financially, if that is really the best move for you or not.

Okay.

So our first questions would be, do you have any debt?

Thank you. at that point financially if that is really the best move for you or not.
Okay. So our first questions would be, do you have any debt? No, I actually paid off all my debt in September.
Okay. So I'm completely debt free.
Cool. I make about $100,000 a year.
Okay. Part of paying off my debt was I got a large settlement from my previous employer for a sale.
So I have about 60,000 of that left over in savings. Some of that is going to be taxes, though.
Okay. And then, you know, I'm contributing right now 10% to retirement because I am trying to save for a house.
Okay. So that's kind of where I'm at.
Okay. So the 60,000 you got, you know, you set the taxes aside.

That's fine.

What portion of that would you consider a three to six month emergency fund?

Probably, I mean, really probably 15 would be generous.

Okay.

So that'd be more towards 6,000 or six months. I mean.
Okay. So I'd set aside what you would consider six months of expenses and that's kind of separate.
And then aside from that, yeah, you could consider the rest. This is my working pile of debt payment money.
And then for you, and just to clarify for anybody listening, so technically you're on baby step 3B and step 4, and what you're doing is totally fine.

If you say, I'm not ready to go all in on 15% investing like we'd say because you're saving for a down payment, that's totally fine.

How long do you think it'll take you to save up the down payment that you want?

Well, I'm just trying to save up big, I guess. I know that in August I'll be getting a retention bonus as well.
Okay. So that should be about half a year's salary.
So between that and then another $1,500 a month or so going into savings, I would assume by the end of next year I will be in a comfortable spot to do, you know, 30 or 40% down on a home. Okay, great.
I love that plan. I think that that sounds wonderful.
The only thing that I would caution you about, and this is something that you, if I were in your shoes, I'd work it into the plan now. When you have that house, like once you buy the house, your expenses are going to go up is my guess, right? I don't know what you're doing now.
Are you renting? I am. I am renting.
Okay. So calculate, okay, is my payment going to go up or down? Does that affect my emergency fund? Does that affect what I would need to make things sustainable over three to six months? Do you see what I'm saying? Okay.
Yes. Yes, ma'am.
And that's basically it. Congrats.
Yeah. I mean, you've done a fabulous job, John.
I mean, it's incredible. I mean, yeah, I think that that's exactly right.
And if you want to make it easy and make it that automatic transfer to a money market account or a high yield savings account to save for that down payment, I would say, yeah, absolutely. You know, there's always, you know, I don't feel this with you.
That's why I just want to say it out loud, though. There is something when you're starting something new, you all that are listening and watching, and you're starting to build new habits, I do think being as hands on as possible, and going through the motions is really important.
And so some people just want to automate it their whole life and be like, Oh, I don't want to have to like feel anything, it's just going to happen. There is something about stepping in and saying, No, no, no, I'm going to transfer the transfer the money myself so I'm practicing and seeing this happen and there's something about taking control in this discipline over your actions which is a big part of winning with money long term but John I think you you have some of these disciplines already in place it's not like you're trying to change something big from your habits it's more of a tactical change and so doing something automatic at that point I think is great right when you can yeah when you have stuff that just automatically comes out because you know yeah we're paying for electricity we're paying for cable like yes and it's just coming and it's making my life easier in that way uh that's a benefit for sure and that would be the same with savings so if you do want to create an automatic you know transfer and and knowing that that high yield savings you can get to that money for some reason right if you lose the job or like whatever it is you know you can get to that money um but yeah but that's great john how old are you i'm 25 okay way to go and what do you do for a living uh i'm a lease manager i work for an oil and gas company out here okay okay that's great i know it's always encouraging talk to people in people when they're young and in their 20s and you're making, yeah, I mean, incredible money doing it and handling it really well.
So that's incredible, John. Good luck to you.
I think that that's, yeah, that's amazing. Way to go.
I liked what you said about the automating, because I think that's very, very important. Yes, for sure.
All right right let's see we got uh oh this is a fun instagram handle okay ready for this yeah jacuzzi 101 okay you like a good time at what point should my adults children's finances be none of my business oh i'm gonna go with at the point they're adults so probably now since they're adult children yeah um I mean let's think about this if they're in your home like if you have adult children that live in your home I would say that it's some of your business because they're still in your living space right but if they don't live with you if they are out on their own and in their life or in their marriage i'd say that it's none of your business unless they ask for your help that's right yeah this is always a a tricky one because you hear uh parents still wanting to be involved in their kids decision making and probably some of it out of a good heart right seeing kids maybe making mistakes or making decisions that you wouldn't make and you want to still be the parent in that way and intervene um but i feel like the the more life i've lived jade the more successful relationships i see with parents and adult children happen when they start to become more peers yeah right when you step into adulthood and your parents actually see you as a fellow adult and they're still not trying to parent you or lecture you and they see you as a peer, usually from the people that I've seen in my life that have great relationships with their parents, it's because of that. There's kind of this mutual respect and the ones where there's usually tension when it's like, oh God, my dad's still telling me how to load the truck or my dad you know what i mean or my mom is still critiquing this or that or like you know whatever it is uh that's usually relationally when there's some some tension so i'd say none of your business yeah but it goes both ways because a lot of times kids try to get into the parents that's so true yes that's so true i don't like the way my mom and dad handle their money.
You know what I mean? People call in with that all the time.

And if they don't ask, not much you can do to change other people.

You really can't.

Really can't.

Well, thanks to all the guys in the booth for making this a great hour.

Jade, thank you as always.

Always.

Being a great co-host.

Thanks to everyone out in the lobby at Ramsey Solutions.

And thank you, America.

We'll see you on the Ramsey Network app, podcast, and YouTube. Make sure you guys download the app.
John Deloney from the Dr. John Deloney Show with some amazing news.
The latest episode of United States of Anxiety is available right now exclusively on the Ramsey Network app. This docuseries follows real people from my show as they embark on a 90-day journey to transform their lives, and I personally walk alongside them every step of the way.
Okay, now, here's a sneak peek of what the new episode is all about. And don't forget to click the link in the show notes to download the app.
What's up, Kelsey? So I've lived with crippling anxiety for as long as I can remember. How do I stop it from constantly coming up in different areas of my life? What does crippling anxiety mean? Paint me a picture of that.
All right, so you ready to jump in? I'm ready to jump in. We're going to check in with Kelsey.
30 days, 60 days, 90 days. I cannot even function because I'm just crying.
My mom left us when I was four. I truly felt like for a while I had no family.
She's experiencing things that really hurt a long time ago. Tell me about this boy.
He triggers me a lot. Scared of losing Paul.
Sca of doing the wrong thing, scared of not being enough. It just feels like it would be exhausting to be Kelsey.
It is. Whenever somebody's playing whack-a-mole with their anxiety, when it just keeps moving, that tells me the underlying system's not okay.
How do I get my inner child out of this relationship? Because I feel like she's running the show. One of two people that's supposed to never leave took off.

I was his burden.

Your burden, that's right.

To the one person who should carry it, all of it.

Did you ever tell that little girl that it wasn't her fault?

I don't know what to do.

Do you either have to choose to let this guy love you or you got to choose to let this guy love you, or you got to choose to let this guy go.