To Change Your Results You Have To Change Your Behavior

Speaker 1 Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work they love, and create amazing relationships.

Speaker 1 I'm here, Jade Warshaw, with my co-host today, Rachel Cruz, best-selling author, number one, baby.

Speaker 2 All the time. Sometimes, Jade.
sometimes.

Speaker 1 Listen, take those props.

Speaker 1 Well, we're going to be taking your calls about life and money, and it's the holiday season.

Speaker 1 So, I'd love to hear calls about people deciding what they're going to do for the holidays with their money. That's always fun.
All right, Rachel, you ready to get into it?

Speaker 2 Yeah, let's jump in.

Speaker 1 All right, let's do it. We got Sam from Green Bay.
What's going on, Sam?

Speaker 3 Hi, thank you for taking my call.

Speaker 2 Hey, what's up? How can we help?

Speaker 3 So, my sister and I, we tend to have this debate every Christmas, And so she's using Ramsey as her stance. And I just, I wanted to see if this truly is a Ramsey principle.

Speaker 2 So

Speaker 3 my sister and I go in on Christmas gifts often. And in my mind, if I'm going in on a gift with my sister, that's two people, we split it 50-50.

Speaker 2 Okay.

Speaker 3 But when she's saying that it's from her, her husband, and me,

Speaker 3 in my mind, 50-50 doesn't fully apply because there's three people now.

Speaker 1 You think it should be thirds?

Speaker 3 I think it should be at least recognized that it's not 50-50. So thirds would make sense.
But can I tell you how she frames it?

Speaker 2 Yes. Does she blame us?

Speaker 2 Yes, she does. And I am not sure.

Speaker 3 She says, well, according to Dave Ramsey, we are one household with one joint finance situation

Speaker 3 that we count as one share. And I'm a single person, so to me, that's just rude.

Speaker 1 Well, here's the thing. Okay, it is definitely getting in the lines of like legalistic, I think.

Speaker 1 She's right. If you're married, we think of you as one, like one income, one band, one sound, like that whole thing.

Speaker 1 But I also see your point of view, which is like, hey, let's say we all make $50,000 a year. That's $100,000 from her household and only $50,000 from mine, right?

Speaker 1 Is that what I'm understanding?

Speaker 1 So tell me what you want out of this. Do you want her to just recognize, hey, thanks for going half-esies on me.
I understand that it's two against one here.

Speaker 1 Is it just you want her to validate that, or do you really want her to pony up more cash?

Speaker 2 Good question.

Speaker 3 That is a solid question. I think

Speaker 3 I would like, okay, if it's for my parents, and then, you know, that's more my sister and I, I would be happy with a 60-40 split, just for recognition.

Speaker 2 Okay, 60-40, okay.

Speaker 3 But otherwise, if it's depending on what, who it's for, I think thirds is appropriate.

Speaker 1 Okay,

Speaker 1 can I throw on a sidebar here? This is just where Jade's brain is going.

Speaker 2 All right.

Speaker 1 I think I might. This is, this may not be good.
Okay.

Speaker 1 So if I'm in your, let's, I'm going to be the in-law. Okay.
So I'm your sister's husband. In my house, if my husband was like, hey, me and my sisters are going in on a gift for my mom,

Speaker 1 I would,

Speaker 1 it's like I'm part of it, but I'm not really part of it because it's like they're, they're the, the main family. They've decided what it is.

Speaker 1 I'm kind of just on the side being like, okay, cool, that's fine. I don't even really know what's happening.

Speaker 2 Um, so it does feel weird going thirds.

Speaker 1 It does feel weird going thirds. Now, I don't know the dynamic of your family if it's like, no, like he calls my mom mom and we're all together.
Like, I do think that plays a part.

Speaker 1 What do you think, Rachel?

Speaker 2 Yeah, I mean, I think there's a level of courtesy, right that i'm like okay if it was like you know winston i going in and if one of my siblings was single um a dual income i mean i think there's like a reality of like oh yeah we probably make more from a dual income yes yes single so it just has a nod of like oh yeah but i would do it more sam over dollar amounts specifically of like hey i have a hundred dollars to chip in for mom and dad's gift and that's what i have i love that let's build a gift around that or i'll just get my own right um

Speaker 2 and just do your own thing.

Speaker 1 I really like that.

Speaker 3 I think we did it backwards where we had the gift and

Speaker 3 ended the split.

Speaker 2 So that does make sense to me. Yep.
Yep.

Speaker 1 Yeah. Listen, I want to validate all day the fact that you're feeling like, man, I feel like I'm chipping in more.

Speaker 1 But I like Rachel's idea of just saying, here's my set budget. This is what I can spend.
And if that doesn't work, maybe we choose something else or I just do my own thing.

Speaker 1 Yes?

Speaker 3 Yes, I think so, because I don't know if we're ever going to see each other's perspective fully. So I do think that's probably the best case scenario.

Speaker 2 Yeah. And I do think, Sam, I would challenge a little bit on the end for you

Speaker 2 that what we find on the show so often is that money problems are usually not money problems. There's probably deep, you know, level of maybe kind of hurt and loneliness.

Speaker 2 And I don't know what it is for you, but something there of like, God, I'm flying solo here. Someone like, throw me a rope, at least like, like, at least acknowledge this idea, right?

Speaker 2 And you do kind of feel pushed to the back burner. And then money's put into the play in the relationship.
And then it just feels weird because there's dollar amounts. I don't know.
It gets so sticky.

Speaker 2 It shouldn't and it doesn't feel like it could. It kind of feels like a, oh, not a big problem, but I think it's a bigger problem to you because of other deeper issues.

Speaker 1 I think so too. Not issues, I wouldn't say.

Speaker 2 I would say just emotions. Feelings.
Yeah. Yeah.

Speaker 1 Because the truth is, most of the time, a dual household is going to have more money. Yeah.
And that's a real part of it. And I stand by it.

Speaker 1 If it's one of those families where it's like, you know, everybody's so tight and the in-law played just as much of a part, then I could see a little bit more while she was like, well, can you guys contribute more?

Speaker 1 Cause it's from both of you. But like in my household, I'd be like, what are you getting them? Okay.
Yeah, one unit.

Speaker 2 Yes, exactly. Yeah, yeah.
One unit going in. Totally.

Speaker 1 Oh, but we've had some like discussion over this, and I know we're going to talk more about it tomorrow, but just the idea of setting boundaries around Christmas in general because the expectations are high.

Speaker 1 And a lot of times it's not even that you've intentionally done it to yourself. It's just Christmas happens every year.

Speaker 1 And if the past three years you got someone a gift and then this year you don't, it's easy for somebody to think, well, what's wrong? Did something happen? I have to explain myself. It's hard.

Speaker 2 It's kind of hard to backpedal, but I tradition kind of sets precedent almost.

Speaker 2 We changed it up. So the Ramsey side, we usually each individually like get mom and dad a gift, right?

Speaker 2 So like I'll get, you know, from Winston and I'm like mom a gift and dad a gift and same with the siblings. And then us adults, kids, will draw a name.
Yes. And this year, um,

Speaker 2 we got, we threw mom and dad in the, in the pots. So we're, they're one of the

Speaker 2 adults. So, yeah.
So, like, if you didn't pick mom or dad, you're not buying them a gift. And I'll be honest.

Speaker 2 It's kind of,

Speaker 2 no, it's kind of nice to limit the amount of gifts you have to buy. I mean, obviously, if there's something that's so great and you like want to do it, right, we're not like hard and fast on it.

Speaker 2 But it is kind of nice to be like, you know what? All the adults are playing equally this year and like we're all in. But then that means in turn, they're not, they used to buy us gifts.

Speaker 2 Now they don't have to. Now they don't have to.
So now I'm like, Dad Gummin, I'm like an actual adult now. Hey, welcome to the club.

Speaker 2 Winston's parents still buy us gifts.

Speaker 2 Yeah. So we'll, we'll get some from them.
But I say, welcome to the club. We're adult.
I know. Yeah.

Speaker 1 My family's, my, my sister actually introduced that to us. It's probably almost been.
seven years or so. And I love it.
It's an adult, like my parents were included in the mix. Yeah.

Speaker 1 And I'll be honest, a lot of times I do cheat. And even if I don't get my parents, I'll still get them some.
I just, I can't, but I'm also not in debt anymore. So like, let's throw that out there.

Speaker 2 Margin and you know, it's like,

Speaker 1 yeah, it's the whole argument on being thoughtful around giving gifts, considering your debt, considering your financial state has nothing to do with whether or not we want you to be generous or not.

Speaker 1 That's right. But it's understanding in what ways can you be generous?

Speaker 1 Because the truth is you can be generous and you can be giving and grateful and thankful in a lot of ways that don't require money and don't require you overspending and making a bad situation worse.

Speaker 2 Amen.

Speaker 1 You know what I'm saying? Oh, yeah. Tis the season to be jolly and smart with your money.
This is the Ramsey Show.

Speaker 1 All right, you're listening to the Ramsey Show. If you want to give us a call, it's a live show, so you can do that.
The number is 888-825-5225. We'll get you on the line.
Again, I'm Jade Warshaw.

Speaker 1 Next to me is Rachel Cruz. We're the ones that'll be taking your calls this hour.
So let's go straight to the phone lines where we've got Samantha in Phoenix, Arizona. What's going on, Samantha?

Speaker 3 Hi, thank you guys for taking my call. You bet.

Speaker 3 I am new to the baby step,

Speaker 3 and I was technically on baby step two, but I left an abusive relationship. And I'm going through a custody battle right now, so I've incurred additional debt for attorney fees.

Speaker 3 So I'm trying to figure out my next steps going forward.

Speaker 3 Should I pause making additional payments towards my debt and just work on saving money for additional attorney fees that might come up?

Speaker 2 Yeah.

Speaker 2 I would.

Speaker 1 This is definitely a storm.

Speaker 2 I mean, for sure.

Speaker 1 I would categorize this as a storm. And we do say that when you're in baby step two, especially,

Speaker 1 there's a couple of things that would cause you to kind of pause.

Speaker 1 And that would be a baby on the way or some sort of storm or major emergency that is causing you to kind of have to just hold tight for a minute.

Speaker 2 Yeah, that becomes more of a priority at that point than paying off debt, right? We're all about paying off debt, but your child is a priority there, right?

Speaker 2 If there's a health issue that you have to pause to make sure that you can get yourself in a healthy place, that is, you know, yeah, pregnancy, like anything that is

Speaker 2 takes precedent, right? Which is usually a relational situation or a health situation, we for sure say pause and get that in order. I'm so sorry, Samantha.

Speaker 2 I'm always so impressed with women like you that choose to step out of a situation like that because that cycle can be

Speaker 2 so hard to break out of. How long has this been going on, just from the custody standpoint, fighting it with lawyers?

Speaker 3 So going on two years, the first part was when he tried to fight the restraining order. So that was the first time I took on attorney fees.
And then now

Speaker 3 he was in jail for a bit for violating the restraining order, but now he's out. So now he's trying to come for full custody.

Speaker 2 Oh, my gosh. How many kids do you have?

Speaker 3 Luckily, I only have one.

Speaker 2 Okay.

Speaker 2 And my daughter, but it's still a lot.

Speaker 1 How is your financial situation? How is your home situation?

Speaker 3 So I currently rent and I am safe. Luckily, I'm with family and I make about $52,000 a year.

Speaker 3 But my debt went from I got it down to $12,000 and now it's back up at $20,000.

Speaker 1 And what are you, is that just the outstanding, is that just the $20,000 is the attorney fees?

Speaker 3 No, so about $10,000 of it was attorney fees,

Speaker 3 $6,000 was about credit card, $3,000 about student loans, and then I have about $2,000 left on my car loan.

Speaker 2 Okay.

Speaker 2 Do you have any savings right now that you're pulling from, or are you just

Speaker 2 pretty much occurring the debt as the attorney fees come up?

Speaker 3 So I was able to pull from like 401k to kind of help with this because it was so, I wasn't expecting it. You know, I thought after the restraining order was standing that that was going to be it.

Speaker 3 So I wasn't expecting this. So I was able to get a little bit of help through that.
But of course, I

Speaker 3 want to pay all of this back as quickly as possible. But my biggest fear is I don't know what's going to happen three to six months from now to the, you know, next year as well.

Speaker 2 Right. Okay.
So so are you still in the middle of this then

Speaker 2 I am yeah okay and has y'all has your lawyer given you any time frame by any chance like do you know I mean you're saying three to six months do you know um

Speaker 2 like does he have any conclusion of like when this will end

Speaker 3 no no because we're still waiting on mediation and then more than likely that nothing's going to happen in there because my ex is of course he's not going to agree to anything

Speaker 1 Does your ex have a lot of money? Is that why he's trying to is he trying to drain you out on this?

Speaker 3 Yeah, they think so because yes, he comes from money. So he knows that I would do anything to protect our daughter.

Speaker 3 So he knows that I'm willing to,

Speaker 3 you know, force, you know, figure out ways to get the money because he knows I'm not going to represent myself. I'm not in a position to do that, you know, emotionally.
And

Speaker 3 so

Speaker 1 what is there anybody around you that has the ability to help with this that wants to?

Speaker 1 Because the truth is, this is costing you money and it's costing you money that you don't have.

Speaker 1 And I do believe, like, I'm, I believe that the custody is going to end up with you because from what you're telling me, there's clearly track record that this is an abusive person, especially the fact that he's ended in jail for trying to violate this.

Speaker 1 So I have a feeling that this will end with you, but how long can you go down this track? Do you see what I'm saying?

Speaker 3 Yeah.

Speaker 2 Yeah. So Samantha, so I, yeah, if I were you,

Speaker 2 if I was in your position right now, I would stay current on everything.

Speaker 2 I would not get behind. So I would say, I would be paying your minimum payments on everything.
And then on the side, finding that margin.

Speaker 2 month to month to be able to put some money aside. So as these fees come up, you do have an account that you're going to be able to pull from.

Speaker 2 And then I would also start to evaluate as much as you can the

Speaker 2 consistency of how often the bills are coming, how often you guys are, you're using the lawyer, if there is mediation and all of it.

Speaker 2 Because I think a goal would be small goals, would to say, okay, there's some money set aside for attorney fees. And the truth is, I may have to go into debt for that.

Speaker 2 But if I can at least maybe knock out that $2,000 car loan in the midst of this, right? Because it's not something that's going to be solved. It sounds like even maybe even in the next 12 months.

Speaker 2 So I don't want you sitting idle financially during that time, but I do want you to put some cushion between you and life.

Speaker 2 So putting some money away kind of for an emergency fund that you can pull some of that for attorney's fees as they come up, but then also giving yourself a goal financially to start making some progress.

Speaker 2 Because honestly, too, Samantha, I think making progress in this area of your life,

Speaker 2 it actually might give you, you know, that boost of confidence and there's something proactive that you're doing in your life that actually can start the wheels engaging in a, in a, in a positive way through the circumstance.

Speaker 1 Absolutely. I mean, you, there's only $2,000 left on the car.
What's the payment on that? What will you get back in your pocket monthly when you pay that off?

Speaker 3 So I pay about $2.96 a month for the car.

Speaker 2 Good.

Speaker 1 So another $300, that's great. To Rachel's point, that's even more money that you'll be able to set aside.

Speaker 1 So yeah, like no disguising the fact that this is tough and, you know, you've got your work cut out for you in a lot of ways.

Speaker 1 But I think just being really intentional, still sticking to, still creating a plan and sticking to that plan, whatever you decide that plan is, is going to be really paramount for you walking through this.

Speaker 1 That's so, so, so, so tough.

Speaker 2 I know. I'm so sorry, Samantha.
Ugh, tough to walk through. All right.

Speaker 1 Do you want to try to take another call right quick?

Speaker 2 Let's try it.

Speaker 1 Caleb in Norfolk, Virginia. What's going on, Caleb?

Speaker 3 Hey, thank you for taking my call.

Speaker 2 Merry Christmas.

Speaker 1 Merry Christmas. How can we help?

Speaker 3 So my question is regarding life insurance. I'm currently in the military, but I'm getting out in about three months.

Speaker 3 I have life insurance through the military. It's called Service Members Group Life Insurance.
I pay about $31 a month for a $500,000 policy.

Speaker 3 My question is, whenever I get out, I have the option for a limited time really to roll that over into what's called Veterans Group Life Insurance, which is about $35 a month.

Speaker 3 And that will increase about every five years.

Speaker 3 I'm 26 now. I have no debt, but really, I'm just unsure because I don't have a wife or children yet.
I don't really have anybody relying on my wage, but me. So

Speaker 3 I'm just kind of looking for some guidance here.

Speaker 2 Yeah, I mean, Kim, I don't think you really have to re-up this or roll it over. I mean, I wouldn't.
The reason really you have life insurance is if someone is dependent upon your income.

Speaker 2 So that would be a spouse or children.

Speaker 2 And as a single person, I mean, I would have some money, you know, set aside that if something were to happen to you, like covers funeral costs and that kind of thing.

Speaker 2 But I don't think you need a life insurance policy for that. So I probably would just end up canceling it once you get out.

Speaker 1 I agree. I agree with that statement.
And if you don't have to pay it now, I wouldn't pay it now. Forget the rollover.
I would get out of it now if I could because you really don't need it.

Speaker 2 All right.

Speaker 1 That does it for that. Yeah, I think people forget all the time, Rachel, that there's a purpose to life insurance.
It's not necessarily to

Speaker 1 make you rich or all of these other things. It's for anybody who's dependent on your income.
If something happens to you, how do they make life work?

Speaker 2 That's what it's like for you.

Speaker 1 Children, spouses.

Speaker 2 And term life is so inexpensive. It sounds like some of those rates, you know, it's just not expensive at all.
And so, yeah, if someone's dependent upon your income, make sure you get life insurance.

Speaker 2 You can go to xanderinsurance.com and check it out there because that's a great place to get your term life.

Speaker 1 You're listening to the Ramsey Show. Hey, thanks for hanging out with us.
We're so happy that you listened to this show and you've made it part of the parts of your day that matter. I'm Jade Warshaw.

Speaker 1 Next to me is Rachel Cruz. And I don't know if you realize this, but Christmas is almost here.
It was, it happened so fast. I don't even know what happened.

Speaker 2 Always, every year. Yeah.
Flies by.

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Speaker 1 All right. Let's see what Al is talking about.
He's in Atlanta, Georgia. What's going on, Al?

Speaker 3 Hey, how are you guys doing? Thank you for taking my call.

Speaker 2 We're good.

Speaker 3 So me and my wife, we're kind of looking for a plan and we're kind of going back and forth on whether we should sell our house or not.

Speaker 2 Okay.

Speaker 1 Tell me more.

Speaker 3 So

Speaker 3 the house payment is like $240,

Speaker 3 $240K.

Speaker 3 She has a credit card balance of $232

Speaker 3 and a car payment with $18K.

Speaker 2 Okay.

Speaker 3 And then the debts I have is

Speaker 3 I have a car loan,

Speaker 3 which is $8K,

Speaker 3 and then credit cards,

Speaker 3 about $20K in credit card debt.

Speaker 2 Okay.

Speaker 1 And just to clarify,

Speaker 1 her credit cards, it's only $232, or that's the monthly payment?

Speaker 3 It's only $232.

Speaker 2 Okay.

Speaker 1 And then just to clarify the mortgage, the entire mortgage is $240,000. That's what you owe?

Speaker 1 Yes, ma'am. And what's the monthly payment?

Speaker 3 two thousand dollars but with utilities it comes out to about twenty five hundred okay and what's you guys's take-home pay

Speaker 3 uh we make about 70k or a year 70k and when you take your checks home what is it every month

Speaker 3 uh

Speaker 3 like

Speaker 3 i would say like roughly like two thousand twenty five hundred a month

Speaker 1 okay what's is that a piece or what's missing here wait per paycheck?

Speaker 2 Maybe like that happened. Yeah.

Speaker 1 Okay, per paycheck. So you get paid twice a month.
Is that what you were saying?

Speaker 2 Yes, ma'am.

Speaker 1 Okay, so $5,000 a month.

Speaker 2 Okay.

Speaker 1 So now that we have this extra.

Speaker 2 Sorry, real quick, Al, that's combined, your income and hers, because you split up your debt. Is that both of your incomes coming in?

Speaker 2 Yes, combined. Combined.

Speaker 3 I make about $2K a month, and she makes about $2K a month.

Speaker 2 Got it.

Speaker 1 Okay. So $4,000.

Speaker 2 What do you guys do?

Speaker 3 We work at this little small warehouse

Speaker 3 just operating a machine.

Speaker 1 Okay. Okay.
And you both work at the same place. So both of you are about 35,000 a year.

Speaker 3 Correct.

Speaker 2 Got it. Okay.

Speaker 1 So there are some glaringly obvious things going on here.

Speaker 1 The big one is your incomes are both on the low side. And because of that, this mortgage is half of your income.

Speaker 2 every month. Right.

Speaker 1 And so just to put that in perspective a little bit here, we'd say that we don't really want your mortgage payment to be any more than 25%.

Speaker 1 Sometimes it's a little bit more than that. And people can, you know, make it work at 28 or even up to 30 if they know that they have this track of their income going up.

Speaker 1 But in this case, at being half, there's no real place for you to go. You're extremely house poor and I know that you feel it.

Speaker 1 And so to your point, that that might be the idea is to sell this house. But I want to know, is there a way that you see your income going up? Do you guys have plans? Tell me more about about that.

Speaker 3 Yes, we are picking up overtime. We also have a side business where we detail cars

Speaker 3 and plan on Uber and stuff like that.

Speaker 2 Okay, how much are you guys making on all of that? Extra?

Speaker 3 It varies. So

Speaker 3 it varies.

Speaker 2 Okay, a couple hundred, a thousand?

Speaker 3 Yeah, I would say a couple hundred. Okay, okay.

Speaker 1 So what it sounds like just from, and I'm not saying this to throw shade, it's just the fact.

Speaker 1 Based on the way you're answering these questions, it doesn't sound like you're using a budget because one thing I know is when there's no budget, you're searching for the numbers, right?

Speaker 1 Right. Okay.
So that's the first step here.

Speaker 1 Whenever we talk about the baby steps or the plan for your money, the very first thing is that foundational piece of the budget. You've got to have that.

Speaker 1 And all that is, Al, is you saying, okay, here's our income. And you and your wife sit down together and do this.
Here's our income.

Speaker 1 And we're going to list everything that we could possibly spend money on for the month. And that's the things that are necessities, like rent and utilities and groceries.

Speaker 1 And that's also the other things that you're spending money on, whether it be, I don't know, maybe your wife gets her nails done or something like that, right?

Speaker 1 You're listing it all out and then you're seeing what's left. And so in your case, there's probably none left and you're probably in the red, which is.

Speaker 2 Why the credit card debts there as well. Yeah.
Al, is the 18,000? Was that a car you said her car?

Speaker 3 Yes, that's how much she has.

Speaker 2 Okay. How much,

Speaker 2 have you guys Kelly Blue Booked did it all?

Speaker 3 No, we haven't.

Speaker 2 Okay.

Speaker 2 Because, yeah, I mean, all of this is a little bit disarray. I mean, you're kind of have, you guys have dabbled into like every part from a, from a debt standpoint.

Speaker 2 And I want to give you like a really clear

Speaker 2 path and plan in this call with you in the next few minutes because I think it feels maybe a little jumbled. It is.
So here's what I would do, Al.

Speaker 2 If I were to wake up in your shoes tomorrow, this is always a fun game. It is.

Speaker 2 And much easier said, Al on this side of the desk because I'm talking to you than implementing it because this is going to be really hard. Like, and here's the truth.

Speaker 2 If you want something different with your money, something has to change. And you guys need to make a complete 180 and do things completely differently than how you've been doing it.

Speaker 2 I would put the house up for sale because I think this eating half your income is not going to work long term and it's going to continue to leave you guys in the red.

Speaker 2 I would Kelly blue book her car and and I would get it sold ASAP private sale. I wouldn't take it to a dealership, private sale.

Speaker 2 Even if you, if you're underwater, a few thousand, then take out a loan for the difference and get a $3,000, $4,000 car in the meantime and let that be the car.

Speaker 2 And then I would start working and I'd pay off this $232 like this month. I would, you know, I would work to pay that off.
And then you guys would have the $8K left in credit card debt.

Speaker 2 I think is what it, or no, your car, $8,000 in your car.

Speaker 2 $20,000. And if your car is nicer, Al, give her your car and you drive the $3,000 car

Speaker 2 and so and then those are your only two debt left really is your car and the 20k in credit card debt and again this is going to take you know I've just laid out two to three years of you guys really buckling down and saying we're going to work tons of overtime we're going to get this cleaned up but Al, you guys could be in a completely different situation, but you have to make completely different choices than what you guys have been making.

Speaker 2 And Jade mentioned the budget and the budget's going to be a great thing because it's going to keep you accountable And you're actually going to see, holy crap, here's what we spent going out to eat.

Speaker 2 Holy crap, this is what this is costing and this and this. And you actually start eliminating some of this stuff, find extra margin to throw out this debt.

Speaker 2 And you really could start making some headway. So Al, if you'll stay on the line, Kelly's going to pick up and we're going to give you guys every dollar premium, which is our budgeting app.

Speaker 2 And I want you and your wife to sit down together tonight and you guys start filling this out together.

Speaker 2 And then we're going to throw in Financial Peace University, which is our course and the Total Money Makeover book

Speaker 2 and the audio book. Yeah, we'll get you guys some stuff to really start seeing, hey, here is a step-by-step plan that we have to start taking in order to breathe.
Yes.

Speaker 1 And go to ramseysolutions.com slash real estate to find an agent to sell that house.

Speaker 1 You're listening to the Ramsey Show. We help people with your life, your money, your relationships.
If that's you, you want to get in on the action, you can call us up. It's a live show.

Speaker 1 The number is 888-825-5225, and we'll get you on the line. Today's question, today's Ramsey Show question of the day is sponsored by YReFi.

Speaker 1 When you're trapped in a maze of defaulted private student loan debt, it's hard to find your way out.

Speaker 1 But YReFi can offer you a lifeline with custom refinancing based on your ability to pay and a lump sum payoff option that you could qualify after 20 qualify for after 24 months.

Speaker 1 So go to yrefi.com slash ramsey. That's the letter y refy.com slash ramsey.
Remember, it may not be available in all states.

Speaker 2 Today's question comes from Lauren in New Mexico. I currently own three rental properties and have 30-year mortgages on two of them.
You say to have 15-year mortgages because you pay it off faster.

Speaker 2 If I am putting my profits from my rental toward my principal on a 30-year mortgage and can pay it off in 15 years, is there a a need to switch it to a 15-year mortgage?

Speaker 2 What's the reasoning behind the 15-year mortgage? I make more profits with a lower monthly payment, which puts more money towards the principal.

Speaker 2 Well, Lauren, for starters, we would say not to even have rental property if you're not able to pay cash for it.

Speaker 2 Technically speaking, I mean, if you could pay it off quickly, I would probably just sell one and throw some of the equity at the other and make that a goal to sell it. But having, yeah, three rentals

Speaker 2 that have mortgages on them, yeah, not the, not the best idea, not really the Ramsey way to do it.

Speaker 2 But for your primary home, we do say a 15, even though people, you know, this is one of those that I feel like is, is a slippery slope because, you know, a lot of people still do the 30 and whatever it is.

Speaker 2 But of course, but the thing to remember is that your intentions don't always line up with reality. So if you have the intention of paying a 30 like a 15,

Speaker 2 you know, stuff happens and you're like, oh yeah, well, we won't pay extra this month. We'll make sure to catch up next month.

Speaker 2 And then something else happens and you end up usually not paying it truly like a 30. You don't.

Speaker 2 Now, when you're paying off your house in the baby steps, we do find that people are paying their houses off in like nine to 11 years,

Speaker 2 which is amazing.

Speaker 2 So I think that 15-year fixed rate mortgage that we talk about, it just locks you in to a plan to get you out of debt faster with the guarantee that you will get it paid off in 15 years.

Speaker 1 It makes you accountable.

Speaker 1 And let's be, let's call a spade a spade. The truth is, if you go with a 30-year, you're not paying as much.
So you get more house. Yes.

Speaker 1 And I think truthfully, when people want that, they want more house and not when you're locked into 15, though, it's like, okay, maybe suddenly I can't afford what I thought I could get. Yes.

Speaker 2 So look at the return.

Speaker 2 Yeah. And that's the thing.

Speaker 2 That's what's always interesting with houses is that you're going to qualify for a lot more house and what they will give you than what you necessarily need or even what's good for you financially.

Speaker 2 So we always talk about having at least 5% to put down for a down payment, your payment being no more than 25% of your take-home pay on a 15-year fixed rate, which I always say, we understand that is a very conservative.

Speaker 2 formula when it comes to the housing situation.

Speaker 2 But just like our last caller, you guys, like you see people like get into housing situations and it takes half their income or maybe one spouse chooses to stay home, but you can't because you've built your life around

Speaker 2 having a dual income. And it just starts to limit your choices.
The deeper you go into debt, the longer you're in debt.

Speaker 2 It just limits your life choices on what you can and can't do because it's telling you basically what to do. So that's it, Lauren.
All right. Hope that helps.
Really good advice.

Speaker 1 Let's talk to Greg. He's in Biloxi, Mississippi.
What's going on, Greg?

Speaker 3 Hey, Jaden Rachel. It's so good to be talking to y'all.
I'm fangirling a little bit right now.

Speaker 2 Glad you're here.

Speaker 3 So I have been listening for a little over a year, but the month before I started listening, I co-signed on a truck for my now

Speaker 3 for my now ex-fiancé.

Speaker 2 Oh, Greg, I'm sorry.

Speaker 3 Yeah, rough situation.

Speaker 3 So

Speaker 3 we had agreed once things ended that,

Speaker 3 hey,

Speaker 3 you know, we can keep the loan as it is for a year because we needed to wait for the

Speaker 3 maturity date.

Speaker 2 Okay.

Speaker 3 And so it's coming up on that. And just in talking to her on occasion, she most likely is not in a position to refinance it on her own.

Speaker 3 And she has said that her parents or anyone else won't help her.

Speaker 2 Good for them.

Speaker 3 So I

Speaker 2 yeah, yeah,

Speaker 3 just from my

Speaker 3 perspective,

Speaker 3 I'm not quite sure how I can get myself out of this.

Speaker 1 Have you tried persuading her to sell it and start over fresh on her own?

Speaker 3 I have.

Speaker 3 She is not completely opposed to the idea, but I don't think I can really rely on her actually following that through.

Speaker 1 Can I ask a question? And

Speaker 1 I promise it does kind of relate to this. Who broke up with who?

Speaker 2 No, you're good.

Speaker 3 I ended things with with her.

Speaker 2 Okay.

Speaker 2 It makes it a little stickier.

Speaker 1 It makes it stickier because this, this is a tie to you.

Speaker 1 This is a way for you to still be in her life.

Speaker 2 And I didn't pull over, Greg?

Speaker 3 No, there's an alarm going off.

Speaker 2 Oh, okay. I was like, oh, no, are you trying? Are you pulled over?

Speaker 1 But my point is, like, this is a tie to you. And

Speaker 1 if things were different, I'd say you could make the argument of like, hey, you broke things off and I want a clean break and I need to, you know, be free from this.

Speaker 1 Like you could make that argument, but in this case, it does make it a little tough.

Speaker 1 How much is the loan for?

Speaker 3 There's about 27 left on it.

Speaker 2 Okay. Man, how much is it worth? Do you know?

Speaker 3 I actually did look up the Kelly Blue book a couple weeks ago, and it said that private party sale was

Speaker 3 tops like 23.

Speaker 1 Oh, gosh. And it's upside down.
Yeah.

Speaker 2 Okay.

Speaker 1 Yeah. This, I think this is only going to get worse.

Speaker 1 So I would really encourage her to sell it. And I'd be strong on that.
I'd say, listen, there's a reason that you can't refinance.

Speaker 1 I mean, the math is like the logical reason is there's a reason you can't refinance this. And the reason is the bank has looked at your financial situation and said it's not stable.

Speaker 1 You cannot afford this on your own, which means they expect you to default, which means I'm here for when you default. That's what that means.

Speaker 1 And I don't know the hard part is I don't know if your relationship is there for you to even talk to her like that anymore, but that's the truth of the matter.

Speaker 2 I know because I mean, if you can't, you can't make her do anything. And so you really are kind of at the mercy of her.
I'm like, you can't go in and, you know,

Speaker 2 take your name off the loan in secret. Right.
I mean, like, yeah. So it is.
So yeah, you're in a, yeah, you're in a tough position, Greg.

Speaker 2 And it's kind of one of those, I'm sorry that you're going to have to be one of those sad examples that we'll probably use this week to say when someone calls, I should come, you know, my girlfriend wants me to co-side and we're going to say, talk to Greg in Biloxi.

Speaker 2 Greg would tell you, don't do this because this is what happens.

Speaker 3 My family agrees that this is the dumbest decision I've ever made.

Speaker 2 Oh, Greg.

Speaker 2 Oh, man. Well, I mean, unless you can just convince her because you're a great salesman, but coming from an ex-fiancé, she's probably not going to want to listen.
to her to your advice.

Speaker 2 No, broke her heart. Sorry, Greg.
And now you're, you're, I mean, yeah, there's nothing you can do. So I think it's one of those stupid techs.

Speaker 2 you know and i'm praying she doesn't default me too and she just pays this and and gets out of it but you but that's what she has been very consistent on the payment okay

Speaker 1 what is the payment

Speaker 1 uh oh gosh it's almost seven oh gosh i mean listen the most practical thing you can do to be ready for this storm is if she defaults is if she defaults and to be ready if you kind of have some money packed away on the side because if she doesn't pay it it reflects on you and when it's time for you to buy a house or when it's time for you to do some of the things that you want to do, if you still have a credit score laying around, which you will because of this, it will make it bad.

Speaker 1 And as we've talked about on the show, having a bad credit score is very difficult.

Speaker 1 We talk about having a zero credit score, which is wonderful, but this will keep you from having that, even if you pay off all of your other debts.

Speaker 1 So if I were in your shoes, which this is the game we like to play, I would be,

Speaker 1 which by the way, we don't know much about your financial situation. Do you have debt?

Speaker 3 I, The truck technically. And then

Speaker 3 I have about 22,000 in student loans I'm working on.

Speaker 2 I've already gotten rid of the credit card debt. Well,

Speaker 1 I'd go gung-ho on your debt. I'd work the baby steps on that.
And then when I was through, I would be mindful of keeping some money stacked up.

Speaker 2 Yeah, for your emergency fund, knowing this is something you may have to do. Exactly.
And I would tell her too, Greg, you don't want to emotionally be attached anymore, right?

Speaker 2 And this keeps you guys somewhat together in a weird state for the future. So I'm sorry.

Speaker 1 I hate that that's happening to you. all right that does it for this hour of the show stick around we'll be right back with you before you know it

Speaker 1 From the Ramsey Network app, it's the Ramsey Show. We're here to take calls about your life, your money, and your relationships.
I'm Jay Borshaw.

Speaker 1 Next to me is number one best-selling author, Rachel Cruz. She's my good buddy, too.
I like hosting with her, but we're going to be the ones taking your calls this hour.

Speaker 1 If you want to get involved, you can do that. The number is eight-825-5225.
We'll get you into the mix. Merry Christmas, everybody.
Let's go to Kate. She's in Charlotte, North Carolina.

Speaker 1 I'm sorry, let's go to Morgan. She's in Philadelphia, Pennsylvania.
What's going on, Morgan?

Speaker 1 Hello, how are you?

Speaker 2 I'm good. How are you?

Speaker 3 That is my preserve.

Speaker 4 Sorry for the dogs.

Speaker 2 That's all right.

Speaker 2 Definitely help.

Speaker 2 So,

Speaker 3 my husband's employer hasn't been paying him

Speaker 3 it affects about 15 to 20 managers these are all salary people

Speaker 3 they're saying it's a problem with their payroll vendor and so and I'm not sure how that all works so just a handful of employees at his location are not being paid He hasn't received a paycheck since September.

Speaker 2 Woo! Oh my gosh.

Speaker 2 He smokes.

Speaker 3 We are coming up on six paychecks that we haven't received totaling almost $20,000.

Speaker 3 We have gone through now our emergency fund

Speaker 3 and I'm at a crisis point.

Speaker 2 Yeah.

Speaker 2 What are they telling you guys? Because a payroll issue, if it's not cleared up in 14 days or something, I mean, this is more than that. Do you feel like they're lying to you?

Speaker 3 I don't

Speaker 3 i do i don't feel like they're lying i think

Speaker 2 oh are you there uh our whole

Speaker 1 looks like we lost the board that's okay we'll keep rolling on this because rachel let's let's figure out what we would do if we were in this situation because i know she just gave us a very brief overview but

Speaker 1 you know and i know that these are systems you can call in just like anybody else you can switch to another system you can do it manually you can have the accountant issue the checks There's so many ways to make this right.

Speaker 1 And so for me, just with that brief overview, I do smell a rat. I feel like something might be going on.

Speaker 1 And the fact that she said, I feel like she said early on that it was only management positions, which makes me think that might be higher paid folks.

Speaker 2 Yep.

Speaker 2 And it's not happening. Yes, totally.
Well, and my thing is to, you know, there's a

Speaker 2 a period of understanding. Okay.
Yeah, there's some grace in all this, but also people's livelihoods are dependent. And the fact that people have stayed for almost three months and not getting paid.

Speaker 1 Yes.

Speaker 2 It's pretty wild to me. I mean, it is.
I mean, there's a point that you're like, you owe me this money. Uh-huh.
And I have to feed my family. I'm like, what are people expected to do?

Speaker 1 100%.

Speaker 2 And so, yeah, I mean,

Speaker 2 I'm not going to keep working for free.

Speaker 1 I wouldn't keep working for free. And I'd love to hear Ken Coleman's take on this because if they true, if they truly felt like it was

Speaker 1 some sort of an oversight or some sort of a true mistake that they were truly having issues fixing, which again, I can't see where that would really be the case.

Speaker 1 You could say something like, listen, I've enjoyed my time here. I've been dedicated working here, but I'd like to be paid.
And until you can pay me, I have to go elsewhere.

Speaker 1 It doesn't have to be like, that's it, I quit, you know.

Speaker 2 Sure, no, no, you have to be mean about it, but there is a reality that we haven't been paying. Again, this is three months, you guys.
Like, we're not talking about six paychecks.

Speaker 1 Yeah.

Speaker 2 I mean, this isn't one month, right? And they're trying to work out whatever they are. If you haven't gotten it worked out at this point, then there's, there's other issues happening, I think.

Speaker 2 I think that, yeah, it shows me that you just don't have the money. Yeah.
Because you would find a workaround.

Speaker 2 If this company really cared about its people, within three months, you can find a way to put money in their bank account.

Speaker 1 That's what I'm saying. Issue a paper check.
Yeah.

Speaker 2 And just sign it.

Speaker 1 Yeah.

Speaker 2 Like, like old school. Yeah.
So if I, I mean, honestly, I'm. I'm getting, I mean, maybe through December, but first of the year, I'm looking for a new position.

Speaker 1 100%. You know, I read a stat the other day that said, I believe it was 49.1%.
So let's go ahead and say 50%

Speaker 1 of Americans that if they lost just one paycheck, not for the month, but just that one, because most of us are paid bi-weekly. Yes.
One paycheck, they would be in

Speaker 1 total financial distress. Like they would not be able to meet their obligations.
And that's to say that they probably don't have an emergency fund.

Speaker 1 And in this case, thank goodness that they had the emergency fund.

Speaker 2 Yes, absolutely. That was coming out of an emergency that they couldn't control in a sense, right? So that's what makes it an emergency.
It's It's unexpected and it's urgent.

Speaker 2 You have to have money to put food on the table.

Speaker 2 But then also, there is a point, you know, Morton, that I would say that you guys are going to start to be at fault personally and individually if you stay in a situation like this. I agree.

Speaker 2 So you can, you can point fingers and, you know, talk about how terrible this is, but you guys also stayed in the situation for three months.

Speaker 1 So it would never be me, Rachel.

Speaker 2 No, I mean, seriously, I'm like, I, yeah. And again, if we get her back on the line, we can ask her some more questions about just the history of it and everything.

Speaker 2 But I know, I mean, yeah, it's just not either they're lying to you, either they don't have the money, or they're just completely inadequate in the sense that they don't even know how to pay their people.

Speaker 2 And if that's the case, you may not even want to working for them in the first place. You can't fix this in six, in three months.
I agree.

Speaker 1 It smells fishy. Like if I smell fish, I'm looking for, I'm looking for it.
So I agree, but this just puts into perspective, and I know that this is not the typical emergency.

Speaker 1 This is not the typical hardship that we hear on this show. Right.
But it does put in perspective why it's so important to manage your money well, right?

Speaker 1 We talk all the time about these baby steps so that whatever happens in life, you have peace in the situation, at least initially, because I'm sure when that first paycheck didn't come through, they were like, holy smokes, like rent was due or, you know, a car pay, whatever it was.

Speaker 1 But when you don't have debt, suddenly it's like, okay, my life is a lot more simplified.

Speaker 1 And so if something were to happen where you lose a paycheck, someone gets laid off,

Speaker 1 I don't know, somebody gets injured and they're not able to work, suddenly life becomes more simple.

Speaker 1 You've got this emergency fund to fall back on and you can kind of get, you can fly above that storm, so to speak, and just kind of ride it out without it becoming this, I don't know, complete catastrophe in your life.

Speaker 1 Yep.

Speaker 2 Okay, there's a great question from TikTok. We don't take many TikTok questions.
We don't. I think we should start.
All right, I love that. From CJ.

Speaker 2 Go ahead. Yeah.
And he asks,

Speaker 2 how can you focus on one debt at a time when the payments are all due around the same time i love that yeah so cj yeah when you're paying off your debt it's not necessarily about you know when the bill is actually due for the minimum payment it's about focusing on the smallest debt to get more of it paid off than the minimum payment right so you will have a schedule of when your debts have to be paid throughout the month so they may be spread out or in this case they're all around the same time so you may be paying you know all of it on the 15th you know and it's your car loan it's your credit card you know all of it together on the 15th.

Speaker 2 But what you're really focusing on, when we say focus on one debt at a time, is you're going to focus on that smallest debt.

Speaker 1 That's right.

Speaker 2 Find margin in your budget by taking an extra job, cutting expenses, selling stuff, doing what you have to do to throw that extra money at that smallest debt.

Speaker 2 So the focus is not one debt at a time, meaning you're paying the minimum payments one debt at a time. You're staying current on everything, but you're focused on that smallest debt first.

Speaker 2 That's right.

Speaker 1 That's a really good way to put it because I know I made the mistake of

Speaker 1 kind of what he's saying.

Speaker 1 Sam, when Sam and I were paying off debt, I mentioned this earlier, but Sam and I paid off $460,000. And so the debt snowball that we talk about is really important.

Speaker 1 And therefore, the longest I remember thinking, oh, I don't have to make minimum payments because I was so eager to put extra money on the smallest debt.

Speaker 1 But when you don't do that, things get behind and 1-800-PayMe starts calling you. And before you know it, it's a worse mess because you're trying to do the right thing with the wrong method.

Speaker 2 That's a great way of putting it.

Speaker 1 And so it's so important to do the baby baby steps and do the debt snowball the correct way, listing them smallest to largest, making minimum payments on everything, but putting any and all extra money on the smallest debt.

Speaker 1 Yes. That's how this works.
So good.

Speaker 2 And guys, and we, and Jade, and I both are on all the socials. So check us out on TikTok, Instagram, and Facebook.
Because I'm getting more people saying I follow you on TikTok. My word.

Speaker 2 Jade hates the tic-tac, but here we are.

Speaker 1 You're listening to The Ramsey Show. Thanks for hanging out with us.
I'm Jade Warshot. Next to me is Rachel Cruz.
We are your host for the day, taking your calls.

Speaker 1 And we want to remind you that the best way to make the most of your money is by creating and sticking to a monthly budget. That is the foundation.

Speaker 1 And every dollar makes it so simple to plan your spending, track your expenses, and save for what matters most to you.

Speaker 1 You can do it all in an easy-to-use app that fits into your busy lifestyle and in your pocket because it's on your phone.

Speaker 1 You can keep a pulse on your spending and make progress on your money goals with every dollar.

Speaker 1 So if you haven't already, download every dollar for free in the App Store or Google Play, or you could click the link in the description if you're listening on YouTube or podcast.

Speaker 1 All right, let's go to the phone lines. We've got Katie.
She's in Charlotte, North Carolina. What's going on, Katie?

Speaker 3 Hi, thanks for having me on the show.

Speaker 1 You bet.

Speaker 2 How can we help?

Speaker 3 So I, me and my husband are coming out of credit card debt due to our our business. We closed our business last year and we were living off our credit card last year and we just got it paid off.

Speaker 2 So

Speaker 2 congratulations.

Speaker 3 Thank you. It's a big step in

Speaker 2 the babysit part.

Speaker 3 Yeah, I'm obsessed with the Ramsey show now and I'm trying to revamp our budget and our finances.

Speaker 3 So

Speaker 3 we just combined our bank accounts again, and I'm trying to figure out a budget of not falling into the paycheck to paycheck and falling into credit card debt again and try to figure out what to spend on cash, what to put towards a credit card.

Speaker 3 Minimally, we have child care now

Speaker 3 for both our girls that we plan on using cash and debit.

Speaker 3 And I just am trying to figure out a budget.

Speaker 1 Okay. Have you downloaded every dollar yet?

Speaker 3 I have, and I loaded all of our expenses, and I'm still trying to navigate it.

Speaker 1 Be more specific. Is it that you're you have a lot of money left over and you're not sure to do what to do with it, or are you in the red? Tell us more.

Speaker 3 So I'm in the green right now,

Speaker 3 putting every all of our expenses in and our budget and our income.

Speaker 3 And the issue is with my husband's income, it fluctuates. It's not a

Speaker 3 set salary every week.

Speaker 1 Okay. So, what that's just an irregular income.
A lot of folks are on an irregular income. I am people that work on commission, that sort of thing.

Speaker 1 And so, the way to do that, you're still putting everything in your every dollar budget, but as you're spending the money, you're doing it by priority.

Speaker 1 And so, if you don't have the premium version, I would really recommend that for you because you can plan your paychecks. It's a feature.
It's over on the left-hand side.

Speaker 1 It looks like a, I think it looks like a little bullseye. But anyway, you can do the paycheck planning.
And basically what you're doing with that is you're planning when you get to spend your money.

Speaker 1 So you've already gone through and said, I'm going to spend $600 on groceries. I'm going to spend X amount on rent.
You've already done that.

Speaker 1 But now with paycheck planning, you're going to say, but when do I spend it?

Speaker 1 Because I have to know, because if he gets paid at irregular times and if he gets paid irregular months, you want to know that the money is there.

Speaker 1 And so for you, paycheck planning is going to be a really big feature for you because at the end of the the day for anybody even if you're not on every dollar yet if you're just doing your budget four walls first and then every all the other priorities after that so for you it's going to be rent first you need to be have your transportation your utilities and your food and then for you daycare is probably going to be number five on that list and then as as the month goes on you pay things based on priority and so That's kind of just a crash course.

Speaker 2 Yeah. And what I would put then, Katie, and his income, because with every dollar, there's multiple lines of like different incomes that come in.

Speaker 2 So for his, I would just, I always shoot for lower because I'm on commission too. So I usually shoot lower than what I think and plan all that out.

Speaker 2 And then if he gets paid the third week and there's more in that paycheck, then I would plug that into every dollar. I mean, I change our stuff.

Speaker 2 Like when I get paid on the 15th, I go in and change the income to exactly what I'm getting paid. So I know.
And I would go in and do that.

Speaker 2 And so if there's more than you were expecting, then you're going to get more in the green at the top, more dollars there. But then the goal there is to say, okay, there's some extra money.

Speaker 2 So now I know that I'm going to be able to spend $200 more. And where am I going to put that? Well, I'm going to go down and up maybe the

Speaker 2 clothing category. I mean, I don't know.
You could pick, right? That, okay, I'm going to up that $200,

Speaker 2 but you kind of plan as you go.

Speaker 2 And that is the other thing, Katie, about the budget and for everyone listening, that it is, you know, it is a moving target in a sense that you get to change it throughout the month.

Speaker 2 And we change ours, I'd say, pretty consistently. I mean, like we look and say, okay, yeah, we're like eating, you know, like this month, for instance, we're eating out more than we did last month.

Speaker 2 So I ended up lowering our grocery budget a little bit because we have so much going on at night. We have more babysitters that we're doing this month.
So I upped that category and lowered others.

Speaker 2 So yeah, you can go through throughout the month and change it. And you guys may be doing that more as you know what he's getting paid per month.

Speaker 2 But what Jade was saying is so right is make sure that the top priority is getting paid regardless of what he's making, that you guys can make sure that you're paying, you know, for those, especially those four walls, food, shelter, utilities, and transportation.

Speaker 1 And I love what you said, Rachel, about shooting low and really basic, basing your budget on the lowest possible amount, because then when it's higher, it feels like better.

Speaker 2 Yes, it's crazy. Like, you got a little raise there.
So, if you did have like a big high month, we call them the peaks and valleys.

Speaker 2 You can keep some money in, you know, you could do this in your emergency fund, you could do this in your checking account, but keep some buffer on those really high months because if it is a low month, you can kind of pull that money forward and say, Okay, we're going to use this to make up the gap because it's a lower month.

Speaker 2 So it does take some finagling, but it's possible. It'll take about 90 days, Katie, to get it working.
So keep at it. And by February, March, you'll really, really be in the groove of it.

Speaker 1 Love it. That's a great call.
A lot of people have that question. All right, let's go to Michelle.
She's in Honolulu, Hawaii. Ooh, I wish I was where you are right now.
What's going on, Michelle?

Speaker 3 Hi, thanks for taking my call.

Speaker 3 My question is, what is the best type of account to manage our eight-year-old son's savings if he wants to use the funds to buy a car when he turns 16?

Speaker 3 He earns commissions and divides his money into save,

Speaker 3 give, and spend categories, but we have his save funds specifically set aside for the school.

Speaker 2 Oh, that's great. Good for him.

Speaker 2 I mean, you, I mean, you can do a high-yield savings. I mean, you know, under your account, do you guys have a high-yield savings for you, Michelle? Just you and your husband?

Speaker 3 Yes, we do, but his is specifically in a just a regular savings with a 0.02% APY.

Speaker 2 Yep. Yeah.
So I, I mean, we use Ally Bank for our high yield savings.

Speaker 2 So we have two funds like when I open up our profile, you know, so we have one that's just like strictly our emergency fund, we don't check, and then another that we have just for savings.

Speaker 2 So if we do vacation or something, we're able to pull out of that and we fund that usually once a month too.

Speaker 2 So I would just add another line item for him and call it his and just put the money in. But I wouldn't do anything, I wouldn't do like an investment or anything

Speaker 2 long term, but a great high yield savings, I think it would be perfect for him.

Speaker 1 I think so too. And I know there are products out there that are designed for like teaching kids.
Like there's some banks, I have not used them, but I know they're out there.

Speaker 1 So if you looked deeper into it, if you wanted something that he could see or that had like a fun app or something with it, I know they're out there.

Speaker 2 Yes, for sure. Yep.

Speaker 1 Very good question. Thanks for the call.
Hopefully that helped you out.

Speaker 1 Do you do, is that what you do? Like if your kids, like it's the holiday season and I know already we've gotten some money coming for the kids, what do you do? Do you put it in a separate account?

Speaker 1 Do you just keep it in a cash envelope?

Speaker 2 What do you do? No, we just were talking about this. We need to do better.
I'll be honest, Jade. We're not very

Speaker 2 disciplined with the kids when that stuff happens. Because I would say for the most part, they don't get money.

Speaker 2 They're getting toys. And we started, once I just started talking about it, especially with our nine-year-old Amelia, there's a point that like she wants books.

Speaker 2 I think the toy phase is actually kind of starting to fade fade out Really?

Speaker 2 Okay, and then you just end up with all this crap anyways of stuff So I'm like I don't want to like not do Christmas for them until the grandpa's money But there is a point with birthdays and all that that she's getting to the age that I think we could start asking and saying hey I think She'd rather have money and maybe she take half of that and she can spend some of that but then we need to start formally saving because our savings has still been a little bit hodgepodge with the kids with their money.

Speaker 2 Yeah. It's kind of like, oh, yeah, they just kind of save it up and then we'll go to Target and they'll buy something.

Speaker 2 But But she, I don't know, with our nine-year-old, I'm starting to think, okay, it's she's getting to the age that we could start upping the ante and actually doing things a little bit more formal.

Speaker 2 But what about you guys? Quick, quick hot take, Rachel.

Speaker 1 How do you feel when for Christmas people say, just donate to their 529?

Speaker 2 No, don't do that. Do you want? Do you want it? I hate it.
I hate it. George Camillo would probably love it.
Sorry, George. Sorry, George.
Get a toy for Christmas. It's Christmas.

Speaker 1 This is The Ramsey Show.

Speaker 1 You're listening to The Ramsey Show on the Ramsey Network. We're happy to be with you.
I'm Jade Warshot. Next to me is Rachel Cruz.

Speaker 1 We are taking your calls about your life, your money, and truly your relationships because we know, Rachel, that money touches every single area of our lives.

Speaker 1 Honestly, whether we want it to or want to believe that it does or not, it truly does. And so, if you have a question, call in.
We will do our best to get you on the board.

Speaker 1 But I will say, Rachel, one of the things I found when helping people with their money and me helping me with my money is there's a lot of jargon out there. There's a lot of lingo.

Speaker 1 There's a lot of vocabulary that sometimes we feel, I don't know, just a little silly or maybe even embarrassed to admit that we don't know what it is. Totally.

Speaker 2 You know? Yes. There's parts of money, you guys, that are so, it can feel intimidating and overwhelming.

Speaker 2 And like you said, it's, it's like this whole other world of terms and language and all of that. And you hear it, but you're like, okay, do I fully understand and grasp it? That's right.

Speaker 1 You can feel like it's for smart people only, but that's not the case. You can understand understand it too.

Speaker 1 And so I've noticed that if I want to ask a question and I don't want people to know that it's from me, I'll say that I'm asking for a friend, right? And so I love this segment here.

Speaker 1 Asking for a friend, Jade, what are tax withholdings and how do I adjust them? Right. So tax withholding,

Speaker 1 you probably have noticed on your check that withholdings come out, including federal tax withholding, which is basically when your employer takes out an amount of money out of each paycheck and they're sending it to the government for you.

Speaker 1 They're prepaying your taxes, basically.

Speaker 1 And that number is set on what you tell them they can take out. Okay.
So the amount that they're taking out depends on what you earn and it depends on what you put on your W for okay.

Speaker 1 So after filing, depending on what you put on your W for, they're either going to give you a refund.

Speaker 1 They're either going to have you break even and you owe nothing, or in some cases, you end up owing money. Okay.
But the goal here is we want you to break even because that means you've done it right.

Speaker 1 And if you are getting a big tax refund every year, just remember that that means you're withholding too much. And we want you to have that money back in your pocket.

Speaker 2 All right.

Speaker 1 So how does tax withholding work? Like we said, if you work, you got to pay the withholding tax, right, Rachel?

Speaker 2 Yes, that's right.

Speaker 1 And in certain tax, in certain states, you might even have to pay a separate income tax as well. But when you start a new job, you fill out that W-4 form.

Speaker 1 Or maybe if you get married, right, you have, you fill out a new W-4 form. And on that, that's where you tell your, your employer, here's how much tax I want you to take out.
Okay. So

Speaker 1 that's how that works. So if you're sitting here today and you go, well, Rachel, I got a tax refund last year and it was, I don't know, $1,200.
What would you tell that person?

Speaker 2 Yes. Then I would go on a gesture withholdings, what, $200 a month? Yeah.

Speaker 2 So that you know, okay, yeah, you, you had 200 more that was being taken out of your paycheck and sitting in Washington that needed to be, that they needed to be. So then they're refunding you that.

Speaker 2 So instead of that all happening, put $200 back in your paycheck and you can use that to help pay off debt and save up an emergency fund and all of it.

Speaker 1 Love that. And I mean, the truth is, we don't want to lend the government money.

Speaker 2 Yes. Well, in a tax refund, it is, it's a sneaky way to feel like you got free money too because this check comes, right? And 1200 bucks or whatever.
And you're like, well, that's nice. Thank you.

Speaker 2 You're like, no, no, no, you should have been having that all year. So it's like this, like, it's this weird emotional whiplash that it is your money.

Speaker 2 So go and change it. But if you need to figure out even how much to withhold, you can even look at last year's taxes and say, say, okay, here's how much I paid in taxes divided by 12.

Speaker 2 That's a pretty simple way. Yep.
You could do a mock tax return and a lot of online tax softwares allow you to do this. But as we talked about earlier, Jade, you're like, it's a pain in the butt.

Speaker 1 It's a pain in the butt. I don't like, I mean, there's a reason we get help, right?

Speaker 2 So I don't want to do it myself.

Speaker 1 But yeah, just understand that if you're, if things aren't looking the way you want every year when you get your tax refund, or maybe you're breaking even if you are really good.

Speaker 1 But if you're not, you have the ability to change that. You can change that W-4 form.

Speaker 1 You know, you can fill out a revised one and you can download them from the IRS website. Or listen, I would just probably head over to my HR department and say, hey, I've been noticing this.

Speaker 1 Help me out. Right.

Speaker 2 That's how that works. Yes.

Speaker 1 All right. If you have any questions, contact a Ramsey Trusted Tax Pro.
You could do that at ramseysolutions.com slash taxes.

Speaker 2 And I'll say this too, real quick, Jade.

Speaker 2 For those of you paying off debt, there's like three big buckets that you can instantly get some cash back in your paycheck to get this debt snowball going faster.

Speaker 2 This is one of them, adjusting your withholdings if you're getting a big tax return. One is pausing retirement.
So if you're funding retirement and trying to get out of debt, pause that for a season.

Speaker 2 That'll be money back in your paycheck. And then also shopping insurances.

Speaker 2 Those are like three big buckets to find money that you need quickly in your paycheck that can make some really big, big changes for you. So

Speaker 2 this, yeah, the whole withholding thing is very real, especially if you're getting a big tax refund. Make sure to check that.

Speaker 2 Absolutely.

Speaker 1 All right, Rachel. Good stuff.
Let's go to the phone lines. We've got Mark.
He's in Albany, New York. You were just there.
What's up, Mark?

Speaker 3 Thank you for taking my call. I have a, hopefully, you can help me

Speaker 3 take a friendly debate between my wife and I and give us some clarity.

Speaker 2 I'll give you some background.

Speaker 3 No, no, it's good. It's good.

Speaker 3 So we are Ramsey disciples for many, many years, my wife and I. So we have paid off.
We're both 50 years old. We've paid off our home.
We pay cash for cars. We don't owe anybody any debt.

Speaker 2 Wow. Great job.

Speaker 3 We hope to retire. You know, if we retire at 60,

Speaker 3 the projection is my 401k will be about $1.6 million, and she'll be, she's on a pension system, so her income will be about $150,000. So our retirement's looking really good.

Speaker 3 And we've set ourselves up for success. We've got a couple of kids.
Their college really should be taken care of. But here is my question.
We've been talking about this.

Speaker 2 Real quick. I have to tell you, real quick, real quick.

Speaker 2 Real quick, can I just tell you?

Speaker 1 That is so good. Like, you guys nailed it.

Speaker 2 Thank you.

Speaker 1 I mean, I listen to that. I'm like, that's amazing.

Speaker 3 Thank you. So that's the good part.
And there's another good part, but we needed some guidance from you. So we've been debating this at the dinner table for months.

Speaker 3 And I finally said, I'm just going to call those people that I listen to all the time on the radio. So about six months ago,

Speaker 3 my uncle, who was very close to us, passed away and left us

Speaker 3 about $1.3 million.

Speaker 2 Holy smokes.

Speaker 3 The discussion we're having is

Speaker 3 how do we handle that? Me, I'll give you the two sides. Me, I say,

Speaker 3 hey, we've done great with our mutual funds. My 401k is great.
I know who I work with. We can take that money, put it in there, and it'll double in seven years or

Speaker 3 do that. But then my wife on the other side of it grew up.

Speaker 3 you know, very poor, and she's much more conservative than I am. And she's like, listen, that's not, I don't want to do that.
I'm okay with 50% being

Speaker 3 invested in mutual funds, but then, you know, maybe we do some bonds and maybe we do a money market account. So basically, what I'm telling you is this is how we're currently living.

Speaker 3 What is your opinion on what we should do with the money that was left to us?

Speaker 1 I mean, if you guys are, let me say it like this.

Speaker 1 If you're dead set on investing the money in some form or fashion, like you said, whether it's just normal mutual funds, whether you did bond funds, I would work with a smart vestor pro to decide the best way to invest that as you get older and what makes the most sense.

Speaker 1 But since you called us, like for me, I'm looking at this money. I'm going, you guys have done so well.

Speaker 1 This is really gravy on what you guys have already accomplished. And it's a lot of gravy, but it's nice.
And I'm looking at this. I'm like, okay, I can give, save, or spend, right?

Speaker 1 Those are the three things you can do with money. And I would enact that here.
I would give some of it. I would save some of it and I would spend it.
And that what percentage of that is up to you.

Speaker 1 But I think this is a great opportunity to enjoy some of this money as well.

Speaker 3 Okay.

Speaker 3 All right.

Speaker 2 Yeah. And

Speaker 2 I don't know, Mark. I mean, you guys have set yourself up for peace, which is always what we're shooting for, right? When we talk about financial peace, to have some peace in your life.
And

Speaker 2 you're not going to go, I mean, you really can't make a wrong decision here. Let's just be honest, right? I mean, like, you guys are going to be fine however you do it.

Speaker 2 So you're looking at the most efficient routes of like, hey, let's put this money and invest this. It'll double in seven years.
We're going to make more. Like, why would we not?

Speaker 2 And she doesn't have peace about that. She's like, I don't feel good about that.

Speaker 2 So, there would be a part of me that I think if I were in your shoes, I would probably just invest it. I'm probably more on your side, Mark, just from a, I don't feel like it's risky.

Speaker 2 I think you guys will be totally fine. But again, we're fighting for peace here.

Speaker 2 And because this isn't a black and white issue, because this isn't something that's going to put you into turmoil or like, you know, you can't mess this up. No.

Speaker 2 So part of me would say, yield to your wife some just to create peace in the household.

Speaker 2 And if she wants to invest 50% and then you guys take 50% and put it in a high-yield savings and say, okay, we'll just maybe live off of the 5% we're getting off that.

Speaker 2 Like, you know, and see it and it be liquid, then that's okay too. So I don't want to play like the, oh, everyone wins game here.

Speaker 2 No one's really wrong. Yeah, I would be on your side, Mark, if I personally, but also, again, fighting for peace in the household is so key.

Speaker 2 And if that gives her a little bit more peace, I don't know. I think she'd be fine if you did that.
I agree. Thanks for the call.

Speaker 1 This is the Ramsey Show. Hey, it's the most wonderful time of the year.
And one of the ways to stay on track with your money is to listen to shows like this that'll help you stay motivated.

Speaker 1 And the Ramsey Network app is the only place you can go to get full episodes of the Ramsey show.

Speaker 1 So download it for free using the link in the show notes or by searching Ramsey Network app in the app store. It's really, really a great tool.
You can even search specific topics.

Speaker 1 So if you know, like, I want to know more about real estate or I want to know more about the debt snowball or I want to know more about

Speaker 1 paying off a car and buying a car in cash, you can search those topics and show clips will pop up for you. Or if you just want to watch the show in real time, you can do that.

Speaker 1 If you're on the radio, just know that after this hour, the only place that you're going to be able to listen to the the third hour is on that Ramsey Network app.

Speaker 2 Okay.

Speaker 1 All right, Rachel, let's go to the phone lines. We got Adam in Wichita, Kansas.
What's up, Adam?

Speaker 3 Hey, ladies, how are you doing today?

Speaker 2 We're doing good.

Speaker 3 That's good. So I had a question about Saving for Kids College.
We adopted three kids a couple years back, and due to the nature of where they were adopted from, they get full university coverage.

Speaker 3 They have a full ride to any state institution that they want to go to.

Speaker 2 Oh, wow.

Speaker 2 They're from.

Speaker 3 Yes. So we think that's awesome.
So we've told them that they're required to go, even though they don't want to go to school now.

Speaker 3 My question is, my wife and I are basically on baby step zero. We're starting to save for our emergency fund.

Speaker 3 At what point do we do we worry about saving for college knowing they have a full ride? Because it doesn't do room and board. It does books and tuition.

Speaker 2 Oh, it does not do room and board. Is that what you said

Speaker 2 correct okay yeah i would uh how old are the kids

Speaker 3 uh 13 12 and 10.

Speaker 2 okay great and how much debt do you guys have

Speaker 3 uh accounting student loans 83 000.

Speaker 2 okay how much do you guys make a year

Speaker 3 combined total income

Speaker 3 roughly 102 000. okay

Speaker 2 okay so you guys getting out of debt are you thinking what two and a half years, three years?

Speaker 3 I'm thinking, well, I'm a teacher, so I'm applying to start working after school because we just took a big look at our debt and said, okay, that can't work.

Speaker 2 Yeah. So I'm thinking about two years.
Okay, that's correct.

Speaker 2 That's perfect.

Speaker 1 And that's average.

Speaker 2 You're right on par. Yeah.
And so the oldest at that point will be 15. And then you guys will save up your emergency funds, which may take, I don't know, another year or so.

Speaker 2 So that'll be about 16. So then

Speaker 2 you'll you'll have about two years then at that point to help save for room and board um so i would wait until then i would first prioritize the emergency fund paying off debt and then the fully funded emergency fund and then look at room and board and that's i mean i don't but what an incredible thing because while that still will be some money to save even if you guys only had half of that you know that's right um you know then that 18 year old at the time could get a part-time job, right, to fill in the gaps for what they needed or live somewhere else.

Speaker 2 So I would definitely not worry. And I would give you that same plan even if their college was not paid for.

Speaker 2 And it would be just a totally different discussion on what they could choose and how they are going to have to go because it would look so different.

Speaker 2 So, what a gift that, yeah, you guys will have it. I mean, have they'll have their college paid for.
That's huge. I love that.
Oh, what an amazing opportunity.

Speaker 1 And, you know, we say all the time, it's not, you know, baby step five is the baby step where you are putting aside for kids' college, whether that's trade school or state university, right?

Speaker 1 But it's not required that you pay the whole amount, right?

Speaker 2 That's right.

Speaker 1 The only thing that's really required is that you're having that open conversation and you're letting your kids know the expectation so that you can prepare properly so that there's no debt involved.

Speaker 2 Yeah.

Speaker 2 And too, Adam, I mean, I would, you know, not maybe not at 13 right now, but as they start getting older and, you know, once you start entering high school, college, depending on where you are, you know, people start talking about it.

Speaker 2 And so pull some numbers, you know, when it gets to that point to say, okay, here, because it's going to differ between college and you know, different universities throughout Kansas is where you guys are.

Speaker 2 So, I would pull different numbers from four different, you know, schools in the area to say, okay, this is how much room and board is here, here, and here, and here.

Speaker 2 Realistically, we probably will be able to cover these three schools. This one's probably out of our league unless you get a part-time job, right?

Speaker 2 You start actually having these conversations and looking at actual numbers with them as well.

Speaker 1 Very, very, very good. Okay, let's go take another call.
We've got Matt. He's in Fort Myers, Florida.

Speaker 2 What's going on, Matt?

Speaker 3 Yeah, hey, how are you guys doing? Thanks for taking my call.

Speaker 2 You bet.

Speaker 3 Yeah, hey, so there's a lot of backstory, but to get to cut to the chase,

Speaker 3 we took out a personal loan to fix up a house that was damaged from Hurricane Ian that came through. Okay.

Speaker 3 And we didn't have, we owned the house and property outright,

Speaker 3 so we didn't have any mortgage on it.

Speaker 3 Now, we thought that Hurricane Ian would be a once-in-a-sort of lifetime storm and we would never get any flooding again and you know as the Lord would have it Hurricane Helene came and then Hurricane Milton came and

Speaker 3 those flooded our home as well and so my question is

Speaker 3 the personal loan that we took

Speaker 3 the payment for that is very affordable for us but I could go pay it off and normally normally I would just go pay it off right now

Speaker 3 but at this point I'm wondering and considering just buying a new home altogether that's not anywhere in a flood zone you know and whatever else and I'm thinking that I should

Speaker 3 wondering is should I just take

Speaker 3 I don't want to cut into that down payment on a new house if that's the route we want to go So you're saying you would sell this house, take that money, pay off the debt, and buy a new house. Yeah,

Speaker 3 there's some extenuating factors. We're not going to sell the house and property because it's kind of a family piece and it has to stay in the family for

Speaker 2 but if you get hit again with a storm, how does that solve the problem?

Speaker 1 Because if you're hit again with the storm, you still have to shell out the money to cover the damage of

Speaker 1 based on what you're saying.

Speaker 2 No.

Speaker 3 No, so the house that we're in currently, I don't, I still have to pay the money. I still have to pay the loan anyway.

Speaker 2 Right.

Speaker 3 So,

Speaker 3 but it's very affordable.

Speaker 3 But I'm worried about putting more money into the house to fix it up even further.

Speaker 2 But don't you have to fix it up for someone to live there eventually? You're not going to just have a house vacant.

Speaker 3 No,

Speaker 3 not necessarily. We may.
We may.

Speaker 3 If the storm pattern continues, I mean, we've flooded, just to give you some context.

Speaker 2 I think we get it.

Speaker 1 But the point is, let's say another storm comes next October or next September, right? You don't live in the house house anymore, it's been sitting vacant and it has water damage.

Speaker 1 You're saying you would just leave it to rot,

Speaker 3 not to rot, I mean, but we would, we would, I wouldn't invest more money. I'm debating whether I want to invest more money into a home that is continually flooding.

Speaker 2 Why are you, yeah, why, what's the family, what's the family dynamic?

Speaker 1 Why can't you just sell it? Yeah, so

Speaker 3 because my in-laws, my in-laws have essentially given the inheritance to their daughter, part of their inheritance,

Speaker 2 their daughter,

Speaker 3 right, up front,

Speaker 2 which is the house.

Speaker 3 Which is the house and property so that we can live there.

Speaker 2 So why don't you sell it and you take the equity of it, and that's her inheritance. This is her gift, right?

Speaker 3 Because

Speaker 3 part of the agreement to the early gifting was that we wouldn't sell it.

Speaker 2 Why do they care?

Speaker 1 And since they're alive, can't you go to them and say, hey, thank you for the gift. Is there a way we can rework this? Because where this house is, it's costing us a lot of money.

Speaker 1 It's not feeling like a blessing. It's feeling like a burden.

Speaker 1 They're still here with you, so can you have that conversation?

Speaker 3 That's a conversation that

Speaker 3 could be had,

Speaker 3 but hasn't been had yet.

Speaker 2 So I would do that, Matt. So this is where the entanglement of parents and gifts and early inheritances and all of it, this is where it starts to play up.

Speaker 2 Because what happens, Matt, is you guys as a family unit can't make a decision without her parents involved. And so, like, that's

Speaker 2 that, that, that, that string needs to be cut.

Speaker 2 They either need to give you the house as the early inheritance, and you guys, then, as a family, as adults, get to decide what you do with that, or we're not, or are not playing the game anymore.

Speaker 3 Yeah, I can, no, I think, I think maybe there's some confusion, whether we, we still have

Speaker 3 a loan on you're saying give it to us entirely and put it so that we can sell it if we want.

Speaker 1 Whatever you decide between you and your parents, the point is you've got to get to the point to where if you would like to walk away from this property, you can.

Speaker 1 You shouldn't have to be clung to it because of something they said. Right now it's costing you too much money.
You and your wife have decided we don't want to live there anymore.

Speaker 1 And so they need to let you out of it. And if you want to sell it and keep the proceeds, so be it.
Or if they say, no, we're taking the property back and we're going to keep it, then so be it.

Speaker 1 But either way, you guys need to have final say and control over your your life and your money.

Speaker 5 What up, what up? It's Dr. John Deloney from the Dr.
John Deloney Show with some amazing news.

Speaker 5 The latest episode of United States of Anxiety is available right now exclusively on the Ramsey Network app.

Speaker 5 This docu-series 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.

Speaker 5 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.

Speaker 2 What's up, Kelsey?

Speaker 4 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?

Speaker 5 What does crippling anxiety mean? Paint me a picture of that.

Speaker 5 All right, so you ready to jump in?

Speaker 3 I'm ready to jump in. We're going to check in with Kelsey 30 days, 60 days, 90 days.

Speaker 6 I cannot even function because I'm just crying.

Speaker 2 My mom left us when I was four.

Speaker 4 I truly felt like for a while I had no no family.

Speaker 5 She's experiencing things that really hurt a long time ago.

Speaker 2 Tell me about this boy.

Speaker 4 He triggers me a lot.

Speaker 6 Scared of losing Paul, scared of doing the wrong thing, scared of not being enough.

Speaker 5 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.

Speaker 6 How do I get my inner child out of this relationship? Because I feel like she's running the show.

Speaker 5 One of two people that's supposed to never leave took took off.

Speaker 2 I was this

Speaker 2 I was this burden. Your burden, that's right.

Speaker 5 To the one person

Speaker 3 who should carry all of it.

Speaker 5 Did you ever tell that little girl that it wasn't her fault?

Speaker 2 I don't know what to do.

Speaker 5 You either have to choose to let this guy love you, or you got to choose to let this guy go.