Why Car Payments Are Keeping Americans in the Middle Class

welcome to the ramsey show where we help you win in your life we want you to win with your money win in your work and winning your relationships i'm ken coleman jade warshaw is alongside and We're here for you.

The phone number is 888-825-5222. in your work and winning your relationships.
I'm Ken Coleman. Jade Warshaw is alongside,

and we're here for you. The phone number is 888-825-5225.
That's 888-825-5225. All right, let's get it started with Taylor in Los Angeles.
Taylor, how can we help? Hi, guys. Thanks for taking my call.
How are you? Good. How are you? Good.
Thanks. So pretty much some backstory.
My husband and I have about like $105,000 in debt between credit cards, cars, and student loans. And right now he makes $8,400 a month.
And like we're breaking even between like rent bills and whatever. My question is, I've been doing hair for three years off and on, and I've been doing it consistently for like the past four months now.
And I'm just barely breaking even. I feel like I'm not seeing a profit.
So my question is, would you advise like getting a different job, like a full-time job where I'm bringing in more income? Because I finished the total money makeover and I feel like my mindset has changed about money. And I'm like, I feel like I need to bring in more income in order to make a dent in our debt, but I don't want to quit what I went to school for.
You know what I mean? Well, maybe it's not a matter of quitting it. Maybe it's just a matter of adding to until you're making the money that you want to make.
Because I think you know the answer to this. Yeah, you do need to be making money.
Like you can only go so long breaking even. And if the situation were reversed, let's pretend that you had a nine to five job that you were making money.
And you said, I'm going to go over here and do hair on the side. How will I know when it's time for me to do this full-time? What would we tell you? When you're making more money or when you're making as much as what you're making at your full-time job? Exactly.
Okay. Okay.
So, Ken, how does she play this? Yeah, well, I agree with you.

I think we look at a number that we're trying to make.

So what's a number?

I'm assuming that when you called in today, you've got an idea of the budget, the way you're talking about it.

So what's the number?

Let's take a take-home number after taxes that if you were to bring in that right now, that seems A, realistic,

and B, it would really help on the margin here so we can accomplish what we need to accomplish and knock this debt out.

Thank you. bring in that right now, that seems A, realistic, and B, it would really help on the margin here so we can accomplish what we need to accomplish and knock this debt out.
I would like to help out and knock out the debt, like between $2,200 and $2,500 a month would be very helpful. Okay.
All right. And so what are you making right now in your current job, what you went to school for? So I went to school for hair.
And like I said, after rent and like product and stuff like that, I mean, maybe I'm making $200 a week. Yeah.
So let's figure out where the issue lies. Is the problem that where your studio is is too expensive? Or is the problem you don't have enough clients or is the problem a combination of three things where you are is too expensive.
You don't have enough clients and you aren't charging enough. Probably a combination of, of, of those three.
Yeah. Cause we moved to a new area.
So I'm, so the past like four months I've been starting from square one as far as clients. So I'm just kind of, I feel discouraged because now that I read the book, I'm like, okay, I want to like go, go, go.
Well, with that in mind, I feel like I'm not going anywhere. Yeah.
Well, first of all, that's a low margin business. So I'm going to, I'm going to say amen to what Jade said earlier, which is we can come back to, to doing the hair.
But right now we want to get really intense. And And so, yeah, I'm circling that number of $2,200 to $2,500.
And the way I would come about it as I'd go, how can I help add that amount of money? What does that look like? And so you start playing it out. Okay, so if I get a job making $20 an hour at Walmart, I'm just throwing that out there.
I'm not telling you, Taylor, that's where you got to go. But I'm just saying, you start to look at the possibilities.
And you don't have a degree in certain things. So you go, okay, what can I do for the most amount of money per hour? I'm just taking an hourly job.
But you know what? You might be able to get a, maybe get an office manager job or an assistant, you know, an administrative assistant job. And you start looking at that and you go, okay, what must be true for me to bring home that $2,200 or $2,500? That's where I would start, because that's where the ideation comes from.
And you begin to say, okay, I can go over here, I can do this, I can do this. And so I wouldn't overcomplicate it.
This is just about a paycheck right now in order to get into the debt snowball and knock it out. Then once we get through where we want to be, now we can start to dial back and we get back to building your business over time and then you do well.
But that's the advice I would give you because that's what I would do if I were in your shoes. I'd do whatever it takes to bring home that extra money.
Absolutely. And can I just dig a little bit deeper just because I'm curious.
So your husband's making, you know, a little over $100,000 a year. What's your rent or mortgage situation? How much are you paying a month? Right now we're paying three grand in rent.
Okay. For our home.
Okay. And then you said the car.
Tell me about the car because I'm looking for other ways that I can clear up some breathing room for you. Yes.
I mean, we both have car payments. His truck payment is $600 a month and mine is $400 a month.
Okay. And what do you owe on them? My car, I owe $14,000 and I think his truck, we owe $20,000, what's his truck worth? If you were to sell it today, private sale, if you had to guess, I'm not too familiar with the truck prices, but I think he's, he said around like, you know, 50 or maybe 45.
I'm not, I'm not a hundred percent sure. Okay.
So I would be looking at these cars very seriously because of what you say is true. And I know that you're just taking a shot in the dark here.
But if it's true that he owes 20, but it's worth 40. Do you know what that means? That means that if you sell that car, you're going to have a $20,000 spread of profit, which means you could get into a cash car for 20,000 and no longer be paying $600 a month.
So that's huge. So by the way, just to plug that in, Taylor, what that now means is that $600 comes off of the $2,200 you said you need to make.
So now all of a sudden we don't have to make as much. And that's why that's such a huge play there.
And the same thing could be true with yours. I would say coming off of this call, if you were to have homework, it would be first off, I'm digging into these cars because that could be a pile of money sitting right there in front of your nose.
So I dig into both of those cars, get your husband on board. And then after that, yeah, doing Ken's homework and saying, okay, what can I do? What's the job that I can get? This is not the be all end all.
It's just to make that money. And I think that you're going to find a lot more money quicker than you thought if you guys are willing to make some sacrifices with these vehicles.
Okay. Awesome.
Fair enough. Yes.
Thank you guys so much for your advice. I really appreciate you taking my call.
Yeah. And I love her spirit of what can we do? Yeah.
And I think that, you know, when anybody comes into the show for the first time, maybe some of you are listening or watching for the first time today, and one of the themes that you're going to hear from no matter who's hosting on any given day is that we're always going to recommend the shortest distance to getting out of debt. That's baby step two.
Yeah. Baby step one is $1,000.
So we're going to say, what do we got to do? We sell stuff. We go babysit.
We do whatever to get $1,000. That's baby step one.
Baby step two, smallest debts, the largest debts, knock them out. We're always going to say the straightest, the shortest route, and that is intensity is what I'm getting at.
And so it's first season. And in this case, Taylor is really willing to do that.

I love that. They jump in together.
You've done this with your hubs and you guys paid almost half a million dollars off. The relationship strengthens when everybody's going, we're going to both go all

in and do everything we can. That's right, Ken.
So thanks for the call, Taylor. We believe you

guys are going to do this. We're thrilled for you.
Don't move. More Ramsey show coming up.
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That's BetterHelp, H-E-L-P dot com slash Deloney. Welcome back to The Ramsey Show.
I'm Ken Coleman, and Jade Warshaw is alongside. She takes my cool factor up multiple levels, as I was reminded by somebody in the lobby.
I do my best, Ken. Listen, I need all the help I can get, and I appreciate it.
Hey, the phone number is 888-825-5225, 888-825-5225. Jade and I are here for you.
I want to coach you up. Jade will lead on the money stuff and I'll help you on the income side of things.
How about that? And that is how we get this thing right and work these baby steps so that you truly live like no one else.

All right, we're going to Anchorage, Alaska, and Robert is joining us there.

Robert, how can we help today?

Hey, guys.

Thanks for taking my call.

I recently sold a small business that I've been building for six years and getting about $2.2 million before tax. Nice.
Way to go. Yeah, thanks.
What kind of business was it? It was a media business, like streamable assets. Great.
Good for you. I've been building it since I was 18.
I'm 26 now. Good for you.
How about that? Yeah. How do you feel? I feel excited, but also really scared because my income is going to be gone, my monthly income from this, and I need to invest this money properly in order to replace it.
What were you paying yourself? I'm curious. I was paying myself like $10,000 a month for me and my little family.
Okay. And why'd you sell it? I sold it because the deal was a higher value than I was currently making.
And I just wanted to get more into physical assets, asset creation and digital asset creation. Right.
And the reason I ask that is because

my next question is, what were you or what are you thinking that your next move is? I understand you're calling about the investment piece and we're going to get Jay to jump in on that in a second, but I'm curious, are you thinking about another business, going to work for somebody else? You think about taking six months, 12 months? Where's your head at right now as far as new income? Yeah, I guess I'm a

creative person and things pop up and I need to be able to quickly move on ideas that I have. The issue is that I took this deal thinking it was going to be a capital gains tax.
And I recently moved to a new tax firm and they're saying it's going to be ordinary income. So it's actually much less money than I originally intended taking the steel.

What will it amount to? I think it's going to slim all the way down to like 1.4 million. Okay.
Um, and yeah, that's a little disappointing. Yeah, it's really disappointing.
So originally I was going to have like 1.8 out of this and I could just put this in index funds as i've learned from the dave ramsey show is you know just moderate investments that are not super high risk high reward and and just live off of a small percentage for my family but now i can't do that i need to yeah and i don't know that i would how old 26. 26.
I 100 if I'm just going to tell you Jade's point of view and can chime in. If I woke up in your shoes and I saw myself getting one point four million dollars, I would say to myself, OK, I have this wonderful nest egg started so that when the time comes and I do want to retire, I will be able to.
But I don't think the day is at 26. I think if you start pulling the growth off of this now, you're just I think it's going to stunt you in many ways because you're 26, you're just getting started.
And if you had this idea, there's probably way more ideas in you that will earn you money. And I would see this as, OK, this was a great windfall that we had.
I'm going to put it over here. It's going to grow and multiply.
And if at the time I'm 40, if I want to step back and go, okay, whatever I'm doing, I'm going to do it part-time or I'm working for a different cause now, it's not really a money-driven thing, fine. But I don't think that day is today.
Yeah, I agree. In fact, here's what I would do.
Jay's going to give you any investment advice you want on this. But I would take the $120 that you've been paying yourself, if you've been paying yourself $10 a month.
I'd take the $120 out of the $140, and I'd put that in a savings account. Yeah.
Because you've got to transition. And I wouldn't rely on that.
I'm with with you. Like I wouldn't, I would just put it over there and go, all right, let me get out and hustle a little bit.
Maybe I take a month off, whatever. I'd celebrate.
I'd go do something real nice with the wife, the missus, you know, and, uh, and the kiddos. If you got kiddos really nice and celebrate, I'd take one 20 and I'd put that, this is above and beyond your emergency

fund. I would just put it over there just until we get rolling.
Yeah. And, and, and then I'd

invest the rest. I would not interest, I would not even try to draw off of that for your income.

Yeah. Cause we didn't ask you what baby step are you on? Um, I'm on, I mean, I, I have no debt.
I

paid off my house throughout this business. And, um your baby's step seven? Yeah, we own our $100,000 house outright.
Good. We own every car outright.
Fantastic. Yeah.
Yeah, we just, but the issue is that now our income's gone. We're just sitting on this lump sum of money.
But your income is not gone. I want you to reframe that.
We just said we're going to take $120,000, which would say that's your income for the next 12 months. I mean, you've earned that.
You sold the company that you started with your own two hands. So I take the $120,000.
That's my guaranteed income. I don't miss a beat for the next 12 months.
Invest the rest because you're already in baby step seven and get after it and start doing some creative stuff. Start doing some fun stuff.
Okay. That's really helpful.
Thank you guys. Yeah, you're welcome.
Hey, I'm proud of you. You've done something really cool.
And the good news is I can tell you guys are like frugal people. You're not, you know what I'm saying? If you've done all of these baby steps by 26, you guys know how to live on less than you make.
My guess is that you're going to come up with something to do next and you might live on 70 for a while or, you know, until you get it back up. But I, I'm with Ken all the way.
I, congratulations. That's all I have to say.
So do you have an investment pro pro that you that you have and you're working with beyond the tax pro yeah and I think because I'm 26 I just assumed like this investment would make at least you know seven percent and the more I talk with my pro they're like you should be way more moderate about what this is going to do.

I don't know about that. Hey, I want you to get with a SmartVestor Pro.

Ramsey, we have a team of people that we vet and they do things the Ramsey way. And so a SmartVestor

Pro is going to help you invest this money the right way for you. And we say all the time, you should be looking for an annualized rate of return around 10%, 10% at the least.
That would make my life. Yeah, it will.
And it's not crazy. Like, Ken? No.
It's not crazy. I know what my stuff makes.
And so it's not crazy. Yeah, that's historic.
That's not Jade's opinion. And just look that up and look how it does.
But again, let me just say this. It won't make your life, Robert.
Like, this is a nice windfall for you. Jade's absolutely right.
You're only 26. Now, if you invest this and you invest it well the way we teach.
You're different. this money sitting still is going to do awesome things for you over the next 30, 40 years.

A lump sum doubles every seven years.

That lump sum is going to be great for you, but it's going to do awesome things for you over the next 30, 40 years. A lump sum doubles every seven years.

That lump sum is going to be great for you,

but it's going to change your life down the road, not right now.

So this is a long-term play, 10%, you know,

with that kind of money getting started, you're going to do fine.

You're going to keep making money.

You're an entrepreneurial guy.

You said it yourself.

You know, the wind blows on you the right way,

and there's a new idea. And to Jade's point, you've already proven an otherworldly discipline for a 26-year-old dude in America.
I mean, you're way, way, way ahead of most 26-year-olds. 100%.
Yeah, you're a freak of nature. You're a unicorn.
Let's just say it I just stay I just stay really paranoid I guess about like oh I'm just gonna that's why we're so frugal I think it's sort of like a paranoia that we're gonna lose it all or you're not gonna lose it all go celebrate and Ken and I will give you some ideas I love Europe this time of year look at Jade she knows people's money. I do.
About as well as anybody I've ever met. France? Yeah.
Practice your French. Yeah.
What has your wife always wanted to do? Because you got the money to do it. Mm-hmm.
Go do it. Go to New Zealand and see where they filmed Lord of the Rings.
Wow. Look at you.
You're a virtual postcard today. You just keep...
It's like I'm flipping through postcards. Vacation ideas Ideas by Jade.
I love that. Enjoy it.
There you go. We've got to take a quick break.
We'll be right back. This is The Ramsey Show.
Welcome back to The Ramsey Show. I'm Ken Coleman and Jade Warshaw is joining me here in the studio here of The Ramsey Show.

So excited that you're with us.

888-825-5225 is the phone number.

888-825-5225.

If you've got questions about income, feeling stuck, feeling a little stale, and want to make some moves,

I'll coach you on that.

Got your money problems?

Jade's got you on that, and we combine as well. Let's go to Jennifer, who's in Jackson, Mississippi.
Jennifer, how can we help today? Yes, I just have a real quick question. I have a son who is 17, about to turn 18, and my credit score is 830, and my husband's is like 780, and we want to start him off on the right track of having a good credit much like we do and I was just wondering if there was a particular credit card or how y'all would maybe suggest uh helping him get and obtain a good credit score as well okay uh I've never heard that question on this show before actually actually.
No? Really? I don't think I have.

I've gotten it a couple of times.

Jennifer, when did you start listening? I just started, like, about a month ago. Okay, great.
That makes sense. We're happy to have you.
Yes, welcome aboard. So what is it that, what are you hoping he'll be able to do with that credit score? I just want to learn a little bit more about your intent here.
Well, I just want to know that when he is also about to start college, he's a senior in high school now, and so he'll be starting college, and I know that he'll need, you know, we bought him his first vehicle, but I know that down the road that he'll need to get a vehicle and possibly be able to have to rent an apartment for college and this, that the other so I just want to make sure he has a good enough credit score to be able to get the things that he would need to get like a vehicle later down the road or maybe an apartment or something like that well here's I'll be honest with you here's why I don't like credit scores and here's why I don't I've never focused on one and for you know for all intents and purposes, I don't believe in them at all because you have to have debt.

You have to interact with debt in order to have a credit score.

And we also know that when you borrow money, the borrower is slave to the lender.

And so there's this part of the credit score that it has never it doesn't make sense to me because it's all about how you interact with debt, how much debt you have, what types of debt you've had, how long you've had your debt, what percentage of your debt that you're using, right? It's all, nobody's asking questions about, can you actually afford the item? How are you managing the cash that you actually, and the money that is actually yours that is in your bank account? And so that's why I have an issue with the credit score. What I would love is for you to teach him a way that says, okay, if you have the money, you can afford it.
If you don't have the money, you can't afford it. Now let's go back to the things you talked about.
He is a very good saver right now. So he only works part-time like two days a week, and he has since this past summer.
And he's already saved like almost $3,000 and has purchased like a $2,000 CD and this, that, and the other. So, I mean, we have taught him like you do your 10% tithe, then you have some that you put in this much, you put in savings, and this much is, like, your fund money.
So he's done that. But what I mostly worry about is, like, once he gets off to college and he has to rent an apartment.
I know a lot of apartments look at credit scores. They do.
If he doesn't have one, they may be like, oh, we can't rent to you. Well, the truth is you're right.
A lot of credit card or a lot of apartments do look at your credit history, but a lot of them don't.

And the ones that do, if you simply go to them and say, hey, here's the thing.

I know you guys look at credit scores.

I have a zero credit score, which means that I don't borrow money because I don't believe in debt.

But I also brought a copy of my bank account and you can see how much money that I have here. So I'm good for the money.
I also brought you my pay stubs so you can see how I work. And, you know, if you if you kind of dig deeper and also let them know, hey, they might charge you a little bit more for first and last month's rent.
But the truth is, you may have to do a little bit of due diligence to find people who believe the same things you believe and can actually understand, hey, I actually have money because those apartment complexes are out there. So let's check that one off the list.
And then if we talk about the car, well, I don't know about you, but I'd rather him buy a car in cash and not have payments than put money down and be loaded, loaded up with a car payment. because now we're teaching him, hey, hey if you want a car you have to pay payments on it as opposed to teaching him hey if you want a car let's buy one in cash you got five thousand dollars three thousand saved in two thousand in a cd once that cd is available let's buy five thousand dollar car in cash and then in a year or two if you want to upgrade and add three thousand dollars more're driving an $8,000 car.
And let's do that. And so that you can always have your money freed up.
Because one of the things we've learned, Jennifer, is the car payment is what keeps middle class middle class. Most people are walking around here with a $700 a month car payment.
And because they have that car payment, it's tough for them to do things like invest for their future. And so I'd love to set him up with the mentality that I keep my biggest wealth building tool, which is my income at my disposal.
I don't give it away in payments every month. And therefore, if I'm not in debt, I don't need debt, which means I don't need a credit score okay it's a new way of thinking i know that it is because people don't talk about it it is it's it's scary it's scary new way of thinking but yes i i see your point tell me the fear i it's not scary what are you scared yeah and it it goes it goes beyond the rent.
Because so college will only be four years. And then after that, he'll probably want to buy a house.
And I know it's a lot harder to obtain a house with no credit score and save up for a big, you know. So let me break in, I want my colleague to tell you about that fear.
Go ahead. Explain it.
What if I told you that's not true? Jennifer, I love this call so much. I'm so glad you're with us because you are every woman USA right now calling in.
The truth is credit scores, they benefit from us, right? They benefit from us being in debt they make money off that when we when when you get a credit card when you sign up for a loan there's a little thing called interest and so there's a lot of people making money off of that and so that's why you don't see on tv people advertising uh zero credit scores because nobody's making money off of that and so this whole whole thing is a product. But the truth is you can buy a house.
It's no harder. You can buy a house with a zero credit score.
It's called manual underwriting. And it's the same thing like I told you at the apartment complex.
All they do, it's literally the same process. But instead of looking at your credit score, they're looking at your actual money.
And they're going, okay. I've never heard of that.
I know, but it's true. Do you want to know that I bought my house with manual underwriting? I had a zero credit score.
And so just to clarify, not, not just for you, but anybody listening, a zero credit score is not the same as a bad credit score. A bad credit score is you haven't done well borrowing money.
And so you have a bad credit score or a low credit score. A zero credit score is just as good as a high credit score.
It simply means I don't borrow money. And if you were to look at my credit report, it would say indeterminable.
And so there are plenty of places. Churchill Mortgage is one that we talk about all the time.
They're everywhere in the United States except New York and Alaska.

And they do manual underwriting.

And literally all they look at, I'm going to tell you right now,

they look for 12 months of trade lines.

And that could be you pay your cell phone bill, you pay your utilities,

that sort of thing online.

Or I'm sorry, on time.

They look for 12 months of your rental history.

So if he goes to rent, he just needs to show 12 months, I paid my rent on time. And then they want to see your, I'm sorry.
I just said, uh-huh. Okay.
And then they want to see what you made over the last year. And they'll ask for your pay stubs, just like anything else.
And then they go, okay, great. And if he happens to be self-employed, they might ask him for his tax returns.
But that is it. And I just want to clear the air for anybody.
You're helping so many people right now because a lot of people don't know that this is a thing and it 100% is. And once you know that, all of a sudden it's weird because, Ken, the credit score don't mean a thing but a chicken wing at that point.
So true. And I love what you just said.
The zero credit score tells people, this is somebody who's very solid with their money. And that's all they care about is are

they going to get paid? Yeah. So when you prove, as Jade, you know, really laid out well that you

can pay, your son's got nothing to worry about. So that fear is natural, Jennifer, but it's because

you've never heard what she just laid out. Most people never have, but she's right.
Go do your

homework on it. Check her on it.

I promise you. Oh yeah.
It's popular to do these days. Fact check us.
I think you'll like what you see. This is the Ramsey show.
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.
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.
Hey, you guys know how much I hate banks in general, and so for me to do this is a big deal. Talk to our friends at Fairwinds and check out the combined checking and savings bundle that they created just for the Ramsey tribe.
You guys, it's incredible. Yeah, you guys, it's so easy to join Fairwinds no matter where you live.
So go to fairwinds.org slash Ramsey to learn more. That's F-A-I-R-W-I-N-D-S dot org slash Ramsey.
Welcome back to the Ramsey Show. Thrilled to have you with us as we talk with you about your life, specifically your money, your work, and your relationships.
I'm Ken Coleman, and Jade Warshaw is joining me this hour. The phone number to jump

in is 888-825-5225. That's 888-825-5225.
Well, we've just launched a brand new tour. Dave Ramsey

and Dr. John Deloney are going to hit the road, and they're calling this the Money and Relationships

Tour. A little bit different twist, maybe, on a live event that if you've experienced any of

Thank you. You're going to hit the road, and they're calling this the Money and Relationships Tour.
A little bit different twist maybe on a live event that if you've experienced any of our events before, this could be a little bit different. Very interactive and a lot of fun elements to this where the audience is voting, deciding on content.
Of course, they're going to cover money, relationships, and whatever you want to talk about. So it's going to be a lot of fun kicking off Louisville on April the 21st, 2025, and then Durham, North Carolina, Atlanta, Georgia, Phoenix, Arizona, Fort Worth, Texas, and Kansas City at the end of the tour.
So again, kicking off April 21, 2025 in Louisville. If you want to get your tickets, get them at RamseySolutions.com slash tour.
RamseySolutions.com slash tour. And if you're tuning in on YouTube or podcast, you can click on the link in the show notes to get the tickets.
So go ahead and jump on that. All right, to the phones we go.
Zach is in Salt Lake City. Zach, how can we help? Hey, how are y'all doing? Good.
How are you? Good. Hey, thanks for taking my call.
My main question is, I'm a recent college graduate. I graduated less than a year ago.
I just started working full-time. My long-term goal is to go to law school, but I'm just really not sure how to financially plan for that and plan for my, you know, financial future as a whole.
Are you familiar with the amount of law schools that will give a full ride based on LSAT scores? You familiar with this? Anybody ever shared that with you? I've been a little bit of research. I know I hear mixed things where the ones that are maybe more willing to give out better scholarships for a wider range of LSAT scores are ones where it's harder to get a job out of law schools because they're lower ranked.
So I feel like in some of those ways, it's, you know, I don't know where to weigh out the pros and cons versus a cheaper law school or one where I get a scholarship versus one where there's a higher promise of a better job or an easier process of finding a job outside of law school. Okay, well, I'm glad you're familiar with what I'm talking about because this is the advice I give.
Every time I get this call, and I've gotten this call several times, and I've said it with Dave on the air, I'll say it with Jade on the air, if it were me. Sounds controversial.
Are you going to say something controversial, Ken? You may think it's controversial. I don't think it is.
Let me just get comfortable. All right.
I would go to the school where I could get the full ride, and I don't care if it's got a big name brand or not, because that's what you're hearing. And you're hearing people say things like, well, the more prestigious, the more sizzle factor that the law school has, the greater chance you have of getting placed in a firm.
And I think that's garbage. It's just like people saying you can't get a house without a credit score.
These are all popular ideas that no one's really shown the light of accuracy on. And I'm here to tell you my opinion.
I don't think anybody cares what law school you went to. And if you go to a smaller law school that doesn't have the sizzle factor and you get a full ride or most of it paid for because of a great LSAT score.
And by the way, that's happening all over the country. It's very available.
The reason they do that is because they're competing with the Vanderbilt law schools or the Ivy League law schools that have all the name brand stuff. But I'm here to tell you, the same people that make J.Crew, they make Old Navy.
Okay. And we got to get to a point where we start really looking into this and we go, a law degree is a law degree.
And your ability to practice law is the same whether you come out of a fancy school or a smaller school. And is there some competitive advantage that can be proven if you go to an Ivy League school and they've got all kinds of connections in the big firms? Yes.
Yes. But do you know what the competition factor is there? You're competing with everybody else in your class.
And what I'm here to tell you, Zach, is if you want to practice law and you don't want to go into debt, then I would do what I just said. And I'd brush up on my LSAT.
I'd take it 10 times if I had to, because I can cashflow that. And then I'm going to get a full ride or pretty close to a full ride to a small law school.
And I'm going to get trained on the law and then I'm going to bust it. And I'm going to get an opportunity to go out and be the lawyer that I want to be.
And I'm not encumbered with any of the debt that all these other big shot guys that you think went through, they got all

this debt and they're stressed out of their mind. So that's what I would do.
Cause I can tell you,

anybody you ever represent will never ask you where he went to law school. Is that controversial,

Jade? It wasn't as bad as I thought it was going to be. I guess I know you better than I thought.
I don't even know what any of that means. What did you think I was going to say? I don't know.
It could have, you were setting us up for a cliffhanger. No, no, I'm just saying go to a law school.
Yeah, I agree. With an LSAT score that wants you.
Yeah. And they're going to pay for your law school and you have zero debt.
Yeah. And you can keep taking the, you can keep taking the test.
Take the LSAT 60 times. What's it cost to take it? I want to say it's around like $200.
Oh, yeah. I don't know if you can take it 60 times.
I've made that part up. Yeah, but you're saying prep and knock it out of the park so you can get.
That's what I would do. There's just no reason to go into debt to then get in a scramble with everybody else in your class.
You go to Harvard Law, and you're all competing for the same firms. Yeah.
Were you thinking about Ivy League? No, I just made that up. I was mainly, there's a school to local here in Utah.
It's probably my top school. And it's, I think it turns number 22 in the nation.
It's pretty good. And tuition every year is about 15,000.
So I'd come out, you know, if I didn't cash flow any of it would be about 45,000 in debt on top of you know any other living expenses depending on how much I'm working and stuff and I know that's way less than a lot of other law schools okay now here's the other thing here's the other thing law school is going to be there so go go make the 45,000 in cash flow yeah why not yeah how? Yeah. How long would it take you to put that away? That's the other thing is I'm not 100% sure what that looks like.
Currently in my job right now, I make about $52,000. I try to save as much as I can.
I'm trying to get out of debt in terms of paying off my car. So I'm hoping, you know, by next spring I can be up to the $70,000 range.
I don't know, you know, sometimes you kind of worry about the timeframe of, you know, when you kind of age out of these kinds of things, you know, in terms of starting too late in your career. Yeah, that's up to you.
How old are you now? I'm 26. Okay.
First of all, you're going to be ready to fund law school in two years, two and a half years max if you get after it. So you're not too old.
You've got all these things in your head that I think, this is conventional wisdom telling you, Zach, it's okay, get a loan. I mean, that's the conventional wisdom.
It makes so much sense. You said something that I found to be revealing.
You said, right now I'm working to pay off my car note, which lets me know you don't like being in debt. And if you don't like having a car note, I can guarantee you're not going to like having $45,000 of student loans.
So that was just a little light into your soul on that one. But hey, let me just tell you, my brother, we both went to college together.
And then he went and served a couple of tours in Iraq and came back and did social work for a while. And then he decided, I want to help people even more.
And he became a lawyer and he went to night school and did it. And he was in his mid thirties.
And then by the time he turned 40, he became a judge. So it's not too late to decide what you want to do.
And there's ways to do it to where you're not going in debt for it. So just a little story time there.
Zach, the point is there's no reason in our minds that you should take out loans to go to law school. You just don't need it.
So that's our verdict. I'm going to steal a line.
I think you need your own show, Judge Jade. Oh, don't touch me, Kim.
See how excited you just got? I could see you. Oh, man, I would love to.
I could see you in your own version of a Judge Judy. I'd be presiding.
You'd have a loud collar. Remember how she had the little polite light? Felt like a teacup collar.
I know. I'm going to put spikes on mine.
Yours would have some personality. I would love that.
That would be so fun. You coming in in your big black robe and you kind of sashay behind the...
No, I want like a purple robe. I want like a gospel robe.
I wasn't going to go there, but I like that even more. It's your show.
But tell me you wouldn't love like... I would love it.
Yeah. People coming in with their little...
We need a segment on this show where you wear that robe and people call in and you make financial judgments. The judge is in.
Yeah. The judge has presided.
I like that. We'll keep brainstorming that amazing idea.
Are you the bailiff? I would love to be the bailiff. That's funny.
I'd look like Barney Fife, the old school bailiff. Oh, boy.
That would be a lot of fun. I think people would watch that.
Hey, fun hour. We'll keep concepting the show.
We'll be back before you know it. This is The Ramsey Show.
Welcome to The Ramsey Show, where we help you win in your life, win in your money, win in your work, and win in your relationships. That's our aim.
We're so excited that you're with us. The phone number for you to jump in because it is your show.
Ask questions so we can coach you to get you where you want to be. 888-825- 5225.
888- 825-5225. Alongside the incomparable, the fabulous Jade Warshaw, I am just simply Ken Corwin.
Ken, don't do that to yourself. It's good.
It's good. I'm telling you, it's fun.
We have a lot of fun together, and we're going to help you out. Let's go to Katie in Springfield, Missouri.
Katie, how can we help? Hey, guys. So I am typically very frugal and try to be wise with decisions when it comes to money, but I've been going back and forth on this idea of taking my daughter to a Taylor Swift concert.
She's 15 and she really likes her and I do too, but the frugal side of me struggling with the price for a three hour experience. But then on the other shoulder, I've got the Spaniolo side that, let's make the memories.
So I just would like to talk through that.

Interesting.

Oh, my goodness.

This is...

I have been involved in another very popular Taylor Swift call.

I heard it.

You did?

I heard it.

My daughter wanted to be Rachel when I called in, I'm sure.

She said, please call me Ramsey.

All right.

Well, I tell you what, I'm going to listen along.

I mean, we can... So we've got to find out where you're at financially.
Yeah. Right.
So give us the picture. You guys get any debt? Just our home.
Okay. Just the home.
No debt besides the house. Correct.
All right. What's the combined income? It's right at 175,000.
Nice. Okay.
How much are the tickets going to cost?

Uh, probably $5,000.

Um, and then travel.

So probably right under $6,000 for three hours.

Oh, so you have to drive three hours?

The tickets you're getting, are these like really? We'll have to drive.

We'll have to drive seven hours, but it's a three hour experience.

Got you.

Seven hours.

So are you staying out?

You're staying overnight in a hotel? Yes, ma'am. So $6,000 total for this trip.
Is this for her birthday or is this just because? It's just because. How are you going to buy the tickets? What would be the method of payment? So I would sell some of my um my employee stock purchase plan okay interesting um that's your retirement that's crazy uh no no it's separate from retirement it's single stock yeah it's just single stock um yeah i i'm gonna wait for judge judge jade but i I've already reached my answer.
How much single stocks do you have? I'm just curious. How much in that? So we have about 141,000 in employee stocks and about 50,000 in single stocks.
So about right under 200 in both. Okay.
By the way, are these tickets, and I'm asking because I'm completely clueless, Katie. Are these like really close? We're looking at $2,500 bucks each, right? For two tickets? That's a pretty good experience, right? I wish.
Oh, it's not? I wish. It's the fact that it's the last part of her tour.
And so they're just really priced high for nosebleeds. Oh, so those are nosebleeds at $2,500 apiece? Wait a second.
Wait a second. That changes my answer, which is why I asked, by the way.
Oh, my God. Because $2,500 was like, I was thinking that was Artist Circle or something.
Yeah, like I need to be in the pit. Is that what you were thinking? Yes! I want the sweat to hit me for $6,000.
Nah, I could do without the sweat. In fact, if I'm paying six grand, I don't want any sweat to hit me.
You don't want T-Swift's sweat to hit you? No. No.
I don't want anybody's sweat hitting me. Certainly not hers.
Okay. I got nothing against the Swifty sweat.
I'm just saying. I don't want to be sweat on for that kind of money i'm gonna let you know katie and is this a can i'm shooketh to my core in a biblical sense so what do you tell her six thousand dollars tell her listen give me a specific ruling please because she's got the money she has the money um i actually I have more questions about your investments than I do about Taylor Swift.
But I mean, if you want to go, you can. I struggle with the seats for the money.
That's where my struggle is. It's not on whether or not you can afford to do it.
It's the value in it. Yeah, I'm there.
If I'm being honest, Katie, that's where my struggle is, is the value of the tickets. Not whether or not you can afford to spend $6,000 on a thing.
Does that make sense? Yes. You can afford to spend $6,000 on something? Is that where you were leaning, Katie? Why'd you call us? Well, were you leaning? I'm struggling because I just like to be really frugal, but my daughter said, well, you know, I'm level 16 and Have you guys never done anything like this? No, not the two of us.
No, we haven't. Did I detect a hint of emotion just then?

Yes, because she said, well, we're just very frugal.

And she said, you know, like money is just money.

So, yeah, so it is kind of emotional because I would love to go with her,

but it's like, oh, my goodness, a lot of money. I'm going to take, I am ready.
Oh, okay. I'm going to take a page out of the Stacey Coleman handbook, which is.
I'm unaware of this. The Jar of Marbles.
Yeah. Oh, yeah.
I'm going to take a page out of the Stacey Coleman, which is the days they go by and

you don't get them back is basically the essence here.

Yeah.

And I think you have an opportunity to make a really cool memory, something you've never

done before, and also prove that you can be a cool mom and you can come off the wallet

every now and then and you can afford it.

Yeah.

Do it.

Boy, am I surprised. I love that.
You could knock me over with a feather right now really yeah i did i thought you were coming in hot but uh i'm gonna say because they're so frugal this is not a lifestyle for you guys of no we just go hard in the paint all the time you have the money you weren't planning on putting on a credit card. You didn't mention points one time.
Yeah.

She's 15. By the way, it's employee stock.

It's not out of a retirement.

Right.

She said she's going to sell some things.

Do you have three to six months of expenses laying around for other things?

Yeah, we have about $30,000 in savings.

Okay.

I am 100% in agreement with you. And for the reasons that life is short, they have the money to do this.
It is outrageous. If George were in here, he'd freak out because George can't spend money on anything nice.
But it will be so unforgettable for them. That's what I'm saying.
And to me, this is a priceless trip with your daughter. Katie, I also feel like I hear your heart saying, yes, let's do this.
And your brain's going, hold the phone. And you thought, well, I'll call Ramsey and we'll get somebody else to talk to my brain.
And in this case, yes, it's a lot of money. Yes, it's overpriced.
Overpriced. Completely overpriced.
Painfully overpriced.

But our daughters don't know this.

And in the case that you can do this, this is about a memory.

And one day she'll go, good grief, I can't believe you did that for me, mom.

Yeah.

And I think that's why I do this.

But just don't, mom, don't complain.

If you say, yes, I'm going to do it, don't be like, these seats are crazy.

Just enjoy it. Enjoy it for the experience because in the nosebleed, nosebleed sucks.
Let's be honest about that. I'm going to actually push back on that.
I have watched football games in the very top row of NFL arenas and you would be surprised. These people know what they're doing.
I think she's going to enjoy the heck out of it. The energy is going to be amazing.
I'm okay with nosebleeds for this. It will be a good experience.
But put aside some extra money for a t-shirt. This is the Ramsey Show.
Statistics show that half of Americans don't have enough life insurance. Or they don't have any at all.
I don't understand this, John. Why don't people want to take care of their family? They think they're not going to die or something? Well, I used to be one of those guys.
I didn't even think about it. And one of my buddies said, hey, the only reason to not have life insurance is if you hate your wife and kids.
And I immediately went and got term life insurance. That's a gut punch.
For decades, Dave, I've sat across people who've lost a spouse. They've lost somebody important to them.
Me too. They don't know what to do next.
You're going to have a crisis here. You know, you got two options while you're sitting and talking to a young widow.
She's concerned about how she's going to invest all this money properly and not mess this up, or she's concerned how she's going to eat tomorrow. That's exactly right.
These are the two options. It's saying I love you to your family.
Term life insurance. Jeff Zander and the team at Zander Insurance makes it easy and affordable.
I've used them personally for 25 years. They're the only people I trust.
Go to Zander.com or call 800-356-4282. Hey guys, good news.
Presale is on now for my new book, Build a Business You Love. If you're a business owner, you know running a business is hard.
That's why I wrote this book, to share what we learned over the last 30 years so business owners can grow your business faster with fewer mistakes. Pre-order your copy today and you'll get access to over $350 in bonus items only at RamseySolutions.com slash store.
RamseySolutions.com slash store. Pre-order today.
Welcome back to The Ramsey Show. I'm Ken Coleman.
Jade Warshaw is alongside, and we are together here for you. 888-825-5225, 888-825-5225, taking your money questions and your income and work-related questions today.
It's time for our question of the day brought to you by Why Refi. We've made, let me start over.
All of a sudden I forgot how to read, Jade. That's all right, it happens to the best of us.
Yeah, that's right, and live, it's always exciting. Hey, we've all made money mistakes, so if you've defaulted a private student loan, we're not judging you, but we are saying that there's something you can do about it, and that's contact Y-Refi.
Y-Refi was created for people in your exact situation. Go to YRefi.com slash Ramsey.
That's Y-R-E-F-Y dot com slash Ramsey. It may not be available in all states.
All right. Today's question comes from Hudson in Florida.
He says, I'm 26 and married with three kiddos. I've worked for the same company for six years.
During that time, we've had a lot of growth, which I played a key role in developing. The company now grosses over 10 million a year, and I've been offered a partnership position with the two current founders.
This has been what I've been working towards this whole time that I've been with this company. But now that it's here, I'm second guessing myself

and I feel like I have imposter syndrome. Do you have any advice for me so that I don't set myself up for failure? Yeah.
Love the transparency here. Yeah.
Imposter syndrome is nothing more than doubt. So the first thing I would say, Hudson, is that you're not an imposter.
Imposters are people who pose as someone else.

And typically this is in a illegal operation. So someone who would try to steal my identity or poses me or poses someone else to do something illegal, that's an imposter, a complete fraud, a complete fake.
And then a syndrome is a fancy word for some type of a disease or sickness. And you don't have a disease and you don't have a sickness.
What you have, Hudson, is good old fashioned doubt. And doubt only comes to people who are attempting to move forward.
And so all of a sudden, after all these years, you've been offered an opportunity through your hard work. Because, Jade, you know business.
You know small business. People don't just come up to somebody and tap them on the shoulder and say, hey, we'd like you to be a partner.
They are giving you, my friend, a good portion of this company and their own equity. And they're saying, we're going to split some of our pie for you.
That is the ultimate endorsement.

So I would remind you to remind yourself that the doubt you're feeling is because you're taking a major step up and a step up or a step forward is always connected to the unknowns. And the fear of the unknown is what's creating the doubt.
So what you're really dealing with is you've got some fear, you've got some doubt, and that's very, very normal, but you've earned this. And so to set yourself up to win, you've got to say, hey, I've earned this.
There's going to be some new things. There's going to be some growing pains, but that comes with the territory, and I'm going to do then what I have been doing and that is learning and growing and becoming better so this is all mindset stuff and the doubt by the way is very very natural when we all step into something new doubt on the first day of kindergarten doubt on the first day of high school doubt the first time jade goes into a division one volleyball game it listen doubt only comes to people who are moving forward jade you know who never experiences doubt who people with their elbow deep in the popcorn in the bleachers wow because they're just sitting there watching the comfort zone oh she should have done this or he should have done this and all this kind of garbage those are people that are sitting on the bleachers and they have no doubt they're quite certain of their opinion yeah and what you should have done right very good ken and and that always kills me you know it's like yeah get off the bleachers yeah why don't you why don't you put on a pair of shoes and then you see what you'll do in that situation let's go how about you get out on the field or on the court let's go you want to compete let's see how sure you are johnny rocket up there in the bleachers with your with your hot dog and your your diet coke and your whatever kills me so i like to encourage people that are dealing with doubt that tells me that you are moving forward and that you want to move forward and and as a result you're facing some unknowns and that's all that is you're going to do fine you're going.
Congratulations. Yeah, my goodness.
All right, let's get to Nancy in Los Angeles, California. Nancy, how can we help today? Hi, thank you so much for taking my call.
Yes. Okay, so I'll just get into it.
My question is, how do I, as a Christian, as a believer, how do I walk in contentment daily while also creating goals and aspiring to goals and aspiring to, you know, move forward? And also, like, if I've heard from the Lord that I'm in a waiting season, what do I do with that? How do I balance all of that? And how do I, I guess, wait well? And just for a little bit of context, I'm completely paid off debt earlier this year, March of this year, and really happy about that and just different moving parts. And so that's really where I'm kind of stuck is balancing contentment.
Tell us what you're waiting on and where the lack of contentment is rearing its headaring its head yes sure yeah so i if i'm being honest i we prefer that job what happened i i really dislike my job i can't stand going at all and you know i've i've heard few phone calls and you know i'm really embarrassed to say that it's been 10 years almost over 10 years yeah that I've been at this job I inherited it it's a union job it's very coveted in my area a lot of people you know wish they could have this what are the reasons that you do not enjoy the job um well it's not challenging at all um I don't feel like I'm you know using I don't it's not challenging at all. Um, I don't feel like I'm, you know, using, I don't,

it's not challenging mentally or intellectually. I'm not, I don't feel like I'm really going

anywhere or doing anything moving forward. And then also, um, just, it's kind of rough.
Like

the people I work with, it's mostly men. It's like, I would say I count sometimes it's like

40 men to two women and it's a, it's a blue collar job. Okay.
Can I tell you something? Can I tell you something? I'm going to be really, really honest with you. Um, I love your spirit, but I think you've got this all wrong.
And I think you're trying to justify this, this movement inside of you, this restlessness inside of you. You're trying to justify not acting on it.
I think you needed to leave a long time ago. And I don't say that as a criticism.
I say that as a coach. You don't need to be content.
You need to follow the restlessness in your soul. You aren't being challenged in this.
And that means you aren't using your God-given ability to the extent that you can. And that's why you feel this way.
And it's okay to go, I'm one or two women in a blue-collar room with a bunch of dudes. That doesn't make you discontent.
That makes you a living, breathing human being who is aware. And Nancy, I'm going to hand it over to my colleague, but I think you need to be leaving.
You do not need to be any more content. I think you're now relying on this excuse of contentment to step into the question we just got.
Right. Because what did you think you were going to feel when it was time to go? That's my question.
If you weren't going to feel discontented, if you weren't going to feel frustrated and tired and like it's time to go, then what did you think that you were going to feel? I don't know. I guess since I inherited it, I just have felt like I need to just be grateful and just, you know, just.
I think you have been. I think you've been grateful in heavy doses.
Yeah. You've done everything you need.
It's time to leave. Yeah.
You can be grateful and move on. Like just because you don't stick around with something forever doesn't mean you weren't grateful for it.
It's like you go to a restaurant. Somebody served you a meal.
You ate it. You were grateful for it and you moved.
You left. You went to your next destination.
It's a good call. Do you know what I'm saying? I was really grateful for seventh grade, but I don't want to stay there.
Yeah. Seventh grade was a good year for me.
It was a big year. I may have peaked, but that's a whole other call.
You know, Nancy, do you have a sense, we only got about 40 seconds, so real quick, do you have a sense of what you want to do? I have a few ideas. I'm in school for herbalism.
I'm interested in UX design, graphic design. Okay.
All right. So here, I've got something for you.
All right. So hang on the line, Christian, let's get her copy of Find the Work You're Wired to Do.
It comes with the Get Clear Assessment. Nancy, I want you to take the assessment first, then read the book.
It's like me coaching you through your results. I think it's going to reveal and confirm some things for you.
But hear this from Jade and I. You don't need to be content in a place that you're not supposed to be.
It's time to get a plan together, and eventually we're leaving. We believe in you, Nancy.
You're a good, good lady. This is The Ramsey Show.
If you're a small business owner and you feel burned out, then you've got to join us at Entree Leadership Summit this May 18-21. This leadership conference will refuel you with fresh vision and connect you to like-minded leaders so you can take your business to the next level.
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The Ramsey Show rolls along from our Nashville area-based headquarters. Thrilled that you are with us.
I'm Ken Coleman. And Jade Warshaw is alongside.
The phone number is 888-825-5225. Let's go to Chris in Sacramento, California.
Chris, how can we help today? Hi, guys. I just want to say thank you for hearing me out.
I'm 27, and I'm getting married within a week, and I have a debt, no debt, sorry, but 65% of my income is going to my house, and we're drowning about negative 20% per month on our utilities and groceries, and we've cut back. And I'm debating on whether I sell my home, rent my home.
I have an opportunity out of the area for a job that I would be able to live rent-free and just trying to figure out life. Wow.
Well, what we know to be true is the 65% mortgage can't continue. So we know that's true, right? Right.
So that kind of takes a weight off of our shoulders to know, okay, we can't stay here. And then the question is, what do we do next? Because you said you've got an opportunity.
Now we can start to say, okay, do we want to do the opportunity that's outside of the area? What does it look like? I think you mentioned renting this house. And so now let's talk about those other options.
So is it fair to say that we both agree you can't stay in this house? Yes. Okay.
So now let's talk about what do we do with the house? If I were you, I'd sell it. I'd gross about $150,000.
I'd probably net after real estate fees about $135,000. I like that.
What's wrong with that? Nothing. It's more, it's just my first home.
I just put $100,000 into it the last two years. And, you know, I was envisioning having my kids here.
Yeah. So there's just the emotional connection to it.
How long did you have the property? Two and a half years. I put about $150,000 down on the house when I bought it.
And I had a really good management position at a restaurant before. And that's where I'm going to now for the new opportunity.
Um, I tried to start my own business and it didn't work out exactly how I hoped, but I I'm recuperating my losses and I'm just trying to get back on my feet. I'm currently serving at a restaurant right now.
And I've been getting by with that. And me and my fiancee, we're just our income together it's just where we're at we're not we're not making it you're in Sacramento why are you guys staying in Sacramento for jobs that sound like you could do them really in anywhere in any part of the country well and that's where that's why we're moving it it's just more of a do we rent the home and make a a profit per month about 100 200 or do we sell the home put the entire you know net into a money market account yes and make about 400 a month on money market let's do the latter let's do the latter because if you have the opportunity to rent somewhere out of the area and they're covering the rent, then this is an opportunity for you to

start over. Let that money grow, that equity that you're going to get out of the sale of this home.

Let it grow over time because the time is going to come when you want to buy again.

I did have a math question on this because I thought I heard you say that you put 150 down

on the home. And then I also thought I heard you say that you put 100 into it.
Is that right? So

you put 250 into this home, but you're only coming out with $135. What happened there? Bad contractor.
I got really jacked up by that. I lost probably about $50,000.
Maybe more. Yeah.
And, I mean, I'm not a contractor guy. I was doing my job, and I ended up going underneath the and I just solved problems and I didn't solve problems.
Long story short, it cost me a lot more. And I was paying the mortgage at the same time as I wasn't living in it.
So I was, you know, unfortunately paying double for it away. Yeah.
So it just really drained this down. And then I just paid off all my credit card debt.
I had about $17,000 in debt. We're completely debt free.
We don't have a car payment. Yeah.
So there's some silver linings here. I think the hardest part is you had a vision for this house, you got taken for a ride and that sucks.
And now as a result, you know, it's not going to be the house that you raise your family in. But I love that you have other opportunities.
And I mean, you can, Ken's here on the career side of this to weigh that out. I take advantage of that while you're on the line.
Yeah. Well, Chris, if I heard you right, you've got a really good manager gig you're heading into.
So you feel good about this? Yes, I'm super confident. It's a nice restaurant in South Lake Tahoe.
It's to the ninth. It's like my dream job so fantastic and did you say south lake tahoe yes oh man that's that ain't a bad place to work okay come on chris and i'd be going for about yeah i it just it all makes financial set yep and it's just yeah i just i have with my business i've kind of had some regrets on that and i don't want to have my cart in front of the horse and I love it you're asking the right questions Jay gave you great advice you do not want to be a landlord from long distance this is time to move on it's a clean start and and I think it's great for you you're going into your dream job in one of the nicest places in the United States to live and and you're going to get free of this house which has just been nothing more than a money pit for you, unfortunately.
So yeah, sell and move on, my friend. Sell and move on.
I love that. Do you want to take another call or can I highlight this for the people? Jump in.
Go for it. I want to highlight this because a lot of times people are like, why does it have to, you know, we teach that the mortgage shouldn't be any more than 25%.
And I know there's a lot of questions around that. And this is a really great, it's just a cautionary tale of what takes place when you don't heed that advice.
Because if you really think about it, it, you know, if you look at your, your money as a, as a whole thing, you know, 100%. I love that you've got an orange for our listening audience.
She has a, she has a little tangerine in her hand. Yeah.
And if you think about it as segments, right?

We got to cut it up in a segment.

It's going into segments.

And so if you think, okay, if you do, let's pretend like, yeah, I'm taking your advice.

25%.

Okay.

Now we got 75 left.

And then it's like, okay, if you're a person who values generosity, most of us do.

So you give another 10%.

Now you're at 35.

And now you say, okay, well, you've got to invest.

Baby step four, I'm investing 15%. Now, before you know it, we're already at 50% of our income and we haven't even paid our other bills yet.
We haven't done childcare yet. We haven't put aside for kids college yet.
We haven't, you know, done, taken a vacation. We haven't even done anything yet.
And we're already out 50. So imagine what it would feel like if your mortgage was at 40% or 45%.
You feel that very, very, very, very quickly. So it behooves you.
It's a great word. You know, I like a good word.
It does behoove you to think about, okay, what are my ratios here? And is this sustainable long-term? Because 65%,

like you said, they're burning 20% every single month.

There ain't enough tangerine left over.

There ain't enough. You got to eat the pith.

By the time you do...

That is fantastic. That's why I showed up today for that moment.
That was good. Yeah,

but it's a wonderful illustration. And then I want you to, while we're on this,

also why we give him the advice, don't try to stay, don't become a landlord. Don't

Thank you. But it's a wonderful illustration.
And then I want you to, while we're on this, also why we give him the advice, don't try to stay, don't become a landlord, don't keep that house because you think, well, I'm going to make 400 bucks a month. I want you to walk through the math, the real math, when people think that that's a good idea.
Well, I think for him, it was more of a sunken cost fallacy. I feel like he thought, well, I put this much into this property.
If I hang on to it for a while and keep dumping effort or whatever it is into it, maybe I'll get it out. And for a lot of time, for a lot of us, that's kind of what keeps us locked in to something that's just a bad break.
And you kind of have to just eat pith and go this. This was a bad break.
It wasn't a good investment. You know, I got taken for a ride and walk away.
And for him, going all the way from Sacramento to South Lake Tahoe, and now you're going to be a long distance landlord. Yeah.
Trust me. When he rolls in, in that moving van to South Lake Tahoe, he's gonna be like, I don't, I'm not knocking Sacramento.
Yeah. All right.
But that's a difference. He's gonna be like, forget y'all.
You want to leave all that behind. Yeah.
You want to leave it behind. And he had a bad taste in his mouth.
So I think for him to come out, he's clearing 135. It's not as much as he should.
That's right. But it's still money and it's going to sit in a high yield for however long until they're ready to buy.
I agree. And when they buy, they're going to put as much down possible on a 15-year fixed rate mortgage, hopefully, that they can get paid off quickly.
He's already debt-free. And so the principle of this whole segment is, do you know what it is? You've been saying it.
Don't eat pith. There it is.
By the way, spell that for people. P-I-th.
P-I-T-H. Is that right? I think.
I feel like there could be a hidden letter in there. We did.
We got validation. The guys in the booth.
Great. Yeah.
Yeah. Think about the ratios of your income.
Think about each section like this clementine I hold in my hand. Oh, it's clementine.
It's even better. Mandarin.
Love it. That's how we're going to do this.
Make sure it's the right. I feel like we went back to Sesame Street.
You laid it out for us. I love it.
Good stuff. All right.
Quick break. She's Jade Warshaw.
I'm Ken Coleman. We'll be right back.
Listen, I know a lot of you would rather watch paint dry in slow motion than file your taxes. But thankfully, you don't have to dread filing when you've got Ramsey SmartTax.
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Welcome back to The Ramsey Show. Thrilled that you're with us.
I'm Ken Coleman. Jade Warshaw is with me as well.
888-825-5225. Taking your money questions and your work-related or income questions.
To that end, the Get Clear Assessment, a tool that I was privileged to create a few years ago. It's helped hundreds of thousands of people and just wrote a new book called Find the Work You're Wired to Do.
It came out a little earlier this year, and it includes the Get Clear assessment. So what does the assessment do? Well, it answers four really big questions.
Who am I? What's my unique wiring? And we're talking about in the context of work. Why am I wired that way? What do I want to do professionally, and how do I get there? And that's what these two tools combined do for you.
You're going to spend about a third of your life at work. And I just believe with everything in my being that you shouldn't spend it just doing something that you're okay at or that you're good at, but you don't enjoy.
It doesn't produce a result that motivates you. So you can get the book, find the work you're wired to do, and it comes with the assessment, the Get Clear Assessment.
You can get it at RamseySolutions.com slash store, RamseySolutions.com slash store, or you can click the link in the description of the show if you're listening via YouTube and podcast. All right, to Susan is where we're going to go.
She is in Dallas, Texas. Susan, how can we help? Hi.
I just went through a divorce or finalized it recently. It took a while.
And I've been a stay-at-home mom during my entire marriage for the past 14 years. Anyway, I got what I consider a pretty good amount of money.
And I'm just curious, I don't really know what to do with it. I let my ex-husband handle every single bit of finances i never knew how much money we had or anything um so how much are you getting um well there's a couple components to it i got a check for 1.1 million okay um i got a 401k for $715,000.
Okay. And then $15,000 per month for the next seven years.

Okay.

How old are you?

I'm 40.

Okay.

So you've got a guaranteed income for the next seven years.

That's nice.

Okay.

Okay, great. So tell me your question.

Okay, so my question is I'm completely debt free. I also don't own a home because I just got divorced.
Okay. So you need a place to live.
Right. I'm renting right now, which is $3,600 a month, which I feel like is really expensive.
It is. Um, it's also all bills paid.
So my question, I guess is, um, I've got like $95,000 in a high yield savings account. I started a, a Roth IRA.
I'm like totally, I know nothing about finance. So I've just been trying to learn just in the last month or so.
Anyway, my question basically is, A, can I live off of part of this money, like off of the monthly income? Or do I need to get a significant job? Well, the good news is you do have a monthly income for the next seven years. So you've got some time to reinvent yourself and figure out what you want to do with life.
And if I were you, obviously you don't need $15,000 per month to figure out what do I need? What's a what's a fair budget for me? Maybe it's $7,000 a month and then you take the rest and you invest it every single month. Right.
So that's thing one. You've been bought time to figure out a career path for you.
And I'm going to toss it to Ken in a moment for that. But let's talk about the rest of the income that you have.
So let's say just to keep it simple, let's say you invest half of what you're getting every single month for the next seven years. So around $7,500 thousand dollars.
And then you've got 1.1 million. That's a check, right? Yes.
Yes. And I didn't know what

to do with that. So I just put it in a money market account because I didn't even know how

to deposit that. Great.
I think that's a good place to start. What I want, my homework for you

is I want you to start learning about investing. I want you to start understanding, okay, I know

husband, ex-husband used to do it, but it's now time for you to start learning because

We'll be right back. is I want you to start learning about investing.
I want you to start understanding, okay, I know ex-husband used to do it, but it's now time for you to start learning because the time is going to come where you're going to need to invest this and you're going to want to understand it. You don't want to just hand a check for $1.1 million over to anybody and say, here, you handle this.
You're going to want to say, okay, I get it. And a great place to start is here.
You know, here at Ramsey, we do teach that investing is a better place for you to build long-term wealth than a money market account or a high yield savings account, simply because of rate of return, right? If you invest that money, you'll get a higher compound interest rate of return on that. So it'll grow faster.
And so I would tell you to get hooked up with a SmartVestor're gonna have the heart of a teacher and they're gonna be able to teach you about this and that's the key thing tell them I don't want to invest anything yet I just want to learn right and they're gonna ultimately have you invested in a way that's four different types we're spreading it out it's not going to be high risk it's going to be just in a set of stocks, but I want you to understand that. So when the time comes, we are investing that check, but in the meantime, we're getting with a SmartVestor Pro to teach us.
And then as far as the $715,000 401k, yeah, leave it, let it grow. You're probably going to have to do a direct transfer rollover into an IRA.
And so the SmartVestor Pro is going to help you do that. And then for you, now it's all about career and what you're going to do with your life because you're super young.
I got a couple of questions on the money first. So the $715,000, how old are you? I'm 40.
Oh my gosh. It's going to be so much money.
So the $715 that is in the 401k, that is going to be a lot of money. What is that going to be in 30 years? Okay.
Did you tell me you're 40 now? Yeah, she's 40. Okay.
So let's just say you retire, I don't know, let's say 65. Does that sound good? Okay.
Okay. Let's say you add nothing to it.
That right there is going to be $8 million. Holy cow.
Just not touching it. The reason I went to that, Susan, is because on this work thing, this may or may not be a thing now.
How old are the kids? They're 14 and 11. My other thing is, can I buy a house? Yes.
I was going to say that. I was working that.
And which money do I? I would take the 1.1. The 1.1 check is what you need to do.
Plus you already have $95,000 in another savings account. So I was going to ask you, what is a modest house in a nice area? What is a house price? You know your area for you and the kiddos.
What does that look like? What's the money on that? I mean, right now there's like nothing to buy. I've been looking.
I mean, there's a nice home for $500,000. Okay.
So let's just use that. Let's just use that as an example.
Okay. So if I'm you and then I'm going to pay cash for the house because right now now you're paying $3,600 a month in rent.
So you take just a little bit less than half of the 1.1 and you've got to pay for a house. Now that monthly budget, which I'm using is the $15,000 you're getting in the settlement.
Now that $3,600 was coming out of the $15,000, not anymore. Right.
And your utilities and things like that are going to be nothing.

You still got the two kiddos in school.

So I would come up with the every dollar budget and budget off of the $15K,

and I would do some type of an investment strategy based on what a smart investor pro tells you

because Jade already proved to you, you don't have to put another penny.

And I'm not saying not to, but I'm guessing their investment strategy

and then we'll it does over time. So for me, if I were you, I would take my time.
You just came out of this divorce. You've just settled.
I'm fine with you renting for a little bit longer. You're saying the market right now is not a lot on the market.
Let's see what happens after this presidential election. The point is grieve, stay cool.
The 3,600, while it's a little expensive, it's not even phasing you. I would take my time.
I'd buy a nice house cash. And now you still have over half a million dollars to invest.
And when you invest it, you're probably going to look for something that's non-retirement, something that you can get to sooner that's in some sort of a bridge account so that you can access it before you're 60. I agree with that.
And that should be the advice that you get. After my seven years.
Yeah. But for seven years, my goodness.
But here's the deal. You're going to have some margin in that monthly as well.
That's $180,000 a year for the next seven years. Yeah, you're good.
So from a standpoint of work, hang on the line. We'll give you the book, Find the Work You're Wired to Do and the Get Clear Sessimus.
But that is a relaxed, like, what would I do if I didn't have to work? Which, by the way, you don't have to. You don't have to.
I was just talking purpose. Yeah.
So sorry, we're running

out of time, Susan. Hang on the line.
We'll get that to you. But thank you for the call.

You're going to be in good shape. This is The Ramsey Show.
Thank you.