Debt Is Never a Blessing, It's Always a Burden

Speaker 1 From Ramsey Network, it's the Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Camill, joined by one of my best buds, Dr.

Speaker 1 John Deloney, host of the Dr. John Deloney Show, and we're taking your calls at 888-825-5225.
You call up.

Speaker 1 We'll talk about your life, your money, your relationships, your mental health issues, boundary issues, whatever you want. We're going to air it out in front of everyone for the good of America.

Speaker 1 Is that aggressive enough, John? Is that a big enough promise?

Speaker 2 It's quite the lofty promise. That's right.

Speaker 1 We'll see if we can accomplish it today. Mason kicks us off in Springfield, Missouri.
What is going on, Mason?

Speaker 3 Hi, guys. Thanks for taking my call.
Sure.

Speaker 2 I'm actually

Speaker 3 calling on behalf of my sister-in-law. She had a stroke three years ago at the age of 23

Speaker 3 and has since been trying to

Speaker 3 get back into

Speaker 3 the

Speaker 3 job market. And she just simply can't get herself back to normal and has not changed her spending habits from when she was working two jobs 80 hours a week.
She was a hard worker.

Speaker 3 And now she's stuck and she's taking on loans, and she doesn't know whether she needs to file

Speaker 3 bankruptcy or or if there's another route that she can go.

Speaker 1 There's always another route. The question is, how is she, let's separate the two from financial problems to her health.
How is she doing health-wise?

Speaker 3 She can't speak well.

Speaker 3 She pretty much mixes her sentences with ums and uhs non-stop and has to have assistance with reminding her of different words.

Speaker 3 And then her physicals, about the right side of her body, a portion of it does not work she can't move her arm well she can walk but she is frequently stumbling at times and happens to pull herself up or get assistance to get up

Speaker 3 and that's that's about the the extent of it her health she's still going through therapy but it it's based on what the doctor has said he does not have any expectations that she'll recover past that point

Speaker 2 what is what is she doing for work right now

Speaker 3 she's not she's applied uh multiple places and every time she goes to do the interview, it pretty much gets

Speaker 3 shut down during the interview.

Speaker 2 I would check out. I don't know the resources there in Springfield, but I would check out and call around and see.
Sometimes there are entry-level programs,

Speaker 2 maybe through a disability rights program or some sort of state-run program or local program there in Springfield, which Here's what we're looking for. We're looking for an on-ramp

Speaker 2 so that she can A, get her confidence back, B, figure out the actual limitations in a work setting because those are different than at home sometimes. And then from there, you can springboard to

Speaker 2 another job that might pay more, that might be at a more established place. So that's number one.

Speaker 2 Filing bankruptcy while somebody is still spending out of control is like

Speaker 2 Congress forgiving student loans and making them in the same month.

Speaker 2 Right? Like,

Speaker 2 it's not a solution. The solution number one is like let's stop let's stop the bleeding

Speaker 2 uh why won't she stop spending or where is she getting money to spend let me ask that

Speaker 3 so uh so her spending habits come from when she was working constantly she had enough to pay for her her her lifestyle uh and then was able to save a lot of money and uh she had a boyfriend her and her boyfriend would just essentially just buy whatever they they wanted to and when she had the stroke, she lost both her jobs.

Speaker 3 And then now she's on disability,

Speaker 3 but she hasn't really, she has reduced a lot of her spending, but it's still

Speaker 3 at a specific lifestyle that she enjoyed before her stroke. And I think that's the biggest portion of it.
And then the money, so it'd be her boyfriend who works, and then her disability that she gets.

Speaker 2 Have you talked to her?

Speaker 3 Yes.

Speaker 2 How'd that go?

Speaker 3 Are you referring to talk to her about the spending habits?

Speaker 2 Yes. Yeah, because

Speaker 2 here's the hardest part of all this. At the end of the day, she's an adult.

Speaker 1 Yes. And unless you have financial power of attorney, you got no say in her finances.

Speaker 2 She didn't have to do anything she didn't want to do. And that's hard, and that's miserable, and it's heartbreaking and all those things, but it just is.

Speaker 3 Yeah, that's a conversation that we had just after her stroke about we my wife and I had sought to try to assist with managing her finances. finances.

Speaker 3 We got some pushback from a lot of the family, but they've come to us with assistance and a lot of different things.

Speaker 3 And then when it came to spending less, I would refer to the government example that you gave. It just was not interested in cutting costs and reducing spending as much as it was.

Speaker 3 How can I help get out of this hole? Or how can I get out of this hole?

Speaker 2 And so it may be that the solution out of this situation for you is to, you and your wife, draw some pretty firm boundaries inside your home and knowing that this ship will run aground at some point.

Speaker 3 Yeah, yeah. And I think

Speaker 3 the biggest reason is there's some issues with her and her boyfriend,

Speaker 3 and now she's needing to leave him, but she can't really go anywhere because she's tied to an RV that they live in that is under her name and she can't afford on her own. Yeah.

Speaker 2 And she could sell it. She could trade you some other things, but she's made some choices and refused help from other adults.

Speaker 2 If you and your wife choose, choose, the only way I've seen it be successful is if somebody steps in and says, I need some help, and you're able to say, Okay, here is my conditions for help, and I'm not going to enable.

Speaker 2 Here's what help would look like if you want to participate. And you and your wife make that decision beforehand.

Speaker 2 It's very hard to do in the moment because it sometimes includes

Speaker 2 you're not there for me. You hate me.
I knew I couldn't, like, all that kind of stuff that just is real personal and attacks. And

Speaker 2 it's hard to hold boundaries in the moment if you haven't thought through them clearly on the other side i mean on the front end right

Speaker 2 yes yeah that's i mean that's the best case she doesn't have to do anything you say um she hasn't for a long time and until she says hey i need some help and i'm willing to accept the help that you'll you'll provide um i think what you can do is let her know that you love her and that you'll be there when she decides to call

Speaker 2 I don't know another option. You know what I mean?

Speaker 1 If you give her a book, it's just going to sit on the shelf.

Speaker 2 And maybe one day she'll pick it up.

Speaker 1 But we can't force her to go, you're going to learn this and you're going to do something about it.

Speaker 3 Yes, and this is actually a lesson we've already learned in this process.

Speaker 3 I think it was more of a, and even if we came to her with this advice, which is an advice that we've given before, it has been more of a, that's a really good idea.

Speaker 3 And that was pretty much the extent of the response from her.

Speaker 2 How much of that is boyfriend?

Speaker 2 Say that again, I'm sorry.

Speaker 2 How much is the lack of action on the back end is boyfriend?

Speaker 3 Would you say you mean how much does he provide or no?

Speaker 2 Like you guys sit down with her and say, hey, here's reality. Here's the amount of money that you're spending.
We want to help you. And she's like, that sounds amazing.

Speaker 2 And then she tells him, he's like, that's stupid.

Speaker 3 Yeah, he's not really involved in the conversation because she's trying to get away from him due to certain circumstances that are nothing violent or anything.

Speaker 3 It may have, you know, I think it goes back to the thing that you guys mentioned about not putting yourself in financial situation that requires the income of

Speaker 3 people that

Speaker 3 you may not have a long-term

Speaker 3 established relationship, such as marriage. And there's no marriage between them.

Speaker 1 Well, aside from her health issues, she's made a lot of choices, and it's going to be hard to unwind all of this unless she really wants to, on top of fixing the health issues.

Speaker 1 So I hope she does, and I hope you can help her with some resources. But like John said, I wish I could just wave a wand and change people because I love them.

Speaker 2 Adults can't change other adults. It's heartbreaking.

Speaker 1 That's one of the hardest truths to learn in life. But thanks thanks for the call, Mason.
You're a great brother, and I wish you and her well on the financial journey. This is the Ramsey Show.

Speaker 1 This is the Ramsey Show. I'm George Campbell, joined by Dr.
John Baloney. We're taking your calls at 888-825-5225.
Danielle joins us up next in Milwaukee. Danielle, welcome to the Ramsey Show.

Speaker 3 Hi, thanks for having me.

Speaker 1 Absolutely. How can John and I help?

Speaker 3 Well, I'm calling about a question regarding paying for my father's phone bill.

Speaker 3 Basically,

Speaker 3 my dad

Speaker 3 lives below the poverty line due to his own life choices. I've helped him financially throughout the years.

Speaker 3 And currently, I am just paying his phone bill. And

Speaker 3 I

Speaker 3 want to help him. And this has been a way that I've been able to do so, but he

Speaker 3 has been making some questionable choices, and I don't want to parent him.

Speaker 3 And I just, I'm not sure if this is the right thing for me to be doing.

Speaker 3 Yeah, I'm happy to give more color to that. It's, you know, family, it's kind of complicated.

Speaker 2 Yeah, it's always, it always feels so complicated when you're in it. And in Georgia, in my seat, it's usually way less complicated.

Speaker 2 Can I ask you a hard question?

Speaker 3 Yes.

Speaker 2 Are you paying his phone bill for him or for you?

Speaker 3 For him.

Speaker 2 I know, but are you paying the bill for him or for you?

Speaker 3 Well, I guess I want him to be okay, so I guess for me in that regard.

Speaker 2 Has he listened to any of the wisdom or advice you've given him over the years?

Speaker 3 Um, no, not really.

Speaker 2 If behavior is a language, what has he been telling you for a long, long time?

Speaker 2 Well,

Speaker 3 I guess that he doesn't value my

Speaker 2 input. Yeah.
He'll take your money. He'll take your phone, Bill.
Cool.

Speaker 2 But when it comes to I want to live a different life, a healthier life, a safer life, a more loving life, yeah, I don't really care about that. I'm especially not going to take that crap from you.

Speaker 2 And then with the healthy dose of who do you think you are? I'm your dad.

Speaker 2 How long have you been chasing him?

Speaker 2 Your whole life?

Speaker 3 No,

Speaker 2 I would say

Speaker 3 when my parents, my parents were married for 35 years, and once they divorced, I kind of

Speaker 3 not right away, but as he just continued to make bad choices, I sort of,

Speaker 3 unbeknownst to me, took the role of my mom.

Speaker 2 Yeah, there you go.

Speaker 2 Yeah. Yeah, I know.

Speaker 1 It's a weird position to be in.

Speaker 1 And while you chose to be there, he had a part in putting you there. And you have a choice also to get out of this and just say, hey, dad, listen, I can't cover your phone bill anymore.

Speaker 1 What would happen if that were the case? What would the conversation be like?

Speaker 3 At this point, it's going to be me probably writing him a letter.

Speaker 3 I've tried to,

Speaker 3 this is the second time I, you know, I wanted to go out and visit him. He lives out of state, and

Speaker 3 I don't know if he just doesn't want me to visit him or what, but he always has a way of just, you know, bringing, we don't always agree on, you know, kind of

Speaker 3 everything, right? And I'm fine to just leave those things out of the conversation, but he has a way of bringing them up and just

Speaker 1 would you call this relationship transactional at this point

Speaker 3 no it's not I mean he was a really good dad to me growing up and he's not a bad person he just makes really bad choices and doesn't seem to learn from them so that's why it's you know he's not a bad guy and well it's not about his character but I'm saying the relationship right now is I pay the bill he doesn't really want to see me doesn't want much to do with me but please keep paying my phone bill and thank you

Speaker 3 It's more nuanced than that, but I mean, yeah, I realize I'm calling you guys up here for yourself.

Speaker 2 I mean, is it more nuanced than that?

Speaker 3 Yeah,

Speaker 3 I really think it is. I mean, he, you know, expressed that he was excited to see me, but then he's telling me, you know, he's,

Speaker 3 I don't want to get into, I don't want to take too much of your time, but, you know, he's

Speaker 3 he went through, he's not even technically divorced this third time, but

Speaker 3 he is separated, I guess, legally.

Speaker 3 And

Speaker 3 he's started these like date some kind of dating site. I don't know what he's doing.
And there's been, you know, people he's been talking to.

Speaker 3 And, you know, I thought all of that was behind him now, but he just shared with me that he's been talking to like 30-year-old women on some weird encrypted app. I just don't understand.

Speaker 3 And now I feel like he's putting my own safety, like with my phone account, like linked to his, in jeopardy and i'm just like

Speaker 2 yeah your your gut your gut instinct is right

Speaker 2 and there's more to it than this too

Speaker 3 yeah

Speaker 2 i think if to circle back to the first question i asked you is are you paying this phone bill

Speaker 2 so that you can sleep at night knowing i tried to preserve my relationship with my dad as i watched him slowly the the man that i love the good dad that i I had,

Speaker 2 as I watched him slowly implode his life,

Speaker 2 getting involved with all these people, getting married a bunch of times. Now he's just slowly just unwinding.

Speaker 2 Often we try to hang on because something inside of us says that if there's just, we say the right thing or we can just give the right amount of data or just do the right nice, kind thing, that suddenly they'll be like, oh, amazing.

Speaker 2 Hey, by the way, can you help me with my love life and my money?

Speaker 2 And unfortunately, this call is not going to come.

Speaker 2 And so if you want to make, if you want to pay his phone bill and just pay his phone bill and make that a part of your life and

Speaker 2 not hope for that that will have an RO, a relational ROI on it, great. Knock your lights out.
George and I, let's just say, make sure you're not putting that on a credit card, right?

Speaker 2 If you're just tired of being involved with all this and now you're wondering what he's even doing on an encrypted app

Speaker 2 that's linked to you and your bank account, dude i let's just i'm gonna write him a letter and say

Speaker 2 i'm gonna step away from this

Speaker 2 yeah and then you're gonna have to spend some time in this scary um

Speaker 2 uh black hole called grief it's not supposed to be like this your parents are married for 34 years

Speaker 3 yeah

Speaker 1 so here's the spark notes if a cell phone bill is propping up with a relationship and this is one jenga piece that knocks the whole thing down there was never a relationship there, and that's the hardest, scariest part to face is that whatever was, I know he's a good guy, he was a great dad, but it's changed.

Speaker 1 The relationship's changed, and I think that's the hardest part to grieve is the guy he was and the guy he is now.

Speaker 2 And I know you know this, but I feel compelled to say it. You didn't do anything wrong, Daniel.

Speaker 2 You've been a good daughter.

Speaker 2 There's not a thing.

Speaker 2 I know, but there's not a thing you could have done differently in a conversation you didn't have. He's your dad.
He's a grown man. He's way older than you.
He's made adult choices.

Speaker 2 And

Speaker 2 we told the previous caller, there's just nothing harder than watching someone you love

Speaker 2 flush their life away, especially when you're standing there on the bank of the river saying, I can help, I can help. And they're like, nah, I'll just stay here.

Speaker 2 It's heartbreaking.

Speaker 1 What is his portion of the cell phone bill? I'm just curious. What's the financial amount?

Speaker 3 Maybe like 70 bucks or something like that.

Speaker 1 So if it was on him to cover 70 bucks from now on, do you think he could do it?

Speaker 3 No, I think he'd have to go back to like a flip phone.

Speaker 2 Maybe

Speaker 2 that's the best thing he could do. That's a great idea for him.

Speaker 3 Honestly,

Speaker 3 ever since he got this iPhone and he's had more time on his hands, I just don't even understand what's going on over there.

Speaker 2 Yeah, it might keep him out of jail. I think it's a good idea.
Seriously. Yeah.

Speaker 3 Something's weird.

Speaker 2 Yeah.

Speaker 1 I'm so sorry, Daniel. That is not a fun thing to deal with.
The theme so far of this show, John, has been you cannot change people. No.

Speaker 1 No matter what you want to give them or cover for them, it's not going to make the relationship better and it's not going to solve their problems.

Speaker 2 You can create good boundaries. You can be graceful and merciful and forgiving.
And then you can do the next right thing for you and for your relationship. And sometimes that's walking away.

Speaker 2 Or sometimes that's just saying, I'm taking my hands off the wheel. You're driving.
Cool.

Speaker 1 I'll be here when you're ready. more of your calls coming up triple eight eight two five five two two five this is the ramsey show

Speaker 1 welcome back to the ramsey show i'm george campbell joined by best-selling author dr john baloney open phones at triple eight eight two five five two two five let's keep it rocking with danny in columbus ohio danny welcome to the show We are rocking, Danny.

Speaker 2 Hey, guys. Yeah.

Speaker 3 How's it going?

Speaker 2 Good. How are you?

Speaker 3 Not too bad. Appreciate you guys taking taking the time.

Speaker 3 I had a question.

Speaker 3 I recently got promoted a couple months ago, and I've got some extra money coming in and was just curious to hear your thoughts on how I should split that up and incorporate that into my budget.

Speaker 1 Fantastic. Congrats.
Tell us about the promotion. How much more are you making?

Speaker 3 So I went from, so there's a 10% bonus attached to the base salary. So I went from about $78,000 to $89,000.

Speaker 3 And then with that bonus, it's about $85,000 to to 98,000.

Speaker 2 Incredible.

Speaker 1 Okay, so let's talk about how much is actually coming into your budget every month on top of what you were making. So what's the increase in your take-home pay?

Speaker 3 I don't have, so

Speaker 3 currently gross pay last paycheck was about $3,600. I get paid bi-monthly.
I don't know. I don't have exactly what

Speaker 3 it was prior to that, but around

Speaker 3 it's like around $5,000 coming in each month. I think $2,400 after pre-tax deductions and,

Speaker 3 you know, $401K and all that.

Speaker 1 And what's your financial picture? Do you have any debt? Do you have an emergency fund?

Speaker 3 Yeah, so that was kind of part of the question, too. So right now I've got, you know, I max out my Roth contributions every year, max out my HSA company matches 100%

Speaker 3 up to the first 6% of my 401k. So all of that's being contributed.

Speaker 3 And then I've got about $8,000 cash and savings. And the only debt I have, so I had 20, around 23,000 of student loans.
Paid that off during COVID, and I've got $4,900 left on that.

Speaker 1 What, you have $8,000 in savings and $4,900 left in student loans?

Speaker 1 Yeah, yeah. You know what this means, Danny.

Speaker 3 Yeah, I know. I got to pay that off.

Speaker 1 Why aren't you doing that today?

Speaker 3 Well, I kind of wanted to call. I mean, I kind of figured y'all would say that.

Speaker 3 I guess the the situation I'm in now, so

Speaker 3 I know how

Speaker 3 Dave and you all feel about car leases, but

Speaker 3 I've got a lease and

Speaker 3 I think following the baby steps, that kind of puts me in a weird spot where I've got some emergency cash saved up, but I also still have this car lease.

Speaker 3 And I know paying that off early doesn't really help you.

Speaker 3 So I guess with that taken into consideration,

Speaker 3 if I do pay off that $4,900,

Speaker 3 once we hang up, kind of how to move forward from there.

Speaker 1 Well, if you want to keep the car, what is this car worth if you did the early buyout on it

Speaker 3 um so i'm on the portal right now if i were to do if i requested a buyout right now it'd be 38 000.

Speaker 1 okay now that's your only vehicle only thing with wheels and motors in it

Speaker 1 yeah that's it do you love this car do you want to keep it

Speaker 3 um i mean if it makes financial sense to keep it by the time that the you know the lease cycle is over um i'd definitely hold on to it it's not i didn't really get into a car lease to get a new car every year um right now it just kind of made

Speaker 2 apartment? Yeah.

Speaker 3 Yeah, yeah, renting.

Speaker 2 You keep saying that it made the most sense. How?

Speaker 2 How does paying a car dealership money for their depreciating assets so that

Speaker 2 they can fund the gap between the car that it's going to lose money?

Speaker 2 How does that make sense?

Speaker 3 Yeah, I mean, that's a fair question. I kind of put off getting a car for two and a half years and saved up some cash, used that money to pay off the student loans instead of

Speaker 3 buying a car. And

Speaker 2 what were you driving during all that time?

Speaker 3 I was just walking and taking the train.

Speaker 2 Yeah.

Speaker 3 Yeah.

Speaker 1 Danny, I, here's my thing. I have like lofty financial goals where I'm like, I want to own a house one day.
I'm going to get married. I want to save up for a vacation.

Speaker 1 And so cars are a depreciating asset and leases just allow you to prepay all the depreciation is essentially what happens. And so it's not that the car is too much of your world.

Speaker 1 We say, hey, no more than half of your annual income tied up in all the things with wheels and motor. So you're not above that right now.

Speaker 1 You're not, you know, breaking that parameter, but it's a lot of car for a guy who has some debt, doesn't have a fully funded emergency fund, probably wants to own a home one day.

Speaker 1 And so it's not, you can keep the car if you want aggressively paid off. You can pay this thing off in a year or two.
Go ahead and keep it if you love it.

Speaker 1 But I would also reassess what your future looks like. Not what tomorrow, Danny, looks like, not what a year from now.
What is five-year Danny?

Speaker 1 What would he look back on and go, that was the right move?

Speaker 3 Yeah, so I guess kind of with that, you know, I'm 20, 25 right now.

Speaker 3 Was that taken into consideration, you know, as far as addressing the car situation,

Speaker 3 would you request that buyout and just take a loan and try and just pay that thing off as soon as possible? I mean, is there a way of getting out of that?

Speaker 3 lease, you know, just kind of ride it until the end of the cycle and,

Speaker 3 you know, kind of go from there and

Speaker 3 likely not lease another car, but buy something that

Speaker 3 buy it in cash kind of what you're doing.

Speaker 1 Yeah, I mean, you could save up the cash and do it. But again, that's a big mountain to climb right there, isn't it?

Speaker 1 Yeah, yeah, for sure. Because so far you've saved up eight grand.
Save up 38 grand, you're like, oh my gosh, is this car worth it?

Speaker 1 And by the time I buy it, that thing's only going to be worth 25 grand. And so that's the problem with these leases.
So you can do what you want here.

Speaker 1 When it comes to the budget, if you're laying out your every dollar budget, income, expenses, I filter it through the baby steps.

Speaker 1 And right now you're in baby step two, which means we're pausing all investing. We're actually going to take all savings but a thousand bucks, throwing it at the debt.

Speaker 1 And what that will do is catapult you in your financial journey.

Speaker 1 And within a year, if you get rid of this car, you do all the things I mentioned, you'll be in such a different financial place and you'll be making very different decisions. with all this new money.

Speaker 1 What you don't want to do is allow lifestyle creep to set in where Danny goes, hey, I made an extra 10 grand this year. I'm going to spend an extra 11 grand.
That's most Americans.

Speaker 1 Yep. So I hope that helps.
I would contact the dealer and get the early buyout amount, see what your options are. But I don't know that I'd want to take out a $38,000 loan right now.

Speaker 1 That's not going to further your financial goals.

Speaker 1 All right, John, let's go to the Ramsey Network question app. How do you feel about that? You feel good?

Speaker 2 Yeah.

Speaker 1 John's hung up.

Speaker 2 Well, so I'm a high schooler. I have a high school kid, and of course, on day one.
He's in high school? Yeah, he's in high school now. Oh, this gets worse.

Speaker 2 He walks into his econ class, and the curriculum is you and me, George. You and me.

Speaker 1 Oh, that's right.

Speaker 2 And on the Ramsey Education high school curriculum, and his teacher, he said, his teacher raised an eyebrow and looked at him and said, are you? And he goes, yes.

Speaker 2 And he said, only one of the students caught on so far.

Speaker 2 He did have some choice things to say about our acting. I don't think we're that great.
I thought it was pretty. I thought we crushed it.
I mean, it was a little bit Grammy.

Speaker 2 I mean, not Grammy, but it was Emmy worthy.

Speaker 1 Here's my thing. Are we going to trust awkward teenagers to judge our acting?

Speaker 2 Fair, well played.

Speaker 2 Just saying.

Speaker 2 But he was asking me about car leases. He's like, I don't understand them.

Speaker 2 And as my 14-year-old laid it out,

Speaker 2 it makes so no sense. It's so irrational to do a car lease that my 14-year-old can't wrap his head around why people would do that.

Speaker 1 Well, it's simple. I get the shiny thing forever, even though if I don't own it.

Speaker 2 But in his head, why would you give,

Speaker 2 he's like, hey, this new car is going to go down in value.

Speaker 2 So if it goes down in value over two years and you lease it, you're just paying the dealership for two years so that they get to keep all that money.

Speaker 2 And then you have to eat the depreciation, then they get the car back. And I was like, yep.
And he's like, why would somebody do that? And I was like, I don't know, man.

Speaker 2 And so I just get stuck on, no, I had to, man. It It was the right thing.
It's just not. It's just not.

Speaker 1 Well, people go, well, John, I don't have to deal with the maintenance and it's awesome. And I just keep getting new fancy cars and I love the new car smell.

Speaker 1 All the while realizing that this is one of the biggest things holding people back is car payments and leases. And there's a reason the dealerships love to push you to a lease.

Speaker 2 They love them because they can't get a red flag right there. They're getting a gently used car that they control the mileage on back that's been majority depreciated.

Speaker 2 And then they resell it to somebody else and they win twice.

Speaker 1 It's a sad conundrum. And I write about this in my book, Breaking Free from Broke, John, to try to steer people away from it.
And I walk through all of the reasons it is in existence to screw you.

Speaker 1 And it moves you backwards financially. And the best thing you can do is just save up and buy a cash car you can afford versus listening to the human brain that says, ooh, shiny, you want to do it.

Speaker 2 Anything. That's right.
That's it. You're the person who's going to be a little bit more.

Speaker 2 We come back. We'll go to the Ramsey Network app question.
But sorry, my 14-year-old can do better math than some folks out there.

Speaker 1 Way to humble brag. Hank's an impressive cat.
Hashtag just saying. I'll just say that much.
Hashtag just saying it. More of the Ramsey Show coming up.
Don't go anywhere.

Speaker 1 Welcome back to the Ramsey Show. I'm George Campbell, joined by Dr.
John Deloney. You've heard me talking about every dollar on this show, and that is the best way to make the most of your money.

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Speaker 1 Go to yrefi.com today slash ramsey. That's lettery R-E-F-Y.com slash Ramsey.
Might not be available in all states.

Speaker 2 All right, today's question comes from Alyssa in Pennsylvania. Alyssa writes, I was completely debt-free, but recently had some life situations that put me back in debt.

Speaker 1 Can we stop real quick here?

Speaker 2 I want to rephrase this in a more accurate and honest way. okay

Speaker 2 today's question comes from Alyssa in Pennsylvania I was completely debt-free but life happened and I chose to make some purchases on credit cards see what I'm saying that's more honest because life situations they have no ability to they don't put you that's right that's right but I made some choices how you respond there you go there we go I opened a store credit card for home remodeling purchases and charged seven thousand dollars over several months each time I made a purchase they would give the option of interest-free, which I always opted to do.

Speaker 2 In the past five months, I paid over $5,000 on the credit card, bringing my balance to $2,000.

Speaker 2 So proud of myself. Today, my balance had gone back up to $5,000, and I freaked out because I knew I'd been hacked.

Speaker 2 Come to find out, they'd added a $3,000 penalty for not paying the entire balance by a certain date. I had no clue about this.

Speaker 2 I told him I wasn't going to pay a red cent and asked him to close my account.

Speaker 2 I've always paid my bills and have good credit, but it should be illegal to charge a single mom who only makes $25 an hour this exorbitant fee. What is your advice on the matter?

Speaker 1 Okay, so I never, ever will have empathy for a credit card company, but I'm on the credit card company side. They do not care

Speaker 1 how much you make per hour. They do not care if you're a single mom.
And no, it's not illegal. You probably just didn't read the fine print.

Speaker 1 You signed away in a hurry because you were excited to remodel your home.

Speaker 2 And they lured you in with free.

Speaker 2 Just click, make sure you click the button that says interest free. And you're like, sweet.
And they were like, don't read over here where.

Speaker 1 Where it says, if you don't pay the balance in full, there's this massive penalty. Oh, and by the way, there's 25% interest, which is like a fourth of the entire debt that's going to get added to it.

Speaker 1 And so what is my advice on this matter? Should it be illegal to charge?

Speaker 1 I don't think it's, you know, we live in an economy and a capitalistic society. You can pretty much do what you want.

Speaker 1 You're an adult. You get to make decisions that can derail your financial life if you want.
That's part of American freedoms.

Speaker 1 And you also have to own up and look in the mirror and go, yeah, that was pretty dumb of me to trust a credit card company to be a blessing in my life.

Speaker 2 Yeah. And

Speaker 2 at the end of the day,

Speaker 2 here's the hard thing.

Speaker 2 Yet you owe that money.

Speaker 2 And so choosing to not pay quote-unquote a red cent and asking them to close your account,

Speaker 2 it doesn't work like that. It's going to add up and it's going to add up.

Speaker 1 They'll just sue you if you don't pay, which is only going to add more financial.

Speaker 2 Yeah, so this $3,000 is going to turn into $10,000.

Speaker 1 And by the way, these store credit cards are some of the highest interest rates.

Speaker 2 Yeah, I remember one time Dave called, I think it was Sears back in the day when that place was open, that they are just credit cards with stuff out front.

Speaker 2 And I like that, like, like store credit cards.

Speaker 1 The stuff is just the vehicle. Like, they're really in the credit card lending, the lending business.
They're in the lending business. And they have stuff in front of them.

Speaker 2 They can have pants out front. That's right.
Yeah. And screwdrivers and whatever else they got.
So,

Speaker 2 yeah, I hate this for you, Alyssa, but you got to pay. You got to pay.
I think, man, if I could give you one piece of advice, it's

Speaker 2 to be bummed out and take full 100% ownership of what you put your name on. And you don't have $3,000.
I don't know anybody that just has a spare three grand laying around.

Speaker 2 We got to figure out how to get this stuff paid off. And then we have to commit to

Speaker 2 not quote-unquote letting life situations put you back in debt.

Speaker 2 That might mean we're going to do without a sink for a while. That might mean that it's going to be hot or it's going to be cold because we can't afford X, Y, and Z.

Speaker 2 That just may be the reality of what you can or can't afford. And that sounds harsh, but this is what happens.
This is what happens. And

Speaker 2 I remember, I remember when Hurricane Alicia came through Houston when I was a really young kid and that we had no power for a week and we ate off a camp stove. I just remember that.

Speaker 2 I I tell you that to say, whatever you're going through, you'll look back on it in five years, 10 years, 15, 20 years, you'll remember those things. Remember that time we had to do without?

Speaker 2 Yeah, that was weird and that stunk or whatever. But it keeps this kind of crap from happening.

Speaker 1 Yep.

Speaker 1 And so the better way to do this next time is to give yourself a 0% loan you never have to pay back because it's coming out of your own bank account from money you saved up for through a sinking fund, through an emergency fund, if it's a true emergency.

Speaker 1 That is the way to do it where you never have to deal with any of this crap ever again and you have freedom and options so thank you for the question

Speaker 1 we are we're not pumped about this and trust me i'm no fan of credit card companies all right jacob is next up in jonesboro what's going on

Speaker 3 oh how are you guys doing today oh i just um i'm 20 years old i'm uh active duty military and i have no debt so i'm just trying to figure out what exactly to do to better my future love it thanks for your service and congrats on living a debt-free life.

Speaker 1 Thank you, thank you. How much money do you have in the bank?

Speaker 3 Right now I have four grand saved up.

Speaker 1 Awesome. And what does life look like for you in the next year or two? Or do you have a contract, deployment, or what's the next goal?

Speaker 3 I have two years left on my contract with a deployment in that two years.

Speaker 2 Okay.

Speaker 1 Are you single?

Speaker 3 I am single.

Speaker 1 Awesome. So let's say two years goes by.

Speaker 1 Can you keep saving money? How much money could you save save up in that account in the next two years?

Speaker 3 I make roughly two grand a month. So, I mean, it's kind of hard to say because I do have like, I guess I have car insurance

Speaker 3 and stuff like that. But

Speaker 3 definitely could probably save $1,000 a month pretty easy.

Speaker 1 Okay, so think about that. We're talking another 24 grand added to your four.

Speaker 1 So two years from now, you have 28 grand sitting in account. That's your emergency fund plus some extra.
Maybe we separate them out and start a down payment fund.

Speaker 1 Because one day you're probably going to want to buy a house, right?

Speaker 1 Yes. That's great.
And I would park it in a high-yield savings account.

Speaker 1 And one I love and use is called Laurel Road. If you want to check them out, laurelroad.com slash George.

Speaker 1 And that'll at least help it grow at like 5% over the next two years while you keep being diligent and serving this country.

Speaker 1 So you are on the path. As far as setting yourself for the future, beyond your emergency fund, I would begin investing.
I imagine you have access to a TSP through the military, a retirement account.

Speaker 3 Yes, I am putting, as of right now, 20%, and then they match 10.

Speaker 2 Wow. So we're talking 30%.

Speaker 1 Yes. And 10% of that is a 100% return on your money.

Speaker 3 Yes.

Speaker 1 You are doing it, my man.

Speaker 1 And if you wanted to ratchet it down to 15% and you wanted to get the emergency fund dialed in first, I would recommend that personally to get you in an even better spot financially.

Speaker 1 Get you a little more foundation. And guess what? At 22 and you get a paid for house by 28 or 30, now we can really create some serious wealth.
But I think that you need to set a vision for yourself.

Speaker 1 What does 25-year-old Jacob want to be doing? What does 30-year-old Jacob want to be doing? Is marriage in the future? All of that.

Speaker 3 That was pretty much it, sir. Just trying to figure it out slowly and surely.
I'm kind of new to all the budgeting stuff and all that, but I mean, I've always been pretty decent with money.

Speaker 1 You've done a bang-up job without us, Jacob, and the Ramsey Plan is the way. And for your service, I want to gift you Financial Peace University to give you even more education.

Speaker 1 These nine lessons will walk you through the ins and outs of wealth building, insurance, you name it. You're going to be more equipped.

Speaker 1 And at 20, John, can you imagine getting this stuff at 20 years old?

Speaker 2 No, I didn't know what day it was when I was 20. I didn't know what day it was when I was 30.

Speaker 1 There's still some days you don't know what day it is.

Speaker 2 Today. This is a weird Tuesday afternoon.

Speaker 1 Oh, my goodness. Well, that's inspiring.
I needed a win, Jacob, and you were it. A 20-year-old who's dead-free going, I'm just trying to set myself up for the future instead of pay for the past.

Speaker 1 That's it. That's the whole goal, my friend.
You're doing it. That puts this hour of the Ramsey Show in the books.
Thank you to Dr.

Speaker 1 John Deloney, all the guys and gals in the booth keeping the show afloat, and you, America, will be back before you know it.

Speaker 1 From Ramsey Network, it's the Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined this hour by the one and only Dr.

Speaker 1 John Deloney. We're taking your calls at 888-825-5225.

Speaker 1 We will do our best to help you take the right next step for your life, your relationships, and your money. Taylor's going to kick us off this hour in Orlando, Florida.
How can we help, Taylor?

Speaker 3 Hi, good afternoon.

Speaker 3 My question is about two loans that I took out that were really bad ideas. And one of them was a car loan, and one of them was for solar panels.

Speaker 3 And they really put me in a bad financial spot, and I really regret them.

Speaker 3 And I was even thinking about lowering my 401k contributions, which I don't want to do because truthfully, I should be putting in more, not less.

Speaker 1 Got a lot going on here. Let's say we focus on one thing at a time.
So, how much do you have in the car loan and how much is left on the solar?

Speaker 3 The car loan is $3.35 a month, and the solar is $127 a month.

Speaker 1 Okay, here's the deal. I want you to stop thinking in terms of payments, because that's what got you into this, right? Oh, I can afford the payment.
Who can't afford $127 a month?

Speaker 1 And what you need to look at is the actual loan amount. So what is the total loan amounts on both of those that's left?

Speaker 3 I, to be 100% honest with you, don't know the exact number

Speaker 3 because

Speaker 3 when they're selling it to me, that's how they're talking about it, is just the monthly.

Speaker 1 That should always be a red flag when they're not talking about the total cost of the item and instead, well, hey, we can do 50 bucks a month.

Speaker 1 We'll just stretch out the payments, give you a crazy high interest rate, and we'll be out of your hair. That's pretty much what they're telling you.

Speaker 3 So that's what happened to me at the car dealership because

Speaker 3 they convinced me to do the 84-month term, which I didn't want to do, but they were like.

Speaker 2 They didn't convince you.

Speaker 1 You chose to say, okay, that sounds good.

Speaker 3 Yep, $100.

Speaker 1 Did they tie you back in the finance office and go, you're going to take this 84-month loan, lady?

Speaker 3 No, they didn't.

Speaker 2 They didn't do that. That's

Speaker 1 good. I would have reported that to the police.
So let's...

Speaker 2 Can we do one thing just for me? It's just for me. And I'll let George get back to the numbers.

Speaker 2 Will you say out loud, I'm kind of frustrated with Caitlin for taking out these two loans I shouldn't have taken out.

Speaker 1 Well, with Taylor.

Speaker 2 Or Taylor, sorry.

Speaker 3 I'm very frustrated with Taylor for taking out these two loans.

Speaker 2 Okay.

Speaker 2 This is the first step.

Speaker 2 In all emotional health challenges, mental health challenges, relationship challenges, it's ownership of

Speaker 2 they didn't make me do this. I did it.
I wanted it and they were convincing and yada. I signed it.

Speaker 2 Is that cool?

Speaker 3 Yeah, it was me. In the end, it was me that did it.

Speaker 2 I love that because now we can go solve this problem. Now we can solve it.
You can still be mad at them, but

Speaker 2 you took ownership. Let's go solve it now.
I love it.

Speaker 1 Right. So what is your income, Taylor?

Speaker 3 I make cake home, probably

Speaker 3 just under $3,000 a month.

Speaker 1 Okay, and are you single?

Speaker 3 Yes.

Speaker 2 All right.

Speaker 1 So the bad news is we can't return the solar. The good news is we might be able to sell the car.

Speaker 1 So if the car is, let's say the car is worth $30,000 and you owe $25,000, basic math would say you'd get a five grand check.

Speaker 3 Right?

Speaker 3 Yeah, but then I wouldn't have a car.

Speaker 1 Well, five grand can get you a car, can't it?

Speaker 1 True.

Speaker 1 So that's what I would do. That's what I did.
It's what John did. And this is the only path to getting out of this cycle that I think you've probably been in your whole adult life.

Speaker 3 Not really. It's weird.
I spent most of my working life doing, not buying anything, but 100% necessity because my goal was to buy a house.

Speaker 3 And so that was all I thought about was saving up for the down payment for the house.

Speaker 1 But you didn't have a principal in your life that said, I don't borrow money. Taylor's going to live her life debt-free.
At some point, you said, eh, I'll take on some debt. It'll be all right.

Speaker 3 Yeah.

Speaker 3 And basically, like, after I bought the house and I didn't have that goal anymore to kind of keep me on track, I was like, well, now that I'm not saving up for a down payment, I can just spend money on things.

Speaker 1 The first solar guy that shows up, I'll hand him $40,000.

Speaker 2 So here's the thing.

Speaker 3 Yeah, basically, yeah.

Speaker 1 Your income is the key to getting out of and you might need to get your income up and you might need to do about seven other things.

Speaker 1 So the question is, if I told you Taylor can be debt-free guaranteed in less than two years if she follows these recommendations, would you just do it?

Speaker 2 I want to say yes. She's not going to do it.
That's the right answer.

Speaker 1 One of the recommendations is going to be Taylor needs to stop investing because Taylor has a priority to get out of this mess.

Speaker 1 And trying to do four things at once is only going to slow down all of it.

Speaker 1 so how much are you investing right now

Speaker 1 just my 401k I'd put 15% in my 401k 15% of your income is probably a hefty number we're talking hundreds and hundreds of dollars

Speaker 1 it's like $480 a month if I gave you $500 back in your life to tackle debt you think it'd make a dent to add six grand a year to your debt snowball

Speaker 3 I want to believe that I would put it towards the debt but my worry is that I would just spend it well we got to to fix that first.

Speaker 1 You got to have this one singular focus that I want to get out of debt because this habit is going to cause you to be back in, you're going to be calling us a year from now.

Speaker 2 Yeah, why don't you trust Taylor, Taylor?

Speaker 3 I don't know. I just have,

Speaker 3 I don't know. Like when I have a goal of something I'm saving up for, I can be so disciplined.

Speaker 1 But when I don't have that goal, this is a goal. You're saving up to get rid of debt.

Speaker 2 Yeah, this is a goal to save your life.

Speaker 1 It's an even bigger goal. It's more exciting than saving money because you're getting a monkey off your back.

Speaker 3 Right.

Speaker 2 So true.

Speaker 1 If you don't tell us it's going to go back into debt, then we can't help you get out of debt.

Speaker 3 100%. Yeah.

Speaker 3 And it sucks because if I hadn't taken out the, because the car I had before was completely paid off, and then I traded it in for this more expensive car, and I'm just kicking myself over it.

Speaker 1 The key here is we've got to learn to live on less than we make. And we have to make decisions that will make future Taylor proud.
And so that's where the budget comes in handy.

Speaker 1 And I'm going to to gift you every dollar premium and it's going to help you find these kind of margin activities to where you go, hey, if I pause investing, that's 480 bucks.

Speaker 1 And what if I got a side job making an extra 500? That's a thousand bucks I can throw with this debt.

Speaker 1 And then what if I was getting a tax refund every year of, you know, let's say it's three grand, three grand a year.

Speaker 1 What if instead I put that back in my paycheck and now I got, you know, 250 bucks back in my life on top of that.

Speaker 1 So you can see all of these ideas as you get creative and resourceful start to add some serious momentum to your debt snowball.

Speaker 1 That's the only way to get out of this without continuing down the path of just trading one debt for another and going, well, I found a 0% credit card. I can put it on.

Speaker 1 And then I'll do a balance transfer. And then I'll give the credit card company more money to try to move the debt around.
We've got to stop playing the shell game at some point.

Speaker 3 Yeah, well, I don't have any credit card debt, but that's good at least because I've always been a person who pays the balance off every month.

Speaker 1 Well, how about you switch to debit card for a month and see if it doesn't change your spending habits?

Speaker 3 Well, then I wouldn't get the cash back, though.

Speaker 2 Oh, my goodness. Taylor,

Speaker 1 you really think this cash back is a blessing in your life. You think you're winning right now?

Speaker 3 Well, because I don't pay any interest on the card.

Speaker 1 You were like a rat in the maze, and you got to the cheese, and you thought, oh, my gosh, I made it. And I'm looking above it.

Speaker 1 I'm going, oh, my gosh, Taylor's in this experiment from the credit card company. Let's get her out.
And she said, no, no, no, I'm going to miss my cheese. I got to have my cheese.

Speaker 1 And I'm going, do you know what they're doing to you, Taylor? Get out of the maze. I'm gonna send you my book, Breaking Free from Broke, along with Every Dollar Premium.

Speaker 1 Call me back after you read it, and I hope we can have a very different discussion. And I want fired-up Taylor that is ready to knock down some doors to get rid of this debt.
This is the Ramsey Show.

Speaker 1 Welcome back to the Ramsey Show. I'm George Campbell, joined by Dr.
John Deloney. Open phones at 888-825-5225.

Speaker 1 We are headed to Pittsburgh, Pittsburgh, Pennsylvania next to join Caitlin. What's going on, Caitlin?

Speaker 3 Hi, good afternoon.

Speaker 3 Yeah, so I'm a younger millennial, and the idea of being a homeowner feels so unattainable for me in a reasonable amount of time due to my current debt expenses and cost of living.

Speaker 3 And those are mainly my student loans, child care, and rent. So I'm happily married with one daughter and another on the way.

Speaker 3 And we're slowly running out of money and room in our current renting facilities.

Speaker 3 So just looking to see what options I have to meet my goal of being debt-free and also, you know, a homeowner in a, like, where I'm not 45 years old.

Speaker 1 How old are you now?

Speaker 3 I'm 28.

Speaker 2 Okay.

Speaker 1 28 years old. You're about to have two kids.
What's the child care cost?

Speaker 3 Yeah, monthly. Right now, just for one, it's $1,500, but in October, it's going to be $3,000.
Woo!

Speaker 2 We're going to stick. I saw a comedian recently say that if he had just landed on planet Earth and seen a video with no sound of them storming the Capitol,

Speaker 2 he would have thought surely that was about the child care costs.

Speaker 2 I'd buy it.

Speaker 1 That would track. It's so expensive.
Well, Caitlin, I hope you have a strong household income. You got two working people here?

Speaker 3 Yes, my husband and I are both engineers.

Speaker 1 Wonderful. What's the household income?

Speaker 3 We take home a little over $12,000. Woo!

Speaker 2 That'll knock out some debt.

Speaker 1 That'll save up a down payment real quick.

Speaker 2 But here's the thing.

Speaker 1 I think you want to do it all at once.

Speaker 3 Yeah. Unfortunately, because we're both engineers, we both got stuck with student loans.
Me, mainly because I was 18 years old, just went to college, didn't think anything of it.

Speaker 3 It was a private school, and those loans were pretty hefty.

Speaker 2 How much?

Speaker 2 What's left?

Speaker 3 Well, what's left is $100,000. I just went under $100,000.

Speaker 1 Okay, I'm sitting next to a guy who happened to pay off 100,000 in student loans.

Speaker 2 Can I tell you, Caitlin? So here's what I hear in your in your voice. I hear anger and bitterness, like just frustration.
Is that true?

Speaker 2 Yeah. At who?

Speaker 3 Honestly, I don't even know who I'm angry at because I can't really blame myself for being 18 years old. Like I wanted that degree.

Speaker 3 But I just feel frustrated because like I've been told, you know, if you do everything in this order, things will work out. And here I am 10 years later and nowhere near being a homeowner.

Speaker 3 And so I'm just like angry that I can't get what I want essentially.

Speaker 2 There you go. So once you, once you take that level of ownership,

Speaker 2 I think I get that. I don't want to blame an 18-year-old.
I was the same way. I just signed the paper.
I didn't know.

Speaker 2 But also, I don't have to take blame as much as not by my hand, but in my lap. Like, I got to take ownership.
I signed my name. Here we are.

Speaker 3 Yep.

Speaker 2 And what I would tell you is any energy, any energy you spend being angry at this amorphous them,

Speaker 2 the people who told me this, the this,

Speaker 2 it's just energy not going to your family and not going to work. It doesn't solve anything.
It just, it's a decision to make your present miserable.

Speaker 2 The best thing is to get a plan and roll out of it. And what I would tell you is, having been there,

Speaker 2 I sold my truck and I sold my house and I moved my family into a residence hall. And I know not everybody can do that, but I'm just telling you, I had a toddler and

Speaker 2 we were trying to work on a second kid and we sold everything just because we had to get, I was sick of it. You have to get radical in terms and let this, and by the way, I was an associate dean.

Speaker 2 I was a professor. My wife was a professor.
We had fancy jobs just like you and your husband. Everyone around us looked fancy.

Speaker 2 You have to decide, I don't care what anybody looks like. I don't care this quote unquote, what I think I deserve, what it's supposed to be.
I just, in two years, I want this gone.

Speaker 2 What must be true in our life so this is all gone in two years? Is there a different child care place? Is there a teenager who can come over here?

Speaker 2 I don't know what the world looks like where you live, but how radical and obnoxious, borderline insane, can we get so that this goes away?

Speaker 3 Yeah, so when we were looking for daycare, we were kind of trying to be financially responsible. And in the Pittsburgh area, it can be as low as 1,200, but as high as 2,000 for child care.

Speaker 3 So we went with a cheaper facility and they forgot to feed my daughter. So went into Overdrive and like really did digging and we found like a median facility.

Speaker 3 So like we did, we definitely did try that the first go-around.

Speaker 2 That's cool. But here's what's important though.
Can you exhale that you made a choice? Yeah. On behalf of your daughter.

Speaker 2 It's too expensive. It's so expensive.
So expensive.

Speaker 2 And and me and my husband made a choice and it's the right choice i'm telling you i'm applauding your choice as as a as a parent george is sitting right here too we're both applauding your choice you did the right thing

Speaker 2 but we made a choice we want our daughter to eat every day so um the choice is we're gonna spend 1500 bucks a month yes what's your rent

Speaker 1 um 1800 wow that's amazing for your income so what what would it take let's say you rented a bigger place if you needed it what's that gonna cost a reasonable place nothing crazy.

Speaker 1 What would that move your rent to?

Speaker 3 So, in the Pittsburgh area, most places for rent that we're seeing that's bigger than what we're currently living in is probably $2,500-ish.

Speaker 1 Okay, that's still very reasonable for your take-home pay. Are you guys doing any investing right now? Retirement plans elsewhere?

Speaker 3 Definitely 401ks.

Speaker 3 How much? But again,

Speaker 3 I think I just do whatever my company matches, probably like 5% or 6%.

Speaker 1 What if I told you you could be, let's say, debt-free in less than 18 months, have an emergency fund a few months after that, and begin saving up for a house, and probably have that down payment in less than a year at that point.

Speaker 1 So we're talking three years total. You are in the house of your dreams, completely debt-free with an emergency fund.

Speaker 3 Yeah, that would be great.

Speaker 1 Now, the question is, what are we willing to do to make that a reality in that period of time?

Speaker 1 And part of that is, you guys are a young couple making amazing money, and we can pause the investing right now because we're going to get back to it with a vengeance.

Speaker 1 And instead of 4%, we're going to be investing 15%.

Speaker 1 And that's just until we get our house paid off, which is going to happen pretty freaking quick when you're making 12, 13, 15,000 a month at that point with no debt except for the mortgage.

Speaker 1 So you see how this, the Ramsey baby steps kind of unfurl as you get momentum.

Speaker 1 But most people understandably go, well, I want to pay off the debt. I want to save up for the house.
I want to invest in the 401k. I want to have XYZ lifestyle.

Speaker 1 And it becomes very difficult to accomplish any of it.

Speaker 3 Yeah, it's so tough to do it all.

Speaker 2 Yeah. Can I tell you this, too? That was shocking to me.
How much combined income do you and your husband have?

Speaker 3 $12,000, like a little over $12,000.

Speaker 2 Okay, on an annual basis?

Speaker 3 Oh, like you mean like yearly?

Speaker 2 Yeah, what's your annual take on both of you? Just approximate.

Speaker 2 250,

Speaker 3 $60, maybe. Yeah.

Speaker 2 You guys make $500. Didn't we all hear a story that if you made a quarter million dollars a year that you would never think about money, you worry about it?

Speaker 3 I know.

Speaker 3 Whenever I got my new salary, I was like so proud of how much we make as a couple. And then once we look at everything, we're like, wow, we are nowhere near where we thought we would be with this.

Speaker 2 Okay, that's the feeling. Yeah.
And if you take that feeling and start spraying it it all over your neighborhood and in your city,

Speaker 2 it doesn't accomplish anything.

Speaker 2 I know people who cross that million-dollar line, they cross that first seven figures and they thought it was going to feel a certain way and it doesn't.

Speaker 2 And it's so frustrating. I thought I wouldn't have to think about this and then the school calls and then the car break.

Speaker 2 Like I just thought and I thought and I thought, let's just traffic in reality and get this thing knocked out.

Speaker 2 It just, it just is what it is, what it is. I'm going to choose optimism and a plan George is going to lay out for you other than just anger, embitterment.

Speaker 2 And by the way, I know that the people pulling up next to you in the parking lot, some of them know what you make or have some ballpark. And they're like, why are you driving that?

Speaker 1 Can you believe she put her kid in that daycare?

Speaker 2 Exactly, exactly.

Speaker 1 So, Caitlin, hang on the line. I'm going to send you a copy of my book, Breaking Free from Broke.
Two specific homework assignments. Number one, read the first chapter.

Speaker 1 It's pretty much what you said verbatim. So it's going to let you breathe and go, oh my gosh, someone gets me.
Then read the margin is breathing room chapter.

Speaker 1 There's like 20 things I've got in there to make more and spend less that will lay it all out.

Speaker 1 Do that in the Every Dollar Budget with your husband and go, oh my gosh, we're sitting on five grand a month that we could throw towards this debt. We can do this in two years.

Speaker 1 This is definitely possible. And you're going to leave with hope and a practical plan if you read that book.
So hang on a line, we'll send you a copy of Breaking Free from Broke.

Speaker 1 We are wishing you the best. Thanks for the call.
This is The Ramsey Show.

Speaker 1 This is The Ramsey Show. I'm George Campbell, joined by Dr.
John Deloney, and and we've got a special treat for you because on the debt-free stage, we have Bruce and Corey. Welcome, guys.
Thank you.

Speaker 2 Where are you from?

Speaker 5 Louisville, Kentucky.

Speaker 1 All right, and you made the drive down.

Speaker 2 Yeah, we should.

Speaker 2 I'm glad you said it the right way. One time I said Louisville, and I was attacked in the parking lot.
I think it's a hate crime. We forgive you.
Yeah, Louisville. Louisville.

Speaker 1 We are glad you're with us today. So tell us, how much debt did you pay off?

Speaker 1 $111,000.

Speaker 3 Woo!

Speaker 1 That's a high number.

Speaker 1 How long did it take?

Speaker 5 Six years.

Speaker 1 All right. And what was your income range during that time?

Speaker 5 Highest was $100,000. And right now we're at about $70,000.

Speaker 2 All right.

Speaker 1 And let's do this. What do you guys do for a living? Was there a job change?

Speaker 2 Oh, yeah.

Speaker 4 I am a stay-at-home mom.

Speaker 1 That is the best job change. Congratulations.
Thank you. Was this during the debt-free journey? Yes.

Speaker 2 Wow.

Speaker 4 Yeah, we made the decision. You know, thought that the Lord wanted us to do it, and we thought if we did it, we'd maybe pay off in another two years or something.

Speaker 4 We did it, and we were all finished with debt eight months later.

Speaker 1 Wow. So you thought it would slow you down more than it actually did.
Absolutely. Because it probably lit a different kind of fire.

Speaker 1 When you went, this is what's right for our family, and we're going to keep full steam ahead. For sure.
And Bruce, what do you do?

Speaker 5 I'm an electrician.

Speaker 2 Wonderful.

Speaker 1 God bless the treasure.

Speaker 2 And as his shirt says, he's the dad of girls. Dad of outnumbered.
Hashtag outnumbered.

Speaker 1 How many are we talking about?

Speaker 2 Two. Oh, Lord.
Okay.

Speaker 1 I didn't know if this was one of these, like, we got nine kids and it's a farm. It's a homestead.

Speaker 4 We have a five-month hold-at-home.

Speaker 1 Wow. How are you even here right now? I know.
Is it a miracle unto itself? No.

Speaker 2 Oh, my goodness.

Speaker 5 This is our first trip with just the two of us.

Speaker 2 Did y'all just make snow angels in the hotel room last night

Speaker 2 in the blankets?

Speaker 2 No one's screaming.

Speaker 2 I don't understand.

Speaker 1 Like phantom screams.

Speaker 1 Why is there? I think I heard something. What type of debt was the 111?

Speaker 2 It was our house. Whoa!

Speaker 2 Hold the phone. Hold on.
Hold on. Guys in the trades and stay-at-home moms cannot pay off homes.
Right. That's not real.
Absolutely.

Speaker 2 We're so poor, but we're not. Not at all.

Speaker 2 This was all mortgage. Yeah.
All mortgage.

Speaker 1 That's amazing. So six years ago, you guys had the mortgage.
You were debt-free other than the house.

Speaker 1 What made you go, hey, what if we just went ahead and knocked this out instead of looking at this amortization schedule for the next 25, 30 years? Yeah.

Speaker 4 Well, when we were only engaged, we went to Financial Peace University together. And that was fantastic.
That got us set up to be married and to be on the same page financially.

Speaker 4 And so even when we bought the house, we were like, this isn't going to be, we got the 15-year mortgage like what's suggested and we did the down payment that was suggested, but we knew we were going to pay it off fast because we were.

Speaker 1 So here's what I want to ask because people go, this is outdated and Dave doesn't understand.

Speaker 1 You guys decided in the face of all that, no, what if we just did a mortgage the right way and that set us up to be debt-free six years later?

Speaker 4 Well, I didn't want to listen to my dad anymore.

Speaker 1 Oh, there we go. That's part of it.

Speaker 5 Yeah.

Speaker 5 You know, it was just going through your all's class, and it was just so convincing. You know, Dave was so convincing, and he was like, we got to do this.

Speaker 1 Wow. And here you are now, a young couple, two little kids, no payments in the world.

Speaker 4 Yeah, he turns 30 tomorrow. What? Yeah, this is his birthday trip.

Speaker 1 Oh, my God. We got to do something more exciting than this.
But Nashville's a great destination.

Speaker 2 Yeah.

Speaker 2 They pulled up to the parking lot on a pedal tavern, George. Trust me, they've got the weekend.
They figured it out.

Speaker 4 We pulled up in our hoop dee, and I was like, we're going to fit in.

Speaker 2 Yes. This is good.

Speaker 1 It'll be just fine in the Ramsey parking lot.

Speaker 2 Hey, so I'm interested in hearing from both of you.

Speaker 2 What was money like growing up?

Speaker 2 Did y'all both come from a lot of money, or was money a struggle growing up?

Speaker 5 Well, I didn't particularly come from much money.

Speaker 5 And it was just my dad raising us. But the thing about my dad is he never did take on debt.

Speaker 5 So growing up, I didn't even know about credit cards. And when we got married, she was like, You should get a debit card.

Speaker 5 And I did, and I remember going to the gas station thinking, I hope this works.

Speaker 2 He still carries cash to this day.

Speaker 4 He's like only cash. He's still to this day.

Speaker 1 You are the youngest living boomer. I know.

Speaker 2 That's incredible. Dude, stay strong, Bruce.

Speaker 1 That's amazing. So, tell us about this home payoff because a lot of people have, like, I've seen like, there's this TikTok strategy to pay it off faster.
You guys actually did it.

Speaker 1 So, you are the poster children. What did you actually do?

Speaker 4 You just work hard. You make a budget.

Speaker 3 Yep.

Speaker 1 So your mortgage payment is how much every month just if you just paid the normal payment?

Speaker 2 $1,400.

Speaker 1 And you guys said, let's put extra on the principal. Was it once a month? And you were consistent?

Speaker 5 No, it was kind of fun. You know, just doing the budget and whatever extra we had, we put towards it.
And, you know, it almost became like a game.

Speaker 5 You know, it was every time we got an extra payment, I was like, yeah.

Speaker 4 At one point in time, we lived off only his income to see if we could be stay-at-home. So we just lived off his income, and my income went completely to the mortgage.

Speaker 1 Wow.

Speaker 1 So every few months when you could, you're like, hey, what if we put an extra thousand or two thousand? What was the biggest extra payment you applied?

Speaker 4 Oh, there were some big ones. Because when we got like our taxes back, and sometimes we'd put all of that.

Speaker 1 Like a refund, you go, let's throw that on there. So a few thousand bucks, probably.
Yeah.

Speaker 5 I think it was the COVID checks they were hanging out.

Speaker 2 I think we put all of them. Yeah, all of them.
We were like, look, look,

Speaker 2 we don't need that money. The COVID checks they were handing out.

Speaker 4 The government paid off our mortgage.

Speaker 1 Wow. Those Biden bucks came in handy for you.

Speaker 1 Wow, that's incredible. What was the hardest part of all this? Because six years is not a short amount of time to sacrifice.

Speaker 5 Well, you know, we've been doing maintenance on our cars, just keeping them chugging along. Yeah.
So probably keeping those cars going.

Speaker 4 And we did have a lot of naysayers. Like a lot of people in my family

Speaker 4 would be like, oh, you need a new car. You need this.
Or just do this. This is the way everybody does it.

Speaker 1 And we were like, wait, family telling you what you need? Isn't that your job?

Speaker 2 Yeah. Oh, my goodness.

Speaker 1 I can't imagine. So kind of just putting the blinders on and going, this is what's right for our family.
And I don't care about your opinion because you don't pay our bills.

Speaker 2 Yeah, that's right. That's powerful.

Speaker 4 That's a good idea. That's a good way to say it.

Speaker 2 Corey, what was money like in your house?

Speaker 4 My dad was the typical. He has credit cards.
He still does to this day. And I love him to death.

Speaker 4 And he has the house payments and stuff like that. And

Speaker 4 he still will today. He'll probably maybe listen to this show and be like, well, I guess he did okay.

Speaker 2 He'll be like, ah,

Speaker 2 here's what I think is so, so amazing, and y'all are experiencing this right now in real time.

Speaker 2 Your two daughters will never understand the electricity that's in a home when you're worried about, hey, I just did a job for this contractor. He didn't pay me.
Or I'm waiting on that check.

Speaker 2 I'm waiting on the check. And

Speaker 2 they got to go get X, Y, and Z groceries.

Speaker 2 They'll never know that.

Speaker 4 Yeah, and I'm so glad. Like,

Speaker 4 we do do things cheaply. We get secondhand clothes and we get groceries at Aldi.

Speaker 4 But I am glad to show them that. But I'm also glad to show them that it's not from fear.
It's from we made a choice and we think this is wiser than this.

Speaker 4 And so we're not afraid of spending our money, but we're going to not do it stupidly. Be intentional about it.

Speaker 2 Yeah, you're also not afraid to drop the five-month-old off and pack up and come to Nashville for that weekend, right? I don't know about that. It's amazing.
Oh, it's amazing.

Speaker 1 So what do you tell people the key to getting out of debt is completely, mortgage and everything? How do you do it?

Speaker 5 Well, I think the first thing was going through your offs class and just having the mindset shift that, you know, debt is not good. And after that, the budget is just such a key, key part to it.

Speaker 2 I love it.

Speaker 1 Well, we've got the budget for you, every dollar. We're going to gift you two subscriptions for a full year, and you can use them.
You can gift them to someone else to get them on the journey.

Speaker 1 But that really is the key is paying attention to your money and sticking to a plan. So, we're so honored that you decided to join us.
Happy 30th birthday tomorrow. What a way to celebrate.

Speaker 2 Hey, what do you tell to a couple out there who

Speaker 2 wants to be a stay-at-home mom and married to an electrician?

Speaker 4 Oh, gosh.

Speaker 4 Yeah. You know, if you think the Lord is telling you, he's going to, you can do it.
It doesn't matter if you make, you know, at one point we were making $50,000 a year.

Speaker 4 If the Lord wants you to do it, he's not going to be like, now I'm going to smite you. Like, he's going to lift you up and he's going to do well to you.

Speaker 2 And y'all got to to go make decisions every day.

Speaker 3 Yeah. Yeah.

Speaker 2 Amazing. I'm proud of you guys.
It's awesome. I love it.
Let's get to the fun part.

Speaker 1 It's Bruce and Corey from Louisville, Kentucky. $111,000 paid off.
House and everything in six years, making $100 down to $70,000. So Corey could stay at home with the kids.

Speaker 1 What a beautiful picture of the new American dream. Debt freedom, baby.
Count it down. Let's hear a debt-free scream.

Speaker 2 Three, two, one.

Speaker 3 We're debt-free.

Speaker 1 The unity, John, unmatched.

Speaker 2 They heard it all the way back at Louisville.

Speaker 2 Incredible.

Speaker 1 That's inspiring. Making 70 grand, Louisville, Kentucky, two kids, normal couple doing very not-normal things.
Going, hey, what if we had a different picture for our family's life?

Speaker 1 What if we could be completely debt-free before we're 30 years old? That's inspiring. This is the Ramsey Show.

Speaker 1 Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr.
John Deloney. Open phones at AAA-825-5225.

Speaker 1 Here's your reminder that the Live Like No One Else cruise is quickly approaching. Cabins are going fast.
More than 85% of the cabins are booked. You don't want to miss this.

Speaker 1 We are going to Turks and Caicos, St. Thomas, Puerto Rico, and the Bahamas.
And who's going? It's all of us. All the Ramsey personalities.

Speaker 1 You, hopefully, special guests, comedians, musicians, celebrity chefs, you name it.

Speaker 2 I heard you opened up five more spots because it's sold completely out.

Speaker 2 You opened up five more spots for your cannonball competition. Yeah, cannonball settings between you and Kenned Coleman.

Speaker 1 Submit your videos.

Speaker 2 That's right. So there's five more spots.
DM them to John.

Speaker 1 That's where they're going right now.

Speaker 2 He's handling that. It's on the Google Doc.

Speaker 1 We are going to have a lot of fun. All the food is included.
Even room service. You can lounge by any of the pools, the hot tubs.

Speaker 1 They've got a state-of-the-art fitness center or pickleball courts, which, can I tell you, John and i played this morning and it was a good time we got worked over by ken coleman and that is not

Speaker 2 that's a hundred percent true ken coleman is um

Speaker 1 savant he is the lord of the pickleball court so join us we'll be having a good time seven days march 22nd to the 29th 2025 ramseysolutions.com slash cruise all right eric's up next in des moines how can we help today eric

Speaker 3 hey thanks for taking my call sure what's going on uh my wife and i are on baby step two with 70K to go,

Speaker 3 and I receive child support.

Speaker 3 It's about $400 a month. I was curious if we should use that as income or put that into like a $529 for college

Speaker 3 or myself.

Speaker 2 Okay.

Speaker 1 So $400 a month. We're talking about $5,000 a year.
And you're saying, hey, should we use this? for college? Do we use it for living expenses? Should it go toward the debt?

Speaker 1 Are you just wondering where you should use this money?

Speaker 1 Yeah, because I don't touch it because I just don't need it necessarily to cover the expenses for the month.

Speaker 3 Yeah, I don't need it.

Speaker 2 That's an interesting question. No one's ever asked this question when I've been out here.
Eric, great question. What do you think, George?

Speaker 2 Because part of me says you throw every penny towards this debt, but I can see a scenario where I'm just going to continue to fund this 529.

Speaker 2 I get both sides of this. How old is he? Yeah.
It's an interesting question.

Speaker 1 Seven years old. So we're talking 11 years.

Speaker 1 Do you have any money saved for college yet?

Speaker 3 No.

Speaker 1 Okay. And you don't need this money, like you said,

Speaker 1 to cover his expenses.

Speaker 3 Yeah, I haven't used it

Speaker 3 since I've been received.

Speaker 1 And you've got 70K in debt. How much do you have in savings?

Speaker 3 We have our thousands

Speaker 3 for baby step one, and then I have a couple of thousand that I'm gonna allocate towards that.

Speaker 2 Good. Okay.

Speaker 1 Yeah, it's an interesting one. There's no

Speaker 1 domestic principle around this. I would personally, I would probably put it in college because I'd sleep better at night knowing I was using it toward his future.

Speaker 2 Yeah, how long is this going to take you to pay off?

Speaker 3 We use your calculator on your website, and it said February of 27.

Speaker 2 February 27. How much money do you guys make a year?

Speaker 3 I'm not sure per year, but we net $6,400 per month.

Speaker 2 That seems like the variable you can toggle.

Speaker 3 Say it again.

Speaker 2 That seems like a variable you guys could adjust. It seems to be the only one you could adjust unless you've got really high living expenses, which doesn't sound like you do.

Speaker 2 But, man, I really want to see that down into early 26.

Speaker 1 Okay. My gut check says, well, let's not invest while we have debt.

Speaker 1 And so if you're using $400 of your normal income to cover his expenses, there's no difference in using this new $400 of child support to pay off debt because you're covering all the expenses and more.

Speaker 1 There's no needs that he has that you're not able to cover. And so I don't see a problem with using that extra $4,800 a year to get out of debt faster.

Speaker 3 Okay, so but it's towards debt.

Speaker 1 Yeah, I mean, if you're saying that I have 6,400 plus the 400, is that what we're talking about?

Speaker 3 Yes.

Speaker 1 Yeah, and I would even go and try to make more than that. I would try to cut my expenses down because I do think your timeline feels like a long ways away.

Speaker 1 And I'd rather see you guys in baby steps 4, 5, 6, where you're investing for your own future, saving for his college, and by then you might be putting even more away.

Speaker 1 And you still have time if you got, you know, a nine-year time horizon before he goes to college.

Speaker 1 Okay.

Speaker 1 So, I mean, yeah, there's both options there. My heart says just lean into the baby steps and throw it toward the debt.

Speaker 1 And whether the money is coming from your income or child support, it's all the money that's being used to cover the family expenses. And part of that is debt.

Speaker 2 Yeah, because, yeah,

Speaker 2 I agree with that. It took me a minute to think through it.
So thanks for talking that out loud, George.

Speaker 2 But yeah, you're spending that much money on a girl and young boy and groceries and the room as part of the rent or mortgage. So yeah, I mean, you're working it out that way.

Speaker 2 You're spending the 400 bucks a month and more on a kid.

Speaker 2 And as he gets older, good gosh, I think I spend about six or seven million dollars a month on feeding my 14-year-old son. That kid can eat.
It just, it just is.

Speaker 1 It's working, though. He's like twice my size.

Speaker 2 Yeah, well, that bar is very, very low. Fair enough.
But yeah, Eric, I would get out of debt as quickly as possible.

Speaker 1 And we do have an article for you, Eric, that we'll send to you. We'll also link it in the description and show notes wherever you guys are watching America.

Speaker 1 And it's called What Can Child Support Be Used For? And it's on the Ramsey Solutions blog. So we'll be sure to link that and send it out to you.

Speaker 1 And I hope that will help you make the right decision for your family. Thank you so much for the call.
All right.

Speaker 1 John, before we take another call here, I want to mention that for all of the folks listening on YouTube or podcasts, the show is about to end.

Speaker 1 And so if you want to listen to the rest of the show, John and I will still be here taking them, but you got to jump over to the Ramsey Network app.

Speaker 1 It's the only place to get full episodes of the Ramsey show, and it's the best place to stay focused on your goals with content that keeps you motivated. It's all Ramsey all the time.

Speaker 1 And if you're just listening on radio, stay right where you are. The show will go on for you.
But YouTube or podcast, jump on over.

Speaker 1 So you can click the link in the show notes to get the app or just search Ramsey Network in the App Store. Go check that out.
All right, let's try to get one more in here, John.

Speaker 1 Zachary is in Indianapolis. How can we help, Zachary?

Speaker 3 Hi.

Speaker 3 So I had a house fire a little ways back,

Speaker 3 and we are going to be, we had originally planned on selling our house and buying another one in contingency.

Speaker 3 I actually called you and Jade back about two months ago, and you guys helped me clear up that we shouldn't buy a house at the moment. That's not the right time.

Speaker 3 I finally talked my wife out of buying a house when we do end up selling this house, but it looks like we are going to be getting a little bit more back from insurance, and

Speaker 3 as well as a good chunk from when we end up selling the house.

Speaker 3 So I was curious if you guys would recommend just continuing the baby steps in order of the debt snowball or if you think we should clear up one of these big car payments that we have to get rid of the car first to clear up about 800 bucks a month.

Speaker 1 What's the total consumer debt you have left?

Speaker 3 Right now we have about 75 to 85. I'm not sure on the exact number.

Speaker 1 And how much is the insurance check?

Speaker 3 The insurance we're going to be getting anywhere between 10 to 20. It just depends on reconstruction.

Speaker 1 Okay.

Speaker 1 And you're saying, should we use this insurance check to just plop into the debt snowball, smallest to largest? How many debts could you knock out?

Speaker 3 So

Speaker 3 I have two student loan debts.

Speaker 3 One is about $3,000.

Speaker 3 I haven't started paying on that yet.

Speaker 3 I'm not supposed to start until November.

Speaker 2 But you're allowed to, though.

Speaker 3 Yeah, yeah, I know. I just got the information to start paying it like less than a month ago.

Speaker 1 What's the next biggest debt?

Speaker 2 Start this month.

Speaker 2 Let's get rid of that.

Speaker 3 The next biggest is another student loan debt of about $8,000.

Speaker 2 Okay.

Speaker 1 So let's say you knock out both of those debts, debt snowball method. How much is that going to free up payment-wise? Do you know?

Speaker 3 About $500.

Speaker 2 Okay.

Speaker 1 And then we have a new $500 to apply to the next debt

Speaker 1 on top of our income. And what's the timeline?

Speaker 1 If you do it that way, what is the timeline to be completely debt-free?

Speaker 3 whenever i wrote it down uh i wrote it down back right before this whole house fire and everything happened so

Speaker 3 um i'm pretty sure we escalated around like three

Speaker 3 three and a half to four years

Speaker 1 i think we need to reassess and go what is it going to take what is the gap to where we can get rid of this debt in two years because four years is a long time to pay off 75 grand so i would try to get your income up get the expenses down and do not buy a house just plow through the debt snowball that's what i would would do if I was in your shoes.

Speaker 1 Thank you for the call. That puts this hour of the Ramsey Show in the books.
Be sure to jump onto the Ramsey Network app if you're on YouTube or podcast to keep listening and watching.