Are You Ready To Break Out of Your Debt Cycle?

from Ramsey Network. It's the Ramsey show where we help people build wealth to work that they love and create amazing relationships.
I'm your host today, Jade Warshaw. Your other host today is Ken Coleman in the house.
We're going to take calls all afternoon long. We're going to talk about your life, your money, your career.
If you want to chime in, you can give us a call. The number is 888-825-5225 and we'll chop it up with you.
All right, let's go straight to the phone lines where we've got Violet from Grand Rapids, Michigan. What's going on, Violet? A lot.
Tell us. Definitely have a couple of questions for you.
So my family and I live in southwest Michigan. We lost our townhouse completely leveled to a tornado on May 7th.
We were renting it. Oh, goodness.
We lost everything in it. We did have renter's insurance.

However, it only covered about half of our belongings. So fast forward a couple of months,

we have moved into a smaller place that is more expensive. And here's my line of questioning here.

So we have, my husband and I have a total combined student loan debt of $150,000.

Okay. We have a car that we owe $12,000 on.
Our other car is paid off. And we have total credit card debt of $10,000.
We were steadily starting to pay everything off before this happened. We filed bankruptcy in 2020.
We have a 100% on-time payment history since then. However, we had considered before the tornado moving to Florida because we have job offers and have had several down there where we would double our income.
Okay. We're in kind of a job desert where we're at right now.
I have a master of business administration. I'm one class away from master of Science, and I have 20 years in hospitality management.

My husband has a Master in Theology,

and he's an armed guard for an international company right now.

However, the question is, because we have now,

we did not send any credit cards through the tornado

and all of the issues there.

However, we had drained our savings, which was only about $ dollars to begin with i bet you did yeah so yeah so our question is do we next year when the lease is up where we're at go ahead and move forward and move away to highly boost our income but now go into more debt unfortunately we are only going to be able this year to put away half of what it's going to cost to move what would cause you to go in what would cause you to go into debt if you move to Florida in a year the move in general that the u-haul the first month security deposit what's the what's what's what's the cost what's the estimated cost of moving cost of moving is about $12,000. We gave ourselves a couple thousand dollar leeway.
Yeah, that's about right. Okay.
So, okay, I want to go back a second. I'm not sure I understand why you're waiting a year to take these jobs that have been offered to you that double your income.
I'm wondering too. Yeah, the only reason is because we find a leaf here again because everything was such a mess and we don't want to, in order to break this leaf, it would cost us almost $5,000.
Yeah, yeah. And I agree with Ken, but I also feel like you're in storm mode, like you're in crisis mode.
It could add a lot more confusion to make that move immediately. I got to dig some more.
I don't want to leave this alone. How are these jobs going to still be available for you a year from now? That doesn't sound normal.
It's not that the exact jobs would be available. It's just that after two years of job hunting here and heavily researching the job market there, we know that if we continue to apply within six months of leaving, yeah, we would make a lot more money.
All right, I'm sorry. I'm a dog on a bone here.
Keep going, Ken. I'm going somewhere with this.
When were these two jobs offered to you in the hubs? How long ago? About two months ago. Have you officially turned them down? Is that thing still open or they've moved on? We have been in contact with them as of right now.
They have moved on. However, his company and the school system that I was going to work for, as well as the college I was going to teach for, have left the door open for me.
Okay. Because they will always need teachers and they will always need colleges.
All right. I don't.
Okay. So, all right.
I don't want to get bogged down here, Jade, and I don't want to play armchair quarterback Violet. However, I think it's kind of important.
I would have taken the two opportunities two months ago and I would have negotiated and I would have found a way to get out of the lease. I would never stay somewhere for a year in a job market like you've described because there are no guarantees.
There's an old phrase called a bird in the hand is worth two in the bush. And it simply means if you've got the opportunity to get two birds over here, but I've got one bird in my hand, take the one in your hand.
It's old school, I know. But there's some real truth to that.
And again, I don't want to play armchair quarterback, but if those two jobs were open right now,

Jade, where I was going with this is, I'll take the $5,000 hit on the lease if I can't negotiate it better than that in order to double my salary, which allows me to immediately do what you're going to coach her to do now on the snowball. So that's, I take double the money because I still come out ahead.
I'm not going to stay in Southwest Michigan with no job prospects in order to finish my lease out. I'm sorry.
I don't think the, and to be clear, my only, and for the most part, can I agree 100% with you? My only thought was not because of the lease, but just because something really traumatic happened. I was trying to buy you a little bit of time to just get your bearings.
Well, double the income will help you with your bearings. I don't know what you disagree with, but I just, I would still go back to it.
That was the initial thought. That was the initial thought, because we also have a 17-year-old pretty autistic son

that has kind of gone into a really bad stupor through this.

So the initial thought, I guess on my part,

which I am regretting at this point,

my initial thought,

because we had loss of youth through insurance,

so they were paying for our hotels, and they would have paid for the hotels in Florida as well while we searched for an apartment. So that's my biggest regret.
But I literally was like, oh, my gosh, I can't do that now on the back of this tornado. Well, we don't think you need to go into debt.
Well, Jade, I don't think you've got to go into debt here don't come up with the 12,000 to move. And well, that's the other part of it where I was a little bit hesitant.
And please understand me. My disagreement with Ken wasn't on getting the job.
It was on how do we do it? Like, do you need more time to save up? Because I mean, it does cost to move. My husband and I moved cross country, you know, two years ago and it was was over $12,000.
And I remember being like, just shook because of that. And if you don't have any cash, yeah, what is your other option? So it will take you time to save up that money.
So that's kind of what that was my only hesitancy is I didn't want you to rush into this and end up making bad decisions that you will literally that will cost you because of it. I think what you did discover, which is a good thing and can unpack this, is that your job is worth more in another state, which is great to know.
And there hopefully will be other opportunities. And if it's not Florida, maybe there's another state that you can be looking at where you're making more money.
I would discuss a moving. I would discuss, here's what I know about this economy.
If an organization wants you, you could go to them and say, look, here's what we've estimated our moving cost. This is our situation.
Would you be willing to, in lieu of maybe future bonuses or an advance? Yeah. There are creative ways to come up with the moving money, Jay.
But sometimes they don't give you the money until after you get there. Oh, that's fine.
There's just a lot there.

We got to get out of this place.

We do got to get out of this place.

I want you guys out of Michigan.

I want you somewhere where you're making more money, where you have peace.

Michigan feels like a traumatic place for you.

There was a tornado.

There was a bankruptcy.

And I think there's a better place for you around the corner.

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You are listening to The Ramsey Show. I'm Jade Warshaw.
He is Ken Coleman. We're taking your calls all hour.
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All right, let's go to Susan. She's in Lynchburg, Virginia.
What's going on, Susan? Hello. Thank you for all that you've done in the world of, in the, to build the kingdom of God, I guess I could say.
Wow, thank you. Yeah.
How can we help you today? Yeah, so my husband and I are 71 and 73, and my husband recently had a heart attack type event, and our home is not suitable for us anymore. It's because it's two levels, so we need to get to a one level place.
We own our home free and clear. I'm thinking about taking out a mortgage on our home in order to give the cash out to our son-in-law to renovate a second home that we had owned next to their home.
And some of our kids are saying, don't do it, and others are saying, yeah, that's a good thing. But anyway, yeah.
Okay. So we're just going to go back and forth.
Tell us more about the renovation, the cost, and what it would do specifically. so that is kind of

it the cost and what it would do specifically? So that is kind of, it's an unknown, the whole thing. It's kind of a big house, and we don't know the costs, actually.
So the second home, do you own that home, or who owns it? Yes, we own that home too, free and clear. Okay, and it's one level.
Well, yeah, we can live on one level there. It actually has a second level, but we can live on one level.
And so what they're saying is our son-in-law and daughter, they're saying they'll renovate that first level quickly and we can move into there and then they'll finish the top level more slowly. Why would they finish the top level if nobody's going to live up there? Exactly.
Because we have lots of grandkids who would like to come and visit. Sorry, I want to make sure we get all the questions out.
What's the difference between you living on one level in that house versus you living on one level in your current house? Because our current house is 825 square feet and we have a mattress in the middle of the living room floor. Okay, what would happen, Ken, I'm just spitballing ideas here, Ken jumping at any point.
What would happen if you, if the house you're currently in is too small, you're not going to do much with it. what would happen if you if you're if you if the house you're currently in is too small you're not going to do much with it what would happen if you sold it and moved into the other house temporarily and once you sold the other house and you got the money then you give it to your kids to renovate and maybe you live you know you you figure out maybe you're uncomfortable for a little while but you make this work and that way you're using cash instead of a heloc is sounds like what you wanted to do because well because the second house is a wreck you can't move into it right now okay that was my next so is someone living in it now and renting no nobody's living in it so it's just you own it free and clear and it's just sitting there decaying.
That's right. Uh-huh.
Then what would happen, I'm going to throw out a third idea, what would happen if you sold both of these houses and moved in and pocketed some of the cash and then moved into a house that was already ready and had everything you needed and wanted? Well, that's the other option that we're looking at. That's the one.
I like that one. That's the one.
This makes no sense for you to go into any kind of debt for this. You just have so many other better options.
I'd get rid of the rec house. I'd sell it for a song and just let somebody else come in and take it.
And you don't need to make a bunch of money on it. And I would slowly renovate the current house.
I'd change the current house around if I was going to do that. I mean, maybe the upstairs is for the grandkids, and you rework.
It's a small house. I get it.
You know what? Now that I think about it. I'd sell both.
I think Jade's right. I'd sell both houses and stay where you are currently.
Nobody cares that you have a bed in the living room. This is a transition period because of a health event.
I like Jade's idea. I'm with Jade.
Sell both houses. Come up with a better living situation that fits him.
And then you guys are still in great financial shape. And it's a better timeline for him.
Because if you guys, you know, paying someone to renovate the downstairs and then the upstairs, like that could be like a long time. I love that plan.
Okay, you called us, Susan. That's what we think.
All right. Thank you for the call.
Did she say some of the kids were trying to talk her out of it? Yeah. Yeah, we were with them too.
That was the smart ones. We get to say that because they're not our kids.
That's right. That's hilarious.
Let's go right to the phone lines. Elyse, Virginia Beach, Virginia.
What's going on, Elyse? Hi, thanks for taking my call. You're welcome.
How can we help quickly? So we just started the Dave Ramsey plan, and we called our credit card that has the most debt. It's $26,000.
The interest rate is $14.9. We're military, so we're a banquet, maybe federal.
We asked them if they could lower the interest rate or do anything to help us, and they offered us a program where there's no repercussions in any kind of way, but for a year they'll freeze the card and bring it down to 3.9. Great.
So our question is, is should we, you know, not do the snowball method and for that year, just throw everything that we can at that one card. What other debt do you have? What other debt do you have? So we are full-time rv-ers and i i know how

dave feels about that um so but we have uh two personal loans um our what are the amount rv so we have um one for 900 another for 900 um another credit card that's 5 000 another credit card that's 7,600, a van5,000. Another credit card that's $7,600.
A van, $7,100. A truck is $57,000.
And then the credit card that we're talking about right now is $26,000. And then our RV is $71,000.
Oh my gosh. How much is the rv worth um it's probably worth like 55 now oh gosh in the truck well you got a truck and a van yes okay let me answer your first question first i i probably wouldn't do this i i really think that you guys need to i mean you, you could probably knock out the two personal loans pretty quickly.
And then the credit cards, you've got the 5,000, the 7,000. I think that I'd rather just go in order because there is momentum that happens when you do that.
You're gonna feel the feeling of paying off one and moving on to the next. And if you get to the chance, if you can, if you look up and it's a year later, ask him, call him back and say, hey, listen, I've banked with you guys forever.
You guys offered me this deal, but I'm doing this debt snowball. Will you refund the amount of interest that accrued over this past year? Here was the offer that I was given.
See if you can get that in writing and that way get the deal in writing. And even if you don't take it now, bring it back to them in a year and say, hey, they offered this, but I was doing my debt snowball.
Here's what we've paid off. Will you refund the difference? I bet you they will.
But the bigger problem here that I'm seeing is this truck in this RV. It's going down in value and you have so much money tied up in it.
I would rather you be in a rental. I would rather you be in an apartment, anything, but these depreciating assets that are just eating you alive.
71,000, 57,000. The more time that goes, the more upside down you're going to be.
So I would be looking for a way to get out of this lickety split. What do you think, Ken? Mo money.
Start working, start selling everything. We've got to get some more money quickly to get some equity back in that RV and sell it instantly.
Instantly. This is the Ramsey Show.
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You're listening to The Ramsey Show. I'm Jade Warshaw.
Next to me is Ken Coleman. we're taking your calls 888-825-5225 is the number to call ken tell me something good um tell you something good tell the good people okay there's a lot i could tell you i think one thing i would tell you is despite all this political uncertainty and interest rates staying elevated, we still sit at a very good employment market.
So, you know, as we talk about money, making more money, one of the good things, despite all the uncertainty and inflation being kind of stubborn and things costing more, we still are in a healthy job market. So that is some good news, specifically related to people who go, all right, I'm not happy in my work, or you know what, I'd like to make more money so that I can get out of the baby steps faster.
We still are in a really healthy market to make money. And when we've got to go to work, we've heard Papa Dave say that for many, many decades, we're still in a good place there despite some of the more challenging parts of our economy.
So that's some good news. I was reading the job report and the numbers this morning.

So that's top of mind when you said, give me some good news.

Well, what about people who are saying, like, everything going on with the election is so crazy.

Maybe I should wait to see where things land before I make a transition.

I wouldn't wait.

Although I will tell you that Bank of America economists came out with a report today.

I was reading it this morning.

The Great Resignation, which you remember, you know, we kind of date that 2021 to first part sort of fade at the end of 2022, the first part of 2023. People, the mean of increase in salary people were getting when they left to a new company was 20% bump, which is, you know, that's a bump.
That's a bump. It is now dropped back to 10% bump and that's pre-2019 levels.
So I do, to answer your question very specifically, I wouldn't wait. If it's a good opportunity, I'd go because the days of the big bump and I'm just going to get that job opportunity and the great resignation.
We saw the musical chairs. Those days are over.
If you feel it's the right move, go. But it can't be, I'm just going for the 10% bump now.
I want you looking five, seven, and 10 years down the road saying, or asking yourself rather, if I make this professional move for more money now, does it set me up for more money later? That's the key. I want you making moves that have long-term potential, not just short-term potential.
So that's what I would say on that. Yeah.
I like it. Very good.
All right. I love it, Ken.
All right. I got to be ready, James.
You never know when you're going to get a pop quiz from Jade here. That's the tell me something good segment.
Thankfully, I did my homework this morning. You did.
You had something good to offer. I'm telling you.
Or I was about ready to go, the dog ate it. The dog ate my homework.
I did put you on the spot, but you always, Ken is a guy who always has something good to say and have something meaningful and helpful to say. There we go.
Coach Ken, you know, you always got something. I appreciate that.
All right, let's go to the phone lines. Angela in Philadelphia, Pennsylvania is on the line.
Philadelphia Freedom. What's going on, Angela? Hi, thanks for having me on.
So I'm a fairly new small business owner, been in business just under three years and drowning in debt and sales aren't coming in. Yeah.
What's your business? I sell maintenance products online, e-commerce business. Okay.
What kind of maintenance? So we ship all floor cleaners, machines, that sort of thing. We ship all over the U.S.
and into Canada. And you're in your...
I'm sorry, I interrupted you. Go ahead.
No, it's a business I worked for for a number of years before purchasing it. Oh, okay.
So you purchased it from the person you worked for? Yes. What'd you purchase it for? Oh.
I guess what I'm trying to see is how, did you ever break even? And then you met, like, I want to know more. No, no, never broke even.
Been operating at a loss since the beginning. What did you pay for it? $267.
And was it owner financing or did you go get a loan? No, I went and got a loan. Shoot.
Oh, boy. So what kind of debt are you in? A lot.
I've got probably over about $500 right now. And that's just on the business yeah and that includes like vendors and all that kind of stuff and that includes the initial loan yeah has revenue gone down over the three years since you've taken ownership um tremendously this year so first year i did, um, last year I did just under a million, nine 89.
And this year I've only, uh, generated $350,000. What do you attribute that to? Partly because of the lack of cash, um, to keep products in stock and then, you know, interest rates.

My SBA loan wasn't fixed.

And so that has been hurting me over the past couple of years.

And it's just been, so I'm just at a point where I'm like, all right, I don't know if it's time to like cut my losses.

It could be.

Are you a sole proprietor, like, excuse me, solopreneur? Do you have a team? I do have staff. I do have three part-timers.
Yeah. Have you had to let anybody go? Last year I did.
Last year I was able to cut my expenses by almost 80,000, but that includes me not paying myself.

By the way, just real quick, just a quick learning moment for our entire audience here,

Jade, and sorry, Angela, to do this at your expense, but you are Exhibit A.

This is exactly when the Fed raises interest rates, this is how it leads to higher unemployment,

which then cools inflation.

I want to point out, like people go, I'm not saying the Fed was right or wrong. I'm just saying this is economics 101 right here on the phone.
This has affected Angela. Those interest rates have crushed you and have made it very, very expensive to do business, which again is why we believe in a cash business.
If you don't have that debt, then Angela has cash. So back to the question at hand.
What I want. How do you turn this around, Angela, in theory? Without going further into debt.
Just on paper. Like if you were going to turn it around, what would it take? Yeah, and that's the hard part.
I don't want to go into any further debt um you know it's i've been calling on you know existing customers because they say you know it's cheaper to keep a customer and then go out and get a new one right um but then when i don't have the product here that's what i'm wondering that's why i'm asking that question i'm not trying to be theoretical i'm actually actually, because we got to wrestle with the bankruptcy thing, Jade. And it's like, at what point do we have to say it's time to shut it down? That's why I'm asking.
I don't understand your business. Is there anything else that would allow us to, that's what Jade and I need to know before we can fully answer this question.
Is there any way conceptually that you could present to us on how you turn this thing around? Because you don't even have the cash to actually have the inventory to then actually turn it into sales is what we're hearing. Right, right.
I've been trying to sell. I do have some stock just trying to sell that to then, you know, generate income to get the stuff that really, really sells back in.
How do you sell? Are you, is it people visit your website or are you on amazon are you on the other sites so they have to come directly to your where do you do the most business on your on your site or on amazon yeah on our site okay so maybe it's a traffic issue you're not getting enough people organically coming over to your site that's a a, that's part of it too. There's a lot of competition, you know, that market has been, um, saturated with other and larger companies have come in, you know, and we're going to run out of time.
We're going to run out of time, but here's what I think, because there was never, it almost felt like you rode the wave from the previous owner and then it just steadily went down. never had a moment of prosperity on your own in many ways and i hate to say it like that but there's something about this that that's not clicking for you there's some missing pieces and i don't want you to keep losing money on this and at this rate that's that's all that's going to happen i would love for you to get connected with our entree leadership um program because within that at some point you can get access to coaching and maybe somebody else can look at this or maybe you're looking for a business consultant to say, hey, here's what's wrong.
Here's what we need to fix. But for all intents and purposes, me listening to this, I think at some point you're going to have to cut losses, sell it, figure out what you can sell it for.
If you can sell it for something. For something.
I would also agree with that. I try to see what you can sell before you go the full bankruptcy route.
Yeah. I don't think you keep going forward in this business model.
Yeah, absolutely. Oh, that's the hard part.
So sorry. You know.
Oh, I hate that. I hate that for small business people like Angela.
I know because she's on the hook for that money. Yeah.
Either way. Don't go into debt when you start your small business.
Don't do it. Speed of cash.
That's the way to do it. You're listening to the Ramsey show.
We'll be right back. Hey, listen up.
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All right, all right, you're listening to The Ramsey Show. Hey, thanks for listening.
I'm Jade Warshaw. Next to me is Ken Coleman.
I'm here to help you with your money. He's here to help you with your career.
So if you have a question, you can give us a call. This is a live show.
You can call in. The number is 888-825-5225 and we'll hook you up.
All right. Ramsey show question of the day.
All right. Today's question comes from Ryan in Colorado.
Oh boy, Jade. Take a deep breath on this.

I need you to slow your pulse down as I read this.

I have a $350,000 HELOC loan on our house, which is worth $700,000. The first mortgage balance is $400,000.
I also have $40,000 in credit card debt and two vehicles that we owe nearly $100,000 on. Are you up to date on this right now? How's your blood pressure? You doing okay? It's high.
Okay. I also have a $30,000 loan against my 401k.
I earn $175,000 a year. My wife is a stay-at-home mom.
These debts are primarily the result of my attempts at stock market trading, where I chased losses, creating this financial disaster. This cycle of greed and poor decisions has not only affected my family, but also my mental health.
I'm overwhelmed with guilt and feel like I have failed as a husband and a father. I'm in desperate need of advice on how to manage and overcome this financial crisis.
Large asterisk here for Jade as she takes this on. This is an email.
You can't go back and forth with this guy, but go ahead, take it take it away i mean no wonder he's feeling overwhelmed and no wonder he's feeling like he failed and no wonder his you know mental health is feeling affected this is a big big big big big mess he doesn't tell us um over what period of time this happened all of this and i'd be interested to know because the truth can when i look at this i see a person with a gambling problem oh there's no question this is a gambling problem and it was just in the form of stocks uh-huh i'm gonna take a guess that it was a short amount of time because this feels desperate to to rack up the 350 heloc uh-huh uh-huh and then the loan against the 401k it feels like he was like i gotta earn this back fast yeah the credit cards i guarantee the credit cards are all for this the heloc is all for this the 401k loan um and now the cars that's kind of a separate lifestyle issue um let's talk about the the the mental side of this first like i, I think this is a guy with a gambling problem. I, if I'm you, I'm getting into gamblers anonymous.
I'm getting into some support groups. I'm getting on with better help and I'm going to go into counseling a for me.
And then I'm going to do a separate set of counseling with my, my spouse, right? Because this is taking a toll on your entire family. And what a woman to stand by you at this point.
Although she doesn't need to be standing by, she needs to be working. Yeah.
I mean, he's got a good income, but you know, this is back to the baby steps. Yeah.
We're back to the baby steps. So that was the mental side.
Let's talk about the money side, which is Ken is exactly right. Both of you you guys need to be working and at this point you know i'm assuming probably there's a stay-at-home mom situation here and this is all hands on deck there's certain times where that's just required and i'm sure the wife is like heck no i didn't do this you know and there's probably part of her that's like i don't i had no part in this.
I don't want to help clean this up. I don't want to sacrifice.
And that could be her choice to make. But, you know, if they want to come out right side up on this, they're going to have to start working.
I'm clearing out these cars, $100,000 worth of cars. You guys are driving beaters, like less than $10,000 cars to get out of this.
You know, I was just doing some math that I want America to catch up on.

If you're new to the show, and a lot of you are,

Jade and her husband Sam paid off half a million dollars.

I just did the quick numbers.

If we take out the actual first mortgage, we're still at $520,000 he's racked up here. It's a lot.

So you've actually done this.

I've done this.

What was your combined income? Do you mind telling us? Yeah. You started it was 30 000 when we started right then the next year it jumped it went up steadily with us working like crazy yeah so it was like 30 000 year one 50 000 year two you know 80 000 year three and we were moving moving up um what was the highest because i'm what i'm doing is i'm comparing it to where he is on a single income of 175 this is very doable is the point and i'm looking at a person who knows that it's doable this is very doable um there might be a situation where they've got to get out of this house right um and probably so that's what i would do for more reasons than one not just a financial reason but, but you guys need a fresh start.
Like you need a new start at life here. And so for that reason, I mean, you got $50,000 of equity here.
That's your wiggle room for you to pay the realtors and get clear of this and get into, uh, get in an apartment. And I'd live in a box to get rid of that HELOC of 350.
I think it was. And Ken Coleman, cause a lot know right now I don't know when they bought this house I don't know what the interest rate is and there's a lot of uh talk about well you know I rarely would tell somebody to sell their house in this market especially if they had a two two and a half percent interest rate or three percent but in this case this is something that you burn down and begin again Like in my mind, there's nothing to hang on to here.
Every time he walks in that house, he's going to feel the weight of his mistakes. You know what I mean? And so there's a piece of that that is like, just start fresh.
You've had way too many conversations in the kitchen. You've had way too many arguments with your wife in that bathroom.
Like you need to start fresh. So I think that that's probably what I would do to get some of this out of the way.
And then once they clear the cars out, now they're looking at $70,000 of debt. He's making $175,000 in income.
They can absolutely get right sized. Right.
But they got to change their behavior. And I'm glad that you brought up Ken Sam and I's journey because, you know, I say all the time, you know, sometimes I'm hard on people who call in and sometimes people think that I, you know, I go too hard in the paint, but the truth is there's a level of sacrifice that really is possible.
Yeah. And I tell people, I mean, you just asked a good question and I'm like, income was such a piece of it.
You know, you have to look at what you're willing to do to get right side up. And a lot of people want the benefit on the other side, but they don't want the work on the front end.
And I'm like, listen, you do what you have to do. I tell people all the time, Sam and I got roommates.
We had roommates for a year. And I wouldn't recommend it.
It's not fun, but if you want to get out of debt, you're saving. 100%.
You weren't thinking ideal. You were thinking, let's get real and get out of this thing.
How long did it take you? Seven and a half years. Seven and a half years.
And what was the most amount of income you guys made in that season? The seventh year, we made $260,000. Okay.
So that's a pretty good size shovel, but it was not always that. It wasn't that.
But here's the thing. There's part of this where it's kind of a biblical principle, right? Where when you're faithful with the little, God gives you more.
Yeah. And that's what happened.
A lot of us, here's the thing. A lot of us think all I need is a big check.
And if I get a big check, I promise I'll put it on the debt. You don't know that you'll do that.
And so for us, there was this part of it that was like, hey, you know, the first five years of whittling away with this with a teaspoon. Right.
It's like, OK, every bit of extra money we got went to the debt. And even as our life, you would think like your lifestyle could increase as your income is increasing.
But we had none of that. I mean, we didn't.
People know we sold all of our furniture. We slept on an air mattress.
We didn't get a couch until. Well, I love that.
You know what? I think I missed the point that you and Sam had another couple live with you for a year. Yeah.
Where was that year? What? One, two, three, four, five, six, or seven? That was in 2009, 2010. No, but what year in your seven-year journey? Three.
So three years in. Yeah.
And so I'm curious, did that couple paying you rent, did that cover your rent? No, it cut the rent in half. Okay, but that's a huge deal.
We each paid $6.50. Okay, so that saved you half in rent.
It saved us half in rent. Which is masterful.
It was masterful. And I mean, these are the things that you have to do, you know, and so sometimes it's a- That would have been a great reality show.
Because here you are sharing an apartment with another married couple. Yeah.
We got two couples sharing an apartment. That's a great reality show.
Yeah. For the purposes of getting out of debt.
I mean, we got along. There was no like crazy, you know, there was no like fights or anything like that.
But you had to share the kitchen, share the fridge. Yeah.
You got to share. And it's like you come home and you're like, what is that smell? Oh, chops it's like oh gosh next time i'm with sam i gotta ask him for a couple stories i know he's got some fun stories on that because that's just not natural but it's but it was worth it but the point is you know you're not gonna the chances of you opening up the mailbox and getting an envelope full of the money you need is far few and far between.
You have to build up that trust with yourself that no matter what margin you have, you're going to put it towards the debt. And when you're faithful with a little bit, you can have more.
And then when the more comes, you'll also put that to the debt. Right.
And so that's how this thing works. Hey, America needs to know this before we go to break.
You had two bathrooms, right? During that time. Yes.
Okay. Two bathrooms, One upstairs and one downstairs.
Not sharing a bathroom. There was going to be some follow-up questions had that been one.
Listen, if that's what it takes. I get it.
Whatever it takes. This is The Ramsey Show.
We'll be back. From The Ramsey Network, it's The Ramsey Show where we help people build wealth, do work that they love, and create amazing amazing relationships i'm jade warshaw next to me is ken coleman one of my favorite guys to host with wow i gotta say you know there's not many to choose i was gonna say the list is not very long so the list is short we have a good time on here i'm here talking about your money and ken is here to talk to you about your career questions so you can give us a call 888.
Making mo money. By the way can I point out before we go to the phones yeah somebody has brought a cut out of Dave Ramsey.
Yes. Is it you folks out there is it this couple here in the lobby? It's throwing me off.
And I swear to you all like it every and I know it's there but James multiple times I look up and it freaks me out man. Yeah.
Like he's just standing there and it's pretty life-size. I it's close well he's pretty that's a pretty short i'm talking about the head and the shoulders yeah you know knees and toes yes okay i'm just saying it freaks me out a little bit i look out there so i may make you all turn him the other direction here in the second third hour we'll see sorry jade i had to have you noticed him i noticed it first hour and i did like a triple take i was like what's dave doing and then i was like wait a second um that's funny okay adhd is real it is real i was talking about the number if you wanted to call sorry i know just freaking me out it didn't know you are right about that 888-825-5225 and And we will take your calls about your life, your money,

and your career. We got Renee in Houston, Texas, H-Town.
What's going on? Hey, guys. It's so wonderful to talk to both of you.
I really enjoy listening to the Ramsey show and grateful for all of the insight, especially Ken. Your books are just great.
Thank you.

So I've been in a job now for about three years.

I, during that time, was able to get my master's in project management. Through my work, I actually am benefited with tuition remission.
So my school was paid off. Good.
And so, yeah, it was great. In the process, though, because of the position that I have, I'm only a few hundred dollars less than one of my managers.
And I think that a lot of that has caused a lot of resentment. And she's had issues.
How she communicates with me is very retaliatory at times. and I've even gone to ombuds just to seek out some additional assistance with how to actually improve work relations, if you will.
Um, it's, uh, she's not wanting to go to ombuds cause that's just kind of like, um, she doesn't apologize for how she treats me at times. And, um And it's difficult because she's kind of like not my direct boss.
I have a program director for medical education. I love the people that I work with.
They're all doctors. They are the salt and life of the world and very service oriented, like I have learned with being a project manager um i am scheduled to take my pmp on august 20 uh august 9th and i'm super stoked because as we know it's kind of like the boards for becoming a project manager and a lot of funds are usually tied to that because a lot of job places want that if you have that certification.
So she doesn't see the value in the fact that I have this exam scheduled. It's always about the job that I have, and I don't want to stay in my job forever because I'm not a wall financially.
Right. I went through a divorce a few years ago, have three kids.
Right. And I'm just really trying to put my foot forward.
I have applied for jobs and just really don't know what to do next. Okay, so let me dig a little bit.
So if you were to pass the PMP, are you immediately going to be up for some type of role in your current company? I don't think I could. Keep your phone on your mouth here because it's kind of going in and out.
Sorry. There we go.
Okay. All right.
So that's not a viable option right now. No.
But. Because it's a university and they don't have job openings.
Okay. Gotcha.
But you'll be immediately looking for something the moment you pass that. You'll immediately be looking for project management roles, correct?

Oh, absolutely.

And I have already because I have my master's and plus 20-some-odd years of work experience.

Yeah.

I'm not fresh out of college.

Well, I didn't hear an exact question, but I know what you're saying.

And so I'm going to tell you that I would not sweat her very much at all.

I wouldn't sweat that. You are a short-termer.
Would you agree with this? Oh, absolutely. Absolutely.
And there's a lot of what you do right now with your actual, I don't understand if she's like your half boss or your sort of kind of, like that threw me for a minute. But all of that is I'm just kind of coming in at going, number one, you're not going to be there long-term.
Number two, she's not even your direct leader. And you actually said the other folks are the ones you actually enjoy working with.
I would treat her the way we treat difficult people that we cannot remove. And I think all of us have difficult people in our lives that we cannot remove.
I don't want that to sound like... Don't look at me, Ken.
Oh, no, gosh, stop it. I'm just saying, my point is, whether it be in our family, whether it be in our friend group, whether it be at the office, I think we can all acknowledge today there are difficult people that we don't have any kind of actual control to be able to remove them from our orbit is what I'm getting at.
And so what do we do in a situation like that? Jade, how do you handle a difficult person that you can't change that person and you can't get them out of the orbit? So how do you deal with it? I'm doing two things. I am avoiding as much as I can.
If I don't have to interact with you, I'm not going to. But when I do, I'm killing you with kindness.

She did not know I was going to put her on the spot, Renee. I think that's fantastic advice, and that's where I was going.
I think you just be the bigger person. Do not give her any power.
This is kind of like the mean girl or the bully. She's on the haterade.
You don't give her any power, and the more you let her get to you, the more she sees that she's getting to you, and she goes, I'm winning. I love Jade's killer with kindness.
I think that might drive her away from you because she's going to be like, well, that's not working. See, here's the bottom line.
This is a woman who is consumed with resentment and it's very clear and you know why. So because you're short term, I would literally rise above and I'd take Jade's advice.
I thought Jade's advice was fantastic. Wow.
Thanks for the call. It was a great call.
Yeah, absolutely. You know, gotta be the bigger person.
You have to be. Better, you know, kinder.
Just be like, I'm not letting you pull me into your vortex. You know, she saw, it's almost like, I'll call her her leader for lack of a better word, but saw her going up and achieving more and doing more.
And instead of congratulating her, she started hating on her. And I'm like, that is not a good quality.
That's exactly right. And by the way, one other thing to add to this.
Now, this takes some maturity. And I wish I could tell you that I did this right away.
I had to learn this. And I will tell you, I had to learn it slogging through process.
Okay. But here's what you have to do in that situation.
If you can get to the point where you realize that this is a hurting person, and they're not happy with their life, and they see your progress, and all your progress does is remind them of their lack of progress. By the way, folks, I'm getting real right now.
Some of you all are dealing with this, trying to get out of debt, and your friends and family are being haters. Yeah.
And you're going, what's the deal? And it doesn't make sense because they're supposed to be for you, and they still are. You got to give them a little bit of grace because what I think they're dealing with is they're seeing you progress, and as you're leaving their debt-ridden status, they feel like you're leaving them, and they want to pull you back in so they don't feel as bad about themselves.
I'm telling you, I'm spitting truth right now. Come on, Ken.
And I think to the extent that you can see that person with empathy and grace and then go, I'm not going to let them bother me. Bless their heart.
It's that old school, bless your heart. Bless your heart.
As you said, you said it, kill them with kindness. Kill them with kindness.
Yeah, whenever you're moving forward, like Ken said, it's a mirror. And when you do it, they can see all the things they're not doing in the mirror of things you are doing.
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Hey, thank you for being a listener. I know a lot of you guys have been with us for a long time.
Some of you maybe just found the show, but you're here with us today. And if you're here with us today, I have a small favor to ask you if you like the show, whatever you're listening to, whether it's a podcast app, if you're listening on YouTube, take a moment, like, and subscribe to the show if you can.
Share it with a friend or a family member or a coworker. When you do that, it's so helpful for all of us.
It kicks it up in the algorithm and more people have access to the life change that you experience on this show every single day. And it literally moves us up the charts.
It's crazy. Yes.
We got an email not too long ago. We were like number one or two or something in the whole thing.
And I called my mom. So it helps us with our parents.
Is that what you were getting at? Just a stupid joke. Just a silly joke.
You know, no, of course not. But that's kind of wild.
Yeah, it is crazy. That's how the whole algorithm works.
I can't spell algorithm, but apparently that's how it works. Yeah, and when you subscribe to it, it's great.
Because then when you open up your app, it's already there. You don't have to search for it.
It's already served up to you, which is nice. And of course, when you share it, you're sharing the good news.
And people need what we're talking about on this show. People need to hear Ken Coleman.
Well, yeah. Yeah, I'll go with that.
Sure, sure. By the way the way i'm jade warshaw he's ken coleman we're taking your calls this is a live show that's right so if you want to get on you got a call script here we're having fun this is the real deal there's no script and you know let's just take a moment because some people probably want to know like what's on our papers like does it tell us what to say no and the answer is no it doesn't it's a lot of blank pages that tell us suggestions yeah we got suggestions you know yeah what happens the next hour you need to talk about the question of the day right after that you need to talk about right you know but there's no there's no uh cue cards no no it's all real it's real time real life happening in the moment that.
So let's go, let's help somebody. Let's go to Melissa in Sacramento, California.
What's up? Hi there. How's it going? It's going great.
How are you? Oh, I'm so excited. I'm here with my husband, Chris, and we're very excited to talk to you today because we are waging a debate.
oh oh so yeah i get my gavel. Yeah, so we've been married for eight months and we just finished Baby Step 3.
So I'll kind of give the debate and then some background and then I'll let you do your thing here. So our debate is that now that Baby Step 3 is complete, what do we do with the extra margin as we prepare to buy a house and start a family? Essentially to 3B or not to 3B? That's our question.
Ooh, I love how you post it. My husband would like to continue using our monthly margin just to stack cash for upcoming moving and growing family, where I'm a little more keen to start baby step four and then put away any other leftover as sort of like a liquid account.
Okay. All right.
So a little bit of background here. Our goal is to buy a house in the next six to 12 months.
We have about $70,000 in equity in our condo, which we'd sell to move. And we'd probably walk away with about $130,000 after selling.
The homes that we're looking at are about $450,000 to $500,000 range, but our income is not currently high enough to meet the monthly 25% rule with a down payment on a house for that cost. So we're in process of raising that.
We've been earning about $6,000 to $9,000 a month. We've had a pretty variable income for the last six months.
My husband is working on changing careers. I'm looking at getting a raise and looking at tax withholdings as well.
So essentially, we've been able to find $2,000 to $4,000 each month to put towards savings. Um, and again, my husband wants to just keep on backing that, that margin, um, for all the upcoming expenses that we plan to have in the next six to 12 months.
Um, plus, plus, plus, plus we've got to have more down payment is what you're telling me in order to, uh, to get to the 25%. Is that what I'm hearing? Yes, if we can't get the income up.
How much more do you need? And I wrote down $130,000 is what you're saying you guys are going to walk away with in selling the condo. So in order to get to that formula that we teach, that your mortgage is no more than 25% of your take-home, how much more down payment, so beyond the $130,000,

how much more cash would we need to get there?

I don't want to assume the income, and I'll tell you why in a second.

I have a chart, but I don't know what the number is off the top of my head.

Does Chris?

I don't know.

I think that maybe he could look it up here for me real quick. I would want to say it would probably be another, like, $20,000.
Okay. Okay.
I know I'm just getting that information for Jade there because I think it helps us, you know, because we've got to come up with another $20,000 there. In order to get it to 25%.
In order to get it there. And how long do you think it would take you all to get that $20K at your current rate? At the current rate, so that's a little bit of a tough thing.
So for the

last six months, we've been earning that sort of like variable about $9,000 a month, but with the

recent career change, our income has changed. Okay, but ballpark it.
Ballpark it. Probably about, again, five to six.
Well, yeah, five to six months maybe. Okay.
All right. So do you think that you spend more time in the $9,000 range or in the $6,000 range? Right now with where we're at job-wise, it would be $6,000.
Okay. So that, I mean, that's a big change.
That's a $6,000 range? Right now with where we're at job wise, it would be $6,000. Okay.
So that,

that, I mean, that's a big change. That's a $3,000 swing every single month.
So when you're

calculating this with him, are you calculating it at the $6,000 mark or the $9,000 mark?

Yeah. To get to that six months from now to have that additional 20.
That's what we're asking.

We have been calculating at the 9,000 because the career change just happened this month. All right, so does that push it back to, we're being conservative, does that push it back to nine months, 12 months to get the additional 20? Yes, most likely.
If we didn't focus on, I think we're focusing more on getting our income up versus giving up the down payment. And I think that's great, but I think it's both and.
Like you guys can still save money while trying to get better jobs. So it's not choosing one or the other.
Jade, I'm going to get out of the way because you're the money expert. I'm going to vote for I'm with Chris.
I think Chris is right. I think I would save the additional money because it's such a short amount of time, but it gets you in such a better financial position, one that we actually recommend.
And then once we're in the house and we made all the moves and stuff, that cash that Chris has pulled aside, then we go into baby stuff for. Yeah, Ken is right.
And the reason he's right is the way that we look at this is, you're right. You have the opportunity to toggle between those two or choose one or the other.
But the way that we decide what's best is if it were going to take you more than three years to save up this down payment that you need, we might say, okay, save up hard for three years. And then once you hit the three year mark, we want you investing something.
So from there on, you would kind of split it up. Or you could decide, you know, if a home ownership wasn't even on the table at all, you could go directly to four.
And then once it is on the table, you could pause it and go back to 3B. So you have options.
But because for you guys, it's less than a year that all of this can take place. Yeah, I'd probably, you know, put my head down and you guys save up this money.
I'm with Ken all the way. All right.
Well, Chris will be very pleased to hear that. Is he on the line? Is he right there? He's in the house, but I'm in a different room.
Oh, okay. But you know what? You're being sweet about it, but this is not like a major fight.
You guys, and your heads are in the right place. I just think if anything, this will motivate you to actually knock that 20 out really quick and pursue the professional changes and the timeline changes when that income changes.
Yeah, absolutely. And, yeah, we've had a good time talking about all of this.
That's good motivation. Yeah, we had our dream conversation, and he gave me a hard time because he said I didn't know how to dream.
Well, I think what he's saying is, you're probably the saver, aren't you? Of the two, you're the big saver. Yes, I've realized, yes.
Yeah, well, you know what? You've got to have a little bit of fun in the midst of all that discipline. I think that's what Hubs is saying.
Yeah, this is really good. I think a lot of people face this, so we appreciate the call.
And by the way, if you're a person who is looking to figure out if you can afford the house, should you be investing?

Should you be waiting? Should you be saving for the down payment? We have a really cool mortgage calculator that you can check out. It can help you determine how much house you can afford.

There's one that can help you determine when you're going to pay off your house.

It's really, really helpful. You can find that at RamseySolutions.com slash real estate,

along with anything else that you could have in way of real estate needs. It's a really great hub.
So yeah, check that out. This is The Ramsey Show.
You are listening to The Ramsey Show. Thanks for hanging out with us.
I'm Jade Warshaw. Next to me is Ken Coleman taking your calls all hour long give us a call numbers triple eight eight two five five two two five we'll try our best to get you in uh ken you know i i you know i i partake in the instagrams and the tiktoks a little bit yeah you're pretty good at it i mean i'll i post yeah, you mean the scroll? Yeah, you know, I'll get in there and scroll for a little while.

I try not to do too much.

But the stuff on car payments and car notes is really what gets me.

There's a lot out there.

And recently James sent me one that I had not seen that I was like, this is diabolical.

Oh, this is fresh.

Are we about ready to see one?

Yeah, take a look at this.

You'll see what I'm talking about.

Oh, boy.

Hey, you know how mortgages let people buy houses they can't afford? Think about doing that for cars. Like, loans for cars you can't afford.
Yeah. But no one's going to want to borrow to buy an appreciating asset.
I think they might. Well, the loans would have to be dirt cheap.
See, I was thinking about making them expensive, like more expensive than a mortgage. Mate, nobody's going to go for that.
I got a feeling that by 2024, Americans alone will owe $1.6 trillion in car debt. Really? So let me get this straight.
If I wanted to buy a Mercedes with a loan, it'd end up costing me like $75,000. i saved up it might cost me like 50 000 saved up what are you six years old do you want a new car i do oh no you know what that's brilliant actually i didn't know what we were going to get there that that's actually brilliant it's from to finish, that's brilliant.
Yeah. I mean, it's brilliant.
Okay. So for those of you who couldn't see, it's basically a guy and he's explaining the fact that, hey, mortgage loans make sense.
I mean, it's an asset that's going up in value. People are willing to pay.
It's a low interest rate, depending on who you ask. But with cars, the idea is like, what if we did the same thing with cars? Nobody would want to do that.
It's a depreciating asset. And why would they want to spend more in interest payments? And the truth is people do it.
It's the last line. What I mean by brilliance is in how he lays out the absurdity of the proposition, but lands it on the clarity of the psychology.
And he basically, the last line where he looks at the guy and he says, do you want a new car? Yeah. That's the psychology.
Simply put, that's why the whole system works. People go, I want it.
This is painful. This doesn't make a lot of sense, but gee whiz, good but you want to know what and thus you get a car i don't even think people run it out like that ken i don't even think no think about the numbers at all i don't think they're going well it is a depreciating asset yeah but they do feel like this is gonna hit me i think they know what that payment's gonna be like people $700 plus.
Well, I think that's because most people are just like, I want it. I want it now.
That's what I'm getting at. Don't tell me the numbers.
That's the whole point at the very last line. They are going, the payment's a little stiff.
It's going to be tough, but I don't care. And I thought that was what was so brilliant, James.
Has that thing gone viral? I'm not sure. context if you couldn't that you couldn't see if you were just listening is it says like the invention of car loan so it was like taking it back to the parody of that but yeah i saw it it was brilliant this is how it all came about yeah it's just somebody was like we need to make money how can we make money off these folks this is how it came like we have we have proven we'll pay we'll pay a premium for anything even something that's going down in value and i love what he said there's i don't love this but he highlighted this and it's actually a sad truth over 100 1.55 trillion dollars oh yeah that's in auto loans as it stands you know 1.55 trillion ken i know you know what i was thinking about halfway through that deal there's another trend that's probably come and gone what how it started how it's going remember that yeah i think it was kind of a relationship thing or something so the how it started james is that right there the car loan yeah how it's going is what george gets all upset about where people are financing a 12 pack.
It's gone crazy. With Walmart.
We've gone from that to now we're actually financing household groceries. Yeah.
That's how it's going. But I mean, I think...
It's crazy. You know, this car payment thing, though, it's...
Like we said, people go, I want it. I'm going to get it.
I've got the margin. And know yeah they ran out the numbers and said what you're paying beyond because of your interest rate but you have to do the bigger opportunity cost here and really play this out because think about it okay the average new car payment right now is 736 dollars but there's a large percentage almost 20 percent of people are paying a thousand dollars or more for their their auto loan.
And I always play it to you like this. I'm like, if you live in a family, like most people have two cars.
So it could be double that. And so.
Absolutely. You're looking at a lot of American households having $1,500 or more a month combined.
Then, Ken, this stat's going to blow your mind. 64.5% of buyers that have payments over a grand also have long-term loans.
So people are paying $1,000 a month and they're locked into seven-year terms. For seven years, the opportunity it costs on that, that's $120,000.
If you took that same money and just invested it for that same seven-year term it's 120 000 oh my gosh yeah and i love what he said in the thing too that you know if you saved up for the mercedes you can get it for a whole lot less as opposed to financing it you know and uh that's yeah my favorite mercedes is the one that i picked up on an unbelievable deal a couple years ago a little old lady had it was her. And it only had 47,000 miles on it.
And your boy rolled up and paid cash. Listen, your Mercedes is cute.
I've seen it. It's a cool little car.
Yeah, I like it. No, it's not brand new.
It's a Mercedes. That's my point.
Yeah. But I paid $16,000.
That's it? Told you. Because it's a 2013.
Okay, Ken Coleman. I'm keeping it real.
But you wouldn't know it's a 2013. I wouldn't know.
Yeah, and it had 47,000 miles on it. That's a sweet deal, Ken.
It's a little deal. It's a little, and you know who's gonna get it next? Josie Bird.
My daughter. So, you know what I'm saying? Like, I'm driving it and my point is, is like, that's a quality vehicle.
Yes. and I got it for a song but you're not because I was not I didn't have to have the ego yeah attached to the car and you're not thinking about the values depreciating because you it's it's off your books at this point like you you pay cash for it you're not thinking about that I'd still bragging on what kind of deal I got for it but if you had payments well if I had each mile that on it well let me give you two E words if I had ego and emotion which I think is wrapped around all this stuff you've been talking about then your boy's financing a G-Wagon because I love you know how much I love the G-Wagon that's my dream car Ken we haven't talked about this I want the matte black finish is that you too? Ken you're a gangster i've been trying to tell these folks that ken is a gangster listen i don't know what that means but i'm receiving it when sam and i were getting out of debt we put on our calendar it was like 10 years in the future like we buy we said what's our dream car i said i want a g-wagon we put it on our calendar this is the day that we can buy it we're all gonna roll around the g-wagons i'm speaking it over us wow i gotta get my kids i I'm going to-Wagon.
We put it on our calendar. This is the day that we can buy it.
We're all going to roll around the G-Wagons. I'm speaking it over us.
Wow. I got to get my kids through school.
Yeah, you do. You know what I'm saying? But let me tell you something.
Daddy is going to get a G-Wagon. Mark it down.
Ken, when you get a G-Wagon, you need to roll by the workshop house. No payments.
No payments. Oh, I'm going to come pick.
Pick us up. Listen, Stacey and I are going to roll down there, pick you up.
We're going to go to Nash, Vegas. I'm going to be like, let me ride.
But I think it's wild that we both want the matte. I love that matte black finish.
Oh, that's it. With the mag wheels.
Yes. And what's the interior? You know what? We could go a lot of different directions here.
For our listening audience, it would be a deep, deep caramel is what I like. Kind of like this wood finish for our viewing audience.
A dark, not a tan. Rich, a little richer.
In fact, I'll tell you what it is. BMW has a leather in its kog neck is what they call it.
Yes. That's what I would want.
Wait, pronounce that. Is it not cognac? Did I give you a kog? Did you give me a Cogue? Is that right? Oh boy.
We both looked at James for the answer. Cognac? I think it's Cognac.
Thanks, Dad. How did I say it? Did I say it wrong? You put a G in there.
I didn't mean to. Oh, okay.
I didn't know. Cognac is how you say it.
Did I do the Kog? It might have been the G. You gave a little Kog on there.
I was on the G wagon. That's what it was.
Because I started fantasizing about that vehicle. Me too.
I would climb a mountain with that thing. That's right.
But one thing neither of us would ever do is go into debt for it. As much as we salivate for these vehicles, we will never go into debt for them.
And neither should you. It's costing you.
Whether you realize it or not, it's costing you your future. This is The Ramsey Show.
You're listening to The Ramsey Show. Hey, we've got big news.
Ken, this is the biggest the news gets. Oh, I think I know what you're talking about.
It's almost as big as a cruise ship. All right, we got the Live Like No One Else cruise.
Guys, it's almost sold out. Like, this thing sold like hotcakes.
This cruise is really the ultimate debt-free celebration. That's what it is.
It's for people who have walked through the baby steps. They've, you know, paid off their debt.
They've saved up the money. It really is for people who are in baby step four or above it's not like we're bouncing people but well george and i made a joke about that on wednesday on the show we were like george you should be at the um what is it called the gangway gangway yeah oh look at me trying good job this is your world i am over my skis right now but anyway i said you should be there with a clipboard and and and making people at least look you in the eye and commit to it.
Yeah, we were joking about it, but we're not going to do that. No, we're not.
But the truth is you'll have more fun if you wait. I'm sure at some point we'll do it again.
I got to ask you, okay, for those of you, well, let me tell you all about Jade really quick. So then I can ask her this question.
You'll understand. So Jade is a veteran.
She's a professional musician, not just an awesome, you know, bestselling author and wonderful coach and all the things that she is in her previous life before us. She was, you know, I mean, like she can sing Whitney.
I was a Whitney Houston impersonator. Like, like, do you understand like how hard that is? Yes, you people do.
You've seen American Idol. You know how hard it is.
so she could sing whitney and so she and sam would travel together he's a musician producer he's he's a he's a talented dude and so they would travel on all these cruises like how many cruises would you say a thousand oh three thousand okay it's it's yeah it's a lot all right here's my point uh i want to know what you think of this itinerary mrs i've've traveled the world. It's a win.
You like Turks and Caicos. It's a win.
St. Thomas.
St. Thomas is great, especially if you're into buying jewelry.
Great port for that. See what I tell you? She's got the inside scoop.
That's right. Puerto Rico.
Puerto Rico, wonderful. I wonder for it.
I like downtown. Downtown is beautiful.

Old Town San Juan. Old Town San Juan.
Really fun. There's a lot of free things that you can do, a lot of scenic walks that you can take.
Uh-huh. And then last but not least.
Bahamas. What do you think? I'm guessing it's the private island.
It is. You like this itinerary? I love it.
Okay. You can jet ski on the private island.
Matter of fact, when my husband and I were getting out of debt, we were jet ski instructors. I'm telling you, that was one of our jobs.

I'm a demon on the jet ski.

Really?

Uh-huh.

Speed demon. back when my husband and I were getting out of debt, we were jet ski instructors.

I'm telling you.

That was one of our jobs.

I'm a demon on the jet ski.

Really?

Uh-huh.

Speed demon.

Speed demon.

That's what I'll be doing on the excursion.

I promise you that.

I love it.

Who else is going besides you and me?

It's going to be all of the personalities.

Myself, Ken Coleman, Dave Ramsey, John Deloney, Rachel, George.

Everybody's going to be there.

It's seven days.

Now, this is a seven-day cruise. going i am not going look at that face i know only a mother could love it okay march 22nd through the 29th is when the cruise is going down here's the thing the cabins are running low so vip upgrades and many of the cabin types are actually completely sold out.
So if you want to get in, you got to get in where you fit in. So pick up your cabin now.
You can secure your spot with a $600 deposit. That's all it takes to get started.
And you want to book this today. So go to RamseySolutions.com slash cruise to book your cabin.
And I did say the personalities are going to be there, but there's also going to be a lot of kind of like celebrity folks there. Steven Curtis Chapman, Manit Shohan.
I love her from the food network and tons more all week. There is a rumor going around that there will be some, you know, like musical moments.
I asked John if he was going to play his guitar. He said, yes.
Oh, me George are working on our duet. Really? No.
Yeah, I was gonna say, I don't like that pairing at all. You got too much power.
He's like the folksy guy. You know, he's kind of your folk music, folk rocker kind of thing.
We could do a Kermit and Miss Piggy deal. I feel like that's a...
Now that, yeah, that's true. He could do that.
That is good. All right, let's go to Scott.
He's in Spokane, Washington. By the way, I want to say this before you go to Scott.
Okay. Since I'm a little offended no one's asking me for a duet opportunity, I'm sneaky good at singing.
People don't know this. I feel like you're like a...
If there's a pickleball court on this cruise, I'm just telling you all, I am holding court literally. All right? Lessons, domination, conversation, all of it to be had.
All right. I need to check into that.
Check in. I will check in with Ken.
All right. Spokane, Washington, the city I was born.
We got Scott. What's going on? Holy smokes.
You're from that part of it. Listen, I'm from Cheney, Washington.
Don't judge. I was born and i know and i know where that is and that's where my late wife and i've started our journey back in 1984 i was born in 1984 oh this is getting to be thick now what is happening april april April 7th of 84 is when we were married.

I am another commercial for Dave.

We did not listen to, and I've only been listening for a short time, but we had gotten term insurance, and a month before it was going to expire, she passed away after a year-long battle. Oh, so sorry.
Oh, my gosh. How long? 37, 37 and change years.
We were married last year inlong battle. Oh, so sorry.
37 and change years. We were married, lost her in October of 21.
Oh, so sorry, Scott. So sorry.
So my question is, do I need life insurance? Because mine obviously expired about a month after, you know, and I, it's just going to get cost prohibitive. I have insurance to work, which is equivalent to two years of my salary.
I have no debt. I have, I'm beyond baby step three, I'm sure.
And for, I don't, I don't know what, where it'd be, but there's a hundred and a hundred plus stacked in the bank. The house is paid off and the house is worth over 700.
And how much is your work insurance policy worth? Two years of your salary. What's the number? It's going to be probably about 200K.
Okay. And are you remarried? No, I'm not remarried.
It's going to have to be somebody really special for me to remarry. Any kids? I told my kids.
Is there anyone who depends on your salary? No, my kids are all adults. My youngest is turning 24 next month, and my oldest will be really close to 40 in December.
Nine grandkids. So, yeah, that's not an issue.
I just wonder, you know, because obviously they're going to get everything. My 401k is going to have a little over 300 when I retire and I'm retiring in two years.
How old are you? And it's already, I'm 63, going to be 64 in December. Yeah.
I mean, the purpose of insurance is to replace income for the people who depend on it. In this case, there's really nobody there.
And you know that your estate is in really good shape. There's no debt there.
There's only assets. You've got this other policy through work that's worth $200K, which is more than enough to pay for, you know, any final things that you would want for your children in your case.
Yeah. You don't need it.
If you want it to have this money to, you know, as for legacy sake, you could do that. If you're willing to, you know, for your kids, if you say, you know what, I've got a great estate, but I'd love to leave them a little bit more.
You could do that, but it's not a necessity at this point. You point you could you know you're at that self-insured place in life um in this case but if it's worth it to you to pay i mean if you're healthy and it's worth it to you to pay a couple hundred bucks um every month or whatever it is then yeah you could do that and it it really just puts your legacy sets that up a little bit better but you you don't have to.
Uh-huh.

I wouldn't.

I wouldn't if I were you.

When and where were you in Cheney?

Oh, gosh.

Well, I was born on a cold day in 1984.

I'm just kidding.

I was born in 84, but we lived there for a little while, and then we moved over to Oregon.

And so, yeah, not long, but I got a few memories.

There was a place called, do you remember the place called, it was called Zips?

Yeah, it's still there.

It's still there?

Wow.

Oh, yeah.

That's something.

This is great.

I'm going to go ahead and take the rest of the show off and you and Scott can just get

caught up.

That'd be great.

If I'm ever in the Cheney area, I'm going to look you up, Scott.

You should.

Hey, thanks for the call.

Oh, my goodness.

Where were you born, Ken?

I was born in a teeny tiny town in West Virginia called Point Pleasant, town of 5,000 people, just really super small. Most people are like, what? But my dad was a pastor, started a church there out of college.
That's how I got to teeny tiny town in West Virginia. Moved away when I was 12.
Wow. To Virginia.
So there you go. Wow.
That place is so small,

they pump sunlight into it. Wow.
That's saying something. Think about that.
Well, I love that

call. I loved hearing from Scott again, insurance.
It comes in need when you need it. If you don't

have it, you need term life insurance and you can get that from Xander insurance, which is where

Ken and I get ours. Term life is what you're looking for.
All right. That does it for this

hour of the show. We'll see you.
This is the Ramsey show. You're listening to the Ramsey show where we help people build wealth, do work that they love and create amazing relationships from Ramsey network.
I'm your host, Jade Warshaw next to you. Next to to me is Ken Coleman we're taking your calls about your life

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and you can get involved

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it's a good question

that's right

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that's right

you gotta get through

the screener

alright Laura got through

the screener

she's in Harrisburg

Pennsylvania

let's see what she's

talking about

what's going on Laura

hi

thank you for having me

you're welcome

we're glad you're here

Thank you. All right, Laura got through the screener.
She's in Harrisburg, Pennsylvania. Let's see what she's talking about.
What's going on, Laura? Hi, thank you for having me. You're welcome.
We're glad you're here. So my husband and I are on baby steps four, five, and six.
We have three kids, four and under, and we plan on moving next year. And we're talking about leaving both our careers and moving to another state and starting a business.
Wow. Y'all don't like to sit still or chill, do you? No.
That's my husband. That's not me.
What state are you moving? Bless you. What state? Pennsylvania.
We're in Pennsylvania now, but we're looking at Wyoming, Idaho, or Tennessee. Big sky.
Somewhere a little more conservative. Okay.
Well, welcome to the, yeah, we're the land of the free down here for sure. Tell us about the business.
What would this business be? We've been debating about it and we think a donut shop. I was fed on a bakery before.
I love to bake. My husband also loves to be in the kitchen.
We love to bake. I mean, my heart needs to beat for a second.
Listen, I have so many questions. I do too.
Hold on a second, Jade, before you go there. What does he do now for a living? I guess both of you, what do you do for a living? He works on the family dairy farm.
I supervise a unit of analysts for a law enforcement agency. What do you guys earn together? 130, 135.
130. Who makes what? Break that down.
I'm at about 100 and he's at about 35. And when you say the family dairy farm, it's his mom and dad's? His aunt and uncle.
His aunt and uncle. And he's only making 30K? Yeah.
How old is he? 35. All right.
I'm sorry. Let me tell you something.
That is not enough. No.
But what's also not good about this equation is that for me okay i'm gonna say where my objections are and you correct me where i'm wrong you've got a great income between the two of you you are in baby steps four five and six which means you really do have three to six months of expenses but then the idea is we just up and move to a place we've never been and we open up a donut shop which we've never done before and we're going to quickly make enough profit to sustain our lives not going to happen can i pop the bubble yes tell me tell me tell me what's going to happen that's going to make this happen exactly as you've said it so the the idea is when we move that he would most likely work and i would be starting the business from home um like a cottage food industry yeah yeah um so he'd be working in and having the main job and i would be working on that okay we're ready to go full time and what would his main job be and what would he be making? We haven't figured that out yet or looking long term at least a year out. So this is a dream.
A dream without a plan is a wish, right? This is a wish that you have in your heart. Ken, let's make this into something that is...
All right, so let's take the current plan and let's try to put some brick and mortar around it. All right.
First of all, he's 35 years old. I don't know what his work history is, but he is at his age with his ability.
I'm going to suggest gently that he's grossly underpaid for what he could be making in the world of work. Would you agree with that, Laura? Yes, I agree.
Okay, he's working for Aunt and Uncle Larry and Mildred, and he's on a dairy farm, and they're underpaying him. Or he's doing a job that, quite frankly, that's what it earns, and he's okay with that because your mama's bringing home the bacon to the tune of $100,000.
So, I mean that's pretty great. So, um, what I'm going to do is, is he's going to get a better job and he's going to get a job, uh, with any kind of skill, any kind of experience he can that is at least double what he's making.
This is all minimums, by the way, Jade, this is my minimum plan. Okay.
So he needs to be doubling his income at a minimum with a path for growth for heaven's sakes all right and then you need to do your best to stay within your industry or something that is transferable and make similar money yeah you need to still be making 100 so we go to wyoming tennessee what was the other place idaho idaho all right and so we've increased our income. And then at night and on the weekends you are coming up with two or three signature donuts.
Not 20 different types of donuts. You're right Ken.
Two or three bangers. Like something really creative going this is my best shot.
And I'm not going to spend any money on growing this business other than the materials or, I say materials, ingredients I need to make my best donuts. And I'm going to sell those donuts to people at church.
Coffee shops. I'm going to give them away at places and I'm going to test my donut.
And I'm going to see what people say when they bite into my donut, right? And then I'm going to go, what's happening here? Is it better than everybody else's? And if I've got something, then we figure out what are the next steps to grow the business from home. But I think this is a pure side hustle testing play before you try to launch this business and make any money that would go towards living expenses.
So I know I took a little bit of time with that.

Nope, that's right, Ken.

But that's the process.

And oh, by the way, you still can move to a place

where you like the politics and the values

and whatever, whatever, whatever,

all in the middle of that plan.

Yeah, I think Ken has laid this out beautifully.

I don't have a whole lot to add to it

except to beg and plead with you to take his advice.

Because, you know, it's like the best laid plans, right?

If you don't plan for the what-ifs and you get out here

and I'll see you next time. except to beg and plead with you to take his advice.
Because, you know, it's like the best laid plans, right? If you don't plan for the what ifs and you get out here and let's say, you know, I don't know you very well, Laura, but you might actually be a terrible cook. We think you're great, but what if nobody likes the donuts? So what Ken said is so true.
By the way, by the way, I got to add this. Have you had five daughters donuts locally? Oh, show you right, Ken.
So guess what? I know her. I know the lady who owns it.
Oh, yeah. The founder.
Okay. Her daughter and my daughter are friends.
So I have had the chance to talk to her at a birthday party and ask questions. Here's why I'm going to share this.
Okay. You know how expensive five daughters donuts are? They're pretty high.
They're pretty high. But they're pretty freaking fantastic.
Listen, I'll pay the price in more ways than one. I'm about to shock some Ramsey people right now.
Ramsey show listeners, because y'all are cheap, because we've told you to be. Okay, let me tell you what, a dozen donuts, $5, it's over $50.
Yeah. Okay? Look at the lady on the front row.
Lady on the front row. She was like, oh.
They are flavors you're not going to get. First of all, the donut is this tall.
I mean, it's massive. It is unbelievable.
Very specific flavors. It's a meal.
Here's my point. Laura, here's what I'm trying to.
I'm not trying to get you to copy what she's doing. What I'm saying is she's making margin on those donuts.
A lot of margin. But the value exchange is there.
Do you, you've got to figure out this donut business because you cannot feed babies and pay the bills on donuts unless you're selling a lot of donuts or you're selling a premium donut. I'm just giving you a little business 101 lesson here to figure this thing out.
It's all fun to go. I want to bake donuts.
Yeah, but you'll starve. Yeah, the move is not to go dream about business spaces.

Go get a space and just be like, and I've got 39 flavors.

And you're just a grand opening.

The way to do it is the way Ken said, where you start small.

You start on the ground level.

You let people taste it.

Let the people decide.

That's great advice, Ken Coleman.

This is The Ramsey Show.

You're listening to The Ramsey Show.

Oh,

Thank you. Hey, Ken, let's talk about real estate for a moment.
Oh, I love talking about real estate. You know this.
I do too. Selling a house the Ramsey way makes home ownership a blessing instead of a burden.
We talk about that all the time. We have a set of parameters around here that we teach people how to buy and sell the right way.
And so the Ramsey Trusted Program was created to kind of help push this forward. It's the only way to find an agent that you can trust to keep you on track with what we teach here at Ramsey.
And this will help you get the best offer on your house or find the right house for you. We send some of the top agents that are in your area.
These are people that we trust. You review their stats, you get to interview them, and you get to decide which one ultimately that you want to work with.
And so these Ramsey Trusted Agents, they have years of experience, guys, and they are going to help you make wise decisions when it comes to pricing, marketing, making, or even choosing the right offer. So if you are looking, whether you're buying or you're selling, this is for you.
Okay. You find a Ramsey trusted agent for free, by the way, at Ramsey solutions.com slash agent.
And I always tell people, I love my Ramsey trusted agent. She's great.
She's wonderful. And that's all I have to say about that.
All right. So check it out.
All right, let's go to the phone lines. We've got Brooke and Raleigh in North Carolina.
Come on and raise up. What's going on? Hey, yes.
My mom is worried that she does not have enough to last her in retirement. And I mean, to the point that she's like worried it's been anything like it's not a necessity.
and I have tried every which way I to um to tell her and show her that I think she's more than okay I think a lot of her fear is coming um we lost my dad suddenly last spring um and then she also retired this June um which was the plan before my dad passed and so we've kept to the plan that she was able to retire but I think it's just um I think she's just a lot of fear is there yeah without his income and everything that makes sense how old is she so she is 66 okay and how do you know what the nest egg is do you know what she has I do so um I and and just for a background to you I'm an only child and we have a really good relationship.

So I've been helping her with everything. So her nest egg, the retirement nest egg is about $750,000.
Okay. And does she have debt? No debt.
Including the house? Including the house. Excellent.
And so for real estate, she has a little vacation home that's worth $200,000.

That's paid for.

And then a part of the other plan was when my dad retired, they were going to move next door to us.

They already owned a piece of land next to us.

We did move that up once he passed away just because I am my only child and we both felt better with her being closer. So that she lived in there and that was paid cash for.
Okay. The house and all she built a house and so now we are in the process of selling the house that they had lived in.
Okay. That's going to bring another about $250,000.
Okay. And the house that she lives in now that's paid for is worth about $265,000.
Okay. So you got the $750,000 nest egg.
Here in a minute, you're going to add $250,000 from the sale of the other house to it. Everything is cash.
Is she using the vacation home? I guess for now, you know, keep it until she's not using it anymore but i mean does that generate revenue the vacation home i guess for now you know keep it on the keep it until she's not using it anymore

but i mean does that generate revenue the vacation home no so that was one thing my dad actually bought that um a year before he passed and it was kind of like that it was somewhere that we went every um a week out of the year for as a family and he didn't want it to be rental it's like ours as far as a family.

It was going to be our little place.

Listen, over a million bucks is here um the way to look at this and i i still want her to sit down with maybe a smart vester pro to really get her head around this if she's not because sometimes you know i think that you're really helping her and doing a good job but sometimes you want the person with the degree and the letters after their name to tell you but the way i'm looking looking at this is kind of I'm looking at the average return on this. So even just the the seven hundred and fifty thousand, if you think of her average annualized rate of return, if it's in good growth stock mutual funds, she should be somewhere around 10 percent.
And so if you think, hey, can she live off of just the growth? She's got no debt in her life. Can she live off of seventy five thousand dollars a year my guess is the answer is yes yeah right now she started drawing social security um in january off of my dad's because he always made more than she did he worked part-time for years and um so she's only getting in like 2600 and i've tried to've tried to do a budget, like worst case scenario, and also including like insurance and taxes for the year for both properties.
And, I mean, worst case scenario, she would have to draw like an additional $600 a month after retirement. Okay, that's nothing.
If she wanted to live, but I want her to be able to enjoy it too. Yeah.
And that's what I'm trying to tell her that if she wants to go and get a meal with a friend for $10 it's okay probably it sounds like your dad did a great job handling this and she kind of deferred to him and maybe he encouraged her to you know cut back over the years so that they could have this great nest egg and now it's here and maybe she's used to looking to him for you know what we do next and you know that's understandable the opposite it was the opposite he was the spender and she was the saver but he made more he made his income was quite a bit more than hers right and i think the thing is now i think too without the comfort of that income yeah she's scared she's she's really scared. You know, here's what's interesting.
I think Jade's advice is absolutely, as is what I was going to say, I think she's spot on. I would get her with a SmartVestor Pro in your area or two.
Let her meet with two or three. And she gets to pick the one she wants that she's most comfortable with.
That's the advice we've given for decades. And this additional income from the house goes on top the $750.
Now let's just say you're Mrs. Calculator.
I am. I'm going to give you a chance here because I always go to Jade.
She loves this. She's 66.
She's 66. Let's just say, what does the $750 turn into in 10 years if she doesn't even touch? Well, she's adding the $250 from the sale of the house.
That's what I'm saying. I want you to be able to make this case, but a smart investor pro will do this with her.
But if the daughter's trying to get her to listen, but Jade's right, she's not going to listen to you. She needs a pro to tell us.
But just the $750 alone over the next 10 years is going to turn into a sizable chunk of change. But let's just say it's a million.
The million at the time she's 76, what's that going to be? Well, let me start by just saying a lump sum is going to double every seven years. That's why I was saying the 750 example.
What's the 750 going to be 10 years from now? Well, can I just turn it to a million? Give me one second, buddy. Well, you were throwing me off.
Okay. I was trying to just stick with the 750 because that's what she has now.
And that plenty of money we're trying to prove it to her okay and let me go back to 750 i want to make sure i'm not crazy you're not crazy i feel like she's good no trust me she's okay survey says it's coming all right so if we say just for the next 10 years 750 000 she doesn't add anything to it uh average rate of return let me get that decimal out of there because it doesn't want that there. It will be $1.8 million.
Ding, ding, ding. All right.
And that's her doing nothing. That's just the $750,000.
And I think we add the $250,000 on top of all this. Yeah.
And all that's going to just burn away in a good way. Like it's just going to keep moving and investing first.
So I think the SmartVestor Pro is the way to go. Yeah.
Have a pro who's got great bedside manner. You're just the prophet in your own town.
You're too close. Yeah, that's what it is.
Jade's right. You're right, Jade.
I mean, it's 100% what's going on. We're going to go meet with her.
She's not. No, no.
I just want to make sure I'm not leading her down the wrong road. Let her see this show.
Play the her go into the ramsey network app you know what that's it go into the app or show her on youtube here's the deal uh what's your mom's name um it's ann ann listen to me ann you're not okay you're great you are in great shape and you are you need to go have a lunch every weekend with the fried green tomatoes. Have some fun.
Join the YMCA and take a swimming class. You know what? You're going to be okay.
You're going to be good. Because even with the a million, if we did a million for the next 10 years, it's 2.4 million.
Even if you do nothing to it. That's fantastic.
Mama is good to go.

She's fine.

I love when we have good news, Ken.

That was some good news.

I love when we get to give the good news.

And in this case, it is very, very good news.

Compound interest is always good news.

It is.

This is The Ramsey Show.

You're listening to The Ramsey Show. I'm Jade.
He's Ken. Give us a call.
The show is live. So if you want to talk to us, call in.
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We hope. Lee is here.
He's from Washington, D.C., our nation's capital.

What's going on, Lee?

All right.

Thanks so much for taking my call.

I was actually calling because I recently, yesterday, I was laid off from my job, and

I was contemplating if I should pay off my credit card debt, which I was initially going

to pay off before I got laid off.

But I'm wondering if I should change my priorities. What happened? The company, so I worked at a startup and they just couldn't afford to continue to pay me.
I had just started that job in July, July 1st. So it only, this is the first month I got the job through internship because i was interning with them for two months and then they hired me on and now they've uh they've laid me off because they couldn't afford to pay well first of all i'm sorry about that that uh that stinks and um and it's happened to all of us uh what were you doing for them? Software sales.

Okay.

So I was a sales development representative. What's your confidence level? I'm sure your brain has been running 100 miles an hour.
What's your confidence level of getting another sales job or something else in that field or just anything? What's your confidence level in the next 30, 60, 90 days? I'd say in the next I think that I could

comment confidence level in the next 30, 60, 90 days? I'd say in the next, I think that I could confidently say that I could be placed in the same role with a different company, at least in the next 60 days. Can you survive from a cash standpoint? What's your cash situation, your bills and everything that you've got responsibilities for? I do.
Yeah, I can survive right now. I have about four months of expenses saved.
Do you have any debt besides the credit card? Yes, I do. Jade, walking through that whole situation.
In this situation, I hate that you got laid off. And you're kind of in a transition.
And so we would tell you to pause the baby steps. So for all intents and purposes, you're on baby step two, which is you have debt and you need to clear out your consumer debt.
And so because this kind of storm has happened, we'd say pause that, stack up as much cash as you have. It sounds like you have four months of expenses, but you also have debt.
And so if I were you, I'd continue to make the minimum payments on all your debt because you want to stay current, you want to stay on top of things. But I wouldn't pay anything over it until you land that next position.
Okay. And can I please, please, please, please ask you to get to work very quickly? It doesn't even mean, you know, if you've got some things that are working in the industry, that's fine.
Play out the interview process, but I would be doing some type of part-time job or maybe something full-time until I had something, something that's just a gig kind of a thing, the gig economy, you know, and keep income coming in. Here's why.
Let's say that this thing plays out like you think it's going to, and within 60 days you're backing up and working. Now all of a sudden we're right back in the baby steps like Jay just told you, and now that four months' worth of expenses is all going towards the debt.
But I want you to keep income coming in in this time. That's where you actually turn a really sucky situation into a better situation by going, all right, I got laid off.
That sucks. Taking a pay cut, but I'm at least bringing money in.
And Jade, if he could, let's say, make enough money in a gig to take care of his four walls, and I'll let you explain that, then I like his position once he gets back up on the horse. That's excellent.
Matter of fact, I might keep a little bit of the gig while I get back on the horse so that you can pay off this debt as quickly as possible because that's the goal. I want you to, once you land the job, the money that you have in savings, I want you to use that to pay off the debt.
That's the baby steps. Baby step number one is you keep a thousand dollars000 or you get $1,000.
You stash it away. That's your starter emergency fund.
Baby step two is you pay off all of your debt except your mortgage using whatever extra money you have laying around and to Ken's point, side hustling and doing all those other things. So you said you have four months of expenses.
At this point, if I were you, that money goes to the debt. And then after the debt is cleared up, you save back up that four months of expenses or up to six months if you wanted to.
And then you move on from there and you start investing at baby step four. So that's how I would run this if I were in your shoes.
Very good call. Let's go to Maggie.
She's in Tampa, Florida. What's going on, Maggie? Hi, thank you for taking my call.
You got it. I'm getting, you know, I'm getting a little like anxious.
We were, my husband's 76 and I'm 69 and we just bought a house. We wanted to downsize from the one that we had that was bigger.
And I'm getting a little anxious because the house is taking a little long to sell. It's been the market for six months so you sold one and you moved into another house before you sold the other one yes oh mama oh and so are you about to be paying two mortgage payments no no no the other one is paid off okay good the one that we're selling is paid off okay okay so we we thought it thought it would sell really fast, but with the market, the way it's going,

it's been a little longer on the market.

How long?

Six months.

What is your real estate agent telling you about your current listing price?

Oh, we just lowered it.

When was it? It was at $5.75, and we just lowered it from how when when was it was at 575 and we just lowered it to 569 okay so i just saw this headline today today uh we're seeing the florida housing market begin to contract a little bit because it was exploding uh and now we're seeing it contract in fact many people feel like it was overpriced. Yes, it was.
Overheated. And so you're in Tampa, which is the Tampa area, which is certainly one of the better markets in Florida.
So I think if you've got a really good real estate agent, and if you don't, I would highly recommend that you go to RamseySolutions.com slash agent and talk to some of the trusted pros there on that site that we know. Because in this current market, I think patience is the game.
And listen, six months for a house listed in Tampa? I don't think that's crazy if your pricing is right. Yeah, I agree.
I agree. Tell me, is there anything on fire, though?

Because, of course, everybody wants their house to sell.

Was the plan to take the proceeds from this sale and put it on your current house?

Or did you buy your new house?

Tell me more about that.

No, I put some down.

So we owe $326,000 because the house was $430,000.

Okay.

So we just want to pay the house. We don't want000.
Okay. So we just want to pay the house.

We don't want to have that.

Sure, I got it.

We don't want to pay the bank any interest.

Sure, but you're not.

We didn't have to.

But what Jade's asking you is,

are you in a financial squeeze because this thing has not sold you?

No, we're not.

All right, then be patient.

This is all about making sure your pricing is right and then just hold.

Yeah, just hold.

I definitely don't want you to put a price that's too low.

you can see the next one. patient this is all about making sure your pricing is right and then just hold yeah just hold i i definitely don't want you to uh put a price that's too low because you're anxious and you just want to move it you know you're not agree with that you're not everything must go you're not in that in that mode so just you know you got to know when to hold them sit tight uh i'm going to do a little bit of fork i'm no real estate pro but i as you know way too much attention to the headlines.
Okay. Forecast for us, Kim.
I pay attention to what the Fed is doing and what they're saying. We are in a presidential election.
I would not be surprised given where we are right now. We're seeing unemployment tick back up over 4.1.
I think it's 4.1, the latest job report, last month's job report. We're starting to see a softening in the labor market.
All of this in a presidential election. This is exactly what the Fed set out to do.
Jerome Powell is on record as saying, we've got to raise interest rates, and it is going to cause pain in the employment market. And pain in the employment market, and then when we see interest rates high for the home industry, mortgage rates, this creates a cooling of consumer demand.

Of course. And consumer confidence, which then in turn, theoretically, drops inflation.

So all that to say.

Put it in more layman's terms because the cooling is happening because everybody's holding on to their money.

That's exactly right.

Okay.

And so what's happening is people are also sitting and waiting to see what happens in the next quarter or the fourth quarter as it relates to mortgage rates. I think you're going to see a slight rate cut in the third or fourth quarter.
And I think you'll start to see people move back into the housing market. So I would sit tight if I'm in a position where I'm listing, I'm going to list it and stay with it.
But I think you're going to see an increase in home sales as we look to the end of the year. All right.
I love that because that's been the issue. Not enough homes on the market, not enough supply to meet the demand.
You heard it first. You heard it here from Ken Coleman.
Let's see, is he correct? This is The Ramsey Show. This is The Ramsey Show, your scripture and quote of the day.
Do you not know that in a race, all the runners run, but only one gets the prize? Run in such a way to get the prize. That's 1 Corinthians 9.24.
And then Simone Biles' Olympic opening ceremony is today, by the way. I will be watching.
I'm a big fan of the gymnastics. Me too.
Well, she said this. She said, I'd rather regret the risk I didn't take.
I'm sorry. Let me read it again.
I'd rather regret the risk that didn't work out than the chances I didn't take at all. Yeah, I like that.
Can we throw that scripture of the day back up there? Yeah, put it back on. I'm going to do something I've never done before, James.
Are you going to preach? I might. It says, do you not know that in a race all the runners run but only one gets the prize? Run in such a way to get the prize.
So there it is, a little biblical case for there are winners and losers. And maybe we shouldn't be giving trophies to people who lose soccer games 11 to 0.
See what I'm doing there? Yeah, just leave that right there. We got a bunch of soft people coming out into the real world because they think everything needs to be handed to them.
And scripture says right there, everyone runs the race, but only one of them wins. And I got news for you.
It's the dude or the gal who breaks the line before everybody else. And that's the person, by the way, that we will see in the Olympics this next two or three weeks, gets the gold medal.
So you're telling everybody else to quit whining? I'm just saying, you don't deserve a trophy or a medal if you don't place. Work in a way, live in a way that you place.
And if you don't place, it's because you didn't work hard enough or you aren't good enough. So, man, I'm just, I'm so tired of all the whining in this world.
Stop whining and get to work or get some self-awareness. There's a reason why I'm not trying to play pro basketball right now.
I'm 5'8", I'm white and can't jump. Okay? There's three reasons.
Keep going, Ken. I'm just saying.
I'll give you the slow clap. This is the only thing I can do is actually talk on a mic.
It's like the only thing I can do. Quack.
Quack. Some of you will get that.
Some of you will not. Yes, I love that.
But good job, Ken. You know what I'm saying? You're right.
No, you're 100% right. I'm not trying to be mean.
I'm just, it's the truth. You got, if you listen, we're here to help you win.
Yes. And, and you need to understand that winning with money is the same as winning in a race.
You know, you got to put the work in, you got to be disciplined. So all right, enough.
Take it one day at a time. Enough of that.
So for some reason that verse got me all fired up. I think it should.
That's, that's very good. People needed to hear that and people needed to know that Ken.
All right. They did.
Let's go to Matt. He's in Scranton, Pennsylvania.
What's going on, Matt? Hey, Jade. Hi, Ken.
Thanks for taking my call. You bet.
Question. So I'm 30 years old.
My wife and I are in baby step two. We were looking forward to getting out of debt next spring however there's a parent plus loan that is in my former stepmother's name that morally I do feel obligated to kind of at least take over the principal amount of that loan which is about 60k what's the problem is okay sorry go ahead you said the principal amount, what's the rest of the amount? What is it with interest? So yeah, about $38,000 worth of interest has accrued from the time they began being dispersed till now.
I was told that it was being worked on and taken, quote, taken care of. However, obviously, obviously that's not the case.
So. Is your name on it at all? Is it connected to your? It is not.
Okay. So this is just you saying, I guess what I want to ask you is initially, and this is what I always ask people with the Parent PLUS loan, it's horrible and it causes so much division.
The question I want to ask for you is, when this loan was taken out, what was the decision? Like, what did you guys decide? Did you say, okay, we're taking out this loan, and it's up to you to pay it, Matt? Or was it, hey, we're going to help you out as your parents, we're taking out this loan, we'll pay it? Or was it a half-seize? Like, what did you guys decide? So, yeah, the intent was I would have my own private loans, which I got. And about $4,000 from being paid off on those.
And then the Parent Plus loan would be taken care of, you know, by them. And it kind of fell through the cracks.
And I'm obviously a little upset. How did you find out about it?

I was totally out of the loop on this.

Well, so my father and now former stepmom got divorced.

And the loan is in her name.

Ooh.

Okay.

Now I see why you're feeling the need to step in and do this.

What's your wife say about it?

We're kind of in alignment with, you know, morally, I should pay the principal.

But the interest, that was not my doing.

So I don't feel responsible to pay that interest. I'm good with that.
I agree. I'm good with that.
I feel the same way. That feels...
Case closed. It's case closed because I think, honestly, for you, I applaud you because you looked at the situation and said, this woman stepped into my life.
She was here for a season. She did this thing, which in her mind was a good idea.
Obviously, it wasn't and it didn't pan out well for her. I think that you're a really good guy for stepping in there and even saying, hey, let me let me take care of the principal.
What does she say about all this? Is she trying to say no, pay the whole thing? Tell me me what her stance is on this yeah so i got like we got something in the mail last week uh like a letter on a certified letter i guess basically recommending paying the 98 000 which includes the interest within 30 days from her from her oh that's fair that's rich so there was like legal action oh like she's trying to get into that that's what it sounds like but but if we're going the legal route again like my name's not on it so there's no you know yeah um yeah that's certified letters on her completely but that tells you where she's at this is going to be interesting it is going to be interesting i think that i don't know what your relationship with her is. I'm guessing it's not wonderful if she, if she started with this, is this where she started on the conversation? Or had you been talking up until this point? Yeah, we talked last fall when this was still, you know, in forbearance interest wasn't accruing.
And I said, you know, just let me know what I need to do. Like all, and I even started started then like i don't feel responsible for this interest i i don't think you should pay this full amount i agree with that because you know what did she say all right hold on what did she say when you said this to her in person so this wasn't in in person we used to have a great relationship but then when everything happened with the fallout between her and my dad, we're kind of just on text messaging terms at this point.
Oh, gosh. This was all over text.
Yes. The only positive is it's in writing.
That's the only positive. So what was her answer via text when you said, I'll pay the 60 or whatever it is? So the last text I had from her was she's going to see if there's a payoff amount and what they would take for a payoff amount.
Oh, like a settlement? And then you've not heard anything else until this letter? I haven't heard since. That was last week when I got the mail.
Wow, okay. So that ratcheted up pretty quickly.
Yeah, she escalated that quickly. Listen, I think you stick to your guns, and I think that you, in many ways, I actually do like the fact that you kind of have this text message chain.
I think if this goes further and you need to settle it in some other way, it'll be good to have just kind of some written document. But to Ken's point, she is on the loan.
And so legally, really, she's liable for it. And she should be thankful that you're a good guy stepping in.
And by the way, she has no leverage, so don't give her any emotional leverage. This certified letter feels like a tactic to me.
Yeah, it is a tactic. Like I'm going to fire a shot across the bow, and I think I would just laugh and just say, you missed, and let me tell you how this is.
I'm a good person. I'm a person of integrity and character.
And here's what I'm going to do. And I'm not going to pay a nickel more than that.
And that's how it's going to go down. And just look her and call her bluff.
I mean, in poker, that's what you do. You think you got the cards? You call someone's bet.
And I think in this case, you got the cards. She doesn't.
Because 60K, that's a pretty penny. How long will it take you to save that up right quick? Because we're about to go up.
Oh, to save it up? Oh, geez. Well, with our other debt, we have about 40, a little under $40,000 left and everything else.
So we were going to be out of that by next May. Okay.
You do that first. I ran the debt snowball with the 60K and it pushes us out to like spring of 27.
Okay. So if I were you, I would obviously finish your debt snowball first.
I'd even put your three to six months in first. And then I tackle this because it's not your debt.
You're doing it out of the goodness of your heart. And I'd want to make sure that you're squared away first.

And honestly, yeah, that's the way I do it.

I don't want you to miss out on any time because of this.

And so keep moving forward through your baby steps and weave this in at the right point

that makes sense for you and your family.

Good to host with you, Ken.

Thanks for the guys in the booth

for making the show happen.