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Hi, I'm George Camel Ramsey personality, personal finance expert, bestselling author of Breaking Free from Broke and co host of the Ramsey Show. And today I'll be answering your questions about getting out of debt and staying out. This is debt support. And let me give a firm handshake to deleteme for sponsoring this channel. The Voice of Antiquity asks, I have a pension, 401k Roth IRA and a Robinhood account that I have used for learning the stock market. My question is, should I cash out my Robinhood account to pay off down some lingering debt? Let me tell you, Voice of Antiquity, I don't like anything that lingers. And therefore I would xnay the et day. I think that's how Big Latin works. Not an expert on that. But here's the deal. Robinhood is a trash app and you should delete it. They exist to rob you of your money, hence the word rob in there. That's where it comes from. But really, they're going to send you notifications to come back and make another trade. And it's so gamified that it will cause you to make bad financial decisions. So there's better ways to quote, unquote, learn the stock market. Number one, I would not be investing in single stocks, ever. I'm gonna always do a mutual fund, which is a giant group of single stocks all bundled into one nice diversified little fund. And so I would cash out your non retirement investments to pay off your debt and then stay out. No lingering here. Stumler says married equals S1 account doesn't actually equal one account. What? What is that a sentence or is that a riddle wrapped in a rhyme? Okay, let me try to think this through. Married equals. Is it the S1 account doesn't actually. What does this mean? Oh, Stumler really stumped me. Okay, come back again and use words next time. That would be helpful. I don't do geometry or whatever you put in front of me. I don't do Pythagorean theorems, Bro. S equals one and therefore one. Nerd. Coach Nielsen asks, what happens to your debt when you die? Well, if we're talking about financial debt, it's different. But spiritual debt, if you believe in one true God, your debts have been paid by Jesus Christ. Congratulations. It does not go to debt heaven, unlike dogs, so don't even try it. Debt. You're not making it through with my pup. But to actually answer your question, your estate would pay those debts first. So if it was your name on that debt and the creditors get notified, the valid debts would be Paid out of your estate, which is all of your assets. Think your bank accounts, your investments, your car. And if it is a secured debt, like a car or a home, the person who takes it over has got to continue the payments to the lender. Or it can be repossessed. But if it's just a debt in your name, it's unsecured. You'll either get paid out of the estate. If the estate doesn't have money, they basically write it off. But it's not going to go to your heirs to pay on your behalf. Whatever's left out of your estate will go to the heirs. But hopefully you die without debt. That's a good life goal, I would say. So get out of debt now, because who knows what tomorrow holds? We are not promised anything. And read your Bibles, Okay? Gosh, do I have to do all the evangelism? Jesus paid it all
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to me.
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That's a jam. That's a bop. Honestly. All right. Shannon asks, what is your best advice for someone with a car lease who doesn't have the money saved up to get a car in cash? Well, Shannon, here's the problem with a car lease. It is a contract with the lender saying, I'm going to make these payments for this amount of time and then the car is no longer mine, or I can buy it out at the end of the lease. So your options are either have the full amount of the buyout, so ask for the early buyout amount and then save that up. And until you have that money, you can't get rid of the lease. The other option is you keep making lease payments and then give the car back. That option also sucks because of how expensive leases are and how much you're losing, because you're basically prepaying all the depreciation while staying in these really tight parameters of how much you can drive, the damage done to the car, all of that. They will ding you with fees until the cows come home. The other option is find someone to take over your lease, which there are sites that can connect you to those people. But very hard to do to find someone who wants to take over that lease. Cause why not just go get a new lease if you're that person? And then the last option which you can do is you go to some of these places like a CarMax or a Carvana, and they will buy out your lease. But here's the thing, you don't own the car, so you can't just go sell it on Facebook Marketplace, because it's not your car. To sell. But places like Carvana or Carmax, they might give you enough to make it worth your while, but you're likely going to be underwater on what they're willing to give you versus what you owe. So you're going to need at least that amount in cash. And the only time it would be okay to take on some debt is if you're going to your local credit union and taking a loan out for the difference. So Instead of being $40,000 in debt, you're $10,000 in debt. Much better problem to have. But leases are one of the trickiest, stickiest, worst things to get into. So highly recommend you get out and stay out. Good luck. Wayne says, how do you stay out of debt? This is my first time being out of debt in five years. Well, Wayne, the simple smart aleck answer is don't go back in. Right?
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He's right.
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He's right. You were in the lion's den and you escaped with minor injuries. So the easy answer is, let's not go back into the lion's den. But what's tempting is you go. Well, it's a. I gotta have a credit card to build my credit score to get the points and the rewards. Why not just use it and pay it off every month? Well, if that were so easy, then half of Americans wouldn't be in credit card debt totaling $1.28 trillion. So if I were you, I would add friction to my life to make sure that I stay out of debt. Here's some simple ways to do that. Number one, freeze your credit with all three credit bureaus. And when you do that, no one can open up a new account in your name. No one can take out a loan in your name, including you, without a bunch of hoops to jump through. So freezing your credit's a great option. Another option, cut up all of your credit cards and stick to debit cards or cash. That's a great to know. You'll never go into credit card debt because you don't have one. And then third, doing a budget, making sure that you actually have enough to cover all of your bills. Hit all your goals. Having an emergency fund is another huge one. Having three to six months of expenses is your never go into debt again insurance policy. So there's a lot of things you can do to make yourself not go back. But adding friction and paying attention to your money is the crux of it. And congrats on being debt free, by the way, my man. That's awesome. Think about the sacrifices you made over five Years and go, I don't want to do that again. Not fun. Glad I did it. Glad I got out. Wouldn't want to do it again. 0 out of 10 stars. Would not recommend. Andrew asks, in what cases slash circumstances, is it better to only make minimum payments on a loan, car, mortgage, etc. If the interest rate is lower than the market rate of return? Here's the thing, Andrew. You are comparing something that is fixed to something that is variable. And there is no quote, unquote, market rate of return. If we're talking about the stock market, okay, there's no guarantee that in 20, the market is going to do 20%, and therefore hanging onto my 3% loan is wise. I don't buy it. And so what I do is I control the controllables. I know there's a fixed savings rate to paying off this fixed interest debt, and so I'm going to always pay that off regardless of the interest rate, including my mortgage. And I've done that. Now, on paper, looking in hindsight, could I have made more money and made a bigger spread if I invested those dollars instead of putting it toward my mortgage? Maybe. But life is too short to be dealing with that kind of anxiety. And so control the controllables. You control paying off your mortgage. You can't control what the stock market does. And by the way, you pay off your debts, guess what? You free up payments that you can now use to invest. Bada bing, bada boom. So there are no circumstances in which I would say it's wise to only make minimum payments in order to invest. Instead, you would not borrow money to invest. And that's essentially what you're doing by saying, I'd rather invest versus paying down the money that I borrowed. See that? A little M. Night Shyamalan twist I put there? All right, let's see this one from Taylor. What a cute couple. Look at him giving her a little smooch. Keep it PG in the avatar, guys. Gosh, my daughter watches this channel. Taylor says, my husband and I are in $11,000 in debt. And each month when we get paid, we get into a disagreement about what is priority. Putting a chunk toward the debt or putting it into savings. Which is better? All right, we're talking about two good things, right? Saving money and paying off debt. And this is where the Ramsey plan is so helpful. It guides you and tells you what to focus on next. So baby step, $1,000 starter emergency fund. So if you guys don't have that, that is the priority. So I don't know which of you thinks you should do what but 1000 bucks first. Then after you got a thousand bucks saved, focus on paying off all of your consumer debt using the debt snowball method. That's smallest, largest balance, ignoring the interest rate. Because this is about momentum and behavior and it's psych, baby. It's psychological warfare. So we gotta get rid of that smallest balance first. Knock it out, make progress. That's what it's about. Then once you're done with your consumer debt, we focus on building a fully funded emergency fund of three to six months of expenses. So you're both right and you're both wrong. Isn't that fun when nobody wins? Those are my favorite marital arguments. Never been in one of those. I always lose. But I'd love to be in one where it's a lose lose. You know what I mean? Everything seems copacetic on the old home front, huh? But good luck paying off the 11k in debt. Here's what I'm thinking though. If I had to guess, she wants to put money in savings because the security gland is flaring, going, we're not safe. We're not safe. And I'm going, you're right. So maybe we get out of debt and stop owing other people money so that we can create some real safety instead of the illusion of safety, which is having some money in savings while having a bigger pile of debt. It's like Thriller. I hardly know her. Just a Thriller. I can't do the dance, but if I could, I'd be doing it all day. And that's why I don't learn it. Yeah, probably for the best, dad. One WeTube. Have you seen the Cancelina commercial where she runs around with giant oversized scissors cutting up and canceling credit cards? Quote, don't be like Cancelina. I guess that's a. That's a question. He's asking a real question. I've not seen the canceling a commercial, but now I desperately want to see it. So let's. Let's find out. We're going to click on the ad for canceling a meet.
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Cancelina. She's a credit wrecker. She loves canceling older credit cards when they're paid off. But what she doesn't know is that canceling them can decrease the length of her history and hurt her credit mix, both of which could lower her score. Don't be like Cancelina. Instead, learn how to avoid the wreckers@creditrecors.com okay, one bank for what's ahead, guys.
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What? That's assault. You can't just do that to somebody and she's in front of a gravestone and you're gonna knock her out cold. This person is a murderer. So here's the deal. This is bass ackwards, Mark. Safe for homeschoolers. Safe for homeschoolers. Here's the deal. What this is encouraging you to do because they're called Credit One bank, they clearly want you to go into debt and keep all of your debt accounts as long as possible, because that's how they make their money. Instead, they're saying, hey, don't cut up those old credit. It's going to hurt your credit score. Don't want a bad credit score, do we? Open more cards. Use it wisely. This is an exhausting life. And back in the day, this was me. I had a bunch of credit cards, you know, 2012, 2013, and I finally went, enough is enough. I'm now in credit card debt because I wasn't paying attention. I was spending more than I thought I was. Because you're someone else's money. I'll pay it back later. Right? And so instead, I cut them up. And I just stop worrying about my credit score. Because here's the deal. As you pay off your debt, your credit score might do a little bit of this. It dips down or go back up. But when you pay off debt, your credit score does not go down, it goes up. Now, if you cancel a bunch of cards all at once, you could see a temporary dip. But the goal here is not to keep your credit score up. The goal is to build wealth for yourself, regardless of your credit score. So what happened is I paid off my consumer debt, and about 12 months later, my credit score was indeterminable. Now you're going, well, George, how are you going to live your financial life? I lived it just fine, my friend. Not worrying about my credit score ever again. I was able to get a mortgage without a credit score through something called manual underwriting. Shout out to Churchill Mortgage. They're the pros at this. And I didn't need it for insurance. I didn't need it for a job. Not a single time has my credit score come in handy. And so don't need it, don't want it. And I think you should be, like, cancelina weird name. Don't know who. Maybe it's a family name. I'm not one to judge, but this has 1.3 million views. How they got those views, I have no idea. I can tell you now, dad, one WeTube. I have seen the canceling a commercial and it is garbage. But this does bring up a great point. Don't use banks like that. Banks that clearly want nothing more than to keep you trapped in this debt and credit score cycle as long as possible. Instead, partner with a bank who wants you to win. Like Fairwinds Credit Union, a sponsor of today's video. Look, most people only notice their bank when something goes wrong, like getting dinged with a random fee. But that's backwards. Fairwinds is built to make everyday banking simple, clear drama free. And not only do they not charge you fees, they'll even refund your ATM fees and your first two overdrafts. It's like accident protection baby. And it's banking designed to help you win and keep you in control. So get their smart bundle today for free including a no fee checking high yield Savings account@fairwinds.org Ramsey and before we get back to the Q and A, allow me to A another very important Q How can you make sure spammers and scammers can't buy your personal info from online broker sites? George Asks Answer Signing up for Deleteme, another sponsor of today's video. Deleteme combs through hundreds of shady sites to remove your data before it winds up in the wrong hands. Alright. It's a great way to help protect you from phishing, scams spam texts and other digital hornet nests. You'll even get a custom report every few months letting you know exactly what they've done on your behalf and how much time they've saved you. And right now you can get 20% off their annual plans by going to joindeleteme.com George Kaiser Soze asks, what's your take on debt repayment using the Velocity Banking method versus Debt Snowball Slash Avalanche method? Oh boy, you've been on TikTok too long. Oh Kaiser so here's the deal. Velocity Banking. It sounds really cool. I'm gonna admit it. Great marketing name behind Velocity Banking. But what it really is is taking out a HELOC and putting all of your expenses through it in order to save some interest. Which is as insane as it sounds. And here's the thing, you would have to do the so perfectly and not screw up at all in order for this to make any difference at all. That is stupid because the thing is, if you're in a bunch of debt, what makes you think you're going to be so disciplined to use another tool of debt to get out? So I'm always going to recommend the debt Snowball method. Even over the Avalanche method. Avalanche says highest interest first debt. Snowball says knock out the smallest balance first, which happens really fast. You free up that payment, you roll it into the next debt, and the snowball picks up steam. And by the last debt, you've freed up all of these payments to throw at that final debt. And it moves. F you actually make progress, you feel the momentum instead of Avalanche, which is, well, I think I'm saving interest but not making much progress. So velocity banking. Thumbs down. The giggle district said $50 a week. Doing what? Selling Girl Scout cookies. What in the world? I don't have the brain power to even think about the context as to what this is referring to. Giggle District. Are they. Did I say in a video that you can make $50 a week selling Girl Scout cookies? I gotta know more, Giggle District. And I also dark curiosity as to what your YouTube channel is. The funniest neighborhood on YouTube. Here the jokes hit harder than your morning coffee. Expect outrageous skits, wild reactions, hilarious characters, and non stop daily laughs. I think I'm gonna hard pass, bruh. Epic fail compilation. Okay, I might be back in. Neither here nor there. Don't know what you were asking. I apologize again. You and what's his face need to hang out. Stumler. Are you in cahoots with Stumler? Trolling me? This is 32 asks, should I pay down my 3 to 5% interest student loans or invest in the stock market? I'm 32 with $96,000 in my Roth IRA. I've got $44,000 in student loans. I own my home with $100,000 in equity. AI says to pay down the loans until I'm left with 3% student loans. Cheers. Keep up the good work, heart. Okay, I don't know what AI you use, but I don't like it. So what this is saying is, well, it's at low interest, so let's not get too carried away paying this debt down. Which is why I'm not a fan of using traditional AI for financial advice. So what I'm gonna do is pop it into Ask Ramsey, which is our new AI tool that our team built. Because I want to see what it has to say about this conundrum that many people find themselves in going, should I pay down low interest debt or should I invest? Because I've heard I can make a lot more in the stock market. So let's see if Ask Ramsey is gonna go against the grain and against the other AIs. Pin them against each other. Watch them fight. Bada Bing bada boom. All right, copy and pasted her question here. Moment of truth. Ooh found five sources. Thank you for laying out your situation so clearly. Here's the bottom line. If you have any non mortgage debt including student loans, no matter the rate, you need to pause all investing and attack those loans with gazelle intensity before putting another dollar into the stock market. Could I have said it better myself? Nay, I could not have. Doesn't matter if the interest rate is 3.5percent or even lower. Carrying any student loan debt means you're still on baby step two and the fastest path to building real wealth is to clear that debt completely. The AI says leave the 3% loans advice is not in line with this plan. Debt is debt and robs your income and peace of mind. It then even gives you the exact next steps to take a Chef's kiss to ask Ramsay it's fantastic. If you guys want to check it out, you can jump on ramseysolutions.com and check it out for yourself. Ask your questions. I'll also drop a link in the description if you want to click it instead of type it. So I wholeheartedly agree. I would always recommend paying off every penny of your consumer debt before you invest a dime. And if you want to know the plan that I use to pay off over $40,000 in consumer debt back in the day, click here to watch me break it down or use the link in the description. That's it for today. Thank you for all of your questions. Thank you for watching. We'll see you next time.