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When it comes to budget planning, what is the 50, 30, 20 rule? Is it A, a rule that applies to your retirement savings? B, a rule that applies only to wealthy people? C, a rule that tells you how to allocate your money each month, or D, a rule that applies only to people who are just starting to save money? Correct answer. C, if you got it right, give yourself pat on the back. That is the first of 10 questions on a brand new financial quiz from the failing New York Times. That was not. That wasn't good. That was a little over the top. Anyway, it's from the New York Times. I really feel bad about that impression. It wasn't good enough to be scathing, and it wasn't bad enough to be offensive. It was just that murky middle. Well, today I'll be taking the rest of the quiz live in living color in real time to see if I can pass it. So with that, we'll give a fire emoji to deleteme for sponsoring the channel and hop right in. Wow. I am slowly dying. Oh, you know what? Say what you will, the New York Times has a great like, graphic designers. This is really cute. I like this. So far we covered that one 50, 50, 30, 20 rule, which, by the way, I do not subscribe to. I'm not a fan of it. A rule that tells you how to allocate your money each month. You see, when I. When it comes to budgeting, here's my take. It depends on where you're at. You should not just be putting 20% towards savings if you're in crippling debt. You know, most people are living paycheck to paycheck, so therefore, this is a real pie in the sky mentality now. You could do worse. Will you survive if you stay out of debt and you're saving 20%? Absolutely. But I follow the baby steps for a reason. There's a time and place to be doing all of this. And of course, you got to cover your needs. 30% on wants feels a little egregious if you're in debt, by the way. All right, I got one right so far. Feeling pretty good about myself. 2 out of 10. How many subscriptions does the average person have? I know this one because I've quoted this stat a whole bunch too well. What? You're lying through your teeth. New York Times. You make a fool out of me. Failing New York Times. From streaming services and exercise apps to digital cookbooks and substack, the average American pays for five subscriptions. No way. No way is it five. I call Bull Hockey on that full baloney. Nearly 25% of people spend over 100 bucks per month on streaming services. According to a survey, 5,000 people buy Bango. You're gonna. I'm sorry. You're gonna trust a platform that provides subscription services called Bango Bingo Bongo Bango. Tiding back. And your subscriptions. Easy. Yeah, sure. All right, you know what? You know what? I'm doing it, guys. I'm gonna duck, duck. Go this thing. How many subscribers does the average person have? 7.4 digital. There's one four paid video, two paid music, three paid gaming. That alone is nine. All right, whatever. I just hate that I already have one wrong. I'm already down to an A minus, which is not okay for me. All right, third question. When is the best time to start saving for your child's college education? As soon as possible. By the time your child starts kindergarten. By the time your child is 10 years old? By the time your child starts junior high? Well, of course, as soon as possible. Thank you. Beginning In July of 2026, the federal government will cap parent plus loan amounts at 20 grand per year. That change can make it harder for some families to pay for college. Good. Have you seen what Parent plus loans have done to families? Listen to the Ramsey show for 20 minutes and you'll find that it has destroyed relationships because the parents were like, well, I'll take it on for you, sweetheart. Expecting the kid to pay it back eventually. Then the kid is 30 years old and the parents are like, hey, remember all that money that you owe on this Parent plus loan that's been accruing at a really high interest rate? Yeah, we need you to pay that. All of a sudden, Thanksgiving is awkward. So not a fan of Parent plus loans or going into debt for college whatsoever. But at least they got one thing right. The best way to save is usually in a 529 savings plan, which lets you set aside, invest money that grows tax free. Some states offer tax breaks on contributions. It can be withdrawn tax free as long as it's used for eligible expenses like tuition, housing, food, and other costs. That's what I do for my kids. I got the 529 savings plan, and anything that is not college education related, I put in brokerage account that is in my name, my control. Because the problem with a lot of these other accounts like the ugma, the upma, the Trump account, the kid gets control when they become of age. And that really frightens me because if you invest well and there's 150 grand in there. Your 18 year old can do what they will with 150 grand. That scares me. All right, we're back on, we're back on the horse though. I feel good about this. All right, number four, when it comes to housing costs, what is the 30% rule? Spend no more than 30% of your gross monthly income on housing costs. Spend no more than 30% of your net monthly income on housing costs. You should have at least 30% of the purchase price for buying a home. It's for sure. Not that one. Rent should cost 30% or less than a mortgage would. Nope, not that one either. So it's between gross or net on the 30%. This one's hard for me because I believe that your housing, your rent, your mortgage should be no more than 25% of your take home pay. So let's see, I feel like they're, they're a lot more liberal on this. I'm going to go 30% of gross is what they recommend. I know thy enemy. Okay, as a general rule, housing costs should not exceed 30% of your pre tax income. But think about this, guys, this is crazy. Like if you make, I don't know, I mean, let's do some easy math here. Don't want to hurt anyone's brain. $5,000 a month gross income. That's what 1500 is. 30%. That's pretty wild because then think about it. Your take home pay after deductions, taxes. Some of you live in a really high tax state. You could be talking 3500. So now 1500 out of your 3500 is going towards housing. Now you barely got anything to save. Cover all your bills, put food on the table, cover the utilities, pay for insurance. So life gets tight with this 30% rule on gross. Which is why stay conservative with me so you have extra money left over to actually enjoy your life, to live, to invest and save. And stick to 25% of your take home pay. That's not a, you know, legalist thing. We're not trying to be legalistic here. If it's 26%, you're not gonna go downstairs. But I'm just saying if you can keep it at 25% or less, life will be easier. You're gonna build wealth faster and not be stressed out or have to, God forbid, sell your home because it's eating up too much your take home pay. All right, I'm doing pretty good, feeling pretty good about myself. Number five, during a period of high inflation, who is in the best Financial position, savers with cash, bond investors, retirees on fixed pensions, borrowers with fixed rate debt. I mean, savers with cash would be the only logical answer here. Bah humbug. New York Times. Who came up with this? I gotta know. I need names. Connie Chang and Julie Fraga. You know, friends of mine, but. Illustration by J. Daniel Wright. This guy could be friends with. Good illustrations. Terrible questions, even worse answers. This is the New York Times. Failing New York Times. All right, back to this stupid answer. Let's see. They said borrowers with fixed rate debt are in the best financial position during a period of high inflation. Okay, let's see their explanation here. Inflation tends to increase the value of some assets, like real estate or stocks. So borrowers who have secured loans at low fixed rates to buy these assets benefit most when inflation increases. As their assets appreciate, their loan payments remain the same. Meanwhile, cash loses value with inflation, eroding the purchasing power of savers and retirees on fixed pensions. Inflation also typically leads to higher interest rates, making existing bonds less valuable compared with newly issued bonds with higher yields. I guess they're saying you're. If it's in a savings account making 0% interest, inflation is eating away at that. That's the only logic I have here. But if you're a borrower with fixed rate debt, that says nothing about your ability to actually pay your bills. Cause if life gets tight, inflation's high. That means everything is costing you more while you still have the same freaking payment. They're not lowering the payment just because times are tight. So boo on you, New York Times. I feel like I got that right. But, you know, it's their quiz. It's not my quiz. All right, question number six. True or false. You should refinance your mortgage only when interest rates fall by more than 1 percentage point. True or false? Well, this is an insane question because there's far more variables than just the interest rate falling. A percentage point that's like. That's in a vacuum here. So I'm gonna say, how does the New York Times think about this? With their little squirrel brains? I'm gonna go. They would find that to be true. No, it's false. Okay, you know what? This is why I don't do quizzes as an adult. Too much shame. They even mark it in red to let you know you really screwed the pooch on this one. If you can lower your mortgage interest rate by at least a percentage point, refinancing might make okay. However, each situation is unique. Did I not say that? I guess I. You know what, I was on the same page and I thought they're going to try to trick me. So I went with the opposite answer. Houses in high growth areas will appreciate in value, which could make refinancing a decision. But if you don't expect to stay in your house long enough to cover the closing costs and refinancing fees, which generally ranges from 2,500 bucks to four grand, you might not end up saving very much in the end. Precisely. Let's say your refinancing fees and closing costs are four grand. And the refinance will cut your mortgage payments by 400 bucks each month. Divide four grand by 400, you'll get the number of months, 10 it will take to recoup your money. So breaking even at 10 months, that's pretty good. Breaking even after five years, not so good. So here's my rule of thumb. If you can break even in two years or less, this could be a good deal. If you don't plan to move in the next few years because otherwise you're gonna pay off the mortgage and then maybe get a new one at the new place you live. But I do wanna throw to a trusted source here. Ask Ramsey. So I'm going to jump to ramseysolutions.com I want to see what they have to say about this question. Maybe they can give us some actual helpful advice. When does refinancing your home make sense? This is our AI tool that is built on everything we do on the Ramsey show. All of our articles, books, all of that. Okay, so here's what it's saying. Refinance. If you can switch to a 15 year fixed rate mortgage from a 30 and keep your payment at or below 25% of take home pay. Refinance if you have a high interest loan, an adjustable rate mortgage or a mortgage term longer than 15 years and only move forward if you'll recoup the closing costs within two to three years. Boom. And plan to stay in the home longer than your break even point. The shorter your new loan term and the lower your rate, the more you'll save. Don't refinance just for a slightly lower payment. Focus on paying off your house faster and saving thousands in interest. And it adds. Always crunch the numbers. So this is the, the little break even analysis. Way to go. It is even following up. Are you thinking about refinancing? Hey, can I help? So helpful. Unlike the New York Times, which is only existing for me to fail. Thanks. Ask Ramsey. You can check it out for yourself. By the way, I'll drop the link in the Description to our AI financial advice tool. It's fantastic. Number seven. You have $5,000 in credit card debt at an APR, or annual percentage rate of 24%. If you make only the minimum payment of 3% of the balance with a floor of $15 per month, approximately how long would it take to pay off the debt? Who was coming up with this Common core math riddle? This is insane. So $5000 times 24% APR, that's 1200 bucks is what you pay for that year at that balance. All right, let's clear it out now. 3% of the balance. So we're going to 3%, $5,000 balance, that's 150 bucks is your payment. Your minimum payment's 150 bucks that month. Now, here's the key. The balance goes down slightly each month because It's a fixed 3% for the balance, which is a wild take because I have not seen a credit card that actually calculates it based off of the balance. It's usually just a set minimum payment. So here's the problem with this. Think about it. The interest is 1200 bucks. Divide that by 12, that's $100 per month going to interest. Which means out of your $150 minimum payment, only 50 bucks is going to principal out of the 5,000. So if you're tracking with me, this is going to take forever to pay off. So is it 1 to 3, 4 to 9, 10 to 15? 16 or more? I mean, because of how stupid this is, it's gonna take 16 or more if you just make the minimum payment, and most of it's going to interest. So check this out. Making only minimum payments on credit card debt is a Sisyphean trap. Love a Sisyphus reference. Most of it goes towards interest rather than to paying down the principal. In this example, two thirds of your 150 bucks covers the interest, while only a third reduces your debt. Guys, I nailed this one. At this rate, it would take more than 23 years to fully pay off what you owe, and you'd pay an additional $9,300 in interest. Guys, think about this. The balance was $5,000, and you paid 9,300 in interest alone. That is insane. That is the actual math on minimum payments on credit cards. Paying just a bit more can significantly decrease this time and save you money. Yeah, no, duh. Thank you for that. All right, next question. What monthly bill are you currently overpaying on? If I had to guess, it's your phone bill. And I would guess that I'm correct. But the good news is with the sponsor of today's episode, Boost Mobile, you can unlock up to $600 in savings by switching over to Boost Mobile's unlimited plan. Now, you may be wondering, George, how could changing phone carriers save me that much? Well, get this. Boost Mobile offers their unlimited plan for just $25 a month. Forever. No contracts, no hidden fees. The price just stays that way. Which means if you're paying more than $25 a month, you just save money by making the switch to Boost. So head on over to boostmobile.com Ramsey to start saving today. Based on average annual single line payment of AT&T, Verizon and T Mobile customers can compared to 12 months in the Boost Mobile Unlimited plan as of January 2026. See website for full offer details. And for some extra credit on the quiz, put your mother's maiden name in the comments. I'll wait. What? You don't wanna do that. Of course you don't. But for some of you it wouldn't matter anyways because you're already letting personal info like that float around the Internet unchecked. And that's exactly why I recommend signing up for Deleteme, another sponsor of this video. Deleteme sifts through hundreds of data broker sites behind the scenes constantly to remove your personal info and make sure your digital footprint stays squeaky clean, saving you plenty of time and stress. And their digital privacy experts will do this all year long behind the scenes to make sure it stays gone. And you can get 20% off through annual plans by going to joindeleteme.com George all right, back to our quiz. Your credit score is 720. You'd like to raise it to qualify for a lower car loan rate? Well, we're already making bad decisions here. Of these four options, what's the best way to increase your score quickly? Oh gosh. Pay an additional thousand bucks on your most maxed out credit card. Yikes. Finally pay off that student loan you opened 25 years ago. This person's life sucks. If this is you, apply for a new credit card to increase your available credit or check your credit report multiple times. Okay, let me think through this. As a guy who does not live in this debt ridden world, I assuming paying down the balance on a maxed out credit card could help your score. Finally paying off a loan you opened 25 years ago if you pay it off, yeah, that would help. That would help. Applying for a new credit card to increase your Available credit? Yeah, could be it. Checking your report multiple times is not going to help at all. I'm going to say finally pay off that student loan. I think decreasing your debt will help your score in this scenario. I had a feeling it was between the top two. Pay an additional thousand on your most maxed out credit card. I just. I doubt the person with a maxed out credit card has a 720 credit score. Just saying. Let's see their explanation here. Avoid opening a new card, since hard credit inquiries can temporarily lower your score. Your payment history has a big impact on your credit. So missed or late payments hurt. But utilization or the percentage of your credit limit you're using matters almost as much. So typically the answer is to pay 1000 bucks. This is how stupid credit scores are. They punish you for paying off your student loans, but they'll happily let you take on a bigger line of credit and max out your credit cards and tell you you're winning. Which is why I stopped playing this game, what, 13 years ago now, almost to the day. I cut up my two credit cards, never looked back, paid them off, and stopped playing the credit score game. And what happened, naturally, was that my credit score became indeterminable. It disappeared after about six to 12 months of having no open accounts. Not just cutting up the card, not using it, but literally closing down the account and only using my debit card and cash. And let me tell you, I built wealth so much faster without playing a stupid game of trying to get my credit score up to do what, as they just explained, to get a car loan at a lower rate. Instead, I had money because I was out of debt. And so I just saved up and bought a car I could actually afford in cash and then upgraded in cash over time. That's what actual wealthy people do. We did a millionaire study of over 10,000 of them. And they're driving paid off used cars. They're not taking out brand new car loans like dinguses trying to get their credit score up. Egg on my face on that one. New York Times. You win. All right, question nine. Your salary of $50,000 stays the same for five years, but inflation is 3% on average every year over this period. In terms of today's dollars, your purchasing power in five years is equal to 35,000, 43,000, 47,000. 50,000. Okay, five years, 3%. All right, let's see here. $50,000, 3%. That's 1500. Okay, so my brain, I don't know if I'm doing the inflation math right, but if it's 1500 for five years, 7500 off of 50 brings it down to about 43,000. Yes. Boom. In your face, New York Times. Your boy can do basic mathematics. Also, if your salary stays the same for five years, like not a single cent more, you either suck at your job or your boss hates you. Just saying, you should be making more over time. Let's hustle, guys. Let's get that promotion, bud. You can do it. I mean, at least a raise equal to inflation would be nice. Inflation can sneak up on you. They say Ms. Buyer Bayer, I barely know her, sees it with her clients on a fixed income. At first, they may not feel an impact. After a few years, they realize costs are adding up and are not able to buy as much. 57%. Got that right. And count me in. The 57. Feeling pretty proud. All right, we're down to our last question, I hope, because this is exhausting. Two investors contribute $5,000 per year for 10 years to a retirement account with 8% average annual returns. Investor A invests from age 25 to 34 and then stops. Investor B invests from 35 to 44 and then stops at age 65. Approximately how much more does investor A have compared with investor B? All right, this is going to take some calculations, and for that, I'm going to use our investment calculator@ramseysolutions.com I'll show you how to find it, but even better, you can just click. Click the link in the description if you want to use it for yourself. Free tools. All right, here's the investment calculator. So let's go back to the question at hand here. All right, 25 to 34. Five grand per year. So let's pop that in. $5,000 per year is 416 and 66 cents per month. So that's my number here. 25 to 34. 25, 34. Nothing saved. Four hundred and sixteen. 66. Well, it depends on the return. Does it say. It said the return, right. 8%. All right, 8%. Pretty conservative. Let's see. All right, this guy's got $65,600 after those 10 years. Now, remember that number. I'm going to write it down before I forget. 65. 5, 9, 4. Okay, that's a. Now let's go to our other friend here. Invest from 35 to 44 and then stops. So 35 to 44, starting with 0. Same amount per month, same return. Look at that. It's the same number. Guys, I just wasted your time with that one. Cause it's the same amount of time and same amount invested. So that's the key here. You're gonna have the same amount. So they both have the same amount. But the key is one of them has a much longer time horizon before 65. The boy who got started early. So at age 65, how much more does investor A have compared with investor B? Well, I'm gonna go. Our starting number is now 65594. And from 44 to 65, so that tells us 776-85644 to 65 contributes nothing. 3, 4, 9. So we've got 776856 for investor A versus investor B, who has 349, 991, $426,000. There we go. The lesson here is actually incredible is the power of compound growth takes time. And the results are exponential. You can see that they invested the same amount, $65,000, as what they had at that age. But because one guy started a decade earlier, his grew sizably to the tune of $426,000 more. So get a head start and get out of debt. Get that emergency fund. Get investing as soon as possible. Don't say, well, it's a problem for future me. I won't worry about that. You should be worried about it. Cause there's no reason to retire broke in America today. That is all to distract from the fact that I failed this quiz. Now, I technically got six out of 10 right, which you could say is a D. So I failed. I don't know how you guys fared. Let me know in the comments. Because you played along hopefully and realized, dude, I'm so much smarter than that George guy. Hey, if that's, if that's who you're looking for in your life, you won. And I would also tell you to find a better life if I'm your bar for intellect. But it turns out when you follow some of the principles I teach on this channel, you will fail a lot of traditional money quizzes. Because most of these quizzes assume that debt and credit scores and huge house payments are just a part of life. And if I fail a quiz that says people with debt are better off than people with cash, I can live with it. I'm good. I'm gonna sleep great tonight. So if you enjoyed this, you'll definitely enjoy when I took another financial quiz from the brainiacs at George Washington University. So click here to watch it next or use the link in the description. That's it for today. Be sure to hit like on this video. Subscribe, if you haven't already. Let me know your score in the comments, and I'll see you next time.