Change Your Mindset, Change Your Life

Summary

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Podcast Summary: "Change Your Mindset, Change Your Life"

Podcast: The Ramsey Show – Ramsey Network
Air Date: August 7, 2026
Hosts: Dave Ramsey & Rachel Cruze

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Overview

This episode centers on the transformative power of changing your mindset around money and life choices. Dave Ramsey and co-host Rachel Cruze (his daughter) field listener questions about wealth building, debt, investing at any age, handling emotional setbacks, and making confident decisions. The hosts tackle both the mathematical and psychological barriers that often hold people back, advocating for hope, concrete planning, and taking action—no matter your starting point.

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Key Discussions & Insights

1. Investing at Any Age: It’s Never Too Late

(00:55–09:01)

• Caller “Neo” asks: How to convince parents (ages 55 & 62) to start investing for retirement.
• Dave's Response: Age is not a disqualifier; most resistance is from lost hope or fear/ignorance. Use actual math to "sell hope." Demonstrate likely returns using Ramsey's retirement calculator and real market returns.
  • Notable Quote [01:22]:
    “When you say ‘I’m too old to invest’, that means I’ve lost hope... The thing that has always helped me sell hope is actual math.” – Dave Ramsey
• Rachel's Advice: Guide them to a SmartVestor Pro for professional, teacher-oriented help. More knowledge reduces fear.
  • “Anything that we don’t understand is scary. That’s human nature.” – Rachel Cruze [03:22]
• Stock Market Facts [02:00]: Highlights recent years' impressive returns (2023: 26%, 2024: 25%, 2025: 18%, 2026: 13%), showing the power of compounding even over short periods.
• Mindset Takeaway: Compound interest gives hope; urgency increases with age (“Go now. How much can you save? How much can you invest lump sum wise?” – Rachel [06:40]).

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2. Emotional Realities of Home Renovations

(12:30–18:59)

• Caller “Bailey” asks: After buying a fixer-upper that became a “lemon,” should she and her husband keep or sell?
• Hosts’ Perspective:
  • Renovations take longer and cost more than TV suggests (“Nothing about this house makes sense.” – Dave [13:58]).
  • Emotional fatigue: Living in disruption and endless projects drains enjoyment.
  • Recommendation: If you can get your money out, sell and move on—especially if the ongoing work saps joy and strains your relationship.
• Real-life Example [16:09]:
  Dave recalls his own rehab nightmares:
  “The construction techniques in 1898 and in 1905 were substantially sucky compared to today’s construction techniques... Thank God it was crap.”
• Guiding Principle: Only buy a fixer-upper to live in if you’re in construction and have owned a home before.

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3. Separately Managed Accounts (SMAs) vs. Mutual Funds

(22:21–26:28)

• Caller “Nick” asks: Fidelity is pushing him towards SMAs; does this make sense?
• Dave's Breakdown:
  • SMAs are like DIY mutual funds but less diversified and often less efficient.
  • Tax harvesting (offsetting gains with losses) is not inherently bad but shouldn't be a goal—it means something went wrong.
  • Mutual funds often outperform; a skilled advisor ensures funds consistently beat indices.
  • Notable Quote: “If you focus on getting out of debt like your life depended on it, you would work all the time. You wouldn't have time to do anything else.” – Dave [90:24]
• Rachel highlights: The value in outsourcing financial decisions after you understand them; professionals add both efficiency and peace of mind.

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4. The $1,000 Emergency Fund—Is It Still Relevant?

(32:25–38:17)

• Rachel observes: Some new listeners question if $1,000 is enough given today’s costs.
• Dave's Response: Baby Step 1’s $1,000 was never meant to be “enough,” just a buffer to handle small emergencies while attacking debt.
  • Notable Quote [35:28]:
    “A properly funded emergency fund has always been three to six months of expenses... $1,000 isn’t enough. It’s a starter, little baby, tiny, horrible emergency fund.”
• Personal Story [38:48]:
  Dave patching a leaky roof with black tar, refusing to go back into debt, illustrates doing “whatever it takes” until a permanent fix is affordable.

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5. Navigating Income Crisis & Disability Setbacks

(43:49–52:18)

• Caller “Lindsey” shares: On general relief, post-hip replacement, facing anxiety and $20k credit card debt.
• Hosts’ Focus: This is an income crisis, not just a debt problem.
  • Dave's tough love: “If I were in your shoes I would go to work, even work from home. I would do something, starting today.” [47:51]
  • Emphasizes that activity and restored income will alleviate much anxiety—and that even hard jobs or side gigs help regain dignity.
• Encouragement: Even after extremely hard times, taking small actionable steps can start the turnaround.

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6. Career Stress, Burnout, and Life Choices

(54:36–62:06)

• Caller “John” asks: Should he leave a $120K/yr high-stress job for a lower-paying, less stressful one?
• Dave’s Advice: Don't assume you must trade income for stress reduction. Try to fix systems/culture at current job first, then look for a better, less-stressful higher-paying role.
  • “Stress does not equal income.” [57:16]
• Rachel: Recognizes high multitasking capacity as a skill; ultimately, don't sacrifice mental health for a pay check if leadership refuses to help.

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7. Thoughtful Gifting and Legacy

(64:46–71:27)

• Caller “Debbie” asks: Should she use a $120k annuity to help fund her adult children’s Roth IRAs?
• Dave: The key is intentionality, not specific vehicles or tying “found money” to gifts.
  • “There’s nothing wrong with a Roth. There’s nothing special about the Roth either.” [69:10]
• Rachel adds: Consider giving gifts that will be seen/enjoyed during their lifetimes if that’s meaningful.

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8. Rapid-Fire Calls: Debt Payoff, Retirement Worries, and More

(Throughout)

• Credit card consolidation: Don’t chase lower interest rates—focus on cash flow and rapid pay down [87:33].
• Buying vs. Building First Home: Buy existing; building a house is stressful, especially early in marriage [93:32].
• Late-Life Investing: It’s never “too late”—compounding works at all ages, but urgency rises [101:44].
• Smart budget logistics: Switching from monthly to biweekly pay? Use the EveryDollar app’s paycheck planning to “spend this month’s income on this month’s needs” [99:12–101:20].
• Trust/estate execution: Most inheritances like cash, home, and post-death asset sales aren’t taxed unless they include traditional pre-tax retirement vehicles [118:28–121:49].

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9. Inspirational Debt-Free Story:

(107:32–116:39)

• Keith & Candace (South Carolina): Paid off $201K of debt over 5 years—cars, camper, sea-doo, credit cards, student loans.
  • They struggled for decades, doubted the “debt-free” plan, but finally got on board after getting sick of endless payments and stress.
• Their Secret:
  “Actually paying it off. Just gotta make the decision: keep having fun and being broke, or don’t worry about when the paycheck comes because there’s already money there. We love it.” – Keith [113:37]
• Big Moment: First ever airplane trip to do their debt-free scream on their 32nd anniversary.

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Notable Quotes

• On Mindset:
  “Normal is broke and common sense is weird. So we're here to help you transform your life.” – Dave Ramsey [00:05]
• On Loss Aversion:
  “For every dollar you lose in an investment, you have to make $3 to feel the same. We're such negative ninnies.” – Dave [05:44]
• On Budgeting Emergencies:
  “When you don’t know how to budget, everything’s an emergency.” – Dave [37:42]
• On Hard Choices:
  “You have to be different to win. Most people think making a will is some huge legal project they'll get around to someday... Don't miss one of the most important steps that can help protect it all.” – Dave [38:48]
• On Generosity:
  “There’s really only three things you can do: you can invest, you can be generous, and you can enjoy it.” – Dave [126:36]

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Timestamps for Important Segments

• Investing for Older Parents: 00:55–09:01
• Home Renovation Burnout: 12:30–18:59
• SMAs vs. Mutual Funds: 22:21–26:28
• Starter Emergency Fund: 32:25–38:17
• Overcoming Crisis (Income, Health, Disability): 43:49–52:18
• Career/Job Burnout Decisions: 54:36–62:06
• Funding Children’s Retirement: 64:46–71:27
• Debt-Free Scream (Keith & Candace): 107:32–116:39

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Tone & Takeaways

The tone throughout is empathetic but direct, blending practical financial strategies with tough love and the occasional self-deprecating joke. Dave and Rachel continually remind listeners that building wealth is less about technical prowess and more about mindset, urgency, and “actually doing it.” They champion taking the first step, leveraging professional help without abdicating understanding, and sticking to basics: avoid debt, invest early and often, and live on less than you make.

Key encouragement: No matter your mistakes, current income, or age, you can turn it around—if you change your mindset and act.

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Transcript

[Dave Ramsey]

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studios, this is the Ramsey Show. I'm Dave Ramsey. The phone number is true. 888-255-2225. My co host today, number one best selling author Ramsey personality Rachel Cruz, also my daughter. Jump in and talk, folks. It's what we do here. We're here to help you. Neo is with us in Jacksonville, Florida. Hi, Neo, how are you?

[Caller]

Hello.

I am so honored to be on the show. Thank you so much.

[Dave Ramsey]

Honored to have you. How can we help?

[Caller]

All right, so I have recently had a conversation with my parents about what they are planning to do for retirement. And I was a little concern. They don't have any money invested at all right now. And so I was like, I didn't pick apart, you know, what they have in savings or debt or whatnot. But how can I convince or how can I have a conversation of investing even at their age? So my mom is 55 and my dad is 62.

[Dave Ramsey]

Oh, I'm surprised they're still alive. They're as old as me. They're as old as me. I can't believe it. Oh. Well, the thing that has always helped me sell hope, which when you say I'm too old to invest, that means I've lost hope. And so if I want to sell hope in the world that I'm in, I often use the actual math. Okay. And so I would jump on and play with some numbers and then take the numbers to them and show them on your laptop. Okay. And just go to ramseysolutions.com and look at our retirement calculator, okay. And say mom and dad, if you put in, I don't know what their income is or whatever, but you could guess at it and say if you put in $500 a month when you're 72, here's what it'll be. But here's what it'll be if you put it in at 3% in a high yield savings account. Cause you're too old to invest. All right? And the market has done unbelievably well in the last five years. And it's not going to stay at that level forever. It doesn't average as as it has lately. But in the last four years, in 23, I mean the numbers are in 23 it was 26%. In 24 it was 25% in 25 is 18%. We're already at 13% up this year. So the stock market, basically, if you put money in 23, a lump sum, it would have doubled by now. So if you put 100,000 in and didn't touch it, it would already be 200,000 just four years later, five years later.

[Caller]

So is there anything I need to do on my end to help them? Like, okay, if the next step is investing and I've convinced them that this is a good idea, what would be the next step?

[Dave Ramsey]

Well, the other thing that holds people back from investing, other than belief that it's not gonna work, is knowledge. And so anything that we don't understand is scary. That's human nature.

[Rachel Cruze]

Yeah. But to answer your question, though, you would reach out to a smartvestor pro and sit down with an investment professional with them if they would, you know, if you're kind of guiding this journey with them and they. Your help and you in the room and your opinions.

[Dave Ramsey]

Hey, Dad, I got in touch with a smartvestor pro on the Ramsey site, and I talked to them for a minute and they said they'd love to sit down and talk to you. And these people are not there to put their glasses down on the end of their nose and talk down to you. They are teachers. And if you learn, your fear goes down. And if you believe the numbers are gonna work, your hope goes up.

[Rachel Cruze]

And what you put your money. Yeah, and what you put your money in, you trust the system, right. Ultimately, which is the market, like, you are putting your money in and saying, I trust that this is. It's not going to go to zero. I'm going to trust that, if anything, it's going to make me more money. And so when you sit down with an investment professional, they can run those numbers, run the history, you know, you can just see and get kind of a confidence of, okay. It's not as dramatic as what everyone thinks. Right. When you live in that fear bucket of the market, people, they dream up all the scenarios in their head that aren't. Aren't true, you know, and so

[Dave Ramsey]

they repeat the mythology. I'll give you an example. I was doing Fox yesterday. I was doing an appearance on the Fox show, one of the Fox shows yesterday, and they were talking, was it yesterday or day before? I don't know. The Dow has broken another record, 54,000. Okay, but does anybody remember when grandma said, or your friend said, we lost all of our money in the stock market in 2008. Does anybody remember that? And that's an Absolute lie. It was mathematically impossible for you to lose all your money unless you bought a single company and that company went broke. But if you were invested in a mutual fund, the Dow, which is now 54,000, had peaked at 13,000 in.08 and then dropped in half. Oh, like to 6,300.

[Rachel Cruze]

Yeah, yeah, yeah.

[Dave Ramsey]

And so if you had a million dollars in at 13,000 and it dropped 6,300, your million turned into a half a million. So I lost half of my money if I bought at the top and sold at the worst possible day.

[Rachel Cruze]

But if you kept it in.

[Dave Ramsey]

But if you kept it in, it went from 13,000 to 6,300 to 54 freaking thousand.

[Caller]

Right.

[Dave Ramsey]

As we sit here today, our memories are so funny about remembering negatives and not positives. I read an investment psychologist that did a study one time. They said for every dollar you lose in an investment, you have to make $3 to feel the same. We're such negative ninnies.

[Rachel Cruze]

Yep, yep.

[Dave Ramsey]

The human nature is we have this little black cloud over the top of us, and if we lose a dollar, it takes $3 in gain to feel the same.

[Rachel Cruze]

To feel it. Yeah. But I would also say to the 62 year old, dad, dad, you got to get on it. The dollar you put in now is not like the dollar you would put in when you were 30. You know, George, Cameron, you missed that, though. I was just in a. Yeah, we were just in a content meeting and George was showing about. And I'm. I need to pull up the numbers maybe for next segment because it was so fascinating. But he talked about, you know, if you put in a dollar, I think it was like at 25, it actually means $72.

[Dave Ramsey]

Yep.

[Rachel Cruze]

At, you know, retirement. And so you back it out, but you start to see how quickly. And that's not to lose reality to your money and your time. So it's almost this urgency of get in now, like go now. How much can you save? How much can you invest lump sum wise?

[Dave Ramsey]

Cause you're gonna be 72 unless you die.

[Rachel Cruze]

Exactly. It's going to be.

[Dave Ramsey]

And you're either gonna be eating Alpo or you're gonna have some more money.

[Rachel Cruze]

Why do you always say Alpo is that dog?

[Dave Ramsey]

Cause it was a thing.

[Rachel Cruze]

Say Ramen. Ramen.

[Dave Ramsey]

No, no. People actually, poor people actually opened and ate dog food because they have nothing to eat. Have you not heard these stories?

[Rachel Cruze]

I have, but I always wondered why not just ramen.

[Dave Ramsey]

Ramen's not dog food.

[Rachel Cruze]

Exactly. Why? I know, but because it's not as

[Dave Ramsey]

dramatic and not as important.

[Rachel Cruze]

That's what I needed. I always was like, why do we always use this example, people eating, and maybe people did, and. No, they do.

[Dave Ramsey]

I mean, I've heard the stories. I've heard the stories. And so.

[Rachel Cruze]

But if you need to eat ramen

[Dave Ramsey]

opened Granny's cabinet, and there was Alpo in there, and she doesn't have a dog. Okay. So there you go.

[Rachel Cruze]

Get a ramen.

[Dave Ramsey]

Yeah, well, there you go. But still, if that's the case, I don't know. I don't know if ramen's any better or not, but I've never had either the chicken flavor.

[Rachel Cruze]

You've never had ramen noodles?

[Dave Ramsey]

No, I have managed to avoid that. I eat well. Can't you tell? Do I look like I'm underfed?

[Rachel Cruze]

You are not a millennial that went to college during those days.

[Guest/Caller]

You're right.

[Dave Ramsey]

I'm not a millennial.

[Caller]

Full of

[Rachel Cruze]

beef ramen noodles.

[Dave Ramsey]

So George's point is, and her point for her dad, that you're making all drama aside.

[Rachel Cruze]

Sorry. Yeah.

[Dave Ramsey]

Is the best time the old saying. I think it's Franklin or somebody said it. Best time to plant an oak trees 30 years ago. Next best time is today.

[Rachel Cruze]

That's right.

[Dave Ramsey]

Today.

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[Dave Ramsey]

We're talking about the math. Giving hope. I was 22, maybe 23 years old. I have a degree in finance with specialization in real estate, a degree in real estate and urban economics, which is a Finance degree with real estate classes thrown in. And I had never sat down and looked at mutual funds. They don't teach personal finance in that they teach corporate finance and analysis and concepts of future future value and net present value, those kinds of things. And I went to this thing, and the guy put up there compound interest if you do your investing in a mutual fund. And I was 23 years old, and I went, I can be rich. It'll work. What he put up there was $100 a month invested from age 25, and I was 23. So I had a head start in my mind. $100 a month invested from age25 to age 65 at 12%, which is a little bit more than the stock market is average. But right around there, it's averaged 11.8 $100 a month, and it's still true. $100 a month at 12% from age 25 to age 65 is $1,176,000. And I went, $100. And guys, that was 1983. $100 was a lot of money, but I went, $100. I can do this now. $100, if you don't do that and don't become a millionaire is laughable, but you should be going. You put that stuff in that Ramsey calculator on the website, and it shows you that compound interest. And the compound interest gives you hope, and hope will make you act. It'll make you go do the $100. But if you thought, well, I'm too old. If I put in $100, I won't. Too late. Well, if you don't put in $100, it's really going to be too late.

[Rachel Cruze]

You won't have anything. What will make you sick is a car payment.

[Dave Ramsey]

How much you have if you paid yourself a car payment instead of staying in debt on a stupid car. And it used to be that $500 was an outlandish car payment. Now $2,000 is an outlandish car payment. Bailey is in Lubbock, Texas. Hey, Bailey. What's up?

[Caller]

Hey, y'.

All.

Thanks for taking my call. I'm super excited.

[Dave Ramsey]

Sure. What's up?

[Caller]

So my question is, my husband and I, we bought what we thought was a cosmetic fixer upper two years ago, turned out to be a lemon. And we're trying to decide if we should sell it or keep working on it.

[Rachel Cruze]

Oh, man. What's been. What's been wrong with it? Everything from, like, foundation. I mean, anything and everything.

[Caller]

We've had to redo all of our Plumbing. Oh, man. Now that you're asking me, I'm kind of blanking on.

[Rachel Cruze]

No, no, it's fine. No, no. Did the inspector.

[Caller]

There are a lot of things that are. That our inspector missed.

[Rachel Cruze]

Okay. And how much. How much money have you guys put into the house already?

[Caller]

We haven't really been keeping track of it, but we're thinking we've put about 30 into it already.

[Dave Ramsey]

What'd you pay for it?

[Caller]

We bought it for 163 and we still owe 150 on it.

[Dave Ramsey]

And is it in worse condition now that you've been doing the renovation or better than when you started?

[Caller]

No, it's in better. We have been doing. My husband's really handy, so we've just been doing all the work ourselves.

[Dave Ramsey]

So what can you sell it for?

[Caller]

Well, that's the thing. We don't know.

We're.

We. I mean.

[Dave Ramsey]

Well, I mean, let's pretend you could sell it for 200. Would you not sell it?

[Caller]

Well, that's kind of my question because I don't really know if it makes more financial sense to sell it.

[Dave Ramsey]

Nothing about this house makes sense.

[Rachel Cruze]

When did you guys buy it, Bailey? How far?

[Guest/Caller]

How long ago?

[Sponsor/Advertisement Voice]

Two years.

[Caller]

August of 24 years.

[Dave Ramsey]

You've been working on it for two years, you said, right?

[Caller]

Yes.

[Dave Ramsey]

And you are emotionally over this house. We can tell by talking to you.

[Caller]

Yes. Yes.

[Rachel Cruze]

So it is a.

[Dave Ramsey]

Even if this house is completed and it's excellent, when it's completed, you're still not gonna like it because of what you've been.

[Rachel Cruze]

Yeah, maybe. Or maybe you fix it and it is what you love. So do you not like the house, Bailey? Like, when you're in it? What, are you annoyed by it?

[Caller]

Yes, very much. Because it's a constant construction zone all the time. We've got things going on here, things going on there, and so there's never any, like, peace at the house. It's chaotic all the time because there's always something. And whenever we start a project, it just turns into.

[Dave Ramsey]

How long will it take you if you finish the projects and have a perfect house? How long is that gonna take? From today,

[Caller]

we anticipated about a year and a half more. Yes.

[Dave Ramsey]

This is a three and a half year renovation. Y' all are slow.

[Rachel Cruze]

Well, her husband's doing it.

[Dave Ramsey]

I know y' all are slow. That's what's killing you.

[Rachel Cruze]

Probably cost. They're keeping their costs down. They're taking a little bit at a time. That's what we tell people to do on the show.

[Dave Ramsey]

And you eat Sawdust for breakfast.

[Rachel Cruze]

Yeah. Living in it is what that. That's fair. That's one thing.

[Dave Ramsey]

Yeah.

[Caller]

Mm.

Well.

And then the other thing, too is that it's only a two bedroom house and we do want kids in the future, so if we stayed in this house with kids, then we would need.

[Rachel Cruze]

I would cross that bridge when you get there, though. I wouldn't make the decision.

[Dave Ramsey]

That had nothing to do with it. When you bought it two years ago.

[Caller]

Yeah.

[Dave Ramsey]

There were kids in the future then. But what happened is this is taking three times longer than you thought it was going to and it's costing more than you thought it was going to and more. And that took all the fun out of the fixer upper. You too many of those fixer upper shows on TV and thought it was going to be that easy.

[Caller]

Oh, man. Yeah.

[Dave Ramsey]

Yeah. I hate those shows because they're a lie. It's not what really happens. You've lived the reality. They're a lie.

[Caller]

Definitely.

[Dave Ramsey]

Yeah. So I used to do historic rehabs, and I did a bunch of rehabs of all kinds, but we would buy houses in the historic end. And I bought several houses from like 1898. They're beautiful old gingerbread looking houses when you get them done. But they, you know, the construction techniques in 1898 and in 1905 were substantially sucky compared to today's construction techniques. They don't build them like they used to. Thank God it was crap.

[Guest/Caller]

Okay.

[Dave Ramsey]

And we would open up a wall, one of these plaster walls, which once you open it up, you got to do the whole stinking wall. It's not like drywall where you just open up one little piece and then put it back. We'd open up a. And then we'd end up taking the whole stinking room down to the studs and hadn't anticipated that. It was a freaking nightmare. And we were doing it for investment. It was crazy. I bought one house for 13,000 and spent 78,000 fixing it in today's dollars. Just add a zero or two. Like buying it for 130 and spending 780,000.

[Rachel Cruze]

Wait for the break even. So for someone like Bailey, who's asking, I would move.

[Dave Ramsey]

If I'm Bailey, I'd put it on the market. If you can get.

[Rachel Cruze]

If you can get your money, get the show ready.

[Dave Ramsey]

If you can get your money out of it and get out of there today. Get out of there. This has lost its glamour. There's no romance in this relationship, and

[Rachel Cruze]

it just keeps going.

[Dave Ramsey]

Yeah, it's just not fun. It's not fun. And by the way, her husband, bless his heart, he'd been working his butt off and he's got, you know, he's got a black fingernail from hitting his hand with a hammer and all this stuff. The pipe wrench slipped and busted his. He's sick of this thing too. He's sick of it too. I've been that guy too, you know, like, honey, would you do that? Honey. The problem with knowing how to fix stuff is you've got to fix stuff. And so. Yeah, man.

[Rachel Cruze]

Man. Okay. Don't you think though, homes like good old ranchers from the 60s and 70s, they're built well though.

[Dave Ramsey]

Yeah.

[Rachel Cruze]

When you say like There's a period

[Dave Ramsey]

62 is different than a 1902.

[Rachel Cruze]

No. That is true. Yes.

[Dave Ramsey]

Way different. 1962. In most areas the construction technique is very similar to what it is today.

[Rachel Cruze]

Yeah. Just. Or even better than some of these pop up houses that go quick too, you know.

[Dave Ramsey]

Yeah, yeah.

[Rachel Cruze]

Be good.

[Dave Ramsey]

That's how it works.

[Rachel Cruze]

Okay. It is. I will say though, so recommendation.

[Dave Ramsey]

I would never buy a fixer upper that I'm going to live in unless I'm in the construction business and unless I've already owned a home before that. Never do that as your first home.

[Rachel Cruze]

And if it is thing, if it is their intention, I think when she said was cosmetic. Right. Like if you want to like change out cabinetry and like those kind of things you can do. You wouldn't do that.

[Dave Ramsey]

Paint and bushes and a roof and carpet. Well, our floors. Yeah. But I'm not touching the plumbing of the electrical.

[Rachel Cruze]

Right, right. That's right.

[Dave Ramsey]

And once you pull the cabinets out, you just got the plumbing and you just got into all the appliances and so here we go.

[Rachel Cruze]

Paint the cabinets. Just paint the cabinets.

[Dave Ramsey]

Well, there you go. From a distance. Yeah. Spray them. I mean it's just. Don't touch them.

[Rachel Cruze]

The romanticized idea, stupid TV show. And I'm gonna keep going back around though is because the market is high, people are buying smaller older homes that do need some work. And so you do have to estimate that you may not be able to afford the nice new home.

[Dave Ramsey]

I'm fine with that.

[Caller]

Yeah.

[Dave Ramsey]

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[Dave Ramsey]

You know, there's some things people don't realize about wills. Wills are not about your age. They're not about your net worth. Wills are about being an adult. 30 year olds die and 70 year olds die. Everyone needs a will. If you're an adult with people you love, kids, pets, anything you want handled in a certain way. And you don't want the government or a judge to decide and you don't want a judge to decide because all a judge is is a frustrated lawyer. You don't want them deciding anything. And there's nothing worse than a lawyer except a frustrated lawyer. So if you're ready to create a will, go to mamabearlegal.com if you're not sure where to start, text Quiz to 33789 and we'll help you figure out which option fits your situation. Nick is with us in Detroit. Hi Nick, how are you?

[Caller]

Hey, good, how are you? Thanks for taking the call.

[Dave Ramsey]

Sure. What's up?

[Caller]

Sure. So my wife and I, we manage most of our investments ourselves and we just sort of follow the broad strategy of index funds or other broad mutual funds. But recently as our net worth has been increasing, Fidelity has been calling and they're trying to sell us on SMAs or separately managed accounts and comes from Reading. We've got some reservations but curious what your thoughts are.

[Dave Ramsey]

Well, it's basically an individualized mutual fund without as much diversification. But it's really appealing to you. Diyers. There's nothing wrong with it except it's just not as efficient as a good mutual fund. I can buy good mutual funds and whip your butt with it.

[Caller]

I see. So one of the things that they were pushing that they do, like tax harvesting, to try and offset all their gains by taking losses.

[Dave Ramsey]

Yeah, that's fine. You can actually do that with a mutual fund too. You don't have to have single stocks to do that.

[Caller]

That makes sense. The one thing that concerned me though is with buying mutual funds, we typically just buy and hold for a long time. So everything sort of turns to long term gains pretty reliably. And with this, they'd be sort of buying and selling stocks frequently. And so we wouldn't sort of have that. And we'd have some short term. If we ever need that money, we'd be paying essentially income.

[Dave Ramsey]

If the only way, if you don't pay any taxes with this, it's because your tax harvesting outdid your gains, which means you're not making any money. You have to lose as much money as you make to have no taxes with tax harvests. That's the only way it works. And so tax harvesting is smart because we're going to take the losses and offset some of our gains and we're getting out of the stupid stock that we're losing money on. That's tax harvesting.

[Caller]

Yeah.

[Rachel Cruze]

And with the Fidelity account, Nick, is somebody going to be doing that for you? Managing that or with this sma, will it be you doing that? That's a lot of work.

[Caller]

It would be them.

[Rachel Cruze]

Okay. Okay.

[Dave Ramsey]

Okay.

[Rachel Cruze]

That's good.

[Dave Ramsey]

Yeah. I mean, Fidelity's a good company. I own some of their funds. I do not use them to manage my money. I have a professional broker who is not dialed in on one brand. A Smartvestor Pro. They're not brand loyal. And they're gonna do what's best for Dave, not for Fidelity. And that broker is gonna manage that in such a way that if there's tax harvesting to be done, fine. But I don't wanna set up my portfolio to go rushing towards tax harvesting. That means I'm losing money. I would rather have no taxes to harvest, meaning no losses. It's not possible.

[Rachel Cruze]

Right, right.

[Dave Ramsey]

But I would rather have that to be my goal rather than, ooh, tax harvesting. You know, it's kind of cool. But let's just take an advantage of something that went bad. That's all it is. So now I. You know, Charles, you've chosen to do this this way. I've got Nick. I'm sorry, Nick. You know, Rachel and Winston have substantial money in Mutual funds. Dave and Sharon have substantial money in the stock market. And neither one of us use either of the processes you've been using.

[Rachel Cruze]

And index funds are easy too. Just the S and P. I mean

[Dave Ramsey]

Y if you want to.

[Rachel Cruze]

Anything under that umbrella.

[Dave Ramsey]

Yeah. Index funds. What's called, you know, it's a Bogle head. Bogle invented the Vanguard brand and he started the push on the index funds because the index outperforms a lot of the mutual funds. And that's true. But there's a lot of mutual funds that still outperform the indexes too.

[Rachel Cruze]

Yeah.

[Dave Ramsey]

You just got to go find them. They're not. It's. It's not.

[Rachel Cruze]

That's why having a SmartVestor Pro in your corner is great. Because they know. They know those accounts inside and out, which is great.

[Dave Ramsey]

My SmartVestor Pro is never going to bring me a mutual fund that has not outperformed the index. Cause he knows immediately the first thing I'm gonna ask is this has outperformed the index. Right. And that's kind of a Ramsey thing, you know.

[Rachel Cruze]

Yeah. So for people out there, investing have those high standards. That's not just for you to be pushing to. If you have a mutual fund for it to be outperforming.

[Guest/Caller]

Yeah.

[Rachel Cruze]

Like those are very valid.

[Dave Ramsey]

I understand that. Okay, so let's talk about that.

[Rachel Cruze]

They'd be very valid. You know what I mean? That's a valid question. That's not just a statement to make. If you have an investment professional in your life push them on that.

[Dave Ramsey]

Yeah. So Nick, back to your orig question. Fidelity is a good company. I don't have a problem with them. They're not like a whole life company that's ripping people off. I tell people, stay away from them. They're a good company. They've got, I guess Fidelity Magellan is probably still the largest or one of the largest, One of the two largest mutual funds in the world. It's the first one to go over a billion dollars. Years ago, when I was first getting in the business, it was like, woo, Fidelity Magellan. It was the thing and it was the hot chick. And so the. It's a good company. The concept that they're talking about is not a bad concept. Tax harvesting is not a bad thing. It is a bad goal, but it's not a bad thing to do as a minor goal. Take advantage of the things that went wrong. That's all it is. But we don't want things to go wrong very often. It's not that. But overall, whether we're doing your DIY approach or whether you're doing your modified DIY approach with them. The research says you're going to underperform a portfolio of actively managed people looking at good growth stock mutual funds with long track records. And you ride the ups and downs in the market. And you don't sit and chew your fingernails off looking at your computer screen all the time talking about this. And so the research says getting in the market in a good steady fund that has good performance ratios, good expense ratios, and staying and don't screw around with it all the time outperforms all the stuff you're talking about. That's what the research says. And also it has a lot less anxiety. So that's what we do and it's also what we recommend. But I would not throw you under the bus or what you're talking about under the bus. I just think if you click to the right two better notches, you would do what we're doing. But if you want to stay where you are, you're not over in the dumb side, okay? You're not over in the crazy or getting ripped off side. You're not buying whole life or index universal life or something where your insurance agents acting like a investment professional. And they're not really, they're just a stupid insurance agent. And so, you know, that kind of stuff, you're not anywhere near that end of the spectrum. You're over on our side of the boat, okay? So we love you and we hope it works for you. And you apparently get some joy out of tinkering with all this and your nerdiness and that's fun too. I don't get joy from messing with it. That's the other thing. I don't want to screw with it.

[Rachel Cruze]

I was gonna say for the average person out there, that's. That's to me, the parts of money, if you can outsource once you understand it, all right, you're not turning a blind eye, but you have someone else helping you with this. It's almost like a automatic out of your checking that you pay bill. Like there's something about outsourcing. Some of this button clicking in the financial space is it takes the brain calories out for you that are all juggling a thousand different things in your life. This is one less thing that you feel like you need to check in on all the time.

[Dave Ramsey]

I know how to cut. I know how to cut my grass and I know how to make it look perfect. But it's a lot more fun for someone else to do it.

[Rachel Cruze]

Yeah, the outsourcing, the outsourcing.

[Dave Ramsey]

I know how to change my disc brakes, but I don't want to bust my knuckles with a wrench. Yeah, it's a lot more fun for somebody else to do it that knows how to do it and they're going to be faster at it, more efficient. And it's the net, net net. I'm not saving that much after I pay myself a dollar an hour for changing my own brakes or mowing my own grass.

[Rachel Cruze]

Yeah, and when you try to DIY all financial stuff, you guys, you miss out on these professionals, whether it's real estate, you know, trying to sell your home yourself versus having a real estate agent, you know, your taxes could be either way. But you find these.

[Dave Ramsey]

The data on that one's there. Fizzbuzz. I know for sale by owners on average get 12% less in price than a professional high octane real estate agent.

[Rachel Cruze]

Yep.

[Dave Ramsey]

Now if you got one of those donut eaters that sells once one house a year, you might beat them. But if you get a professional high octane real estate agent that knows what the flip they're doing, they're gonna kick your little for sale by owner. But you don't really save the commission because you don't know what you're.

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[Dave Ramsey]

Thank you for joining us, America. So Rachel, you're seeing some people comment about the thousand dollar baby step One, you said?

[Caller]

Yeah.

[Rachel Cruze]

I just mentioned to you in the break that we're number one. More and more new audience is coming to Ramsey show. Thanks to podcast, YouTube. I feel like we're just easy to find these days or on social media. And the very first step as you are starting the baby steps is $1,000. And so. So I see kind of two ends of the spectrum. Either some people, because we see 40% of Americans can't cover a $400 emergency in cash. So getting $1,000 for that group feels like, oh my gosh, that's a lift. I don't even know if it's worth starting because it does feel so. Such like a big mountain to climb. Other people on the other spectrum are like, gosh, that's not enough. Like a thousand dollars would have been fine in 1992, but in today's world, because of inflation and everything, most you know what it feels like. Anything big that happens, it's going to be over a thousand dollars very quickly, very easily.

[Dave Ramsey]

So oddly enough, it was about 1995, but that's about right when I started. You hit it pretty close. It's not enough. It was never meant to be enough. Let's talk about it for a second. So what we figured out years ago, and so some of the things we teach kind of give people a head tilt and they kind of go, oh, that feels weird. It's like, stop your retirement, even if you get a match temporarily while you attack the debt. Because your most powerful wealth building tool is your income and you've given it all away in the form of debt. You have to clear the debt to build wealth, mathematically, emotionally, relationally, habit, pattern wise, everything. And we've proven that because now teaching this since 1995, right, that tens of millions of people have become millionaires doing what we teach. We got baby steps. Millionaires everywhere. And so when I started teaching, we didn't have the baby steps. I just said, shut up, get out of debt and sell everything. That's not retirement. All your stocks, clean out all your savings and put it all on your debts. Smallest to largest, get your debt snowball rolling. And what was happening then was that people would come in and we were teaching Financial Peace University. People would come in and say, yeah, that's all great. I just did what you said to do. I got zero money. I got $50 in my checking account and the alternator on my car just blew and it's 400 bucks. I'm screwed. So now I got to go back in debt or not. Get to work to have the money. And so I was cornered. And so I started looking at that. And that was a very real thing. And it happened a lot because I'm so hardcore. I mean, can you imagine personally meeting with me once a week and you're not getting out of debt? I pound them, man. Cause I want you to win. I want you to win so bad. Sometimes I wanted it more than they wanted it, but I would talk them into doing this stuff. And then they were cornered. So I said, okay, we've got to have a little baby starter emergency fund to cover the little stuff. Because it was little stuff that was knocking people off the wagon.

[Rachel Cruze]

Yeah.

[Dave Ramsey]

And so we said, okay, thousand dollars. Then fast forward to today. People say, well, thousand dollars is not enough. It wasn't enough in 1995. A properly funded emergency fund has always been three to six months of expenses. So in 1995 that might have been 10,000. Today it might be 20,000. But it wasn't enough. $1,000 isn't enough. And so if you inflation adjust, you say, okay, we're going to make baby step one, $2,000. It's still not enough stuff. It's not an emergency fund. It's a starter little baby, tiny, horrible emergency fund. It's not designed to cover you if you lose your job and you're out of work for six months. It's not designed if the $14,000 heating and air system goes out. It's not designed to cover that. It's designed to cover the little stuff, which is what most things are. While you're learning to budget and you're selling everything in sight and you're cleaning off your debt. And it's only until you work your baby step two, which, if you're working your baby step two with the focused intensity, extreme intensity that we teach, you've stopped your emergency fund. You've cleaned out every bit of savings that's non retirement, thrown it at your debt, non mortgage debt. If you're attack, attack, attack. You're on beans and rice, rice and beans. You're not going on vacation. You're not whining about your $5 coffee that you have to have. You're not doing any of that. You're just totally nose down, getting out of deb. Your friends think you've lost your mind. You're out of debt in 18 months on average. And we've taught millions of people this. Now that's the average. Meaning some people do it in 18 days and some people do it in three years.

[Caller]

Right?

[Dave Ramsey]

I Don't know what your debt is, but 90% the bell curve on the people that get out of debt is right around the 18 month mark. So the only 18 month. You're only living 18 months with only $1,000. And by the way, you're already broke, so what's the big deal living like you're broke, you know, and so we're only saying $1,000 is not enough. But I will cover a lot of little tiny things while you're learning to budget.

[Rachel Cruze]

Yes.

[Dave Ramsey]

Because when you don't know how to budget, everything's an emergency. You don't have money set aside for car repair. When you don't know how to budget the kid forgetting that they have a field trip is an emergency. Emergency, you know, because you've never taught the kid yet. They got to put it in the budget or they don't get to go

[Rachel Cruze]

on the field trip or you don't have a miscellaneous. You know, there's no organization.

[Dave Ramsey]

There's no organization. Everything's chaotic. And so every little thing is an emergency. But the longer you budget and the more wealth you build, the larger the event has to be to be declared an emergency. So $1,000 in the first 18 months will cover almost all your emergencies.

[Rachel Cruze]

Well, and my thing is too, if it doesn't, if you're deep in the debt snowball and you're throwing so much of your income that used to be going to debt payments, where those debt payments are now paid off because you're rol into the bigger debts, you could pause it for a month and collect a couple thousand bucks if you need. If something did major happen, fix the emergency and then plug back in. Right. Because that happens. Life does happen. It goes up and down. And we hear that a lot from people. And so that's. I think that's the important thing is to know that there's a way to finagle it, to figure out, how do I get through this event?

[Dave Ramsey]

It's not supposed to be enough.

[Rachel Cruze]

That's right.

[Dave Ramsey]

And if it is, if a thousand dollars is a lot to you, that means you really need to do this. Your new name is Facebook Marketplace. You need to sell everything. Sell so much stuff, the kids think they're next name the dog, eBay and the cat. Facebook Marketplace. I mean, everybody's got a new name. You're all for sale. We're getting out of debt. Those golf clubs, seven sets of golf clubs. Ebay, baby. Get rid of the crap in your house and clean out this debt. You got to get completely dialed in and focused on this. And, Rachel, you were a baby, so you don't remember this, but I distinctly remember two things that were emergencies. Okay? So I've got a wife who's been through bankruptcy and is living on the edge of terror at all times, who has a toddler and a brand new baby. And our roof started leaking, and we had started working this. We're not borrowing money. We did not have thousands of dollars to put a roof on the house. And it was dripping through the light fixture over the top of the kitchen table so it would drip onto the kitchen table, running down electricity, water and electricity. This is not good. And so that's what's wrong with. We said, okay, this is bad. This is an emergency. Yeah, but you know what? When you decide you're not borrowing money, I got the hardware store. I got that black tar stuff. I crawled around like a redneck up on top of the roof and spread that black tar stuff around. It looked like white trash lived there. And it was a nice home, but white trash was there right then because we were broke people. And it stopped the leak. And 18 months later, we had gotten out of debt and we'd saved some money, and we put a roof on the house the same summer stupid air conditioning goes out. August in Nashville, where you can cut the humidity with a knife, and there's nobody happy. The dogs aren't happy. Everybody's sweaty and mad. And the air conditioner guy says, you know, it's going to be $2,000. I'm like, I haven't seen $2,000. I don't know when. So we bought some box fans, little fans. And then I talked to a guy at church who works on heat and air, and he said, if you'll buy the parts, I'll try to fix it. And I ended up fixing it for $89, and it made it for four more months to winter. By the next summer, we saved up the money and bought an air conditioner to replace the condenser that was bad on the back of the house. Now, this was a house that was a reasonably nice home. This was not a white trash house. But it was just. The air conditioner was old, the roof leaked, and we don't borrow money. But this is what you do when you change your mindset. We made the decision after filing bankruptcy. We don't borrow money. Did people think we'd lost our minds up there spreading that black stuff around on the roof? 100% of them did. I had no black stuff on the roof. Cheerleaders, nobody going, you're the wisest guy I've ever met. They all looked at us like we had one eye in the center of our head. Well, welcome to being different. Normal is broke. You have to be different to win. Most people think making a will is some huge legal project they'll get around to someday. If you're working hard to get out of debt and build wealth to change your family tree, don't miss one of the most important steps that can help protect it all. Making a will. At Ramsey, we trust and recommend Mama Bear legal forms. Mama Bear has taken something people assume is complicated and made it simple. Their wills are specific to your state and they're built by attorneys to help you protect your family the right way. You're not downloading some generic form from the Internet and hoping it will work. You'll have guidance every step of the way so you can be confident you're doing it right. Plus, the whole process only takes about 20 minutes. And August is national make a will month right now. You can go to mamabear legalforms.com and save 25% on your will with the promo code Ramsey. It's their biggest discount of the year, but it ends August 31st, so don't wait. That's Mama Bear legalforms.com for 25% off with the promo code Ramsey. Ramsey. Welcome back to the Ramsey show in the Fair Winds Credit Union studio. Rachel Cruz, Ramsey personality. My daughter is my co host today. Lindsey is with us in Los Angeles. Hi, Lindsey. How are you?

[Caller]

I'm drowning and on the dumb side of things, Dave, but thanks for taking my call.

[Dave Ramsey]

Ouch.

[Rachel Cruze]

I'm sorry.

[Dave Ramsey]

What's going on, kid?

[Caller]

So I will withhold my emotions as best as I can because I know this isn't a therapy session, but I'm definitely general relief right now, which is $221 a month and food stamps. I've been on disability for about two years. I had temporary disability run out in February, which is why I'm on general relief right now with food stamps and just found out I'm not allowed to pay debt off with the $221 I receive, which is. I mean, obviously, how can I survive on that and pay off debt? I have $20,000 plus in credit card debt over the last couple years. And unfortunately, this isn't my first rodeo of paying off debt and trying to.

[Dave Ramsey]

What's the nature of your disability?

[Caller]

So I had a total hip replacement and I had a. When I tried to go in for surgery last year, I had an anxiety Attack. And that kind of put me in about three to four months of hot flashes and basically palpitations and emergency room visits and medications and all that. And then I was able to finally get the surgery, which is successful. I'm still under doctor's care though, and I'm not allowed to get unemployment or work. So that's.

[Rachel Cruze]

How old are you, Lindsay?

[Caller]

49.

[Rachel Cruze]

49. Okay.

[Dave Ramsey]

And so your hip, your hip surgery, did you do a hip replacement?

[Caller]

Yeah, total hip replacement. Okay.

[Dave Ramsey]

And you're, you're up and around and the hip replacement was how long ago?

[Caller]

March. Beginning of March. So about four months out. Five months out.

[Dave Ramsey]

Okay. So based on the hip replacement, you would be able to go back to work, but the anxiety and some of the mental issues, the emotional issues are keeping you from it, is that right?

[Caller]

Not necessarily.

I just, they, they haven't cleared me completely.

Why?

And I, most people that I know

[Dave Ramsey]

that have had hip replacements are back going within two weeks and sadly I've

[Caller]

been kind of, that's been thrown at me. Why are you special? Because you're six months still on disability. So I don't know other than my expertise or my training is a medical field. And the surgeon did say that because of the work that I do, he prefers to keep people six months out. So that's the only reason I have been given and that's what I tell others.

[Dave Ramsey]

Okay. The reason I'm asking you all these questions is that you, what you have is an income crisis. Agreed?

[Caller]

Yes, Sir.

[Dave Ramsey]

Okay. Because $221 isn't going to do anything that's not even going to feed you.

[Caller]

By God's grace, I've been blessed to have a rent free stay with a lady from church. So I'm only surviving.

[Dave Ramsey]

Yeah. And she's feeding you and everything. So. Yeah, I mean that's, that's, that is grace. You're right. And that's generosity. It's wonderful. It's a wonderful thing on the short term. It's not a long term plan. Obviously if we want to solve a debt problem or a situation like you're in and it's very scary where you are because you feel overwhelmed. I'm sure, I'm sure it's added to the anxiety problem, not subtracted from it. And so the weird thing is that what, you know, I really, I'm not a medical person. If I were in your shoes and were as scared as you are, I would go to work, right?

[Rachel Cruze]

Even work from home.

[Dave Ramsey]

I would do something. I would do something starting today, right

[Caller]

and interestingly enough, I do have a trade of making jewelry and, like, sun catchers and things, so that I just got a free desk last week and I just started to clean it up.

[Rachel Cruze]

Yeah, you do that, too. But also you, I mean, you need a job. You need a job. Like, I, I would, you know, be a. Be on a phone bank for a company and make 22.

[Dave Ramsey]

And what are you going to do? Anything. You don't necessarily be walking around or lifting things or. No, something else. I don't care. But you need an income.

[Rachel Cruze]

Get a hat.

[Dave Ramsey]

And sun catchers are not an income. That's a nice side hustle. It's a nice side hustle. I think there's nobody making $60,000 a year with sun catchers.

[Caller]

No, I, I, you're right.

[Dave Ramsey]

Okay. Okay. So that's what I need you to make. 60,000. Cause here's the thing. A whole bunch of your anxiety and all of your financial troubles go away when you get a $60,000 a year job.

[Caller]

I don't even know how to spell that, but.

[Dave Ramsey]

I know, but I'm speaking that for you.

[Caller]

Okay.

[Dave Ramsey]

Cause I'm talking to a lady who's not unintelligent. She's had a really rough patch, and we're coming out the other side of the rough patch. And no pun intended, but I want to run out of this rough patch.

[Caller]

Yes.

[Dave Ramsey]

Okay. And so I want you to get up and go right now and just tell your doctor I'm sorry. I would love to have laid around in rehab for seven months like your theory of your textbook, but I had to do this thing called eat. And so me and I, we went and got a job. Me, myself and I, all three of us went and got jobs. And so you know that. And the weird thing is what I found in working with people over the years. I'm not a psychologist, that's Dr. DeLoney's field, but I have found that depression and anxiety leave with increased physical activity and increased income.

[Caller]

Right.

[Dave Ramsey]

They don't leave completely, but they're diminished to where they're not overwhelming. You're not struggling with depression, but you should be.

[Caller]

No, it's definitely bubbling up.

[Rachel Cruze]

Yeah. Using your mind and your body.

[Dave Ramsey]

Yes, I've been there. When you're that broke and that scared, it takes your breath away every morning just to get out of bed.

[Caller]

It becomes your God, ultimately. And you're right about the work and functioning because it gives a sense of purpose.

[Dave Ramsey]

Exactly.

[Caller]

At the beginning of the year, I was trying to figure out who was

going to Take care of me.

[Dave Ramsey]

Your brain is too busy to spin out, Lindsay.

[Rachel Cruze]

Were you doing in the medical field? What was your position before?

[Caller]

Just a caregiver. I mean, I say just because it's the, you know, bottom of the rung in that security.

[Rachel Cruze]

Is that what you said?

[Caller]

Caregiver.

[Rachel Cruze]

Caregiver. Okay, gotcha.

[Dave Ramsey]

You're not going to be lifting anybody, though. Not right now.

[Rachel Cruze]

No, no, no, no. I just was wondering, going forward, you know, two, three, four, five years from

[Dave Ramsey]

now, what's your new career going to be?

[Guest/Caller]

Yeah.

[Rachel Cruze]

Of What?

[Dave Ramsey]

You're only 50, right? And you're just half done. What are we gonna do with the other half?

[Caller]

So I've spun out because of all the options. Do I go to school then? The other side of it, Dave, is my hand is starting to show nerve damage. So I. And I also have like spinal stenosis. So there are other physical ailments that could contribute. And actually when I went in for the hip doctor, he said, oh, people think it's their hip, but it's their back. And I didn't really believe him because what screams the loudest is what gets the most attention. And that was my hip. And I couldn't walk for seven years. I mean, I really was in a, you know.

[Dave Ramsey]

Yeah. Are you overweight?

[Caller]

Of course. Okay.

[Dave Ramsey]

I mean, substantially.

[Caller]

I'm on the. I'm walking up to two, three miles a day now.

[Dave Ramsey]

Oh, good. Okay. So you're doing something about that too. See, that's awesome right there. You're walking two or three miles a day. Hey, you can go to work. This is awesome. I'm so happy. Hey, listen, we'll help you any way we can, kiddo. You have an income crisis and it's because you've been through a hard time. I'm sorry. Sorry. You've been there. But you're gonna be okay. It's an income issue. Get the income flowing. A lot of this is gonna self fix.

[Caller]

Foreign.

[Dave Ramsey]

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[Caller]

attorney advertising results may vary and no specific outcomes guaranteed.

[Dave Ramsey]

Hey guys, if you like this show, we could use some help. Please share it with a friend. Click the share button or share a link or just tell them about it. Send them where the podcast or the YouTube or if you're listening on talk radio, tell them what radio station we're on and what time of day they're carrying us. All that kind of stuff. Spread the word for us. You guys are our number one marketing method. We don't spend any money marketing this show. The only way it gets spread out is if you tell people about it. That's how it works now. We put it out on social media. We put out all that stuff. We do that stuff. But I don't have, we don't like buy ads. Come listen to the Ramsey show. You're it. So if you like it, help us and send your friends and your family. We would appreciate it. John is in Pittsburgh. Hey John, what's up?

[Caller]

Hey Dave. Hey. Appreciate you taking the call.

[Dave Ramsey]

Sure.

[Caller]

So yeah, just looking mostly for, I guess some career slash life advice. Okay. Yeah. Ultimately curious right now. I'm looking at if it would be an unwise move to maybe take a job that pays a lot less to sort of get rid of the stress that I have with my current job. That's ultimately at a high level what I'm asking. But I'm happy to map out anything you need for some advice.

[Dave Ramsey]

What's the nature of the stress at your current job?

[Caller]

So I am essentially doing a split role with this company. So I'm a renewals and growth specialist and also an accounting executive for one of their products.

[Dave Ramsey]

So why is that stressful?

[Caller]

Constant firefighting on the renewals and growth and contracting side, getting hit up, you know, all the time for, you know, contracts that need out within the hour. On top of that, trying to manage a quota carrying experience for the account executive side. Managing that. It's, it's just becoming a lot mentally for sure.

[Dave Ramsey]

What do you make?

[Caller]

So my base is. So I have a base salary and an OTE and the base is 85 and, and if I hit my own target earnings, it's another 35. So all in the 120 per year. Okay. All right.

[Rachel Cruze]

Is it essentially two different jobs? You're doing two full time jobs into one? Like could, could you hire someone and do something and that position be filled with just your time? Half of it?

[Caller]

I think so, yeah. They don't necessarily look at it that way, but yeah, I certainly feel that way.

[Dave Ramsey]

How old are you?

[Caller]

I am 27.

[Dave Ramsey]

How long have you been there?

[Caller]

A little over four years.

[Dave Ramsey]

Okay, well, the first thing I want to do is say reset your narrative on how you're looking at this. Somewhere along the line in human nature, we're taught our brain goes negative. So I get this call. It sounds like this, John, Hey, Dave, I just got laid off. And do I just take any old job to get back in the workforce and make half of what I used to make? Why do we assume. Why does that person assume that if they got laid off that they can't go get a job making more than they used to make? Because we all kind of have this little negative ninny in our head. You know, everybody does. And so I'm going to have you reset your narrative. I think I want you to get a job making $150,000 a year. Year that is less stressful than the one you have. Stress does not equal income.

[Caller]

Okay, so.

[Dave Ramsey]

So you don't have to go make less to get rid of the stress.

[Caller]

Yeah, I mean, that's definitely true. I guess within. Yeah, I guess just my concern, if I were to stay in the sales slash renewals field, you know, maybe it is company specific. Where, where it's kind of a lot on me and that's where the stress is coming from.

[Dave Ramsey]

Well, there's always pressure to perform. Everyone has that. If there's no pressure to perform, you're a bureaucrat, you work at the dmv. Okay. But everybody else has pressure to perform. The plumber has to stop the leak, the electrician has to get the light to turn on or they don't get to keep their job.

[Rachel Cruze]

Job.

[Dave Ramsey]

Okay. And you have to get enough lights to turn on so your lights stay on. If you're the electrician, that's how. I mean, there's. The marketplace has always got pressure to perform. So I don't want you to think you're going to get away from that. That's just called being a grown up. You're going to carry some weight, you're going to carry some water in order for somebody to be willing to pay you. But it sounds like that your day has gotten extremely chaotic and the stress is coming from the unknown. Like about the time you feel like you've got this thing on the rails, somebody comes along and hits the side of it and knocks it off the rails again.

[Caller]

Yeah, exactly.

[Dave Ramsey]

Yeah, that's what it feels like.

[Rachel Cruze]

And there's no end in sight. It's not like it's seasonal, right?

[Caller]

In your interview?

[Dave Ramsey]

Yes, it's every day. Every day, all day long. And it's just like, well, crap, could we just follow through one time? You know? And so what I'm going to do if I'm you is the first step is I'm going to sit down with my supervisor and say, all right. The way I'm experiencing this pressure to get this job done, it's really, I need some help with that. Okay. And so can we restructure some of the flow in my day so that I still get the work done, but so that everything's not an emergency? You know, it's like the old guy with the thing on his desk that says, your lack of planning is not my emergency.

[Caller]

Some people would follow that a little bit more to heart, for sure.

[Dave Ramsey]

But you're going to have to have backup from leadership. You can't just do that to your fellow co workers and not get fired. Right. And then if an emergency does occur, occasionally, you're easily going to handle that. But living life emergency to emergency is called stress. And it's emergencies not created by you or your lack of anything. It's just stuff that keeps dump. They just come along and throw up on your desk every so often.

[Caller]

Yeah, no, exactly.

[Dave Ramsey]

And so what I want to do is restructure that. Now, if you worked here and that could happen at Ramsey, I mean, we work hard at Ramsey and we throw stuff around and we're moving stuff, and anything that moves is shoved. And everything is shoved has friction. I mean, there's stuff going around this building. I'll just tell you. And if you came in and sat down with one of our leaders and said, help me restructure my day, we would just go, okay, there's a little bit of a system broken here, a little bit of a process broken here, and we need to set up and go, okay, all emergencies have 24 hours to be solved, not 24 minutes. Okay? That's a new system. It's a new policy. And so then what we're going to do is we're going to stack all the emergencies and do them from 4pm to 5pm before I go home instead of stopping in the mid flow on being account executive and fixing somebody else's crap. Right. Am I. Am I reading the mail right?

[Caller]

Yeah, I think so.

[Dave Ramsey]

It's a system.

[Rachel Cruze]

Is it a company culture that would listen to that, John, or do you feel like it would fall on deaf ears?

[Caller]

So I think it might be. I think it would probably be received on deaf ear. Deaf ears, Excuse me.

[Dave Ramsey]

Here's what I want to do. I want to try that first. I'm gonna sit down with a leader first and say, I think we have systems and a process problem. Would you help fix it? I want to participate. I want to be a good team member. But the way we're doing it right now is killing me.

[Guest/Caller]

Okay.

[Dave Ramsey]

And if they say, oh, screw it, you just do your job, then I'm going to go look for a new job, but I'm going to try keeping my $120,000 a year job first. Okay? So the first thing is one conversation. A simple short one. Kind and respectful. Honoring. Listen, I want to be a good team member. I'm not saying anybody's doing anything wrong. I think we just have a systems and a process flow. And the way I'm experiencing that pressure is stress. And I don't think I'm doing as good a job as I could. If we could put together a little bit of a system, would you help me with that? And if they go, no, you just shut up and do your work. Then I go get another job because this is a bunch that's going to run this car into the wall.

[Caller]

Yeah, no, that definitely makes sense.

[Dave Ramsey]

And what I want you to get is a job that makes 150 a year.

[Caller]

Okay. Okay.

[Guest/Caller]

All right.

[Dave Ramsey]

And hang on. I'm going to send you a copy of Ken Coleman's book, the Proximity Principle. And I want you to use it to land that job. Because obviously you know how to juggle. You can join the circus, man. I mean, you know how to juggle. You can join anybody's circus.

[Rachel Cruze]

Having a large capacity to be able to handle a bunch of things thrown at you. That is, that is a skill set.

[Dave Ramsey]

Multitasking.

[Rachel Cruze]

And do you want to be in that forever, though, in a high stakes rate where you just, you know, you feel like you're never getting traction either?

[Dave Ramsey]

I don't mind having a bunch of tasks as long as I can get them accomplished within reasonable expectations of the people that handed them to me.

[Rachel Cruze]

Yes. And that there's a reasonable.

[Dave Ramsey]

And I don't feel like I'm being abused that it's.

[Rachel Cruze]

Yes, yes.

[Dave Ramsey]

The abuse. The abuse of.

[Rachel Cruze]

They take advantage of the lack of

[Dave Ramsey]

respect of your space is the thing. And so like, we've got a whole bunch of workstations through our thousand people here and a lot of them just put up a little sign that says, not now, I'm working. Send me an email. Because people just walk by those workstations, interrupt people. Right. So it's a system stuff.

[Rachel Cruze]

I would never not just chat it up with everyone.

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[Dave Ramsey]

Debbie's in Jacksonville, Florida. Hi, Debbie. How are you?

[Caller]

I'm great. How are you?

[Dave Ramsey]

Better than I deserve. What's up?

[Caller]

So I have a question. My husband and I are looking at retirement. He's retiring actually in a couple of months. I'm already retired and we've been. I've been looking at our investments. I have one annuity that isn't. It's not a lot of money. It's about 120,000. It's not earning much interest at all. It's mature or actually will be fully matured next year. And I'm wondering if there's any downside. I've been thinking about trying to contribute to each of my four grown children's Roth IRA just to help encourage. They already saved, but to help encourage them if they're doing their 401ks and also to be still alive during part of the time that I, you know, during a time where I Can see them enjoy it and get excited about it. And if there's any possible downside to that.

[Dave Ramsey]

It's an interesting question. Well, the two issues are separate issues. The annuity comes to you cash it out. Okay. It's a crappy product. And then we're going to invest that money into a good product. Okay. Into some good mutual funds. All right. And move away from that insurance garbage. And so then there's a different issue of do we want to give our kids money? And if so, do we want to do it in the form that they open? You can't open a Roth IRA for someone else. They have to open it.

[Rachel Cruze]

Yeah. Do they have one already, Debbie?

[Caller]

They.

They all have them. Yes.

[Dave Ramsey]

So you would just be funding them every year?

[Caller]

As soon. As soon as. No, I haven't been, but I open.

[Dave Ramsey]

Are they funding their Roth irs?

[Caller]

They are.

[Dave Ramsey]

You can't do another one on top of what they are doing, right?

[Caller]

No, they. They are, but they have slowed down. A couple of them have had some challenges, so some are funding more than others. I feel like if I did that, they could still contribute to their 401k. But as my husband and I are looking at retirement, as you know, all I can see is, oh, my gosh, you pay so many taxes for all the savings you've done your whole life.

[Dave Ramsey]

If it's not in a Roth. Not in a Roth.

[Caller]

You do. Yeah, right.

[Rachel Cruze]

How much do you guys have? So. So, Debbie, do you just want to give them each $7,500 a year to just max out their Roths and as a gift is kind of what you're thinking about that.

[Caller]

It's $120,000 annuity. I can give them $5,000 a year for five years each, which would just help them and then encourage them to put the additional funds that would max it. Okay. My husband and I are. This is not money I think is going to be important about. Well, are you asking me?

[Dave Ramsey]

Yeah. What's your net worth?

[Caller]

I'm sorry. We've got about four, four and a

half million dollars, and you want to

[Dave Ramsey]

give away a couple hundred thousand bucks? That's fine. No problem. And again, though, we're going to move it out of the annuity into a good mutual fund, and then you're going to decide later if it's a separate decision from moving it out of the annuity into a mutual fund. Now, I've just got some money here, period. It doesn't have to be the gift doesn't have to be tied to the annuity. In any way, it does no good to tie it to the annuity. Okay. It's just that for you, it's emotionally found money and you don't need it, and so that's how you're tying it. But they're not necessarily connected.

[Rachel Cruze]

How old are your kids, Debbie?

[Caller]

Yeah, they're older.

[Rachel Cruze]

That's fine.

[Caller]

They're between 33 and 45.

[Rachel Cruze]

Okay, well, you just made the comments, and it made me think of the book. There's a book called Tie with Zero. And I don't agree with everything in the book, but it's a little bit of that premise of, of parents who have done well and their adult kids are there and they're in a time of life. Maybe they're buying a house, they need to upgrade a car fund. Retirement, I guess could be any. Whatever. And you're. And you help them while you're alive. What you said were your words. I want to see them enjoy it. So I would. I would just throw out that. You know, if you, if you.

[Dave Ramsey]

You're actually not going to see the Roth.

[Rachel Cruze]

If you put in the Roth, they're going to be 59 and a half

[Dave Ramsey]

and you're going to be dead.

[Rachel Cruze]

Well, we'll hope for longevity for Debbie, but I'm just saying, if you want,

[Caller]

I'll get to see them enjoy it as it grows.

[Dave Ramsey]

Yeah, you'll get to see the growth.

[Rachel Cruze]

You'll get to see the growth save.

[Caller]

Well, none of them have any debt. Well, I have one child that has debt.

[Rachel Cruze]

That's okay. But Debbie, I'm just saying, if that's your heart, you know, there could be. If you wanted. You don't have to. I think this is a great. A loving thing to do for sure. What a nice, kind gift.

[Dave Ramsey]

Yes, yes.

[Rachel Cruze]

But if you wanted to see it, you know, I don't know if the kids are having babies and you're like, listen, we just want to upgrade the minivan for you. I mean, like, I don't know you. There's another way.

[Dave Ramsey]

I want to put money in a car fund for a grandkid or the.

[Rachel Cruze]

Yes. Or that.

[Dave Ramsey]

529.

[Rachel Cruze]

But a Roth would be a beautiful legacy.

[Dave Ramsey]

There's nothing wrong with the Roth. There's nothing special about the Roth either, is Rachel's point. And so if you want to give, you can give. An individual can give an individual up to $19,000 without any gift tax. And if you're married and your kid is married, you can do four times that. So you give 19 to each kid and spouse your husband gives 19 to each kid and spouse. So each family unit could, could get almost $80,000. If you wanted to do that in one fell swoop. And if you wanted to do that and it sounds like you have good relationships and respect for them, you could just say. What I would like to see you do with this is put some in the 529 and make sure your IRAs are maxed out. Because I just discovered taxes on our IRAs and I don't like it. And I want you to do some Roth IRAs. Make sure your Roths are maxed out. But you do what you want to with it. Here's our gift. Gift. I mean, you can do that. That's another way of getting at this because you're going to have to get their permission anyway. You can't just write a check into someone else's Roth.

[Rachel Cruze]

Yeah. You're going to be giving them the money and then it'll be up to them to put it in. If that's what you wanted. Right.

[Dave Ramsey]

You could be very controlling about them putting it in there. But it doesn't sound like that's your relationship.

[Rachel Cruze]

No, but it is a really creative way to think through. I haven't really thought about that. Funding your kids Roth. Because that is something that's going to grow versus children's. Yeah. Versus a depreciating asset like a van. I threw out the van as an example. That's going to go down about like this will be something that builds forever and ever and Amen. Which is. That's a pretty cool way too, to. To build that legacy.

[Dave Ramsey]

So there's nothing wrong with any of that.

[Rachel Cruze]

And well done, Debbie. For 4.5 million, you and your husband,

[Dave Ramsey]

we probably at Ramsey would. Ramsey's would say use it for wherever you are on the baby steps. That's what we would do.

[Rachel Cruze]

That's a good point too.

[Dave Ramsey]

Yeah. That's what we would do with it and what we would tell our kids to do with it. But we say, hey, we suggest that you finish up that debt and that you get yourself clear on that budget and then you make sure you're putting 15% away and you throw the rest at the mortgage. And that's what we suggest. And we would walk right up that with whatever the size of the gift is, is if we did it with our kids in this situation. But there's nothing dysfunctional or wrong. There's no advantage to it being a Roth for you or them tax wise. Today there's no tax write off for you contributing to A Roth or them contributing to a Roth. A Roth is all after tax, as you know, it does grow tax free, but that's the whole thing. So. Yeah, that. Interesting question. Thank you for calling with it. Charles is in Charlotte, North Carolina. Hey, Charles, what's up?

[Caller]

Hey, Dave and Rachel. Thanks for taking my call. Sure.

[Dave Ramsey]

How can we help?

[Caller]

Yeah, so I'm under contract on a new house. Supposed to be closing at the end of the month here, and I'm starting to have some reservations. Just want to make sure I'm making the right move for my family here.

[Dave Ramsey]

I don't think you have a choice. Just on the contract.

[Caller]

Yeah, I mean, my realtor, I've talked to him a little bit about it and he said, you know, you haven't. You're not closed yet. So if you, you know, if you're not sure, it's not done.

[Dave Ramsey]

What do you mean it's not. Is there a contingency in the contract that if you get cold feet, you can walk away?

[Caller]

Yeah, that's. Well, that's what I've been told.

[Dave Ramsey]

Really?

[Caller]

Yeah.

[Rachel Cruze]

What makes you uneasy?

[Caller]

Well, I have. I have only 10 years left in my current home. And to give you a little context, I have a baby and another one on the way. So the.

[Guest/Caller]

How.

[Caller]

We're just outgrowing the house right now. We've talked about doing renovations, but either way, the current home, I have 10 years left on it. 110,000. I'm at a two and a quarter interest rate. The new home, I'd be taking a $210,000 loan out. It's going to be 1800amonth. Month.

[Dave Ramsey]

What's your income?

[Caller]

I make a hundred thousand right now. And my wife has not been working, but she's actively trying to get a job now, so she should be back to work.

[Dave Ramsey]

Is there anything wrong with the home at all? Is it just the move up in money that's bothering you?

[Caller]

Yes, the cash flow. And then starting. Starting over the 30 years when I'm.

[Dave Ramsey]

You're not starting over, you can attack it at whatever rate you want to attack it at. I'd close on the deal. You gave your word. When I wrote my first book and launched the radio show, things looked a lot different. I was out selling books out of the trunk of my car. If you wanted to build a business, you had to figure out distribution, inventory payments, and a hundred other things on your own. Today there's Shopify. There are still plenty of challenges that come with building a business, but Shopify helps you build your online store. Manage your business business and start selling without knowing how to code. Their world class checkout makes it easy for customers to buy from you. And Shopify's AI assistant sidekick can help answer questions and guide you as you grow. Millions of businesses trust Shopify because it brings everything together on one platform. So you can spend less time figuring out the technology and more time serving your customers. All you need is the idea. Shopify handles the rest. Start your free trial [e-mail] Ramsey shopify.com Ramsey that's shopify.com Ramsey. Folks, our EveryDollar app. The number of you that are now using it and using it almost every day is exploding. Thank you so much for the number of you that are learning how to handle your money properly, working together with your spouse and working the baby steps, working the Ramsey plan. The EveryDollar app helps you do every bit of that. And one lady wrote in, I love this app. It makes it super easy to budget. With my husband. We've implemented this practice since our wedding day and we've had zero money fights. That's pretty cool. And what's even more cool is the traction that you're going to get and getting out of debt and into wealth. Every dollar is free to download in the App Store or Google Play. Free every dollar. Check it out in the App Store or Google Play. Phil is in Phoenix. Hi Phil, how are you?

[Caller]

Hi, Dave. I'm good. Thank you so much.

[Dave Ramsey]

Sure. What's up?

[Caller]

Okay, so I have about combined debt between business and personal of $55,000. I'm liquidating the business. I'm going to get out of it. I just took on a new commission job and it's slow going right now. I've only been doing it three months. My take home pay is about $2,450 right now. But I could expect with a little ramping up to be about 7 to 10amonth. My question is primarily I want to avoid bankruptcy at all costs. So I'm trying to figure out if that's the only option I have or if there is a way to deal with the creditors by settling in what that process looks like.

[Dave Ramsey]

What kind of debt is the 55,000?

[Caller]

It's all credit lines.

[Dave Ramsey]

Credit lines?

[Caller]

Yeah.

[Dave Ramsey]

With a bank or credit cards or.

[Caller]

I apologize. It's credit cards. I apologize.

[Dave Ramsey]

Credit cards is 100% credit card debt.

[Caller]

Yes, sir.

[Rachel Cruze]

How many different ones? How many different cards?

[Caller]

There's eight cards, four personal for business.

[Dave Ramsey]

Well, they're all personal. You signed for them.

[Caller]

Okay.

[Dave Ramsey]

Your business did not. That was not Big enough for them to loan your business money without your personal signature. So. So they're all personal. They're all going to sue you eventually if you don't take care of it. But that's. That's okay. How long has it been since you've paid on them?

[Caller]

I've. I've been keeping up. I've been making minimum payments.

[Dave Ramsey]

Oh, you're making minimum payments now? How?

[Caller]

Yeah, I'm trying to. Well, it's. The business was winding down and. But as I realized I had to get out of it and get a new job.

[Dave Ramsey]

So you're still making a little bit of revenue?

[Caller]

I mean, minimal. I got. I don't have the time to. I don't have time to commit.

[Dave Ramsey]

And when you said liquidate, is there anything being sold except just selling off the inventory and closing it?

[Caller]

That's exactly it, yeah.

[Dave Ramsey]

Okay. How much inventory you got left?

[Caller]

Oh, gosh, it's probably less than a thousand.

[Dave Ramsey]

Okay. All right. So you're just about done with that. So there's no real asset as far as the business goes.

[Caller]

Correct.

[Dave Ramsey]

You got equipment or anything that you're going to sell off? Furnishings or anything left over from the business that's going to bring any money?

[Caller]

No, sir. It was E. Commerce, pretty much just. It was inventory that just went into the various platforms.

[Dave Ramsey]

Gotcha.

[Caller]

Okay.

[Dave Ramsey]

All right. That makes sense.

[Caller]

Okay.

[Dave Ramsey]

You're nowhere near bankrupt. Not even close.

[Caller]

Beautiful.

[Dave Ramsey]

Okay.

[Caller]

Okay.

[Dave Ramsey]

You're going to be able to work through this. And actually, I mean, there's a couple of ways you can do it. They are not going to settle with you for less than 100 cents when you call them as an individual while you're making payments. Okay. But if you're six months behind, which I'm not going to recommend. Okay, sure. Then you could call them up and say, okay, I owe you $10,000 and I have $3,000, and I will offer you that as settlement in full. And after a bunch of haggling and whining and spit and all that other stuff going on, then eventually you'll get them about to do that. Okay. The other thing in your situation you could do, we have a sponsor called Guardian Litigation, and they specialize in working with people where you are not people that are six months behind, but people that are worried that they're going to get there because their income is not able to maintain the payments on these. Because at $2,450, you're not going to eat and pay all these payments.

[Caller]

Correct.

[Dave Ramsey]

And that's what you're Already seeing. And you're saying this is coming to a screeching halt, and then these people are going to get mean and nasty, and you're.

[Guest/Caller]

They are.

[Dave Ramsey]

So I'm going to put you on hold, and Christian's going to hook you up with Guardian Litigation. Again. It's a sponsor of ours. They have attorneys on staff, and they will start the negotiation process. While you're current, they don't require you to get behind in order to put you into a plan. And they work with the companies all the time and are able to pull things off that the individual can't. And so that's why we brought them on as a sponsor. I. Generally. There's a lot of people in that bucket that I don't recommend. Debt consolidation. People we don't recommend. But Guardian does a great job. And so we'll. We'll send you that direction and see if you can't get some help. You're not going to file bankruptcy?

[Rachel Cruze]

No. And as quickly as you can get to that 7 to 10,000, that changes. Yep. Absolutely. And in the meantime, I mean, probably working extra, working side jobs on the weekends just to keep something afloat, because 24 hours in general is in Phoenix. Yeah.

[Dave Ramsey]

Tough.

[Rachel Cruze]

I don't think you can live on

[Dave Ramsey]

that, so that's tough.

[Guest/Caller]

Yeah.

[Dave Ramsey]

All right. Grace is in Raleigh. Hi, Grace. How are you?

[Caller]

Hi, Dave and Rachel. I'm doing great. How are you guys?

[Dave Ramsey]

Better than we deserve. What's up?

[Caller]

So I was just calling my husband and I. Due to a series of unfortunate events,

our car got totaled.

Not our fault.

[Dave Ramsey]

We got insurance.

[Caller]

Yes. About 5. 5,000 for it.

[Dave Ramsey]

But that's what the car was worth, right?

[Caller]

Yeah. Yeah, exactly.

Okay.

But we are currently under contract on a house, and so obviously no buying cars yet. But looking ahead, just because we've been sharing a car and it's been a little difficult with work and schedules and such.

[Dave Ramsey]

I'm sorry. You have a $5,000 check from the insurance company. The contract on the house does not prohibit you from buying a $5,000 car for cash.

[Caller]

Yes. Which leads me to my question, which was, do you think that it would be smarter to get, like, a $5,000 car or wait until we're closed on the house and we have some funds coming in and get a nicer car as we're looking ahead to having kids and wanting, like, an SUV or minivan?

[Dave Ramsey]

You're doing fine in the $5,000 car. Before this happened, we were.

[Caller]

Yes. So it's a little bit earlier than we were expecting.

[Dave Ramsey]

You have Extra money set aside for a car already in addition to the house.

[Caller]

Just the 5,000. We had not been planning on getting a car quite yet.

[Dave Ramsey]

Do you have an emergency fund? Fund?

[Caller]

We do, yes.

[Dave Ramsey]

How much is in that?

[Caller]

About 25,000.

Okay.

[Dave Ramsey]

And what should your emergency fund be?

[Caller]

25,000. Just about right. For six months.

[Rachel Cruze]

Is that a six month. Do you guys have kids? Grace?

[Caller]

No, not yet. We were kind of hoping next year. Sure.

[Rachel Cruze]

Yeah. Yeah. Totally. Pretty stable jobs.

[Caller]

Yes. Okay.

[Dave Ramsey]

And that there's a. What's your household income?

[Caller]

Household income is about 140.

Okay.

[Dave Ramsey]

Yeah, 25 is probably pretty. That's probably about three months. Yeah.

[Rachel Cruze]

That's six months.

[Guest/Caller]

Yeah.

[Dave Ramsey]

It's not.

[Caller]

Well, we. I guess now with the mortgage, might be about three.

[Rachel Cruze]

Okay. That's.

[Dave Ramsey]

When are you closing on the house?

[Caller]

Next Wednesday, August 12th.

Okay.

[Dave Ramsey]

And you're not using any of the 25,000 to close on the house?

[Caller]

No, no. We're doing it the Ramsey way.

[Dave Ramsey]

Good. Good for you. Good for you. Well done. All right.

[Rachel Cruze]

I'd be okay throwing a couple thousand.

[Dave Ramsey]

Yeah. I mean, if you took it to 20 or something. But I'm not. It's not an emergency to move up in car. This is more of a gyration in your budget than anything else. You make a lot of money. You don't have any debt.

[Rachel Cruze]

Yeah. And go get it. Go get a $10,000 car. Don't get a minivan yet.

[Dave Ramsey]

Yeah, get a 10. You don't have kids.

[Rachel Cruze]

Yeah. Get whatever you want. And then, you know, when life happens,

[Dave Ramsey]

get a $10,000 car. Put the 5,000 back in the emergency fund as soon as possible and then start saving for the next car after you get in the house. You don't need a $25,000 car when you totaled a $5,000 car.

[Caller]

For sure.

[Dave Ramsey]

And you certainly don't need a car payment. But purchasing a car and using some of your emergency fund or some of your $5,000 from the insurance with no payments at all, no bank involved, is not going to spoil the purchase of your home in any way.

[Caller]

That's fair. We just were wanting to be safe.

[Dave Ramsey]

It won't mess up the mortgage company. If you bought a $25,000 car, I would just call you stupid.

[Caller]

Yes, that's fair.

[Dave Ramsey]

Okay. So don't do that. You're awesome. Thanks for the call. We appreciate you.

[Rachel Cruze]

Yeah. A 5,000 to a 10,000.

[Dave Ramsey]

That's a big jump.

[Rachel Cruze]

That's a jump. So take it and then drive it for 18 months.

[Dave Ramsey]

And it's like, listen to what they did, they have a fully funded emergency fund. They're 100% debt free, make $140,000 a year.

[Guest/Caller]

They're buying the house.

[Dave Ramsey]

They're buying a home. Nobody can buy a home, but they're buying a home. And guess what? They were driving a $5,000 car. They're doing everything right. And then some stupid person totaled their car. Somebody T boned them at the light, you know.

[Rachel Cruze]

Now she gets a $10,000 car, though. Blessing in disguise. Hey, guys, it's Rachel Cruz. If you're working the baby steps, every major expense deserves a second look. And health care is one of the biggest expenses in most families budgets. And that is why I recommend that you check out Christian Healthcare Ministries. Ministries. CHM isn't insurance. It's a health cost sharing ministry that means members help pay one another's medical bills. And they've been serving Christians since 1981. CHM programs start at just $115 a month. And here's why that matters. If you are paying more than you need to for healthcare, that money could be going toward paying off debt, building your emergency fund, or reaching your next financial goal. And your monthly cost isn't based on your medical history or where you you live, y'. All. A lot of families find CHM gives them more room in the budget. That's why so many members say they're better with CHM. And right now, new members can receive a 50% credit towards their first month of membership. Go to chministries.org budget and use promo code RAMSEY. That's chministries.org budget and promo code Ramsey.

[Dave Ramsey]

Welcome back to the Ramsey show in the Fair Winds Credit union studio. I'm Dave Ramsey, your host. Thank you for joining us, America. Open phones at 888-820-55225. Rachel Cruz Ramsey personality number one bestselling author. My daughter is my co host. Today David's in Virginia Beach. Hey, David, what's up?

[Caller]

Hey, David, how you doing?

[Dave Ramsey]

Better than I deserve, man. How can I help?

[Caller]

I was wondering. I'm in 35k of credit card debt and I'm keeping up with minimum payments, but I'm making just a little bit over them every month. I'm wondering if I should get a personal loan to get rid of all the credit card debt. That way it's at a lower interest rate and then I just try to tackle that loan as aggressively as I can.

[Dave Ramsey]

Interest rates, not your problem. The amount that you're paying on the debt is the problem.

[Caller]

Yeah, no, for sure.

[Dave Ramsey]

Yeah. What do you do for a living? Virginia Beach. Are you military?

[Caller]

No, I. I work with an ISBN Internet service provider. I work as a construction project engineer, kind of managing fiber cruising construction.

[Dave Ramsey]

Gotcha.

[Rachel Cruze]

How much do you make?

[Dave Ramsey]

40 hours a week

[Caller]

around there. It's like more or less. It's kind of just. I work. I kind of like the work I do, so I do more. I just kind of stay on top of my stuff. But I make around 84,000 a year. Okay.

[Dave Ramsey]

And how much is your car payment?

[Caller]

Car payment is around 800, but I've also got a. I've got my own business where I do fiber splicing and that I bring in around 2 to 6,000, depending on how much work is available and I can do in that month.

[Dave Ramsey]

How much. How hard is it to get more

[Rachel Cruze]

work

[Caller]

just depending on.

[Dave Ramsey]

Because you're not getting the 6,000 very often or you wouldn't ever called me.

[Caller]

Right? Exactly. Yeah, it's. It's more on the two. 2000 on the minimum a month is what I'm bringing in consistently with the business. But I'm gonna try. The way that I can get more is mostly stuff out of my hands. Permits and stuff. How much?

[Dave Ramsey]

Okay, let's. Let's pretend for a second that we took 33, $35,000 and we put $4,000 a month on it. It would be gone in nine months. Okay. And the interest rate doesn't matter in nine months. The interest rate only matters if you keep it nine years.

[Caller]

Right.

[Dave Ramsey]

What you need is $4,000 a month to put on this. You have a stupid $800 car payment. That's insane. So maybe we sell a car and get a beater, and Maybe we work $6,000 worth of splicing and gosh, that's $7,000 a month. If you just lived on your other income, you freed up 800 plus 6,000 splicing. You'd be done in just a handful of months. So what I would tell you to do is work your tail end off. Live on nothing. Don't go to happy hour. Don't go out to eat. Don't go to happy hour. Don't go out to eat. Sell your car and you'll be out of debt in no time. And don't go to happy hour.

[Caller]

Definitely don't go to happy hour.

[Rachel Cruze]

Loud and clear. You can listen to Smart Money Happy Hour on the Ramsey Network and have

[Dave Ramsey]

a mocktail and watch them have a drink, but you're not going to happy. No, I'm serious. You have to you have to focus on. If you focus on getting out of debt like your life depended on it, you would work all the time. You wouldn't have time to do anything else. And you would sell everything in sight because your life depended on it. And you'll be out of this debt in no time when you do that. Okay, so four to seven thousand dollars a month makes 35,000 go away really fast.

[Caller]

Right.

[Dave Ramsey]

And I think you've got that at your fingertips. Tips. But we just got to adjust a few things. Because you make good money.

[Caller]

Exactly.

[Dave Ramsey]

And you've got a great skill set.

[Rachel Cruze]

Yes.

[Dave Ramsey]

That is very marketable. I mean, this first time I heard of splicing as a side hustle, and I just love it. I'll tell you.

[Caller]

Yeah, yeah, it's good. It's. I definitely haven't a good opportunity. I was just super stupid when I got into it and made a bunch of money, and then I just got out of hand, and now I'm like,

[Rachel Cruze]

well, how old are you, David Ramsey?

[Caller]

I'm 24.

[Dave Ramsey]

Perfect.

[Rachel Cruze]

Okay.

[Guest/Caller]

Yeah.

[Dave Ramsey]

Have you cut up the credit cards?

[Caller]

I. I threw them in the freezer into a giant and into a pot, and they're at the bottom of the frozen pot.

[Dave Ramsey]

Well, we're not going to eat them as leftovers, so just get them out, thaw them out, and cut them up.

[Caller]

Okay.

[Dave Ramsey]

You don't need them. They've not been a blessing. Get you a debit card, which will mean you spend your own money to buy crap. You know, that's it. Because that's the problem. You've been buying crap with other people's money, and that's what a credit card card is. So, yeah, just thaw them out. That freezer thing has been around for 40 years. People been putting them in freezers. 40 years, as if we were gonna thaw them out, and they're suddenly gonna be okay. It's like, oh, now they work good.

[Rachel Cruze]

It's still, like, a safety of, like, they're still there, but they're still really hard to get to.

[Dave Ramsey]

I can get to them still.

[Rachel Cruze]

It takes work.

[Dave Ramsey]

Here's the other thing. If you cut them up. I'm sorry, I don't. I probably shouldn't say this, but if you cut them up and you call the bank.

[Rachel Cruze]

Glue them back together.

[Dave Ramsey]

No, the bank will send you another one in the morning.

[Rachel Cruze]

Okay. There you go.

[Dave Ramsey]

I mean, you really. It's easier than the. Actually, if you want to. If you want to fall off the wagon, the bank will help you. They like having you in debt.

[Rachel Cruze]

They're not going to be mad at you. Want another credit card?

[Dave Ramsey]

You know, I placed some scissors across. Someone went, oops. And so can you send me another card? And they're like, oh, yeah, that happens all the time, those Dave Ramsey people. We'll send it. We'll send you one in the morning. They'll fix you right up, man. Sarah in Austin, Texas. What's up in your world?

[Caller]

Hi, Dave. How are you?

[Dave Ramsey]

Better than I deserve. How can we help?

[Caller]

So, Dave, I get married in three weeks.

[Dave Ramsey]

Congratulations. How old are you?

[Caller]

Austin, Texas, Boston. I'm 27.

[Dave Ramsey]

Awesomeness. Cool. How can we help? How can we help?

[Caller]

My fiance is 30, and after we get married, we are considering buying. I. I mean, building a home. And I'm curious of your opinion about building. Rather than just buying on your first home.

[Dave Ramsey]

I would purchase an existing home.

[Caller]

Yeah. Okay.

[Dave Ramsey]

Because building is a royal pain in the butt and I don't want to put that strain on your relationship in your first year of marriage. I want you to concentrate your energies on other things in the first year of marriage. Rachel, you guys have been built a home and you have bought a home before that. Straight up, right?

[Rachel Cruze]

Yeah. I mean, easier to buy.

[Dave Ramsey]

Building a home is a hassle and it's.

[Rachel Cruze]

But it's fun if you enjoy it. So later, make that your next goal.

[Dave Ramsey]

Just to say maybe number two house was you.

[Rachel Cruze]

Yeah. Yes. So, you know, you could look out and say three to four years. Let's. A dream goal is to build, but there's a lot of decisions. Unless, I mean, my husband is in real estate and does project management. All of it. So he. It was up his ass.

[Guest/Caller]

It was.

[Rachel Cruze]

We were fine. We loved the process. You had an excellent builder, too, and a great builder. Yeah, we had a great. We had a great experience, but that's, I feel like more rare.

[Dave Ramsey]

It's also because they went into it with their eyes wide open and they'd been married a while and they had a basis in the relationship to make the arguments about how the kitchen sink we buy.

[Rachel Cruze]

It's a lot of decisions.

[Dave Ramsey]

Yeah, you're picking out a lot of stuff.

[Rachel Cruze]

And unless it's. I mean, there are a ton of neighborhoods going up of, you know, homes that the floor plans picked out. You may pick out a couple of fixtures custom from the ground up.

[Dave Ramsey]

I still wouldn't do that on your first home. They've been. They're not even married yet. They're getting married next week. Yeah, the first one. I just go buy a house. Go buy a house and and you know, pay for it and, and build later. Building is an extra level of stress.

[Rachel Cruze]

Yes. But if, if it is built and it's just a new house and it's

[Dave Ramsey]

like, it's a brand new house and it's a spec house, it's sitting there.

[Rachel Cruze]

That's what I'm saying. Or maybe you get to pick up the light fixture here or there and it's not, it's not from the ground up. The ground up process is a, that's a mountain.

[Dave Ramsey]

Let's start with dirt and, and a piece of paper called a blueprint. And then let's lay out a budget and lay out a schedule and get the builder and you're going to know,

[Rachel Cruze]

Sarah, how to build the house that you guys would want. You know what I mean? Like you haven't lived together and, and created a family.

[Dave Ramsey]

And so it takes, we always laugh and say it takes a year of being married to know how close to your mother in law to buy. You got to get to know each other. You work your butt off for your money, but your money's never going to return the favor if all you do is hope for the best. If you're ready to learn how to make your money work for you, check out the Smartvestor program. Smartvestor can help you find advisors who specialize in retirement planning, charitable giving, advanced investor investing strategies and more. Whatever your goals, your pro will take the time to explain your options so you never have to invest in anything you don't understand. Head to ramseysolutions.com smartvestor to get connected. Ramsey Solutions is a paid non client promoter of participating pros. Learn [e-mail] SmartVestor. Buying or selling your home is high stakes. One bad deal could cost you you tens of thousands of dollars. Guy called in the other day and his mother in law had sold her house for 325,000 and the appraisal came in at 379,000. Well, she sold her house. It's over. She made a huge mistake because she hired a realtor, didn't know what they were doing, real estate agent, didn't know what they were doing. And so it's you don't want to make a big mistake in real estate business. You don't want to make a small mistake. It's tens of thousands. So that's why Ramsey trusted connects you with v vetted real estate agents who we have checked out and they are pros and they have the experience to guide you step by step to make smart decisions. And don't sell your $380,000 house for 325. Connecting is easy. Just compare agent profiles. Interview your top choices. Pick the right one for you. Find a local Ramsey trusted real estate agent that we have vetted who has your best interest at home heart for free@ramsey solutions.com agent or click the link in the description if you're listening on YouTube or podcast folks. If your private student loans are in default, that's when you've fallen so far behind the loan is considered unpaid. Why Refi might be able to help why Refi helps borrowers in tough situations Explore low fixed rate refinancing options that fit your budget. Go to y refi.com reference Ramsey that's the letter y r e f y.com Ramsey might not be in all states

[Rachel Cruze]

Today's question comes from Lisa In Maryland, I have been getting getting paid once a month for 10 years, but my employer just changed their process and now getting paid every two weeks even though I am getting the same yearly salary, it's divided into 26 paychecks throughout the year instead of 12. How should this impact the logistics of the budgeting process? It's a good question, Lisa. Well, you just need to make sure that when all your bills hit that you have money in your account for it. Where you used to have a lump sum that you could probably pull out throughout the whole month. Now you just have to plan and make sure that there's enough in there that's going to hit between the 1st and the 15th before that next paycheck. But if you're beyond baby step, I mean I would even say Beyond Baby Step 2 or 3, you need at least least a good amount in your checking that could cover one of those paychecks. Just for a buffer is always a great safety net from just a logistics standpoint. But yeah, it would just be maybe moving some bills around. So not everything hits right.

[Dave Ramsey]

Every dollar app has the paycheck planning that Would you just lay it out which.

[Rachel Cruze]

That's right.

[Guest/Caller]

Yeah.

[Dave Ramsey]

Which item comes out of which check.

[Rachel Cruze]

Exactly. Yeah, that's true. So if you have every dollar plug it into the paycheck planning and then it'll flag you.

[Dave Ramsey]

Yeah. It'll say you're run out of your Internet bill in the second check and pay your electric bill in the first check and it'll show you you figure out which one comes out of which check before the month begins.

[Rachel Cruze]

That's right.

[Dave Ramsey]

The other thing is with every dollar you're spending that month's income on that month's bills and goals before the month begins. So two times a year, you're going to have a larger month because you have two times a year, we call them magic months, that you get an extra check. You're going to get three checks in a month.

[Guest/Caller]

Yep.

[Dave Ramsey]

Two times a year when you get paid every two weeks. And so.

[Rachel Cruze]

And that always conf. It confuses people sometimes because if you do get paid at least twice a month, I guess in her case, it would be every two weeks.

[Dave Ramsey]

Every two weeks.

[Rachel Cruze]

But when that paycheck hits, for some people, the paycheck hits at the. Like a. Like an October 30th first. And technically, that's quote, unquote, October money. But you're going to use that as if it is November 1st.

[Dave Ramsey]

Exactly.

[Rachel Cruze]

And you use that through November. Some people do that.

[Dave Ramsey]

November, that's the pay. The pay from October is going to be November 1st. And that's what we have to work with. And so you got that two weeks, you got the next two weeks. And then twice a month, you're going to get another one at the tail end.

[Rachel Cruze]

That's right.

[Dave Ramsey]

Or twice a year. Twice a year. And so you just. For those two months, you're going to budget that money. You're going to spend all that money on paper both times, and it's a little less on the 10 months, and the other two months, it's a little more than it used to be. And so you're going to make a little less progress on some of your goals is all that is. And then a little more progress. Suddenly some big chunk like getting a little bonus check is kind of what it is. But you still are going to spend that money that month, whatever the month of has, and it's just going to change that around a little bit. You need to be doing a unique budget every single month anyway. These budgets are not templates. This month's income on this month's needs and goals.

[Rachel Cruze]

Yeah. And the truth is, 75% will probably stay very similar.

[Dave Ramsey]

Yeah, but it's not the same.

[Rachel Cruze]

No, it's not.

[Dave Ramsey]

Your income might change a little in this case, twice a year.

[Rachel Cruze]

And life is different month and then some.

[Dave Ramsey]

You know, you get that card paid off, so you have a new goal. You're moving up the baby steps. You're moving up the debt snowball. Or down the debt snowball. Jenna is in Des Moines. Hi, Jenna. How are you?

[Caller]

I'm great, thank you. How are you?

[Dave Ramsey]

Better than I deserve. What's up?

[Caller]

Well, I am approaching a 62 year old mark. Dave.

And I've made some foolish decisions and

I have zero retirement. And I also lost my hearing in 2013 and did not know that my health insurance would pay for a cochlear implant until.

Until 2022. So I went through a major income shift and I started cleaning houses.

And I have a successful quality cleaning business.

[Dave Ramsey]

Good.

[Caller]

I'm the only employee.

Thank you.

I'm proud of that. However, my mom passed a few years

ago and I'm sitting on $150,000 in the bank. And I don't know if I should get a second job. I mean, I'm working a substantial amount.

Five days a week. Nine.

[Dave Ramsey]

And what are you making?

[Caller]

Between 30 and 40 after my expenses.

[Dave Ramsey]

How much. How much debt have you got?

[Caller]

Zero.

[Dave Ramsey]

Oh, good. What about the house you live in?

[Caller]

My rent.

[Dave Ramsey]

Okay, cool, cool. All right. Well, I would sit you. I want you to sit down with a professional and begin to learn how to Invest. Invest the 150 so that it will grow while you're still working instead of it sitting in the bank. When you are putting money with the bank, you are loaning them your money at 3% on a high yield savings.

[Guest/Caller]

Okay?

[Dave Ramsey]

When you buy an investment, you're an owner, not a loaner, and it grows.

[Caller]

Who should I contact for that?

[Dave Ramsey]

Just jump on ramseysolutions.com and click on Smart Voice Investor and it'll drop down on the number of different people in your particular area there in Des Moines that we have checked out and that we trust. And the big thing they're gonna have that I really, really, really want for you is I want you to go slow and I want you to learn. Do not invest money because I said to or someone else said to do it. When you understand it, it. And the good news is it's not super complicated. Everyone can understand it.

[Caller]

Do I want a financial fiduciary?

[Dave Ramsey]

I guess that is who I'm talking about. That's what I'm talking about. Financial advisor.

[Guest/Caller]

Okay?

[Dave Ramsey]

And they're going to. They're going to walk, they're going to help you. But the way they help you is they teach you. And then they say, okay, here's an example of a mutual fund like I'm talking about. And it's one that I might do. And you look at it now. I. Now you understand it. But people put money sometimes in investments and they can't even spell investment. Don't do that. You need to understand it because otherwise it'll rob your peace. You're not afraid of that. Money sitting in the bank, if you put it into an investment that you don't understand, your anxiety level is going to go up.

[Caller]

Right, Right.

[Dave Ramsey]

Don't do that.

[Caller]

Do I need to do it incrementally?

[Dave Ramsey]

If that helps you have peace and knowledge and understanding, yes. If you have full understanding and it's not going to steal your piece to put it all in at once and put it all in at once.

[Rachel Cruze]

But I would say too easy math, Jenna, if you think about it, every seven years that money should double if

[Dave Ramsey]

it's in a mutual fund making 10% or more.

[Rachel Cruze]

So that 150 in seven years, if you don't touch it turns into 300,000. Right. So as you continue down now, you'll probably be living off some of this stuff, some of that money eventually. But that's the point is you want to take as much advantage as you can with it just sitting there. And so the compound interest, it will happen.

[Dave Ramsey]

Yeah, yeah. Your money will grow. And so if you learn about this and you get comfortable and you're invested in a mutual fund that makes 10% or more in seven years at 69, your 150 will be 300. In seven more years at 76, your 300 will be 70 600. And if you have earned enough through there and or living on Social Security, one of the two, without touching this nest egg and let it alone and let it grow, that's what's going to happen to it. And that's good news.

[Caller]

Sam,

[Dave Ramsey]

You spend hours researching before making a major purchase like a home or car. But it's also a good idea to put in the work searching for the right insurance coverage to protect your biggest assets. I recommend using Ramsey trusted pros. Whether you're looking for car, home or any other type of insurance. Ramsey trusted providers have been coached and vetted to certain you like. We would find what you [e-mail] insurance. In the lobby of Ramsey Solutions, we have the famous debt free stage. On the debt free stage is Keith and Candace. They're now famous because they're debt free. Congratulations, you guys. Where do y' all live?

[Guest/Caller]

Abbeville, South Carolina.

[Dave Ramsey]

Very fun. What's that?

[Guest/Caller]

Near Greenville's about an hour south.

[Dave Ramsey]

Oh yeah. Love it, Love that area. It's beautiful.

[Rachel Cruze]

And I see a little button on your, on your dress. It's your anniversary, is that right? Yes, yes. Today is how many years?

[Guest/Caller]

32.

[Dave Ramsey]

32 years.

[Caller]

Wow.

[Dave Ramsey]

Way to go. Look at you guys. And how much debt have you.

[Guest/Caller]

You paid off $201,555.

[Dave Ramsey]

Cool. And how long did that take?

[Guest/Caller]

About five years.

[Dave Ramsey]

Okay. And your range of income during that five years?

[Guest/Caller]

140. Pretty much the whole time.

[Dave Ramsey]

Okay. What do y' all do for a living?

[Guest/Caller]

I'm a funeral director.

[Dave Ramsey]

And I'm a nurse educator. Ah, very cool. Good for y'. All. Well done. So if it took five years and it's 200,000 and it's in small town, South Carolina. Is that your house? No, no, no. What was the gun?

[Guest/Caller]

It was, let's see, Cars, credit cards, camper, Sea doo.

[Dave Ramsey]

Student loan.

[Guest/Caller]

Student loan.

[Dave Ramsey]

Y' all were normal. You had a little bit of everything.

[Guest/Caller]

We were, yes.

[Dave Ramsey]

And normal sucks. And you said, I don't want to suck anymore. I'm getting out of this.

[Guest/Caller]

That's right.

[Dave Ramsey]

Look at y', all, man. Way to go. I'm so proud of you, man. You've been scratching and clawing for a while at this.

[Guest/Caller]

A lot of baloney.

[Rachel Cruze]

Lot of eating at home.

[Dave Ramsey]

I like it.

[Caller]

I like the expensive meat.

[Guest/Caller]

Ham.

[Dave Ramsey]

Very good. Very good. Okay. Five years ago, something flipped. Some switch flipped. Something happened because y' all been married for 32, so at that time, you would have been married for 27.

[Guest/Caller]

Right?

[Dave Ramsey]

So you've been doing it a long time, one way. And you went, we're getting out. We're changing. What happened?

[Guest/Caller]

Trying to make a. Trying to figure out when to make a truck payment, what I was going to put off to make the truck payment or, you know, if I was going to put the truck payment off. And I said, I'm tired of this. It's almost 600 bucks a month, you know, And. And I just put the information, and I just got curious about Carvana, and I put the information in, got the offer. Two days later, the was gone.

[Dave Ramsey]

Whoa.

[Rachel Cruze]

Sold it quick.

[Guest/Caller]

Got more than what I paid for it.

[Dave Ramsey]

You.

[Guest/Caller]

You were.

[Dave Ramsey]

You. You said enough already, okay? And then. And then you. How did you find Ramsey? How'd you get it? With us.

[Guest/Caller]

We failed Financial Peace University twice.

[Rachel Cruze]

We had to repeat your course.

[Dave Ramsey]

A beauty school dropout. That's right. Yes.

[Guest/Caller]

I told her the first time that we took it. I said, this is crazy. This will never work. Well, we might as well not even try, you know? And so we didn't. And we stayed broke for 27 years.

[Dave Ramsey]

Oh, gosh. So you took it a long time ago. Yes.

[Guest/Caller]

Back in the O's.

[Dave Ramsey]

Oh, wow.

[Rachel Cruze]

Back in the O's.

[Guest/Caller]

Wow.

[Dave Ramsey]

I'm sorry. Wow.

[Guest/Caller]

Yeah.

[Dave Ramsey]

I wish I'd have been bit more persuasive. Well, I mean, We're a little bit hard headed, a little stubborn. But you look up and you say, I'm. Trucks gone. Maybe rams. He's not lost his mind. We're doing this.

[Guest/Caller]

We're doing it. We did it.

[Dave Ramsey]

Then you plugged back, you got your old. Got your old tapes back out, your old CD's back out.

[Guest/Caller]

Dusted off the envelopes.

[Dave Ramsey]

Did you really? Yes, yes, we did.

[Guest/Caller]

Yeah, we have all the CDs from

[Dave Ramsey]

the original back in the day. Wow.

[Rachel Cruze]

How funny.

[Dave Ramsey]

I had hair, man. This is a long time ago.

[Guest/Caller]

So did I.

[Rachel Cruze]

Now I have a hat. Now I have a hat.

[Dave Ramsey]

So good, you guys.

[Rachel Cruze]

Okay, so were you both kind of at the same point to jump in and do this?

[Guest/Caller]

Sick and tired of being sick and tired, both of you.

[Rachel Cruze]

You kind of hit the wall at the same time and you're like, all right, this is worth it. We're going to just sacrifice and eat baloney and get out of this debt.

[Guest/Caller]

His.

[Caller]

His mom passed in 2010, and then his.

[Dave Ramsey]

His dad has always been almost squeaky with money. And my parents are the opposite of that. Like they say, we were like, we need to find somewhere in the middle where you can have joy which your money, but tell it where to go. You know where it's going. So I don't have to figure out how to hide the $600 truck payment under a P just so I can hurt a shell so I look good

[Guest/Caller]

at a red light.

[Caller]

Right. We were.

[Dave Ramsey]

We had one of the houses we lived in. We lived two summers with window units in it because we couldn't afford to

[Rachel Cruze]

replace the H vac during this. Yes, during one of the times when

[Dave Ramsey]

we were failing, I'm sure.

[Guest/Caller]

Yeah.

[Caller]

Yeah.

[Dave Ramsey]

I mean, that's back before you did the stuff.

[Guest/Caller]

Before we did this, you know.

[Dave Ramsey]

Okay, so then you get on a budget and you start selling the truck. And you said, what else did you sell?

[Guest/Caller]

The camper.

[Dave Ramsey]

The camper went. The sea doo went. Wow, you on a selling spree.

[Guest/Caller]

Yes. And we sold. There was nothing left. I mean, everything else we just took to the dump because we couldn't sell it.

[Dave Ramsey]

And so you just cleaned house. And how much did that reduce the debt?

[Guest/Caller]

Well, the truck went 35,000.

[Caller]

Boom.

[Guest/Caller]

The camper, I think, think it was another 10 or so. And then the. The sea do was actually paid for. It had paid it off already, but I sold it anyway. So that was another 5,000 just to throw at it. Right.

[Rachel Cruze]

Because 201 of consumer debt. That's a big. Yeah, y' all did it. That's A lot.

[Dave Ramsey]

You. You threw a bunch.

[Guest/Caller]

That's a big amount. 76,000 was a student loan.

[Dave Ramsey]

Okay.

[Caller]

Ah.

[Dave Ramsey]

Okay.

[Rachel Cruze]

Y. Yep.

[Dave Ramsey]

The educator. Yeah. All right. Wow. Wow. Well, congratulations, y'.

[Caller]

All.

[Rachel Cruze]

Well done, you guys. How does it feel?

[Guest/Caller]

Feels great. I mean, we're here. Yeah.

[Rachel Cruze]

On your anniversary.

[Guest/Caller]

On our anniversary.

[Rachel Cruze]

Chose to come here to this romantic spot.

[Guest/Caller]

I chose to get on an airplane for the first time in my life.

[Dave Ramsey]

No way.

[Guest/Caller]

Yeah. And I was a little anxious because when I got here, I didn't have a car. I couldn't just, you know. So we're ride sharing and that kind of thing.

[Rachel Cruze]

But good for you guys.

[Dave Ramsey]

All kinds of.

[Rachel Cruze]

No, you're on a trip, debt free. On a trip. Yeah.

[Guest/Caller]

Love it. Love it.

[Dave Ramsey]

It felt so good to see that student loan where it says zero.

[Guest/Caller]

That was it. That was April 28th.

[Dave Ramsey]

Okay, so tell us, tell the audience two things. One, tell them what we always ask, which is what's the secret to paying off $200,000 worth of debt in, you know, 50 something months?

[Guest/Caller]

Paying it off. Actually paying it.

[Dave Ramsey]

Do it. Yeah.

[Guest/Caller]

Just gotta.

[Dave Ramsey]

It's not a theory.

[Guest/Caller]

You gotta make the decision. Okay. I can. I can keep having fun and keep being broke and living paycheck to paycheck, or I can just not worry about when the paycheck comes because there's already money there. That's the way we are now and we love it.

[Dave Ramsey]

How connected were you all through this time? I mean, were you a lot of communication or not?

[Guest/Caller]

Oh, yeah, yeah.

[Caller]

Yes.

[Dave Ramsey]

Good.

[Guest/Caller]

I hate.

[Dave Ramsey]

I hate the budget meetings, but I

[Caller]

know it has to be done.

[Guest/Caller]

I am the nerd.

[Dave Ramsey]

Ah, look at that.

[Caller]

So you can guess what I am then.

[Rachel Cruze]

Yeah, girl. Free spirit. I like you, Kansas. I like you.

[Dave Ramsey]

But.

[Rachel Cruze]

But from a relationship standpoint, does it feel different not having the stress of money in a marriage? Like, it's just. There's a freedom there.

[Caller]

Yes.

[Guest/Caller]

The only money arguments we have or where we're going to eat dinner.

[Rachel Cruze]

Yeah, yeah. Where we're going to actually go to the restaurant. Yeah, yeah, yeah.

[Guest/Caller]

Now that we can go to one.

[Dave Ramsey]

Now that you can go. Yeah.

[Guest/Caller]

Good for you.

[Dave Ramsey]

I actually had a conversation with my boss at the school, the dean. She said in a meeting the other day, said, I'm probably going to die

[Caller]

with my student loans. I said, well, if I can have

[Dave Ramsey]

this, you can too.

[Caller]

I could tell.

[Dave Ramsey]

Teach you how. And she said, what's that like?

[Rachel Cruze]

I said, freedom.

[Dave Ramsey]

I like it.

[Rachel Cruze]

It's great.

[Dave Ramsey]

So the next question I got then is you took it years ago ago and we laughed and said you flunked it, but basically what happened was you didn't believe it would work enough to go do it. That means we failed you. And I apologize for that because we didn't sell it to you hard enough. I think it was laziness, honestly. That's okay. But if you got somebody that's been listening to the show, maybe they didn't go to financial peace, but maybe they didn't listen to the show and they're kind of going to that same conclusion. Yeah, but that won't work for me.

[Guest/Caller]

That's it.

[Dave Ramsey]

What advice do you have for that person that's listening? That was you many years years ago.

[Guest/Caller]

Just, you're, you're crazy for the thoughts. It's a crazy way of thinking. It's, it's, it does work and we're living proof that it does work. And we're not, we're not, you know, we're on that. We're not on any Forbes list or anything. We just have a normal, everyday, average income and we were able to pay off a lot of debt just by working hard at it and not worrying about, well, we're going on this cruise or we're going on this vacation. We're not, we're not going with you

[Rachel Cruze]

paying off debt.

[Guest/Caller]

We're gonna pay off some stuff.

[Dave Ramsey]

And now you can.

[Guest/Caller]

And now we can.

[Dave Ramsey]

And now that you flew to Nashville for the first time, by the way, I'm amazingly honored that your first airline flight is to come do this. Well, I take that as a great, I take that as a badge of honor. That's very cool. That's a very big honor. You pay us with that. Thank you.

[Guest/Caller]

You're welcome.

[Dave Ramsey]

You guys are incredible. Keith and candace from South Carolina. 202,000 paid off in five years, making 140. Count it down. Let's hear a debt free scream.

[Guest/Caller]

Three, two, one.

[Rachel Cruze]

We're debt free.

[Caller]

Yes. Yeah.

[Dave Ramsey]

That's how you do it.

[Caller]

Woohoo. Hey, what's up guys? It's Jade Warshaw. Listen, summer spending adds up so fast. Between vacations and road trips and camp fees and events and all the extra gas and grocery runs, money can get tight before you know it.

[Dave Ramsey]

To really get your money under control

[Caller]

and keep it that way, you're gonna need a plan. And that's what you'll get with the EveryDollar budget app. It helps you track your spending, free up cash to put toward debt and savings. And it's the simplest way to make a plan for your money before the month begins. So no more wondering where your money's going.

[Rachel Cruze]

You're telling it where to go. Download every dollar in the App Store

[Caller]

or Google Play and start for free today.

[Dave Ramsey]

Our scripture today, Galatians 6, 9. Let us not grow weary of doing good, for in due season we will reap if we do not give up. T Harv Eker said, it's simple arithmetic. Your income can grow only to the extent that you do. True, true, true. Joe is with us in Phoenix. Hi, Joe, how are you?

[Caller]

Hi, David and Rachel. Honored to talk to you today.

[Dave Ramsey]

You too. How can we help?

[Caller]

Thank you. So I'm a. I'm the trustee for my, my parents estate. My father passed earlier this year and my mother the year before.

[Dave Ramsey]

I'm sorry.

[Caller]

But thank you for that. As a trustee, though, you know, you, you probably know what that job entails, but I'm consolidating assets and, and I'm almost done with everything. And I was wondering if you could tell me the best way to distribute this inheritance that the beneficiaries are going to receive. I'm one of them.

[Dave Ramsey]

I take it is all actually in a trust?

[Caller]

Yes.

[Dave Ramsey]

Okay. Because you are using the proper terminology for a trust, which is you're the trustee and the heirs are the beneficiaries. And that's the proper words. What's the size of the estate state?

[Caller]

By the time everything is consolidated and liquidated and consolidated, it'll be a little over 300,000.

[Dave Ramsey]

Okay. There will be no estate taxes on it on the federal level. Federal. No federal estate taxes. Is there anything that was in a 401k that's traditional or a traditional IRA?

[Caller]

No.

Okay.

[Dave Ramsey]

Because that would be tax. Taxable income tax when it comes out in traditional. But any other investments, what was the money in?

[Caller]

They had a. They have just a standard investment type of portfolio. It wasn't a lot. And then they had a couple of bank accounts and the house. And that's really.

[Dave Ramsey]

Okay. There'll be no tax, wasn't it? There'll be no tax. There's no, no federal estate tax and no federal income tax on anything you described. That's a general statement. And if you want to check me out, that wouldn't be a bad idea to sit down with one of our tax elps and comb through the details to be 100% sure. But in general, the type of account you're laying out there should not have any taxes. If there's an inherited IRA that is traditional, it's going to have income tax on the entire amount because it's never been paid income tax because it's stuck in an IRA or in a 400, 401. If there was. If the estate was over 20 million, you might have some federal estate taxes, depending on how it was laid out. But we don't have either one of those concerns. Any capital asset you sell, like stocks or bonds or stuff in that investment account or that home is considered to be sold at market value if it's done within six months of death or so. And the IRS won't question, that's pretty much what it's worth. It sold for what it's worth. And the basis in something like that is market value at the time of death. So there's no tax, there's no gain, there's no taxable gain. Now if you took that house and held it and it's worth $200,000 and you held it 10 years and it's worth 200,000 at the time of death and you sold it 10 years later for 500,000, you'd have taxes on that 300 gain since death. But because you're selling it within six months of death, it's considered sold at market value. So zero gain.

[Caller]

Okay.

[Dave Ramsey]

You see what I'm saying?

[Caller]

I'm very educational. Thank you. Yeah, I do.

[Dave Ramsey]

And so you're perfectly clean. And the stuff you're describing is very easy, very clean. And thank you for loving your mom and dad well by honoring their wishes and executing this in a businesslike and thoughtful manner. And wow, that's very, very big of you and very good of them, they picked the right person to be the trustee. And again, to be 100% sure, if you want to spend 200 bucks and sit down and have a tax professional, not a guy on the radio, go through your stuff and be sure I'm right, that's not a bad idea because I'm not that great at taxes. I do know what I'm talking about on what we just talked about, obviously. But there might be something down inside this that I missed because It's a simple three minute conversation. So just go to ramseysolutions.com and click on tax preparers for ELPs. Endorse local providers. And there are people in each market. We definitely got them in Phoenix that in each major city that do those things that we have vetted and they're people we believe in and we endorse and they're local and they provide help. Endorsed local providers. That's where that comes from. Garrett's in Los Angeles. Hi, Garrett, how are you?

[Caller]

Good.

How are you, sir?

[Dave Ramsey]

Better than I deserve. What's up?

[Caller]

So, hi, Ms. Cruz. Thank you for taking my call. So, the short version of my question is the following. And I know I'm blessed to be in the situation, but in a nutshell, I'm trying to figure out with our current amount of money saved and our current income, what is the right amount to continue, continue to save, which we will, versus how much we can safely

[Rachel Cruze]

spend and enjoy travel.

[Caller]

And. Yeah, and, and look, you know, look, let's say my buying my wife beautiful purses and nice things like that. Yeah. How do I come up with those numbers? And I'm happy to tell you, you know, tell me where you. Yeah, for sure.

[Rachel Cruze]

Well, how much, how much do you guys make a year?

[Caller]

So the average over the last three years is about around 800 to 900,000.

[Rachel Cruze]

Nice. What do you do?

[Caller]

So I own a small company. My wife's a doctor.

[Rachel Cruze]

Okay, good for you guys.

[Dave Ramsey]

You have any debt?

[Caller]

So our house is paid off, our cars are paid off, we have no consumer debt, nothing like that. We do own a rental property, a home that we share with some friends. It's fully rented, long term rental, it's cash flow positive.

[Dave Ramsey]

What do you owe on it?

[Caller]

We owe 550 between the two of us.

[Dave Ramsey]

Okay, gotcha. All right, and how much do you have in investments right now?

[Caller]

And we all. I also own an industrial property that my business also uses, and that one we also can't prepay because it was an SBA loan. So there's a, there's a prepayment penalty and that I share with a business partner, and that's a million and a half, and we owe about a million on it.

[Dave Ramsey]

Okay, and how much do you have in investments?

[Caller]

In liquid, we have about 3.2, 3.3 million.

[Dave Ramsey]

Okay, I want you. First thing before we go back to your question, I'm going to stop. Where? Because I got stuck on this. I don't run into any SBA loans that actually have prepayment penalties on them. So I think you've gotten some kind of tangled information. Either this is not an SB SBA loan, or it is and it's some kind of other loan, or it's an SBA loan and someone misunderstood. I don't think there's a prepayment penalty on an SBA loan.

[Caller]

So it's a 504 and I double and triple check Mr. Ran.

[Dave Ramsey]

Okay, when does the prepayment penalty run out?

[Caller]

10 years. And then the.

[Dave Ramsey]

I would consider how much the prepayment Penalty is. And look at it very carefully, I might pay it off anyway.

[Caller]

I don't know.

[Dave Ramsey]

I don't want to get into that on this call because you ask a different question. So you make a gob of money. How much do we save and how much do we enjoy?

[Rachel Cruze]

Yeah, well, I think the balance of giving, saving and spending has to be there. So I would be maxing out all that you can investment wise with retirement. So you know, the backdoor Roth, if you. I don't. I guess you own your, you own your business. But 401k, all of that I would do. And then you're going to be surpassed that with that 15%. So I would for sure be hitting that 15% in retirement. And then I would have extra goals of we make this amount what feels reasonable to set aside for these other goals that we have long term in the next two, three, four, five years. Have a goal out there, be putting money aside for those goals. And then beyond that, lifestyle wise.

[Dave Ramsey]

I mean, enjoy some of it.

[Rachel Cruze]

Yeah, for sure.

[Dave Ramsey]

I would set a percent, I'd say a percentage of my income that the two of you agree to that we are going to spend a. On excess lifestyle, wonderful travel, wonderful cars, wonderful purses, wonderful whatevers. Okay. And then beyond that amount, we're going to invest and be generous because it's really the only three things you can do. You can invest, you can be generous and you can enjoy it. And so set a percentage of your income that you're going to do that with. So if you put, if you said I'm going to enjoy 20%, that's $180,000 a year, you're still going to be unbelievably wealthy.

[Rachel Cruze]

Yes. Or if you want to join 30%,

[Dave Ramsey]

you'll be driving anything you want to drive, traveling anywhere you want to travel, and carrying any purse you want to carry. But it would keep you from accidentally being one of those morons that spends 900,000.

[Rachel Cruze]

Yeah, I was going to say, but be intentional about it because being sloppy is that that starts to feel gross spiritually. I feel like in the financial space.

[Dave Ramsey]

We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace and that's to walk daily with the Prince of Peace Christ Jesus.