Caller (3:06)

Okay.

Caller (3:06)

So, you know, while paying off my

Caller (3:08)

student loans, it's maybe dumb to say,

Caller (3:11)

but I kind of just wanted to

Caller (3:13)

save some on the side.

Caller (3:14)

So my wife and I, we've been

Caller (3:15)

putting every month or so, some into

Caller (3:18)

our high yield savings. And I do have around, I would

Caller (3:21)

say, 55,000 in high yield savings. Good. And I just don't know, should I

Caller (3:26)

dump that into my pseudo loans or

Caller (3:27)

just keep it as is?

Jade Warshaw (3:29)

Yeah, I would. So here we teach a series of baby steps. Are you familiar with them at all?

Caller (3:35)

Yeah, I am.

Jade Warshaw (3:36)

So then you know that baby step one for us is a starter emergency fund. And I'm going to blow your mind and probably some people's minds who are listening right now when I tell you that that starter emergency fund is only $1,000. So essentially, yeah, you'd be taking 54,000 of the 55 and throwing it at these student loans and knocking them down to 395. But doesn't that feel amazing?

Caller (3:59)

It does, yeah.

George Campbell (4:00)

And if you had an emergency, what would likely happen is you take that next paycheck and apply to the emergency instead of the debt. And so making your kind of money, there's very few emergencies that would exceed your paychecks in a month.

Caller (4:14)

Yeah. Yeah. So, you know, one of the main reasons for my call is because the last. Over the last few months, I've been

Caller (4:19)

putting every single cent into my loans

Caller (4:21)

and stopped funding my high yield savings account. And my wife and I just weren't

Caller (4:26)

sure is that the best idea?

Caller (4:29)

And I kind of just want to hop on this call and just get that little relief, you know?

Jade Warshaw (4:33)

Yes.

Caller (4:34)

Yeah.

George Campbell (4:34)

You're doing the right thing, even though it feels weird because, like, well, I've been told it's good to save. Sure. It's also kind of scary to have half a million dollars owed to a lender. And those payments are coming due whether you like it or not. So the faster you get rid of these loans, the faster we can live Our life. And I'm happy that you're a practicing dentist and you made it through making good money. How much are you actually making?

Caller (4:56)

So I'm only eight months in.

Caller (4:59)

After taxes. I take about 16,000amonth.

George Campbell (5:02)

Great, great, great, great. And right now you're applying, what you told me, about 7,500amonth toward your debt?

Caller (5:09)

Yeah.

Caller (5:09)

The last few months, I've been putting

Caller (5:11)

around 10 to 11,000.

George Campbell (5:12)

Good. Well, let me do some math for you, because I did it just to give you some encouragement. If you did 7,500amonth toward the debt, you're done in five years. If you do 93.75, you're done in four years. But here's the plan. I want you to aim at three years. You can pay off this debt if you put 12,5 towards it every month. That's aggressive, right?

Caller (5:32)

Yeah.

Caller (5:32)

And three years fly by pretty quick.

George Campbell (5:34)

But then you got to learn how to live off four grand a month for your life. So if you can keep living like a broke car college student, even with the kid, with your wife, and go, hey, 36 months of sacrifice so the next 36 years can be filled with freedom. That's what you're really doing.

Caller (5:50)

Yeah.

Jade Warshaw (5:51)

And do you think. You think your income will go up at all in those three years?

Caller (5:55)

Yeah.

Caller (5:56)

So, I mean, I'm projecting my income in the next couple years to go

Caller (6:01)

up to at least, you know, 20, 30% more.

George Campbell (6:04)

Amazing.

Jade Warshaw (6:05)

There you go.

George Campbell (6:05)

So with every increase you get in income, don't go, increase your lifestyle instead, increase your debt payments.

Caller (6:12)

Yeah.

George Campbell (6:12)

That way it's done in less than 36 months because you have too many goals to be just. Just scraping by, making minimum payments. You want to own a house, you want to own a practice, and the best path to that is to clear the decks, get rid of the debt, rebuild the emergency fund, and now you're able to cash flow. Think about now you got 16 or 20 grand free to do whatever you want with to stack up for a down payment or for a practice. It's a different ball game.

Jade Warshaw (6:38)

And I just want to. I want to add to that what George is saying, because there you can walk away from this conversation with two points of view. One is what we're saying, which is, hey, the quicker you get it done, the quicker you can get about the business of, yeah, saving up for a down payment, saving up for the practice, all those fun things. Right. Or you can walk away from this conversation and go, oh, two, two to three years, that feels too long. That doesn't sound fun? I'm not going to do it. I'd rather go ahead and, you know, start on the house and stack up more debt there. And I'd rather think about this practice and st up more debt there. Right. So this really is going to point to what mentality do you want to have in life? Do you want to be a person who can short term sacrifice for a while for a long term gain? Right. Can you have the foresight to say if I just really lock in and I think you have that foresight. You're a dentist, for crying out loud. Right. So lock into that same mindset that allowed you to accomplish that degree and allowed you to go on that path where you said just for a short time, it's really going to suck. But if I do this now, the world becomes my oyster, right?

Caller (7:39)

Yeah.

George Campbell (7:39)

And so the biggest blocker for you, Omar, is not going to be you and your wife. It's going to be your friends, your family, your peers going, dude, Omar, what are you doing, man? You should have a nice house by now. You should be driving a nicer car.

Jade Warshaw (7:51)

Yeah.

George Campbell (7:51)

You should have your own practice. And you're going to be going, nope, I am laser focused on this debt right now. But the truth is, most dentist dentists won't take the advice that we're giving you right now. And also most dentists are broken. They have a huge house with a huge payment. They have luxury cars with a huge payment. They have practices with a million dollar loan on them while they're still trying to pay on their student debt.

Caller (8:12)

That's what a lot of people, my colleagues, have been telling me. Just pay the minimum, open up your practice and just worry about it later. Pay the lump sum down the road.

George Campbell (8:20)

Oh, the old down the road trick. That's right. When life gets so much easier, we have less responsibility and chaos. Dude, do it now. Your life will never be as simple as it is now. And I promise you, if you hate it on the other side when you're debt free, owning a practice free and with a house payment you can actually afford. If you hate it, call us back and you can yell at us. I give you permission. Let's talk about something nobody wants to think about until it wrecks their budget. Medical debt. Medical debt is one of the biggest financial landmines in America today. And that's why Health Trust Financial is the only health insurance provider Ramsey recommends you guys. A lot of people have medical debt even with health insurance, because you can pick the wrong plan, pay big monthly premiums and still get slammed with huge out of pocket costs later. And if you're self employed or you run a small business, you, you're paying 100% of that bill. But Health Trust Financial shops multiple top rated carriers with no extra costs or pressure to help you get the right plan while finding you big savings. And they don't just look at the cheapest one. They help you understand deductibles, networks out of pocket costs so you don't get surprised later. And most people who work with Health Trust Financial save up to 50% on their health insurance costs. That's real margin you can put towards working the baby steps instead of medical bills. So don't let one hospital visit sabotage your financial plan. Go to healthtrustfinancial.com and protect your budget. That's healthtrust financial.com. Megan is in San Antonio. Up next. Megan, welcome to the Ramsey Show.

Caller (10:23)

Thank you so much.

George Campbell (10:25)

How can we help today?

Caller (10:27)

So I'm a single mom with three young kids. I've been divorced for about six years and after the divorce my mom moved in with us and so I support her but she helps with the kids. I've worked very hard to get to Baby Step 4 Since the divorce, but now I feel stuck. My take home after taxes is about 6,200amonth and I recently put my house on the market just because we live in a very tight space. It's three bedrooms too bath for the five of us. I'm sharing a bathroom with my three kids. So my question is, would it be smarter to deal with the living space that we have currently to have sooner financial freedom or should I make the sacrifice to get a bigger space so my kids have more room while they're growing up?

Caller (11:15)

Wow.

George Campbell (11:16)

Well, first of all, you have done an incredible job. I mean, coming out of one of the hardest seasons of your life, you have just scratched and clawed and taken care of those kids and gotten out of debt and taken care of your mom. You are, you're a hero. You're a warrior.

Caller (11:29)

Thank you.

George Campbell (11:30)

So just know that the path looks different for you. It's not as easy as it is for some people with two incomes and nobody to take care of. And so it's going to look different. So let's talk through this decision. You bring it home, 6200. What is your current mortgage payment?

Caller (11:45)

It's 1800amonth.

George Campbell (11:47)

Okay.

Caller (11:47)

Not including insurance. Oh.

Jade Warshaw (11:50)

What is it with insurance?

Caller (11:53)

It's another 150 for insurance.

George Campbell (11:55)

Okay. So about 1950 all in for principal, interest, taxes, insurance.

Caller (12:02)

Correct.

George Campbell (12:02)

Okay. And this house that you would get, what is that going to cost you? Is it equivalent? Is it going to be a lot more?

Caller (12:10)

As far as the mortgage, it would be more probably. If I were to get a 15 year mortgage, it would probably be 23 at least.

Jade Warshaw (12:21)

Oh boy.

George Campbell (12:22)

Okay. And is there opportunity for you to make more at work? What does this sort of path for growth look like?

Caller (12:31)

I was just recently promoted, so I don't see any other promotions happening anytime soon. I'm a nurse, so I do pick up extra shifts on the weekend, but it's hard to balance that with also wanting to spend time with the kids too.

Jade Warshaw (12:46)

Yeah, I wonder. So you said you have this deal with your mom. She's living there. In exchange for that she helps with the kids. Is there, is she unwell? Is there anything that precludes her from having her own space at this point?

Caller (13:02)

It's just my, my schedule is very sporadic, so I can get called in in the middle of the night. And so that way if she's there and I need to leave to go to work, she's. The kids will be taken care of.

Jade Warshaw (13:15)

Here's where I'm, here's where I'm trying to solve so that you kind of know my train of thought. You're already over slightly. What we would say is kind of that baseline for where your mortgage wants to fall 25% of your take home. In a perfect world, your mortgage would be like 1550, right. And it's already 1950. I would have a hard time telling you, hey, yeah, go up in mortgage, go up to 2300 because that's going to make you house poor for all intents and purposes. And I would not want that for you. So I, in my opinion, we need to look for solutions that don't cause you to pay more money per month for your living space. And the first thing that I'm looking at is freeing up space. And already. Did you say it's a three two?

Caller (13:56)

Yes.

Jade Warshaw (13:57)

So freeing up some space there. I'm fine with the kids sharing a room. I'm fine with the kids sharing a bathroom. But it feels like with your mom in that space, it's causing difficulty. So in my mind I'm thinking, okay, is there a way that mom can move to. Maybe she's in an apartment that's really close by that if you do have to do something in the middle of the night, it's easy for her to come by. Maybe there's some future planning that we can do to, to, to mitigate some of that that craziness in the night. But do you see what I'm saying? I don't think going up in mortgage payment is going to solve the problem. It's going to create a different problem for you.

Caller (14:32)

I think that's probably true. That's why I'm.

George Campbell (14:36)

And you likely couldn't invest any market. You're probably gonna have to forego investing and go, well, I can't afford the 15% investing. I need that money to afford the mortgage and all the bills. That's the other part that worries me is we put a total halt on your wealth building. And so this might just be a not now. It might be, let's wait a year, let's build up some more equity, let's keep knocking down the mortgage so that we have more to put down on the next house, bringing the mortgage down. Or we go, is there a house that's actually bigger? That's maybe a little further out, but it fits our family and we can keep that payment to 1600 bucks a month. So that's the other option. Is, is there other houses out there? Have you actually looked with a real estate pro to see what the options are?

Caller (15:17)

Yeah, it's just unfortunately everything around here. Those are pretty much the cheapest options

George Campbell (15:23)

to stay near your employer, near schools, all that.

Caller (15:28)

Yeah.

George Campbell (15:28)

Okay. And what is the long term plan with mom? Is she able to afford her own place? Is she able to eventually take care of herself?

Caller (15:36)

I know she 100% could, but I feel like there's an obligation to support her because she retired a couple of years early to move in with us.

George Campbell (15:47)

When you say obligation, is that financial or is that she can't physically take care of herself?

Caller (15:53)

No, no, she can take care of herself. I just feel like the expectation on her part is that I will take care of her since she made a

Jade Warshaw (16:01)

sacrifice to take care of the kids. How old are the three kids?

Caller (16:06)

Five, six and eight.

Jade Warshaw (16:08)

So they're all in school, right? The five year old is in kindergarten.

Caller (16:12)

Yes, but I homeschool them so she helps with that too.

Jade Warshaw (16:17)

Interesting. Yeah, I, I can point to a couple of places. Now this is a values conversation, but I can look at a couple of places where there might be room to move. And again, it's. When I say move, I mean something to shake loose. But it's really up to you on, on how important those things are. Because if you told me, yeah, my kids are in school, um, and grandma looks after them when they come home from school at 3 o' clock or at 3:30, whatever. The time is, then I'd go, okay, well, you know, that makes. It makes. Does that make sense? You wouldn't have to feel so much of an obligation to her, but when you tell me, oh, no, she's. She's basically working a full time job by homeschooling them and taking care of them, I see why you feel such a strong obligation there. And unfortunately, if you continue to choose that. I'm not saying it's wrong, I'm just saying it's. It's your values. If you continue choosing that, then what you're all also choosing is we live in a smaller place where we're cramped, and that's okay. It's hard. Yeah, it's hard to have it all sometimes.

George Campbell (17:19)

But I want to address the. The expectation because it seems like there's some unhealthy entitlement creeping in here. And I get that. She's sounds like a wonderful woman. She's helping take care of your kids. And while she expects you to take care of her, you didn't expect to go through a divorce, decimating your life, crawling out of debt, taking care of three kids on a single income. And so there's also this resetting of expectations of. Mom, in a perfect world, I would love for you to be able to live with us, but unfortunately, right now everything's tight, we don't have anywhere to go, and we need a little bit of our space back. I still would love for you to help in this way, and you get a vote here too.

Jade Warshaw (17:56)

But that's kind. I see what you're saying. Like, I think that you're viewing it as, this is her pay. Like, I can't give her salary for the things that she's doing. So in exchange for that, her pay is she gets to live here and I don't charge her rent. Is.

Guest (Andrew or Megan) (18:11)

Is.

Jade Warshaw (18:11)

Am I looking at that right? So if you say, mom, move out, but still do all these tasks for me, it's kind of like she's working for free.

Caller (18:21)

Yeah.

Jade Warshaw (18:22)

And she can't afford to do that, right?

Caller (18:26)

Yeah. I mean, she has Social Security, but

George Campbell (18:29)

she's just living off of Social Security.

Jade Warshaw (18:30)

Okay, so she can't afford it either.

George Campbell (18:32)

What's her payment every month or what's her income total?

Caller (18:36)

I think she gets. I know she has a lot in investments, but she's worried that if she were to ever get sick or need a retirement home as she got older, that all of that money would be needed for that. Which I understand, makes sense, but Social Security is 2,500amonth. That's all she pays for is her insurance, which is about 300amonth.

George Campbell (18:57)

Okay.

Jade Warshaw (18:57)

I think you guys have a deal here. And it seems like, you know, it's a quid pro quo. You got your part out of it, she gets her part out of it. And I think that there's just some parts of it that are uncomfortable. And I think that's just part of dealing. To George's point, you're. You're a single mom making it with three kids, and there's going to be. I mean, I don't have to tell you, you already know. You're well acquainted with the sacrifice and the struggle here. And I think that this is just part of it for this season.

George Campbell (19:25)

And the other option, Megan, I'm just throwing it out there. I don't love it, but you could get the new house, 2300amonth, and she pays 700 bucks so she can have her own room and space. And that could solve a few problems. Now, it doesn't solve the long term because if she moves out, you're stuck with that payment. But it could in the short term alleviate some of these issues. But it sounds like right now you just got to wait, keep knocking out that mortgage with the equity, and then eventually we can make this move once we are capped.

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George Campbell (21:31)

Big announcement, guys.

Caller (21:33)

May.

George Campbell (21:33)

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Caller (22:07)

Hey, how's it going? How are you?

George Campbell (22:08)

Great. What's going on with you today?

Caller (22:11)

Nothing much. I just have a quick question about. So my wife and I are expecting our first at the end of the year and we're trying to pay down some consumer debts. So we've looked at balance transfer cards. We have one line of credits that is currently bearing interest at 15.4%, which is pretty mild as far as like credit cards go. There's about $12,000 on that card and we're paying it down aggressively. 2,000 bucks a month. We've been hammering it towards that plus our balance transfer cards and whatnot. My question to you guys is, is there an option to like, I've looked at personal loans or debt consolidation loans, but every offer that I get is above that 15.4% that that one line of credit is actively accruing. And so my question is about, is there ways to consolidate lines of credit from pre existing cards, like ones that I've already set up for back in high school. I'm 26 for reference. And the newer balance transfer lines of credit that were set up within the past 24 months, like, is there a way to consolidate the lines of credit? Is there a way to unlock other tools that may be lower than the 15.4 outside of going to friends and family?

Jade Warshaw (23:22)

I mean there possibly would be. But the question I have before I answer that is how quickly do you think you can pay off this?

George Campbell (23:30)

12,000, 10 months.

Jade Warshaw (23:34)

Okay. So we're talking about, we're trying to do the most to save ourselves maybe 140 bucks a month and interest.

Caller (23:43)

Yeah, I think the most recent interest charge that was on that line of credit was like 220 bucks a month.

Jade Warshaw (23:50)

Right. But you're quite frankly, you'll be actively paying it down. So the amount of interest that you're paying is also the actual amount is going down. I think that your energy is better spent in this way, paying off the debt and finding ways to Pour more money on it. I think that's where the energy's better spent. And I say that for this reason. The why behind that is a lot of times when we. There's two things that happen here. What kind of debt is it?

Caller (24:18)

First, it's consumer debt. We got married in May of last year, so a lot of it is wedding. Wedding debt.

Jade Warshaw (24:26)

And is it just on the credit card? It's just on one credit card or multiples?

Caller (24:30)

Yeah. So there's. There's the 12,000 that's bearing interest on the one credit card. We've done two balance transfers to two separate cards. One of them is completely paid off. The other one, I recently just renewed my, what you call it, the offer to get 0% on another balance transfer so that.

George Campbell (24:48)

So what's your total debt right now?

Jade Warshaw (24:49)

Yeah.

Caller (24:51)

17.

Jade Warshaw (24:52)

Okay. So the other reason that I don't love consolidating debt is because the way we teach debt payoff is the debt snowball method. And there is something to be said for having a couple of smaller debts that are separate versus one big debt, because when they're separate, you can focus all of your extra margin on one, get a quick win, and actually feel good about what you've done. So instead of having one massive thing that's 17,000, it's kind of cool if you have it broken up. There's a 12,001, there's a $2,000 one, and there's a $3,000 one. Can you knock out the $2,000 one? And there's actual science, like there's psychology behind that that backs that up. And so for that reason, I. I kind of like keeping them separate. If you were con, if you did consolidate them, George, there's worse things he could do. But I don't think it seems like that's where your energy is.

George Campbell (25:37)

So far, Joseph, everything you've said is a shell game of just moving the debt around, switching outfits for the debt. Let's move the debt in some stretchy pants so we feel a little more comfortable. I'm trying to get rid of the debt instead of move it around. Are you with me? You with me? We lost, Joseph.

Jade Warshaw (25:56)

Okay.

Caller (25:57)

There you are.

George Campbell (25:57)

I was like, come on, man. I was hoping for a big one more time. Are you with me?

Caller (26:02)

Can you. Can you hear me?

Guest (Andrew or Megan) (26:03)

Yeah.

George Campbell (26:03)

Yeah.

Caller (26:03)

Hello?

George Campbell (26:04)

Yeah.

Caller (26:04)

Okay, cool. Yeah, I understand what you said.

George Campbell (26:06)

I can tell you're a smart guy. You got. You know your numbers. I just want you to, like Jade said, focus your energy in the right place, not calculating how much interest you can save, but instead calculating how fast can I get out of debt if I just throw the most at the payment? No more balance transfers, no more consolidation, no more lines of credit, no more Instagram ads. No debt relief, no debt settlement. The guy in the mirror is the solution to the debt. Not an outside force, not another debt. Whack a mole. You feel me?

Jade Warshaw (26:37)

He's there. He feels you.

George Campbell (26:38)

He's there in spirit. Thank you. His phone keeps cutting out. I promise, guys, he is pumped up right now.

Jade Warshaw (26:42)

I'll play the role of Joseph. Yes, George, I feel what you're saying.

George Campbell (26:45)

I could just feel. I was exhausted just listening to him talk about all the balance transfers. He did move all this around. Like, dude, in that time, you could have just knocked it out.

Jade Warshaw (26:53)

You could have been done.

George Campbell (26:54)

I mean, if you're throwing two grand at the debt, you got 17. It's pretty easy math here. Let's just knock it out in, you know what, eight months, nine months? You said 10 months, so. All right, less than a year. It's gone. And we're not going to focus on interest rate. We're going to focus on the margin. We're throwing at that principle. That's the goal here. Thank you for the call. Stephen is in Fort Worth, Texas, up next. Stephen, welcome to the show. How can we help?

Caller (27:18)

Thanks for taking my call. I'll try to keep it quick. So my wife and I are having a baby in June. We've already got, like our Stork Mode. We've got 16,000 in a high yield savings account for that. Since we already have that saved up, we've still been paying on my wife's student loans. We've paid about $75,000 since last June, and we are on track to pay off the last $20,000 by the time the baby is born.

George Campbell (27:40)

Awesome.

Caller (27:42)

However, I just got a job offer that would require me to move to another city. And the house that we bought four years ago was a bit of a fixer upper. And we paused our renovations to do the baby steps properly. So we feel like there's some work that's going to have to be done before we can actually sell it. And we're not sure if we should continue making big payments on the student loan or hit pause on that right now so that we can cash flow anything as long as it would have a good roi. That makes sense, actually increase our equity.

Jade Warshaw (28:16)

I mean, I got to tell you, I think I'd hit pause on both of these things since this baby is on the way.

George Campbell (28:23)

How. How Soon. Is this job stuff happening? Is that for sure?

Caller (28:27)

Like, I have a contingent offer. They're running a background check right now. We still haven't established the start date. They already said that they would be willing to let me do a hybrid sort of thing until I'm ready to move after the baby's born.

George Campbell (28:43)

Oh, that's great. That buys you some time.

Caller (28:45)

The move would prob be July or August.

Jade Warshaw (28:49)

What type of work needs to be done on the house and how much money do you think is at stake if you do or don't do?

Caller (28:58)

Would be probably several thousand dollars if we. Because we did most of the work already ourselves, and we're kind of exhausted of that, so we need to have a contractor do it. It's things like updating the flooring, a little bit of painting, and then potentially even renovating the master bathroom. That's like original 50s.

Jade Warshaw (29:16)

Oh, boy, that's a lot.

George Campbell (29:17)

Is that like 10, 20 grand? What do you. What do you think the real number is?

Caller (29:21)

Everything together. Would could be that. Like I said, we need to talk to a realtor about specifically which items would increase the value the most. But yeah, it would probably be anywhere from 5 to 20,000 total.

Jade Warshaw (29:35)

I don't see how you can do a bathroom and floors for 5,000, but maybe check the.

Caller (29:40)

I mean, if you didn't do the bathroom, it would be five. If we didn't use this, there would be 25.

Jade Warshaw (29:44)

Okay, gotcha. I was about to say that makes more sense. In 1999, I think that how long would it take you to save up the money to do that work?

Caller (29:56)

So we'll be getting 7,500 of miscellaneous expenses paid by the company as part of the relocation package on top of what they calculated it would cost to actually move.

Jade Warshaw (30:10)

Okay, but you'll need that money to move. So that's already earmarked for whatever.

Caller (30:17)

Whatever they pay us to move plus miscellaneous expenses is another.

George Campbell (30:21)

They'll cover that too, anyway.

Jade Warshaw (30:23)

Right. But I'm saying with your own cash money, because the money that they're paying you to move, trust me, you're going to need that money to move. So I would keep that earmarked for what it's earmarked for. And now we have to set aside and understand what the timeline is going to be for us to do these renovations. How long would it take to save up 20 to $25,000? And really, just. I think now you are in stork mode. We're pushing pause on it. But during that pause, let's really plot this out and map it out with a timeline. How much do we need to save? How much time is it going to take to save it? Can we, can we work as we go and really just create a plan? It's going to give you guys a lot of peace.

George Campbell (30:57)

Yeah, I'd iron out the exact start date and push it as far as you can to buy yourself as much time to get the renovations done. Get the baby here, get yourself in good financial position.

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George Campbell (32:26)

may vary and no specific outcome is guaranteed. Ryan is on the line in Kansas City. Ryan, welcome to the Ramsey Show.

Caller (32:45)

Hi, thanks for having me guys.

George Campbell (32:46)

Absolutely. What's your question?

Caller (32:48)

So I have a financial advisor and, and we were kind of going through the baby steps and I was kind of telling him where I wanted to go with the baby steps. And I was getting my 401k investments up to about 15%. I was at 13, my wife was at 12. And he told me, hey, have you ever thought that you might have too much in retirement and you might want to live a little bit more freely now? And so he suggested that we kind of knock it down to 8% because my company matches my 8% at 11%. And so he suggested that that's too much money going into retirement and we should live more freely currently. And I was hoping to get your guys opinion on is this the right move or should I still be pushing to get done with baby step four?

Sponsor/Announcer (33:38)

Wow.

George Campbell (33:39)

I've never heard of a financial advisor telling you to Invest less. I mean are you guys already financially independent? Do you have millions of dollars?

Jade Warshaw (33:47)

What do you have?

Caller (33:48)

Okay, so we don't have millions. We've got 350 put away in our 401ks. Between my wife and I we make, combined I make 111, she makes 118 a year and then I also get 24,000 from disability from the military service and we have two kids and I, I kind of want to start saving for my kids college fund and that's why because I've got a seven year old and a four year old and I'm scared that I'm not going to be able to just cash flow that for them. I want to start building 529. That's kind of where all this came in.

Jade Warshaw (34:23)

And you don't have the margin to do the investing that you're doing and put aside some. You guys make a great income.

Caller (34:31)

Well thank you. And right now we're kind of struggling to do both.

Jade Warshaw (34:38)

Why something that, that means something is out of proportion.

Caller (34:42)

Yeah. Lifestyle creep.

George Campbell (34:44)

There it is. Thank you for the self awareness Ryan. I love that we didn't have to pull it out of you.

Jade Warshaw (34:48)

Well, let's go back to the. So we've got lifestyle creep going on George. And let's also go back to, and answer the question the, the advisor. So I love the fact that you have an 8% match that kicks in at 11%. I think that's, that's very cool and I think that that's gravy because the truth is you could switch jobs and they're not be a match to that extent. And I just love the idea of when you're in baby step four, understanding what it feels like to flex your muscle of investing 15% and that way if it ever goes away you're just used to like this is what I do, this is what I do. And you can consider the match just a really awesome bonus in the benefit that it actually is for you building wealth. So I actually wouldn't take the advice of the advisor. If you truly are on baby step four, I think that you need to do baby step four and sock that money away. Now to that point if it's tight. I'm looking at other areas on the budget George to see what's going here.

George Campbell (35:43)

So 38k is about 15% of your gross income based on my calculations. So that's how much we want to be putting away into tax advantaged retirement accounts regardless of the match. So that's, that's step One. Once you have that going, then we move on to college savings and set a goal. You can use an investment calculator on our website and go, all right, if we put 400 bucks away for the older one, 300 bucks away for the younger one, we're going to have this much by the time they turn 18. Plus we might need to cash flow some. They get scholarships, yada, yada. So that, that's where you form a game plan for that. And then you guys also have a mortgage.

Caller (36:21)

We do, Yep. And that's $22,040, $24 a month.

George Campbell (36:28)

Okay. That's very reasonable considering your, your take home pay, which I imagine is your take home pay, like 15 grand a month.

Caller (36:36)

It's. It's a little shy of that. It's 14. It's. It's a little over 14k. Yeah, yeah, yeah, perfect.

Jade Warshaw (36:41)

And then you get those bonuses at the end of the year.

George Campbell (36:43)

So now I'm going, okay, how do we budget this 14k in such a way that we're able to invest for our kids first before we have every little luxury in life? And my guess is you can find some wiggle room and fun money in $14,000.

Caller (36:59)

Yeah, yeah, you're. You're right. And we're trying to. So we just. I just downloaded every dollar and I finished my first month last month in April. So we just started budgeting, trying to verify where we could when everything was red and I overspent. Not the best, but it helped. It was eye opening, I think is the best way to say it. It was eye opening to see where the money was actually going versus where we thought it was going.

Jade Warshaw (37:27)

So you saw the lifestyle creep happening.

George Campbell (37:30)

But the crazy part is you were doing that already, but just delusionally instead of intentionally so. Now you know, now you can do better. And go, all right, we need to cut in this area. Here's where the money leaks happened. We thought we were spending 200 bucks eating out. It was really 500 bucks. We need to ratchet down on that. So now you and your wife can create a game plan and spit shake and stick to it and go. All right, we're going to cut these areas down, ramp this area up, add this investment. And what I do, Ryan, is I auto invest it to my kids529 plan so that the paycheck hits. You don't even know see that money, it happens on payday. So by the time I have a chance to even look at the bank account, the money's already building wealth for Me, that's the kind of mindset you need to get into, is being so proactive that whatever is left and whatever the fun stuff is that floats to the bottom, the priorities are at the top.

Jade Warshaw (38:17)

And to George's point and that. That's such a good point, George, for anybody who's listening, whatever. You can automate. You automate your 401k. Obviously, that's coming out of your check automatically. 529 coming out of the check automatically. If you're putting money aside for sinking funds, it's coming out. And when you do that, then when you actually receive your check into your account, you're. You're already used to what that amount is and you don't miss. Does that make sense? Like, you don't miss the money that's gone out.

George Campbell (38:41)

You force the boundaries to do the smart thing that you know is good for you. You forced yourself to eat the vegetables first.

Caller (38:48)

Okay, so really quickly. Especially because, George, you're on the phone and you always use the retirement calculator. I was using the retirement calculator on Ramsey Solutions and I plugged it in. I plugged all of our stats in, and it's showing that in retirement it could be up to, like, with the 11.8% that you suggest, it could be up to 22 to 24 million dollars in retirement. That's. To me, I feel like if I sacrificed a little bit of that now it would make sense because I could pay. You know, I feel like I'm going to be fine in retirement anyways, but getting kids through college might be tight. We still think drive to the 15% and then just focus on the budget, crack it down, and go through with the 5 29s as well.

Jade Warshaw (39:33)

The reason. Okay, I would love to talk about that a little bit because I do think if you had called in today and you were like, hey, we've been socking money away. We've got $4 million, you know, and you had accumulated a certain amount of wealth. I.

Caller (39:49)

Well, give me a little bit, Jade.

Jade Warshaw (39:52)

I would have definitely felt the feeling of, do we have to be quite so intense? I mean, we're going to have so much money. I could understand that. But you're not quite there yet. Therefore, the choices that you make today really, really matter. And how you craft your lifestyle really, really matters. And where you are, where you're making this really great income, it's so easy to get sloppy because you do have the cash flow and you can. Do you know what I'm saying? Like, your income can Kind of COVID up things. But the truth is, if you're making this income and the margin is not there for you to do the baby steps, that is a huge red flag that, man. We do need to tighten it up. If I looked at my budget today, George, and I said for some reason there's just not 15% there to invest, you'd look at me like I was on the crazy train, like, what in the world are you doing?

George Campbell (40:37)

Because the truth is, I'll find it. It just might be hidden in a debt payment or lifestyle creep.

Jade Warshaw (40:41)

It's hidden in doordash. Yeah, absolutely. And so for you, Ryan, I think you have the opportunity to, to really look at your lifestyle and put the correct boundaries in the correct place. And that's something that's going to serve you well. Bey being able to have the discipline of saying, I know when I'm off the rails and here's what it looks like. So it's more of a philosophical thing for me than a, if you don't do this, does that make sense? You're going to have plenty of money and there's a lot worse that you could do. Okay, so hear me say that.

George Campbell (41:11)

The other part of this is there are a lot of assumptions made. Like, it's fun to punch it into a calculator and go, cool, that's how much I'm going to have. But we also don't know what the returns will be, what inflation will be. Will your income stay this high forever? What if there's a health diagnosis? What if one person wants to stay home? And so you have to factor in a whole lot of options. So I like to be a little bit pessimistic about the future, to force myself to do smart things. And if you have too much money, that's just more impact you can have on your family, your community, the things you are passionate about. So I wouldn't be too worried about having too much, but I think creating the habit of at least investing 15%, especially with your low mortgage compared to your income, I think you can find this money easily. And it'll be a great exercise for you and your wife to be a little less sloppy with the spending because you can out earn your stupidity with the money you guys make. You know, the money leaks can happen. You don't really feel them. So adding some friction back in and putting your money where it matters, man, you're going to feel so good. I think being proactive and intentional instead of just going, yeah, we'll be all right. What's a Little doordash here, a little doordash there.

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George Campbell (43:56)

Welcome back to the Ramsey show and the Fair Winds Credit Union Studio. I'm George Camel here with Jade Warshaw taking Your calls at 888-825-5225. Max is in Minneapolis up next. What's going on, Max?

Caller (44:11)

Hey, George. Hey, Jade. How are you guys?

George Campbell (44:13)

We're doing great. How can we help today?

Caller (44:15)

Hey, yeah, just, I had a quick question for you guys. My wife and I are in baby step two and I just received a pretty significant job offer. I'm just, I'm really struggling with the idea of leaving my current employer and just I really don't know how to, how to leave an employer that's been so loyal to me. I just was wondering what your thoughts were. Wow.

George Campbell (44:40)

What's the pay now and what will you be making?

Caller (44:44)

Currently I'm an electrician, so I'm an Apprentice. I'm making 28 an hour right now. And the new job offer at the other place would be 50 an hour. Whoa.

Jade Warshaw (44:54)

Wow.

George Campbell (44:56)

That's a pretty serious upgrade, man. That's almost doubling your income.

Caller (45:00)

Yeah, by a lot.

Jade Warshaw (45:03)

So explain to us the trouble that you're having with. So it's not the move, it's not the job, it's strictly. Man, I'm loyal to these People, they've been good to me. How do I tell them? Is that it?

Caller (45:14)

Yeah, that's pretty much it. One of the biggest things that he helps my wife and I with, he owns duplexes in town, and he gives us 750 off a month on rent just for working for him. So that's a pretty. That helps us a lot just with our living expenses and, I mean, part of being an electrician. To become a journeyman, which is the next step, you have to take a pretty big test. And he takes his time out of Saturday mornings to come into work outside of work hours to help me study and help me understand what the test is going to be like. And he just does a lot for me and gives me a van to drive.

Jade Warshaw (45:56)

It sounds like he's a friend. It sounds like he's just as much a good friend and a good person

George Campbell (46:01)

as he is a good boss, mentor, super generous. That's awesome. How long have you been there?

Caller (46:06)

Five years.

George Campbell (46:07)

Okay.

Jade Warshaw (46:08)

Is it. Is it fair to say? Let's, let's. Because I'm kind of going somewhere with the idea that he's not just a boss. He's been a good friend. So if a friend called you up and told you some really great news, how would you feel? Even if it kind of affected you, affected you. But you can tell, man, this is really good for them. How would you feel?

Caller (46:29)

I would feel very excited for them.

George Campbell (46:32)

Were you out there, like, looking for this job?

Caller (46:36)

Not really. I just have other friends who are in a similar position who had already taken before me, and there's just more to come to. They're looking for people. They're looking for guys, guys that are hungry to work and.

George Campbell (46:52)

Yeah, well, what I wouldn't do is just stay in it for loyalty. I would have the conversation with a whole lot of gratitude and let him know exactly how you feel. Man, you honestly changed my life over the last five years. The way you've mentored me, the generosity you've had toward me and my family, the things you've done for us outside of this place, it has impacted me, and I'm going to take that with me forever. But there's an opportunity that is going to change our family's finances and help us get out of debt, help us build wealth, and we're going to take that opportunity. But I want to let you know that this place means the world to me, and I hope that we can remain friends. How would he handle that?

Caller (47:32)

I think he would handle that pretty well. I think I'm just A little too nervous about what the reaction will be.

George Campbell (47:38)

Yeah. Well, I think it's probably worse in your head than what's. I don't think he's going to yell at you.

Jade Warshaw (47:44)

You.

George Campbell (47:44)

And go, after everything I did for you, this is how you treat me? I mean, if he knew you were going to double your income, he should be happy for you as a mentor. The reason he did all this was because he believed in you and he wanted you to grow as a person, as an electrician. And a natural byproduct of that is when you grow, you outgrow.

Guest (Andrew or Megan) (48:02)

Yeah.

Jade Warshaw (48:03)

And I think mature adults understand that few. Nothing lasts forever, you know, and few things last for a really, really, really, really, really, really long time. Right. So I think that's just part of life. You. To George's point, you grow, and sometimes you outgrow and you can move on from different spaces, and that's okay. I think, judging by the way you're describing this guy, I think he's gonna understand that.

Caller (48:27)

Yeah.

George Campbell (48:28)

I would be more worried if he was, like, a toxic boss. I gotta bring him this news. And he's a narcissistic jerk, and he's not gonna take kindly to it. But, I mean, great examples. Our friend Ken Coleman, who recently left Ramsey, perfect example. He was here 12 years. Friend to Dave's before he got here, friend to Dave's after he left. And he had a very honest conversation with Dave and led with a whole lot of gratitude because, I mean, Ken and I, you know, we grew up here. I feel like. Especially me. And I kind of took over for Ken when I started here as a host and emcee. And so my journey and Ken's intertwined. And as he shared it all, you, like, he was dripping with gratitude for the way Dave has treated him, the team here, and nobody felt any level of, wow. I thought Ken was loyal. We know he was. He was loyal up until the day he left. And now he's just a loyal friend.

Caller (49:17)

Yeah.

George Campbell (49:17)

And so I think you're going to have to. This is like the first breakup of other breakups. And the first one, always the first one hits the deepest. First cut is the deepest.

Jade Warshaw (49:26)

I knew you're going there.

George Campbell (49:26)

I didn't want to sing it, but I wanted to just know that.

Jade Warshaw (49:28)

Cheryl Crow.

George Campbell (49:30)

So, Max, I think you have the emotional maturity to have this conversation. And luckily, I think he has the emotional maturity to handle it. And I'm honestly just so happy for you. And I'm not even your friend. I mean, I guess I'm A new friend. But if he finds out you're going to double your income, he can't pay you that. Right. It's not like he's underpaying you right now.

Caller (49:49)

No, he. I don't think he could match that.

George Campbell (49:52)

Exactly. And I think that's a fair. You're not doing this to try to like manipulate him into paying you more because he can't.

Caller (49:58)

Yeah.

George Campbell (49:58)

And so therefore it's not like a tactic you're using. You're just changing your family tree right now as a young electrician who has a lot of room for growth. And I think you're going to find that if he's a real one, he's gonna stick with you as a friend in the long haul and he's gonna be cheering you on from the sidelines.

Jade Warshaw (50:13)

Now, are you moving to take this job or are you staying put?

Caller (50:17)

It's union, so I kind of pick where I wanna work, but there's per diem and stuff that comes with it.

Jade Warshaw (50:24)

Okay. And are you going to choose to move or are you gonna choose to stay put? Okay. And are you still gonna live in the duplex that your old boss offers you?

Caller (50:35)

You.

Caller (50:37)

So it's. I'm locked in for a year with. He hired out a management company, so it's technically through a management company. It's not necessarily just.

George Campbell (50:47)

You're not dealing with him directly.

Jade Warshaw (50:49)

Okay. I wanted to know how that's going to. I could. Yeah. Some awkwardness.

George Campbell (50:54)

Get out. Okay. What. How much debt do you have Left?

Caller (50:57)

We have 22,000 in consumer debt.

George Campbell (51:00)

Awesome. And you're going to be making 100k on your own when you take this new job.

Caller (51:05)

Yeah. Our, our take home pay with this new income would be around 10, 6amonth.

George Campbell (51:11)

Like that, man, that's pretty wild. Which means you're going to get rid of this debt fast, build up an emergency fund fast, be investing double what you would have been. And I, I think that's an amazing feat at your age to be in that place. And nobody would fault you for it.

Jade Warshaw (51:25)

Nope.

Caller (51:28)

Yeah, that's, that's, that's the goal, man.

George Campbell (51:30)

And if you want, here's what I would do. I would practice the conversation. Like you can write a letter first to kind of get all the words out there. Because when you start the actual conversation, it's going to be like a word vomit and you're going to be nervous and it's going to be emotional. And so just knowing ahead of time how you want it to go and kind of knowing the flow and the arc. I want to start with the generosity. I want to then enter with the opportunity, end with how grateful I am for this friendship, and then you guys can get into logistics. And I think quickly you'll find his facial expression will be that of maybe surprise, maybe a little bit like, oh, man. But then at the end, happiness for a friend. Thanks for the call, man.

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George Campbell (54:03)

Joseph is in Tampa. Up next. Joseph, welcome to the show.

Caller (54:08)

Hey, how's it going?

Sponsor/Announcer (54:09)

Great.

George Campbell (54:09)

How can we help today?

Caller (54:12)

I don't really know how to put it in a question, but I have a lot of debt. I'm not really sure where to go, and honestly, I just feel like I'm failing my fiance and our two kids, and. And I just need help.

George Campbell (54:29)

Wow, those are some fighting words. How much debt do you have total?

Caller (54:36)

$77,607. Okay.

George Campbell (54:39)

What kind of debt is that? Break it down for us.

Caller (54:44)

34,000 in credit cards, personal loans, and a broken rental lease. About 29,000 in a pickup and about 14,600 in student loans.

George Campbell (55:03)

Okay, so the overall is. I want to get out of this. I want to let go of the stress. I want to do more for my family financially.

Caller (55:12)

Yeah. Sorry.

George Campbell (55:15)

It's all right. You take your time. This is. I mean, there's a lot here. I can tell this has been weighing on you a long time.

Caller (55:20)

Time. Yeah. It's really hard. It's really hard.

Jade Warshaw (55:25)

What. What caused this? Was there a. An incident that kind of caused a snowball in the wrong direction? Or is this just a couple of decades of, you know, just not being intentional and just letting life happen?

Caller (55:39)

Someone may 25 and it. I mean, I don't want to make excuses for myself. But I grew up and watched my parents be really bad with money, have a lot of debt, and they still. So, I mean, I didn't really know what a debit card was. Grew up, growing up, I knew what a credit card was, you know.

Jade Warshaw (55:59)

I understand.

Caller (56:01)

Okay. So the last few years, you know, just making dumb decisions, and now I've matured a little bit and realized that I messed up and I got to fix it.

Jade Warshaw (56:11)

So you're working. What are you earning?

Caller (56:14)

Yes.

Caller (56:16)

I don't know the exact. I think it's almost 71,000 year.

Jade Warshaw (56:20)

Okay, what does it look like a month? What's your paychecks look like every time you bring them home?

Caller (56:25)

About $1,200 a week.

Jade Warshaw (56:27)

Okay, $1,200 a week. And what about your fiance?

Caller (56:31)

She stays home with the kids.

Jade Warshaw (56:33)

Okay. And how old are the kids?

Caller (56:36)

Our daughter is almost 4 and our son just turned 2.

Jade Warshaw (56:41)

Okay, and is there a wedding in sight or.

Caller (56:46)

We've been thinking about going to the courthouse, but we've also kind of agreed that we need to tackle some of this debt first before we can start saving for a wedding.

Jade Warshaw (56:58)

Okay. I would. Okay.

George Campbell (57:01)

What are your monthly expenses look like right now?

Caller (57:05)

So everything that I'm actively paying on comes out to $1,870 a month.

George Campbell (57:14)

That's just the debt.

Caller (57:16)

No, that's just like my, my, my pickup payment and then all my bills.

Jade Warshaw (57:21)

Okay, that's not the, that's not your full.

George Campbell (57:24)

Are you guys renting right now?

Caller (57:27)

We are currently with my in laws right now.

George Campbell (57:30)

Okay, so you have very little housing expenses, which is good.

Caller (57:34)

Yes.

George Campbell (57:34)

So you have a little bit of margin right now to throw extra on, on your smallest debt.

Caller (57:40)

The way I've got it calculated, and I could have it calculated wrong, is, is I have about 250 bucks a week left over.

George Campbell (57:49)

So a thousand bucks a month to throw extra on the smallest debt.

Jade Warshaw (57:52)

Have you, have you built a budget yet? Because if you don't have every dollar, we need to get you in that because I think it's going to give you a better visibility into all of this. Have you, have you tried that?

Caller (58:03)

I have downloaded every dollar before. I can't tell you that I've used it. I just have a piece of paper in front of me with the cost of all my bills. And you know how it comes out

Jade Warshaw (58:15)

each month before we get off the line, we're going to make sure you have every dollar because it's going to help you in so many ways. Number one, it's going to give you a clear picture of what your income is, what your expenses are, and it's going to help you with the most important thing next. And that's what you need to focus on and just being able to see once you plug in, okay, here's my income, here's all the expenses, here's how much margin I have per month. Looking at it on a weekly basis is helpful, but really seeing it for the month and seeing those lumps sums is, is even more helpful. And I think that's going to give you a clearer picture on what's actually going on. And then you'll know, Okay, I have, you know, $800 or I have $1,000 every single month that I can throw at the smallest debt, which in this case is the student loan. But I have questions about this $29,000 truck. Can you tell us more about that?

Caller (59:06)

Yeah, Yeah. I was 22, thought I was doing well for myself and I mean at the time it wasn't the worst, but I'm doing way better now. And I.

Jade Warshaw (59:18)

What's it worth?

Caller (59:21)

Probably right about actually talked to my buddy, he's a car salesman, but he said he can blue book it at right about 28. So I owe just about what it's worth.

Jade Warshaw (59:30)

Okay. So I. If I were in your shoes, I'd be offloading that truck immediately. Do you have any money saved anywhere?

Caller (59:38)

I have $400 in a savings account.

Jade Warshaw (59:40)

Okay, so here's the plan. I'm going to give you a step by step plan thing one, I want you going by a credit union this weekend and I want you to say, I need 5,000 bucks and that's going to be the money that you spend on your used vehicle. It's going to be a beater. It's going to suck. It's going to have a lot of miles on it, but it's going to be like a Toyota or something that runs forever.

George Campbell (60:01)

Okay.

Jade Warshaw (60:02)

Okay, so that's thing one. And then thing two is you need to get $1,000 saved, so you need 600 more dollars in a hurry. So I want you going through your house, you and your fiance, looking at every single thing that you can buy or post or, you know what I'm saying, to sell because you need $1,000 saved. That's baby step one. And just having cleared out that truck and now having the truck payment back because what were you paying on the truck?

Caller (60:26)

$930.

George Campbell (60:28)

And that's without the insurance.

Caller (60:30)

Yeah, my insurance, I cover my fiance's as well. Is 330.

Jade Warshaw (60:34)

Yeah.

George Campbell (60:35)

So you having that 1200 bucks freed up on top of 1000 that you said you can throw at the debt, now we're moving. See what's happening here? We just freed up 2,200 to throw your smallest debt, right, which is over 25 grand a year. So worst case, if you just did that and nothing else, you're done in three years. So I want to show you there is a way out if you just get really focused and follow this plan exactly as we teach you it. If you go, well, I want to just take parts of it. It's not going to work. You got to go all in.

Jade Warshaw (61:02)

Now let's go back to the fiance. So you don't. You don't have the money saved for the wedding. Tell me about the courthouse. Can you guys just go down to the courthouse and get married legally? So it's done and done?

Caller (61:13)

I think so. I mean, I don't really know all the rules.

Jade Warshaw (61:18)

It's just a certificate. It's just something you both sign.

Caller (61:22)

Okay. Told me in the past that even if we do a courthouse wedding, that she said she would still want a dress and a photographer and a tux.

Jade Warshaw (61:32)

Here's what I'm getting at. And. And this is what. Here's where my mind is going. You guys want to be married. You have a family together. I would love for you guys to be able to link arms on this and attack this together because it's for both of your future. You called in here, here sounding like you just have a pit in your stomach. It's because you're looking at the future with this woman and with your kids, and you want to do better for that, right? And so what better? What better way to start than to fully commit now, today? You don't have the money for, you know, a big party. If she wants to put on her best dress and go down to the courthouse, I think that's great. Or if you guys simply want to say, today, this is kind of our secret, and we're going and we're signing the paper, nobody really has to know about it. This is just so that legally we have the protections to go all in on this together. And then after, you know, in a year or however long, once we calculate that this is done, then we can throw the big party, and we can tell our. All of our friends, and it can be this funny story that we tell. Hey, we were married all along. We just didn't. Right? That's fine. But for today, what I want is the security of you knowing that you can talk to her and include this her in this. And her income now counts towards this. And now it's just not your debt. It's her debt too do. And you guys are actually beginning a life together.

Caller (62:51)

Okay?

Jade Warshaw (62:51)

And I don't want you to feel the pressure of I've got to clean this up first before you got children.

George Campbell (62:58)

Yeah, that's a great why by the way, Joseph, one of the best wise is those kids and that woman who you love. And so I want to circle back to what you said at the beginning, that you're failing your family. Let me tell you this. Failure is an event. It's not an identity. Failure is a comma. It's not a comma. So don't let it be. That's not who you are. You made some mistakes at 22. Welcome to the club, man. Now it's who am I gonna be tomorrow? And the next day and the next day. You live that out. We're gonna hook you up with every dollar to walk you through it. And my book, Breaking Free from Broke. I want you to call us back when you're married, when you're debt free. We want to celebrate every single milestone with you, buddy.

Caller (63:38)

Foreign.

George Campbell (63:54)

Hey, you guys, did you know that there are thousands of data brokers whose entire business is collecting and selling personal information? Things like your home address, your phone

Jade Warshaw (64:04)

number, and even your relative's name. Names. You guys, that is just crazy. But that is why I use Delete me.

George Campbell (64:11)

Because those companies pull information from public records, social media, and all kinds of other places. Then suddenly all that information shows up on random websites. And removing it yourself means going site by site, filling out forms and hoping they actually take it down.

Jade Warshaw (64:28)

It takes hours, and then it can

George Campbell (64:30)

even pop up somewhere else again.

Caller (64:32)

But.

Jade Warshaw (64:33)

But Delete Me's team of privacy experts

George Campbell (64:35)

removes your personal information from hundreds of those data broker sites. And within a week, you'll get a

Caller (64:42)

report showing what they have found and what they have removed.

George Campbell (64:46)

And they keep scanning and cleaning up

Caller (64:48)

your data year round.

Jade Warshaw (64:50)

So take back control of your privacy. Go to JoinDeleteMe.com Ramsey and get 20%

Caller (64:56)

off your annual plan.

George Campbell (64:58)

That's JoinDeleteMe.com Ramsey.

Jade Warshaw (65:01)

Ramsey.

George Campbell (65:17)

Ask Ramsey is our free AI tool that's built and trained on proven Ramsey principles. And today we're going to break down the most asked questions from the week. A lot of questions about buying and selling a house, investing and budgeting. But the top question was around retirement savings accounts.

Jade Warshaw (65:32)

Yeah, the specific question was, should I only contribute to a 401k or switch to a Roth IRA. Good question.

George Campbell (65:39)

Juicy, nerdy debate.

Jade Warshaw (65:40)

Very juicy.

George Campbell (65:41)

There's a lot of variables here. So number one, if you're still paying off debt, you pause all investing. So this is a question for later. If you have paid off all your debt, you get three to six months of expenses saved, then you should be investing 15% of your gross household income into tax advantaged retirement accounts like 401ks and Roth IRAs. So to start we say match first. So if you have an employer match inside of a 401k, then take that first free money, then you can go to a Roth ira.

Jade Warshaw (66:09)

Yes.

George Campbell (66:10)

Next. Finally, if you run out of money like you've you max out the Roth IRA, you can go back to your traditional 401k until you hit 15%.

Jade Warshaw (66:19)

I love that we call that rule of thumb here. Match beats Roth, beats traditional. And part of that, like we said, yeah, matches free money. That's free free money that your company is giving you. You don't want to miss out instantly. Yes, of course. And then of course you know the Roth ira, that's going to give you the tax free growth and tax free withdrawal in retirement. We love a Roth. If you have a Roth 401k, go like ham on that immediately. And then of course, if you don't have that, you just do the Roth IRA and then you can go back to that 401k traditional, which helps you get to your 15 goal.

George Campbell (66:50)

So if you want to play around with your numbers, your situation, have the conversation with Ask Ramsey. It'll help you determine how much of your household income needs to go into each retirement account. And you can ask all of your Questions today@ramseysolutions.com or click the link in the description if you're on podcast or YouTube. Stephanie is in Detroit. Up next. Stephanie, what's up?

Caller (67:10)

Hi. I am graduating from medical school next week with a lot of debt. My question is, do you think making minimum income driven payments to qualify for the public service loan forgiveness is a smart strategy or am I taking too much risk relying on a government program potentially accruing more interest if the program is canceled?

George Campbell (67:35)

Very thoughtfully worded, Stephanie. Appreciate that.

Caller (67:38)

Thank you.

George Campbell (67:40)

Yeah, people hear us on the show and they go, wow, these people really hate student loan forgiveness. No, we're just pro people taking control of their life. It's not even a responsibility thing. There's nothing wrong with the public student loan forgiveness program. It's just really hard to actually get it done. And it's A long time, and you're still making payments the whole way. And you're also limiting your income because you kind of have to work in a certain place in order to get that forgiveness. And if that changes, well, you're out. And so that's the risk that I'm more worried about, not it being canceled entirely, but more just. You don't know what the future holds. And I don't want to limit you if you get an amazing job offer in the private sector sector, but you can't take it because you have these golden handcuffs. That's a real bummer.

Jade Warshaw (68:24)

But truthfully, the data on it, I mean, the data on it is not good. And I'll just tell you right now, at this point, like, currently only 5.5% of the applications are approved for forgiveness. So that means 93 of the applications are denied. That's.

Caller (68:44)

That's a lot.

George Campbell (68:45)

You're telling me there's a chance.

Jade Warshaw (68:46)

That's a horrible. Like, that's. That's a horrible shit shot, you know, to risk how many years of your life doing a job that maybe you don't want to do just to possibly get the chance at this. So how many. How much student loans do you have?

Caller (68:58)

I have 300, about 315,000, which is a lot. I'm starting residency in June at a place that does qualify, and I'll have about six years of training that would go towards the 10 years. So that's kind of where I like, you know, I'd only have four years as a practicing physician elsewhere that would need to finish to qualify.

George Campbell (69:25)

And what do you think you'll be making

Caller (69:28)

after fellowship? I'll probably be making between 350 and 400.

George Campbell (69:34)

That's fantastic.

Jade Warshaw (69:35)

Excellent.

George Campbell (69:36)

I mean, well, here's the napkin math on that. If you can just for a short time. Let's say we can go both ways. Let's say you do did it four years, you made the minimum payments, so you still paid into it, but maybe you got the rest forgiven after four years. Cool. We did it. Let's look at the other side, where you are in full control and you just attack it with a vengeance and keep living like a broke college student in residency. Well, if you could put, you know, if you could live off, let's say, 75 or 80 of that. 350 to 400. Right. That leaves you with 300 grand. You could throw at the debt. So you'd be done in 18 months.

Caller (70:10)

Right.

George Campbell (70:10)

Instead of hoping that four years from now or whatever it is that it's paid off. So either way, I think you could try it. But I think I like the odds of Stephanie more than the government program working out.

Caller (70:24)

Right. I guess we're just. I'm engaged in. One of the things we wonder is, should we be putting more money towards the loan right now or should we try to, like, buy a home and, you know, know, pay a mortgage?

Jade Warshaw (70:38)

I just think that kind of where we go, I listen, we had a dentist call in earlier, similar question, similar amount of debt, and he had the same struggle is like, hey, I'm getting to that point in my life. I want to start a family. I want to buy a house. I also have this crippling debt. And don't forget, you know, with the mortgage, you're taking on debt, you're taking on more risk, you're taking on more financial responsibility in your life. And when I hear somebody that has $315,000 of D debt and then you say, oh, and I'm thinking of buying a house on top of that, that just feels like the ultimate stressor because now you're cutting into your margin because home ownership, George, I don't have to tell you, it's one expense after another.

George Campbell (71:17)

I mean, especially as a newlywed couple.

Jade Warshaw (71:19)

Yes.

George Campbell (71:20)

There's no reason you guys have to jump into a home. I mean, just rent for a year, enjoy your newlywed life without all of the stresses of home ownership. Yes, there's some. There's some blessings in there. But if you do it with a huge mortgage you can't afford, which, by the way, you'll have close to nothing down, which is going to make your mortgage huge on top of the student loan debt. Even if the payment is income driven and it seems low, it's sort of a, you know, a farce because it's 315 grand no matter what the payment is every month.

Jade Warshaw (71:48)

That's a good point. And if you really think about this, Stephanie, the house that you would choose to purchase on a $400,000 income is if you had no debt, debt. The house that you would choose is very different than the one that you would choose if you had 315,000 in debt. Am I wrong or am I right?

Caller (72:06)

Yeah, absolutely.

Jade Warshaw (72:07)

Yeah. So I think it's worth it. It behooves you to. To wait on this, get the debt paid off by then maybe you're even earning a little bit more money.

George Campbell (72:15)

And your then husband will be working too.

Jade Warshaw (72:17)

That's right.

Caller (72:19)

Yeah. He's where he works.

George Campbell (72:21)

What's he doing?

Caller (72:22)

We, you know, he works as a breast salesman, so he does well for himself. We're just not planning on combining anything until we're married next year.

George Campbell (72:33)

But think about that. Let me walk you through that. If you get debt free, let's say, before you're married, let's say you follow this in 18 months or whatever, you do this now, obviously you need to be out of residency making that kind of money, so you'll probably be married by then. But if you can pay off the debt in 18 months, 315 grand, then you can save up another 315 grand in 18 months.

Caller (72:52)

Yeah, well, my, my income won't be that for another six years.

Caller (72:56)

Yeah.

George Campbell (72:56)

So that's a ways away. So even when you're married, though, when you combine incomes, once you're married, you'll still be able to start knocking out this debt even before you're making that kind of money. And so it still tells me. I'm just saying within three years of being married, four years, you're probably going to be debt free with an emergency fund and a down payment. But you just have to stay focused. It'll happen. You'll be shocked at how fast you'll move once you guys are married and you have two people working toward the same goal now. Now that's, that's hoping that he's on the same page as you, that you guys have the same money, values, principles, goals. That's going to cause you to move so much faster. And I have great faith that you're going to be just fine. But I would focus on, on paying it off because of your situation. I think the upside is there for you just to knock it out and not have that carrot dangling of forgiveness and then to not get it because you messed up the application or you got a private sector job. Job.

Caller (73:51)

Yeah.

George Campbell (73:52)

So I wouldn't do it personally, but I'm not mad at you if you do it.

Jade Warshaw (73:56)

And don't take my word for it, Stephanie, get, get on the, on the interwebs, get on chat GBT and look it up for yourself. And you're gonna, you will be astounded at the numbers and at the data on this. And you're gonna go, oh, crap, she was right. I wish she wasn't. Listen, I wish I wasn't right. I wish that this was a guaranteed move for you and it would happen and it'd be a light switch. But that's just, just unfortunately, that's just not the way it is.

George Campbell (74:19)

Yeah. Especially when I think the problem is people are now going into massive amounts of Debt without really feeling it.

Jade Warshaw (74:26)

That's right.

George Campbell (74:27)

Because they're going, well, it'll. I could probably get it forgiven later. Hopefully. Fingers crossed.

Jade Warshaw (74:31)

Well, what. What it's hiding under is the rate has actually increased. But when you say, oh, we've gone from 3% or we've gone from 1% to 3% or 3% to 5%, and it's still 5%, that's terrible.

George Campbell (74:45)

Now it's five out of 100 people who are gonna get it. All right, Jay, let's talk about insurance. Everybody needs it. Nobody wants to talk about it. And it can be hard trying to find pros who aren't just looking to make a buck trying to find agents who know their stuff. But we've got you. Ramsey trusted insurance pros are vetted and coached to make sure they're market experts who have your best interest at heart. So go to ramseysolutions.com coverage to find the type of insurance you're looking for and connect with a Ramsey trusted agent.

Jade Warshaw (75:52)

Amen.

George Campbell (75:53)

Love, love to see that. I just upped my life insurance last night, and I felt real good about it. Went over to Xander, got the quote.

Jade Warshaw (75:59)

Yeah.

George Campbell (76:00)

Filled out the application. It was a breeze. Five minutes on my phone.

Jade Warshaw (76:03)

Love that.

George Campbell (76:03)

And I slept a little bit better

Jade Warshaw (76:04)

at night, so now I just do another appointment.

George Campbell (76:07)

I think I need some blood work done. That's the non. Are you squeam is a little bit. Well, the one time they hit a. They hit a. A valve. I didn't know I had those, but apparently we all do. And so I. I never gave blood after that. Let me just say that that was painful.

Jade Warshaw (76:23)

Somebody just passed out whilst they were driving, listening.

George Campbell (76:26)

Sorry, guys. My bad, my bad. All right, let's go to the phones. Blake is in Chattanooga, Tennessee. What's going on? Blake?

Caller (76:34)

Hi. Thank you guys for taking my call.

George Campbell (76:36)

Sure. How can we help?

Caller (76:38)

I have a question about retirement. So right now, my husband and I, we're on baby steps. 4, 5, and 6. We are not hitting the 15% of our income, and I'm not sure where to go. So we already max out our IRAs. We're doing 12%. My husband's 401k through work, which is about 12 or 13 grand.

Caller (76:57)

And that does only brings us to

Caller (77:00)

27,000 on a low year. Like if we take a low month, 30 grand a month, roughly, that's a low month for us. That's 360 grand a year. Right. We're coming up pretty short on 15% for the year, so.

George Campbell (77:14)

Good.

Jade Warshaw (77:15)

I Love that.

George Campbell (77:16)

So what is your gross household income for the year? Give me a ballpark on that.

Caller (77:22)

The lowest it would be is about 360, but probably somewhere closer to, I'm hoping 450 this year.

George Campbell (77:28)

Woohoo.

Jade Warshaw (77:29)

So you're maxing out the 401k. You're each doing a Roth IRA or IRA. You're maxing out those. Are you doing an HSA as well?

Caller (77:37)

No, we do not do an HSA.

Jade Warshaw (77:39)

Okay. I love this problem. I mean, I can tell you, George.

George Campbell (77:44)

Yeah. So I'm going to show you what I would do. I'm going off of that $450,000 number and we're going to go 15% of that is 67,500. Okay, so if you both max out a 401k, is that what I'm hearing?

Caller (77:58)

No, I don't have a 401k. Just him.

George Campbell (78:00)

Okay, so we're going to do. Max out his 401k, I believe. Is that 24, 500 this year?

Caller (78:06)

Yes.

George Campbell (78:06)

Okay, so we've got that done. Now both of you can do a backdoor Roth IRA because your income is too high for that. You do that. So that's 15 grand, 7,500 a piece.

Caller (78:17)

Yes.

George Campbell (78:18)

Okay. And do you guys have access to a high deductible health care plan?

Caller (78:25)

We. I feel like that's what we have. Yes, Is a high deductible health care plan.

Jade Warshaw (78:29)

So you should have the hsa.

George Campbell (78:30)

If you do, then you have the ability to open the hsa.

Caller (78:33)

We don't ever use it because we don't really. We don't ever really go to the doctor or need the money.

George Campbell (78:38)

Well, here's the life hack that's even better. You fund this thing and any money above a threshold, like any money above a thousand bucks, you can invest just like an ira. And the really cool part is you can just stack money in there, there. And after the age of 65, it becomes like a bonus traditional IRA.

Jade Warshaw (78:56)

And I think it's 8,500 a year. You can do.

George Campbell (78:58)

Yeah, I think like 8,750 or something for the family. So I would max that out as well. If you have access to that, that's another 8750. And then you. He might have access to something called a Mega BackDoor 401K. And this is where you can do after tax contributions and then convert it it over to a Roth IRA so he can look into that. But honestly, once you've done the 401k, the IRA, the HSA, I might then just go to a taxable brokerage account and invest in index funds and kind of have a, what I would call a bridge account because I assume you guys are young.

Caller (79:36)

Yes. 35, 36.

George Campbell (79:38)

Amazing. So this bridge account, let's say you wanted to be work optional at 50 or 55. Well, this bridge account in this brokerage account, that's not a retirement account account, you can just use that money. You'll pay, you know, capital gains taxes on any of the growth, but you can use that money to float you until you hit 59 and a half to access the retirement accounts without penalty. Okay, so that's what I would be doing in that order of, you know, we talk about match, then Roth, then traditional, and then outside of that, you got the HSAs, you have the back door options. Then if you've exhausted all of those because you want to take advantage of anything that has tax advantages, then go to the brokerage account and just invest outside of retirement. Retirement to finish it out.

Caller (80:20)

Okay, that makes sense.

George Campbell (80:21)

Yeah. So you might be Putting, you know, 20, 30 grand into that brokerage account. And if one day you may have an employer plan, then I would start utilizing that.

Caller (80:30)

Yes, sir.

George Campbell (80:31)

You're doing great. What's your net worth? You said 35.

Caller (80:35)

Yes. Oh, probably not very much. Our. I mean we owe it on our house. I mean, we've got our emergency fund. I don't know, actually.

George Campbell (80:44)

Oh, there's an idea. You know what I would do personally? Personally, I might use that extra money and throw it at the mortgage we do.

Caller (80:52)

We pay 1500 dollars extra month to our. Towards our, towards our house right now.

George Campbell (80:56)

On top of the normal payment?

Caller (80:59)

Yes, correct.

George Campbell (81:00)

Make it 3,000. Let's get now, how much faster will it get paid off at that point? How many years?

Caller (81:04)

Yeah, it's a 30 year loan. We bought the house probably a year and a half ago. I think we owe 490 on it. So it's pretty hefty payment. $3,500.

George Campbell (81:16)

I'd start chipping away at that thing and knocking it out in like seven. I would have a goal to have it paid off in about seven years with your income.

Caller (81:24)

Seven years, you can do it.

George Campbell (81:27)

You guys make half a million dollars. I mean, not that it's easy, but you can definitely accomplish this. If you throw, let's say 100 grand a year at it, you're done in four years, five years.

Caller (81:39)

Yeah, yeah.

George Campbell (81:40)

And that's plausible for you? Yeah, I mean that's throwing like what, seven, eight grand a month at the mortgage Total. So I think it's very doable. I would sit down with your husband tonight and start crunching some numbers and setting some real tactical goals. And I think that's going to put some fire under you guys to get even more intentional with everything you're doing. And then I would automate it all so that you don't have to think about it. Less brain calories.

Jade Warshaw (82:02)

Love that.

George Campbell (82:03)

That's a great problem to have. I love that question. All right, Derek is in Grand Rapids. Up next.

Caller (82:08)

Next.

George Campbell (82:08)

What's happening, Derek?

Caller (82:10)

Hey. So I had a question. I've got some people that are calling me for wanting me to pick me up as a client for their financial advising services. Paint you a quick picture. I'm a self employed real estate agent, been doing it for six years. So my income is not guaranteed. I own a house, I'm married with one kid. And my goal so far has been to just pay off the house as quickly as possible. We don't have any other consumer debt other than the house. And my dad's been getting on my case about starting investing in some more traditional ways. And one of those ways is he said I need to get life insurance because I have a kid and I need to start investing in traditional accounts. Well, this financial advisor, I know Ramsey's position on whole life insurance and that it's terrible and I agree. But he presented this thing called a variable life insurance plan and it sounds good and I feel like I'm missing a downside.

George Campbell (83:14)

Oh, I bet he made it sound good. Do you know why, Derek? Do you know why he would pitch you a VUL over term life insurance?

Caller (83:22)

I'm guessing he'll make a lot more money.

George Campbell (83:23)

Ding, ding, ding. We have a winner. This guy wants a fat commission check. And let me be clear, he's not a financial advisor, he's an insurance salesman.

Jade Warshaw (83:31)

Yes.

George Campbell (83:32)

In financial advisor clothing.

Caller (83:35)

Could be.

George Campbell (83:35)

He probably calls himself. Does he call himself a wealth strategist on Instagram?

Caller (83:41)

I don't, I don't know. I'm not on Instagram.

George Campbell (83:43)

Okay. That's the tell. By the way. If they come, they don't. And their websites are always a little bit vague and sketchy. Like what is he actually.

Jade Warshaw (83:49)

Yeah, because it's selling, it's investments. But you don't have to have a securities license to sell variable.

George Campbell (83:53)

That's the scary part. They can get away with with kind of selling investments through the insurance policy. But no, these are, these are terrible investments and the returns are awful. The commissions are super high, the premiums are super high. So here's what I would do instead. Get term life insurance to cover the insurance side, which is going to be a fraction of the cost, like 20, 30, 40, 50 bucks a month. And then invest the difference.

Caller (84:18)

The term policy he presented was like 28 bucks a month.

George Campbell (84:21)

There you go.

Caller (84:21)

Super cheap.

George Campbell (84:22)

And then whatever premium he was pitching you, if it was going to be $500, just invest that $472 difference on your own. And you, you will be so much better off. Otherwise, you're going to be calling me back in five years going, hey, how do I surrender this awful policy that my friend roped me into or family friend roped me into? No. And I wouldn't get any financial advice from him in the future because it's tainted now. You already know he's trying to steer you towards products that make him money, not build you wealth.

Jade Warshaw (84:48)

Yes.

George Campbell (84:49)

Big difference. Big difference. Thanks for the call, man. Welcome back to the Ramsey show and the Fair Winds Credit Union Studio. I'm George Camel, joined by Jade Warshaw. We're taking Your calls at 888-255-225. Beth is in Pensacola. Up next, what's going on?

Jade Warshaw (85:29)

Beth?

Caller (85:31)

Hey, how you doing?

Caller (85:33)

Good.

Caller (85:34)

How are you?

George Campbell (85:34)

Good. What's your question today?

Caller (85:38)

Okay, So I have $80,000 cash, but I have a three and a half year old mobile home that I owe $86,000 on that's completely falling apart due to manufacturer defects. It's completely rotted. We have mold. We really need to get out of it here. And then I also have student loans. So I'm trying to figure out, like, do I take the 80k, pay off the house and just walk away from it all, or do I take the money to fix the house, which estimates right now are between 60 and $90,000.

George Campbell (86:10)

Goodness.

Caller (86:10)

Or do I get the student loan monkey off my back?

Jade Warshaw (86:13)

How much are the student loans?

Caller (86:15)

So between me and my husband, it's 85,000.

Jade Warshaw (86:19)

85,000. Where did this 80,000 cash come from? From?

Caller (86:24)

So we actually purchased property that we were going to move the mobile home to, but in its current condition, if we take it apart, it's a double wide, it's in a trailer park. Right. Now, if we were to try to put it back together, the engineers say that it would probably never go back together. Right. So we sold the property, and so now we have the money from the property that we purchased.

Jade Warshaw (86:44)

Got. Got it. Got it.

George Campbell (86:46)

So what would this thing sell for? Or even if you did the repairs?

Caller (86:51)

Like, nothing. That's. That's What I'm trying to figure out,

George Campbell (86:54)

it's not worth sinking 90,000 into it when it's already not worth that.

Caller (86:59)

Right.

George Campbell (87:00)

So could you get anything for it right now?

Caller (87:03)

I've tried. I've not had any luck. I've honestly been trying to move out of here since I purchased the place because nothing is basically what I was sold.

George Campbell (87:13)

But how much did you purchase it for?

Caller (87:15)

For.

Caller (87:17)

So it was worth 129. I purchased it for 105 at a discount in exchange for living in the park for four years, which at that time we didn't have the property, so it was okay. And then I owe 86 on it today.

Jade Warshaw (87:29)

And you've been in the park for four years?

Caller (87:33)

We will be in August. So it's. Our home's about three and a half years old.

Jade Warshaw (87:37)

Okay. Man, oh man. And how many, how many bids have you had on the mold? Have you checked with several places or just the one that quoted you 60 to 90?

Caller (87:50)

Yeah, no, we've been like four months back and forth with the insurance and the mobile home dealer, and, you know, they're saying they're not going to touch it because it's out, out of warranty. Even though another home identical to mine with the identical damage in the same park, and he actually just let his home go back to the lender. But we worked really hard to build our credit.

Jade Warshaw (88:11)

Yeah. Where are you living in the meantime? Where are you living? You can't live in the mold.

Caller (88:17)

We're still in the house.

George Campbell (88:22)

The hard truth is this just might be a money pit. And either way, it's a money pit, or already has been a money pit. And you might need to just use the savings, pay off the mortgage and get out of this thing as soon as you can.

Caller (88:34)

I think so, too.

George Campbell (88:35)

Otherwise you're going to go through foreclosure, give it back to the bank, and it's going to destroy your financial world for a while.

Caller (88:43)

Yeah.

George Campbell (88:43)

And you guys can save back up 80 grand. That's not the end of the world. Right.

Caller (88:48)

It kind of feels like it. We both kind of came from nothing, so this is like a huge amount of money for us.

Jade Warshaw (88:54)

It is. But let's, let's, let's paint a picture because I think, I think you've been in the midst of this for a while. And how would it feel to completely be free of this? There's no mortgage left. You can walk away from it, scrap it. Right. And then you guys look for an apartment. You're renters now, but there's no mold. And when you come home it's peaceful and you're not, you know, battling insurance people anymore. You're not battling. Do you see what I'm saying? There's, there's peace on the other side of this. And it might cost you $85,000 or $80,000, but there's so much peace on the other side of getting rid of this mess. Mess.

Caller (89:34)

I'm just afraid that with the rental prices in our area, we're in northwest Florida that we won't be able to save up to buy our place for like years and years. And I've got an 11 year old now and I really wanted to give him a safe home, you know, out in the country would have been the dream.

Jade Warshaw (89:54)

What do you guys do for work?

Caller (89:57)

So I'm a stay at home mom. We have three kids and I homeschool. And then my husband is an engineer year.

Jade Warshaw (90:01)

And what's he.

Caller (90:02)

And then I do all kinds of side stuff. He earns right out 100,000.

Jade Warshaw (90:06)

And what do you earn with the side stuff?

Caller (90:09)

Anywhere between like 10 to 20.

Jade Warshaw (90:12)

Okay.

George Campbell (90:13)

So $120,000 household income. You guys can definitely afford rent. It's not going to be fun. It's going to be more than you're paying now on a mobile home. But it's not outrageous.

Caller (90:23)

Yeah, well, it feels outrageous.

George Campbell (90:25)

What's it, what's it going to cost? What's the actual rent for a reasonable home? Nothing fancy.

Caller (90:29)

Fancy rent for a reasonable home with no mold down here is about $2,000 for a three bedroom. Great. And we can a one bedroom. Yeah. And we don't have any other bills. Like we've paid everything else off.

George Campbell (90:44)

So it's 25% of your take home.

Caller (90:46)

But you're right there.

Caller (90:50)

Yeah, yeah.

George Campbell (90:51)

You're just not used to paying $2,000 for any type of housing. So it feels, feels outrageous. But for your income and your take home pay, you're right there. That's perfect.

Jade Warshaw (91:00)

And honestly rent is the right space for you right now anyway. It's, it's passing off risk to the, the, the landlord, which is great. Or to the apartment complex, which is great. You don't have to shell out any extra money for anything else because right now once you get into an apartment that you can afford or a rental house that you can afford, the next thing for you guys to tackle is this 85, 000 of student loans.

Caller (91:22)

Yeah, yeah, definitely.

Jade Warshaw (91:24)

And, and I think I, I think honestly, even though there was what we would call some stupid tax attached to This. I think this is going to help you guys get right side up and start doing things in the proper order.

Caller (91:36)

Yeah.

Jade Warshaw (91:37)

Do you know what I'm saying? To where you're really able to achieve that financial peace that clearly you want, otherwise you wouldn't be crying. Right. It's setting you. It's setting you on the right path. And so. So that's the learning, and that's the piece that comes from all of this is. You know what? This is just putting us on the right path now. We're doing. We're walking before, we're crawling before we walk. We're walking before we run, which is good.

Caller (92:01)

Okay.

George Campbell (92:01)

And honestly, Beth, I don't want you to drain all of your savings to pay down a mortgage for a mobile home that's worth nothing. So what I would do first is negotiate with the lender. And you might. Maybe a short sale is the best move, but I think you could do a negotiated settlement with the lender after explaining all of this, and they might be willing to work with you to take a much smaller amount to call it good and get you guys out our credit. It may temporarily, but you guys are going to rent for a while. You have no other debt, and so it's not. It's not the end of the world. In that case, okay, you're not going to be buying a home in the next, you know, six to 12 months. Let's rent for a while. Let's rebuild. Let's get rid of the student loan loans, let's build an emergency fund, then save a down payment. So, yes, I know your dreams of having a home in the country and homeschooling, that's still on the table. It's just a. Not now.

Caller (92:53)

Okay?

George Campbell (92:54)

This is just a reset period. And I think you're gonna have so much peace getting out of this. And by the way, your health and your family's health is worth getting out.

Jade Warshaw (93:01)

Gotta get out of that.

Caller (93:02)

Yeah, y' all are right.

George Campbell (93:04)

So you're not a failure. You're doing the most right now, and you guys were dealt a bad call, hard. And I'm so sorry that you're having to deal with this financially, emotionally, in the midst of some chaos.

Caller (93:15)

We work so hard to raise it, you know, to do everything right, and then at no fault of our own, we're losing everything, and it's just really hard.

George Campbell (93:24)

Well, I hope you can. I hope you can negotiate with that lender, explain your situation, because this is. I mean, yes, there were some decisions on your part, but there was also just a real of the defects and the mold that was just out of your control. So I wish you guys the best in cleaning the mess up and getting some a fresh start. You deserve that. Hey, summer's rolling in soon. Vacations, camps, all the fun. And if you're already thinking, man, I hope I can afford all this, you can enter right now for a chance to win $10,000 in the Ramsay May cash giveaway. $10,000, that's breathing room. You can fix the car. Say yes to plans. Stick to your budget without stress. We're giving away one $10,000 grand prize and weekly $500 prize. No purchase necessary. Go to ramseysolutions.com giveaway. Today's Ramsey show question of the day is brought to you by yrefi. If you've lost control of your private student payments, your financial progress has stalled out. But why Refi helps borrowers explore refinancing options with payments built around their real life situations. So learn more@yrefi.com Ramsey that's the letter y r e f y.com Ramsey may not be available in all states.

Jade Warshaw (95:08)

Indeed, today's question comes from Justin in Iowa. He says, I'm in baby step two and I've been selling items to to help pay off my $15,000 of debt. Currently, I'm just finding free items online and selling them on various sites. Sites. While I've been doing this, I've seen some inexpensive items that I can purchase at a low price, allowing me to flip them for profit. Is this a good strategy to pay off my debt?

George Campbell (95:35)

Interesting arbitrage, the old arbitrage move. You go to Goodwill, you find something that you can find on ebay listed right now for five times the price and you flip it.

Jade Warshaw (95:46)

I'd love to know. I think there could be some validity to, to this, but maybe I'd give you give some guardrails here because what you don't want is you've invested, Even if it's $400 into a bunch of items and they've all been sitting on, I'll just say the Craigslist to incorporate all of those different sites. They've been sitting on the Craigslist for four and five and six months and before you know it you're like, ah, I thought this thing was going to sell. It didn't.

Caller (96:11)

Yeah.

Jade Warshaw (96:11)

Like that's, I feel like that's a sticky. That's a slippery slope to get it.

George Campbell (96:17)

I like the idea of it almost as a, it's kind of like a little business.

Jade Warshaw (96:20)

Yeah.

George Campbell (96:21)

And so if you look at it like that, you're going to invest a little bit of your own money to purchase the inventory that you're going to sell. So in that regard, what I would do is set a boundary on it in your budget to say, hey, this is how much I can purchase each month to flip, but it's going to come out of the profits from other things I've sold. Yes, I like that idea. And only after you've done all the research because you can get starry eyed and just start buying stuff up, hoping you see sell it. No. Find out what is constantly selling consistently at that price point and then make sure that you can still ROI after all of the fees and shipping and all of that.

Jade Warshaw (96:53)

And I'd even say in addition to, I don't want this to be your only side hustle, I want you to be doing something else that's kind of like guaranteed quick, quick money as well. So that you're not getting. There's, there's an opportunity that this could actually slow you down on your journey versus speed you up if you're investing too much of your profits.

George Campbell (97:12)

Yeah. I've got a friend who is doing this, this for fun and she was finding like old school toys. She was buying stuff for her kids at like consignment shops and she would find these toys, look them up on, you know, ebay and sell them for, you know, she'd buy it for five or ten bucks, sell it for $300.

Jade Warshaw (97:29)

Yeah.

George Campbell (97:29)

Cuz some of these vintage toys, these parents are like, I want my kid to have the exact thing I had when I was a kid. And they'll spend crazy money on it. So.

Jade Warshaw (97:36)

And, and furniture flipping, that's a huge one. You can make so much on that

George Campbell (97:40)

if you're handy and you can do the research. It's not now you got to think about how much time you're investing into it.

Jade Warshaw (97:44)

Right, Right.

George Campbell (97:45)

Your hourly rate might be $3 an hour after you poured all this into it. So make sure it's worth your time. But that's a valid business idea. Very cool. Thanks for the question, Justin. All right, Jason is with us in Houston. Up next, what's going on, Jason?

Caller (97:59)

How you doing, George?

Caller (98:00)

Good.

George Campbell (98:00)

What's your question?

Caller (98:02)

Well, my grandmother. Oh, my mom passed away first week of December last year.

George Campbell (98:07)

Sorry.

Caller (98:09)

Thank you so much. And then my grandmother passed away the week after. Oh yeah, it was a tough month, definitely. My wife's grandmother passed away in January. Sony.

Jade Warshaw (98:19)

That's.

Caller (98:20)

Anyways, since my mom passed away from my Grandmother. My grandmother's inheritance goes to my two aunts and my sister and I because it goes via the lineage. So it kind of bypasses. My dad. My dad called me last week and wanted to know if I'd be willing to give my sister my portion of the inheritance from my grandmother's estate state because she's always been a little behind and everything like that, and she needs to really start saving up for retirement, stuff like that. She has pretty much nothing saved up and we're pretty well off. My wife and I are over here and how much are we talking about? A hundred thousand.

Jade Warshaw (99:02)

Wow, wow, wow.

George Campbell (99:04)

So you're gonna give somebody who has no ability to handle money the most money they've ever seen in the their

Jade Warshaw (99:10)

life at your detriment too?

Caller (99:14)

Yeah, well, my dad said he would give me his entire. And that's when he passes away.

Jade Warshaw (99:18)

Which is how much?

Caller (99:20)

Well, he's got a house that's worth about 280. I think he's got 60 less on the mortgage.

Jade Warshaw (99:28)

So wait a second, he's saying. And now. Now is this. Is he holding it hostage? Is he saying, if you don't do this, you will not be part of my inheritance? Is that what he's saying?

Caller (99:38)

No, no, no.

Jade Warshaw (99:39)

Okay, okay. Just checking on that.

George Campbell (99:41)

He just sort of guilting you into it, like, hey, hey, she could really use the money you guys are doing okay. What do you think about giving it to her?

Jade Warshaw (99:47)

Listen, I'm gonna tell you right now, I think that's totally out of bounds that he asked that.

George Campbell (99:51)

Isn't she already getting $100,000?

Caller (99:53)

She is getting $100,000. Not only that, she was $24,000 in credit card debt and my mom used to help her out, but she passed away, so she's not helping her out anymore.

George Campbell (100:02)

How about this? Let's let it play out. Let's see what she does with her $100,000 dollars and see where she is a year from Georgie.

Jade Warshaw (100:08)

I'm not even letting it play out.

George Campbell (100:09)

Well, it's more for entertainment purposes at this point. I'm not saying you should promise him anything. I would not be giving your sister this money. And it's not because you're cruel. No, it's because it's actually going to hurt her, not be a blessing to her.

Jade Warshaw (100:21)

And also because it was intended for you.

Caller (100:23)

My sister's debt, it.

Jade Warshaw (100:25)

But, but here's the thing. Here's the thing. The money was intended for you. There was a portion that was intended for her. There was a portion that was intended for you and some that were intended for other family members. Members. There is no obligation for you whether she's doing well or not doing well. What it doesn't, her side of this honestly matters. Nothing.

George Campbell (100:44)

We don't weight inheritance based on who could use it the most.

Jade Warshaw (100:47)

No, it was intended for you and it's yours. And if you wanted to do that, that would, you would have to come up with that idea in your brain. But for your dad to reach over and say, hey, son, I think it'd be a good idea if you helped out Linda. That's not fair. That's neither fair nor right in any way, shape or form.

Caller (101:05)

And since my mom was helping her out, my wife and I are actually, actually we settled her debt that she, she has no debt anymore.

Caller (101:12)

Oh my God.

George Campbell (101:12)

Your sister has no debt anymore.

Caller (101:15)

Correct. We, she had like $24,000 of credit card debt. I managed to contact her creditors and settled it for 16,000.

George Campbell (101:21)

Wow. So where is she at now?

Caller (101:25)

She works at a retail job, but now she's on the level she can't get a credit card anymore. Nobody will give her credit anymore. So now she can save, you know,

George Campbell (101:36)

and she's saying, I'm hoping.

Caller (101:38)

I told her that I want her to invest all of this money that she gets. And so I was going to send her information from investor pros and stuff in her area.

Jade Warshaw (101:47)

How old is she?

Caller (101:48)

Hooked her up with every dollar.

Jade Warshaw (101:49)

How old is she?

Caller (101:50)

Is, let's see, I'm 51, so she's turning 40 this year.

Jade Warshaw (101:54)

Is there anything, and I'm asking this in the most delicate way that I can at this point, I'm not going to lie, I'm very irritated. Is there anything that precludes her from going out in the world and basically doing what other adults do or is there a mental problem? Is there anything that's precluding her or is she just not.

George Campbell (102:12)

It sounds like her growth is sort of stunted in a way.

Caller (102:15)

Right.

Jade Warshaw (102:15)

And we want to know, is there truly anything there that we need to be considering or is this just a person who's just deciding I don't need to do all the things that the other adults need to do?

Caller (102:25)

No, no, no. She, she wants to find a new job. She's actually going to get married later this year and her, her fiance is a very level headed guy. I like him a lot. They work in like the same area, so they work close together.

Jade Warshaw (102:40)

So then why is it up to you guys to step in and save her is my question. She seems fine. It Seems like she's fine. She's in a relationship, she's got a job, she's got. Got a future spouse on the way.

George Campbell (102:54)

She's got 100 grand coming to her. Yes, she, she doesn't need your help at this point.

Caller (103:01)

I mean, I would love.

Jade Warshaw (103:02)

You want to know what I'd love to do, Jason? I'd love to shift the conversation to. So what are you going to do with this $100,000 of inheritance you're about to receive?

George Campbell (103:09)

What are your goals, Jason?

Caller (103:10)

I want to shift it so we're, we're pretty well off. I'm, I'm planning on putting it in an index fund in case my dad needs assistance later when he gets older. He's already 71, so, I mean, what a guy.

George Campbell (103:23)

You're already thinking about other people as you build wealth. I would go read the parable of the Talents in the Bible. It's a great parable that explains how you can squander wealth or how you can grow it. And there's a lot of scenarios and some people cannot be trusted with money because they will not handle it well. And your job is to be a steward of any money that comes from your way. That's my viewpoint at least. And so if you were the steward of this money, what is the best use of this money? Is it to give it to someone who you know will not multiply it, but instead likely squander it? I don't think that's wisdom.

Caller (103:58)

Yeah, I mean, and another concern of mine is I have a special needs son who's going to be leading care of the rest of his life. And we need to have a pretty big message.

George Campbell (104:05)

Yeah, we need a special needs trust and fund it. That's what I would be doing with this month. You got your own life and she has her own own life. You've already done enough for her, settling her debts. I would step out and let her spread her wings.

Jade Warshaw (104:40)

When people hear my story of paying off debt, they say things like, dang, that must have been so hard. I could never do that. And I tell them, sure you can. It's a short term sacrifice for a long term gain. But do you know what's really hard? Working your whole life and never having anything to show for it. Never having the long term gain. Just feeling broke and stressed and maxed all the time. And sadly, that's the hard that most people take. Choose. Listen, you're capable of transforming your situation and living a life of freedom, but you need the right tools to do it. Like our Every dollar budget app. In minutes, it'll build you a step by step plan that's tailored to your money situation. And every day it finds ways you can free up extra money in your budget so you can get rid of your debt and actually build wealth. So make the choice today. Short term sacrifice. Long term gain. Choose the tool to help you get it done fast. Download the EveryDollar app and start for free today.

George Campbell (105:49)

Welcome back to the Ramsey show. We are now joined by a wonderful couple on the debt free stage. It is Andrew and Megan. Welcome, guys.

Sponsor/Announcer (105:57)

Welcome.

Guest (Andrew or Megan) (105:58)

Thank you guys.

George Campbell (105:58)

Hello. Thank you very much. Thanks for coming all this way to celebrate with us. Where are you guys from?

Guest (Andrew or Megan) (106:02)

Chicago.

George Campbell (106:03)

Chicago. Awesome. How much debt did you pay off?

Guest (Andrew or Megan) (106:06)

I got it written down. $165,293.

George Campbell (106:11)

Love that. Fantastic. And how long did it take to pay that off?

Guest (Andrew or Megan) (106:15)

22 months.

George Campbell (106:16)

Okay, there's a story here.

Jade Warshaw (106:18)

Something happened.

George Campbell (106:19)

There was some hustle going on. And what was the range of income during that time?

Guest (Andrew or Megan) (106:22)

About 200 to about 230, depending on overdue time in side hustling.

Caller (106:26)

Wow.

George Campbell (106:26)

Fantastic. What kind of Debt was the.165.

Guest (Andrew or Megan) (106:29)

We had a car in there. Car, A swimming pool.

Jade Warshaw (106:33)

Whoa.

Guest (Andrew or Megan) (106:34)

And then our mortgage.

George Campbell (106:36)

Just throw that in there for fun?

Guest (Andrew or Megan) (106:37)

A little bit. Yeah.

George Campbell (106:38)

That is incredible. I gotta say, I just saw the photo of. Was this like a backyard renovation situation?

Guest (Andrew or Megan) (106:44)

No. So we just. We, the kids love being in the backyard. We got the pool. So we just some lights and a little movie screen back there for summertime

George Campbell (106:51)

and living the life. That is awesome. And now it's actually yours.

Guest (Andrew or Megan) (106:56)

All ours.

George Campbell (106:56)

They can't repo the pool now.

Guest (Andrew or Megan) (106:58)

Nope. Absolutely.

George Campbell (107:00)

I'd love to see them try. Yeah, that's awesome.

Guest (Andrew or Megan) (107:02)

We'd be in a lot of trouble with the kids.

George Campbell (107:04)

Yeah. Now they're like, we need this pool now. Okay, so 22 months ago, you were sitting here with the mortgage, the pool, the car loan. What happened that made you guys go gazelle? Intense.

Guest (Andrew or Megan) (107:17)

I hate saying it, but it was. He started it. He was a Ramsey fan before I knew what Ramsey was. And I said, oh, that's great. Good. Do your thing and I'll do mine. And we just sat down in. It was January of that year and we were talking about kind of what our goals were and long term goals, what we want to do, what we want to do for the kids in college and all of that stuff. And he mentioned Ramsey again. And so I finally. We had the book on the shelf the whole time, since before we met. So I finally Read it. And I'm the nerd. And once I read it, I was like, let's go, like, spreadsheet open. We've got this. We're doing it. And so just kind of dove in head first.

George Campbell (107:54)

So you're telling me that what really changed it was, number one, you guys sat down and actually had some vision for your future.

Guest (Andrew or Megan) (107:59)

Absolutely.

George Campbell (108:00)

And then it was, okay, we got to reverse engineer it. How are we going to do it? Well, here's a plan over here. And you dusted off total money makeover and said, let me just read it. All right. And that sold you?

Guest (Andrew or Megan) (108:09)

Absolutely.

George Campbell (108:10)

Yeah.

Guest (Andrew or Megan) (108:11)

It's so simple that it's like, why weren't we doing this before?

Jade Warshaw (108:15)

And you guys floored it all the way through. It's like, baby step two, you said, okay, we'll do this car and this pool deal, but that's not good enough for us. We're gonna tack the mortgage onto it as well.

Guest (Andrew or Megan) (108:25)

Yeah, we realized that kind of with where we're at in our life and the age of the kids and, you know, I know sometimes people say I just. I want to be there for my kids and I don't want to miss things, and I didn't want to miss it. But more importantly, I didn't to want to miss the future. I didn't want to see them going into debt for college or doing things like that. And so we decided to just really floor it and live on beans and rice and do the thing. So he has always been, I'm going to throw a little extra on the mortgage. A little extra on the mortgage. Which made a difference, but it didn't when we were financing cars and pools.

Jade Warshaw (108:56)

So how much of it was the mortgage that was left?

Guest (Andrew or Megan) (108:59)

About probably 120 or something.

George Campbell (109:02)

Oh, yeah. I was going to say, I totally get it.

Jade Warshaw (109:04)

It would. When you're that close, you're like, I'm just going for it.

Guest (Andrew or Megan) (109:07)

And we kept seeing it go down, you know, month after month. And so we did the pool first. We actually. We got our tax refund and paid the pool off right away. So that was a nice jump start. We had some in savings. The car, I think we paid off almost a year before. My initial projection was because we just started. What don't we need in cutting the budget down? And so then by then, we were getting close to the house, was inching closer and closer to 100. And we were like, well, I mean, what if we just kept this up? And so we did. And, you know, any overtime that he could get from work and then. And then my side job, I just picked up as much as I could there, too. And we just threw it all there.

George Campbell (109:40)

Wow. What was the side job?

Guest (Andrew or Megan) (109:42)

I'm a nurse practitioner, and so I do home health visits.

Jade Warshaw (109:45)

I love that.

George Campbell (109:45)

That's fantastic. That's a great side gig.

Guest (Andrew or Megan) (109:48)

It's probably one of the better ones, I bet.

George Campbell (109:50)

Yeah.

Jade Warshaw (109:51)

Cause everybody. I mean, listen, if you can get it in your home, that's wonderful. So good.

George Campbell (109:55)

And how about you, Andrew? What do you do for work? I'm a fireman. Oh, fantastic. Yep. Look at this. We got a nurse practitioner, a fireman.

Jade Warshaw (110:02)

So what would you say about this? I mean, obviously they're noticing life around here has changed. Mom and dad, like, tell us more.

George Campbell (110:09)

There were definitely times where they were like, mom, dad, why can't we go on vacation? Our people down the street are. They're getting the newer toys. They're getting. We said, no, we're gonna hold off on that. You're gonna get it later on.

Guest (Andrew or Megan) (110:22)

Yeah. And they. I listen to the show all the time, and the kids are. They know the phone number, and they're like, oh, you're listening to Dave Ramsey. Like, they know all about it now. And they. They laugh when they hear the commercials. And it's like, what's in your wallet? They're like, not a credit card.

Jade Warshaw (110:36)

It's a debit card.

George Campbell (110:37)

That's incredible.

Guest (Andrew or Megan) (110:38)

They're on board. They're drinking the Kool Aid, too.

George Campbell (110:39)

That may have been the best part of this whole journey, is that we say more is caught than taught. And you guys have set a precedent to. Now. They're not gonna turn 18 and go, well, Mom, I think I really need to build my credit and get a credit card. What do you. They know better now.

Guest (Andrew or Megan) (110:51)

Absolutely.

George Campbell (110:52)

At such a young age, you don't even need to talk about it. You've lived it.

Guest (Andrew or Megan) (110:54)

Yeah. And I think that's a big thing. The more and caught. More is caught than taught. We were wondering how we bring it in and how we teach them. And we realized that just doing what we were doing and telling them, like, no, we're putting some into savings, and, you know, this is what we're doing and why we're doing it. And they. For. For their ages, I think, understand pretty well. So.

George Campbell (111:11)

Yeah. What's the house worth?

Guest (Andrew or Megan) (111:14)

Anywhere between 400 and 450.

Jade Warshaw (111:16)

Let's go.

George Campbell (111:17)

What do you guys have across your retirement accounts in Nest Egg?

Guest (Andrew or Megan) (111:21)

I think we're probably.

Caller (111:22)

Probably.

Guest (Andrew or Megan) (111:22)

We're probably right at. Or maybe over the threshold there for. For Baby step Millionaire.

George Campbell (111:27)

Depends.

Guest (Andrew or Megan) (111:28)

Depends on how the market's doing here.

Jade Warshaw (111:29)

So we're very close.

George Campbell (111:31)

If we're not there, way to go.

Jade Warshaw (111:32)

Exciting. So how's it feel? I mean, you don't have a payment in the world, you owe nobody nothing.

Caller (111:37)

It.

George Campbell (111:37)

I feel like sometimes it still hasn't hit me.

Guest (Andrew or Megan) (111:39)

No, it hasn't.

Caller (111:41)

We have the proof.

George Campbell (111:42)

Yeah, but I'm still.

Jade Warshaw (111:43)

Oh, you got the proof.

George Campbell (111:44)

I see everyone else hear everyone else telling about, talking about what they're paying off and what they sell. Have to, they still hold on their homes. And I'm like, oh, I don't know anything. Do you know the exact amount you guys have freed up in payments from the car loan, the pool payment, the mortgage payment?

Guest (Andrew or Megan) (111:58)

Probably close to, if not at about

George Campbell (112:02)

3,000amonth, I would say closer to 3,500

Guest (Andrew or Megan) (112:05)

from what we were doing.

George Campbell (112:06)

So we're talking like a $40,000 raise and take home pay.

Guest (Andrew or Megan) (112:09)

And it's. He last month worked some overtime and we didn't realize how much it was until the check came in. And so instead of figuring out what goes where, we're like, what are, what are we going to do with this money? Like, it's a great, it's a great problem to have and fun to, you know, kind of plan what we'll be able to do with that for the future.

Jade Warshaw (112:27)

What are you going to do, what are you going to do to celebrate this? Because this is a major, major accomplishment.

Guest (Andrew or Megan) (112:31)

Yeah. So we are. Well, we came here, obviously. That's, that's the first part.

Jade Warshaw (112:35)

What else?

George Campbell (112:36)

What else?

Guest (Andrew or Megan) (112:36)

We are going to take a trip this summer. We're going to just drive out west with the boys and kind of see as many the sites as we can for a couple of weeks. And then ultimately we would love to be able to live on a lake. And so we're, we're putting money away to hopefully one day be able to do that too.

Jade Warshaw (112:51)

I love that.

George Campbell (112:52)

That's so cool, man.

Jade Warshaw (112:53)

Live like no one else. So later you can live and give like no one else.

Guest (Andrew or Megan) (112:55)

Absolutely.

George Campbell (112:56)

So what do you tell people the key to becoming debt free is?

Guest (Andrew or Megan) (113:02)

I think it's what everyone says all the time.

Caller (113:04)

Right?

George Campbell (113:05)

Yeah.

Guest (Andrew or Megan) (113:06)

Being part of and having those conversations together. I think we, when we first got married, did not have joint finances. I was paying off student loans and I said, let me just keep it coming out of my account. And then we didn't know where the money was, what was coming, what was going, who was spending what. And so finally when we sat down and did this and got everything on the same page. It just makes so much more sense. And now there's no question about what's going on. So the communication and getting on a good budget. Every dollar is my favorite thing. I'm on it all the time.

Jade Warshaw (113:34)

Love that.

Guest (Andrew or Megan) (113:34)

Because we know exactly what's going on, Then both of us can say, I

George Campbell (113:37)

love to hear it. Well, we'll gift you two everydollar subscriptions. You can keep those to renew yours and keep the fire going for your new savings goals. You can give them to someone else who you want to encourage to get on the same journey. That's our little parting gift to you.

Guest (Andrew or Megan) (113:50)

Thank you.

George Campbell (113:51)

Can we get the kids on the stage?

Guest (Andrew or Megan) (113:52)

Yeah.

George Campbell (113:53)

All right, what's their names and ages?

Guest (Andrew or Megan) (113:54)

So Gavin is nine and Leo is seven.

George Campbell (113:58)

Love it. And they've been practicing. If they know the phone number, they for sure have been practicing. Practicing the debt free screen.

Guest (Andrew or Megan) (114:03)

Yeah, we're very good screamers in general. So we're hoping that the debt free part.

George Campbell (114:07)

Hey, blow the audience away, guys. Okay, ready? We've got Andrew and Megan and Gavin and leo. Chicago area. $165,000 paid off. That's the car loan, the pool, and yes, even the mortgage. They did it in 22 months, making 200 to 230 with the side hustles. Count it down. Let's hear a debt free scream.

Guest (Andrew or Megan) (114:28)

Three, two, one.

Jade Warshaw (114:31)

We're debt free.

George Campbell (114:38)

Man, that's pretty wild.

Jade Warshaw (114:40)

That's what I'm talking about. Listen, you know what we teach on here all the time. You know, you can be intentional. You don't have to be intense about paying off the mortgage. But, man, every once in a while, folks like Megan and Andrew come along and they just sit slam on the pedal. And I'm not mad at them for doing it.

George Campbell (114:55)

No. And what's crazy is, yeah, they're making 200 grand, but the stats show people making six figures. Half of them are paycheck to paycheck. So don't tell me, well, if I made that much, no. Use your income and as you make more, keep throwing at the debt, keep working the plan, and eventually you'll become baby step millionaires at a young age with a whole lot of life on the other side. So proud of you guys.

Sponsor/Announcer (115:39)

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George Campbell (116:22)

Our scripture of the day, Matthew 6:34. Do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own. Mark Twain said the two most important days in your life are the day you were born and the day you find out why that's good.

Jade Warshaw (116:40)

You gonna learn today.

George Campbell (116:41)

All right. John is in New York City. John, welcome to the show.

Caller (116:46)

Hey, thanks for having me.

George Campbell (116:47)

Sure. How can we help?

Caller (116:49)

So to give some context, my mother in law, I love her to death. I love her daughter so much. She has a great income, you know, no debt except for her car. You know, the house has paid off. But I can't get her to buy in on retirement or saving. Actually I can't get her to buy in for a little bit. But then it's just goes completely out of the window for this reason or that reason. And admittedly I am worried that in 20 years she will be totally. That we will be responsible for her financially. And that concerns me, of course. So I don't really know how to get her to a place to like fully buy in because she's in a rare and unique circumstance where she has the ability to save her retirement over the next 10 years and have a good retirement retirement, but she just won't for, you know, a multitude of reasons.

Jade Warshaw (117:48)

Sounds like something spooked her or scared her or she grew up hearing something. Right. There's something that's living in her psyche that is informing her and it's clearly not the facts.

Caller (118:00)

I think that's right. Yeah. She grew up pretty poor and so I think it's one of the mentalities of what if I die tomorrow? And so she'll save. You know, we did get a Roth IRA going. You know, that's great. But you know, that's pretty much all she has saved for retirement.

Jade Warshaw (118:16)

So she will do a Roth IRA.

Caller (118:19)

Oh, she has about 25,000. And so that's the only thing that we've been able to stick to mostly because I think it's automated so she's

George Campbell (118:27)

maxing it out every year.

Caller (118:29)

Yes, but it only started three years ago. So, you know, quick napkin math in 10 years. I mean, in the way that, and frankly the way that she spends, you know, I mean, that will go in three months probably.

Jade Warshaw (118:42)

Does she have access to a 401k through her work.

Caller (118:46)

Yeah, yeah, she has access to it, but it, and we've sat down and, you know, did every single cent where it goes. And I mean, she has like five, six thousand dollars a month in her, in her mind.

Jade Warshaw (119:00)

What's the difference between her doing the Roth IRA and letting that be, you know, automated versus also setting the 401k and obviously that being automated in her mind, what has she said the difference? Is it just the amount of money or.

Caller (119:15)

Yeah, yeah, it's essentially the amount of money. But she, she recognizes that she makes a good amount of money, but she believes that life just continues to get in the way. You know, but then it's like I walk into Easter and you know, I got a basket.

Jade Warshaw (119:28)

Oh. So it's not the investing, it's her parting with that being that money being part of her day to day spending budget.

Caller (119:35)

Yeah, exactly, exactly. I mean, it's probably $200 a day and I just don't know where it goes goes. Like, frankly, I don't know where it goes. And I think that I will grow resentment if she has no money in 10 years. And I've just been watching this for, you know, two decades.

Jade Warshaw (119:51)

Where's your wife? And where's your wife, where's your wife in all of this? Because if you, you're a good son in law, you're talking with her, it feels like this is something that maybe your wife should be taking the lead on. And, and there's part of this where you both are going to have to relinquish the idea that you can't make her do anything. Like, she's a grown woman, she can make her choices. And because of that, you can also control what you're gonna do, which is if you and your wife have sat down and said, we don't believe that it's our job to fund her retirement. Let's just, we agree on that. Fine. But maybe it's our due diligence to let her know that as well so that she can factor that into whatever plan that she has. And then from there on you can kind of just go on about your business and say, I set the expectation and I'm aligned with my spouse. It's all good in the hood. Move on. What's wrong with that?

Caller (120:45)

No, and you know what, that, that, that is definitely a conversation where neither of us want to have it. And I think that if push comes to shove, we're both like on the fence. Like, of course we'll take her in, but that budget will look totally different than what she wants it to look like. But I think that setting the expectation is, is probably what needs to happen. Like if it, personally, if it were my mom, like, I'd probably like lock her in the closet, you know, six days. I'd be like, what are, what are we doing? Like, this is ridiculous because she, her take home is, is nearly $150,000.

George Campbell (121:16)

I mean it's, it's just disappearing into random spending.

Caller (121:20)

Exactly. Like I said, it's probably $200 a month.

Jade Warshaw (121:24)

I think you're burning too much energy on.

Caller (121:27)

Yeah.

Jade Warshaw (121:28)

Just continually circling what she's not doing. I can't believe she's doing this. She's got this. Why wouldn't she do. That's a lot of energy you're burning. Burning, John. And so I think you need to burn more energy on. Here's what I'm gonna do and here's what that's gonna look like. Here's what my wife and I are gonna say. Here's what we're gonna do. This is what it's gonna look like, this is what it's gonna sound like. And if it makes you feel better, because please hear me, I get it. There is just. When you come from someone, you know, you've got parents, you care about them. And even though it's very easy for myself or George to say it's not your responsibility because this is your family, you do feel it. So I want to acknowledge that you do wish that you could medal in it and go in and change it, but you can't. So if it makes you feel better, what you could do is say, I just want to make sure she knows I'm just going to set a regular rhythm of, you know, maybe it's once a year we kind of have a state of the union and we say, hey, we just want to. I. We don't know if you're interested in the investing thing yet. We're still here if you want help because remember, remember, we're not funding this. And, and as long as you're. It's almost like the college discussion that you have with children. You set the expectations and you set it early and often.

George Campbell (122:36)

No one's wrong with this.

Jade Warshaw (122:38)

Yeah.

George Campbell (122:39)

So I think you're gonna, you can, what you can do is support and equip your wife with some information to bring to your mother in law so that this conversation goes better. Because it's gonna take a little bit of a persuasive argument if you can even get her to invest. But the Good news is, as you found out, if you can get her to automate it it and just live on what's left, then you're golden. And so if your wife can sit with her, log into the 401k, ratchet it up, and all of a sudden she has less coming in each month. Well, now she has less that will, you know, flitter away into money leaks.

Jade Warshaw (123:09)

And also the good news, I think I heard you say her home is paid off. She's not taking on any new debt. Correct.

George Campbell (123:16)

She just has the car loan.

Caller (123:18)

Yeah, she just. A very nice car. And that's it.

George Campbell (123:21)

What's left on the car loan? Do you even know?

Caller (123:23)

Oh, my gosh. 34, probably. 34.

George Campbell (123:28)

Does she have any plans to pay that off or she just doing the minimum payment?

Caller (123:32)

Oh, minimum. Yeah, the 600amonth or whatever it is.

George Campbell (123:36)

She has.

Caller (123:36)

Savings bleeding. No, and that's the thing is that we would get. We would get to like 15, 20,000 again pretty easily, pretty quickly. And then it's like, you know, all of a sudden, like, one of them has access to the account and It'll be like $400 in there. I'm like, what is this? And it's not on the surface of like, you know, a $12,000 handbag or whatever. I think it's just like, literally $200 a day of just.

Jade Warshaw (124:02)

That'll do the choices.

George Campbell (124:03)

That's $6,000 a month, if you're doing the math at home. So it doesn't take much to just have all these money leaks eat away. Even when you make great money. And the more you make, the more you go sweet. More I can blow without feeling it. So this is going to be.

Caller (124:16)

We've doubled our salary. Like, we, like, we've done really good work. And I'm. And you're right. I'm so emotionally attached. Like, I. I just. I think about it as much as I think about my own finances.

Jade Warshaw (124:25)

You got to ch.

George Campbell (124:26)

That's the scary part. This is consuming you. So, I mean, it's like you can't want it more than she does. And at some point she might need to feel the pain. But again, that's too late for you where you're going. Well, I don't want to need to fund her retirement, so that's going to be up to your wife to go, mom, we love you. We are not your retirement plan. And I don't know what your plans are, but it doesn't seem like you have one. And I love you too much to watch you Retire broke and for you to become a burden. I want your retirement to be filled with dignity, filled with options and flexibility and not you needing to live with us because you have no other option.

Jade Warshaw (124:59)

Yeah. Oh, boy. And for anybody listening, man, if you're listening this, and you're in, you know, late 40s, going into your 50s, 60s, please, please, please take it upon yourself to do the right thing. Do not set up your children to have. To have conversations like what John is having. It is your duty to set yourself up for life. It. It should not be your. When you bring children into the world, world, it's your responsibility to take care of them. You brought them here, you take care of them.

George Campbell (125:24)

And there's no quid pro quo of, well, they now are my retirement plan because I raised them. No, that's selfish. That's what it is. And we're. We're seeing a generation that is the sandwich generation. Yes, they are trying to raise their kids. They're trying to set their own financial goals, and they got to take care of mom and dad who did not prepare for retirement.

Jade Warshaw (125:42)

They got their own kids to take care of.

George Campbell (125:43)

Like, hey, mom and dad, you had a situation 70 year heads up that one day you're not gonna be able to work anymore, and you squandered it. So this is why we're seeing a generation who wants to learn financial literacy, which is probably the only silver lining here. Well, that puts this hour of the Ramsey show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of peace, Christ Jesus.