Stop Starting Over and Break the Cycle for Good

Summary

The Ramsey Show: "Stop Starting Over and Break the Cycle for Good"

Date: May 26, 2026
Hosts: Rachel Cruze and George Kamel (Ramsey Network)
Theme: Breaking the financial cycle of setbacks and “starting over”—why people keep returning to Baby Step 1, how to stay committed as a family, overcoming debt fatigue, and building sustainable wealth regardless of setbacks.

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Episode Overview

This episode focuses on helping listeners recognize and break the recurring cycle of financial setbacks—especially the discouragement and frustration of constantly “starting over” with money goals. Through live calls with listeners facing real-life financial emergencies, marital discord, debt relapse, and income changes, Rachel Cruze and George Kamel provide practical solutions rooted in the Ramsey Baby Steps. The hosts emphasize the importance of aligning relationships, changing mindset and behavior—not just numbers—and address the emotional and psychological components of money management.

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Key Segments & Advice

1. Breaking the Cycle of Starting Over (00:32–09:20)

• Topic: How to stop recurring setbacks when paying off debt; the need for spousal alignment; ADHD’s role in financial overwhelm.
• Caller: Hannah from NYC
• Issues:
  • Restarting Baby Step 1 four times due to identity theft, COVID job loss, moving, and emergencies.
  • Husband overwhelmed (ADHD) and wants to separate finances for mental clarity.
  • Disagreement on use of incoming bonuses and settlements.
• Advice:
  • The core problem is misalignment in the marriage, not just the money.
  • Cut up credit cards, freeze your credit to remove temptation—"make the only path forward." (George Kamel, 06:30)
  • Employ zero-based budgeting for clear visibility and shared responsibility.
  • Seek therapy/counseling not just for ADHD but also for marital communication.
• Notable Quote:
  • Rachel Cruze [07:51]: “At this point, this now becomes a marriage problem. Not as much a money problem.”

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2. Climbing Out of the Payday Advance Trap (10:37–20:29)

• Topic: Overcoming the vicious cycle of payday loans and cash advances despite increased income.
• Caller: Savannah, single mom, Sacramento
• Issues:
  • Working two full-time jobs while in school, still "stuck" in debt cycle.
  • Doesn't experience relief from raising income due to lack of budgeting.
  • Facing collections and potential lawsuit over maxed-out credit cards.
• Advice:
  • Budget with the EveryDollar app (gifted a free premium year).
  • Zero-based budget: “If there is no plan, then it is gonna just disappear.” (Rachel, 14:00)
  • Cut up credit cards, negotiate with collections attorneys (Guardian Litigation Group).
  • Emotional encouragement: recognize the magnitude of being a single parent.
• Notable Quote:
  • Rachel Cruze [19:53]: “When we talk about changing your family tree on this show, that’s what it’s about. That’s your ‘why’—fighting for these girls so you guys have peace and control over your money.”

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3. Scarcity Mindset & Delayed Goals in High Cost-of-Living Areas (22:43–35:37)

• Topic: Feeling “left behind” despite six-figure income due to housing prices and fear-driven savings.
• Caller: Jordan, age 24, San Diego, earns $120k/yr
• Issues:
  • Frustrated with not being able to buy a home, start a family, or “feel ready.”
  • Significant savings/investments but feels addicted to saving and fearful of spending.
• Advice:
  • Practice patience; don’t rush milestones—“Release yourself from the guilt and from the lies you were told…” (George, 24:11)
  • Budget not just for savings but also for experiences and giving.
  • Hosts run investment projection: his $50k now = $2.7M–$5.9M at retirement with zero or modest contributions.
  • Let go of social comparison, focus on the slow, non-flashy path.
• Notable Quotes:
  • George Kamel [26:35]: “All you’re seeing right now is this little tiny snapshot of your life right now, and then you see these very big goals far away. And I think you’re closer than you realize.”
  • Rachel Cruze [35:43]: “Let us free you. Enjoy some of the money because you’re going to get to 12 million and go, ‘should have went on a vacation probably.’”

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4. Negotiating Collections & Avoiding Lifestyle Traps (36:51–42:48)

• Topic: Handling collections for small debts despite high income and a luxury car.
• Caller: Lindsay, OKC; $270k annual income; $77k debt
• Issues/Advice:
  • “Don’t out-earn your stupidity” (George, 41:22) — high income doesn’t excuse financial sloppiness.
  • Set identity statements: “I’m a person who doesn’t borrow money… who works on weaknesses.”
  • Sell expensive car unless it's quickly paid off; focus on systems as much as behavior.

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5. Multigenerational Living Boundaries & Communication (45:46–51:08)

• Topic: Should an in-law living in your home pay for room and board?
• Caller: Katherine, Atlanta
• Advice:
  • Clarify expectations via open conversations; ambiguity breeds anxiety and resentment.
  • Consider if in-law is “earning her keep” via free childcare, which often outweighs rent.
  • “To be unclear is to be unkind.” (George, 51:33)
  • Rachel Cruze [51:56]: “Choose guilt over resentment. You’re going to feel guilty having the conversation, but you’d rather have that feeling than let resentment build.”

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6. Wealth Guilt, FIRE Movement, & Healthy Spending (54:26–62:45)

• Topic: Difficulty adjusting from “deprivation” mindset to enjoying financial success.
• Caller: Woody, Atlanta; $1.2M+ in retirement, pension guarantees
• Advice:
  • Arthur Brooks “Five things you can do with money, four of them bring happiness: generosity, buy time, buy experiences with loved ones, save/invest.”
  • Allow forced “fun” spending in the budget.
  • Evaluate therapy for persistent anxiety/scarcity, often rooted in family upbringing and trauma.
  • Rachel Cruze [60:57]: “Money can control you … on one end if you’re broke … but it also, on the other end, can have the control where you have this false sense of deep security, and opening your hands and letting some money go kind of counteracts that.”

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7. Debt Fatigue & Dad Guilt (65:59–68:05)

• Topic: Struggling to stay motivated in Baby Step 2 and not wanting to “rob” kids of a childhood.
• Advice:
  • “We are pinning getting out of debt and not spending money to ‘bad childhood’… you can have a great childhood and not buy your way into it.” (George, 66:25)
  • Short-term sacrifice will give space for long-term family joy; time is more important than stuff.

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8. Smart Business Buying Without Debt (68:28–73:00)

• Caller Question: Should I buy an existing business by borrowing, or start slower with cash?
• Advice:
  • Never borrow for a business; instead, negotiate seller-financing based on profits with no personal risk (“sweat equity” agreement).
  • Don’t stake your future on inflated valuations and hope—move at the speed of cash.

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9. Rebuilding Habits after “Shortcut” Debt Payoff (73:00–74:56)

• Topic: Paying off all debt via home sale — fear of slipping back.
• Advice:
  • Validate fear—pain teaches behaviors, so “manufacture friction” (close accounts, freeze credit, formal family discussions) to replace it.
  • Only take the shortcut if you’re radically committed to the new identity.

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10. Mortgage Payoff and Tax Implications for Retirees (77:17–81:58)

• Caller: Sylvia, Seattle; 73, considering cashing out 401k to pay off remaining mortgage
• Advice:
  • Run numbers and decide if paying a little extra in taxes is worth the “done” feeling.
  • Consider diversified asset liquidation (sell less-loved property?); prioritize peace of mind over minor tax optimization.

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11. Navigating Marital Crisis during Financial Hardship (82:12–86:54)

• Caller: Sophie, Austin; husband left, $26k medical debt, precarious cash flow
• Advice:
  • Marriage and financial crisis require clarity: ultimatum conversation—“If you don’t come home, you’ve opted out.”
  • Secure safe housing/income, then legal support for settlement/divorce if reconciliation fails.

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12. Is Debt for Education Worth It? (86:54–95:23)

• Caller: Jason, Jackson; considering $65–80k student debt for civil engineering degree
• Advice:
  • Cautioned against 6-year online degree plus debt for a modest salary uplift (“It’s not double your income”).
  • Promoted alternate solutions: Sell depreciating assets (mobile home, vehicles), rent, cash flow education.
  • “Everything in your life right now is going down in value and you owe payments on it.” (George, 93:12)

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13. Financial Fragility & Bankruptcy Myths (98:35–104:00)

• Caller: Mary, Tulsa; $178k in debt (IRS, student loans, credit cards), considering bankruptcy
• Advice:
  • IRS debt trumps all—can’t be discharged in bankruptcy.
  • Fire unhelpful CPA, get onto payment plan.
  • “You can clean this up, but it’s going to take a lot of focus and it’s going to take some time.” (George, 103:20)

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14. Baby Step 2 Confusion: Which Debt First? (107:50–115:27)

• Caller: Brittany, Raleigh; $100k in total debt, confused by secured vs. unsecured debts.
• Advice:
  • List debts smallest to largest, regardless of type (use the snowball method).
  • Drastic lifestyle changes—possibly sell truck, become a one-car family for a season.
  • It’s temporary, not forever: “There has to be something drastic that changes from a lifestyle perspective and income perspective.” (Rachel, 113:12)

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15. Young & Ambitious: When to Buy Your First Home (118:44–123:00)

• Caller: Noah, 19, Missouri; $34k saved, wants to buy $200k house
• Advice:
  • Mortgage payment on a $200k house would eat almost all his income; focus on raising income and keep saving for now.
  • “Don’t rush into the housing market … Your best wealth-building tool right now is your income.” (George, 121:13)

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16. Truck Debt Trap: Getting Out (123:06–126:49)

• Caller: Nathan, Rochester; owes $29k on a $17k truck at 14% interest, payment $586/month
• Advice:
  • Sell the truck, take out a small personal loan to cover the deficit, buy a beater car.
  • Never let cars exceed half your annual take-home pay.

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Memorable Quotes & Moments

• George Kamel [06:30]: “If you make the only path forwards, you will move forward.”
• Rachel Cruze [07:51]: “At this point, this now becomes a marriage problem. Not as much a money problem.”
• Rachel Cruze [14:00]: "If there is no plan, then it is gonna just disappear."
• George Kamel [41:22]: “What’s happened is we've been lackadaisical with our money because we can sort of out-earn our stupidity.”
• Rachel Cruze [19:53]: “You are doing an incredible job setting up a life for your girls … When we talk about changing your family tree … that’s what it’s about.”
• Rachel Cruze [35:43]: “Let us free you. Enjoy some of the money because you’re going to get to $12 million and go, ‘Should have went on a vacation probably.’”
• George Kamel [51:33]: “To be unclear is to be unkind.”
• Rachel Cruze [60:57]: “Opening your hands and letting some money go kind of counteracts that [false sense of deep security].”
• George Kamel [115:32]: “A third of people making six figures … are paycheck to paycheck.”

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Closing Thoughts

This episode demonstrates the complex, deeply personal reality behind “just follow the steps.” Rachel and George push beyond formulas, shining a light on relationship alignment, mindset shifts, and the power of clarity and boundaries. Their patient, sometimes tough-love approach empowers listeners to break free from repeating financial cycles and chart a new, sustainable course.

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Timestamps for Notable Segments

• [00:32] – Show Introduction & First Call (Hannah: Marriage, ADHD, Debt Cycles)
• [10:37] – Savannah: Payday loan cycle, single mom survival
• [22:43] – Jordan: High income, scarcity, housing in San Diego
• [36:51] – Lindsay: Collections, high income, lifestyle trap
• [45:46] – Katherine: Multigenerational living, boundaries
• [54:26] – Woody: Saving addiction, retirement, FIRE
• [65:59] – Grayson: Dad guilt, debt fatigue
• [68:28] – Eunice: Buying a business, avoiding debt
• [73:00] – Natalie: Paying off debt with home sale—behavior vs. pain
• [77:17] – Sylvia: Paying off mortgage as retiree
• [82:12] – Sophie: Marital crisis, debt, “should I leave?”
• [86:54] – Jason: Is student debt for career worth it?
• [98:35] – Mary: Crushing debt, bankruptcy myths
• [107:50] – Brittany: Which debt to pay off first?
• [118:44] – Noah: Can a 19-year-old afford a house?
• [123:06] – Nathan: Stuck in truck debt trap

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Useful Links Mentioned

• Ramsey Solutions
• EveryDollar budgeting app
• SmartVestor Pro investment pros
• Guardian Litigation Group
• Ask Ramsey (AI tool for financial Q&A)

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Tone: Conversational, tough but kind, hopeful, direct, coach-like
Language: Practical, sometimes humorous; empathy and real talk for callers’ emotional as well as financial struggles.

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“You can do this. You’re not starting over—you’re leveling up.” – Ramsey Show Core Message

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Transcript

[Sponsor/Ad Reader]

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[Rachel Cruze]

Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey network in the Fairwinds credit union studio, this is the Ramsey show and I am Rachel Cruz hosting this hour with good friends and my other co host of smart money happy hour, George Camel.

[George Kamel]

Excited to be with you.

[Rachel Cruze]

Always fun.

[George Kamel]

George, new hairdo. By the way, if you're watching on YouTube, I want to call it out. The extensions are gone. If you've been following the journey of Rachel, Jeff.

[Rachel Cruze]

I chop the hair. I change my hair every six months. So, yeah, this is the new and approved.

[George Kamel]

See, I look the same as I did four years ago.

[Rachel Cruze]

George hasn't changed.

[George Kamel]

A man of consistency.

[Rachel Cruze]

Always predictable, George Camel. So, yeah, give us a call at 432-55225 because our advice is as predictable as George Camel's looks.

[George Kamel]

So there we go, full circle.

[Rachel Cruze]

All right, let's go to Hannah in New York City. Hi, Hannah. Welcome to the show.

[Caller]

Hi, Rachel and George. Thanks for having me.

[Rachel Cruze]

Absolutely. How can we help?

[Caller]

Okay, so my question is, how can I keep my husband dedicated to paying off this debt with me when we are back at baby step one for the fourth time now and he is overwhelmed and wants to separate finances.

[Rachel Cruze]

Oh, wow, man. What's caused you guys to be on it the fourth time? What's happened?

[Caller]

Yeah, we've had a lot of bad luck. I'm just going to wrap it by our time line for you here. We got engaged in 2019. That's when we started this journey, started paying off. We had no major, major debt. It was some credit card debt, student loans, nothing major. At that same time, we found out that his mom stole his identity and it was mainly student loans in his name that he did not know existed that he was getting the refund checks back to her. So that kind of muffled things up, but we were working towards it. 2020 came Covid. We got married that year, but we canceled our wedding. We kept working at it. 2021, I got pregnant with our daughter and we lost our jobs because of COVID It was really hard here. We had to move because our landlord died. And then from there, we kind of wiped out our savings for the first time, and we had to start over at baby step one.

[Rachel Cruze]

Okay. So it's been started over four times over the last eight years. So it feels like every other year you're going backwards. Okay. And is that the main reason of his. Him wanting to separate finances? Because maybe decisions you guys made in the midst of some of this he doesn't agree with.

[Caller]

So it's more so that he has really bad adhd. He wants to be able to focus on. He works in sales, and he wants to be able to focus on his work and not have to worry about, like the bank account being too low or anything like that. Because it's basically we were hit with something every year and it just kind of resets us. And I'm throwing all the extra money at paying off this debt. And now he's trying to focus fully and he's saying that if we share a bank account that it's too confusing for him because he gets overwhelmed because he doesn't know what's going on, what's coming out. And we've tried every app, every spreadsheet, everything, and it just seems like nothing's working.

[Rachel Cruze]

He thinks the solution is just to work on two different pages is his solution.

[Caller]

Yeah, he thinks that's going to make

[George Kamel]

this go better for everybody, for you

[Caller]

to do this on your own.

[Rachel Cruze]

That he can't concentrate on one account. Yeah, the fact that you said adhd,

[George Kamel]

so he wants to focus. I'm like, well, those things are just already not working together.

[Rachel Cruze]

Okay, so, Hannah, how much debt do you guys have?

[Caller]

So currently we have. We fell back into credit card debt about two years ago. We have 15,000, just about on that. And then we just have my student loan debt left, which is 23,000.

[Rachel Cruze]

Okay, how much do you guys make a year?

[Caller]

Our take home is 7,500. And then on top of that, he will get commission and bonuses.

[George Kamel]

Where do those go?

[Caller]

He just. Right now, he just started a new job because he was laid off two months ago and then went right into a new job. So he worked it out that he will get a bonus at six months and a bonus at 12 months. That's going to be $10,000. And then he's also looking at a settlement from his last job because he was laid off while he was on paid family leave because her son was born. And he's negotiating that, but that's looking to be about 10,002. I want to put throw that at the debt. And he wants to have that as kind of like an Extra nest egg, him, more security.

[George Kamel]

It's going to disappear just like it has every single other time. So here's the. Here's the napkin math, Hannah, just to give you some clarity, if you knock this out in 12 months, that's a little over three grand a month, which means you guys live off of 4,500. Plus the extra, the bonuses, all of that. Can you guys do that?

[Caller]

It's a little tight because we live in New York. Our rent is a little bit over 3,000. That includes all our utilities, everything in it.

[Rachel Cruze]

Are you working, Hannah, at all?

[Caller]

Yeah, I work from home and stay home with our kids. Okay.

[Rachel Cruze]

How much do you bring in home?

[Caller]

About 1,000 a paycheck, but that's after my insurance and everything.

[Rachel Cruze]

How much are you. How many paychecks do you get? Two paychecks a month. Are you paid weekly or checks a month?

[George Kamel]

And that's on top of the 7,500, or is that combined?

[Caller]

No, that's included in it. So his base is 70,000, and then I get the 2,000, and then he'll get commission and bonuses.

[George Kamel]

Got it. Okay, so 7500 plus is what we're working with. Have you guys tried every dollar, our budgeting app yet?

[Caller]

We did a while ago.

[George Kamel]

Okay. I think we need to restart this process with a whole different mindset that we are doing this together. We are going to cut up the credit cards, we're going to freeze our credit, because so far, you've given yourself every opportunity to take a shortcut, to go backwards. And so if you make the only path forwards, you will move forward.

[Caller]

Yeah, I mean, where I'm at, where. I just kind of want to throw everything at this and get it over with, because I feel like we're paying about a thousand. Well, I know that we're paying over $1,000 a month at credit cards every single month. And I just want to get it

[Rachel Cruze]

over with like, okay, so that. So the fact that you guys. Because, I mean, if you're saying what you're saying is true, and if you're as, you know, hard bent on like, hey, we're not. We're not going into debt anymore, even if an emergency comes up. The thing about taking debt off the table is it forces you to be creative in your options. And so it forces you then to say what else has to be true for us to move forward in this emergency. So if that is where you're at and that's not where he is and what he's wanting to do with money is so different to the point of wanting separate finances then at that point, you guys just are not aligned, Hannah. I mean, you and your husband are. At this point, this now becomes a marriage problem. Not as much a money problem.

[George Kamel]

It's not the budget's fault.

[Caller]

I agree. I agree.

[Rachel Cruze]

Have you guys ever gotten, have you seen anybody? Have you guys brought in a third party at all?

[Caller]

We, this is difficult to. We were seeing kind of like an ADHD therapist for his adhd, because a lot of it stems from that.

[Rachel Cruze]

Does he have some, does he have medication at all?

[Caller]

Yeah, he's on medication for. It's a very severe case and.

[Rachel Cruze]

Okay.

[Caller]

Yeah, I don't know what else to do about it. Like, it's just very hard for me.

[George Kamel]

Well, what I would do, what you can control is the safeguards you can put in place so that you can't make any more mistakes, that you can't go backwards. And that's why I'm telling you, if you cut up the cards, you don't own a credit card, you can't go into credit card debt. If you freeze your credit, you can't go into more debt. So if we at least stop that, it'll help.

[Rachel Cruze]

And it sounds like you guys need new patterns in your marriage because his ADD adhd, it's affecting you is what it's sounding like more than just the money. It sounds like it's kind of coming. So you guys may need some more guardrails and processes in which you make decisions within your marriage and new communication styles almost in general. And then that will actually bleed over to the money thing. So I'm glad you guys are seeing someone at some level, but still engage your marriage because when that heals, the money stuff will follow.

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[George Kamel]

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[Rachel Cruze]

Up next, we have Savannah in Sacramento, California. Hi, Savannah. Welcome to the show.

[Caller]

Hi there.

[Rachel Cruze]

Hello. Hello. How can we help?

[Caller]

So I'm a mom of two little girls and I work two full time jobs and I go to school full time and I'm in about $37,000 of debt and that includes my car and everything. And I'm stuck in like this loop of like cash advances and everything. And so when I get paid, I feel like I have nothing and it goes by so quickly and I just don't know how to get out of this. Like, I want to get my debt, you know, back to zero and not have to worry about any of this anymore.

[Rachel Cruze]

Yeah, absolutely. Are you, are you single, Savannah?

[Caller]

Yes.

[Rachel Cruze]

Okay. And you have your two girls. How old are they?

[Caller]

I have a seven year old and a two year old.

[Rachel Cruze]

Oh, wow. Okay. And you said you're working two jobs. Is there one that's full time and then one is part time or are they both part time?

[Caller]

No, they're both full time. I work both of them at the same exact time. One's remote and one's in office and I just do both at the same time.

Whoa.

[George Kamel]

And you're in school full time?

[Caller]

Yes, and I'm in school full time.

[George Kamel]

How many hours in a day do you have? Do you have more than us? How are you doing this?

[Caller]

No, I. I know it's crazy. It really is crazy. I just. One of my jobs is a little more laid back and so I'm able to do my other, you know, because I do customer support on one side and I do property management on the other and I've just been really blessed with my property management one.

[George Kamel]

So what's your income?

[Caller]

I've been able to make it work. I bring home about 6,005amonth to maybe 7,000. It just depends because sometimes I get, you know, like lease bonuses for the property management one. So give or take, it's about 6,500 7,000amonth.

[George Kamel]

And what's causing you to go in the hole every month and turn to these cash advance apps?

[Caller]

I think it was just a cycle because I just got this second job maybe two months ago. So I think it was a cycle with my other job that whenever I'd get paid, like it just wasn't enough. Like I have my, you Know, my rent, my bills, daycare. Like, I drive a lot, so gas is expensive and I've just got stuck in these. And then also my credit cards, you know, I have these minimum payments that I have to, you know, keep up with. So I just feel like I don't have enough ever. And so now I just, I need to get out of this, like, cash advance.

[Rachel Cruze]

Have you ever, you know, have you felt different the last two months considering you just added a full part time job or. I'm sorry, a full time job. Have you felt any, any relief in it at all or where that money's going?

[Caller]

You know, it's funny you say that because everyone asked me that and no, I don't even feel that there that I've even made any more money.

[Rachel Cruze]

How much extra are you making per month now with this job versus in January?

[Caller]

I would say it's about an extra 2500amonth.

[Rachel Cruze]

Okay. Are you on a super strict budget?

[Caller]

No.

[Rachel Cruze]

Okay. That might be our problem, Savannah. Honestly, Because I think so. Because what you described, you should feel a immense amount of relief with $2,500 extra and the fact that it's just slipping.

[George Kamel]

Disappeared.

[Rachel Cruze]

Yep, it's going somewhere. And I'm not saying you're being irresponsible or anything like that, but I think there is something about having a plan for this money because if there is no plan, then it is gonna just disappear.

[George Kamel]

Someone else will have a plan for it, like the cash advance apps or doordash or whoever. They want your money and so you need to want it more than they do.

[Rachel Cruze]

Yep. So. Well, we teach Savannah as a zero based budget. So every single month before the month begins, you're gonna look at the month ahead and say, you know, in this case it will be June, which we're toward the end of May. This is actually gonna be a great experiment. And just as a little side note, we will get you everydollar premium for a year. That's our gift to you because with every dollar premium, you're able to attach your bank account to it and you're going to cut up the credit cards. There's no more swiping. They're going to be gone. Okay. You're going to just use your bank debit card and you're going to create a zero based budget within every dollar and every dollar. That's the way the app is designed. Some people do budgets, you know, like a 50, 30. Like, people have like different philosophies around budgeting, but we have found the zero based budget is One of the most effective, because what you do is you take your income, and then under that, you're going to list out everything you spend money on. And again, in every dollar, there's going to be some pre categories that everyone has, right? Rent or your mortgage or lights, electricity, cable, whatever. So you can add. Subtract some of these categories, but the goal is for that $7,000 every month has a plan, and you know exactly where it's going. Including debt, including extra on the debt. Because you're looking at your food category and you're like, I'm only spending. I'm making this up. 500 bucks a month on food. Like, that's it for me and the two girls. Like, that's all we're spending. And we're gonna have to get creative. And it's gonna be beans and rice, rice and beans, peanut butter and jelly, ramen noodles. Like, we. We want nutrition. But that may come a year later when we have our money under control. You know what I'm saying? Like, genuinely, it is like stripping down to everything. And you're gonna be cutting your lifestyle. Cause when you do the budget, you're gonna. It's gonna be very revealing of. This is where all my money's going. And there's going to be categories. Savannah, you're going to get pissed, and you're going to be like, get this out. No, we're cutting that subscription. We're not doing this because it starts to actually visually show you, like, here's some freed up money, and here it is. That's going to be tackling the debt. That's where that margin is going to go. And so that would be my number one for sure. And then George, obviously starting to pay off some of these still with the debt snowball, even though the payday options are in there, which are terrible and terrible interest rates and all of that. But talk to us about your debt, Savannah. How much if you break it all down, what's all the categories of the debt?

[Caller]

So most. I mean, most of it's credit cards. I owe 7,000 on my car. But that one, I make sure I pay that every single month or, you know, but what made me honestly reach out is my. One of my credit cards, I got a letter from an attorney that they were going to try to, you know, sue me for the money. And I'm like, you know, what do I do? So all these credit cards, they're all maxed out to about 5,000. And then I have one that I share with actually my dad, and that One's maxed out to 10,000. And it's not his fault, it's my fault. So I just. It's a lot, you know, I need to get these credit cards under control for sure.

[Rachel Cruze]

Yeah. And so cutting them up and them not even being an option is going to be your first bet. But then you can also, if they have gone into collections, there are some great options with actually calling them and negotiating your debt. And there's actually some resources.

[George Kamel]

George, we're going to hook you up, Savannah, hang on the line. We'll hook you up with Guardian Litigation. They're a partner advisor, a nationwide law firm, and they help people exactly in your shoes to make sure that you're not getting bullied and harassed. And they can actually help you settle these debts for what you can pay. And so we'll hook you up with that. You can go to guardianlit.com Ramsey but we'll make sure that when you're off the line, our team connects you to those good people. And that's part of the solution. And then the rest is how do we debt snowball these things? You know, delete the cash advance apps and go. Like Rachel said, we're going to get creative. Debt is no longer an option because we're not going to be able to get out of debt if we go into it. And so that's going to be your hard line with the budget. That's going to be your hard line with spending less and making more. Clearly, you're doing a good job making more, but you're finding out there's a ceiling to that. We have to learn how to spend less too, in order to create that margin.

[Caller]

Right? Yeah.

[Rachel Cruze]

Yeah. And don't let the credit card companies scare you, Savannah. I mean, if anything, if they are in collection, honestly, it's more an advantage for you because what happens is they end up selling the debt to another company and then they call you the collections company and then they end up selling it next week to another company. I mean, it's just a disaster, that whole industry. And they're going to try to freak you out, but they're going to sue you, they're going to garnish your wages. They'll just talk it up. And honestly, if it isn't collections, that gives you the power to negotiate. Now, if you have the money, people listening out there, that's not in Savannah's case, if you have the money to pay your credit cards off, you pay them off. But when you're in a case like you, Savannah, where you're like, I don't have the money to pay. Then when they go into collections, then again, it's a little bit to your advantage because you may be actually be able to negotiate and depending on how deep it is, I mean, sometimes pennies on the dollar. So you. So. But yeah, but that company, that law firm will be able to help you. Yeah, they're amazing. And then I just want to encourage you, Sav, you're a single mom. And any single parent out there, just in general, whether you know you have your finances in order or you're stressed about them, that in and of itself is exhausting. Like, that is so hard. So hard. And you are doing an incredible job setting up a life for your girls. I mean, you're gonna be doing the grunt work for the next probably two years to get yourself out of this. But, Savannah, when we talk about changing your family tree on this show, that's what it's about. That's your whys, fighting for these girls so that you guys have peace and control over your money. And you're. You're a hero to say, I'm going to strap on that cape and I'm going to take this journey. So we're here for you. Stay on the line, though. We're going to hook you up with everything we've talked about and call us back, Savannah, if you need anything.

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[Rachel Cruze]

We always get tons of questions when it comes to investing. And so if you have a lot of questions or you just want some help, make sure to get a smartvestor Pro in your corner. Smartvestor Pros are registered investment professionals who lead with the heart of a teacher. And we have been and they've been connected to our listeners for years. I mean, this is something that Ramsey is so big on is getting someone in your corner that you can trust. So SmartVestor pros can create a plan to help you reach your goals and help you make informed investing decisions. So we will show and we can Even show you 5 star rated SmartVestor Pros in your area for free. If you go to ramseysolutions.com smartvestor to find an investing pro near you or if you're listening on YouTube or podcast, make sure to click the link in the description. All right, let's head to Jordan in San Diego. Hi, Jordan. Welcome to the show.

[Caller]

Hello. How are you guys doing today?

[Rachel Cruze]

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

[Caller]

I'm doing great. So my name is Jordan. I'm from San Diego, California. I'm 24 years old and my current income is about $120,000 a year. The reason I'm calling you guys today is feels like my entire life people have always told me go to college, get a good job, make a lot of money and everything else will follow. I think I've done a pretty good job at getting to that point now. But it seems like the more time goes on and the more money I make, the life I always imagine myself having keeps going further and further out of reach. The reason I say that is, as I said, I live in Southern California, in San Diego. I look for houses in San Diego too far out of my reach. I make a broader circle and I go further. And no matter how far I go, it still feels like houses. A mortgage is going to cost me around 3,500 to $4,000 a month, which with my income doesn't sound so bad. But I think I've finished most of the steps I want to in life and the next thing I want to do is start a family and have kids and focus on that. And it just feels so out of reach for me to keep contributing to my savings accounts, to pay off a mortgage, to be able to support my wife while she stays home and to take care of kids and make sure that they have some sort of support going to school and I don't really know if I'm doing something wrong or if there's something I could do differently.

[George Kamel]

Here's what you've done wrong, Jordan. You've assumed that you have five years left to live and that you must accomplish all of this in the next five years or else. So all you need is patience. You're doing so well at 24, far better than I was. And yes, you have a high cost living area, but there's no rule book that says if you don't own a house in San Diego by 25, you screwed it up, man. And so release yourself from the guilt and from the lies that you were told, that if you just do all of these things, your life's going to be great. Those people meant well for you, but they don't live your life. And so I would just be very patient. Go. You're crushing it. Let's learn to live on less than we make. Put money in savings and then do this for the next six years and then call us and see where you're at.

[Caller]

Okay, I appreciate that. Something I did want to ask. I'm currently putting money into my work tsp. I work for the government's wheel at their savings plan. I put money into my personal investment account that I'm saving and I feel like obviously I'm extremely grateful for the job that I have and I know a lot of people are in a much worse situation than me, but I feel like there's a lot of things I don't do because I'm just so addicted to saving my money. I'm so afraid of bad debt that I think there's a lot of debt. Do you have any debt? I have a $7,000 remaining on my car note.

[George Kamel]

Okay.

[Caller]

And other than that, are you working

[George Kamel]

on paying that off?

[Caller]

Yeah, I just paid off. I think it's 290amonth and it's easier for me to just.

[George Kamel]

How much do you have in savings?

[Caller]

I currently have in my individual account I have around $20,000 in savings, liquid cash, and my savings account have 5,000. And then I have personal Roth IRA with 25. And then like I said, my TSP has another 25 in it.

[George Kamel]

Great. Well, you're doing great on the investment side. I would just have some focus with your financial goals. And right now my singular focus would be getting out debt. The next focus is to have a liquid emergency fund of three to six months of expenses. And as a young single guy, this is also the best time because you have no other responsibilities, no one else to answer to. It's just you and your own goals. So you can actually make a lot of traction right now until you meet that wonderful person, start a family, maybe they'll be working too. Your income's going to grow over that time. And so all you're seeing right now is this little tiny snapshot of your life right now, and then you see these very big goals far away. And I think you're closer than. Than you realize.

[Rachel Cruze]

Yeah. And I don't think you're comparing your life to reality either, Jordan. So you either have expectations that you should be, you know, where you should be at 34 and you're 24, or you were seeing people on social media, or your friends are talking, whatever it is, and what's being painted in front of you is probably not the full picture either. And so if you are in your early 20s, making six figures, no debt. So I'm going to count that for you because I want you to pay off your car tonight with some of the savings, okay? Just be done with the car and then. And you have cash, you know, saved, you have investments. Like, everything that you're doing, you are doing it well. And the hard thing about building wealth the right way is that it takes time and patience. It's not going to be as flashy as the people you see on TikTok that are like, I bought 18 VRBOs and, or VRBO, whatever they call, or, you know, Airbnbs and, like, you know what I mean? Like, you're gonna see and I make 1 million a month, or like, what all the crazy stuff you see majority of the time, number one, is not even true, or number two, they've built their entire financial life on a house of cards. So slow and steady wins the race. And it's not gonna be flashy, it's not gonna be exciting, but it is gonna be solid and it's gonna be all yours. Cause you're not gonna be borrowing money to do any wealth building. It's gonna be you actually making decisions about your life. And so that's what I would encourage you, that I think what you're wanting is not bad or wrong, but I think feeling like a failure because you don't have it right now, to George's point, at 24, we just want to, like, be like, Jordan, you're good. You're doing great. You're doing great.

[Caller]

I think. I think one of the reasons I'm so overwhelmed now is because I have happy to say I've already met the love of my life. We're talking about marriage.

[Rachel Cruze]

Oh, great.

[Caller]

Talking about kids.

[Rachel Cruze]

Yes, sure.

[Caller]

I don't have a ring. I don't have a wedding. I don't have a honeymoon, which is obviously, I'm not planning on spending an extravagant Amount on it. Right. I can't imagine bringing kids into the world until I feel ready, which everyone

[George Kamel]

tells me, not emotionally, not financially. The best thing you can do is be debt free with an emergency fund and be aligned with your spouse on your goals, financially, spiritually, all of that. That's the best thing you can do to be ready. Other than that, don't wait until you have a certain amount in your investment account to have a kid.

[Rachel Cruze]

No. And go ahead and get married. Jordan, if you guys know, do it.

[George Kamel]

What's holding you back right now? Is it finances?

[Caller]

I'm so afraid of not having money.

[Rachel Cruze]

How did you grow up?

[Caller]

I grew up. So my dad is the hardest working guy I know. He never. He doesn't have a retirement. He doesn't have anything.

[Rachel Cruze]

That's your fear.

[Caller]

Another thing.

[Rachel Cruze]

That's your feel.

[Caller]

And I'm just. Yeah, I'm so worried.

[Rachel Cruze]

Yeah.

[Caller]

Like, I want. I love my dad, but I want the opposite of that.

[Rachel Cruze]

Yes.

[Caller]

I want the idea where I know the bills are gonna get paid. That's why I love my job. Everyone talks about owning a business. I love union. I love having a stable paycheck. I love having investments made into my account automatically. And there's no other way to rather do it.

[Rachel Cruze]

Yep.

[Caller]

There's just the idea of me, like you're telling me to pay off to $7,000. Right. Which I know is a great idea. The idea of me losing $7,000 in cash and it goes into my car. I know it's a good idea, but it feels wrong because in my head, if I don't save, I feel like I'm failing.

[Rachel Cruze]

Right. Because at that point, from where your psychology is, is that saving is the only. The only thing you should do with money. And out of good reason, because you're looking at your parents and like, holy crap, they have nothing. They're not gonna. They worked so hard, but now they have nothing to show for it at retirement. But here's the deal, Jordan. There's two other parts of money that you have to engage in to have a holistic, healthy financial picture. Giving and spending. Okay? So you may go through seasons where you're gonna be saving more. Maybe you and your soon to be fiance, soon to be wife, you're saving up for that down payment on a home. And you guys are really like, hey, we're gonna pull back on lifestyle to really get that down payment. That's great. But over the course of your life, Jordan, if you have this mentality the rest of your life, that's where Money can become an idol. You will hold onto it so tightly and have this sense of security that this is gonna be your answer. And then you're gonna look up and realize, oh my gosh, I have wasted because fear has driven my financial decisions. Not a healthy balance of all of this.

[George Kamel]

So I want you to budget is your answer. Budget for the fun stuff. Budget for some giving.

[Rachel Cruze]

Yes.

[George Kamel]

And budget for the saving.

[Rachel Cruze]

Yes.

[George Kamel]

And realize I'm young, I got a lot of time on my hands. You're doing so good.

[Rachel Cruze]

Hey, and Jordan, go on ramseysolutions.com and pull up the investment calculator and put in what you have right now with investments at 24. And if you and just do the math, if you never put another diamond, what you'll have at retirement 40 years from now with compounds, you're gonna be doing great. Even where you are now. You're doing great, Jordan. So chill, relax, enjoy the ride.

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[Rachel Cruze]

Well, George, when it comes to investing, we were talking about just the previous segment of how powerful time is. And even if you just do the boring stuff, time is on your side. So the earlier you can start, the better off you're going to be.

[George Kamel]

Yeah, and the first milestones are really hard and then it's like a hockey stick with compound growth. So getting to that first hundred thousand invested is such a marathon. And then from a million to 2 million, you sort of blink and you're there if you do it the right way. So I want to take Jordan's numbers who was on the call with us. He made 120 grand a year and he felt like it just wasn't enough. He was behind. He can't accomplish his goals. So he was like hoarding money to invest and couldn't enjoy any of it. And I just wanted to show the audience at home, even if he never invested another dime, where his investments would be okay to help with the scarcity mindset that he was experiencing. So he's currently 24. We're going to pull up the screen here if you're watching on YouTube or Spotify or the Ramsey Network app. So 24 years old. Let's go to 64. So it's a 40 year career. And he currently has, he said 25K in a Roth, 25K in the tsp. So we'll call that 50K. And he's never going to add another dime. So how much will you contribute monthly? 0. And I'm using the Ramsey investment calculator. We'll put a link in the show notes to plug your own numbers in annual return. I'm going to go with 10%. Now in the last since 1950, the S&P 500, which is the top 500 companies in America, have returned about 11.8%. So 10% is very realistic.

[Rachel Cruze]

Let's do both. Let's do both. We'll go conservative. 10.

[George Kamel]

And then Rachel will be the optimist. Glass half full boy.

[Rachel Cruze]

Always more.

[George Kamel]

All right, I'm going to hit calculate $2.68 million. Jordan at 64. If he never adds a dime, which basically 2.7.

[Rachel Cruze]

See, we round it up again now at 12%.

[George Kamel]

You're looking at 5.9 million.

[Rachel Cruze]

5. That's a 2.

[George Kamel]

That's pretty wild. $6 million story over 40 years really adds.

[Rachel Cruze]

I hope he hears this.

[George Kamel]

But let's go back and let's say

[Rachel Cruze]

you never do another thing. Isn't that wild? Never do another thing.

[George Kamel]

That's compound growth. And look the contributions. He didn't contribute anything but the 50. And it turned into that just right.

[Rachel Cruze]

So if you could imagine continuing to invest 15% of your income.

[George Kamel]

15% of his 120 grand. That's 1500amonth from 24 to 64. Let's see what happens if he continues this.

[Rachel Cruze]

Oh, my gosh.

[George Kamel]

$12 million at 10% rate of return. Jordan, There you go.

[Rachel Cruze]

Jordan.

[George Kamel]

So if. And that's if you never get a raise and your spouse never works.

[Rachel Cruze]

That's right.

[George Kamel]

Yeah.

[Rachel Cruze]

Yeah, that's a good point.

[George Kamel]

So let us free you. Enjoy some of the money because you're going to get to 12 million and go. Should have went on a vacation probably. That probably would have been a good idea. I got a lot of money now and don't have enough time to spend it.

[Rachel Cruze]

Some furniture that we actually like, enjoy and want to pick out. You know what I mean? Like, it's okay.

[George Kamel]

Well, that's what happens. We, you know, we talk about this book, Die with Zero, which we don't agree with everything in the book, but the concept is do not wait until you're 70 or 80 or at the point where you pass away to then hand your kids a million bucks when they don't need it in their 60s.

[Rachel Cruze]

That's right. That's right.

[George Kamel]

Use it. Enjoy it while you're alive.

[Rachel Cruze]

And even giving them some too. Right. But while you're alive, actually be giving

[George Kamel]

people like Jordan a leg up to be able to buy a house in San Diego at 24 if you're that boomer. So there you go. Some encouragement that you don't have to retire broke. And the younger you are, the more every dollar counts because it has more time for compound growth.

[Rachel Cruze]

We hear that all the time, people. Why did I not start this earlier? Why did I not get out of debt and start, you know what I mean, Start the whole baby step process?

[George Kamel]

Why didn't I start when I was 4 years old? I would have had an extra 20 years.

[Rachel Cruze]

Not George.

[George Kamel]

But that's the idea. The best time to plant a tree was 20 years ago. The next best time is today.

[Rachel Cruze]

So start. Start where you are.

[George Kamel]

I all wish we could have started earlier.

[Rachel Cruze]

That's right. All right, let's go to Oklahoma City. And we have Lindsay on the line. Hi, Lindsay. Welcome to the show.

[Caller]

Hi. How are you guys?

[Rachel Cruze]

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

[Caller]

Yeah, I had a question. I have a credit collection services bill in the amount of $1,000 and $1,035, and I'm about $70,000 in debt and.

Or $77,000 in debt.

And I was just curious. I tried calling them earlier to see if they could make a settlement for $400, and they denied it. And I was just taking Dave's advice to do that. And so I was just curious what you guys would do.

[George Kamel]

How old is the debt?

[Caller]

Oh, as of April 17th.

[George Kamel]

Oh, so it's Like a month.

[Caller]

Yeah.

[George Kamel]

Okay. Yeah. A fresh debt like that, they're not going to be as willing to settle as one that has been sitting for three or four years because they kind of see the writing on the wall. They'll be lucky to get anything out of this debt. And so not that I would wait on purpose to pay this off, but the reason they're not going to take, you know, 400 on $1,000 debt is because it's only a month old.

[Rachel Cruze]

Yeah. Yeah. If it was a year or two, that's when you can really, really negotiate. Do you. What do you have, Lindsey? Do you have extra margin every month that you're trying to pay off debt?

[Caller]

Yeah, for sure. I mean, I've got.

I've got a lot. I'm just trying to figure out where

you put your money.

[Rachel Cruze]

Yes. Okay, so will you tell. Let us know. So you have that $1,000 bill, and then what's the other $77,000? What kind of debt?

[Caller]

Well, 70,000 of it is my car.

[Rachel Cruze]

70,000 is just in your car?

[George Kamel]

That's one car.

[Caller]

Yeah.

[Rachel Cruze]

How much do you make a year?

[Caller]

200. Well, 225 days.

[Rachel Cruze]

Okay.

[Caller]

And then plus commission.

[Rachel Cruze]

Okay.

[Caller]

So last year I made 270.

[Rachel Cruze]

Okay. Okay. Well, that's not completely out of proportion just for an income standpoint. I was nervous. You're going to say you make 75. We get that call sometimes.

[George Kamel]

But all of your problems are solved if you just sold the car, right?

[Rachel Cruze]

Yeah. Yeah. How are you. How do you have a credit in collections making 270 a year?

[Caller]

Well, because I'm not very good at.

I'm very good at my job, and

I'm not very good at taking care of everything else.

[Rachel Cruze]

Okay. From like, a detail standpoint and getting everything paid.

[Caller]

I have a problem with details.

[Rachel Cruze]

Okay, so you do have $1,000 to pay this debt, though?

[Caller]

I do.

[Rachel Cruze]

Okay. Okay, well, so then I wouldn't. I wouldn't negotiate.

[George Kamel]

It's not worth the brain calories to try to negotiate and fight at this point.

[Rachel Cruze]

Be done. And then what's the other 7,000

[Caller]

credit

card debt and like, oh, some credit card debt. And then a little bit of, like,

oh, I put something on a furniture plan, but I'm just trying to figure

out how to spend my money.

And. And I was just curious what you guys thought, because Dave always talked about,

you know, you guys can call a credit collections company and, you know, offer 30%.

And I offered more than that, and they didn't settle.

[Rachel Cruze]

But they also.

[Caller]

Yeah.

[Rachel Cruze]

And if they have Any insight into your income as well? They're not going to be settling with you either.

[Caller]

So I didn't know if they did or not that would make more sense.

[Rachel Cruze]

So. Well, so I would say, Lindsey, I would, I would start to put some parameters in place, some identity statements, if you will, about who you are with money. Okay, so you, if I were to like wave a wand, I would want you to say, I'm a person that doesn't borrow money. I don't need to borrow money because I'm a really hard worker, I'm very smart and I can make a lot of money. And I am. That's part of who I am. That's part of you, Lindsay. Also, details are not my strength, but I am a person who works at my weaknesses, especially when my weaknesses are costing me all this money. Like the amount of interest you're paying Lindsay on credit cards, when you make $270,000 a year, it should be like.

[George Kamel]

That is wild. What do you do for work? I'm curious.

[Caller]

Rep.

[George Kamel]

Sorry, you broke that.

[Caller]

I'm a lighting sales rep for commercial.

[George Kamel]

A lighting sales rep. Yeah. I imagine that involves some details, right? You got to know the customers, know the products.

[Caller]

Too many. We represent like 208 different manufacturers right now.

[George Kamel]

Sounds like you know some details. And so I think what's happened is we've been lackadaisical with our money because we can sort of out earn our stupidity. But the problem here is not settling a thousand dollar debt. The problem here is you're going to make $1,000 at work today. If you make 220 grand a year, that's about every workday you have in a year. So let's take advantage of this amazing income and go, I'm cutting up the cards. I'm only going to use money I have in the bank. I'm going to sell this car just because I know it was a mistake. I'm going to purchase something in cash and I'm going to be a kind of person who can save up for that. And guess what? Your next few paychecks, you could buy a used car that is wonderful. That'll get you from A to B without any debt attached to it.

[Caller]

So you would suggest buying something, buying something else. I mean, obviously, I know it was kind of a dumb decision, right?

[George Kamel]

What kind of car is this? America wants to know.

[Caller]

It's a defender. 130.

[George Kamel]

Oh, so you knew the details there. You didn't just walk up and say, I'll take any old car you got.

[Rachel Cruze]

So here's what she wants to know.

[George Kamel]

The hardest part is going to be swallowing your pride and selling that car and buying something that is not a Defender 130 brand new.

[Rachel Cruze]

Yeah. Or if you can pay this off in a year, Lindsay, I would be okay with you keeping it. But you actually have to do a plan and say, I'm putting, putting all of this extra money towards paying off debt. So you're going to live on nothing.

[George Kamel]

That's like $6,000 a month just going to the car.

[Rachel Cruze]

Everything is going to be going to this car.

[George Kamel]

Unwilling to do that, it needs to be sold tomorrow. Hey, George Camel here. Let me pull back the curtain on something you may not know. If you're in debt and collectors are threatening lawsuits, the worst thing you can do is is ignore it. That's exactly what they're counting on. Because when you do nothing, they can take you to court. And if you don't respond, they can win by default and even get access to your bank account. And that's why I tell people about Guardian Litigation group. Guardian Litigation is not another debt relief company with some bait and switch tactic and empty promises. They're an actual law firm with real attorneys. And from day one, you get an attorney who represents you. They step in when collectors are trying to push you around and they handle it. So instead of panicking, you've got a plan for peace of mind. So if you're backed into a corner and facing imminent legal action, don't stick your head in the sand. Ignoring it will make it worse. And Guardian Litigation is who you contact when it gets worse. So go to guardianlit.com Ramsey that's guardianlit.com Ramsey Attorney Advertising Results may vary and no specific outcome is guaranteed.

[Rachel Cruze]

Welcome back to the Ramsey show and the Fairwinds Credit Union Studio. I am Rachel Cruze hosting this hour with good friend and co host of Smart Money Happy Hour, George Camel. We are answering your questions, so give us a call at 888-825-5225. And we do this show every day from 1 to 4 central time so you can come and visit us. We are just south of Nashville in Franklin. We got a, we got a full house today here on Memorial Day weekend. And yeah, it's always fun and it's always fun. We get to see people and interact and say hi. It's sometimes lonely here behind the house.

[George Kamel]

Box of emotion we find ourselves in.

[Rachel Cruze]

But when y' all are out there, we appreciate it. And George, we actually went on the road and did the show Live in front of a bigger audience than once,

[George Kamel]

a couple hundred people.

[Rachel Cruze]

It was awesome and it was so fun.

[George Kamel]

We did these four cities in April.

[Rachel Cruze]

Yeah, we did these like small kind of theaters around, some in Southern California. We were in Orlando. Where were we?

[George Kamel]

Charlotte, Denver, Phoenix.

[Rachel Cruze]

There we go.

[George Kamel]

And Anaheim area already blacked out. Seal B to be specific. Orlando was last fall.

[Rachel Cruze]

Orlando. Yeah. I can't keep up.

[George Kamel]

It's been a wild ride for us.

[Rachel Cruze]

Yeah, May has been something.

[George Kamel]

But there were some great moments and the team did a great job with these events and the video side of it. And you get to see the emotion on their faces, the laughter, the tears, the awkward debates with their spouse standing next to them.

[Rachel Cruze]

That's right, yeah. So make sure to check those episodes out, you guys. I think we have three out of the four that are out and so you can check them out on the channel. And yeah, it was just kind of a fun different way to do the Ramsey show. But we love to it. Love to be in there. All right, let's go to Atlanta, Georgia and we have Katherine on the line. Hi Katherine, welcome to the show.

[Caller]

Hi. Thank you.

[Rachel Cruze]

Yes, absolutely. Thanks for calling in. How can we help?

[Caller]

Several years ago my mother in law moved in with me and my husband and she's been living with us since then. And despite the mother in law stereotypes out there, she's actually been fabulous. But while she watches our kids and started that four years ago, she doesn't pay any anything for like room and board. She has helped a lot with like household items and things like that. But when you think of the whole scope of it, I'm like, oh, that's a lot of money. And I don't know if that's something we should ask her, my husband's siblings to help contribute to or even my

[Rachel Cruze]

mother in law herself to contribute to like a, like paying rent and for utilities. Is that what you mean specifically?

[Caller]

Yeah, essentially room and board. We do pay a lot of like the food too, like pretty much every day, like necessity.

[George Kamel]

And it's expected on her part,

[Caller]

I guess that would be it, yeah.

[Rachel Cruze]

Expected not to pay you mean?

[George Kamel]

Yeah, it's expected that she doesn't pay and that you guys get all the

[Rachel Cruze]

groceries and just because of childcare. How often is she watching the kids?

[Caller]

She watches the kids. So it's been one kid every day or when I was working full time for four years and then I just had a child. So it's going to be a four year old and a little baby and then it'll be five Days a week.

[Rachel Cruze]

Okay.

[George Kamel]

Wow.

[Rachel Cruze]

And you're not paying her for that, correct?

[Caller]

Yeah, yeah.

[Rachel Cruze]

I feel like she's kind of earning.

[George Kamel]

You guys are getting a deal out of this, not her. Yeah, because what you would pay for someone to watch those kids, I mean, you're talking about a nanny, a live in nanny situation.

[Rachel Cruze]

I mean, you'd pay a full salary, you know, 40, 50 grand a year for that person. So you're not paying that.

[Caller]

True.

[Rachel Cruze]

So I think she's probably earning her keep, if you ask me.

[Caller]

Yeah, that makes sense.

[George Kamel]

And was anything established early on of, you know, whose decision was it for her to live with you guys?

[Caller]

It really was me and my husband's joint decision. She was in an abusive marriage and so essentially got her out of her house and for safety reasons. And then. And she got divorced. And I was like, you stay here, like as long as you need, and even if you want to stay, stay. That's fine. And that's just what it turned into for like a year and a half. And then I had my son and things just stayed the same.

[Rachel Cruze]

Okay. So I do wonder if there's any level of you, Katherine, having a low level. You sound very pleasant and peaceful, but a low level of frustration that an urgent thing needed to be done. And I think you guys made the right decision. Right. I think if anyone was in that position and their mom was, you know, in a dangerous situation, come. But then the fact that there was no that that act now has become the rest of your life as you see it, because there's no other conversation of her leaving. So I think that's probably more of the problem that I would be. I would think for myself, Catherine, you know, pretty intently of like, hey, what do I want my life and my household to look like in the next four or five years? Is it that you're going to be working full time and until these kiddos go off to kindergarten, you're gonna need help? And actually it's a gift that she's there, but, you know, when that time comes, maybe, you know, she can find her own place. Or maybe it's in 12 months that that happens. I don't know what that looks like for you and what you're desiring, but I would find that. And then in a very kind way, obviously, you know, bring that up to your husband and be like, hey, I'm having this feeling. Can we just. Can we talk about it? Cause it just feels like it's like ambiguous and. And that ambiguity is causing probably some level of like, oh, crap, this is now forever. Should she be paying towards the mortgage because she's living here? You know what I mean?

[George Kamel]

She's a roommate.

[Rachel Cruze]

Yeah. Yeah.

[George Kamel]

And I think that just was never established because you sort of all stumbled into this situation and you all love each other and it all made sense and now you're going. We probably should have some level of boundaries here about what this looks like. What is the responsibilities for everybody.

[Rachel Cruze]

That's what the plan is.

[George Kamel]

Because she might also get resentful and go, wait, I just realized I'm not getting paid for this. This, this is crazy that I'm watching two kids five days a week and

[Rachel Cruze]

she can't create her own financial independence at all from you all. You know what I mean? Because she, you know, I don't, you know, I don't know how anyone's thinking or feeling, but I think starting those conversations. And again, nothing's on fire, but when this drags out another 12 months, I would, I would not want that to happen without some conversations of just the plan. Hey, what are we desiring? What are we wanting? What's the plan going forward?

[Caller]

That makes sense. Ambiguity does make me anxious.

[Rachel Cruze]

Yep.

[Caller]

So.

[Rachel Cruze]

And that is fair.

[Caller]

I have word to it. That makes a lot of sense.

[Rachel Cruze]

Yeah. Yeah. And I, and I don't think that's mean of you or, you know what I mean, that you're a bad daughter in law or, you know, anything like that. But especially when you start mixing, you know, families and living situations, when it's not talked about and established and expectations and desires and wants and fears, all of that is pushed out on the table and talked about. It can get messy really quickly. And some people do it well. I think we had a call maybe this week even about that, George, when I was on with you on Monday.

[George Kamel]

There's ways to do it well, but it takes a lot of communication on the front end and it takes healthy people on every side of it. That's the other part.

[Rachel Cruze]

Yes. And Katherine, you know, opening that conversation may end up in resulting possibly of her saying, you know what? I want to create a life for myself and get some independence, which may mean she moves out and gets a job and you got to figure out, you know, childcare stuff. I don't know what that means, but I think being true to yourself and what you guys want is going to be the most important long term.

[George Kamel]

There's a saying around here at Ramsey, to be unclear is to be unkind.

[Rachel Cruze]

That's right.

[George Kamel]

So it's actually the nicest thing you can do. Is to communicate with clarity, even if you go, oh, that didn't feel good in the moment, but at least we all know where we stand. There's no ambiguity.

[Rachel Cruze]

Okay, that quote's good. And then what does Deloney say about resentment versus oh, no, sorry, Deloney. Do we remember?

[George Kamel]

Choose guilt over resentment.

[Rachel Cruze]

Yeah, that's it. Choose guilt over resentment. So you're gonna feel guilty maybe trying to have this conversation. You feel bad about it, but you'd rather have that, that, that emotion, then resentment build over the next couple days.

[George Kamel]

That's a poison.

[Rachel Cruze]

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 number, and even your relatives names. You guys, that is just crazy. But that is why I use Delete me. Because those companies that 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. It takes hours, and then it can even pop up somewhere else again. But Delete me's team of privacy experts removes your personal information from hundreds of those data broker sites. And within a week you'll get a report showing what they have found and what they have removed. And they keep scanning and cleaning up your data year round. So take back control of your Privacy. Go to JoinDeleteMe.com Ramsey and get 20% off your annual plan. That's JoinDeleteMe.com. All right, Woody is in Atlanta, Georgia. Hi, welcome to the show.

[Caller]

Hello.

How are you guys doing?

[Rachel Cruze]

Hi, we're doing great. How can we help?

[Caller]

So my wife and I, we've been married for a long time and we started financial peace at University around 2007, before we got married at Jonesboro First Baptist Church. And so we followed the baby steps pretty much. We're 40 and 41 now. And I've noticed that I can't seem to switch it off anymore because I'm constantly just thinking about like savings and, and investing and we actually have a pension at our workplace. And I've noticed that our like a 401k and a 457 and stuff like that have actually reached to like $1.2 million already. And.

[Rachel Cruze]

Wow.

[Caller]

Yes. Definitely gotten to the point where am I really enjoying the money that I'm saving? What? It's almost like I get anxiety when I spend on frivolous things, but I will give money away if I, you know, to people when they need It. For certain things, but it's almost like I don't get enjoyment out of just spending money. And I'm not sure what my plan is because we only have really. Because my wife is a teacher and I'm in public safety. So we retire pretty early, like at 52 years old. So we got about 11, 10 years left to really work. And it's going to be about $150,000 a year just for the pension alone.

[George Kamel]

So you're basically saying we're good on the investment side. How do I unlock this spending side? Because even when I do spend, I don't enjoy it.

[Caller]

Right? Yeah. Because, I mean, we. We paid off our debts. You got a mortgage, you know. No, we paid off our house. We follow all the baby steps. We're complete.

[Rachel Cruze]

Well done, you guys. As a teacher. And what did you say you did?

[George Kamel]

Safety.

[Rachel Cruze]

Public safety. Okay. Yes. Well done, you guys. That's amazing. That is.

[George Kamel]

You did. Now what.

[Rachel Cruze]

What's your wife like with money?

[Caller]

She just, she really. She sticks to the plan that I just kind of go, hey, we need to just do this. And she just kind of steps back and just allows me to invest and just. Just do whatever. And then, you know, we go on vacations. We enjoy just hanging out with each other, but we live very, I guess minimally because we really don't spend that much money on just random things anymore.

[Rachel Cruze]

Yeah.

[George Kamel]

Is there things you want to do but you can't get yourself to do it? Experiences things.

[Caller]

Well, I've always interested in the fire movement, just, you know, because public safety is one of those things where I can't just leave work because things may happen that I need to be there for. So I, you know, I deal with emergency management, so it's pretty much for a whole county. So it's not something I could just leave and go on vacation. So I guess my big thing right now is just focus on like, financial independent and retire early. But. But we're there.

[George Kamel]

So you want to go on more vacations, but you can't do to your role? Yeah, if I could snap my fingers, that's where I'm going. Where would you put your money? If I snap my fingers today, is it a hobby? Is it a thing? Is it upgrading the car? Is it, you know, buying back your time? You guys are doing things you don't

[Caller]

want to do, probably buying back time. I mean, that's pretty much what I focus on. I've noticed that. That's all I kind of think about right now is like, can I actually retire early, because, I mean, our house is. You're not even part of the net worth. Our house. I don't even count the house as part of our net worth.

Sure.

[Rachel Cruze]

Do you guys have kids? Everything.

[Caller]

Investments? Yes, ma'. Am. I have a three year old and we've already funded his 529 and it

[George Kamel]

just got on the plane.

[Rachel Cruze]

I believe you, Woody. I believe you. You have been. Yes.

[George Kamel]

You funded your grandkids, you've been a

[Rachel Cruze]

big student, you've got an A for the, for the Financial Peace University, graduated.

[George Kamel]

You won, Woody. You won the prize.

[Rachel Cruze]

Okay, so you know what I think about Woody a lot when it comes to spending is a couple of things. One, you wanna have that muscle built, right? Because like you said, you're gonna just end up hoarding, not enjoying anything. And part of the gift and the blessing of being diligent is that you reap what you sow. And you guys have sowed really well, right? You've put in a lot of patience and wisdom and sacrifice. And so now you're gonna have the ability to do some really fun things in life, but you won't be able to have fun with those things if you don't enjoy letting go of some of this money. So that's one thought. And then Arthur Brooks, who we just love so much, he talks about there's five things you can do with money and four of them will actually bring you a level of happiness. Okay? One, generosity, which you already mentioned in this call, which I love that about you. So, yes, always looking at ways to be generous that actually has a level of happiness in your life. One of them is buying your time back. Just what George said. So are there things, conveniences in life with having a three year old that maybe your wife's like, hey, I would love, love grocery delivery. I don't want to go to grocery anymore. Let's. Let's do that. Or let's have someone come clean the house. Like, I don't know what that looks like for you guys, but what are things you can spend money on to actually get your time back or your wife's time back and, and do something productive with that time? He says the third is to spend it on experiences with people you love. So find, if you can find the time. I hear that your job is very taxing in that way, but if there are moments of reprieve that you can say, no, I can get PTO here, go enjoy those. And take, take your, you know, take your son, take another couple with you guys that you love or I don't know what that looks like, but go and have some experiences with people you love. And then the fourth is actually saving. You actually do get a level of happiness by saving because there's progress and you've been doing that. And then the fifth thing you can do with money, it's not a bad thing. It just won't bring you happiness. It's just buying. So. But again, there's a little bit of me that kind of wants you just to buy some stuff. I kind of want you to, in your budget every month, have a line

[George Kamel]

item of just like, force that line item. That's the one thing you have to do in the budget, is spend on this thing.

[Rachel Cruze]

And it can be as tactical. Like, my husband and I, we will spend differently. Okay. I will spend on probably cheaper stuff, but more stuff.

[George Kamel]

She's a quantity gal.

[Rachel Cruze]

I love.

[George Kamel]

Winston's a quality guy.

[Rachel Cruze]

Yeah. So Winston, be like, let's upgrade the water hose or whatever it is, right? And he's like, there's a purpose to it. It's tactical, but he's like, let's go buy a kn. Like, that's where he'll spend. But find things that you can spend money on throughout the month because that will help you let go of some of this, because it will. Money can control you. It can control you on one end if you're broke and you have no money. Right. There's a level of control there because you're stressed out all the time. But it also, on the other end of the spectrum, can have the control where you have this false sense of deep security and opening your hands and letting some money go kind of counteracts that.

[George Kamel]

So what has been a feature is now a bug. That's the problem. The feature was, man, you're so good at living on less than you make so good at saving. And now that you made it, it is a bug that we need to debug. And that's.

[Caller]

I do buy random stuff. I mean, we got two Teslas. I mean, I literally bought two back to back. And then I was like, well, those are paid off. So. So I think giving away my money at this point is going to be what to my family members and stuff. I think it's going to be the best bet because we put away a good bit of money into vacations too now. And so it's kind of hard for me to shut it off because if money's just sitting around in the bank or something, I feel like I'm not getting a lot of interest off of it. So I end up just investing it, and that's all I seem to do with just standing money.

[Rachel Cruze]

Yeah, and I think that's okay too. I mean, my husband and I, that, I mean, we'll get to a place where we have a high yield savings account. We'll put some money in and then we'll look up and we're like, okay, you know, there's some money in there and it's just sitting there. We could invest that. And so we'll take, you know, some of that money and put it back into investment. So, like, I think that rhythm is not. Is not bad. And what it sounds like what you just said gives me some level of relief. Maybe you're doing better than you think you are. What?

[George Kamel]

Yeah, I think some therapy would be the next good purchase to go. What's underneath all the scarcity mindset? How do I, I, you know, kind of unlock this abundance mindset now that I actually have it? Nothing is on fire. And yet I always feel like something's on fire that might be part of your wiring. I mean, you're in public safety. You're always like, waiting for the other shoe to drop. That might be part.

[Caller]

My parents came from a communist country, so that probably had a lot to do with it.

[Rachel Cruze]

Oh, yeah? Where'd you come from?

[Caller]

Well, I was from Vietnam. My mom, like, we. Vietnam after the war and everything?

[Rachel Cruze]

Yes.

[Caller]

I mean, I was a little kid, but it was just like years after and like, live really poor. So I guess that I can't switch it off. My brother's the same way. So.

[George Kamel]

Yeah.

[Rachel Cruze]

Which makes sense, right? When you can connect those dots. Like, you're not crazy. Right? I mean, what you've lived through and experienced, you're like, there's no way. I want to. I want to go back to that. But again, that's a good motivator to get you to a place of security and safety with money, which is what's happened. So now not still depending on that same wiring is what's going to be key. So rewiring wiring, some of that and having some peace with your money and enjoyment, definitely with the thing to be working on. Hey, guys. Healthcare is one of the biggest stress points in your budget. It's confusing and most of the time it feels completely out of your control. But there is a better way to handle it. Christian Healthcare Ministries isn't health insurance. It's a health cost sharing ministry where Christians share each other's medical bills. And it's not a new idea. CHM has been around since 1981. It's predictable and proven and they've shared over $13 billion in medical bills for their members. Plus, you get more flexibility, there are no network restrictions and you don't have to wait for open enrollment. Now let's talk about how CHM helps your budget because programs start at just $115 a month and many families save hundreds of dollars a month compared to traditional options. So if you are tired of feeling stuck, check out Christian Healthcare Ministries. Right now, CHM is offering new members a 50% credit towards their first month of membership. Go to CHMinistries.org budget and use promo code RAMSEY. That's CHMinistries.org budget and Use promo code Ramsey. Today's question of the day is brought to you by why Refi? If you've been turned away by other lenders because your private student loans are out of control, why Refi may still be able to help? So they specialize in refinancing options built specifically for borrowers. In that situation, go to yrefi.com Ramsey that's the letter y r e f y.com may not be available in all states.

[George Kamel]

Today's question comes from Grayson in Maine. I'm having trouble with baby step two. I've saved the thousand dollar emergency fund but can't seem to make any headway on paying off our debt. I have three daughters under 13. It's difficult for me to go fully scorched earth when I want to still give them a decent childhood and provide the things they need. How can I stop feeling stuck? What a good day dad.

[Rachel Cruze]

The dad guilt. It's real.

[Caller]

Wow.

[George Kamel]

Okay, so the, I think there's a, the issue here is we are pinning getting out of debt and not spending money to bad childhood. And I think you can have a great childhood and not buy your way into it.

[Rachel Cruze]

And getting out of dad doesn't take their entire childhood. It may take two, three years, but not their entire childhood. And, and I mean I say this about my kids. I don't know if you feel like this, George. Really what they want is you and you playing with them, being involved in their lives, doing things not necessarily that cost money, but just spending time with them, being around them. There's something to that that I think we gloss over and think they just need more stuff and just keep pushing that agenda. When at the end of the day. Yeah. Do teenagers want stuff? Absolutely. Not saying that. But, but truly the priority of what is being built within them and their character is really gonna come from you and the time spent with them.

[George Kamel]

Well, and if you're in debt the whole time they're going through childhood, you're not gonna be fully present, you're gonna be stressed. There's going to be financial burdens that will take you away from letting you enjoy them as children. And so I think a short time of sacrifice for long term gain, especially as they enter their teenage years, years, which is when things really get expensive, you know, they're going to start wanting there's clothes, there's prom, there's all the activities, the sports, college funding, all of that. You're going to be able to do so much easier without this debt in your life. So some of this is just not feeling the dad guilt that you're doing a bad job. And some of it is going short

[Rachel Cruze]

season and your parenting might look different than other people's parenting in that season and that's okay too. Right? So, and so maybe do an X, Y and Z with their kids. And you, you, you're not because you are putting that money towards getting out of debt again, which is not forever. It's not their entire childhood. They're going to promise, promise they're going to be okay. All right, let's go to Eunice in la. Hi, welcome to the show.

[Caller]

Hello. Very nice to hear your voice, guys.

[Rachel Cruze]

Oh, well, thank you. You as well. Thanks for calling. How can we help?

[Caller]

So I've been in USA for almost four years. My background is about like meat shops, businesses back in my country from my family. And when I came here, I started working with somebody that he owns a retail store in a good location. And right now he's going to retire. So he was offering for me the store for 300k and I was, I have like $50,000 to give it, to give, to give it to him as a down payment. So I'm thinking, the question is, I'm thinking if I go ahead and buy the store, I mean, buy the business or go and take that 50,000 and open my own shop. So that's my question.

[Rachel Cruze]

Okay. Would you be able to open your own shop with 50,000 or were you going to plan on borrowing money as well to do that? That.

[Caller]

Yeah, I do have a friend that he can borrow for me like another 75 without, without interest.

[Rachel Cruze]

Okay. Eunice. I think it's a terrible idea to borrow any type of money for anything. And especially when it comes to small businesses and especially in the food industry, that's the number one industry that ends up closing its doors and then people end up owing. So Much. And not because you're not great at what you do. It just is what it is. And so when you add debt to the picture, you add on stress, you add on a lot of risk and you add in levels of decisions that you make in order for the business, in order to pay the payment. That may not be great decisions long term for the business. So there is something that, about the peace of mind and moving slowly and moving with the speed of cash to grow. Something that doesn't lock you into a small business loan or worse, owing your friend money that he's going to get for you. And then when the, if something happens and the shop closes up now, you owe your friend money and it may take, you know, four or five years to pay that off. And so staying ahead financially is not going backwards and going into debt.

[George Kamel]

Okay, what's the net profit of the business every year?

[Caller]

Like 120k.

[George Kamel]

Okay. So they're basically valuing it at, at a little under three times that. At 300,000?

[Caller]

Yeah.

[George Kamel]

Okay. Have you talked to him about a potential agreement where, where you basically pay him income out of the profits until he hits a certain amount?

[Caller]

We were thinking about it, yeah.

[George Kamel]

That's a much safer way to do this. And the only way I would do it is this sort of sweat equity agreement where you pay him a certain amount of the profits. Maybe it's a certain amount, a certain percentage until you hit 300,000 and at that point he's cut off.

[Rachel Cruze]

And it's almost like you. Yeah, you're paying for it as you go versus going, getting a $300,000 loan and then having the bank be the one that's, you know, in charge of it all. Because with this other agreement, you have not borrowed money at that point under your name.

[Caller]

Right. But actually he's offering for me like 300k under his loan. So I'm going to pay like a seller finance method.

[George Kamel]

Yeah, but that's a very different situation than you paying him out of a percentage of profits, let's say 25% of profits to him until it's paid back. You see what I mean? Because then if the profits aren't there, you're not on the hook. And so I would have a business attorney draft this up to avoid you having, carrying all of this risk.

[Caller]

Okay.

[George Kamel]

So if you look at 25%, you're talking 30 grand a year. So it'd be 10 years to fully pay him back. Now you guys might agree on a different percentage. Maybe it's 40%. So he gets paid in less than 10 years. But this idea that you're going to take on a quarter million dollar debt hoping this all works out perfectly is just. You're jumping off a cliff.

[Caller]

Yes.

[Rachel Cruze]

Right, Yep. So, yeah, staying away from any debt situation and if you can create some kind of agreement with them, what George was saying, that's what we would recommend. So thanks for the call. George. We have a question from Facebook and Natalie asks. We are planning an out of state move and we'll be paying off our debt with the sale of our home. This feels like we are cheating on the plan. So how can we make sure that we feel the pinch and don't go back into poor money habits? Go. That's it.

[George Kamel]

That's, that's very self aware. So they're going, hey, we'll knock out the debt with the sale of the home. But we know we sort of shortcutted it and it worked out.

[Rachel Cruze]

That's right.

[Caller]

Yes.

[George Kamel]

But our behavior hasn't necessarily changed. How do we make sure it's changed? I mean that's the honor system at that point. But one way to know that is have you actually been budgeting? Are you living on less than you make? Is there margin every month? Have you shut down all of your debt accounts, including your credit cards? Have you frozen your credit so you can't get back into debt even if you wanted to? That tells me that the behavior's changed.

[Rachel Cruze]

Yes. If there's any kind of friction you can put into place is going to be huge. And especially on the debt side. And just like what you were saying, George, closing accounts, you and your husband saying hey together, we are agreeing. We are not borrowing money. So there's going to be no avenue for debt. So we're going to get rid of the credit cards, we're getting rid of this or that and start living on a budget. So start practicing living on less than you make now and that will create the habit. So pain is a great teacher and people that have a lot of pain and sacrifices, they go through baby step two. They're like, I'm done when I'm done with that.

[George Kamel]

If you're the hot stove, you're not going back. But if you bypass the hot stove, you may not have learned the lesson.

[Rachel Cruze]

That's right. But I think you can still do it. We still people, you know, we see people do it. But I think it's very, very wise that you're cautious about this.

[George Kamel]

So put some stuff, prove to yourself that you are worthy of trust when it comes to final finances and over time, you will become that person.

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[Rachel Cruze]

Buying or selling your home is a really big deal, and you want an expert in your corner fighting for you to find the best deal at the right price. And our Ramsey trusted program really is the only way to find a top agent that you can trust. Trust who's going to make your home a blessing and not a burden. And it's really easy. You can compare agent profiles, interview them, and choose the right one to work with. So find a local Ramsey trusted real estate pro for [e-mail] agent or click the link in the description if you're listening on YouTube or podcast. All right, let's go to Sylvia in Seattle. Hey, welcome to the show.

[Caller]

Hey, thank you for taking my call.

[Rachel Cruze]

Absolutely.

[Caller]

I am interested in your thoughts on paying off my mortgage as a whole in one payment or splitting it up in two years to reduce the amount

of tax burden I would have to pay with a large sum.

[George Kamel]

Where is the tax burden coming from? Are you selling off assets?

[Caller]

Well, no, I'm just saying my income

taxes, If I pay 150, $130,000 in one sum, that will take me into

a higher tax bracket, where if I

split the amount in 50 to $50,000 per year, then that keeps me in the lowest tax bracket. I'm retired. I'm 73 years old. I have Social Security in my 401. The funds to pay for the mortgage

[George Kamel]

would come out of my mortgage. That's traditional and therefore increase your income tax. Got it. Okay. How much do you have in the 401k?

[Caller]

About 600, about 700,000.

[Rachel Cruze]

And how much are you going to pull out to pay off the home.

[Caller]

It's 129,000 right now.

[George Kamel]

Do you have any other assets?

[Caller]

I'm debt. Well, I have $3 million in property

[George Kamel]

assets, and those are all paid for.

[Caller]

Everything's paid for by my house.

My husband died in 2018, and I got onto the Dave Ramsey program and paid off my debts about $300,000. And then I got breast cancer.

[Rachel Cruze]

Wow. Well done.

[George Kamel]

You've been through a lot. Yeah, it's been a tough couple of years.

[Rachel Cruze]

So how much do you. Did you run the numbers and do you know exactly how much extra you'll be paying because of the tax bracket if you paid it off all in one lump sum?

[Caller]

Well, my income is 60,000 a year, so I can pay off about 40,000

safely to 50,000 safely and keep me in a lower tax bracket, the lowest tax bracket for my state.

[George Kamel]

Okay. I mean, I wouldn't wait because of the taxes. I would calculate it and go, okay, I know it's going to be an extra, let's say, $10,000 total in what I actually will owe the IRS. And I'm okay with that for. Or the idea of being completely debt free, not paying any more interest on my mortgage and having that peace of mind. And so that's kind of the trade off here. But I also wonder if there's a different way to do this. And I'm wondering if you would maybe sell one of the properties, pay off your mortgage and sock away the rest in an investment account to sort of diversify your portfolio. Anyways,

[Caller]

that is a thought.

The kids have interest in the housing properties and they're resistant, wanting. Not wanting me to sell it because their vacation. It's a vacation property that's worth about $250,000. That would easily pay it off.

[George Kamel]

But what are the other properties?

[Caller]

The other property is timberland.

I live in a rural area and I grow timber.

Oh, wow. Last year we lost a hundred thousand dollars, brought in $100,000 for six acres of timber.

[George Kamel]

Where did that money go?

[Caller]

That money went into a kind of an emergency fund.

And I've been using that to do home repairs and, you know, roof. Put a new roof on my house.

[George Kamel]

And could you sell more of that?

[Caller]

Not for another four years.

[George Kamel]

Okay.

[Caller]

We have a plan.

You know, we have it planned out because the timber market is very.

It's a cross, you know, it's like gold. It goes up and down.

And right now, right now, with the political climate, the American woods are, you

know, lumber is not doing well.

[Rachel Cruze]

Okay.

[Caller]

As well as it could.

[Rachel Cruze]

Yeah. Well, I don't think you're in any kind of trouble. So if you decided to do this over two years or something, I mean, I think you're gonna be fine either way. So it would just be the peace of mind that you just have personally to say, say it's worth paying a little extra and the penalty of the extra taxes. Just to know that I'm done, that I'm done and I can just live my life. I don't have to worry about it. And for a lot of people it's kind of worth it. And especially because you're going to be fine. Because you have these other properties that if something ever got in trouble you could sell.

[George Kamel]

That essentially is your nest egg at this point because you'll have a little over half a million left in that retirement account, which is awesome. But the real value here is those 3 million in properties.

[Rachel Cruze]

That's right.

[George Kamel]

So that's why I asked if you can offload a little bit of that, maybe your least favorites. But it sounds like it's mostly land plus the vacation home.

[Rachel Cruze]

Right? Right. All right, let's go to Sophie in Austin. Hi Sophie, welcome to the show.

[Caller]

Hi, how are you?

[Rachel Cruze]

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

[Caller]

Okay, so my husband and I have been together for about 16 years. We're about in debt. 26,000 in medical debt. He currently is not working and hasn't had a paycheck since before December. I only make part time income.

[George Kamel]

So you're breaking up on a. Sophie, can you speak directly into your phone? So I heard 26k in medical debt. He hasn't worked since December. You're working part time, what do you make?

[Caller]

Well, part time I make about 120 a day depending on how many days I can work.

[George Kamel]

What does that turn into a month?

[Caller]

It just depends. Sometimes it's 600amonth, sometimes it's less than that. Come August, I'll be making 2,600amonth.

[Rachel Cruze]

Okay. How are you guys paying bills right now?

[Caller]

Well, I don't know. I paid all of the month of May, I found out. So my husband left. He went to a different state and just kind of left me and the kids here. It's like he kind of just threw a bomb. And we're taking care of it on our own. My parents have helped, but.

[Rachel Cruze]

Oh wow. Okay. So your marriage is falling apart. He's left.

[Caller]

Yeah.

[Rachel Cruze]

Is he wanting a divorce? Like is he going to be going through some proceedings?

[Caller]

We've tossed it around. It's definitely inconsiderate.

[Rachel Cruze]

Why did he leave.

[Caller]

He said that he left to go work with some friends, but he's been gone about a month now, and he's only sent us maybe about $700 since he's been gone. And that has basically not covered much of anything. So I've had to lean on.

[Rachel Cruze]

Do you know. Do you know said friends?

[Caller]

I know the friends. Yeah.

[Rachel Cruze]

And they're. They are really working.

[Caller]

Yeah, they say that they're working.

[George Kamel]

Okay, Well, I mean, at this point, he should just come home and work because he can do. Do minimum wage job and make more than this.

[Caller]

Yeah. And before he left, I practically begged him to stay and was like, you can work here. You don't need to go work there. I think our priorities are different. And I get that we're both stressed or both overwhelmed, but his tendency to leave is very much a pattern. And I'm at the point where I'm like, should the kids and I just call it quits? Just move out and file for divorce and start fresh and sell everything?

[George Kamel]

Do you guys own the home?

[Caller]

If I'm being honest, we do own the home. But the problem is since he's been gone, I've been having to deal with all these finances. Everything's in his name. My name's not on anything. And so I can't actually sell anything to help. And I don't have. All I have is $1,600. I opened up my own bank account and moved my paycheck over there, and that's all I have. And that's not enough to move out?

[Rachel Cruze]

No, no, it's not. It's. Gosh, Sophie, I'm so. I'm so sorry. So, I mean, I would make one last ditch effort in saying if you don't, I mean, it's kind of an ultimatum. If you don't come home, you've opted out of this family, us work on this marriage together, then, yeah, you probably will be looking at a future where you're not together. And that will be his choice, Sophie. That's his choice to do that. And then in that case, yeah, you need some good family and community around, stable income. Yep. And you'll have to go through the proceedings and then he will probably have to pay and, you know, the debts will be split.

[George Kamel]

We'll get there when we get there.

[Rachel Cruze]

But again, the prayer and the hope is that it's reconciled and you have to be. Be able to. And I would give him that option, but he has to choose. Welcome back to the Ramsey Show. I am Rachel Cruz, hosting with George Camel. We are answering your questions. So give us a call at 888-255-2225. We're talking about your life and your money. All right, kicking us off this hour is Jason in Jackson.

[George Kamel]

That's a tongue twister. Yeah.

[Rachel Cruze]

Hey, Jason, welcome to the show.

[Caller]

Hey, how are y'?

All?

[Rachel Cruze]

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

[Caller]

So I'm basically contemplating if it's a good decision to go back to school and accrue about 65 to 80 thousand dollars worth of debt.

[George Kamel]

Okay.

[Caller]

I would be going back part time, so I'd be remaining a full time worker during this.

[Rachel Cruze]

All right.

[George Kamel]

What are you going to school for?

[Caller]

Civil engineering.

[George Kamel]

Nice. It's a good field. What are you doing now?

[Caller]

I have an associate's in AutoCAD technology.

[George Kamel]

Okay, so you're, you're kind of adjacent to the civil engineering world now and what you do.

[Caller]

Yes, sir. Yes, sir, I pretty much do it. I've. I just don't have the degree for it.

[George Kamel]

What are you making?

[Caller]

I make around $62,000 a year. Year.

[George Kamel]

That's a pretty good income to not have a four year degree.

[Caller]

Yeah. And I would be increasing it to about 82 if you had the degree. Yes, sir.

[George Kamel]

Okay, so we're going to spend 80 to make 20 more. Take you four years to break even. That's without interest and without the payments. I'm trying to figure out how we can cash flow this thing because I love the goal.

[Rachel Cruze]

Sure. Are you working for a company right now that you would probably stay at if you had this other degree? Degree?

[Caller]

Yes. And that's a big thing, pushing this, my top out right now. My current position isn't all that much compared to what it could be if I do go get that four year degree.

[Rachel Cruze]

Okay.

[George Kamel]

And I would be, I would be

[Caller]

increasing my top out from 77 to 112.

[Rachel Cruze]

Okay. Okay. And the company, now, have you talked to their HR department? Is there any benefits of any level of tuition that's paid if you choose to stay to work with them?

[Caller]

So right now that's a gray area. Hasn't happened in the past.

[Rachel Cruze]

Okay.

[Caller]

Definitely not something to rely on.

[Rachel Cruze]

Okay. But so what makes it gray and not just like, no, that's not an option. Did they kind of open a door because of a conversation you had with them?

[Caller]

Possibly, but nothing's guaranteed as of right now.

[Rachel Cruze]

Okay. And what college have you gotten accepted into?

[Caller]

Oregon State University, which is the only college in the United States that offers this program online.

[George Kamel]

There's no other civil engineering programs that are online in the country.

[Caller]

None that are a better credited.

[George Kamel]

Oh, interesting. So they can charge what they want for it. It sounds like pretty much how many years this program.

[Caller]

So you can. The max you can go on it is 10. So they don't require you to be very aggressive at it. But I'm guessing I'll be doing it since I'm old. I'll be part time, probably. It'll probably take me about six years. Years. And I think. Guesstimating.

[Rachel Cruze]

I don't love that it's already going

[George Kamel]

to take forever to get there and then it's going to take you another. Another whole bunch of time to pay it off.

[Caller]

That's right.

Yeah.

[Rachel Cruze]

It doesn't sound like a great plan, not only from the debt aspect, but also the timeline aspect. So I'm just wondering, is there. There's no call to. In Jackson or near Jackson or in your state to do it locally to do this at all?

[Caller]

Yeah, there is, but it's in person. And you know, that would take away from my current income and I do have bills, which would be the only reason I couldn't. Couldn't do that for sure.

[Rachel Cruze]

What would that. What does that option look like? I'm just curious. Would it take you two years to complete or is it four?

[Caller]

It would be probably about four. Yes, ma'. Am.

[Rachel Cruze]

Okay. Okay. And do they offer any tracks of having classes at night that if you did go work full time and then you were a student?

[Caller]

No, ma'. Am.

[Rachel Cruze]

It would have to be during the day.

[Caller]

Yes, ma'. Am.

[Rachel Cruze]

Okay. Yeah. I don't know. I mean. Yeah, Jason, I just. In good faith, I couldn't tell you. And I mean, the jump in income is. It's good. Right. But it's not double. Right. What you would make. And if it takes you six years to complete and then actually, I mean, you won't see that money for.

[George Kamel]

Yeah. I'm wondering, can you. Can you just stack cash for two years and then pursue this?

[Caller]

Potentially. And as of right now, I'm on track to be debt free in about five years.

[George Kamel]

How much debt do you have?

[Caller]

58,000.

[George Kamel]

What kind of debt is that?

[Caller]

So I have about 20,000 in a vehicle and then another 35 in a house.

[George Kamel]

Oh, on a mortgage?

[Caller]

Yes. Wow.

[George Kamel]

How is it so low?

[Caller]

So y' all aren't gonna like this, but it's a. It's a mobile home. It was a very temporary fix to a.

[George Kamel]

A problem that was my fear I was having. Okay. So this thing's like going down in value yes.

[Caller]

Yes, that is.

[George Kamel]

What is it worth today?

[Caller]

About 64. I had it appraised last year.

[George Kamel]

And what's the car worth?

[Caller]

The car is worth. Let's see. And that's on two vehicles. One is on. I think it's worth 18 last I checked. And the other one 16.

[Rachel Cruze]

Why do you have two vehicles?

[Caller]

So one of them is a. It's a side by side. Y' all consider that a vehicle, right?

[George Kamel]

I consider it a toy that is in the way of you pursuing your dream.

[Caller]

One is a toy then?

[Rachel Cruze]

Yes.

[George Kamel]

And you won't have time to do that if you're pursuing school and working full time, right?

[Caller]

That is right. Which is mainly just used around the house.

[George Kamel]

And can we do some math together? You ready for this, Jason? You're telling me you got 20k worth of these car loans and the Toy, they're worth 34 total, right?

[Caller]

Yes, sir.

[George Kamel]

So you could profit 14 off of that? You could profit about 29 from your mobile home if you sold it. You tracking with me?

[Caller]

Yes, sir.

[George Kamel]

That gives you $43,000. And you go rent somewhere and use that 43 grand to start cash flowing this degree. And you save up the other 20 over the next couple of years because you'll be debt free. You freed up those payments. Now we can save that cash.

[Caller]

Yes, sir.

[George Kamel]

I think we just found the answer. I don't think you like it, but that's what I would do if I was in your shoes.

[Rachel Cruze]

In a heartbeat.

[George Kamel]

Because everything in your life right now is going down in value and you owe payments on it. So what if you rented for a season, worked on this degree and finished it even sooner?

[Rachel Cruze]

Yeah, finish it in four years versus six, because you work your butt off doing it online.

[George Kamel]

And yeah, save a couple hundred bucks a month to cash flow the final years and you're there.

[Caller]

Okay, okay. The only problem is, in the small town that I am from, there is not very many rental options.

[Rachel Cruze]

I bet you can find something.

[George Kamel]

Jason, nobody would be willing to rent a room to you.

[Caller]

They would. It's just extremely high from what I've seen in the past, which is why I went with the mobile home option.

[George Kamel]

What's high?

[Caller]

I think last time I looked, I tried to find the cheapest. It was about $800 to run a mobile home?

[Rachel Cruze]

No, no, we're not talking about renting a mobile home. Renting an apartment.

[Caller]

Oh, an apartment or a house or

[Rachel Cruze]

a room in a house with roommates. So they're looking for a roommate.

[George Kamel]

Let's just take mobile homes off the Table.

[Caller]

Okay. Yeah, I haven't looked at that market at all. Really.

[Rachel Cruze]

Okay, so that's probably what I would do. Yes.

[George Kamel]

Because you're bringing home over four grand a month right now.

[Caller]

Yes sir.

[George Kamel]

So let's keep that rent to no more than a thousand bucks a month.

[Caller]

Yes sir.

[George Kamel]

And you'll be better off than being underwater in this mobile home in a couple years and it's worth nothing.

[Rachel Cruze]

And Jason too. Your income can continue to go up. You said your, the, the ceiling was around 75 I think you said. So you still through these, these next four years while you're in school and you're going to go to school cash flowing at the way George just laid it out out, your income is going to continue to go up. So yes, I think it's a great move to do it, but you would have to cash flow which means you're going have to make some big decisions.

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[George Kamel]

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[Rachel Cruze]

So ask Ramsey is our free AI tool that is built and trained on proven Ramsey principles. And we now have so many people and they're asking questions George. So we can actually start to see some trends of questions people are asking. It's fun.

[George Kamel]

It's like being able to see people's Google searches.

[Rachel Cruze]

Yes, I know financial but there's a lot around insurance and investing and so one of the main questions is how do I know how much house I can afford based on my salary and financial situation. So again, insurance and investing was asked a lot. But I just saw here the most asked question is around buying a home. So the core rule here is that your monthly mortgage payments should never exceed 25% of your monthly take home payment pay. And that 25% will include your principal interest, property taxes, homeowners insurance, PMI, HOA fees. All of that is included in that 25%. And why we say that a fourth of your take home pay is so that it Frees up the rest of your money. 75% of the money that you have then can be going towards debt. If you have consumer debt, you can be using it for investing or saving. And so what happens is people can quickly get into a home and it's 50% of their take home pay and they just don't have a lot left when it comes to even just food. Right.

[George Kamel]

And paying the bills instead of a blessing.

[Rachel Cruze]

That's right.

[George Kamel]

So that's why it's conservative. It's so that you have more money left over to pay off the mortgage early, invest for college, go on vacation, upgrade the car so you actually have a life instead of just a house. So Ask Ramsey is a great tool, can help you determine how much house you can afford based on your specific financial situation. Go check it out for yourself. Ask your question today. Go to ramseysolutions.com or click the link in the description if you're on on podcast or YouTube.

[Rachel Cruze]

Yeah, it's a. Have you, have you gone on it a lot, George?

[George Kamel]

Oh, I use it a lot. It's fun. It's my only friend is I just chat with Ask Ramsey Cause it'll talk

[Rachel Cruze]

back to me and it talks to you, gives you some encouragement.

[George Kamel]

It's the only one who wants to nerd out with me. Like let's crunch some numbers.

[Rachel Cruze]

Are you wondering about this? Those are always my follow up. I love the follow ups of like, have you thought about this? And you're like, show me more, tell me more. We love it. All right, let's go to Mary in Tulsa, Oklahoma. Hi Mary, welcome to the show. Show.

[Caller]

Hi. Thank you so much for taking my call.

[Rachel Cruze]

Absolutely. How can we help?

[Caller]

Well, I am $178,000 in debt and that probably another 20,000 will be added to that by the end of the year. I make about 125 a year between 120 and 125. And I'm kind of wondering. The problem is my monthly cash flow, so it's getting, getting ahead. As it stands, I'm an LLC and I am not currently taking out enough for taxes and that just keeps adding every year. So I'm wondering if it's time to consider bankruptcy.

[George Kamel]

No.

[Rachel Cruze]

Wow.

[George Kamel]

Okay, good for a thousand reasons. But number one, you're not going to be able to discharge the IRS debt in bankruptcy.

[Rachel Cruze]

How much do you owe in taxes?

[Caller]

Oh goodness. I owe 46,000 in back taxes and I have yet to file 2025 which will be the most likely additional 20,000 by the end of the year.

[Rachel Cruze]

Oh, that's where that 20 came from. Okay, did that 46 count in your 178, that number you gave us?

[Caller]

Yes.

[George Kamel]

Okay, what's the other debt?

[Caller]

So the other debt is 100,000. Well about 96,000 in student loans and then I have prob $35,000 in credit card debt. I'm paying $2,500 a month right now on credit cards. 500 to a debt relief program which would only take about $20,000. So since bankruptcy is not an option, I'm wondering should I throw my money at my credit cards that the debt relief would not take and increase my monthly cash inflow or do I just need to to crunch it and focus on taxes?

[Rachel Cruze]

Well, the IRS always gets moved to the front of your debt snowball. So unless, which I don't know if you can, if you want to go try to get a loan for that 46, pay off the IRS and then you just owe a credit union instead of the irs. It's probably a better deal. And if that's the case then you'll just put that in your debt snowball.

[George Kamel]

The issue is that debt relief company tanked your credit so you're. I don't know if anyone's going to give you a dollar at this point point because that's how these companies work. They tell you to stop paying on the debts, give us that money instead. Collections comes after you and they try to settle with collections.

[Caller]

Yes.

[George Kamel]

So have you talked to the IRS yet?

[Caller]

Five months in, I haven't. I'm on a payment plan film so

[George Kamel]

I, that's what I wanted to know.

[Caller]

I'm good with that. But it's the now taking out current taxes to not get more in debt.

[Rachel Cruze]

Yeah, that's right. Yeah. You need to start paying your quarterly especially here in 2026. Mary, have you done that already? Like have you set that up for this calendar year?

[Caller]

No, I'm taking out my CPA takes out monthly payroll and they take out taxes there.

[Rachel Cruze]

But they did not do that in 2025.

[Caller]

No, no, I did. Just not enough. And which is why I've not filed yet because I was kind of shocked at how much I owed in 2025 for even with my, my write offs. So I've just not filed yet because I know I'm going to owe more in and I can't pay right now.

[George Kamel]

How long have you had a cpa?

[Caller]

Two years, three years.

[George Kamel]

And they didn't catch any of this?

[Caller]

No, I know. They kind of send me an email and they're like, let us know when you want to do payroll. So I just say, hey, let's do 2,000 payroll or let's do 3,000 or whatever. I was able to submit in billing because I'm really bad about getting all my billing submitted. So. And that's, that's kind of it. I'm not really even sure how much I need to be keeping out.

[George Kamel]

That's where I'm going. Do you need to fire your cpa?

[Rachel Cruze]

I know it sounds horrible.

[George Kamel]

What are they even doing for you? They're giving you zero advice. They're not telling you to withhold enough for taxes and pay your estimates. We're giving you more tax advice than your CPA has. Okay, based on what you told us, I don't know.

[Rachel Cruze]

But how much are you making a year, Mary? 125. Yeah, 125.

[George Kamel]

What kind of business?

[Caller]

120. I'm a mental health therapist and I'm an LLC, so I contract.

[George Kamel]

Okay, well, the. You're not going to bankrupt on the student loans or the irs, so this is a majority of the moot point anyways. And I would, I wouldn't tell you to file anyways. You can clean this up, but it's going to take a lot of focus and it's going to take some time.

[Rachel Cruze]

Are you able to pick up extra clients, Mary, and work more?

[Caller]

I am. I'm really working at my max right now. I'm working about six days a week and I'm a single mother, so I don't want to take that extra time from my child.

[Rachel Cruze]

Okay. Yeah, well, there's going to, you know, I'm glad you're working that much. That's, that's encouraging because the income is going to be the thing that's going to matter probably the most in this situation. But yeah, it's going to, it'll take. Yeah, it's going to take you four to five years to kind of clean all this up.

[George Kamel]

You're going to be throwing thousands at the debt every month and extra more than just the minimum payments. Otherwise this is going to be a 10 to 20 year journey.

[Rachel Cruze]

Are you on a really tight budget, Mary?

[Caller]

Yes, I am. I mean, I keep myself on a tight budget.

[Rachel Cruze]

Good. How much margin do you have per month to throw it down?

[Caller]

Debt I have, after everything, all necessities. I have 1400amonth left. I currently pay about 360amonth out of pocket for counseling. And if need be, I can, I can forego that for a little bit,

[Rachel Cruze]

pause that for maybe a Year or something if you need to.

[Caller]

Yeah, okay.

[Rachel Cruze]

Yeah, because I think the. I think the goal would be, gosh, even 2,000amonth, it's still going to be

[George Kamel]

because you're going to have about $200,000 to clean up. And so if you factor in, you know, 24,000 a year, that's still 83 months. At two grand a month being thrown at the debts. Now you're throwing a lot at the debts already. You said you had 2,500 in credit card payments plus the IRS, plus the student loans. What do all those payments add up to a month?

[Caller]

Oh, goodness. Let's see. The IRS is 700. The credit is 2,500, and then the student loan loans are a thousand.

[George Kamel]

Okay, so $4200 is already out the door every. Every time you get paid. And my guess is you probably take home around seven grand a month if you factor in taxes.

[Caller]

I, on the low end, I bring home about 10 with before taxes.

[George Kamel]

Okay, we need to start factoring after taxes. I think what got us into hot water is forgetting that taxes are a part of the game. So, yes, if you make that seven, start paying those taxes.

[Rachel Cruze]

And the positive thing, Mary, is as you start paying off that lowest, even the credit card, that's going to free you up a couple hundred bucks a month to keep throwing at that. That's where the debt snowball. Momentum really happens. But yeah, you got a marathon ahead of you, Mary. But you can do this. You can do it.

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[Rachel Cruze]

Day. One of the best parts of our job is when we get to hear from people and their stories of how that. How they are winning. And we just got this great review from EveryDollar. EveryDollar app. A fan said just being able to use every dollar and see all the Extra we had every single month was very motivating. We'd have thousands of extra dollars and we can just throw it at the mortgage. Absolutely. Amazing. Well, if you guys want to take control of your money and find some extra margin, make sure to start every dollar for free. And you can do that in the app store or Google Play. All right, let's go to Brittany and Raleigh. Hi Brittany, welcome to the show.

[Caller]

Hi. Thank you for taking my call.

[Rachel Cruze]

Absolutely. How can we help?

[Caller]

So we are currently on baby step two, me and my husband and we have a little over 100,000 in debt. We have personal loans, a credit card and a truck payment. So my question is, which one do we start with? I know the baby step two calls for the lowest amount, but one of our loans has a lien on my car with it. So would that be where we start since it's such like a high risk loan or should we start with the credit card which is the lowest amount?

[George Kamel]

What kind of loan is this? Is like a title loan or is that a personal loan secured against the title like from a credit union?

[Caller]

It's a personal loan.

[George Kamel]

Okay.

[Caller]

Yeah.

[George Kamel]

How much is that?

[Caller]

It's 18,000 now.

[Rachel Cruze]

And what's your other debts? What do they amount to?

[Caller]

The. We have a credit card that's 13,000, a truck that's 36,000. A 401k loan for 15 and another personal loan for 28,000.

[George Kamel]

Okay, what's the truck worth?

[Caller]

We're looking on Kelly blue book. It's worth between like 22 and 25.

[George Kamel]

And do you guys have anything in liquid cash right now in the bank?

[Caller]

We have our thousand dollar emergency fund.

[Rachel Cruze]

How much do you guys make a year, Britney?

[Caller]

Well, I'm a stay at home mom currently. I do go back to work during the summer at like a preschool. My husband, he makes roughly 90 to 95,000 and he made more and we recently moved and he took an unknown pay cut. So he was making more and it was helping with the debt but said an unknown payment.

[George Kamel]

Pay cut?

[Caller]

Yes.

[George Kamel]

Like he didn't know that he would

[Caller]

be making the same company. Yes, it was the same company and the same job position. But he, his job runs on like the routes and stuff. He delivers food for a living and his when he runs routes he gets paid for certain things and it doesn't pay as much where we move to.

[George Kamel]

And he didn't know that ahead of time when he was, you know, signing the paperwork.

[Caller]

Nice.

[George Kamel]

Well, you got 100k in debt and about 100 to pay off the goal. Would be to get out from under this truck. What's the payment on that thing?

[Caller]

620amonth.

[George Kamel]

And what about the personal loan against the car?

[Caller]

The one with the against the car? It's 480amonth. Wow.

[George Kamel]

So right there, you'd free up a nice chunk of change if we got

[Rachel Cruze]

rid of both of those.

[George Kamel]

What's the smallest debt that's up next Based on the balance? Balance.

[Caller]

The smallest debt that is up next would be the credit card, and it's at 13,000.

[Rachel Cruze]

And that's all on one credit card?

[Caller]

Yes, it's a bank credit card.

[Rachel Cruze]

Okay. What were y' all using it for?

[Caller]

Well, it's max currently, but it was just used for groceries, gas. Just kind of making up for the loss of income that he had when we moved. We moved about a year ago ago.

[Rachel Cruze]

So you spent. Okay.

[George Kamel]

Every month as well. What was that used for?

[Caller]

Which one? The lean.

[George Kamel]

Both of them.

[Caller]

On the car. One was for our old house where we lived. We used it to do renovations and fixing it up. And when we sold it, we didn't sell it for what we wanted to. To be able to pay that one back. And then the other one was for moving cost and just catching up on everything.

[Rachel Cruze]

What caused you guys to move?

[Caller]

Well, it was kind of free choice move. We decided that we wanted to. And the job. When you moved for work as well.

[Rachel Cruze]

You moved for work, but you get paid less.

[Caller]

Yeah. It was unexpected, though. Like, we. He was told that he would be making about the same amount as he did. And then when we got moved and everything settled in, it just kind of lowered. It's not a huge significant amount, but it's definitely enough to notice like, a

[Rachel Cruze]

thousand bucks a month.

[Caller]

Yeah, around that. Yeah.

[Rachel Cruze]

Which is what you guys are used to living on, which caused the 13,000 in credit card debt. Thousand bucks a month that you lost.

[George Kamel]

Are you guys in the hole every month right now, or do you have enough to cover all the bills and debt payments and have anything left over?

[Caller]

We have somewhat left over. I'd say we have between like 3 and 500 left over every month.

[George Kamel]

Okay. So the goal now is to do a detailed budget and to find all the money we can in this $95,000 income and then some. That might mean he's working a second job and you're picking up more work, and you guys tag team, and he high fives you on the way in and you go to work. Because right now we need a couple of thousand dollars a month to throw at this debt. Yes, that's the only way out. I mean, and again, getting out of the. That truck is going to be a real blessing if you can find the amount you're underwater on about ten grand and then sell it. Do you guys have any other vehicle you could use right now?

[Caller]

No.

[George Kamel]

That's your one car.

[Caller]

Well, there's a car with my lean on it and then the truck payment in the truck. So we have two vehicles that both of them, one has a lien and one's a loan for a car.

[Rachel Cruze]

Right, but if you got rid of the truck and you took it down from 36,000 to 10,000 and you were a one car family for a bit, that would be. You could do that.

[Caller]

Okay.

[Rachel Cruze]

I mean, yeah. I mean, are y', all, are you both on the same page, that this is just crazy and you're never, ever, ever, ever going to touch debt again?

[Caller]

Yes.

[Rachel Cruze]

Do you both, do you both feel that he feels that too?

[Caller]

Yes.

[Rachel Cruze]

Okay. Yeah. So, I mean, this is going to be a, this will be a journey, Brittany, but. And it's going to create a lot of sacrifice for you guys. Meaning, like that, like that kind of thing, right? You're taking from 36 to 10. 10. Right. And, and that's a sacrifice, but for one year, two years, until maybe we save up some cash on the side and buy a crappy $5,000 car for him. Like that. That's what it's going to be, you know, so like there, there has, there has to be something drastic that changes from a lifestyle perspective and income perspective. And it's going to cause you guys to be really, really uncomfortable. And it's going to be hard. It's gonna be really hard. But it's dual doable. That's the wild thing, is that you guys may look up and be like, okay, maybe he can actually, yeah, work. Work longer and pick up some more routes and bring in an extra two grand a month. And then, Brittany, on the weekends you're working somewhere, you know, bringing in two, two grand a month and that's an extra four grand. Just. You know what I'm saying? Like, it's these, these opportunities, but it costs time, it costs energy. You guys are going to be really tired, but it's not your whole life lives. It is going to be for a season of your life, probably two to three years. But then you, you look on the other end of this, George, and it's like, okay, we did it. But the only way out is that that's the hard thing. I wish there was an easy button.

[George Kamel]

Well, we, you tried those easy buttons and there were shortcuts into more debt. And so now we got to do it the hard way, which is make more, spend less, use the margin to knock out the next smallest debt and the next smallest debt. So, no, I don't. The lean doesn't need to go to the top of the debt snowball. You just need to put these all in the debt snowball and attack the little one with a venture vengeance and cut your lifestyle down to nothing.

[Rachel Cruze]

And the good thing is, too, you know, like, once that credit card is, I'm sure the interest rate is 25, 28%. Who knows, you know, once that's paid off, you know, the, the interest and the payment, right, is freed up. So that's a, that's a couple, you know, hopefully 100 bucks, right, that you keep throwing at the other debt and so you'll start to get some momentum. But it's going to be a, it's going to be a, a, a trip around the sun.

[George Kamel]

George for It's a stark reminder. It's so easy to go into debt in America today.

[Caller]

So easy.

[George Kamel]

At every corner. You can rob the 401k, get the personal loan, max out the credit card, get a lien against your card, even if it's paid off. And then it's so hard to get out.

[Rachel Cruze]

Take a, take a little bit of an income, you know, setback, and you just fill it in with the credit card and you just keep on moving. I mean, you see how it happens. Right?

[George Kamel]

The problem is, even when you make more, it doesn't necessarily mean that you're going to save more.

[Rachel Cruze]

No.

[George Kamel]

Or have more. Because your lifestyle creeps up with it.

[Rachel Cruze]

That's right.

[George Kamel]

And we find that a third of people making six figures, it's even edging up to about half now, are paycheck to paycheck.

[Rachel Cruze]

Yeah.

[George Kamel]

Here's a good example. You guys are making great money, well above the average household income in America, and there's not much to show for it because of all these debt payments. So that would give me some anger and urgency to get out of this once and for all for your family, for those kids, for your future. You guys are worth that. So find whatever income you can cut, whatever expenses you can, and get on the same page and get on a plan to go never again. Hey, do you ever get to Memorial Day weekend and wonder, how is it almost June, summer's almost here. Why do I feel like I'm in the same spot? This weekend you can grab two hardcover books and assessments for 20 bucks. And that matters because summer chaos is about to ramp up and you want to keep your focus. Kids out of school trips, fourth of July party. Before it all gets wild. Grab the books and tools that help you stay on track so when it all hits you are still on track. Two for 20. Go to ramseysolutions.com store.

[Caller]

Foreign.

[Rachel Cruze]

Comes from Deuteronomy 8:18. Remember the Lord your God, for it is he who gives you the ability to produce wealth and so confirms his covenant, which he swore to your ancestors as it is today. Zig Ziglar said rich people have small TVs and big libraries and poor people have small libraries and big TVs.

[George Kamel]

Sick burn from Zig.

[Rachel Cruze]

There you go. What you value the bit. Do you remember? Well, and he, and he was a, you know, big in the 80s and 90s world. Do you remember those big.

[George Kamel]

The old school TVs.

[Rachel Cruze]

The old school big TVs.

[George Kamel]

The gigantic box. I don't even know how you got it into your house. They look like they were two thousand pounds.

[Rachel Cruze]

No. Oh man. Too good. All right, let's head to Noah in Springfield, Missouri. Hi Noah. Welcome to the show.

[Caller]

Hi. Thank you all for taking the call.

[Rachel Cruze]

Absolutely. How can we help?

[Caller]

Well, I'm 19 and I'm looking at buying a house at the end of the year. And I just wanted to see what you guys would do in my situation.

[Rachel Cruze]

Well, nice. Why are you wanting to buy?

[Caller]

Well, I'm thinking $200,000 is, is the max that I can buy. I have 34 and a half grand saved up. I'll make another eight grand. That's base pay minus my monthly expenses by the end of November. The big bulk of my money Is are in CDs. They don't expire until the end of November. I got a credit score of 741.

[Rachel Cruze]

Okay, what kind of consumer debt do you have, Noah?

[Caller]

None.

[Rachel Cruze]

Zero debt. Amazing. What are you making a year or. You said AK a month is what you're bringing home.

[George Kamel]

You said that's, that's how much you can add to the down payment fund.

[Caller]

Yeah, so. So I'll make that. I'll make another 8k and 5, 6 months.

[George Kamel]

What do you make a month? What's your after tax income monthly

[Caller]

21 or 2200.

[George Kamel]

That's how much you make. Perfect month.

[Caller]

Yes.

[George Kamel]

So you're making like 24 a year. Take home?

[Caller]

No, it's 41 grand a year.

[George Kamel]

Okay, so you're talking. I'm just confused on the math.

[Caller]

Okay. Oh, I budget for get paid bi monthly. So 1100 a paycheck, base pay.

[George Kamel]

And that's two time, two times a month?

[Caller]

Month, yes. Okay.

[George Kamel]

That is 2200amonth.

[Rachel Cruze]

Yeah. Did you get a big tax refund?

[Caller]

No.

[George Kamel]

Well, here's our housing parameter, Noah. Just so you understand, we recommend the mortgage payment be no more than a quarter of your after tax monthly income on a 15 year fixed rate mortgage. So I just crunched the numbers here for you on our mortgage calculator. A $200,000 home with 42,000 down on a 15 year fixed, you're looking at about $1,700 dollars out of your 2200.

[Caller]

Okay.

[George Kamel]

So that is, you're going to be poor. You're going to have $200 left over to basically fund everything else in your life. So you're not ready to buy a home. And I don't think you're in desperate need of a home. Are you living with family right now or renting?

[Caller]

I'm rent free with family right now.

[George Kamel]

Okay. I would work on your income. That's going to be your greatest wealth building tool. It's going to give you the ability to buy a home one day and afford the mortgage pay. But right now you should be focused on how can I make more in my career.

[Caller]

Okay.

[Rachel Cruze]

Yeah. Because that monthly, that monthly payment's going to be kind of your make or break, Noah, just on what you really can afford. And if you keep saving up a big down payment, that'll be great because hopefully you'll continue to get raises, you know, over the next few years. And I wouldn't, and I wouldn't rush into the housing market. When you're ready to buy a home, that's going to be a great time. But it may be in another three to four years and that's okay. And you can rent in the meantime or you know where you are. But I, and when these CDs expire, I would take them out of CDs and I would put them in a high yield savings account. Our friends at Fairwinds Credit Union is a great, that, that's a great place to open an account. You can get a free checking account and they have a great high yield savings option too. And so I would put my money in there versus a CD and, and yeah, and just keep piling money because you do want a fully funded emergency fund as well on top of your down payment. So some of that 34,000 DOL housing can be set aside as an emergency fund and just continue. Yeah, I mean I would say I love the motivation that you have, Noah. And where you are financially is amazing. Like the fact you have no debt, the fact you have $34,000 saved, and you have a goal that you're working towards for this home, like all of this is so great. And so I would say I just. I wouldn't be as urgent as maybe you are and give yourself a little bit of time to get that income come up.

[Caller]

Okay, so just rent in the meantime?

[George Kamel]

Yeah, just rent or keep living with family. I mean, you're 19. I would just focus on what can I do to grow this career, grow this income, so I can speed up this process. But you're on the right path.

[Rachel Cruze]

Well done. All right, let's go to Nathan in Rochester, New York. Hi, Nathan. Welcome to the show.

[Caller]

Hi. Thank you for having me.

[Rachel Cruze]

Absolutely. How can we help?

[Caller]

So about nine months ago, I bought a truck for about $29,000. I sat down recently, looked at everything again. I still owe 29,000 on it and been making my payments every month. And I need help trying to figure out how to get out of this situation.

[George Kamel]

What's the interest rate?

[Caller]

14%.

[George Kamel]

Well, that'll do it.

[Rachel Cruze]

Ouch.

[George Kamel]

The interest payment you're making is probably as much as your monthly payment. So they're just washing each other out.

[Rachel Cruze]

How much can you sell it for, Nathan?

[Caller]

I just got it quoted for 17. 5.

[George Kamel]

Why is it so low? Did you roll over negative equity?

[Caller]

No, I did not.

[Rachel Cruze]

Was it for a trade in or a personal sale? And where'd you get it quoted?

[Caller]

Local dealership. I was looking. I was just trying to figure out what I could get it for. And they evaluated at 17.

[George Kamel]

Yeah, who's they? The dealership?

[Caller]

Yeah, the dealership. Yes.

[George Kamel]

Well, that's the worst place to get it valued. I would look at the private party value on Kelly Blue Book, because there is no way a $29,000 car nine months later is worth 17 grand.

[Rachel Cruze]

No, it should be more like 22ish, probably.

[George Kamel]

Now, obviously you got screwed on this deal, so they may have sold you a $17,000 car for 29 grand for all I know. I'm especially charging you 14% interest. Was your credit just shot?

[Caller]

No, I don't remember exactly what it was, but it was around the high 780s.

[George Kamel]

How did you get a 14%? I mean, I just don't understand that.

[Caller]

Yeah, I. I don't. I don't.

[George Kamel]

Do you have any other debt, like everything?

[Caller]

No, I do not. It's that. So I. When I bought the. The truck, I was at my job I was making $28 an hour. And then at the end of beginning of this year my whole company got let go and I've taken a almost seven dollar pay cut at my current job.

[George Kamel]

What are you making now?

[Caller]

Base salary right around 21, 62 and a half hour.

[George Kamel]

Okay. So about 44, 45,000 a year probably.

[Caller]

Correct.

[George Kamel]

Okay, well this, this truck needs to go and so you might need to save up the amount you're underwater on just to get rid of it and that would still be worth it. And you go get you a beater car to get you from A to B in the meantime until you can save up and buy something used in cash. But there's no other way to get out of the payments.

[Caller]

That plus all like the, the insurance. I'm 21. My insurance is around $300 a month.

[George Kamel]

Yeah. That's expensive for young guys. A lot of risk for the insurance companies.

[Caller]

Yep. And with all, with the gas and everything at the end of every month I'm scrunching pennies to try and make

[George Kamel]

your credit score still good. I'd go down to your local credit union and see if they can give you a loan for the difference you're underwater on. But still try to get top dollar for it. That might be private party, that might be like a Carvana or Carmax. But just see how small you can make that gap. You're underwater water on. Get a loan for the difference plus some to get you a beater car from A to B and you'll be out of this thing and be able to save up.

[Rachel Cruze]

And, and your payments are gonna, it's gonna, you're gonna feel the difference of what you're doing now and it's not making a dent. Right. Versus a, I don't know, a $12,000 loan from the, you know that you pay off the difference and then go get, go get a beater car.

[George Kamel]

It'll have a lower interest rate.

[Rachel Cruze]

Yes, for sure. And yeah.

[George Kamel]

What's your payment right now?

[Caller]

Now I'm paying 586amonth.

[George Kamel]

Ouch. Plus the 300 in interest. So you're going to be.

[Rachel Cruze]

And it's not even doing anything loan that just hurts.

[George Kamel]

Cuz. Well you're probably paying 586 in interest. So every month it's just, it's not moving the needle on the balance. And so that's, that's the issue.

[Caller]

I looked at the, I looked at the loan. It's a, I think it was like $11 14 a day on interest.

[George Kamel]

Ouch.

[Rachel Cruze]

Gosh. Yeah. And Nathan, remember this rule of thumb too too that your what you have in motors and wheels should be no more than half of your annual take home pay. And you exceeded that getting a $30,000 truck while making $45,000 a year. So keep those vehicles below that so that you don't get stuck in the situation again. Thanks for the call. Thanks to everyone in the booth, George. Thanks for a great show and thank you America. And remember, there's ultimately on the one way to financial peace and that's to walk daily with the Prince of peace, Christ Jesus.