We Make $200K and We’re Still Broke

Summary

The Ramsey Show – “We Make $200K and We’re Still Broke”

Hosts: George Kamel & Rachel Cruze
Date: February 26, 2026

Episode Overview

This episode centers on the financial challenges people face at all income levels, emphasizing that even high earners can feel financially “broke” due to debt, lack of planning, surprise expenses, and poor money habits. George Kamel and Rachel Cruze take calls from listeners across the U.S. (and Canada), offering practical advice grounded in the Ramsey Baby Steps. Key topics include tackling overwhelming debt, dealing with tax messes, communicating with partners about finances, and making big financial/life decisions (like moving, buying a house, or managing an inheritance).

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Key Segments and Discussion Points

1. High Income, High Debt: "We Make $200K and We're Still Broke"

[00:42 – 08:37]

• Caller: Jessica from Idaho
• Situation:
  • Couple, both 50, combined $200K gross ($161K net) income.
  • Owe $47K in taxes for 2024 (filed late), $25K for 2025, and $137K in consumer debt (credit cards, personal loans, $50K septic loan).
  • No retirement savings and a $575K mortgage ($4,150/month); no kids at home now.
• Hosts' Advice:
  • Acknowledge that even with high incomes, debt can swallow all margin if not controlled.
  • Quick math: If they put $6,000/month toward debt, could be out in under three years; at $50K/year pace, debt gone in four.
  • Recommendation: Live on bare minimum, sell unnecessary assets (camp trailer), and consider extra part-time work to accelerate payoff.
  • Prioritize IRS debt – “The IRS will screw up your life.”
  • Moral/emotional support: Reassurance that the best gift to their kids is not being a financial burden in retirement.
• Memorable Quotes:
  • “More money for us to make more bad decisions with.” – George ([02:56])
  • "We jumped on that bad decision train." – Jessica ([03:06])
  • “You're not alone in this... there’s hope here.” – George ([03:12])
  • “Are you going to call us in three years for a debt-free scream?” – George ([07:44])
• Action Plan:
  1. Spit shake agreement: $6K/month toward debt; IRS first.
  2. Sell assets (trailer); only consider selling house if desperate.
  3. Commit to intense lifestyle change for 2–3 years.

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2. Parent Plus Loan Burden: Should I Drain My Retirement?

[10:08 – 16:56]

• Caller: Pat, Philadelphia, 68, with $40K Parent PLUS loan for daughter, $37K in IRA, only $400/month left over.
• Dilemma: Should she cash out her IRA to pay loan in full?
• Advice:
  • Warns against fully draining retirement ("Now you’re left with nothing").
  • Pause all retirement savings; intensively direct all extra funds to loan.
  • Ideally pay $3K/month to clear in 2 years (instead of $600, which is mostly interest).
  • Be open/blunt with daughter about the burden—even if she can't currently help.
• Quotes:
  • “I just don't want them to... have to cover her financial life.” – George ([15:08])
  • “There's no other magic wand: these loans are not even bankruptable in most cases.” – George ([16:43])

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3. Underwater Vehicles and Smart Car Decisions

[17:05 – 19:44]

• Caller: Riley, Memphis, owes $39K on a $29K–$32K truck, payment is $758/mo; brings home $1,400−$2,000 biweekly, often left with $100 per paycheck.
• Advice:
  • Sell the truck, take out a small loan to cover being “underwater,” buy a cheap used vehicle to get around.
  • Do not use a title loan using other car as collateral.
  • Quote: “You save almost $1,000 a month... you're going to feel like you got a giant raise.” – Rachel ([18:44])

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4. Homebuying Too Soon? Navigating New Life Phases

[22:27 – 30:30]

• Caller: Tyler in Canada, newlyweds, wife just finishing vet school, $80K saved (from inheritance/savings), $30K student loans, $345K house under contract. Family worried they’re “buying too soon.”
• Advice:
  • Ramsey philosophy: Be debt-free, have 3–6 months living expenses, and a healthy down payment before buying.
  • Extra caution due to rural housing options and debts; suggest possibly renting for a year, even with some inconvenience, to ensure financial stability.
  • “Your house is supposed to be a blessing... not a burden.” – Rachel ([29:03])
  • Being “right on the edge” can add unnecessary stress.

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5. Big Moves, Health, and Fear of Never Catching Up

[32:21 – 41:34]

• Caller: Haley, recently disabled, sold affordable home in Boise to rent in Seattle to be near family—massive jump in housing costs ($1,200 mortgage to $3,285 rent). $230K from sale saved, husband stressed about financial future; fear they’ll never be able to own in Seattle.
• Hosts’ Approach:
  • Normalize the grief, stress, and transition; moving for major lifestyle change is sometimes more than a math problem.
  • “You need to grieve the life you had… that one's over. Now there's a new chapter.” – George ([36:58])
  • Use cash for a future home, don’t rush—market isn’t as scary as imagined.
  • “I do think there's some semantics when it comes to the economy and the housing market.” – Rachel ([41:07])
  • Prioritize finding the right set up for their new life before wealth-building.

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6. Back Taxes & Hidden Financial Messes in Marriage

[44:07 – 50:39]

• Caller: Lynn in Maine; newly married, just paid off $80K in back taxes after discovering her husband hadn’t filed for several years; expecting to owe another $40K; $60K in business, $20K in personal, pregnant.
• Advice:
  • Don’t pause IRS payments (even in “stork mode”—the Ramsey recommendation to slow debt payoff in late pregnancy).
  • Use business emergency funds to pay IRS; replenish as you go.
  • Stay on top of quarterly tax payments—hire a trustworthy tax professional immediately.
  • Emotional support: Acknowledge the trust and communication challenges—common in financial stress after marriage.
  • “I want this [pregnancy] to be exciting and fun, and not this looming in the back of your mind that we owe the IRS.” – George ([48:15])

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7. Marriage & Talking About Debt (Premarital Financial Counseling)

[53:55 – 61:27]

• Caller: James, 30, engaged, wants to have "the debt talk" with fiancée (she has about $25K debt), nervous about coming off as controlling.
• Advice:
  • Approach the conversation with empathy; focus on future goals, not judgment of the past.
  • Suggest reading financial books together or go through Financial Peace University (FPU) as premarital “counseling.”
  • By the wedding day, both should know the full financial picture ("income, debts, savings, retirement").
  • Quote: “When you’re engaged to someone, everything’s out on the table. You’re about to combine your lives…” – Rachel ([58:01])
  • Hosts send him and his fiancée two copies of Total Money Makeover and Know Yourself, Know Your Money.

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8. When to Combine Finances Before Marriage

[68:36 – 73:16]

• Caller: AJ, Nashville; engaged, fiancée makes double his salary, debt still an issue for her, both feel house-poor, considering combining finances before marriage.
• Advice:
  • Wait until married to combine finances; until then, each pays their own debts and expenses.
  • After marriage, align fully—combine income/assets, follow a single budget.
  • Quote: “All marital assets should be combined… that is the key to a great marriage as it relates to money.” – George ([72:50])
  • Make a premarital plan: what will financial life look like when you’re married?

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9. Inheritance, Windfalls, and Cautious Investing

[92:18 – 94:53]

• Caller: Steven, 21, about to graduate debt free, inherits $50K.
• Advice:
  • Park the funds in a high-yield savings account until settling into post-college life—don't treat it like a lottery win.
  • Quote: “This is not a post-graduation vacation and a new car. This is future Steven down payment money.” – George ([94:45])
  • Later, use toward emergency fund or home down payment.

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10. Investing and Decision Fatigue

[107:01 – 116:43]

• Caller: Sarah, 23, NYC, no debt, $80K in savings, started a 401k, wants advice on investing and whether to buy a car.
• Advice:
  • Set aside a starter emergency fund; only buy a car if truly needed—consider NYC car costs.
  • Increase retirement investing to 15% of income (not just up to the employer match).
  • For investing beyond retirement, contact a vetted financial advisor for guidance.
  • Encouraged to use Ramsey’s online investment calculators to project long-term growth.

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Memorable Quotes & Moments

• On the normalcy of financial struggle, regardless of income:
  • “Normal is broke. Common sense is weird.” – George ([00:14])
• On the importance of emotional reckoning:
  • “The emotions are just right there, which actually is a good thing, because you’re actually feeling something. And that’s going to help in the motivation of it all.” – Rachel ([05:24])
• On helping adult children when you’re broke:
  • “The best thing you can do is clean up your own financial mess so that they don’t have to take care of you later on.” – George ([07:08])
• On communication in relationships:
  • “The more aligned you are before the wedding day on every topic… there's more clarity, more direction, and a bit more enjoyment.” – Rachel ([74:00])

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Timestamps for Key Segments

| Segment / Caller | Time | Key Topic | |----------------------------------|------------------|----------------------------------------------| | Jessica, $200K but broke | 00:42 – 08:37 | High income, high debt, tax crisis | | Pat, Parent PLUS loans | 10:08 – 16:56 | Draining retirement vs. loan payoff | | Riley, under-water on truck | 17:05 – 19:44 | Auto debt, smart car payoff | | Tyler, home-buy in Canada | 22:27 – 30:30 | House buying vs. stability | | Haley, post-disability move | 32:21 – 41:34 | Selling home, rising rent, emotional impacts | | Lynn, restaurant back-taxes | 44:07 – 50:39 | Cleaning up tax mess in marriage | | James, engagement finances | 53:55 – 61:27 | Premarital financial conversation | | AJ, combining finances | 68:36 – 73:16 | Timing joined finances before/after marriage | | Steven, 21, inheritance | 92:18 – 94:53 | Windfall management, new grads | | Sarah, 23, investing/buying car | 107:01 – 116:43 | Investing basics, buying/maintaining car |

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Summary of Advice & Ramsey Principles Emphasized

• Get out of all non-mortgage debt as quickly as possible—regardless of income.
• Always prioritize IRS/tax debt first (they have unique and severe collection tools).
• Never cash out retirement savings unless it’s for essentials or truly last resort.
• Combining finances should wait until marriage; full openness before/after is key.
• Home purchase: be debt-free, have 3–6 months emergency fund, and a healthy down payment.
• For windfalls, don’t rush; prioritize stability and long-term goals.
• Use trusted advisors; avoid scams and bad financial products (e.g., title loans, whole life insurance).
• Communication and unity with your spouse/partner are essential.
• Emotional challenges (grief, stress after disability, etc.) are real—financial advice must accommodate life changes.

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Closing Thoughts

In this episode, the hosts reinforce the Ramsey Show’s core beliefs: Building wealth is possible for anyone, but only if you acknowledge mistakes, get unified in your household, and are willing to make uncomfortable sacrifices. Instead of focusing on past errors or blaming circumstances, everyone—whether earning $30K or $200K—can take practical steps toward financial freedom if they commit to a plan.

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For more resources, calculators, and guides, visit ramseysolutions.com To ask your own question: Call weekdays 2–5 p.m. ET at 888.825.5225.

Transcript

[Sponsor/Announcer]

Brought to you by the EveryDollar app. Start budgeting for free today.

[George Kamel]

Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studio, this is the Ramsey Show. I'm George Camel, joined today by the Rachel Cruz, who is also a co host of mine on another show we do called Smart Money Happy Hour, which you can check out on YouTube, podcast, Spotify, all the good places taking your calls at 888, 825-5225. Jessica kicks us off in Idaho. What's going on?

[Caller]

Jessica, hi. I'm real nervous about talking through with this, but real thankful it's you too. I enjoy your other show, Smart Money Happy Hour. So I'm feeling a little on the anxious side.

[George Kamel]

We got you, but.

[Caller]

Well, thank you. All right, I will just jump in here. So my husband and I are both 50. We have a combined gross income of 200k net 161. We did not pay taxes in 2023. He owns his own business, an H Vac business. And with the accounting we paid, we found out last October for 2024, which filed late was 47,000 that we owed. Well now, because we didn't find out, so we now did not get to correct anything for 2025. And so we owe an additional 25 for 25,000 for 2025. We also have combined current consumer debt, which again, I am not real proud of this by any stretch, but it's about 137k. So what is that, Jessica?

[Rachel Cruze]

What does that consist of? The 137.

[Caller]

Oh, the good, the good stuff. It consists of credit cards, some small, you know, side, you know, loans to try to, you know, eventually refi, but then didn't necessarily refi. But then also we had a, after we purchased our house in 23, we had a really bad septic issue and had to replace that end our drain filled which cost us 50 grand. All that.

[George Kamel]

And so you took a loan out for the whole 50?

[Caller]

We sure did.

[George Kamel]

Okay, yeah. Can I ask a stupid question on behalf of America?

[Caller]

Sure. Maybe not.

[George Kamel]

Well, for a couple that's making $13,400 a month in take home pay, why were you turning to debt at every corner? Where was all that money going?

[Caller]

I think what stupid? It was just all stupid. You're 100% right. We weren't making that at the time. That's just where we're at now.

[George Kamel]

This is newer income. So you guys have made more money over Time and have probably spent it all, as most people do. As soon as they get a raise, they go, sweet. More money for us to make more bad decisions with.

[Caller]

Right. We. We jumped on that bad decision train. Absolutely. And again, not proud of that by any stretch.

[George Kamel]

Well, you're. That's normal. Jessica, you're not alone in this. And I think there's hope here. You have 137,000 in loans that the cross consumer debts. You have another. It's called 75k owed to the IRS.

[Rachel Cruze]

So it's a little over 200,000 that you guys have, right?

[Caller]

Correct.

[George Kamel]

That's the total mess to clean up. And that doesn't include your mortgage. How much of that mortgage is your mortgage?

[Caller]

Our mortgage is 4,150amonth. 4,100. Yeah, 4,000. Anyway, that's monthly, so our mortgage is not even included in that. And so our mortgage is 575total.

[George Kamel]

Okay. That's what's left on that. Okay. Well, the good news is you guys have an incredible income. The bad news is you're going to

[Caller]

have any retirement either at 50 years old.

[George Kamel]

Yeah, we'll make up for that later. Yep. You guys are going to be working probably longer than you wanted to, but you can keep making 200 grand. This is a solvable problem.

[Rachel Cruze]

Yeah.

[George Kamel]

On napkin math, you go, all right, 50 grand a year, we're done in four years.

[Caller]

Yeah.

[Rachel Cruze]

If you guys can. If you guys can find a way. And I just took you, you what you bring home a month minus the mortgage, you know, you should have around 11,000ish left. And if you guys can throw 6,000amonth at this debt, Jessica, which means you live on nothing. I mean, you guys, your grocery budget's like 200 a week. If that, like, I mean, it is like we are just. We are doing nothing but paying this off. Yeah.

[George Kamel]

And if you can, it's under three years.

[Rachel Cruze]

Yeah. If you can throw. If you can. If you can be intense for three, three and a half years, you guys could get out of this. And that doesn't even include selling stuff. Right. Or working extra or whatever that is. I mean, there's. There's stuff in here that you can move. It's just gonna be. It's gonna be a couple of years of grinding it out.

[Caller]

I may or may not be wanting to cry right now because that makes me real excited because we're both on the same page. We both wanna tap this.

[Rachel Cruze]

And are you guys both working full time? Jessica? Are y' all both full time?

[Caller]

Yes, we okay. Yes, we are.

[George Kamel]

And kids.

[Rachel Cruze]

Do you have kids?

[Caller]

No, not. We do. Not in the home.

[George Kamel]

Okay. Okay.

[Rachel Cruze]

So that's a good. I mean, honestly, that's great. And if you guys.

[George Kamel]

Less mouths to feed.

[Rachel Cruze]

Yeah. And it takes a level of even a step of humility at 50 years old after two great careers to say, hey, we're gonna go work nights. And you and your husband just handshake and say, all right, I'll see you at 9pm tonight. Cause we're gonna leave at 5. Our jobs. We're gonna go work somewhere for four hours, and we're gonna come home, and that's gonna be an extra 1500, 2000 bucks a month that's added to this. That shortens it. You know what I mean? Like, you start to see. See a path out. It's just going to be hard, Jessica. I mean, but I think you guys are at it. I mean, even as you're explaining, coming onto the call, how you're feeling, like, the emotions are just right there. They're right there, which actually is a good thing, because you're actually feeling something. And that's going to help in the motivation of it all. It really will.

[Caller]

Yeah.

[George Kamel]

What was going to be your next step if you hadn't called?

[Caller]

Well, I mean, obviously, looking at the debt consolidations just literally. I mean, we've already talked because we're like, all right, we got to get these baby steps started. So we've already got, you know, drawn out our spreadsheets, living that life. And then, you know. Yeah, calling Debt Consolidated. What can we do to, you know, shorten this pain, you know, that we both are anxious about? And we. Neither of us like it. It's very weighty. And, you know, we've got kids that are getting married and all the things. And so it's just. You feel real handicapped in your abilities to really be progressively moving forward and, you know, and trying to even bless them with, you know, helping to pay for all this. And. And so you just. I don't. We don't like feeling this pressure either. And so we're definitely to that point of just being super overwhelmed.

[George Kamel]

Well, I want to free you of feeling the obligation that you need to pay for everything, or else you're a bad mom. I think you guys are incredible. The fact they're even struggling with this tells me how much you care about these kids and your family. And so here's the truth. You can't cover a wedding right now. You can't bless them with some outrageous gift. But the best thing you can do is clean up your own financial mess so that they don't have to take care of you later on in life. That's the true burden to worry about. And maybe later on down the road, you do get to bless them with an amazing gift six years from now.

[Caller]

Yes, that would be, that would be awesome.

[George Kamel]

So can we say we're doing this in three years, that you'll call us back and do a debt free scream?

[Caller]

Oh, my gosh. I would, I would love to.

[George Kamel]

Well, here it is.

[Caller]

Absolutely.

[George Kamel]

You spit shake with your husband. Six thousand a month is going toward this debt. The IRS debt comes first because they will screw up your life. So let's make sure that we cover that, then attack all of the other debts, sell everything we can.

[Rachel Cruze]

Do y' all have anything to sell? Jessica, do you have like a four wheeler, an extra car? I mean, I don't even know we do.

[Co-host/Guest Expert]

We.

[Caller]

No extra vehicle, but we do have a, a camp trailer that we've definitely. That's one of the things my, my husband has said. Let's, let's try to get rid of it and sell it. Yeah, we even talked about selling the house, to be honest. Not sure that there, I mean, there's maybe 120, 20, you know, maybe, maybe in there.

[George Kamel]

That's like your like, last ditch effort. That's like, we're on the ve bankruptcy. We're gonna have to sell the house. But I wouldn't do that. You guys have an amazing income and we are rooting for you.

[Sponsor/Announcer]

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[George Kamel]

See boostmobile.comramsey for details. Pat is in Philadelphia. Up next. Pat, welcome to the Ramsey Show.

[Caller]

Oh, thank you. Thank you for taking my call.

[George Kamel]

Sure. How can Rachel and I help today?

[Caller]

Well, I'm 68 years old and I have a $40,000 student loan debt for my daughter. And the only requirement amount I have is 37,000 in an IRA. I am still working and I wanted to know if I should take that all my retirement savings and pay off

[Co-host/Guest Expert]

this student loan and just be done with it.

[Caller]

That's the only debt I have right on my house. I own my car, no credit cards.

[George Kamel]

Oh, man. Is the loan in your name?

[Caller]

Yes.

[George Kamel]

Okay, so is it a parent plus loan?

[Co-host/Guest Expert]

Yeah, it's a parent plus.

[George Kamel]

Oh boy, that's brutal.

[Rachel Cruze]

Where's your, where's your daughter at in life, Pat?

[Caller]

No, she never finished. Never finished? She's

[Co-host/Guest Expert]

stay at home mom. So she doesn't really have the finances to help pay. I've asked her several times.

[George Kamel]

Does she understand your situation?

[Caller]

Yeah, she does. Okay. Again, she, she just, she doesn't have the money.

[Co-host/Guest Expert]

Yeah, well, she has two little ones, so she's, you know, she can't work right now.

[George Kamel]

And what about her? I mean, her husband's working right

[Caller]

on and off.

[George Kamel]

Oh, boy. Well, here's my fear, Pat. Let me play this out for you. You drain every penny of retirement to pay off your, these Parent plus loans. Now you're left with nothing. Now we're down to Social Security and you working until you can't work anymore. That's it. That's the only future available to you at that point. Not that the $37,000 is your saving grace for retirement, but that's something that's really draining everything down to nothing. All to pay off this parent plus loan for your daughter. And so I'm just trying to figure out what the other options are. What is your current income?

[Caller]

78. 78 a year.

[Sponsor/Announcer]

Great.

[George Kamel]

And what are your expenses?

[Caller]

So around 3,000amonth.

[George Kamel]

Okay. So you should have, if we were doing a budget, you should have a few thousand dollars left over each month.

[Caller]

Oh, I have a few hundred left. I, I figured like around 400 left.

[Co-host/Guest Expert]

I do budget and I do have other debt or.

[Caller]

No, that's all. But it's, you know, till my take

[Co-host/Guest Expert]

home Pay is like 3400 because of

[Caller]

me contributing to my IRA, I been putting 25% in. I've been really trying to, to build it up.

[George Kamel]

Because you're trying to make up for lost time,

[Sponsor/Announcer]

man.

[George Kamel]

Well, I'm trying to think through a plan where you could knock out these loans, get them out of your life and still try to build a decent nest egg.

[Caller]

And that's what I've been trying to do. I've been putting 600amonth against this loan.

[George Kamel]

Well, the interest is probably 600 bucks a month at this point. Those parent plus loans are brutal.

[Caller]

Oh, they are brutal.

[Sponsor/Announcer]

Yeah.

[Caller]

I was looking at the daily interest is 6, almost $7. A day. And that was the other thing. At 7.9%. Is there a way to negotiate that interest?

[George Kamel]

I don't know that they'll negotiate. The only way to get out of that would be to refinance it, which you'd lose the federal protections. It'd become a private student loan. And I don't know if you'd get a much better rate. It's something you can look into. But again, I don't think this is going to be the solution. I'm wondering if we pause all retirement investing and just got real intense about you, pay it off in two years. Because right now you're trying to do two things at once, and you're not making great progress on either.

[Co-host/Guest Expert]

Right.

[Rachel Cruze]

Pat, what will you be getting at? Are you getting Social Security right now?

[Co-host/Guest Expert]

I am. I'm getting 2,000amonth in Social Security.

[Rachel Cruze]

Okay.

[George Kamel]

Are your benefits hurt by the fact that you're working right now?

[Caller]

That I don't know, because I just started collecting Social Security.

[George Kamel]

Okay. You are full retirement age, so I think you should be getting the full amount, even if you're working at this point. But that's something to look into. At least you have a great income. I mean, there's some saving grace here. Usually people that are 68 either retired and are just trying to live off Social Security, or they're not making 80 grand a year, they're making 30, 40, 50. And so this is at least something you have to your advantage of knocking this out. And maybe eventually, I don't know their situation financially, but if they're able to even chip in and help, because I just. Just don't want them to. You to be a burden to them when you're in your 70s because you have nothing saved. And now Mom's got to move in with them and they have to cover her financial life.

[Co-host/Guest Expert]

Yeah, that won't. That won't happen. The husband, he wouldn't even let you move in? No.

[George Kamel]

Sounds like a peach. All right. Well, Pat, these Parent plus loans really are becoming like a cancer on society. It's destroyed relationships, and parents took it out thinking they were doing the right thing for their kids. The kids go, hey, it's in your name. You took it out. I was a kid. I was 18. I didn't know what I was doing. This is on you. But I would at least be very blunt about your financial reality with your daughter so that she knows what's on the line. And if they can at all help you get rid of this, that at least gives you a Chance at a decent retirement.

[Caller]

Okay, so I'm pausing my contributions into my IRA.

[Rachel Cruze]

Yeah, put that 25% back in your

[George Kamel]

paycheck, but remember, you're not pausing it for the rest of your life. You're pausing it for a short period of time. 24 months. We're going to pause it all and we're going to start throwing, you know, this kind of loan. You're talking about three grand a month going toward the loan to knock it out in two years. A little more than that because the interest is adding up. You're right. And so the more we throw at the principal, the faster this thing's gone. Because right now you throw 600 at it, but 100 or 200 is interest. Well, only 400 is now knocked out. And so if we can start throwing 3,000 at it, you'll actually see that balance start to go down instead of just keeping it at bay. Okay, but there's no other magic wand I can throw at you. I mean, these loans are not even bankruptible in most cases. And so really, the only way to get rid of student loans is to pass away, which is the darkest part of it all.

[Rachel Cruze]

Yeah.

[George Kamel]

Oh, my goodness. I'm wishing you the best, Pat.

[Rachel Cruze]

So sorry.

[George Kamel]

Riley is up next in Memphis, Tennessee. Riley, welcome to the show.

[Co-host/Guest Expert]

Hey, how are y' all doing?

[George Kamel]

Great. What's going on with you?

[Co-host/Guest Expert]

Hey. About two years ago, I bought a $60,000 truck. I currently owe 39 on it, and it's worth about 20, 29, 32.

[George Kamel]

Okay.

[Caller]

I can.

[Co-host/Guest Expert]

I say I can afford the payment, but once I get done paying the payment, after I get paid, and you know, insurance and mine, diesel for it, left with about 100 bucks for two weeks.

[George Kamel]

Yeah, that's right.

[Rachel Cruze]

After your. After your truck payment.

[Co-host/Guest Expert]

Yeah, after my truck.

[Rachel Cruze]

How much do you make? How much do you make a month? How much? You bring it home a month?

[Co-host/Guest Expert]

It fluctuates depending upon if they're letting us work over time, but it could be anywhere from 1400 bring home to 2000 bring home in a week, you know, I mean, every two weeks.

[George Kamel]

Okay.

[Rachel Cruze]

Okay. And how much is your truck payment?

[Co-host/Guest Expert]

$758.64.

[George Kamel]

That's a lot, my friend. That's a quarter of your take home pay just going to the truck payment. So you're underwater by seven to nine grand. So that's the magic number we need to come up with, either in cash, through savings, future income, or by going down to your local credit union and seeing if they'll give you that loan. For the difference plus some to get you something to get around in. B.

[Rachel Cruze]

An ideal situation is like $12,000 loan, $13,000 loan. So you have an extra three to four thousand to go get a crappy

[George Kamel]

truck, Facebook marketplace and get an inspection and just go, all right, this thing's not, it's not fancy but it runs.

[Rachel Cruze]

And then you save almost a thousand dollars a month. 750.

[George Kamel]

Yeah. Between the diesel, the insurance and the payment, you're going to feel like you got a giant raise because you did.

[Co-host/Guest Expert]

Yeah. Well, I talked to the bank this morning and they told me that I have another car that's paid for and it runs fine. It's in the driveway. They told me to get the VN and put it up for collateral and go to. Don't do that.

[George Kamel]

Like a title loan.

[Rachel Cruze]

No.

[Co-host/Guest Expert]

Yeah, like a. They just said for collateral.

[George Kamel]

Yeah, I've never had a. That's a title loan. I mean they own the car if you miss the payments. I don't like that at all.

[Rachel Cruze]

Yeah, no, just see if they will. If you can do just. Yeah, just a personal loan for nine grand at that point or if you have a thousand bucks saved your highly then an eight thousand dollar loan, whatever it is, for that difference. Yeah. And pay this truck off asap.

[George Kamel]

You've worked too hard to get control of your money just to let strangers control your data. Think about it. Just about every time you sign up for a newsletter, grab a coupon code or start a free trial, your personal info like your name, email address, phone number and more gets scooped up and sold by data brokers. Here's the deal. Freedom isn't only being debt free. It's also being free from companies cashing in on your data. And that's where Delete me comes in. Delete Me's privacy experts find your personal info on these shady data broker sites. They get it deleted and they keep it gone. It's like having a digital cleanup crew that scrubs your online life so you get way fewer of those spam calls, creepy texts and scam emails that make you wonder how they even found you guys. The less noise in your digital life, the more time you have for what actually matters. Because when you protect your privacy, you protect your peace and your freedom. So go to JoinDeleteMe.com Ramsey to get 20% off their annual plans and take back control. That's JoinDeleteMe.com Ramsey. We wish that we could get to every call and question here on the Ramsey show and we can. But if you have a money Question you want an answer? There is hope for you. You can head over to our website and use Ask Ramsey. It's our free AI tool that is built and trained on proven Ramsey principles. This is stuff that you're not going to get from your other search engines because they just don't know us like that. Yes, this thing is has the brain power of all the Ramsey Showcase.

[Rachel Cruze]

All rams. It's kind of scary articles. Just like a robot of rams. It's like us, George.

[George Kamel]

It's a superpower and it's way smarter than us because it knows everything.

[Rachel Cruze]

That's so true. Can do.

[George Kamel]

I actually use it today. Rachel, you know what I asked it.

[Rachel Cruze]

What'd you ask?

[George Kamel]

You know, I know our car parameter that no more than half your income and things with wheels and motors. But I was like, what about net worth as a ratio? And it told me, it said, hey, make sure that the cars you know in your life aren't more than 5% of your total net worth.

[Rachel Cruze]

Of your total net worth.

[George Kamel]

I was like, thanks, Ask Ramsey.

[Rachel Cruze]

Gosh, Ramsey, we should.

[George Kamel]

I was like, I think it's five. I think I've heard Dave say this. And Ask Ramsey knows all.

[Rachel Cruze]

There you go.

[George Kamel]

So it settled the debate for me. And you can get the answer the same way we'd answer it right here on the show. So ask your question [e-mail], go take it for a test drive. I think you'll really enjoy it. Or click the link in the description if you're listening on podcast or YouTube. Tyler joins us in Canada. Tyler, welcome to the show.

[Co-host/Guest Expert]

Oh, thank you for having me. It's my first time calling, so I'm excited to hear your feedback.

[George Kamel]

About time. We're glad to have you. What's your question?

[Co-host/Guest Expert]

Thank you very much. Yeah, so my wife and I are moving to a different province in Canada. She's just about to be done graduating seven years worth of school. She's going to be a veterinarian when she's done.

[George Kamel]

Nice.

[Co-host/Guest Expert]

And because of the she has a job guaranteed contract. She's already signed it. And I have work lined up back home as well that we both know what we're going to be making. So we went ahead and made a decision. We put an offer in on a house in part because of the money we had saved for school. Plus unfortunately her father passed away recently. But that meant she got, you know, the life insurance payment, made it so that it was more than possible for us to do either a 10 or 20% down payment. On all the housing that we were looking at in rural New Brunswick in this case, which maybe that's, maybe that's fine advice, maybe it's not. But the problem became then, you know, they're good people and they had their worries and concerns, but her mother and grandmother and my in laws have sort of been telling us that it's too much too soon and it's a bad decision. And I was just wondering if there's, if I'm making a mistake or if, if what I'm doing is fine.

[Rachel Cruze]

Are they saying it's a bad decision because of where you guys are financially or because it's just too soon because you just graduated, you're newlyweds. Was it more of a life or a money reason?

[Co-host/Guest Expert]

I think it's definitely more money reasons. Like we've been married for almost five years, so it's not like you're keeping up too much onto a new relationship

[George Kamel]

or any know your incomes.

[Co-host/Guest Expert]

Yeah, they have a lot to be

[Rachel Cruze]

making a lot of debt from her vet school.

[Co-host/Guest Expert]

We have some hangover. The only caveat here is because it's Canada, there's no interest on the student loans. So we are paying them. But it's a little matter for the. It's. It's around 30,000.

[George Kamel]

Okay, what other debts do you guys have?

[Co-host/Guest Expert]

Nothing, it's just those.

[Rachel Cruze]

Do y' all have any loans?

[Co-host/Guest Expert]

There's no credit cards.

[Rachel Cruze]

Okay, and how much money do you guys have saved total? Including what she. When her father passed away.

[Co-host/Guest Expert]

So all between what I've saved and between what we have, we've probably got around 80.

[Rachel Cruze]

80,000. Okay.

[Co-host/Guest Expert]

It'd be a little over $80,000. That's like liquid right now.

[Rachel Cruze]

Okay.

[Co-host/Guest Expert]

Non retirement.

[Rachel Cruze]

Gotcha.

[George Kamel]

So if you take away the loans that brings you down to 50. Take away an emergency fund of six months, that takes it another. Another 30 down. So you're left with 20 grand essentially.

[Rachel Cruze]

Let's go three months. They're young, they don't have kids.

[George Kamel]

Okay. Rachel's being very kind.

[Rachel Cruze]

We'll go 20.

[George Kamel]

20k. So 20k for emergency fund, 30k for 30k. And then leaves you with 30 left for a down payment.

[Rachel Cruze]

Yeah, 30,000 for a down payment is where we would say you guys are parameter wise versus 80.

[George Kamel]

How much is the house that you guys put an offer on?

[Co-host/Guest Expert]

So what we ended up settling for was 345. So 10% would be the 34 and a half. Yeah, I was hoping to. So maybe this is the philosophy difference. I was going to leave the student loans and go for 20 on the house and then use the excess because it would be, you know, an extra 500 bucks a month and I'm saving on the mortgage and I wanted to use that to go in and pay the student loans.

[Rachel Cruze]

How much a month extra would you get? You said you'd save 500amonth if you put 20%.

[Co-host/Guest Expert]

Right. Because it would avoid PMI.

[Rachel Cruze]

Right, yeah, sure.

[Co-host/Guest Expert]

That, that would be going instead of, you know, paying immediately just because it's. Because there's no interest on it. My incentive to pay it isn't. Isn't quite the same. And I would rather, I think I'm saving more money by reducing the insurance load or the interest on the house rather than, you know, the student loans that I'm less incentivized to pay.

[Rachel Cruze]

Yes, well, yeah. And in that case, if it was just 500 you're putting towards those loans, it'd be like three and a half years till they're paid off. So our philosophy is to be debt free before you buy a home and to have an emergency fund in place and then what is left is. Yeah. What you would put down for a house. How much do you guys make a year together? What will the new job.

[Co-host/Guest Expert]

It'll be. So about the floor, the most conservative estimate will be 125.

[Caller]

Okay.

[Co-host/Guest Expert]

Her job, she's expected obviously like within three years to be making a lot more than 85 starting. And there's a commission component, so depending on what drug she does or doesn't sell. So one, I'm not like planning that into a budget or anything, but it's another consideration.

[Rachel Cruze]

So 125 for both of you, Right.

[George Kamel]

What are you making?

[Co-host/Guest Expert]

Oh, no, no, that's combined. 125 is combined.

[Rachel Cruze]

Combined.

[Caller]

Okay.

[Co-host/Guest Expert]

Around 85. And I'd be about like.

[Rachel Cruze]

Okay.

[George Kamel]

Yeah.

[Rachel Cruze]

So if you guys lived on 90. Well, I guess that's before taxes.

[George Kamel]

Yeah. My guess is your take home pay will be somewhere in the $7,000 range.

[Co-host/Guest Expert]

Yeah, that seems about right. Okay, maybe I would say a little bit more than that, but.

[Caller]

But yeah, that's around there.

[George Kamel]

Okay. My fear is that, I mean, if you do it the Ramsey way, you're talking about, I know you guys have a different mortgage structure. You guys have like adjustable rate mortgages that change every five years. Is that right?

[Co-host/Guest Expert]

And our interest or the rate is like three and a half percent here where it's more, I think for you guys as well.

[George Kamel]

Okay. Not sure though, but the rate could change, you know, every couple years. Yeah. So my fear Is that you pick up this home and if you do it our way, you know that mortgage could be $3,000 out of your seven. Right.

[Co-host/Guest Expert]

It's possible.

[George Kamel]

That feels like a big load to carry going into this new phase of life. We know, we recommend 25% going towards your housing and so you'd be closer to 40, edging up to 50 depending on the situation. Insurance, property taxes, all of that hoa. I don't know how that works in Canada, but that's my fear.

[Co-host/Guest Expert]

Right now it's rural, so there's no hoa. And the property taxes is a little bit, it's about $100 a month.

[George Kamel]

Okay. So there, there's a piece of me that says you guys might be able to make this work, but it's going to be more stressful than you think it is. But if you waited another, let's say six months, you signed a short lease agreement to rent in this new province, kind of get used to the area,

[Rachel Cruze]

even just a year, you know what I mean?

[Caller]

It just, it's, it's the, it's the

[Co-host/Guest Expert]

province where we were from. I guess the other, the only other thing, piece of information that might be relevant here per job requires her like we gonna be, got to be in one places. So where we were getting is kind of in the middle to reduce her driving between each one and it's closer to where I would end up working as well. So the options to rent that are actually close are like close to non existent because of how rural it is.

[Rachel Cruze]

Well, how far is the, what's the difference of the, of the two places it'd be.

[Co-host/Guest Expert]

We're talking about like 45 minutes. That's 20 minute drive versus over an hour. Yeah.

[Rachel Cruze]

Okay, well for a year. Here's the thing, Tyler. The reason that everything is laid out the way it is with the baby steps and all of it, which hasn't changed in 30 plus years, is because this is the most peaceful, most efficient way to build wealth long term. Okay. And so, and I say peaceful people getting out of debt, it's not really peaceful. It's crazy. You're like trying to get out. But the point is, is that especially with a house, you know, your house is supposed to be a blessing. It's supposed to be a place of peace and rest. And the thing is people quickly move into that purchase thinking, okay if I could just get that house, it's going to be okay. And, and we'll figure out the finances. Well, it's okay, we're right on that edge. But What George was saying earlier is you're just, you're right on that edge. And what it could cause is a level of stress that's unnecessary for today. That if you guys just waited one year, had an inconvenience of an extra 25, 30, 40 minute drive for one year, saved like crazy, knocked out the debt, had, you know, looked at and said, okay, we can go full force, 20% down, like it's just a more peaceful way. And there's no one telling you you have to buy a house right now. You know, there's no one, so.

[George Kamel]

And you can, you know, it gives you more options down the line. One of you, let's say you have kids. One of you wants to stay home. Well, you can't. And guess what, there's no daycare out in the woods. And so now we're left an alert. So we're trying to think about future Tyler as well. Wishing you the best.

[Sponsor/Announcer]

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[George Kamel]

Haley's in Seattle. Up next. Haley, welcome to the show.

[Caller]

Hi. Thanks. Super excited to be here.

[George Kamel]

What's going on with you today?

[Caller]

I am trying to decide if my family just made the biggest financial mistake of our lives.

[Rachel Cruze]

Oh, no. What is it?

[George Kamel]

Say more.

[Caller]

So we just sold our Ramsey model perfect house in Boise, Idaho to move to a high cost living in Seattle, Washington.

[Rachel Cruze]

Why'd you move?

[Caller]

We have two young kids and I became permanently disabled from my job and I wanted to be close to family. Oh, thank you. I'm dealing with it. But I wanted to be close to family to help with the raising of our children.

[Rachel Cruze]

Yeah, that's a, that's a very noble decision and a great why. So what is causing you to feel like that was a big mistake? Is it all financial related because it's just more expensive?

[Caller]

Yes. So. Well, I mean, it's hard to justify leaving a twelve hundred dollar mortgage.

[Rachel Cruze]

Well, it is when you're permanently disabled and you have young kids, you want to be in your family. I mean that's.

[George Kamel]

And it depends on how much of your world this new mortgage is. Yes, you might just like, well, we were paying this much, now we're paying this much. The sticker shock sometimes hurts more than the actual reality ratios.

[Caller]

So like our rent, we moved into an apartment and our rent is $3,285.

[Rachel Cruze]

Oh, yeah, that can hurt.

[George Kamel]

And what's the household income now? Like every month?

[Caller]

About 7,500.

[George Kamel]

So that's where you're feeling the pinch is half of the income is now going to rent instead of building equity at $1,200 a month.

[Caller]

Exactly. And it was, I mean, it was just such an affordable place to live too.

[George Kamel]

Yeah, sure.

[Rachel Cruze]

Okay, well, it's done, right? The decision's made. The house has been sold, correct?

[George Kamel]

Yes.

[Rachel Cruze]

Yep. Okay, so what can we do moving forward to help you?

[Caller]

So we, my husband and I feel like we are never going to be able to reenter the economy as like homeowners and like take that next step again. We feel like we took this huge step back and I guess my husband is in the mindset currently that we made the biggest financial decision that could ruin our future going forward and it's going to take us years to recoup in rent.

[Rachel Cruze]

Wow, very dramatic.

[George Kamel]

The cloud is hovering over you. Well, what happened to the proceeds from the house?

[Rachel Cruze]

You sound like me, like the world's coming to an end.

[Caller]

I mean, it's scary. Like I get where he's coming from. Such a solid financial base that I don't think that's not true.

[Rachel Cruze]

How much did you get from the house when you sold the house?

[Caller]

230.

[George Kamel]

Where'd that go?

[Rachel Cruze]

Where's that?

[Caller]

That one is in a high yield savings account right now because we don't know like when we could buy again.

[Rachel Cruze]

Okay, what are the houses going in the area that you guys are in?

[Caller]

Oh, gosh. Like for a decent three bedroom house, we're looking at seven to 800,000.

[George Kamel]

Okay.

[Rachel Cruze]

Yeah.

[George Kamel]

So this is a solvable problem. I mean, yes, it's more expensive than living in Boise. So we need to get that out of our head.

[Rachel Cruze]

And y' all Knew that, though, Haley. Like, right. Like, you. You guys didn't just, like, show up in Seattle and be like, oh, my gosh, this is more expensive. Like, you knew that. So living in. It's a different reality. I understand that, but. But it wasn't. It wasn't.

[Caller]

It is.

[Rachel Cruze]

It wasn't. Like it surprised you.

[Caller]

Well, I think it surprised my husband a little bit just because he wasn't really for the movie, loved our home and, like, the situation we were in, and we felt like we were really financially stable, and he kind of believed that.

[Rachel Cruze]

So I wonder if that's part of his draw. I wonder if that's part of the big statements. Haley, is that, yes, it is more expensive, which can feel overwhelming, but you guys have $280,000 sitting in a high yield savings account, which is more than enough for a down payment on a new home destitute. And I think part of it is, is I just don't want any level of bitterness or resentment in him to grow because it doesn't sound like you both were. Felt really, really solid and really excited and really on the same page about this move.

[George Kamel]

It's not something you chose. You didn't do it out of a place of strength. No.

[Caller]

Well, it just seems so. It feels like we just went against everything that Dave Ramsey teaches.

[George Kamel]

Forget Dave Ramsey. This is your life, Hailey. I mean, you have this. This health condition that has caused you to have to move, and it wasn't your choice. And I have Dr. John Deloney in my head going, you need to grieve the life that you had. That one's over. And now there's a new chapter. And so we can either look backwards and go, oh, my gosh, if we just could live in Boise again, or we can go, hey, this is a fun adventure. We got young kids living in this really cool city. Yes, it's more expensive, but my husband has a great job. Maybe he can make even more money in the long run being in Seattle, especially with all the tech stuff around it. There's a great economy there.

[Rachel Cruze]

Yeah.

[George Kamel]

And you guys will be homeowners again one day. You have hundreds of thousands of dollars saved.

[Caller]

Right. And I would put all of that money down on a new home.

[George Kamel]

Yes. It was stuck in the last home. Was. What else would you do with it?

[Caller]

Sure. I don't know. I just feel like. I don't know.

[Rachel Cruze]

Yeah.

[Caller]

I guess it just feels like a lot of.

[Rachel Cruze]

Was this move, Haley, a quick decision when. From the moment you guys started talking about it to it actually happening was It. A couple. Like, was it a year? Was it.

[Caller]

Oh, gosh, like, months?

[Rachel Cruze]

Okay. So I do. I do wonder if you guys rushed into it. And George, I love you, but I will. Correct. He said you needed to move. You didn't have to move.

[George Kamel]

Yes.

[Rachel Cruze]

You chose to.

[George Kamel]

For the help.

[Rachel Cruze]

Yeah. Exactly. For the overall quality of your life because of what happened. How long ago was the accident that caused you to be permanently disabled?

[Caller]

It's just. It's kind of hard. I'm blind, so it was a slow progression.

[Rachel Cruze]

Okay. Oh, I'm so sorry, Haley. I was just dealing with a. Can I just say that you're just dealing with a lot? That is one of the most.

[George Kamel]

It's a lot of life changing.

[Rachel Cruze]

Horrific. Life changing. Yes. I mean, you're grieving your sight, which I can't even imagine.

[Caller]

Oh, I didn't want to give up work.

[Rachel Cruze]

Sure. Yes. And giving up that part of you that was contributing and that you loved your work. Your husband, who's. You know what I mean? There's a lot.

[George Kamel]

And I'm sure it's a lot on him to figure out all this out.

[Caller]

Yeah.

[Rachel Cruze]

I think the stress is less about it being more expensive in Seattle, and I think it's that your life has completely changed. Completely changed. And what George said, quoting John, of kind of grieving what was supposed to be what our life, what we thought would look like for the next 10, 15 years of our life. It does. It looks so different on so many levels. Right. And that's.

[Caller]

It does.

[Rachel Cruze]

That's a really sad reality. You know, that's hard. Not that you guys can't get through it and create something beautiful in this next season, but to acknowledge that, that.

[George Kamel]

That's.

[Rachel Cruze]

That's difficult.

[George Kamel]

Yeah.

[Caller]

Yeah, it has been hard. But I. Again, like you guys said, I feel like we're in, like, a safe space. I mean, we're around family, and there is the financial backing to purchase a home. We're just kind of hesitant in this. Of, like, putting all that money into a new home in this area. Like, just with the current economy and climate, like, we don't know if that's like. Or if renting is the better.

[Rachel Cruze]

What do you mean? Yeah, what do you mean by the current account when you say that? What does that mean to you?

[Caller]

It just. To me, it feels like with the interest rates of where they're at and the type of houses they're, like, they're not. Like, a lot of them are fixed or uppers at the 700 to 800,000 range, you know, we're going to have to, we'll get into a home and we'll probably have to replace the roof or the H VAC system is going to be ancient. And so it's like the, this fear factor of, like, if we buy into another home, like, is that really going to be wise? Is, are we going to get equity

[Rachel Cruze]

on that long term? Long term it will. Paying $3,000 in rent forever and ever. Amen. Is not the wisest move. It would be, you know what I mean? Yeah. More wise to get in. And, and you guys need to, I would say, slow down before you buy and actually look to see. Yes. Does the H VAC unit need to be replaced? How does the. You'll see all of that in the inspection of the home. None of that will be a surprise. You will have some factor. But yes, being a homeowner is more expensive. You're exactly right. But also, I do think there's some semantics that are thrown around when it comes to the economy and the housing market. And it is true, houses are more expensive than they were five years ago. Yes. Interest rates are around 5% and they're not at the 2 to 3%. There are some realities, but just this vague idea that, oh, gosh, the economy's just not good, we shouldn't buy a home. I would want some more facts around those thoughts.

[George Kamel]

My fear is you look back 10 years from now and you go, wow, the economy was great back then and we had no idea. And so I'm, I'm a glass half full kind of guy when it comes to that. So the, the goal is let's, let's grieve what was, and let's make a plan for the future. And that might mean we're going to save 25 grand a year or 30, 50 grand a year for this next home three years from now, and that's it. It slowed down your wealth building, but you have the right setup in place for your life, and that's far more important.

[Caller]

Well, Dave, you know, on the show all the time we get calls about cars, used cars. What's one thing you want folks to know?

[Sponsor/Announcer]

Well, really a couple things. Number one is always buy used. Unless you got a million dollars, we don't buy new cars. And if you're going to buy used, number two, you want it to last. And that means regular, proper maintenance.

[Caller]

Yeah, that's a big deal. I know when Sam and I moved

[Rachel Cruze]

from South Florida up to Tennessee, that's the first thing you're looking for.

[Caller]

You need somebody who can Take care of your car. So when we found Christian Brothers Automotive, it was a no brainer and they've been absolutely great.

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[Caller]

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[George Kamel]

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[Caller]

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[Caller]

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[George Kamel]

Welcome back to the Ramsey show in the Fairwinds Credit union studio, I'm George Camel joined by best selling author Rachel Cruz. And we're taking Your calls at 888-255-225. Lynn is in Maine up next. Lynn, welcome to the show. Are you with us? So close. All right. Oh, good. You scared me half to death.

[Caller]

Thank you so much for taking my call. I'm sorry.

[George Kamel]

What's going on?

[Caller]

Hi. So my husband and I got married last year. We started the baby steps right after getting married. We paid off our debt, aside from our mortgage. And six months into marriage, I found out that my husband owed $80,000 in back taxes. And also at this time, we found out we were pregnant with our first child.

[Rachel Cruze]

Oh, my gosh.

[Caller]

Finding out. Yeah, A lot going on. We paid the $80,000 out of our emergency fund and house funds, so we had the money to pay that. But we are unsure where to go from here emotionally and financially because tax season. So 2025 is quickly approaching and we are expecting to owe about $40,000.

[George Kamel]

Oh, my gosh.

[Rachel Cruze]

Lynn, why is the accounting not changed after everything?

[Caller]

The accounting I.

[Rachel Cruze]

Quarterly payments.

[Caller]

No, we. No, we hadn't.

[Rachel Cruze]

Okay, okay. So you didn't learn.

[George Kamel]

You didn't make any payments in 2025,

[Rachel Cruze]

but didn't learn from owing 80,000. Do you know what I mean? Like, I'm just wondering, did it not occur to your husband.

[Caller]

We found out in December, so we were trying to catch up before we paid 2025.

[George Kamel]

Oh, so you found out about the 80 in December?

[Caller]

Yeah.

[George Kamel]

And at that point, 2025 you found. That was for 2024.

[Caller]

That was for 2022, 2023 and 2024.

[George Kamel]

Got it. So by the time you found out about all of this, it was too late, because 2025 was over at that point. So now we're just sort of cleaning up up. This is still part of the mess. Let's call it 120 grand. And you've cleaned up 80 of it.

[Caller]

Yes, exactly.

[George Kamel]

Well, it's fairly simple. It's a $40,000 debt that you owe the government. And so we got to pay that as aggressively as possible. Do you have other debts as well?

[Caller]

We don't. We paid off all of our other debt.

[George Kamel]

Good.

[Caller]

Thankfully, we do have. We have a business, it's a restaurant. So we have $40,000. Well, total, we have $60,000 in the bank account for our restaurant and we have $20,000 in our personal account. And I know you talk about pausing paying debt when you find out you are pregnant. So we're just wondering if we should pay money from the business account or if we should get on a payment plan with the IRS or what our best way forward is.

[Rachel Cruze]

Yeah, I think for stork mode is what we call it. I think IRS debt is not included. Like I think you gotta, especially if

[George Kamel]

you have the money. So the question is, what was that 60 grand earmarked for in the business account? Is that needed for upcoming purchases, investments, anything like that? Or was it just kind of an emergency fund for the business?

[Caller]

Yeah, an emergency fund for the business. It takes about $15,000 a week to operate. While we do bring in more than $15,000 a week, we just wanted to kind of.

[George Kamel]

Yeah. How much do you guys bring home

[Caller]

a total a month? We bring home about 15,000amonth.

[George Kamel]

Amazing. So you could easily restock the business account.

[Rachel Cruze]

I would pay 40k today out of the business.

[George Kamel]

Because truthfully, this is kind of an emergency for business is you didn't withhold enough taxes or at all. And so I would take that out now. You get 20k in there plus 20k in checking. So you're not in a lurch if you did need to cover, you know, an emergency. And so I would just work on restocking that. And you guys should still be good for your stork mode. I mean, you have 20 grand. This is the sork mode is more for like we are broke. We have a thousand dollar starter emergency fund and we need to make sure that we're covered in case there's, you know, Health bills.

[Caller]

Right, Right. Okay.

[George Kamel]

So I have full confidence I would clean it up. Because truthfully, while you're pregnant, you don't want to be dealing with the stress of irs.

[Rachel Cruze]

Yes. Yeah.

[George Kamel]

I want this to be exciting and fun and not this looming in the back of your mind that we owe the irs.

[Rachel Cruze]

Do you have someone that's helping you with your taxes for the business?

[Caller]

We do now, yes.

[Rachel Cruze]

Okay.

[Caller]

That we had before wasn't great, but we have somebody trustworthy now, which. So we feel like we're in a good path forward. Obviously, this was very hard emotionally, which I'm still trying to get over. I think that's the biggest thing for me right now, emotionally.

[Rachel Cruze]

Because you didn't know about it because trust or.

[Caller]

Yes.

[Rachel Cruze]

Yeah. And it wasn't. Do you feel like. Was there any level of secrecy out of. Out of. Not malice. That sounds bad, but of like, oh, gosh, I don't want her to know. Or was it complete just ignorance of genuinely not knowing that he owed this?

[Caller]

I think it's hard to say for sure. I think part of him maybe knew that he owed something. I don't think that he knew that he owed 80,000. He was filing taxes for the business, but wasn't filing personal. The money that he was taking from the business.

[Rachel Cruze]

Yep. Yep.

[Caller]

And he wasn't fully realizing, but also should have definitely checked. So it's just been hard to find that out.

[Rachel Cruze]

Yeah, for sure, Lynn. That's very stressful. Yeah, absolutely.

[George Kamel]

Well, the good news is you guys can cover this with the cash on hand, and it's fixed for the future. So I would just get rid of it now. I wouldn't get on a payment plan, just cut them the check for 40 grand and fix it for the future. I mean, you got your. Your next quarter's coming up here to pay your quarterly estimated payments. So let's prepare for that and finally get ahead of it instead of kind of being reactive.

[Caller]

Right. And use kind of cash flow for the next month or try to cash flow for the next month that quarterly. Because we're kind of still playing catch up right now.

[George Kamel]

Exactly. So you might owe 10 or 15 grand in quarterly. And a quarterly payment coming up. And so we got to make sure we have that. And so the next week, we're going to be living on a pretty tight budget now. So I don't know how you guys are living now. If I was making 15 grand a week, I'd be living la vida loca. And so it might be time to batten down the hatches and live a little bit more conservatively until we get through this phase. The taxes are solved. The baby's here.

[Rachel Cruze]

Yeah. He may not bring home as much because he's putting more in the business to make sure those taxes are paid.

[Caller]

Okay. Okay. Awesome. Thank you so much.

[Rachel Cruze]

Best of luck with that.

[George Kamel]

Good luck, baby.

[Rachel Cruze]

I know.

[George Kamel]

Such an exciting time. You don't want it clouded by this mountain of debt.

[Rachel Cruze]

So much. And it's scary. Like what she said. I mean, when. And thank God. I mean, they, they're somewhat responsible. They got 60 grand in an emergency fund in the business. 20 grand. I mean, like they're. There's elements of it that are a saving grace because some people usually, if

[George Kamel]

you're making that kind of money, you're comfortable with all these payments around you and you're just sort of keeping up.

[Rachel Cruze]

Yes.

[George Kamel]

And luckily they, they lived fiscally responsibly in other ways.

[Rachel Cruze]

Yes. To be able to have some of that. Yep. That savings.

[George Kamel]

And a good reminder for anybody who is self employed, even if you do like side gigs, I mean, you got to pay self employment tax. You got to pay your quarterly estimated payments. And it's not that hard. You can, can sort of calculate using calculators on the IRS website how much you'll owe in taxes. And you go, all right, I'm going to owe 40 grand this year. Or I made this much this quarter. I need to write a check to the IRS and log in, connect your bank and pay the IRS what they're owed. It's not fun, but we can't pretend like, ooh, free money. I don't have to pay taxes because I'm self employed. You got to pay them and then some, bud. You got the business taxes and your personal taxes. The government wants their cut. And so make sure you take care of that so it doesn't add stress to your life. Because the IRS can really screw it up. They can garnish your wages, come after your stuff. They're not your traditional lender, so take care of the stuff. Hey, what's up? This is Dr. John DeLoney for my friends at Mama Bear Legal Forms. I spend a lot of time talking with people about anxiety, relationship challenges, and all kinds of other things that keep people up at night. One thing I'm always telling everybody is that peace does not come from avoiding hard things. Peace comes from facing hard things and directly walking through them. One of the hard things we all face is our own mortality. And if you've got kids or people you love, creating a will is one of the most important things you can give them. I'm such a big fan of Mama Bear. When I moved from Texas to Tennessee, one of the first things I did was set up my will through Mama Bear so that my family was protected in my new state. Mama Bear will help you make a clear, legally valid will in about 20 minutes. They provide step by step guidance that makes getting a will simple. Simple. Believe me, if you're ready to love your family in a real impractical and lasting way, go to mamabearlegalforms.com and use the promo code RAMSEY to save 20%. That's mamabearlegalforms dot com use code RAMSEY. Foreign. We're headed to Providence, Rhode Island. James joins us there. What's going on, James?

[Co-host/Guest Expert]

Hey, how you guys doing?

[George Kamel]

Great. What's your question today?

[Co-host/Guest Expert]

My question is about communication. I'm 30 years old. I just got engaged and I found you guys maybe a year ago. And I'm on baby step two. I got $10,000 left on a car loan and I budgeted 12,000 and maybe a little more for a wedding that we have coming up in 2028.

[George Kamel]

That's a long ways away.

[Co-host/Guest Expert]

Yeah, well, we could have done it next year, but we wanted to fund it ourselves without going into debt.

[George Kamel]

Okay.

[Co-host/Guest Expert]

So that's why we chose 2028. Right now I make 50. Around 50,000 a year. But transitioning careers to become a firefighter and I'll be making 80k so helping my income for our future. But I wanted to try and start a conversation with her. But as I like, tried to talk about debt and all that, I just found myself not knowing how to approach it.

[Rachel Cruze]

Well.

[Co-host/Guest Expert]

I've become really passionate about living debt free and trying to become debt free. So how do I communicate with her without coming off as controlling or judgmental about her having debt and all that?

[George Kamel]

What do you know about her finances?

[Co-host/Guest Expert]

From what I know, she has credit card debt. She has card and student loans. The amount is not. I don't have full knowledge on the amounts. I know it's north of 25,000 total or more.

[George Kamel]

Well, you guys are engaged, so you have the right to start talking about this stuff. It's not like it's been two dates and you're like, hey, I really want to lay it all out. And so now is the time. Consider this yours. Like premarital counseling to make sure. And you go into it saying, hey, as we head towards marriage, I want to make sure that we're aligned because I know money is a huge part of Marriage. And I don't want us to be having money fights. I want us to hit our financial goals. And my values around money is that I believe being debt free is our best path to building wealth and having a marriage with less fights. And see how she, how that hits her. And it's not a judgment. You're not saying, I can't believe you're in debt. You better get out before we're married or else. That's not the spirit of this.

[Rachel Cruze]

Yeah, it's almost like not even shaming the past decisions, but it's more like, hey, going forward, how are we going to build a life together where we're unified and we, and we, we have the same value system. Right. And that would be true with how you want to handle in laws, how you want to parent, you know, your spiritual life. Like, I mean, this is all part of, you know, uniting two lives together. When you get married and you don't have to be the same person. Right. She may still be a spender, you may still be a saver. It's not like you're trying to morph her into who you are. But the value systems on which you make decisions, how has. Doesn't have to be consistent. But the more consistent they are, I would say probably, I don't want to say, the easier the marriage is going to be, but definitely it's a less, it's a less mountain to climb.

[George Kamel]

Yep. Less tension in that area for sure.

[Rachel Cruze]

So. Yeah, so go ahead.

[Co-host/Guest Expert]

I know she, like, she's the one. And like, I really want my future to be with her. And I just want our, our future together to be as stress free as possible, you know?

[Rachel Cruze]

Yeah.

[George Kamel]

What if you guys did something together to sort of get on the same page, like reading the Total Money Makeover or going through Financial Peace University and going, hey, as part of our sort of premarital counseling, I'd love for us to go through this money course or read this book together so that we're kind of speaking the same language.

[Co-host/Guest Expert]

Well, her language. She's a teacher. She's an English teacher. So her language. She has a bunch of books. So I mean, that would probably be the good first step is through books.

[George Kamel]

I love it. And even an audiobook too. If you guys are on a road trip or something, just. It can be casual. It's not like it's an intense. We're going to do a book report. Yeah.

[Rachel Cruze]

No, and you're not wrong to ask this stuff, James. I do want to just affirm that when you're Engaged to someone, everything's out on the table. Like you're about to combine your lives, you know what I mean? So bringing up big conversations and hard conversations, that. That's a. That's the, you know, the grounds of marriage, like that, that is what you're gonna do. And so you're right. Practicing that now is very important. And for you guys to, you know, I mean, by the time you guys walked down the aisle, James, you need to know how much she makes, what's in retirement, what she has set up, you know, as a teacher, what debt she has. She needs to. I mean, you guys are gonna know everything. Cause you're gonna combine it all and be one after that marriage. So just don't want to come off

[Co-host/Guest Expert]

as, you know, someone like, I'm trying to, like, dominate or anything. I just want to know what I have to deal with and what we will have to deal with together once we become married.

[George Kamel]

And nothing about you sounds controlling and dominating at this point in the conversation. So I don't know that you could really screw it up unless you're just super, way too passionate and overbearing. And she's like, who is this guy? He came out of nowhere. But if she knows you well enough, this is gonna feel like another conversation. And just say, hey, I've been thinking a lot about this and I was thinking, man, it'd be really cool to be heading into marriage debt free. Can we like just. I wanna map it out on paper and just see like, what's possible. Cause you gotta pay for the wedding. You're both covering that and you're still

[Rachel Cruze]

getting out of debt, James. So it's not like you. You know what I mean?

[George Kamel]

There's no better than that.

[Rachel Cruze]

Yeah, Yeah. I mean, that's what you can say. I mean, I've, you know, messed up with money. I've been so in debt and it stressed me out and I. I've started to actually find freedom and peace by getting out of debt. And it's really important to me that as we build a future together that we see and are aligned on this. And it doesn't have to be like this my way or the highway, but at least approaching the conversation, you know,

[George Kamel]

and then whatever she says next, that's your cue to dig in and ask more clarifying questions and really get to the heart of whatever her fears or dreams are.

[Co-host/Guest Expert]

Definitely.

[George Kamel]

And then you can sort of couch that to go, okay, now I can see how debt freedom is a part of that. And I think even going into it, saying, I Have these goals. How cool would it be if we had options when we got married instead of having to clean up a bunch of debt? How awesome would it be to have the wedding paid for and no debt and money in the bank so that we're closer to buying a house or we can go on this amazing vacation or honeymoon? And so now we're dreaming. This is an exciting conversation versus a woe is me.

[Rachel Cruze]

And you get to know a person through the lens of money, right? Of how she grew up, what was. What was her household growing up with money. You know, was it stressful? Was money talked about? Was there scarcity, tension? Was it scarcity mindset? A bunch. You know, you kind of learn of how she is, what her personalities are, what her tendency is around money, the things that she loves to do with it, the things that she's scared of and that she's fearful for in the future. I mean, you know, you get to. You really get to know someone as well on a. On a great level, on a deep level when it comes to these conversations, too.

[Co-host/Guest Expert]

Okay, thank you so much.

[George Kamel]

Sorry.

[Rachel Cruze]

Probably overwhelmed you.

[George Kamel]

James.

[Rachel Cruze]

You know what? Hold on the line, and Kelly's going to pick up, and we'll give you a copy of my book, Know yourself, know your money, because it does talk about those money classrooms of how you grew up in your tendencies and total money makeover. We'll give you two copies. We'll give you two copies of Total money makeover so you each can read one.

[George Kamel]

She's an English teacher. She wants her own.

[Rachel Cruze]

Yeah, yeah.

[George Kamel]

And mark it up. Highlight it.

[Rachel Cruze]

Yeah. This is exciting. We probably overwhelmed him. Sorry, James.

[George Kamel]

No, he's. He's excited. I get it. In the engagement, you're nervous. You're like, I don't want to screw this up. You know, you're on the precipice. Yes. So you're like, now's not the time to throw a wrench into things. But it's the right.

[Rachel Cruze]

But it is it. Yeah.

[George Kamel]

It's the right wrench. You don't want to throw it because money fights.

[Rachel Cruze]

I know.

[George Kamel]

Money throw wrenches.

[Rachel Cruze]

I know. But money fights and money problems are one of the leading causes of divorce. It's in the top three list always of reasons why people get divorced. And it's a big, big conversation. Like, it's a big conversation to have and an urgent one to have because

[George Kamel]

I don't know what woman is like, if you came up to her and said, hey, money fights and money problems are one of the leading cause of divorce. I don't want that to be us. I want to just. Yeah.

[Rachel Cruze]

You almost feel loved and cared for.

[George Kamel]

What a fiscally responsible man I'm about to marry. This is awesome.

[Rachel Cruze]

James is such so responsible and if

[George Kamel]

she gets, if she gets frazzled or upset, then you, you're the calm one going, hey, what's going on?

[Rachel Cruze]

Well then that's saying more about her. What's going on there and then you can dig in. Yeah.

[Caller]

Yes.

[George Kamel]

So there's really no like lose, lose.

[Rachel Cruze]

Yes.

[George Kamel]

This is going to be so great. I wish I was there to watch it. You know, we should do like a show where we, we were like, we're in their ear with a little microphone.

[Rachel Cruze]

Oh my gosh, that'd be so fun. And we're like, say this, say this. Hold on. Hold her hand, grab her hand. Okay.

[George Kamel]

All right. If you guys want that show, man, we'll, we'll workshop it, we'll pitch it to the network.

[Rachel Cruze]

Cuz people know we can talk. I think we just talk. James 0.

[George Kamel]

I would love it. But like you have her, I've got him. And we're like sort of battling, you know.

[Rachel Cruze]

Oh, that's good. I think that's great.

[George Kamel]

I'd watch that show.

[Rachel Cruze]

I think that sounds fantastic.

[George Kamel]

It's like impractical jokers.

[Rachel Cruze]

That's what I was going to say. There's a show that. Yes. So they make them do something. But we would actually be helpful.

[George Kamel]

But it's not a prank show. We're just trying to help you. We're really trying to help nail the conversation.

[Rachel Cruze]

Ooh, the money fight show. That's what it should be.

[George Kamel]

All right guys, I think we just nailed it. We just pitched it. I think Dave Ramsey just signed off. We're good. Can't wait.

[Co-host/Guest Expert]

Sa.

[Rachel Cruze]

If you're looking for a more budget friendly way to save on medical costs and stay true to your values, Christian Healthcare Ministries is a great option to think about. CHM is not health insurance. It's a health cost sharing ministry. A biblical community based way for Christians to share each other's medical bills. That means no enrollment deadlines and you can choose any doctor or hospital you want. That kind of freedom is big, especially if you're self employed between jobs or you just need something that fits your budget better. CHM has been around for decades, faithfully serving the Christian community. And many members save hundreds of dollars a month compared to traditional health insurance. And that margin gives you breathing room when you're working the baby steps and trying to steward your money well. And right now CHM is offering new members a 50% credit towards their first month of membership. Get [e-mail] budget and use promo code Ramsey. That's chministries.org budget and promo COD Ramsey.

[George Kamel]

The Ramsey Show Question of the day is brought to you by WireFi. When your private student loans are in default, your progress stalls out. Why? Refi can help you restart by refinancing defaulted private student loans into a low fixed rate payment that fits your budget so you can stop spinning your wheels. Visit yrefi.com Ramsey that's the letter y r e f y.com Ramsey may not be available in all states.

[Rachel Cruze]

Today's question comes from Brooklyn in Ohio. I am 27 and married to a great guy who also lives by your principles. We're on baby steps four, five and six and our home will be paid off in five years. We have a six month old baby. I'm a free spirit, but with my husband's help, I have become a saver.

[George Kamel]

Wow, I didn't know you could change.

[Rachel Cruze]

Our wedding budget a couple of years ago was almost $50,000 and with inflation, our daughter's wedding is going to cost around 70,000. I want to start a wedding savings account for her, but my husband thinks we should pay off the house first. Can we do both at the same time or pay off the house first and then save for the wedding?

[George Kamel]

That is a hilarious and fantastic. I mean from a free spirit to I'm planning the wedding for the six month old.

[Rachel Cruze]

That's pretty impressive because she wants a great wedding in 20 plus years or whatever.

[George Kamel]

Yeah, in the year 2050.

[Rachel Cruze]

So no, Brooklyn, I would not be saving right now for a wedding. I would be paying off the house.

[George Kamel]

Yep.

[Rachel Cruze]

I'm on your husband's team. You don't know, you don't know what it's going to cost. You don't know what your daughter is going to want to. Is going to want. We don't know that far in the future. Right. So that's a very far off purchase to make. Now one thing you could be thinking about though is college, you know, and saving for that. But yep, for the wedding I would, I would wait a little bit. I would get the house paid off and get some college funding happening on the side and then as she gets older and you guys are in a great financial position to be saving and.

[George Kamel]

Yep, yep. I just crunched the numbers for you while Rachel was talking. I got so deathly bored. I was like, I'm just gonna go to the investment Calculator. Well, I want to just show her that this is a solvable problem. Right. You focus on paying down the.

[Caller]

Yes.

[George Kamel]

Five years from now they're debt free with a five and a half year old daughter. Right. So that gives them, let's say 20 years. Let's say at 25, she's getting married, weddings happening. So it's 20 years. If you invest 100 bucks a month starting from nothing in an investment account, non retirement. So just like a taxable brokerage account in index funds, you will have $86,000 likely. Let me go 10% to be conservative. That's at 11, 10% you'd have 75

[Rachel Cruze]

and that's 100 bucks a month.

[George Kamel]

So 75 to 85%. 75 to 85 grand you'd have when she's 25. So that's 100 bucks a month. That's very doable. Again, when you have no mortgage payment.

[Rachel Cruze]

Yeah, absolutely.

[George Kamel]

And that's what I'm actually doing right now is not just for wedding, but you got to think about, that's how I was. A car, a wedding, a down payment as a gift, what our house is going to cost. How can I help my kid get a leg up?

[Rachel Cruze]

Yes.

[George Kamel]

While they're young adults.

[Rachel Cruze]

I think it's more that. I think it's just the savings for future purchases in life. Right. College. Yes. If you want to help them in some other way. Down payment you mentioned or. Yep. Wedding, all of that.

[George Kamel]

And there's no obligation. You're not a bad parent if you can't help with these things. But if you can, and you definitely can, when you have a paid for house, following the steps, it just gives you more options and flexibility and more room to be generous. So I love this question. Brooklyn, you are nailing it. You and your husband are doing the exact thing we would tell you to do, do. So keep it up. Pay off the house first. AJ is in Nashville. Up next, aj, welcome to the show.

[Co-host/Guest Expert]

Hey guys, how you doing?

[George Kamel]

Great. How are you?

[Co-host/Guest Expert]

I'm doing pretty good. Wanted to call in. So my fiance and I got engaged last March and the wedding is in July this year. I already had a house and everything, so she just moved in with me about a year and a half ago. So I paid a mortgage and kind of feel house broke. I reckon she makes a little more than twice what I make and I know she'd help if I asked her to, but with her student loans, credit cards and just, I guess miscellaneous things like her wedding dress and stuff like that, money's Type her, too. So my question is, I know Dave's generally pretty traditionally against it, but would it be easier for us to combine finances early since the wedding's in five months, or just hold off on it and then, you know, hit the ground running from there?

[Rachel Cruze]

Yeah. No, I would not combine finances till you're married. I would have her be working on her debt and you working on your financial situation. Then when you guys get married combine, and then if you are out of debt and she still has debt, then your income will be going to help her pay off her debt. And, you know, you guys are focused as a household that. So, A.J. how did you afford the house before she moved in? Because you said you were. You had a house and then she ended up moving in. But it's. It's still stressful for you. Is it too much house?

[Co-host/Guest Expert]

I'd argue it is, but it's. When I bought the house, it was in 21. I was in a sales role, so I was doing really well. And then some things happened with the customers I was working with, so I kind of just took a hit.

[Rachel Cruze]

Oh, gotcha. Okay. Okay.

[George Kamel]

Are you still in a sales role?

[Co-host/Guest Expert]

No, I still make commission, but it's more of a support.

[Rachel Cruze]

Okay. When you guys combine in July after you get married, because that's soon. I mean, you guys will be, you know, it's a couple months. Will the mortgage then between both of your incomes be about a fourth of your take home pay,

[Co-host/Guest Expert]

monthly check on pay? Yeah. Yeah.

[Rachel Cruze]

Okay, perfect. Okay. So you guys can afford the house once you guys get married. But. Yeah, but. But to answer your question, no, I would keep everything separate until you get married.

[George Kamel]

The scary part is that she doesn't have housing expenses and she makes double what you do, and she's still paycheck to paycheck.

[Co-host/Guest Expert]

Yeah. So she's got her loan debt. She just paid her car off.

[Sponsor/Announcer]

She.

[Co-host/Guest Expert]

I think the way we grew up is really different. She's been pretty much on her own. She was like 15, so I think it's just a matter of how we look at it.

[Rachel Cruze]

Yeah. Is she PayCheck to Paycheck, AJ because she's paying off debt, or she just paying minimum payments on everything?

[Co-host/Guest Expert]

I think it's minimum payments. I think lately she's kind of kicked into another gear where she wants to try to get everything paid off before we get married, married, or at minimum, before we have kids, which was ideally two years is a timeline for that.

[George Kamel]

Okay. I would just dig into this and get aligned on what the Goals are going to be. It sounds like she is aggressively paying off the debt. I don't think she's just sitting around comfy, going, well, we'll just deal with it when we're married. I like the attitude of how cool would it be to have this debt paid off by the time we're married? So I mean, it's going to be tight until then. I don't think it's an. If you were like, hey, listen, it's tight for me to cover all of the housing expenses on my own right now. I don't think it's terrible to ask her to pitch in. And if you did it, you know, I'm old school. I would have just said let's not move in together before we're married. But you know, you guys have made those choices already. We're not going to evict her at this point. I don't think that probably wouldn't go over well for you. But I would get on a game plan of here's what's going to happen from, you know, March through July. Here's how we're going to handle the finances once July comes, we're married, we'll combine and whatever debt is left, we'll attack together.

[Co-host/Guest Expert]

Yeah. I think my fear was, was on asking her initially when she moved in was I didn't want her paying towards like a house if she's not getting anything out of it.

[Caller]

I think that's a big thing.

[Rachel Cruze]

Yeah. I mean, unless it's quote unquote rent at that point. Right. If you had a roommate, they would be paying rent. But yes, no, I hear what you're saying, cuz her name is not on the house. But when you guys get married.

[George Kamel]

Yeah.

[Rachel Cruze]

Combining assets and everything is, is a big.

[George Kamel]

I mean it will end up being half hers in a sense once you guys are married. So. Yeah, I mean, you did the front end work, so either way, I believe all marital assets should be combined one account. Not keeping your separate accounts for fun money. Just do it all out of one joint checking account. Do a budget, keep a high yield savings that's again joint that you both have access to. That is the key to a great marriage as it relates to money. Okay, good luck, my man.

[Rachel Cruze]

Great job.

[George Kamel]

AJ I'm going to send you a financial peace university as our premarital counseling gift. It's one of the best courses to get on the same page and to light a fire under you guys to start dreaming about what life is going to be like as a couple as you build wealth thanks for the call. It's, it's wild how relationships and money get so intertwined and it can get heated quick. And he's trying to avoid the I don't want to ask her because she's working on her thing and do we combine?

[Rachel Cruze]

Yeah. And I think the most important conversation is when July happens and we are a married couple. What does life look like? And painting that picture is really important

[George Kamel]

because you probably both have very different pictures. Right.

[Caller]

Right now.

[Rachel Cruze]

Yeah. If you haven't talked about it, you do. Yeah, absolutely.

[George Kamel]

It's rare that you're both like, I was thinking the same thing.

[Rachel Cruze]

This is what I want.

[George Kamel]

That's rare.

[Rachel Cruze]

Yeah. So the more aligned you guys can be before the wedding day on again, every topic in life this happens to be. We're talking about money here. But on everything that. Yeah, I mean there's just more clarity, more direction and a little bit more enjoyment. Cuz you're walking the same path together through life versus competing.

[Co-host/Guest Expert]

Right.

[Rachel Cruze]

Or butting heads in it. So. Yep. AJ Great question and good luck to you guys. It's exciting. It'll be here before you know it.

[Sponsor/Announcer]

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[George Kamel]

Welcome back to the Ramsey Show. Tax season is upon us. If you want free checklists and guides that will help you file, go to ramseysolutions.com taxes we've got you covered for all the resources you need. Elaine is in North Carolina up next. Elaine, welcome to the show.

[Caller]

Hi. Thanks for taking my call.

[George Kamel]

Yeah. What's going on?

[Caller]

Well, I am recently widowed. My husband took care of all the finances. I am 64. I'm in good shape in regards to finance. I just don't know exactly what I'm doing. So I have about three and a half million dollars in a high yield savings right now. I have two homes probably worth right under another million. I know I will eventually, hopefully this year be selling one of the houses. And I do have an appointment next week with a certified financial planner, someone that I trust and that. So my question to you is, do I just deal with one financial planner or do you, should you split up your money and do it with different people?

[Rachel Cruze]

I'm, I'm comfortable with one. Having someone in your corner that, that you trust and you look at. I mean, I, I think having a team of people is wise, like having someone, you know, a tax pro in your corner for taxes and, and different things. So there's different elements of money that I would probably bring some people in just to make sure you have expertise in these areas. Areas. But when it comes to specifically investing and looking over your entire financial picture. Yeah. If you had one person again, that you, you trust and that you, that you know, that you at least know the history of even other people they've worked with, you know what I mean? Like that, that they are reputable.

[Caller]

Yeah.

[Rachel Cruze]

I would be comfortable with just one. And I say that because my husband and I, we just, we have one, one that we use and that we've used for 10 years. So they'll be able to look at this 3.5 million and say, hey, how much of this do we want to leave liquid? How much of this do we want to maybe put into the market so that it grows? And maybe you can live off that and even have some when you pass away to pass on to your kids. Right. And so whatever that legacy looks like for you guys, because what a wonderful position that you're in, Elaine, I'm so, so, so thankful for that. I know that's such a heartbreaking thing to lose your husband. And I'm so sorry. But I'm glad the financial piece isn't a stress factor in this.

[Caller]

Yes. I'm very thankful to my husband. Yes to God.

[Rachel Cruze]

Yes.

[Caller]

I have one more question for you.

[Rachel Cruze]

Yeah.

[Caller]

So being 64, I don't yet have Social Security. My husband would have been, while he passed away. He would have been 65 this year. So I was told. And I'm just wondering, because I've heard from different people, I was told, though, that I should not take Social Security right now or claim his, because I really don't need it right now. And I never worked really, outside of our home. I did the whole wife and mom and, you know, all them of that stuff. So what I would get in Social Security would be minuscule. And I've been told that if I wait till, what, later 60s, 70, that I would get all of his. What he would have had.

[George Kamel]

Yeah. At 67, there'll be full retirement age. So you'll get 100% of the benefit. If you take it now, it's reduced. And so because you don't need it, I mean, you're three years away. You get three and a half million. I would just wait. And you're. You said you're healthy.

[Caller]

Yes, I am healthy.

[George Kamel]

So the longer you live, the better of a deal it becomes to take Social Security later. And obviously, you know, God only knows how long we get to live, but in your case, I would be waiting till 67.

[Caller]

Okay. And that's actually what my financial planner said. But, like, I was talking to some friends and they were like, well, you don't know if you're going to live that long. And you could, you know, take it now and then if you don't know, need to invest that. So.

[George Kamel]

But, well, the truth is, you're going to be fine either way, Elaine. I mean, Social Security is a drop in the bucket compared to the legacy that you guys have built on your own without the help of the government.

[Caller]

Okay.

[Co-host/Guest Expert]

All right.

[Caller]

Well, that helps me. That gives me a lot of confidence.

[Rachel Cruze]

Yes. Can I ask, the. The 3.5 million, was that part of that life insurance? Was that you guys, over decades saving? How did you guys. How did you accumulate that money?

[Caller]

It was both.

[Rachel Cruze]

Okay.

[Caller]

It was both. I just got a. My husband always had life insurance, praise God.

[Rachel Cruze]

Yeah.

[Caller]

And then he was a very hard worker. And we did, in fact, we employed the Ramsey program years ago. And before our children married, we took them to Atlanta to see your father and go to, you know, before they got married. And we were like, you need to do this.

[Rachel Cruze]

Was it so great, Elaine? Oh, my goodness. Well, and I would. And I would wait, too, Elaine. We do say usually if there's some type of, you know, tragedy or death, that it's okay to wait a year. Right. Just to. I don't know how. When he passed away, but you can have some Time. There's no rush to do anything. So if you feel a little stressed or questioning or not understanding, you have time on your side. So don't feel any urgent urgency from this financial planner to do something today. You know, you can, you can wait a little bit and, and that's okay. It's whenever you feel comfortable and any questions you have for this financial planner, ask and fully, fully understand before you put your money into whatever you're putting in. So I would say those two things.

[Caller]

Okay, thank you so much. I really appreciate it. Helps me a lot.

[George Kamel]

Well, thanks for trusting us with the call and I'm so sorry for your loss. Lucy is in Lewisburg, West Virginia, up next. Lucy, welcome to the show.

[Caller]

Hi, how are you guys?

[Sponsor/Announcer]

Great.

[George Kamel]

What's your question?

[Caller]

So I just turned 30, I've got a 4 month old married last year as well. And my grandparents, when they were still alive, they had built a cabin that could comfortably hold at least 12 to 18 people overnight. So they made it as a vacation one for us because of what we do. We're farmers, we don't get to go on vacation very often. This is kind of close to us. But my grandparents left the entire cabin in my four, well, myself and my four siblings names. So there was money to maintain that cabin and it's drying up. In other words, you know, we're running out to the bottom of it. And right now our farm is currently bankrolling it. So we estimate about 8 to 10,000 a year is what it costs to maintain the cabin. That's everything. And maybe a little bit extra if we have stuff happens, you know, quick fix and stuff like that. But I know first. So I'm 30, I have another sibling that's 27. One that's 25 and 20, gosh, 24 and then 18. So my question is that the form is not in a position to bankroll this for a long time. You know, it's a farm, we'll take care of it for, you know, what it needs. But when does it ultimately become the responsibility of my siblings and I to pay for this? Because we own it, but we have guests and friends to stay in it too at no charge.

[Rachel Cruze]

So yeah, you guys are going to have to just create some kind of document, honestly and rule, rules and boundaries around this property because five, five people owning a property is, is pretty difficult. And so from the.

[Sponsor/Announcer]

It is.

[Caller]

And the biggest thing is that I know at least. So my brother, the only boy, he will probably, we've talked about it in a family before. He will not financially be able to contribute to this camp year after year. So we estimated, you know, between 15 to $2,000 a year each of us give into the camp to kind of, you know, help.

[George Kamel]

Need to just buy his portion out and he doesn't own it anymore if he can't.

[Caller]

That's the thing, though. My parents alive. Like, he shouldn't do that. Just pay for his part. You know, he can't do it. So someone needs to help.

[George Kamel]

Shared ownership means shared responsibility. And so it doesn't really matter what your parents feel like you should do. He owns a fourth of this, so fourth of it is his responsibility. And if he can't pay it, you guys can be generous for a little while and chip in, but long term, you're going to have to figure out if he should be a part of this or not. And that's going to be the harder conversation. Wishing you the best as you have those conversations. But I like Rachel's plan. Make a document, make it very clear so that nobody goes. But I thought that's not what you want. Welcome back to the Ramsey show in the Fairwinds Credit Union studio. I'm George Camel joined by Rachel Cruz this hour taking your calls at 888-825-5225. Hannah is in New York City up next. Hannah, welcome to the Ramsey Show.

[Caller]

Hi. How are you guys doing?

[George Kamel]

Great. How can we help?

[Co-host/Guest Expert]

So basically my question is my husband and I own a gym here in New York City. And about a year ago, right before, we decided to move into the basement of the gym to save money on rent and then kind of make it so that I could be a stay at home mom and run the business at the same time. And in that year, because we were like able to save so much money, we paid off $70,000 of our business loans, but we still have about $120,000 in debt. And we're trying to decide when to move out because we're not technically to live here and it's not the most comfortable living situation, but we do want to pay off the rest of our debt.

[George Kamel]

Oh, boy. So when you say technically, do you mean it's not legal?

[Co-host/Guest Expert]

It is not zoned for it.

[George Kamel]

Oh, boy. Well, that poses a problem.

[Co-host/Guest Expert]

Yeah.

[George Kamel]

I mean, one is the actual legal implications. Another one's just the integrity of the situation on top of the risk that you're putting yourself in. Especially with a business baby.

[Caller]

Yeah.

[George Kamel]

I mean, is it even safe to have a baby there?

[Caller]

It is safe.

[Co-host/Guest Expert]

It is. It meets all the requirements of the Windows being above ground and, like, the ceilings being high enough, all of that. It's just the zoning.

[George Kamel]

Got it. Well, the real question is, why can't you guys afford rent and start to knock out this debt?

[Co-host/Guest Expert]

We. I mean, in New York City, rent is so expensive. We were paying. Paying $3,000 a month for an apartment that was basically, you know, a closet.

[George Kamel]

Yeah.

[Rachel Cruze]

So can y' all afford to live there? Hannah? I mean, you're. You're not paying rent right now, but in order to, you know what I mean, have the four walls, we call them food, shelter, utilities, transportation. In order to survive, you have to be able to afford it. Will you guys be able to?

[Caller]

I think so. We went from last year when we

[Co-host/Guest Expert]

moved here, we were only bringing in, gross $40,000 a month for the gym, and we've improved that by $25,000 a month. So now we're bringing in about $65,000 a month.

[George Kamel]

Nice. How much of that do you take home?

[Co-host/Guest Expert]

So last year we were taking home basically nothing, but now we're probably taking about 10,000 to $15,000 a month.

[George Kamel]

Great. Okay, so let's play this out. Even if you're spending four grand a month and you make, you know, 15, that's still reasonable. And of course, everything's just going to be more in New York City, but it's not like you guys are making five grand a month and you're paying four grand in rent, right?

[Co-host/Guest Expert]

Yeah. And we could probably pay the same amount of debt off that we were paying last year.

[George Kamel]

Yeah. I would make that a goal of let's still attack the debt aggressively and have a place that is. That we can legally live in and rent.

[Rachel Cruze]

Yeah.

[George Kamel]

Because it slows you down.

[Sponsor/Announcer]

Yeah.

[Rachel Cruze]

Because eventually, really, you're gonna have to move. You know what I mean? So I think I would rather be on the proactive end of you all choosing than versus, I don't know, getting fined or something. Found out. You know what I mean? It's like a force situation or get

[George Kamel]

sued by the city. I don't know.

[Rachel Cruze]

Yeah.

[George Kamel]

That sounds like I wouldn't put it past New York City.

[Rachel Cruze]

I know, right? I mean, for real.

[Caller]

Yeah.

[Rachel Cruze]

I would be. I would be making this move soon and just to set up a home and set up a, you know, a place that you guys are going to be for a while. Where did you guys move from?

[Co-host/Guest Expert]

From just a couple blocks away.

[Rachel Cruze]

Oh, okay. Gotcha. Okay. Because we said we moved here last year. I didn't know what that meant, so. Okay.

[Co-host/Guest Expert]

Yeah, no, we just moved Here last year we actually did. The inspectors did come and look at it because someone reported us.

[George Kamel]

Oh, boy.

[Co-host/Guest Expert]

So, yeah, you already found out you're fine.

[Caller]

Yeah, but they didn't.

[Co-host/Guest Expert]

They said that we were okay.

[George Kamel]

Wow. New York City is just a wild place.

[Co-host/Guest Expert]

It is a wild place.

[Caller]

So that's why we weren't. We're not too worried about it.

[Co-host/Guest Expert]

But it would be nice to have more of a real house.

[George Kamel]

I would make it a very urgent goal to get out of there and get your own place. Now, what makes up the 120,000 in debt?

[Caller]

What's left now is credit cards is

[Co-host/Guest Expert]

about 40,000, and then I have 80,000 in student loans.

[George Kamel]

Are those broken up into smaller debts and multiple credit cards?

[Co-host/Guest Expert]

Yeah, it is multiple.

[George Kamel]

So I would just debt snowball this. And you're going to just try to live as frugally as you can, which I know is saying a lot in New York City, paying four grand in rent. But anything that isn't your four walls and insurance, we're going to try to chunk at this debt. And that gives me some urgency to also go, hey, how can this business make even more? How do we really continue to scale this thing? Because then if you can keep that up and you're debt free, you guys are going to be living beautifully in New York City.

[Co-host/Guest Expert]

Yeah. Yeah. That's very exciting to think about.

[George Kamel]

So I think this is a very doable plan. As long as that 65k a month is sustainable and it's not going to go down to 40 or 30 in the next few months, then, you know, spending four grand a month on rent, you know, if you need a slightly nicer place, you don't need to go crazy. But I think four grand a month will get you something a whole lot better than the three, right?

[Co-host/Guest Expert]

Yeah, absolutely.

[George Kamel]

Okay. The goal is to keep it around 25% of your take home pay, which I understand a very high cost of living area like New York City, it might be a little over the parameter, but the goal is to not have 50% of your take home pay going to rent. And you guys are on the path to that. So thank you so much for the call. Stephen is in Lynchburg, Virginia. Up next. What's going on, Steven?

[Co-host/Guest Expert]

Hey, how are y' all doing?

[Sponsor/Announcer]

Great.

[George Kamel]

How can Rachel and I help?

[Co-host/Guest Expert]

All right, well, I'm 21, I'm a senior in college, and I'm planning on graduating that. And my grandfather passed away in October and I just turned 21 and I found out that I've inherited about $50,000. And I like to know what to do with it. Y' all were recommended by a friend,

[George Kamel]

so we came highly recommended. Wow.

[Rachel Cruze]

Call a friend. And Stephen called us, George.

[George Kamel]

So you said you're graduating debt free. Do you have any other debt? Car loan, credit cards, anything like that?

[Co-host/Guest Expert]

No, sir.

[George Kamel]

Okay, how much do you have saved right now, aside from the 50k?

[Co-host/Guest Expert]

Not a whole lot, to be honest with you.

[George Kamel]

Okay.

[Rachel Cruze]

And you say you're graduating in May?

[Co-host/Guest Expert]

Yes, ma'.

[Caller]

Am.

[Rachel Cruze]

Yes. What are you going to do after graduation?

[Co-host/Guest Expert]

Do you know that is one thing I'm trying to figure out.

[Rachel Cruze]

Okay. Okay. You know what, Steven? You know what I would do? You're probably going to hate my advice, but. But I would put it in a high yield savings account and I wouldn't touch it and I would just let it sit there. Okay. And I would. Force yourself, not force. That sounds terrible. I would, I would make myself when I graduate college to find a job, start living a lifestyle on the salary that I'm making and create a life for myself. And then when you are somewhere that is settled and that you know, okay, I'm probably going to be here for a bit, then I would probably use part of that 50 grand and other money that you're going to be saving from your first job as an emergency fund and then possibly a down payment for a home.

[Co-host/Guest Expert]

And you know what high yield savings accounts you would recommend.

[George Kamel]

Oh yeah, I got the one for you, my friend. We're in the Fair Winds Credit Union studio and they have an awesome smart bundle that they created just, just for people like you.

[Rachel Cruze]

Yeah.

[George Kamel]

And it's got a high yield savings account with a great rate. Also has a no fee checking and I like that. The no fee checking is connected to high yield savings. So if you did have an emergency where you needed this money, you could get it. You could get it easily.

[Rachel Cruze]

So Stephen, my caution to you is $50,000 is going to feel like 5 million when you're 21. That can go so fast. So don't feel like you hit the lotto, okay? Because if that's your mindset, you're going to end up spending it and thinking it's going to last you years and years and years and it won't.

[George Kamel]

This is not a post graduation vacation and a new car. This is future Steven down payment money.

[Rachel Cruze]

Yes, future Steven.

[George Kamel]

You will be so thankful you did it.

[Rachel Cruze]

So thankful. Great job.

[Sponsor/Announcer]

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[George Kamel]

Scott is in Sacramento. Up next, Scott, how can we help today?

[Co-host/Guest Expert]

Hey, thanks for taking my call. I appreciate everything you guys do.

[George Kamel]

Thank you. What's going on today?

[Co-host/Guest Expert]

Yeah, I have a question regarding when it would be prudent to take on new expenses during the baby step journey. So a little bit of background for

[Sponsor/Announcer]

me

[Co-host/Guest Expert]

starting sometime last year, I just got sick and tired of being sick and tired. Started really looking at my finances a lot closer and I'm in some debt and I decided to do everything I can to get out of it. And I started listening to the Ramsey show about two months ago or so. I'm picking up a lot of tidbits of knowledge and I think I'm really enjoying a lot of what you guys are doing.

[Rachel Cruze]

Good for you.

[Co-host/Guest Expert]

Yeah, I appreciate it. My question though is some of the stuff that I've heard Dave and you all talk about is are some certain types of expenses that would be probably good expenses, such as certain types of insurance, long term disability, identity theft insurance, things like that. My life insurance policy is like one times my salary or now. And I'm kind of in the, I'm in the baby step two phase right now. I would like to know when during the baby step journey would be a good time to start paying towards these other expenses that I'm not currently paying towards another one would be like a will. I heard him talk about how at age 18 you should be getting a will or even financial Peace University. You know, any kind of expenses that I feel like would really help me in my financial journey.

[Rachel Cruze]

Yep. No, they're great questions. Yeah, so some of these insurances, yeah, I would say are probably a requirement that I would do. So some that you would definitely want are renters or homeowners obviously and car insurance. But yeah, long term disability is definitely one I would pay for. I mean, ID theft protection is a great one. You know, Zander insurance is who we recommend for, for that and then for life insurance. Are you, are you married, Scott?

[Co-host/Guest Expert]

That's, that's complicated question. Yes, but I am actually in the beginning stages of a divorce.

[Rachel Cruze]

Oh, shoot. I'm sorry. Do you have kids? Do you have kids?

[George Kamel]

No. No.

[Rachel Cruze]

Okay. Okay.

[Co-host/Guest Expert]

But it is, it is, it is amicable, so.

[Rachel Cruze]

Yeah, so. Because the life insurance, that's what I was going to say to have just term life is if someone's dependent upon your income. And so, so yeah, in this situation, I guess depending on, on if you have to pay alimony, I don't know what that would look like. But if it all comes out that you guys are not. If there's nothing financial that you're tied to her in any means, because you guys, especially because you don't have kids, you may not need a ton of life insurance. It's really. If someone's dependent upon your income, so that would be the one that you may. Could get away with for a little bit. Unless again by court proceedings or something that you have to pay her a certain amount and you, you know, or something like that. But.

[George Kamel]

And then what other. Do you have health insurance right now through your employer?

[Co-host/Guest Expert]

Yeah, I have, I have health insurance, I have auto insurance, I have homeowners insurance.

[George Kamel]

So it's really life, long term disability that you were kind of unsure about.

[Co-host/Guest Expert]

Yeah. Identity theft as well.

[George Kamel]

Think about it this way. If the baby steps are kind of offense to build wealth and then you've got all these insurances in place for dirt defense because those can derail all the wealth you're building. When you think about how many people go into bankruptcy for medical costs or a car wreck and you were underinsured and now they're suing you for hundreds of thousands of dollars, that's the kind of stuff that you need to transfer the risk to the insurance company and it's well worth the cost. The insurances we're talking about here are not expensive.

[Co-host/Guest Expert]

Yeah. Correct.

[George Kamel]

How old are you?

[Co-host/Guest Expert]

But is it something. I'm 41.

[George Kamel]

Okay. What was that?

[Co-host/Guest Expert]

Is it something I should be, Is it something I should be looking into getting right now? Even though I've, I've, I really, I've just started getting Gazelle intense, as you guys put it.

[George Kamel]

So. Yeah. The insurances are not a baby step.

[Rachel Cruze]

Yeah, yeah.

[George Kamel]

It's a prerequisite.

[Rachel Cruze]

Yeah.

[George Kamel]

To doing the baby steps. And so I would get A will in place. And if you want help with that, we've got a great partner with Mama Bear legal forms. You can create that online. Online. And they're, you know, created by attorneys, but you can just fill it out all online. So it's super easy. And it's, it. These are pieces of the puzzle. Especially at 41, I don't know what the rest of your life looks like. Will you get remarried? Maybe.

[Co-host/Guest Expert]

I hope. I hope so.

[George Kamel]

And so again, life insurance, you might want to get it now while you're young and healthy.

[Rachel Cruze]

Yeah, it's a good point because it's

[George Kamel]

only going to get more expensive and you can lock in, you know, a 25 year term so that, you know, you could get married and have kids and your covered for until you're, you know, in your 60s. And so there's things that you want to sort of think about future Scott and what he would be thankful to have. And I would just get it all priced out. And you don't need like millions of in dollars of life insurance. How much do you make a year?

[Co-host/Guest Expert]

About 120 right now.

[George Kamel]

Okay. So you'd be looking at like a, you know, $1.2 million policy, maybe even a little more if you want to go 12 times your income. And you might find that it's pretty affordable. And yes, it slows down your debt a tiny bit because it's going to cost, cost you, I don't know, 80 bucks a month or whatever it ends up being. But the peace of mind that you get knowing that you're covered and knowing you're not going to pay 120 bucks four years from now when you're older and it's more risky. It wouldn't be a bad idea.

[Co-host/Guest Expert]

Okay.

[Rachel Cruze]

Yeah. And stay on the line, Scott, because Kelly will pick up and we'll give you Financial Peace University and a year of every dollar, our budgeting app. Just as a thank you, as a new listener, we have an insurance lesson

[George Kamel]

in Financial Peace University. That's right. Juicy, juicy stuff. Dave really crushes it on the insurance lesson.

[Rachel Cruze]

Rachel made sure he did that to binge it.

[George Kamel]

It is Rachel. Hey, do you want to do this lesson in Financial Peace University?

[Rachel Cruze]

And I said it's too good. I'm going to give it to Dave. I'll let Dave do it.

[George Kamel]

He loves it. He loves the deductible.

[Rachel Cruze]

We love a deductible.

[George Kamel]

You're asking the right questions. I appreciate the call.

[Rachel Cruze]

We're excited for you. Yep. Sorry about the.

[George Kamel]

Yeah, not a fun situation.

[Rachel Cruze]

The divorce Stuff, but excited about the money.

[George Kamel]

Well, usually it's when those, the life changes happen is when you sort of take stock and go, do I have, am I doing all the right things?

[Rachel Cruze]

That's a great point. People, when they get, when they have babies, they do the same thing. They look up like, oh my go. What have we been doing? You know, kind of. Yeah.

[George Kamel]

Yeah. And a good way to make sure you're covered in all the bases for anyone listening is jump on a ramseysolutions.com checkup. We have an awesome coverage checkup tool. With just a few clicks, you'll kind of know where the blind spots are when it comes to insurance. And we'll connect you with the people that we trust for all of that.

[Rachel Cruze]

Yeah. But in high level Zander insurance for ID theft, protection and term life insurance is great. Mama bear legal forms for will. So just some resources for you guys out there that are wanting to, wanting to get your insurances in place as well.

[George Kamel]

Want to get a little nerdy and sleep better at night. That's it. All right, let's get out to Julia in Pittsburgh. How can we help Julia?

[Caller]

Hey guys. So I just recently got my work bonus. It was about $14,000 after taxes.

[George Kamel]

Heck yeah.

[Caller]

Yeah. And I have about $32,000 in debt and I'm trying to figure out what is the best way to pay down some of it. With my bonus I have about 15,000 in savings for a long term emergency fund and 1,000 for a short term. So I'm, I don't really feel like I need to use it to amp up my savings. I want to try to tackle the debt. However, half of it is no interest and some of it is very low interest. So following the debt snowball, I could pay down the lower balances, but there's zero percent interest. So I'm trying to figure out, does it make more sense to knock out the ones that have a little bit higher interest and pay it down that way?

[George Kamel]

Well, the truth is you could be close to debt free free as soon as this bonus hits because you'll have $30,000 in cash spread out right between the bonus and all this emergency fund.

[Caller]

Yeah. Yeah.

[George Kamel]

So it really won't matter much if you do it the Ramsey way, which is leave the thousand dollar emergency fund but take the bonus plus the full emergency fund. That's, that's going to be 29,000 out of the 32 and you can knock out almost all of it. And so at that point just knock out the lowest balances and free up those payments faster and then you'll have three grand left and so the interest is really not going to matter.

[Caller]

Okay. My only worry, and I feel like this is probably a worry a lot of people have when they have an emergency fund is like it took me a while to get there.

[Rachel Cruze]

But you also have, but you also

[Caller]

have zero percent interest.

[Rachel Cruze]

Yeah. But you also have a ton of payments right now. So if you, if you were debt free today, how much money is going out the door in payments?

[Caller]

So payments are 900amonth. I pay.

[Rachel Cruze]

Okay. So let's say you were gazelle intense and that's baby step three is to bump up your emergency fund to three to six months of expenses. So what if you threw an extra thousand dollars a month at that emergency fund plus what you were paying your payments? You could, in 10 months you could be back up to where you are and completely debt free.

[Caller]

Okay.

[Rachel Cruze]

You've got to be intense about takes

[George Kamel]

a mental shift to go up. Oh, I'm actually not safe having this money over here cuz I owe 32.

[Rachel Cruze]

The risk is still there.

[George Kamel]

Yeah, yeah. So getting rid of the risk, you will stock up that money really fast. And I highly doubt you're going to have a $20,000 emergency while you're trying to build this up. So we're rooting for you. Follow the plan. It works. Hey guys, George Camel here. Do you ever feel like insurance companies only care about your money and not what you actually need? Well, there's a better way. When you go to Ramsey's insurance resource hub, you'll start feeling confident that you're getting the right coverage that's truly best for you. You'll find helpful info on everything from life insurance, health insurance, identity theft, protection and more. And when you're ready to get the coverage you need, you can connect with a Ramsey trusted insurance pro who will only get you what you need at the best price. Go to ramseysolutions.com insurance ramseysolutions.com insurance. Sarah is in New York up next. Sarah, welcome to the Ramsey show.

[Caller]

Yes, I hope are you good?

[George Kamel]

How can Rachel and I help today?

[Caller]

I'm just a little confused. I 1 I have some money like that I don't need right now and I was thinking about Sing it. I just don't know like who to trust and what to do. I'm not very savvy. That's one I have another one I had is that I wanted to like buy a car. Do you suggest buying or leasing? I want you.

[George Kamel]

Okay, so I think you broke up on us a little bit. But you have cash, you want to invest, you don't feel super confident, not super savvy on that. And you want to know about buying a car and what the best way to do that is?

[Caller]

Yes.

[George Kamel]

Okay. How much money do you have right now?

[Caller]

So right now I have about, I have cost 100,000.

[Rachel Cruze]

Wow, nice. Where is it right now?

[Caller]

No, I'm sorry, I'm sorry. Yeah. Right. So I have about like close to 80 just like sitting and wanting like, like that wasn't a cd. But I'm like I want to just stop with cd. I want more. And then I have about the rest. I haven't just like my checking out which a little bit of every month but I make sure every month to leave over some for savings even though I have too much for sure.

[Rachel Cruze]

So you kind of have an emergency fund that's there yet?

[Caller]

It's not an official emergency fund and never set up one. I just set up a 4:1, a 401k plan where my company overs 3% match and I did that.

[George Kamel]

Nice.

[Caller]

Just.

[George Kamel]

Do you have any debt?

[Caller]

I have zero debt. No. I'm learning all this.

[George Kamel]

You're crushing it. And you, you said you're looking to buy a car. Do you have one right now?

[Caller]

No, I don't.

[George Kamel]

Okay. And you need one for transportation to work or what?

[Caller]

No. So that's the thing. I work in, I, I take a bus to work. I work in the city. It's not worth like Manhattan. It's not worth driving.

[George Kamel]

Yeah.

[Caller]

But like personally I think it would be nice to have a car. I, I don't know if I can assure a Ford one. I know I could, but I just don't know if it's worth it.

[George Kamel]

Let's focus on the definition of a Ford because most people go, well, if I can afford the payment, I can afford this car. And the problem is these dealerships term with insurance. What's that?

[Caller]

No, I know I could afford one now I don't know if I can upkeep one with insurance with amount.

[George Kamel]

Yeah, that's, that's something to think about. And so the key is we're going to pay cash for this car and we know the long term maintenance and insurance costs on top of top of that. And having another city is like 10x the cost of having it anywhere else.

[Caller]

Yeah.

[Rachel Cruze]

And a lot of people sell their car when they go to Manhattan. So do you feel like you really do need one, Sarah?

[Caller]

For my freedom. Yeah. And just to get out places that would be nice. To have one.

[Rachel Cruze]

Okay.

[Caller]

I haven't got one till next. I wasn't sure. I don't know. I just opened the 401k and I now pay for my own. I pay for insurance. I was on Medicaid, but I was kicked off, so I'm not, you know, taxes just eats up so much.

[George Kamel]

Yeah. How old are you?

[Caller]

I'm 23.

[George Kamel]

Okay, awesome. How much do you make?

[Caller]

I make about 49 years.

[George Kamel]

49,000?

[Caller]

Yeah.

[George Kamel]

And how much are you currently investing into that 401k through your employer?

[Caller]

I'm investing 6% because I get like three. So I'm investing six.

[George Kamel]

Okay, so you're investing six. They're adding three on top of that. So a total of 9%.

[Co-host/Guest Expert]

Yeah.

[George Kamel]

Okay, so that's $4,410 is what's happening pretty year out of your $49,000 income.

[Caller]

Okay.

[George Kamel]

So the difference between investing in that CD is a CD has a fixed rate and it will mature and you'll make that, you know, three and a half or 4%, right?

[Caller]

Yeah.

[George Kamel]

But with investing, you're putting this money into the stock market, and if you do it right, you're going to have a tiny piece of a whole bunch of companies that are doing really well that we're all rooting for and what we've seen.

[Caller]

How do I know who to trust and where to go? I'm ready to invest close to 80. Like, I don't need it now. I can invest like the next five years.

[George Kamel]

Sure. So you. Well, you have this 80 and that might be for a different purpose. And so right now we're investing. I would recommend investing 15% of your income, regardless of the employer match. So you put in 15, they put in three on top of that. That would double your investment rate right now. How cool would that be?

[Caller]

They're giving me 3% though, only for. For a 401k plan. That means I can't pull it in. Correct?

[George Kamel]

Correct. You would have to wait until you're of retirement age. So if you want money outside of that, that you want to invest, you could use a portion of that cash to do so.

[Rachel Cruze]

Yeah. So, yeah. So what I would do, Sarah, is I would, I would get an emergency fund. So I would, I would open up. I just go to Fairwinds, that's a credit union, one that we recommend, and open up a high yield savings account. Okay. And pay. Put some money in probably three months of. Of what your expenses would be for three months and that we can consider that your fully funded emergency fund. So if we were to do that, how much does it take you to live a month? What are your expenses per month?

[Caller]

So it takes me probably a little over a thousand.

[Rachel Cruze]

Just a thousand bucks.

[George Kamel]

How is that?

[Rachel Cruze]

Is that rent?

[Caller]

I would live on nothing. I know. I live on the idle. I don't. I live with my parents.

[Rachel Cruze]

Oh, okay. So, okay, so for now, we'll say your starter emergency fund is, you know, 5,000 bucks for right now. Okay. So I would just keep that on the side. And that's there just in case something happens. Now when you move out of your parents and you start paying rent, you're going to bump that up. Okay. As your lifestyle goes up, then I would look at my retirement like what George was saying. We want to fund 15% of your income into. Into retirement. So that means 6% already is going into this 401k. That means you have 9% left of what you can invest with your income. And so what I would do is open up a Roth IRA and you can put up to $7,500. Is that right? Is that 7,500 this year? Yes, 7,500 per year is the limit. And so I would do and figure out, okay, how much of that 9% of my income. Income needs to go into that Roth ira. So those are. That's retirement. Okay, so when you do that. Oh, my gosh. I bet you could run numbers. Yeah, George, run. Did you run some numbers?

[George Kamel]

What I was calculating here, Sarah, and you can do this at home. And we'll put it up on the screen here for anyone watching. I'm using our investment calculator and I'm going, okay, Sarah's 23. She makes 49,000 a year. And if she invests 15% plus you have a 3% match. That's 8,820 bucks a year. Are you tracking?

[Caller]

Yes.

[George Kamel]

So monthly, that 735 bucks a month is going into that 401k into what we call mutual funds. And that has a collection of hundreds of companies. And you own a little piece of those. And what we've seen is about a 10% to 12% rate of return over the last several decades versus that 3 or 4% you're getting in the CD you tracking.

[Caller]

Yes, but I did. I never put that into the CD. Mean to say is I only put the EV sales into the A CD.

[George Kamel]

Got it.

[Caller]

That's less than 80.

[George Kamel]

But as far as the return, like you said, you're like, I want to do more with it. And that's what investing will do for you, it's going to have compound growth. So if you have a thousand bucks. So number one, you have funds within your 401k and there's going to be some great funds in there as well as investing outside of retirement, which is where you can reach out to a financial advisor and you can jump on to Ramsey Solutions.com and click on Smart Vest investor and you can reach out to someone called a SmartVestor Pro. These are financial advisors that will teach you and help you understand what you're investing into before you make any decisions. So it's not, hey, here's my money, take it, invest it. You want someone who's going to help you understand this. And what they'll do is invest you into very similar three people.

[Caller]

I'm like, I'm not sure who to try. I'm like, I don't know.

[George Kamel]

You're right to be skeptical because there's a lot of bad actors out there who are really just insurance salesmen in cheap's clothing, Wolf's clothing. And they're going, hey, hey, I got you. How about this whole life policy? And they make it real complicated. You want this to be as simple as possible. And so what you'll end up having is a retirement account, your 401k, maybe this IRA, which again is not connected to your employer, but another great place to invest with compound growth. And then outside of that you've got the just a, it's called a taxable brokerage account. And this is a non retirement account where you might be able to, you'll be able to access that money before you're of retirement age. And so think about it like buckets. You want to have a few different buckets for flexibility and options. But can I give you the numbers here before we run out of time?

[Caller]

Yes.

[George Kamel]

If you keep this up, you remain debt free and you never get a raise, which we all agree Sarah will get a raise. She's going to make more than $49,000 in her career. Right. But even if you didn't, from 23 to 63, if you invest $735 and we assume a 10% rate of return over those 40 years, if we smooth it all out, you would have $4.6 million sitting in that 401k at 63, here's the crazy part. You didn't contribute 4.6 million. You contributed $352,000 of that 4.6 million, 4.3 million. Sarah was just compound growth doing the heavy lifting over a long period of time. So you want to start now?

[Rachel Cruze]

Yep. So go and find a SmartVestor program in your area. Interview two or three of them, get a feel for them, see if you like them. But these are people that we have vetted and that we trust.

[George Kamel]

And if you guys want to check out that investment calculator, I will drop a link in the show notes or description of this episode. So go click there, play with the numbers for yourself and see just how many millions you could have to build wealth and leave a legacy.

[Sponsor/Announcer]

If you've been working the plan, paying off debt, saving, and changing your family tree, I'm proud of you. And if you're in baby step four or beyond, it's time to celebrate the live like no one else Cruise is back. 3-14-21, 2027. Join the Ramsey Personalities. And as we sail to Half Moon Cay, Cozumel, Jamaica and Grand Cayman on the ultimate debt free vacation cabins will sell out just like last time. Lock in yours with a $600 deposit at ramseysolutions.com events.

[George Kamel]

Our scripture of the day, Proverbs 28:19. Whoever works his land will have plenty of bread, but he who follows worthless pursuits will have plenty of poverty. Justin Timberlake once said, if you put out 150%, then you can always expect 100% back. That that's what I was always told as a kid, and it's worked for me so far. Interesting math. So you got to put 150 in to get 100 back out. That's put that in your investment calculator. Not a great investment. If I popped it, I don't know

[Rachel Cruze]

if I would do that investment, Justin. I don't know.

[George Kamel]

Okay. But I guess you really got to overdo it to succeed. You got to go over index on how much you try.

[Rachel Cruze]

Yeah, I guess so.

[George Kamel]

But man. So if I put 50% in, I get zero out, apparently, based on this math.

[Rachel Cruze]

That's right. Yep. You got to go above and beyond.

[George Kamel]

Gotta go all in, baby.

[Rachel Cruze]

Above and beyond.

[George Kamel]

Thanks, jt. All right, Rachel joins us in Utah. Up next. Rachel, meet Rachel.

[Caller]

Hi.

[George Kamel]

Hey.

[Rachel Cruze]

Hi, Rachel.

[Caller]

Hi. Hi, Rachel. I just have a quick question. So my husband and I just read the Total Money Makeover last week. We like, binged it and we're so excited. We're all fired up about getting started, but we just want to make sure that we make the right first steps because we just got a tax return, about $8,000, and we have about $4,500 of credit card debt. But we also want to sell our cars to Downsize. So we don't have car payments, and we don't think we're going to be able to sell my husband's truck for more than what we owe on it. So we're wondering if we should use the cash that we have from our tax return to help pay off what we owe on the truck after we sell it or if we. The cash to pay off the credit cards and then sell the truck later on.

[Rachel Cruze]

Oh, great question. Okay, how much do you guys owe on the truck?

[Caller]

About 14,000.

[Rachel Cruze]

14,000. And what's it worth now if you were to sell it to an individual?

[Caller]

I don't know, but my husband's thinking it's going to be less because it's. It doesn't have like, it's been in a wreck, and so it doesn't have like a clean title. So I don't think that we're going to be able to sell it for.

[Rachel Cruze]

But you don't, you don't know 100% though, right. So I would look at Kelly Blue Book and put in all that information because you'll have. Yeah. History with the vehicle. You'll. You'll put input all that data, and I would be curious what Kelly Blue Book says. You might be right.

[Caller]

Yeah.

[Rachel Cruze]

You might be some underwater or. You never know. Depending on when he bought it, you know, sometimes you could sell it for 15 grand. You're actually a thousand ahead. I mean, we're not sure yet.

[George Kamel]

What's your household income?

[Caller]

About 80,000.

[George Kamel]

Okay. Because the other option is just keeping the truck and just paying it off aggressively,

[Caller]

right? Yeah, it's hard because we. Yeah, we're just not sure if we should, like, do the credit card debt first or the. Or the truck loan. Because I feel like with this cash, we could for sure pay it off, you know, after. After we sell it, we could make up for what we owe still. But if we don't do that and we use the cash to pay off credit cards, I feel like we will have that truck payment for a lot longer in order to save up.

[George Kamel]

If you knock out all the credit car cards, that still leaves you with what, 3,500 bucks to throw at the car loan?

[Caller]

Yeah, that's true.

[George Kamel]

Then you're down to 10,000.

[Rachel Cruze]

And how much does go in to credit card payments every month? How much are you guys paying?

[Caller]

We've actually, we have been able to pay off our credit cards without like the total statement balance without paying any interest up until this point. But we. That's. The 8000 is basically all the Cash that we have.

[Rachel Cruze]

Yes. I was just thinking, yeah, if you paid off the credit card debt, that does free up some more money per month. That's not going to pay minimum payments on credit cards. You know, it's, that's cash back to you guys.

[George Kamel]

But you're saying you've never had credit card payments. You've just paid it in full each month until now.

[Caller]

The statement. Yeah, we've, we've never.

[George Kamel]

Yeah, but now there's a balance that you're carrying.

[Caller]

Now there's a balance. It's not due till like the middle of next month.

[Co-host/Guest Expert]

Month.

[Caller]

So we have, we'd have, you know, a couple more paychecks before then, but it would probably. We might not be able to make it. I'm not sure.

[George Kamel]

Okay. I wouldn't just knock out the credit card debt. Just debt snowball everything. So you'll knock out all the credit cards, you'll knock out a chunk of the car loan. You'll have 10k left on that. You're making 80k. So now it's how much of that 80k or take home pay can we throw at this car, at this truck? And my guess is if you can throw, I mean, two grand a month, you're done in four, five months.

[Caller]

Right? Okay. Yeah.

[George Kamel]

So three grand a month, you're done a little over three months.

[Caller]

We'll use that cash to do the credit card.

[Rachel Cruze]

Yeah. Is that all your debt you got is just the credit cards in the

[Caller]

truck and my car. But we'll be able to sell my car for more than what we owe on it.

[Rachel Cruze]

Okay.

[George Kamel]

And still have enough to get something different. Because you, you're going to need something to get around. Right.

[Caller]

We actually, we actually have a car. Another car.

[George Kamel]

Oh, my goodness.

[Rachel Cruze]

Oh, perfect. Perfect. That's great.

[George Kamel]

Sounds like a Russian doll. Underneath that is another car.

[Caller]

Okay, Right, that's good.

[George Kamel]

So you can sell it and be just fine and be completely debt free and then keep that intensity up and build the emergency fund and then you'll never have to go into debt again. You've got sort of a debt insurance plan at that point.

[Caller]

Yeah, we, yeah, we were kind of shocked when we read the book because we're like, oh my gosh, we could be debt free in like a few months.

[Rachel Cruze]

Yes. That's awesome. Well done, you guys.

[George Kamel]

I'm proud. That's, that's the hardest part is just really realizing we don't want to live like this anymore and we don't need to. Most people just assume, well, you gotta have a car payment what are you gonna do? You can't save up and pay cash for a car. That's crazy. So you guys are doing it the right way. We're happy that the total money makeover helped you guys out. It's a great book for anybody out there who's like, what is this Ramsey stuff? I just wanna get on the planet and get fired up. It is the book. You can go check it out. Ramseysolutions.com Doug is in Sacramento. Doug, what's going on?

[Co-host/Guest Expert]

Hey, how's it going?

[George Kamel]

Good. How are you?

[Co-host/Guest Expert]

Good. Hey, so just my question is. Is real brief. I feel like my wife and I are doing well. We both have good jobs, but I feel like we're not doing more with our money because we don't know what to do. We have an emergency fund that's 15K. We have, like, 165 and a high yield savings.

[George Kamel]

What's that for?

[Co-host/Guest Expert]

But it's. That's what. That's the thing is, like, my wife is this. She wants to save all our money. She's, like, worried about not having any, and she wants to save, save, save. But I feel like we should be doing something with that.

[George Kamel]

Okay, are you guys renting or do you own a home?

[Co-host/Guest Expert]

We own a home.

[George Kamel]

What's left on the mortgage?

[Co-host/Guest Expert]

340.

[George Kamel]

Okay. So that's one thing we could do with the money.

[Co-host/Guest Expert]

And It's. It's at 3.4%.

[George Kamel]

Okay. And you guys have no debt.

[Co-host/Guest Expert]

I have.

[George Kamel]

Outside of the mortgage.

[Co-host/Guest Expert]

I have a truck payment. We owe, like, it's 460amonth, and we owe 20 on it.

[George Kamel]

That's another thing you could do with that money. I'm finding all kinds of things.

[Rachel Cruze]

We can do a lot of stuff, Doug.

[Co-host/Guest Expert]

We have a couple grand on credit cards, but we always pay them off. We never pay interest. Interest on it.

[George Kamel]

Okay. You're not carrying a balance. You're saying no?

[Co-host/Guest Expert]

Never.

[George Kamel]

Okay, well, I would if I'm in your shoes. You're saying, what do we do next? I would get rid of any and all debt in my life and then start to tackle the house and also be investing 15% after that. So are you guys investing a certain percentage right now of your household income?

[Co-host/Guest Expert]

I don't think a percentage. So we both have, like, Robinhood accounts that, like, a fraction from work turned me on to. And I think I have, like, 10 grand in on mine, and she has, like, 5 or 6 grand on hers.

[George Kamel]

Do you guys not have, like, a retirement plan through your employers?

[Co-host/Guest Expert]

She has a 401k, that's got 360 in it. And I have a deferred comp that's got 78 in it.

[George Kamel]

Okay. I would focus on those tax advantaged accounts.

[Rachel Cruze]

Yes.

[George Kamel]

Long before I ever opened up the Robin Hood app. I hate that thing with a burning passion. It's basically the lottery for gross.

[Co-host/Guest Expert]

I know, I know. I know nothing about, like, investing. So, like, that's the only thing that I knew how to do. Like, a friend showed me how to do it.

[George Kamel]

I would say investing is in your retirement plan is easier than navigating Robin Hood because they always got something new they're trying to throw at you and get into. So I would put away 15% of your household income, which is how much. What's the total between the two of you? Gross household income, 27 70s. That's a fantastic income. I think you guys should be doing a whole lot better. That means you should be investing $40,000, $40,000 across retirement plans. And I would start with anything that has a match on it, then move to any Roth type accounts or Roth 401k or, you know, whatever you have available, and then move back to traditional accounts. And if you still haven't hit that 15% mark and you maxed everything out, then you can go to things outside of retirement, you know, like a taxable brokerage account. But I would stick to mutual funds. I would never play with individual stocks. I wouldn't touch crypto. You guys can build some serious wealth if you just start to attack these things in order with some focus.

[Rachel Cruze]

Yeah. So getting out of that consumer debt, getting a 401k in place and a Roth IRA, and you guys funding 15% of your incomes into those. Yep. Is a great place to start and then start attacking the house. You guys have some movement you can be making for sure with this money.

[George Kamel]

The baby steps will tell you everything you need to know, my friend. All right, that puts this hour of the Ramsey show in the books. We'll be back before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of peace, Christ Jesus.