Breaking the Paycheck-to-Paycheck Cycle

Thank you. Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual, amazing relationships. I'm your host, Jade Warshaw. I am joined by one of my favorite co-hosts, Rachel Cruz, best-selling author, host of the Rachel Cruz Show, and we are joined together, joined forces, to answer your questions about life, money, relationships, the holiday season, whatever is sticking in your crawl, we are going to help it come out of your crawl. As we take your calls, give us a call.

Yes, thanks for taking my call.

No problem. How can we help?

I'm kind of new to all this. I just recently heard about y'all because some friends are talking about a concept of debt snowball versus a debt avalanche, and it got me curious, so I started looking and researching all up and found the Baby Steps, and I got some savings, so I'm trying to pay off debt, so I'm looking at all the places to get my hands-on money to help pay debt off, and I have a 401k that they call the Target Date, 401k from a previous job. Is there any downsides, or is that a good place to look at getting money to help pay off debt, since I'm currently in a 457 at my new job?

Yeah, I mean, I love the fact that you're looking for ways to pay off your debt, and I love that you feel that it's urgent for you to quickly get your debt paid off, but I would not pull from retirement savings of any kind in order to do that, and the fact that you once had a 401k, and now you have a 457, that's not really a license to do that, because it's still retirement money, and so there's still penalties and fees if you were to dip into that money. Not to mention, that's not truly the solution, right? We don't want you robbing from Peter to pay Paul, and so I think the solution for you is probably gonna be finding that money either by picking up extra work or cutting back areas in your budget.

LJ, your 401k that was with your previous job, is it still there? Have you rolled it over into a traditional IRA?

It's still with the company that I left it with.

Okay, so I would recommend actually taking that out and just rolling it over to a traditional IRA. One of our Smart Investor Pros in your area can help you do that, but yeah, I wouldn't leave my 401k with a job that I'm not at currently, so rolling that over just to an IRA is one move you could do. It won't help with the debt payoff, but it will help with your investing overall picture.

Okay, so not to put it with the new 457 government program that I have?

No, I would keep it separate and just a traditional IRA, yeah, so that you're not paying taxes. And then how much debt do you have, LJ?

About 33,000..

Okay, and how much do you make a year?

My mortgage, me and my wife combined make about a 90..

Okay, that's great.

Look, you can be out of this debt in a year. I mean, if you guys decided, hey, we're gonna live on 60,000, you're out in 12 months, and that's not including extra side hustles, which you could easily decide to pick up.

Right.

So what do you think about that?

That actually sounds really good. That'd be awesome to get out of all this debt.

Does it seem possible, like when I said that, did you go, oh yeah, we can do that? Or was that like, oh, you're right, Jade. What did you think?

Well, it sounds great. I just thought it would take more, like two or three years.

No, the good news is, you can do this really quickly. I mean, just looking at the numbers, and, like I said, you guys cutting down your lifestyle, which is gonna take you guys getting on a budget, which are you already on a budget?

A loose one.

A loose one. What are you using? Is it, what are you using currently?

We just run our numbers through a, you know, like Excel spreadsheets.

Yeah. Well, I wanna get you guys hooked up with EveryDollar, because it is the best budgeting app that is out there, and it'll help you get a really, really clear picture on what your numbers are every single month, and it'll help you set those goals. You can really get in there and see, like to the date when you're gonna be done paying off your debt, and you get to adjust that money and adjust those payments in order to get it done either faster or push it down a little bit. So that's our gift to you today. Look, I'm really proud of you.

Exactly.

All right, let's go to Kevin. He's in Houston, Texas. What's going on, Kevin? Let's make it a quick one.

Hey, how you doing?

Doing good, how are you?

I'm doing good. Finally talked to you guys.

You too.

So I'll make it short and simple. I just paid off like $10,000 in credit card debt. I'm on baby step number two.

Good for you.

So my next loan to attack is my truck loan, and it's my only thing I have left, but it's a high one. It's around $83,000 left. Whoa! It used to be 94.. It used to be 94,000, but now it's at 83 because I make extra payments.

What kind of truck is this?

This is a souped up Ford F-250 Lariat.

Is it for work purposes?

No, it's just pure luxury. I'm one of those that just has the truck for luxury. I don't pull nothing.

How much do you make a year, Kevin?

It's the truck that I've always wanted. I make about $14,000 a month.

Okay.

Yeah, give or take. Like. sometimes it could be 10, 12, 14, depending on how much I want to work.

I'm selling it.

Yeah.

I'm selling it.

I would. Kevin, $83,000 in a truck? That has debt that's going down in value that you're paying interest on?

Wow.

Yeah, it took me like a while to get it, because it was like, I had to pre-order it.

I believe it. I'm sure you did. Yeah, I bet.

And so I do want to add it to the debt snowball, but I just, I'm trying to figure out how to go about it. If I should just pay more every month or just save up one giant sum and just pay off.

No, no, you want to be paying on it. Yes, as you get extra cash flow, you're throwing it at the truck. But we would, I mean, I would run the numbers, Kevin. I would Kelly Blue Book it, run a scenario, look on Craigslist, look at local dealerships for other trucks. And just for a second, just think, oh my gosh.

It's about $1,700 a month.

Oh Lord, sell it.

Kevin, Kevin, Kevin, run the numbers. Okay, go to ramsaysolutions.com and pull up our investment calculator. If you invested $1,700 a month, if you invested that, Kevin, do you know how much money you would have? I wish I had my computer on, I would do it right now.

I'm a skeleton, I'm dead. I am just, wow. And do you have other debt besides this? or is this going to be it?

This is it, this is really my only payment I have a month is because all my other expenses are paid for. So there's nothing to worry about.

Rachel, you keep the conversation going, I'll do the investment calculator.

You got to go, we got like 30, we got 30 seconds. Okay, I would, I mean, Kevin, I'm not going to sit here and like convince you. You're a grown man, you can do what you want, but our biggest goal is that we want your money working for you, not against you. There are so much of your income and heart, you make incredible money. I mean, 150 to 160 a year, that actually you'd be building wealth for your family.

Wow, if you did 1,700 a month, $2,225,000 after 25 years.

25 years, you could have $2 million.

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You're listening to the Ramsey Show. I'm Jade Warshaw, joined by Rachel Cruz. Give us a call. The number is 888-825-5225.. We'd be happy to hear from you.

Hi, so my question is, so I work with my dad after I'm done with school like two or three times a week, and I make like $80 a week, and I wanna know what I can do with my money right now to set up myself for my future.

My goodness, Caleb, how old are you?

I'm 12..

Wow, that's so impressive. What kind of work do you do with your dad?

We go to people's houses and fix like washers, dishwashers, refrigerators, and like microwaves and stuff like that.

Caleb, let me tell you, not just the money you earn is helpful, but knowing how to do all of that later in life, in about 10 years. I know, right? People will be very thankful to be your friends, because not a lot of people know how to fix all that stuff, Caleb, so I love that you're even learning that trade now. That's amazing, amazing. Well,

I'd agree with that.

Yeah, I use every dollar and I have my financial plan for December. This guy. I'm gonna put 80% of my stuff into, 80% of my money into savings, and then 10% into tithes and 10% into fun money.

Wow. Good for you.

Caleb, so what do you spend money on right now as a 12 year old? What are things that are fun for you to spend money on?

Well, to be honest, I like going, I spend it on video games, to be honest. Yeah.

Hey, that's great. That's great, that's great.

Good for you, Caleb. Wow. Very impressive.

And your parents, look, when you get off the phone, don't give your parents a big hug, because they have really taught you well. And for those listening, he is doing right. Like you, do three things with money. You can give it, save it or spend it. So he's decided to save 80%, which is.

Great.

That's great. And then you're giving 10% and spending 10%. And in your case, yeah, I think spending on video games sounds wonderful. I don't have anything to add to this, Caleb. I just wanna say thank you for your call.

Or be a co-host here and help some people out, because you're doing real good for 12 years old.

Wow, I know that's right. Shout out to the parents.

I know, well done. So great. Thanks for calling, Caleb.

Thank you so much. Oh my goodness. Let's go to Lauren in Dallas, Texas. What's going on in your world, Lauren?

Hi, so my mother-in-law lives with us. She's gonna be moving out in June when our lease is up. Our rent is 2,400 and she pays 800 of that. So I'm getting a raise in January, which will increase our income about 550 a month. My question is, since we're kind of paycheck to paycheck right now, should we use the raise to save for a security deposit and moving expenses and move somewhere less expensive in June, or should we use the raise to pay off debt until the lease is up and then stay in our current home come June?

Hmm, the lease is up in June.

How much do you guys make a month?

Currently about 106, with my raise we'll be up to about 115, but.

A year? Yes. Okay, okay.

And what do you take home each month? Like, what do you see when you take home your check each month?

About,

55, okay, good. How much debt do you guys have?

Quite a bit. With cars, credit cards, medical debt, student loans, all that we're at about 100,000..

Okay, 100,000.. And you said it's cars, medical debt, credit cards, just kind of normal.

Yeah, well, with your current income, yeah, $2,400 a month for rent. I mean, that's bumping up to close to half your income. So I, yeah, this is too of an expensive place, Lauren, where you guys currently are. So if your lease is up in June, I mean, you probably can't, I don't know if you can break the lease or what, if you can move out sooner, but I would work towards looking for a new place in June, especially since your mother-in-law is not gonna be living with you guys. Yep, find the cheapest place that you can, and then from there, start working the debt snowball.

Probably a credit card.

Okay, which is how much, how much do you owe on that?

2,000..

Okay, so yeah, I would make it a goal to start chipping that away and working extra. And I guess, is the 115 a year include you and your husband's income? Yes. Okay, so yeah, I mean, you have a, yeah, I mean, you're making good money, but you also have a good amount of debt, 100K. So I'm gonna say that there's probably gonna be a season of side hustles and earning some extra income.

Yeah, we have three.

Okay, so yeah, so that's always a tricky thing to navigate.

No, definitely not. I agree wholeheartedly. Have you priced out some cheaper apartments in your area?

Yeah, we're. currently, we have two dogs also, so we're in a house right now. So I feel like we need to stay in a house just because our family's five with two dogs. Yeah. It's a little chaotic in our apartment, I can imagine.

Yeah, you gotta find, you're definitely gonna need to find something. Otherwise, I mean, it goes one or two ways. You either see your income going up substantially, like 25% more to where this knocks, down, to where it's supposed to be, or you find an apartment or a home to rent. that's 25% less.

Yeah, and Lauren, and remember, this is just for, this is temporary, which I know it's like, it sounds, it's easy on our side of the desk to be like, go, find another place to move in. You're thinking of all the logistics and upbringing your family. Like, I know, it's a lot. I know it. Yeah, I mean, it is, it's a lot.

I would too, because, like you said, that intensity that you put in, that's not supposed to be the way your life is lived.

Right, right. Like you'll just,

everything you do is like, I'm just working to live. You know, I'm just working to do this house payment. And then you're gonna hate your house because-.

Oh, it's taking you away from your kids and stuff. Yeah, it's a burden, not a blessing, that we talk about a lot on this show.

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What's going on, friends? You're listening to the Ramsey Show. I am your host this hour, Jade Warshaw, joined along with best-selling author and author of the new book, I'm Glad for What I Have. Yes. Yes.

No, I've not.

But I thought it would be cool. And James was like, hey, we need to watch this, and we need to see you guys' reaction to it. So go ahead and give it a whirl. I feel like my husband and I are doing everything right. We both have good jobs.

Paid the mortgage.

Yeah, just mortgage, gas, and groceries. And now to only have two to $300, that's like the, yeah, that's crazy. Look, I have my take on it. You tell me yours.

Whoa, okay.

Yes.

And you only have three to it. So that means that you pay.

Because if they really only did groceries, gas, and mortgage.

That means, yes.

There's a ratio that could be off somewhere.

Yes, and if you only have two to $300 left in your account, that means the other paycheck you got 15 days ago is gone too. What is that going to? Are there other payments? You know what I mean? As it starts to decrease that much.

Well, let's look at this in a real way. Okay, so let's say she got paid on the 30th, which is like the first for most people, okay. And if they paid their whole mortgage, that's most people's biggest bill. So that's gone. And then if they spent half their grocery money, half their gas money, then I'm like, okay, the next check is if they've got two kids, we don't know how old they are.

but also I would wanna know where else is that, right? So, like, where did the 15th paycheck from the month before, where is that all going? Is there payments? Two car payments sitting in the driveway? You know what I mean?

I mean, she says, quote, we've done everything right.

Which I feel, because that is a sentiment. What she said is you're told, go to college. In fact, when I went to school, which was 15 years ago, there was no even talk of, hey, let's look at price tags. It was really. go where you can get in, you go, and you'll get a great job, working 40 hours a week.

And she says, I don't know if it was in this video, cause I've seen both versions. Did she say that she's going to school full-time too? No. She's going to, okay. So that wasn't in the clip, guys.

Which is a big expense.

So here's my take. Here's, this is just me. She says, okay, I'm working full-time, going to school full-time. Papa's working full-time. He's got a second job, plus two kids.

I'm already overwhelmed. The number of hours in a day.

So part of me also feels like there could be a piece of this. that's like, if she's going to school full-time.

Stress is somewhere else too. Yeah.

I'm like, stress will make everything seem worse. And when you feel stretched on your time, it makes everything harder. Like those $300 that they have all of a sudden just feels like even less, right? Because, like, I don't want to cook tonight. And I don't want, like, there's a lot that feeds into that.

Well, and I'm like, maybe it's just because we're on the Ramsey show watching this, but I automatically wouldn't be like, how much are the car payments? How much are the debt? Because that's always our thing. But Jade, and again, this may not be her situation, but statistically speaking could easily fall into this scenario where there's two $600 car payments in the driveway and that's $1,200.. That's gone every single month out of a paycheck.

I believe there are.

I would want to know. Yeah, because if you're a registered nurse, you're making great money. And if your husband's working full-time and, on top of that, working a side hustle.

And if you're in a state where the nurses don't make a lot of money, maybe you need to move. Because that pay changes depending on where you live.

Yeah, that's true.

And so, like plenty of people all the time, are in jobs where theoretically they should be earning more, but they happen to be in a place where they're just not earning that much. And so in this case, I feel like that could be at play.

Yeah, because that's a complete flip of the perspective. That's a great point. That's a great point.

Because I'm not like, I'm not trying to be ugly or, you know, incompassionate, but the fact is probably no one's gonna knock on your door and go, I'm here to save you. Like, no one's gonna do that. The government, look, they're just gonna keep on ticking and keep on, and I don't want you to keep living like that. So my guess is there's probably not a real budget in place, because when there is a real budget, you can see, like you said, if those ratios are off, if you're like, wow, we're paying 50% for this 1,100 square house, you know, that's too much. You'll be able to see those numbers, so.

Yeah, and I think you're right. The idea that you have to advocate for yourself. No one is gonna come save you, and that's true with your health, with your, I mean, like all these areas of life, not just money, but you do get to a point, as a grownup, where you're like, oh my gosh, I felt this with my kids, like, at the doctor or something. I'm like, oh, there's no one else, like, it's me. It's me that's having to do this, right?

You're listening to The Ramsey Show. I'm Jade Warshaw, this is Rachel Cruz, and we are taking your calls all hour. Give us a call. The number's 888-825-5225.. We'd be happy to hear from you.

He was laid off from a job just before our wedding, and it was unexpected.

We were given the choice when we had a wedding. I have super savvy, money-savvy parents, and I just kind of thought that the lifestyle would somehow continue,

and we were keeping up with the Joneses,

and we chose the wedding over the down payment for the house. We were paying higher rents, and it put us in a position where we made very bad decisions with credit cards, and we've honestly been struggling just ever since. Income-wise, we're in a good place right now,

but we had two kids 11 months apart.

within the year of getting married, and now we have a little girl.

that's just about to turn four, but we still have that credit card debt.

from like six, seven years ago, and we're in debt, and we're living paycheck to paycheck. No matter how much we make, it just never seems to be enough, and I just really wanna get smart with our money, and I just feel like we're in this big hole, and we can't get out of it. because of our past, and we have about $65,000 total worth of debt, and we don't even touch 45,000 of that, and because we have poor credit, we pay high interest rates for our cars and have all along, and we were just finally on the path to homeownership, and two years ago, two months before we closed down our house, my husband was laid off again, and fortunately, we never missed a paycheck. He was reemployed within two months and ended up income-wise getting more, but at that point, we had no choice. We were gonna lose the house, so my mom fortunately stepped in and took on the mortgage for us, but- So you're in the house now?

We're safe.

Okay. Like I said, my parents, fortunately are- What is the mortgage? Opposite of me. Can I get a few particulars from you? Sure.

Yeah, how much are you guys making a year?

My husband makes about $125, and I make about $25, and then we each have a few occasional side hustles, but they're seasonal, so per month, we bring in anywhere between 96 and, 9,620,. I would say, I'm sorry, 9,600 and 10,500 a month. Okay. And can you go through and list out each debt that you have that totals up to 65,000?. We have about 45,000 in personal loan.

when we bought the car two years ago.

Okay, what other debt? So we've got the 45,000 personal loan, 14,000 on a car. Yeah, and then about 5,000, I would say, in credit card debt, and probably about 4,000 in medical. Okay, so you've got a really good income. This is good.

Okay. I mean, after we pay our bills,

I mean, it just seems like every month, anytime we get ahead, I mean, just like with home oil, once we get a delivery, we're back to zero.

because we're busy with the kids,

and we're working, and paired with trips to Marshalls and HomeGoods. You see, that's, girl, that's where the money's going, and I'm glad that you recognize that it's you doing that. The question is, what's going to happen to change that? Because here's the thing. You could pay off all this debt, but if you don't get your spending under control, you're still going to spend away all the money that you're supposed to be using to do things like save and invest, and this is going to be an ongoing problem for you, even if you guys manage to pull yourselves out of debt over time.

Yeah, I try a budget, but then, you know,

if something happens, or we need home oil, heating oil, or, you know, I have a rare eye condition, you know, a contact lens tears, and I need a contact lens. that, weirdly, isn't covered by the insurance company, and it's just like one thing after another, it seems, and any time we get a nest egg, it just seems like something pops up. Okay, well, that's where your budget is going to help you, because if you're doing a good budget, you're going through every single dollar, and you're assigning it with a purpose, and you're choosing. Like, budgets include more things than just rent, mortgage, utilities. It includes things like a trip to the eye doctor, or my contact lenses, or a miscellaneous category for things that, you know, there's always something that pops up in the month.

Yeah, and Diana, there's, and you've said it twice on this call, so I'm going to just kind of say what you've said is keeping up with the Joneses, keeping up with the Joneses. I know, you know, like you've said that a few times, and, you know, money, we can talk about the numbers a lot, and that's what we're good at on this show to help you solve that. But what Jade said earlier was exactly right, that until you, Diana, like, there's something in there with you, and I can say this because I'm a spender, and I get it, but I think, being able to pinpoint what is it in me that is causing that? What is it, what is the insecurity in me? Because it's not other people's fault, right?

Give her mine too, give her mine too.

Because, oh yes, and money's not a math problem, Jade's quick read. So this is so true for a lot of people, Diana, but if you can get Diana under control and actually start mapping out a budget, I think you guys are gonna see a lot of progress. But it's hard, but you can do it.

You can do it. We're pulling for you, Diana. This is The Ramsey Show.

For order now. It's not pre-order, it's out. Oh, it's out now. Out and about.

Girl, I'm reading this copy all wrong.

You're good, no worries. No, you're good, you're good. Yes, yeah, it launched beginning of November of this past month. So yeah, it's been so great. And talking to so many parents, talking about contentment with kids is a really important conversation to have.

I've really enjoyed, on your social, seeing everybody post, them reading it to their kids, and, yes, I love it. Love to see it. So if you haven't gotten your copy, get your copy today. It's out there. It's a great Christmas present.

Now yours is pre-order.

Yes, mine's still on pre-order until December 5th.

Okay, it's coming soon. Oh Jade, I'm so excited for you.

And it's really great because if you do order it while it's on pre-order, the book that I came out with is called Money's, Not a Math Problem. And if you order it now, you get three months of every dollar premium for free, which is our budgeting software that we talk about here all the time. And most people are trying to get their money on track for the new year. So this is a great time to pre-order it so that you get every dollar premium with it. So that's that.

Hi. Yes, my dad, he's in his 80s and I have determined that he's been scammed out of thousands of dollars by a fake publishing company. Shoot. And so I recently persuaded him that it's a scam, but I still feel like he's very vulnerable, because they'll just keep calling and keep calling with a new scam and all of those things. Well, a year ago, he got a call out of the blue to republish one of his books.

Oh, wow. So how much money are we talking?

Right now, it's almost 20,000.. Wow.

Brenda, do you guys have contact information for these people? I mean, like this is, they're stealing money. This is illegal. Have you contacted the police?

No, I haven't really known what road to go down legally. What I have been doing is like, we canceled his cards and got new cards and we put in fraud information with the bank. And he recently agreed to add me to his bank account. You know, I mean, he wants to leave a legacy for his family and he's written these books and they're wonderful books, Christian teaching books. And it's just hard for him.

Wow.

So I guess my question really is, cause he's written another book and they want, and he didn't tell them, fortunately, but it, you know, it's ready to go and be published again. And he's basically told me, can you find me a safe place where I can publish this book? And in some respects, I wanna just shut the door and say, don't do that anymore. But writing is his outlet.

Well, sure. And when you say publishing, when you're saying publishing, Brenda, do you mean just printing copies of the book?

Printing copies of the book and like making it available on Amazon, you know? Yeah. I mean, that would probably check all the boxes for him right there.

Okay, yeah. And all of that's not like crazy inexpensive. I mean, it's not crazy expensive. Yeah, yeah, yeah. You could do that.

Well, and I don't think I would trust it at this point.

Yeah, no, no, no, no. I know, I know. So, yeah, I think you guys need to print, yeah, some copies and have a few boxes to give to the grandkids. I think you can probably put it on Amazon. I mean, we do that kind of stuff here at Ramsey.

Well, yeah, and the main thing that he's asked me is, you know, can you find me somebody that can be kind of like my agent? And in respect to that, I feel like if he had somebody that he knew was a legitimate, trustworthy publisher, then he would be less likely to fall into the trap of those that are untrustworthy and pursuing him constantly. Thought about getting him to change his phone number and everything, but.

What if he got around, it kind of sounds like he's trying to do a lot of this in a vacuum. What if he got around some clubs, like, and started getting to know a group of writers to, where everybody's kind of looking at each other's stuff and everybody's kind of sharing contact information and it's a little bit more of a trusted environment where it's like, have you used this guy? Yeah, I've used this guy. Like, you know, how did you get your book on Amazon? This is how I did it.

And he's 80 years old, Brenda. I mean, what's your, do you like, like, what do you think his motivation, like, what do you think this is in him? Has he always wanted to do this? It's not to crush his dreams. There's also a reality that you're 80.

this may not be your big break.

Right, I mean, I don't understand if there's a unhealthy part of him trying to be somebody. Is there anything like that? Or is it just genuinely he loves what he's writing about and he wants it available for people to read, right? Like, I'm like, I wonder what his motivation is in all of it.

Well, and his first book that he wrote is a kind of a teaching book on Christian foundations.

Yeah, a great outlet. To grab onto, to give him focus. Yeah, so what I would do, Brenda, if I were you is I would sit down with him and say, hey, dad, listen, here's what's happened. You have been scammed out of almost $20,000.. We can't keep doing this.

You're listening to The Ramsey Show. I'm Jade Warshaw, your co-host today, joined by Rachel Cruz, your other co-host for today. Give us a call. The number is 888-825-5225.. And if you are into Spotify, you probably received your like annual Spotify wrapped results, which is pretty cool, where it'll just basically tell you like what the top things you listen to.

on the like main image. Oh no! There we have three people. So it's Dave, Jade, and George,

right? Look, luckily they got my good side. I'm so excited. It's a great picture. Here are some of the usernames of people who have shared that.

Hey, thanks for taking my call. Follow the Baby Steps. Everything's great. For people that are listening for the first time, they definitely do work. So follow them, of course.

be? Yeah. So with a pension, we usually say that you want to take that percentage and just cut it in half. So 50%. So 7% of it's fine.

Yeah, perfect. Just 8% into a Roth IRA, max it out and follow the steps from there.

Perfect. Yeah. Great job, Jake. Awesome. Well done.

All right. Moving on along, we've got Andy who's in Tulsa, Oklahoma. What's going on, Andy?

Thank you very much for taking my call. I'm calling today for some advice. Helped with my 25-year-old daughter who a year ago had $30,000 in the bank and her own business, but she walked away from that and went to another state to join a fellow that she had met up with. And unfortunately, two weeks ago, she came back home. The relationship went poorly.

And the total amount is $80,000?.

It was purchased for $80,000.. There's a $70,000 owing on it. And unfortunately, I booked it. And the Kelly Blue Book on the car is about $35,000 to $40,000 as a private party. So yeah, horribly upside down.

because that is an atom bomb. Let's be honest about that. That's going to follow her around in a similar way that even a bankruptcy would for quite a while. So $70,000, I mean, the other debt that she has, the $6,000 lease thing, the $6,500 credit cards, that's not something she can't easily overcome. And the $70,000 car is a lot.

doing eyelashes, eyebrows. And at one point she was earning more than I am. But she walked away from all of that. And, to be perfectly honest, I have no understanding whatsoever how these two were doing online coaching for physical training and fitness and nutrition, et cetera.

So, just like influencing and stuff. Okay.

Right. And it clearly doesn't work.

Okay. So she's not earning anything right now?

She's not earning anything right now.

So, Andy, and where's the guy in all of this? She left town, but is he...

Yeah. So she's come back home now, two weeks ago. It ended up abusive, both mental and physical.

Wow. I'm sorry.

So there's that side of it.

Yeah, for sure. Which is real.

Yeah. He's back in the state that they were in, but I heard he's mobile. I don't know. He's gone to the wind.

Okay. So he's out. Yeah. So we're starting clean slate, without him.

I'm 100%.

And so, yeah. So I would say, like Jade said, the atom bomb of the car repossession, I almost would just try to sell it for that 40,000, take that $30,000, hit, take it. And so she's going to have a loan of that. She's going to have a lot of debt here.

Yeah. She's got to get a loan for that difference.

Yes. But then there's going to be some years of working through this, but obviously I'd rather be in this situation than where she was. That's right. But there's just some things that she's going to have to really slow walk financially. But I also think it's possible for her.

You're a good dad. This is The Ramsey Show.

Oh, my gosh.

While simultaneously plan on spending more this year.

This year just keeps going, keeps going.

And so I find that to be very interesting. So, Rachel, I'm going to hit you with a couple of facts. And I want you to react, and let's get into this. So the stats say that, on average, Americans are going to spend $875 on Christmas. And that kind of shakes out to a little over $600 on gifts for immediate family, co-workers, then another around $200 on decorations, miscellaneous things.

It doesn't sound like terrible to me. It doesn't sound... I thought it would be more. Yes. I would have thought at least $1,200..

This is the holiday season. Yeah. And part of me goes, okay, $875.. Couldn't we have like stacked up a little money throughout the year to make that happen?

I know. That's right. That's right.

Think about that, guys. Okay. So then I read this stat, 48% of Americans start shopping before the end of October. So... Oh, wow.

Right. Through at least three months. Yeah.

But they're putting it on credit cards.

Yes. It's going on to debt.

Okay. So this is the kicker. Here's the kicker. 61% of people have said, and this is very current, like as of October, 61% of people have said, hey, we're living paycheck to paycheck. Four out of 10 people are saying, man, we are worse off this year than we were last year.

What's happening?

And then they come through with a stat that says, 74% of Americans say they feel stressed about their money. I'm like, what is happening? You're making this choice.

Yes. Oh, my gosh. See, that's what's funny is I'm like, and it's such a human behavior thing that it's like, once you have your mindset to something, you're like, oh, I'm going to do it. Regardless of what the other numbers are saying, I'm going to choose to continue following this plan. And you're just like, wait, no, no, no.

Yeah. Let me tell you what I'm hearing in my heart, that I know, that I know someone is saying, I know someone is like, Jade, the year has been so hard. I feel like I can't spend money on anything. I just need a little joy. I just need a little joy.

And what's funny is the gifts. Let's just be honest. Some, I'm sure, really great sentimental things. Yeah. Probably a lot of crap for the kids that they're going to play with for two days.

Yeah.

I mean, like, right. There's a lot of this in play when you could actually say, okay, let's just stop. Let's just stop. And reassess what's really happening. And we can get our kids some things, but it doesn't have to be that much.

It doesn't have to be that. What would happen if you got like a family gift? That like the whole, like a ping pong table, like something that it's one gift. Like you don't have to spend four and $500, but it's one gift that the whole family can truly enjoy. It brings everybody together.

That's it. Yes.

Keep creating debt. And, or do we want to just do, cause? really, usually it only takes one year to like, put that stake in the sand and be like, all right, this, this year is going to be different. And you can get so much traction.

Yes.

From just one time drawing that line and be like this year, we're not doing it.

And there's something about lived experiences that I think bring us back to what we've always done. Right. It's like, it's, we know it, we're comfortable with it. It's just what we do. And so we just go back into what we do.

Yeah.

Everyone's fine. Yes, that's right. We all survived. And I could repeat that again. Right.

Yeah.

And everyone else is going to be okay.

That's a word, that's a word, Rachel, because it really is like, it's like a news cycle. Like when something is really big in the news and it's like the only thing anybody's reporting on. And then, two, three weeks later, it's crickets. You never hear about it again. Yes.

I know.

It's over.

Yep. Yep.

December 26th, it's over. And you can go, wow. Okay. Like that is over now.

And honestly, and call me cheesy, but I'm being for real. I'm like, even just past Thanksgiving, I'm like, and I know Thanksgiving doesn't have gifts and all of it, but I'm like, when I look back with my kids, I'm like the memories we have, we took bikes to an empty parking lot from a high school down the road, rode bikes around the parking lot. Cause Caroline can now ride her bike. Um, you know, we went on a hike, we did puzzles. I forced my kids to do puzzles, cause I'm 80 years old and I love puzzles.

And you know what I mean?

I'm like, you look back and it's like, that's the good life.

100%.

It's not all the crap that you clean out of your playroom 18 months later. That's all. You know what I mean? Like, yes. So that's it.

So that is true.

Don't go into debt. Like it. don't stop. Just stop. It's unnecessary.

I mean, it might be the first time you've ever done that. Rachel, what you're describing, that is a mindset and for many, that is a complete mindset shift. Like I was on a webinar the other day about budgeting and we were talking about, look, if your Christmas budget doesn't allow for it, you may have to cut back. And some of the people in the chat were saying, oh, we're not having Christmas this year. And like, oh, I guess that does it for Christmas this year.

But did I tell you my story about this last year?

No, but tell me. We, I did.

Okay. I did that. Okay. I saw everyone posting their pictures. I thought it was sweet.

Winston, did we?

So obviously we did good. It made me feel good.

That's great.

Because there wasn't a ton, but I feel like we got good gifts for our kids. It just made me laugh because I was like, Winston, who knew it? We were minimalists. Didn't even know it. And it was a great Christmas.

So you don't need gifts to have a great Christmas. This is The Ramsey Show.

Hey folks, there's a lot of half-baked investing advice out there, but here's what you can do to get more confident about this stuff. Check out the SmartVestor program. SmartVestor connects you with local financial advisors who have the heart of a teacher. They'll help you level up your knowledge and build a retirement plan based on your goals, not theirs. Go to RamseySolutions.com slash SmartVestor to get connected and get more confident about your plan.

This is The Ramsey Show. I'm Jane Warshaw, joined by Rachel Cruz. Give us a call. The number is 888-825-5225.. Let's go directly to the phone lines where we've got Monica in San Jose, California.

Hi, thank you for taking my call. So I am calling because my husband and I bought our first home in the Bay Area in September. I can go into the financial details of how it all went down, but essentially it was for $1.19 million.

One point what?

One point nineteen.

Okay, okay.

We were able to put $550,000 down.

Wow, nice.

Yeah, so I, again, if it's helpful, I can go into all the financial details of, like what the mortgage is, all of that.

What's your question?

The question is that we hate the house.

Oh, what?

Yeah.

What changed?

Oh, no.

Yeah, we're really unhappy.

Shoot, why?

It's just, it's not a great layout for our lifestyle.

Like you, didn't buy it sight unseen.

Yeah, I know. We did know it, but we, you know, we were first-time homebuyers. And I think we really didn't spend enough time on thinking about the home. We were really concerned about whether it was a good financial decision. And we spent a lot of time thinking about that.

Do you feel like it's going to be a loss?

Well, like my husband is in a particularly very unhappy year. And like, I just feel life is really short and it's causing a lot of stress.

And like financially, if you sold it, why would it be at a loss?

Well, the value of the home has already dipped since we purchased it.

What's it at now?

And also, of course, the seller fee, for, you know, working with a realtor, all of that, it's going where we would definitely take a loss. It's a matter of how much of a loss. So we're just trying to think through, does it make sense to stick it out? Like, how long should we try to stick it out before trying to sell it?

I gotta be honest, like part of me, like I'm hearing what you're saying, and I can tell that it's really bothering you.

Um, it's bothering your husband more than you, Monica. And that's my, that's a little bit of my question, is that he's unhappy and he's short and he's not.

But, like I, the reasons, and look, feel free to elaborate. But like people calling in, they're like, oh, the guy upstairs is smoking weed. Or, you know, my neighbors are violent. Or there, there was a murder in, you know, across the street. Like there's, those are the reasons that I'm like, yes, you need to move immediately.

Well, you know, we moved from a home that was in the same community that we were renting, and it was fully upgraded. And we missed the opportunity to buy that home, like without a realtor is being involved. You know, it could have been like a directly buying from the owner situation. And so I think, like that's really weighing on us. And comparing this home to that is really hard, because that was an upgraded home.

Well, a sound machine can solve that. We can just get one of those white noise machines.

Yeah.

Yeah, it doesn't, Monica. I mean, from a, you call it into a financial type show. And so we do look at the numbers of this. And yeah, I mean, it's not. I mean, if you guys have the money and you find something better, and you guys just shake hands with each other and say, we're going to take the loss.

It's just. it's more so that when someone is deeply unhappy, like every single day, and it's impacting your well-being to the point that it's...

That's it, though, Monica.

But a house shouldn't be doing that.

It shouldn't be impacting him because there's three stories. That's where I'm like, there's some stuff happening. that's probably more than just the house in his life. and what's happening. I mean, like, if you're really that unhappy because of a layout of a house, then you're an unhappy person.

Yeah, I second that. I think there's some... I mean, my husband and I moved from South Florida to here, Monica. And before we moved, we had done everything. We had completely renovated our house, made it exactly the way we wanted.

So I guess the question is, how long do we need to hold it before it makes sense to sell it?

Our rule of thumb is five years for a house to kind of ride through the market. Well, we tell people to buy... If you're going to buy a house, make sure you're in it for at least five years. That's usually a good average amount of time for the market to kind of go up and down, all of that. But again, and we're in a weird market, you know.

And figure out what the real problem is.

Yeah, to have to deal kind of with where you guys are. And I know that's stressful as a wife and all of it. Yeah, you're in a hard spot, Monica. And I'm so sorry. So again, if you guys choose to...

Well, it also makes me wonder. I'm like, okay, if they sell this house at a hit, they're not gonna... They bought what they could afford. So what are the chances that they're really gonna be able to get anything better than what they already have? now?

I mean, a better layout, maybe?

Maybe, but it might not be fully upgraded. I don't know.

I'm sorry, Monica.

Deeper issues are involved here, 100%. That does it for this hour of the Ramsey Show. Join us for the next hour.

It's great, hey. Very similar. All the same, all the same.

We're taking calls about your life and money, so give us a call. The number's 888-825-5225, and we would be happy to talk with you. Again, anything that has to do with your life, your money, Christmas gifts, whatever you can think of, we will talk about it, as long as it has to do with life and money. So give us a call. We'll go directly to the phone lines here with Dorothy in Boston, Massachusetts.

Hey, Jade. Hi. Hi, Rachel.

I love that question.

Like how to invest? Is it you? It is me.

I'm asking for a friend.

Yeah, it's right here.

No, it's great.

You know, let me just tell you what I did. I knew that I wanted to work with a smart investor pro or like work with a professional, but I also wanted to kind of have like a baseline of knowledge going in so that I could follow them in the conversations and also have an idea of what I wanted, because I didn't want to go into it with this idea of like, okay, you just tell me what to do, right? I wanted to learn and understand it. And so for me, a lot of that was. I started listening to shows like this and digging into that content.

Yes, it is. I'm not quite there yet to baby step.

Four.

Four, will we start? Yeah. Yeah. But I just want to have like...

Some basic knowledge. Yeah.

Yes. So when someone's like S&P 500 or whatever it is.

Yeah, totally. Okay. So here's just kind of a, let's just do a quick, like four minute high level investing school for you, Dorothy.

Ooh, I love it. Okay.

So, when it comes to investing, we always have, we have the rule, we call it the KISS rule. Keep it simple, stupid. That's what we say, keep it simple. Great rule. Yes.

I'm like...