Why Slow and Steady Always Wins the Race

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. Thank you for joining us, America. Thank you, America. Rachel Cruz, Ramsey, personality, best-selling author multiple times over, and lately, best-selling author of the new book, Children's Book. I'm glad for where I am, the second in a series. She's my co-host today, and my daughter. The phone number is 888-825-5225.. That's 888-825-5225.. Adriana is in Dallas, Texas. Hi, Adriana. How are you?

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

Sure. What's up?

How long have you been married? My husband passed away about a year ago.

I'm sorry.

Thank you.

How long were you married?

Thirteen years. Wow.

How old was he?

He was only 41..

Whoa. What happened?

It was a rare presentation of colon cancer, and from diagnosis to his death, it was just under two years. Wow. It was really fast.

I'm so sorry.

Thank you.

Well, you obviously smelled a rat, or you wouldn't have been asking.

Right. Yeah.

Are you sure these are financial advisors and not just insurance agents?

They have a financial planning.

Okay. What's the company?

Well, they work with, I think the company with the whole life is New York, I'm sorry, it's Eagle Strategies.

But New York Life.

New York Life, yes. Yeah.

These are insurance agents. They're not financial advisors.

Okay.

Because the insurance people don't know how to do anything but sell insurance, and they're not licensed to sell anything but insurance.

But she said Eagle, there was another of him, investing firm.

You can't write for a New York Life unless you're a New York Life agent. So they're captives. So it's not an independent. So this is just the name of the local New York Life office. So no, we're not doing business with them. You need to move. You're getting bad advice.

Okay.

Mathematically. Okay. And it's just the, it's just insurance age. I mean, if you ask a dog if it's hungry, it always says yes. If you ask an insurance agent if you should buy insurance, they always say yes. So, I mean, it's just, especially in the whole life world. And so now you, and, and you do need to get the mortgage into your name instead of your parents' names, and that's going to require some other things, but we don't need to go get in debt to cause that to happen. So here's what we're going to do, okay? We don't need anything from you. We're not trying to sell you anything, quite the opposite. As people of faith, our book tells us to take care of widows and orphans. And people that take advantage of widows and orphans, by the way, really get in a bad place. You don't want to be there. And so we're going to do quite the opposite. here. I'm going to furnish you a Ramsey counselor, a Ramsey coach that's been through our training completely free, and let them, let them coach you through how to get your investment structured and how to get this mortgage redone and hands-on, rather than trying to give you an insurance agent, I mean, give you an answer on the radio and certainly not going to give you an insurance agent. So, I mean, you may need some insurance. All insurance agents aren't evil. That's not what I'm saying. I am saying that if you ask a whole life agent if you should buy a whole life 100% of the time, they say, oh, yes, it's the answer to everything. And if you ask me if you should buy a whole life 100% of the time, I say it's never the answer to anything.

Yeah. And in her situation, she has the two kids. So you hit on the...

It's so dirty that he's taking advantage of that emotion.

Yes. So that on the health side... But the other component of whole life, of what people get sold on to, is the investment idea, right? And she was even saying...

Yeah, they have a high upfront interest rate.

So, but for her to know that there's other options on how to invest for your kids, that you actually will end up, they'll end up with more money.

A whole lot more.

Than versus even just this policy.

If you put it in a fruit jar, you'll end up with more than screwing around with a whole life insurance policy. Because at least if something happens, you've got the money in the jar. These people take it all. It's the payday lender of the middle class. That's how bad it sucks. mathematically. It's absolutely a scummy product. And to play on a widow's emotions about her children might have, oh God,

But they also are convinced, agents are, that it really is the best, right? I'm like, they like...

Well, there's only two kinds. There's ones that are dumb and are convinced it's a good product, because the only way you could convince yourself is if you can't do math, or you're scum. Right. But we're not sure what's really going with us. Or you're selling something you know is bad.

So, that's bad. But I mean... For people listening, though, that's...

Does it not give you a little bit of a chill to sell a widow her kid's stuff based on the death of their dad? I mean, does that not just a little bit? Hello, people. I mean, that's nasty.

Well, and the good thing is that there's other avenues for both of these, from the insurance routes.

There's all kinds of avenues.

Totally.

A lot of stuff you can do.

That's the hopeful side. Because what happens...

And almost all of it is better than this.

Yeah, and what happens, I could imagine, when she's sitting in their office and they're explaining it, there's not option A, we could do whole life, option B, you could do term life in this, and option C. It's all one thing, right? It's like this is the only option. And so, just to know that there's hope, that there's so many, so many things out there for her to do.

I'm the hammer.

That she's going to be okay financially and her kids are going to be okay. Trying to give some hope. Trying to give some hope.

Yeah. Hang on. Christian will pick up, honey. We'll get you taken care of. No cost to you. Zero. This is the Ramsey Show.

Hey, thanks for having me.

Sure. How can I help?

So, I have around $34,000 saved up, and I make about $4,200 a month. I spend probably $1,500 after bills and food, and I was just wondering, instead of me putting money into my 401k, and instead, could I just invest in real estate and put rental properties up so I can have an income at all times?

Well, you don't have the money to buy a rental property.

I was going to go and take out a FHA one.

Yeah, which tells me you don't have the money to buy a rental property. So, Bryce, what we have found is that the people that avoid debt, including rental properties, are the ones that prosper. I own a bunch of real estate. I love real estate. I'd love for you to own some real estate, since you want to someday as a part of your life, but I want you to pay cash for it. Do you own the home you're living in?

Yes.

Okay. Is it paid off?

Yes.

Good. Good for you. What's it worth?

I got it appraised last year, it's probably worth $120,000.. Good for you. But it was failing out, so I got it for $30,000.. Wow.

You got a deal. Good for you. Well, that's cool. So, I'll tell you what I did, and I would recommend you do something similar. Okay? We recommend that if you're out of debt, and you have your emergency fund in place, then we do Baby Steps 4, 5, and 6, and Baby Step 4 is 15% of your income, which is, you know, you're making like $50,000, $60,000 a year. Okay? Yeah. And so we're talking about $7,000, $8,000 a year is all. Okay? Going into your 401k, Roth, preferably, if they have a Roth available, and with a match, that'd be wonderful, and some good mutual funds. Beyond that, I started saving, once my house was paid off, to buy my first real estate after I had gone broke in real estate by having too much debt. So, by the way, but yeah. So, anyway, I just took an S&P fund, and I started chunking money beyond my 15% into that S&P, and when it got to be enough in there to pay cash for my first little rental, that's what I did. You're probably not that far from doing that.

So, I was going to buy a 10-acre lot for $75,000, and then I can get a used trailer that was repossessed for $10,000.. They redo it and everything, and then it cost me $5,000 to get it put in, and then I already have someone put it in my set big for $2,000..

Problem is, that won't go up in value. Only the dirt will, not the trailer. Yeah. So, I would not invest in that as a rental, because I want to invest in a home or a duplex or something that's going to go up in value, not go down in value. And so, the only time I would look at trailers is if you bought a whole trailer park, and they cash flow like a bandit. They make so much money, cash on cash return. It's unbelievable, but you've got the constant problem of taking them out of service because they deteriorate.

it. Yeah. How old are you, Bryce?

19..

You're 19?.

Yeah. You've got plenty of time to do this, right?

You've got lots of time. Yeah. And I would say, too, Bryce, just to this point, it's going to take you... And you're a smart guy. I'm like, you're already at 19.. You're like thinking of ways, how can I wheel and deal and make some money, which is so great. And in this process, it's going to take you longer, but I think, having a goal, as you do the math out and say, okay, how long will it take me to save up? Because where you are in Louisville, Kentucky, I'm like, save $150,000 and go find a foreclosure at some point. This may be years down the road, and that be your first. Find the deal on the sale and just say, yeah, this is going to be my first, and you just slowly build. But the frustrating thing about this process, Bryce, is that it's slow, but the great thing about it is that it carries so much peace with it. It carries so much peace. You're not stressed.

And, by the way, I've bought over 2,000 pieces of property. And Rachel's husband, Winston, does this for a living. now. It's what he does. He's in the real estate business. And he was trained here with me running my property. And so we're both doing the exact same things we're telling you to do. But we're just decades past you. We're 20, 30, 40 years beyond your process. But I remember the first time I finally got $150,000 saved up. And, oddly enough, that's what it was, to buy that first property. And I had it laying there in that mutual fund. And then I looked around and found a bargain.

And Winston and I, what we've done, too, like there was a condo we got. Our very first rental was a condo in foreclosure, nasty thing. It was like a one-bedroom, one-bath. I mean, it was not much.

It was really nasty.

It wasn't much. But we fixed it up, did it. And then, eight years later, it doubled. And so we were like, well, we could sell that, go to find another deal somewhere else. So you can even step up in property, too, as you go through this process, if you don't want to just hold on to it.

Did you get rid of that junky condo?

We did. Wow. We did.

That thing was like a family member. It had been around a while. It was your first one.

I was like, eh. Winston was attached. I was like, that's good.

Not you. I was fine.

I trusted him.

I was like, that's good. I did not know the junky condo was gone. That's cool. Although it wasn't junky anymore.

It wasn't junky. We did good to it.

That's how it started out. That's how it started out.

But it is fun, Bryce. I think a lot of people are interested in that. This idea that investing sounds boring, but it's a tried and true way to build wealth. So do it. But then the other offshoot of investing and what you're talking about, and you're actually going to talk about it at y'all's investing livestream coming up, is real estate. And people really are interested. And it is. It's great. You love it. It's a great way to diversify, even your wealth building when it comes to that.

I've made a lot more money in real estate than I have in mutual funds. But I've also put more money in real estate because I'm a real estate person than mutual funds. So my personal net worth is probably 80% real estate. Between mutual funds and real estate, anyway. Not counting this business that I own and that kind of stuff. But yeah, it's very interesting. So, Bryce, the key is it's very difficult at any age, but it's really difficult to go slow when you're 19.. Please, listen to the old people. Go slow. The people who go slow in real estate are the ones that are still doing it 20 years later. The ones that go fast get burned and they get to start over again, which is what I did. I started buying real estate when I was 22, and by the time I was 28, I was broke. And so I went from nothing to a millionaire to broke between 22 and 28.. And so I just don't want that for you. I want you to just go slow. I don't want your face on the front of Fast Company magazine. I want your face on the front of Slow Company magazine.

Slow real estate.

Slow real estate magazine.

Which is everybody in America right now, let's be honest.

You're not going to be a TikTok sensation. I can promise you. Not, if you're doing it right. This is the Ramsey Show.

It was four years and two months.

Four years and two months. Good for you. And your range of income. during that time? We started at about $60,000 and ended up at about $130,000.. Wow.

Nice.

Doubled your income in four years. Yes, sir. How'd you do that? I asked my boss to just bury me in work. And he obliged. Yes, he did. What do you do? I'm an independent insurance adjuster. Oh, very good. Okay. So you can do that. Yes. Okay. And what about you, Katie? What do you do?

I'm a stay-at-home mom and homeschool mom.

Love it. Good for you guys. Well done. All right. So that income change is all on your boss burying you. Yeah. Pretty much. Good. Very good. Very cool. What kind of debt? Was this? $123,000?? It was a multitude of just about everything. Student loans, two cars, credit cards, medical bills. I don't think I'm missing anything else. Yeah. Just normal. You were normal. Yeah. How long have y'all been married?

Almost 13 years.

So, nine years into the marriage, give or take, eight years into the marriage, something happened. What happened? Well, first off, we just want to thank you and thank God for putting that blessing and that call on your heart to help us and help the millions of people that you've helped so far and will continue to help. And that's really where our journey began is getting into our Bible and getting back to those biblical principles that are buried in there that we just needed to go find. And you really brought them to light for so many people and including us. But when, about four years ago, almost five years ago, we went in to go get diapers for our middle child at the time, and I went through probably about three or four different cards and I couldn't buy them.

We pulled the old book off the shelf because the book went through eight different moves with us.

And never read it. Nope. Which one? Total Money Makeover? Yeah. We hear that a lot.

We hear this a lot. This is a very common story.

Total Money Makeover, America's coaster on your coffee table. Yeah.

Exactly. Oh, my gosh. So, Katie, when that moment happens, you're sitting there in the car. Are you thinking, oh, thank God, let's do something? Or were you like, wait, is it that bad? Oh, gosh. Like, what was your reaction in that moment? Yeah. I mean, it was just like a feeling of dread. Everything that we've done, trying to live normal, just didn't work at all for us. It all came crashing down. And then, yeah, we were pretty much all in. We talked to our pastor at our church, and they were offering FPU.

Oh, good. She went through financial peace.

Yep. We got in a class right away.

Yep.

We had to travel like an hour for it. Yeah.

We drove an hour for it to Concord, New Hampshire. Wow. And then shortly thereafter, the next February of 2020, we led our first class ourselves. Wow. Yeah. Well, thank you.

we decided, yeah, we're going to lead our own class.

And then right in the middle is when COVID hit. Of course.

January of 2020.. Yep.

Of course.

Oh, man. What debt was it for you guys that you were like, oh, it's gone? I'm so glad. I'm so glad it's gone. Credit cards.

Oh, for you? Yeah. It was student loans for me. Okay.

Okay. Okay.

Oh. Yep. It was that last one where it was just over the hump, especially during when you're right in the middle of it all. And the longer that you're doing it, the higher the debt is that you're trying to pay off. Oh, yeah. So that snowball, it works, but we...

The mountains to climb. Yeah.

Yep. The back of it's steep.

It was 50,000.. So it was almost half of our debt was the student loans at the end. Yep. Yep. Yep. And we paid that all off in one year. We were just, that was our last year. Whoa.

So you did half of it in three years and the other half in one year. Yep. Yeah.

We had a baby along the way. Yep.

Okay.

So that slowed us down. I had a surgery as well. Okay. Line out. Oh my gosh. Yeah.

Life definitely happened. Then that math is fair. Yeah. That's good. That's good. Way to go, guys. Thank you. You persevered. You kept with it. You kept with it. You kept with it. Why didn't you quit?

What do you guys say to families out there? Because I have three little ones too, and I just know life is just tiring, right? You're in a really tiring season and you're home all day with the kids while he's working extra, right? So you probably feel like a single mom half the time while he's gone. You're exhausted. So what do you say to families out there? listening? And they're like, this is just not the time. This isn't the time to do it. We're so tired. We're barely getting by. I don't know. I don't know. What would you say to them?

I would just tell them to continue to communicate with each other, because that's been the key to this whole thing. Don't give up. To keep on going, no matter how grueling it gets, no matter how long the days are, no matter how much time that you feel like you don't spend with your kids, they're still going to be there. Yeah. They're very resilient. They're still licking lollipops and laughing along the way. But just to keep on going. Don't give up.

Yeah. Yeah. That's good. It's never too late to start.

Never too late.

I mean, we were married for years and years, and at one point we had said we're always going to have a car payment. Yeah. Always. It came out of his mouth. Yep. And now we're never going to have a car payment again.

It's not like a statement of principle. It's a statement of hopelessness. Yeah. Yeah. Exactly. Yeah.

We've been there and you can turn it around.

Well, thanks to your pastor for teaching Financial Pitch University at his church, and it was there at just the right time. It was. Go figure. Yep. I knew it. So great. Yeah. Very cool. Good for you guys. I'm so proud of you. Thank you. Well done. You're heroes. Thanks. You're heroes, to those little kids. You changed their whole family tree. So well done, y'all. Thank you. So well done. You're on the opposite of the spectrum from not being able to buy diapers to buying diapers for the rest of your life. There you go. For other people. this time. There we go. I like it. If you live like no one else, later, you can live and give like no one else. That's how that works. All right. Bring the kiddos up. What are their names and ages? So we've got Isaiah is nine, Mia is five, and Levi is three. All right. And we've got matching dresses with mom. That's pretty cool.

So cute.

I like that. They've been practicing their debt-free scream in the car right here. All the way down. Yep. From New Hampshire to Tennessee. That's a lot of practice. Yeah.

Lots.

Wow. Lots of Advil.

We're debt-free.

Very cool.

I'm good. How are y'all?

Better than we deserve. What's up?

So I got a question for y'all. My wife and I just bought our first house.

So your family is your wife?

Yes.

Okay. All right. And I'm confused. How many hours a week are you working as a UPS driver?

Anywhere between 55 to 60 hours a week.

Are you able to cut back on just your hours there if you wanted to?

Unfortunately, no. The way it works is whenever you start is the start time that they give us, and then whenever you're finished delivering is when you're finished.

Okay. So when?

Unfortunately, there's nothing else.

Okay. What's the price? What are you going to be making, the difference in income?

So currently I'm $30.75, and then the new job will be $25.38 an hour.

And have you run the?

About a $5 jump.

Okay. Yeah. And have you guys run the math on?

It's not a $5 jump, because you're going to be doing 40 hours instead of 55..

Correct.

So it's a 50% pay cut.

Correct.

Have you guys run a budget to see, like, just to see, hey, if I took this new job and with the pay cut and the hours I'm going to be working, here's what we have left, and, like, this will be our life financially. Have you guys run those numbers?

We have, but I just feel like we're missing something.

Yeah, you're running it at 55.. You're running it by the hour. That's what you're missing.

Well, I was looking for a job. Okay.

Well, C is what you want. You want a job that pays what UPS is paying without working 55 hours.

Yes, sir.

Okay.

And I also get a pay jump this year, too.

Good. I want you to find a career that pays $70,000 to $80,000 a year and start working your way towards that career, working 40 hours or so.

It's a great place.

And the stock plan is incredible. I mean, and I don't know exactly how, where you are, what you're doing works, but my feeling would be, Clayton, that you could probably pick another route over time that got your hours down.

Yeah, I was going to say.

As you move up in seniority, right?

Yeah.

Yeah.

Is that not how it works? Let me.

Yeah, as you move up in seniority, you can get a better route and stuff. But there's, at my center, there's over 100 drivers, and I'm currently like number 70.. So that's going to be like 10, 15 years.

No, it's not. No, it's not. They don't stay. You got turnover in there. They don't all have to die off.

Clayton, how old are you? Can I ask you that? How old are you?

Yeah, I'm 26 and my wife is 27.. I actually wanted to say something else real quick, too. With this new job, my hours will be 40 a week, but I go in at 6 and I clock out at 2.. So it gives me the opportunity to pick up a second job.

So where's the quality of life? increase, dude?

I guess, yeah.

Yeah. And now you picked up a side hustle. So you're, you know, unless that side hustle is taking you into something where you want to be when you're 36, no, no, I wouldn't do that. I'm not saying UPS is the end, all to be all. I'm not, if you, if you want out of there, I'll help you get out of there. Hang on. I'm going to send you a copy of Ken Coleman's book. This new one, find the work you're wired to do. They get clear assessment. And I want you to take that assessment. I want you to start thinking about what you really want to be, not just what you make. What is it you want to do with your life?

There's seasons of sacrifice. And for Clayton, and I don't know, I'm just making this up, but I'm like, yeah, there could be a season. You're an entry level guy. You got the crappy route and you do that for two years and then you get a better route, better pay. And you know what I mean? But like there's, you don't get to start off, and not that he's saying this, but you don't get to start off, you know, at the top necessarily. And so it was funny. I was doing career day at my third graders little class. And they said, where did you start off? I was like, I started off going to assemblies and high schools all across America. And I did that for, like, you know, three years.

Who knows?

I didn't get paid yet. I mean, who knows where in these small towns and all of it. But, you know, again, there's just, there, is that level of sacrifice, but then there's a clip going around on you, on, on, on, on, on the socials, and you're like work 80 hours a week. So everyone does think that you're just like a workaholic.

Well, I know everybody that wants to pitch and moan some of that. just, but yeah, if you want something to whine about, you can find a clip of me to whine about. That's not hard. I've done 50,000 hours of radio. There's plenty of me saying something out of context. That'll get you where you want to go for your little Tik TOK. Click through. This is the Ramsey show.

Hi. Good. Thank you. How are you?

Better than I deserve. What's up?

I'm calling because I have a daughter who's going to be graduating college this month. She's going to have about $80,000 in student loan debt.

Good Lord.

I know. So here's the thing. My husband and I knew inheritance money would be coming our way. So we didn't push back on her going out of state where there's higher tuition. And we didn't really tell her we would pay for her college, but we told her we'd figure it out because we thought we might be able to do that.

Does he have the $40,000??

Not right now. He does not. Okay. All right.

Does the divorce decree demand that you two pay this, or is this just something you all sort of kind of had a discussion about once way back there and never talked about it again?

Correct. There's nothing in the divorce decree on this.

Yeah. Your ex-husband is not going to give her any money.

Well, yeah, I, I think he wants to, and he would, if he could.

I mean, if you're, if you're on speaking terms with him and you want to pay it in full, say I just paid it off. One time we talked about it and you said you'd pay half. If you can ever give her the other 40, maybe she could use that towards a house or something.

Okay. Yeah. It was a quite. Oh, go ahead.

Yeah. That's okay. So if you, I mean, if you can have that conversation, that would be fine. But then, but then forget it. It's over. You know, you don't get to go back later and go, where's that money? Right. You just, you just drop it. You made a decision and you made a comment and you moved on. That's what I would do. Cause otherwise it's going to ride around rent free in your head.

Yeah. Yeah. We're in, we're quite, we're friendly. It's quite an amicable situation.

Not relative. If he doesn't ever give her money. Yeah. And it bothers you and you lay awake and he doesn't think about it again. You'll be the only one thinking about this on the planet.

How much did you get from the inheritance, Katie?

Um, well, quite a bit. I was able to buy my own home after the divorce with it.

What's quite a bit. How much did you get?

Do you feel comfortable saying it or no?

Sorry. Just under a million. Okay.

Yeah. So you have a paid off house. How are you doing financially? Cause that's almost what I'm wanting to make sure that, you know, this money's being, cause, I mean, it's 80 grand. So I'm like, I want to make sure, Katie, you're, you're set up well, um, for your future retirement. I mean, like looking like we talk about doing that, laying that foundation for the parent first, before the kids. And so making sure that, yeah, where you are financially is in a good spot. So you bought your house outright, so you have no mortgage.

Um, I am, I think I'm okay. I have 700,000, um, in an IRA, well, in the IRA 85 and a 401k.

And the house is worth what?

500,000..

And you're how old?

55..

Cool. So you're a 55 year old married, I mean, divorced millionaire. Cool. That's neat.

All thanks to my mom.

I know. And so we want to honor that memory by being wise. If I'm in your shoes, yes, I would write a check based on what you have told me and pay off your daughter's student loans. And yes, I would make a phone call to the ex and say, Hey, remember when we said that I just paid the whole thing. When you get ready to pay her your half, like you promised, someday, she can use that for her first house or something else. And, um, I'm not letting you off the hook. I want you to know I had done it, though. And drop it after that. Forget it ever happened. Just walk away and never think a thing about it again. Can you do that?

I can do that. Okay.

Because I don't want this becoming this constant thing like, when's he going to do his part? You know, and all that. Because you're doing your, the only person you can control is you. And you can't control him. And, um, you know, you're, you're saying it's amicable and he intends to, and you have faith in him. Um, you know, I've just been doing this 35 years. My faith in the ex following through on a promise is fairly low. You know, it's just fairly low. I just see, you know, I guess nobody calls this show and says, Oh, my ex followed through. That doesn't happen. We get only the other ones. Yeah. But, but yeah, I just wanted to let you know, Dave. No, I mean, cause I guess some of them do, but I mean, we just don't run into it.

And thank God for, you know, that she, I hate to say that cause it was her mom's passing. So I didn't mean that, but just that she's in the situation she's in, because that's another reason why we say don't take on debt because life happens. And they had this plan and then ended up getting divorced in the middle of school. And if this inheritance hadn't come, this daughter, you know, if it's a parent plus loan, I'm like, yeah, both could be on the hook. But also, I don't know what the daughter signed. I don't know how they did the student loan agreement, but.

No, the daughter signed up for it. Yeah.

She could have been 80.. I mean, she would have been 80 grand, thinking like, we'll, we'll take care of it too. So that's the asterisk too of this story is that you're taking on risk always, always, always, always, when you take on this debt. And life rarely plays out exactly how we have it planned out.

Like never.

Yeah. So it's, it's just that, that word of caution, but, Katie, I'm so sorry. That's a hard season, Katie, you know, losing your mom, the divorce in the middle of it. And it's just, that's hard. That's really hard. But this is a redeeming, beautiful thing that you'll be able to do from a financial aspect, to be wise with. So I'm glad you called in.

Very good. Very cool. Good stuff. So, yeah, the, the cool thing about student loans is, is they shouldn't be there at all.

Yeah, it's going to be a fun weekend. It's always fun. Our events are always enjoyable. And we'll all be there. And I like that. it's so money focused the whole weekend, which will be great.

Yeah, you'll laugh. You'll cry. You can bring that spouse that needs to be converted or that friend that thinks you're crazy, and they will leave being as crazy as you. Yeah, that can happen. Daniel's with us in Tallahassee. Hi, Daniel. Welcome to the Ramsey Show.

Hey, Dave, Rachel, how are you guys doing?

Better than we deserve, sir. What's up?

All right, just a quick question. So, basically, after some convincing, I did get my wife on board. So we are both on board when it comes to attacking our debt. I want to be Gonzalo and Sanson, and I can borrow the language you guys use. She wants to be more on the intentional side, while still taking care of things that she thinks are still important. So I'm the grumpy guy who says I don't want to do nothing. No more Christmas, no more gifts, no more nothing.

Did you say no more Christmas?

Well, no more. Yes.

Well, no wonder you're unpopular, Grinch.

Yeah, I am the Grinch. Only because I'm like, how can we strip down to the bare minimum?

I'll go with that. But, I mean, you start with Christmas? I mean, I'm cutting some of your stuff before we're getting to Christmas, buddy. Oh, my gosh. No wonder she's not enthused about you.

So my question, well, I guess I introduced her to, we both, I introduced her to sinking funds. And now we, it seems like we're starting to have a growing amount of sinking funds so we can stop dealing with things as they come up. And it's helped. We have the money when we need it, but I feel like the sinking funds are taking a little too much of the margin. I would like to attack the debt at a more aggressive speed. So I don't know how to compromise with her. And we're running at different paces here, it seems like.

What are the sinking funds for?

Let me pull up every dollar, just to give a few examples here.

She's saying every dollar. Okay, keep going. Sorry, go ahead.

For instance, the homeschool program every year comes around around August, September. We pay for that. We used to go out to debt for that, but we stopped doing that since we stopped this whole thing.

How is that a waste?

It's not a waste. Some of these are not a waste.

Okay, we need a, for instance. that's one of these things that's bothering you.

Give us a waste.

That one's not bothering you. If it is, you've got an issue.

My daughter's birthday. It's coming up. This is so bad.

How much are we planning to spend on the daughter's birthday?

We're setting aside about $100 a month.

You're going to spend $1,200 on a birthday party?

No, no, no. It's about $500.. It's coming in August.

So $250 a kid.

No, I feel like we're starting to all add up.

Well, they're adding up because they're real. I mean, that food thing, it adds up.

Yeah, because I think, Daniel, there could be an instance of like, oh my gosh, life is expensive. We've all just been charging everything. You said the homeschool stuff, we just go into debt for it. You almost just delayed everything. And now, when you're paying for stuff so upfront, it is going to feel like, yeah, that there is more.

Yeah, you're actually admitting what's going on now by doing a budget with sinking funds, and you weren't before.

Unless it's a vacation, right? Gazelle Intents, I would say...

We don't do vacations.

Let's pause 12 months on the vacation.

Eating out.

We're going to pause. Like a couple of things to do. But the reality of life and what life costs may be the thing that's like, oh, crap. This is a lot. And when we're cash flowing, everything, like what we teach, you really face, oh my gosh, our life is eating up so much of our money because life is expensive. So there could be stuff that you guys tweak here or there.

Yeah. So, Danielle, it sounds like that.

Yeah. Right.

You didn't tell me you spent $12,000 or $12,000.. If you just said $1,200, I'd probably say, well, it's a bit much. But, yeah. But the... And it depends on the age of the kid and all that kind of stuff, too. I mean, if you got twin one-year-olds, they don't even know you're doing this. So you're doing it for you. So then that's a different thing. So, you know, but if they're twin 10-year-olds, they definitely know. They know everything about what's happening there. And I guess, a visit to the Magic Mouse, Mr. Cheesy. What's his name? Chuckie Cheesy. Chuckie Cheesy. Yeah. The Magic Mouse. I guess that's probably a couple of hundred bucks.

I was like, Mickey Mouse?

I guess. No, I think I'm thinking Chuckie's probably a couple of hundred bucks to go down there.

I mean, per kid. Yeah. I mean, those birthday parties at those places, you're paying per kid. Yeah. Yeah. So, I mean, the packages, it can be expensive. I mean, you've had them down there.

I don't know what they cost. Yeah. I've been down there when it happened.

It's probably 20 bucks a kid, 30 bucks a kid for the unlimited stuff.

Me and the mouse are in there.

We've drugged, I have to. Chuckie Cheese, indoor trampoline parks. There's been a lot of great birthday parties.

Yeah.

A lot of great birthday parties.

There's not enough disinfectant in the world.

There are some. Gross.

It's full of kids.

Yeah. Full of kids. Little sweaty kids. All over. Yeah. It's just nasty.

So, yeah. I would say, if you're getting out of debt, the birthday party is probably at home. You're ordering some pizza, having some friends over, and calling it a day. I mean, like, you know what I mean? If you're going to go just like the simple routes. Yeah. And it can be done.

Like, it's, that's possible. But the thing here, Daniel, I think, is, as we talk through this with you, everything you brought to us were things that were not out of bounds. And so, it didn't sound like your wife with the sinking funds is, like, destroying your little plan. It's more like reality is destroying your little plan and dampering your enthusiasm.

And it's actually a really great point. I hadn't thought about that. But for a lot of people that are starting this process, when you say no debt so that we can pay off debt, then those expenses are real. It's not this, like, oh, we can just worry about that later.

It's like real money now.

Kick the can down the, yeah, down the road. But then that's the power, too, though, to his point, is that's when you can cut some of those things. You're like, oh, my gosh, what were we paying for that? Maybe there's a cheaper homeschool program or whatever, right? Like, that's when you actually start caring about the expenses, because you're seeing it in real time and in real life.

Rachel Cruz, Ramsey personality, is my co-host. today. In the lobby of Ramsey Solutions is the Debt Free Stage. On the Debt Free Stage is Ruben and Kirsten. Hi, guys. How are you? We're awesome. Hey, Dave. Welcome. Good to have you. Good to have you. So where do you guys live? Colorado Springs, Colorado. Colorado. All right. Well, welcome to Nashville. Good to have you. And how much debt have you two paid off? We paid off $270,000 in five years. Wow. Nice. Good for you. And your range of income during that time? We started at $72,000 and then went up to $112,000.. Very good. Very good. What do you do for a living? We both work in the finance department of a software supply chain management company. Okay.

Same place, same company?

Yep.

That's fun. Did you guys meet there?

We actually met at a different location and we worked together the entire time. Yeah. We've known each other just different places.

That's awesome. So great.

So how long have you been married? It'll be six years next month. So, right after marriage, boom, boom, we're getting out of debt. Yep. Five years, game on. What kind of debt was the $270,000?? This was our house. You paid off your house?

Oh, my gosh.

Looking at a couple of weirdos. I love it. You're so weird. What's this house worth? Probably about $425,000.. I love it. And how old are you two weirdos? 30.. 30 years old. No, I'm 31.. He's 35. Okay.

Close enough.

Close enough.

Reuben's trying to get some youth.

Good move, Reuben. Well played. Yeah. I like it. Hey, very good, guys.

In your early 30s, that's amazing.

So you get married, and is this the only debt you've been working on, or did you pay off others before that? So it started about eight years ago, but we cash flowed. my bachelor's degree, our wedding, our honeymoon to Alaska, just saved like crazy. And then, during the payoff, we financed or not financed, sorry, we paid off about $50,000 in home renovations. Yeah, and paid $270,000.. Yes. Way to go, guys. What in the world happened to you? all that made you so weird? This is wonderful. Like a year after marriage, it's game on on the house. Yeah, basically started for me about eight years ago, driving home from work in a job that I hated and just really wasn't happy about who I was and where I was at in life.

That's amazing. And that's it. I'm like, that's the key for so many people. It's that awakening of like, oh, my gosh, I can do this. Like I can wake up tomorrow and make different decisions. It's so empowering. So you guys had babies during this time. How old are the kids?

Isaac is two and Ruby is seven months.

Okay, okay. So you all have little ones, little ones. So what was the hardest part of this? I mean, this is a lot of money, guys, that you paid off, a lot of, I'm sure, extra work and everything. But, yeah, what was difficult?

You know, it could have been really easy to divert the plan. or, you know, just make other decisions. We've had hail-damaged cars our pretty much whole lives, you know. We just don't care. But it could have been really easy to divert, but we had a better purpose and we knew we were bringing kids into the world at some point. Was it worth it? Oh, it was so worth it. Absolutely. Who made fun of you? We got called crazy a lot. But nothing like down-putting. that was just more poking fun and it encouraged us just in a different way.

Yeah, okay. The jobs and cheerleaders, people that were supporting.

Yeah, definitely. Yeah, good, good. And another thing that was kind of hard for us, I guess, is I had had a townhome in like 2015 and it was super cheap and it was not in the best part of the Springs and there was a lot of crime, activity, drive-bys across the street, you know, somebody had gotten killed, shot and killed. So people were like, you need to get out of there. And we're like, no, we're doing this for a reason. You know, this is for a purpose. So that was, yeah.

Yeah, the location. And then you got the house, though, so you moved out of that.

Yeah, we just knew that we wanted to wait until after we were married and do things in the right way. Yeah, that was great. We stayed there longer than we should have, but we did. We're still here. We weren't shot. So there you go.

Oh, you guys, that's incredible.

I don't know if I've ever heard anybody say that so pleasantly. We're still here and we didn't get shot. Way to go, Kirsten. I love it. Good for you guys. Way to go, you guys. I'm so proud of you. I would imagine your mom and dad are jumping up and down proud, aren't they, Ruben? Oh, man, my mom passed away in 2008,, so, you know, part of that was she did have a $30,000 in life insurance that we were able to put down on the house that we're in now. So to honor her that way has been awesome. Yeah.

It's incredible. So great, you guys. So great. So what would you say to people? the key of getting out of debt is?

For us, when we initially got the mortgage, we put the extra principal when we did the paperwork. So there was that gap. for us. The extra payment was automatically coming out, so we just got used to that being our mortgage payment, even though it was more than double, and it put that gap. So you couldn't make any real impulse decisions that would take you off of your goal.

Yeah, yeah, that's great. That's a smart way of doing it, for sure.

Automate your discipline. I like that.

Just keep it going.

That's a good plan. I used to do that to myself all the time, until I had natural discipline. I put stuff on auto, everything, so it just automatically happened, and I went, oh, now I have to live on what's left, because I put all that money in a mutual fund. It's like, wow, that's very cool. Good for you all. Well done. Very well done. Congratulations. All right. You want to bring Isaac and Ruby up for the debt-free scream? Isaac. Come on.

So sweet. Oh, my gosh, she's so cute. Seven months.

Seven months. She's going to get scared to death when her mom and dad yell at her.

I hope so. The babies, yeah, they always get a little frightened with the screams. So great.

I love it. All right, Reuben and Kirsten, Isaac and Ruby's heroes. They've changed their family tree. Early 30s with a paid-for house in Colorado Springs. Meanwhile, America sits around in some places whining that it can't be done. These two prove that it is done every day. This is what you call millennials. This is what you call millennials that win, and we see them all the time. Or Gen Z. Reuben and Kirsten, paid-for house, Colorado Springs, 270 paid off in five years, making 72 to 172..

Count it down.

Let's hear a debt-free scream. Three, two, one.

Debt-free! Yay!

As predicted, scared poor Ruby to death.

I think Isaac got a little scared too. Jumped.

There's a lot going on there. That's so great.

Amazing.

Yeah, so for every time I hear that you and I on the Ramsey show and Jade and George and we're out of touch and we don't know what the real world is today, and you're speaking boomer language and all that kind of stuff, all these negative things that are out there, then we meet people like them.

Yep, Kirsten and Reuben. I know.

Not just purchased a home, but they paid it off in five years, in their 31 years.

Yeah, and I think it was making 112, not 172.. 72 to 112..

Oh, I wrote that down. It looked like a seven.

No, no, but I'm saying, you know, so it's...

It's not like they're making 300K.

Right, right, exactly. I mean, it's amazing, and it is. It's the discipline and it's choosing. And now it's the whole idea that now, oh my gosh, there's no payments. There's no payments, but they did it. Well, Reuben said, y'all could replay that monologue over and over on loop, because it's true. I'm like... You have to change you. Yeah, you take responsibility, and it's amazing.

Yeah, he said, the guy in my mirror had to change. And he did. I'm so proud of him. What a hero. And he's got... He changed his kids' lives.

Yes, and Kirsten, just killing it. I mean, amazing.

Well done. Well done. This is the Ramsey Show.

Hello.

Hi.

Here we go. So, I'm about to be divorced. The income disparity between my wife and I is pretty great, so I have a large amount coming my way in a quadro, and alimony coming my way, three years of bonus money of her coming my way. We're going to be selling a home here soon, and I'll get about $100K out of that. I want to get myself into a house and have it paid for in the next few years. I don't have any retirement or anything set up yet. I'm 46.. My income is growing rapidly. I'm a brand-new barber. I'll make about $30,000 this year, but I believe every year probably go up about $10K.

Okay.

Where am I going with this? What do I do with this quadro? I'm going to have... A quadro's got to be put into an IRA.

You've got to leave it alone. If you cash that out, you're going to get penalized in tax. You've got to leave it alone.

Just pretend. it doesn't exist.

Exactly. You need to get with a SmartVestor Pro at RamseySolutions.com and find somebody to sit down with, and they can help you do the rollover, and you can move that into your own personal IRA and some mutual funds and have no taxes on it. But if you pull it out and screw with it, you're going to have taxes on it, so leave it alone, because it's in her... All it is is a section of her 401K being sliced off for you. Yeah. That's all it is.

I have thought about using that for a down payment at home.

No. You're getting $100 out of the home, and you're getting what other money? You said you're getting a couple of bonuses and other stuff. How much money total?

Yes.

Not counting the quadro.

Four years of alimony, $875 a month. In three years, 25% of her bonus, it'll be about $8,000 to $10,000 each year.

Oh, it's not all in a lump sum?

No.

The only lump sum that we can touch, then, is $100,000..

So you're getting $8,700 a month?

I'll be getting about $1,600 a month in alimony and child support.

Oh, okay, okay, okay. I got you. Okay.

Yeah. Yeah. Okay.

So it's broken up over four years, and my income will be increasing over that time as well. Yeah.

So I'm going to be looking at putting $100,000 down on a house. That's what you've got.

Yeah. And just ignore that quadro.

Yeah. You've got to. Because it'd be like taking the money out at 30% interest.

Yeah, because I'll just get taxed.

You're going to get taxed and a 10% penalty. You're going to get hammered. So you leave that puppy alone and just go do your house of some kind with $100,000 down, based on the current income that you've got. And you can count palimony. You can count child support. I mean, you can count all of that in terms of as long as it's going to continue. And that'll offset the fact that your income hasn't gone up, or you can wait a year and let your income come up. And then you've got a story to tell to a mortgage company showing tax returns as a new barber that made this, and then I made this, and then I made this, and here's a trend line. And so it's reasonable to qualify you based on those things. You've got to have two years tax returns as a new self-employed person.

Taylor says, I'm currently 12 weeks pregnant with a baby girl from my boyfriend. I recently lost a loved one who left me a large inheritance. I have $40,000 of debt and my boyfriend is debt-free. Do I take this inheritance and put towards my debt and then take what's left and put down 20% on a house? My boyfriend and I plan on getting married, but for some reason he's really against getting married before I have the baby.

That's weird.

Okay, well, I don't know why that would be the case, but yeah, I mean, that's what I would do. Yeah, I would take the inheritance. I'd pay off your debt. Taylor, I would keep everything so separate. If you bought a house, I would buy it on what you make, your income, your life. I mean, I would be very, very hesitant to put him on anything. I wouldn't put him on anything.

Not hesitant.

Just don't do it. Yeah, just don't do it. And I probably wouldn't do anything until the baby comes. I mean, honestly, I don't think I would make a big decision.

No, pay off your debt.

Pay off your debt, but I wouldn't buy a house pregnant. I would continue to rent, maybe rent for the next year or two. Then hopefully you guys get married, then, after you have the baby. And then you guys together, after you're married, look and say, okay, let's purchase a house. But while you're pregnant, I wouldn't take some of this inheritance and put a down payment. I would rent, be where you are for one to two years, and then from there see what happens relationally, if that changes, and then even just financially at that point.

Yeah.

Okay, careful.

Called shotgun wedding.

Oh, yeah.

Which you got a baby on the way, buddy, you show up, or daddy's going to bring a shotgun and help you show up.

Oh, my gosh.

That's what that means. Does it really? That's where that comes from. That's where that comes from. I'm going to bring my shotgun, and, by God, you're going to marry her.

I just thought you meant a fast money. Okay, yes.

No, this is like disturbing. But I agree.

Well, I agree. that's weird, that he's like really against getting married.

It's fast backwards.

No, no, no. So I'm like.

Right? No, I wouldn't.

No, I would not say just go, get married right now if he's not a great guy.

For some reason, he doesn't, you know, I'm going to. Okay. So, yeah, don't put this guy's name on anything until he is a husband. And period. Yeah. Under any circumstances. Don't put anybody you're not married to, period. No matter how sweet and wonderful they are, their name on your freaking house. You get yourself in a disaster.

How are you? Good. How are you? Thank you for taking the call. Sure. So I've got a bet with my wife on what we should do with our side hustle money.

Your wife has been listening to the show and she set you up.

Yeah. She said that we need to just pay off the house.

She set you up. I hope you didn't bet much.

No.

John, what we teach and have the entire time we've been on there for 30 years is that you pay off your house as fast as possible, regardless of the interest rate beyond the 15%.

Not one.

We've never met a millionaire who really did this. We've met a lot of people who have a theory and discuss it the way you're discussing it, because you're a math guy like me and I immediately go to where you're going to, because that's how my math brain works. You're looking at the spread. But what your spread doesn't take into consideration is risk. The two elements of someone getting their first one to five million is typically their 401k being well-funded, which is 15% of your income going in. You're doing that in a paid-for house. You're on track if you follow her plan to be a millionaire faster than if we follow your plan based on the data that we've studied of actual millionaires, not with mathematical theory. Because the math theory of what you're bringing up is reasonable, but the actual facts are when you pay off your house, other stuff changes in your life and you tend to excel in your career and do other things.

You can invest the mortgage payment.

Yeah.

Once you don't have one.

Yeah, you can invest the mortgage payment like crazy and you go into overdrive. This is the Ramsey Show.

Hi, Dave. I'm doing great. How about yourself?

Better than I deserve. What's up?

Well, first, I just want to tell you really quick. I met my husband one of the first dates we had. He told me that his dad raised him with the Bible in one hand and a Dave Ramsey book in the other. That's how I kind of was introduced to you, so I thought that'd be funny to kind of share.

That's a little scary, actually.

Cool. Well, it put us on some good paths here. Good.

How can we help?

Today, I'm calling. I wanted to ask you, as you both know, daycare costs are really high. We are expecting our second child in August, which we're really excited about. We both work my husband and I full-time, and so daycare is our option in life. right now. When it comes to trying to figure out in our budget—we're on Baby Step 4, 5, 6—kind of like how to best budget for the upcoming expensive daycare, we are kind of at a loss with—we can't afford it. That's not an issue, but where does it come out of? We're trying to figure out with our budget, does it maybe impact us putting—right now, we are putting 15% each into retirement. For a season, until my older son can go to a less expensive daycare, we put maybe 10% into retirement each, so we have a little bit more room to give to the daycare for our second child when he goes to daycare, or kind of trying to figure that out.

What's your household income?

We currently make $121 a year.

Okay, so 15% is $20,000.. Okay.

Yeah.

And daycare is how much?

Right now, we pay $311 a week for our son, so that's roughly, depending on the month, it could be between $1,500 and $1,200,.

Yeah, so it'll be $3,000 a month. is what you guys will be paying in daycare. Yeah. And how much do you make a year?

So I currently make $55 a year, and my husband makes, I think when I broke it down, it's $65 a year.

Oh, that's right. You said $121 a household. Yep. Sorry, I had that number. Okay.

That's great.

Yeah, do you guys have, Claire, do you guys have margin in your budget when you budget month to month? Do you have money that you're putting away in savings just for other things? Is there, what does your budget look like?

Yeah, so typically in a month, we put towards retirement and some other savings about $1,300, and then extra, we have leftover for gas. We donate to our church, groceries, household items, utensils, toilet paper, things like that. So we do have, we budget as closely as we can, with everything, but just trying to figure out well before a baby comes and everything else, how much more do we save, and then that only lasts us for so long. And again, this is only for a short period of time, because our son could go to a different daycare when he's four, the oldest, and it would be a third of the cost. So it's not going to be forever that we would be in this predicament, but just for a short period of time, we're just going to be at a higher daycare cost.

Yeah, yeah.

For $30,000 a year, I'm going to start looking at alternatives too. I'm not going to just accept that as the only possible method.

Yeah, and that's something I started to look into as well. The one other option we discussed was not contributing to the 529 plan for a little while for our son because my mom...

No, I'm talking about other daycare options.

Yes, that too. We have looked at other daycare options.

$30,000..

Yeah, but $311 a week, I mean, that's pretty standard. I mean, that's not unreasonable. That's not an unreasonable amount.

But it gives me a lot of thoughts. when I start talking about $30,000 a year. I can start thinking about a lot of different things then. But yeah, I would look at all that. And I'm with Rachel.

I would do 529 before retirement.

Yeah, I would. I agree. Okay, great.

Thank you so much.

I'd pull that off. And then I really would, honestly, look at alternatives on the daycare, because it's such an onerous amount as a percentage of your budget that they have priced themselves out of somebody who makes $120,000 a year. Yeah, they price themselves out of it. And so you're not far from affording a nanny for $30,000.. I mean, not far at all. So, I mean, it can be done. I start thinking about it differently. It's kind of like if you're going to charge me $120,000 a year for a nursing home, for $120,000 a year, I can hire a full-time in-house butler.

Yeah, you can't do everything.

And buy a reclining bed.

Yes, I know, I know. But I know her feel, and I've done the research, even locally. I know. Like the moms that work here at Ramsey. I know. It is a crazy expense. And then you do. For so many women, you ask the question, is it even worth it, right? That's right. Because it's the $20,000 extra. So instead of making $121,000, we make $100,000.. Is that worth it? Right. I mean, you have to play out all these different scenarios. But it does. This part, though, it makes me, as a mom with little ones, it is. It sucks because they have trapped us. in a sense. It can feel like that with the prices. They go up as people.

Well, there's a supply-demand curve. And it keeps going, going, going. And people are paying it. So they're open.

They stay open. They're paying it.

Well, when price raises to a certain point, the volume comes down. That's supply-demand. And so they're reaching the top of this. Because this has been a discussion like 10 times in the last year.

Well, yeah. And it's like 37%. It's risen since 2020.. I'm like, it's crazy. It is crazy. So they do. They will end up. And that's what we talked to so many women that just end up saying, hey, I'll stay home, right? Like if you have three kids, right? I mean, you start to actually see that. I'm working 40 hours.

And after taxes and daycare, I net $5,000.. Right. Screw that. No, thank you. That doesn't make sense. And she's almost there. She's almost there. Not quite with her numbers.

Well, and the four-year-old will go to a less expensive school. Right.

So you've got to light at the end of the tunnel with that. Exactly.

I know. But that's so hard, Claire. So hard. I hope that's helpful.

Yeah. Thanks for calling. This is the Ramsey Show.

Hey, good folks. Dr. John Deloney, here. Don't you think life is too short to hate Mondays? Listen, you're worth loving the work you do and where you do it. So guess what? Ramsey Solutions is hiring. If you're ready to join an amazing team. that's all about changing lives and spreading hope, we want to see your application. Right now, we're hiring for technology, sales, marketing, writing, copy editing, and creative roles. Check out all our job postings at RamseySolutions.com slash careers. That's RamseySolutions.com slash careers.

Rachel Cruz, Ramsey personality, is my co-host today. The best way to make the most of your money is by creating and sticking to a monthly plan. People that win plan to win, and that includes money, and it's called a budget. Your budget should give every dollar an assignment, every dollar a mission, every dollar a name before the month begins, and you and your spouse agree on it. if you're married. Every dollar is our budgeting app. The world's best budgeting app. One of the largest these days. Millions of people joining in the last just little. It's crazy, y'all. Thank you so much, by the way. It's an easy-to-use app that fits into your busy lifestyle. You and your spouse can both have access to it, see what's going on. You can keep a pulse on your spending, make progress on your money goals. Download Every Dollar for free in the App Store or Google Play today. And you can even get it at EveryDollar online, at EveryDollar.com, just for your desktop if you want. Brianna is with us in Columbus, Ohio. Hi, Brianna. How are you?