Choose Peace Over Payments

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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 amazing relationships. I'm George Campbell, your host, this segment, and this is your show, America, so give me a call at 888-825-5225.. We'll talk about your life and your money and whatever's on your mind, whatever ails you. We got some fun news last night. My new book, Breaking Free from Broke, is officially a number one national bestseller.

Hey, I had a question about paying off my debt in cash, and I want you guys to try to convince me to pay it off in cash when I make more money in interest, with that cash being in a high-yield savings account, than I do on the interest rate on the loan.

Ooh, so you want a spirited debate. here is what you're looking for, kind of a prove me wrong. Yeah. Okay. Well, I'll see how far I can get.

A little bit, I guess you could say.

How much debt do you have?

So I have $14,000 left on, it was an initial $25,000 personal loan at 2.

Okay.

Yes.

And how much money do you have in savings?

I have about $34,000 in cash, $50,000 in stocks and mutual funds, and then about $5,000 in a 401k.

All right. So what are your goals?

My goal is in about a year from now, 12 to 18 months to purchase the home.

Okay. And so is that what the cash is for and the stocks? Would you cash the stocks out to use as a down payment?

Probably not. I would just keep saving. I'm saving a lot of money every month now.

On the cash side?

On the cash side. So I would continue to do that until I had a big down payment to put down.

And what's your income?

I make about $120,000.

Awesome. How old are you?

24.

Dude, you're crushing it. What are you doing for work?

I do engineering.

Way to go. Great field. And that's the top, in our millionaire study, that was the top career, was engineers. And it sounds like you're on the way. So you want to buy a home.

It was just a career starter loan through USAA that I got from being in the Air Force a while ago.

Cool. All right. So what's the payment on this personal loan right now?

It's $468 a month.

Now, if you freed that up, let's say you paid off, you have the $34,000 in cash. You pay off the $14,000.. That leaves you with $20,000 in cash, and you free up $468..

So I've crunched the numbers a little bit. And if you don't mind, I'll go through them. Sure. Stop me if I get too in-depth or if you have any questions.

So you're saying either way, you get to the same result.

Exactly.

So why not pay off the debt? You've burned more brain calories figuring this out. You make too much money to be spending this much time nerding out.

Yeah, that is true.

This is living in your head, rent-free, regardless of the interest rate. You're too smart and successful to even be playing around with this at this point. Because if this really worked, right, Joey, you would just go take out as much debt as possible at $299 and put it in high-yield savings, wouldn't you?

Absolutely.

So why don't you go get some more debt?

I'm not sure if that's an option. I don't know if interest rates for personal loans can be got at 3% now.

But the theory is, if you could get a loan at $4.

Correct.

And I'm playing a different game. That's checkers. I'm over here playing chess. When you don't have any debt, you don't have any payments, it changes the decisions you make. It changes how many brain calories are used to make these calculations.

The only thing, and that, you know, that is the obvious answer, but the only thing is that I really plan to buy the house in 12 to 18 months. So I would, you know, in 12 months, have more of a need for the cash than I would just saving up more money for the next 33 months, which is the...

So you wouldn't actually make that spread in the end?

I would be right. I would only make that spread if I kept investing $468 a month for the next 33 months into that high yield savings account.

Well, here's the other thing to think about, Joey, that high yield savings account rate can change at any time. Your interest rate is fixed. And so I think interest rates will start going down as things start to cool. And so, truthfully, you're going to be fine either way. It was a fun debate, but goodness, gracious, the amount of time we spent here, we could have just went and made 600 bucks and called it a day.

Hey, thank you for having me.

Sure. How can I help today?

So my question is, I have about $45,000 in credit card debt split between two different cards. And oddly enough, the amounts are even. And so I've kind of been having trouble with the plan to really pay it off. So I'm not really sure which method would be best to use, like either the Snowball or Avalanche. I'm not sure.

Oof. Are these like a retail card?

Yeah, it's really high. One of them's a Citibank card, like a cash back card. And then my other one's with Wells Fargo.

Ouch. And are they both at 26.29?. What are the two interest rates?

The Wells Fargo one's at about 20%.

Okay. I mean, because the balances are... If the balances are exactly the same, you can just attack the one with the higher interest, since there's really no difference here. You're going to feel the progress knocking them down. either way.

No, the payments are not the same. They're a little bit different.

What's the difference in payments?

The Citi card's around higher end of 900 a month, and then the Wells one's like 550.

Okay. I wonder if you plug this into our debt snowball calculator, it may tell you which one would get knocked down faster if you were throwing extra money at it. And that might help you make this decision and get you out of this paralysis mode. Okay. Because the key here is, you want to knock down that principal as fast as possible.

Yeah, exactly. Because I've been trying to double the payment each month, and actually my goal is to try to put at least 2,000 to 3,000 towards it, but it's barely making a dent, I feel like.

That's the problem with these high interest rates. The higher the rate, the slower it's going to go, because that interest is just killing you. So what other debt do you have?

Really no other debt. That's it. I own my car. I have no student loans. I own my house.

Do you have any savings?

I have. So that's the problem. I've been trying to put all my money, thousands, into just paying off these cards. I have about $2,500 in a mini-emergency fund, but I don't have a huge savings because I'm just throwing everything at these debts.

Good. Baby step one is a $1,000 starter emergency fund. If you have that set aside and then you have enough to cover your bills for the month, everything else needs to get thrown at that one credit card while making minimum payments on the other.

Right. Okay.

What did you spend the $45,000 on in these cards?

So last year I had a bunch of some medical issues that unfortunately wasn't really covered by insurance, and then I own an older home, so I had to replace the windows and doors in the home. They were starting to leak water. I had some moisture damage, so I had a lot of house things that I ended up spending money on. Probably should have waited on them. They weren't dire, but I wanted to get them taken care of.

But when you have the card, you're like, why not? Yeah, exactly. Have you cut up these cards already?

Now I've learned my lesson.

Huh? Have you cut up the cards?

No, I haven't yet.

I think it's time. I think it's time we cut up the cards, close the account, and then we start paying off these balances. You need a line in the sand where you go, no more. Morgan works too hard to be this broke, and these card companies have not been a blessing to me thus far, and they're only going to encourage me to make bad decisions with the guise of cashback.

Right. Yeah, and I even tried to call them to ask if they could lower the APR, and they said no. I just wanted to ask. You never know.

I mean, we've heard stories where people just call and say, hey, I'm struggling to make this payment. Can you lower the interest rate? And they'll just do it. So you can fight them and keep doing that and see if that's going to help, but truly your best bet is just working your tail off and knocking this thing out as much as you can. So what is your income?

I earn $113,000 a year.

Good news.

Yeah. So biweekly, I'm getting about $3,000 biweekly, and I also work a part-time job that I get about an extra $1,000 a month at.

Great. So we're talking about 7K coming in take-home? Yep. Yeah. Great.

And so.

Are you investing at all right now?

No, I was. I did have stock, but I sold it. I actually have about $187,000 in a 401k Roth IRA.

Good. Well, leave that alone, but make sure you've paused all investing, all contributions until this debt is paid off. And that's going to light another fire under you to get out of debt faster, because you want to get back to investing. You're good at that. You're good at saving money, but right now we've got to pay off some debt and clean up this mess.

No, I'm not.

Well, it starts today. I'm going to gift you one year of every dollar premium. And once you go in there, there's a paycheck planning tool with the premium version. There's a financial roadmap that will show you when you're going to hit these milestones. And, of course, the budgeting app itself, which is going to help you lay out a game plan for every single dollar coming in.

Hey, thanks for taking my call.

Sure. How can I help today?

So, basically, I'm in a situation now where the last two years I started to make more money than what I've made ever previously. I'm 32, I'm renting right now. I grossed about $120,000 a year and I net about $75,000 after my nickel and 401k expenses. And I guess my situation right now is I have about $6,000 in credit card debt spread across three cards. The interest rates on them are like 29%.

Oh, no.

Yeah.

Okay. Well, Lauren, you're doing a lot of good things, you're just doing them all at once and you're not going to make progress that way. And so you said, you told me you're investing into your 401k. That's a good thing, but now's not the time because we have a pile of debt to clean up. You told me you want to buy a house.

No. Honestly, I have about $3,000 in a high yield savings account right now, and that's really it. What are you contributing? Last year was the first year I made this type of money.

Okay. Awesome. Well, this is going to really help you get out of debt fast, because the good news is you make $120k and you have what, $16,000, $17,000 in debt?

I just upped it. I was 8% last year and I did 15% this year to try to help myself and, for the tax purpose of it, to lower my tax bracket.

Well, guess what? You're going to pause investing and it's going to free up $18,000 for you to attack this debt in one year, and you're going to be done probably in a few months if you do that. So I would highly recommend pause all investing, go scorched earth, take $1,000 and start knocking away at the IRS debt, then hit the credit cards, smallest to largest balance after the IRS debt, and you will be on your way. You'll be debt free in no time, but you've got to do one thing at a time, focused intensity. This is The Ramsey Show.

Yeah. And what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible. People that call in and their spouse has passed away suddenly and they don't have life insurance. When you have to think through, how am I going to pay my bills in the middle of all that grief? Like it's just, it is, it's terrible.

And it doesn't cost much, because Zander shops among a gazillion different companies. It doesn't cost much. You just have to admit that someday you're not going to be here. You got to say it out loud and you got to say, I'm going to say I love you to my family by taking care of them and taking the time to put this stuff in place. It's a Costco stinking pizza.

Tell the people, George.

On The Ramsey Show YouTube channel, we are going live after The Ramsey Show just for YouTube. And we're going to be hosting a live Q&A all about money and budgeting. We're going to have a special laptop that's visual. It's going to be pulling up every dollar. We're going to show you exactly how to get ahead with money, answering all of your questions.

in real time.

Yeah. So anything could happen. It's the first time we've ever done this, but you have to join us. Don't miss it. January 30th.

Hey, how you doing?

Great. How are you?

I'm all right. Hey, so my quick question is, how do you get out of a poverty mindset, man?

Are you in poverty?

No, but the mindset, you know, I was raised by a single mother, two kids, died in prison, my whole life, Section 8.

You're impressive, dude.

Man, I struggle, dude.

So you're doing great now. The struggle is real. But you still have that, it's always gnawing at. you, like this could all come crumbling down. What's the fear behind this?

Well, I mean, I've always, what's the word, man, I've been taught how to survive and not thrive.

So what's, you're motivated out of fear or, like scarcity, you're not motivated out of confidence.

Yeah, exactly.

It's not coming from a place of confidence.

Yeah, my wife is very concerned about it, you know, because we want to have a family and I want to better, you know, put confidence in our kids and put them on the right path and everything else. But it's hard to do that, parent that, when you don't believe it in yourself. That's right. So it's like, you know, I'm a pilot, I was in technician, I've been a technician for 10 years. now, 11 years, started at 11 bucks an hour, you know, now I'm in the 60s a year working flat rate.

So give an example, like, I hear what you're saying, but it also sounds like you're moving forward. Give me an example of how you feel it, holding you back today and in this moment, because I do think that when you grow up that way, or when you grow up with a set of beliefs and you're working very hard to shed out those beliefs, it's not just a light that flips on and flips off, right? It's more like, it's more like that old, you know, lawnmower, that you have to keep pulling the cord and pulling the cord before it gets started, right? You always have to kind of, like, remind yourself, like, what do I believe? Like, what's true?

I just see in debt every day.

How much debt do you have?

You know, I have 13 in tuition, three in a credit card, seven in a personal loan.

Okay. What else?

We bought it brand new. Our mortgage, we're at 200..

Okay, not bad. Anything else?

No, my toll bill, but there's no interest on it, but it's still a debt.

How much?

And I'm at 700 bucks on it, paying it.

And how much are you bringing home every single, you and your wife combined, what are y'all bringing home?

Mine varies, just because I'm a flight rate technician. So, I mean, I can work 80 and bill 120, or, like this winter, you work 90 and get paid for 70..

Okay.

My lowest has been a month is right at two.

To what?

And then my wife, two grand. And then that's the lowest.

What's the highest?

If you're busting your butt, what are you making? Yeah.

If I'm busting my butt, you know, my wife always busts her tail. I mean, we can easily do probably six or seven a month.

Okay. Six or 7,000.. So, I think that, you know, we can kind of have a therapy session and dig into your past and figure out what's going on, or we can just look at the math and give you a little bit of peace through the math, which is, if you guys are making $7,000 a month, are you guys on a budget? Because when I look at that number, I go, that's a lot of money there. There should be some margin to really make some headway on this debt.

Yeah, we're budgeting. My wife's better at it than I am. She actually paid off all her student loans last year after getting her master's degree.

Okay.

Are you guys doing this money stuff together?

Yeah, we are. And I just-.

You have one combined account?

Yeah, we do it because in our checking we do, and then we have a separate savings. And then with the business, I got a high interest shield on the business account.

That's right.

In my eyes, though, it's like, you know, that was my debt. I know she married into it, top of deal. We went through a lot. Like, we lost everything. a couple of years ago.

Listen, when you get married, I get it. I hear what you're saying. When we got married, my husband brought $230,000 of student loans into the mix, right? And I only had $34,000.. So the idea of feeling guilt and shame and feeling like, listen, this should only just be on me.

I guess I know, you know, to add to it, I mean, you know, the guilt side of it is just like, you know, I grew up on spam, baloney and stuff like that. And my wife's parents, you know, they did really well for themselves. They were able to put two kids through college, pay for it. I mean, they did really well, still are. And I just don't want to put my wife back on a poverty table, you know, something she's never really experienced.

But that's not poverty.

And Landon, I'm also going to send you a copy of my book, Breaking Free from Broke, to help you get out of those chains, man. You're changing your family tree. It's hard, but it's worth it. And it means you're going to be busting your butt for the next year or two to clean this mess up. You got to stop letting life just happen to you and going, well, we had to.

Get connected with better help too. You might need to talk to somebody. that'll help you.

This is the Ramsey show.

It is. But have you noticed that more and more people are going to social media for their, for their information.

That's true. Especially TikTok.

Yes. TikTok is big. Although I have to say, like, I don't spend a whole lot of time on TikTok. Instagram is my jam, but.

Well, can we be real? Because those on TikTok, no. Everyone dogging TikTok, because they're on Instagram reels. You're seeing the same videos just three weeks later.

Listen, you're not wrong.

You're like a Baptist church. You'll get there, but it's going to take you a little longer. You know?

What does that mean, George?

You know, it just takes them a little longer to get, get with the times, Jade. You know what I'm saying? Like they got a drum set, but it was about three years too late. You know?

Oh, well, okay.

They got the contemporary service, but all the young people have left already. You know what I mean? That's how, I grew up Arabic Baptist, so I can say that with pride.

La da, da, da, da.

It's the one moment. All right. Here's this article. I want to get your take on. Okay.

Yeah. Okay. Yeah.

So define loud budgeting for those that don't know.

Okay. So loud budgeting, this is me. in my own words. It's basically people coming on Instagram and sharing openly. They'll either openly share their actual budget or they'll share all the tips that they're using to spend less.

It's the social accountability, it seems, and it's flying in the face of, it's the opposite of quiet luxury. That's how it started. I think this guy, Lucas Battle, started this TikTok trend of loud budgeting, but it's pushing against this influencer consumerism pressure and it's people owning saying, I can't spend money on that.

Normalizing real money talk.

What's frustrating is that we're out here, we're talking about budgeting every day and people dog us for it, but then Gen Z makes a viral TikTok trend and now budgeting is cool again. It's like cash. Dave's like, get the envelope system. They're like, he's an out of touch boomer. and then it's like cash stuffing is in.

Listen, I say all the time, the most powerful thing that you can do for yourself and for others is start utilizing the word no and start saying out loud, literally out loud, in a confident voice. I'm not going to buy that because it's not on the budget. Like when I started doing that, that's when stuff started changing, and not only is it good for you because it's just, it's an exercise in choice, because you're saying, I'm not going to spend that. Not, I can't afford it and I'm not going to be able to get well ahead of you.

A lot of times people use it and there's shame, there's justification, and I'm telling my friends, it's not on the budget. And they go, oh, what a cheapskate. Instead, do it with a smile and say, hey guys, it's not in the budget for me to go out. Would you guys be okay coming over and we do a movie night? Right.

Or you put, you put on the other side of it, you put your, what your goal is. Like you say, you know what guys, I'm not going to, I'm trying to pay off debt. Yeah. I've decided I'm not going to brunch this weekend because I'm really trying to get my savings up. Not only does that reinforce your goal, but, like even psychology says, you get that hit of dopamine when you share your goals.

For too long, we're just letting our friends make stupid decisions. That's no friend.

That's not a good friend. I'm totally with that, George.

I like what this, this says in this article, um, suggests you should speak up about your financial situation and make spending decisions that support your goals and match your current budget and needs. That's right. That is a trend I can get behind. That's right. Ask yourself, are these spending decisions supporting my financial goals?

I like that. I like that. Listen, I love that. it has a new term. It's kind of like when TikTok came out with cash stuffing and they acted like they were the first ones to do that.

To invent the envelope system. Right. Your boy, Dave, he's been out here 30 years preaching it.

Listen, I feel like we've been preaching this same loud budgeting thing here at Ramsey for the last, I know, for Dave, 30 years. And for us, the length of time we've been here, and you just really have to be, what I would say is, I think that social media can be a great place to get advice, but you do need to be careful. I feel like I'm kind of shifting the conversation a little bit, but I think you have to be careful, because there is a lot on social media when it comes to money and advice and tips. that's like, I don't know about that. There's got to be method involved.

It works every time. Instead of telling people, well, you need to be investing, but also you need to be paying off your debt, but also you need to, it's like people can't make progress like that. And even worse, a lot of these financial creators out there are sponsored by the credit card companies, which is why they're telling you, here's how to maximize and here's the best card to get. and use my affiliate link. And I'm like, are you guys really falling for this?

But loud budgeting is good.

Tread with caution. Yeah, I'm a fan of this. I'm just sad we didn't get there first, Jade. How do we create the next viral financial trend on social media?

I think we were there first. Listen, I saw...

Are we too old?

No, I saw Rachel Cruz sharing real people's budgets. I know I've been on there sharing real budgets and sharing our own numbers. Like, listen, we're not late to the party, we started the party.

And we're here to stay. That's right. All right, Zachary, you're up next in Tampa, Florida. What's going on?

Hey guys, just to piggyback on what you just said, I've been debt free before I found Dave Ramsey, and when I found your show, it was finally someone who gets it, a group who gets it. They really get it.

I love it.

I just wish I had found you sooner. A lot of shortcuts.

Well, how old are you?

I'm 36.

Oh, you're plenty, young, man. People usually say that at like 65, so you've got plenty of time. What's going on?

Well, my girlfriend and I are in love. We're getting engaged soon and we're planning to get married. And we have, thank you, and we have some really exciting plans to both sell our homes. Well, she wants to keep her home, and that's why I'm calling. She wants to rent out her home and mine is paid off and hers still has a mortgage.

How much is the mortgage on hers?

Her mortgage, she owes almost $200 on it.

Okay.

And she bought it about three years ago in 21.

Okay. And you don't have a mortgage and she's saying, hey, why don't we rent this out? I'll come live at your place.

Well, she wants to sell my house and get a home in between Orlando and Tampa, because she's an attorney that services both of those, and it's just easier for her to do that.

And she wants to take out a mortgage to get it? Or you're going to just pay cash again?

I can't fathom being in debt again after not being in debt for so long. I just can't fathom doing it.

I'm guessing your girlfriend is really good at arguing.

This was her first house, and so she worked really hard and it's her baby and-.

Oh, poo-poo. It's a wooden box, man.

She worked hard for it.

She's about to rent it out to strangers. She doesn't care that much about it. Stranger's about to demolish that thing over time. And so if you're going to do this move, you got to pay cash for the next one. We are not carrying two mortgages around.

And honestly, if you're moving far enough away from that other rental, you need to consider selling that because you don't want to do that long distance landlord deal.

Listen, keep your blankie for emotional support, not a house. That's a different decision. I wish you guys the best in your journey. Marrying a lawyer, like I wouldn't even dare argue with my wife at that point. There's no debate there.

That's right.

Or international impact, Jade.

International impact, and speaking of the nations, I have to mention that you're national, number one national bestseller.

That is so kind.

I have to mention it, George, because the other day it wasn't number one, and then you were like, Jade, it is now number one.

Publishers Weekly hadn't put their list out yet, and we were number one in hardcover nonfiction. And number five overall, out of all books. So that was humbling, and I told them in the first segment of the show that I feel like a turtle on a fence post. The turtle didn't get there by itself. We have an amazing team here.

Your analogies are second to none.

Thank you. I try really hard. But thank you, Jade. It's been fun. And you just launched a book that was also a bestseller, with Money's Not a Math Problem, and it's making big impact.

It is making big impact.

People are changing their beliefs around budgeting and money, and that's the biggest part. It's the hardest part.

Listen, I feel like a wiener in a steakhouse, you know?

There it is. That's my other favorite. I know.

I was just setting.

It's an alley-oop right there. All right. Let's go to the phone lines. Mitchell joins us in Anaheim, California. Mitchell, what's going on?

Thanks for taking my call.

Sure.

So my problem is, or question is I'm trying to buy my first house. I'm 35 years old, married. Southern California is an expensive place, so it's hard to get started. My in-laws are offering to provide a down payment of $200,000 toward a $900,000 house. However, the down payment is not a gift.

Red flag. Red flags all over the play.

Yeah. I mean, if everything worked out financially, it would help us get started, obviously, you know, because right now we're paying $3,000 a month in rent.

Sure.

It's one of those scenarios where everything has to play out just perfectly in order for it to work and there not be anger or bitterness. or he said he was going to do this, or ooh-wee.

Yeah.

And so, I mean, I'm worried about, I mean, what happens when something breaks on the house? Who's paying for it? What happens when, you know, there's taxes due?

What happens when the house appreciates the $2 million and now they get $1 million? Yeah. And they're stealing your wealth?

Mm-hmm.

I don't like any of this, man.

Me either.

I don't do strings attached opportunities. Yeah. And so I would say that is so kind of you guys. Thank you. Right now we're just trying to buy our own house, our primary residence.

Yeah, definitely not. Definitely not. Listen, so how long is it going to take for you guys to save up a down payment? Let's start thinking about what it means for you.

Yeah, four or five years, hopefully, in that range.

And you have no debt with an emergency fund right now? Where are you guys at financially?

I have stocks, $150,000, cash, more, like $30,000.

Okay.

And no debt? My car debt, $20,000..

Okay, we're going to pay that off today. How would that sound? Yeah.

And I'm also interested in moving this money out of these stocks.

Is it just non-retirement and single stocks?

Exactly, yeah.

What if you just put it in like an index fund for the next five years?

Yeah, that's generally what it is in right now. It's in a couple different index funds.

Well, is it index funds or is it single stocks? Because George asked that question.

Index funds.

Okay. So it's spread around a fund of lots of stocks in one spot, right? Exactly. Okay, just checking. All right.

Okay. And you'll have $200,000 of your own in no time. I still think you might need more than that. What's your household income?

$250,000.

Okay, and you're going to be buying in the Anaheim area?

Yes.

Okay. So I would start setting a goal and saying, hey, we're going to buy something reasonable for our first home. The first home should always be the worst home you live in. No such thing as the dream home when it's your first. So don't try to aim too high.

What does $900,000 get you in Anaheim? Because? are you still shooting for the $900,000 mark? Or not anymore because the parents aren't involved?

With the parents involved, that's what we're shooting for. Without the parents, we'd probably knock $200,000 off that.

$700,000.

It's a townhome. Exactly. It's like a two-, three-bedroom townhome.

That's all you need. My first two homes were townhomes, and we have no regrets. And I think too many people poo-poo the non-single-family home because we wanted the big yard, and we wanted this, and we wanted these countertops and five bedrooms. And I'm like, it's just you guys and a dog. What do you need?

Climb the ladder one rung at a time.

And townhomes still appreciate in value. It's a beautiful thing. And there's less maintenance. Insurance is cheaper. So there's a lot of benefits to condos and townhomes there.

Probably not. I mean, we've been doing a couple thousand dollars a month here and there just to have a reserve fund.

What would it take for you to pay off the car today?

I mean, I'd like to have a rainy day fund of cash.

Well, let's put it in perspective. Let's put it in perspective. What's your car payment? And what are you putting towards it every month?

It's $550 a month.

So it's $550, and you said you're putting a little extra on it every month. If you paid it off, how much extra do you put towards it every month?

It's kind of just whatever extra we have. Give me a ballpark.

One or two thousand. So let's say $1,500..

Okay.

So if you paid it off today, you have now freed up $2,050 that you can put away every single month into your rainy day fund. Think how quickly you'll save money like that.

Nine months. You're done.

Yeah. Okay.

Just a little food for thought.

Yeah, I know. I'll talk to my wife and see if we can do that then.

I love it. Whose car is it?

Hers.

The plot thickens.

Well, I hope she goes with it. And make sure you present it in the right way. Not like, hey, I called the Ramsey show, and these dopes are telling me to pay off your car. I don't think it's a good idea. But what do you think?

Yeah, that's a good point.

You guys make $250,000.

Yeah, but it's true. Whatever advice we give people, they've got to ingest it and decide that this is what I believe too. Because if you're pitching it to your spouse and you're like, listen, these bozos told me to do, then you're never going to sell it, right? It's got to be your idea, not our idea.

Car loans are the number one wealth killer in my book. It's now surpassed student loans, Jade. It's a nightmare. Get out of it, Mitchell. You're too successful.

Listen, George, I have a groundbreaking idea for my presentation. No, I'm not going to tell you what it is, but I'm just letting the folks know it's going to be different.

We're going to break some ground, apparently. I don't doubt Jade. I never do, because I'd be on the wrong side of that. So join us. Total Money Makeover weekend, May 10th and 11th.

Hi. It's such a blessing to talk to both of you today. Thank you for taking my call. Absolutely. I have a HELOC.

Is this your only debt?

Yes.

It's your only debt. And so, technically, the way we look at it is like this. If the HELOC is more than 50% of your home, then it would go with Baby Step 6 when you pay your home off. But if yours is less, which it sounds like it is at $32,000, am I right? Yes.

How much do you make?

About $90,000 a year.

Awesome. So if you used the majority of the savings, it would knock down the HELOC to $5,000?.

Yes.

And then you could knock that $5,000 out within a few months, it sounds like.

Correct.

I like that plan. I don't know how long you plan on needing to work until, but I want you to retire with some dignity. And getting rid of your debt is going to be your best option. Do you still have a mortgage?

I do. My mortgage is about $140,000..

Okay. So if I'm Michelle, I'm going, hey, by 60, I want to be completely debt-free. What's the plan to do that? Right now, it's getting rid of this HELOC the next few months. Then it's restocking the emergency fund to six months.

Are you currently investing at all?

In my 401k at work. And I'm at 7%, so it's been, well, I just paused my, what's the word? Contribution? I just paused contributions, yeah. Good, good.

That frees up $525 a month.

I'm sorry?

That's going to free up over $500 a month to grow the HELOC.

Right. So that's why I paused it, starting February 1st, so I could put that towards it and then build up my emergency. That was my other question. My emergency fund, since I'm single, should that be three months? Should it be four months?

I like six months. Listen, after COVID, I am always in the camp of six months.

Always. No one ever regretted having the six months. And so, especially with you being single, single income, there's just more risk. When you have two people with a stable income, there's less risk. So you could lean towards three.

I also think you're at an advantage when you're single. Kids are out of the house. There's nobody else to get in the way of. what you're trying to do is what I'm trying to say. So I think that you can go as quickly as you want to go and get as intense as you want to get.

I love it. Thank you for the call. Up. next, we have Timothy in Washington, D.C. Timothy, welcome to The Ramsey Show.

Hi, George. How are you?

We are doing great, my friend. What's going on?

Well, first of all, I'm just going to tell you that I'm the blind guy that called into your show on the Smart Money Happy Hour, I think it was, or the special show you did when your book was released.

Oh, yes, the live stream Q&A we did. That's right. You were saying how great it is to have a wonderful audio book to listen to because you're unable to read the hardcover.

It is. It's wonderful. And the sound effects just added so much fun to it. I was laughing all the way through it, listening to it.

That means the world.

Here's my question. Thank you so much. So here's my question. So I'm a single man, 30 years old.

Great question, Timothy. Well, you've been doing great so far, and you're at that home stretch with the emergency fund, which puts you in that baby step 3B. So you're thinking through this the right way. Okay, the most you can save right now is $20K. If you've done that budget and you're going, hey, there's no other expense to cut, then the other side you need to go to is, how do I make more?

Absolutely. And I have been doing some – I'm a music teacher on the side outside of my federal government job. So I do do a little music teaching on the weekends. Problem is, I've had a hard time finding students. Now, one thing I did do is on my Facebook page.

Oh, you've got to be careful. Listen. Jump in some Facebook groups locally.

That's a great place to start, but in the meantime, hop on Instacart, man. Make you $1,000 extra a month. That's $12,000 a year. Add that with the $20,000 you're already saving. I mean that's how you make headway.

Yeah, and check out that Marge and His Breathing Room chapter in the audiobook, Timothy. That's going to help you. I've got lots of ideas for those side gigs for you there. This is The Ramsey Show.

Listen, George, before we go further, I, listen, I clowned myself on that last call. I clowned our guy, Timothy, because he's blind, and I suggested Instacart. That was horrible.

Oh, boy.

I dropped the ball. Timothy, my guy, I made a mistake. I'm sorry. We need to come up with some side hustles. that will work for you, because the truth is, Instacart doesn't work for everybody.

It was an innocent mistake, Jade. I'm sorry. We've all been there. And this show is live and on the Internet forever, so I apologize for that. That's just the nature of the beast around you.

Listen, y'all can come for me in the comments. I'm ready.

I deserve it. They've come at you for less stuff, so just be ready. So I'm going to just go through a list of things, not just for Timothy, but some ideas that anyone can do. And obviously, if you've got any kind of disability, it's going to add a challenging layer. Yeah, that's a fact.

That's true. That's a great one.

And if you can do that from your home, think about other things you can do from your home. There's a lot of at-home jobs out there. One thing that anyone can do is just sell stuff. It is amazing how much crap we have sitting around and how much people are willing to pay for your crap. That's a good point.

It's a loop. That's right.

And so sell it on Facebook Marketplace. And guess what? If you want it later on, you can buy it again from Facebook Marketplace for about the same price. So flipping stuff is also something I've seen a lot of people do successfully. Yes.

100%.

And make big profit. So that's another thing people can do. Of course, Jade, you mentioned Instacart. There's a lot of delivery-type apps, Amazon Flex for packages, DoorDash and Uber Eats for food. And so if you have a vehicle and you're able to drive, you've got a driver's license, you're old enough, then that can be a great option to go make money.

Oh, anybody can do that.

If you're getting a $2,400 refund, you can change your withholdings and get that $200 a month back in your life to help you pay off debt.

And now's the time of year to do that. Now's the time. It's the beginning of the year. Get the full effect.

Don't think that was a gift from the government. Pausing investing is another way people can free up money in their budget. We're hearing all these calls and we go, hey, how much are you investing? They go, 7%. It doesn't feel like much.

With these rates? Okay, I know that's right, George.

It's crazy. House cleaning is another one that anyone can jump into. If you're not scared of other people's dirt, I mean, you go in there and start scrubbing and mopping and wiping down and dusting. It's amazing how much money you could make for one house.

Listen, I don't know what I would do without the person that cleans our home, so thank you so much, Chelsea.

Whether it's full-time business or side hustle, it's a great way to do that. Indoor, outdoor, home maintenance and repair. I mean, if you are remotely handy, I'm talking about my handyman said, I go to this wealthy neighborhood and people hire me to go change out a light bulb.

Yeah.

And they either don't have the ladder, the know-how, the confidence, the time, they're older. Whatever it is, you'd be amazed if you just put yourself out there. Car detailing is another one anyone can get into.

It's these everyday tasks that people don't want to do. I was out the other day. This was in the fall, so there was a lot of leaves out. And the kid was scooping up leaves and putting them in the paper bags. And I was like, hey, can you come over here and do that in our yard?

That's what it's all about. And so those are just some ideas to make more. There's tons of ways to spend less. We won't get into that today. But you've got to be doing a budget, first and foremost, to actually make a plan for this.

You, at least, at the very least, need to be charging a full dollar an hour. If you're not, you're dead.

So 60 minutes is 60 bucks.

That's the starting, yeah. And then you need to very quickly be charging $100 and then $150 an hour.

Well, depending on the kid and the skill level and your skill level, if people are taking this seriously, parents are willing to pay.

The last voice lesson I took was $200 an hour. I took the lesson.

Wow. And look at you now. One of the best voices I've heard. There it is. So there's a lot of things you can do.

And listen, I know a lot of people who are doing virtual assistant jobs. Yes. And that is like, they're making major bank doing.

Customer service jobs too. Just answering phones, helping walk people through stuff. There's a lot of jobs out there.

That's right.

So just some ideas. Again, I would, depending on what you're able to do and your skill set, you just got to get creative.

Get the old juices flowing.

Sometimes people turn it into their full-time gig. Yeah.

I think that's how a lot of people's self-employed business starts, is they start with something small that they like, that they're good at, that's a convenience for other people. And because they're good at it, it just starts to grow and there's a need for it. And that's how it starts a lot of times.

Well, especially from the music world. We're both musicians. And so I'm thinking about Timothy. There's room in the licensing world. I mean, if you just license your music for TV, films, weddings, that's what I used to do, Jade, as a side hustle.

Or a lot of times, instead of paying for the licensing rights to use an actual song, they just want you to make kind of like a Bobo cover of it. Yeah. Like I remember my husband, remember that Sly and the Family Stone, Everyday People?

Oh, yeah.

I am everyday people. They went to my husband, Toyota, and said, hey, will you make a Bobo version of this?