Escape the Gravitational Pull of Stupid
2024-01-04 01:56:31
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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 actual, amazing relationships. I'm Dave Ramsey, your host, Ken Coleman, number one bestselling author, host of the Ken Coleman Show. Ramsey personality is my co-host today. Thank you for joining us, America. The number is 888-825-5225, 888-825-5225..
Scott starts this hour in Springfield, Illinois. Hey, Scott, welcome to the Ramsey Show.
Hi, Dave. It's an honor to be talking to you and Ken. I appreciate you guys and what you do, and I'll get right to my question. Okay. So I don't hold you guys up.
My question is, me and my wife and my five kids, we have a 40-acre farm and a log cabin that we just recently sold. It's under contract. We signed the papers January 19th. What we're looking to do is, with the cash we get from that, we plan on building a new place over on an acre and a half that we were gifted. And we're trying to figure out where to put the money and why we build, and the build would start January 19th closing.
So more or less, we would try to be in there by September 1st, is the goal, to have everything done and built. I'm being general contractor, and just trying to figure out where we can put that money to have best access to it.
You're going to use the money to build with?
Yes, use the money. We have no debt. We have no debt at all. We are, our farm and cabin and everything we have now, thanks to you guys.
So, if I'm understanding you, you're going to use up the majority of the money by September?
Yes, correct.
Correct. So you're going to draw down on it, beginning almost immediately, as you put in footings and start to lay block and start to order your lumber package, which is, as you know, is one of your big ticket items. So, I mean, in the first 60 days, you're going to come out of pocket with a ton, right?
Yes, correct.
Correct. Yes. That's how a building budget works. So, yeah. I would just lay out your budget and, you know, a high yield savings account, a money market, something like that, it doesn't matter, because you're not going to have the money in there.
Basically, you're going to have the equivalent of half this money in there for nine months, three quarters of a year.
So if something's paying 5%, you're going to make the equivalent of 2% or 2.5% to down to about 1.5%. So, net, net, net, that's the net dollars you're going to earn because you're only going to be in there nine months and only half the money is going to be in there because you're going to be drawing down on it. through there. You follow me?
Yes.
Yes. So, my point is what you earn on it doesn't matter much. Having solid access to it does, and having it in a separate account that you nicknamed building fund does. So, a high yield savings account, money market with check writing privileges, that's fine. so you can write your checks and pay your bills, right?
Okay. Yes. Because what I'm seeing around here is I'm seeing like 4.5% on a high yield savings.
Yeah.
But it's, again, you're not going to make 4.5% because you're not going to be in there a whole year with a whole pile of money.
Okay.
Understand if you're taking it out, let's say you took it out over 12 months, the average would be half the pile through the 12 months. You follow me? Yes, sir. And so, the average would be half of 4.5% net that you're actually making on the pile. So, the point of all that is when you add up the actual dollars, it's not going to be a lot.
You just want it safe and you want to be as wise as you can. So, the important thing here is check writing privileges, access to it to follow the building budget and the cash flow needed.
And so, a money market with check writing privileges at your local bank, if you found one, four and a half, and they've got check writing privileges to be able to pay the bills and be able to transfer money to your lumber company and so on, then you're right on track. That's exactly what I'd do. Good question, man. Sounds like you're living the dream. Congratulations.
Yeah. Exciting, isn't it? To hear a young couple, because you can tell he's young, and they're going to cash flow a bill. And I think that's pretty amazing. That, to me, is the American dream.
I hear all this stuff all the time. Oh, can we get ahead? And the answer is you can't. But you've got to be disciplined. You've got to be debt-free, because he's got lots of options.
Jim is in Hawaii. Hey, Jim, welcome to the Ramsey Show.
Hi, Dave. Aloha.
Aloha. What's up, man?
Well, my wife and I are in a dilemma, and we're trying to figure out if it makes sense for us to sell our home in Paradise and move to Florida. I've got details, but I don't want to give them to you until you're ready, so fire away with your questions. Help us figure this out.
It's funny. Hawaii's Paradise, and we've got to move to Florida.
Which Yankees from New York think Florida's Paradise. Okay, now.
Yeah. Who wants to move most? So why are you moving?
Primarily, for... We could sell our house for 2.5 and buy a house there for about 1.5, put a million in the bank. We're debt-free. She's retired. I'm not.
So we'd save on state income tax, put some money in the bank and earn more money. that way. Local politics kind of drive us crazy, and the cost of living keeps going up in Hawaii.
Yeah.
Well, if that was me, I'd be going to Florida.
Yeah.
If those were my answers, that'd be enough. Yeah.
That sounds like you've got a lot of math reasons to leave, and the sad thing is Hawaii, as wonderful as it is, is the third, is in the number three state that people are leaving. Number one's New York, number two's California, and number three's Hawaii. And the reason they're leaving all three of them are exactly what you've outlined, taxes and politics.
Financially, I don't want to go back into debt, and the rest of our money is tied up in other areas. So the only way we can really do it is to sell, and we don't feel emotionally ready to leave, and so we can't find an emotional way to unhook ourselves.
You've been there a long time.
I don't want to go back into debt. There's no financial solution either.
You've been there a long time.
In Hawaii? Yeah. We've been there 15 years.
And you didn't leave. The state left you. Mm-hmm.
You didn't change.
That's right. I wonder, Jim, how many more times you have to pay those taxes, how many more times you have to see some type of politics that you just really don't align with before your emotions do get ready.
I got a buddy of mine just moved out of California, and he paid cash for a house in Nashville. He's been in California his whole life. He paid cash for a house in Nashville with his income tax savings in one year. One year of income tax savings from California, just getting out. He makes a lot of money, obviously, but one year with no California income tax, bought him a cash house in Nashville.
That's why people are leaving. I mean, it's math, and it does pierce through the emotions. So I get why you would leave. I also understand it's a beautiful, wonderful place, and it's hard to leave home, and it's home for you. So those are decisions you guys have to make as a couple.
The emotional part of it, mathematically, if I'm you, I'm gone. I get why my buddy moved out of California. Again, he paid cash with one year of tax savings.
It's bonkers.
Art Laffer tracked this years ago. The states that have an income tax, particularly high income tax, have the highest rate of exodus, and it's gotten worse and worse and worse every year in those three states. with the COVID policies, when the Fauci pandemic hit, and the policies around that, and the crazy politics, and the lawlessness, and everything else. People are bailing, man. It's crazy.
And it's sad, because they're wonderful states. The actual geography is wonderful. This is the Ramsey Show.
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Ken Coleman, Ramsey Personality is my co-host today. Open phones at 888-825-5225.. Bethany is with us in Dallas, Texas. Hi, Bethany. How are you?
Hey, guys. Thanks for taking my call. I'm doing great. Good.
How can we help?
Hey. So my husband and I both work for my dad. He owns a hardware and feed store, and we, you know, he's owned it for 16 years, so I've worked on and off just through middle school and high school, and then now we both run the store full time. We make about $34,000 each a year, and then Ivan, my husband, makes $19,000 with the VA income, and so collectively we make $87,000.. So instead of a raise the last few years, he has given us 1% of the store's, I guess, value.
If the store would ever sell, we would get X percentage of the sale price, and so right now we have 3%, and we—sorry, backstory—we're debt-free. We are in the middle of building our home, and so our home loan total is $292,000.. We were able to buy the land in cash, and so we own, sorry, about an acre and a half, and everything else is paid for. We have our six-month savings saved up, and so kind of, I guess, our big question is, we've been listening to the Ramsey Show, and we hear all these crazy numbers of combined income, and I know you're not supposed to compare, but I do, and so we live comfortably. We have three kids.
We're able to pay all of our bills. With the home loan, we're going to be able to pay that off soon, but whenever you look at our income, it's significantly lower than a lot of people, and so—but we have the percentage in the store. So the big question is, do we stick with the store to where, when Dad retires in about 10 years, we already have 15% in it, or do we look for something that has a higher income,
but then we wouldn't own the store? So I don't know. We're kind of—we're torn, and there's some days that we're like, yeah, it's worth it in the long run, and then some days it's like, but man, it'd be cool to pay off the house in three to four years instead of 10 years. I don't know.
So my question is, what's the long run look like with real numbers, and is it really worth it? And my question is, I don't think it is.
I'm asking you, if you've played that out. What's the store worth? What's the store worth? Yeah.
Why is it worth it?
The store—why is it worth it? personally or financially?
No, what's the store worth? What's the value of the store if he sold it today?
The value of the store today would be between $2.5 and $3 million.
Okay. So 1% is $25,000..
Right. Right. And so this year we would have three.
How did you come up with that value?
That's what he's gone by, and so he just did a re-evaluation of everything, too, and the bank said, hey, we are worth between $2.5 and $3..
Does that include real estate?
That includes real estate, and that's just the hardware store, so he also owns a bed and breakfast around the corner and et cetera.
Well, the question is, are you going to get all of that? Are you the only kid?
The only kid that wants it. So my brother has no interest in any of it, and so he's told—.
Yeah, but are you going to have to buy your brother out of his share?
No.
Okay. All right. So, well, $25,000 a year on top of $34,000 or on top of—that helps your income. Basically, that's what 1% is worth, right?
Correct. Yeah.
So then you just ask yourself, is that—?
So it's more than the cash that we bring home.
Could he hire a manager? A couple of managers, for $34,000 apiece, plus $25,000 bonus.
Probably not.
Yeah, I don't think so.
Yeah, because it's just me and my husband that manage the store, and then there's a couple of high school kids that come and help.
Yeah. I mean, we're out in the country. What does the store make? What's the profit on it?
Couldn't tell you off the top of my head. I don't have the numbers in front of me. Okay. Well, hold on. No, I'm not going to waste your time with me.
That's okay.
Well, I'm not questioning your contentment or whether that's fair or not. It's just a matter of, is this a fair deal to you? And that's really what you're asking. And the fair deal to you is—the answer to that is the math for me.
I don't think he's giving you enough percentage per year to make me excited. if I'm you. He needs to up this to 5% a year, to where, after 10 years, you own 50%.
Okay, that makes sense.
I'd be excited about that.
Oh, and by the way, as I own more percentage, that percentage of the profit comes to me each year because I'm one of the owners. I don't own 25% and you keep 100% of the profit.
Yeah, that makes sense.
So, yeah, I think you just need to talk to your dad about—because his intent is not to run you off. Right. And his intent is not to be cheap. He just hasn't thought it through. And you're going, Dad, when I think this through, the numbers don't make sense to us.
5% a year would make sense to us.
And so you're saying at the end of the year, say we own 3%.
He should give you 3% of the profits and 5% of ownership.
Yeah. It's like a dividend payment.
Gotcha.
I have a question. If you own 10%, you get 10% of the profits, and, you know, now we're talking. that's fairly generous.
You get 10% of the profits and 5% more ownership each year. But each year he bonuses you 5% ownership because then you don't have to buy out—I mean, I don't want you 85% having to buy him out after you've done this and enslaved all these years. That doesn't feel right.
Yeah.
So I have a quick question on this. Do you guys want to be in the feed business, the hardware business, or do you just want to own your own business?
It's probably a combo of the two. I love this store. I grew up here and I love the people, and I love serving the community. And the community is a big part of it for me. And so from the beginning, it's never been—.
Because none of this matters if you hate every day, but you don't hate every day.
No.
Yeah. That's what I wanted to know first. And I think Dave is absolutely right.
I'm going to throw this out. I'm curious to know what Dave's going to say about this. It's not a guarantee that dad's going to walk away in 10 years either. It's hard for founders to walk away. So that to me also, that's why I asked that first question.
Is it really worth it? And what I mean by that question is Dave addressed it. Is it worth it year in, year out? But I'm also asking, is it worth it 15 years from now? What could turn into 25 years?
I think that's what he needs to give you in writing. that he's done in 10 years. He gives you 5% a year and he pays you your percentage of ownership and profits every year. That's a fair deal.
That makes sense.
He would have to do that if it was a third party coming in to interest them in taking it, managing it. for him. To get a world-class manager that knows the community and cares as deeply as you do, he would have to pay that kind of money to get them.
That makes sense.
And this doesn't hurt him. He's in good shape. He's fine.
We need to work towards that. By the way, too, you need to add up all this stuff, and if it's worth more than $20 million, I don't think it is, but if it is, you guys need a detailed estate plan, because the freaking federal government is going to come. take some of it when he dies. if you don't have a good estate plan. But a written game plan that you take over the store, buy out the remaining ownership after 10 years, and in the meantime, he gives you 5% a year, and in the meantime, your percentage of ownership gets paid out in profits every year on top of that, and you get paid your salary.
That's a fair deal. That is not an unfair deal at all. And it's a good way for him to not have to pay out cash right now. And it accomplishes his long-term goal, which is to hand off the store.
But if his only income is coming from this store, this is going to be scary for him.
I think it is. I think it's going to be an interesting conversation.
Very cool. So, Ken makes a good point. Those of us that are founders, and I'm one of them, that found a business, as we've studied family business succession planning,
the hardest move is from generation 1 to generation 2.. The founder handing off is very tough because they're all wrapped up in it. Those of us that are founders are hardheads. We're stubborn. We gutted it out.
And we don't like to let go of stuff. We like to control stuff. And so it's very hard for us to hand off to the next generation. The most emotional handoff is gen 1 to gen 2. And the founder, it's incumbent upon them to be a grown-up and to count on the next generation taking over.
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Ken Coleman, Ramsey Personality, is my co-host today. Thank you for joining us, America. Donnell is with us in Salt Lake City. Hi, Donnell. How are you?
I'm good. Thank you. How are you?
Better than I deserve. What's up?
I have a little dilemma that we're trying to figure out what we need to do. I have a 2012 Hyundai Elantra, and it's got over 200,000 miles on it. Around the end of October, I was backing up out of a parking spot, and a guy behind me backed into my car.
It didn't ruin my car, so I couldn't drive it, but his insurance totaled my car. Great. So now, yeah.
I mean, you're driving a hoopty and you're getting a check.
Yeah, I can get a check for it for sure. I can get $3,745 and keep it, and I'll have to get a salvage tile.
No, you don't want it.
Or they'll give me $4,538..
No. You take the full pay, give them the car, go, get your car.
Okay.
If the car was in good shape, and it's a 200,000-mile 2012 Elantra, what's it actually worth? Have you looked it up?
It's probably under $5,000..
Well, that's what they're giving you is under $5,000..
Yeah.
I want you to make sure that what they're giving you is the actual value of the car.
Well, the $45,000 is what they would give me, and that's what I've looked up.
No, honey, they're going to give you the value of the car. That's the law. Okay. They may not have understood that yet. You may have to help them with that.
Yeah.
But they're supposed to give you the value of the car. The guy tore your car up. So it didn't take much to total this car, but it's okay. Cool. I'm glad.
So I want you guys. You said we. Are you married? Uh-huh. Okay.
You guys jump on the computer before you accept the offer and find out from Kelly Blue Book what the retail value of that car is, and enter it with 200,000 miles, no damage, and the attributes of that car, the accessories it has, and so forth, and then look on stuff like Trader.com and find some that are for sale that look similar in mileage. And if you find out that car is worth 5,200, you call this insurance company up and say, You need to pay me 5,200, and here's the appraisal from Kelly Blue Book, and here's three cars on Trader.com that look the same. And all these things say 5,200, not 4,500.. And the guy will go, Okay.
All right. Who's the insurance company?
Bear River Mutual.
What?
Say it again.
They're the ones that.
Say it again.
Bear River.
That's the actual insurance company, not they wrote the policy. The what? Bear River Mutual. Okay. I just don't know that one.
Okay. All right. Well, because sometimes I know the reputation. Like if it's State Farm, you can pretty much be assured they're trying to screw you. Okay.
Yeah. That's like their modus operandi. Okay. I've been hit by State Farm people twice, and it's been a problem both times. Okay.
They're just a pain in the butt. And see, it cost them a lot, because I just said that. But anyway. So, yeah. Just verify that.
the actual cost value of the car. I'm not trying to rip them off. I want them to pay you what you're due. That's all. Yeah.
It's an honest transaction.
With the ding in it.
I'm sorry?
I mean, with the ding in the car?
No, darling. There wasn't a ding in the car before he hit it.
Oh, okay.
Before he hit it, what was the car worth?
Yeah. Okay.
All right. Because that's what they owe you. That's the market value of the car. Because you've got to take the cash and go buy that exact car on Trader.com from somebody else. That's what you're going to have to pay for it.
Yeah.
That's what they should give you. So this is my other question. They should replace your car. No, you don't keep your car.
Okay. My other question for you, then, is...
This car was almost dead before this guy put a bullet in it. Let it die. Yeah.
It's true. It's true.
Okay.
So I have listened to you for years, and I just get sick to my stomach now thinking about even taking a loan out on a vehicle.
Well, don't. Buy a $5,000 car.
We have money put aside.
Pardon?
Buy a $5,000 car.
Okay.
You have $5,000.. You were driving a $5,000 car before this happened.
True.
So it was doing...it was perfectly good with your life. Or good enough for now.
How much money do you have set aside, and is that earmarked for something else, or was it for a car replacement?
It's to go toward the car replacement.
How much you got?
We have about $7,000..
$7,000?. So then you...
That's your car fund.
Yep. Okay.
Well, then you can buy a $12,000 car. Yeah.
Okay. Yeah. All right. I just...my husband wants me to have a car that he knows we can depend on, and he's like...
Man, man, man, man, man, man.
Where was this husband before you got hit in the parking lot?
He was sitting next to me.
I know. I know. But you see what I'm saying. He wasn't whining about you having something that was dependable. when you were driving this $5,000 hoopty.
You were saving up to get out of the hoopty. Now you got...you sold the hoopty. You just sold it to an insurance company.
Yep. You're right.
A lot of $12,000 cars that you can rely on.
$12,000.. Excellent. A car. that'll do, any...it'll do double back flips. You can get great cars for $12,000..
Yes. Okay. The best value in the market is $10,000 to $15,000.. It's the best buy in the car market. You get the most bang for your buck, and it's a great...you can get a great vehicle for that.
that'll last you for a long time. Yes, yes, yes, yes, yes. There's no reason for you to go in debt, hon. It's just...it was an event. Thank God nobody was hurt.
And it's just sad that your car...the parking lot ding. I never heard anybody get totaled in the Kroger parking lot, but there you go. So, bump. You're totaled.
I was going to say, that was quite an incident. He must have been on his way to the game with the wings and the chips and salsa. He was in a hurry.
Something going on. Amber's in Spokane. Amber, welcome to the Ramsey Show.
Thank you. I just have a quick question. Actually, two-part question. I have an 18-year-old son. He's still in high school.
He will be 19 next year graduating, and he is planning on opening his own business. Doing what? With his landscaping. With his own money. Good.
He's very smart with money. He doesn't have any debt. He won't get a credit card. He only uses what he has.
Mm-hmm.
But I was trying to explain to him the other day that he can do it with a zero credit score.
I am also confused a little bit, too, but I know it's possible. He doesn't want to take out any loans.
Then he doesn't need a credit score.
Why do you need a credit score?
I think he's more worried about if something comes up where he has to—.
Borrow money.
Borrow to—yeah, if he has to get a bigger machine or—.
Well, that already is going to come up. A hundred percent of the people that buy machines buy too many of them.
Well, he has a plan to buy used.
And cash. And if something comes up, he'll buy, used and cash. He does not need a credit score. Do not use debt as your backstop in case of emergencies in business, because you will live in debt the rest of your life. Because a hundred percent of—there's three rules in business.
It takes twice as long as you think. It costs twice as much as you think. And you're not the exception. Those are the three rules of business.
The nice thing is that he understands all three of those rules and he—.
Then he doesn't need a credit score.
Okay. The other question I have is how—I've been trying to get him to listen to your show or read your book or—and he's 18.. I'll give him that because he's just—he's still in that mentality stage where he's 18.. And is there something—I don't want to push too hard so that he doesn't do it all together, but is there—I know you have books and programs and stuff like that, but I've already bought those and he wasn't interested in it. Is it something that may come along later on when he's going through?
I guess. I mean, the only thing I can tell you is the only good I've ever been able to do with my kids once they turned 18 and beyond was I tried my best to not use my dad voice, because once I do, they quit listening. I have to use my persuasive uncle voice. Like I'm their uncle that loves them and has no power, because I am that person that has no power once they're 18.. So you've been using your mom voice.
You need to listen to Dave. That won't work. He turned that off immediately. Use your friend voice and maybe, maybe he'll pick it up. Probably not, but maybe he will.
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Ken Coleman, Ramsey Personality, is my co-host today. Thank you for joining us, America. So, interest rates on home mortgages are dropping. It's having a predictable effect. Just to give you a little history, the 30-year interest rates on the 11th of December were 7.1..
Now they're 6.6.. The high was 8%, so it's down almost 1.5% from the high. The 15-year on the 11th of December was 6.5.. It's sitting right now at 6.0.. It's down 0.5%.
The high was 7.35, so it's down 1.35 from the high. So, interest rates on home mortgages dropping. It's about a 10% drop, which equals about a little less than 1% drop, but not from the high from just the other day, which is $275 a month on a $400,000 house, just to give you an idea. 1% is. That's a change.
So, what we've seen since the day after Christmas is a huge increase in consumer demand for mortgages and agents, and we've also seen a similar increase in the number of pros, real estate pros, trying to become one of our Ramsey Trusted Pros during that time. So, all of that means the real estate market is coming back to life after a really cold, dark winter. Yeah, it's pretty much sitting dormant, and this little drop, it's 1%, basically across the board, in a month, that's a lot,
and really 1.5% is causing people that were sitting on the sidelines to come back into the market, even some real estate agents that were kind of waiting. I'm just waiting until spring before I go selling houses. I don't know what the flip you people are doing, but anyway, the real Ramsey Trusted Pros are people that sell 100 to 300 houses a year. They're high-octane, high-protein real estate agents. They're not your Uncle Charlie, who got his license three weeks ago, and he gets his feelings hurt if you don't list your $500,000 freaking house with a newbie, which would be the definition of dumb, okay?
So, we don't hire Uncle Charlie as one of our Ramsey Trusted Pros. No. We get the top people out there, because real estate business is a business where people come in and out like a revolving door, depending on how devoted they are to that as a career, but if you're devoted to it as a career and you're selling large volume, you didn't sit on the sidelines in the last three months while a lot of people did.
That's exactly right. But what's really interesting about this, and you said this, we've talked about this on the show, people were shocked by the increase in rates, and then, the minute you start to see a little drop, you had people that were all pent up, and now they're moving. And so, it's going to be very interesting to see.
And it's an election year. Hello.
It is, and you explained this to me years ago, so I want to tee you up to talk about it, because the Fed right now is kind of hedging its bets. You see a lot of different news on it, but there's no guarantee that the Fed is going to actually drop rates. They said they're going to be in a holding pattern, but that doesn't mean they're going to drop. So, we may stay where we are, but regardless, that's not what is going to drive the actual mortgage rate. It's people, it's the bond market and the whole thing.
Mortgages are sold as bonds once they're packaged together, and so the bond, the interest rate, the prevailing interest rate on the bond market, is the mortgage rate. That's right. Period. That drives the mortgage rate. The Fed has absolutely no direct connection to mortgage rates.
That's right. The Fed rate is the rate that banks borrow money from each other. It's the wholesale money rate in the industry. That's all it is, and so it is not a direct connection, but it does telescope out, telegraph out where we're going, and it's not unusual. with the Fed raises rates.
You're going to see that bond market raise rates, and when the bond market raises rates, your mortgage rates go up. So, that's what's going on, but you've got to think anything the Biden administration can do to put pressure on the Fed to not do that, they're going to do, because a president that is in a very weak, precarious political position, add a bad economy to it, and you've got a 100% chance of non-reelection.
That's right. There's a lot of speculation on that.
So, they're going to do everything they can to get rates down, and that's not politics. That's just history of politics.
Good luck with that. Good luck being a president and trying to get re-elected in either party when the economy is bad in your watch. Good luck with that. There's almost zero time that has happened. I think it is zero.
Do you have an opinion on if it will be a long time before we get back to the rates that we've had over the last five, ten years?
No. Economists and weather forecasters are the only people that can be wrong all the time and keep their jobs.
I love it. You're like, I'm not touching that one.
I have no idea. I do know this. 100% of the time, they go up and down. They've been up a while, so they're kind of due to come down. It's real.
It's always going to go up. No, it's not. It's going to come back down. No, it's always going to go down. No, it's not.
It's going to go back up. It's the same with the stock market.
It's going to move. About. all we know is change is coming. That's a 100% prediction on change. I honestly think that any political pressure that can be brought, any administrative pressure that can be brought to bring rates down, is going to occur, because whoever is running the Biden administration, they've got to have a clue that even if someone else is running in the Democratic Party, they're not going to get in if they don't get this straightened out, because the economic situation is dire.
with the inflation and with the high interest rates. You've got true stagflation going on. Open phones at 888-825-5225.. Milagros is with us in Charlotte. Hey, Milagros, how are you?
Good afternoon. Good. How are you?
Great. How can we help?
Well, I am a new teacher. I worked my first year in 2023, and I recently discovered your show, about two months ago. So I've changed my ways, but I wanted to give you a little bit of background before I tell you what my end goal is right now. So I'm a first-generation student. I graduated in 2022, so I had to take a lot of loans out and private loans as well to pay for school, because I was decided to be the first one to graduate in my family.
How much debt do you have, honey?
So I have $8,000 private loan that was originally $6,000, and it's still growing, but I'm paying monthly now with very high interest.
How much debt do you have, honey?
$28,000 federal student loan, $19,000 a car, $5,000 credit card, and that's it.
Okay. Are you ready to stop borrowing money because you've been borrowing on everything in sight?
Yeah. I got a second job, and now I'm paying with that second job.
What are you getting paid as a first-year teacher in North Carolina?
$38,000..
Yeah, and you got a $19,000 car you can't afford. Right. You got student loans coming out your ears. You bought a car way too expensive.
I know. That was the first mistake that I made after graduating, because I thought I was a big girl, big girl job, and I could afford a car, but now I'm paying it every month.
Now you got big girl problems.
Yeah.
Okay. Let's get rid of it. Let's sell the car and get you a cheap one.
Yeah, I've tried to, but I'm scared like no one's going to buy it.
Well, how would we know? We've not tried.
Yeah.
The definition of insanity, is continuing to do the same thing over and over again and expect a different result. You've been borrowing on school and justified that. You borrowed on a car and justified that. You borrowed on a steak dinner and put it on a credit card and justified that. At some point, you've got to quit borrowing and justifying.
At some point, you've got to say, this is stupid, and I'm going to go back to ground zero and start building my life. I make $34,000 a year. I'm a first-round teacher, and I'm going to pick up a car, pick up tutoring jobs on the side, and double my income, and get these stupid student loans and credit cards out of my life, cut up the credit cards tonight, and sell the car this week.
Time to take radical action, kiddo. If you want to win, that's how you do it. And I'm trying to shock you and break you loose here, because how you grew up has nothing to do with student loans. It's because you didn't work while you were in school. That's why you have student loans because you could have worked your way through.
A bunch of people do every day right now. So it's okay. I'm not mad at you, but don't walk around justifying this. Get it cleaned up now, because it's between you and becoming wealthy. This is the Ramsey Show.
Live from the headquarters of Ramsey Solutions, it's the Ramsey Show. We help people build wealth, do work that they love, and create actual, amazing relationships. Ken Coleman, number one best-selling author of the book Paycheck to Purpose, host of the Ken Coleman Show, Ramsey Personality, is my co-host today. Thank you for joining us, America. The phone number is 888-825-5225..
Clayton is in Little Rock, Arkansas. Hey, Clayton, welcome to the Ramsey Show.
Hey, sir. How are you guys?
Better than we deserve, brother. What's up?
Awesome, man. Well, first of all, I just want to say it really is an honor to speak to you guys. I'm a huge fan of the show. I've watched countless YouTube clips, et cetera, and I think you guys are out there changing lives, so I want to start off with that.
Well, thank you, sir. How can we help you today?
Absolutely. Well, I'll kind of start from a broad overview, and I'll kind of break it down if that's okay with you. Just my broad overview question, Dave, is really just how not to get discouraged in the wealth-building process. I'll give you some background information. I'm 27 years old.
My wife is 30.. We have a combined net worth of around probably $200,000 or so. Wow. It's right there on my number. Thank you.
And I make about $58,000, $60,000 on my primary job, and I do a side hustle. But total, I make around $80,000 to $90,000, kind of depending on the year. And my wife makes around $72,000.. The only thing that we owe on is our home. We both have MBA degrees.
We have no consumer debt, no car loans, anything like that. My home is currently worth probably around $300,000, and I owe about $195,000.. We have two kids, and overall, life is good. We're still in the process of trying to button everything up. We're investing 10% right now.
I know I need to get that number to 15.. My home's on a 15-year note. We're trying to get our kids college, all that situated. So there's nothing really on fire, per se. But in general, I really do believe what you guys teach, and I believe we give 10% of our income to the church.
I mean, I'm a really big believer in living within your means. I'm not saying we're perfect by any means.
You've done a great job, Clayton. I mean, your numbers are amazing for your age. Way to go. You make $160,000 a year. You have no debt except your house.
Everything's on track. You're killing it.
Right, right. Well, man, I really do believe it, and I appreciate it. But at the same time, I think long-term, right?
Yeah, but have you done the math? Huh? Have you done the math?
Right, right, yeah.
I mean, if you save 15% of $160,000, that's going to be a million dollars in 10 years, dude.
Right, right.
And that's with no match. Have you got a match?
Yes, sir. Yes, sir.
Do the math.
Right, right. Well, you know, man, it just. . .
Did you do the math? No.
Yes, sir, I did, yes.
Okay, then did you see 10 years? you're going to be a millionaire at 37 years old?
Yes, sir. Yes, sir.
So how is that discouraging?
You know, I don't know, man. I just, like, I look at life, right? And I know comparison is a piece of joy, and I don't. . .
You know, I try not to go there in my head, but. . .
Comparison to what? If anything, you compare to, you should be ahead of.
Right, right, right. Well, you know, I just. . . Is it okay if I give you some background, some more background information?
Is that okay?
Okay, I'm trying to understand. It's okay. I'm trying to understand why you're discouraged. There's no reason to be. I'm really confused with that.
Yeah. Because, dude, you're in the top 2% of America. You're killing it.
I just think, like, long-term, Dave, I think, when. . . I just see how everything is so expensive, and even when I pay off my home and I have all my retirement accounts, et cetera, I just. .
. You know, I'm trying to really set my family up so, like, in 10 years, my daughter will be 13, right? And I'm trying to almost get ahead of the game, where I can make sure we can go on big vacations, you know, take care of her college. And I realize, okay, I'll be a millionaire, but I just. .
. It feels like everything is so expensive, and it's such a long process. And I realize that wealth isn't obtained easy. I'm not trying to say that, but. .
.
It is a long process. 10 years is a lot longer than 10 minutes. And most people have the attention span of a gnat. That's why they're not able to build wealth.
I've been listening, Clayton, and I've been where you are. I actually. . . I hear me 10 years ago on this phone call.
So I just want to say this. Your issue is not comparison. Your issue is fear. And you're afraid you're not going to be able to do the things that you would like to do because you're too stuck in the headlines. And what you're not focusing on is, as Dave has pointed out, you're crushing it, number one.
You're really ahead of the game. This is all going to compound for you, and you're going to be fine. You're going to take some great vacations. But what you're not focused on is what you can actually do. You're focused on all these outside circumstances.
The economy, inflation, whatever else is going on in your head.
You do need to quit watching the news.
Yeah, you need to start focusing on your income and what you're going to make next year and the year after that, and how you're going to be able to make more money and that you can go out and determine your financial future. You're already great, but you're forgetting all this headline stuff and all this fear and comparison. Here's what you're forgetting. Your ability, your wife's ability, to put a financial plan that includes increasing income. You're going to be able to pay for all those things.
Yeah, your incomes aren't going to be stagnant for the next 10 years.
Absolutely.
I don't know if that helps you, Clayton. You've got to shake all that stuff off. You're inside your head so deep.
And here's the thing. The secret to happiness is low expectations, and I'm a little bit afraid you thought when you made $160,000, you were going to be rich.
That's a very good point.
And you're not rich at $160,000 with two kids. It's no cake. You thought it was going to be on Easy Street, like you were going to be flying in a private jet or something. And it's $160,000.. You're not.
So? you've got double the household income of the average American. You're in the top 1% or 2% of the average American. Your age, where you are, with no debt and already having a positive net worth of a couple hundred thousand dollars, you are killing it. And you actually are paying attention, which puts you way above almost everyone who walk around with their heads stuck in the fog.
That was kind.
I did that. I did that for radio. Yeah, I mean, you're incredible.
You're doing great.
You're doing great. Calm down and enjoy the ride, buddy. Really, I can't tell you enough to do this over and over and over again. Enjoy the ride.
I want to say one other quick encouragement, because, Dave, I think you're absolutely right. I just want to echo what Dave said. We have, with all young generations throughout history, but even more so now because we're in the social media era.
God help us.
I know.
Unrealistic expectations lead to unmet expectations. I can't say that enough. I wish I could preach that message to every young person in the world, because here's the deal. You nailed it. They think when they get to six figures, life's going to be an easy streak.
I thought you were talking about my golf game and your golf game. Unrealistic expectations lead to unmet expectations. Mine are unrealistic. That's it.
My golf game is in the last category. Just unmet, period.
It doesn't matter how.
That's what it is. Here's the thing. When you make $100,000 a year, you thought it was going to be easy. When you make a million dollars a year, you thought it was going to be easy. It don't get easy.
It just gets better than if you don't pay attention. That's all it does. This is the Ramsey Show.
Ken Coleman, Ramsey Personality, is my co-host today. Thank you for being with us. Chaz is with us in San Antonio, Texas. Hi, Chaz. How are you?
I'm doing pretty good. My question is about what is the best route I could take to become an airline pilot.
Here's some quick details about my situation. I am in my freshman year of engineering college, and my plan is to get a four-year mechanical engineering degree that my parents are willing to pay for. With that degree, I'll get a job and then pay for flight school with my own money without going into debt. Then, on top of that, I will have an engineering degree to fall back on in the case that I can't fly in the future for whatever reason. However, I'm starting to rethink this plan because I'm sure you've heard there's a massive pilot shortage right now.
I think it might be a good opportunity for me to skip college and go straight into the airlines. I would get lots of benefits going in immediately. I would be in a hot job market, and I would also start my aviation career earlier, which would get me something called seniority, which is very, very important. in the airlines. It's basically the pilot who's been there the longest, has the most job security, the best pay,
and has been in a really good position.
Chaz, a couple things. Number one, you can't just go into being a pilot. You're still going to have to fork out a lot of money for the training, but I've got a better solution for you. This is not my opinion. This is from a guy who is one of the top pilots for FedEx, flies all around the world, flies their jumbo jets, met him over the holidays, had coffee with him.
Here's what he said. I asked him, what would you say to somebody who asked this question, because I get this question a lot. He said, and this is a guy who was a Navy pilot, he said, I would have a young person go into the military, and you're going to get paid for the training, and there's no debt, and they're going to train you as a pilot.
And you're going to have the hours.
You're going to have the hours. You get everything paid for.
And they pay you.
They pay you, and you come out of the military, and now you're qualified and ready to go. So skipping college, if you wanted to fast forward, then go right into the military. But if my mom and dad are going to pay for a mechanical engineering degree, and that was a fallback plan, that's not a bad plan, and then go into the military out of school. So I would say those are the two best options. If I were you, based on what I know, that's what I would do.
Okay. One thing I can tell you is it may be wrong information, but I'm pretty sure it's correct. I talked to an airline pilot that lives in my neighborhood, and he told me not to go to the military route, because they can get you all the hours that you need, but they can't actually get you the ratings that you need for the airlines, which is something that you're going to have to get yourself, which will still cost money. And my parents are willing to help me pay for the fast track school to the airline partially.
Okay. Well, that's new information. You are correct. Your friend is correct. Your neighbor is correct.
But still, you're getting advanced. You're advancing yourself in the military without having to come out of pocket. But if mom and dad are willing to pay cash and not go into debt for the training, then that's an option.
So, Chas, if you fast track with them, you go to fast track school, what's that cost? How long does it take?
Since I already have my private pilot's license, it would cost $80,000, and my parents would pay for that partially. I'm assuming about half, maybe a little bit less than that.
And how long does it take?
It would take nine months, and I could get into the airlines very soon. And one thing I would like to mention is the reason I would want to do this is to get into the market immediately, because the pilot shortage is right now.
Sure, but who's paying for the other 40? If mom and dad are paying about half?
Oh, me. I would be going into that $40,000 of debt.
Okay, but that's not what you said earlier. So now the story's changing. It was mom and dad could pay for the flight in fast track. Well, they can't. They can only pay half.
I said partially, partially, not entirely. I would be going into debt, yes, sir.
Well, we would not recommend that you go into debt for this when you don't have to.
And here's the thing. When you come out with a four-year degree in mechanical engineering, we're talking about $90,000 to $100,000 a year. When you come out of $80,000 worth of flight school, you're flying American Eagle for $35,000 a year.
You know, I don't give a crap about the pilot shortage, honey. They ain't putting you in a 727 when you're 19, freaking years old and you just come out of school and wet behind the ears. They don't do that, okay? The guys in the big jets are old, and they don't put the boys in there. They put the little boys in the American Eagle, little Canadian jets.
I fly with them. I see what they're doing. I got socks older than these guys that are flying these things, and they don't pay them anything. So you need to check your fax on actual entry, on what you do get paid coming in because you're going to fly a regional, at best, prop or jet, and you don't make any money at the start, even if there is a pilot shortage. The pilot shortage is a shortage on the top end stuff, not people getting paid, no money doing.
And if you go the military route, you can save up the money for your instrumentation and all that. Not to mention, I wish I knew this. I'll know this next time, but I also wonder if the GI Bill does not maybe go towards that certification and that education as well. I would tend to believe it does, but I'm not 100% sure.
I think it probably would.
I think it would. I'm just not 100% sure. So therefore, no debt.
Chaz, let me just tell you, working with doing what I'm doing for 30 years, pilots are a different thing that activates in people when they decide they want to be a pilot. Flying an aircraft, you've got your private, you know this, is addictive. And you guys, you lose your minds in order to get to fly an airplane. You're willing to jump through and do anything just to get to fly an airplane because it's just so stinking much fun. People do ridiculous things.
So don't trade a $100,000 job for a $35,000 job and $40,000 worth of debt. Don't make that trade. Please. don't, just because of this.
There's something about the pilot thing that people,
the only other one is like becoming a chiropractor. They spend $200,000 to do that. You spend the same $200,000, you'd have been an MD. And instead, you're making $45,000 or $50,000 a year as a chiropractor. And it makes no sense at all, but their head gets all foggy with the process of doing it or whatever.
I don't know what it is. It's different than other careers.
Well, it's a good career. I'm going to make good money, so we justify it.
And again, there's not good money on the start.
There's not.
There's not good money on the start.
There's not. There's not at all.
Because there's a line of these guys that are addicted to flying. So, yeah, there is a pilot shortage, but it's a certain kind of pilot, and it's not entry level.
I wish you could have heard this guy, Dave. He was a Navy pilot, straight out of Annapolis, Navy pilot for 20 years, flew combat missions, and now he's flying the biggest jet FedEx has. And he was like, tell people, tell young people, they have a great career if they go the military route and they're not going to go into debt and they're going to be able to pay for it. He was very emphatic about it.
Well, yeah, you fly with a pilot and you know they're military, you can tell when they land.
That's right.
They're not worried about soft.
That is true.
They put them down. Yeah, that guy, he was Navy. That guy was Air Force. He didn't fly luxury charters, I don't think.
Well, they land on an aircraft carrier.
I guess, yeah.
Unbelievable, talking about that. In the middle of the ocean.
Chaz, go live your dream, buddy, but don't turn it into a nightmare. That's all we're saying. Yes, great point. So if you were my son, I would tell you to finish your mechanical engineering degree and then work on your pilot stuff, and I would consider the military route. If you were my son, that's what I'd tell you to do.
So that's the summation of the call. We appreciate you calling in. Open phones at 888-825-5225.. Started a long time ago when people started saying, live your dream, live your dream, live your dream, Ken, and people will then justify that and turn their dreams into a nightmare if they're not real careful.
So true, and it happens all the time. It's the trap, and the trap is this, I want it now. And I've never seen a dream that was worthy that you got now or that you got fast. Change your mindset on that, and then you'll be able to avoid the temptation.
Philosophy 101, Ken Coleman. This is the Ramsey Show.
Ken Coleman. Ken Coleman, Ramsey personality, is my co-host today. All right, I got a question for you folks out there. How long does it take you to pay off a credit card that has a $5,000 balance with an APR of 16%, which, in the credit card world, is a good deal,
if you pay $100 a month minimum payment, which is the average requirement on that? $5,000, 16%, $100 minimum payment.
Answer.
Six years and 11 months,
and you pay $3,200 in interest on the $5,000 while you do it.
Can anyone spell stupid in math? I just did.
That's stupid in math spell. I just spelled stupid for you in math.
It's pretty good.
Seriously. And yet we all walk around, well, I get airline miles. Oh my God, you're so stupid.
Discover gives me a dollar back for every $100 I spend. Oh my God, you're stupid.
I've never met a millionaire. that said, Dave, you know, I made all my money with my airline miles. It doesn't come up, man. It just doesn't come up. The problem is you get stuck in a cycle of this stuff, and it's so freaking, hopeless, like the student loans.
They're hopeless. It's like a pile of Mount Everest of debt, and I don't know how I'm going to climb it. I'm stuck in a cycle of debt. I'm stuck in a cycle of stupid financial stuff that's out there. And did you know that?
stupid has a gravitational pull, and you can't break loose from it? It'll hold you into the orbit. You just keep orbiting around and around and around, stupid. You know how you break in orbit? Massive energy.
You have to expend massive energy to break in orbit. So if you're stuck in the cycle, you can kick the year off. We're hosting a free live stream one week from today, on Thursday, January, the 11th, at 7 central. It's officially our largest live stream ever. Over 250,000 people have already signed up to watch it.
It's completely free. It's called Break the Cycle. Break the cycle. Break the orbit off of stupid. You are not stuck.
Your family curse is not your problem. The neighborhood you grew up in is not your problem. You need some more information and some more inspiration, and we can show you how to break the cycle. We've done it for millions of people. So me, Rachel Cruz, George Camel, Jade Walshaw, Dr.
John Deloney, we're going to be doing Break the Cycle, talking about navigating the money anxiety, bad money habits that keep you stuck, practical money tips that actually work, how to break the cycle.
Because you're stuck. And we're going to give away $1,000 ten times. $10,000 to people that are viewing. There is no purchase necessary, but you must be a viewer, not having just signed up to watch. And so we want you to watch.
We want to help you. We want to change your life. We want to give you the information and the inspiration. It's called Hope.
Break the Cycle. So what do we do? We go to ramsaysolutions.com slash, break the cycle, and you sign up for the free live stream. It's going to be 7 o'clock central time, Thursday, January the 11th. And I'm guessing at this stage of the game, we're probably going to have close to 400,000 people, maybe even 500 viewing.
So thank you. Thank you for your response already, and thank you for those of you that are going to respond after. I just did this. Because you are not stuck.
But I will promise you, I've been there. Stupid has a gravitational pull, and if you continue to do the same thing over and over again and expect a different result, that's the definition of insanity. If you don't like the cake, change the recipe. I don't like chocolate cake. Quit using that recipe.
And then scratching your head why you're getting chocolate cake. That's how it works. You've got to change something if you want something to change. And we're going to show you how, baby. We love you enough to coach you.
We love you enough to encourage you. We even love you enough to get up in your face, because we want you to win. And we've proven it 30 years of doing this. So come, join us. RamseySolutions.com slash, break the cycle.
Matt is in Knoxville. Hey, Matt, how are you?
Hey, Dave. Thanks for taking my call. I just had a quick baby step question with my own variables, if you don't mind.
Sure.
So I have these two credit cards, one is at $2,200, one is at $6,800.. I make $56,000 a year. It usually comes out in my check, about $3,500.. When those are all said and done, I've got about $800 to spend or live life with, essentially. And on top of this, I have a beautiful girlfriend in medical school, and I'm looking to buy her a ring.
And one thing I did last year was I maxed the match with my retirement at 7%, I think. So my retirement got up to like $9,000.. And obviously with this credit card debt, I'm thinking I couldn't have afforded to do that. So I took that down to 3% into my retirement to have the extra money to go to the ring and whatnot, and my credit card debt. And so I'm just kind of curious in my situation.
I'm also looking to gain income. I've got some side hustles in the works to gain income and get a new job too.
You're 25?.
Yeah, I turned 26.. And that's the other thing. I'm diabetic, so I'm going to have to pay for my own insurance. And not cheap wouldn't be diabetic.
Juvenile diabetes or adult?
Yeah, juvenile.
Okay. All right. Man. Okay.
So what do you do for a living?
Fundraising.
Okay. All right. So you're doing what most people do, and we discovered a long time ago doesn't work. And that's trying to do six things at once, and none of them get done.
Right.
You're getting no traction nowhere. Everything's half-assed. Follow me?
Yes, sir.
Yeah. So what I'm going to change is just tell you to get totally focused on one thing first. Do you have any money saved?
500 bucks.
When are you going to pop the question?
Six months.
You're going to wait six months to pop the question?
You said don't wait?
I said, are you going to wait six months to pop the question, and I understand you're right. That's a long time.
Yeah, yeah, sir. That's the longest. That's the longest. I'll wait.
Okay. All right. Well, we need a game plan here to lay out to save for this, all right? All right. So here's what I would tell you to do.
I would stop all saving.
Okay.
Stop everything. All right? Did you get a tax refund last year?
My taxes were screwed up. I'll have to redo it this year.
So you don't know. Because I don't think you're taking home enough. I don't know if the $3,500 was after $9,000 coming out. If it was after $9,000 coming out, then that's about right. But if it's not, then there's something else wrong.
But anyway, so I want to take all we can home without creating a tax problem, and I want to stop all 401K temporarily and focus on the first goal is get $1,000 saved. Okay. The second goal is pay off the $2,200 credit card and cut them both up tonight, by the way. Plastic surgery. No screwing around with those things anymore.
They bit you in the butt, and you need to throw them out the front door.
Right.
All right. Now, then the $2,200 is gone. Then I want you to save for a ring. How much are you going to spend on the ring?
About two grand.
Okay. So if I'm understanding right, I need $500 to finish my $1,000, and I need $2,200 plus two. So I need $5,000 to get the credit card paid off the ring and have my first $1,000 saved, right?
Right.
Okay. You right now have $800 in your sort of budget, but your sort of budget sucks. So you're going to do a real budget where you make every dollar behave. Every dollar is going to scream. I'm going to give you an app called EveryDollar.
It's the world's best budgeting app, and I'm going to put you into Financial Peace University, our nine-week class on how to handle money, and I'm going to pay for it.
You're a hero.
No, you're going to be the hero. You're going to go. do this crap, because what you're going to do is hard. You're not going out to eat. You're not going on vacation.
You're going to take the side hustle, and you're going to have five grand done in two months. Two months, man. Yes, sir.
Yes, sir.
No, one credit card down, ring bought, and $1,000 in the bank. And then, once the ring's bought, we go back to that snowball and knock that other credit card out, and we're game on, and I'll show you how to do the rest of it. in Financial Peace University. It's called the Baby Steps. You're going to win.
You're just the guy we work. You're the guy why I'm here. I love where you are. You're a great guy. You just need somebody to show you how to do it, and I'm the guy.
Hold on. Austin's going to pick up. We'll put you into Financial Peace and get you in the EveryDollar app. My gift.
All right. Let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates, but when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey Trusted Agents aren't just experts who guide you through buying or selling. They're someone you can trust to have your back from the first call to closing day.
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Ken Coleman, Ramsey personality, is my co-host today. The Ramsey Show question of the day is brought to you by Neighborly, your hub for home services. From repairs and maintenance to home improvement projects, winter brings some challenges for homeowners. You need to check out Neighborly's helpful winter checklist, which you can download for free. Check it out at Neighborly.com slash Ramsey.
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Today's question comes from Kelly in Ohio. I'm 23 and about a year out of ministry school with no school debt, since I worked four jobs and cash flowed everything, so I'm totally debt free. Way to go, Kelly. I work at a professional screen printing and embroidery shop and volunteer for ministry, making $20 an hour. I work 45 hours a week at the shop, and after taxes, I'm at about $36,000 a year.
This is the most I've ever made, but when I listen to the show, I'm often confused at what you all say is a good income. To me, this is good income, since I'm able to save $1,100 a month towards a down payment on a house. What are your thoughts? Do I need to be worried about getting another job, or is it about how I'm budgeting? All right, a lot of questions here.
First thing that comes to mind is why do we go to ministry school?
If we go to ministry school and we've changed our mind, fine with that, but if we went to ministry school to be in the ministry, I'd want to know what the path is to ministry, and then, once you get into ministry, it depends on what you're doing, because people don't go into ministry to make money, at least the people that are actually about ministry. The question about good income, I think it's a tad bit relative, but if you look at the income scale in the United States, $36,000 is obviously on the low side, but I love your discipline that you actually have a budget and that on that income, because you have no debt and you're living on less than you make, look, you're saving some pretty good money there. I don't think you need to be worried about getting another job, no, but the answer to that is, what job do I go to next? Because I doubt that you want to be in the screen printing and embroidery business for the rest of your life. So if I was sitting with you, I'd say, what's our long-term plan?
Or what are a couple options that we are considering for the long term? And what I'm talking about. there are destinations. And once we have an idea on some destinations, we can start to choose direction. Direction is always more important than destination, because the destination tends to change, but direction will get us going and making progress.
So you're doing a great job on budgeting. And as you increase your income with the way you budget, the more you save, the more you can invest.
Yeah, that's the proper answer to your question. Also, hidden in your question was you didn't like it that we said $36,000 wasn't a good income. Good income is not a moral statement. Right. Good income is relative to the average household income in America, which is $78,000 right now.
And so if you make $36,000 as a single person just out of school, you are considerably less than the average, which would also make up the average, and that's okay. It's not the end of the world. You're not a bad person. You're not a horrible income earner. You're not lazy.
None of those are judgments. when we say good income. All we're saying is relative to the average, yours is low. But somebody's got to make up the average. So the question is do you want it to be you?
And so, you know, you start thinking about where you want to be in 10 years. If you're just out of school, let's call you 23.. What do you want the 33-year-old version of you to look like?
Detail it out. Ken just told you to determine the direction, the destination, and then let's move towards that rather than landing and being satisfied and say, well, I've got margins, so I call this a good income, even if you all don't. Well, our portion is not that you can't live on it. I think you're doing a great job. You're amazing.
You're doing a great job with your budgeting. But your income is below average. That's another way of saying it rather than saying a good income. So when someone calls us and says they make, you know, $160,000, that's double the national average. And so that, by definition, is a good income.
It's above average, way above average. And so these days, when you make six figures, you're above average. The old days, when you made six figures, you were called rich. But nowadays you just can buy Alpo. But, you know, there you go.
But that's the thing. I mean, so, you know, because Alpo, have you seen the prices? No, I'm kidding. So the thing is, Kelly, that you are doing a good job and you're not spiritually or psychologically wrong to be satisfied right now with where you are. However, as a person that tells you, you know, we want to be anything that's not growing is dying.
So let's be something that's growing. Let's be aiming at something and have a destination. Dustin's in Kansas City. Hi, Dustin. Welcome to the Ramsey Show.
Hey, Dave. How's it going?
Better than I deserve, man. What's up?
Hey, I talked to you and Ken back in 2021.. My income was considerably low to where I'm making now. And I'm just trying to get some guidance on what house price is reasonable for my income and then also what my five-year plan should be.
Real quick, tell us what you were making when you called us and what you're making now.
So when I called you guys, I was making $46,000, and that was just my main job. Now I'm making $100,000, $60,000 of that being salary, $40,000 of it being in bonuses within the last two years.
Well done, sir.
And then also my side business that I've been running this year was a major, major job, and I made $125,000 just on that alone.
That Ken Coleman guy, when you call him, he's amazing.
Yeah, right. You had everything. That's amazing.
Way to go, stud. Wow.
Proud of you, man.
That's excellent.
Yeah, that's great.
You have a good income.
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