The Best Way To Build Wealth Is To Save Early and Often

Silence.

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, joined by best-selling author Rachel Cruz. This is your show, America. Give us a call at 888-825-5225.. You jump in, we'll talk about your life and your money, and we'll try to help you take the right next step when it comes to your biggest life decisions, and maybe smallest.

We're here for everything.

No problem too small. Kenneth kicks us off in Houston, Texas. Welcome to The Ramsey Show, Kenneth. Hello. Hey, how you doing?

I'm doing fine for now.

What's going on?

So I'm currently in a situation where I'm living in my car. I started in November because I racked up about $14,000 in credit cards, and I have $16,000 on my car as well.

$16,000?.

Yes, on my car. Okay.

Where were you living before this?

I was actually living in an apartment with my cousin and her boyfriend, but they decided to get their own place, so I ended up in a car.

And right now, you can't afford rent because of the debt?

Yes, it's taking about half of my paycheck every two weeks, and my car payment is $346, so I'm left with about $200.. So I started this debt snowball, and I managed to pay off one credit card, but it's still not enough.

It sounds like we need to get your income up. Are you working full-time right now?

Yes, yes, I am. I actually submitted applications to places. I still haven't heard back yet.

So what are you doing right now for work?

I'm a sterilization tech. I clean dental instruments.

Okay. And what do you make doing that?

I make $18 an hour on my W-2, so I made $32,000 this year.

Okay. And you're working 40 hours a week?

It's between that. We work half days on Fridays, sometimes full days, so between 36 and 40..

Can you work extra if you chose to?

Yes. I'm currently looking.

I would see if you can work overtime with your sterilization job, on top of that, getting another job on the side. I mean, $18 an hour is not nothing, and so it feels like it's not just a car loan. What's your minimum payment on the credit cards?

Altogether, it is over $500, $529.. I have a spread between seven.

And do you have any friends or family that you could have to help support you, go live with some friends for now, crash on a couch, anything like that?

Friends? No. Family? I do. They have offered, but the environment for me around them is I do not enjoy, so I'd rather stay in the car instead of having my emotional well-being...

Are you safe living in this car? Where are you actually staying?

So I stay around near my job. So far, nothing has happened. I believe, I don't know how many months, like four months now.

Are you able to shower, and how are you doing all of that?

So I actually have a gym membership, so showering, doing whatever I need to do, I can handle that at the gym.

Kenneth, how much is your car worth?

I checked on Kelley Blue Book, it's at $12,000, the last time I checked.

Okay, worth $12,000..

You owe $16,000, some change?

Yes. Yes.

And no money saved?

No.

No. Because my biggest concern right now, Kevin, for you, yeah, is what kind of George was hinting at, but it is your living situation. I mean, one of these, you know, four walls is what we say, food, shelter, utilities, transportation. Like, these are things that are necessities, those are needs, and you're lacking, obviously, one of those. So the family situation, would it be, like, is there a way to at least have a roof over your head and give yourself a timeframe and say, within 90 days, I'm going to be out of here and looking for my own place.

Well, the place, at my family's place, I would have to pay rent, which is not much, but I wouldn't have any left to put towards my credit cards.

So, right now, if you're working 40 hours a week at 18 an hour, it's about 2,900 bucks a month before taxes. So how much is getting taken out of these paychecks? Are you actually looking at the paychecks and seeing where it's going?

No. I know that about 180 is being taken out for insurance, but taxes-wise, I have not checked. Okay.

I would go look at that. Make sure you're not taking out too much in taxes. Make sure that you're not putting any money away into investments. Right now, every dollar you can get out of those paychecks needs to go to covering your four walls, like Rachel mentioned.

Yeah. Because, besides, the...you have the car payment, the credit cards, but you should have around $2,000 left that month.

Because you got about 900 in payments?

That's what it's looking like. Yeah. I get...each paycheck, it depends. I get about the minimum at least 1,060 each month, I mean, each every two weeks.

Okay. So the first thousand covers your debt payments. Where's the other thousand going?

I have no idea.

Okay. So I think that's going to be a...that's a key piece to this, Kenneth, because $1,000, I'm like, that's a significant amount, right? So I would want you to be tracking and knowing, like, this is exactly where every single dollar is going, right? And even just going back to the basic of a budget. And we can, if you hold the line, we'll give you every dollar premium to be able to figure out so specifically where that is.

And you need to be working every weekend.

I was going to say weekends and even nights, Kenneth. It's going to be exhausting, but you're...I mean, you're going to have to dig yourself out of this hole. And one of the...I mean, the two ways to do that is income and expenses, right? Those are the two parts of the equation. So upping the income, lowering the expenses, is going to help you gain some traction.

Do you have insurance bills as well to pay outside of healthcare?

No, it's too much for me right now.

Like auto insurance?

Yeah. For the minimum for me is $400, so...

Why is that?

I can...

Do you have a bad driving record?

No, my driving record's good. It's just been like that...the least I have paid is $300.. Maybe it's because I was in an accident, but it wasn't my fault.

Kenneth, you need auto insurance, man, even if it's $300.. You're in a very risky position right now. Jump on to ramsysolutions.com, connect with one of our insurance pros to help you with that, and hang on the line. We'll send you every dollar premium to help you make a plan for every one of those dollars. Wishing you the best.

Thank you.

What's going on?

Thank you for taking my call.

Oh, absolutely.

I was calling because I've had this collections since my husband passed away. I think it was even before then, but I never saw it until after. He passed away, August 4th, 2021.. So sorry.

Thank you. How old was he?

49..

Wow.

Sudden heart attack.

Oh, gosh, Maria. I'm so sorry.

Thank you. I'll try to get through this without crying.

No, you're okay.

You're okay. You take your time. You're okay.

So I don't know what this is. I don't know what the, it says. it's a mortgage account statement from a collection agency. So it's up to $44,837, and I don't know what it even means.

Was this for a mortgage on a house?

Well, I still have the house, and I've been making payments. I've never been late or anything. It's just this one thing coming from a collection agency.

Have you contacted them to verify the debt?

I have not, because I didn't know what I should do, how I should do it. I didn't know what to say to them, basically.

Is the debt, was it in your husband's name?

It was in both our names, and then I noticed after he passed, it just has my name on it now.

Okay. And you don't know where this is from? You don't know what it is?

No. It just says, like, I was looking at, I found a paper that was back from 2015 as the statement date, and it just says at the top, real-time resolutions, mortgage account statement. And at that time, it says the outstanding principal was $37,468.. And the interest is at 7%. It says it's until August 1st, 2037..

Do you think this could have been some kind of second mortgage that your husband had taken out?

Well, that's what I thought, but on my mortgage website, when I go in there and everything, it shows the principal, it shows the first and the second mortgage, but none of them are that same amount, because I still owe $173,000 on the mortgage. Okay.

I would contact this collector, and what you need to ask for is a debt validation letter, and they legally have to provide that to you, and that's going to show exactly how much you owe, what creditor the collector is representing, and confirmation of all of the information, the balances, the account numbers, and that will help you understand what this is for and if this is legit.

Okay.

Make sure there's no errors on there.

Have you pulled your credit report, Maria?

No, I haven't in years.

Okay. So I would do that, and it's a good thing just to check it even once a year.

You can go to annualcreditreport.com and pull this for free. Don't pay for this. You can pull it from all three credit bureaus to get a full picture of what debts are attached to your name.

Yeah, just to make sure that you're able to see, because on one end, it's either something your husband did and you were unaware of it, and now it's in, because if it's in both of your names, then yeah, then it is in your name now, or in a weird way, it could be like identity theft. Someone got your social security number or something. I mean, I don't know, right? So you just want to make sure and validate that this is actually legitimate, and I would look for signed documents as well, like if the collections agency has any tracking of where it came from. And it may be kind of a rabbit trail that you go down, because I'm sure it got sold to another collection.

I have, and it just says it's a collection agency, but it doesn't tell me any more.

I would contact them, and here's the deal. Never give debt collectors access to your checking account. You set the terms, you let them know what your situation is, and you have 30 days. Once they send you the debt validation letter, you'll have 30 days to respond with a debt verification letter. And I'll get our team to send you a link.

I know, and it keeps going up and up every month, that they send me these letters, and I've kept every single one of them.

Good. Good.

Yeah, and I'm just like, I don't know what this means. I don't know what it is. He never discussed any of the mortgage or anything with me before he passed.

What's your current financial situation? outside of that?

I'm working full-time.

You have kids?

Well, I do have kids, but they're adults now. The youngest is 22..

Okay. So no one's relying on you?

No. No.

And you're able to cover all the bills with your own income?

No. My daughter and my son-in-law live here too, as well as my son, and they're helping me with the mortgage.

Okay. Do you have any other debt?

No, I just paid off my car last week.

Good. Congratulations. So just the mortgages left, plus this weird outstanding collections debt.

Correct. And I have no credit cards, never had any, no other anything, just the mortgage.

Well, I would try to do some digging to see, on that credit report, what's in your name, see if you can find any documents from the financial statements that were in his name. Yeah. Have you looked into that?

I have not.

Maybe on a Saturday, have the kids help, because it's going to be hard, because you're sort of reopening the wound, in a sense, as well.

Is your hunch, Maria, that this is an additional mortgage on your current home, or are you thinking there could be another property out there?

No. It's got to be on this... Okay. No, I mean, the address they're sending it to is this, it says, in regards to property

out there. Oh, okay. Okay. Okay. Okay.

No idea.

Yeah. So yeah, I think, getting to the bottom of that, but again, it may be a rabbit trail to actually get to the actual lender that's holding it, and where it originated from, not just the... Right. Yeah. Not just the one in collections.

But yeah, yeah. I'm guessing it's got to show up on that credit report. And here's the deal, if the debt collector can't verify that debt, they have to stop contacting you about it, and they have to let the credit bureaus know to remove that from your report. Okay. So I'm not saying that's the case.

Right. Yeah. Yeah. I just... He never said a word to me about it, so I have no idea.

Are you doing a budget with your income coming in?

I haven't really, but I know I need to. I just... I don't spend frivolously at all. I just get what I need to get, and that's it. That's why I don't have credit cards, because I'm like, if I can't afford it, I'm not going to buy it.

Wise. Wise woman. Well, we're going to hook you up with EveryDollar Premium as well to help you make a plan for every one of those dollars. And what you'll do is list your income at the top, and then list all of your expenses, and start with the priorities. Your food, utility, shelter, transportation, insurance, bills, and then whatever's left, we can start attacking this, maybe this debt, with that's in collections.

And they can be scary and intimidating. You know, you're like, oh my gosh, it's in collections. Like, even that word sounds so scary, but you have a lot of power in that situation and to figure out what to do, and yeah.

And let this be a lesson to all of you. Talk to your spouse about what is going on in your financial world. Share all the documents with them. We call it a legacy drawer. Create a document base with everything you need, every account number, the passwords, whatever it is, so that they're not left grieving while trying to figure out what the heck was happening with the finances.

I think, yeah, FUN is more of Smart Money. Happy Hour, I would say.

Yeah, it's what we aim for. And so we've got a cocktail or mocktail in hand and we talk about money through the lens of what's going on out in the world and pop culture. And we have a great time.

All the trends happening out in the world and how it relates to money. It's great. We have a good time. We have a good time.

It's got a cult-like following, Rachel. We love meeting people all over the world. You were in Disneyland and people were like, I love Smart Money, Happy Hour.

They said, I love you in George. They called you out, George.

Once in a while.

I was getting on the barnstormer in Magic Kingdom and someone was like, Rachel, I love you in George. on the happy hour. I was like, thank you.

You just wave, like you're the mayor of a small town from the ride?

I was in line.

That's so fun. Well, hey, we're glad you're here. Glad you're with us. It's an open phone line at 888-825-5225.. And we've got a segment we've done once before on the show.

Yes, we did. It was so fun.

It's called Pick a Side. Yeah. I've never been a part of one of these, but we have a caller with someone else on the line and we have to hear them both out, hear their case, and then you and I have to pick a side. I love it. Are we ready for this one?

Oh, I can't wait.

All right. Let's find out what's happening with Kiri and Diana in Columbia, South Carolina. Welcome to the show, guys.

All right. Thank you.

You ready to battle?

We are. Okay.

What's the situation? Who's going to go first?

Diana wants me to spell it out and then she'll correct any inaccuracies.

I like this.

We have a Stanley situation.

A what?

A Stanley situation.

A Stanley situation.

Oh. So do you know the Stanley cups?

Yes.

Yeah, not the hockey, like the mugs.

Not the hockey. The indestructible tumblers. Oh, we know. Oh, we know of these. And they fit in your cup holder.

And they have a handle and a straw.

Yes.

And yet somehow still leak.

A little bit, yeah. No, they don't.

They're very well made. Okay. So a Stanley. Oh, my gosh.

What's the problem here?

So we had a discussion. My 11-year-old came back from school and she said her friends have a Stanley cup. And she wanted to buy a Stanley cup. And both myself and Diana have done the Financial Peace University and the Legacy course. So that all kicked in.

How is the 11-year-old making money?

So when they get a present, but then, you know, we've got some chickens, so they sell eggs and then they babysit other people's chickens in the neighborhood.

What a beautiful little old timey world you've created. They're buying silver coins from you and they're making money from the chickens. This is like 1800s.

Yes. Beautiful.

Except she wants a Stanley Cup.

And they take part in studies where they go into the university and they do like exercises and stuff and they get paid quite well for that.

Good. Wow. That's amazing. Is she in the fifth grade? Sixth grade?

She's sixth grade.

Sixth grade. OK. OK.

And I've got four daughters and they're all super smart kids. And they understand they have to give away some of it and all of that. OK. So they do save. So that's not the problem.

OK.

But I went into a rant about brands and industrial psychologists and behavioral economists trying to get us to buy stuff that we don't need. And maybe a little bit over the top, but, you know, she probably fell asleep mid-conversation.

It's great. OK. So, Diana, are you OK? OK. So what's your take, Diana?

So my opinion is that you need to take each situation for what it is. My kids are good kids. Like you said, she saves a lot of money. She actually has, like, quite a bit of guilt about spending any of her money. You know, and I think that comes from the Save-a-Holic dad.

That's the right word.

She is just so good at saving. And so when she came and she said that she wanted to spend some of her own money on this Stanley Cup, I was so before it. And I was like, if you're sticking to your percentages of what you plan to save, what you plan to give and what you plan to spend, that's totally fine with me, because she's working hard for money, you know. And, like I said, if I was dealing with a different situation of someone that wasn't able to save and give and things like that, then I would reconsider. But because of the type of kid she is, I think it's totally reasonable.

Wow. Well, you're both very convincing. I don't know if it's your lovely accents, but I'm thoroughly convinced. Here's the funny thing. I think you're both right.

We should have done a one, two, three, pick a side.

Well, here's the thing. I'm, Team Kiri, in the sense that I'm like, I would be like, well, the Stanley, big Stanley's trying to get at you with their consumer marketing, it's influencers.

I know. You think they're stupid. George doesn't like Stanley's. He thinks they're so stupid. So yeah.

First of all, thank you for calling me a man.

I'm not even offended.

You know what I mean?

There's always going to be things. There's going to be stuff that you guys do. How much you pay for your haircuts, George?

I'm like, this is so crazy. Hey, that's not the discussion here, Rachel.

That's crazy. I know. So all that to say, all that to say, I'm with George. I'm with Diana. I'm sorry, Kiri.

There's no entitlement here.

Yeah. No, she said it.

a little bit like you, at times. A little save-a-holic, if you will.

But to give the freedom that she needs to learn. And she may regret this purchase, right? She may regret it. But good for her to actually experience those emotions on her own versus trying to talk them out of everything. Like they need to make some mistakes.

So you're saying buying a Stanley's a mistake, Rachel?

No. I didn't say this was a mistake. I know it's stupid. It's expensive for a cup. I get it.

I drove my wife's car today, and what's in the cup holder? The giant Stanley. Guess, who didn't have room for his little cup? Me. The giant Stanley, was taking up the whole cup holder.

It is wild, though. After... Oh, sorry. After I saw how bad she felt, and we had all these discussions and stuff, and I'm like, you know what? I might not understand.

I'm so glad you emailed.

Can I ask where your accents are from? Because I want one.

South Africa.

Oh, just lovely. Just lovely.

You have to go live there for about 30 years, and you're good.

All right. And you'll get it.

Easy. Well, have her. listen to this call, and have them say, Rachel, and George said, buy the cup.

But I will say, we have a daughter. She's in the third grade, and even some girls in her class have families. She does not, because I'm like, I'm not going to buy that for you. You know what I mean? I love...

But then it becomes, well, look what my friends are driving, Rachel. I need a car like that, and it becomes, look at what their life is.

Yeah. So there is a precedent. And what I think, what you guys have done so well, is you've set a norm, right? The level of normalcy that your kids are experiencing is working hard, saving, giving, being wise. That's the norm.

Thank you so much for the call. I wish the 11-year-old could call in next time, and let's hear her case, and why she needs the Stanley.

She'll be a millionaire by 21..

You know what she's going to tell me? She's going to say, well, George, it fits in the cupholder.

And it has a handle and a straw. Dear Lord, help us all. And it really works, y'all.

Cups have worked for centuries. This is not a new invention. There's been handles on things for a long time, Rachel.

Not like this, though.

You won't convince me. This is The Ramsey Show.

Hey,

Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. Open phones at 888-825-5225.. Tom joins us up next in Las Vegas. What's going on, Tom?

Thanks for taking my call. You guys have got a great call, screener.

Oh, thank you. We got the best in the business. We got Taylor and Christian today.

I mean, they're just cackling back there, Tom. You made their day.

They never get this kind of affirmation from us. I'm glad someone gave it to them.

My question is regarding the collection notice I received. I had a dispute with a phone company, cell phone company, a couple years ago. I just kind of left it at that. I got a collection letter and I checked my credit report. It's on the credit report.

Sure. So how are you going to pay for this?

Cashier's check.

Okay. And make sure that's certified mail. Okay. When you send that.

Okay. Do I need to send a request letter of certified mail, or can I just call them in? Call them on the phone and say, send me the letter that you'll agree to take it off.

Well, did they send you a payment agreement?

Yeah. Well, they said, you know, they said, you can pay me over so many months. or you can pay over two months, or just pay it in full and I'll just pay it in full and get rid of it. Get it out of my hair.

Yeah. If you send the, make a copy of everything you send, including the cashier's check, and staple the payment agreement, the certified mail return receipt and the copy of the cashier's check together and hold on to all of that.

Okay. Now, I have heard somewhere that the collection agency can only report paid in full. They cannot force the credit bureaus to remove it completely, as though it was never there. Do you know, is that correct?

You can dispute it on your credit report once it's paid in full, and they can then remove it.

Okay. After it's paid in full.

Exactly. So you shouldn't have an issue there.

Okay. I appreciate it. How long does that normally take, once the collection agency gets my payment, until it's reported to the credit bureau?

You know, I'm not sure of that specifically. I'm sure every bureau's got a different process and a different timeline, but I can't imagine it's going to be months. I would imagine it's between, you know, 30, 60 days.

All right. I appreciate that very much. You've been very helpful. I hope you have a good weekend.

Thank you, Tom. And shout out to the phone screeners. They do a heck of a job. They're on the front lines, Rachel. Who knows the stuff we never even hear.

That would be a good show, though. Just let anyone and everyone.

That's our premium version. You can access the unfiltered calls coming into the show.

You pay a subscription. You can get that.

Yes. We do appreciate all of the callers. I know it can be hard to get on air, but we appreciate all of you trying your best. And Patrick made it, Rachel. All the way from New York, he made it onto the show.

Hey, thanks so much for taking my call. I'm a huge admirer of you all. I want to echo the great call screeners as well.

Wow. There's a theme hour now. That's so kind. They're very thankful. They're bowing.

Well, thanks so much. So we have, about, my wife and I, 68,000 in credit card debt. I have 30,000 in a Roth IRA. That's actually in cash. The stock was sold.

Are you sure this is in a Roth IRA?

Yeah, I'm positive.

Is it in a settlement account?

No. It was invested in a stock with one particular company. It made maybe $2,000 over the course of 10 years. So not terribly great, I guess.

So who cashed it out?

I did. We sold it.

How old are you, guys?

Oh, I'm 38..

Okay. So there must have been penalties then.

No, no, no. Because the Roth IRA, I don't think they're...

Oh, on your contributions.

Yes, exactly.

You can take out the contributions without the penalty, but it will count as income.

Okay. So it would count as income, then.

I believe so. I would check on what happened with that transaction. But if it is sitting in cash, the damage is already done, then yes, this would just be considered liquid cash that you can use to pay off debt.

Okay. Okay. That's kind of where I was leaning towards, but I'm not 100% sure what the best option is.

Patrick, what caused you guys to get $68,000 in the credit card debt?

Being workaholics.

So is this... I'm trying to understand for the listeners out there who may be experiencing something similar. Are you saying you guys were working so hard and you were so stressed that you just sort of ate your feelings month after month?

Yeah. I mean, I would say more out of convenience. It's a mixture of convenience and not working a lot.

What period of time was this? Over how long?

Probably in the course of two years.

That's a lot of...

$34,000 a year?

Yeah. It also includes some medical...

Okay. Okay.

I was like, $2,800 a month on door-dash? I don't think I could do that if I wanted to.

Yeah, well, it can happen pretty quickly if you, you know... And the illusion is if you make a lot of money,

right? How much do you guys make a year?

Combined, we're about $250,000 a year.

Wow. So you could clear this credit card debt without even touching the Roth IRA. But this will just help you speed it up?

I think it would help speed it up, yeah. Do you have any other debt? We could do that. I'm sorry?

Do you have any other debt?

No.

Okay.

The reason why the medical... We have to use a credit card because it requires a reimbursement of this particular plan. It's a bit of a previous health plan.

Well, have you cut up the cards yet?

We don't use them anymore. We just use a debit card now.

But you still have access to it. What's connected to the DoorDash account? That's the question.

Oh, the debit card.

Okay. I might delete the DoorDash account altogether for now, until we get this situation under control. How's your health?

I mean, it's better now that I've, you know, gotten a physical, going to the doctor, exercising, all those sorts of things.

Good.

It is interesting, Patrick. We hear a correlation a lot with money and health just in general that when you get to a point on one of those subjects that you're just like, oh my gosh, I can't keep doing this anymore. With your money, we can't keep doing this. We have $68,000 in credit card debt. You kind of have this awakening to change what you've been doing with money and doing something different.

Out of a dark curiosity, what's the APR on these cards?

I think it varies depending on the credit card, but it's probably like a yearly interest of about 20%. You're going to look at fees like up to $2,000 a month combined.

That's the scary part.

Part of me is wondering if I just have that chunk of cash. Can I throw it at the debt?

How many cards is it?

across? It's three cards.

I'd use that $30,000 and attack the smallest one first, and then, if it covers the next one, go that way and you'll flip the payments along the way.

That sounds great. We've been working on it already a bit, so the number was even a little bit higher because of getting the budget under control, doing all those things, getting rid of the credit cards,

It is a slippery slope.

Using your own money will always change the game. You can't go into debt if you run out of money in the bank account. That's why I stick to debit.

Amen, brother George.

Man, this hour. took my breath away, Rachel, but it was fun. You did a great job. You handled it. Shout out to the phone screeners this hour.

Hey, George and Rachel. I am a little sad that I can't talk to you guys for five hours, but I'm excited to be here.

Hey, five minutes is better than nothing.

Alrighty. Well, I've got my question. I can read to you, so I sound a little bit smarter.

Okay. Use some big words.

Okay. I have been married for two years, and we are currently gazelle-intense paying off my wife's nursing school debt. As we plan for the future, we are eager to bring children into our family. We both come from single-income families, and we've always imagined that that's how our lives would turn out as well. In fact, we borderline consider it part of our faith to build a family with a stay-at-home mom.

Ooh, that's a good question. Well, let's start with this nursing debt. How much does she have? About $50K. Okay.

Nope. Is she working right now,

Reagan? She is. She's just barely graduated nursing school. She's making about the same as me. Okay.

$55K. So let's say, the household income's about $110K? Yep. Okay.

Yeah, I mean, Reagan, I will never tell someone not to start a family, get married, you know, big life decisions.

and we haven't started. Well, we're out of debt. Should we wait until we have a house? Okay, then we'll wait another three years so we can get the down payment and be in a house. Yeah.

And that's the goal is to have her debt paid off in the next six months is what we're tracking towards. And then after that, there's a lot of big decisions we can make. We both drive old cars and we want to save up for a house and things like that. And it's just trying to balance the excitement of being out of debt and taking the next step with taking on these extra responsibilities that might harm our income.

Getting the emergency fund in place once your debt freeze is going to be important, if you want to upgrade the cars with cash, that would be a future goal. And then, beyond that, you might need to rent for a few years until you have that down payment saved up. And the problem is, a lot of people have a kid and they all of a sudden go, we don't have any room. now, we have to go buy a house, even though we're broke. And so I don't want you to fall into that trap.

That's the plan. I think what scares me more is just having the space in my income after we have a kid. if we were to go to a single income to then save up for a down payment.

Yeah, it would just take you longer. You guys will just be... In order for one goal to happen, which is for her to stay home with the baby, then other goals are going to have to shift, right? And it's a priority thing for you guys. If it's more of a priority for her being home, then the house is going to be down below that.

baby, and once we have baby number two, then she's.

going to stay. Or you guys decide something else, because the house, that's more important than that goes first. And then her being home goes second. But it's up to you guys.

Yeah, that's perfect advice.

All of these actions, Regan, they have a blessing and a consequence. The blessing is my wife gets to stay home. The consequence, our income got cut in half and it's going to take us five more years to get a house. And so we have to weigh what's more important to us, what are the priorities right now, because we can't have our cake and eat it too. I wish I could snap my finger, and you guys are debt free with an emergency fund, living in your dream home, she's staying home, everything's great, but there's going to be sacrifices.

for the next three years. Yeah, and Regan, too, just know this, when it comes to the, and I know you guys don't have the baby right now, but if that is in her, that she wants to be home, you don't regret that stuff. You don't regret being home with your baby if that's where you want to be. Now, I work, right? So I'm not in that situation, but I did pull back some from work a few years ago to be home with the kids more, and I look back on that and I'm like, I don't regret that.

follow your dream, go $50,000.

in debt, and now you want to stay home and be a mom, you know?

of these decisions. And I want to give a shout out to all the moms out there. Rachel, there's so much mom guilt on either side of, you should be at home, you should be working, you should do this. And I just feel for the moms out there struggling with these decisions. Yeah, and some moms.

don't have the choice either, right? That they have to be working.

for you and accept that there may be sacrifices needed. Yes, and you guys.

just had Mia, your little baby, and I think, too, you could plan as much as you want and then, once the baby's here, you may be like, give me out of this house a little bit, please. Can I get out? Or you may be like, no, I want to be here more. So you can plan, but sometimes that plan even changes.

Amen. This is the Ramsey Show.

Happy Hour? Oh, yes. Yes. Wow. On top of this show.

say that. People are like, you need Smart Money, Happy Hour every day. I'm like, listen, we got 19 hours of content coming at you guys.

That's plenty. We really...

Go be with your families. Go on a walk. Listen to some music.

We'll be with you once a week.

Well, we've been getting a lot of questions about taxes, and I get it that taxes can be real confusing, and so, to help you get a better handle on them, let's unpack a question from one of our listeners. What's the difference between a tax deduction and a tax credit? It's not a trick question, but people get confused. I just uploaded a video about taxes for beginners on my YouTube channel today. I went on the street on Broadway in Nashville.

Oh, like asking, just like basic...

If they knew the difference between deductions and credits. Many people were like, well, tax credit, credit's like dead, so... I was like, no, it's... Okay. So here it is.

clues, right? If I was on... Yeah.

It's a decent guess. Here's what tax credits actually are. They cut your tax bill dollar for dollar, so if you end up owing $1,000 in taxes, a $500 credit will slash your bill another $500. And a tax deduction, on the other hand, is more on the front end. It lowers your tax bill by lowering your taxable income.

Today's question comes from Mark in Florida. I'm 64 years old, a retired executive with an encore career, happily married, no debt, and $3.4 million net worth. I want to lease a new Maserati that will cost a total of $60,000 over three years. My wife is against it. since this provides no financial benefit.

Wow. This is an interesting one.

Can you afford it? Yeah, you can afford it.

You could afford a lot of stupid decisions. It doesn't mean you should do it.

It's just that leasing a car, it is the most expensive way to finance a vehicle. And it's going to be you basically just renting a car for three years.

it hurts my heart that you're just going to blow $20,000 every year for fun and then still have to get a different car three years from now.

That's the hard part. I wouldn't do it because obviously we don't affirm leasing and all that.

If they have a $3.4 million net worth, just purchase it in cash and you'll still end up in a better spot. Because guess what? After three years, you can go sell that Maserati.

How much is a new Maserati, George? Google it.

It depends on the actual model.

I know, you know cars so well,

George. Just a car guy.

I've been in the market. I've been test driving.

some Maseratis. I'm so excited. I bet I'm going to get ads now for Maserati. They're going to be like, this guy wants a Maserati.

Badly. I know. I'm terrible at guessing prices.

of stuff. What would you guess they go for?

Because a Maserati... I don't even know what it looks like. I need to see what it looks like.

Oh, yeah.

We're going to go... Don't tell me. I'm going to guess. I'm going to guess.

No. I'm sure you can soup it up. $150?. But for their normal.

$63,000?. We got a guy that had a Honda Civic loan for $60,000, with me and Jade.

You know what I might do? These ultra luxury cars, they tend to depreciate. What I might do, if I'm in his shoes, is take that $60,000 and go, what used Maserati can I get for $60,000? Or just go buy a new car, dude.

Just go, buy it.

The juice ain't worth the squeeze on this.

I feel like SUVs... When we were in the car shopping season, after we had our third, we ended up with an Odyssey minivan. But we didn't look at... SUVs, you look at Suburbans, you look at all those.

Some of those big boys.

Those are like $100,000, brand new.

It hurts my soul.

I'm just shocked. I don't know why. Should I go get a Maserati?

I think it's time. This has now become an ad for Maserati.

Alright, Mark in Florida, go, get you a Maserati. Pay for it in cash, don't lease it.

I'm looking at slightly used Maseratis. They're going anywhere from $40,000 to $60,000, maybe $70,000 for 2023.. So, if I'm him, I'm going to take that $60,000 and just go buy one in cash.

Golly. What are the other cars that are insane, though? Why did I jump to...

Lamborghinis.

There you go. I've heard of those. Are those like $200,000 or am I just crazy? Are there any cars for $200,000??

A Ford GT is like $300,000..

So, depending on the model. Alright.

I don't want to go too far before the car bros come at me. They're very aggressive.

And the interest rate is hidden in the lease. You don't even know what you're paying interest-wise.

That's the craziest part about leases. They don't legally have to disclose it because technically it doesn't count as a loan.

Oh, it's how they...

That's how they get away with it. So, they just bake it into the price. So, you think you're getting a deal, but really you're just renting very expensively. No, thank you. Alright.

Go get a brand new one for $63,000.. Apparently, it's what we just learned.

But the key word here is, my wife is against this. That would be all it takes for me to go, alright, we're not doing it. If you're not in agreement on this big financial decision, don't do it.

Yeah, that's fair too.

Alright, we did it.

We figured it out for Mark.

Alright, let's go to Florida. To Tampa. we go. Alex joins us there. What's going on, Alex?

Hey guys, thanks for taking my call.

Sure. How can Rachel and I help?

Alex, do you own a Maserati?

I wish.

We'll get you there.

How can we help?

So, my question is, so, about a year, more than a year ago, January of last year, I got a new job that doubled my income.

Awesome.

And when that happened, before I knew you guys existed, I started the debt snowball kind of on my own. And I was like, that just makes sense. I'll pay off the little stuff first. So, that's more than a year. And I found you guys somewhere in there.

So, what's your question?

My question is, should I do the emergency fund first, just to have a little bit of a fallback before I continue down the debt?

snowball? How much are you making now?

I make $110,000.. $110,000.. Okay.

How much debt do you have?

A lot.

Oh, okay. What about outside of the mortgage? Just the consumer debt?

Just the consumer debt is $125,000..

Okay. What kind of debt is that?

A lot of it is student loans. About $60,000..

Okay. The line of work. you're in, Alex, quickly, because we're coming up on a break. Would you be able to find a new job if the layoff happened?

Yes, eventually, but there's been a lot of people struggling.

If I were you, I would start attacking the debt, because the layoff, it's not imminent. It's not that it's going to happen. It's a fear of it.

If it happens, you'd pause the snowball and get to work, doing whatever you could until you find stability.

That's right. That's right.

Hope that doesn't happen, man. Follow the steps. It works.