Don’t Let Your Failures Hold You Back From Your Future

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 Ramsey personality, George Campbell, joined by my good friend, Jade Warshaw, and we're taking your calls at 888-825-5225.. If you've got that burning question, you find yourself at a crossroads, you're not sure what to do next, you're in a pickle, we're here for you. That's what we do. Whether it's about your money, your life, your relationships, we want to help you take the right next step.

Hi. Thank you for taking my call.

Absolutely. How can we help?

Yeah. So I am in a unique situation. I am currently in vet school with about two years left, and through some loan simulators and things like that, I've been able to calculate that I'm going to end school with about $400,000 to $420,000 in student loan debt. So I guess my question is related to how can I set myself up now and in the future, for the best financial position to be in, and should I take advantage of situations like the public service loan forgiveness to potentially rely on that for some of this loan debt?

Well, you say you have two years to go, so right now would be the time to stop in your tracks and stop creating more debt, because how much do you have at this point?

So at this point, I'm about $240,000 in debt, but I have two years remaining in my vet school program.

And then your question after that was basically, what can I do to have better choices and be on a better financial footing? And the answer to that question is right now, you've got $240,000. now, you've got to turn the faucet off.

Yeah, absolutely.

So what would that look like?

Well, it would likely look like probably finding a job while I'm in school to pay for some of the tuition and fees that come up, then I guess I don't really have any other debts outside of my student loans. And so-.

Well, let's not take solace in that. Let's not take solace in the fact that you don't have any other debt outside of your student loans, because your student loans are astronomical. So I don't want you leaning on that, like, well, it's only my... It's just these student loans, because it's a lot. So I don't want you to let your mind go there.

Are you single, Erin? Is it just your income?

I am single, yes.

Okay. What's your current income?

I am currently a full-time student, and as far as in school, it's kind of tough, because it is a professional program, to have an income on the student loans.

Okay. So you're putting all of your life's expenses on these student loans, essentially.

Yes. What will you earn when you get out of school?

So, coming out of school, it's going to be dependent on location, but about 100 to 150,000 starting out.

And you understand that if you're going to go the student loan forgiveness route, you would have to work for a nonprofit animal welfare organization or shelter, or like the Department of Agriculture, which means your income is going to be limited. Yes. You're not going to make as much as if you were a private practice.

Yeah. I've looked at some of the average salaries for some of those positions, and again, location dependent, but about 90 to 100,000..

Okay. So think about it this way. Let's say you go and you make 90.. That's a best case scenario, right out of school. Well, making 90, and now you still have bills to pay, you're only going to be able to put away, let's say 30, if you're lucky on your student loans every year, which means you're on a track with interest, maybe pay this off in 15 or 20 years.

Yes, I do.

And so your best bet is to number one, minimize the damage. Is there a way to transfer and go to a more affordable vet school at this stage?

At this point in my education, unfortunately, no, because I would likely have to backtrack just because some of the programs are so different from each other.

Do we know that? Or is that an assumption? Do we know that for real?

Yeah, I've looked into it when I was way earlier on in my academic career. And I had actually a close friend who did transfer from one program to another and had to backtrack by a year.

Okay. My next question would be, how old are you?

I'm 25.

There's not, I'm just going to be honest, there's no scenario where I'm going to say, yeah, just go ahead and take these loans and deal with it when you deal with it. So for me, even if that means I got to take a break and stack up some money so I can pay for the next semester, I'm going to do whatever it takes to make this happen. Because there is a part of this equation where there's something that we want and we want to have it quickly. When you think, oh, this is the career I want, I want it in four years. So I'm going to take this degree and I'm going to take student loans to make it happen.

Yes, it does.

And so, yeah, we think, okay, four year degree, maybe five years, but this might take you longer to have that. And you have to decide, is it worth me having it the right way, the way that causes the least amount of risk and friction in my life? Or do I want it now the way I want it and I'm going to go into $500,000 of debt in order to get it and then make $30,000 a year debt payments? I mean, the choice is yours.

So, Erin, you got some homework in front of you. And, like we said, your best path is to limit the bleeding here and then make as much money on the back end and pay this off as quickly as possible. But I would not graduate and then hope that 10 years down the line of working in nonprofits that you get these forgiven. That's a bad plan. This is The Ramsey Show.

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Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225..

there. I'll remind you, George.

Thank you. I'll be here. All right. Let's get to the phone. Savannah is up next in New Orleans.

Hi. Thanks for taking my call.

Sure.

Yeah. So my question is, I recently read The Total Money Makeover with my husband, and we have honestly never budgeted before, have kind of been irresponsible. We currently are homeowners, and we have about $10,000 in credit card debt. However, I do have $6,000 in our savings account. I'm really passionate, really want to get this debt paid off.

I would. If I were in your shoes, I would most definitely use this money, saved, all but the $1,000, and throw it towards your debt. Okay. Is the credit card debt your only debt?

Yeah. Our cars are paid off. I do have, of course, my mortgage, but other than that, that's it.

Yeah.

I would do it. I mean, think about it like this. I know this might seem kind of funny, but I'm like, listen, it's not hurricane season yet. So you've got some time to pay off this debt and start saving up very quickly. And there's a big part of this where I like that pressure of feeling like, if I do this, I've got to move quickly, because so many people think that they can just kind of patty cake their way through the baby steps.

I do. I even have another $3,000 saved up, because I started my young children on a college fund. So I kind of had my baby step out of the water.

Hey, there you go.

So that's socked away in the kids' college fund.

It's already in the 529?

It's already invested. Or is that savings?

Well, it's not in a.

Okay. Not in a college fund. Oh, this is good news. Not in a college fund. It sounds liquid to me.

That means you have $8,000, you can throw at 10, which means you have two left. So then the question becomes, how quickly could you pay off $2,000??

Next month?

Now that we've started budgeting, I think we probably could get it pretty quickly. We've been irresponsible with our budget before, but we downloaded the app and I love it. And we're really focusing on our budget, so I do think in maybe like two, three months, we probably could get the other $2,000..

What's your household income?

It's about $100,000.

So let's say.

Yeah. We bring home just under $8,000 a month.

Oh my goodness. That's incredible. That is. So. you're telling me out of $8,000, next month you couldn't find two to throw at the debt?

Yeah. But we have two children.

Well, how much is your mortgage?

My mortgage is $1,200.

Okay. That's not bad. And you've got two children. What age?

Four and two. And they're both in daycare.

Okay. So what are you paying? $3,000 a month for daycare?

I actually have a really great local church daycare, so we pay about $1,500 a month for.

daycare for both of them.

So where's the rest of this money going? Because those are generally the two biggest expenses. You don't have car notes. You don't have any other debt. Where's the rest of the money going?

To be honest, we just started budgeting last month, and all of our money was just literally going down the trash.

So then, George is right. That's what we don't need. George is right. That $2,000 is definitely there. Yeah, because unless you can name off one other major expense, that's throwing off our brains right now, if it's not the mortgage, and it's not daycare, and it's not the cars, then everything else is tiddlywinks.

Okay. So here's your homework, Savannah. You and your husband, you're going to sit down, you're going to make that every dollar budget, and you're going to list out food, utility, shelter, transportation, insurance, list out your minimum payments on the debt, and then see how much money is left over. if you just followed that plan. My guess is you'll go, oh my gosh, if we actually followed this, we would have $2,400 extra this month.

Okay. That's it. Okay, no, that definitely makes sense. I think food was our biggest expense.

I was going to say, check that DoorDash, check that Uber Eats. I guarantee you it's somewhere in that category.

Yeah, it was bad. Whenever we looked at our budget for last month, it was like $4,000 worth of food.

Listen, there it is. And there it is. You're not alone. Like Michael Jackson said, you're definitely not alone in that category, but you can get it on track.

This is amazing. I feel really good about this. I'm happy too. Because there's so much hope in the situation.

Well, at first I thought she was going to say, oh, it's our mortgage. Like our mortgage is 60% of our debt, you know, something crazy. But listen, DoorDash, it's...

That'll get you. Yeah. Higher than the mortgage payment. And she was investing in the kids college fund, which is a good thing. But the problem, Jade, is a lot of people are doing a lot of good things at once and then they become bad things.

That's right. Or out of order.

Yeah. I'm trying to pay off debt, but I also want to invest, but I also want to save up for this thing. And I also need to cover this thing. And there's a method to the madness that is called the baby steps. That's right.

Which most people get it in 30 days or less.

She already had it. Yeah. Great. So you leapfrog to two. Pay off all consumer debt outside of that $1,000..

And most people are done with that in two years or less.

18 to 24 months for baby step two. on average. Very good. And then baby step three takes another three months, six months. Some people it takes 12 months.

And I always say it's basic expenses, because a lot of people, it takes them forever to save that up, because they're saving up all their bells and whistles. budget, right? And I'm like, no, this is the money that it takes to keep things ticking.

If crap hit the fan, what do we need to cover? That's right. This is not all the extra luxuries.

That's right. And then baby step four is my personal favorite, right? Four, five, and six, you're doing them simultaneously. But I love that initial baby step four of saving 15% of your gross really income every month. And so that's my favorite.

Saving for the kids' college. But even then you do them in order. That's right. So you got to put your own mask on first. I was just on a flight and the flight attendant, we had our baby.

I've been doing this show for over 30 years, and some of the saddest calls I have taken are from situations that are completely preventable.

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

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

Welcome back to the Ramsey show. I'm George Camel, joined by Jade Warshaw this hour. The number to call is 888-825-5225.. You call us up, we'll talk about your life and your money. Jacob is up next in Los Angeles, California.

Hi, thank you for taking my call.

Sure. How can we help?

So I kind of need some, I guess some direction in terms of what to do next in my life financially.

Why is that? Why is mom not working?

Oh, no, no, no. She is. She is. So because, you know, cost of living in California is insane. I, the way we set it up is I pay for, I say, I want to estimate like 60 to 70% of my take home pay.

Okay. Okay. So, when you say 60 to 70% of your income, tell us dollar wise, how much, how much money is this costing you every month?

I would say maybe around 28 to 3000.

Okay. So you're spending 3000 bucks, kind of paying the, the, the things that make the house go around and tell me again, explain to me again why mom is not contributing?

No, no, she is.

But how much is she contributing? If you're contributing that much?

Right now she's contributing maybe like 1500.

And explain to me why that is.

Um, well, she doesn't really make much. So, because I make the most in the household right now. So I wanted to, you know, obviously.

So did she ask you to take on the brunt of this, or was this something you sort of stepped up and went, mom, here's what I'm going to do.

Yeah. No, I definitely stepped up. I mean, it isn't fair for her or for me to force her to try and find a job out of nowhere.

The scary part is, it's not fair for you to prop up a lifestyle that's not sustainable for them. Because, let's say, you go and get married next year, you move out, you're not still paying all of their bills.

And how old's your sister?

My sister is 25.

Objection. Wait a minute. Let me, let me jump in here. Okay. A couple of quick, quick questions.

Well, my dad's business was here, so we all moved here and my mom does help with that. Even through the divorce, you know, it wasn't an ugly divorce, you know, now it was one of the situations where, you know, they got married, you know, out of necessity, because they needed to help each other.

But that money's not filtering into your lifestyle now, because they're now divorced and the two children are grown. So my question stands, it sounds like if this is an unsustainable situation for your mom, and I'm saying your mom, because the two kids are grown, like you're grown. It sounds like she's got to decide where can she live, that's not Los Angeles, California, and afford her lifestyle. Because here's my second part of this, you're 28,, your sister's 25.. Typically, the reason that somebody would say, somebody your age would say, hey, I'm living at home is typically because they've got student loans, they've got bills, and it's cheaper for them to live at home than it is for them to maybe do something on their own.

I'm an analyst for a film studio and I earn grosses around $80,000.

Okay. So that's great. To me, $80,000, you're doing good. There's got to be a life that you can have on $80,000.. Is that fair enough?

Yeah. Okay.

There, Jacob, on my screen. here, it says, how do I make enough to take care of my mom? Is that the ultimate question? Are you wanting to make more so she can stop working?

Yeah, she's working right now to help contribute, but obviously she's kind of getting up there and I don't know how to put that delicately, but because she-.

How old is she?

English is her first language. She's turning 60, but she does have some health issues.

So what is her plan for retirement? Because right now, you're just going to stunt your growth as an independent person to just, well, I got to take care of mom for the rest of my life. I'm going to live at home. What if she lives to be 90?? Yeah, I'd be 58..

Yeah, that's the kind of situation I'm in. She does kind of have a very loose retirement plan. I don't think it's as structured as I would like, personally.

What is it? Lay it out for me.

So she said that her plan is to, well, we'll still live in this house or this condo that we have.

Will?

Did you say will? All of you will still be living together for her retirement?

No, my sister is planning to move out, and so it'll just be me and my mother.

Okay.

This is not good. This is not good. This is not good.

Yeah, and I know it's not good, but yeah, once she is old enough to get Social Security, she says she plans on finding one of those, I guess, apartments or whatever that is income based or low income, something like that, and kind of live there. But I guess another piece of information is my parents do have a second property that's paid off, and they're getting rental income, but because of the divorce, they were debating whether or not selling it or just splitting it.

Do you know what it's worth? If they were to sell it, what would they take to have to split?

I think collectively, if they sold it, they'd get maybe around a million.

Okay, so she'd get 500,000 and then have to take out fees and whatnot, right?

Yeah.

Is she getting rental income right now from this property?

Yeah, yeah, right now. It's already been paid off for years, and they've been kind of-.

How much is she making from that?

Now that it's split, she'll make around 1,000.

And then what is she making from her job?

Right now, she's in like elderly care, so I guess it's based off how many people she takes care of. She's only taking care of one person, so she earns around 1,500 net, but she says she is planning on assisting another person. that would bring her income to maybe 3,000..

Listen, I don't mean any harm. You got to separate yourself from the situation. This is going to pull you under, dude.

You're going the opposite direction by saying, I'm going to work more, so mom doesn't have to work, because that becomes enabling. And you're going to have to keep that up for the rest of your life, because mom's not going to up and get a job 10 years from now if you decide to move out. Right.

And right now, to your point, you're paying 60% to 70% of the household expenses. She has no reason. And in her mind, the plan is your sister can go on along, but you're going to live with me until I'm done. And that really puts you in a bad position. If I were your mom, I would be talking to ex-husband, I'd say, we need to sell this property because I need this $500,000 and I need it in my nest egg so it can grow for me for the next 10 years.

And she still has to work for the next 10 years.

That's right. Oh my goodness.

So, Jacob, we're basically telling you to do everything opposite the way you're headed right now. And it's because we care for you. We care for your mom. We want her to have a great life. And currently her loose retirement plan is going to end up stunting your growth for the next decade or two or three.

You know, it doesn't take a degree in statistics to realize this one stinks. 93% of undergraduate private student loans are cosigned. So when you're delinquent and drowning, mom or papa or uncle Joe is stuck in that financial stress along with you. But there is a way out. Why refi?

Why refi is not licensed by the California Department of Financial Protection and Innovation. Why refi is not authorized by the New York State Department of Financial Services to service any New York loans. Funding may not be available in all states.

Love it.

Amanda's up next in Honolulu, Hawaii. Amanda, what is going on? Aloha.

Aloha. Thank you so much for taking my call.

Sure. How can we help?

My husband and I just got out of Baby Step 2, so we're debt-free and we're looking into the next step, which is the three to six-month expenses saved up. My husband's in the military, so he gets a housing allowance, but we don't see it. since we live in privatized military housing. I'm wondering if I should be including that number in our three to six-month expenses or just go based off what comes out every month.

How much longer will you be in this scenario where you have that stipend?

His contract ends in 2027.

You could look at it a couple of ways. I definitely would want the emergency fund to be based on your life, but if you know that that's going to be changing here very quickly, then I would base it on what you know your life is about to be. In this case, you've got three years. You might consider saying, okay, we're going to do six months or three months, as is, and then just know, when that time comes and you no longer get that benefit, that you're going to have to up your emergency fund based on what your new mortgage or your rent payment is.

Okay.

What are your current expenses?

There are between $1,200 and $1,500 a month.

Okay. So let's say we went on the high end of six months, $1,500.. So we're talking about nine grand for a fully funded emergency fund.

Absolutely. And can I ask a follow-up question? real quick? Sure.

That would be, I would call that separate savings, because emergency fund is for emergencies. So if something out of the blue took place and you had to deal with it, you've got the emergency fund. But if you know, hey, my family, they live a plane ride away and I'm going to have to see them from time to time. I would have that a separate account. That's basically just a sinking fund to know, okay, how often do we plan on visiting them?

Is it three times a year and it's going to be 500 bucks a pop? Well, that's going to be 1,500 bucks we should have set aside.

Absolutely.

Awesome. Well, thanks for the call and tell your husband, thank you for his service. That's huge. I mean, people moving around all over the country, now there's worse places to be than Hawaii.

Absolutely.

If you're going to go somewhere.

It's a good discussion on that. three to six months of expenses. I think that people don't know, should they have three months or should they have six months? And so, we always filter it through things like, if you're married, are both spouses working?

Are they stable jobs?

Are they stable? I mean, what job really is, but you know what I'm saying? It's different if you have two jobs.

It's like a teacher and a postal service worker. Pretty stable versus commission, something where it's a startup, some of that tech world where there's layoffs all the time.

Right. If I was single, though, and I had one of those, quote, stable jobs, I'd still do six months. Of course, you want to consider the health of your family, the health of yourself.

There's chronic health conditions in the family. You've got to worry about that. Yeah.

So, there's some things that you can filter through to figure out what really is most suitable for you. And then there might be a situation, like this is the way Sam and I are. I'm like, we both have stable jobs. There's two of us working. We don't have health concerns.

insurance deductible. Add a pocket max on your health insurance. All that stuff. Your home insurance deductible, the car insurance deductible. All that can add up.

So, it's good to think about that.

Good questions. Thank you. All right. Tracy is up next in Sioux Falls. What's going on, Tracy?

Hey, guys. How are you doing?

Doing great. How can we help?

Yeah. So, here's our situation. It's a real estate question. About a year ago, we sold our home under a contract for deed and purchased a different home. Well, two months into the contract for deed, it fell apart.

Okay. What's left on your current primary home mortgage?

So, on, the house that we live in right now, we have a mortgage of $340,000.

Okay. And on the rental?

I'm sorry. No, no, no. I'm going to back up here. So, on the house we're living in, that is $44,000..

Sorry. You broke up with us. Speak directly in the phone. See if that helps.

Okay. On the house that we're living in right now, we have a mortgage of $440,000.. Okay. And on the rental home, we have a mortgage of $65,000..

Okay.

What other debt do you have?

Zero. Okay.

And you guys have a fully funded emergency fund?

We do. Yep.

Do you have one for the rental home as well?

We did. We upped emergency fund. after we kind of chatted with our financial advisor. We upped that. So, we're at like a $30,000..

And what's the rental worth if you sold it after the year was up?

Right now, it's about $420,000.

Okay. So, you probably net around, I don't know, $320,000 out of the deal?

Yeah. If you sold it? Right, around $350,000 is what we figured, because we actually have somebody who's interested in purchasing that. So, we wouldn't need to pay for real estate fees or anything like that.

Okay. So, what would this do? Just help pay down your current mortgage? Is that the goal here?

Yeah, exactly. So, when we bought our home a year ago, we're at like a 6.1% interest rate. So, kind of like our nature is that it makes us feel a little bit itchy to have a high balance on our mortgage with a kind of high interest rate. But our long-term goal has always been to have a rental property kind of in our portfolio. But it just sort of feels like a question of timing.

I think you're asking yourself the right question. If I were in your shoes, it would be really important for me to live in a paid-off residence before I had a rental property, especially a rental property that would be paid off soon. I mean, you only have $65,000 to go, if I heard you correctly. And so, if I were you, I'd sell it. I'd take the $350,000, I'd put it on your mortgage, and that leaves you with less than $100,000 to pay off.

So, thanks for the call, Tracy. Hope that helps. And the other option is you aggressively pay down the rental. That frees up that payment, and now we start attacking the mortgage, and you hang on to the rental. I'm okay with both of those plans, but if you want to be debt-free sooner, sell the rental.

Interesting. So you have to dial a number.

Yes. All y'all sending me the DMs with, like, nine paragraphs, I'm telling you, call the show. This is the best way to get your financial questions answered. That's what we're here to do. Nikki was brave enough to call in, and she made it.

It's going good. How about you guys?

Doing great. How can we help?

Okay. So my husband got a workers' comp settlement for an injury, and it's about $100,000.. And so we took—they just automatically put us in biweekly payments, so we're getting about $1,300 for it every two weeks for the next three years. We currently have a school loan and a car loan left in debt. And so our question is, should we take the full payout of the settlement, which would cost us 4% of the $100,000, or should we keep doing the biweekly payments?

It costs you 4% to take the full $100,000?

You're talking—you'll take a $4,000 hit in order to get—you'll get $96,000, essentially.

Correct. I'm doing that.

Yeah, so we would lose a little bit, yeah.

I feel like, not only financially, but also emotionally, mentally, you know, you're going to be in a very different spot.

Yeah, plus, for many reasons, because you'd also get used to having this pad in your budget. that's not real, per se. And then, when it's gone, it's like, oh, that's a total lifestyle shift. And if you can take that money, that $96,000, what can it clear? Tell us all the debt and stuff.

So we have a $30,000 car loan that's at a 6% interest rate, a school loan that's $46,000, so a total of $76,000.

But if you paid it off now, you'd pay off the car, the student loan, and you'd have $20,000 to put towards?

Correct. Do you have an emergency fund?

Nope. We've been kind of stuck on Baby Step 2 for several years now. So this is kind of like our jump of, like, we could get past all of it, and then we would just have our mortgage left after that.

Yeah, what's the mortgage?

Mortgage, we have $300,000 left on that. We've been paying a little extra to it, so we have $2,000 a month that we pay towards that.

I love that. If I woke up in your shoes because of the situation you're in, I would 100% use that money. The $4,000 to me is very negligible in this whole equation. I'd pay off the debt. I'd put the rest aside and whatever else you might need to call it three to six months of expenses, and then I'd start Baby Step 4, investing 15%.

Perfect, because that's what we're doing.

And the other piece of this, you have $20,000 at the end of this that you put in a high-yield savings account. That'll make, right now, 5%. That's $1,000 in a year.

That's great.

That you would make. Perfect. And so that, on top of the interest savings from not having to pay interest on these payments and freeing up those payments, which have you done the math on what that adds up to? What do those payments amount to each month for the student loan and car loan?

Just $900.

Just $900?

Yes.

So think about it that way. I don't want a car payment. You're getting a forever $900 raise just by getting rid of these payments. That's right.

Right.

So that on top of the high-yield. Okay. We've convinced her. We're done. Our job here is done.

I want to caution you, Nikki. One thing. I hear there's just been a couple of little things that you've said that I'm like, listen, you're not doing the Baby Steps in order. You're kind of still doing your thing. I heard you say that you're already investing.

Okay, perfect. I know my husband has a – it's a mandatory 12% match, so we automatically have that, regardless of whether we want to or not. Great. So that's been going for the last –.

Well, make sure you add your 3%. Make sure you're still investing up to 15%. And the reason we say that, you might think, well, Jade, there's the match. But if he loses that job and doesn't have the match anymore, you guys are not in the rhythm of investing 15% of your money. Right.

And if you guys have too much in your nest egg, later on, you can call back and yell at us about how you have too much money. I have too much wealth. That's a good problem to have.

No, I think that is perfect. We put in the paperwork to do the buyout, so hopefully all of this will be done soon. But I appreciate your guys' advice and taking the time. Yeah.

I hope your husband's doing well, too.

Yeah, final question. How's your husband doing? It's a pretty serious injury. He is doing good.

Yeah, he had two discs replaced in his neck. He's a firefighter. Wow. But yeah, it ended up being a very lucky scenario, and it was awesome that his work took care of him. So he's in a good spot and doing well.

Awesome. Well, wishing you guys the best on this financial journey. That's a good problem to have.

Yeah.

An extra $100,000 just came about, and we just knocked out all of our debt. And that's our emergency fund, and we're ready to invest. So I'm going to leap just emotionally, to leapfrog and not have this year of sort of just deep sacrifice. Yeah, yeah. And to be at that spot.

There is the piece of that, though, where you have to do an extra layer of work to make sure your behavior has actually shifted. And that's why I kind of called her out on, hey, you guys are having this windfall. Obviously, it was at a cost to her husband's health. But don't let that convince you that everything's like hunky-dory, because there is some mental work and behavioral work. And, I mean, obviously, sticking to the plan work that still has to be done.

Yes. When you build those habits and discipline, you have that deep sacrifice. It changes you. Your physiology changes and the way you look at money changes versus, hey, we just got a lump sum. Let's pay off the debt, and let's keep living on more than we make.

It's interesting. There's that gradual change that happens mentally. And for her, it's going to be lickety-split.

Yeah.

She can do it, though. I have nothing but confidence in them. They seem like very smart folks.

Got a good hand on the shoulders? Yeah. Oh, my goodness. Well, hey, the baby steps work, y'all. You got to do them in order, but they work.

Here's your challenge, George.

Uh-oh. What is it?

First you said big dog. Then you said unleash. We've got a pet theme going, so let's get it with money and marriage. What are you going to do?

You think of this one. Money and marriage getaway happening this fall, so you've got time to plan for that one. And don't be barking up the wrong tree if you miss out on the tickets for this one. Okay? They're going quick.

No, they don't.

From the scary stuff. They're going to get up in your business to help you win in your money and marriage. You'll walk away with tools you need to build that deeper connection and win with money together. So if you want to attend any of those events in person, the virtual one, go to ramsysolutions.com. Learn more.

How we doing?

Good. How are you?

Good. I just have a couple of questions. My first one is I am a father of two and a husband, and my wife has been a stay-at-home mom for about a year and six months now, and I'm just trying to figure out what's the best way to bring that conversation up of going back to work, because we're a family of four on $43,000..

Yikes. How old are the kids?

One in six months, but we have a lot of family and friends in our church and in our family that would watch them for little to none.

Uh-huh. So you're making $43,000, and what type of work do you do?

I do environmental work. So I took this job because I got laid off from my last job with a guy that I go to church with, and it was just like a spur of the moment, and I can't afford to miss, like, any work.

What'd you make at your last job? What'd you make at your last job?

Fifty-six.

Okay, so you know that you have the potential to earn more, but right now it's just, I got to take anything until I get the job, right, if I understand? Yes. Okay, now, your wife, what was she doing before she started staying home with the kids?

She was a cosmetologist.

And what was she earning every month?

I think, like, $15,000 to $2,000 a month. So she's earning... An hourly commission.

Okay, so she's earning $2,000 a month. So how much debt do you guys have?

I brung in the debt of a truck of, it was $31,000, but I've got it down to $27,000.

Okay, what else?

That's all the debt that we have.

That's it.

That's it.

Now, this is solvable. What's the truck payment?

$530 a month.

So if you had an extra $530 a month, would things be better? Would she be able to continue staying home?

Things are just, like, super tight. Like, I pay $530 for a truck, and then my interest, or not my interest, my insurance is $418..

But if you got rid of both of those things, let's say you sold the truck. Now you've got basically $1,000 freed up every month.

Uh-huh.

Would that fix your financial situation? And let's say, you got your income up a little bit, too. I'm just wondering, are there other paths here? I would rather you sell the truck than your wife have to go back to work if she's truly wanting to stay home.

She really is wanting to stay home, but I've just, I've brung up the conversation just because of how tight it is right now.

The question is, here's my question from her perspective. Did you guys speak about what the plan would be once she had the babies? Was it like, hey, we're going to have these babies. I'm going to stay home. And you were like, I'm good with that.

We discussed it, but it wasn't like up for her to be a stay-at-home mom for like a forever time. Okay. It was just like a timeline, and then, I mean.

And what was the timeline?

11 months later, we had our daughter. Okay. It was like we had been together for two years. We'd been married a year, but we were together for two years, and then we had our son. And then, three months later, she got pregnant again with our daughter.

And are you guys on a budget? Are you working a budget, or is this just kind of chaos right now?

I would say we have a written budget, but we don't really stick to it. So it's kind of just like chaos.

What I would say, I want you guys to get on EveryDollar. And if you don't already have it, Christian will pick up and make sure you guys have it. Or at least go to EveryDollar.com slash Jade and get. I want you on the premium version, because I want you to have all of this in your arsenal here. I want you guys to sit down and do the budget tonight.

We've talked about that, and we've had a couple of people tell us, like, yeah, we'll watch them three or four times a week, and then she just works. Because we only have one car at the moment.

The truck?

So it's just—.

The truck's, the only car? Oh, okay.

What's the truck worth?

Yeah.

About $17,000.

That's what Kelly's rulebook says. Yes.

Oh, man.

So I had a Kia before this, and we were having another kid, and we were just, like, so certain on getting a bigger car. And so I was literally, like, four payments off from paying the Kia off. So I sold it for, like, $3,000 or $4,000 more than what I owed it. So then I paid off what I owed, and then all the money that I got back from that, I poured into the truck.

Well, not necessarily a pour. You dripped it into the truck and took most of it on a loan. Let's be honest.

Yeah. So then—.

You bought way too much truck, Manuel. Wow. Way too much.

Oh, I know. And I regret it every day.

And I would rather see you sacrifice to get rid of this truck instead of sacrifice to harm your wife's well-being and her dream. And so that might mean you go side, hustle your way for the next few months, scrape together $10,000, sell the truck to get rid of the loan, and then you scrape together another $5,000 and get a beater car that gets you around for now.

Well, yeah, I thought about that. And then I also was talking to my wife when we were doing numbers last night, was, if I, like, door dash for nine months every day after work, I would be able to pay off my truck in six to nine months, depending on how aggressive I want to do this.

I'd also look at getting a different full-time job where you're making $56,000 or more again. I don't want you to get too comfortable here. Just side hustling. If you can get your core income up and then side hustle, this speeds up the whole process.

Mm-hmm.

And start looking around your house and seeing what you can sell. Look at everything. Suddenly, everything has value. Something's going on Facebook Marketplace. It's going on Oleo.

I would make some deep sacrifices and revisit this conversation six months from now and see if it's still the right move for her to go back to work. But I wouldn't just do it today.

Not with a six-month-old.

That puts this segment in the books. We'll be back right around the corner.

Hey, guys. Thanks for taking my call. So I really am seeking some financial advice. I'm originally from the Nashville area, and I've been living and working out here in San Francisco for about eight years. And my wife and I, we kind of know that even if we could afford a house in San Francisco or the Bay Area, there's no point in us spending a million dollars on a two-bedroom house.

Way to go.

Yeah, thank you. So we're just trying to figure out, like, we kind of know, San Francisco is not our final destination. We know that we'll end up moving. And the other part that sort of complicates this is my wife is from Germany originally. So we flirt with the idea of moving to Europe.

Is this? well, I don't know if that's so. you'd buy the house and go to Germany for a while, or you'd buy the house and stay in San Francisco for a while.

Stay in San Francisco. Yeah, I have a, I have a pension on my work, and the longer I stay, the better it is.

Okay. I think that you guys have some choices to make here. I would not to, to broadly answer your first question. I would not buy a house in Nashville, rent it out for years until you're ready to move. I wouldn't do that for many reasons.

Yeah. Oh, I work at a, as a technician and a hospital owned by the university of California. And she's going to graduate with the international business degree.

Can you both do your work in other States? It sounds like it.

We could, but the compromise would be that if I were to go work at Vanderbilt, I would probably make 25 to $30 less an hour.

Okay. But you're also living in a different market. And so the reason that you earn more in, in California is because it's a more expensive state. So there is some balance. They also have wages,

no income tax here in Tennessee, as you know.

I know.

So I think it might be a wash is all I'm saying.

Yeah. You know, that's, that's true. The thing that I, we're super fortunate, you know, I, to the house that we were in now, I, I actually put my own listing on Craig's list and said, Hey, this is who we are. This is how much we'll pay. So we have a, we have a two bedroom here in San Francisco and we paid 1,900..

that's excellent. Like, how are you only having 2,600 a month total in expenses in San Francisco? That's crazy.

That's excellent. But that's not where you want to be. And it's a rental.

I know. I know.

So everything you've described is just like golden handcuffs. Like, well, I got to stay for the pension and I got to stay for the rent, but I don't want to live here. That's what I heard.

Yeah. Yeah. Essentially, essentially, I can't, you know, I can't justify it in my own mind to, like, you, know, what would, what would a half a million dollar house get you in Tennessee versus.

Honestly, right now it wouldn't get you much. I don't know if you've been in Nashville lately, man, but it is tough cookies around here for a $400,000 house.

But it's going to get you more than it would in San Francisco.

Yeah. And that's the thing too, is like, I think like, okay, I've got this California money and I'm still living on a really reasonable, like cost of living month to month. And so is it smarter to me to like, use this California money and invest it while, you know, the market is lower than what it will be in potentially five to 10 years when we move back home or.

I think the baby steps still apply here. And that means, you know what, the 20 K savings we're going to take down to one. I'm going to throw 19 at the student loans. We're going to get rid of these student loans faster. When she graduates, she'll help beef up the emergency fund.

Got it.

And then, when you're ready to make the move, you just move and you don't let your, that career, that job, that rent price, dictate the rest of your life. That's my worry.

Yeah. Definitely don't let your pension be the dictator here.

Cause I mean, you're, you're not that old. How old are you?

31.

You got plenty of time and life to invest and create your own pension through nest egg.

Yeah. And so, you know, there's so much noise from the outside. Like you, hear people talk and they say, okay, well, you're not going to have social security by the time you graduate.

But you, you, you have a job and you make plenty, plenty good money. Your wife does too. And the quicker you do these baby steps, like George laid out, the quicker you'll be investing 15% of your income every single month. And that's going to stack up. You're a young guy.

Or they hate their job and they're like, well, I got to have my pension. I'm like, that's not who you want to be.

Yeah. George and I know the stats. We know the stats, and a lot of people are not walking the walk. They're just yapping. So don't let that phase you.

Yeah, definitely. All right. Well, thanks you guys. I appreciate that.

Yeah, man. Absolutely. Best of luck coming back home here in Nashville. Love it. Stephanie's up next in Milwaukee.

Thank you for having me on. So my husband and I are wanting to get a new car for safety reasons. And I just kind of wanted to talk to you guys and see if it sounds rational or we're just trying to buy a new car. Cause we want it.

Tell us about it.

So we live in Wisconsin where it gets really snowy. So half a year, it's kind of difficult driving around. If you don't have four wheel drive, when it's all icy and snowy,

I feel that.

And then we also have a one-year-old daughter. So safety has become, you know, more of a concern, especially driving her around in that type of weather. We have been sharing a car for about three years. So we do have one nice, reliable car, but, and we both worked from home, but now my husband is working outside of the home. So the other car that we have is a, kind of an older car that I don't feel super comfortable in.

When you say older, I want to know details.

So it's a 2000 Toyota van, but it does only have 75,000 miles on it.

Okay. And it just doesn't have four wheel drive. That's the only thing.

Yeah. And just with it being, you know, 25 years old, it just, there's a lot of rust on it. And it just, it feels kind of unsafe. Like something could break at any point.

Okay. So tell us now the financial snapshot. Tell us, you've got the nicer car. Is that one paid off?

It is not. It is a 2021 Toyota RAV4, 45,000 miles, 15,000 still owed on the loan.

Okay. 15,000 on that one. And then, of course, this older van is paid off. Please believe.

How much money do you have?

Well, we do have a good income, but we do have some debt, we're trying to pay off and we do have a bit in an emergency fund too.

Okay. What's the income and what's the debt? Total debt.

Income is about 200,000.

How much total debt do you have real quick?

Oh, about a hundred thousand. Okay.

Oh, my goodness. And you have money saved. You said how much saved?

25,000 emergency fund.

Okay. It's not really an emergency fund that should have gone towards the debt. If you were to sell the car, if it really is in bad shape, and you could sell it and maybe get a couple thousand for it and put another couple thousand for it. I'm fine with you spending $5,000 to upgrade this car, but I wouldn't spend any more than that. I keep it.

I think mama drives the RAV4, he sells the van and gets him a little beater car to get around it. That's what I would do. Mom always gets the nicer car. That's the rule in our house.

Yeah. He says, how do I find motivation to budget when I can't find it? That's a good question.

It's like car keys. I just don't know where I put that motivation. I don't know where I left it.

I love that he's thinking about this. You know, in high school, I.

I didn't have motivation at 16 to budget.

Not to budget. I mean, do homework, practice, volleyball. Not budgeting, was not in my, my thoughts there, but I love that he's thinking this way. You know, if you can get in your mind very early on the three things that you can really do with money, which is give it, save it, spend it. And if you can do that in the proper ratio at that age, I think that you're ahead of the game.

Yeah. The way I look at this is showering. How do I find the motivation to shower? You don't, you just get up and you shower. It's just part of being an adult, right?

But he's not an adult yet.

Well, you know, but he probably has, you know, there's some people in the picture. Maybe he wants to go on a date, ask someone to prom.

He definitely needs to shower.

And so that's how I see budgeting. It's just a habit and discipline you want to build. It's not this thing. like, I got to find the motivation today. You go, what are my goals and what do I need to do to get there?

Yeah, that's true. It's really the means to the end to get the life we want, whether that's a vehicle or a class ring, or, you know.

And when I was working at 16, 17, I was a knucklehead. I was spending every paycheck at my retail jobs and nothing to show for it. And I wish someone had showed me the investment calculator. Hey, I just put 20 bucks away today at 16.. What will that be when I'm 66??

Yeah, no, I had no – I wouldn't even known the words that were coming out of your mouth when I was in high school.

I was like, let's go to Hot Topic, man. Let's do this thing. Hot Topic. Let's hit the movies. Hot Topic.

It was good. It's very high school.

Meant. for those that understand. Jade speaks in parables. I love that. Let's get to the phone lines.