Freedom Isn’t Found by Borrowing Money

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 Jade Warshaw this hour. The number to call is 888-825-5225.. You call in, we'll talk about your life and your money. And if I feel spirited today, it's because I am, Jade, because we have an electric crowd that's here for our Total Money Makeover weekend.

That's right. I know, that's right. It's about to be a pep rally up in here.

Well, let's kick it off with Joe in Newark, New Jersey. Joe, welcome to the Ramsey Show.

Hi, George. How's Jade?

Well, the biggest thing I hear is it kind of—and I'm not trying to overstep, but in many ways it kind of sounds like you're predetermining his path in life. You're saying, hey, it's not worth it for you to get your education, son, because you are going to run the family business. And there's a very good chance that—well, number one, it's putting the pressure and stress on him now, at ninth grade, to kind of say, like, this is my future, whether I like it or not. And listen, you might be seeing him say, hey, I do want to do this or I'm interested in that. But at ninth grade, he really doesn't know.

Sure. Okay.

My overall thinking is this man's not even done with puberty. Do we really need to be throwing him into this family business at this stage? He's probably just, you know, the guy wants to get his first girlfriend at this point. And so I feel like we should. let him be a teenager, let him be a kid, let him grow a mustache, let him grow a mustache, let him experience, you know, high school.

And there's probably a way that you could, if you wanted to give him some exposure to what it is that you guys do all day, to what the values of the company are, like, there's probably ways that you could build that in. You know, like Rachel says, more is caught than taught. So if you're talking about it at home, you know, every once in a while, he's showing up with you on a Saturday, or you're, you're talking about the things that you're working on. You're talking about the things that you do, that, what the business does. I think that he is, he is going to understand that, okay, this is what my family does.

Okay, that's great. Thank you very much. Definitely a lot to consider. I see the value in what you're saying.

Listen, I'm going to flat out tell you, don't do it. I mean, I hope you don't do it.

I'm 50-50 on it. It's like, it's like when he has a day at school and one of the teachers is kind of like, kind of in the weeds and being silly about things. I, in, in my heart, in my mind, I'm like, we're kind of past. that. I don't, we don't really need to deal with that.

Like, if you're talking about what's going on, like the educational situation where he goes to school, if you don't like that, like that's a completely separate issue. If you're saying, hey, maybe this is not the right environment for him to have high school, then yeah, there's options there. Whether it's homeschool or online school, or a different school or private school, like. there's a lot of options there, but I don't want to confuse the two topics. I definitely, you know, so that's a different, that's a different thing.

What does he think about this, Joe, when you ask him about it?

He, he, he's very opinionated. So he likes, um, he, he knows, uh, kind of the, what we do and the velocity of what we do it and things like that. And he thinks to himself, why am I here? Why am I going to school? This is dumb.

So like, well, that's one reason to put pause on this whole thing. Correct.

Correct. I want to put them in military school and say, I'll see you in four years. You know what I mean? So it's like, sometimes. he's really pleasant.

And it's like, I feel like there's two issues we're talking about here. I feel like the first thing you called him was, you know, we need somebody to pick up the family business. Now's the time for him to get the training now. But I feel like now we've shifted into, he doesn't want to be at school, but I think he should be somewhere, because he's kind of starting to show these spoiled tendencies. I think there's two separate issues that need to be worked on.

And you got to remind him, listen, if you're going to be a part of this, you got to work twice as hard as everyone else. It's got your last name attached to it. That's how Dave sees this. And if he's got that entitlement, he's not going to be part of the business until he's emotionally ready. And we're talking about a 14-year-old.

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Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225.. You jump in, we'll talk about your life and your money. Well, it's graduation season, and the grad in your life has now spent more than 4,300 hours in class.

Thank you very much for taking my call. So I'm going through a major life change, going through a separation.

Wow. How recent was this?

That I've been put in? Within the last two months.

Wow.

Is it finalized or is it still processing?

It is processing. The paperwork has been signed, just waiting to go in front of the judge.

Okay.

So you'll get $80,000 out of this, but you'll have the car and the car payment. What's going to be your living situation?

So I'm going to be moving in with my father temporarily.

Okay. And then until you kind of get your footing and find where you want to live?

Yeah, I'm just not trying to make any rash decisions, and, you know, like rush out and buy a house or go and get an apartment to rent. I don't want to rent anything, because that's like throwing your money away.

We can talk about that. How old are you?

Jinx, you may go. 36.. Okay. Well, you're restarting your new life, new chapter. It's a clean slate.

What's left on the car loan? So I had to refinance it out of her name so that she could get pre-approved for a house.

Okay. And what's your income?

So my income last year was about $46,000 before deductions.

Got it. Ken? Okay. Well, you're going to be able to easily pay off that car loan as soon as you get the ADK cleared. And it's still going to leave you with $68,000..

Are there children?

Yes, there are two children.

Okay. What's the custody situation?

So it'll be shared.

Okay. And is there child support, alimony?

Well, no, there's none of that, as long as everything is approved by the judge.

Okay.

So does that mean that you and her have just decided that you're both kicking in? Or what does that mean?

Well, I'm sorry. What do you mean by that?

Have you guys decided your own method for splitting the cost that it's going to take to raise these kids? Or what does that mean specifically?

So we've gone the route of disillusion rather than divorce. It's just not as common for people to know what a disillusion is. Basically, we've come to our own terms on everything, and it just has to be approved by the judge.

Got it. Got it. Got it. Okay. Yeah.

Okay.

Are the kids going to stay with you half the time?

Yeah. Yes. So it'll be a 50-50 week on, week off.

And right now, would it be staying at grandpa's?

Yes. When they're with me, yes. Okay. My father does have a very decent size home, so the kids will have their own space. I mean, we're all going to have our own rooms.

Okay. That's good. That's good.

Yeah. So it's, I mean, it's temporary. My daughter is a little bit older. She is probably primarily going to stay with her mother because of where she intends to go to school. She's doing college classes.

Okay. Well, the other piece to think about here is how can we increase your income in order to be able to afford rent with multiple bedrooms and all of that? And so that would be my next step as a real estate agent, go, what do I need to do to get some more clients, even in this market? Do I need a side hustle right now to supplement until things pick back up? So that'd be my next step as you knock out the debt and begin to save up for the down payment.

And begin having those conversations about how you guys are planning to help out with college as those things come on the forefront.

Don't let any assumptions happen.

Yeah. Make those expectations clear.

JC is up next in New York City. What's going on, JC?

Hey, Jim, George. Thank you for taking my call.

Sure.

My wife and I actually yesterday finished Baby Step 2.

Amazing.

I just raised the roof on your behalf.

You just fully raised it now.

Thank you very much.

I couldn't reach the roof, but I would have if I could have.

Yeah, she brought a book home 13 and a half months ago. I picked it up, read it, and I said, we're doing this.

Let's go. Anyway, proud of you guys.

Yeah. Thank you. My question is this. We'll have a fully funded emergency fund by October 1st. We want to do six months.

I wouldn't start with the HSA. I would with the 15%. First of all, I do it off your gross numbers. And I would start with whatever employee-based plan you have. So, whether it's a 401k or a 403b, if you have a match there, I would start with the match.

7,000 this year.

This year. And I would start with that. If there's still money to go, then you could go back to the 401k or 403b, or whatever it is that you have. What do you have?

Well, we have both. Well, she has a 401k that's sitting dormant right now from an old employer. So now she has a new employer. She'll be eligible for a 403b. And I have a 401k through my employer.

You can do a backdoor Roth if you're a high-income earner, which sounds like you are. Do you have a Roth 401k option and a Roth 403b option?

The 401k, I can say yes, for sure. I'm not sure about her 403b.

Well, I'd start with the Roth 401k option. And you're probably going to be able to do up to the max 23,000.. I'd start there. And then, if she has a Roth option, I'd go there. And then, like George said, if there's still money to be had, since you're on the backdoor status, then you can move over to that backdoor Roth IRA and make sure that she's doing a direct transfer rollover for that old 401k.

Yeah, don't let it sit there. We want her to have full control. And the Roth IRA will give her a lot of options that are traditional IRA, depending on what those funds are sitting in. You don't want to transfer it to a Roth account if it's not, because you'll have a tax burden there. And you only do that once you're in baby step seven, which I believe you guys are on the track to be there real soon.

I've been doing this show for over 30 years, and some of the saddest calls I've 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?

How am I going to eat next week?

In the middle of all that grief, it's terrible. So life insurance is the one thing, especially as a mom with three little kids, that I'm so big on for people to get because it's inexpensive. Zander is the place that Winston and I actually get all of our life insurance.

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. So get a free quote.

This is The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Open phones at 888-825-5225.. Jade, you sent us this article that it piqued my interest, and I think the listeners can learn something from it. So would you regale us the tale?

Yeah, it all started. I did a media deal on that show on Fox, The Bottom Line. And so it kind of came as a result of this. It's this Wall Street Journal, I believe, saying Gen Z sinks deeper in debt. And it's all about how Gen Z is facing kind of this debt-to-income ratio, rent-to-income ratio.

Quarter of your take-home pay.

Yeah. Especially if you're going to own a house. And so if you want to at least get to where it's a third, that person would need to take home around $5,961 per month.

So about six grand a month.

That's right.

To 72 grand a year.

Meaning, well, meaning they would need to take home about $84,000 to $85,000 a year. So that's a $25,000 increase in order to get this rent where it needs to be in their budget. And so when you look at that, okay, $25,000, it sounds like a lot, but then you go, okay, that's about $2,000 a month. Right? So my thought here is we're kind of the side hustle.

Yes. And I know it's not fun to go, we shouldn't have to work three jobs to make a living. And I'm going, listen, when I was 22 and I was a college graduate, this was my life. You know, it was side hustles, getting out of debt. I had roommates up until I was married.

Absolutely.

You can't get your own flat in the best part of town. And the median means middle. Middle. That's right. That means half of the rent in America is less than that.

That's true. But I mean, for me, it's society is going to put an option out there as the solution. And we've really got to beware. Because I think when you do find yourself in a situation financially, that's not, you know, what you want to your point, George, where it's rent is high, or there's inflation, or there's student loans, whatever that thing is. Society is going to say, oh, we have the solution for you.

It's the most marketed product in history.

That's right. And so in 2021, credit card companies loosened the qualifications for who could get credit cards. And more people opened new accounts. And so Gen Z members opened new credit card lines at a faster rate than other generations during the pandemic. And so that's why I think the message that we're putting out here, George, is really, really important.

And then buy now, pay later becomes your solution, quote, unquote. And the credit card companies are always marketing to you as, hey, we're going to give you financial freedom and breathing room. They're using the same language we do. But they're selling you chains. That's what they're really giving you.

And that's the thing. That's honestly, George, that's what you have to take away from this. Any company that's really benefiting from your bondage. Benefiting from you being in debt. Benefiting from you taking on more of that.

I mean, because you needed the extra, the money.

Yeah, the rent was, the rent was $1,200.

That's a side hustle in its own right. And that's why I wrote the book Breaking Free from Broke, was to help people understand all of these traps out there. Show them a different way, regardless of what's happening with inflation, the economy, and who's going to be president in November. It was all so exhausting because none of it led to solutions or freedom. It just led to wallowing and pity parties.

You can't let a good reason become a bad excuse. And that's what we want to get to. Listen, there are good reasons out there. Like. the reason is inflation.

Amen. Well, we built a free tool to help people find a great side hustle for them. You can go to ramsysolutions.com slash side hustle. And this is a tool that I help build. that really helps people figure out how much time do I have?

Tell them a little more about that. Because when I saw this quiz for the first time, a lot of people think I don't have time for a side hustle. Or my skill set, I don't have the right skills for side hustles. But the way this does it is really great. It talks about your time.

And we have different kind of. in the back end, there's quadrants. You have low skill, high time. Do you have high skill, low time? Do you have a mix of both?

Make it better.

But you've got to be a part of that. You have agency. This is The Ramsey Show.

This show is sponsored by BetterHelp. Hey, good folks, it's Deloney. And with back to school madness on deck, my family's schedule is already so packed. And we haven't even made room for things like exercise and date nights and counseling and all the other things that make our life even worth living. When it comes to taking care of me, I have to remember to put on my oxygen mask first, meaning I have to do the things that help me stay well and whole.

Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. If you're enjoying the show today, or any other day for that matter, do us a quick favor and hit the subscribe button, hit the follow button, leave a comment, leave a review, share it with a friend. All of that is the best marketing plan we have. And you guys are so good at it, naturally, but it's helpful to remind you to do it.

Good afternoon. Thanks for having me.

Sure. How can we help?

So my wife and I have accrued some points from a credit card that we have. And really, I'm just curious, on your opinion, if we should use those for vacation. Probably this fall, take our kids on vacation, as we're just working through getting through that debt at the same time.

Oh, how much debt do you have?

So between on the credit cards, we have $64,000.

What's your household income?

$122,000 or $120,000.

Whew, that's not really a vacation. I feel like it's hard to vacate when you have that kind of debt tied around your body, right? And you're going into debt in order to make it happen?

Well, we already have the points accrued. So we've got like $3,300 worth of gift cards. So it probably cost us $2,000 to $3,000..

No, it cost you $64,000.

At 22% APR. Yeah. So the points are the problem. They're not the solution to anything. And so I would clear the debt.

Why are you guys spending so much on these cards and not paying it off? Because the truth is, George, plenty of people argue with us and say, oh, I use my credit cards for the points, but I pay it off every month. And you're a really great example of somebody who's not paying it off every month. So what's happening? that you're putting $64,000 worth of debt on a credit card?

Yeah, that's a great question. So we relocated about five years ago. And before we moved, that was exactly what we did. But with that relocation, we started to just be foolish and lived outside of our means. And I wasn't making, or we weren't making, the amount of money that we are now.

Okay, I get it. I think in her mind, it's like, listen, we have this free money sitting here. Why not use it? And then we can tackle these credit cards. I'm just worried that.

Right. So we've got $5,000 or so in savings. So more than just the emergency fund. And I could just put that obviously on the credit cards. that kind of kept it there, with this in the back of my mind.

How bought in? are you guys? Are you ready to sell the cars level?

I don't think we're quite there. I drive a lot for my job. So I'm not sure I'm ready to get a beater of any.

You know what that means? If you drive a lot for your job, it means your car is depreciating faster than the average person, which means you are going to be upside down on this car if you're not already.

That's true. Hey, before we get too far into the cars, you said you had the $3,300 on gift cards. Is that what I heard you say?

Yeah. You can redeem it for gift cards.

They're already gift cards. They're already redeemed.

What kind of gift cards are they?

They're for Disney.

Oh, you redeemed them for Disney gift cards. Well, ain't that a...

Here's my thing. I think we hang on to the gift cards. They're not going to lose value over time. Let's wait till we're debt free and then we'll do a Disney celebration. And these gift cards will help pay for it.

So break down these cars. You said $44,000 in cars. What's yours and what's your wife's?

So I drive a Jeep Cherokee. It's a 2021 Jeep Cherokee. And then my wife drives a 2019 Chrysler Pacifica.

And what's the debt on your 2021?

$23,000.

Okay. So it's about equally split.

The credit cards, are they split amongst a bunch of cards?

Yes.

Okay.

Here's my rule. Here's my rule where it comes to these cars. And I don't think you're going to be able to do it. So I think one of them is going to get sold. If you can't pay it off in two years or less, then it's out.

Well, that's combined with her. She works part time. She brings in less than 10..

Okay. And is that because she's staying home with kids?

Right.

Okay.

Is there a way that she can make more part time? Do you think?

I don't think so. She picks up as much as she can for extra shifts, but without having to add in child care, we don't have any family nearby that could pick the kids up from school. So adding in the cost of child care, we've really looked at that, but it wouldn't work.

If I were you, if you're not yet upside down in one of these vehicles, if I were you, I might get rid of one of these vehicles and take $4,000 of your saved money and put a little money with it and get you an $8,000 car that she can drive. Whoever wants to drive it, I don't really care. But I'd clear one of these out now. That's what I would do to knock this down, especially since you don't see your income going up anytime soon. And that clears out $20,000 of this.

$9,000?

Yeah, that's where we're starting. We're listing them in order from smallest to largest. We're paying minimum payments on everything, so you don't have debt collectors and whatnot. And then all the extra money, you got to put it at the smallest debt. And I know you said it's not possible, but I really want you guys to sit down and truly, truly get sober and somber about this and say, okay, what do we have to do?

So the other aspect that I haven't shared yet, but I don't know really about it yet, because I just started this new opportunity, but I'll bonus twice a year.

Okay, good.

And that could be, it could be $18,000 twice a year. Great. So, kind of in the back of my mind, I was thinking that I'll use that and pay off one of the cards as quick as possible or put it on the credit cards, one or the other.

When you say could, is this like a 80% thing, like a 90% thing or like a 20% chance?

I will. That's where it's going to go.

Okay. Okay.

I just don't know which is the right one to do, if I put it on the cards or if I put it.

You put it on the smallest balance and when it's knocked out, you attack the next smallest balance while making minimums on the rest.

If I were you, I wouldn't let those bonuses keep me from selling one of these vehicles. I would still do that because I want you out of this debt as quickly as possible.

You've got $108,000 in debt. You make $120,000.. And here's the deal. The context for what Jade's saying is on average, it takes people about 18 to 24 months to pay off the debt. So it's going to take massively longer than that.

Yeah. Our monthly expense is not factoring in anything extra like clothes for the kids. Just the base expenses is just over $6,000..

Is this because of your mortgage? You must have a massive mortgage.

Yeah. What's the mortgage payment?

The mortgage is $2,100.

Okay. And what's your take-home pay every month?

So, like I said, I just started this opportunity. So I've literally gotten half of a paycheck so far.

What is it? What will a full paycheck be?

A full paycheck should be $4,200 bi-weekly.

Ooh, lordy, lordy. Okay. That's twice a week, so twice a month. So it'll be about $8,000.. Then you're okay.

Two cents, if that. That's the price of admission.

There it is. Phil joins us up first in Reading, Pennsylvania. What's happening, Phil?

Hi, guys. Thanks so much for having me.

Sure. What's going on?

I have a pretty good problem. My wife and I, and our three daughters, we are saving for the college. They're eight, six, and four, and we started their 529 in the account as soon as they got a social security number.

Amazing.

We agree that we should eventually tell them that they have these accounts. We're just not sure when it's appropriate or when it would be wise to tell them, and if it's ever a good idea to tell them how much is in the account.

Oh, man. I think it's a great idea to let kids know that we're planning for your education, and the expectation is that you are going to continue your education in some form or fashion. I think it's great to start sharing that. Honestly, as early as it makes sense, without being weird.

My guess is middle school, high school is when they start even thinking about that. I don't think there's a need to tell a four-year-old, hey, buddy, there's $100,000 in your 529 plan. They might be like, whoa, that's a lot of money, but there's just not as much context as to why it matters. It's not like you're going to give them a trust fund that they're going to go blow in Vegas here. That's right.

I would take it a step further, too, in letting them know. I don't think it's wrong for them to know the amount at the right age to say, let's say, for the eight-year-old, there's, I don't know, $70,000 in the account by the time she's ready to go on to further education, to kind of say, hey, this is the budget. This is the limit. It doesn't go beyond this, and the only way it goes beyond this is if you decide that you're kicking in some cash because we're not doing student loan debt. I think that the 529, obviously, the point of it is to save up, but it also creates an opportunity to open up these lines of communication to where you are speaking about the things and the expectations around college, that a lot of people, frankly, they don't have those conversations.

And then we'll figure out the rest later, and figure it out means taking out a whole bunch of loans and parent plus loans and delaying their future. So to me, I'm already convinced that you're going to send these kids to college debt-free, and so I'm not worried about that. You've done a great job, Phil. I think as they get into high school, you start having the conversation and saying, hey, you're going to finish college in four years. That's what Dave said to all the Ramsey kids.

Yeah, for sure. And we were really just, like you guys said, they are going to start to hear about college, middle school, high school. Their friends are going to start talking about it. The teachers start to talk about it. And we figured one less thing to stress over, figuring out how to get there.

Yeah. One thing that I like, and this is kind of an approach that my husband and I are trying to take is, I want to be the authority on all conversations for my kids. I want them to hear about the things from the first time from us. So the first person you're going to hear talking about school and college is me and Papa, right?

Not from the guidance counselor.

Not from the guidance counselor. And that goes on a lot of other issues, by the way, as well. But if you guys, you want to be the authority when it comes to how to pay for college, how to handle your money, how to do it. And the way you do that is, you're the first person that they ever hear talking about it. And so I think that that's an advantage that you guys have in this situation too, that they're looking to you for advice, not anybody else, as the forward.

Yeah, you guys are doing a great job. And you show them that, hey, money comes from work. You can give, save, spend, teach those lessons early on. When they get to college, it's not going to be a whiny entitled, I just want to go where I want to go, regardless of...

Where my guidance counselor said there were student loan options for me.

Oh, my goodness. Yeah. And that's a bunch of financial aid in the form of loans. No, thank you. All right.

Hi, George and Jade. I'm so excited to be on with you guys.

We're excited as well. What's your question today?

Thank you for taking my question. So I was just looking for some guidance and some wisdom. It's kind of on the same vein as the last caller. Up to this point, my husband and I have been putting our kids' birthday and Christmas money into the regular savings account. My oldest is now six.

I teach them with all the money, because it is with all of your money. So I would just... If you're teaching it to them as an umbrella way of thinking about money, then I think that it does apply to all of that. And obviously the ratios of it might differ depending on how much it is or what they've already done. But as long as they know, there's three things that you can do with your money,

Would you recommend a high yield savings to put that away? Or just a regular savings is fine?

I mean, it's no cost to you to do a high yield.

Right.

Yeah, they'll earn more interest. It's not going to be life-changing when they've got $100 in there, but it's a great principle to teach them that broke people pay interest, wealthy people earn it. And this is what it looks like to prepare for the future. How old are the kids?

My oldest is six, and then my little one, he's four.

That's fun. My kids are that age too.

Are they in the kindergarten phase? The six-year-old, are they in elementary now?

Yeah, my six-year-old is just finishing kindergarten.

Okay. I'm going to make sure... Our team sends you a great blog from our friend, Rachel Cruz, called 15 Ways to Teach Kids About Money. And it goes through age-appropriate ways to teach kids, whether they're in preschool, kindergarten. You know, this starts with a clear jar for savings, setting an example with your own money habits, show them that stuff costs money.

I'm going to add something to the list. Another one I'd add to the list is the idea of, in a moment, if you want to buy something, it'll be there a week from now and two weeks from now. So it's like, hey, we're not going to buy that today. And then go back and show them a couple of weeks later. Listen, it's still there.

I love this. Teach your mother young. This is preventative medicine, America. And I'll make sure our team puts the blog, 15 Ways to Teach Kids About Money in the description and the show notes. If you want to read through that, it'll give you some great tips on how to teach your kids about money.

They're cheering and everything.

They're enthused. This is the kind of live audience we've been missing out on, Jade.

That's right. I could get used to this.

This is wonderful.

You guys want to come back next time, next week?

We've got our event kicking off tonight up at the brand new Ramsey Event Center. It's going to be a good time. And we appreciate all of them traveling from all over the world to be here. Jordan is on the line in New York City. What's going on, Jordan?

Hi, how are you guys?

Doing well. How can we help?

Um, I just needed a little bit of, maybe more than a little bit of financial guidance. Um, I'm getting a settlement cost of around $75,000.. Okay. And I'm not sure what to do with it.

What was the settlement for?

Um, I was in a car accident.

Was everything okay? Are you good and healthy at this point?

After a couple years, yeah. For the most part, I'm good now.

You're able to work?

Uh, yeah. So I currently got my real estate license, um, April 30th. So I just started that journey.

Okay. How old are you?

I'm 23.

Okay. Are you working full-time outside of the real estate right now?

No, sir.

So you're doing real estate full-time?

Yes, sir.

Are you making any money yet?

Um, no. Not as of right now.

That worries me. Where are you living?

I live in Hayside.

Okay. Are you living alone with family?

I live with my mother.

Okay. So you have very little expenses?

Uh, yes, yes, sir.

Do you have any debt?

Um, currently I am paying off a car loan of $10,000 right now.

Okay. But that's it. Nothing else?

No, that's it.

Okay.

Do you have any money saved?

Um, I have about a couple thousand in my savings, um, in my checking account, and I have about $7,200 invested in Google and Amazon.

Okay. So that couple of thousand, is that like $2,000 or $6,000?? How much is it?

That's like $1,500.

Cool. When is the settlement gonna hit your account?

Um, well, my lawyer wanted to meet again in one month, so I think around a month.

Okay. If I were in your shoes, I would, there's a couple of approaches I'd take here. Um, when this money comes through, I would pay off the car. I'd get that car debt out of your life, uh, with, with the caveat that you're not gonna borrow money for cars ever again. At this point, you're, you're set up to buy cars and cash from this point forward.

Mm-hmm.

Were you working before this, Jordan?

Yeah, I was a pharmacy technician for around four years.

Okay. What were you making doing that?

Um, around 32.

Okay. My worry is that the real estate game right now could be tough to get into and actually see a paycheck from because it's commission-based. And so I think you might need to get a part-time job right now, or even a full-time job and do real estate on the side and start to build that up until you can, kind of, instead of it being a leap, it becomes a step.

Yeah. How'd you get out of the pharmacy tech? Did you quit or did something else happen?

Well, uh, I, at one point I joined a contracting agency to where they, you were contracted hospitals for certain times that needed help. And when my contract ended, I decided to step full in, full in to the real estate journey, I guess.

Are you working for a broker right now?

Uh, yes.

Which one?

Keller Williams.

So it's costing you money right now to be a real estate agent. You're losing money because of all the fees associated with this. Mm-hmm. You've got the NAR fees, you've got the Keller Williams fees, and you're not selling any houses. And so that's the part that worries me is from the settlement, I'm scared you're going to just drain this thing down to survive and live while hoping real estate takes off.

What's it cost every month?

Um, like a hundred.

Okay. That's not bad. I agree with George 100%. I think that you need to go back to doing either pharmacy teching or whatever it was you were doing before. Either way, you need a full, you need a full-time income.

Right.

Hope that helps Jordan. I wish there was a, we could just snap our fingers and make this pretty, but it's going to be hard work. Real estate is, is no joke. And right now the market's tough. You're in a very intense market in the New York city area.

And if I could just offer a little piece of, I'm going to say this because I think to be good at real estate, you got to be a people person and you got to be, have a little bit of pizzazz, a little bit of razzle dazzle. And I didn't feel that from my guy.

I wasn't getting a rizz Jordan.

I didn't get the razzle and I didn't get the dazzle. So that's one woman's opinion, but this is.

No, that's a, that's a good point. Real estate, it takes a certain personality type. You kind of want, you kind of need to like the spotlight in order to do it.

Good with your words, good at selling.

And people get into real estate, thinking this is going to be, I'm going to own the job. I'm going to make great money. And you can eventually, but it can be a grind to get there.

And it's not going to come to you. You have to go, get it.

Yes. You know, back a few years ago, a monkey could sell houses cause they were flying off the shelves. right now. You gotta be a real pro to do it. And so for that reason, Jordan, I would try to get as much training as you can and get this thing off the ground while working full time.

Hey, thanks for making me debt free first.

Woo, you did it. We didn't do nothing, but thank you.

Yeah. Back in 2010, we went with the plan and got debt free. But my question is, my granddaughter is a senior in high school. She's leaving to go to George Washington University, and she's got a scholarship, but it doesn't meet all her needs. And she's going to have about a $20,000 a year gap in her scholarship and tuition.

Well, you're not making her do anything. If you're in a financial position to bless her in that way, that's something that my wife's grandparents did for her, and it was a huge blessing. And she didn't even realize it until she was out of college. in the real world. Are you financially able to do that without affecting your own life?

I am. Well, my wife passed away a few years ago, but we're debt free. I'll have just close to probably about a million dollars in liquid and real estate.

John, if you've got the cash to do it, it's not holding you back. I think that's a wonderful blessing.

Or you could split it and say, hey, you work part time and pay $500, and I'll pay the gap each month, because studies do show that when students work part time, they do better all around in school.

If she's got some skin in the game, she's going to go, I got to finish. in four years. I got to actually go to class.

She's already got a part time job. Well, we'll have a part time job.

Okay, good. Wonderful. We've got a good hand on our shoulder. She's got an awesome grandpa. Man, I think that's one of the coolest ways you can live and give like no one else, is.

Who is that?

Baby step four and beyond, which means you have no consumer debt. You've got the emergency fund and you're ready to have some fun and celebrate. This is the ultimate debt-free celebration. I think we're going to try to set a world record for largest debt-free screen.

I'm here for it.

Let's go. I've always wanted to be a part of a Guinness World Record. This is my chance. So we're going to take over the entire cruise ship. It's going to be all Ramsey fans.

Yes, I'm bringing my kids. Should I be saying that on the air?

I'm not bringing them. Warshaw. kids are going to be running rampant. But no, someone said, hey, can I bring my teenager? And I asked the team.

Your whole family, as long as y'all are debt-free in baby step four.

Love it. So go book your cabin. Ramseysolutions.com slash cruise. That's the place to go. Can't wait for that.

Good afternoon. How are y'all?

Doing well.

Good, good. My question is, me and my wife are interested in purchasing a laundromat. I'm just wondering, would it be better to do a seller financing route or would it be better to take out an SBA loan?

Ooh, juicy conundrum here. Well, this is, you're launching a business. And if you're familiar with Dave's Entree Leadership book, the whole brand, we are big on launching and starting and running and growing your business completely debt-free. Which tells me we're not ready to start this business. Gotcha.

Approximately around $750,000, but we're still kind of shopping around.

That's just to get in? That's the lowest entry point?

Yes and no. We're still kind of looking around, but that was one of the starting prices that I had for one. I was kind of selected here in Atlanta.

But what made you go, I'm going to buy a laundromat in Atlanta?

Well, we were just looking at businesses that obviously have that type of cash flow that we can kind of self-manage. And just something, just a starter for us to continue to develop income. over the year. Laundromat into a smaller car wash kind of came about.

When I hear $750,000 to start, that doesn't feel like what you just said. Like a starter, like an entry-level thing just for you to get in and manage. That feels like something that is a huge undertaking to manage. And, honestly, financial output before you're able to earn it back. Because you're not profitable until you've paid back the $750,000..

What's the cash flow of this place?

The cash flow is about $250,000-$300,000 a year in revenue. Top line? After, no, top line, I think is around $9,200,000..

No, it's.

The bottom line would be the smaller number.

Oh, I'm sorry. Yeah, I'm sorry. Yeah. Yes, sir. Yeah.

Bottom line profit going to you, not net profit.

Yes.

Yes. And this would be your full-time job?

No, this would be something outside of my full-time job.

Okay. What's your current household income?

Current household income is $148,000.

Cool. And how much... Do you have any debt right now?

No, sir. We are debt-free.

Wonderful.

If I were you, I would not forfeit your debt freedom. In any case, I would not do this deal in debt. But especially you forfeiting debt freedom, because you guys have chosen that to be a value in your life. And so this doesn't align with what you guys have said. are your values.

Gotcha. Yeah, that doesn't make sense. Yes. I know. just for us, we're just looking just to buy a vixen business, just to kind of create more income, change down the road.

If the goal is to create more income, I want you to understand that you can do that. You don't have to buy something existing to create income. You can create income tomorrow selling the things out of your garage. If that's the goal. When you run it through that lens, you go, okay, that makes sense.

It's going to add a whole lot of risk to this. And that's what we find with business owners that do it with debt, is they end up adding a whole bunch of risks to their life. You're going to take out most of this with financing and with an interest rate. And then what happens if something goes wrong? What happens when you want to move?

And the truth is, when you operate a business with debt, my husband and I's business, we've always operated it at the speed of cash. It's a debt-free business. And I can't imagine having to make the decisions that we've had to make on a daily basis with the caveat of debt, right? Because then you're going, well, I've got to make this because I've got these bills coming in and I've got to make this. It creates a level of franticness around your decisions that I wouldn't want.

So if it's just about cashflow, CJ, you might want to look into real estate investment property that you pay cash for. And maybe that's a $200,000, $300,000 condo that you pay cash for, and it's going to cashflow, you know, $2,000 a month. And we start there and build. But it doesn't sound like you're passionate about laundromats. You love the idea of cashflow.

Yeah, everybody wants to make money. That's nothing wrong with that.

Yeah, we all want that kind of freedom. But adding debt to the picture is not going to give you the freedom you think. Thanks for the call. Kelly is up next in Phoenix. What's going on, Kelly?

Hey, thanks for having me. I just had a quick question about the two cars I own. One is paid off. One has an $11,000 loan on it. The one with the loan I use recreationally on the weekends, and then the other one I use as a city commuter.

Do you have any other debt?

Like my second car. I do not. No, just the car.

How much money do you have in savings?

Just the starter emergency fund of $1,000.

And what's your income?

$40,000 after taxes.

Okay.

It's just you?

Just me, single, yep.

What's your other car worth, the paid for one?

I think $5,000. give or take on Kelly Blue Book. It's a Hyundai Veloster.

Wow. And your recreational vehicle is worth how much?

About what the loan is worth, about $11,000 or $12,000.

Yeah, I would sell that thing because it's a toy. It's not, even, doesn't have any functional utility other than having a good time. And I'd rather you get rid of that, clear your debt, build a fully funded emergency fund, and then save back up and pay cash for that recreational toy next time.

Got it. Okay.

That's what I would do in your shoes. And if you want to aggressively pay it off, you can, but making $40,000 after tax, it's going to take a long time. And this thing really has no functionality in your life. I'd rather you use that time you would have spent recreationally to be doing side hustles to get rid of debt and get you in a good financial spot. So we'll get back to the fun in no time.

It's way too easy to put off making a will. And believe me, I've heard every excuse in the book. But not having the time is one excuse we can kick to the curb right now. Because these days, most folks can make a legally binding will on their laptop between loads of laundry. If you're wondering if you can make your will online or if you need a lawyer, we have a quiz to help you figure that out in less than five minutes.

Welcome back to The Ramsey Show. I'm George Campbell, joined by Jay Warshaw. Our question of the day today comes from Anna in Colorado. And we have phoned a friend. If you're wondering what Dr.

I was just doing somersaults in the hallway back there. And you're like, hey, you want to come on the show?

He's generally, if you're wondering what John's doing when he's not on the show, he's working out constantly.

You're right. Probably not.

Well, thanks for being here to help us answer this question, John.

All right. So Anna in Colorado says, she says, I'm the wife of a military veteran who suffers from mental illness and a traumatic brain injury. Because of his injuries, I am responsible for handling all the finances in our house. I try to sit down with him once a month to go over the budget. But even if he participates, he will forget it almost immediately.

That one's a heavy one.