Living a No-Debt Lifestyle Will Give You Peace
2024-01-24 01:56:29
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the headquarters of Ramsey Solutions. It's The Ramsey Show, where we help people build wealth, do work that they love, and create actual, amazing relationships. I'm your host, Jade Warshaw, joined by George Campbell, author of Breaking Free from Broke. It's good to be with you today,
George. It's been a while, Jade. It's going to be a fun show. We're taking your calls. Give us a call.
The number is 888-825-5225, and we are here to give you the hookup. We'll chop it up with you. Let's go straight to the phone lines where we've got Terrell in Berkeley, California. What's going on, Terrell? Hey, how are you doing?
Doing good. Did I get your name right? Yes, Terrell is the name.
Let's go. How can we help? I'm just calling for a little bit of advice on buying a car. Right now, I've been saving some money to buy a car, and I just want to make the best decision of either buying a used car or one that is pre-owned. I'm actually in the motion of trying to own a house.
I've been buying used cars for approximately a couple of years now to save money, and so I won't have a big overhead on cars or paying a car note. I'm just trying to see.
exactly what's the right decision to make. You've been in the process. You've currently bought used cars. Have you been purchasing them in cash? Yes, cash.
Good. That's very, very good.
It sounds like you're considering two things, either continuing to do that or possibly buying a brand new car or taking on a car note. Yes, yes.
What's driving you to upgrade and car? No pun intended.
Actually, my car just broke down after four years, and I'm just tired of the fact of having to spend money on mechanical issues with buying a used car. I just want to buy something that's more prolonged, buying a vehicle that I know that I can trust for a couple of years, so that I don't have to worry about any car issues. In the past, how much have you spent on a used?
vehicle? What's your vehicle worth now or when you bought it?
My vehicle that I bought was $2,200, and it lasted me four years after just a couple of mechanical problems. That's some pretty good R&D. Very good. Listen, that's not bad at all.
How much money do you have right now in cash?
In cash, actually, I saved up around $80,000.
. Wow. Yes. Do you have any debt? No, no debt.
I always watch a guy's show about learning not to get in debt. I have no debt at all. What do you earn a year? I earn approximately, this year I made $94,000.. That's great.
Doing what? What's your job? I actually do sewer maintenance.
Okay. Listen, Terrell, I'm proud of you. You've been buying cash cars, you've been staying out of debt, you've managed to save $80,000.. Here's the thing, when we tell people to buy cars in cash, it is a way of life, right? You draw that line in the sand, you say, I'm not borrowing money anymore.
However, the idea of driving a hooptie for life is not really it, is it, George? We want you to slowly but surely upgrade your car with cash. I don't want you driving a $2,200 car when you're making $94,000 a year and you have no debt. It's time to moving on up. Time to upgrade.
All right, yes, time to upgrade. That doesn't mean go to the nearest dealership and find the shiniest, newest car on the lot. That's right. What's your net worth right now?
My net worth in all. in all total, I will say that it's around the 80,000 mark or plus.
Okay. I'd rather us focus on that as the scoreboard instead of your credit score, because you're about to... I'm sure you said you had a great credit score, right?
Yes.
And you know what? The dealership, the salesperson, is like, I'm about to get Terrell with this car payment. I know, right? Can't wait. I'm going to tell him how great of a job he did with his debt management score.
So I'm going to ignore the credit score and we're going to look at your income and also tell you that the time to buy a new car, brand new, is when you're a net worth millionaire.
Exactly.
Because you buy a $40,000 car, bro, that's half of your net worth right now. That hurts my brain. So there's a time and a place to do it.
Approximately, excuse me, I've seen a car approximately for about $15,000 and I was going to put half of the payment down and try to slowly either make payments on that.
But you have $15,000.
. You have $15,000 cash money that you can go into that dealership. You can buy a $15,000 or $20,000 car, walk out, own it free and clear, and not owe anybody anything. Because here's, I don't think you realize how well you're set up. Terrell.
George just outlined it. You're in a situation that you don't need anything from anybody. And credit scores are for people who think they need something from somebody. Like credit cards are designed for people who think I can't do this myself. I've got to borrow the money.
You've already completely just bashed through that.
Cut out the middleman.
You already cut that out. Exactly. And so, at this point, the only thing that you have to do is continue to live the life you're living. And when you start thinking about the time to buy real estate, start putting aside the same money, the same way you started saving that $80,000 is the same thing you're going to do when it's time to buy a house. And that's really...
Terrell, you've already knocked out one of the two kingpins of the no credit lifestyle. The car, because so many people think you can't buy a car in cash and continue to buy cars in cash. You've already crushed that. You got it. And the next thing is the house.
And so for you, that's after you get through this car thing, the house is your next big goal. And you'll save that down payment and you'll be able to buy that with a zero credit score as well. So in your situation, it's better to have a zero credit score, no credit score, right? Which means you're not messing around with debt at all. Then to try to play this game.
And maybe if I take out a little bit on my car and pay that for a while, or maybe if I pick up this little credit card here, it's a game that you have already decided I'm not playing. You've already changed the game in your life. So don't go back and try to play a loser's game because you're.
already a winner. Fair enough? Okay. Yes. That's fair enough.
What kind of car are you looking at? I was looking at a Honda Accord. Yes. Okay. This guy.
This guy. Like low maintenance Honda Accord or Toyota Camry.
Listen, come on with the Camry. There we go. These are the reliable cars we're talking about. That thing will outlive me. And so I'm going to go with one of those.
You can find them for 15 or 20 grand. You're going to walk in there. You don't have to walk in with a briefcase of cash. You just say, hey, I'm looking for the out the door price. That's what you asked for.
And then you're going to get a pre-purchase inspection to make sure there's no mechanical issues. And what happened? right there is someone else paid the depreciation on that vehicle for you. when you buy a used car. Someone else took the hit because they paid $38,000 MSRP.
and Terrell got it for $15,000.
. That's a deal, because new cars depreciate much faster than used cars. They go down in value trail. Get this 60% in the first five years. Okay.
And so by buying used, you're being a really smart consumer. And one day you'll be driving a brand new car when you got a million dollar net worth. And if you want an Accord, you just walk on the lot and you choose that Accord. If you want something fancier, you've earned the right to do it. And so this is going to help you build wealth by making these decisions now.
Terrell, how old are you?
Yes, sir. I'm 33..
Come on. 33 years old. Killing it. Killing it. Very, very good.
It's so hard living in the Bay Area due to the fact that the cost of living is so high. We have a lot of high interest rates of buying vehicles and buying homes. So that's why I've been really just trying to save as much money as possible, because my first goal was to buy a home. And that's why I've been buying used vehicles to try to keep saving up to buy a home.
That's wisdom. You're doing everything right. You're doing everything right. Keep doing that. Stay out of debt.
Practice life. staying out of debt. You're doing the right thing. You've saved up the money to buy a much nicer car in cash. And that's what ultimately we want for you.
You're not driving a hooptie for life. You're upgrading. And with your income, you can definitely easily afford to pay $15,000, $20,000 for a used car.
And he's not trying to impress anyone. He's impressing future Terrell. I like that. This is The Ramsey Show.
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You are listening to The Ramsey Show. I'm your host, Jade Warshaw. Next to me is George Camel, host of the YouTube show, The George Camel Show, also author of the book Breaking Free from Broke, which is out now in the wild. George, that's exciting.
It's been so fun to see it arrive at people's homes, and the reviews have been just wonderful. People are changing their lives, Jade. From 17 to 51, cutting up credit cards, ditching the credit score. I love it. Very encouraging.
You love to see it.
Love it. So if you haven't gotten a copy, be sure to get your copy. I've got mine. Let's take a call. Let's go to Molly, who's in Boston, Massachusetts.
What's going on, Molly?
Hi, thanks for having me. So my husband passed away four years ago.
I'm sorry about that.
And thank you. So I have benefits from his death. So I live very comfortably on the income that I have. However, I'm getting a couple of one-time payments that I don't quite know what to do with. It's a substantial amount of money.
And I don't know, like, I lost a lot of money in the crash in 2008 through my 401k and stuff. So I'm a little leery to do that.
Well, you only lost it if you pulled it out. Did you pull it out?
I did.
Okay. Okay. We'll consider that as we move forward. But keep talking.
Okay. So, like I said, I live comfortably on what I have. When I take vacations, I prepay my credit card with my guesstimated, you know, what it's going to cost. So that I don't actually incur debt, but I feel it's safer than using my debit card and you can't rent a car with, you know, a debit card.
Okay. We'll talk about that too. Okay.
Okay. So I have these two lump sums coming in, and I don't really know what to do with them. And my bank offers a 5.5% interest on CDs. So I've considered, like every two weeks, putting in a substantial amount of money so that if I need it...
How much are these single payments going to be? And how many of them do you think you'll get?
The total for the two are 555,000.
Okay. 555,000.. Wow. And you're getting it two times. Okay.
No, it's the total. That'll be one time. That's the total of the two.
Oh, got it. Okay. So they'll give you 225 for one and 225 for the other, or whatever, or whatever. it is, 275.. Okay.
So let me ask you a few questions now, just to put it all together. So do you have any other debt? Like, do you have any debt on the books? Do you have a mortgage? Can you tell me a little bit more about your financial situation as far as income and debt?
Okay. So I did purchase a house last May and I purchased it for 429.. I put 115,000 down on it. Okay. So my mortgage payment now is 2,500 a month.
Okay. No other debt.
No other debt. Cars paid for?
I'm driving a 16-year-old truck.
Okay. Now, other than this 555, that's coming, do you have any other money saved?
I do not, just because I just bought the house and had to furnish it and everything. But my monthly income is 7,200..
Okay. So you bring about 7,200 home every month. And what about children?
I'm out of the house.
Okay. Okay. So, George, jump in at any time. So I'm looking at this situation and I'm filtering it through our teaching here at Ramsey. I don't know how familiar you are with it, but we view everything through seven baby steps.
And these baby steps are what we feel are the fastest path to wealth, with the most amount of peace, least amount of stress. All right. So that's everything I'm talking to. you is going be through that. So with you, it's great because-.
I just recalculated, because I actually bring in 7,400 a month.
Oh, excellent. Love it. Love the increase. Okay. So, with you, because you don't have any debt, that's excellent.
It's kind of jumping us to the third baby step, which is making sure you have three to six months saved. So, if it were me and I woke up in your shoes, that would be my first thing that I'm going to gun for. I'd think, okay, what do I need? What would constitute six months of expenses for me? And I would work at getting those saved.
When are you getting that first payment? Within a couple of months. Okay. So, between now and then I'm going to use my income and I'm going to start to build up that three to six months of savings. So that's thing.
one that I'm focused on, is how can I get six months of savings? Thing number two that I'm going to focus on in your case, just because I think everybody needs a budget, is I'm going to start a budget.
The going forward, now that you've got this house, you've just got this new life in front of you, with new expenses and new money and a new relational situation. It's just a whole new life for you. And having a budget is going to give you a lot of peace, month to month, of how you're spending your money. Okay. So that's thing one and thing two.
Now I'm looking at this money and George is going to talk to you more about the investing side of things, because I think that's worth noting. But as we've talked about saving and budgeting, I want to go back to what you said earlier about your credit card and it being safe versus a debit card. If I were you, I would think really seriously about cutting up my credit cards and deciding that I'm going to live a debt-free lifestyle. Because for you, it's easier than ever. And you don't need the credit card.
You don't need it. You've got money in the bank. And so, as far as you're worried more about safety,
it sounds like. Yeah, I've had my debit card compromised several times and I found that it's easier, if that happens when you're traveling, to have your credit card, because it's not your real money. It's their money. And I found that it gets resolved a lot quicker. And so that just makes me nervous, because if I'm traveling and I'm using my debit card and it gets compromised, then I'm stuck.
I've never.
. I can vouch for this. I've traveled to over 92 countries. I've never had a problem with them restoring the money to a debit card account. George, you just talked about this.
The protections are exactly the same, as long as you call and say.
If your debit card has a Visa or MasterCard logo, you're covered under their zero liability policy. And there's even a federal law, the Electronic Fund Transfer Act protects debit cards in cases of fraud as long as you report it within 60 days. And so, on top of that, renting a car, every single major rental car company has their own debit card policy. And so there may be a slightly bigger hold on your checking account, which you have the buffer for, but you'll have no problem doing that. Yeah, those companies definitely make it a little harder, but you can still do it.
It will reduce your risk as well as give you more peace when you just use your own money. now. And I talk about this in my new book, Molly. So I'm going to send you a copy, because I cover how to rent a car without a credit score, why you should ditch the credit card, and even the CDs, and why I'm not a big fan of the Certificates of Deposit. you mentioned.
What's going to happen there is it's going to lock that money up. And if you withdraw it before it matures, the maturity date, you're going to have to pay a penalty of losing some of the interest. And so you can actually, that meant that rate you mentioned is what I'm getting right now in my high yield savings account, which is completely liquid. There's no penalties if I take the money out. So I would encourage you, just as you pause and decide what's next, to put the money in a high.
yield savings account. That's what I would do. And that's what I do as well. So I think that kind of gives you some just lifestyle changes to consider, cutting up the credit cards, living a cash lifestyle. That's good to consider.
And then finally, if I'm you, as this money is rolling in, the way we teach the baby steps, let me just roll through them real quick, so you get the context. Number one is for people who are first starting out, they just get $1,000 saved. Number two is for people who have consumer debt. They pay off all of their debt except the house. Number three is where you're technically at, which is saving three to six months of expenses.
Then, from there on, people do four, five, and six simultaneously. So, because I know you're going to have six months saved up quickly, let's talk about those real quick. Baby step four is you're investing 15% of your income every single month. So I want to make sure that we start that habit for you. And then, if you have kids that are going to college, baby step five, you can do this.
at the same time. You can start setting some money aside for college if it makes sense. And then finally, baby step six, you can start putting extra money towards your house. So, putting that in context for you, if I'm you, I'm going to start putting that 15% aside on auto pay coming out of my check every month. And I'm going to start looking at, when this $555,000 comes, how I can start paying my home off.
And that's an emotional decision, but it is a wonderful.
one to make. And you'll still have over 200 grand left over to max out retirement, to give more, to enjoy life and spend more, and to upgrade that 16-year-old truck. Molly, it's time.
It is time.
So hang on the line. We're going to send you a copy of Breaking Free from Broke. It'll walk you through all of the stuff we talked about and hopefully help you have a new paradigm around it. I love it. Man, what a blessing to have life insurance.
Not fun, but man, it changes things.
Absolutely. This is The Ramsey Show.
You are listening to The Ramsey Show. I'm Jade Warshaw, joined by George Camel. And I just want to thank you guys so much for tuning into the show week after week. Thank you for hanging out with us on YouTube or whatever podcast service you use. Thank you for sharing the show with the folks around you.
And we want you to continue doing that. Wherever you consume the show, we would love if you took a moment to like the show or subscribe to the show. It really helps when you do that. Even when you just send a link through a text to a friend of one of your favorite episodes, that means a lot, not only for us, but also to the person that you're sharing it with. There's so much great information on the show.
So when you share it, it not only helps that person, but it helps us. more and more people see the show and the algorithm. And it is just a wonderful chain of events that takes place. So if you've been doing it, keep doing it. If you've never done it before, just take a second.
It's free. It takes two seconds of your time. And the result of it is massive. It's a great return on investment, George, as the financial folks would say. That's right.
So thank you so much for doing that. It means a lot to us. And let's head over to the phone lines where we got Molly in New Orleans, Louisiana.
What's going on, Molly? Hi, everyone. How are y'all? We're doing good. How are you?
I'm doing better. We're in a bit of a sticky situation, and I'm calling to kind of get y'all's advice on how we should address a pretty big financial situation. Our dishwasher busted, flooded us, and we are down to the slab and the stud. Yikes. And yeah, it's not ideal.
I'm six months pregnant, and I have two small children. Oh, no. Oh, no. Not exactly a convenient time. The big problem we've run into is insurance is denying our claim.
So it's looking like we're going to have to pay for this entire.
renovation out of pocket. Oh, so, this isn't just a dishwasher. You have to replace flooring?
Oh, yeah. I mean, it floors, it ruins cabinets. Walls? Oh, gosh. A little bit, yeah.
We're going to have to replace some drywall, some insulation. What's the price tag? So I'm waiting for my full estimate, because I went and I picked materials today to go pick out flooring and things like that.
But on cabinets and then the demolition alone, it's $17,000, and that's not anything to do with floors, my countertops, et cetera.
Where we are fortunate is that we do have money saved and invested that my husband inherited after his mother had passed away.
But we're looking, I guess, for the best way to use that money in order to pay for it, because we really don't want to have to take out a personal loan.
or go into any sort of debt to find- Well, that's off the table. So let's look at this as though debt doesn't even exist in the world. And I like to look at situations that way, because it then takes it off the table and it frees my mind to be very creative in my approach. So from this moment on, there's no such thing as debt. It doesn't even exist in the world.
So let's talk about it like that. You mentioned that there's some money that you have, but you also mentioned that it was invested. Can you tell me more about that? I can tell you, I guess, generally,
my husband tends to be the one to run the investment side of things. But from him, we do have, he said there's $59,000 in a high-yield savings account. Good. It's $53,000 invested in stocks and bonds. Specific ones, I can't speak to personally at this time.
I just don't know.
Look, the $59,000 is where I'm at right now. That high-yield savings account just covered.
this renovation, didn't it? Listen, I know it did. There's another $11,000, he said, it's called a money market account. It's built with cash. Sweet.
Yeah. Okay. So listen,
the good news is you guys have the cash to cash flow this. And that's really comforting and good for you guys for making sure that that safety net is in place. I'm just curious, do you have any other debt that we should know about? that plays a role in this?
Not really. I mean, we have.
a mortgage. Fine. And then we only have, we were completely debt-free until about the last year. We have about 5,000 in credit cards, and that was three out of four family members wound up in the hospital at some point. So very sudden, random, unforeseen circumstances that happened.
Aside from that, both cars are paid off. Good. Okay. So 5,000 clears all of your consumer debt.
Yes. Let's do that today. Love it. We're clearing that debt out today. I love that you still have extra money left to get this kitchen fixed and to repair these damages.
I don't think you're going off the wall. I don't know that you have to spend every dime that you have, but what I do want you to get from this, and what my takeaway from this situation, Molly, is, you guys have done a good job. You've kind of played patty cake with your finances in a way that it's like, oh, we can take out some debt for this. Maybe we can consider it for this. Because I have a feeling that if you hadn't called in, you guys might've taken out a personal loan to cover something that you can pay cash for in cashflow throughout your life and your situation.
And so my takeaway from this would be coming off of this call, I would have you and your husband really get on a good budget, because that's what's going to inform your lifestyle from here on out. And I think when you have a good budget, it's giving you like this snapshot of what your entire financial situation looks like. So when something comes up, like family members getting ill, you're not going, oh, I'm not sure if we have the money for it, so let's just use the credit card. Or, if something, like a catastrophe pops up, like with this dishwasher, you're not thinking, oh, our only option might be to get out a personal loan. You've got all your finances in one place.
And of course, the budget we recommend is every dollar, because you can see everything about your finances in that one app. And it just kind of gives you that peace of mind to go. In your case, you would look at that and go, oh my gosh, we're doing far better than what I realized. And we can pay cash. We don't have to go into debt or stress or monthly payments in order to deal with something honestly as big as a dishwasher flood in the house.
I love that. you guys have $59,000, really $62,000 saved.
It's amazing. That saved the bacon today. And, Molly, a few things to consider. Number one, you may want to consider appealing the claim denial with insurance. If you feel like you have good reason to believe it should be covered.
Is that the case? And that's been my battle, the.
two weeks. I think the next step is seeking out some legal advice, which is, you know, an avenue that we're willing to explore it. I feel it was definitely a premature denial of our claim. And then I fought back and fought back and fought back. They kind of sent someone out, I think, to appease me, maybe, you know, let someone come take a look.
So I had someone in my house, but then, you know, they're still maintaining a denial, which maybe I'm in denial. Maybe I'm just.
not willing to accept that. Well, if the appliance was old, it wasn't maintained properly, there was negligence. You know, there's a lot of things that would cause the denial, but I'm just, if it takes a month of fighting to make that 25 grand needed for renovations, I'm fighting it. So that's one angle. The second is to make sure you get multiple bids on this.
Don't just take the first bid from the first guy who says they can fix it. So I'd get multiple bids. I would try to negotiate and say, hey, we can pay upfront with cash if you're able to give us a discount and see what they say. And a lot of times, you'll get 4% off, which adds up when it's $25,000 work.
Listen, wait, I might go against that, George.
What's that? With cash?
You're talking about with the contractors?
Well, with whatever the bid is.
That's true, but I would never pay a contractor upfront.
Well, when the work is done, but I'm saying, like some people, will go on payments or something like that.
Oh, you're saying no payment plan. I got you.
Yes. Hey, we'll write you a check when this is done. Okay. Yeah. Because I was about to say, when the guy comes in...
When they swipe a card, there's fees involved that they have to pay. And so if that's a 3% fee and you say, can I get a 3% discount, if I just write you a check? Just simple things like that can save you money. So I'd get multiple bids and do your best to just lower this cost. Because I know it's a stressful time.
You're six months pregnant. You got two kids running around like crazy. And I'd also get more details on this investing side. What's your husband's doing? You should have some clarity and understanding of everything going on with your financial picture.
But man.
I definitely agree with that. Listen...
Not fun.
That water is one of the most insidious things that can happen in your home. It is just the worst, especially in her situation. Six months pregnant, two kids on the way. Oh, I felt her pain.
I just want to say, not today, Satan.
Not today. I know that's right, George. But thankfully they had the safety net of an emergency fund. A fully, fully, fully funded emergency fund. That's what you need when life storms hit.
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This is The Ramsey Show. I am Jade Warshaw, your host, joined by George Camel, your other host. George wrote the book, Breaking Free from Broke. I wrote the book, Money's Not a Math Problem. And so, listen, just two authors sitting in chairs talking about...
Doing the dang. George. That's what I'm talking about. So, how has it been? Tell me a little bit about the journey.
here of this book here. Well, writing a book is one of the hardest things I think I've ever had to do, especially when it lives in the world of Total Money Makeover. And what's been really encouraging, though, is people going like, this is... Dave Ramsey said this is financial peace for the next generation. The reviews are saying this is like Total Money Makeover, but written for 2024.
with me in mind. All of the objections, all of the struggles I've been dealing with the last few years, with inflation and the housing market, and what do we do now, and credit scores and credit cards. There's so many more traps than there was even 10 years ago. And so, I covered all in this book to help you have this paradigm shift and go, I don't need to play this game. Building wealth and living a life I want to live is so much simpler than I thought.
I just got to ditch this money matrix that's been created for me. So, the reviews have been awesome. And your book hit the bestseller list, Jade. Congratulations. I did not even know that that was possible,
George. Because you have... Love will find a way. You have what I'm going to call a full-sized book, and I have the miniature version. A quick read.
Which is a quick read. And I didn't know it was possible, but here we stand in the national bestseller category. Booyah. Yes. I love it.
Very cool. That means people are getting helped. That's right. And that's what we're here to do, help you guys, help you with your money situations, your relationship situations, mental health situations, career situations. All of that is directly connected in your life.
So, that's what we talk about on the show, Your Life and Your Money. So, you can give us a call. The number is 888-825-5225.. And we will do exactly that. And let's do it now.
Going to Taylor in Washington, D.
C. What's going on, Taylor? Yes. So, first, congratulations to you both.
on your new book releases. Gracias. Same claps. to that. I am calling, because I'm in a little bit of a situation to where currently I own my home.
I also have an investment property. The investment property is doing well in terms of just the equity aspect. So, at the moment, it has about $150,000 worth of equity. that's in it. However, I'm really not making anything off of it too much.
I find that I'm actually putting out money. So, for example, 2023, I probably spent $2,000, $2,500, something like that, just doing repairs that maybe the rent wasn't able to cover. And so, I'm in this little mix of understanding that real estate is the best part to wealth. I have a home with my husband that we own. We still have a mortgage on, of course.
How much? And so, the idea was to acquire more properties in a sense. But now, I'm starting to have this idea of do I offload the property at $140,000, $150,000 where I will be able to get that equity and possibly just pay off my student loans, where I currently have about $80,000, because I ended up getting my MBA. And obviously, as a result, like a lot of other people, racked up a lot of debt with that. What other debt do you have?
My revolving debt. I only have about $15,000.. I'm not going to say only, but I have about $15,000 in revolving debt, which includes my car, note, credit cards, things like that. So, I'm just not sure of which way to go.
What about your husband? What debt does he have?
My husband probably has about $10,000 worth of debt, and that also includes
vehicles and credit cards. Okay. So, he has $10,000 in cars and credit cards.
He doesn't have student loan debt? He does. I'm sorry. Yes, he does. He's less than mine.
So, I think he's $40,000.
. He's about $40,000 now.
Okay. So, $40,000 student loan from him. Okay. So, there's a lot here, Taylor. I'm not going to lie to you.
This is a tangled web. You got $150,000 in just consumer debt.
Yeah. So, what is the investment property worth?
Right now, it is worth.
. I could probably get $360,000. at the minimum. The high would be $380,000, and I owe $199,000.. Okay.
And you're thinking, after fees, you'd walk away with about $130,000?
. Yes. Yeah. Yeah. I'd take about...
Yeah. After all of the credits and things like that, at least.
You guys have any money in the bank right now in savings?
Yes, we do. We have about four months worth of our living expenses. How much is that?
We are.
. It's about $40,000 in our...
Okay. Yeah. Do you guys have stocks, like single stocks or single investments?
I do, but it's not much in there. I only have about $6,000 in my single stocks, and obviously, not including 401Ks or anything like that. And do you have a brokerage or anything else that we should know about? No, that's probably it for the most part. And what's the household income?
Combined, we are about $240,000.
Good job. Okay, good. And okay, so I know, George, I'm looking at these numbers, and I'm just seeing a situation that's so complex that doesn't have to be complex. It looks... When you just said all of that, it was just even a lot to say.
To list all that out was a lot to say. We had to take a deep breath at the end. We had to wipe the sweat off of our brow. I think that there's a way to really simplify this. And in my mind, it does start with selling that rental, because it's going to give you the cash you need to get a hold of your life and to simplify your life.
And then, and only then, you'll be able to do the thing that you want to do, which is purchase real estate, and you'll be able to do it the right way. So I kind of feel like... Have you ever seen on the movies where the guy clears the table off and he just uses his hands to knock everything off, like I did with the microphone? And then you got the clear slate. I feel like that's what we have to do with this, is just knock everything off the table and start over.
And I think that selling this real estate is the way to do that. You're going to clear, like you said, about $130,000, and then we've also got $40,000 saved on our debt. And, I think... Or saved in a savings account. If you take that money, you can be debt-free.
immediately. With most of your emergency fund on top of that, because you're going to have like $176,000.. If you include the stocks, if you sell those too, that $176,000 is going to clear your debt and leave you with a fully funded emergency fund. How good would that feel?
It would feel great. Now, it's a little intimidating. So we are in our early 40s. So it also is like feeling like starting over with rebuilding.
What are you rebuilding? You're clearing the deck here in the best way possible. You got no payments and you make $240,000.. I think you're going to be okay.
You're not rebuilding. Right now, you're 400 pounds.
And you're out of shape. And what we're doing right here, when you do this, you're going to be 160 and lean. That's what we're doing for you. Because right now you're overweight. It's stressful.
It's heavy. It's a lot to carry. And by you doing this, it's literally getting you financially fit. is what we're doing. And when you're able to be fit, then it's like, okay, I can move better.
I can think clearer. And you're going to be able to do what you want to do ultimately, which it sounds like. you guys aren't interested in real estate. But now you're cleared up to be able to do it the right way, which is ultimately paying cash for it after you've paid off your home. So there's a right and a wrong way to do certain things.
And there's a better and a best way to do things. And we're trying to tell you the right, better, best way to get where you want to go.
Fair enough. Fair enough. Thank you, guys.
I don't think you're going to regret this decision. I don't think so either. But I do think,
and it's worth noting. while you're on the line, I do think there's a certain meeting of the minds that you and your husband are going to have to come to. And when you get off this call tonight, you guys get home and you're having dinner and you talk about this. What does that conversation?
look like to you?
We'll probably both be on different chapters.
That's what I thought. Is he going to want to hang on to the debt?
Yeah. And that's what made it hard a little bit to move forward with decision making, of trying to find that alignment. I feel like, slowly we're getting there, but it's like each of us presenting our case. And so it's, like you said, trying to have that meeting of the minds and find that mutual decision. Well, here's what I would suggest.
I wouldn't suggest you going straight away tonight and being like, I was on the radio and these two blockheads told me to do da, da, da, da, da. I would suggest you taking a moment to get your head around what we've just said, because we told you a lot and there is an emotional component to that. And there's an emotional, it's just a lot. So I would recommend you taking a moment to get your head around it, figuring out how you feel about it. That way, you're presenting your case, not George and I's case.
Because if it's not real to you, and if you don't have a genuine connection to it, it's not going to go over well.
And I think that's important to know, George. Yeah. You guys make $240,000.. There's no reason to play with debt anymore. You're too successful.
You're too smart. You know too much to stay broke. It's time. It's time. The time is now.
This is The Ramsey Show.
Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual, amazing relationships. I'm your host, Jade Warshaw. I am joined by George Camel today, one of my favorite co-hosts of all time. Wow. Author of the book, Breaking Free from Broke.
We're taking your calls. The number is 888-825-5225.. So give us a call, and we would be happy to help you out with whatever the concerns you have about your life and your money. But, George, I have to say I'm really excited because we have just recently announced a new event here at Ramsey Solutions.
It's a big one. Brand new, new content, new talks.
Yes. Total Money Makeover Weekend. That's it. I was waiting for cheers and cannons. Total Money Makeover Weekend, I'm really excited because it's really...
Total Money Makeover is the book that started. really all of this hoopla, the baby steps, all of that. And so we're creating a live event weekend around that. It's May 10th and 11th. And, as George said, it's all the personalities.
We'll all be there. The GOAT himself, Dave Ramsey, will be there. And we're all going to do all new content on really the same money concepts that we've taught for 30 years around here. So, if you're new to the Ramsey way of life, this is a great event for you. If you've been hanging out with us for the last 20 years, this is a great event for you.
Give me some pep in your step. It's been a while. Yeah. It's like a rally. Tonight we rally.
You know, a reminder of what you're doing this all for.
That's right. That's right. So it's here now. Early bird tickets start at just $99, but they're for a limited time. So make sure that you get your tickets now.
You can do that at ramseysolutions.
com slash events. But I'm looking forward. It's going to be a different format than a lot of our other events. There's Q&A sessions.
Yeah. This is a two-day event, Friday and Saturday. We got Smart Money, Happy Hour, Live with Rachel Cruz and I on Friday night. And musical experiences. So it's a whole weekend in Nashville.
Make plans to be here. That's right. Get your lodging and transportation in the budget and come hang out with us.
Lodging. I like that. Lodging. Yes. Again, go to ramseysolutions.com slash events in order to get your early bird tickets.
I'll see you there. All right. Let's go to Spokane, Washington, the city I was born in, to talk to Isaiah. What's going on, Isaiah?
Hi, how y'all doing?
Doing good. What's going on in Spokane?
I am here in Spokane training to be a missionary pilot mechanic. I'm in my second year. Okay. So my question is, is I have some money in a 529 college plan from my great grandma. It's about $31,000..
I've paid for school the last two years out of my personal savings. And my wife and I are making enough to where we could probably pay for school for the next three years of the program. My question is, should I keep the money in the 529 or roll it over into some other investments? That way it isn't locked up and we have access to it, to whether that be reimbursed, what we spent on school so far, or to just make sure we have the funds to remain out of debt moving forward.
I would definitely use the 529 to pay for college, because if you wait and try to use it after the fact, whether you have loans or things like that, there's limits on you using that money to pay off student loans or anything like that. So if the money is earmarked for education, which it is in a 529, I would use that money. And then you use your personal income and cashflow to do whatever baby step you're on. And if it happens to be investing, then you would use it there. Does that make sense?
Yes. So if I've already spent some of my personal money for the 529 plan, can that come back in to reimburse what I've spent, or does it have to be current and future college expenses?
What you spent.
. Let's see. You're asking if you can use the 529 to reimburse what you've already spent. I believe you can. You'll have to look into it, because they're different by state.
Okay. And George, it looks like George might be looking at that right now.
Yeah, I know you can do that against.
. If you get a scholarship, you can then take that withdrawal against the scholarship with no fees or penalties. But as far as just going, I paid tuition last year, can I take the money out now? I'm not sure about that based on the plan.
And I know that if it was a student loan, if you're like, hey, I have a student loan, I think you can only do 10,000 out of a 529 to cover a student loan per year. So there's some stipulations around that, which is another reason why, from here on forward, I would just use that money to pay for education. And that just frees up your income to do life on a daily and monthly basis with your wife. So you've got 31,000 in the 529.. Is that going to cover everything that you need?
Yes. I mean, for the last two years, it's only been about 5,000 a semester, which we've covered. And, moving forward, I've gotten a lot of really good scholarships and stuff. So even if I were to take it against the scholarship, I could definitely use that money. This year, I had about 18,000 in scholarships I got.
So what you mentioned, you can use a scholarship to take the money out in place of that. So yeah, we could definitely use the funds.
And then whatever's left, it can roll over to different family members. So if your wife has further education, if you guys end up having children, depending on the state, you should be able to roll it towards different family members as well. And the good news is over time, I believe a 529, by the time you're in your 60s, it becomes just part of your retirement, if I'm not mistaken. But there's some flexibility there. The point is, when money is earmarked for a certain purpose, especially when it's invested money, you definitely want to use it for the purpose that it's earmarked for, because it's better off.
Was there any other part of that?
that you had questions or concerns about?
No. The only question is, if I were to roll it out or take it out for school, that would free up some of our savings money. Absolutely. Should I just keep getting, just grow the savings, or should we start investing? As a missionary pilot, I'm only going to be able to fly for missionary aviation until I'm about 63 in that field, because they kind of cut you off before you get too old.
Flying isn't the easiest. So I was wondering if I should start investing sooner, knowing that I won't have to save as much for college because we'll be using that plan.
That would be a good idea. If you've got no debt,
emergency fund, you're able to cash flow all of your program 100%, then you can begin investing now. But just make sure, do the math on all this and make sure you're not going to get to year three and go, oh gosh, more expensive than we thought. So figure out all of the expenses needed, whether that's housing and textbooks, and who knows what else is involved here. Is your wife working?
Yes, she works full-time as a nanny. So that is one nice... Okay. And you don't have any debt? No debt.
Perfect. Will you be making money? while in school? I work a little bit. My school is 40 hours a week and then homework on top of that.
So it's not the most friendly to work as well,
but I try to pick up stuff here and there. Okay. So that's the part to think about is you may have a reduction in income. And so I don't want you guys to use up all that emergency fund, because.
you're in school. Yeah. And I'd be working now with whatever money you have left over to build a separate emergency fund.
You've got this 529 money. What other money do you have?
We have about 5,000, 6,000 in savings. And then our monthly expenses, we don't pay rent or utilities, or cars or phone bills or anything. Our parents have blessed us with all of that. So our monthly expense is about $1,500 a month. So we're on that four month emergency fund.
Listen, if I'm you, I'm going to stock up that emergency fund in six months. I'm going to make on an every dollar budget. So I know what the plan is and I know what we're working towards. And for you, it's getting six months saved. And eventually you'll be investing 15% of your income every month into investments and retirement.
This is the Ramsey show.
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You're listening to the Ramsey show. I'm Jade Warshaw. This is George Camel, host of the YouTube show, The George Camel Show. George, how's that show going, by the way?
It's honestly bonkers, Jade. I don't know. You know, January is always a big month for all of our shows, but ours in particular has gone zoom, zoom, as our friend Dave would say. And so right now, I don't know what's going on, but we had a really strong episode with Dave. It was millionaires and cars getting coffee with Dave and I in a Tesla.
And we went to his barn. It was there's behind the scenes. He made me a cup of coffee from a fancy coffee machine. And we had a great conversation. Was the coffee good, though?
It was good. Yeah, I got no complaints. That felt like it wasn't that good. Well, I don't want to. I don't want to dog Dave.
You know, I got very bougie with my coffee, but it was a great cup. So you can go check it out on YouTube. Just search George Camel with a K on YouTube and you'll see all the stuff. Love it. All right, let's take your call.
By the.
way, you can give us a call. The number is 888-825-5225 and we'll answer your questions. So let's go to James in Cleveland, Ohio. What's going on, James?
Hey, how's it going? Thanks for taking my call. You're welcome. How can we help?
So I make about $80,000 a year. I have about $85,000 in consumer debt spread out between a car payment, a personal loan and some credit cards. Okay. Can you tell us, can you tell us how it spreads out? just so we know?
Yeah. So I have $43,000 on a 2021 truck, $24,000 on a personal loan and then the rest is credit card. Okay. Thank you.
Back in September, I started working with this company that is supposed to negotiate with these credit card companies and the personal loan company to help bring the balance down. These debt settlement relief companies? Yes. Yes, exactly. And so I just recently finding you guys, I'm coming to the horrible realization that this was a bad idea and to the point where most of these accounts are defaulted or not going to work with me personally.
So I don't really know where to go from there. in the baby steps. I have $1,000 funds saved, but as far as like tackling the debt, the truck itself is the only thing that's active, if you will. Is it upside down? No.
So we're selling truck. First off,
that's what I'm doing, because a guy who's making 80,000 probably shouldn't have a car. that's more than half of his annual income. That's kind of just a rule of thumb that we go by around here. And I mean, yours is just a little above, but considering your debt, if I woke up in your shoes, the first thing I would do is sell that car. And so many people call in, James, that are upside down in their vehicles, and it kind of puts a wrench in the plan.
I mean, they're still able to do it, but because you're not upside down, if you sold that car today, what would you get?
It'll be real close regardless. But my question with that would be, if I travel for work and my vehicle is like my lifeline, every six weeks to three months, I'm going to a different part of the country. I build retail stores for a living.
So I mean, having a vehicle with a warranty was kind of why I went with a new vehicle when I purchased it in the first place.
So you're hauling things in the truck because of your work, like it's a work truck?
Yes.
So you're saying that there's no way that you could have half the truck, have a $23,000 truck, do the same thing?
No, I guess that's not the case.
Yeah, because I'm not, listen, I'm not telling you that you have to get a $2,000 truck. I'm just saying, I think there's a significant downgrade that you can do in this situation. And I'm saying that that's what we're working up to. Thing one here is we're paying off your debt. That's what that's the house, that's on fire.
That's what we've got to be focused on. And part of that, the reason that your house is on fire, is because you've got a $43,000 truck. So if we can knock that down for the time being, if we can knock that down for the time being to far less expensive, that is going to get you where you want to go. And then the time's going to come where you can upgrade slowly to get back to a $40,000 truck.
Sure. So would I attack the truck, get rid of the truck and then start working on this debt that's now going to collections and stop working with this consolidation company?
Yes. Stop giving them money. So what these companies do, James, and now you know this, is they'll intentionally tell you, hey, stop paying all payments on this, let it tank, and then we'll try to negotiate the payment to make it lower, which in turn just implodes your financial life and really doesn't solve the problem. And, by the way, you could have done that. You could have done that yourself.
Yeah. And so these companies are a borderline scam and I hate them with a burning passion. But yeah, we need to get rid of this truck and downgrade for now, which is going to free up a payment. You said, how much is the payment on this truck?
It is $835,000.
Oh, Lordy. Listen, James, $835,000, that's so much money. That is so, so much money. You're going to be able to make such great headway. Before you sell the truck, obviously you're going to need to set aside some cash that you can get a car in cash.
And again, remember, this is just short-term. I understand everything you said about your truck being your livelihood in many ways, but this is just such a short-term sacrifice because with $835 saved up or saved in your budget every month, you're going to be able to pay off $10,000, $11,000 in credit cards, lickety split. You're going to be able to pay off that $24,000 loan, lickety split, because I know that's not the only money that you'll be able to free up to put towards this debt.
Yeah, sure. Absolutely.
And James, the other issue with using this truck for work, a new expensive truck, is that you are destroying the value by taking this thing on the road like that. And so you need to get out of this thing while you can and you're not underwater.
He's lucky he's not already with the miles.
You'd put another 10, 20, 30, 40,000 miles on this thing, and that value is just going to drop.
like a rock. So that's your homework coming out of here. Your homework is, A, we tell everybody to get on a budget. So make sure you pull up an every dollar budget. That's just going to help you.
That's your roadmap going forward. And then number two, you're going to start saving up a little bit of cash so that as soon as possible, you can sell this car and have some cash to get just in the meantime, because once you sell that car, it's going to take you a year to get out of this debt or less. I'm going to say eight to 12 months to pay this off if you get after it.
Fair enough.
Okay. And I'm not entirely alone here. I do have a fiance and two children at home. I have a seven-year-old and a one-year-old. So it makes it a little difficult for my fiance to help in the income endeavor.
As of now, we don't really have a strong support system around. But as-.
Well, I don't think she should help you yet, because you're not married yet. So until you get married, I do, even though you might be living together, financially, keep it separate. And this is your debt until you guys do get married.
Because her credit card debt is in total with that $85,000.
Okay. Okay. So thank you for the clarification. For right now, when do you guys get married?
We've been together 12 years, so-.
Oh, you've been together 12 years, but when do you get married?
Yeah, good question.
Listen-.
James.
James, you just flipped the entire script on us right here.
Ticked off the wrong Jade.
No, I'm not mad. I'm not mad. I just wish I had this information sooner. Listen, number one, get married and stop playing. If you've been together 12 years, you got two kids together.
This is the woman. And if it's not-.
It's a real wedding and it's just not in the table financially.
Okay. I get that. But literally just get the piece of paper, because this is for legal protection for both of you. And if you guys want to do the party later, that's fine. But get the piece of paper so that you can combine your money and it's safe for both of you.
Just talk and be like, listen, girl, we've been together all this time. Come down to the courthouse with me. Let's get this paper signed. You don't even have to tell anyone. All right?
That can be your little secret until it's.
. This is just to keep you safe under the law of combining your things together. Because if something happens, you want to show that you were legally married.
There's financial legal protections with marriage.
That's right. So that's A1..
You got some work to do, James.
James, thanks for telling us. He just entered the fire by telling us last minute.
12 years. Listen, get a Costco pizza and a Costco cake and we'll celebrate later.
Listen, they don't even have to tell anybody. Just go, get the dat gum certificate. Don't tell anyone. And then you can pretend like, oh, we set a date and we're getting married. Nobody knows.
At this point, they forgot. I mean, it's been 12 years.
Everybody around them thinks that they're married. Yeah. That's crazy. Listen, if you're listening, I don't care if you've been dating for eight years or 24 years. If you don't have that piece of paper and something goes wrong, you are not protected.
Get married, get the piece of paper so that, if something goes awry, the law is on your side to make sure you get your cut. Come on, ladies. This is The Ramsey Show.
You're listening to The Ramsey Show. I'm your host, Jade Warshaw. Your other host is George Camel with a K. Don't get it twisted. And we're taking your calls all afternoon long.
The number is 888-825-5225.
. And we're coming, George, around the pipe to my favorite time of year. Not true.
Tax season. It's a whole season, Jade. We got birthday month, but it's tax season.
Season. Yes. I don't historically love tax season, George. I'm not going to lie about that. I, it feels stressful.
It feels like, all right, like I got to start, you know, people are sending me papers in the mail. They're emailing me papers. I got to download the PDF and send it to my, you know.
Well, at least you're tech savvy and young, you know. My mom, I got to show her how to get the PDFs downloaded and printed. It's a whole situation. The PFD. The PFD.
No, I get it. I mean, when I schedule my tax appointment, it might as well be scheduling a colonoscopy. That's how it feels. I'm just preparing my heart for what's to come.
I don't feel like we have to feel that way. I feel like that's kind of just the stigma of taxes, but I feel like it can actually be simpler.
Oh, well, I like my tax. I got a tax pro and I've enjoyed working with them. So I'm like, I get to see them again this year. This'll be fun. Get to catch up.
But, you know, there are, with the stigma, Jade, there's a lot of myths out there. And I released a video on my YouTube channel called Five Tax Myths Broke People Believe. And not just broke people, a lot of people believe these. Okay. And so I want to cover them real quick, the SparkNotes version.
Okay. And then people can go watch the full version, with all the funny memes and clips that we put in there and jokes. But this one's less jokes. Okay. You ready for it?
I'm ready. Myth number one, a tax refund is reason to celebrate. You've seen people bragging and the commercials are all like, woo! I'm going to Disney with my tax refund. Yikes.
Here's what this really is. It's an interest-free loan you gave to Uncle Sam. Yikes. Because that means you overpaid your taxes all year long, and they're just giving you your money back.
So wait a minute, you're telling me that I loaned the government money and they didn't even pay me interest on it?
0% is what you got. And then I have to file something in order to get my money back? Just to figure that out. That's a problem. So think about it.
What could you do with that money instead? if you had it all year long? If you had $2,400 refund, that's $200 every month that you could have been using to budget.
George, listen, I know folks out here who are getting $8,000 refunds.
That hurts my brain. They are giving the government way too much. We already do that. enough with taxes. Can we do a poll on that?
I want to know what folks are getting. Put in the comments, put in the chats, what is an average or a normal tax return amount for you? I just want people to see the amounts that they're letting the government borrow. Gross. That'll be fun to see.
So the goal here is to get it to as close to zero as possible. Yes. You don't want to give too much,
you can just go on your W-4 and change it. They've made it easier to change your withholding.
Yeah. So work with your HR team and you can adjust that form. Myth number two, it's bad to be in a higher tax bracket.
Mo' money, mo' problems.
People are always scared of making more money, Jade, because they're like, well, I might push me into the 22% tax bracket. I'm like, you, don't, that's not how-.
It doesn't even work like that.
It doesn't. And I walk through this visually in this YouTube video. We're not going to do it here, but tax rates are marginal.
It's not your whole amount that's taxed. Yes. Thank you, George.
This first portion of your income is taxed at 10%. That's right. This next portion is taxed at 12% and it stair steps up. Yes. And so if you make an extra $2,000, you're not going to be just jumping into wildly more taxes.
That's right. Help the people. You got to think about the effective tax rate instead of marginal. I walk through it in the video.
Yes. Good.
Myth number three. You've heard this one. Keeping debt around is good for the write-off.
Yeah, bro. I keep my house payment for the tax write-off.
You've heard people tell, don't pay off your house. You'll lose the mortgage interest deduction. The numbers on how many people actually itemize, which, by the way, is the only way you can get the interest deduction.
Yes, that's true.
Is so abysmally low.
Yeah. Most people take the standard deduction.
Exactly. And you don't think about what you've been paying all year in interest for the benefit and joy and blessing of getting a little bit back.
And then there's just the piece, right? Can we just-?
The piece of not having debt. So don't spend a dollar to save a quarter. That's bad math. That's stupidity. And don't spend money to make money.
You've seen the people are like, I'm going to buy a G wagon for $240,000 and write it off like a life hack. No, no one thinks you're cool. Myth number four. You have to pay by tax day. And if you can't, don't even bother paying at all.
You missed it. You missed the boat.
That's a lie. That's a lie. Do you know what musical that's from?
I don't want to embarrass myself.
Dreamgirls. But keep going.
I was going to say Dreamgirls, which would have been embarrassing. So that's why I didn't do it. So yeah, you have options here. Don't ignore taxes. just because you can't pay by tax day.
You got to file anyways.
Right. It's just you filing the paperwork, right?
Yes. And you can file an extension for the payment, but you got to pay as much as you can and get on a payment plan. And if you do owe the IRS money, put it to the very top of your debt, snowball.
Ooh, good one, George.
That goes to the front of the list, because they can screw up your life and garnish wages and take you to court. You don't want to do that.
Pay your taxes. Please don't mess around with these IRS folks. Okay, keep going.
Last myth. You're not smart enough to do your own taxes.
Hey, hey, I have felt that. In times past, I have felt that, George.
Well, they got all these forms and they ask you a billion questions. And so here's the deal. It's become a lot easier. And this one depends. Some people, it's wise to do it yourself if you feel comfortable, and some people it's worth working with a pro.
So online tax software can be great. If you've got one to two sources of income, you don't have a bunch of non-retirement investing going on. You're taking the standard deduction. You don't have any major life changes like moves or marriage or whatever. Babies.
Online tax software is great. And we actually have one called Ramsey Smart Tax.
There it is.
That is wonderfully easy to use. It guides you through the whole process. There's no gimmicks. There's one price, you pay, one flat fee. And there's not this surprise at the end of, oh, you have one extra form?
We're going to get you at this one, like the other guys do. So they make it super simple, upfront pricing. I love that.
But if I, like literally me, if I'm looking, I'm going, listen, I can't do my taxes. I got a small business. We just had a baby. His income is like that. Then you're looking for a pro.
And we've got a whole network of Ramsey-trusted tax pros all over the country who are ready to help you with that, that you can trust. They have the heart of a teacher. They want to actually educate you. And so those two are great options. So you can go check that out, ramseysolutions.com slash tax.
Our team created just an entire hub. Number one, there's a few questions you can select. It's going to show you the best option for you. Should you file online? Which version?
Should you work with a pro? And it'll give you the next steps. There's also a great guide to taxes and some great checklists, like prep checklists. I print this out every year from this website.
So that you make sure you're having all the paperwork for your tax pro.
All my ducks in a row. Because there's always one I forget. Like, oh yeah, I need the 1099I for the interest income from the high yield. All of that is right there in the checklist. So you know you're ready to go when you meet with the pro or you're filing online.
I suddenly have less stress, George.
That's the goal. That is the goal. So ramseysolutions.com slash tax. You know too much now to fall for these myths, y'all. And happy tax filing.
I like to get mine done as soon as possible, truthfully.
I am already there. Listen, last night, as we were getting ready for bed, Sam's mom is an accountant. She's done our taxes forever.
Bless her heart.
And so I was like, did you send your mom the tax stuff? And he was like, yeah. I'm like, did you send her our giving statement? The giving statement, you know, at church, you give your tithe. That checklist, I now too am going to go download that checklist just to make sure.
Because there's always one or two things that slip your mind. And so it's nice to have that checklist to remember all those, like you said, 1099I, all those little things.
So go to ramseysolutions.
com slash tax. You'll see my face. You'll see Dave's face. We're smiling. We're happy.
And it says you shouldn't have to doubt your tax service. So we've got all kinds of options. We'll walk you through. Should you work with a pro? Should you file?
And at the bottom, you'll see the free tax guide. You'll see the personal checklist, even a self-employed checklist. That can be stressful for those that are self-employed.
Listen, I want to roll back, though, George, to that myth number one about the refund being a reason to celebrate. I feel like people, y'all, don't give yourself enough credit. A lot of people just view it as, hey, George, this is how I save for vacation every year. Listen, it's easy. My tax refund comes, and that's our trip to Disney.
I really want to bust that myth up, because you could literally keep that money in your account and have a better rate. You could put it in H-Y-S-A for 12 months and have a better rate of return than letting the government hold it for a year, because you don't think you can save money.
for a vacation yourself. Well, too many people are complaining. they don't have margin in their money right now. with inflation. I'm like, well, you have margin.
You just are giving it to the government all year, and then you're getting it at the end of the year. So change your withholding.
It's January. This is a good time to be looking at that.
Reset.
Whatever you've been getting over the past, look back on years past, whatever you've been getting, take that number and divide it by 12.
. Like George said, that's the amount of money you could be having back in your budget every single month. Think about that, man. With inflation, that's groceries. That's gas money.
You just gave yourself a raise. I love it.
Significant.
There it is. We ate our vegetables, Jade. We taught the people about taxes. You did a great job. Are you happy, James?
James is never happy.
This is The Ramsey Show.
You're listening to The Ramsey Show. I'm your host, Jade Warshaw. This is your other host, George Campbell, with a K, your producer, James Childs. He just told us we did a good job, and that rarely happens.
You know how rare that is?
He said a good job.
You guys are gaslighting me so bad right now. It's like the dad who's never said he's proud of you, and then finally, 20 years in-.
He shakes your hand and says, I'm proud.
He gives you a handshake and he says, take care, buddy.
Yeah. Not a hug, a handshake.
Okay. I'm kidding.
He pulls a quarter from behind his ear and says, go, buy yourself something nice.
Don't spend it all in one place, kid.
I love it. He's the best. The guys in the booth are the best guys ever.
And the gal.
And gal. Yes, Eboo. Listen, they're really the ones that make this show happen. Let's be clear about that.
I can't imagine being on the front lines of screening the phones for this show.
They whisper all the answers into our ear pieces.
That would be amazing.
Give us a call. The number is 888-825-5225.. We're just having a good time. And let's go straight to the phone lines where we've got Mark from New York City, New York. What's going on, Mark?
Hi, Jade and George. Thank you so much for taking my call. You guys are my heroes.
Wow.
That's awesome.
You can set your sights higher, but I really appreciate that.
I appreciate your time.
My wife and I are in a unique situation. We have about 1.6 in a brokerage account, 43.. We have about a quarter million in retirement. I'm about 17 years in the public retirement pension system. in my job.
We owe about $260 on our primary and around $113 on our rental property. And really, what it comes down to is, after listening to you guys, I wonder if I should use the brokerage account to pay off the two properties and become truly debt free. We have no debt. Cars are paid off. No credit card debt.
It's just such a big decision. I'm just a little... I'd like to get some advice.
You just need somebody to kind of push you. It's like jumping out of an airplane. You just need the guy on your back to just jump and then you go.
You know what we're going to say. Yeah, you know. The question is, what's holding you back? Like $373 out of your $1.6, you're still going to have $1.2 million sitting in that brokerage account.
And that's what my advisor is saying. However, I got this money initially from my grandmother, when she passed away as an intern. I feel like I'm the steward of this money.
Absolutely.
And I just don't want to do anything wrong with it. Pretty much, we've basically quintupled the money. And I know this is a great problem to have. I'm so afraid of making the wrong decision.
Listen, the good news for you is we teach grandma's way of handling money. That's our whole thing here.
I never met a grandma that liked debt. I'm just saying.
I think your grandma, if you talk to her now and you said, listen, grandma, I took that money. I paid off all my debt. My family's living debt free. We're millionaires. We've got paid for real estate.
Our own home is paid for. I think she'd probably, I don't know the woman, but my guess is she would be so very proud of you.
I guess the only, well, thank you. But I guess the other thing would be opportunity costs. With that money still invested, would it outstrip the,
would it make more than it's as an investment rather than, um, or is this more of a, just a, um, emotional decision rather than a purely numbers decision? Well, there is also the tax liability on selling those, uh, investments. I'm wondering if that would, would be an issue as well.
Well, are these going to be long-term capital gains?
Yes.
Okay. And you're not selling all of it. And so do the math on what you would owe in taxes. And we're going to set that aside as well. But again, you're still going to have over a million dollars sitting here.
That money's going to continue to grow. Do you need to touch that money for any other reason?
No, no. We've used it in the past, like to, you know, the down payment on this, this, our current home and things of that nature. But, like I said before, I really try to keep hands off of it as much as possible. Okay.
Well, play it out. Think about this too. You have two mortgage payments right now. Take those mortgage payments and plug them into investment calculator. You're 43..
Let's say, for the next 20 years, you start to invest that much more into that same account.
That's going to change the numbers for you.
That's, I'm guessing, a few thousand dollars. you're now investing that you weren't before. Correct?
Yes, absolutely. I mean, it would definitely free up cashflow that, you know, in a way that we've never seen before. That's for sure.
And every, if you get, let's say, a 10% average annual return in this account, if it's invested. well, that money's going to double every seven years. So 1.2 turns into 2.4, turns into 3.6, and you're still going to be, you know, what, in your sixties at that point?
Correct. And that's if you do nothing else. That's if you just leave it alone and you don't put another dime in there. So you're going to be okay. So I'm less worried about opportunity costs in the future.
I'm more concerned about Mark, right now at 43 years old, and the freedom and options he gets to have with his family with no payments in the world.
It does sound very enticing. Maybe it is. I mean, I called up because I wanted an answer from people that I respect and trust. And, to be honest, I probably have gotten the answer that I expected.
So what are you going to do, Mark? The question is, what are you going to do?
I'm going to do it. I'm going to make the call and pay it off.
Dude, we always joke, if you regret it, Mark, you can always go get more debt. You can take out against that all those equity in your homes and get HELOCs up to your eyeballs.
That's right.
I don't think you will. I was going to mention that we have a low interest rate, but I know how that goes over on your show. Oh, yeah. I figured I'd keep that to myself.
Mark, my favorite interest rate is zero, and that's what I have on my house. And that's what you're about to have.
Rich people earn interest. They don't pay it.
Exactly. And you are a rich person. And your grandma left a beautiful legacy, and I think she would want you to solve for freedom. And this is what freedom looks like, man. The world is your oyster, with no mortgage payment.
You guys have done so well. 43 years old, net worth. I'm guessing we hadn't even hear the full picture. Man. With all what the properties are worth, plus the millions in these accounts.
Excellent.
The way he's going to be able to give, save, and spend for the next 40 years is mind-boggling.
That's exciting. It's so hard. He's a math guy. He's all into numbers. They're the hardest to remind about peace.
Well, when it comes to emotion, I can get people to look at the math. But when people are mathematical, it's hard to get them to look at emotion. It's so hard to go, what would that feel like? And they go, well, I don't know, because on paper, it's a low interest rate. I can make a spread if I invested it.
And they're losing brain calories and sleep over this. I got peace and no payments, man. Try it out. See how you like it.
I hear that. Let's ask Dennis. Let's help him out. He's in White Plains. I think we can help him right, quick.
What's going on, Dennis?
Well, it's not White Plains. It's West Plains.
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