Today Is the Day to Chose What Your Future Looks Like

Live from the headquarters of Ramsey Solutions, this is the Ramsey Show. It's where we help you win in your life. We do that by helping you win in your money, in your work, and in your relationships. I'm Ken Coleman, joined by George Camel, my good pal, and the author of a soon-to-be-released book, and it's a good one. We'll talk about that coming up, but the phone number to jump in is 888-825-5225, 888-825-5225..

How are you today? We're having a blast. What's up? All right, guys. So, George, a special thank you, first off, for, you know, reaching out to me.

George is calling callers now? What is happening? It feels like we have a boundary. Listen, Stephen, he sent me a DM.

yesterday with this question. I said, hey, I want to dig into this. Will you call the show? This is a perfect call for Ken and I to take. I want to hear Ken's thoughts.

You really are a man of the people. You are a man of the people. What can I say?

All right, Stephen. What's going on? All right, guys. So, as I mentioned to George, I'm a former lottery winner. A million dollars?

taxes on that. So, take-home was $555,000.. Okay. And over the span of eight years, you drained that $555,000 in your bank account to zero? Yes, sir.

curiosity, can you tell us where that money went? Yeah. So, I mean, obviously, I bought the ticket, so I gambled to buy the ticket, right? So, that never stopped. It was more so with casinos, sports gambling, et cetera.

there's addictive behavior here. Have you dealt with that over the last eight years? Are you still?

grappling with that?

Is this the first step you've taken as we're talking now? What's that? Is that the first step you've taken to get control of this?

Yes. And I realized that it was an issue, but still would go at it.

Wow. So, would you say it was largely gambling? Did you buy a house, a car? Did you upgrade your?

lifestyle? Definitely upgraded the lifestyle. A little bit. I did buy a new car. I paid cash for it when I won.

today. I don't have a car debt. Okay. Well, we're going to help you take the right next step. We're not here to beat you up.

Yes, sir. I'm in restaurant management. My income is $75,000..

Good. And how much debt do you have left?

$29,000..

All right. And how much money do you have in the bank, if any?

About $6,000..

Okay. That's good news. And are you single?

I have a girlfriend, not married, but I have a girlfriend and we do live together.

Okay. And the $29,000, is that one student loan or a bunch of student loans? What kind of debt is?

that? It's two different federal student loans that total the $29,000..

Okay. We can start to chip away at that with some of the savings. You have your $1,000 emergency fund. Now we're going to debt snowball these pretty quickly, making $75,000, knocking out $29,000.. How quickly could you do that?

Well, I have roughly $2,400 a month left over after all bills are paid.

Yeah. You'll be done with this in under a year. I mean, $2,400 a month, that's $29,000 in a year. So let's focus on knocking this out over the next 12 months. Then we're going to get a fully funded emergency fund so that you never have to go back into debt again, so you have financial foundation.

Yeah. I don't really spend all that much. I don't live a highfalutin lifestyle. I just, I gamble, and that's where it's going.

Have you cut off the ability to gamble, whether it's your friend group, whether it's the cards, whatever it is that's enabling you to do this, have you cut those pieces off?

I don't really know how to cut that. I have a couple of friends that are well aware of what's going on.

Are they the kind of people that will challenge you, hold you accountable, check in on you? Will you be honest with them? Could you listen to them?

Absolutely. They have done that. We haven't spoken recently. We had a conversation about six months ago, about all of it. I haven't stopped since then.

Do you have any credit cards open?

No, sir.

Okay. What are you gambling on right now? Is it football or what is it?

Yeah, I'll do sports gambling.

Is that through an app or website?

No, it's just live.

Okay. Because the one thing you can do is delete all the apps, delete all your logins, all your payment info for all these sites. You can block these sites too, through your browser. Yeah. I think we need to put some software steps in place.

I think George is right. Stephen, I think you have to do that, but you have to have some accountability. Your girlfriend, it would be like-.

And Gamblers. Anonymous will help with that, for sure.

It will, but I think you need to decide today. I'm not, again, in any way taking away from therapy or anything else, but I do think you need some accountability. I would almost treat your gambling like I would a teenager looking at stuff they shouldn't look at on a phone. I would get the girlfriend involved or a really close friend and set it up to where they set up, where there's notifications or something. There's got to be a way to do this.

Yeah. I've always held myself accountable in all areas of life.

Except this one.

Except this.

Also, here's the deal.

It's frustrating.

I know it's frustrating. Again, I think you need help. I would absolutely go and get with a therapist. I would. I'd make a couple phone calls today.

Hi.

And we're here for you. 888-825-5225..

I like your child.

That's not how I expected that to play out.

It felt like you were egging it on. You sounded like a 10-year-old. Yeah, you were egging that vibe on, so I went with it. It's called improv.

Well, you know, George, I knew you when you were single.

That's true.

So tomorrow, this would have been a day that would be an exciting day for you. Thank goodness. Thankfully, you somehow coerced Whitney.

What day is this?

It's called Singles Day. Are you aware of this?

Never heard of it.

There's a day for everything. And in my hands here,

So we just made a holiday to make it happen.

So we jumped in on it. Why not?

Get in on the fun.

It's happening. So Dave said, get there. So what we're doing is a one-day sale. only on Saturday. You can get our best-selling books, like Total Money, Makeover, Baby Steps Millionaire, From Paycheck to Purpose.

Okay, this is pretty meta, because we have the $12 sale, but just for one day only, you get $1 off. And it's not just if you're single. Now, it's aimed at the singles, but, truth be told, we can't police that on the website.

We can't. So there you go. And you can also get my Get Clear, accessible, the digital.

For $11..

For $11.. That's normally $30.. I don't know how my kids are going to eat next month. Highway robbery. I'm going to talk to Dave about this.

Just one more reason to celebrate, Ken.

My job is to read the notes.

It's time for the Ramsey Dating App. The Ramsey Dating App. That's the next one, Ken. There it is. We'll never make.

From Singles Day to the City of Brotherly Love. Chris is joining us now in Philadelphia, Pennsylvania. Chris, you're on the Ramsey Show. How can we help?

Ken, George, thanks for taking my call. How are you today?

We're good. Sorry. I got a little chuckle going on here. What can we do for you?

Sure. Don't give me a call here, because, unfortunately, it appears that I'll be losing my job here in the very near future.

Oh, no. What's going on? I'm sorry. What's happening?

My company is experiencing some financial difficulties. They had a low interest rate for a very long time. And, like most individuals, they work off of debt as a company.

Are you in the financial sector?

I am in the pharmaceutical sector, small pharmaceutical company.

Is this like in a week, or is this a month? Do you have any idea of the timeline?

It could be anywhere from a week to the next month. That's correct.

Okay.

And you are certain that you have already been selected to be laid off?

I'm 90% confident that it'll occur.

Okay.

What do you make?

Currently, I make $135,000 with a 10% targeted bonus, so about $150,000 a year. But I am married and have a one-year-old daughter as well. My wife is, fortunately, a teacher making $70,000 a year, and she has tenure. So at minimum, we have that going for us.

Is that enough to cover the bills if it was just her income?

I'll have a super majority of those bills. I'll tell you, George, we live with our purse strings very tight. Our basic needs, we run at about 40% of our budget. Our savings and debt reduction, we've been going crazy at 46%. And we live with a menial 15% of our nice-to-haves to our budgeting.

Okay. So how much debt do you have?

We have $110,000 left, and it is our mortgage, and that is it. Oh, okay.

So no consumer debt, and the mortgage is reasonable as a part of your take-home pay?

It is $1,800 a month. And we, as a total, from a net perspective, bring home approximately, hold on, $12,000 a year.

Wonderful. Okay. So you are in a solid financial position, which gives me great joy during this time of stress that you're going to be okay financially. And so now it's up to you to find that next job, which, Ken, he's the man for that.

Yeah. So what do you do in pharmaceuticals?

Sure. I'm a transparency specialist. The pharmaceutical industry has a very niche requirement through the government. It's a compliance role, but essentially, we look at financial transactions and disclose payments to doctors. It's a very niche area, but I've also worked in finance for six years.

Well, that's fine. And I love that. And we've got a free resume guide, which I'll make sure that we get to you at the end of our call. It's a free resource. We've also got some great templates that'll help you stand out.

I'd honestly love to go back into finance, but honestly, the call and question that I wanted to jump into, I'm going back to my contacts in finance to get a role.

That's correct. Make sure that we're covering everything. You're in storm mode, which means we're pausing the baby steps. We'll stack up a whole bunch of cash until we get stability. Then we can move forward.

That's right. It's the only debt you've got left. You're in great shape and you're very disciplined. This is a blip for you. It's a bump in the road.

We really do. A rowdy bunch. We have to contain them. Yeah.

No, they're not very rowdy. I love when you say rowdy bunch, and there's one guy out there that was like arms crossing. It was sarcastic. I'm rowdy.

They're a little miffed.

I'm rowdy. They're a little miffed now because we called attention to them. They're on the edge. They're lovely people. And there's a lady waving at us.

Good reminder that you can come visit us.

You can come visit us. See the show live. We have free coffee, free baked goods.

And the show is free.

Show's free. And we come out and take pictures with you, whether you want us to or not. That's always not awkward. So, you know, that whole thing is great. To the phones we go, 888-825-5225, 888-825-5225..

Hi, George. Hi, Ken. I'm calling because I know you'll help lock some sense into me. I'm in Baby Step 3B, and I am hoping to start saving. I mean, I'm saving for a home, but here in California, I'll have to save $100,000 to just get in and down payment, so that my monthly payment will be ridiculously high.

And I want to get going.

I'm 39..

Oh, my goodness, you're ancient.

Easy, George. I know.

Three years from now, you're going to be 42?.

You can't tell women that. What's wrong with you?

You're going to have to find a house with no stairs. I'm not sure you're going to be able to walk up those things.

You know, they have those little chairs that go slowly up the stairs. We could get her one of those.

I do need one floor because I do have arthritis, and so I cannot imagine myself going up the stairs.

I nailed it. Oh, geez. That's going to limit the housing options already.

Okay.

Emma, let's walk through this. So there's this home buying program. Is that what you're saying? That will allow you to put less down and qualify for more loan?

Yeah, like an FHA loan.

Ugh, gross. Okay, so let's talk about house fever first. Yeah, the house fever, I don't know that I can squelch. You're frustrated by high rent prices. You want to be putting your money towards something, building equity, instead of, I'm quoting this, throwing away money on rent.

Yeah, of course you did.

Okay, so that's very understandable. I have a lot of empathy for many people out there who want to be homeowners. They've been working for a long time, and they're going, this should just be possible for me. Real quick here. And it feels impossible.

And I want you to walk through here, but on this fever issue, I think I can address the house fever.

All right, hit me.

Because when I moved here with our family, what, nine years ago? I got into Williamson County and I started driving around on the roads, and I want to make sure you hear this, Emma, and I got what is known as land fever.

Oh, boy.

Yeah.

That's full on Yellowstone. Oh, boy.

I was looking at large parcels of land where we could, with a house or where we would build. And I just got in love with it. And I'm not kidding you. There were two or three nights a week. I would, on my way home, I would go check out things and my wife would be like, hey, dinner's almost ready.

A Toyota RAV4..

And what color was that Toyota RAV4?.

A silver.

Silver. Do you remember seeing a silver RAV4s all over the road for the first three, four, five days? You remember that?

Yeah. Now I see them everywhere.

You see them everywhere. Did the God, did the car fairy just drop in Toyota RAV4s all of a sudden on the road? The answer is no. Here's the exercise. What we focus on is what we see everywhere.

Houses. Land. Land, parcels.

I'm not looking at dirt, you know? And so that's really important. Yeah.

Well, Emma, the problem with these programs and what you're talking about for the listener's benefit is the Federal Housing Administration, FHA loans, and they're designed for people who don't qualify for conventional mortgages. Do you know why they don't qualify?

I'm assuming because they don't have enough money.

Because private lenders are saying this is way too much risk. Even for a lender to take on, they're going, no thanks. So the government swoops in to be the savior, allowing broke people to get into homes for a little three and a half percent down, which sounds great. But then think about this. That means you're financing 96.5% of that on top of something they charge you called mortgage insurance premium, MIP.

Yes, yeah.

So I don't want that to become you, because I care about your future too much. And if that means Emma has to rent for two more years than she wanted to, I'm okay with that. Yep. Renting is buying patience. I'm sick of people telling you that renting is a sin and you're wasting money.

I make about $100,000..

Wonderful income. And you have any debt? You're in baby step three, so debt free.

What do you do for a living?

I do a little bit of, I do like sales and I do product group managing.

You know, I'm telling you, you need to be looking at some gigs. The gig economy, which is nothing more than freelancing. George is right. And of course, I'm always going to agree with him on, hey, well, how can we make extra money to speed this timeline up? I'd put that anxiousness and that house fever into money fever.

That feels like a personal attack on me, Ken. But it's fine.

You took that personally? How much news do you watch?

Not much. Sometimes I'll watch like a late night show monologue, just to digest some of what happened in a fun way. But that's about it. No kidding. Unless Ken tells me about it.

Are you not on a news website?

Well, I'm busy in the personal finance world, you know, being a nerd.

Well, first of all, I'm not judging you. But boy, oh boy, did you take that and run with it.

That's what I do.

But, okay, so George is a prime example. Now, I'm on the other side of it.

You're always following the news.

I'm paying attention to the news because somebody has to.

Thank you, Ken. You went first. So brave.

Listen, it is what it is. I like to know what's going on. So here's what's going on. If you do pay attention to the news. Now, George, this will all be news to you.

That was a good pun. You like that? Golly.

Americans say the economy stinks, but they're spending like it's great. This is a headline from CNN. Wow. I'm holding here this article in my hands.

Strong headline.

And here's what is happening. And, by the way, I've been talking about this. So inflation has been high for some time, even though it is slowing, but still high. That's a negative. Job market, really good.

Underutilized.

It really is. Because they're spending money on concerts. They're spending money eating out. They're spending money on clothes.

Vacations.

Vacations. Credit card at an all-time high. Credit card debt at an all-time high. And, by the way, I don't know if you saw this, Mr. Money News, this will be embarrassing for you if you didn't see this.

Oof. That's going to leave a mark.

So you're smart. Isn't that the equivalent of going, I'm going to go buy this. But if I use my credit card, I'm actually paying 20% more.

Oh, absolutely. I mean, that's the premium.

But people don't think that way.

Well, Ken, there's a story I'd gone, well, I'm going to pay the balance off. I'm going to get my 2% cash back. So I'm going to beat the system, Ken. And here we are at record high of $1.08 trillion in credit card debt. And you're going, how are you guys beating the system?

I got killed by the snowflakes on social media when I put out an Instagram reel saying, your paycheck is not your problem, your budget is. And I got lambasted.

Can I guess what they were saying?

They called me out of touch, millionaire, you know, all these things. Like I've got my head in the sand.

Here's what I'm guessing. What else did they say? Let me guess what the comment section is. I'm going to sum it up. Yeah, but Ken, wages haven't kept up with inflation.

And then, and then a bit how out of touch I am, except for paying attention to what I actually said was, is that if you can live on less than you make. and the real data from Ramsey Solutions, having polled, surveyed over 10,000 net worth millionaires, the third largest group being teachers, teachers aren't making bank. They're just living on less than they make, George.

Well, they got very few people to impress, because they're just trying to survive with these kids out here, not trying to pull up in the Beamer next to their coworkers.

There you go. So, I mean, we're in this day and age where everybody wants to spend, by the way, can I make just one little comment on the, um, my, my pay isn't keeping up with inflation.

Sure. I can't stop you.

Thank you very much.

Well, the housing market jumps 30%. We can't all just automatically get 30% raises because the company revenue didn't automatically jump 30%.

And I want the youngster at Burger King to make good money when he's flipping the Whopper. But when we got to paying three or $4 an hour, guess what else goes up? Anybody?

The cost of the Whopper.

The Whopper combo. So you're griping about how much you're making and you're griping about how much the food costs. We've got to understand basic economics in this country, and everybody wants what they want because they want it. They don't understand what it takes to get it. And it's not somebody handing it to you.

That was your Gen X rant of the day.

Thanks for calling it a Gen X rant.

I can't call you a boomer.

No, I would be very upset. We couldn't be friends if you called me a boomer. Anyway, back to the phones. we go. John in York, Pennsylvania.

Hey guys, I have a question for you. So I have a sports car that I am considering getting rid of or keeping, and I wanted your advice on it.

Tell us about the car.

It's a Mustang. It's worth about $60,000.. It's actually gone up in value since I bought it.

What year? What?

It's a 2017..

Oh.

Okay, so tell us more. Do you have debt on this?

Yeah, I owe about $15,000 more on it right now. Um, I could pay it off right now if I wanted to. Um, I'm just waiting on a, uh, high interest rate, um, savings account to, uh, time out before I go and pay it off because I'm making more on the money in the bank versus...

No, no, John, that's broke, people talk.

Oh, I see what you did there.

What's your payment on this thing?

Uh, it's about $1,000 a month.

Okay, so let's just do some basic math. You get rid of this payment and you start investing $1,000 a month. Don't you think that's a better decision for your future than hanging onto a car payment to make a tiny spread in a savings account?

Well, so that's my question. Should I sell the car and take all my equity in it and just invest that and be away with it? Or should I keep it, get away with the payment and start to invest it slowly?

How much equity do you have?

Um, well, like I said, it's worth about $60,000.. I've got about $15,000 left on it.

So... Okay, so $45,000 would be your profit. You buy yourself a little car. Is this your only car?

Um, no.

Oh, boy.

I drive a company truck for work that's fully paid for by work.

Okay, well, if you want a cool Mustang, go get you something from the 60s, my young friend. Let me tell you right now, that's what I would do.

Ken, we're not looking for having to upgrade, all right? We're trying to help him out.

No, I'm saying he cashes out. He saves and then he gets himself a real Mustang.

That's some healthy profit.

Well, what's your income? Somebody has to tell him.

What do you make?

I make about $120,000 a year.

And what other debt do you have?

Um, my wife and I own a house that is worth about... or our mortgage is about, $300,000 left on it.

Okay. So, so far you're not violating any principles. If your cars add up to more than half of your annual income, I'd go ahead and sell it. I still think, because this is weighing on you and you called us, it sounds like selling this thing would be a relief for you. You can always go get a car later on when you are a millionaire and you got a paid-for house.

And again, a Mustang from the 60s. You pay cash.

Thank you, Ken.

It's going to be a better thing and it's worth something. It's going to grow in value. Not a 2017..

All right, we got to get out of here.

Good hour. Thanks, James, Chiles, and everybody in the booth. Thank you, George. Thank you, America. This is the Ramsey Show.

Hi, guys. Thank you guys so much for taking my call today. So this is kind of what's going on. My dad, unfortunately, relapsed on meth. And he was supposed to take over my grandfather's business.

Okay. So do you want to take over? Sounds like you do. Yeah.

So I'm actually a nurse and my husband was active duty military. He just retired.

What is the business?

It's a motorcycle business.

Motorcycle. You guys sell, repair?

So we sell the parts for Harley-Davidson Motorcycles. Yeah, we don't do any repair work. We just sell the parts. Nice. Yeah, it's a very successful business.

All right. And so when you say protected from the family, you mean protected from your dad getting it?

Well, my dad and also my aunt and uncle, unfortunately, all three of them are addicts. One lives under a bridge by his choice. The other one lives with various people, couch surfing. I mean, they're all in their 50s and 60s, and this is just what they've made of their lives, unfortunately. All right.

So am I right that if your grandfather puts it in the will and all of his documents, and it's laid out that you and your husband are going to be inheriting the business, you'll be sole owners of the business upon his death? Does that not take care of that issue?

Well, yes and no. My issue is my dad tries to claim that the business is his because he took out.

What does your grandfather say about that claim?

Not really anything. He says not to worry about it, but I do worry about it.

Well, I'm calling you guys. No, no, no. And I appreciate that. But I mean, I can claim to have dunked a basketball in the 10th grade, but I can claim lots of crazy things. I never did dunk, George.

No one thought. you did.

That's what I thought. Never could quite get there. I just couldn't. I tried. But anyway, so this is an easy fix.

A hundred percent. And this is between your grandfather and your father. Yeah. You don't need to get in the middle of this. Your grandfather needs to communicate all of this and you need to say, I'm not taking over this business until we have all of this in writing, that this is free and clear, that we are the sole owners, that they will have no stake in this.

And great advice, George. This is granddad. does this. Granddad's got to talk to his grown son, who's a meth addict, and he's got to fix this mess.

Because my guess, he's not in the will to inherit anything, let alone the business.

Yes.

Okay.

Does that answer your question, Nicole?

Yes, that does. And I will get with him and see what he says.

It doesn't make it any less-.

Wait, a second. Wait, wait, wait, wait, wait. I heard a little something there.

A little sass.

No, no, not sass. I heard doubt. Are you doubtful that granddad's going to take the necessary steps to confront this?

Yes. Only because he has given my father probably no BS to you guys. Probably five businesses. Very nice businesses. My grandfather's always been an entrepreneur and my dad's run him into the ground.

All right. What if we do this? What if we do this? What if we then take out the grandfather confrontation piece and the grandfather, who came to you and said, I want you to take this business. Then the grandfather just makes...

Yes, he will do that.

We'll then do that. What we were getting at is like, this is grandfather needs to take care of this.

It's not fair for him to put that on you to deal with that. That's what we're saying. To tell dad he has no part in this.

Right. And, by the way, I don't think anybody needs to tell your dad anything.

Just be ready when he comes running for his piece of the pie and you have to get legal involved and it's going to be messy.

Which is, well, it shouldn't be messy. if you get all this done with your grandfather. There's nothing, there's no mess.

It's like, well, the mess is just dealing with, you know, that squeaky wheel. Of an addicted dad.

Well, they can go have a petty party under the bridge for all I care. You got to get this thing right, you know, and you get it right by having granddad lay it all out. This is my wish. This is exactly who's getting the business. And then there's no argument.

Right.

The key is clear communication, upfront in writing and get legal involved. Yeah. But I'm sorry you have to deal with this. This is not a fun way to take over a family business. No.

And you and your hubs are going to do great. We're excited for you, Nicole. Just take care of this. Don't leave it up to chance. In paper, in writing, no worries, no messes.

Today's question comes from Allen in Georgia. Should I leave my family's business? Although I get a lot of great experience there, I've noticed it struggles to pay the techs and owners what they deserve and cover expenses. There is also lots of debt that hasn't been addressed. I have helped support it with my own income and hiring feels impossible due to these challenges.

There's your answer, Allen. Because you don't have the capability to fix the problem, it is no longer your problem, and thus no guilt. You got to move on, because this is quickly going to turn into a lot of bitterness, a lot of resentment, and all of a sudden Thanksgiving and Christmas is ruined, all because you just went, I feel like I have to stay in the midst of this mess. As opposed to, you. leave, you go, do your own thing, you leave behind the mess that you can't fix in your mental capacity, emotional capacity towards the family that you're working with.

Yeah, the only way you should be involved in a family business, if it's a healthy family and a healthy business. There it is. Otherwise, you have no moral legal obligation to just stick this out for the rest of your life because it's mom and dad's business. I'm sorry, but if they're not running it properly, you got to go, hey, thanks for the opportunity. I learned a lot here.

I agree, yeah.

That's a hard conversation. I'm not trying to minimize that. There's going to be feelings involved, because this is mom and dad's baby and this has been in the family for generations, and you're betraying the family. But guess what? You can't control how they react.

Or lots of people have said, and then maybe it got attributed to somebody, but we digress.

We digress.

Hey, as we get back to the phones, we'll take any of your work-related calls. I'll help you out in that area. If you're feeling stuck, you're feeling confused, a little bit bored, you want to move on, you're trying to figure out how to do that in the middle of the baby steps, we could talk about that as a part of the money questions as well. And we're going to get to Tim now in Des Moines, Iowa. Tim, how can we help?

I've got a question today about the debt snowball. My wife and I are on baby step two, and for the last eight months, we've been in stork mode. And so, as we've got our debts listed out, we kind of just keep staring down that last debt, which is just the largest number. And we wonder, because we've got a large lump sum, if it would make sense for us to pay down that largest debt with the lump sums that we have smaller debts to work with and are not kind of staring down a giant at the end of the snowball.

Well, what's the giant? What's the biggest debt? What's the smallest debt?

So the smallest one is $3,000, the largest one is going to be $14,000.. We've got a total of about $52,000 in all student loans. It's broken down into nine different accounts within those student loans. And so it's about $2,000 to $6,000 of the rest, and then there's that $14,000 one at the end. And currently, we have $19,000 in savings.

OK, $19,000 in savings, $52,000 in debt, and that's all student loans? Yes. So you're saying, hey, I could throw the $19,000 at the $14,000, knock out the biggest one, free up the payment, and continue on the snowball from there, or should I just follow it as it's laid out, smallest to largest? Yes. How many debts would you knock out with...

It would be about four.

And what would the payments amount to from those four, the minimum payments?

About just over $100 a month.

Between the four?

Yes.

I thought it was going to be more. OK.

Yeah, so we were defaulted into the income-driven payment, and so total, our minimum payments for all of the student loans only ends up being about $300 a month.

Oh, gosh. Well, the good news is you have way more to throw at that. The bad news is that sucks, and if people follow that plan, they would never get out of debt, and it would balloon in growth. So what's your household income? How much are you guys able to throw a month toward debt on top of minimum payments?

We make about $100,000 a year between my wife and I and five jobs. And then we are doing just about $2,000 a month right now.

Awesome. So at that rate, if you took $18,000 from the $52,000, that would knock you down to $34,000, and you said you could do $2,000 a month?

Yeah.

Man, you're going to knock this out real quick. 17 months, according to my records, and I think you're going to even beat that because it's going to become addictive. You're going to free up more payments. But no, I would just follow the debt snowball. This is not going to free up a $700 student loan payment that you can then use towards the other debts.

Okay.

Less to mentally manage.

Yeah. Thanks for the call, Tim. All right. Let's go to Birmingham, Alabama next. Casey's there.

Hey, my husband and I are in Baby Step 4, 5, and 6, and we have just kind of over the years, found ourselves with a little bit of extra cash in a high-yield savings account and trying to figure out the best way to utilize that. And I stumbled upon the idea of doing a mortgage recast and liked the idea of maybe lowering my monthly payments so that maybe I could start taking some more time off of work and being home with the kids a little bit more while they're in the teenage years, and wondered if that was a good idea.

Well, the reasoning behind it is a very, you know, I like the motive, but mortgage recasting doesn't actually do anything. It's not going to change your interest rate. It will lower your monthly payment, but it also causes you to be less motivated to continue paying down the principal. And so it'll just take longer to pay down at that point.

Yeah, right. But it does give me the option to, you know, if I do have certain times when I'm taking more time off, I've done a big chunk of money towards that to where it's, you know, I am paying it down quicker. We're usually paying about $3,000 extra a month already on it, and I would keep doing that. It would just allow me to do that without that money sitting in the high yield savings account.

But if your income doesn't change and your expenses don't really change because you're still throwing the $3,000 a month, then we haven't really solved any problem. Could you just stay home while continuing on as you have been?

No, definitely not. My income is a little bit higher than the family.

Right. But I think what we're getting at here, Casey, is you're really trying, the problem you're trying to solve is you'd like to spend more time with the kids.

Mm-hmm.

So you're not accomplishing anything with a mortgage recast. In your mind, you're going, well, it gives me more time with the kids, and I think we can figure out more time with the kids without doing the recast. So what has to be true? So let's just assume that we were going forward with the recast, okay, which we're not. We don't think you should do that.

Just being home in the afternoons when they get home from school.

But give me, I mean, let's talk real hours here. What are we talking about?

Probably an extra nine hours a week off.

All right, nine hours a week. So what I would be doing is I'd be thinking, how do we find nine hours a week? How do you make the same money you're making, or pretty darn close, and so we don't affect our income and all of our financial goals? Because you guys are killing it, by the way. So how can I do that and find nine hours with the kids?

That's a very different problem. I just don't think refinancing and doing the recast actually solves anything here. It might mean you have too much house.

It gets you the nine hours, but it hurts you another way.

Let's get to the root of the problem before just moving around the debt a little bit.

I love your heart for that. I think it's a good idea. I think you can do it. I think you got to get creative and you have to look specifically in that area. Thanks for the call, Casey.

Thank you for that, Ken. It's not the animal, but it is pronounced as such.

That's right. I like that and very easy to remember. We've got a great studio audience with us in the lobby. Camel and Coleman.

We sound like the worst law firm ever.

We're like the law firm in Rainmaker. We're just trying to win the first case.

That's all it takes.

By the way, do you know that movie, The Rainmaker?

It's been a while. I was probably a toddler, but you know.

I mentioned it on the show yesterday with Rachel Cruz.

Never heard of it. Your references are-.

She acted like I was her grandpa.

They're a bit dated. We can all admit that.

Does that mean that I'm dated?

No, you're classic. That's how I look at you. Timeless.

Look at how he spins, folks. Nobody. George, should run for Congress. That was just absolutely effortless. there.

I hope so.

All right. Melissa, how can we help?

Hello, guys. Thank you. I'm so grateful to get your advice today.

All right. Well, let's see if it's any good. We don't know yet.

So I am new to the Ramsey show. I've been binge watching for about two months. And what I'm realizing- Well, first of all, we're on Baby Step number two. And what I'm realizing as I listen to you guys, is that I haven't- we haven't been putting nearly enough into our 401ks. And so I'm trying to concentrate on Baby number two, but I'm nervous for the advice of stopping my investing, because I feel like I'm 46 years old and I feel like I'm already behind.

Well, your nerves are justified, but there's a reason why we do it, George.

Absolutely. Well, tell us about your nest egg. What's in there now between the household?

So I have $134,000 in my 401k. I also have an IRA from a previous job and that's got $104,000 in it, but I'm not adding to that one. So it's just sitting there, hopefully growing. And then my husband has about $80,000 in his 401k.

Okay. So that's not nothing. I mean, you could be working-.

But it's not enough at retirement, I don't think.

Well, it's not right now, but compound growth is going to work its magic over the next 15 to 20 years of your careers. And, by the way, if you're listening to this show, we're going to up your investing and there's going to be catch-up contributions and you're going to start to make leaps and bounds on the investing side.

That's what I'm nervous about.

But first, we got to eat our vegetables, and that's getting out of debt. Yes. So how much debt do you have?

Counting the mortgage, $226,000..

Take out the mortgage. Let's focus on Baby Step 2.. What's the consumer debt?

So if you have a calculator, $226,000 minus $180,000..

Okay. So you have $46,000 in consumer debt. What does that make up of? What's in there?

We have two cars and then two credit cards. One of the credit cards is very small. I'll be paying that off by January.

Okay. And what's the household income?

My husband and I. together, we make about $210,000 a year.

Oh, heck, yeah.

Taxes and insurance and all that.

After taxes.

We bring home about $10,000 a month. No, no, no. $210,000 a year is the salary. We bring home about $10,000 a month after taxes and insurance and 401k investments and all that stuff.

Okay. And how much are you currently investing? What percentage?

I invest 6% at my job and then my employer matches 4%. And then my husband is, he's only investing 4% at his job.

Okay. So here's the encouragement. If you follow this plan, we're going to get you out of this muck and mire and cycle of investing measly percentages like 4% and 6%, and we're going to like triple that. You see what that does? If both of you get up to 15% of that amazing income, that's going to be thousands of dollars more a year you're investing that are going to be working for you with compound growth.

Okay.

So you're not going to fall behind.

15% of each of our incomes, not the house. It's not just 15% of that.

Think about it this way. 15% of your income, plus 15% of his income, becomes 15% of your household income. So it's the same amount. Okay. You know, $100,000, 15% is 15 grand.

I'm curious what kind of debt you have on the car. How much, do you have any equity in those cars at all?

Yeah, quite a bit, I think. I have one car that we owe about $15,000 and it's, Sally. Blue Book is showing about $24,000 for private party sale. The other car, we probably owe exactly what it's worth, about $13,000..

All right. Here's a crazy idea. I don't know if George agrees with me on this.

Don't get rid of my car. Don't get rid of my car. You don't have to.

I mean, you guys make enough income to where you can pay this off, but you approach this with the idea, you're brand new to us, right? You've been binge watching videos and you're nervous about pausing the retirement savings, right? Yes. You're nervous about it. Yes.

About $10,000 in the one car.

Oh, $10,000.. But I mean, there's a lot of decent cars out there for $10,000.. And you get a nice car, a nice $10,000 car, boom, that car payment is gone. That money goes towards paying everything else off. That is the snowball, as you understand it.

No, I don't think that's too aggressive. I would still pause investing on top of that. But here's the thing. Oh, I would. Because she was so against selling the car, it tells me, all right, well, then, you're backed into the corner of having to pause investing if you want to get out of debt.

That's why I babble.

Okay, so you have $318,000 in your nest egg. $318,000, right? You're $46,000.. You have $318,000 total. If you invested nothing else, $0, for the rest of your life, and you had an average annual return of 10%, which is the average we've seen with the S&P 500, you guys would have $1.5 million at $62,000..

It's wonderful. I just don't know if it's enough to sustain us if we live 20 years after retirement.

We're not going to do $0 in investing. What's going to happen is, six months from now, we take 15% of $210,000.. Well, now we're cooking with gas. That's $26,000, $25,000 a month. you're throwing to investments.

Okay, that sounds much better.

You just added $1.3 million by following the Ramsey plan. And all I'm asking you to do is for six months, just trust us and bring investing down to $0.. Six months.

Okay.