Focused Intensity Over Time Will Move the Needle

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I'm George Campbell, joined by the Jade Warshaw this hour, and we're taking your calls at 888-825-5225.

Ring us up, we'll talk about whatever's going on with your life and your money.

And Jade, it was a fun week last week, pre-launching my new book, Breaking Free from Broke.

Thank you to the thousands who have already pre-purchased to get all the bonus items.

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Oh, I love that.

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Alright, let's go to Lydia out in St. Paul, Minnesota. What's going on, Lydia?

We have some credit card debt, about $9,000.

My husband and I are moving, so he can go back to school and he won't bring in some income, at least during the school year.

So I want...we want to figure out how can we eliminate most of this credit card debt.

I do have a little bit of student loans, as well, in the next year.

The way it works is that we go under our archdiocese, and so they will be paying for all the seminarians.

Yeah.

And are you working outside of the home?

I have a flexible schedule, and I'll be able to keep my job.

Yeah.

Is that enough for you guys to live?

It's not like normal Protestant seminary.

It's truly giving up everything.

So let me just make sure I get a whole idea of this.

He doesn't start this for one year, so you're wanting to pay off as much debt as possible

so that when you get to this seminary time, you have less debt.

Yeah.

And then how long does seminary last?

He graduated a year ago from his undergraduate, and it's been very hard for him to find something that...

We thought about waiting about five years, so that way he could find some work.

But it has been very, very hard.

And so one day we were like, maybe we should just go earlier.

And so we've spoken with a lot of people, and they said, before you have more kids,

before you have to, you know, think about other things, educating your kids and all that,

maybe go...

I'm going to be honest with you.

I think I disagree.

I think that you guys have a mess that needs to be cleaned up, almost $40,000 of debt,

and you guys have not figured out how to make an income as a couple yet.

And I think that you need to figure that out for a couple of reasons.

A, when you enter life as an adult, and you get your big girl and big boy job,

and you're like, you know what?

Okay, I've established my value in the market as far as what people will pay me to do a job.

There's a certain level of confidence that comes along with that.

And I think going from that into seminary is going to make you guys feel far more confident going forward,

as opposed to it kind of being like, well, he wasn't able to get a job.

Let's just go ahead and try seminary.

And then it puts you up against this clock of, okay, we have one year.

And then, because what happens if you don't pay off the debt in a year?

Because on $2,200 a month, that's going to be very difficult.

And so that's, I mean, you called us.

That's my two cents.

I understand you said you have a lot of other folks giving you some other advice.

But if it were me, there doesn't seem to be any reason for him to quickly go into a season of not making income for three years.

That's just me.

Where did this come from?

And we got married in college.

We've lived, you know, we've lived in his parents' house.

We've been able to be in our own place for a year.

I mean, we've lived incredibly frugally and humbly, trying to get through school and being married and also bringing in a baby in our first year marriage.

So we're used to the lifestyle of living pretty humbly.

He's trying to get through school.

He's feeling the pinch.

You're trying to take on the burden of running this household financially and physically.

And that's going to take a toll on the marriage.

So anything you can do to pay off this debt before you start seminary is going to set you up for success.

Because the truth is, dreams take sacrifice.

And so if he really wants this dream, he has this dream of being a priest, he better work 80 hours a week for the next year if he's serious about this dream.

What does a priest make?

Like what type of salary or is there a salary?

It depends on what the parish that you're assigned to.

And we've got to do some homework here before we take this next step.

But I'm doing everything I can.

I'm pausing this dream until we get this debt paid off and get a good financial footing under us.

Thanks for the call, Lydia.

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Welcome back to the Ramsey Show.

I'm George Campbell, joined by Jade Warshaw this hour.

The number to call is 888-825-5225.

Well, Jade, about 4,000 people sent me this article.

Our team was buzzing about it.

This was big news last week.

Yes, it was.

Here's the headline.

Into It to Close Mint and Migrate Users to Credit Karma.

Budgeting app Mint will be killed off on the 1st of January with users invited to migrate their data to Credit Karma.

Ooh, how inviting that sounds.

That's what it feels like.

Gross.

Last year, the Mint team was integrated into Credit Karma as Into It looks to combine the former's money management products with the latter's technology and product ecosystem.

Let me tell you what their product ecosystem is, by the way.

It's debt.

Uh-huh.

That's their entire business model is luring you into different loan products, credit card products, and debt products, so don't fall for it.

That's sad.

Yeah.

That's not budgeting, by the way, and so what they're moving people to is not a budgeting app at all.

Hold up.

That's right.

But actually making a plan for your money, and we've got millions of people that have used every dollar to get that financial piece, get that confidence for where their money's going, and that's the crux of our entire plan.

We won't sell them debt, and we'll give them – here's what I'll be honest.

Back in the day, back in 2015 or so, I downloaded Mint thinking, okay, I need a budget.

I'll try this one.

What it wasn't – why I didn't like it is because if you're trying to get out of debt, if you're trying to save money, if you're trying to build wealth for the very first time, you need education.

Like, you need guidance.

You need something there helping you, knowing what the next step is.

Okay, I have this option or this option.

What should I do?

And one of the things I love about EveryDollar is there's that guidance built in that's always kind of pushing you in a direction.

It's connected to Ramsey, so it's always teaching you our principles.

Really, so it's more than just a budget.

It's like a free education, you know what I'm saying?

Oh, yeah.

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Like that.

There you go.

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All right.

Let's get to the phones.

Kalen joins us in Atlanta.

Kalen, welcome to the show.

How can we help?

So I'm trying to figure out a way to eliminate.

I have $314,000 in debt, so I'm trying to figure out ways that I can pretty much reduce that.

So the mortgage debt, is it just simply your mortgage, or did you take out any sort of

P-lock or loan against your mortgage at all?

So for the time being, can we just take that $278,000 and just put it on the shelf and

kind of pretend for a moment that it doesn't exist?

Because the way we teach, the first amount of debts that you're going to pay off is just

everything except your mortgage.

So I think looking at it like that is going to make you go, ooh, okay, $27,000 of debt,

I can handle that.

Is that fair enough?

So how familiar are you with our teaching?

I've been starting to get into it, especially now that I've gotten older.

I just graduated last year and life kind of sped up.

So now I'm like, all right, let me get ahead of the game before I let a lot of time pass.

baby steps.

And for all intents and purposes right now, you're on baby step one.

Now, do you happen to have any money saved anywhere?

So I have three separate retirement accounts, and then in my bank account, I have about

$4,000.

Now, is that for bills or is that money that you're calling savings?

So what I would do, baby step one is to get $1,000 saved.

So I would earmark $1,000 of that as baby step one for you, and that leaves $3,000 left.

And we would take that $3,000 and we would apply it to your debt.

Baby step two is paying off all of your debt except your mortgage, and you're doing that

using the debt snowball method.

And what that is, is we list all those debts that you have, smallest to largest.

So in this case, probably your two credit cards are going to be first, and then your

student loans, if those are broken into smaller loans, you would list those along with your

credit cards in order of smallest to largest.

Does that make sense?

Okay, yeah.

So we'd pay that $3,000 on whatever the smallest debt is.

My guess is the credit card?

That's going to feel good.

So you pay off that first credit card, and then if you have any extra money that you

can throw towards debt, you put it on the next smallest debt.

And that's what you're doing month to month.

And the key here is you going quickly, right?

So we're bringing in as much money as possible.

What's your income at this point?

What are you investing right now?

You said you've got three retirement accounts.

What percentage of your income are you investing?

That's through Primerica.

And then I have a 403B account for a hospital that I used to work for.

I worked every once in a while.

So usually about a month, I'm putting in 35, and they're averaging like 15.

It's not too much on that one.

So let's say $50 a month, and then I'm doing 4% of my actual salary right now

in a separate Roth.

So what if for just a short time, we took that 4% down to zero,

we paused all of our investing?

That's only $100 over there, 4% over here.

But what that's going to do is add a nice chunk of change to your monthly

income you can use to throw at the debt, probably $300 worth at least.

Because I think making $100 grand, you can pay off $27 very quickly.

What would it look like if you lived on $75,000 or $70,000 this year

instead of $101?

Man, doing this while you're young as a new grad is going to be so much easier

than doing it later on in life when you have other responsibilities

and a spouse or kids and life got expensive.

And I think that's going to free you to then get your emergency fund fast,

three to six months after you're out of debt.

Then we'll go back to investing, and it's not going to be a meager 4%.

We're going to bump that up to 15%, which is going to be 15 grand a year.

And then you pop that into a compound interest calculator,

and your eyes will explode over how much money that will turn into over time.

Then in baby step six, once you got that dialed in, baby step six,

we can start paying off the house early by throwing extra at the principal.

And you'll get there, man.

Sounds good.

That's right.

And not fall for all the traps and distractions that are out there today.

And there's a whole lot of them.

Yes.

Are you in 30s?

Okay.

I wasn't sure.

I'm somewhere between 25 and 40.

I'll never tell.

No, it's fun.

It's a good life living in baby step seven.

I'll tell you that much.

And it's possible whether you're 25 or 55, you can get there.

These steps work for everyone.

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Welcome back to The Ramsey Show.

I'm George Campbell, joined by Jade Warshaw.

If you want to talk about your life and your money, call us at 888-825-5225.

Eileen is in Portland, Oregon.

Eileen, welcome to The Ramsey Show.

And you guys talk about long-term care, but I think I can self-insure.

What's your nest egg?

And are either of you still working?

Okay.

Wonderful.

Okay.

And what does the next few years look like as far as his care?

Have you looked into that?

He really needs to change careers because it's causing more stress.

But we don't know what that looks like yet.

since he's already gotten a diagnosis?

Uh-huh.

Well, I guess my question is, so if he loses his job, he is a breadwinner,

and he holds all the insurance.

Uh-huh.

The health insurance.

So if he loses that or can't work, then we have—I'm 56,

so we would have many years without insurance until we can get the Medicare.

Uh-huh.

I mean, you guys have an awesome nest egg.

What is that invested in?

where the company contributes some, too.

A match.

Yeah.

Well, kind of.

Kind of, like, 3% a year.

And then I have a couple of few small ones, but I'm self-employed,

so I can't contribute too much.

What portion of that is his and what portion is yours?

Okay.

And then I'm the rest.

Okay.

But that's all gross.

That's gross.

That's not net.

So what we need to cover—what we're thinking about is just not only your normal insurance needs,

health insurance needs,

but at a certain point, you're going to want some sort of care for him as this progresses,

some sort of in-home care, right?

Okay.

But I don't know how soon.

I'm just—I just have no idea.

It was a surprise.

That's a very difficult process.

it may keep you from qualifying.

I'm glad you have this nest egg because if this happened and you guys were broke,

it would be a different situation.

But you might need to self-insure.

You might not qualify for that long-term care.

I would still look into it.

I think it's a bargain for what you're going to get out of it.

But you guys should be okay other than, you know, dealing with this diagnosis

where we don't know what the next several years of his life looks like

and if he's going to be able to continue working.

But it sounds like you guys have set yourself up to where it's going to be okay either way.

I guess, you know—

So if you looked at your household expenses and you looked at your income,

could you still cover all the bills without even touching the nest egg right now?