Don’t Follow the Trends and You Won’t Fall for the Traps!

This is the Ramsey Show where we help you. win in life, win with your money, win in your work and win in your relationships. I'm Ken Coleman, George Camel, with me today in another fine looking jacket. He's ready to go. The phone number to jump in is 888-825-5225, 888-825-5225..

We can mix the two.

All right, so when we get together, we try to have some fun. Let's have some fun today, as we talk about the very serious stuff. George is our resident money expert and I'm your resident income expert. I want to help you make more money and George wants to help you do good stuff with it. So we're going to get right to it and I'm going to tease this, George.

Whoa.

That's all I'm going to say.

Is this dangerous territory? Should I be-.

As a matter of fact, I think the audience is going to love it, because it's a unifying statement and it has to do with money, George.

Okay. How about that? We can all agree on that.

So now everybody can take a deep breath. There's not going to be anything controversial.

No vitriol.

No vitriol and nothing controversial, but it is that time of year, George. And so more on that a little bit later, but first let's get right to the phones. Heather is going to start us off in Knoxville, Tennessee. Heather, how can we help?

Hi, thanks so much for taking my call. My aunt, it was in her mid-70s. She's been a widow for about seven years now, has been the victim of a romance scam. we've just found out.

Oh, gosh. Is this like the catfishing that we hear about?

Yes. On Facebook, a guy had reached out to her and she'd been talking to him for about a year. We found out and we said, you know, this is a lot of red flags. We think this is a scam. Whatever you do, do not send this guy any money and you don't need to talk to him anymore.

Oh, my goodness.

So she didn't send him money, she racked up debt in her name and bought him stuff?

Yes. And then sent him the money. So we are trying to figure out what to do. She lives off of Social Security. She only brings in about $1,200 a month.

Before we get to the money part, I just have to ask, is there any potential help from Facebook in any of this or the credit card company on this?

I mean, that's a good question. I have a feeling that it's from overseas, because she was buying a bunch of $500 minute cards for phones that she was sending them. So that makes me feel like it's out of a lot of jurisdictional hands.

OK.

Yeah, it's rare that anything can be done about this stuff.

I just had to ask. My stomach is turned here for you.

Oh, yeah. It's horrible.

Have you reported the crime, at least, to your law enforcement's non-emergency number and at least have this on file? Yes.

Yes. They reported it. They're going to be getting all the details. I'm not sure how much they can help, though, since she took out loans in her name and things.

They're going to go, hey, this isn't fraud. You did this. Yeah. But at least it's on file and maybe they can track this scumberger who's doing this. You can also report it to the state attorney, FTC, at least to make yourself feel a little better.

Well, we're trying to. Just trying to. I don't know if we've gotten the full picture yet, but, yeah, we're. we're going to get the girl's credit cards canceled, her bank account. We had to close the bank account because what had happened was that she was going to get reimbursed by this guy.

So she has a new bank account now?

Well, we're going to have to set one up and her son is on the bank account. So that is one good thing. But I don't know if we have the ability to. I don't know if she should have access to an account, if that's even an option.

Does she realize what has happened?

I think on some level, but I'm afraid on another level, she hasn't really processed it because she keeps thinking that he's going to send her the money like he promised. Even now, it's very sad.

How old is she?

She's about 75.

Is she? is she having struggles with just mental acuity?

I think she's just very, very lonely.

And you're the and you're the niece. Like, where where are your cousins at in all of this?

They are around. Unfortunately, they don't have a lot of financial security to help in this instance. But my, my aunts, sisters, my mom and everyone are trying to kind of gather around her and help where they can to help her get out of the negative on a lot of her bills. But that's about all that we can do.

And so were you calling us for ideas or were you calling us for some type of approval on something you're thinking about? That's what I'm trying to get to.

I'm wondering, is it moral or ethical for us to say, just don't even don't try to pay back these credit cards, put those aside and and just let them go into collections? And maybe at that point, she can settle for pennies on the dollars, if she will even have that money at that point.

Or do you mean she truly does not have the money? And so I don't think there's anything wrong with saying, listen, she was a victim of fraud. This is what happened. She doesn't have the money. She's living off of twelve hundred bucks in Social Security.

Yeah, I agree with that. I'd do that instantly.

I think the son does need to manage the money from here on out. She's shown that she's incapable and she's still not even convinced. this is fraud, which means it can continue to happen if we continue to give her access to more money.

Absolutely. OK, that's a great point. Freezing, freezing all of her accounts for the credit wise. And we need to get her to sign something for us to be able to do the money, because I think she does have her mental faculties other than this gigantic blind spot. But is that or would you just set up a new account?

You might need a financial power of attorney, unless they both say, hey, this is a joint checking account. The son is on it. Mom is on it. If we do it that way, you'll be fine.

This feels like a family meeting, though.

But yeah, this needs to be the fact that the niece is calling and tells me, number one, you really love your aunt, which is so sweet. Yeah. But I think we need to have a big family meeting. Go. Here's the next steps that we're going to take.

Yeah. If this were, if this were my aunt or my mom, there would be an absolute come to Jesus meeting to make sure she understands she's been scammed and this is not real. And let's address the loneliness as well. But, man, we got to rebuild here. And I would.

Maybe even third party counseling.

But protect her, by the way, before we help her, or else all those good deeds, George, and all that money raised for her is going to go back out the window on the next thing. Wow. Tough call. Don't move. We'll be right back.

Hey, guys, George Camel, here as a new dad, I see a lot of things in a new light, the cost of diapers, the value of sleep and how crucial it is to have a will, because if something happens to me, I don't want my family stressing about the details. And that's why I recommend making a will. with Mama Bear, Legal Forms. A will gives you peace of mind, knowing things will be taken care of the way you want, instead of a random probate judge deciding who gets your fine china or precious moments collection. Looking at you, Aunt Shirley.

Welcome back to the Ramsey Show, where we help you win with your money, win in your work and win in your relationships. I'm Ken Coleman. George Campbell is with me this hour, 888-825-5225.. All right. So we've been talking about this for a while, George.

That's right. That's the official title. Do you know why it's called that?

Because if you live like no one else, later, you can live like no one else. So you can go buy a ticket and and go on a cruise with us, with Dave Ramsey, George Campbell, John Deloney, Jade Warshall, Rachel Cruz and myself and other guests. And you can just do that by simply putting a deposit down, George, of six hundred dollars. You know why? Because you've got six hundred dollars.

You got the margin. So this is for folks who have done the first part. They've lived like no one else. They've made the sacrifice. They pay it off the deck, got the emergency fund.

cruise. Are we going to be checking people's baby step status at the door?

That could be fun. I would love to volunteer to be that guy.

You give you a clipboard, you would be so happy.

I know. How do I verify? Are we pulling credit reports?

You can't. How are we going to do this? It was a joke. It's a ludicrous suggestion. But nonetheless, you got excited.

But what if we freak people out as they try to get on board? And I go, no, no, no. Let's check that credit report.

What if we had Dave shoot a video and it was kind of like an A.

I got. I got to see your DFV, your debt free verification.

Oh, see, look, you've already run with this. All right, George, tell them where we're going, because the the lineup is absolutely unbelievable.

We're going to Turks and Caicos, St. Thomas, Puerto Rico and the Bahamas. Yeah, that's an amazing lineup.

It's a great, great, great lineup. We also have some good friends going with us. Big time chef Maneet Shohan, Deanna Carter of country music fame and Stephen Curtis Chapman of Christian music fame. So we got a little something for everybody there. And all the personalities, including Dave, will be speaking, hanging out with you, and George is going to swim with the dolphins.

It's a synchronized experience.

Yeah. So we're working on that. By the way, George swims in a swim shirt. So that's always worth seeing. And it's an extra bonus with the floaties.

International. International. We have Scotland, Australia and more.

Yeah, it's unbelievable. So always fun to meet you, fine folks. And we'd love for you to come see us. To the phones, we go 888-825-5225.. Tampa, Florida is where Matt waits for us.

Hey, thanks for taking my call.

Sure, what's up?

Hey, I'm separating from the Air Force next month or in a couple of months, and I have a few job offers lined up for airlines. I'm a pilot in the Air Force and I'm switching to the civilian sector. And we're looking at probably a 40 percent drop in pay. If I can start right away when I leave. We do.

OK, let me get out of it. There's a lot coming at us. So, George, let's break a couple of things down here. that'll help us. First thing is explain the training delay and, and in context with, do you want to fly commercial airlines?

That's right. Right.

And so if they're delaying training, that means they're delaying hiring.

Well, sort of. I've got three job offers. They just haven't said. they just say we're not going to start you until they can train January at the earliest, to start you in training, which means essentially start you and pay and pay you.

Why are you leaving the Air Force?

I basically I want to stop moving so much.

But do you have any option to leave, or is this like, hey, on this date, it's over, or can you hang on to the Air Force?

I could, but the it's really important to me to be able to get with an airline, a major airline, at the earliest possible point.

If this is the difference between you guys losing your house, I'm going to go, well, let's pause on this career move until we know what it's going to look like and that we can afford it. Yeah.

I mean, let's skip ahead then. So we're jumping around, but I think it's important to jump around, George. We don't like the idea, George. Why? We don't want him to try to sell a house and take a loss on this.

Yeah. Well, and the question is, how do we get you from the Air Force position to another position without a gap in income and without a loss of income? So what are you making now and what are the job offers offering?

So what I'm making now is about taking a pay of $11,000 to $12,000 per month. And the first year of pay with any airline is a little bit lower. So I'd be looking at about $6,000, $7,000 per month.

Even with your experience?

That's right. The first year pay is always lower.

Does your wife work?

It bumps right back up. My wife works. She's a nurse. She makes about $4,500 a month.

So it would still be a $40,000, excuse me, a 40% hit in your first year. How quickly does it jump up in year two? And does it get back up to where you currently are? Or is it still below that level?

It would, it would go back up to where I currently am.

So for one year, you got it. You basically got to float the 40% difference in one year. But you don't have. I mean, being an airline pilot, you don't have a lot of time for the side gig, do you? Or some something else that you could do to make up that money for one year and not lose the house?

So that's true. And the the other big concern is what if they don't start training for longer?

Why is this the only option? Could you not do cargo plane? Could you not fly private? Why is commercial day one the only option?

So I could. I could do other other things in the meantime. to you have to come, Matt.

You have to. you're basically telling us that we're looking at six months from today at the earliest, that you would actually start to get a paycheck. And you're looking at leaving the military when?

At the end of September. And now I would get about $15,000, $15,000 of extra pay with upon leaving.

But that's a, that's a month and a half. That's a month and a half.

What's your mortgage payment?

Mortgage payment is about $3,600.

Okay. So, based on our parameter, about a quarter of take home pay, you need to bring in about $14,000 to make this house sustainable. Right. And right now, if you you and your wife, let's say you took the pay cut, it was $7,000.. Your wife makes $5,000..

I have other job offers that if they did start me, one of them is scheduled to start me. They could bridge the gap in between now and then.

Well, you just answered your question.

I really could not.

I think, George, we like that. I want to wrap it. We're about shy on time here, George. I think we prefer he take that option, not sell the house.

You can't take a job that brings home less than $10,000 a month. So if you make that the one thing you're focused on, you'll focus on it.

What you're saying, not sell the house. Try to avoid selling the house.

Avoid selling the house. Because they're underneath it. Delay your dream of leaving Air Force until we figure out what's next.

Because they could turn this house into something that's an asset.

Yeah. Moving in with family, all because of an urgency to get out of this job. I don't see it. I don't see the need.

All right. Thank you for your service, Matt. We appreciate you. You're a great American. Don't move.

This is a paid advertisement.

How you doing out there, America? You doing all right? You doing okay? You making enough money? You keeping enough money?

It's awkward. Some of y'all still are trying to Venmo each other and their spouses. Yeah. That's a scary scenario, Ken.

How's that American dream idea? to work really well, to work really hard and keep moving up? Maybe start your own business. How's that going, folks? How's it going?

And people are starting to lose hope out there, Ken. There's a lot more. They're hanging on to hope for the wrong reasons.

Yeah. And so we want your hope focused on your actions and what you can control. And that's what we do here. I'm Ken Coleman. George Campbell joins me.

Hi, guys. Thank you so much for taking my call.

You bet.

It is Devin. You are correct.

Okay, good.

All right. So my question is, my husband and I, we have three children. They are 20, 18, and 16.. And our rule has always been that if, after high school, you don't have to go on to college, that's fine. if that's, you know, what you select.

My first pass is, I don't know that I would change the expectations for her. Now, I'm assuming that if she's careful in this role as a makeup artist, or whatever you call it these days, an esthetician, I mean, that she can do that with low risk. Is that true?

Yeah. I mean, there's no rhyme or reason. as to when she fractures. I mean, she's, again, broken so many bones. I mean, she can sneeze wrong and she can break a rib.

It is what it is.

And we've always.

But I like the idea of her working full time and having her own insurance. It's time.

But the stipulation was, if she's working full time, which I assume is 40 hours a week-ish, then she has to get her own insurance, regardless if the employer offers insurance? Yeah.

Well, no, if the company she works for offers it, she has to take it. You can no longer stay on our insurance. It's just the new insurance.

See, Devin, here's where I'm at. I don't know what George thinks. I just, I would not make a decision to limit her earning ability, to limit her dignity building, simply to save her a little bit of money. on insurance. I mean, because, in other words, it's like, well, she could stay on my husband's insurance, but she has to only work part time, which means the way I look at that is, I'd say it this way.

Yeah, no, no.

Okay, so you get my point.

Right, right. I mean, she could get disability, but we have said absolutely not. You are capable of working. You're going to work.

So walk us through this. Let's say she's working at Sephora full time. She has insurance through Sephora. What are the downsides there compared to what you have right now?

So if she, you know, ends up in the emergency room or she has a series, a bunch of different specialists that she does have to go to, um, the copays are much higher. There's a much higher, you know, out of pocket expense.

Well, let's be prepared for the out of pocket maximum and let's teach her how that works. And let's make sure she has that amount saved.

It's a great point.

And depending on the insurance, we also don't know what the insurance is going to be. Let's look into that. Depending on the employer, let's find out what the copays are. And then it becomes a line item in her budget that she needs to manage. As a working adult, though, this is going to be a higher percentage of my budget than all of my friends.

That's right. She's going to have to effectively have a, I think, a line item in the budget, that is, I'd call it copay. And, and I just think teaching her how to be self-sufficient here, you guys are going to sleep better at night knowing that she's figured it out. And it's literally a function of saving and allocating that in the budget to go. It's kind of like a mini emergency fund, but it should be actually in her budget.

And she's going to continue to live at home. What's the plan there?

Yeah, no, she'll probably, yeah, she'll be, she has to live at home for probably the next few years.

She, yeah.

But see, I like that, but see, I like that because now she can stack more money away in that actual line item of copay or medical. Okay. Like, she has a medical line item and it's like a mini emergency fund, George. How does that feel to you? Correct me if I'm wrong.

I feel real good about this. And so show her, hey, we're going to get a high yield savings account set up for you. This is what an emergency constitutes. We're going to make sure we have the out-of-pocket max. Here's what your copays might look like year one.

That's huge.

While under the care of mom and dad and under their roof. So she has minimal bills while working full time. There's no reason why she can't put away money.

Yeah. All right. Wonderful. I appreciate it, gentlemen.

You're an amazing mom, by the way. You are. I can't imagine the difficulty of that situation. Three kids, one with that special need requirement. And I'm wishing her the best on her journey to become an esthetician.

Yeah. Devin? Appreciate it, guys.

Thank you. Devin, can I, can I put you on the spot? I think you can handle this. If you don't like this, just say no, and it won't be awkward at all. But I just have a feeling right now, George, and I'm going to trust this feeling.

So our faith has been absolutely crucial in all this. We did not know she was going to have this disease when she was born. She was diagnosed at six weeks old.

Wow. That's beautiful. Devin, thank you. Thank you. You really encouraged some people today.

I cannot imagine. I mean, first of all, the trauma that would cause me, let alone the financial aspect.

That's what I'm saying. From every aspect, here's your little one.

So what I'm hearing is for special needs parents, they can't go, well, the Ramsey plan is not for me because we have different circumstances. You have to do this plan. if you've got that. I think it's vital. You have to have the emergency fund.

That's what I heard from Devin, not from us. And wow, what a special family. But then fun to see that, you know, their daughter is coping, and not just coping, winning and thriving. And thank you again, Devin. I hope that encouraged those of you out there that are in that situation.

Wow.

Great stuff, Devin. Thank you again. All right. Don't move. Quick break.

Nick says, I wanted to ask your thoughts on getting an American Express charge card. I'm completely debt free and see there are major benefits in terms of points and airline miles for using these cards that you pay back the next month and never carry a debt. What is the downside to using them like a debit card? This is a question we get very often, Ken. And the part that frustrates me is that you can't use a credit card like a debit card because they're so different.

Because they don't want to pay the percentage.

They don't want to pay. And American Express has fees upward of 3.5% versus a 2.5% with the other card. So the businesses are saying, hey, we're not going to take the hit on this. The consumer's paying big annual fees. And on top of that, what do you think happens psychologically when you're chasing the points and airline miles?

That's why it works that way.

You got 1,000 tickets. And you're like, oh, man, I'm going to get the boom box at the top. And they go, nope, you get a pack of sweet tarts. Sweet tarts and a sticky hand is what you're walking away with. The sticky hand.

Yeah. Good stuff. Thanks for the question. All right. Let's go to the phones.

Hi, guys. So, I'm going to achieve Baby Step 1 by August 1st. After starting Baby Step 2, when should I park to save for a basically guaranteed and necessary professional move?

How much would the move cost, do you think?

It varies. I'm not taking any of my furniture wherever I go, but I'm in early career academia. So, I'm thinking $3,000, like the bare minimum, to potentially get me across the country and start over wherever I end up.

Is it traditional in the academic world to offer, when they hire someone, to offer some type of a moving bonus?

It depends on the position. If it's a tenure-track position, yes. If it's like a visiting lecture position, usually no.

And what are you going for?

I offer everything because of my field. I don't get to be too picky.

Well, why make this move, then, to be a visiting professor, or whatever it's going to be? What's the upside for you versus staying where you're at?

I can't stay where I'm at here in my position here, and it does not renew. So, I have to apply for academic jobs this fall, and then I have to move accordingly. And professionally, it's better for me to leave my home institution where I got my PhD, go somewhere else, and kind of get some distance, and then pop around. It's a weird job market.

Well, okay. So, George, what do you say? He thinks he's got about $3,000.. We're estimating about three. Let's round it up a little bit.

Well, you've got $1,000 already with Baby Step 1.

I think he was stunned by the level of detail you gave him there. All right, let's go to Cheyenne. Can I just tell you something, George? I've never been to Wyoming. I've heard it's beautiful.

Well, yes, sir. Our household income is around $900,000 a year. We live on $200,000 of that. We don't have any debt.

I hope not. I was going to say, that was what I was expecting you to say. when you're stocking away $700,000 a year. That's pretty good.

Well, we've been married 12 years and not had debt since our third year of marriage.

I assume your house is paid for as well.

Yes, correct.

So you've got a few options. And this is for any high-income earners out there. You don't have to make $900,000.. Even if you make $250,000, these might be options you can look into. So you do have a 401k through your employer?

No, I'm self-employed. My wife has a 401k through her employer.

Okay. As someone who's self-employed, are you doing any investing through that? Have you set up a solo 401k or a SEP, anything like that?

No, I'm just contributing.

Well, you've got to be doing a backdoor Roth IRA with making that kind of money.

So I need to do that.

That is an option. You need to, legally. You cannot contribute to a Roth IRA with that kind of income. What you can do is use after-tax money to fund a traditional IRA, and then you can immediately convert it to a Roth with no penalty. So I'm going to set you up with a team, because that's what you need.

My wife does, to her employer, I do not.

Okay. So with that HSA, you can also contribute there. And beyond a threshold of about a thousand bucks, you can invest, and when you're 65, it can turn into a traditional 401k, essentially. You can use that money for things outside of medical expenses. So, beyond all of that, the brokerage account is your best bet, where there's no tax advantages, but there's no income limits, no contribution limits.

Yeah, a smart investor and a tax pro would be absolutely your number one options here.

Good problems to have.

Oh, yeah. You're going to love it. He's going to love the plan they developed for him. Really good stuff. All right, that's going to do it for this hour.

Oh.

And then we're going to talk a little politics. We're going to take on one single issue that I believe every American can get united around.

And that we should be talking about.

And we need to be talking about more. And in light of the presidential race and as wacky as it's been, holy moly, July's been a month. Feels like a year.

So that's coming up.

You do not want to miss it. Trust me. And for those of you that are getting squeamish, don't be. We're not going to take on that.

I don't think you can be offended by this.

I don't. In fact, I would challenge you to try to be offended by what I'm going to say. How about that? So we'll see. That's coming up.

Ken, George, it is great to be able to talk to you guys today. So quick question. My wife won't let us let go of the last credit card. And I just need your help convincing her.

What is her reason?

She kind of likes the buffer of it. You know, we just pay it off at the end of the month. She kind of likes the thought of the safety and the travel. My friend's gotten stranded before and all he had was a debit card. So he wasn't able to rent a car to get home.

All right, question for you, Charles. Question. Yeah. What's the limit on this one card that you guys have? What's the max you could charge on it?

Oh, I don't know. About $5,000 or so.

I got an idea. I'd come up with $5,000 and say, Babe, I have replaced the comfort of the credit card with the absolute max that we could borrow. And so I've got an additional $5,000 in our emergency fund. That's why the emergency fund exists. But I've long since wanted to answer this question this way, and I haven't had an opportunity to.

There's some really simple workarounds, Charles, and I could hit you with. here's what you could do. Here's what you could do. The truth is, this is emotional for her. It's been a security blanket for a long time.

I think that she might go for that. And let me tell you the reason that it's only maybe is she can't stand the Ramsey plan.

There it is. Ding, ding, ding.

See, and that's exactly.

So why doesn't she.

It's probably you.

Actually, that would track.

No, actually, George is who got me into the Ramsey plan. I didn't like it at first either. He's a real good salesman.

I know, I know. I was just thinking that maybe your wife... I thought, maybe your wife didn't like you. I was trying to come up with something.

Well, maybe your wife would like Rachel. Is that a good, you know... Rachel's inoffensive. Everyone loves Rachel.

Yeah, exactly. So why do you...

It just feels like.

It's restrictive or intense, or what?

It's for broke people.

Well, that hurts my feelings.

It is for broke people.

It is.

And.

And it's for rich people.

Well, they become rich.

Right, right. Luckily, we skipped Baby Steps 1,, 2, and 3 when we found Ramsey. And she just feels like it isn't for us.

Oh, because you were already.

That's correct.

Okay. So what is your household income?

Through 1, 2, and 3.

Are you guys exactly where you want to be financially? Do you think you could be doing any better? Or is she like, hey, we are crushing it. Don't mess with it. It ain't broke.

She doesn't. actually... I feel like she doesn't understand how well off we are.

Is she also financially responsible? Or did you kind of...

She's extremely financially responsible. I'm actually... I'm the nerd and I'm the recluse.

So she.

Um, I would say zero, but it actually happened a couple months ago on her own card.

So she got bit by the snake and she says, no, no, no, the snake is still my friend.

Yeah. Well, it was my fault.

We're best buds. I mean, it's not the snake's fault.

I picked it up.

Right. It wasn't a full bite. It was just that it snapped and barely missed her. It was only like a $10 balance or something she forgot. You know, it wasn't big enough to really leave a mark.

So here's the deal, Charles. I'm going to send you a copy of Breaking Free from Broke. And in there, I want her to read the credit card chapter. specifically. In the credit card chapter, I cover the eight archetypes that I found of credit card people.

Right now, we have a $10,000 emergency fund. We have on top of that around $17,000..

Oh my goodness. And she still thinks this is the path. Is there more? Is it a fear thing? Because another one's the fear tranquilizer who says having a credit card makes me feel more secure.

I feel like part of it, we had a lot of fraud on one of our bank accounts. So sometimes she brings up, oh, she doesn't like the bank we have.

Switch banks.

But yeah, I feel like-.

Put a freeze on all of your credit. Switch banks.

Yeah. But here's the thing.

We got to address this. And problem solved.

We got to address the relationship piece. So you're going to have to patiently and methodically address all of these concerns for her. Or else you guys are going to still be at odds over this. This is not... I said this earlier and I was being glib and I need to retract it.

Hi, I just want to say thanks for picking up my call. I'm a new Ramsey, I guess, member here. I just started listening like about two weeks ago.

Well, awesome.

Wow, you're like the hot. now sign at Krispy Kreme. I mean, fresh.

I love it. Yeah, pretty brand new to all this. My question is, I have a spreadsheet of mine and my wife's budget. And I put all of our bills and all of that stuff into it. This was probably about two or three months ago.

That'll leave a mark.

Hold on, George, I'll get the Tums for you.

I actually got some Harper.

You got some, yeah, a little Harper.

All right, so what is the mortgage? And what is your after-tax monthly income?

The mortgage is $180,000.

So, all together, we're talking $5,000,000 and the mortgage is $1,500,000.

What do you guys do for a living?

She works for the state of Texas and I'm an electrician.

I don't know if the number's right here, but what you just told me would mean your mortgage is 28%. The mortgage is $1,428,000.. You guys are bringing home $5,000,000.. Did I miss something?

Oh, well, maybe I looked in my, or maybe I have a wrong calculation in my spreadsheet. But I guess that leads to my question is like, we don't really have much debt. We have about $1,500,000.. We have about three months of our expenses saved up. And I was just basically trying to figure out, like, it feels like we're not saving anything any month, but I don't know if that's because of us or...

What kind of debt do you have?

We have like $1,500 in credit card. Both of our vehicles are paid off. We have about an $800 medical debt that we're paying off.

Okay. So if you paid off the medical, you have savings right now? You said you have three months of expenses saved?

Yes.

What's in savings?

We have $16,000 in our savings right now, as well as.

What are you doing? hanging on to the debt? Why not just pay off? I mean, you got $2,300 in debt. You have $16,000..

I guess it's just kind of scary watching that money go away.

It's scary watching your money go to lenders every month.

Yeah. Yeah, that's true.

I mean, you're actually wasting money making these payments when you actually can get rid of it right away.

You have 22% interest on that credit card. That scares me.

And just for information here, how much are you saving on a given month?

I mean, it really depends on if.

Give me an average. I want you to... Come on, man. Your last three months, give me an average. What do you think?

Saving from just our income, probably basically zero.

Well, then how did you get the $16,000 saved up?

We actually saved it up probably a few years ago and we've been dipping into it. It was actually more than that.

So you're telling me right now, you guys are paycheck to paycheck. as far as expenses. You have nothing left over when you pay everything.

We aren't necessarily paycheck to paycheck after everything is paid. But I mean, after all the bills and groceries and stuff come out, we probably have anywhere between $100 and $400 a week.

Well, $400 a week, that's $1,600 a month you could be saving. So I think what's happened is you're new to the plan. You guys are just new to paying attention to where your money's going. And you're making pretty good money, but it's disappearing. And that's where the budget comes into play.

Yes, she is.

Why is she only bringing home $2,000 a month?

Because she works for the state.

Well, a lot of the money in her paycheck goes towards insurance for us and our kids.

What's her gross income and what position is she in?

She's, I don't really know what you would call the position. She works in child support, but her gross is probably around 38..

Yeah. And so is that, yeah, and so she's just kind of capped. There's not a lot of room for promotion. And even with a promotion, in that, it's just not that much money from a state job. So she's, she's what I would call George, a little bit capped.

Anywhere from mid thirties to, I'm in the forties now.

Okay. Craig, I'm going to ask a question, and it's, I'm shocked. Are you early on in the trade and are you not, are you not seeing that there's massive opportunities for electricians now all across the country, but certainly in Texas?

I'm about three years in, but we live in a pretty rural area. We're not actually in Dallas.

Oh, I see. Okay. So, but you feel like you're, you, you've got your best option. right now. There's no upward mobility.

With where I'm at right now, I think I'm on the upper end of it with where we live.

Are you, are you, are you married to staying in this rural, remote location?

Oh, we're pretty invested here. We're right next to all of our family. We grew up in this area and we bought our house here, and our kids will go to school right across the road.

I get it. So here's the deal. The only way you make more income is if you actually start doing some stuff on the side.

Yeah.

So that's a viable option here to get ahead. You don't have to do this forever, but if you want to get ahead, more income into a budget that George is telling you to. So here's what we're getting at. Discipline budget. And let's bring in some more income.

Yeah, for sure.

Well, that's less than two grand a month for a guy who's a working electrician. I mean, I don't think I'm painting too high of a goal, am I?

No, I don't think so.

All right. So let's get a bigger goal. So if the number's 30 or 40 or 50, using George's discipline in the budget here, you guys are going to be in great shape.

And you need to prioritize savings. It's not, well, if there's something left over, that'd be nice. It's, nope, we're covering our four walls, food, utilities, housing, transportation, insurance. Beyond that, we are putting money away in savings. We're going to invest it in a Roth IRA.

I agree.

Okay. Well, that's definitely a plus, because we really love where we live and we're trying to make it work how we can.

Yeah. So, and by the way, the numbers you gave George were correct, not the numbers in your spreadsheet. Is that right?

Yeah.

Okay. Then so he ran the numbers. You're fine on that.

And Excel lied to you. So go check out EveryDollar. It's going to be much easier to use. You type in your income at the top for the month. You lay out all of your expenses for the month.

And again, this is a great example of some people who, by the way, I love this, you know, they go, this is where we want to be. So when you're in a smaller rural area, you are limiting your income possibilities. So then you're going to have to deal with that. And maybe you have to do some things different for a short season. But that is a reality.

otherwise.

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Hello.

An assassination attempt. And then a sitting president deciding to bow out of a re-election race. You just don't see those headlines. And it's been crazy. So obviously the election is coming in November, George.

What a tease, can I just say.

Well, let me tell you something. It is a growing problem, and it is growing by the second. The issue that I believe that the American people should unite on is the national debt. Here we are at Ramsey Solutions, where, for decades, we have helped people get out of debt.

We've come dangerously close to, by the way. This is not like a thing that, oh, it'll never happen. We've been on the precipice multiple times.

We have. And we've also seen the national debt explode. I asked the team, as we speak, the national debt is growing. So we're going to throw it on the screen for our listening audience.

The national debt calculator.

We are right now, George, at $34,960,000,000,000 in debt. And it continues to go up. They're literally, if you're watching right now, you can see it on the screen. If you're listening, this is out there. They have this at bus stops in Washington, D.C., by the way, where it's literally going, and it's a ticker.

This is like the opposite of Xanax. This is very anxiety inducing.

Yeah.

So we see those numbers grow at that alarming rate. We are just, and we owe money to a lot of people.

100%.

Which puts us in a precarious position. Right.

So, before I break down the five factors, the five ways this will affect you, I want you to understand something. The reason that we, the people, you, me, George, we just don't pay attention to this, because we somehow think the federal government's got this ultimate insurance policy or that they're all going to come together at the last moment of crisis and figure it out. But, folks, if you pay attention to the headlines, year in and year out, we see Congress deal with what we call raising the debt ceiling. They aren't doing anything about it.

It's like raising your credit card limit every year because you can't get your spending under control.

So here we are, on the doorstep of $35 trillion. Now, some of you think this is not an issue, Ken. You're being a little dramatic because it's the Ramsey Show. No, I'm not. Here we go.

So the cost to borrow goes way up.

For everybody and everything. You think interest rates are uncomfortable now? We're talking about double-digit interest rates overnight.

So credit card interest rates, mortgage interest rates, student loan interest rates, car loans, everything.

Number two, the stock market would probably experience a significant volatility. Am I saying crash? I can't guarantee this. Massive decline in the stock market. What does that mean to you?

Well, when people get spooked, including the big-time investors, they sell off their equities. And when they sell it off, the stock price goes down.

But how does it affect the average American person?

Well, you look at your 401k and we all remember the 2008 crisis or whatever. We saw this just a few years ago. My retirement just got cut in half because of what just happened with the market.

Number three, you think inflation has been bad over the last couple of years? If we default on the national debt, inflation skyrockets.

AKA, you can't spend more than you're making as a state.

This ticker the team just put up here. where we're barreling towards $35 trillion can't happen. And so how would we do this if we, the people, to Congress, to our senators, demanded a balanced budget amendment? Because it would take that kind of support. The American people would have to be in absolute unity in massive numbers.

We need like a national rice and beans type diet. here. We spend less than we make, which we joke about Congress, spending like crazy, writing new bills. That's right.

I think we, the people, need to say, you know what, instead of fighting over social issues and fighting over insults and accusations, we ought to go, you know what, the thing that threatens us the most is the actual national debt. And we need an amendment to the constitution.

Or for people can go on, you guys, this is far more complicated than you're giving credit to. It really is this simple. We are spending more than we're taking in. It's that simple. That's how we got here.

I could take Mr. Camel to Washington, and I could have George in a room.

Get me on the floor, Camel.

With all of the bean counters in the federal government, and George could actually balance the budget. I know you could. We could take every dollar and hand it over to our bureaucrats.

I think every dollar would break if we put $35 trillion into our debt category.

So there it is, folks. I bring this up because I think we should be paying attention to this. A balanced budget amendment to the U.S. Constitution would, in fact, force the politicians to get our country debt free. That would let us all sleep well at night.

Let's think about it. Tell us what you think. One more thing. I yield my time.

I think I already made you yield it, whether you wanted to or not. This is The Ramsey Show.

I know you work hard for your money, and the key to keeping more of it in your pocket is by making a plan for your spending with a budget. And EveryDollar is the budgeting app that I use personally, because it's perfect for looking every dollar you make in its little president face and telling it exactly where you want it to go, just like you told that guy in traffic exactly where you wanted him to go. And even better, EveryDollar walks you through the entire budgeting journey, so you always know your next right step. Download EveryDollar for free in the App Store or Google Play today.

Welcome back to The Ramsey Show, America. My fellow Americans. I forgot to say that to start off the rant in the last segment.

I was hoping you'd weave in constituents.

Well, I can't.

It's one of my favorites.

Oh, instead of listeners?

Yeah.

It's a little stuffy. Hey, let's get to the phones. 888-825-5225.. He's George Campbell. I'm Ken Coleman.

Hey, thank you for taking my call. You bet. So, the dilemma I have right now is that me and my girlfriend are looking to buy a house within the next year, probably starting summer 2025. And we're debating whether to go the conventional route or go the FHA route that Grant Cardone and many other real estate gurus preach.

Yeah, you had me at Grant Cardone. Guru. Okay, what is causing you to want to buy a house when you don't have any money?

My girlfriend's going to graduate from college around May of next year, May 2025.

Okay. And what's the urgency to buy a house versus a rent until you have enough money to do this with a little bit more peace and equity?

The fear of, I guess, throwing money down the drain.

Let me paint you a different picture of fear. You move into this house with an FHA loan, meaning you have to borrow the rest of the money because you're putting basically nothing down with these loans.

That's right.

Now you have a giant mortgage that you can't afford. That's 64% of your take-home pay, and you don't have money to pay the rest of your bills. Do you see that side of the fear?

I do. I do.

And the problem is, your risk meter gets broken when you follow these gurus out there who are saying, bro, here's how you get this house, and you're going to rent it out. You're going to buy 10 more houses. By the time you're 30, you'll have 100 houses. And that's pretty much what they're saying out there. Am I correct?

Yes, sir.

Okay. So we got to turn off those inputs because they are not there to bless us. They want you to buy a course and go to the 10x event, where you're going to 10x your mindset and all this crap, right?

So that you can have a yacht too. It's important to point that out.

So that aside, here's my beef with the FHA loan. So this is a Federal Housing Administration loan. It allows people who don't qualify for a conventional mortgage to still become homeowners. So you can put as little as 3.5% down, and they have more leaning credit requirements and allow a higher debt-to-income ratio. Here's the problem.

Yes, absolutely.

And so number one, I would rent. I'm not going to comment on your situation. But until you're married, I would not buy a house together. OK. Can you promise me that for the good of the group?

OK. Now, I do a follow up. What, and I understand you just said not 20 percent, but at least enough. What is the fine, the sweet spot, at which point you're not, you know, I'm not missing out on the cost of opportunity, on taking extra money, investing in the S&P 500 or et cetera, a list of other...

Do you have any debt?

I have about $20,000 of student debt.

OK. How much money do you have saved?

$50,000.

Great. Why aren't we paying off the student loans today?

Because.

Let me guess. The opportunity cost of investing that in the market.

Yes, sir.

What's the interest on your student loans?

About 4.

OK. And the 50 grand is in a savings account, making 4.7 percent?

No, it's in the market. Well, it's...

Then you don't have $50,000 saved. You're playing with $50,000.. If the market goes down 20 percent this year, you don't have $50,000..

OK.

So that alone frightens me that you have nothing in liquid cash.

Yes, it does.

And so I'm trying to give you a path of peace where you're moving slower, but you're actually going to get to where you want to go without falling flat on your face. So I know I sound like the old guy in the room, Daniel. I think you're a real sharp guy. The fact that you've come this far, you've saved this much, you're investing. I love that.

And Daniel, I'll just add this. George said it, but I just want to drive this point home. By keeping the student loan out there and just keeping it like it's a pet, and then putting all that money in the stock market. You know, you've doubled your risk. You've not removed any risk.

I understand. I understand.

All right. I'm going to send you a copy of my book, Breaking Free from Broke Daniel. In there, I unpack credit scores, credit cards, student loans, mortgages, including the FHA loan and all of that. And then I'll show you that path that I'm talking about. And I hope that I convince you to go down that path.

You know, it just occurs to me, because I think he was absolutely, you know, processing what we're telling him. Don't know if he'll do it. Don't know if he agrees with us. He was processing it. But it is so not fun.

It's not sexy.

And it's like, ooh, ooh, ooh. But it is not a great long term play. And it is rife with risk. And yet it's being packaged as, you're an idiot if you don't do this. And that's what's really tricky about this stuff.

So there's a lot of ways to go about this. But we found this way actually works. No matter who you are, what your income is. But you got to get your risk meter back intact. There you go.

Good hour. George Camel. I'm Ken Coleman. This is The Ramsey Show.

Hi, guys. I'm in a major bind with my husband. We were doing pretty well at one point. And I guess, with everything that's going on with the world, his business is not doing as well. I don't work because I just had a baby.

Sure.

Tell us about what you mean when you say he's not doing well at his job. Does he own his own business?

Yes. He used to be a property acquisition. He used to do property acquisition. He worked in real estate. He sold and bought land.

Well, he's got some experience in real estate, correct?

Yes.

In sales.

In sales, too. I just would... If he was on the phone, the first thing I'd say to him is, listen, man, the economy and demand can change. Something has happened there. And I honor him, Natalie, for jumping in the car and driving Uber.

Right. And we have a high debt, too. We have like $460,000 in debt.

What kind of debt is that?

Credit cards. We have our home. We have a HELOC.

How much of the $460,000 is your home?

$217,000.

And what about the HELOC?

$149,000.

Well, he made a very risky move, and it didn't pan out, because life happens.

He's regretting it now.

Do you have family around you all?

We don't. That's another tough issue.

What's your home worth?

I don't know. I think he said like $400,000 or $500,000.. Okay.

So you guys have $250,000, maybe $300,000 in equity in the home, which is good. What are you doing to pay the bills now? How much money do you guys have in savings?

We don't have a savings. We use it all up because we haven't gotten any closings or anything in the past.

So are you living off of credit cards right now?

No, we're very behind on everything.

So you can't make any payments?

Barely.

Are you going to lose the house?

Right now, I don't know.

What were you doing for work before you were staying at home with the baby?

I was an underwriter. I was a full-time underwriter. And...

What were you making?

for commercial lines. This was like six years ago. I haven't worked in six years.

Okay.

But back then, I was making about.

So you were home before. you guys even had kids?

Yeah. After my first child, he just said, you know, stay home, you know.

Okay, so you have a second.

Yeah.

George, I'm going to give it over to you, but I got to jump in really quickly here. Natalie, you're going to have to get very innovative and creative with child care. I agree. It's not a daycare, because that's going to end up eating up a lot of the money, if not most of what you would go earn. But you guys need to get involved in a church.

And I don't see daycare in that expense or child care. If you're making $4,000 and daycare costs $1,500, well, you still have $2,500 that put food on the table. And so you're right. If you're not making that much to where it's just a wash, it may not be worth it. But I would want to see you go make $50,000 back in the underwriting world or whatever you were doing, whatever your skills transferred to.

Or else they're going to have to sell this house. And then what?

That's. the worst case scenario is we sell the house, we pay off all of our debt, and we rent once we have a foundation under us. Debt-free, with an emergency fund. But I think you guys, your world just got rocked. You were living La Vida Loca, spending, enjoying your big lifestyle.

$24.

OK. So if you guys aren't consistently bringing home $8, $9, $10 grand, this house is not going to be sustainable on top of your other bills. But I think the key for you guys is looking at reality. It's scary at first, but if you list it all out in every dollar, which I'll gift you guys. That's our treat.

And Natalie, we're also going to give you one session with one of our financial coaches, here in the building or wherever. we're going to put you with the financial coach. One of our coaches. Because you need to be able to go beyond this phone call. We can't walk through the minutiae of some of the steps you're going to have to take.

We'll cover the cost.

We'll cover the cost of a financial coach to help you out. But you guys can do this. We're talking about. the mindset is absolutely, we are in a five alarm fire and we've got to get out of the fire. We don't sit there and think about the fire.

If you're financially ready to step into it, do it. Don't wait for the market. Good.

So I knew that was the answer, but I thought I'd tee you up. I don't want to put words in your mouth.

You made me look like a hero, Ken. Thank you.

Absolutely. And so I want to tell you about our Ramsey Trusted Program so that you can find an agent you can trust to keep you on track with what we teach here at Ramsey and get you the best offer if you're selling and find the right house, if you are shopping. And so we'll send you to some of the top agents in your area who we trust. We've vetted them. And then you get to interview them and you decide who you want to work with.

So my question is, are my wife and I's mortgages up for renewal in about six weeks? And we're going to have just about enough to pay it off. And the question is, should we pay it off and leave ourselves with almost nothing just for a little bit? Or should we wait?

What does almost nothing actually mean?

We are going to be left with maybe around like just a few hundred dollars. after we pay it off. We're thinking, maybe we could. Yeah.

That's a little tight for my liking. Now, if you said, hey, we're going to go down to about three months of an emergency fund in order to pay off the house, I'd say go for it. But anything less than that, I start to get just a little sweat on the back.

There's just no reason to take that kind of risk.

Take it right to the edge.

You're so close. How much longer would it take you if you did what George said and just said, okay, we'll back it down to three months emergency fund?

Well, I don't know how the bank would allow us to set up that remortgage.

Tell me about this renewal. You said the mortgage renewal.

That's interesting.

I've only heard about this in Canada.

Yes, I'm actually located in Canada.

That explains it. So it's like you have this rate for five years and then it moves to the market rate the next five years. Is that how it works?

Exactly.

So why not just you have the new mortgage at the new rate and then you knock it out in a few months?

They would make us do at least one full year.

You have to make one year of payments before paying it off early?

Yeah, you wouldn't be able to pay off the lump sum until the year's up.

Is there a penalty? if you do? What's the stipulation there? They won't take your money?

Yeah, you'd have to do the full, full year of the interest payment.

That's the dumbest thing I've ever heard.

So that's the penalty. essentially is one full year of interest. Well, what's left on the loan at that point?

Probably like five to ten grand.

Okay. So five to ten grand, the interest may not be all that much.

No, it would probably be at around a five percent rate.

Okay, so we're talking like a few hundred bucks?

Oh, that's the work around there, George.

So if that's the penalty is you pay a few hundred bucks, I'm okay with that, to leave you with peace instead of at risk where one emergency, because that's when the emergency hits, you know that, right? Soon, as you go down to a few hundred bucks, you have the car, repair, the broken tooth, whatever it is. And so that's what I would do if I was in your shoes. I'd pay down as much as I could before the mortgage renews, leave three months of expenses in that savings account and then knock it out as soon as you can and you pay the penalty, because that's Canada for you, man. I don't know what they're doing over there.

It's just wacky, wacky, George.

That is wacky, Anthony, but I'm proud of you, man. That's amazing. You're so close to complete debt freedom, especially in Canada, which I don't know if you've seen the prices in Canada and the homes and the mortgages, but it's out of control. So to be a debt-free homeowner in Canada, I think, is the ultimate flex.

Yeah. What's going on? What's going on up there?

They're like, milk is $17 a gallon, Ken.

This is crazy, but they got the health care they brag about.

It's always their thing. They're like, hey, but it's free health care. Can't afford to live, but when we die, we're going to have great health care.

That's all I hear from Canadians is how expensive housing is up there.

So thinking of all my Canadian friends going through it.

Oh, Canada.

I see where you're going with that, Ken.

You see what I did there? Let's go to Portland, Oregon, where Rachel is waiting. Rachel, how can we help?

Hi, I'm calling in today because I've got a question related to whether or not I should go back to school or what my husband and I should do, planning for kind of going ahead, and whether or not I choose to leave my current job and go back to school full time. The biggest thing is I'm looking to expand my career, end up in a position where I'm going to be making almost double the income that I'm making now if I return to school and do this three-year program.

Tell us what this is. Three-year program to be able to become what?

I'm currently a nurse. I'd be going back to school for nurse anesthesia.

Oh, OK. Got you. And do you have the money for this three-year program?

No.

How much is it?

Altogether, it's going to be about $147.

What school?

It's OHSU.

Are there any more affordable schools that offer the same program?

The big issue is there aren't a lot of programs on the West Coast. OHSU is the only program in the state of Oregon. If I chose to, I would have to go out of state for a different school.

So you're telling me, if you want to be in nurse anesthesia, you've got to go to this exact school and pay $140,000?

If I didn't want to leave my home and my husband for three years, yes. Right.

We understand it. It's just amazing that that's the only option.

That's pretty rare.

Yeah. I mean, I can go... I mean, with healthcare, the beautiful thing is I can go a lot of different routes. But for my career, this is kind of where I wanted to go next step.

Sure. I get that. Listen, I get it. And I want you to go after the thing that you want. I mean, that's my whole thing that I'm always espousing.

I think in more rural areas, states you can move to. My current state, my current position doesn't offer that. The hospital I work for would pay a percentage, but it would be minimal. at best. My husband and I, we do make the kind of income, and we've spoken about this, that we would be able between now and when I started school, we could probably put away about $75,000..

How long would it do?

No, we'd be able to pay yearly, but I most likely would have to stop working. The big issue is that in the year before I start school, right now, while I'm working full-time, we would be able to save the money, but we wouldn't be able to save any more.

Once you're in school, that's an income, you couldn't continue to cash flow.

Sorry, I spoke over George, Rachel, and that's why you couldn't understand this. My question is, you're going to save the $75,000 in a year. Is that what I heard you say?

It's a little over a year.

All right, so how long would it take you to save up the entire $140,000?

It would probably be just shy of two years, maybe.

If I'm you, and you are not going to like this answer, but if I'm you, I wait. And here's why. I think, if you make the mental decision to say, you know what? I am not going to go into debt. I'm going to walk into this new career where I can make double, and I'm not going to owe a cent.

Yeah.

Then I think you can wait two years.

George, I'm with you on this. I love this plan, and that patience is going to pay dividends, because all of your fellow nurse anesthetists are going to be like, what? Debt free? I got $200,000 in debt. How'd you do it?

I'll tell you what you're going to be doing. You're going to get in the car after a day of helping people, saving lives, making lives better. You're going to get in the car and go home and have zero stress, with money and paying off $140,000 with interest. Wait, it'll be worth it. This is the Ramsey Show.

Hey, thank you guys for taking my call. So I've been on a string of doing dumb stuff, and I'm trying to get a second opinion before potentially doing something else that's dumb.

Oh, wow. This is a great setup, George.

I like a self-aware person doing dumb stuff. That's good.

And before you ask the question on how dumb do you think it is right this very moment before you get our opinion?

As it is, I don't think it's a dumb idea. I've been watching you guys show for a long time. I'm on baby step three of the baby steps. Well, I'm working through baby step three right now.

Sure.

I haven't completed it yet.

So you have no debt?

No, I don't have any debt. Well, no, that's actually not true. I do have debt.

Let's start with honesty, George. I do have a car loan. Okay.

How could you be on baby step three if you have a car payment?

Well, yeah, you're right about that. Well, I do have the money in savings that I could pay off the car loan, but I haven't paid off the car loan, hence my dumb stuff here. So I'm trying to get a bit of organization.

Well, I feel like, George, we're off to a little bit of a dumb and dumber start here.

Yeah, relationships are built on trust, George. So we need you to be vulnerable. Yeah. What is your question?

Well, my question is this. So, since the past year or so, just a string of crazy stuff. I've taken on extra responsibilities. My income is halved. I was making $110,000 when I had my transportation business running.

So you bought too much house. Your business has sort of taken a big dip. What is your income now?

Yeah, $50,000, so $50,000, so huge change in income.

Still working for yourself, or is that somebody else paying you? No.

As it is right now, I have a.

Sure. What's your question, George? I want to make sure we get to it.

Yep, my question is.

Yes, that's very smart, George.

That's the smartest thing you've said so far.

It's the only smart thing you've said so far.

Okay. What is option number two?

Well, option number two is keep the car and continue making the car payments. But the only issue with that is on $50,000, the car payment, insurance, and other bills, it's not making any sense.

I would agree.

Option one, George. George and I are picking door number one for you.

So the car's worth $28, you owe $40.

Right.

Now we're at a different place. Think about this. You're completely debt-free, no payments. You have an emergency fund of three to six months of expenses. Now, any future income we can use to build wealth and invest.

And now you'll actually be in baby step four, by the way, we actually define them, George.

Exactly. So what's your car payment? What are you paying all in for this car every month?

Right now on this car payment, I'm paying $750.

Plus insurance.

And insurance is just crazy. It's $500 for insurance.

Why is your insurance so high?

I have no idea. The only thing that I could hear from the insurance companies when I call is that state, whatever they got going on, insurance is high.

You need to reach $6,000 a year. as soon as you're off the phone. You're going to reach out to our friends at Zander and they're going to reshop your insurance because you are way overpaying and you're getting hosed.

I think so too.

Unless you've been in a thousand wrecks, and this is a luxury vehicle.

I have zero accidents.

$500 a month. I literally have heartburn right now.

And they told me that's on the low end of things. Yeah. How did that happen?

You're going to go to Zander.

I think someone's honestly lying to him, George.

Oh my gosh, George. We're so close to doing things the right way, but you got to just trust us on this, that our way is going to lead to a better life. We are unbiased. We just want to help, George. That's it.

Wow. That's a lot right there. I'm still having a hard time processing. That's his actual insurance.

$6,000 a year for one car. That's a lot. Yeah.

Oh boy.

I don't think I pay half of that for two cars.

Yeah. But I will tell you as a father of two teenage boys, it's a racket what insurance is doing to boys and those of us who help with the insurance. It's unbelievable what they charge.

Yeah. I mean, it's all about risk and the insurance world has gone crazy. I just got the update and my insurance agent at Zander said, hey, luckily your insurance isn't going up, which is great, considering a lot of people's insurance is going up. Across home, auto, everything. Insurance is just crazy.

I think there needs to be reform on that.

How do we do that?

Well, again, it's lobbyists. and getting the lobbyists out of DC, getting some good people in Congress to go, at what point do we not get a better deal on our insurance? I mean, we're paying a lot in there and we're not using it. that much. Come on.

Someone's making big profits here.

Big profits. Speaking of Washington, Washington DC is where Rachel joins us. Rachel, how can we help?

Hi. I've been just like turned on since listening to y'all. So my question is I'm trying to figure out how I should go about clearing out some past debt that I had. For some context, I had to let about eight of my credit cards go to collections because I was having to pay for an attorney to go through family court. And so with that, it tanked my credit score a lot.

Yes. You should try to settle with them and say, hey, if the balance is 10,000, say, listen, I got two grand. Will you settle this in full and get it in writing that it is paid in full if I give you this $2,000?? And you keep doing that across every creditor until this is knocked out. That's the right way to clean up this mess and get your credit score back intact.

Um, no, I'm pretty stretched, Dan, and I'm trying to figure out like what type of a side job that I could possibly pick up to try to help create some extra income so that I could be able to start offering some settlement for these accounts.

Well, we're up against the clock, but you can go to georgecamel.

Yeah, you can do it, Rachel. We're going to walk with you on this. Just a lot of intensity and intentionality, and you will get on the other side of this. Thank you for the call.

We'll be right back.

This is The Ramsey Show.

Oh, I'd love to see Mark Twain's TikTok.

I think, I literally think it would combust.

He'd get a follow from me.

Yeah, absolutely. All right, let's go to Connie now in Memphis, Tennessee. Connie, how can we help?

Yes, I'm going to try to get through this without crying. I lost my husband at 35 years. We were together almost 40 earlier this year.

So sorry.

And thank you. And we were already at baby step seven. Everything we own is paperwork.

Um, well, go ahead and move it after the 90 days.

Absolutely. But I wasn't sure exactly where it can, I want it to be accessible to me.

Absolutely.

I want to be smart with it. Um, again, you know, I've, I've downloaded it. Sorry, you broke up a month ago.

You downloaded what?

I downloaded the app about a month ago.

Every dollar?

Yes. Every dollar app. Great. So I know, with, uh, spending and giving, um, I've, I'm saving 500 a month.

What is your actual income right now? And are you still working for the large chain?

I am working.

Okay. So what's your income?

Um, 72.

Okay. And then do you have, what's the 401k amount? Is that above and beyond the IRA that you mentioned? Have it a million in?

Yes. Um, it is 160..

Okay. So your total nest egg, is. that, is that everything?

Yes. Okay.

So we got a little over a million.

175 in insurance, the life insurance was 175.

Okay. So let me give you a few tactical steps. and you got a paid for house. So you don't need any of this money right now, which is great. And you're going to continue to work, continue to invest.

I'm putting 18% in 401k. I've been doing that for a long time.

Wonderful. So with this 175,000, number one, it's good temporarily in a savings account, but even then you may want to invest this money into the market. And here's what that could turn into. You're 61.. Let's say you invest this into the market and a SmartVestor Pro.

Wow.

And so I think you're going to be just fine if you can learn to live on a budget. It doesn't sound like your lifestyle is out of control. And so you're doing the right things. And I love that you called in with this question.

I did one crazy thing.

That's sweet.

And.

Well, wait a second.

You know, and my husband would have wanted that.

Did you feel bad about it?

Why do you think that's crazy?

No, I.

That's okay. Connie, listen.

You've been taking care of everyone else your whole life, haven't you?

Yeah.

You always think of others. You're just a selfless person. Yeah.

You're a sweet, sweet person. You paid cash for that new car, didn't you?

Yes. Okay. I had to check for it.

There we go. We didn't go into debt. We didn't put ourselves in a backward financial position. You still have money.

Oh, my gosh.

You're not broke.

You are so set up for the future, Connie. It's unbelievably exciting coming out of this awful pain.

No, and it's sad, because I'm doing this by myself.

I know. It's not how you pictured it.

That's the hardest part.

I know.

No, it's not.

I know. I know. And we feel for you on that. But the peace of mind is huge. So, George, on that.

account because she wants access to it. If you are really like, I don't want to put this in the market. We have friends over at Laurel Road. They're an online bank. It's FDIC insured, and they've got 5.15% APY.

Get to it, which is what you want to do.

So that'll do for now. But I'm saying long term, you don't need the money. And so I would still consider investing it into the market with a good mutual fund, index fund, and let that thing grow for you at an even higher rate over time. But again, none of this is on fire.

I like some of that, George, for Connie taking some trips with her grandbaby.

Yeah, do something fun. What have you done for Connie?

Well, we actually did go to Chattanooga this last week. I mean, I work for a very large hotel corporation.

So, Connie, where would you really like to go? Where would you really like to go? And you can't say any place in Tennessee.

Oh, no, no.

What was the retirement dream with your husband? What was the thing? you guys were like, man, when we retire, we're going to do X.

We actually bought a 19-foot GeoPro. It's more of a couple's camper. And I'm actually in the process of selling it. They're going to sell it because I really can't see myself.

I get it.

Don't want to loan.

Connie, I got an idea. Yeah. Connie, I have an idea. I think you should go on a trip with some of your best girlfriends.

Somebody else told me that.

Absolutely.

And I should do that.

I think you should.

I don't know if I'll ever be ready to go back to Colorado.

No, go somewhere else. No, this is like the yaya sisterhood or the traveling pants or the fried green tomatoes or your best girlfriend and just go somewhere and have fun. You've been through a lot. You're still grieving and some girl time doing something you've never done before. You've got a lot of cash to be able to do a really fun trip and celebrate you, celebrate all that you have still and just do something fun for you.

And, like our friend, Dr. John Deloney says, you got to grieve. what was the picture of what you thought it was going to look like. And now we've got to have a new picture of what's, what's the next 30 years going to look like for Connie. And I think that's going to be, you know, sad, but also exciting to start dreaming again.

Connie, thank you so much for calling us and sharing your story with us. I know that was not easy, and we're rooting for you. And the sun is going to keep showing up. And you've got a bright future ahead for you as well. George Campbell, thank you, my friend.