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Chapter 1: What financial challenges are discussed at the beginning of the episode?
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From the Ramsey Network and the Fairwinds Credit Union Studio, this is The Ramsey Show. I'm Dave Ramsey, your host, Jade Walsh, our number one bestselling author. Ramsey personality is my co-host today. Open phones here at 888-825-5225. That's a free call, and some say the advice is worth exactly what you pay for it. Leonard is in Sacramento. Hey, Leonard, how are you? Doing good.
How are you guys today? Better than we deserve. What's up?
So long story short, me and my wife have together. About $86,000 in debt. We make about $200,000 a year. And our current house and situation where we're living has rendered us paycheck to paycheck every single month. We have no money in savings. We have no dispensable money whatsoever.
Okay. And what's your house payment?
So we pay rent. Our house is $3,300 a month. Okay. And all of our other utility bills accumulate up to about an additional between $400,000 to $600,000. So we're paying about $4,000 alone in just rent and utilities.
What's the $86,000 in debt?
So we got a little marriage happy and got into a truck payment on a high interest rate and high monthly payment. So it's just one truck for $86,000? No, the truck is, we bought it for $62,000 and we currently owe $55,000 and that $55,000 has not moved at all in the past 12 months due to interest.
Got it. I think we've identified the problem.
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Chapter 2: How can one manage living paycheck-to-paycheck despite a high income?
That's only $7,000.
Unexplained.
Unexplained. So that's why I say that. And I think that that is a key problem when people have a higher income. It gives you more margin to act silly and more margin to get sloppy. And I think that's probably what's going on here.
Yeah, we're training the next Olympian in dance class, the next MLB player in travel ball.
There you go.
We're eating out fine dining frequently. We have a wonderful vacation every year, but we can't make ends meet. And so you're going to have to go to Scorched Earth on the Lifestyle, get a detailed budget.
find the margin in the detailed budget by using every dollar it'll point the margin out to you it's one of the things that it's built to do it'll show you immediately and you'll be going oh my god every time every time somebody does it me included when you first do a budget you look at it and go i'm so bad where's all this money going yes it just you have this moment you're like i'm stupid and um
And so you're not stupid, but you've been doing stupid stuff. And so all of us. And so when you find that margin in there and you get that stuff going and you sell the truck. You got to sell the truck. Sell the truck, cut up the credit cards, go to scorched earth, and you'll be out of debt and in control and have margin year after year. A year?
Oh, yeah. And part of that, when we talk about the budget, probably the key behavior that a lot of people don't do is you've got to track your transactions just about every day. And that's the way that you stay on top of the numbers. A key thing that I find that people do that's actually wrong is they make the budget for the month, green check, that's great.
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Chapter 3: What are the implications of high monthly payments on lifestyle?
You can't see it because it's imperceptible because it's 1% and 2%, but they're constant feedback and constant adjusting to the plumb line, to the actual target. Yes. And that's what the daily check-ins do, and it forces you to do this stuff. And it forces you to look at stuff like, that car is brain damaged.
Yeah.
We can talk about it a lot of different ways, but the largest thing that Americans buy in the typical American budget... that is stupid is cars.
Yes.
And it's like stupid on steroids, the level of money we spend and, and go and get a car that's completely out of control. And, and, and we'll just sign me up for 21% because while I'm out of control, I'm just going to be all the way out of control. Yeah. And, um, but we do it and guys are worse than gals. You think so? Men will impulse a freaking pickup for $80,000.
He said a marriage thing, and he's driving the pickup.
Yeah.
And he blamed it on the marriage. Come on, Leonard. You know, car payments— I'm going to blame it on Leonard, okay? So when Dave buys a pickup, it's Dave's fault. Hello. Because, guys, we get into cars. Some guys are more into cars than others, but I'm redneck. I like the loud mufflers and— all that stuff. I love a good muscle car, a good sports car. I love all that.
Now, my wife thinks a car is just a really large purse, but she's not as into the car other than she wants it to start when she sits down in it. But other than that, you know, she's like, oh, this seems to be a nice car. Yeah, you have no idea how nice this car is. You know, you should really enjoy it. No, it's just, it's a place to put the things I just bought at Target.
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Chapter 4: When should a side hustle be formalized as an LLC?
Oh, they're not worth $12 each? Mm-mm, $12 together. No, no. Yeah, I've been, like, going to dealers, CarMax, Kelly Boogaloo, trying to, like, sell it online.
Yeah, that's usually wholesale. And those are cheap enough cars. You probably could attract somebody in private sale and get a little bit more. They're only selling for six or eight grand apiece. So, I mean, the Corvettes are going to attract somebody that's just interested in that cool old car. You know, same thing with the Fiero, I guess. Sort of. But, you know.
Are you the only one working? Yes, ma'am. I am the primary breadwinner. My wife, she takes care of our kids. She does have a small side hustle. She does flower arrangements and all that. How many children do you have, sir? I have two, sir. What age? Five-year-old and one-year-old. Okay. All right.
Well, yeah, she's probably going to have to do more than arrange flowers, and she can do that from home while they're in daycare taking a nap or whatever it is that she works her schedule around to where she can make a lot more than the few hundred dollars a month doing flowers. She's not making anything doing that. That's a hobby.
And then you're going to pick up an extra job, and you're going to sell at least those two cars for sure. But this is not a debt problem. This is an income problem. This is a career crisis where you go from 112 to 50 grand. That's your problem. The other things are little things we can do to kind of shore up. while the waves are crashing in. But the big deal is for you to get back to 100K.
And where are you going to do that and how are you going to do that? And it's not just applying for jobs. It's getting your foot in the door on a job and using the skills that you used to run the insurance company before. You could be a project manager with those kinds of skills because you have administrative skills and people skills.
A lot of different things you're doing when you're a general manager in an agency like that. So you need to start looking at that that way and reset this in your mind so that you don't look up four years from now and still be making 50 or 55.
Absolutely. Yeah, you can't consider the 112 a fluke. You have to consider that your new standard.
Once you have driven at 112 miles an hour, it feels weird to drive at 50. Your body is now reset at 112. Your mind is reset. Your spirit is reset at 112. And so you should, if you keep a positive attitude and keep looking for opportunity and how can I do this, who do I know that works over at that place where I want to be doing that thing now?
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Chapter 5: What strategies can help couples avoid money fights?
Zero money fights because there's full transparency. We're on the same page. See, that is a key to winning right there. That'll cause you to be able to build wealth and to win in your relationships. Every dollar.
Chapter 6: How can transparency in finances improve relationships?
The budgeting app. It'll help you work the Ramsey plan exactly like you had us in your back pocket. It's in the App Store for free and Google Play for free. Donna is in Dallas. Hi, Donna. How are you?
I'm fine, thank you. How are you?
Better than I deserve. What's up?
Okay, so my husband and I are older. I'm 71. He's 84. During COVID, we had our 401Ks. our retirement accounts in the stock market took a dive and we went down like $26,000 in a week and we got nervous.
Chapter 7: What should you do if you're nervous about stock market volatility?
So we took it out real quick. And our thought was, I know our thought was that we don't have time to recover. And you've been out since then? We tried it one more time. The same thing happened and we just couldn't do it again. We just couldn't do it.
It went up 25% three years in a row and you missed that.
I know, but I keep thinking it can't stay like that. It's going to be gone. Oh, God.
Chapter 8: How can understanding market history help with investment decisions?
Am I going to feel worse if I lose it or go up? What's going to be the worst there? Donna, the problem is the first dive when you said you lost the $26,000. It recovered in like 50 days. The moment you took it out, you just locked in that loss. You 100% lost the $26,000.
You do not need to be investing in the stock market.
Yeah, that's kind of like my thought.
Because you don't have the backbone to stand the volatility.
Yeah, the stock market's not the problem.
No, the history of the stock market, you lost your butt. You got out at exactly the wrong time, like the worst possible. You did it the worst possible way you could have done it. And so if you're going to do that again, you need to stay away. Meanwhile, I made 100% on my money. While you did that. Because I just rode the roller coaster up and down and enjoyed the ride.
Got off, got on it again and rode. Never got off. I just stayed on and said, take me around again.
Take me around again. I think there's a bigger issue at hand. How much did you have in the stock market? We had about 190,000. I think that's the issue. I think that the bigger problem is you're worried that you don't have enough to live on throughout the entirety of your retirement. And so that's what's causing you to be very like trigger happy with this and very like quick to move.
Now, what's causing that is a lack of knowledge of the market. And you're not familiar enough with the history of the market to be comfortable. So you think all bad news is the only news. And so if you can't get past that, you're going to do this again and again. And I would recommend you don't do it again and again because you're taking a beating. Yeah. And it's 71 and 84.
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