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The Ramsey Show

"Buy. Now, Pay" Later Is Exploding (Hour 1)

28 Jun 2023

Transcription

Transcript generated automatically by AI and may contain errors.

Chapter 1: What is the main topic discussed in this episode?

28.904 - 55.013 Ken Coleman

Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, this is The Ramsey Show, where we help you win in your life, specifically your money, your work, and your relationships. It's a toll-free number to jump in, America. 888-825-5225. 888-825-5225. I'm Ken Coleman, joined by my colleague, the incomparable...

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55.145 - 77.318 Ken Coleman

George, camel with a K. This is why I love hosting with you, Ken. You know how to butter me up. Well, you know, you're a great joy to be together. Some of the people out there in the social media land where you live, I stay away from the comments. You like to dance among the comments, have referred to us and our combination. As a root beer float. That's right.

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77.458 - 93.425 Ken Coleman

And we still don't know who the root beer is and who the vanilla ice cream is. Well, you self-proclaimed that you were the root beer and that I was the vanilla ice cream. I'll take it as a positive. Well, you're so smooth. Well, I don't. And I got a little zip and zang to me. Zip and zang. Yeah. Making words up. I like it. George and I are here.

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93.445 - 103.054 Ken Coleman

We have a lot of fun together, so we're going to have some fun, but we're here to help you. So let's go. Jolie. Oh, I just want you to start singing, George. I want you to just bring out the guitar.

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103.074 - 103.935 George Campbell

I want to stay on the air.

103.955 - 123.636 Ken Coleman

I mean, if you're in Nashville and you see the word Jolie on the screen, you know, you start thinking about Dolly. It's close to Jolene. One of the great songs. It is. I know. But you think Jolene. And Jolie, you know, you see where I was going there? I could get there. Come on. I could get there. You didn't think Jolene? No. Not at all? No. Jolie. All right. She probably hates it now.

124.077 - 126.879 Ken Coleman

Fort Worth, Texas is where she is. Jolie, how can we help?

128.28 - 132.604

Hi there. I actually get that a lot. Yes. Okay. Ken's right.

132.624 - 139.491 Ken Coleman

Thank you. Because George was being snarky there with my Jolene reference. I know your name is Jolie, but thank you. How can we help?

Chapter 2: How can I budget on an irregular income?

492.51 - 496.074 George Campbell

And I would let Jolie take senior portraits of you and I, Ken. What do you think?

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496.314 - 497.256 Ken Coleman

Oh, I see.

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497.276 - 498.137 George Campbell

I never had a good one.

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498.197 - 506.668 Ken Coleman

I'd love a redo. You didn't? You know, I'm willing. I'm on a couple days this week. I'm willing to bring my senior picture the next time I'm on with George.

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507.108 - 507.549 George Kamel

Wow.

507.569 - 527.175 Ken Coleman

And I'll tell you why. It'll give him unlimited fodder. You should see it. 1992 the year was, George. I'm going to have a whole stand-up special dedicated to your senior portrait. I'll let you see it because I don't mind. It was a pretty good picture for back then. Back then the operating phrase. Hey, George and I, well, we've got to pay some bills with these commercials, but we're not leaving.

527.275 - 542.436 Ken Coleman

Don't move. Helping you win in your life, in your money, in your work, and in your relationships. This is The Ramsey Show. I'm Ken Coleman, joined by George Camel.

542.857 - 562.684 Ken Coleman

We have people that are tuning in every day to an episode of The Ramsey Show, and you're starting to learn the language, or you know what we talk about when it comes to money and work and relationships, but you're feeling stressed because you're stuck financially. And there's a difference, George, you know this, between knowing what to do with your money and actually doing it.

562.905 - 581.611 Ken Coleman

As Dave has said for decades, personal finance is 80% behavior, only 20% head knowledge. And that's why we believe in our Financial Peace University classes. This class is different in that it is the difference between trying to get in shape on your own which never works for me, and hiring a personal trainer.

Chapter 3: What are the best accounts for saving for college tuition?

635.804 - 654.217 Ken Coleman

Hey, if you're new to the show, I am the Ramsey personality that focuses on work, all things related to work. As Dave has said for decades, Your income is your greatest wealth building tool. I want to help you make more money. And a part of that, George, is doing work that you really, really love. The largest study of net worth millionaires said that 96% of those millionaires enjoy their work.

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654.277 - 671.925 Ken Coleman

And that's what I specialize in. So I'm throwing that out there. If you're feeling stuck or you're feeling confused, wanting to get a promotion, want to make a pivot, We'll take some of those calls today because those play in big time to your money. So I just want to throw that out there. And, George, I love taking those calls with him. So we'll take your work calls, your money calls.

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672.406 - 695.952 Ken Coleman

Let's go, Athens, Georgia, the home of the University of Georgia two-time national championship winners in college football, George. That's a sport where people wear helmets and pads. I've seen that one. It has a face mask on it. There you go. Casey is joining us in Athens. Casey, how can we help? Hey, thank you all for taking my call. How are you all? Good. How are you? I'm doing well.

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696.193 - 730.463 Ken Coleman

Thank you. How can we help? I just have some general questions about how I'm saving currently. I am 31. I make about $3,600 a month. I have no debt. I currently have $14,000 in an emergency fund at my local bank. I have $6,300 in a high-yield savings account for things such as my future house, car insurance, and Christmas. I have about $100,000 in my retirement account.

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732.006 - 745.511 Ken Coleman

And I'm trying to figure out what's the next step. I really need to be saving for college for my son. He's two. But I don't really have anything started for that, and I don't really know where to put it. I don't know if... You know, what if he chose not to go to college?

745.671 - 771.453 Ken Coleman

I don't know if I want to put it in, like, you know, mutual funds, you know, something that I start myself that I can pull out or what I need to do from there. But also, I have, my husband and I had started him his own mutual fund. It's just an S&P 500 fund. Um, and I think it has about 3000 in it, but it has a rule on it. Like we said it where he can't touch it till he's 21.

771.553 - 773.416 Ken Coleman

And I didn't know if that was best or not.

Chapter 4: Why is the 'Buy Now, Pay Later' trend exploding?

773.896 - 776.6 Ken Coleman

So kind of trying to figure out which direction to go in right now.

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776.88 - 781.006 George Campbell

Yeah. You guys have a lot going on and you have a goal of buying a house. Are you guys renting right now?

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781.967 - 782.588 Ken Coleman

Yes.

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782.608 - 787.755 George Campbell

And you said 3,600 is your take-home pay. Does that household or is that just you?

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788.416 - 789.197 Ken Coleman

That is just me.

789.658 - 791.32 George Campbell

Okay. What about your husband? Is he working?

791.958 - 801.999 Ken Coleman

Yes, he works, and he kind of has variables. So, like, it might be, I would say at minimum it's an extra $3,000 on top of mine. Okay.

802.279 - 805.005 George Campbell

I mean, you guys have combined finances, right?

805.458 - 806.219 Ken Coleman

Yes.

Chapter 5: What are the risks of using 'Buy Now, Pay Later' services?

1168.637 - 1174.263 George Campbell

That's exciting. I'm very excited, but I'm going to be honest. My lack of sleep is already kind of freaking me out. Yeah, I can't wait.

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1174.283 - 1180.31 Ken Coleman

I can't wait for you to walk in and sit down next to me and try to put a sentence together. I'm going to be a zombie. Yeah, you are. You're going to be fine, though.

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1180.411 - 1180.631 George Campbell

Thank you.

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1180.651 - 1186.818 Ken Coleman

You're going to be a great zombie. All right, so George, I've got another trend that just feels like The trends are everywhere.

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1186.858 - 1187.94 George Campbell

You are a trendy guy.

1188 - 1204.42 Ken Coleman

No, I'm not. But you have a line about the trends. Oh, that's right. Let's deliver your signature line, and then I'm going to tee you up to comment on one of these trends. Go, George. If you follow the trends, you'll fall for the traps. Folks, that's why he is who he is. And you love alliteration, Ken.

1204.52 - 1220.007 George Campbell

I do. I knew you'd appreciate that. The whole thing makes me happy, because you're right, and it sounds good. Well, and it summed up what this entire generation, what they're doing. They're looking for the latest trend because they want to build wealth way too fast or have a shortcut to avoid pain, and it ends up being a trap.

1220.027 - 1242.645 Ken Coleman

Well, I want to throw a trend at you that you're already aware of, but I think it has now reached ridiculous proportions. A friend of ours, mutual friend of ours, Andy Barton, the OG, was out shopping recently and saw this picture. I will describe it for our listening audience. Guys, let's throw this picture up for our YouTube and viewing audience. They will see this picture on the screen.

1243.366 - 1267.756 Ken Coleman

There it is. It's in a Walmart. That's in a Walmart. And you've got several cases of Coca-Cola. In fact, those are 24 packs. Good heavens, that's a lot of Coke. And you can see there, the rollback price, it was $12.58 for this. It is now rolled back there to $11.28. But can you zoom in there, guys? I don't know if we can zoom in.

Chapter 6: How can I afford a vacation home?

1365.737 - 1375.299 George Campbell

You're way overspending because you don't feel the payment when you get to pay 25% of it today and another 25% next month. and next month, and next month.

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1375.339 - 1403.9 Ken Coleman

Well, this is nothing new. In 2022, folks, listen to this. The share of online purchases using Buy Now, Pay Later grew by 14% compared to 2021. This is from Adobe Analytics. But now, George... As you said, the piper has come calling. The rents always do. Buy now, pay later orders growing 40% in the first two months of this year compared with a year earlier.

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1404.34 - 1431.251 Ken Coleman

And now these users, which accounted for some 70% of consumer borrowers between the first quarter of 2021 and the first quarter of 2022, were 11 percentage points more likely to to have a delinquency of at least 30 days on their credit records compared to non-buy-now-pay-later borrowers. So these are, I don't know how else to say it, these are the most egregious borrowers.

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1431.652 - 1438.405 Ken Coleman

They're getting in more trouble than your regular borrower, of course. They're just going, whatever. Throw it in the buggy.

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1438.645 - 1457.781 George Campbell

Well, what at one point sounded like a good idea to just put those things on payments is now becoming, oh, I actually can't afford this. I thought I could afford that payment next month, and it turns out I can't, and now I'm delinquent, and it's affecting your credit. And you know that we are not fans of the credit score here, but a bad score can hurt you. Yeah.

1457.761 - 1476.208 George Campbell

And that's a huge problem for so many Americans. And I called this out, Ken, in our January Building Wealth event. I said, mark my words, the biggest trend of 2023 is going to be buy now, pay later exploding. Yeah. As more and more people are broke, inflation and the cost of living is so high, Ken, what else are we supposed to do? Put those purchases on payments.

1476.429 - 1483.219 George Campbell

And can I just say, this is not people's rent and food. We're talking about some frivolous purchases here, some consumer spending.

1483.359 - 1498.13 Ken Coleman

The only thing that would make this more frivolous is that was beer. Agreed. I mean, the Coke, I mean, come on. You're going to buy your buzz now and pay later? You see what I did there? That was pretty good. Yeah, I like that. You're giving them taglines, Ken.

1498.15 - 1499.072 George Campbell

Don't help them.

Chapter 7: What should I consider before buying a vacation rental property?

1607.877 - 1616.174 George Campbell

Because Walmart knows it's going to increase the store order by 45%. Are you seeing who's winning here? Everyone but you, America. Right. You're feeling the stress.

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1616.194 - 1630.283 Ken Coleman

This is the craziest part. And they're coming after you, by the way. They will come after you. If you don't pay, they're going to come after you. And I think that that's what people need to understand. I don't know what the psychology is there to where you go. Again, you go up there and you go, well, my grocery budget.

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1630.323 - 1634.091 George Campbell

Imagine you went to Walmart and it said 75% off everything in the store.

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1634.172 - 1634.512 Ken Coleman

Right.

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1635.013 - 1654.976 George Campbell

That's the marketing. Yeah. That's the number you end up seeing is it's 75% off. I only make one payment today and I'll make three more later. Right. And I'll have the money later. Right. But then life happens and you realize you had 17 different purchases that you couldn't keep track of. Now you overdrafted, getting hit with overdraft fees on top of living paycheck to paycheck.

1655.056 - 1659 Ken Coleman

I just don't get it. Are they thinking they're getting a deal? I don't get it.

1659.44 - 1665.226 George Campbell

I don't know, Ken. At this point, you know, trying to understand the American consumer and how out of control they are is beyond me.

1665.426 - 1665.646 Ken Coleman

Wow.

1665.986 - 1670.931 George Campbell

But don't fall for this stuff, guys. Pay for it with cash. How's that for a concept?

Chapter 8: How does a 529 plan work for college savings?

1778.266 - 1779.028 George Campbell

What's the home worth?

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1781.833 - 1784.097 George Kamel

Probably around $330,000.

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1785.018 - 1786.882 George Campbell

Okay, and what's your income?

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1788.905 - 1793.013 George Kamel

I get $4,646 a month from my pension.

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1793.033 - 1794.556 George Campbell

$4,600?

1796.178 - 1796.479 George Kamel

Yes.

1796.577 - 1804.024 George Campbell

Okay. So you're no longer working. You're retired and you're going, hey, I want a vacation home. I want to enjoy it, but why not rent it out and make some extra money? Is that the idea?

1804.364 - 1804.584 George Kamel

Correct.

1805.085 - 1806.887 George Campbell

Okay. Where's the vacation home going to be?

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