Chapter 1: What money-related questions are addressed in this episode?
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Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studio, this is The Ramsey Show. I'm George Camel, joined by Jade Warshaw this hour. The number to call is 888-825-5225. It's your show. We're here to help you take the right next step for your life and your money. Rihanna is with us in Minneapolis.
Rihanna, welcome to the show.
Hi, thank you so much for having me today.
Yeah, absolutely. How can we help?
So I just have a question for you guys. So was I right to break off my engagement because of long-term money issues and bad spending habits? I've always been disciplined with saving and planning for money, but he's struggled with overspending and staying employed. Now that he's moved out, I've taken on full financial responsibilities myself.
How can I stay on top of my bills while saving and protecting my future?
That was like 20 things in one.
Okay, we'll tackle the first part first. Were you right to break this off because of red flags that were not attended to? This was a value you had. And this is a value every woman has. If I'm going to marry some guy, he's got to be able to do at least two things. Provide and protect. That's the reason why we find a mate. Primally speaking. And you're saying he can't provide for the future.
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Chapter 2: Was breaking off the engagement due to financial issues the right decision?
So I'm going to ride with you on this because you are the one telling us your side of it and it makes sense to me. Now he could call in and say something different, but still at the end of the day, it's your choice. So yeah, thank you. So what's the second part of the question?
Yeah. So I would like to be able to better now that I've taken on, I've asked him to move out. I've taken on full financial responsibility of like paying our rent. And then, um, while we were together, I purchased a car, um, because I was able to make up that payment with having him here.
Now that I hold on Brianna, you went into debt during the engagement.
Yes, and that was primarily because he kept telling me that I needed a new car.
What were you driving before? I was driving a Nissan Altima that needed quite a bit of maintenance. Got you. And what did you get?
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Chapter 3: How can I manage my finances after taking full responsibility?
I got a 2025 Mazda CX-70. What do you owe? I owe about $50,000 on that. Shoot!
What do you make?
I make about $100,000 a year.
That's a lot of car, even for your income.
Is that your only debt or do you have more?
I have about 15 grand in student loans, and then I have like two grand in credit card debt, but that's it.
Okay, here's my thing, Brianna. I was really team Brianna, and now the more I hear you, the more I go, I'm not sure you believe in your own principles, because you wanted this guy to clean up his act financially while you were an accomplice to the crimes.
So it's like, how am I supposed to take you seriously if I'm the fiancé going, you really need to get better with your spending habits, and then I'm over here financing a $50,000 car. You know what I mean?
Yeah. And it's difficult because he drives a BMW X4 M Competition. That is really difficult. So it was just like, it's terrible to get a nice car.
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Chapter 4: What are the implications of supporting a financially dependent family member?
I found when I use my debit card, I don't need hope or luck. I can actually pay attention to my money. And when I run out, I can't spend anymore. And to me, that is a great way to build wealth. And it adds really healthy guardrails. So that's why I'm recommending all of this to you. And I unpack all of this in the credit cards chapter of my new book, Breaking Free from Broke.
I'm telling you, you will want to take a shower after reading that chapter. I unpack the studies. I go through every objection that's in your mind. I'll show you how to live life outside of the credit card and credit score system. So hang on the line. Our team's going to pick up and we will gift you Breaking Free from Broke.
You can choose audiobook, ebook, the hardcover copy, however you like to read. We want to make sure we get it into your ears or in your hands. Thank you so much for the call. Great question. Love your heart around this. And I hope we've convinced you to stay away from these gross companies. Because listen, Capital One's out here sponsoring the Taylor Swift tour.
We can't afford tickets to the Taylor Swift tour. Who is winning here? It's not us. It's the companies with the big buildings downtown. This is The Ramsey Show.
Hey, it's Rachel Cruz. The holidays are here, which means family time and giving back and remembering what the season is all about. And let's be real, it also means shopping. Y'all, if you're anything like me, December gets really busy and really expensive. It's harder to stay intentional with your spending. And that's why I love shopping on Amazon, especially this time of year.
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You're listening to The Ramsey Show. Thanks for being here. I'm Jade Warshaw. Next to me is bestselling author George Camel. Today's question of the day is brought to you by WhyRefi. If you're in over your head with private student loans and tired of getting calls from collection agencies, I know how that feels. You need WhyRefi.
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Chapter 5: What are the key statistics about 401k accounts?
Yes. I actually just talked about this this morning on Good Day Orlando. We did a media hit with the nice people over there. And this is exactly what we talked about because there's so much hope stealing going on out there. All you hear is there's a retirement crisis and the next president's going to screw this up and cause us to all be broke.
And here's Fidelity saying, actually, we're at record highs and across our 401k accounts, they have half a million people who have balances of a million dollars or more in that one account. Wow. Wow. In just one 401k account, which is very encouraging. Average balance hit $1.6 million.
That's great. That's excellent.
So that's encouraging. So the question is, good for them, George. What about me and my 401k?
Chapter 6: How can I effectively increase my 401k savings?
I don't have a million. Well, that's true. The average 401k out there is more like $126,000. Yeah, yeah. So it's like a tenth. So how do you get there, Jade? Well, it takes consistent investing over a long period of time. So if you sporadically put 3% to get the employer match, yeah, it's going to take a bazillion years to get a million.
But if you follow the Ramsey plan, you get out of debt as soon as you can, two years or less, you get the emergency fund in place, you begin investing 15% of your household income into that retirement account, you will see that it doesn't take long for compound growth to work its magic.
That's right. And all the time around here, we're talking about 10% returns. And anytime I talk about 10% returns, especially if it goes on social media, there's always somebody popping into the comments saying something like, well, where are you going to get that? Or how could you get that? Or that's impossible. And I always have to explain the idea that this is an annualized term.
Chapter 7: What should I know about different types of retirement accounts?
Number one, it's not to say that every single year you're going to get 10%, but over the lifetime of your investing, that is what you're getting. That's the average of all the years you've been investing.
So if it was up 30, down 12%, up 20%, down 6%. If you take into account all of those years, you're looking at 10 to 12% on average in the stock market.
That's right. And when you look at them by year, most of the years are up years. You know, you have those years that tank because something catastrophic has happened, whether in politics or, you know, international, but it always recovers and it always recovers really in our favor.
I just looked at the S&P 500, which represents the total U.S. stock market. I looked at the numbers, Jade, this morning, and in 2004, so 20 years ago, we have 5x'd since then.
Yes.
So if you had 10 grand, now you're talking 50 grand. And even if you had started investing 10 years ago, your money would have went 2.5x. That's right.
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Chapter 8: How do I manage family financial dynamics after an inheritance?
And so it's not a rocket science analogy here. You just need savings rate, how much money you're putting in, plus time.
That's right.
That's the formula to become a 401k millionaire.
Yeah, that's what we're looking at here. So your 401k is a great place to start. We say all the time, sometimes here we talk about baby step four and we kind of push past it, but it's worth talking about, George, because a lot of people have questions. A lot of people don't realize, okay, when I invest in my 401k at work, what does that mean? And where does that get me?
So let's take a moment and kind of explain that because I posted a video on Instagram last week about baby step four, and I was overloaded with questions on, okay, what does that mean? Where do I go? What if it's Roth? What if I get a match? So let's take a moment and teach the people when we say baby step four, what are we talking about? I'll start with the first part. So
Here we teach that you're not ready to invest until after you've paid off your debt, which is baby step two. And after you've invested three or and after you've saved three to six months of expenses, that's baby step three. From there, we then teach, OK, now you take 15 percent of the gross that you're making every single month. This is before insurance comes out, before taxes comes out.
You take that money and you're investing it. And we say, let's start with an employer sponsored account if there's a match.
yes so if you make a hundred grand a year you should see fifteen thousand dollars in contributions in that retirement account that's fifteen percent yes and the strategy here is simple match beats roth beats traditional we go for the match first because it's a 100 return on our investment i put in four percent the employer puts in four percent great next we can move to all the roth options available all that means is that the money is is uh put in after tax and grows tax free so you're not going to be able to deduct it from your taxable income for the year like it's traditional
But you never have to pay taxes again. If you have $2 million in a Roth 401k at retirement, Uncle Sam doesn't touch it. That's like $2 million of net income, take-home pay. So I love that. Then beyond the Roth options like a Roth IRA or Roth 401k, you can move to any traditional options you have.
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