Chapter 1: What financial challenges does A.J. face with his debt?
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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 John Deloney, joined by best-selling author, great human being, Jade Warshaw, and we're taking your calls on money, work, life, all of it. 888-825-5225 to call in live.
Let's go out to Charlotte, North Carolina and talk to A.J. What's up, A.J. ? Hey, how's everybody doing? We're doing all right. How about you? I definitely need help. I have over $137K in debt. And I have $66K with the IRS. And I have an extra $70K with personal debt, including cards, credit cards, and student loans. And my problem is, well, me and my wife...
Every year we make more money, we owe the government more. And with the $65K that we already owe the government, the interest piles on every month. And I'm at a crossroad because I don't know which one should we start with first. Should it be the IRS or should it be the personal credit? Because every year we go up in bracket with our income, we owe an extra $65K.
$8,000 that's added on to the debt that we already owe with the IRS. So it's kind of like it's a... Well, why aren't you paying your taxes? Why does it have to keep going up is what I'm saying. Oh, yeah. So she's an RN and I have two jobs. So during that process, I say when we was 23, had somebody do our taxes and we got audits.
And since we got audited, it's been an ongoing cycle for the last five years of us not getting ahead of the IRS.
I understand. So why is it that, okay, let me go back and answer your first question. Yes, IRS debt needs to come first. But going forward, you need to be paying your taxes. And what I don't want to hear you say is that the excuse is we're making more money. It's a good thing to make more money. You don't want to make less money.
And if your tax bracket creeps up, it's only for the percentage more that you're making. It's not for your entire amount. Now I'm being taxed on. Do you see what I'm saying? It's just the amount over that bracket that you're being taxed on. So that's an excuse. I don't want you to keep leaning on that. It's a good thing to make more money.
What needs to happen is you need to look at your withholding and find out why are you not paying enough taxes that you're owing so much at the end of each year and it's stacking up on you. Does that make sense?
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Chapter 2: Why should IRS debt be prioritized over personal loans?
Yeah. I like that better. Yes. Definitely. Yeah. But the personal credit, worry about that later, right?
I think if today... Don't even worry about it. Don't even worry about it because it's not doing anything for you. It's playing no role in this. The only thing it's done is gotten you in a heap of trouble. Think about it. It got you in a car you can't afford. You haven't bought a house. You're a renter. Your credit has... It's the least of your worries right now.
The government's taking money out of your check, dude. Yeah. You know what I'm saying? Yeah, that is right. What is your take home? Every month, what do y'all bring in? $13,000. Good grief, dude.
Figure out how to live off of six, and that's being generous, and take the other $10,000 a month and get this thing paid off in six months and stop owing the government money and then get on with your debt. Jade, what am I missing?
I think he's just been majoring in the minors.
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Check out chministries.org slash budget to learn more. That's chministries.org slash budget. All right, let's go to Virginia Beach and talk to Renee. Hey, Renee, what's going on? Hi, how are you? Doing great. What's going on? Um, so I recently filed for chapter seven bankruptcy and in the process, my car was repossessed.
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Chapter 3: What strategies can be used to tackle overwhelming debt?
So they're out there. I'm just letting you know they're out there. So don't, you have to look for them, you know, but private sale, Facebook marketplace, go to a church, say, Hey, is there anybody here selling a car? I'm in a bad jam. I mean, I got 3000 bucks who can sell me their car. Right. And I think, you know, yeah, look for a Toyota, look for a Nissan, look for a Honda. Don't get a HHR.
Yeah, or a square Kia with one button that just plays house music. Hey, okay, so what do you do for a living? I'm a mental health professional, so I work with the youth. They're in home, and I help them before they go into a facility or foster care or something like that. Are you licensed? Do you have an LPC or an LMFT or something? I'm working towards that.
No, right now I just have a QMHP, but I'm getting my master's in order to be in a practice. Okay, so you're continuing to add to this $90,000 student loan debt? Unfortunately, yes. Okay. Here's essentially what you've done with the bankruptcy. You've never turned the faucet off.
And so the faucet that buried you up to your eyeballs in debt that you called and you filed bankruptcy for, they came with a big bucket and took some of that water out. But that faucet is still going full blast. Yeah. You're going to find yourself in this exact same situation. And if you are able to navigate that system, which is a nightmare.
helping those kids out, what that means is you have skills that a local school district would want. Even if you had to go be a teacher on an emergency certification, if you had to go help out as a part-time social worker, here's what I'm trying to tell you. You can't just sit there and say, well, they're taking my jobs away and I guess I'm just going to live in la-la land.
You've got to start taking your skill set and start hitting the streets trying to find places where you can work. And you've got too much value to add. Can I tell you my long-term goal?
Here's the thing, and I say this with all due respect, it doesn't matter what your long-term goal is right now, because you're like trying to explain to me and Jade what your beach house is going to look like, and your boat sank out from underneath you in the middle of the ocean. You've got to swim to shore first. Yeah. Right? Yeah.
Well, I plan to move to a different location to get more clients in June, so that's kind of why I'm like... That's great, but even if you max out your earning potential... What is the max on your job? 50 grand? 60 grand? Yeah, that's true. And you're going to owe 125 when you're all said and done? Schedules, yeah. I definitely need more income. You've set yourself up with a vicious math problem.
And your heart is too good and your skill set is too necessary for you to chain yourself to this and then go out in the world and say, hey, I'm here to help. You get what I'm saying? And so I think all you, your future dreams, your clients that you're serving now and in the future, everybody is served if you just hit pause for a second and clean up the mess, the big hole you've dug yourself.
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Chapter 4: How can A.J. navigate his financial situation effectively?
But I also am not planning to take out student loans. I'm looking at the scholarship route. So my question is, should I pause Baby Step 4 and stockpile cash to live on? Or should I try to start a side business? That's something I've been considering to pay my bills while I'm in grad school. The first question is, how long have you been working in the industry? Six years. Okay.
So what is an MBA going to give you that you seeing multiple businesses run all at the same time, all like film industry, there's so many different businesses happening all at the same time. I would think you have a grasp on the quote unquote business world that very few people have. What would an MBA get you that you don't already have?
More opportunity specifically in the world of producing on a studio level. And that's where a lot more of the money tends to come from. And a lot of people who I've kind of talked to who have gone that track, that's been a huge recommendation is to get my MBA. Okay. So my second question would be, can you not get your MBA and still continue to work at the same time? Um, that's the thing.
A lot of the scholarships that I'm looking into, you have to be a full-time student. So, um, it's not, I guess it's not impossible, but it is, it would be a lot harder where I'm not sure how successful I would be if I was still, um, if I was able to focus full-time on the program.
And it's two years?
Um, it's, yeah. One program I'm looking at is two, another one is three. Okay. So even if you get a full ride... I want you to also calculate in the lost $52,000 per year. Okay. So it's going to cost you the tuition and you're in the college world room and board, right? Like you're going to still have to live, you're still going to have to eat, right?
And buy a computer and all that kind of stuff. But you're also going to have the missed opportunity of $104,000 in income over two years. Yeah. And so just...
you're calculating out the roi on what you think this is going to do for you and what you think like you're watching the film industry dissolve underneath you as everyone is across the country is getting into production putting all your eggs in that basket to the tune of 104 000 bucks minus two years in the workforce to then circle back is it is that a good roi downstream
That sounds really tenuous to me.
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Chapter 5: What are the key values to align on when managing money as a couple?
Yeah. And... Oh, boy. Let me just tread into this for a second. And... The truth is there's two people, right? He has a set of values. You have a set of values. You want to align on how are we going to do our money. You have to decide which hills you're going to die on. Because you're trying to get... In many ways, you're trying to get a little deer to come to you and do these baby steps.
You don't want to scare it away. So... If everything else is like trucking along and it's like, hey, we're making progress. This is just the one area that they're a little bit reticent to to come on board. All right. Like what's a way that we can slowly make that transition versus bashing somebody on the head of you're doing 99 percent of the things I asked you to do.
Chapter 6: How can I effectively communicate financial boundaries with my in-laws?
Where's the and then you're slamming them for the one percent. Right. Yeah. maybe uncommon opinion, but maybe it's better than we think. Do you see what I'm saying with this?
Can we agree, no appetizers, no drinks, and we don't have to get ribeyes, and do we have to eat out? Does it have to cost $100, or can it cost $40, or can it cost $35?
I would just hate for this one thing to be the bone of contention when so many other things are maybe on track or hitting right.
It usually is one of two things, right? It's that. It is somebody that... you know, amazing is the enemy of perfection, right? It's gotta be perfect. Or this is one of many, many places where they're not aligned. This is just the easiest place for everybody to land.
Chapter 7: What steps should I take if I feel pressured to make financial decisions?
Right.
And we fight about, we fight about eating out. We fight about money, but there's, that's just the tip of the iceberg.
Yes. And, and only, only Brianna knows that if that's the case, then 100%, there's, there's many things at stake here. But if truly you can look at the situation and go, it's like my husband making up the bed every day. He's making up the bed. He may not do it exactly to the T the way I make up the bed, but the man is making up the bed. So I'm just going to leave that right there.
And let me flip that around. I make the bed often. It's kind of like whoever's the last one out makes the bed. And I noticed sometimes that I come back in after making the bed. Sheila's redone it. It's nicer than when I did it.
Chapter 8: How can I find balance between financial goals and relationship harmony?
Yeah. And that used to make me mad. I used to be like, oh, I'm not. And now it's like, you know what? She can do whatever she wants.
If she didn't say anything and she just went back in and remade it.
Awesome. Amazing. We both won. We both won. And here's the deal, Brianna. At the end of the day, you don't have to go out.
Yeah, he could go by himself.
You don't have to go out to eat. You can say, I'm going to save that money and I want to stay committed to the goals that we made. And so if you feel like you need to go out, great. I'll just stay here and eat the napkins in the glove box because I guess somebody's got to
It's leading by example, which is pretty awesome.
I'll just have yogurt and granola and we'll call it or whatever. But you don't have to go. You don't have to go. You've got more autonomy in this thing than you think you do. But I don't know. I think there's a conversation beneath this conversation, which is are we aligned on this deal? I agree. All right, let's go out to San Antonio, Texas and talk to Lily. Hey, Lily, what's going on? Hi.
Yes, so I am... Currently enrolled in an online class at GCU. I'm studying for education and they have me with, they put my account, they linked it with like the FAFSA subsidized loan. However, my mom offered to take out equity on the house and then pay her back. Okay. What if you stop doing everything that you're doing except for going to school and just doing that somewhere else?
Yeah, so I currently also work full-time, and the program at GCU is one class every eight weeks, and that really works. Did you say at TCU? GCU, yeah. GCU. Yeah, yeah. So a private, online, faith-based university. Yes. Very expensive, correct? Yes, it is. It's $1,500 per class. Oh, gosh. Whereas you could get a teaching certificate.
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