This Is Why You Don’t Let Fear Drive Your Financial Decisions
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What is discussed at the start of this section?
Live from the headquarters of Ramsey Solutions, this is The Ramsey Show, where we help you win in your life. We want you to win with your money. We want you to win in your work. We want you to win in your relationships. And so we take your questions. I'm Ken Coleman. George Campbell joins me this hour. The phone number to jump in is 888- 825-5225, that's 888-825-5225. George and I always have fun together. There's a, I don't know what you call this, the comment, Hinterlands, or they call us the root beer float. Yeah. And you have self-designated as the root beer, and so that leaves the vanilla ice cream for me. We'll see how it goes today, but we do enjoy being with you. We enjoy having fun while giving you advice.
That's the goal. So you ready to go? I'm excited. I'm excited. All right, Jonathan starts us off in Pensacola, Florida. Jonathan, how can we help?
Hey, gentlemen. Thanks for having me on. You bet. What's going on? I had a quick question. I'm trying to consolidate my snowball for paying off my debt, and I wanted to know how to properly break it up. So I have a student loan, a credit card loan, and then I have a medical debt. But the medical debt is... It's going to the same collection group. It's just, they have it in two different accounts. And I wanted to know on my snowball, do I separate that debt into pay into two different accounts? Cause one is $3,000. One's a little over $10,000. And obviously the $3,000 would be at the bottom. Like it would be the first one I'm trying to pay off.
Yes. And they have different payments?
They're to the same people. They're two different accounts.
Okay. With different payments. So one has a $200 payment, one has a $500 payment? Yeah, basically. Okay. Then I would keep them separate because the key with the debt snowball is that you keep them separate on purpose. You said the word consolidate, which is meaning to bring together. I want you to keep them separate so that when you free up a payment, you roll that next payment into the next debt and you feel the momentum faster. That's the psychological win of the debt snowball. So if you just laid out the balances, smallest to largest, regardless of the payment, which one would come first? What's the smallest balance?
The $3,000 one.
Perfect. Followed by one of the credit cards, I assumed. Are these multiple cards?
No, it's just one. It's a little over $6,000. Okay.
Followed by your $10,000 medical, followed by a student loan? Yes. Nailed it. Okay, so that's the order you want to attack these. Make minimum payments on all of the debts except for that smallest medical debt and throw as much as you can extra to that debt until it's knocked out. How quickly can you knock out that first debt? Oof.
I mean, I could have it done by the end of the year for sure.
End of the year? $3,000 is going to take you all year long? What are you making?
Maybe not. Annually, I bring in a little over $48,000 a year after taxes.
Okay. What are you doing for work?
I'm a pastor. Okay.
All right. Well, can you do things on the side, like officiate weddings or funerals and get some honorariums for that?
I do some things on the side already.
How do I effectively set up my debt snowball?
What I bring from pastoring is a little over $38,000. There's another $5,000 I do in cleaning work that I do. Okay. And I do hospitality events as well. Okay.
Right. All those side hustles are going to help you create more margin. That's what you need right now. Because if you don't have an extra 500 bucks or a thousand bucks to throw at this debt, then something is wrong with your expenses and your income. Right. So that's your next goal is to free up as much as you can to throw at those debts. And we'll help you out. I'm going to give you one year of every dollar premium so that you can lay out your debt snowball, track every expense, track the transaction, connect your bank account and feel the momentum of this snowball.
Oh, thanks.
I appreciate it. Thank you. Absolutely. Thanks for calling in.
There you go. You know, you were starting to get a little agitated there, but you pulled it back. I thought maybe you're going to challenge the pastor with some type of parable, maybe, you know, a little biblical challenge.
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Chapters
8 chapters
1
What is discussed at the start of this section?
0:28–3:46
2
How do I effectively set up my debt snowball?
3:46–7:19
3
What should I do with gifted money?
7:19–12:19
4
Can we afford to go on a vacation?
12:19–51:52
5
How can I afford a home in today's market?
51:52–52:56
6
What should I consider when saving for a down payment?
52:56–53:33
7
How does patience play a role in financial decisions?
53:33–54:12
8
What are the benefits of waiting to buy a house?
54:12–1:52:27