Chapter 1: What is discussed at the start of this section?
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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 Campbell, joined by my pal and co-host on Smart Money Happy Hour, another great show on the Ramsey Network, Rachel Cruz is here with us as well. We're here to answer your calls about life and money.
The number is 888-825-5225. Miguel kicks us off in Dallas, Texas. What's going on, Miguel?
Hey, George, how you doing?
Doing great. How can we help today?
Yeah. Hey, so, you know, I've been following you guys for quite a bit sometime now. I kind of wish I'd started earlier, like most people. 100%. Same. Here we are. You know, I'm working on step number six, thankfully. But I do have a question because I listen to Dave say all the time how credit cards are the devil and they are the worst thing that...
one person can uh use and i agree with all of that except um so a really long time ago uh kind of like dave i at a very young age i did bankruptcy and since then i learned to live within my means um so i've but i've had a lot of credit cards since then i just paid them off at the end of the of the month I don't have any credit card debt. I haven't had for over 10, 15 years now.
So my question is, you know, if I pay off my credit cards at the end of the month and I am using them a lot so that I can get like, you know, free tickets to travel with my family and stuff like that, would you still recommend that I don't do that? If so, why? Or is it okay for me to continue using my credit cards as long as I pay them off?
Well, as of this recording, it's still a free country. So you are free to do as you wish, Miguel. And so is it okay? Sure. If it's working for you, go for it. But the reason you called in, there's something inside of you that maybe is thinking, is there a better way? Could I be doing better?
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Chapter 2: How should I approach using credit cards responsibly?
So I don't pay my mortgage or anything like that with my credit cards. But there are actually a lot of things that I can pay with my credit card. I do my groceries with my credit card, all of my regular spending. And that adds up to quite a bit throughout the years.
You've impressed Rachel. Rachel, if you could see her face, she is so impressed. No, she's not.
I'm just sighing. Well, here's the thing, Miguel. A couple of things. Number one, studies have been done, and it has been proven mathematically that you do actually end up spending more when you're spending it with a credit card. And it may just be groceries and all the things, but because there is zero...
emotional connection to your money, subconsciously, naturally, without you even realizing it, you end up spending more. So even with groceries, for instance, we've talked to people on the show and they say, oh, I just would use my credit card for the things that we needed, you know, the bills and groceries and gas. And then we have heard countless times, haven't we, George?
People say, actually, we ended up going without a credit card for six months to see if we could save money. And we actually ended up spending less. we don't even know how that happened. And I'm like, well, cause I know because there's no emotional. So you don't even realize the amount of money that you're actually overspending.
So over years of spending hundreds of thousands of dollars on this credit card to get $4,000 of flights, What could have been saved actually may have been even more than $4,000 with the subconscious spending that you're doing and not even realizing it. So that's one thing. And then number two, Miguel, and again, this is a personal kind of conviction for me, and it may not be for you.
I'm not saying it has to be for everyone. But what's so frustrating to me, and I think because we're in this line of work, and George and I talk to people every single day who do have credit card debt, and these banks and this whole debt industry has screwed over the American people. They have, they have not helped people. They have hurt people. That's why we have a job.
And because of that, the people that are hurting, the single moms that are calling in that have $11,000 in credit card debt and they're trying to get out, or it's the families who lost, like people that are struggling and they are in credit card debt and they're the ones paying the fees. They're the ones paying the interest.
They're the ones making the bank rich to get people like you to get free points and free flights. So off the, I mean, it kind of feels like off the backs of people who are struggling and hurting. I don't want a free flight out of that. I have the ability to save up and work hard myself and not have to deal with this industry at all. And I have no bill at the end of the month.
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Chapter 3: What are the pros and cons of renting out my home?
Okay. Is there something else in that field? I put in a ton of hours, but it just doesn't seem to help.
What are you making right now, Andrew, doing that?
Yeah, like 110.
Okay. Is there a role you could take? I don't know if you want to stay at that company or a different company that at least is a little bit more enjoyable. You may take a little bit of a pay cut if it's less of a senior role just to get you in a place where at least you're making an income.
You can save for nursing school and like can actually float you through some of the things you want to do in the future.
Yeah, I would like to be able to do that. I just don't know if it's going to be an option. You know, if this role doesn't work out, if they'll let me take something more junior at the current company or they'll just, you know, cut me off and then I'll have to, you know, try to just find something in the open job market. I have been looking, but had a couple interviews, but no offers.
Okay. How old are you? 39.
39.
Okay. And how long have you been doing this?
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Chapter 4: What should I consider before moving in with my girlfriend?
We're going on eight months now. Well, might as well be eight years. You like this gal? She's pretty all right. Whose idea was it that we should live together? Sort of my idea because she already lives with me and my grandparents. She's living with you and your grandparents.
How old are you guys, Matthew?
I'm 19 and she's 19. Okay.
Are you guys working in school? What's your status?
I'm currently working for a blasting company and she's currently working for Walmart.
Okay. Good for you guys. And she's living with your grandmother and you. Is that what you said? Your grandparents and you? Yes. And because it's...
too expensive for her to live on her own like give me or is it relational you guys just want to be together it was it was between her and her dad her dad wasn't really the best guy and she wanted to leave him okay so i gave her an out okay so it's a bad situation you said hey come come hang at grandma and grandpa's they're cool with it yeah okay how do grandma and grandpa feel about all this
They love her. To be honest with you, she does more around the house than their own children do. I believe that. They love her.
Yeah.
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Chapter 5: What are the pros and cons of using a 529 plan versus a UTMA account for my child's education?
So exciting.
Excited about March.
What a great month.
What a great month to get married.
Is that when you guys were married? No, December. Okay. That's what I thought. I don't know.
It just feels springy and new.
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Chapter 6: How can I effectively manage my child's investment accounts?
I don't know.
Yeah. It's great. Rebirth. Beautiful. All right. Emily's up next in Atlanta, Georgia. What's going on, Emily? Uh-oh. Your phone's all busted, Emily.
Chapter 7: What should I consider before moving to a new state for better financial opportunities?
Can we hear you?
I can hear you.
Can you hear me?
Yeah, we're good now.
I'm so sorry. Thank you so much for taking my call.
Sure. What's your question?
I have a four-month-old son that we have started a 529 plan for, but I was speaking with my financial advisor a little bit ago, and she recommended a UTMA or UGMA account. I was just wondering what your thoughts were on possibly putting some money in a UTMA account to pay for maybe their first car or something like that, or if I just should put all that money towards 529.
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Chapter 8: How can I balance my income and expenses while planning for my family's future?
Awesome question. How old are the kids?
I just have a four-month-old son.
Oh, sweet. Okay, so we got plenty of time. This is the best time to open up an investment account. Here's my thing, and this is not a knock against your financial advisor. I'm personally not a fan of the UTMA and UGMA accounts because that money is legally that child's money. So you lose control completely. And there's no way to restrict. Yeah. Once they turn 18 or 21, depending on the state law.
It's basically like opening an investment account in their name. But the UTMA is the umbrella that covers it, shields it from them until they're 18. So what George is saying is if you start investing, investing can be crazy. Over 18 years, if you start throwing like 100, 200 bucks in a month, I mean, that stuff can just... It could be a lot of money for an 18-year-old.
So George is just saying caution because you could be handing over, I mean, tens, hundreds, thousands of dollars. Yeah, depending on how much you put in there.
And how much growth.
But yeah, so for a car and stuff, I probably wouldn't, honestly. Now, mom and dad, they did for us. When we started working and actually could file a tax return and all of that, they opened up a Roth program.
Yeah. Once you have earned income.
Yeah. And that was more when we were teenagers. But that kind of thing is so helpful because it's crazy. Even just that me opening that as a teenager versus even my husband when he opened his when he was like 23, you know, starting to work like even that you're a different. So. There's ways to definitely set them up well to get some things going, like a Roth or the 529 as well.
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