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The Ramsey Show

You Have To Get to the Root of Your Debt Problem

08 Feb 2024

Transcription

Transcript generated automatically by AI and may contain errors.

Chapter 1: What is discussed at the start of this section?

29.663 - 48.87 Rachel Cruz

Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz, and co-hosting today with my good friend and fellow Ramsey personality, George Camel, and we are here to take your calls, America.

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48.91 - 53.536 Rachel Cruz

It is a free call anywhere in the country, which it's been a free call for a long time, George.

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53.616 - 55.098 George Kamel

When are we going to start charging, Rachel?

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55.118 - 55.899 Rachel Cruz

We kind of hope to.

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55.919 - 57.021 George Kamel

Inflation's killing us.

57.001 - 81.945 Rachel Cruz

That's like a 2000. And if you remember having to pay for long distance calls when that was a thing, you would appreciate that. But it is a call, any call in the country at 888-825-5 at 225. And we will answer your money questions, relationship questions, questions about work. We are here to talk to you. So first up, we have Portia in Houston, Texas. Hey, Portia, welcome to the show.

82.904 - 86.788

Hi. Hi, Rachel. Hi, George. Love your book. Breaking, sleeping.

87.249 - 88.39 George Kamel

Oh, thank you.

88.41 - 92.955 Rachel Cruz

It's a good shout out. How can we help you today? Yes.

Chapter 2: How can I effectively pay off my student loans?

278.166 - 281.531 George Kamel

Do you know what his income is, or are you not there yet in the relationship?

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281.551 - 282.512 Rachel Cruz

I hope so. They're engaged.

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282.632 - 284.956 George Kamel

You never know. We've been together for years.

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285.517 - 288.841

He makes $72,000 a year.

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289.102 - 301.464 George Kamel

Okay, so you'll have a household income of over $200,000 this summer, which is going to speed up your debt payoff process. Yeah. If he's the man I hope he is, which is we're going to clean up our mess now.

302.906 - 305.711

Yeah, that's right. Yeah. He's very encouraging.

305.911 - 323.899 George Kamel

So let's play this out. By April, the student loans are gone. You get married in the summer. You're attacking the student loans. And when do you think it'll be paid off with all that factored in with his income? And maybe his savings. Who knows? He may come in with a hundred grand in savings and be able to wipe out your debt.

325.668 - 341.174

True. Well, when I did the math, I know I could pay my car off quick, like in three months. I'm already on track with that. So I'm paying like $2,500 every two weeks to pay that off.

341.194 - 343.097 George Kamel

Great. So like $5,000 a month you're throwing at debt.

Chapter 3: When is the right time to buy a house?

586.904 - 592.889

And it's caused quite a bit of, quite a bit of a hum dig around the family. So.

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593.73 - 601.577 George Kamel

So have they asked you for money or are they just upset and envious that you don't have debt and you're not strapped with payments?

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602.519 - 604.061

Oh, yeah. No, all. Yes, sir.

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604.081 - 611.992 George Kamel

All of it. Yes, sir. Oh, man. So they straight up said, hey, you're doing pretty well, boy, aren't you? You got any of that money laying around for us? Like, was it joking, or was it pretty serious?

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613.294 - 623.928

No, I mean, we went out for a... We have a mess of kids, you know, and so we went out one night for something, and the ice cream was there, and I was like, you know, you told my kids grab ice cream, whatever, kids grab ice cream.

624.208 - 640.303

Well, I ended up getting ice cream forever, which isn't a big thing anymore, and, you know, we're like, oh, it must be nice, you know, and then the next night, they were saying... going out to dinner and my wife was like, oh, we only went to dinner and family over. So I was like, oh, just the two of us will go out. And they're like, oh, you got us. You can go too. No, I do not. I do not have you.

640.343 - 650.535 George Kamel

So there's assumptions and entitlement now of like, well, he'll cover it because he's doing pretty well. So he should cover it. And is this your direct parents? Like who's involved here?

651.877 - 661.867

Everyone. Yeah, no, everyone asked throughout the course of the two weeks after that. You know, they found out about aunts, uncles, cousins. Yeah. Yes, sir. All of the above. Got phone calls and everything.

663.189 - 668.856 George Kamel

Goodness gracious. It's like you won the lottery or something, but it's taken you. How much money do you guys actually have?

Chapter 4: How do I handle family expectations about money?

1404.904 - 1410.836 Rachel Cruz

children fall victim to identity theft every year, with 73% of victims being targeted by someone they know personally.

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1410.876 - 1416.428 George Kamel

Goodness, which is probably going to be a parent, an aunt, an uncle, a brother, a sister. That's terrible.

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1416.628 - 1421.097 Rachel Cruz

And so much of it is financially related, right? Selling your identity to open up accounts and credit cards.

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1421.117 - 1440.252 George Kamel

And they say here, the founder of the law firm said the chief motivation behind these crimes was when a parent has had bad credit and is not able to make a debt based purchase. There you go. And it says in most states, this is a crime, fraud, identity theft, misappropriation of funds or all possible charges a prosecutor could bring. Yep. So it's possible to go to court for this.

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1440.292 - 1448.683 George Kamel

But again, the costs of lawyer fees add up to where you're like, was this I spent 10 grand to fight two grand. Was this worth it in the end? And a lot of stress.

1449.264 - 1462.962 Rachel Cruz

Sure. Emotional term. Yeah. Yeah. And again, you want justice in every legal sense of the word. Right. But but when you get down to it in the real world, it's like, oh, my gosh, for somebody out there, her making seventy two thousand dollars a year, it's like.

1462.942 - 1486.468 Rachel Cruz

is it realistic for her to go and yeah go and hire a lawyer and do all of this you know or do you pay it close the accounts have the threatening conversation with mom um but yeah some people see some people choose the latter so we'll see choose violence never all right up next we have Bailey in Pittsburgh hey Bailey welcome to the show

1487.596 - 1496.222 Rachel Cruz

Hi, thank you for taking my call and thank you to you too and your team for what you do. Oh, thank you. I appreciate that. How can we help?

1496.928 - 1524.37

Years ago, back when everything was paper, I started following your dad at that time and then kind of got off track. And here recently in the last month, I've just, you know, came back around. And I'm trying to convince my husband to, you know, let's follow the program to a T, which means stopping our investing in our 401ks and things like that.

Chapter 5: What advice do you have for someone considering moving to a cheaper neighborhood?

3467.688 - 3470.531 Rachel Cruz

Hey, Sarah. Welcome to the show.

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3470.551 - 3493.663

Hi. Thank you so much for having me. So my question for you guys is Currently, my husband and I are renting an apartment for about 32% of our net income. And in order to get closer to that 25%, we have to move to a low-income house, like a low-income community.

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Chapter 6: How should we approach paying off family debt?

3494.364 - 3513.73

And I'm not sure if that's wise, you know, because sometimes crime is higher in low-income communities. Yeah. I just wanted to know if you guys had any takes on whether we should jump from our 32% to 25% by finding a cheaper apartment in a low-income community or what you think.

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3515.347 - 3533.943 George Kamel

I appreciate your intensity for the plan, but that 25% is really a guideline, and it's not a set in stone. If you're at 26, time to move, bucko. So I don't think this is on fire. You guys sound like you're doing a good job paying attention to every dollar, and my assumption is your income will go up over the next year, correct?

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3536.345 - 3547.757

Potentially. My husband put in some applications to become a police officer, and it could potentially go up a little bit, but he... It's going to stay about the same. Okay.

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3548.578 - 3569.164 Rachel Cruz

Yeah, I mean, I would say, Sarah, I mean, obviously we don't want, you know, you in a situation that maybe you feel unsafe or whatever, you know, it may be for you. I mean, yeah, you want to be able to find a place that you feel good at. And I would say, too, that, you know, just because a situation is different doesn't always mean

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3569.144 - 3595.877 Rachel Cruz

you know make it bad right and so um i think there can be some places that you may overlook because of just the thought of oh gosh you know the high crime or whatever it may be but to really do your research and dig in because there's parts of cities you know that may be lower income but they're great neighborhoods and great people and all of it so i would i would do my due diligence to really look and see um i mean ultimately i want you to feel safe i mean i think that's a that's a

3596.228 - 3618.934 Rachel Cruz

That's a fair value to have in life. But also, you know, to maybe look at, yeah, maybe our life, maybe where we are, though, where we live will look different than maybe what we thought because of our income. And George is right, like that 25%. It is a guideline there, but when it starts to creep up in that 35%, 40% of your take-home pay, that's what it does.

3618.954 - 3626.446 Rachel Cruz

It just limits the amount of income that you can use for other things like getting out of debt and investing and all of that. So how much do you guys make in a year?

3628.129 - 3632.716

We make about $55,000. Just my husband works, and I'm a stay-at-home mom. Okay.

3632.877 - 3658.45 Rachel Cruz

How old are your kids? my son he's almost two okay that's great so great yeah so i mean i think you guys talk about it look at the budget do you guys have a lot of debt uh we do but uh luckily it's just to a family member who paid off our debt so okay how much is that we don't have um it's almost 50 okay okay and are you guys working on getting rid of that

Chapter 7: What steps can I take to improve my budgeting skills?

3659.965 - 3668.622 Rachel Cruz

We are, yeah. Okay, that's great. Yeah, and once that's freed up, you know, that's going to feel like a breath of fresh air.

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3668.822 - 3670.105 George Kamel

Is it a monthly payment you're making?

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3671.547 - 3681.244

Yeah, we're trying to do a monthly payment, and it's pretty low right now. Like if we keep, right now we're only... trying to give about $250 a month, so that'll take us like 10 years to pay him off.

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3681.264 - 3682.146 George Kamel

Goodness gracious.

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3682.266 - 3702.552 Rachel Cruz

Yeah, I wouldn't do that. I would be changing something in that formula, which is probably going to be the income on making more. I mean, you know, and what's so hard, Sarah, is, you know, Math, it is what it is, right? And so being able to look and say, okay, this is the amount of money that we have. And so we want to be wise with it.

3702.672 - 3717.69 Rachel Cruz

We want to be on a very strict budget and know exactly where that's going. But I also don't want this debt hanging around you guys for 10 years to a family member. And even though they're probably not charging you interest, from a relational standpoint, it just gets weird over time.

3717.89 - 3722.676 George Kamel

And so- They'll see you go on vacation and go, whoa, whoa, whoa, they owe us money and they're going on this trip.

3722.656 - 3723.637 Rachel Cruz

Yeah, that's right.

3723.737 - 3725.019

Even once you're out of debt.

Chapter 8: How can I deal with financial stress from family expectations?

3745.366 - 3749.592 Rachel Cruz

All right, up next we have Larry N. Evansville. Hey, Larry, welcome to the show.

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3750.449 - 3752.692

Hey guys, thanks for taking my call today. How are you doing?

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3752.892 - 3754.134 Rachel Cruz

We're doing great. How can we help?

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3755.796 - 3777.182

So I recently found you guys and I'm really trying hard to figure out budgeting type things. I grew up in a family that, you know, didn't really care about it, you know, and I'm trying to figure it out and I've looked at every dollar and I'm just overwhelmed with things. Like I try and budget and then something comes up and it's just very overwhelming and

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3778.09 - 3790.624

It's just I'm to the point of I'm tired of living every paycheck to paycheck, and the next week I'm broke. It's just hard. I just need help budgeting. I need to figure out where do I start.

3791.665 - 3797.772 George Kamel

What's the problem right now when you say, I feel broke? Are there too many bills after your paychecks show up?

3799.514 - 3831.351

So what happened is a couple years ago I did some bad things. I got addicted to some things after an accident I had, and You know, I screwed up our family. When I did that, it meant a lot of death for my family. I'm sorry. And I'm trying to get out of this. And I try so hard. I work, you know, 65 hours a week. And it's just, I don't know. I honestly can't tell you exactly where it's going.

3832.057 - 3839.592

You know, I am paying down the debt that I'm doing, but then also, you know, car repairs come up. My kids need something.

3840.514 - 3842.919 Rachel Cruz

Yeah. Yeah. How many kids do you have?

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