INDIANAPOLIS — It's time to talk about your money and ways to save for the future.
Dave Ramsey and his daughter Rachel Cruze are nationally known for their baby steps and solutions to getting out of debt and building wealth.
While they were in central Indiana for an event, they stopped by the WRTV studios for a sit down interview with Good Morning Indiana Anchor Lauren Casey to talk about a number of hot topics.
Here are a look at that discussion:
Q: Ramsey Solutions did a survey and found 4 in 10 people surveyed reported $0 in savings. What do people do to take that first step to get into better financial footing?
Dave: I've been there, where I had $0 in savings, and it is scary. It's not fun. You feel vulnerable, because you are. And the way you fix it is the way you fix anything in life, you pay attention to it. No one accidentally saves money. No one accidentally builds wealth. No one accidentally gets out of debt. And so you sit down with your spouse, and you go, look, I don't like being afraid like this. I don't like being vulnerable. So we're gonna lay out a game plan, the dreaded b word, the budget, and we're gonna save some money. We're gonna cut back on some stuff, because this feeling is not okay.
Q: On the topic of budgeting, I know for couples, it can be really intimidating to sit down and have those conversations. What do people do right now, with inflation, things costing so much, to just stay on that budget and do their best?
Rachel: It's all about the margin, right? Money flows two ways: it flows in and it flows out ... for a lot of people, they're picking up side hustles. I've talked to so many moms with little ones at home, and they're doing work during nap time and at night remotely. And so again, if there's any way to generate some more income, that's very helpful. And then your expenses are where the money goes. So that means you may be cutting back on subscriptions, maybe gym memberships, things that we kind of think are needed and needs, actually are wants. And so for a season right now, to be able to cut back because you want that margin not just to feed your family at the grocery store, but to use it to save money, like he was talking about, or even to pay off debt. And so again, that season of your life, it's a short-term sacrifice for long term gains. So hopefully, you're not doing this for the rest of your life. But you have to get ahead somewhere. So it's either the income coming in or the expenses going out.
Q: We have the student loan forgiveness. It's in the courts; it's very out of our control. The payments were paused during the pandemic, so maybe a lot of people haven't been making payments on those. What do we do to get that back in our control and get out of that student loan debt?
Dave: Pay it off as soon as possible. Treat it like it's a disease in your house — Sallie Mae needs to be given her eviction notice. She needs to leave your home. And if you wait on someone else to fix your life, your life's gonna continue to suck. You have got to attack this stuff. It is the only way. We've taught people for 30 years how to get out of debt of all kinds. And the student loan is no exception. The problem is there's this thing hovering around out there like the calvary is coming and it's going to save us. But it's not. You have to fix your own life and that's what gets rid of it.
Q: In the Hoosier state, most people need vehicles to get to and from work. Let's say your car just craps out. What's your best advice? What type of car do you buy? If you can't afford to just pay cash, what do you do?
Dave: 90% of the car that we buy is for someone else. It's not really transportation. It's I want to look cool at the stoplight. I mean, come on. So this idea that you have to drive a $50,000 car to get to work is ridiculous. You don't. Now it's okay to have a $50,000 car if you're not broke, but if you're broke, and you're driving that with payments, you're out of control. And so drive a hoopty for a little while. No one really cares what you drive but you at the end of the day, so get something that's reliable, used, that you pay cash for. It's the largest thing we all buy that goes down in value. It is the biggest mistake that people make in the middle class that causes them not to be able to build wealth. $700 car payments, ahh!
Rachel: The average car payment, it's close to $600. For new cars, it's over $700 and so that's so much money. And the problem that we see is Americans are stressed at the grocery store for things that they actually need like food because they have $700 going out in a car payment.
Q: And any last advice on building wealth? Things are a little crazy right now. If you look at maybe your 401K, things may not be where you want them to be at this moment. So what do you suggest people do?
Dave: We find that people that build wealth, they make their financial decisions thinking about how's this going to affect me in 10 years or 20 years. People that are broke, say thank God, it's Friday. Oh, God, it's Monday. YOLO, I'm gonna live in the moment, right. And so, expand your vision. And if you look out there, you will start to realize the things we're in right now, we'll have new problems tomorrow and new opportunities tomorrow. Life is really a filmstrip. It's not a snapshot. If you just take a snapshot of where you are right now, sometimes that's really depressing and fearful. I understand I've been there. But you look over the scope of your life, you can get control of the subject called money. It is doable.
Rachel: One of the biggest things for wealth building, in general, is consistency and investing regardless of what the market is doing. If you are out of debt, and you have a fully funded emergency fund, we find wealthy people, regardless of what's going on, they continue to invest because when the market starts coming back up, they get all that growth versus people that have pulled their money out or paused.