Courtesy of The Ramsey Show <\/p>\n
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A school psychologist named Maria called into The Ramsey Show in July with an unusual problem: Despite having minimal debt and a combined yearly income of nearly $300,000, she and her husband could not seem to stick to their budget.<\/p>\n
Ramsey and co-host Jade Warshaw were visibly frustrated as Maria, who sounded nervous, waffled through the call and struggled to explain why her family couldn\u2019t keep their spending on track.<\/p>\n
The couple\u2019s debts are relatively small. They owe $17,800 on credit cards, $8,000 on a car loan, and pay $2,700 per month for their mortgage. Maria also shared that the recent deaths of her mother and brother had forced the family to cover the funeral costs of $13,000 and $8,000, respectively.<\/p>\n
\u201cWhere do you think the rest of the money is going?\u201d Ramsey asked, but Maria couldn\u2019t account for her family\u2019s monthly spending or explain why the expenses were so overwhelming for their budget.<\/p>\n
Ramsey didn\u2019t mince words: \u201cIt sounds like you\u2019re circling around the airport and refuse to land.\u201d<\/p>\n
\u201cIt\u2019s not an intellectual circus. It\u2019s not that hard,\u201d he added. \u201cYou\u2019re living drama to drama, crisis to crisis, and you\u2019re letting that stuff dictate your life rather than you dictating to that stuff.\u201d<\/p>\n
He advised Maria to re-evaluate their retirement contributions, given that her husband\u2019s take-home pay is lower than expected, and to focus on aggressively paying down their debt. He also urged her to track every dollar and take full advantage of the budgeting tools she already has.<\/p>\n
Life will always come with unexpected expenses. That\u2019s why having and regularly contributing to an emergency fund is critical. It helps prevent credit card debt or other borrowing from spiraling out of control.<\/p>\n
Ramsey recommends starting with a $1,000 fund if you don\u2019t have one, then building up three to six months\u2019 worth of expenses after you\u2019ve paid off debt.<\/p>\n
If an emergency has already pushed you into debt, remember that you\u2019re still in the driver\u2019s seat. Start by reviewing everything you owe, along with your essential monthly expenses. Once you know what\u2019s left over, set a realistic monthly goal of paying off debt.<\/p>\n
Story Continues <\/p>\n
That may mean trimming discretionary spending for a while. But your long-term financial health \u2014 and peace of mind \u2014 will benefit from a few months of simpler living while you work things out.<\/p>\n
One way to build an emergency fund quickly is to take advantage of Wealthfront\u2019s cash account<\/a>.<\/p>\n With a Wealthfront Cash account, you could earn up to 4.25% APY<\/a> on your uninvested cash for your first three months (0.50% APY boost on top of the 3.75% base variable APY) provided by program banks. That\u2019s over ten times the national deposit savings rate, according to the FDIC\u2019s September report.<\/p>\n With no minimum balances or account fees, as well as 24\/7 withdrawals and free domestic wire transfers, you can ensure your funds remain accessible at all times. Plus, Wealthfront Cash account balances of up to $16 million are insured<\/a> by the FDIC.<\/p>\n Read more: Warren Buffett says you can\u2019t buy time \u2014 but landlords are finding a way. Here\u2019s how savvy real estate investors are avoiding 12 hours a month in tedious admin (for free)<\/a><\/p>\n Rachel Cruze, another co-host on The Ramsey Show, frequently talks about how high earners can still live paycheck to paycheck.<\/p>\n Cruze says it\u2019s more than just the lifestyle creep, or the idea that spending rises with income. It\u2019s also who you surround yourself with. As you climb income brackets, your social circles may create a new \u201cnormal\u201d where higher spending feels expected.<\/p>\n She also warns that \u201cdebt steals your income.\u201d Every dollar spent on interest payments is money you can\u2019t put toward savings or goals. If you assume that earning more justifies taking on more debt, Cruze urges you to think again. Pay it off, and you might be surprised how much breathing room it creates.<\/p>\n If you\u2019re looking for a way to track your spending and find more room in your budget for debt repayments, consider downloading a reliable tool like Monarch Money<\/a> so you can take charge of your money in minutes.<\/p>\n This financial management platform offers an all-in-one tool that gives you a complete view of all your accounts at once \u2014 helping you track investments, spending and budgeting, and even offers personalized advice so you can feel confident about your long-term financial planning.<\/p>\n You can also feel confident about sharing your financial data with Monarch Money \u2014 the app is protected by Plaid for secure data integration, and employs multi-factor authentication at login, so you can keep your accounts safe.<\/p>\n Download the app now for a seven-day free trial<\/a>. After that, you can get 50% off your first year with the code MONARCHVIP.<\/p>\n Finally, Ramsey and Warshaw noted that Maria and her husband didn\u2019t appear to be aligned when it came to money. If you\u2019re working to get out of debt as a couple, you need to have regular, honest conversations \u2014 not just about a plan, but about each other\u2019s financial values and attitudes.<\/p>\n Before you bring your concerns to your spouse, it can help to reflect on your own habits and mindset. That way, you\u2019ll be better equipped to have calm, productive discussions that stay focused on shared goals.<\/p>\n Cruze acknowledged that inflation is straining many budgets. For those, like Maria, who live in expensive cities, the cost of living has been unsustainable. In such cases, Cruze suggests exploring a job change or moving to a more affordable area to stretch your income further.<\/p>\n One way to find some room in a tight budget is to look at your insurance spending. Many people think of the cost of their car insurance as inevitable, and don\u2019t consider shopping around for the best deal.<\/p>\n With OfficialCarInsurance<\/a>, you can find new deals on insurance in minutes and cut down on monthly costs to as low as $29.<\/p>\n Their policy search includes trusted names like Progressive, GEICO and Allstate. To get started, fill in your information<\/a> and OfficialCarInsurance will provide a list of the top insurers in your area. You\u2019re closer than ever to maximizing your savings on your insurance.<\/p>\n