Spending problem
A whopping 71% of U.S. adults believe earning more money would solve most of their problems, according to a 2023 survey by Empower. Ramsey admits he had a similar mindset in the past.
“I went through a period of time in my life where I thought I could outearn my stupidity, my lack of organization, my lack of detail,” he said. “You can't.”
Bill’s situation illustrates why boosted earnings is only part of the battle.
He told Ramsey the couple spends $12,000 a month on two mortgages for their primary residence and an investment property, while $8,000 to $10,000 goes to charity. The couple also leases a vehicle for $750 a month.
Even for a wealthy household, this level of spending seems excessive. But what bothered Ramsey was how imprecise Bill seemed to be with his figures, which he attributed to the lack of a detailed budget.
“You’re kind of throwing a bale of dollars over the fence and then coming back to see what’s left later,” Ramsey said.
The host recommended Bill sit down with his wife and hammer out a budget that accounts for every dollar coming in and being spent. By doing so they can identify ways to tighten up their finances and set a savings goal. Fortunately, the couple has some easy targets to eliminate in their budget and can start saving right away.
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Learn MoreEasy targets
According to data from Bank of America, around 20% of households that earn more than $150,000 were living paycheck to paycheck in 2024. The bank suggested one reason for this may have been the purchase of more expensive homes, resulting in large mortgage payments and housing costs. However, Bill and his wife seem to be spending just as much on their mortgages as they are on easily avoidable expenses.
For instance, the couple leases one of their vehicles, which Ramsey believes is unnecessary.
“Why do you have a car payment when you make $600,000 a year?” he asked, arguing the couple could have avoided this monthly drain by purchasing the vehicle with cash.
Another easy target is their charitable donations. Nearly one-third of the household’s monthly expenses are ear-marked for charities.
“Your giving is pretty heavy,” Ramsey told Bill. “I'm not against generosity in any form. I tell folks to do it all the time. But if you're doing zero investing and you're giving 20%, you may need to adjust that, at least temporarily.”
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