143: Growing Up as a Ramsey, Budgeting and Debt with Rachel Cruze

[INTERVIEW]

Casey: Rachel, welcome to the podcast.

Rachel: Yeah. Thanks for having me. I appreciate it.

Casey: I am excited to have you here and joining us. I’ve followed your dad, of course, for many years and now I’ve followed you for a while as well. Read a couple of your books, one of which, ‘Smart Money Smart Kids’ was very helpful with our three and five-year-old. We’ve got another one, I hear, to show up in the near future, so we’re going to need as much advice as we can possibly get when it comes to managing finances and kids, and raising kids. I’m just always learning, always observing. You had a lot of great stuff to offer, so I hope to get into some of that with you.

Rachel: Yeah, absolutely. I’m in your boat then. I have a five-year-old, a three-year-old and a six-month-old, so we’re trapped in it.

Casey: Yeah, we’re in the thick of it. Right now in the middle of a shutdown, probably doing a little bit of home schooling yourself?

Rachel: Well, mine were in preschool. She wasn’t quite in kindergarten yet, so I feel like I kind of got off the hook. I would probably be a terrible homeschool teacher, so I’m kind of glad that… We’re doing a little bit but nothing’s majorly required at this point, which I’m thankful for.

Casey: Yeah, same here. We’ve been trying but it’s been a challenge. I have a much greater appreciation for teachers now more than I used to.

Rachel: Absolutely. So many industries now, whether it’s healthcare workers or teachers. I’ve thought about teachers so many times. I’m like, “Oh, every parent now is seeing what they have to deal with on a daily.”

Casey: Exactly, and a lot of grandparents out there too. I know our grandparents have been pitching in quite a bit here over the last few weeks. It’s been pretty awesome. They keep looking for resources from us on what they can do to teach the kids. My mom was a schoolteacher, so she’s incredibly good at teaching already, but I think we’re always looking to grow. Being that you grew up with a dad that was so ingrained in the financial industry, I’m wondering, what was it like growing up with Dave?

Rachel: Yeah. I think people assume when they hear, “Oh, you’re Dave Ramsey’s daughter,” that we had mutual fund parties for our birthdays and we went to budget camp every summer. All these stereotypes come in people’s heads. Honestly, it was nothing like that. Mom and dad, they were great at teaching us how money works but it was done in such the ebb and flow of life. It was never things like sit-down seminars or money summits that we had to sit through. It was really just what real life brings and money, and they kind of just brought it into conversation. For that I’m really thankful; very, very thankful. They did a great job teaching us and also letting us make mistakes— I always say that about their parenting style— which I really appreciate. They let us learn. They were like, “Yeah, okay. If you fall down here, you’re going to learn that it hurts. If you spend that money on that thing and it breaks two days later, it’s going to hurt but you need to figure that out.” There was a lot of trial and error in our household too.

Casey: Yeah. I think that’s just kind of the way it goes. My dad was a trainer and he did a lot of interrogation, so I grew up with an interrogator as a father, so I didn’t get away with a whole lot. We all have our parents bringing some of that wisdom into the household. I wonder, what is Dave doing today now that he has grandkids. What is he doing to make sure he’s raising money smart grandkids? Is he doing anything different now than he did, say, raising you guys?

Rachel: Very different. He plays a totally different role. Dad really has gotten into the Papa Dave mindset. My parents, I feel like, at this point, they have little… The oldest grandchild is William and he’s six. Everyone’s little. They’ve totally fallen into the classic grandparent “Yeah, bring them over,” and they just give them sugar and let them stay up however late and then they hand them back to us. Yeah, I don’t think he’s feeling any way of this, “I’m going to instill all these incredible principles at this age.” He just spoils them. He really does. It’s so funny.

Casey: It’s interesting to hear that Dave’s fallen into that same boat because I have that experience with my parents. This will be validating for them.

Rachel: Oh, yeah. We had a talk, very non-confrontational. After one Christmas, probably three Christmases ago we were like, “Yeah. Dad, you have to stop buying them all these gifts.” You’re doing everything opposite than the way we talked about in Smart Money Smart Kids. I mean, not really but he laughed and said, “I just want to get it. It’s not that big of a deal.” I was like, “Yes. Now they’re going to expect all this stuff. You are being the classic grandparent right now.” They pulled back this past Christmas, so my sister and I appreciated that because we were like, “It’s not the North Pole, kids. Going to Pop and Mimi’s is not the North Pole.”

Casey: Between you and your sister and all the grandkids, are any of the kids following commission? Are they on commission at this point, or allowance?

Rachel: Yes. Amelia, our oldest, we just started implementing that and my sister’s oldest, William, he’s doing it too. Yeah. Their chore chart is up. During quarantine I really thought, “Okay, we could really buckle down and get in a good rhythm.” I’ll be honest and say, yeah, some days we’re great with it, some days we’re not. My oldest is very much— and I’m sure we learn this with kids’ personalities— but she much more is the pleaser, the doer. She’ll go and she loves to keep score and all of that. She’s right on with the commission system. She gets it, she thrives on it. Our second, who is three, we’ve not been hardcore with her at all. Caroline, she’s two-and-a-half, actually. She’ll be three in a few months. I know her personality already and I’m like, oh no, she’s going to be the tough one. She’s the one that we’re probably going to have to push her a little bit harder.

Casey: For those that don’t know commission over allowance, what does that mean? We’ve got a lot of grandparents listening. They want to implement something while they’re maybe spending more time with the kids during their quarantine. What is commission over allowance?

Rachel: Yeah. We always talk about allowance is giving kids money just because they’re there. They’re just allowed to get money, right? You just give them an allowance. A commission is you work, you get paid. You don’t work, you don’t get paid. They learn that concept very early in life that “When I do the work, what results out of that is money. What can I do with money?” They give it, save it and spend it. They treat their money in such a different way than if it was just given to them. Letting them earn it and realize that money comes from work. Money doesn’t just come from mom and dad’s back pocket. That connection you can make as early as possible is huge for kids.

We always say too, though, that there are chores that they do just because they’re part of the family. It’s not like this little unionized system, “I pick up a sock, I get 50 cents.” There are some things you do because you’re part of the family, but not all chores need to be like that. Some people do that philosophy where they say, “You’re part of the family. You’re going to just help out.” I just think you miss so many teachable moments when you don’t have some chores that you pay. Again, I think making that connection between work and money, and then them actually feeling the sacrifice they had to make to work and how they handle their money is so different when they’ve earned it.

Casey: You said, “Give, save and spend.” Our kids have jars: their save jar, their spend jar and their give jar or share jar. Do you have them allocate these dollars that they pick up in commission? Do they have to put them in certain jars in certain amounts?

Rachel: Yes. We’re not super legalistic about the amounts, but I want them to do all three things. I think that’s really important. You can make a percentage, whatever you think is best for your family on the give, save and spend. Having them do all three is really important. Some kids you’re going to find they just would give it all away, which is great. That’s a wonderful trait but they have to learn to save money eventually. They have to learn to spend wisely. Some kids they just want to save it all and hoard it and keep it all to themselves. No. You need to teach them to also give and also how to spend. Then the spenders, which was me. Still to this day, I’m definitely a natural spender. I would just spend every penny I made. If I did have zero discipline, I would just be a spender. That’s how I was as a kid. It was good for me to learn, “Okay, no. I have to have delayed gratification. I need to put some money away and I need to give some money away.” All three of those money muscles have to be built.

Casey: What are they saving for right now?

Rachel: Amelia, she loves… what’s it called? Slime. She loves all the feelings and stuff. If anything, we’ll just make an Amazon order but I’ll have her contribute some of that money.

Casey: It’s always evolving, right? I think our oldest, he’s been saving for a very long time for a bearded dragon. He recently saw a drone fly over. He decided he wants a drone now. He might be saving for the next 15 years but eventually he will get his drone, I have no doubt.

I feel like we may have had a similar trajectory in the experience we had growing up. Financially, as a kid we didn’t have a lot. My parents struggled and worked very, very hard. They worked all the time. Mom was one of the best teachers in the state and my dad was a business owner who owned several different businesses while I was growing up. 40 hours a week would have been part time. I got to see how hard they worked and what they worked for. I got to see that firsthand. I think that’s what led to a lot of my work ethic is watching them work as hard as they did. Now we’ve got a lot of families that are listening in. I’ve got a lot of friends that are business owners that they had that experience as a kid. They saw that and that’s why they work so hard.

Now we’re in this next generation where now our children are going to be growing up in a wealthier environment, and maybe not even experiencing… I’m not working like I used to. I’m not working 80 hours a week. Now I do want to be there for the kids. I’m going to be there for every game. I’m going to be there in the morning till 9:00. I’m going to be there to pick them up after school, be there every night. I think we all maybe have a little fear around “What are they going to miss out on that I had? Are they going to have that same work ethic that I had when I was a kid?” I don’t know exactly the experience you had growing up, if it was exactly along those lines. What are your thoughts on raising money smart kids, responsible kids, hardworking kids in a wealthy environment?

Rachel: That’s a great question. If you find the answer, let me know. I feel like it’s a journey. This is a subject my husband and I talk about, seriously, I feel like a lot. I do have a lot of fear in that. My parents filed bankruptcy the year I was born. My whole life, over 18 years of being home was kind of this trajectory of them coming out of that. Like you said, I saw the sacrifice. I saw the things that we couldn’t have. I think it’s big on the parents. I always say more is caught than taught. Your kids are watching you. I think it’s good for even my husband and I to say no to things that we want right now and to tell them, “Yeah, we’re not buying that right now. We’re going to save up over a few months.” Just showing a little bit of putting that stuff in practice and teaching that. We don’t use debt, and so if we don’t have the money, we’re not buying it. I think them seeing us live it out is huge.

The giving portion of this, this is something that we’re able to do a lot. I think bringing them in on that gives them this holistic view that money, it’s tangible and it’s a tool to be used to create a life you love. If that life is just full of a bunch of stuff, you’re not going to have joy. You’ll have happiness for about two seconds, it feels like, and then you’re onto the next thing because it never fulfills you. I think showing them the importance of the value of people over the value of stuff. That it’s okay to have nice stuff, but don’t let your nice stuff have you. I think when you are in a wealthier environment you have the ability just to buy stuff.

I even found myself in this habit of… Amelia, my oldest, she was into… she calls them ‘treasures’. She loves these little treasures. It’s jewels, it’s little trinkets, it’s jewelry, anything. I could go on Amazon and I could buy 15 little charm bracelets for, like, $5.99, $6 or something. I’m like, “Oh yeah, that would make her day. I could do that.” I had to pull myself back like, “Why am I doing that? She doesn’t need that stuff.” I think as a parent, I can get lazy and just be like, “Oh yeah, it’s not that big of a deal. It’s not that big of a drop into our bucket. We won’t even notice. It’s fine, just get it.” That can start to numb and that’s what she starts to expect. I have to find myself as a parent to put my stopgaps up and my boundaries. I think that’s really important.

Winston and I, we just talked about this a few months ago because he has mowed our yard forever. We’ve been married 10 years. We’ve never had a lawn service. He’s done it all because he grew up mowing lawns. That’s like his thing. He’s like, “I mow the yard.” We moved to a new house in November and he has a zero-turn lawnmower, the whole thing. He was like, “Rachel, I really want to sell the lawnmower.” We can now afford a lawn service, but he struggled with it a lot because it’s like, “Are my kids never going to grow up seeing me mow the lawn? What does that mean? Am I able to teach them character traits, work ethic in other ways besides just yardwork on Saturdays?” It was this huge moment of like, “Okay, do we sell it?” If we do, he doesn’t have to mow on Sundays. He can hang out with us in the afternoons after church versus having to go in the yard and mow the yard. It’s this tradeoff of time against what are your kids seeing or not seeing. We wrestle with it all the time. We really do. I think it’s a lot of trial and error. I think the character part of who we are as parents, who we are towards them, what we value in life comes across so strongly in our kids’ lives that… It’s that whole ‘more is caught than taught.’

Casey: Yeah, I like that. More is caught than taught. That hour that he would have been working solo, now we can work as a family, right? We can all do something as a family and do work. Maybe it’s volunteering, maybe it’s some type of activity or action. One of the things I wanted to get into was leaving a legacy and not destroying the next generation with those funds. Money can be a very bad thing if left to the wrong individuals. I really want to get into your new book, “Love Your Life, Not Theirs.” I think what you just said really says what you need to do. You need to just teach. You need to teach by example. If you’re just giving all the time then, yeah, the legacy probably isn’t going to work out the way you want it to get.

Rachel: Yeah, that’s exactly right. I think that it’s huge to have those conversations and not be scared of it with your kids. I think the value system of the family is one of the most important parts to work on, whether you have money or not. I think that that’s [important? 00:14:52]. Like you said, money is a magnifying glass. It makes you more of what you already are. If I raise kids who understand what work is, they value work, they value saving, they value giving, they value spending wisely, those things, and then money is handed to them out of that legacy then that’s what’s magnified in them. It’s who they are. I think that’s really important. If you raise a bunch of spoiled brats and give them a lot of money, it’s very dangerous. It’s very, very dangerous when they’re 22 and they get some money. I think it is really, really important.

We’re a family of faith, and so really looking at this as that God owns it all. That’s a part of our value system, that we are managing his blessings for us. When you’re not in the owner’s seat, if you will, and you’re more on the manager side, you look at money differently. That’s one thing that we teach our kids a lot about.

Casey: Yeah. One of my friends often says it’s not about learning something new. It’s about remembering something true. What you said there is something that I hope that the listener is really capturing and remembering. I think about this all the time. Money doesn’t change people. People have that twisted. Money doesn’t change people. It makes you more of what you already are. That’s something that we have to remember is true. Raise those kids right and then you won’t have to worry about leaving a negative legacy because it’s going to make them even better than where they already are in life.

Let’s go ahead and segue into your new book. I want to make sure we get on this. “Love Your Life, Not Theirs”. What does that mean exactly?

Rachel: Learn to love the life that you have, and stop comparing your life to everyone else’s. We are in such a comparison-driven culture. Even during quarantine I feel like people are comparing their life to everyone else’s, even on [Instagram? 00:16:38] during quarantine. What are we doing?

Casey: “Oh, they’ve got a pool in the backyard.”

Rachel: That’s it. It’s so wild. I think learning to put the blinders on and focusing on your life and your money. Quit looking at everyone else. I think that comparison, it doesn’t just steal your joy but it steals your paycheck because you keep living this life and spending this money thinking that “Okay, this stuff is just going to satisfy me if I can just look like them, if I can have what they have. They look perfect. They look happy. Then that’ll be my life.” It’s a lie. It is a total lie and it’s something that’s damaging this generation.

Casey: You have me posting a little bit differently these days. This is the perfect time for this conversation. Everybody is posting more. Everybody is on social media more. I think you’re right. We need to cut back on this “#blessed” piece.

Rachel: That’s it, yes. I talk about that, #blessed versus truly being blessed. It’s hard though because you’re comparing your life and that #blessed picture because it’s this beautiful sunset, this beautiful yard and everyone looks happy. It’s like they’re doing it so much better than we are. You can find yourself just comparing your life. It’s hard because that is just a snapshot, a literal snapshot of this one moment in this one time with a beautiful filter. You have no clue what’s going on behind the scenes. You don’t know the fights that they’re in in their marriage. You don’t know the money struggles that they’re having. You don’t know the entire picture, so you can’t compare yourself to make believe because that’s what it ends up being.

Casey: It’s easy to tell, I guess, that comparison can be a negative thing. There’s going to be a lot of examples of comparisons being negative, but I feel like there’s also some growth that can be experienced out of the appropriate comparison. When can we find positivity or value in comparison, or leverage it to our advantage?

Rachel: Sure. I think comparison turns bad when it becomes envious, when you have this envious spirit that “Oh, I want what they have but I can’t have it. I want them to have it.” That’s the rotting side of it. The positive is when it really forces you to maybe be better in who you are and achieve something great. You see someone on a great vacation and instead of saying, “I want that for my life and I can’t have that,” and it turns negative, you can spin it to that positive and say, “Wow. Okay, if we work and we save for X amount of months, we could do that. We could go on a trip like that. Let’s strive for that.” When it makes you want to achieve something great for the good of who you are, I think that it can be a positive in that way.

Casey: I’ve got to make a transition here because I know we only have a short period of time. We have to get into some of the basic Ramsey stuff, right? If we don’t talk about debt and budgeting with someone of the Ramsey family then we’ve completely lost out. If we’re discussing budgeting… A lot of the people that are tuning in right now, they are first time in retirement or they’re just getting ready to make a transition into retirement. Believe it or not, many of the families we work with, they’ve never budgeted. They’ve made a good living for many years and they haven’t had to budget. Now they’re stepping into retirement and they go, “Oh, you mean I have a fixed income now that I actually have to build a budget around? Where do I even begin?” What would be your guidance to someone that’s making that transition into retirement, building the budget for the first time?

Rachel: For sure, yeah. I think it’s really important to just be intentional with where your money is going so you just don’t blow through it and you don’t look up in a year and be like, “Wow, where did all that money go?” but you are really purposeful. For those people that are entering retirement, this is, they say, the golden years. This is the best years of your life and you want to make the best of it. You don’t want to just waste it away, and so being very intentional with the money. I always teach a zero-based budget, and that’s your income coming in minus all of your expenses equals zero. Every dollar is assigned to a category. The people that are more strict, that I am more hardcore on the budgets are the people that are getting out of debt or they’re saving up for an emergency fund. You have got to be intentional.

Obviously, the more money you have… I’m not saying that you don’t need to budget. You for sure need to budget if you do have some wealth. You need to just be purposeful but you can have a little bit more grace, a little bit more slack on it. You don’t have to have your foot completely on the accelerator but, again, you want to be purposeful and intentional with where your money is going. John Maxwell always says to tell your money what to do instead of wonder where it went. That’s what the budget is. It’s just being very specific with where that money is going, and that way you can enjoy it. Instead of buying something in retirement and thinking, “Was that okay? Was that smart? Can we do that?” Yeah, if it’s in the budget, you’ve planned it out, you see it, it’s like, yeah, you can do it. There’s so much freedom.

I think a lot of people think of a budget as being cheap or restrictive but it’s not. It’s the opposite. A budget doesn’t limit your freedom; a budget gives you freedom. It gives you that permission to spend money on things that you want and you prioritize without guilt, without shame, without question. There is such a freedom in living within those boundaries and those limits.

Casey: Many times we’ll see a family that comes in with this scratchpad. They’ve maybe taken a sheet of paper and said, “Well, this is how much I need for gas. We’ve looked over the last six months. This is how much we’ve spent on groceries, et cetera.” I find 99% of the time something is vastly overlooked. Something they’ve actually been buying on a regular basis has been overlooked completely. How could we better leverage technology, I guess, to make sure that we don’t overlook those things that we’ve actually been spending on on a regular basis?

Rachel: Yeah, that’s a great question. I think even just going on your bank online and looking at your transactions. Going through and saying, “Okay, what things have been consistent over the last few months?” If you’re building your budget for the first time you’ve got to start somewhere. Go back and look at those transactions online and say, “Okay, this is what this is looking like. This has been my habits. This has been consistent,” and then being able to use it.

Then I would use, yeah, a budgeting app. We have one called EveryDollar. It makes it so easy. It’s on your phone. It goes with you. You can even connect it to your bank so that all your transactions come in, and you can just drag and drop them. It makes it so easy and it makes you in control. It is so, so important that you’re aiming for something, and that’s what your budget is. Using that technology to help leverage, I think, the fast connection point makes it easy and it makes it more doable versus having even just a sheet of paper. You can do a budget on a sheet of paper, but I like the idea of it being on your phone because it’s just with you all the time.

Casey: Sure, yeah. I think we need to do a better job leveraging the technologies that are out there. I remember using iBank when it first came out. I think that was probably 12 years ago or maybe 13-14 years ago when iBank came out. I just thought it was the most amazing thing. It automatically categorizes all my transactions. Now it’s incredibly accurate the tools that are out there today for us to use to really nail down our budget.

Now that we’ve covered budgeting we have to get to debt. I feel like these are the two key issues when it comes to Ramsey Solutions. I already largely understand we have to pay off high-interest debt. We need to get rid of debt. Most retirees want to be rid of debt by the time they get into retirement. A question that I’m often asked as part of the network is “Is debt always bad?” Isn’t there some good debt that we could carry? Investment debt, for instance. Some might say, “I can get a rental property at 3% and yield 15%.” Is there good debt? I don’t know that I’ve ever heard anybody from Ramsey Solutions say, “Yeah, there’s some good debt.”

Rachel: I know. Yeah, the answer is no. The one type of debt we are okay with is just your primary mortgage and doing that within terms that we set up and say put a 10% down, 15- year fixed rates and making sure it’s no more than 25% of your take-home pay. Everything else we promote no debt. It’s an extreme viewpoint but the reason we say this is because not only does it just lower your risk, when you own everything your mind, your spirit, your emotions, financially you’re in a completely different mindset. When you don’t owe anyone anything, you’re not having to keep up and you’re not trying to play this math game of interest rates and trying to get a better deal here or there. Listen, when you own it all you sleep better at night. You’re not stressed. So much is taken off your plate when you know, “I’m completely in control. When my paycheck comes in or that investment check comes in at retirement, that is mine and I get to decide to do whatever I want with it.”

I’ve found there’s been a generation strapped to debt. In Proverbs it says, “The borrower is slave to the lender.” That is so true. You are a slave, financially speaking, to whoever you owe money to. It changes so much of your perspective in your life, and so there is such freedom when you don’t have debt. We push the debt-free agenda really hard. It’s a great life. I always tell people, “Listen, get out of debt. If you absolutely hate it, you can easily get back in. If that’s what you want to do, I promise you can.”

Casey: I like that.

Rachel: Yeah, there is such freedom when you don’t owe anyone anything. It’s a powerful thing to put yourself in the driver’s seat of your life and your money.

Casey: We have so many families who we’ll work with that they’ve got $50,000 left on the mortgage. The interest rate is 3.5%. “Should I pay it off? It makes more sense to keep my money invested.” How are you going to sleep at night? It doesn’t matter. Financially, it really doesn’t matter whether you pay it off or not. You’re going to be perfectly fine, so wouldn’t you feel better and get a bigger return on life over the alternative? I would kind of equate this to return on life over return on investment. Don’t take more risk than you need to in retirement. That’s the same thing as paying off your debt even if you can find a financial reason to leverage it to get a bigger rate of return. That’s just not what life’s all about. Life isn’t about money.

Let’s talk about our last couple of philosophical questions, if we have some time. This is a good segue into this. What does retirement mean to you?

Rachel: Chris Hogan, who’s here at Ramsey Solutions, he speaks a lot on retirement. His phrase which I love, he says that retirement isn’t an age, it’s a number. Figuring out that number you need to retire. I love that because it just says, wow… Yeah, people think of retirement as this specific age or this time in life. It could be whenever you want it to be. For me, it is freeing up and having the ultimate choice over your life of what you want to do, what you can do, what you can enjoy. The freedom that comes with that, I think, is so beautiful.

Casey: That’s freedom is what I hear you say. It’s the freedom to do what you… It’s hard to have a whole lot of freedom if you’re saddled with a whole lot of debt. If you had that freedom, or even just today in your own life, how does Rachel define meaning and purpose?

Rachel: Meaning and purpose? Well, it’s a higher calling for me. When I hear “What is meaning for you or purpose in your life?” I think it really is the giftings, the anointing, what you’re called to do in life, pushing for that. I think of a higher calling, if you will, when I hear those kinds of words.

Casey: Rachel, thank you so much for joining us here today. I know that we’ve got an awesome book out there. We’ve got “Love Your Life, Not Theirs”, there’s “Smart Money Smart Kids”. You’ve just got so many different resources that people should be diving into. We’ve put our whole stuff through Financial Peace University and it’s been a great resource for them.

Rachel: We actually have a 14-day free trial of Financial Peace University going on right now, so you can go to daveramsey.com/hope. We’re allowing anyone to go through it for 14 days completely free. It’s kind of our gift to America right now to be like, “While you’re in quarantine, binge watch some videos. Learn how your money works.” You can check that out at daveramsey.com/hope. It’s awesome that they did that.

Casey: Yeah. That would be the best resource that we’d give away here today. I’d say with all the stuff that you have going on out there, which one do we choose first? That’s the obvious choice. That is a huge value. Thank you so much for offering that. You’re making a huge impact in the world. Rachel, thank you for joining us here.

Rachel: Yes. Thanks for having me on. I appreciate it.

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