Transcript of Building Wealth Means Defining Needs vs. Wants

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studio, this is The Ramsey Show. I'm Dave Ramsey, your host. Jade Washaw, Ramsey personality, #1 bestselling author, is my co-host today. Jeff is in Tupelo, Mississippi. Hi, Jeff, how are you?

I'm doing well, how about yourself, Dave?

Better than I deserve. What's up?

Yes, sir, so the question that I have is, is it okay for me to pause my debt snowball to buy a more reliable, bigger vehicle for my growing family?

Tell us more about it. Tell us about the vehicle that you have now and tell us about your growing family.

Yes, ma'am. So the vehicle that I have now, it is a 5-seat SUV, 2015 Volkswagen. I inherited it from my mom. And currently we have 2 kids and my wife and I are expecting and she's due in January. And we just are really going to need something that has third row seating.

Okay. And everybody's in car seats? The other two are in car seats?

No, no, no, no. One's in a car seat and then the other, he's, uh, 9 years old.

Okay. Uh, well, how much debt do you have and how much have you paid off so far? And what do you wanna spend? I know that's a lot of questions, but I wanna know.

Yes, yes, I, I understand. Obviously, um, I have a total of $16,000 consumer debt. Uh, $8,000, uh, a little over $8,000 of it is in a personal loan and then the rest are credit cards. Um, my mortgage is paid off, so I don't have any rent or any, uh, or any, you know, house payments or nothing like that.

That's good.

Uh-huh. What's your household income?

So it varies. Uh, I do get about $4,100 a month from VA disability benefits and GI education benefits. And then on top of that, uh, my wife and I, we run our own, um, HVAC, electrical, and plumbing company. And I usually get anywhere, it goes from like $2,000 a month to upwards of, you know, $8,000 a month. It just drastically varies.

Okay. So, you know, I get it. You're looking ahead and you're feeling the stress of having another child coming.

So what's the Volkswagen worth?

Private party, maybe about $7,000.

Just sell it and buy a $7,000 fan.

That's what I'm thinking.

That doesn't require pausing the Baby Steps.

Okay. Yeah, what we were looking at, I know that—

You were looking at upgrading.

My wife is, yes, is more my wife wants to get an upgrade. Yeah. What we were looking at was something in maybe like the $10,000 to $12,000 range that's a little bit lower mileage, a little newer.

I'll let you argue with the pregnant woman. I'm not going to.

Absolutely.

But no, I wouldn't do that.

Okay.

That's a pregnant woman talking that she wants a new car for a new baby. And no, you need to get yourself out of debt. You have a $7,000 car. If you want to trade for a different $7,000 car that has third-row seating, well, you have now addressed the need, not the want. The other is a want.

Okay.

I want a $35,000 Honda Odyssey. But I'm broke.

Makes perfect sense.

Yeah.

Um, okay, and then I guess the, the other thing also, I, so I'm, I've only been listening for about a month and, and I love it, and y'all seriously lit a fire under me to, to get debt-free.

Um, I want you to talk, I want you to talk with your wife more about why you're excited about that, not what. "Because right now, all she's seeing is all these new rules and all this new enthusiasm from you, and she's not sharing in the vision of why we're doing this. We have 3 babies, and I want to change our family tree so that we're going to live like no one else, so that we can live like no one else and drive anything we want to drive and take these kids on trips and pay for these kids' education and not be worried about bills." And that's why— Okay. I'm so enthused about all this, Mom. And right now she's starting to see, you're gonna turn my name into a cuss word in your house if you're not careful.

Oh, I think it's already become that.

Ah, I read your mail. And now I said she can't buy a car, so I'm definitely Satan incarnate.

Oh goodness. Yeah, one of the other challenges that I'm running into is I find it's very hard to budget. I have the EveryDollar app. And all that, but just with the nature of my business, just with the income fluctuating so much, and then also like how much I gotta spend on materials for my business, it's very hard to—

Your business should be a separate account.

Right.

You should not have your materials for your business in your EveryDollar budget.

Okay.

Your business needs to be running on its own budget, separate checking account, All of the revenue from your business goes into that account. Only expenses for the business, materials, come out of that, and then whatever's left in that account by definition is profit. This is cash basis accounting.

And what I'd also be doing is I'd be working to make, to basically get a month ahead and make a peaks and valleys account to where if you know, I think you said it was anywhere between $2,000 and $8,000 that you can bring in. Did I hear that right?

Yes.

Okay, so let's pretend it takes $4,000 to run your household. You need to make sure that at all times you have $4,000 set aside. So on the months that you do really well and make $8,000, that's the time to fund that account. Make sure it's always there so that if you have a month where you only make $2,000, you can pull over from that account and make sure that you're balancing your budget.

Yeah.

Does that make sense?

But I, I appreciate and I'm honored by your enthusiasm for what we teach. Because it's gonna change your life. I'm happy for you guys on that. But you need to stop, you've done a classic husband move, and it's a bonehead move. And that is you got all enthused and you start talking about what instead of why. And what is, I don't think we can afford a car, we can't buy a car, we're in the baby steps. And they're like, what's the freaking baby steps? Why am I in baby steps? I don't wanna baby step, I want a van. And so— Yeah. I got— I'm pregnant. What's wrong with you? And this is what's going through her head because she's not caught up with you on why this is— because this is going to make you all wealthy, because this is going to get you away from the stress of money, because it's going to get you on the same page. Oh, by the way. And so what I would start with if I were you is an apology. Honey, I'm sorry. I got way ahead in my enthusiasm because I'm really excited about what this can do for our family.

But I want to stop. And would you give me a few moments and let me go back and tell you why I've gotten so excited? Because I can see where we're going. I can feel it. And I want you to feel that with me. And then it's we are making the decision to buy a car that is the same price, but that gives us the functionality that we need as the Volkswagen, so that— So that— we can clear this debt because your debt, getting rid of your debt frees up your most powerful wealth-building tool, which is your income, so that you can become wealthy, so that there's margin in your life and generosity in your life and these kids' lives are permanently changed and you never again worry about having a third row seat. [LAUGHTER] You really won't. I mean, this is the last time you'll worry about it if y'all will play through. And I don't worry about having a third row seat. If I want one, I just go get one. And you don't either. You and Sam, if you need something, you just— you got a nice car the other day.

I did.

You know, and that's because you paid a price to get there.

Paid the price to win. That's right.

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Alan is in Miami. Hey, Alan, how are you? Good, good.

Hey Dave, how are you? I'm doing well, thank you.

Good.

How can we help?

Yeah, I had a quick question. Currently I'm like 59 years old and I work in the service industry as a server. Um, so my money fluctuates all the time. Um, and I'm worried about my retirement, that I'm going to be living on the street and, you know, pushing a lot of a shopping basket around. So how can I work on saving money so that doesn't happen? I'm currently in BS2. So.

Good. All right. So you're paying off some debt. How much debt have you got?

Enough. Um, I've got like $3,800 in credit card debt.

Mm-hmm.

And then I have, and then I have my car loan.

How much do you owe on your car?

This is $18,000.

$18,000. All right. What do you make a year?

$50K a year.

Okay. All right. And how quick do you think you're gonna have these two things paid off?

Um, the, well, the car loan is set to be paid off in 3 years. And then the debt, I'm looking to put up a plan together to pay off the credit card debt by the end of the year.

Okay. Um, I want to have a little more urgency on both of those.

Okay.

Crank your lifestyle down and your hours up. Can you pick up more hours and work more?

I can, but not until the holiday season, 'cause right now it's the summer season, so the hours are cut.

And what can you do with those hours right now to earn some money then?

I'm gonna probably maybe get another job, DoorDash.

There you go.

Delivery.

There we go, something, I don't care what it is.

Are there other restaurants that will pay you, that you can earn more? Have you listened around town? Are there better spots for you? Where your base income can be higher?

I've checked around town, but basically because it's a seasonal and we're in Florida, everybody's kind of pretty much on the same boat, at least where I am.

Are you on the beach?

No, I'm not. I'm in a downtown center.

Mm-hmm.

Okay. I, I'd be looking around. I'd wanna know if I, if I can get in a restaurant that's right on the beach in a, in a high-end area where people are really high tipping, it's high dollar, all the plates, you know what I'm saying? I'd be trying to really get into one of those restaurants. I don't know where you're at now, But I agree with Dave, side hustling is going to help you a lot, but I would really be interested in getting your base income up because you're gonna have to be at this for a while. And I'm worried that having a side hustle and this job for the long haul, you might drop the side hustle and you might give up and I don't want that. So getting that core income up is gonna be a really, really big deal for you.

And, but I think your ultimate, You have a skill. At 59, this is not, you know, you didn't just start waiting tables last week. You know how to do what you do. You're a pro, I assume.

Yes.

Okay, so I would apply that skill as my second and third and fourth job and my new core job. And how can I use that skill to make the most possible money in the shortest period of time? And that's what I'm gonna do. I got my hours cut, it's not really an option. You got $18,000 cars gotta get paid off. Off, and that's standing between you and starting to really seriously build retirement to stay away from the shopping cart that you're worried about.

Do you have any money saved as of now?

I have $4K saved.

$4,000, okay.

I'd pay off the credit card today.

Okay.

Cut it up. Is it cut up?

I don't use them.

They're not cut up.

They're in the freezer.

Get them out and cut them up. Destroy them and close the accounts today. And pay them all off and go get 6 serving jobs and work like a maniac and get this car paid off. And as soon as that car is paid off, I'd like to have it paid off by Christmas.

Absolutely.

You're gonna be really tired, but you're not gonna be so broke.

Are you renting?

Yes.

Okay, do you have a roommate?

Yes.

Okay, that's good. Oh boy.

Okay, so all we're doing here is doing everything we can to cut your costs and increase your income and squeeze the margin out of your your budget, as much as we can, and throw it at that car. Because when you don't have a car payment, you don't have a credit card, and we're living on a written game plan, and then you get in attack mode with every dollar you can squeeze out, now we can talk about, okay, how much can we set aside? Let's set aside $2,000 a month. That's $24,000 a year. What's that gonna turn into by the time I'm 65?

Yeah.

Okay, that's $125,000 plus growth. So you're probably gonna have $200,000 if you do that. But you're gonna be saving $2,000 a month because you don't have a car payment, and you're you're living on a detailed plan, and you've increased your income, and you don't have a credit card. And when you start doing that, I think you can get, you know, 65, 67, somewhere in there, you're gonna have a pretty tolerable nest egg, a long way from shopping cart. What'd you get?

I think so. He said he's 59 years old. If he can start getting a side hustle, getting that income up, if you can put away, find a way to scratch $2,000 away, by 72, you could have $687,000. And so it's very doable.

Yeah, so if we're half wrong, you've still got $300,000 and you're nowhere near a shopping cart and homeless and all that. So, but you're gonna have to have some urgency about this that just turns up the heat and you're just this stellar singular focus on this thing. And if you wanna know how Jade calculated that, it's the Ramsey calculator at ramseysolutions.com, the retirement calculator. You can put in any numbers you want. If you don't like the 72 number, put in a 67. You'll probably get about $300K, which is what I did a minute ago in my head. I didn't use the calculator.

I put an 11% rate of return, which is a fair—

In good mutual funds.

Yeah.

Yeah, in good mutual funds, in your 401(k)s, 401(k)s, if you don't have one, in your Roth IRAs, and sit down with a SmartVestor Pro after you get rid of this debt, and then say, "I've got to catch up. I'm in a panic. I'm trying to stay away from the shopping cart. My goal is to shopping—

no shopping carts." Yeah, and for those of you listening, we'll drop the link to that calculator in the show notes, but I think Alan, Alan just painted the stakes for anybody listening beautifully. We are always talking to people with a level of urgency. We're always pushing people to do it now, do it today, be intense, get it done because you don't wanna be 59 calling in this show with $0 saved. That is what awaits if you don't move and start action today.

Yeah, yeah. So I mean, those of you that are, 22 that are listening, this is your cautionary tale.

Yeah.

And so you don't want to have to be pouring in like this. And if you just start setting aside $100 a month right now, you're gonna be multimillionaire if you're 22.

Yeah, do your work early.

But when you're 59, $2,000 a month's gonna be your minimum to get your nest egg built up, dude. And so that means you're gonna have to increase your income, decrease your outgo, and have a lot of focus on money. You've not been real focused on money in your life, and now money is requiring that you focus on it. It's not giving you a choice anymore, and that's what you're facing. Open phones at 888-825-5225. Kevin is in New York City. Hi, Kevin, how are you?

Hello, Dave, how are you?

Great, man. How can we help?

Thank you for taking my call. It's a very heavy question, but, and a lot behind it, but to make it simple, I'm a lawyer. A month ago, I left my law firm job to start my own law law firm, and then last week I got an in-house offer, and now I'm debating between two options, whether to kick the can down the road and give up my firm that I started, or to go in-house and take that stability.

So what's the new offer? How much?

$150,000.

Okay. And what are you projecting you're going to make on your own?

Uh, so it's only been a month and doing a lot of business development, but in the first month I made about $7,000, $8,000 with a few in the pipeline. But obviously some months will be up, some months will be down.

Obviously. But I mean, how old are you?

I'm 28.

Okay.

And how long have you been practicing law?

Uh, 3 years at this point.

Okay.

In your mind, what's the advantage of the in-house offer? Is it just, I know no matter what I'm making $150K, or is there upside? Down the line?

So—

That you don't think you can accomplish your own, on your own.

Yes. So there's no bonus. There is an equity component that they're giving. I'm not sure exactly how much that is. They won't disclose that. But really the stability. I have student loan debt. That's really my only debt. And a little bit family, about $10,000 to family, but they're not pushing it.

Are you single?

I am, and my expenses are the lowest they'll ever be, so that's—

What do you want to do?

A reason.

What do you want to do?

If I was told in a year from now the law firm would be successful, I would just keep doing it, but— Then do it.

Obviously, this is not— Then do it. Then do it. Working for someone else and calling that stability is an illusion. You're only as stable as your ability to get up, leave the cave, kill something, and drag it home. If you got this $150 offer, you can get another one a year from now if you fail. Go get her done, baby. Get her done.

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Matt is in Raleigh. Hi, Matt. How are you?

Good. How are you, Dave?

Better than I deserve. What's up?

Uh, so me and my wife are kind of trying to decide, we're about to sell our house here at the end of the month. Uh, my wife has some student loans, so we're going to use some of the proceeds to pay off her student loans. Homes. And the biggest question that we're kind of going back and forth on is what to do with the rest.

I have a— Are you buying another home?

So we're selling our house. We are moving with the military. And we're actually going to be— where we're moving to, it's really expensive. So we're actually going to be living on military housing. So we won't have to buy a house. The only thing that's required is buying renter's insurance.

Mm-hmm. Okay, so how much are you gonna take from the sale of the house total?

We're roughly like $38,000, $40,000. And then my wife's student loans is roughly $17,000.

Okay. How much is in your emergency fund?

So I, in my emergency fund, I have about $3,000. And then I also have a high-yield savings account that has $21,000.

Mm-hmm. And how much debt do you have?

Uh, once we pay off our student loans, we'll have zero debt. Okay. And obviously sell the house, we would have absolutely zero debt.

Okay.

Okay. So would you call that a fully funded— that's a fully funded emergency fund for you today. So I'd probably take, take the money, I'd park it in a high yield savings account. How long do you think that you're going to be in this next military assignment? Do you have any indication?

Roughly 2 to 3 years.

Okay, what does she want to do with that money that's left over after her student loan is paid?

So she wants to put it into a high-yield savings account because she's— she doesn't have a job lined up just yet, and she kind of wants to use it as a rainy day fund. And I've explained to her that we kind of already have that.

So she wants to increase from $21,000 to $38,000 on her rainy day fund until she gets a job. After she gets a job, What does she want to do with it?

I have no idea. We've been just very frugal with our money. I— right now we save roughly 35% of our paychecks.

My—

I told her—

Where's that going?

It's going in— we have it kind of broken up. Some of it is going into my personal Roth IRA. Some is going into a brokerage account. Some is going into a custodial brokerage account for my daughter, and then some is going into a high-yield savings account.

Okay.

And so, how much is in the brokerage account?

The brokerage account has about $2,000. Okay.

What's that for?

Just as a way to get in the stock market, kind of separate my funds. Get better yields from it because my high yield right now is, I think, only getting like 3.25% back.

All right. So I think that you have a— I like your thoughtfulness on trying to do the best you can with this money. I actually think you're doing too much, and I think you can simplify it back a little bit. You've got what I would call a fully funded emergency fund for now. The next step in the process is what we call Baby Step 4. Which is where you're investing 15% of your gross income, and you're investing it into growth stock mutual funds.

And that would be, you know, your TSP Roth C plan, and it would be your personal Roth IRAs, the two of you. And when those two get to 15%, beyond that, what I would be doing is using your brokerage account to put good mutual funds and start saving for your next house. Call it the house fund.

Okay. Would you— so in my TSP, I do have part of that, 'cause the match is going traditional. Mm-hmm.

Always is.

And I have about $40,000. Yeah, I have about $40,000 of that that's traditional.

Yeah.

Would you suggest using some of the house proceeds to convert that into a Roth?

No.

'Cause that's kind of where—

Not today.

Not today. You're too young. I mean, you'll get to that. By the time you get to it, you'll have a paid-for house, and it may be not $40,000, it might be $140,000, and you're gonna pay taxes on all that when you move it over to Roth. But I wouldn't do that today. Yeah, you spend a lot of time nerding out on all these plans, and you've really got a— and you've done a great job, by the way, because you're nerding out on all of it. You know it. Yeah. You're— when we ask you what's going on, you know exactly what you're doing, and I can hear why you're doing every bit of it. That's the only one I didn't understand was the little brokerage account, and now I do. It makes sense. So I'm gonna rename that brokerage account House Fund, and I'm gonna dump this money that we're talking about into that House Fund as either now or as soon as Mom gets her new job, one of the two. And then I'm just gonna all overage above 15%, no more than 15% of your income going into retirement, all overage above that from this point forward goes into that House Fund.

Mm-hmm.

And then when you do, either retire from the military or you land in a location where you're going to be a while and it's an affordable housing market and you're going to be there and you make some money on it, then you write a check and pay cash for a house at that point.

Love that.

And that's what we're aiming towards there. And I do that before I worry about converting the $40,000 traditional into Roth. And because that's your match over on the TSP. Make sure all your TSPs in a C right now. The other stuff is sucking wind, it's just horrible. All right, Chris is with us. Chris is in Fort Worth. Hi Chris, how are you?

Hey, I'm doing well, how are you?

Good, how can we help?

I'm not really sure, I have a couple questions. So I have been in, I used to be in the corporate world, tech world, did that whole thing, and went and started selling roofs when I was like 28, 29. Been doing it. I'm 36 now. Started my own company for multiple reasons. Now that I actually know everything, I felt comfortable doing it. Went from, on average, making about $160,000 to $200,000 a year to, I think this year, we could do around $500,000 to $600,000. Way to go.

Profit or growth?

Thank you so much. Profit.

Wow. You're killing it. Way to go.

Yeah, yeah. We're very blessed. And we actually just became obedient to the Lord with our money very seriously as soon as we started our company, and he's taken care of us. So I guess my question is this. So I let a ton of IRS debt rack up. I didn't know what I was doing. I was a 1099. All of that is about to be paid off completely.

Good.

And we have about, yeah, it's gonna be an amazing feeling. My wife is an angel and kind of helped me become disciplined around money, 'cause I was extremely, I'm an extremist. I kind of just— Well, you know how to sell, man.

—trying to outsell your stupidity.

Yeah. Hey man, I could not agree with that statement more. Literally. And if it wasn't for my wife, I'd probably be living in an apartment.

Yeah, you're doing great.

So—

Proud of you.

Thank you. So, yeah, thank you so much. So we own a home. We owe about $470,000 on it with a 6% interest rate. We own 2 cars. One, my truck, I owe $52,000. Hers, we probably owe like $44,000. Other than that, we have zero debt. Of debt and—

How much cash do you have about now?

We have about $290,000.

How much do you owe the IRS?

In investment accounts. $114,000, but that $290,000 was after I pay that off. So I have $114,000 right at the moment.

Did you say it was in an investment account though? It's not liquid, the $290,000?

It's about $100,000 of it is. The rest of it, honestly, like you said, I am actually pretty stupid. So I'm just gonna—

No, I didn't say that. I said you tried to outearn your stupidity. That's different than being stupid. I've tried that too. It means you're good at earning money and it gives you an excuse to not deal with details. And now today you've grown up and decided we're gonna deal with details. I'm proud of you. So take some of that $290 and pay the 2 cars off tonight, okay?

Oh really?

Oh, definitely.

Why did that surprise you, Chris?

I don't know. I'm actually excited to hear that you told me to do that. I figured that we would do that first and then look at the house, but— Yep, that's right. Okay. And we have a very volatile business, so we can make another 6% a year.

And that's why we're telling you to do that. The goal is for you to remove as much risk from this equation as possible. And by clearing out your debt—

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Folks, if you want to work the Ramsey Plan, the Baby Steps like we've outlined, and know every detail, it's the fastest route between where you are and wealth. It's the fastest route between where you are and peace. Financial peace, two words that don't go together like airline service. The fastest way to do that is on a game plan, and the game plan is completely outlined, dialed in, and walks you through giving you the same answers and the same personal coaching that we would give you here on the air, and it's called EveryDollar. EveryDollar. It's our budgeting app that leads you through the Ramsey Plan. So it's not just a budgeting app. It's actually the plan in digital form. So, you want to do this? It's completely free. Start your EveryDollar program for free. You and your spouse both put it on your phone. Boom, we've got a plan. Boom, we're gonna find some margin. Boom, we're gonna get out of debt. We're gonna start walking these Baby Steps. You can find it in the App Store or Google Play. For free. It's called EveryDollar. Paula is in San Diego. Hi, Paula, how are you?

Good, thanks, how are you?

Better than we deserve. What's up?

Um, okay, so my husband and I have been married for almost 2 years now. We have a baby, we got married in the church, all our friends and family were there, but we never filed the paperwork legally to be married, and that's for a few reasons. One is I was in a previous marriage and it would have to— my child support would be reevaluated. And then secondly is because I was defaulting on a credit card at the time. It was a whole, you know, mess. And I really didn't want to mess up my current husband's credit and his chances of, you know, us ever buying a house or something like that. Mm-hmm. I just was wondering your thoughts. I know you're all about getting married, and we work together with money. I'm just wondering what your thoughts are.

So it's been 2 years. Did you clean up these things?

No, the judgment's still out there. At the time, before I met my current husband, my lawyer said that I'm judgment-proof, and she said just don't even worry about it. Don't answer if they call you.

How much is the balance on this credit card?

Uh, well, it was $38,000, I think, when they—

$3,800.

No, $38,000. And then now I think it's at like, they're trying to collect $45,000. I called and made them an offer of $15,000 because I got a settlement.

Oh, good.

And they didn't, they didn't take that.

So you had one conversation and that's, and they didn't settle. Shocking. No, you have to negotiate and argue. That's not one conversation and whoops, they didn't take it. So you're sitting on some cash to settle this with.

Uh, no, my husband and I put it towards his debt.

Oh, how much does he have?

Uh, he's— well, now he's down to about $30,000.

Okay, let's go back to your initial question. I would not wait, um, to get married. I think that at the core of marriage, when you do marry somebody, you're taking all of them and they're taking all of you, and that includes all the baggage that comes with you. Um, and I think it's going to simplify all of this when you guys can get on the same page and start attacking this together instead of letting technicalities bodies get between you. So I would go down to the courthouse and file the marriage license, sign it.

Yeah, and then let's lay out a game plan to clean this up. And so he has $30,000 in debt, and you have $38,000 worth of bad debt that you can probably settle for something. Who's that owed to, that credit card?

Uh, it was Chase. Now it's at some, like, a lawyer firm.

Perfect. I mean, somebody bought it for pennies on the dollar.

Now you can settle Did they give you an amount? Did they say, "We won't settle it for $15,000, but we'll settle it for X amount"? Did they give you another offer?

Yeah, $38,000.

Oh, okay.

Well, that's awesome.

They said, "We'll bring it down from the $45,000." That was all that—

And then to Dave's point, that's all crap. Like, they'll—

So, are you working outside the home?

No, I've got 4 kids.

Okay, and what does he make?

He makes about $3,000 a month.

Why?

And I bring in $1,800 from child support.

Mm-hmm. What does he do for $3,000 a month in San Diego, California?

Um, technical support.

Not much.

No, it's really not.

Do you have to stay in San Diego because of the custody?

Yeah, yeah, we share custody.

Okay, all right.

No, we live for free right now with my mom, so we don't have rent. So most of his paycheck is going towards his debt right now.

Okay. Well, he doesn't have a paycheck. We have a paycheck, and we have 4 kids to raise with $1,800 and $3,000 in San Diego, California. And so I want him to look at extra jobs. I want you to look at what you can do, work from home while you're managing the 4 kids, to increase y'all's income. He needs to double his income.

Soon.

Okay. Soon. His career sucks. Okay?

Yeah, I agree.

And so I want him to make more money. I want you to make more money. And then you guys get on a game plan. And a good rule of thumb is you can't hide your way into wealth. You can't deceive your way into wealth. And you're deceiving your ex-husband. This is an attempt to not engage and get the proper amount of child support according to what the courts say. Oh, okay. If you're raising that many kids and they're all his kids, I doubt you're gonna lose $1,800 worth of child support. It's not like you're getting $18,000, you're getting $1,800. And so you can't deceive your way into wealth and you can't hide from your past enough to become wealthy. So the hack that you are attempting to pull here is really holding you back more than it's gaining you.

Yeah, I agree.

To Jade's point. And so if I were in your shoes, I would finish up the marriage, but I would also, as a part of that, let's figure out how we can prosper, and if we got no child support, how we can prosper and clear these debts. And, you know, if you need some help negotiating next time, get in touch with one of the Ramsey Coaches that's been trained by us, and they can help you with that negotiation. Because you just called up a law firm and they thought, "Oh, she's got some money now, and we'll say no and see what she comes back with." And you say $15,000, and they say $38,000, and you say, "That's not good enough. What would you do that's reasonable? Because $38,000 isn't going to get it. We know you didn't pay $38,000 for this debt. You probably paid—" $2,000 for this debt. And because that's what debt buyers do, they buy it for somewhere around a nickel on the dollar, 2.5 to 3.5 to 4.5 cents on the dollar, somewhere in there. And so if this law firm represents a debt buyer, and they probably do, that's what they've got in it.

I'm kind of surprised they didn't take the $15,000, but they probably smelled on you that they could beat on you a little bit more and get some more out of you. Mm-hmm. You. And that was obviously wrong. It didn't work. But I want you, you know, let's try to scrape together some money again and come at them with another settlement. And let's clear up your husband's debt and let's get your incomes up. And let's quit hiding. You know, here's what's weird. If you reevaluate the child support, you might get more. That could happen. Your marital status does not keep you from getting child support. Child support is not based on your new husband makes money. It's based on what the old husband makes and the number of kids he sired. That's where child support comes from. And so it doesn't— you know, reevaluating it would only be down if his income is down. And so no, I wouldn't try to hide my way or hack my way around into a prosperous life.

I'd be doing— I'd have the opposite mindset. I feel like the mindset should be, how can I set up my life in such a way that I don't need to depend on this money. Exactly. And even if the courts rule that in a way that's not in my favor, I'm still just fine. I don't need the money.

Exactly.

That's where you wanna get.

Exactly. And you know, my lawyer, oh, you're paying a lawyer to fight this $38,000 and they didn't call and try to negotiate it to the other law firm for you? Hmm, that's interesting. Not good. Open phones here at 888-825-5225. So basically, folks, if you have a credit card debt that is in default, and it's been in default 6 months, a year, 18 months, something like that, meaning you haven't paid on it in that period of time, they have no indication that you're gonna pay. Citibank and all the other ripoff huge banks that have screwed you, they don't keep defaulted debt on the books. They sell it off. They give up on it. On it, and they sell it to somebody for a nickel on the dollar. So $50 buys a $1,000 debt. That's what happens. And so that's what she's negotiating in, and that's what we're talking about. If you run a business, you already know this. Bad information leads to bad decisions. And right now, AI is everywhere, but AI is only as good as the data behind it. The best AI is built on the best data. That's why I recommend NetSuite. NetSuite is the number one AI cloud ERP, and more than 43,000 businesses run on it, including us here at Ramsey Solutions.

Their AI isn't bolted on, it's built in. And it connects everything that runs your business, accounting, inventory, customer data, all in one place. Because when your numbers are connected, AI actually works like it's supposed to. NetSuite's AI helps flag cash flow problems, spot inventory issues, close your books faster, and cut down on manual reporting. If your revenue is at least 7 figures, go to netsuite.com/ramsey for a free product tour. That's netsuite.com/ramsey. Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. Amy is with us in Raleigh. Hi, Amy, how are you?

I'm good. How are you guys doing?

Better than we deserve. What's up?

Yeah, so I have kind of a twofold question. I'm just wondering if you could give me advice. I feel a little bit financially behind, so I kind of want to go through that and just see if you have any general advice. And then also, I just have a few questions on how to approach first-time home buying.

Okay, we're going to pick one. We can't do a full counseling session.

Okay, let's do—

What is the main thing you need to know today?

I think that I just want to kind of give you an overview and see if you can kind of decide where areas where we could be improving. Yeah, we can do that.

That. Tell us why you feel financially behind.

Yeah, so I— my husband and I are 30. We've been married for 8 years. Um, we have 2 kids, 2 and 5. He actually stays home full-time with the kids. I work full-time. Um, so we're kind of working with one income, and I just feel like at this point we should have more space. Um, right now— Yeah, so right now I have about $60K in retirement, and then We have about $35K in a high-yield savings account. We have no debt at all.

Your home is paid for.

What'd you say? Your home is paid for. No, we rent. We don't— yeah, we don't own. Okay. Yeah. Okay. So we rent our home. Um, is that—

that's probably why you feel behind is because you're renters?

Yes, I would say that that's probably the number one piece.

Yeah. All right. Uh, I don't think you're as behind as you think and feel. You don't have any debt, which is wonderful. Excellent. You've got an emergency fund. That's excellent. And you've started retiring. I'm sorry, you've started funding your retirement. That's maybe step 4. Yeah, we'll get there. And so, I think that's great. I think the only missing piece to your equation or of what you think is next is, okay, how do we get into a home? And it's just going a little slower than you feel like it should be going. Am I right?

Right. And I mean, obviously we've made the choice to have one income and I wouldn't change that. Like, I think that that has been great for our family.

What is the income?

Um, so I make $155,000 pre-tax. Um, and that is split between 70%, um, base and 30% commission.

What do you bring home every month?

So we bring home after retirement health insurance about $6,000, uh, $6,600.

Okay, and how much of that is margin? When you, after you've done all of those things you need to do, what's the amount that you're like, okay, we can do whatever we want with this money?

Yes, so after we pay all of our just regular occurring expenses, we have about $2,757 left over after all of our bills.

Yeah, that's not counting commissions though.

That's correct. So the way that we approach it is because my commission is monthly and it's kind of volatile, we just put all of that in high yield. So we put that in savings and we live only off my base pay.

Yeah, okay.

Okay, well that's good.

So $6,600 is not your real take-home pay, it can't be. Okay, it's just take-home pay on your taxes.

Yeah, that's just the base. That's correct.

Okay, so if you continue saving—

$2,000 plus commissions are going in high yield for your down payment on your house, right?

That's, yes, that's correct.

You're not behind, you're doing great.

Yeah, if you continue saving at that rate, what do you have at the end of the year?

Yeah. You got rid of it. Well, I mean, she's gonna be, she's gonna be, $2,000 is $24,000 a year plus commissions, and she's making $155,000, So she's got another $3,000 or $4,000 average a month. So she's gonna put $40,000, $50,000 away.

So all you've gotta do is look out at the housing market, look at what it is that you guys think you want, and do the math backwards, work backwards and say, okay, what must be true? How much do we have to save in order for this house to be no more than 25% of our take-home on a 15-year fixed rate? And then you're running it back and say, okay, we'll be there in 3 years or we'll be there in 2 years.

Yeah, you're gonna be there in 2. That's what it sounds like. Like. And, you know, you stay out of debt, you have your emergency fund, and you can decide, "I'm not putting more money in retirement today because I'm going to put it all on this house down payment," or, "I am going to put some on retirement today and that's going to kick the can down the road a little bit further on when we're able to buy the house." Either one of those answers is fine, but you're not behind.

You're not. And more and more people are buying homes in their 40s, and I think that that just opens a bigger conversation on just comparison and making sure that you're running your race and you're not comparing everything that you do to TikTok and Instagram and the other people at work and what your, you know, what your friends are doing. Your race is your race to run, and you don't have any apologies to make for that. When you read out your numbers, I thought it was excellent. I thought this person is doing what they have to do. Another person is gonna call in and they're gonna be 30 years old and it's gonna look totally different for them. But as long as you're taking the next right steps for you, you have something to feel good about.

Yeah, where you're moving towards, you're gonna own a home in the next 3 to 5 years. That's a conservative, good purchase. And then you'll start and begin— put— continue putting 15% of your $155,000 away. By the way, it's going to increase over time. And so you're gonna be putting, you know, $25,000 away a year for it towards retirement, and you'll retire multimillionaires. So no, you're not behind if you keep doing those things. Now, if you go out and buy a stupid car that you can't pay for, and $1,200 a month car payment— We had to have one, our puppy needed a seat to sit in—

Or some kind of bullcrap that people do to buy buy a car, right?

Then no, no, you're gonna get yourself in trouble. But you're not doing that right now. You've been very wise, very smart, um, uh, and you're right on track. Cheyenne is in Fresno. Hey Cheyenne, what's up?

Hey, how's it going, you guys? Thanks for taking my call. I'm blessed with your advice today.

Well, thank you. How can we help?

So I'm newly divorced and I'm wondering if a refi with a cash out is my only option, um, because I need to pay off my father-in-law who was carrying our as well as the ex-husband. Jesus. And my concern is that I'm going to be living paycheck to paycheck, and I don't want that to be my future. I have 2 young boys, a 3-year-old and a 6-year-old.

What is owed on the house?

Right now with the father-in-law carrying the note, it's $123,000.

Plus you gotta buy your ex out for how much?

$104,000.

Oh.

So $227,000. $200,000?

Yes, sir.

Okay. And so I'm not sure.

And what do you make?

$64,000. I just renewed my contract. And so I work at a private school. And so my salary—

So you can pay a payment of $200,000 making $64,000?

So when I was doing my research, the best rate that I could find for a refi is 6%, which would be about $1,300, a little bit more for a mortgage for a 30-year fixed rate. Um, so my take-home is about $3,700 per month. So—

What's the house worth?

We're gonna be $355,000 at our last appraisal.

Okay. And, um, what other money do you have?

So I do get child support. However, because the divorce is new, I just don't want to consider it.

I don't, I don't, I'm not, that's okay. How much child support do you get? Get?

$1,700 a month.

Do you have— did you get $500,000 in a 401(k) 401(k) or something? Is there any other money?

We didn't touch each other's retirement or anything. And I do have like my side hustle is I bake, kind of do my own little cottage business. So I bake decorated sugar cookies. So I try to do that as much as I can.

No, do you have any money in an account, like a brokerage account or anything?

Oh, I have $101,000 in my, like, a retirement account. I have savings. I have about $20,000 in emergency savings.

Why don't you use the $101,000 to buy out your ex?

I wondered that, but my tax advisor said not to.

You said it's a brokerage, right?

Your tax advisor is a moron.

Okay.

You don't— your tax advisor doesn't need to be advising you anything on your life. You've got kids and a father-in-law in your ear and an ex trying to figure— and now you're gonna go borrow money because your idiot tax advisor told you? No! No, absolutely not. Health insurance is confusing on purpose. You call one company, get transferred 3 times, sit on hold for 45 minutes, and end up more confused than when you started. That's why I recommend Health Trust Financial. Their health insurance advisors who actually get to know your situation and help you find the right coverage for your life and your budget. Healthcare needs change every year. Change as your life changes. Maybe it's a job change, the birth of a child, a new diagnosis, or you're just trying to have more margin at the end of the month. No matter your situation, Health Trust Financial shops multiple top-rated insurance carriers and helps you understand what you're actually buying. I've trusted Health Trust Financial for over 20 years because they help Ramsey fans make smart healthcare decisions. Go to HealthTrustFinancial.com today and talk to a real person without pressure or confusion. That's HealthTrustFinancial.com. Mm-hmm.

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Okay, today's question comes from Carmen in Virginia. She says, my husband and I are on Baby Step 7. "and have a question about paying off our home. Should this still be our focus even though we are sure this isn't our forever home? Or should we be saving up more to put down along with our current equity on the right one when it comes along?" Okay, so, and for anybody listening, Baby Step 6 is the baby step that you do in tandem with 4 and 5. 4 is you invest in your retirement. 5 is you put towards kids' college. And 6 is you put any extra money towards the house if you were wanting to. Wondering. And you know, if she told me, we know exactly the house, you know, that we have our eye on, you know, it's just, we need a little bit more time. I might have a different feeling about it, but you don't even have your eye on, on a property. I think it's just something that's living in your mind as an option. And until then, I would put the money on the current home because—

Here's what's interesting. The way she phrases it, she feels like if she puts it on the current home, like it's like she's gonna lose it or something. If you pay down your mortgage, it increases your equity. When you sell your house, you get a bigger check. So it's just a savings account. Your equity is a savings account. When you pay down your mortgage, you're putting money into a house. It's just hard to cash out of. You can't just go down to the bank and take an ATM withdrawal on your savings. But, you know, it's forced savings. And the beautiful thing about paying down on your home, instead of stacking it over in a high-yield savings to use as a down payment later, it doesn't accidentally buy a bass boat.

Right.

That health savings account, those high-yield savings accounts, sometimes, "Oh, we went a little over on Christmas." "Oh, that cruise, it just came available, and I've always wanted to go, and I don't have the money, so I'm gonna use the down payment money for the next house on that." That doesn't happen if you pay down on your house. So, abs— it's forced savings, it's trapped savings. It's not lost money. No! No, you do not put money in a high-yield savings account to the side for a future down payment when you already own a home with a mortgage. No, you pay down the mortgage instead. Every stinking time. Because it traps you and it makes you behave. Protects you from your biggest problem, which is you. Protects me from my biggest problem, which is me. Jenny's in Denver. Hey Jenny, what's up?

Hi, thank you for having me today.

Sure, how can we help?

My husband is a mortgage loan officer, has been coming up on 3 years, and what he is bringing home isn't covering our bills. We have prayed about it a lot, and we were wondering what you would do in our position. He could go back to being a police officer. When he was there, he made about $118,000 to $120,000 a year. Um, we do have a base pay from the military and a little bit from the mortgage company that he works for, but that's about $6,400 a month. And our bills are about $7,500.

What are your bills?

We don't have any debt and we have, um, home, um, insurance.

How much is your home mortgage?

It's $2,300.

Okay. Well, that's not $7,500. Where's the other $5,000 going?

I feel like we are pouring some into his business, doing, you know, trying to market things. We have a couple of kids. I mean, our cars are paid for, gas, groceries, that sort of thing.

So you don't know where it's going?

We do have a budget.

Apparently not. You can't tell me where the $5,000 is going.

Sure, I do think that part of it is— I'm not sure. I think our gas and groceries, that's a lot of it.

No, it's not. That's not $5,000.

Sure, I agree.

Okay. So you guys don't have a budget that you— you don't have a budget that the two of you have agreed to and that we stick to and that we live on every single month. You have a general idea of where you think the money's going, but right but now we can't figure that out, right?

Well, no, I do the EveryDollar budget. I do it monthly. We both look at it—

Get it out and tell me where the $5,000 went.

Sure, I think we have spending money. We have things that come up, like he has had some trips that he's had to do for work. We tithe. The 40— let's see, $2,200 we get from his mortgage company, $4,200 we get from past VA mortgages, $2,300. We tithe about $750, the 10%. We use $1,600 to $2,000 for not just groceries, but that also includes any toilet paper and things that we may use, $400 for Gas. I can't think of anything else. I mean, I can pull it up if you truly want me to.

So my question is, okay, so you've got your home with the kids. How many kids are there?

Two.

Okay. And their ages?

14 and 9.

Okay. I think that you— I love that he's looking at ways to get his income up. I think you can do more to contribute too. That's where I see your biggest opportunity. If you told me you had littles, it would be a little tougher. Not that you couldn't do it, but it would be very tough. But with a 14 and a 9-year-old, I actually think, I mean, I know I'm not wrong that you've got some time that you can put into this and close that gap because it's not a big gap. It's a $1,000 gap. And I think that's exactly where you fit into this equation.

Okay, so number one, the reason he changes careers is not because he, you guys can't make a budget. Budget that we don't know what it is. And so your $7,500 minimum to get by sounds very high. And so I think you guys need to look at that. So what are we spending money on? What's out of control in this household? And what things are we trying to do with this money that we shouldn't be doing with this money while we're tight? Number one. Number 2, we could add some income from you. And then number 3, if then he can't— he's not bringing in enough to support his household and he has the opportunity to change to another career, he should. But there's a third option other than stay. Okay, one option is stay with the mortgage company. Option 2 is go back into law enforcement. A third option is do something else that makes more than the mortgage business right now. The mortgage business is tough right now.

Yeah.

It's hard right now. Now. So maybe he should change, but just running back— I mean, he left the law enforcement world for a reason.

Yeah.

What reason was that? And that reason is probably reason enough not to go back to it. So yeah, I might go to something else, but does your husband need to take a career that will support the household? The answer is yes. Do you need to do some things to add to the household? The answer is yes. Do we need to look at this budget and figure out why it takes us $7,500 $7,100 to exist. That's high, okay? When things are tight, now that's, you know, but you act like that's a template, that that's a—

I think it's what they were used to when he was doing law enforcement. I know.

That's what you usually use.

I'm talking about why, when you, you know, acting like we can't make ends meet. Well, that doesn't make sense. Yeah, well, the mortgage was a little high to begin with.

Even on the $7,100 a month, it was a little high. So now now it's really cutting into your margin in a major way.

Yeah, yeah. So yeah, yes, he does need to consider changing careers, but not necessarily go back to where he was, but maybe go to the third option, which is something new. Yes, you do need to consider having a career. And yes, you all need to go back over this budget together and figure out what we have called a need that is actually a want.

Yeah.

And figure out where in the world this money's going.

I agree.

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How do you choose your mutual funds? And so on. Well, 2 years ago, for the first time ever, we decided to unpack that playbook. We called it Investing Essentials. It was done as a 2-night virtual event with me and George Campbell talking about investing and going through my playbook and also going through several buckets of other types of investments that I don't do. Mm-hmm. And why I don't do them. That's pretty cool. Well, we've only done that 2 times. We're getting ready to do it for the 3rd time. We're changing some of the content if you've watched the other ones, and now we're going to add some stuff on will planning, estate planning, reducing taxes, and some stuff on building a lasting legacy as well. So, which is part of my playbook. I do all of those. And so this year going to be new content in there. It's going to be September 1st and 2nd. Mm-hmm. Event, a 2-night virtual event, Investing Essentials. Tickets start at $199. Get yours at RamseySolutions.com or click the notes in the show, or click the link in the show notes if you're listening on podcast or YouTube. Matt is in Knoxville.

Hi, Matt. How are you?

I'm doing good, bud. Thanks for getting back in touch with me. I had a quick question on If you have equity in your home, using that equity to pay off your other debt so it's all consolidated into one thing, well, into one loan, and if it's a bad idea, can you tell me why? No one else can.

Okay. It's a bad idea. And the only time we suggest you do that is if you're on the edge of bankruptcy and it's the only way to keep from filing bankruptcy. And you're not. So it's a bad idea. Now, why is it a bad idea? Well, in 35, almost 40 years of doing this, of coaching families on money, what we have discovered, including my house with me and Sharon, is that personal finance is 80% behavior. It's only 20% head knowledge. So math is not— is most of the time not our problem. Most of the time, it's our behaviors. And the data tells us, the research tells us, that 88% of the time, that you take your debts, your miscellaneous debts, your student loans, your credit cards, your car loan, some medical bills, whatever it is that's piled up, and we move them over to a home equity loan, we no longer feel the pinch of all those bills piling up, and we don't change our habits, and 9 out of 10, 88% of the time, people run up more debt because they didn't fix the habits that caused the debt in the first place. So, how much debt have you got?

Let's see if we can figure out a way to get you out without doing that.

As of right now, I have $80,000 left to pay on my house, and I got my wife's car that's $25,000, and then one car's paid off, my work car, and then my truck only has $2,000 left on it. Everything else has been paid off, credit cards, personal loans. So the only thing we're talking about rolling is these two 2 cars. Yeah, it'd be $27,000.

And how much, what do y'all make? How much have you paid off so far?

As of right now, we make $80,000. My wife's still in doctorate school. She'll graduate next year. And— Doctorate in what? Occupational therapy.

Is there any student loans for that or she's— You're cash flowing it.

A lot of grants. Her parents have helped and we've just stayed to the grindstone.

Good for you. Very good. Okay, so she's going to come out making $80,000, right?

As should, should, yes.

So you double your income, $160,000. And that's— when does she do that?

She probably in about 2 years because we want to have our second kid after she graduates and didn't want to have to go into work and have just So a newborn right off getting out of college. Okay, I got you.

All right. And so, um, hmm, and you make $80,000. Okay. All right. Well, you can do a couple of things here. But what I would do is simply get on the EveryDollar budget and the two of you sit down and say, "All right, we have a plan. The plan is for her to graduate, have the second child, and then begin work." And so encompassed in that plan is that we also need to clean off this $27,000 in debt, which is $2,000 a month for 24 months— 26 months. Okay? No, it's not. No, it's not. It's $2,000 a month for 12 months.

Okay, yeah, okay.

Yeah. And so—

I was figuring it up in my head.

No, it's 4— okay, wait a minute. 13 months. 13 months gets you out. 14 months, whatever. All right, so $2,000 a month we need to put on this debt. And we'll be done in 14 months. If we're not willing to cut our lifestyle enough to do that, and you pick up a little extra work, maybe she picks up some side hustle, I don't know, whatever it is, maybe we sell something else. You have money in savings?

Approximately right now, $5,000. Well, that was before we put it all towards the truck that we was doing the snowball effect. We put everything towards my truck. It was a $19,000 last year, or a year and a half ago.

So you've been working on this. How much debt have y'all reduced so far?

Roundabout $35,000, about $30,000.

How long did that take?

2 years.

Okay, all right, so 14 months to do $27,000 is not too far off. All right, so you're already living like that. You're already living like this.

Well, and before this, up until this year, I was only making $45,000. So I got a big—

Okay, so you got a huge increase. And so we're gonna live on nothing, finish her school, and get these cars paid off. Or we're gonna sell that stupid $25,000 car.

That's what I would do. Because when I'm looking at this, I'm going, okay, you just told us you used to make $45,000. You're already up against the rule of it being more than $50,000, more than 50% of your take-home. Home at $80,000 because she's not making the other $80,000 yet. So if I were in your shoes, I'd actually sell the $25,000 one now and go down in car and get you something that is more reasonable for what you're earning today. And then when she starts making $160,000 2 years from now, then you can upgrade your vehicle.

When your household income goes to $260,000, you upgrade your income. Yeah, that, that's probably the best thing. If you're unwilling to do that, you're going to have to sacrifice hard for the next 14 months and stay on a beans and rice schedule to clear these off. You cannot You cannot borrow your way out of debt. You're tired of hustling and grinding and pushing this debt monster, and you called us looking for an easy way out with a HELOC, and it does not get you out. It just moves it, and it keeps you from addressing the issue. And the issue is you really bought a car you shouldn't have bought. But if you're gonna keep that car now, and it's not horrible, it's just bad. Uh-huh. Okay? It's not like, "Scream at you, this is the dumbest thing I've ever seen in my life, it's all bad." But it's just bad.

Yeah, it's causing you to move slower than you should be.

Yeah, it's causing you to walk with a limp. And here's the interesting thing, Matt. You guys are so goal-oriented and you're so focused that you've detailed out every part of your lives. You've done a really good job of planning your life out. I mean, you got her in school with Grant's mom's help and mom and dad's help and some hustle and grind. We pay cash for that school. She's gonna come out with a freakin' PhD. And PT and gonna walk in straight into $80,000 to $90,000 whenever she wants after. And, but wait, we're gonna have a baby first. We've laid everything out and it's well thought out. You've done a good job of planning all of this. The only thing that doesn't fit in there is this car.

Yeah, and you've gotta view it as making your journey easier, not as a negative. You know, that's the way you've gotta view it.

But no, under no circumstance would I roll these cars cars onto my home. Because it's gonna make you feel like they're not there, and you're gonna relax, and you're not gonna deal with the issue. And so, absolutely, absolutely. If you wanna keep it, roll up your sleeves and get her paid off. Otherwise, let's dump it and get the other 2 cars paid off, and you got your old truck, she's got a smaller car, a less expensive car, and we're fine. She's a student.

Mm-hmm.

She's not a PT. She's a student. We're driving a $25,000 car.

Joe is with us in Philadelphia. Hey Joe, what's up?

Oh man, I can't believe I'm speaking with you guys. I'm speaking to two big-time celebrities. I have a lot of fans in my family and this is something else.

We're honored to have you, sir. How can we help?

I'm honored to speak to you too. I want to know, I want you to bless me on this, if you think it's a good idea to to pay off the mortgage that I'm still on, but my ex-wife and my kids still live in the house. I no longer live there. And this would be as a surprise.

Wow.

That's an unusual thing to do, would you agree?

Um.

Not many people call me up and wanna bless the ex-wife.

Well, she's an awesome woman and she is the mother of my kids.

Wow. That's— I really want a slow clap right now. Like, I'm not gonna lie.

Well, I'm gonna get there first. I know it's a great— I think it's a great idea, but I'm also like, Joe, you gotta do this. You gotta deliver on this. You can't just dream it up.

Are you financially able to do this? Tell us about your money.

I think I'm gonna pull in about $200K. I work multiple jobs, so it's hard to get an exact figure, but I am, you know, starting to get on the Ramsey Plan, paying off my debts, piling up a big, trying to pile up an emergency fund. And then I'll be, the last part of that will be saving up a slush fund to do this transaction.

Okay, and what's owed on the house? Home?

It's $77,000. I believe by the time next year when they pay it off, it'll be around $65,000.

Mm-hmm. Okay. And how much debt— so let's, let's calculate your journey. So you've still got debt to pay off on your own. How much do you still have to go?

About $20,000, but I will be done with that in about 2 months.

Okay. And then how long will it take you to save up 3 to 6 months of expenses? Expenses?

I am shooting for an arbitrary number that should do it around $60K.

Okay.

And that I think will take around 7 or 8.

Okay.

And—

Okay. And how old are you?

Uh, 43.

And how much do you have in retirement today?

Um, I have over $500,000. I have a net worth about $1.2 million. $1,000,000.

Okay. And so $500,000 in retirement, where's the other million?

Well, I have— I'm sorry, I should cut that down to about $950,000 because some of that is the value of the house. I forgot to split it when doing that. I also have my own Roth. I have kids' 529 plan and have some other— There has some other investments baked in there too.

Do you have real estate?

Tell me about the other investments.

Oh, it's, well, I mean, that's like, I think investments are right around $800,000. A lot of that is money devoted to my kids. I also have about $30,000 in interest.

You have $800,000 devoted to your kids?

No, no, no, total investments.

Okay, investments in what?

What? Oh, 529 plans, like for the market. I have like $200,000—

No, you don't have $800,000 in 529 plans. That's not true.

No, no, no, no, no. I'm talking about my net worth.

I know. I'm trying to understand how your net worth is broken down. So the total in 529s, the total dollar amount is how much?

$200,000. $210,000.

How old are your children?

14 and 11.

Okay. And how much is in your 401(k) 401(k) and Roth IRAs?

Total of that is $500,000.

Okay. So that's $710,000. And then what other investments do you have?

I have HSA. I have, I'm around 30.

Do you have any non- non-retirement brokerage accounts or anything like that?

Um, around $3,000.

$3,000.

Yes.

Okay. All right. All right.

Keep in mind, I'm just starting on this journey.

Yeah. When were you divorced?

Uh, 2023.

I'm sorry?

2023.

Oh, 3 years ago. Yes.

Okay.

All right. Okay, so back to your question then. Jade's right. We want you out of debt, an emergency fund in place, and putting 15% of your income away for retirement. Beyond that, if you want to do a generosity move, you would pay cash for the generosity move, which is going to be around $65,000 or $70,000 in this case. And then the question is, should you do that generosity move? Of paying off your ex-wife's house that has your name on the mortgage. One benefit of that is you no longer have that liability of that mortgage. If she pays it slow, it doesn't screw you up. If she doesn't pay it at all, it doesn't screw you up. Probably wouldn't anyway, 'cause the house is probably worth a lot more than $65,000. Okay, what I want you to visit is this. Before you write that check, because you're thinking about the kids and you're thinking about the guilt from the divorce and some of these other things, I want you to visit— how old are you today?

43.

Okay, let's say it takes you 2.5 or 3 years to get there, so you're 46 years old, and you're sitting there with that money in the bank, ready to write this check and pay off her house, okay? That's about what we're talking about, I think, if I understood all these numbers right. All right, and I want you to ask yourself, I'm 46, at that point I will have been divorced for many, many years, the kids will just be at home a few years more. So you're not really doing it for the kids, 'cause they're gonna be gone from that house shortly. At that point, they're already teenagers. They're gonna age out of that house.

Yeah.

All right? And so I want you to ask yourself, when I'm 56 and I'm dating someone and she says, "You paid off your ex's house?" How's that gonna feel?

She actually approves of it. She listens to this show.

Oh, you're already dating someone?

Yes, she's awesome. She also read Jade's book too. She loves Jade.

I think that, I think what you really want here is the option. And I like that you're working towards it. And I think that you have the option that in 2 years, if this suddenly doesn't make sense, you don't have to do it. And so in the meantime, I would keep this aspiration to yourself. I wouldn't go telling the ex-wife. I wouldn't go telling the kids. I wouldn't be talking about this as though it's something that you're definitely going to do, because to Dave's point, a lot can change in 2 years, and you might change your mind. But I think it's awesome that you're thinking of it.

Now let's pretend the lady you're married— that you're dating, y'all want to get married and buy a house.

And you say, "Wait, I have to buy my ex-wife's house first." I have to pay off her house. I get it.

Yeah. That's going to feel weird. So I'm not saying it's a dumb idea. I'm not saying you're not going to do it. It's unusual enough. And I think it sounds like you're thinking about this only in the moment and you haven't visited the 10-year-from-now version of yourself and ask your— that version of yourself, is this really something I should be doing?

I wonder if there is— and we didn't ask him. But I almost think of it almost like a bankruptcy. If you feel like you owed someone something, and it was absolved, it got absolved, and it was fair in the divorce, but you still feel like there's something that you owe. I wonder if there's something there that he just feels like he needs to—

Just be real careful with those kind of motivations, because they don't age well. That's what I'm talking about. So, you know, especially when if it means you can't do something else that is in the present, because this money is being written into the past. It's not being written to the future. It's not being written into the present. This is money going to the past, which is not the end of the world. Yeah. It's not the end of the world. You can do that. It's your money. You have that right. It's not immoral. It's not a horrible thing. It doesn't make you a saint. It doesn't make you a sinner. It doesn't make you any of that. It's just a guy that felt like that's something he wanted to do, and it's his money. So if that's what you want to do with it, that's fine. But, and I can't say I would, I'm not gonna tell you I don't recommend it. I'm not gonna tell you I do recommend it.

Yeah.

I want you to get in financial shape to do it, and I want you to think about what this means that you can't do and what this is gonna sound like in your head a decade later. And if it still sounds good and you still think you wanna do it, then fine, write a check. Mm-hmm. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. Jade Washaw, Ramsey personality, is my co-host today. John is in Raleigh, North Carolina. Hi, John. How are you? Hi, Dave. How are you?

I'm doing well. How about you, Dave?

Better than I deserve. What's up?

Yeah, so just a little bit about myself. I'm a financial advisor in large part because of listening to your show for years and seeing how you all help people with their money and wanting to be able to do the same. More recently also, I've stepped into a leadership position with my church as an elder. And what I've noticed as I've become more educated and learned a lot more about different financial aspects products and solutions, um, is, you know, I developed opinions on. And of course, follow you, um, and your opinions on whole life insurance. And so, what one thing I've realized in the past couple years is we have a member of our church that is another financial advisor for more of an insurance-based firm, um, and I've noticed that he started working with more and more couples at our church, specifically what I assume is around whole life insurance policies. And more recently confirmed that when one of my closer brothers in Christ told me that he had started working with him. And when I talked to him about what he had bought from him and invested in, one of the things was a whole life policy.

And so, I spent some time educating him on, hey, why I feel like it may not be the best solution for them and the young couple helping accomplish their goals and really wanting to better understand and see your all's thoughts on how can I address this with the other leaders of the church, maybe for those those that don't fully know how this product may not be beneficial for them, and how do I potentially confront this member of our church who I'm not sure— I do believe that he could be doing what he believes is best for the people that he's connecting with.

Wow. Okay, there's two separate issues here for me. Issue number one is the guy simply is in a business that you disagree with, and he's doing business with some members of the church.

That's right.

And you're not going to be able to keep that— that's going to happen all your life, because there's going to be a banker in there there, and people go to open a Visa card at that bank, or worse yet, there's a payday lender that goes to church there, or a car dealer who leases people cars that goes to church there. And they may be elders on the board with you. That wouldn't be unusual for bankers and car dealers and insurance agents to be right there on the board with you, or right there on the deacon board or the elder council or whatever it is in your situation, you name it, governance-wise.

So they simply are in a business doing things that they—

we'll give them the benefit of the doubt that they love Jesus, and that they think that what you said, that they think what they're doing is good. So I, long ago, 30-some-odd years ago, made the decision on those folks, I don't do anything.

Mm.

Okay? It's just my job to educate, and my job to help the ones I'm supposed to help, but it's not my job to be the police officer of what I deem to be a good product for the entire church. And so, and what happened was a guy who's a strong believer and an elder in another church that owns a local car dealership called me when I first started the radio show almost 40 years ago, and I was tearing his head off. I wasn't naming him, but I was just saying, "Car lease is a ripoff. You're screwing people with a car lease." And I'm on the radio saying this, and he's leasing cars every day at the Lincoln Mercury dealer. Mm-hmm., right? And so he calls me and he wants to sit down as two brothers in Christ and resolve this. Well, we weren't gonna— it was a dumb thing to do. I did sit down and I don't take those meetings anymore because at the end of the meeting he's still selling cars on leases and I still think they suck.

Mm-hmm.

And we both had to agree that both of us are probably gonna be in heaven. And so, you know, that's— you know, we just had to go, that's the way it is. Bygones be bygones. And so I wasn't gonna change him and you're probably not gonna change this this guy, and you're probably not going to keep him from doing business with somebody in the church. Now, that's bucket number 1. Bucket number 2 is if you feel like he's going to church there and using his church membership as a prospecting tool, then he's in there—

That's one of the things I was about to ask you.

He's a wolf in the middle of the sheep pen then. And I don't care what he's— Yeah, but I don't think we're going to do that. I don't care what he's selling. There. I don't care if he's freaking selling aluminum siding, you know, that stops. That's church discipline. If his reason for being there is not— has nothing to do with church, and he's just looking at this congregation as a feeding pen, if that's how it's actually going down, then that stops. Yeah, and I'll tell you one thing, one time I did do that— I got church leadership involved— was, as you might imagine, a very enthusiastic guy in a multi-level thing. He wanted everybody in the church to join his multi-level thing because Jesus had told him. Oh, boy. You know, well, I kind of stood in there and I went, "No, you know, you're here for the wrong reasons, and you either need to cease and desist your prospecting protecting the congregation, or you need to leave. And we did get agreement within church leadership on that, because the guy's motives were not pure. He was there to do business. He was not there to worship Jesus and to be of service to a few members of the congregation.

But if— and John, if you as a valid financial planner with ideas that I agree with are in there, your reason for being there is you're just looking across the pew every week trying to figure out who you can prospect, I'm gonna call you out on that.

Absolutely.

Okay, so if he's in that bucket, I'm shutting him down. And if he's just in the bucket of, "I disagree with him," I'm not gonna say a thing.

Yeah.

I mean, you've been in church leadership.

I mean, yeah, I think there's a community aspect of church where it can be an advantage. You know, you can find a lawyer, you can find somebody to work on your car, you can find I need somebody to help with this and that, right?

Yeah, but that's different than prospecting.

Yeah. And unfortunately, even in that situation, even if you're using it as community, one person has the ability to talk to another person after service and find out that they sell insurance and they can say, oh, I'm in the market for insurance. And they sit down and talk and it's fine. And I agree with what you said, Dave, you can't, you're not the police of that. There's plenty of people who are gonna find methods of how they wanna live their life. Your life has nothing to do with what you believe when you walk into the place.

Yeah, yeah. And I've, you know, I sat on a church board with a whole life guy who absolutely could not stand me because his business was suffering greatly because of me. And I was real pleased that his business was suffering greatly.

Yeah, you know, I think the bigger discussion here is there are things, there are products out there that we view as villains, right? Like we view car leases as villains. We, we view payday loans as villains. We, we view credit cards, all those things. But it doesn't mean that the people who haven't figured that out yet are bad people. If they're in that business, do you know what I'm saying? Yeah. There's usually some level of them that they think that they're doing somebody a service when they give you a car loan. They think you're doing the, you a service when they put you on a lease.

So, but if you have a sense that this guy is in there, he's just got his hair clippers out and he's shearing the sheep, then yeah, we're gonna put his clippers up. I'm gonna put an end to that for sure. In any business, legit or illegit, that's not the reason you go to church.

Thank you.

Dave Ramsey here. For more than 30 years, I've been talking to folks on the air, and I can tell you that most people are broke, not because they don't make enough money, but because they don't have a plan. You need to give every dollar you earn a job, because when you do that, something changes. You stop guessing. You stop worrying. You stop stressing. Our every EveryDollar budgeting app will show you how to find extra cash, pay off debt, and finally start winning with money. But most people won't do it. They'll keep living paycheck to paycheck, keep hoping things will change without making a change. It's time to say enough is enough. It's time to take control of your money. It's time to start your EveryDollar budget for free today. Go download it in the App Store or Google Play. In the App Store or Google Play. Well, we wish we could answer every question on here, but we just simply can't get to everybody. But we do have a solution for you. Go over to our website at RamseySolutions.com and use the Ask Ramsey tool. If you ask Ramsey, it will tell you what Ramsey thinks about about this.

And so everything that Jade has said on the radio or any of us have said on the podcast in the last 3 years is built into the data set. All of the articles and books that we've all written are built into the data set. So Ask Ramsey knows what we would say here on the air very accurately. And it's free. It's an AI tool that we have trained only on Ramsey data. Mm-hmm. It doesn't have any of the sewage from Reddit or something else tied into it or TikTok. It's Ramsey data only. So it gives you a Ramsey-only answer. If you want an answer that's not Ramsey, don't go there because it's going to be a Ramsey answer. Ask your question today for free at RamseySolutions.com. Ask Ramsey. James is in Charlotte, North Carolina. Hi, James. How are you?

Hey, Dave, I'm good. How are you?

Better than I deserve. Dave, what's up?

So, um, a family member of mine is, uh, getting ready to sell their home in Key West, and I am wondering when is it okay to buy your second home or vacation home?

When you pay cash. Can you?

No.

Okay, then you can't. Pretty simple.

Simple.

Got it. Yeah, because a second home is a toy. It's a luxury item. And so it's like, I'm gonna buy my fourth car and there's only two of us. It's a toy, it's a luxury item, and it's going to get used about as much as the fourth car.

Okay. And, and so I was able to make it my full-time home and rent out my home in Charlotte, what would—

Why don't you just sell the home in Charlotte and pay cash for it?

Okay.

If you want to move to Key West, you want to live in the house?

I mean, it's pretty great.

Okay.

I love it down there.

Your career is mobile?

Yes.

Okay.

I am able to move.

Wow, that's pretty Pretty cool. Well, that's an option. I would do that. I mean, that's not a second home, though. That's a transfer of primary residence.

Got it.

Yeah, but second home is I wanna buy a lake house, I wanna buy a beach house, I wanna buy a mountain house, I wanna buy a house in Mexico, whatever it is, right? That's second home. And that's a toy, and you need to pay cash for those because you're gonna be disturbed at how little you actually end up using them. Using them.

Okay.

And so, I mean, even if you work at using them, you're not going to be there but 6 or 8 weeks a year, right, on a second home. But now if you're going to live in it, that's not a second home anymore. So yeah, sell the house in Charlotte and go buy it. Maybe that might be your best move. But, and I want you guys to get a second home. I'm not against second homes. But the other thing, Jade, we don't want to do is we don't want to rationalize commercialize it and say, "We're going to rent it out, and the renters, the Airbnb renters are going to pay for it for me." I feel like you're not going to show up and it be the same house.

You know, I feel like you're going to have wear and tear, and you're going to be mad that when you came back, it, you know, it's not the way you left it every single time.

I don't know that I'm right, but I feel like I would feel that way. No, you're right. You're completely right. You turned your house into a hotel. Room.

Yeah, I want it to be mine.

You know what they do in hotel rooms? They take stuff and screw it to the wall so people can't steal it.

Yeah, I don't want to know that somebody else was in my shower or in my sheets. That bothers me.

That bothers me beyond belief. I just got creeped out bad. Jason is in Denver. Hey Jason, what's up?

Hi Dave and Jade, nice to talk to you guys.

You too, how can How can we help?

Got a question for you. So, quick backstory, I guess. I'm 27, me and my wife, we have a 1-year-old daughter.

Congratulations.

We're technically in baby— well, thank you. We're technically in Baby Steps 4 and 5, I believe.

Good.

But from our families, our background, we come from the Amish Mennonite, college isn't really a thing. Is it still smart to do a 529 plan if we know chances are she won't be attending college, or is there a better way to invest? Best.

Okay. I mean, I'm vaguely familiar with Amish Mennonite thing. I wasn't aware of a prohibition against higher education.

Yeah, are you saying that you're not— go ahead.

It's not like they're— well, I mean, technically the Amish are against it. Now, we're not in the Amish anymore, so we're not against it. It's just like my background was I got a full-time job at 14. We were homeschooled up to 8th 9th grade, and then went into the work.

And you were doing a trade of some kind?

Correct, like construction. Yeah, that's what I started in.

Okay, so you're in the construction business, all right. And this is your 1-year-old daughter?

Correct.

Okay, and so what do you perceive in your all's situation, you're not technically Amish anymore, but the culture and the belief system continues to influence you, which is fair, if I understood you right. And so what do you perceive that this lady, this young woman of 20 years old, is gonna be doing?

Man, it's hard to say career-wise. I mean, my guess is, I technically come from a family of entrepreneurs. It wouldn't surprise me if she joins, you know, family business here and there somewhere. But chances are, if she's like my wife, I mean, her dream is kind of to be a stay-at-home mom, not Right.

Okay. So, well, so what education gives a young lady in that situation, whatever the education is, I don't care what it is, but something beyond a homeschool high school education, what it gives them is options.

Right.

And as her dad, what I want her to have is options. In other words, if she has had a degree in— a 2-year degree from the associate's college, local community college, in entrepreneurism, and then she decided she wanted to be a stay-at-home full-time mom, I can make the case that she's better at being a stay-at-home mom because of that education. Could you?

Yeah, I could see that.

She's raising the next generation of entrepreneurs and she actually knows something know about it, okay? And so education, you know, again, but she also has the option of joining her husband's business and helping him run it because she knows something about accounting.

Right.

So education has a value, and the value, if it's usable education— I don't want her to get a degree, you've heard me, we don't want them to get degrees in left-handed puppetry, that's a waste. Well, I want a well-rounded left-handed puppetry. No, that's bullcrap. That's just, you want to go to school and play beer pong. That's all that is, and that's not what we're talking about here. But if there is some kind of—

Right.

Let's call it continuing education after high school, trade school of some kind, an entrepreneurism program of some kind that is a formal certification program, that would add options to her life even though there's a probability that she's going to be a full-time mom because she's been taught to enjoy that and to value that. I don't care. I mean, I'm fine if she does that. My wife's been a full-time mom for 40 years, and we're not Amish. So, you know, I mean, I place a value on that. But I would wager that her having a 4-year degree has influenced the confidence and poise of the daughters and son that she my wife. Okay? And she's never actually used her 4-year degree in the marketplace. So, you know, but—

That's a good way to look at it.

So anyway, that's a thing to think about. So I would be setting some aside to continue education.

Yeah, I wouldn't overfund a 529. I wouldn't go ham on that.

I wouldn't go $200K in it.

No.

And you don't even have to do 529. You could just have a mutual fund in the kid's name.

Absolutely.

You can just do that. This is for you to continue your education because more knowledge adds to the quality of your life, usable knowledge. And honey, we want you to do that because it gives you confidence, it gives you dignity, it gives you poise as a young woman, particularly as a young woman, young man too, but particularly that carries herself well, knows what the flip she's doing, right? You should not feel uncertain about investing, and you don't have to. That's why we created Investing Essentials, a 2-night virtual event where George Campbell and I walk you through my playbook for investing and wealth planning. We'll simplify everything from 401(k)s 401(k)s and mutual funds to passing on wealth so you can invest with confidence. Tickets start at $199. Get yours today at RamseySolutions.com/events or click the link in the show notes. Okay.

Let's take—

Thanks for joining us, America. Open phones at 888-825-5225. Leslie is in Auburn. Hi, Leslie, welcome to the Ramsey Show.

Hi, Dave and Jade. Thank y'all so much for your time today.

Sure.

So yeah, I have a boyfriend. He's on disability. He served as a Marine and has PTSD, which really prevents him from going out and getting a traditional job. I have encouraged him to develop some flexible side businesses related to skills that he's expressed interest in, such as landscaping or woodworking, but he doesn't really seem to show much initiative And I'm wondering, how do I approach this topic with him since we both agreed that if we were to get married that we want a more traditional setup where I can stay home at least part-time and homeschool the kids?

Hmm. So you know he's got PTSD. Is he also depressed? Like, is he feeling like he doesn't have purpose in the world? Because that's what I'm hearing you describe.

Right, it's on and off. He does have a bit of a kind of screen time addiction right now. Always watching TV or gaming, and I think that's just taking up all his time. But he does have— the PTSD is better now, but he does struggle on and off with depression.

And he's working— is he working with a counselor on that?

Not at the moment.

Mm-hmm. So what— why would it get better?

Time. You know, he said the PTSD is a lot improved.

No, it's not.

Okay. Yeah.

He's hiding in games.

True. They're all shooter games.

And he's depressed because he doesn't want to go out in the world. He doesn't have any hope. And so he doesn't want to go— his ambition's gone.

Yeah. I don't think there's anything you're going to be able to say in one sitting to convince him of that.

Yeah.

Okay.

He is not a— if he is not progressing in his healing and doing the work to progress in his healing, he's not going to have any change. And you don't want to be connected to the guy that you're connected to right now 10 years from now.

Right.

Yeah. If he doesn't— if he's not getting better, then, then you have a dream of the way things are going to look, but they're not gonna look that way unless he heals considerably from where he is right now. Is that fair?

Yes, sir, I think so. He also had a really hard childhood, so I think there's a lot of healing, but he's kind of lost faith in counseling.

There's a lot of reasons we could be here, but the reasons are all in the rearview mirror, and the question I've got is hope about the future, and hope about the future means, okay, I'm dating a person that's bipolar. I'm dating a per— that won't take their meds and won't go to counseling. "well, they're not going to get better. I'm dating someone who has a gambling problem, and they just won't do anything about it. They're not going to Gamblers Anonymous. They're not sitting down with a therapist. They haven't cut off DraftKings yet. And so, you know, they're going to continue to have a gambling problem." But you have this idea that they're going to be something they're not, and it's wonderful that you have that hope for him. Hope. I actually have that hope for him, and I don't even know him. As an American that he served in the military on my behalf, I have hope for him. I want him to heal. I want him to get his childhood and the horrible things that happened in the military in his rearview mirror and move forward with a healthy life. And I know many, many men and women who have, but they don't sit in the basement playing games all day.

Right, right.

Yeah, so in other words, I might reframe this. Can I be your old uncle? Ugly Uncle Dave for a minute?

Yes, please.

If he's not gonna get better, don't keep dating him.

Right.

For your sake. For your sake. Don't believe a— don't believe mythology about what you wish. Actually observable things that he is doing, actual behaviors that he is doing that are moving forward for him becoming the the man that God designed him to be. But if he's not gonna engage in those movable, observable patterns, then this is mythology that's in your head. Don't mess yourself up on that, kiddo. So he needs to be moving back to earn the right to date my niece, the Princess Leah. Mm-hmm. Leslie, this guy has to earn the right by working on his healing.

That's right. And you need to have some very clear milestones in your mind of what that looks like so that if the box is checked green, you can go, "Great, he's doing that." And if the box is checked red, you can follow that down the line and go, "Okay, now it's time for me to move on." Exactly.

Exactly. That's what I would do. Yeah. But you can't— take your ambition and inject it into someone else's veins.

No, you can't, and that's the hardest thing.

You can't take your hope and inject it into someone else's veins.

No, you cannot.

You can lay out a plan and say, "If we did these things, here's what would happen," and give someone a reason to have hope, but you can't make them accept it. No, you can't. That's the hard part. Horses don't drink just because you led them to water.

Whew.

Man, that's a hard one.

That is tough, yeah.

Emily's in Dallas. Hi, Emily, how are you?

Hi, I'm good. How are y'all?

Better than I deserve. What's up?

Okay, so my husband and I are in Baby Step 2. We have 3 kids and 1 on the way. And I want to start planning to be able to stay home eventually with my kids, and we've gotta get out of debt first.

Okay.

So my question is, is, should we pay— should we sell our home, our current home that we have quite a bit of equity in, use that to pay off most if not all the debt, downsize as a family of 6, and live in a smaller home for a few years while we get that debt paid off?

Wow, you're really willing to embrace some, some discomfort here. How much debt are you trying to pay off?

I believe it totaled about $84,000 to $86,000. Oh, All right, we have 2 credit cards and a line of credit. That's about $12,000. My student loan is $13,000. My husband's grad school loan is $25,000. We have an auto loan that's $16,000. And before you told me to sell the car, the car's only worth $8,700. We consolidated debt stupidly a few years ago, and so the loan is more than the car is worth. And then we have a home improvement loan that's tied to the mortgage. It's $20,000. And then our mortgage is $212,000 with a lovely 3% interest rate.

And what is the home worth?

I think if we sold it, we could maybe make $340,000 to $350,000. We have not gotten serious comps on it yet, but just in my research, that's what—

And what's your household income?

We bring home about $95,000 to $110,000 per month, sometimes a little bit more. I'm in sales, so I occasionally have a bonus.

So you bring home $9,500 a month?

Yes, my husband and I.

Got it. Okay, so about $150K a year.

Yes.

What portion of that is from you and what portion is from him?

Oh gosh, I think his after taxes and everything on our budget, it's $4,731.

Okay.

And mine is the rest.

Okay, so we've gotta get this to the point where you can live on $4,700 a month, assuming nothing changes in his income.

Yes, and he is trying to up his income. He's a teacher and a coach looking into some principalship, things like that. But right now, that's what it's at.

Do you like your house?

I do. We've done a lot of work to it. It's not our forever house, but it fits us well right now.

What do you pay for it every month? What's the mortgage?

Our mortgage is $1,947.

Ooh, that's pretty good. I don't see how today selling the house is the key to this, 'cause I think I heard you say you owe $312,000 and it's worth $340,000.

No, $340,000 and they owe $212,000.

$212,000, okay.

$100,000, it clears up their debt. They'd be 100% debt-free if they sold it. Yeah, I might sell it and rent it. Rent for a couple years and save up my down payment for the next house. But the next house has to be purchased in such a way that it allows you to quit. That's the trick. But, um, yeah, if you want to be debt-free quick, that's one way to do it. I would not sell it and buy again. All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates, but when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey Trusted Agents aren't just experts who guide you through buying or selling. They're people you can trust to have your back from the first first call to closing day. Find a Ramsey Trusted Agent near you at ramseysolutions.com/agent. That's ramseysolutions.com/agent. Mm-hmm. Proverbs 3:3 is our Scripture of the Day. "Let love and faithfulness never leave you. Bind them around your neck, write them on the tablet of your heart. Then you will win favor and a good name in the sight of God and man." Mm.

Conrad Hilton said, "Success seems to be connected with action. Successful men keep moving. They make mistakes, but they don't quit." Almost what we were talking about with Leslie a minute ago.

Uh-huh, that's right.

There's action involved. Martha is in Nashville. Hi Martha, how are you?

I'm good, how are you?

Better than I deserve. How can I help?

Yes, I'm calling because about 9 months ago, well actually I would say 8 months ago, me and my husband decided to pull our kids out of public school and homeschool them for a bunch of different reasons. And we have done that, and now I'm actually eager to go back to work for a bunch of other reasons. And so I'm just calling to see if it is the best choice and asking me to put my kids back in public school and go back to work full-time.

What changed?

Um, well, about a year ago, or actually right before we started homeschooling our kids, we were in marriage counseling for about almost a year at that point, and, um, The very last session that we had had with our marriage counselor, he had recommended to me that I separate from my husband due to some verbal abuse and emotional abuse that was going on. That, in all honesty, I'm not really for sure if I would consider verbal abuse or emotional abuse, but he had picked up on a few things that we had talked about. And so, I let it go, and we said that we wanted to take a break. And counseling also got very expensive. Expensive for us. Well, about a couple of months later, or a month later actually, um, something changed where I just felt in me that we needed to homeschool, and I brought it up to my husband and we proceeded forward. Well, the last 8 months—

I'm sorry, what does that have to do with the whole marriage counseling thing?

Um, I, I, I really don't know. Um, it's very confusing to me as well, but, um, I guess I had just ignored anything the counselor had instead, and I had proceeded just to move on with my life as if he had never went to marriage counseling.

Okay, so you approached your husband and said, let's do homeschooling. You started doing homeschooling, it's been 8 months, and now you want to go back to work. What, what has changed?

Um, we're not on the same page financially. Um, that got brought up in marriage counseling as well, and I ignored it then.

I understood.

And so homeschooling, in all honesty, has brought out a lot of things that I, I guess I was blind to before, or I ignored. But being home as much as I have been and seeing the chaos that has run amok in my house, where the discipline is not there, the interest in the Baby Steps is not there, the interest in about anything in our marriage is not there. And I guess I needed homeschool to at least show me that.

Understood. So you're seeing the money is a mess, everything's a mess.

I got a feeling you want to get a job so you can leave.

Um, I don't necessarily want to leave, but I do want to get out of the house and And I didn't realize how much I was gonna miss working until I stopped working. And since we are not on the same page financially, I don't know how you getting a job is gonna fix this entire soup that you have explained. I don't believe that it will.

You're in the middle of a soup being stirred around, and you getting a job versus homeschooling is, is just one item in the rest recipe. And you keep jumping from one thing to another thinking that have nothing to do with your marriage problems, thinking it's going to fix your marriage problem. And it never does, because you refuse to address the marriage problem.

See, I don't— I don't think I'm trying to avoid addressing the marriage problem.

Yeah, you both quit, and then you quit work to come home with the kids for no— that has nothing— it's not connected at all to your marriage problem.

If you tell me— It just seems random and impulsive. If you tell me you went and saw a marriage counselor because you needed a professional to step in, and then the professional has said, you've got a problem here, you've got a problem here, and a problem here, but you've said, I've ignored what he said, and you've done your own thing, then yeah, I think that's where the issue is. You got to listen to the professional.

99% of what will be fixed in your home is going to be fixed when you guys get your marital issues aligned and spend your time on that. I would spend all of my energy on that. If you want to go back to work while you're doing that, that's fine. Or if you're going back to work and in your mind you're going, "I need some money because I need to hire an attorney and this is over," then that's a decision. That's a logical decision. I'm not sure it's a good one, but it's a logical one at least. But this just, "I'm gonna come home and then I'm gonna go back to work and then I'm gonna come home," and meanwhile everything's burning down around me and I'm ignoring that.

Yeah.

And that's not okay. There's not they're gonna help you. So yeah, go on back to work. That's fine. I don't care. Doesn't matter. But you're still gonna have hell on earth until you deal with this. That's not going away until you deal with it. So you've— my suggestion is you use some of your new income to pay the marriage coun— another marriage counselor, a different one, and the two of you lean into that. And if you're not gonna lean into that and heal this thing, then call it. If you're not gonna fix it, call it. Because your children are suffering in the middle of this cesspool right now that you call a relationship. Mm-hmm. Relationship. It's awful. Bill is in Raleigh, North Carolina. Hey Bill, how are you?

Howdy, howdy, how's it going? Doing well.

Good, how can we help?

So my grandma really wants her childhood home to stay in the family, and my wife and I were thinking about buying it from her. And so we've actually been renting it from her to kind of test drive it and see if we like it. And I pitched to her last weekend the idea of doing a rent-to-own situation rather than going through the traditional traditional bank because I've never had a loan in my whole life and I don't plan to get any debt ever. And she's on board with it. So I just want to know where from here we should go to get like a lawyer involved to make this official.

I would not do a rent-to-own, but I see what you're after. I'll give you a different structure. Okay?

Okay.

What's the house worth and what's she going to sell it to you for?

It's worth about $130,000 and I think she's going to sell it to us for about Okay, and how old are you two? Uh, we are in our early 20s. I'm 23.

And what do y'all make?

Uh, I make around $62,000 and my wife is a stay-at-home mom.

Okay, all right. Well, a couple things need to be addressed. How old is Granny?

Uh, she is in her late 70s and we have talked about the situation in which she passes away. She's, you know, that's been in the conversation.

Yeah, if she passes away, you've gotta have legal documentation that protects you. Exactly, exactly, that's what I'm asking. And so what I would do if I were her and I wanted you to have this house is I would sell it to you for $100,000, put it in your name.

Okay.

And I would carry back the note. And when I die, the note is forgiven.

Okay.

That's what I would do if I were her and I wanted you to have this house. Okay?

Right.

Now, the downside of that is, is there— your parent and siblings, your aunts and uncles, might feel cheated out of $100,000 Right.

Uh, it is an older home actually, and my wife and I have been putting a lot of work in.

You don't need to put work in somebody else's house. Stop that. You do not own this house. Do not put any work into someone else's house.

Okay.

Don't do that. That's going to end up in disappointment and anger later.

Notice.

Okay. She dies, you got nothing written down. If she dies tomorrow. All the work that you put in is going to be taken by your aunts and uncles, and they're going to sell that house and they're going to make money on it, on your work. Do not do this anymore until this house is in your name. Stop working on it.

Well, she's paying me for the labor fees, so I'm— it evens out, I feel like. But I understand what you're saying.

Okay. Yeah, but you've got your heart and soul going into this, and you're going to get your heart broken if you guys don't get this written down and quit acting like it's all going to work out. Out. So get it written down, whatever it is. Go to a real estate attorney and come up with a structure of some kind in writing that protects you in the event of her death. And then lastly, I'm gonna go ahead and disappoint grandmother. There's 0% chance you're gonna be living in this house when you're 70. Zero. Keep that in mind. Mm-hmm. That puts this hour of The Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Amen.