Transcript of Building Wealth Requires a Long-Term Investing Mindset New

This is an ad for BetterHelp. Stress from money problems doesn't just stay in your bank account. It shows up everywhere in your life. Talking to someone can help you sort it out. Go to betterhelp.com/ramsey to get 10% off. 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 in the Fairwinds Credit Union studio, this is the Ramsey Show. I'm Dave Ramsey, your host. Jade Washall, number one bestselling author, Ramsey personality, is my co-host today. Open phones here at 888-825-5225. That's a free call, and some say the advice is worth exactly what you pay for it. Leonard is in Sacramento. Hey Leonard, how are you?

Doing good. How are you guys today?

Better than we deserve.

What's up? So, uh, long story short, me and my wife have, uh, together about $86,000 in debt. We make about $200,000 a year, and our current house and situation where we're living has rendered us paycheck to paycheck every single month. We have no money in savings. We have no dispensable money whatsoever.

Okay, and, um, what is the, uh, what's your house payment?

So we pay rent, um, our house is $3,300 a month.

Okay, and, and all of our other— go ahead—

uh, all of our other like utility bills accumulate up to about an additional Between $400 to $600, so we're paying about $4,000 alone in just rent and utilities.

What's the, what's the $86,000 in debt?

So we got a little marriage happy and got into a truck payment on a high interest rate and high monthly payment.

So it's just one truck for $86,000?

No, the truck is, we bought it for $62,000 and we currently of $55,000, and that $55,000 has not moved at all in the past 12 months due to interest.

Got it. I think we've identified the problem, Leonard.

Yeah.

It's one of the problems. What's the payment on the truck every month?

$1,142.70.

Okay, that's one of the problems, but there's something else going on here because you're taking home over $12,000 a month, right?

Yes and no. Um, I also, I pay $1,500 a month in child support.

Okay.

So, uh, that's, that's another $1,500 per month. And then, um, we have credit cards, like credit card bills that take up, you know, hundreds, a couple hundred bucks a month as well.

Right. But I still got a lot going on here.

How much is coming out for your 401?

I do not have 401.

How much is coming? How much of a tax refund are you getting?

None. I am maxed. The past 3 years I have owed like $6,000 every year.

Okay, then this has got to be a budgeting issue. I think that you guys make a good income, and as a result of that you can get a little bit reckless. I think that's what happened with the truck, and I think that if I were to plug your numbers into EveryDollar I'd see a lot of areas that would surprise you that you could cut back in, and probably a lot of them are food and lifestyle. Is that fair enough? Are you there?

Leonard?

I think Leonard flew the coop a little bit. Here's where I get that from, Dave. If he's bringing home over $12,000, he gave me $4,000 of rent, he gave me $3,000 of child support and truck payments. He's still got a lot left to go. That's only $7,000. So unexplained, unexplained. So that's why I say that. And I think that that is a key problem when people have a higher income. It gives you more guard, more margin to act silly and more margin to get sloppy. And I think that's probably what's going on here.

Yeah, we're training the next Olympian in dance class, the next MLB player in travel ball. There you go. We're eating out fine dining frequently. We have a wonderful vacation every year, but we can't make ends meet. And so, yeah, so you're going to have to go to scorched earth on the lifestyle, get a detailed budget, find the margin in the detailed budget by using EveryDollar. It'll point the margin out to you. It's one of the things that it's built to do. It'll show you immediately and you'll be going, "Oh my God." Every time somebody does it, me included, when you first do a budget, you look at it and go, "I'm so bad. Where's all this money going?" Yes. It just, you have this moment, you're like, "I'm stupid." And so, you're not stupid, but you've been doing stupid stuff. And so, all of us. And so, when you find that margin in there and you get that stuff going, and you sell the truck.

You gotta sell the truck.

Sell the truck, cut up the credit cards, go to scorched earth, and you'll be out of debt and in control and have margin, year? A year?

Oh yeah. And part of that, when we talk about the budget, probably the key behavior that a lot of people don't do is you've got to track your transactions just about every day. And that's the way that you stay on top of the numbers. A key thing that I find that people do that's actually wrong is they make the budget for the month, green check, that's great. But then they don't check in with their budget until the end of the month.

Which means you're not living on it. You're not living on it. It was a theory.

Yeah, and then you—

It wasn't a guardrail, it was a theory.

And then you track everything and you realize, oh, I was over budget here and I was over budget there. And by that time, it's spilled milk. There's nothing you can do about it.

Yeah, it's like you put, you put, uh, the address in your GPS and then you never look at the map, right?

You just, I think it's this way, right? Bad idea.

Pretty over there, let's go over there, and let's go over there, and squirrel, let's go over there.

Yeah, but when you track the transactions in real life, in real time, you say, okay, here we go, I, I've, I've already spent half of my grocery budget and it's only, you know, a week into the month, I need to pull back, right? You can start to make changes.

You and Sam did a lot of work on cruise ships and you know this, that a cruise ship is never on course. 100% of the time, they are adjusting 1%, 2%, 1%, 2%, based on the currents, based on the winds, based on the weather, based on speed, whatever. But they're all— you're 100% of the time— and if you actually— you can't see it, 'cause it's imperceptible, because it's 1% and 2%, but they're constant feedback and constant adjusting to the plumb line, to the actual target. And that's what the daily check-ins do, and it forces you to do this stuff. And it forces you to look at stuff like, "That car is brain damage." Yeah. We can talk about it a lot of different ways, but the largest thing that Americans buy in the typical American budget that is stupid is cars.

Yes.

And it's like stupid on steroids. The level of money we spend, and go and get a car that's completely out of control, "And well, just sign me up for 21%, because while I'm out of control, I'm just gonna be all the way out of control." But we do it. And guys are worse than gals. Men will impulse a freaking pickup for $80,000. He said a marriage thing, and he's driving the pickup. And he blamed it on the marriage. Come on, Leonard. I'm gonna blame it on Leonard, okay? So, when Dave buys a pickup, it's Dave's fault. Hello. 'Cause guys, we— You just get into cars. Some guys are more into cars than others, but I'm redneck. I like the loud mufflers and all that stuff. I love a good muscle car, a good sports car. I love all that. Now, my wife thinks a car is just a really large purse. But she's not as into the car, other than she wants it to start when she sits down in it. But other than that, she's like, "Oh, this seems to be a nice car." "Yeah, you have no idea how nice this car is.

You should really enjoy it." "No, it's a place to put the things I just bought at Target." Wow.

You know, car payments have caught up to student loans, Dave. $1.66 trillion. Oh, that's painful. I didn't think much could get as stupid as student loans, but there you have it.

I just had a whole nother rant.

Took your breath away.

And I'm not going to have time.

We got another segment.

Hey, you guys, did you know that there are thousands of data brokers whose entire business is collecting and selling personal information? Things like your home address, your phone number, and even your relatives' names. You guys, that is just crazy. But that is why I use DeleteMe, because those companies that pull information from public records social media, and all kinds of other places. Then suddenly all that information shows up on random websites, and removing it yourself means going site by site, filling out forms, and hoping they actually take it down. It takes hours, and then it can even pop up somewhere else again. But Delete.me's team of privacy experts removes your personal information from hundreds of those data broker sites. And within a week you'll get a report showing what they have found and what they have removed. And they keep scanning and cleaning up your data year-round. So take back control of your privacy. Go to joindelete.me.com/ramsey and get 20% off your annual plan. That's joindelete.me.com/ramsey.

Timmy is in Salt Lake. Hi Timmy, how are you? Whoa, try again. You're absolutely broke up. Your phone's not working.

I'm sorry, can you hear me better now?

Yes sir, try again.

I was just saying it's a pleasure to speak to you. I'm doing great. How are you guys doing today?

Better than we deserve. What's up in your world?

Thank you, sir. Um, so first I just want to say I'm really grateful for what you guys do, and I'm calling for your advice. I'm a husband, father, and I just need some guidance in my situation here. Um, so I've been laid off for 2 months. I just accepted a job offer, but it is a major pay cut, and we still have $24,000 left in Baby Step 2. My question today is, should I sell our vehicles and just get a second job to attack this debt, or focus on replacing my old income first?

Both. Yeah, you need to take any job until you get the job.

You did. So what were you making?

So I was making $112,000.

Doing what?

Uh, Um, I was a manager at an insurance company.

Okay. And the insurance company, it wasn't doing well and laid people off and you were one of them.

Yes, sir. Yeah. And I got some severance pay. We had a little bit of savings. We were just tackling debt, um, like knocking out credit cards. We were on this final one here and then boom, I got laid off. I finally received a job offer. I've been applying like crazy, interviewing a ton, and I got an offer for about $27 an hour, um, which is basically like half of what I was making.

Yeah, doing what?

Um, it's still in insurance, just a different type of insurance. Um, kind of starting out from like level 1 basically, but it'll be under the small business side of things.

Okay, I would take that for the time being because you need something, but I'm not settling for that.

That's for today to get you off the street. Okay, what do you owe? What kind of debt are you carrying in Baby Step 2?

It's just a personal loan. Our payment's about $600 a month. Now I have 3 vehicles that I'm considering selling and just like getting a second job just to knock it off.

Well, tell us about the cars, the 3 of them. What are they each worth?

So to our dad's fun car, um, I've got a Corvette, uh, it's a 1986 Corvette, pristine condition, and then a Pontiac Fiero. Um, I could probably get like $12,000 for both. And then we have a second family car that's probably worth $6,000, $7,000.

So you own a total of 3 cars including the 'vette and the Fiero?

Yeah, we have, well, we have 3 cars and then we have, um, like a, like a family car that we would just use.

4 cars. 4 cars.

Yes, sir. Oh, yes.

Okay. So if you sold the Vette and the Fiero, that would pay off the family loan or the personal loan?

Pay off half of it.

Yeah, pay off about half of it. I think I could probably get down the personal loan from $24,000 to about $10,000.

Oh, they're not worth $12,000 each?

$12,000 together?

No, no. Yeah, I've been like going to dealers, CarMax, Kelley Blue Book, trying to like sell it online.

Yeah, that's usually wholesale, and those are cheap enough cars you probably could attract somebody in private sale and get a little bit more. They're only selling for $6,000 or $8,000 apiece. So I mean, the Corvettes, you're going to attract somebody that's just interested in that cool old car. You know, um, same thing with the Fiero, I guess, sort of. But yeah, um, are you the only one—

are you the only one working?

Yes, ma'am. Um, I am the primary breadwinner. My wife, um, she takes care of our kids. She does have a small side hustle. She does like, uh, flower arrangements.

And how many children do you have, sir?

I have two, sir.

What age?

Um, 5-year-old and 1-year-old.

Okay.

Little's. All right, well, yeah, she's probably gonna have to do more than arrange flowers, and she can do that from home while they're in daycare taking a nap or whatever it is that she works her schedule around, to where she can make a lot more than the few hundred dollars a month doing flowers. She's not making anything doing that. That's a hobby. And then you're gonna pick up an extra job, and you're gonna sell at least those 2 cars for sure. But this is not a debt problem. This is an income problem. This is a career crisis where you go from $112,000 to $50,000. That's your problem. The other things are little things we can do to kind of shore up while the waves are crashing in, but the big deal is for you to get back to $100K. And where are you going to do that, and how are you going to do that? And it's not just applying for jobs. It's getting your foot in the door on a job and using the skills that you used to run the insurance company before You know, you could be a project manager with those kinds of skills because you have administrative skills and people skills.

You know, a lot of different things you're doing when you're a general manager in an agency like that. So you need to start looking at that that way and reset this in your mind so that you don't look up 4 years from now and still be making $50,000 or $55,000.

Absolutely. Yeah, you can't consider the $112,000 a fluke. You have to consider that your new standard.

Once you have driven at 112 miles an hour, it feels weird to drive at 50. Your body is now reset at 112. Your mind is reset. Your spirit is reset at 112. And so you should, if you keep a positive attitude and keep looking for opportunity and how can I do this, who do I know that works over at that place where I want to be doing that thing? What is it I always wanted to be and I accidentally got in the insurance business? What was it I wanted to be before that that pays 200? And just reset your whole way of looking at things and continue this career to where this is just a temporary setback, not a permanent path.

Yeah, and we can give you Find the Work You're Wired to Do. That'll help you convert those skills into other career paths along the way.

Stephanie is in Canada. Hi, Stephanie, how are you?

Hi, how are you guys?

Better than we deserve.

What's up?

So my husband and I are having a little bit of a disagreement on when the right time to upgrade my car.

Cool. How long y'all been married?

Uh, over 13 years.

How old are you?

And I've been driving— I am 40.

What are you driving?

About 15 years old, uh, 15-year-old Honda Civic.

Okay, it's a piece of crap. All right, are y'all broke?

Not at all. We make about $250,000 combined.

You have money?

I can pay cash, but we can pay cash.

We make decisions on our cars. How much are you thinking of spending on the new car?

This is a bit of disagreement. Uh, the car, and this is Canadian dollars, so the numbers are a bit bigger. Uh, it's a secondhand SUV. It's, uh, not a Honda basic, but it's slightly above. And it, with taxes, it is about $50,000.

$50,000.

Okay. And what does he drive?

Like 5-0.

What does he drive?

He drives a Hyundai. Another piece of—

Oh, his is old too?

Okay, so this guy hates spending money on stuff.

No, he got it last year. It's not old, it's not new new.

What's it worth? What'd he pay for it?

We paid about $47,000 for it.

Okay. Do you have debt?

Zero debt, except for—

Okay, so we can buy his car for $47,000, but we can't buy yours for $50,000? I'm confused.

Well, it's, it's not that we can't, it's more—

No, I mean, I'm talking, I'm looking at him. He says, no, you can't buy a $50,000 car. I just did, but we won't want to buy one for you. Yeah, that wouldn't go at my house.

But he wants me to wait another 2, 3 years and it's already no AC in my car, uh, no backup camera.

Just tell him, tell him to take your car and you drive his.

Yeah, there you go.

Uh, my car is a manual. He doesn't know how.

I— well, then he's gonna have to learn because he thinks it's an awesome car. And I guess that's what— besides that, we have a lot— it's federal law in America, wife gets the good car. Y'all need to— do you all need to pick that up in Canada? I'm just saying, I think that's a good rule. So no, this is, this is weird, honestly. The fact that if you have the cash and you're just wanting to spend what he just spent on a car, but you're not. Yeah, you lose the argument, my man. My man Stephanie, she's, she's right. You done lost. We're throwing a penalty flag on this one. Statistics show that half of Americans don't have enough life insurance, or they don't have any at all. I don't understand this, John. Why don't people want to take care of their family? They think they're going to die or something?

Well, I used to be one of those guys. I didn't even think about it, and one of my buddies said, hey, the only reason to not have life insurance is if you hate your wife and kids. And I immediately went and got term life insurance. That's a gut punch. And oh, You're telling me. And for decades, Dave, I've sat across people who've lost a spouse. They've lost somebody important to them.

Me too.

They don't know what to do next.

Me too. I mean, you're going to have a crisis here. And, you know, you got two options while you're sitting and talking to a young widow. She's concerned about how she's going to invest all this money properly and not mess this up, or she's concerned how she's going to eat tomorrow. That's exactly the two options. And take care of your dadgum family.

Term life insurance can replace income, pay off debts, cover funeral expenses so your family can actually have the opportunity to just be sad. Yeah, to just miss you.

That's exactly what it's supposed to be. It's saying I love you to your family. Term life insurance. Jeff Zander and the team at Zander Insurance makes it easy and affordable. I've used them personally for 25 years. They're the only people I trust. Go to zander.com or call 800-356-4282. Keith is in Omaha. Hi Keith, how are you?

Oh, thank you. I'm fine.

What's up?

How are you? Good.

How can we help?

Okay. Yes, I'm in a situation where my sister is running without any financial conscience at all. She's running up her credit cards., and my mom is willing to bail her out. And it's at least into the hundreds of thousands of dollars over the last 5 or 10 years. And so that's really eating away at what should be coming to my inheritance, my kids' inheritance. And there's just, there's anything I can do, I would love to know.

Okay.

So your, your, your mom is wealthy.

There, yeah, there's money coming in. Um, there's, uh, yeah, there's a real, real significant, uh, amount of wealth in the family.

Yes. So what does your mom, how much does she have? A million, $20 million?

It probably could be. I don't, I don't know exactly, but I mean, you have an idea.

Give me, give me a guess.

Oh, it's, it's, um, Probably a million, could be $2 million, I don't know.

Okay. $1 to $2 million.

But it's not $100 million.

All right.

And the problem is your sister's—

It's just you and your sister are the only two siblings?

That's right. You're still the only one coming into the estate too.

And how old are you?

I'm approaching 59.

Okay. And what do you make a year, sir?

Okay. I'm, uh, had a long career as a software developer. We're in a new career now. We're managing apartments and are, um, we're in a basically low income, uh, low expense mode here. And, um, basically starting to get up and about the $35,000 a year range. Mm-hmm.

So is there a plan for that to be a good income later?

It's, it's building. Uh, we acquired a new property. Um, we are trying to turn the corner and start getting some savings from it. Uh, we've got, you know, my retirement funds available, especially as I get to 59 and a half to help us.

And how much do you have saved in your retirement?

Uh, it's in the neighborhood of $500,000.

Okay. That's good. Good job on that. So the apartments, did you buy them?

Yes, we own them. Green, clear. Haven't taken any loans.

Um, and you, and you, how, what are they worth?

Um, it's, uh, 3 different properties. Um, together could be probably about $800,000, something like that.

And you only make $35,000 on an $800,000 investment? That sucks.

Uh, well, one of them is the one we live in, so we're, we're, you know, I can't, I can't separate it exactly out because we have one, one apartment that we do in our, in our building. But what is that worth?

I mean, if you took your home out of it, you still don't have a good rate of return. What's, what's wrong with the rent roll on this?

The new, the second property. So if we take mine out, then we've just got the two properties and the one is still just finishing. So we haven't really turned it around to start the income on it yet.

Oh, it's being renovated.

It's just almost finished being renovated. We got one—

I see. So when it's renovated, what will your income be?

Well, that's what I'm hoping is going to, —down the corner and more toward $40,000-$45,000.

So you're gonna be making a whole $45,000 on all of these apartments. That still sucks, man. Your rental rates are horrible for the money you've put into these things. So my reason for asking all of this, Keith, is very simple. Um, your mother has some money. It's her money. She's allowed to do with her money whatever she wants to, even if it's stupid. Yeah. And even if it's harmful to your sister. And I agree that what she's doing is harmful to your sister. But the basis for you having an argument here is not that you are entitled to this money. I would prefer you, sir, at 59 years old, to go have a life and not be worried about your mama's income or your mother's inheritance to make your life good. I want you to go make your life good. And then we can look at this through eyes of strength. And say, how can I lovingly help my sister get her act together and my mom quit being a classic serial enabler? But instead, you're worried about you getting some money because you don't have any money other than you've done a good job saving for retirement.

But your income sucks, especially if you've got $800,000 in paid-for real estate and you're making a whole $45,000 on it. This is horrendous. I mean, I love real estate. I own a bunch of real estate. I can't imagine how mad I would be at myself if I bought into something that paid no more than that as a rate of return. That's nothing. Horrible. So, you know, we've got some work to do to get our rates of return up on these rents and not $45,000 as your new career after you've been a software engineer and we're gonna go into retirement broke and wait on mom to die. This is not a good plan. Not a good plan. So, you know, I want you to approach this subject of dysfunction in your family not from your rights, because you don't have any. You're not entitled. Your mother could leave it all to your sister. She's allowed to do that. Would I agree with that? No. Do I agree with her paying— bailing her out on credit cards and continuing her overspending? No, I don't. But mainly because it's harmful to your sister and your mother, not because you are entitled to some of the money.

You, sir, need to go have a life and then not worry about it, and that puts you in a different place. I agree. Yeah, it's not a good look. So moms and dads, um, Rachel and I wrote about this in Smart Money Smart Kids many years ago, and I was just talking about it with the content team this morning. I think I'm going to do a talk out of it. I haven't done it in a while. I'm doing it with a bunch of wealthy people, and they always ask me, "How do I become wealthy and not ruin my kids?" And I always tell 'em, "Well, you can't. The wealth didn't ruin your kids. They were already ruined. The wealth exposed it, that you sucked as a parent. That's what it was." And so, you know, but the wealth— money doesn't ruin people. It exposes the fact that people suck. It makes you more of what you already are. It makes you more of what you are. So, the way you break that is, from the time they're they can talk and walk, you would start with gratitude. Yes. Gratitude. Thank you. Please. In the South, we called it manners.

I know. That's right. Yes. Thank you, Mom, for dinner, for standing over that hot stove. Mom, I'm going to help with the dishes. Yes. "Because if I don't, Dad's gonna hurt me." Because you're gonna learn gratitude. You're gonna count your blessings, right? You're gonna say, "Thank you, Lord, for bringing me this food.

Thank you." The world doesn't revolve around you. Thank you.

And that leads to the next one, which is humility. But you can seldom be humble without first being grateful.

I agree. Yes, Dave, very true.

And then, if you're humble and you realize it's not all about you, the axis of the world doesn't run through the top of your head, after all, then the natural thing that happens is contentment. This is where contentment comes from. Contentment doesn't just evolve as lightning in a bottle. It's a series of events that comes through gratitude and humility that says, "I'm not entitled." No. It's the antidote to entitlement is gratitude, humility, and contentment. And so, you know, I can remember one of my kids, we finally, we were driving this old piece of crap car, and we were broke, and finally scraped a little bit of money. Things were starting to get a little better at the Ramseys, and we got the car.— and, you know, at our house, we always would, especially when I was growing up, but even with our kids, we do it too. Get a new car, everybody gets in the car. It's not a new car, but it's a new-to-us car, just a slight upgrade. But we're all gonna drive around the block in the new car. And one of 'em lays back in the back seat and says, "We're doing pretty good." My favorite story.

And I said, "We aren't doing anything. You are broke. I am doing pretty good." You got nothing. I know, that's right. You are a poor child that lives with me. That's what you are. We aren't doing anything. You got a mouse in your pocket. We haven't done anything. All you do is consume. I know, that's right. You are not a producer at this stage. Freeloaders.

This show is sponsored by BetterHelp. Summer is here and whoa, everything changes this time of year. The kids are out of school, routines are out the window, you're traveling more, probably sleeping less, And if you're not careful, you and your family can end up running on fumes. I know I'm running on fumes right now. If you don't take time to slow down and take care of yourself, all that stress is not just gonna disappear. It will show up in your body. It will show up in your relationships. It will show up in your work, in your patience, everywhere. This is why I'm a big fan of BetterHelp. BetterHelp is an online therapy platform that matches you with a licensed therapist based on your goals and preferences. All of their therapists follow a strict code of conduct, and you can message yours or schedule sessions right in the app. And if it's not the right fit, you can switch therapists at any time for no extra cost. Listen, you don't have to carry everything all by yourself this summer. Go to betterhelp.com/ramsey to get 10% off. That's betterhelp, H-E-L-P, dot com slash Ramsey.

Marie is with us. Hey Marie, welcome to the Ramsey Show. What's up? Hi, nice to meet you all. You too. How can we help?

So we desperately need to buy a new house and we are trying to become as most debt-free as we can. I don't think we're gonna be able to do it all by the time we need this house, but our biggest biggest loan is our solar panels. Um, it's $40,500, and we'll pay it off by the year 2047. Might as well be dead by that point.

What in the world?

So long. It is so bad. But the reason we did it was because we were homeless for 2 years before that, and our budget was so tight. We needed— we couldn't have our bills fluctuating. $400 every month, and then sometimes it would go to $400, sometimes it would go down to $80, and we never knew what we were going to get.

Wait a minute, stop please. Please tell me you know how stupid this is now, that you traded $47,000 for a $100 fluctuation in your utility bill.

Yeah, it was like a $300—

yeah, it was, but it's—

but still, either way, there's no possible way any of this math accomplished what you wanted to accomplish. You completely surrendered major long-term debt for a tiny little movement in your monthly budget. And don't blame it on you being homeless.

Tell us why you desperately need, which is strong language, to move right now, why you need a new house.

We have a 2-bedroom, 1-bath, 900-square-foot house. We have 4 kids and 1 on the way that's coming in December. We have our 3 oldest kids sharing a room and the baby sleeping with us in our room. Um, but my boys, my oldest are boys and they're getting to the age where they need to be.

How long have you been in this house? 4 years. How old were they when you moved in this house?

Um, well, my oldest is 11 now.

So I guess you already were the old woman in the shoe when you moved into the house. Yeah. You barely fit in there when you bought it. Wow. Yeah, you don't even know what that is. You gotta look that up after you get off the air. Okay, um, the, uh, um, yeah, you remember being in the street, but you also bought a house that wouldn't handle your family, and now you're, now you're realizing that. And it certainly wasn't a crisis when you bought it, and things have not changed except by one baby. Okay, now Now, what is this house worth?

This house has about $35,000 to $40,000 in equity right now.

Not counting the solar panels? Oh yeah, take that out. Then so nothing. So it doesn't have any equity when you pay off the solar panels because they're attached to the house. And what's the house worth?

About $235,000. We're at $186,000 right now.

And, um, after all the payments we've made, so—

okay, now my screen says, my screen says, should we get our solar panel loan canceled? Why would you be able to get your loan canceled? Well, you know how Facebook is.

As soon as you start going in and searching something, it sends a bunch of ads your way, and you never know what's a scam.

Everything on Facebook is a scam. All of it. This is not a place to get solid information.

Yes, that's why I was calling, because it's— they sell a really nice story. So my— I keep seeing the same name of the loan, which I'm sure is done on purpose, um, of the people who sold us the solar panels, and saying that because they were making shady deals and things like that, that people are getting their loans forgiven. Is it a lawsuit?

Was there a— yeah, I don't—

there have been some lawsuits, but it feels a little shady. Like, I need to do some independent—

you need to do some independent research on that. Don't go by Facebook. If you want to know, just research if there's a lawsuit pending against that company.

Is there a class action lawsuit? Yeah. Or has the Federal Trade Commission gotten a ruling? There you go. Go to the ftc.gov. Go to ftc.gov. Federaltradecommission.gov.

Have you done that? No, I was going to ask what are some good places to search because I go on Google and I get all these companies that pop up with the same stuff, so I don't want to go in the wrong direction and then go into debt because of a lawyer or a fee or whatever, and that was unnecessary. What's your household income? $84,000. Okay. We have our three— our three kids are older, have special needs, so we homeschool. I have several chronic illnesses as well.

What's the nature of the special needs for the 3 kids?

Um, well, my oldest has severe anaphylaxis to a lot, um, and they have— all 3 of them have ADHD and anxiety, and 2 of them have autism. Okay. And I have Lyme disease and rheumatoid arthritis.

Oh my goodness, boy oh boy. Okay, there's a lot going on. What are you guys paying? What do you pay for the mortgage? Every month, what do you pay?

$1,400. And in November, that will go up by $300. The windows on our house were cracking and it wasn't safe. They were single-pane from 1984. So we have to get new windows for the house. So to answer the payment—

let's answer your question at hand. You don't have the money today to move up in house. You just simply don't. And we don't want to add insult to injury. The The best thing I could think of is if you're trying to find another place that you could rent for a while that's got an extra bedroom that's in the same range, the $1,700 range. If you got your house sold. Uh-huh. If you sell this house and that can buy you some time to save up a down payment.

Yeah. Okay. Marie, I'm gonna be honest with you and love you. Are you ready for me to do that? Absolutely. You sure? Brace yourself. Put your seatbelt on.

Okay. It's already ugly here. It's all good.

Okay. All right. You guys make a lot of decisions that are large decisions that are very drama-based. Suddenly the 1984 windows were dangerous. No, they weren't. A window salesman called. Suddenly we couldn't afford— we were homeless. And so we bought a house that doesn't fit our family instead of going and renting something that fit our family. And so we went from drama to drama to drama. Oh, and we bought $47,000 worth of solar panels to stabilize a $300, $200 utility bill with another bill that is equal almost that. So all this stuff is— you go to drama, and every time I do drama, and you too, Marie, every time you've done drama, you've made bad decisions. Anytime I get feeling desperate, right after I get desperate, I get stupid. And most people do. So if you feel this rising up anxiety inside of you that this house is a crisis, this utility bill's a crisis, this homelessness is a crisis, and you can't— and you build it to where you justify doing something really dumb to get away from the crisis, you're making things worse every time you do that. You've made 3 large, bad decisions in this phone call, and they all were based on that pattern.

So you've gotta take a step back and take a breath, and you've got a lot on your plate. I mean, you got all kinds of special needs in the house, you're doing it all in 900 square feet, you were doing it in a homeless situation before. Those are they're all real stressors, but when you're in the cooker like that, you gotta be real careful to move carefully and slowly on the next step, otherwise you're gonna step on a rock and fall in the creek. And that's what I do. I get desperate, I get a little jinky, and all of a sudden I get stupid. And you've done 3 really large bad ideas. You should not have bought that house to stop being homeless. You should have gone and rented something that fits your family. You shouldn't have bought windows because they suddenly were a problem from 1984. Crap, those windows were in that house when you bought them. And then you shouldn't have bought solar. So, I mean, I'm picking on you. I told you to put your seatbelt on, but I'm loving you well, hear me, because I can see this pattern real clearly, and if you don't break it, it's never gonna go away.

Yeah. And so I want you to stop. So yes, I want you to investigate and see if you can get rid of the solar loan. It's possible. I'll give you a 10% probability that this particular company has been set up by the FTC and the loans are being forgiven. You can check it out, Federal Trade Commission, ftc.gov. I would pay a lawyer $500 to research it for me and check it out. Against $47,000, that's a good investment. And find out if there's a, a class action suit or something out there, or Federal Trade Commission ruling out there to get rid of this. That'll help help you get this house sold and then gently and carefully and calmly go rent something. 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 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. Andy Andy is with us in Dayton, Ohio. Hi, Andy, how are you?

I'm well, Dave. Good, how can we help? Well, before I ask my question, I just wanna say, first of all, thank you so much to you and your team at Ramsey Solutions for helping my family and I to be able to get out of debt and be successful financially, and then to equip, your equipping of us to be able to help other people through doing FPU at our church and doing personal financial counseling. Wow. And you guys have just been such a blessing to us.

Thank you. Sounds like you guys are a blessing. We appreciate you partnering with us. Thanks.

Well, it's been great. So here's my question. And this is— it's kind of a summary of experiences that we've had counseling people, but it also includes our own experience. And I'm using our numbers because it's what I have available. So I'm not trying to convince you to change your program, but I am kind of asking for help for those of us who are still— it feels like we're still in the trenches even after following your program and being successful with it. So my wife and I started the Baby Steps in 2011. It took us 7 years to finish Baby Step 2. Ooh. We taught FPU several times during this period. And eventually, we paid off our home in 2023. And in 2025, we paid cash for a new roof. In 2026, we paid cash for a new-to-us car. We believe in the Baby Steps and we stick to the plan. But our problem is it sometimes, it just feels like there isn't enough. So here's the numbers. 17% of my income goes to taxes. $25,000 is just for groceries. We give 20%. Our utilities are 17%. Transportation is about 12%. Wait a minute, wait a minute.

What do you make?

What's your household income? About $67,000, not including overtime. Okay. So, if you total all those numbers up, that leaves 9% for retirement, insurance, and lifestyle. And we're not looking to live an extravagant lifestyle, but I guess our question is, when do we, when do we get to take a real vacation?

Well, whenever you want. I mean, you have to budget that in. I don't know how you're spending 25% of $67,000 on food. Well, grocery costs went up 38% in the last— I know what they did. I'm sitting here. Um, I'm talking about $67,000 times 25%. I mean, you don't have children. You have 8 children.

Nope. Both of my children are married and out of the house, but 2 people are spending—

2 people are spending $20,000 on food. $15,000 on food.

Groceries are expensive. Yeah, that's the number that we have. And we're not living extravagantly. Now we, we, we stick to— we try, we try to stick to a carnivore diet, but But that's not exclusive.

Okay, so back to your original question then. I just got sidetracked on that number. It was throwing me. Sure, sure. All right, anyway, the— well, you have a below average household income. Household income in America is $78,000. And yours is slightly below average. And you have zero debt, but all of your bills don't go away when you have zero debt. So I think the only— I don't think you're going to live a millionaire lifestyle on that income, but your income taxes shouldn't be 17% either. They shouldn't be that high. So I'm— you're a detail guy, so I'm struggling with— to be the guy to question all of your numbers, but I'm questioning some of them already. So I don't know the answer to your question philosophically, except to back up and say, if I had debt, I'd be screwed in this scenario. If you had a house payment and 2 car payments, I don't know how you'd make it in the scenario where you've got— where you've locked this down so tight that you only have 9% left to save for retirement. And you don't have a stinking payment in the world, including a house payment.

And somehow, from 2011 to 2023— wasn't it like 12 years?— you found enough margin in your budget to become completely debt-free and pay off your house. And now there's no margin. That's weird. Yeah, that is weird.

I mean, I think I think my guess is there probably is margin. It's just not what you thought it was going to feel like. And there's something to that. You made the point about the income, which is true. And there's something to that. If we talk to a teacher who makes a lower income because they love teaching and they love that, then we say, well, you're going to have a Camry lifestyle. That's just part of it. You're going to drive a used Camry. You're not going to have a ton of margin because because that's the income, that's the life that your income is affording you. And I think that there is just part of that, that the cost of living is high, and because of that, your income doesn't go as far.

It doesn't mean you're not free. Or did he say 20% on giving?

He said 20% on giving, 17% on taxes. That doesn't feel right.

Neither one of those makes sense.

Yeah, uh, 20% giving is a choice. He could be—

I would be doing my tithe at 10% until I got my retirement fund.

I agree. I agree with that.

I got my retirement funded. Says you're all— okay, and biblically speaking, the tithe is off the top before before anything. Offerings are from surplus. And regardless of whether some preacher tells you he wants the widow's mite to build his building, but I can argue about that teaching all day long. But the offerings come from surplus all through Scripture. And the tithe is baseline off the top before you do anything. So, and that's how Sharon and I have given our whole lives. And so, Yeah, I'm gonna check in on a bunch of these percentages if I'm you. Yes, his taxes would be 12%. I got 3 of them written down right here: 17% income tax, 25% grocery, and 20% on giving that I question all 3 of them. So anyway, check in on all that and dial it in, and then redistribute, and let's make sure we're getting 15% of our income into retirement, because you said you only had 9% left over to do that with, and to upgrade a car and so on.

So, now there is something to be said. He said he put a new roof on, he did new cars, things like that.

Where'd that money come from?

You saved it up and you did it. With what?

There's not enough margin here. He explained a budget that was gone, down to 9%, and 9% won't do those things if you did nothing. You know, I mean, so it didn't get him out of debt, it didn't get his house paid off. So, that's the other thing. So, something's changed and it's gotten— some of these percentages have fattened up a little since everything got paid off and since we did these other things. So, but you're always gonna have stuff come up. And you're never going— people would get confused. I wrote about this in Baby Steps Millionaires too. We get emotionally confused because when the word millionaire kind of came out was the 1920s, 1910, '20, '20. Money right in there. And in those days, a million was a lot like a billion today. And so, when you're a millionaire, you drive a 2-year-old Toyota. You don't have 3 houses, and you don't have a private jet. Those are all billionaire things. And a billion is a thousand million. So, it's not going to feel like you're rich. Yeah, yeah, absolutely. Like unlimited funds, for sure. Something. So, um, A, your income's low. B, lower, lowish.

Uh, B, you did this before, somehow did— made these other things accomplished. C, look at your percentages again, cuz some of them are a little wonky.

Okay, guys, let me ask you something. What would it take for you to switch your bank? Because if you're still earning next to nothing on your savings, you need to check out Fairwinds Credit Union. And I know what you're thinking. It might sound like a hassle. Moving your direct deposit, updating bills, getting a new debit card feels like a lot. But here's what most people don't realize. Staying where you are could be costing you hundreds of dollars every year. Y'all, the average savings account pays less than half a percent. So, let's say, for example, you've got $20,000 saved. You might earn around $70 a year. But with a Fairwinds High Yield Savings Account earning 3% APY or more, that same money could earn you over $600. And that's real money that you can use towards the Baby Steps. So, don't let temporary comfort keep you stuck. Check out the Smart Bundle from Fairwinds Credit Union. You get a High Yield Savings Account, a no-fee checking account, and the Ramsey Be Weird debit card. Go to fairwinds.com/budget. Fairwinds.org/ramsey to learn more and make the switch today.

That's fairwinds.org/ramsey, insured by the NCUA. Continuing that discussion for just a second. There is something I have observed as you go through the Baby Steps and as you go through your wealth-building process that gradually shifts, and it's so gradual it's almost imperceptible. And that is that as you build wealth and as you get more and more margin in your budget because you don't have any payments, and because you start to have a pile of money in your retirement 401, you've got a good strong emergency fund, the further down that you move— and it makes sense when I say it out loud, but you don't realize it's happening— the further down that you move, the bigger the event has to be before it financially, the dollar amount has to be larger to emotionally strain you. Yeah. Yes. So, like, if I had a flat tire when I was broke, my life looked like a country song. Everything that could go wrong did go wrong, you know? And so a flat tire was the national debt. It was drama, drama, drama, drama, drama, because it was yet one more thing. And I was so broke I couldn't pay attention.

Now, I would have to total a car— Yeah, to feel— —to have the same, with no insurance, to have the same feeling, you know, or bigger, you know, even. But, and it's not just because I'm older or I got a— but your perception is different the more wealth you have built and the more margin you have in your monthly budget. And so, what used to be a crisis is no longer a crisis. You will experience that, but But it is so subtle and incremental that you don't feel like you've arrived. People have a perception, and this is one of the things he was asking about that I didn't properly address. That's why I wanted to continue the conversation into his defense, was that when you— people have a perception that when you hit Baby Step 7, you're gonna feel like you hit the lottery. Like there's gonna be like a "Woo-hoo" moment. There's not a "Woo-hoo" moment. There's a, "It takes a lot bigger problem now to be a problem," moment. And it snuck up on you, so you didn't even realize it. So, you don't feel like you got there. You don't have this top of the mountain, put the flag in or something, celebration moment when you get to Baby Step 7.

It's kind of a yawn. Yeah, I could see that. And so, you know, I do want you to go there because it's the, you know, it's a better yawn than the nightmares you're living in before you get there. So, you know, let's have a yawn for sure. But you're not going to have the suddenly I have unlimited funds feeling. I think that's—

'Cause you don't. I think that's the difference. You become a Baby Steps millionaire, maybe you have a million bucks in the bank between all your assets and your home, but you don't earn $1 million a year. You still earn $60,000 or $70,000 or $80,000 a year. The only difference is instead of the $800 a month going to the debt, now it stays in your pocket. And most people say, "Okay, we're gonna bump up giving a little bit." Maybe now you increase the grocery budget a little bit, but it's not these major life—

But $800 is not 2 weeks on Santorini and Mykonos, on the Greek island.

And that's my point.

You're not— That's $800. Yeah.

Yeah, it's the ability to have freedom in the day-to-day, the small things in life that you used to have. You used to go to the grocery store and the budget strings had to be ultra tight. Now it's okay to loosen it up a little bit. You used to, you see what I'm saying? It's these little things that are day-to-day.

We can upgrade a car. Yes. And pay cash. We can put a roof on and pay cash. And by the way, it's so— And those are the celebrations, but they feel so mundane. That you don't feel like the celebration is there that you should have felt. It should feel better than this when you get— his point was it should feel different than this, but it doesn't.

Because you still have to have delayed gratification. I think that's why.

And you still have limited dollars. You're still not in Congress. That's right. Yeah, you know, it's still— that's it. You still have to say no. It still takes time to save. Yeah, what you're buying and everything else. Julia is with us in St. Louis. Hi, Julia, how are you?

Good. How about you guys? Better than I deserve. What's up? All right. So, um, I started listening to the Ramsey Show probably about 6, 7 months ago. Um, I recently got married and I had a virtual job that was in my hometown and it was great. I had full-time hours. I moved here about 2 hours north of where I'm from in St. Louis here. And, um, my work downgraded my hours. It's a smaller startup company and there was a bad business venture. On their part. And long story short, I'm only getting 10 hours per week, which really sucks comparison to like 25 or even 30 at this point. So I had to bootstrap up and I say, what, what can I do in my community to make myself make money? And I started a small cleaning business. Good. So, um, now I'm cleaning up to 4 or 5 different houses, and they're big square footage houses, so I'm getting about anywhere from $250, that's the smallest range, all the way up to like maybe $1,000 per week when it comes to just cleaning houses on the side.

You are a grind and hustle girl. Way to go.

Thank you. Thank you. Yeah. Long story short, that has become my main source of revenue at this point.

So I make more than you ever made in your life. Yeah.

Are you, are you making more from the houses than you made full-time doing the other gig? Yeah.

Yeah. I mean, whenever I was full-time, I got smaller, it was a smaller doctor's office. Like it was a virtual—

That wasn't what you asked, honey. You're making more money now than you used to make at a J-O-B. That's what I said. Yeah. Yeah. Okay. Good. Good. Now. Yeah. All right. So what's the problem?

If anything, when should I decide to make this an LLC? Because you don't need an LLC.

Do you have a separate checking account that you run your business on? Correct. You do? You have a DBA account, doing business as? Yes. As a sole proprietor, and you run all of your income from the business into that account and only expenses out of the account. And then when you take money home from that account, you set money aside for your quarterly estimates. One-fourth of what you take out of the business to take home, you set aside for taxes, okay?

Yes, definitely.

Yeah, when you do all of that, you do not— the LLC does not save you a dime on taxes. A sole proprietorship has exactly the same write-offs an LLC does. Exactly. Okay. The only thing you have— only thing you need an LLC for, the only thing you need an LLC for is risk. If you are— if you have— if you're a multimillionaire and you start a business and you think somebody might sue you because of the business and try to get your multimillion dollars, then you would start an LLC. If you're in a business that is high risk, where you could get sued inside the business and you're not, you would start an LLC. Or if your company starts making over a million dollars a year, you would do it for risk. But the LLC is only for risk, meaning that if you're doing business as an LLC, everything's in the LLC name, It's Julia's House Cleaning LLC, right? And that's the name of it, and everything, everything's billed to that. All the workers are working from that. If somebody falls while they're working on the job and they want to sue the company, they have to sue the LLC, and all they can get is the LLC's assets.

They couldn't take your home, they couldn't take your cars, they couldn't take other stuff because your LLC is the one doing business as a standalone entity. That is what it's for. It's for risk management. So she started— but it does not save on taxes.

If she started hiring on other house cleaners to clean as a part of her business.

Yeah, we're 5 or 6 weeks into this. I'm just saying. Yeah. I mean, if she's been running this thing 6 months or a year, it starts making bank. It starts getting really complicated. There's a whole bunch of players involved. You're in rich people's houses or you're in a high-risk environment, like some kind of sensitive office situation. Where somebody misbehaving in that situation is a risk and you're sending employees into that, not yourself, then yeah, where you start perceiving risk is what an LLC. But there's all this crap on the internet that, "Get an LLC, you'll save on taxes." And that's what happens when you're so stupid you listen to TikTok. But yeah, oh my gosh. And I'm on there, I know, I know. Oh no, shut up, but anyway.

If you've had your phone 2 or 3 years, there's a chance it's unlocked. So bringing your own phone is a great way to unlock savings on your wireless bill. You can switch to Boost Mobile to get unlocked. Bring your own device and save big. See, the big wireless companies count on you staying right where you are. Paying more than you should every single month. They make it sound complicated to switch. It's not, by the way. And meanwhile, your bill keeps going up. That's not inflation. That's them taking advantage of you. But Boost Mobile is different. They make it simple. You bring your phone, keep your number, and get unlimited wireless for just $25 a month. And that price is locked in forever. No contracts, no hidden fees. Fees, no surprises. So if you're tired of wasting money on your phone bill, this is your chance to do something about it. Go to boostmobile.com/ramsey, get unlocked, and keep more of your hard-earned money. That's boostmobile.com/ramsey. $25 forever requires customers to remain active on Boost Mobile Unlimited Plan. One of our favorite things is when people send us notes saying they love EveryDollar. Recent quote: "Love this app.

Makes it super easy to budget with my husband. We've implemented this practice since our wedding day. Zero money fights because there's full transparency. We're on the same page." See, that is a key to winning right there. That'll cause you to be able to build what and to win in your relationships. EveryDollar, the budgeting app, it'll help you work the Ramsey Plan exactly like you had us in your back pocket. It's in the App Store for free and Google Play for free. Donna is in Dallas.

Hi, Donna, how are you? I'm fine, thank you.

How are you? Better than I deserve.

What's up? Okay, so, uh, my husband and I are older. I'm 71, he's 84. Um, during COVID we had our 401s, our retirement accounts, and the stock market took a dive and we went down like $26,000 in a week and we got nervous. So we took it out real quick. And our thought was, I know our thought was that we don't have time to recover. Everything. You've been out since then. Tried it one more time. The same thing happened and we just couldn't do it again. We just couldn't do it.

Um, it went up 25% 3 years in a row and you missed that.

I know, but I keep thinking it can't stay like that, it's going to be gone. Oh God. But am I going to feel worse if I lose it or go up? But Donna, going to be the worst scenario.

Donna, the problem is the first dive when you said you lost the $26,000, it recovered in like 50 days. The moment, the moment you took it out, you just locked in that loss. You 100% lost the $26,000.

You do not need to be, you do not need to be investing in the stock market.

Yeah, that's kind of like my thoughts.

So we did try— because you don't have the backbone to stand the volatility. Yeah, the stock market's not the problem. No, the, the history of the stock market— you, you lost your butt. You got out at exactly the wrong time, like the worst possible. You did it the worst possible way you could have done it. And so if you're gonna do that again, you need to stay away. Meanwhile, I made 100% on my money while you did that because I just rode the roller coaster up and down and enjoyed the ride, got off, got on it again, and rode. Never, never got off. I just stayed on, said, take me around again. Yeah, take me around again.

I think there's a bigger issue at hand. How much did you have in the stock market?

Um, we had about $190,000. I think that's the issue.

I think the The bigger problem is you're worried that you don't have enough to live on throughout the entirety of your retirement. And so that's what's causing you to be very like trigger happy with this and very like quick to move.

Well, now what's causing that is a lack of knowledge of the market. And you're not familiar enough with the history of the market to be comfortable. So you think all bad news is the only news. And so if you can't get past that, you're going to do this again and again. And I would recommend you don't do it again and again because you're taking a beating. Yeah. And at 71 and 84, you don't want to take a beating. More than anything, you're taking a beating emotionally. Your $200 would be $400 if you'd have left it alone. Yeah.

Yeah. That's what I'm saying. My sister-in-law, back, I think it was in the '80s or something, the stock market went bad. Or the '90s. It was hers was the '91. And she lost almost everything. No, she did not. She never recovered.

No time in stock market's history it went to zero.

Well, it was such a small amount that I don't know—

she emotionally lost everything but she did not lose— That's like in 2008 okay? The stock market dropped in half! It went from third— the Dow Jones went from $13,000 to $6,500 and people said "I lost everything." No, you lost half.

And the only way you lost it is if you took it out at the bottom.

Bottom perfectly.

Meanwhile, how long does it take to recover? One year. Okay.

And it's not 13,000 now where it started, down to 6,500. It's now 36,000, and that's since 2008. Okay. And so in the last year, the market has made 13%. Since the first of the year, we started bombing Iran and the market went down and then back and it's currently from January to today down 1%. 1%. That's not losing everything. That's losing $19. Okay, okay. So that's— but you've got to get your head around this, both of you, because if you're gonna believe sister-in-law's mythology and you guys are gonna sit and watch the news every night and freak out, then you're gonna do this again and again and again. And I don't want that for you. I think you're better off making too little money and, and not being awake all night.

Okay, right now we have it in CDs.

Um, put it in a high-yield savings account, you know, go to Fairwinds Credit Union, dump it in a high-yield savings account and let her ride. And you're going to make 3 or 4%, you're going to break even with inflation, but you're not going to lose anything. And you, and you're going to sleep beautifully. But I got to make fun of you, okay? Because I love you. I know. Meanwhile, meanwhile, my money is going to be doubling while you're making 3% because it's going up.

If I can convince myself to suck it up, you would have to—

you'd have to read enough, sit down with one of our SmartVestor Pros and read enough and look at the market. So here's the numbers: 97% of the 5-year periods, if you leave it alone 5 years since the stock market began, have made money. That's all of them, okay? So if you had left it alone 5 years in any scenario that we're talking about, you would have made some money, even in a weird crashy weird thing like COVID or Iran War or 2008. Okay, all of those— actually, you can look at it, it's about the same time. It's COVID hit in March and so did Iran War. And so Trump starts bombing Iran, the market dives. All right? And so, 'cause it always does that with geopolitical stuff. And so, if you understand that every time it does that, it returns very quickly, then you start getting the opposite mindset that like, "Oh, he bombed Iran. Great. I'm gonna get to buy this on sale." Okay. The stock market's now on sale, 'cause I know it's gonna go up, instead of, "Oh God, I'm gonna lose everything, 'cause my sister-in-law told me a mythology." Gave me a lesson in mythology.

And so, you know, that's— but you, if you're going to invest again, so here's what I would do. Let me, let me get back up. If I'm 71, I'm 66, I'm 65, getting ready to be 66, so we're close to the same age. I would put this money in a high-yield savings account and let it ride and sleep at night. Meanwhile, I'm gonna challenge you intellectually to sit down with a SmartVestor Pro and start learning. Because knowledge of how this, these markets return, how they go down, how often they come back, what the bounce back period is and all that will cause you to ride out the waves.

Yeah, let me go over it because this is so cool to see. So what I'm gonna tell you is a major market crash that we all know and how long it took to recover the losses. So you could go back to 1987. You were there for that Black Monday.

Black Monday. Yeah. All right. It dove.

It dove 34%. 34%. And it took 22 months to recover.

In one day.

In one day. 22 months. That's less than 2 years to recover. 1990 Gulf War recession. It dove 20%. It took 4 months to get back. Just 4 months. Let's go to the dot-com crash. You said 49%. Half. It took less than 7 years to completely recover. Half. That's one of the big— that's crazy. Look at this one. 2008, the Great Recession. I remember that. 57%. It dove. It took less than 4 years to recover. 2018, federal rate sell-off, 20% crash, less than 4 months to recover. 2020 COVID crash. We remember that. 34% dive. It took less than 5 months to recover. And then most recently, the 2022 inflation bear market that we all experienced. 25% dip, it took less than 22 months to recover. You just have to ride it out. If you can, if you can sit tight for 2 years, you get back.

That one's wrong because in, um, we had a 25%, a 24%, 23%, a 26% market 3 years in a row. We did. And that, so that last one's wrong, but the others are correct. Others are correct. All right.

Yeah. There you go. The internet.

I remember the others. So yeah, okay, interesting. That's interesting. Studying this stuff and going, how fast does it bounce back after the towers get bombed right over the top of Wall Street? Yep, 57 days. Wow, that one came back.

New to the Ramsey Show? Well, don't worry, we'll help you figure out your next step. Take our free Get Started Assessment to see where you are in the Baby Steps and get a custom game plan for getting out of debt and building wealth. It's all free. Tap the link in the show notes and take the assessment. Our question of the day is brought to you by Yrefi. When people get buried under private student loan payments they can't keep up with, they might think there's no way out. Out. Well, Yrefy does help borrowers explore solutions with fixed-rate refinancing and a payment plan tailored to that situation. Go to yrefy.com/ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey.

Might not be in all states. Okay, today's question comes from Zach in New Hampshire. He says, my wife and I have $250,000 in various savings accounts. My wife wants to use the money as a down payment to buy a home. Home. I think it would be a waste to use it that way. I would rather keep investing the money and eventually live off of the interest and dividends. Our rent is affordable and has not increased since we moved in. We have one child and a combined income of about $200,000. We're debt-free and our monthly expenses are very minimal. If you were in my position, what would you do? Well, I'd buy the house. I would, because number one, you're stabilizing one of the largest line items on most people's budget, which is their housing. And your rent may not have gone up yet, but it will eventually. So I would do that. And I also just think there's a peace of mind with having a place that you can call home that's yours, that is gaining equity. And I think, Dave, what I, what I sense in this conversation, and we've had this with many people who've called in, is it's almost like people forget that that purchasing a home is a form of investing.

It's like, "I just wanna invest my money in the stock market." I'm like, "Well, I love the idea of investing. Can you do both? Can you do 15% in the stock market and can you invest in real estate, which is your primary home?" I think they're both very good to do.

Agreed. So, the premise that the person writing the email bases this on is that he's got cheap rent and it hadn't gone up. Up. But everyone listening knows that's going to be false.

It will change.

So that you can't expand, you can't extrapolate that out 40 years, okay? Again, I'm 65 years old, so when I was 25, if I had been renting, can you imagine how much my rent would have gone up during that 40 years of my working lifetime? Absolutely. Even if I had a good deal initially with the first landlord who didn't go up on me for for 3 years or something. But that's going to come to an end at some point. That guy's going to die and the next investor is going to go way up or whatever. It's going to— 100% of rent goes up.

Yeah. And while that's happening, by the way, the real estate market's going up. Exactly.

As well. And so, during that time, you know, again, you've heard us say this before, we've done the largest study of millionaires ever done in North America. In America. Detailed, airtight research. And what we have found is, is that 89% of America's millionaires started with nothing, did not inherit the money to become a millionaire, and became millionaires. So then you have to ask the question, what did they do? If you wanna be one, you do what they do. You study best practices and you emulate it, right? Right. So what did they do? Almost all of them, like an 85, 90 percentile, looked like this. I mean, they all kind of fit the same mold. They were boring. And what we found is they worked and got their home paid off, and it was $600,000 or $800,000, and it took them 10 or 12 years to get the home paid off. And then they've— during that time, they've been investing steadily in their 401s and in their Roth IRAs, and they had another $800,000 or $900,000 or $1 million in that. And it took them 16 years to do that. So you got a, you know, $800,000 house and you got $1.2 million in your retirement or less, anywhere in there, and you got a $1 to $2 million net worth.

So those are the two components of the first $1 to $5 million of net worth that we see people build. And that's normative among them. They bought a house and paid it off. They steadily invested in 401s. That's what I mean by it's not sexy, it's boring. Boring. It's just like, "Da da da da da da, buy a house and pay it off and put money in the 401 and go to work and come home and eat your meatloaf." I mean, this is what you're doing, right? And you become a millionaire. It's not like you somehow invented applesauce. I mean, you didn't do anything that was that brilliant. You were just steady. And so that's why his idea is flawed, because that house becomes one of the two components of wealth building, to your point, of investing, that causes people to become wealthy. And during that time, 100% of the time, rent's going up. Yes, it is. 100%. There's very few things you can predict with 100% probability, but you can predict 100% of the time, in the last 100 years, rent has gone up. Yeah, that's right. And so, I mean, the house that I sold when I was 18 years old, my first house as a real estate agent, I got my real estate license when I was 18, I sold a house 2 weeks later.

I sold it on East Ridge Drive in Antioch, Tennessee for $42,500. That house sells for $600,000 now. Don't be a renter.

Yeah, that's the moral of the story.

I mean, hello! If you were renting that house the entire time, rent is gone. You would have been paying— let me think what the rent would have been. The rent would have been $150 probably. $150 in those days. Wow. Maybe $200. We rented an apartment a couple of years later, a one-bedroom apartment for $235. Oh my gosh. Wow. And so, right after we got married. So, and that was 1982. So, this would have been '78. So, 4 years later. So, yeah, probably been $150, $200 for the rent on that $42,500 brick ranch built in 1948, 1,000 square feet with an unfinished basement. And yeah, and that house will go for $600K right now. Oh my goodness. And that rent, which means the rent would probably be, eh, you'd probably be renting that for $2,500. Oh my goodness. So that's the problem with this theory. And that's everywhere in America, right? That's not in Antioch, Tennessee. That's everywhere. That's all over America. And so, yeah. Now, not ashamed I sold that guy that house, by the way. I think I did him good. I was an 18-year-old idiot, but I still did him good. I didn't know what I was doing, but I thought I knew what I was doing.

But it turned out I knew what I was doing. There we go. So, yeah. So, real estate's a great investment when it's a part of your plan, when you're out of debt, you have an emergency fund, your payment's no more than a fourth of your take-home pay on a 15-year fixed, If you can put down, and this guy has $250,000 to put down, if you can put down 20%, you can avoid PMI, which is private mortgage insurance. And that is a good thing if you can avoid that. First-time homebuyers often can't get a whole 20% down. I understand that.

In this market though, you, you, you're putting down more if you want the payment to be less than 25% of your take-home. So you gotta get there.

Depends on the house. Yeah. And where you're living and all that. But yeah, you're exactly right. It's all numbers. It's all math.

Why, you know, one thing I find on the show a lot is people are always willing to sacrifice their personal residence, whether they haven't bought it yet and they want to put their margin towards investing, or maybe they have bought the house and they don't want to put the margin towards paying it off. They want to invest instead. They're always willing to put their personal mortgage and the peace of that on the line. And I find that to be interesting because the truth is there's more tied up in that than I think people realize in their day-to-day life. Life, but all you have to do is be in a situation where you're up against the wall and you realize how much it matters to you. Anybody who's had a diagnosis, anybody who went through COVID-19, anybody who's been laid off or lost a job, the number one thing that you start thinking about is your home. And you want your home safe and you don't wanna lose your home and you wanna make sure you can make the payment. So don't forget that. Don't forget that.

There's something very primal.

Yes. About that. Yes.

And a different kind of anxiety than—

than, "I can't get the coffee that I want today." That's a different kind of anxiety. "Oh, I'm gonna lose my home?" That's different than having the lights cut off. I've had both, but I don't want— and I don't want either again. And I don't recommend it as a method of learning, but— So, protect it.

Protect it before your back is up against the wall. And I hope it never is, but protect it when you have the ability to, and pay it off when you have the ability to.

So circling back on that guy just for a second, if he keeps investing steadily, his investments will not be enough to cover the difference in rent going up. So he's gonna end up— he's gonna end up going backward. That's a good point. You're saying percentage-wise? Yeah, he's gonna end up going backward in that scenario. Your investments won't do well enough for you to stay ahead of that. And if they are, you're playing in stuff you shouldn't be playing in.

Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey, your host. Jade Washaw, Ramsey personality, is with me. We were talking about stock market returns earlier, and during that break we actually got to play with the actual app a little bit and look at it, and I misquoted some stuff, so I need to clean up my mess. If some of you are still listening, before you're bitching on the comments that Dave Ramsey's an idiot, because 'Cause he was, he messed up. So anyway, the thing to remember about the S&P, it recovered in about 90 days from the high. It was up in February, Trump bombed in Iran, it dove, it came back in, I think it's 92 days, it recovered to where it was, and it's well beyond that now. And I said the rate of return for the year was down 1%. I was wrong, it's up 10%. For the year. So if you've been in the stock market, invested in S&P, which is the stock market, from January 1st to today, you know, then you— June 1st— then you have made 10% on your money. Meanwhile, it went down and back up, and so you rode a roller coaster down and you rode it back up 10%.

Now, in 2024, the stock market made 23%. Yeah, S&P did. Then 25, and then 26, and then 17. And so those are the returns for the last several 4 or 5 years under different administrations and all kinds of different situations and different volatility, and gone up and gone down and back and forth. But you can go back and just pull up an S&P app and look at it online. You can see the thing going up and down. And you say, "Okay, there's a dip. What was going on at that time?" And you go back and look at the news stories of the day. And so you'll see it comes back in 57 days or whatever like that. Just like we just did on that, about 90 days on that, around more, or 60 days. So anyway, the moral of the story is you do not put money in the stock market unless you're going to leave it alone at least 3 years and preferably 5. If you don't have that mindset, you're going to panic every time you read a news story or see a news story on— and Fox and CNN are going to tell you the Chicken Little, the sky is falling, every day.

It's what they do. It's fear porn. And they're going to tell you every day that the world's coming to an end, the world's coming to an end. They always report when the market is down. They never report when it's up, ever. They never say record stock market returns. Now, a business channel like a Fox Business might, or in the old days, the old CNBC back in the day, not there anymore, but if it was a pure business channel with stock market reports, they might say the market's up at a record level. And I think I did say the Dow was at 36,000, it's like at 50,000, so I'm not even close on that. So I screwed up two things in one of those other segments pretty dramatically, but the moral of the story still is no one gets hurt on a roller coaster except those that jump off in the middle of the ride. I do not take my money out of the market based on any singular event because I think the market's going down. Every time the market goes down, instead I am tempted to scrape the nickels out of the corner of the couch and put more in because it's on sale.

When I was a kid, there was a store called Kmart. It's gone now. And when you went in Kmart, they had these little things that on rollers with a blue light on top top. And they would roll this thing over to the whatever aisle, the tool aisle or the socks aisle or the underwear aisle, and they'd turn the blue light on and there would be a blue light special and you could get a bargain. And so the rednecks would flock to the blue lights, right? Like a moth towards a flame. And so I remember my mama running down the aisle at Kmart to the blue light. That's what you should do when the stock market goes down. The blue light is on. It's on sale. Get a bargain. Run down the aisle, you redneck. Get you some money. Okay? That's what we did. And so, there's nothing wrong with that. But if you've got the mindset of, "It has always come back, and the only game is how long it takes it," then when it dives on one of these news items, or geopolitical events, whether it's COVID, or fires in Australia or whatever it is, it causes— the Russians launch a satellite, somebody invades Ukraine, somebody doesn't invade Ukraine, somebody's oil barrel goes up, whatever it is, whatever mess Trump is making this week ends up in the stock market, right?

Or whatever victorious thing he does this week ends up in the stock market. And so, but for a short period of time. You just make money. Yes. So that's the moral of that story. I'll get off my soapbox. All right, let's go to Jay in Richmond, Virginia.

Hi Jay, how are you? I'm good, how are you?

Better than I deserve. What's up?

So, uh, me and my wife just had a baby in January. Yeah, hey, what'd you have? A girl.

Awesome, you're ruined.

Yeah, I know, right? And so doing the, doing the current bills, uh, we're trying to pay off debt, but she just had a school payment come up and that kind of threw everything off. And then daycare is coming up in September, um, and right now we don't have enough to cover daycare. So we're trying to figure out what can we do to get to at least where we can afford daycare and then also pay off that. What kind of, what kind of school payment payment? Uh, the school payment itself right now is $360. Um, but that's just one— that's the private, you know, Sally Mae loan that's out right now.

Uh, I'm sorry, it's a student loan?

Yes, that's my wife's student loan.

Oh, I thought you meant she was in school.

Okay, got it. And how much is daycare?

She's in a break right now. Uh, daycare is going to be $1,600 a month.

And when you say your wife is in a break, when does she go back to school, or when did you plan for her to go back?

That's up in the air. She finds out by tomorrow whether she's allowed to go back. Right now the school is not being very kind with her having a baby, so she plans on going back in the fall.

Can you afford for her to go back in the fall? It doesn't sound like it.

She's, she's on grants for school, so that, that is, her school's covered. And if the grants don't work, her school's pay, or her work pays for it. So they do like a, they pay for her college. So she works So she does, yes, full-time.

And the $360 is for an old student loan, it's not an ongoing tuition payment?

Correct. Got it. Okay. Why are you paying— is that a federally insured student loan or a private student loan? It's a private. Oh, okay. All right. All right, so what does she make at work? She brings in $2,000 a month and $1,600 is the daycare. Daycare? Yes. Well, that doesn't work.

No. And of course, you know, that's— our money's combined, so, um, together we make $7,600 a month.

I know, but her working— if she's not working, you don't have a $1,600 daycare, right? Correct. Well, she's not making $400 bucks. I mean, we're not working full-time to make $400 bucks, right? That doesn't work. So we got to figure out a different job that she does from home or makes twice as much money, because her being— her working and making $2,000 and paying $1,600 for the privilege is not logical. Yeah. No, I would work part-time from home and make more money net of daycare and be home with a baby. That's step 1. Then step 2 is you look at what you can do to pick up extra jobs. And oh, sorry, Sell the car. I didn't even ask about it. Yeah, something else. I don't even know if it's there, but probably sell the car. 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 call to closing day.

Find a Ramsey Trusted Agent near you at ramseysolutions.com/agent. That's ramseysolutions.com/agent.

Faith is in Boise. Hi, Faith, how are you? Hi.

Thanks so much for taking my call. Sure, what's up? I just wanna start off with saying I just know that this is a first world problem and I'm grateful to have it, but I really need your advice. I'll try. Okay? Okay, so we need to know if we should pay capital gains at the number of $50,000 to the IRS or if we should reinvest using a 1031 exchange. So you're selling a piece of investment real estate?

Yes, we are. For how much?

Probably we're listing it at $499,000. So you've depreciated it, your adjusted basis is approaching zero? No, but we are, we'll probably make about $300,000 equity on it.

Yeah, that'd be $45,000. But that's— equity is not equity. Equity is not your basis or your tax basis, right?

So let me tell you, we've gone over this with all kinds of like tax people.

And okay, so the tax people are saying you have a $300,000 gain at 15%, that'd be $45,000. Right. Okay. Is that—

that's what you're hearing, correct? And then with all of the money we've invested into the rental, they're saying we'll probably walk away with a $50,000 capital gains tax. So we can pay that, or we can take that money and reinvest it into something else. Okay, let me stop.

Let me stop here a second because I'm concerned that the number you're giving me is, is where it's coming from, because I want you to go back and double-check that. Let's walk through the basics of that, and then we'll go back to your question, okay? So when you bought the property—

Okay, I think it's all gobbledygook to me, but I'll try. That's okay.

When you bought the property, you're selling it for approximately $500,000, and you're thinking you have about a $300,000 gain. So when you bought it, you probably paid $300,000 for it, let's call it, okay? And then you've been depreciating it, which lowers your basis, and you've been doing capital improvements to the property, which increases your basis. Yep. Okay, that adjusted basis, down by depreciation and up by capital improvements, subtracted from your sale price, subtract, and that number subtracted from your expenses for selling, is your gain. And I can't tell from the way you're wording this if that gain is $50,000 or if your tax is $50,000.

The tax, I was told, is $50,000 after someone else worked out all the numbers.

And the property, what kind of property is it you're selling?

It's a single dwelling.

Okay, so it's a rental house. Okay. And you sold it why?

Well, we want to sell it because where we're living now and we're renting right now, is so extremely expensive. So our ultimate goal is to lower our monthly housing cost.

And take this equity and buy a home.

Yeah, either buy a home or we thought buy a duplex so we don't have to pay capital gains tax.

If you live in it, you'll have to—

Which is a whole 'nother thing.

Yeah, that's a mess. Pardon? That's a hot mess. Can she do that and live in the other side of the duplex? Yeah, but you gotta try to figure out a way to bifurcate the duplex and that's really troubling.

It's not worth it. And in the area that we're wanting to live, a duplex, even if it was only like 1,400 on each side, square feet on each side, would be close to $1 million.

I would pay the gains and use the money and buy the home that you need to buy. You're forcing yourself all into a duplex. You wouldn't have bought a duplex anyway. The only reason you're doing that is to save this gain. And to try to play some kind of shell game with this money. And so, no, I'm gonna pay the tax, get clean, and just buy the home that you're supposed to buy, that you need to buy, that fits your budget with the money that you guys have from the sale of this and from what other money you've stacked up. Put as much down as you can put down, and don't get caught up because you're forcing yourself into a duplex and And if you're living in one side of it, you can't 1031 that side, and yet there's not two sides to a duplex in terms of— there's no line down the middle that you can say one side's investment and one side's not, unless it's a zero-lot line, and it's not. It's a duplex. So you're getting yourself into a real potential barrel of fishhooks if you get audited, and I'm not sure how you'd come out on that.

I wouldn't screw with it for all that, and you wouldn't be buying a duplex if it wasn't for this one simple issue. Issue. And so I just ignore the issue and go do the house you're supposed to do. Not let taxes force you into a decision you wouldn't have made otherwise. I like that. I like that. And that's the way I would go at it. So yeah, but if you live in one side, does it become your personal residence? Oh, but the other side is rented, so that's a rental property. Yeah, but it's one property. It's very confusing. It's a singular property. It's not a dual property. If you bought two properties attached, 2 condos that were attached at the wall, then one of them would be an investment. You could 1031 into that. You could not 1031 into the other, because you can't 1031 into a personal residence, as she's already discovered. But I also, Faith, want you to go back, unless you guys have owned that property a very long time, I'm not sure the numbers you're getting, that's an unusual, If you've spent money on the property doing capital improvements, that's an unusual gain.

So, but I would look at it and try to just make sure that your adjusted basis, that you understand that, and that the difference is times 0.15%, 15%, for your capital gains tax is the $50,000. It might be, it might be, I might be wrong, but I really want to understand it before I move forward just to be double sure, triple sure. But no, I would not do a 1031 in this case because it's forcing you into a purchase you would not otherwise make. It's a good question, interesting discussion. Thank you. Zach's in Lubbock, Texas. Hi Zach, how are you?

Hey, I'm great. How are y'all?

Better than I deserve. What's up?

Well, doing well until your Lady Volunteers beat my Lady Raiders in softball, but all things considered, pretty well. But my question is, I'm a 1099 employee, or 1099, here in Lubbock, and I have Recently done better and better in our career field. Good for you. Thank you. And I've been definitely trying to— I've been maxing out my Roth IRA, and that's gone well. And well, even maxing that out, I'm not hitting my 15% in the Baby Step that I'm in where I'm debt-free and everything but my home. But my question revolves around— I have a tax professional with the heart of a teacher that is telling me, hey, you might consider a traditional IRA with your S corp as a 1099, uh, uh, tax break. You have an S corp? I do, yes.

Hmm, okay. Yes. Um, well, cheaper than that— you, you have employees in your S corp other than you?

Uh, no, it's just me. Okay.

Yeah, you can set up a, uh, what's called a SIMPLE IRA, which is a 401 for small businesses, and you're the only employee. Yes, sir. And you can max it out. Okay. And just hit your SmartVestor Pro up. And, and the good news is that it's basically 401 for small business. They call it a SIMPLE IRA. And the good news is it's $15 a year administration cost. It costs nothing.

Oh, it's nothing. Yeah, yeah.

Like a big 401, like our company, you know, we pay tens of thousands of dollars a year to administer it for 1,000 employees, right? And then we have to pay another $40,000, have it audited and all that stuff. You don't have to do any of that with a SIMPLE. It's all just $15. It's like setting up an IRA. It's like setting up another Roth IRA. And you can do a SIMPLE Roth. So you can just make it more Roth, more good, and put it in there. If you did have employees, you have to match 3%. If you ever hire someone for your S corp other than yourself, you'd have to match 3%. But the weird thing is you can actually match yourself So, which really serves absolutely no purpose unless you're— well, if you're maxed out, it would serve a purpose. If you're going to put all the full amount in, that would get you there.

Hey, what's up guys? It's Jade Warshaw. Listen, summer spending adds up so fast between vacations and road trips and camp fees and events and all the extra gas and grocery runs. Money can get tight before you know it. To really get your money under control and keep it that way, you're gonna need a plan. And that's what you'll get with the EveryDollar budget app. It helps you track your spending, free up cash to put toward debt and savings, and it's the simplest way to make a plan for your money before the month begins. So no more wondering where your money's going. You're telling it where to go. Download EveryDollar in the App Store or Google Play and start for free today.

Day. So Jade's just teaching me something at the break that, uh, goes to our last caller. So the SIMPLE IRA for small business is what I said it was. It is an inexpensive way to set up a 401 for a small business if you If you have employees, you have to match 3%. All that was correct that I told him. You cannot put as much into a SIMPLE IRA as you can a solo 401. But, Jay, the solo can only be if you have only yourself and your spouse. That's right, only the owner and the spouse. But you can't have any employees with solo, but you can put more in it. That's right. So if you're a high, ultra-high income earner, on self-employed 1099, no employees, and you max out your— both of you match out your Roth IRAs. You can also do the solo, which will get you way up there then. I mean, you can put up to $72,000 is the contribution limit with matching yourself and doing all kinds of other gyrations in there to get it to work. Yeah, okay. So there's two types that'll work for you: solo and simple They are a little different product, but you can learn about both of them from a SmartVestor Pro, and you can find your SmartVestor Pro at RamseySolutions.com. Gregory and Kimberly are on the debt-free stage in the lobby of Ramsey Solutions, which can only mean one thing.

Where are you guys from? Bay City, Michigan. I love it. And how much debt have you two paid off?

About $300,000. I love it.

How long did it take you? 72 months. 72 months, and your range of income during that time? About $180,000.

Okay, cool.

What do y'all do for a living?

I'm an occupational therapist rehab director.

Awesome. And I'm an electrical manager at a pickle plant.

Great, very cool. And I'm guessing with that length of time and that amount of money— where y'all from again? Bay City, Michigan. Which is near what? 2 hours north of Detroit. Okay, cool.

All right, I have something in mind here when I'm thinking about $300K of debt.

What was it? Must be your house.

Well, we had about $70,000 in consumer debt and—

Student loans, credit cards, leased cars. Wow. Silly things.

And our house. And the house.

And the house. I saved it for last.

And the house. Baby steps, y'all. Free everything. I'm looking at weird people. Look at you guys. Way to go, y'all. Excellent. So what's this house worth?

$275,000. I love it.

And how much have you got saved in your nest egg so far?

About $688,000.

All right, we're creeping. You are almost millionaires.

Well, if you consider that we also have about $46,000 in liquid assets. You do.

You are Baby Steps millionaires. Millionaires! Way to go, you guys! I'm so proud of you! So, uh, wow, how old are you two? I'm 58. 54. And you're millionaires, and you started with nothing. Surreal. How long you been married? 33 years. Wow. Congratulations. That is so cool. So very well done. So tell us your story. How'd you get started on all this Ramsey stuff 72 months ago?

And well, it actually started in 2014 when we moved to a town in Ohio and I wanted to start working on my retirement and went to a financial advisor and they said, well, you can't really invest until you get out of debt. And it was at that point where I felt like I was going to die at my desk. And in 2018, I met a guy where I worked named Jeff. I call him 1F Jeff because I mess messed up. He's only one F and it's Jeff. I told him about my situation and he says, you need Dave. I said, who's this Dave? Dave Ramsey. He says, I was like, who is this, some snake oil salesman? What's up? Yeah. So I started listening to your show and I listened to about for about a year and it took me a while to get on board.

Mm-hmm. Yeah. Yeah, because a snake oil salesman takes a minute. I understand. No issue with that at all.

What changed your mind, Kimberly? We were just drowning in debt, living paycheck to paycheck, and just tired of being stressed out all the time.

So I'll try anything. Yeah. Even Dave, yeah. I understand, that's how it happens a lot. I like it, I like it. Very cool. Okay, so at that point, sometime y'all had to have a sit down and go, "All right, let's do something." Well, tell me about that moment. Do you remember it? We started selling everything.

Her and I, we did agree to, it's time to do something because like you keep saying, we're sick and tired of being sick and tired. And so we, I think it was April of 2019, we said, "It's time, let's do it." And we started selling everything. As you said, the car, the kids were concerned about they were next and just started pouring money. We had spreadsheets, we used the EveryDollar app. We just did everything we could to get out of debt. And December of 2019, I turned in a stupid car, a lease. And it was at that point where we're like, holy smokes, we're out of debt.

Everything but the house. Everything but the house. Just in time for COVID. Yeah, yeah.

And then last year, last year we decided to move out of Ohio and move back to Michigan. And we sold our house down there. It took a while, but it was about December 9th when we closed on our house in Bay City, and we paid cash for the house. Wow. Wow. We walked out of the title office, which blew my mind. It only took a half hour.

Yeah.

Yeah, I bet. I looked at her, it's like, we're debt-free.

Completely debt-free.

It was just— we're in Baby Step 7. What is this? And who pays cash for a house?

You do? It was amazing.

Wow. It was insane.

Exhilarating. Free. Congratulations. How's it feel to have no payments in the freaking world? It's awesome.

It makes the monthly budget a lot easier, let's put it that way.

Yeah, it's pretty simple now. So what big thing, Kimberly, are you guys going to do to celebrate that you have no payments in the world and you're millionaires?

We came here to do that.

Y'all are people of simple taste. No, seriously, you're gonna go on a trip, buy a car, what are you gonna do? You need to do something.

Look for another sailboat.

Yeah, a sailboat. Bay City. Yeah. Okay. All right. So you have a little one, you need a bigger one? No, no, we sold it. So you got to replace it.

Yeah, we sold it and when we moved out of Ohio.

Okay, so what's the budget on this sailboat?

Sailboat?

Yeah, about $16,000 maybe. Okay, all right, that's nice, very nice.

I love that for you guys. Good for you, congratulations.

And I gotta tell you, it will glide on the water better than that one with payments.

Even the one we sold didn't have payments.

Okay, all right, it just was helping you get out of the other payments.

Okay, so a lot of people would have taken the $275,000 from the sale of the house and used it as a down payment on a bigger house. No. How did you— walk us through your mentality there. Last kid was out of the house, we were empty nesters, so we went from 4 acres and a huge house down to a very simple, you know, 1,200 square foot, easy to take care of, half-acre house. Yours, all yours? Home sweet home.

Wow, way to go. Excellent, guys. I'm proud of you. Who was cheering you on as you you went?

Our kids mostly, and co-workers from time to time, you know.

Yeah, the guy that recommended Dave. Yeah, Jeff with one F.

Yeah, I wish I could find him.

I would give him— I would buy him a drink or something. Yeah, amen.

Well, congratulations. We're very, very proud of you, and we really appreciate you coming all the way down here and sharing your story. And I can't wait to— send us pictures of the sailboat.

Yeah, okay.

Yeah, that's, that's very Very cool, good for y'all. You're living the dream, man. Yes, sir. That's how it works, well done. Gregory and Kimberly, Bay City, Michigan. Quite a journey. $300,000 paid off over 72 months, debt-free everything, house and everything, and in the process become Baby Steps millionaires, making 180. Count it down, let's hear a debt-free scream!

3, 2, 1. We're debt-free!

Yeah, I love it! There we go. So good. Oh man. Hey, you know you're serious when you sell the sailboat.

You know you're serious when you take the $275,000 and buy a house in cash.

Mhm. And move down.

Go down in house to make some room. Well, the kids are gone.

Yeah, we don't need the— Yeah. And don't have to upkeep, up the, the upkeep.

She's right about that. That's true.

You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance coverage. To protect your biggest assets, I recommend using Ramsey Trusted Pros. Whether you're looking for car, home, or any other type of insurance, Ramsey Trusted Providers have been coached and vetted to serve you like we would. You would find what you need at RamseySolutions.com/insurance. Buying or selling a home is A big decision. Last people sold their house and changed cities and moved down. You got to make decisions carefully about that. That's a big one. House is one of the biggest transactions you'll ever do, and you need a high-quality, high-octane, high-protein real estate agent. If you want a Ramsey Trusted Agent, go to ramseysolutions.com/agent. If you want to learn more about the market trends, you can go to ramseysolutions.com market, or click the link in the show notes if you're listening on the podcast or on YouTube. Our scripture of the day is Psalms 143:10: Teach me to do your will, for you are my God. May your good spirit lead me on level ground. Henry Ford said, the only real mistake is the one from which we learn nothing.

Love that. There we go. Ben is in Raleigh, North Carolina. Hi, Ben, how are How are you?

Better than I deserve.

How are you doing? Better than I deserve.

What's up? Um, good question. I really need some help. Um, really help and questions. I have an issue trying to get my wife to agree to a budget. Um, the way things are is that she will look at money in the account and look at it as a way of, there's this amount of money, this is how much I can spend. And I've been struggling. I've been— it's the money in the account has always been causing problems as far as trying to get it done.

Okay, your phone's breaking up. Can you get where you can speak directly into it and keep it clear?

Hear me now? I'm sorry.

That's okay, try again. So, so your wife thinks there's money just because there's some in the account. Account, and you're having trouble getting her to understand we don't have all that money because some of it's got to pay the electric bill next week.

Correct. So what I've done is— it's caused problems in the past. So what I've actually done is I've, I've pulled money into the, um, to the account, onto one account, to make sure the house gets paid. But we constantly run into issues with, um, money, um, being left in the primary account.

Okay, um, so let me stop you for a second. How long y'all been married?

We've been married for 14, just under 14 years. Oh gosh, and how old are you guys? I'm 58, she's 42.

Let me tell you, so why does a 42-year-old woman not grasp the idea that we have bills to pay, right?

She does, but anything outside of that is an open invitation to spend No, it's not.

She's a 42-year-old grown woman.

She's not a 4-year-old. I agree with you completely.

I agree with you completely. Okay, so why, when you look at her and say, I need a grown woman to join me in my marriage and join me for our household good, and that's— you can't spend like you're in Congress. We're going to write down together where the money's going to go, and you and I are going to stick to that., and if you can't keep that contract, we need to sit down with a marriage counselor.

I agree. Um, let me give a little bit more of a backstory. So I did lose my job probably about a year and a half ago, and that put a lot of financial burden on her. Since that time, I've got a job. We've gone through Baby Step 1.

Okay, I'm sorry, what financial burden did it put on her? She was the only one working. Working?

She was the only one working.

No, it put a financial burden on the household, right?

Because her job remained the same.

So there's no financial burden other than the household had less income during the fact that one of you weren't working. For richer, for poorer, in sickness and in health. That does not give you a reason to overspend. Quite the opposite.

Are you back to working?

I'm back to working.

Are you making what you were making?

How much are you making? I'm actually making more. Good. What do you make? Uh, that's more stabilized. What do you make? I make roughly about $125,000. What does she make? She makes around about $35,000.

Okay, so let's start fresh. Here's how the conversation needs to go. Honey, we've tried to work on this together several times. I'm very concerned and I'm really worried about our relationship, our marriage, and our future. And I need desperately to get closure on our money. If we put all of our money in one account and before the month begins, we both sit down and we both have a vote and we both decide where this $150,000 a year, $160,000 a year is gonna go, we're gonna decide this month, here's what our take-home pay is, and every dollar is going to have an assignment. Every dollar's gonna have a name. You get a vote, I get a vote. We're gonna come to a conclusion that every one of those dollars is allocated. We're not gonna spend anything except what you and I have decided is good for our future. Can you help me and can we do that together? If she says no, you don't have a financial trouble, you have a marriage problem. Okay, if she says yes, now put your big girl pants on, your big boy pants on, and both of you sit down like two grown-ups and make adult decisions without any shame of, I've lost my job, or somebody had stress because of that.

Well, we all had stress because of that. Hello. But that's in the past. Today we make $160,000, and today we need to get out of debt and become wealthy and outrageously generous and have a wonderful life. But that's not going to happen by accident. It's going to happen when we sit down. Both of us have a vote. Both of us have a voice and we plan it out. What am I missing, Jade?

I don't think you're missing much. I think that— I don't want to say this, but I think he's afraid to challenge her and like push on this.

You sound like you're a little too sweet. Yeah. Too nice. I'm a Southern boy.

You're here. Yeah.

You know, I think she can take it. I think she can handle you having a very serious conversation when you're saying, "This can't continue. This is a detriment to both of us.

It's a detriment to our relationship." And I'm not asking you to do what I say. I'm asking you to do what we decide together.

And I think that she can handle it.

And if she can't handle that, then there's something else going on. And— but this thing of, "I just do whatever the flip I want after 14 years of marriage, and I'm 42 years old." "Control." There's nothing Southern about that. That's just crazy.

Yeah, 'cause it wouldn't fly if you were doing whatever you wanted. I guarantee that.

I promise you. Yeah. And she'd be calling us going, "How do I get my husband under control? My husband under control," right? I mean, it's like, "Wow." Yeah, there's—

when you become an adult, you have to do the things that require adulting in your marriage, you know? "You have bills to pay. You gotta pay the bills.

You have to work together and just do your own thing." And here's the thing, you can use the downloading of the EveryDollar app, and we're gonna build this together, as a way to do the conversation. Because you're kind of starting to fret. This is a whole new way of us doing this. Instead of me being your daddy, and little girl does whatever she wants, or you being my mommy, and I get an allowance from you. Do it together. I don't care what your mom and daddy did. I don't care what my mom and daddy did. I don't care what we did for the last 14 years. We're gonna build a new thing going forward starting with this EveryDollar app tonight. Let's sit down together and both be grown-ups and both decide on purpose what's gonna happen to this money and both of us push through. And there's some relational breakthroughs when that happens.

I agree, because for him, it's going to have to be— he's gonna have to share something with her beyond Beyond dollars and cents. It can't just be, well, you gotta stick to the budget, you're not doing the money. He's got to share something that has a greater why behind it. It makes me feel scared when I see this. It makes me have a hard time trusting you when you, uh, react like this. He's gonna have to share something that's a little bit of a deeper level when talking about the money so that she understands it, and vice versa.

The breakthrough at our house was when Sharon finally clicked that this was the best way she could get her voice and her vote counted. The budget was a mechanism for her to have a vote that counted, because she's dealing with Mr. Strong Personality over here, right, who just does, you know, just does it and then you figure it out, right? But that was like, I don't know, 30 years ago, right? But that was still a breakthrough. That's how she got a vote with a strong personality. Reality. And sometimes that's how you get the princess off the couch, or the irresponsible guy to plug in and be a man. Yeah, yeah. Whatever analogy you want to use on this. But that's what a lot of people face, Ben. It's not just you guys. Most people struggle in this area. But if you can solve for it, it's game-changing. 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 freedom. Peace, and that's to walk daily with the Prince of Peace, Christ Jesus.