Transcript of Building Wealth Requires Trusted Principles, Not Popular Opinions

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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 Jade Warshaw. Next to me, Dr. John Delony, taking calls from you for the next couple hours at least. 888-825-5225 is the number that you call if you want to ask your question and wish Hope that you do. All right, we've got Maria who's in San Diego, California. Beautiful. How can we help out today, Maria?

Hi, um, I'm 48 years old. My husband's 53. We've been married 13 years. We have one son who's 12. I've been a stay-at-home mom since my son was born.

Maria, Maria, you're breaking up a good bit. If you can go to another part of the house or just speak directly into your line to make sure we can really hear you.

Okay. Uh, should I repeat myself?

No, I heard you up until then.

Okay. Um, so I've been a stay-at-home mom. I do not have any savings, nothing, retirement. And, um, I, my husband and I, our marriage is not in good terms. So I, I think I'm going to be walking away with nothing. So I want to know, um, what I need to do to, um, help myself.

Okay, that's a good question.

What happened with your marriage? What's going on?

Uh, it's been volatile since we've been married.

Volatile like abusive, or volatile yelling and screaming? What does volatile mean?

Yeah, um, a lot of yelling and screaming, and, uh, he doesn't share money with me. I do not know— I just recently found out how much he makes. Um, he does the grocery because he doesn't give me any money. Oh, nothing.

Yeah, that's, that's— we call that financial abuse. That's, that's— you're in an unsafe situation. So first, I would say, if y'all have been together for 13 years, you're entitled to a big chunk of what he's got. And so don't just walk away. Um, you're, you're in an unsafe relationship because you're being held hostage by the person you're married to financially. So, um, if you choose to leave, make sure you get an attorney and do that in a, in a, in a right way. The second thing is, is you'll be faced with the reality that, that the life you wanted to have— I want to be married, I want to be a stay-at-home parent, I want to be focused on my 12-year-old— you're going to have to go get a job, maybe two, right? And you're going to have to create a financial world where you are financially safe. And that might mean being in a one-bedroom apartment. Um, you're in one of the most expensive markets in the United States. And so it might be moving. Like, there's a whole bunch of things that's gonna— it's gonna stem from you choosing to live in this scary word called reality.

This is my new reality, not my new what I wanted it to be, but this is the facts I'm facing here with my living expenses, my eating expenses, my 12-year-old's expense, all those things. And we're gonna just have to create a world around that reality.

Yeah. Yes. I, I looked into, I looked into all that. Yes. So, yeah.

So Maria, you just found out what your husband earns. How much is it?

Yeah.

And do you believe him when he said what he earns, or did you find out because it was written on a paper, or how'd you find out and how much is it?

Mm-hmm. He took out a HELOC to pay off some debt, uh, $70,000. So it was on the loan application. He makes $90,000 a year.

$90,000 a year and he took out a $70,000 HELOC, um, to pay off all of your debt. Is there any other outstanding debt, uh, other than the mortgage that you know about?

No, just the mortgage and the $60,000.

How are you positive of that?

Um, well, when it comes to debt, he'll share it with me. When it comes to spending, he won't share anything.

Okay.

What does he have in retirement savings?

I have no idea. I've never seen it. He has his mail routed to his parents, so I don't see anything.

Oh wow. Okay, do you, do you think that maybe he has been saving? Like, does your sense tell you that he has been, or do you think he probably doesn't have much?

You may not be able to answer that, but he's been in the company, um, 40 years or 30 years. Okay. Um, yeah, so I think he has some type of investment, but I have no idea how much it is.

Okay, you should get half of it. Yeah, or maybe not half, but half since y'all have been together.

Uh-huh, that's true.

So there might be— your situation might not be as financially— emotionally and relationally, yeah, it's a mess, but financially it might not be as bad as you think it is.

I hope it's not. What about the mortgage? Uh, what do you guys now owe, uh, or what did you owe, and what's the property worth? I'll already account for the HELOC.

So we bought— we've bought the house in 2017, and we bought it for 3 $340,000, and it's still $340,000 right now, plus now the HELOCs. And I think the value is about $550,000.

Okay. Okay. So there's the numbers there. John's right. You know, since the marriage, most of this should be split down the middle. Um, that doesn't give you, I don't think, uh, unless he's got this crazy nest egg somewhere, I don't think that's going to give you the ability to walk away, get your half and never have to work again. So the question then becomes, what can you do for work? You've been out of the workforce for a while, for 12 years. Were you ever in the workforce before you had the baby?

Yeah. Yeah. I was, um, I work in the legal profession since I was 17.

Okay.

And, um, I had a good job before I quit my job. My, my son was born premature, so I just didn't go back to work. Okay. And then, um, eventually I'll do pick up some contract work one month here and there.

Yeah.

Okay. So you feel like you have a, a exit strategy as far as career is concerned?

Yeah, but I'm 48, so I mean, that's not old. I'm competing against a younger, uh, junior.

Yes. But let me, let me, you know, inform you on this. A lot of people, they, they earn the most they've ever made in their 50s. Like that's their, their clutch year. So you're approaching that and obviously you've been outta the workforce. There's some variables there, but I, I do wanna encourage you on that and don't get it twisted. Uh, raising kids has life experience all over it that can, those are transferable skills. So let's be honest about that. Um, what's, what's precluding you from making that step? Um, when do you plan on making that step? Do you still feel barriers to making that step? Let us help you with that. What else is there?

Well, because my marriage is not stable, um, divorce was not an option because I don't want to share custody. I don't know what he's going to say to my son about me, so I'd rather stay home and take care of my son, pick him up from school, drop him off, and help him with homework and activities and all that. That's kind of what's was preventing me from going back to work. Because if I actually went back to work for one year last year and my son didn't do well in school, so I felt like, you know, I should be with him for now.

The greatest gift you can give your kid right now is stability.

Okay.

Because there's no way that this is— that your husband is being this, uh, insane with how he's treating his wife and, and also being a plugged-in, attentive, good dad.

So John, be clear about what you think stability looks like, because you could interpret stability as I'm not going to rock the boat right now, I'm just going to stay where I'm at, I'm not going to—

yeah, what do you think? What I would tell you is for your kid, the boat is rocked. Yeah, the boat is rocked in wild ways. The greatest gift two parents can give their kid is a rock-solid marriage and giving your kids something to anchor into. And the data is pretty clear. A, no, don't quote unquote stay together for the kids. Fix your marriage for your kids. Fix your marriage for you, and your kids benefit. But if a marriage is unhealthy, it's bad, it's abusive like yours is, um, then quote unquote staying together for the kids is not good for the kids. Right? You have to ask yourself, is your personal safety and wellbeing and your child's health and safety and wellbeing worth your potential? I might have to share custody sometimes. And the reality is this is still his dad. And so he's still gonna need his father. But sit down with an attorney, a good licensed attorney, and ask these hard questions so you can get a picture and you're not just living on made up stories.

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Back to the phone lines where we have Leah, who's in Akron, Ohio. Leah, how can we help out today?

Hi.

So my husband had a job offer for $62,000 a year salary. And then as he had started the position and he's, you know, talking to people with like HR and payroll, he's being told that, you know, of course he wouldn't get paid overtime, but he still has to clock in, clock out, and if he doesn't make 40 hours, he's being docked somehow, which sounds hourly and fraudulent.

Okay, so you're— are you going to get clarity or are you simply not going to take the offer?

Oh, he already accepted the $62,000 salary offer, but we got our first paycheck and they're not allowing us access to his pay stub. And based off of the number we received, um, it would seem that he's being paid something entirely different than what was agreed to.

What does it look like he's— what does it look like he's being paid?

Hourly, um, which we don't even know what the price is hourly. Um, but what's being paid?

What's the pay stub salary? What's the pay stub amount and how far off is it?

What do you mean, how do you not allow somebody to see that?

But well, it's supposed to be on the app, um, which he has access to the app, but like when he goes to the tab, it essentially says that his employer has him blocked.

So can he— did he go down to HR and say, hey, I'm blocked on this, uh, can you fix it? And did they say no?

Or how do you just know how much he's paying in taxes and FICA and all that stuff?

Exactly. Um, and the way that they're conducting business is they tend to just be like, um, oh well, we'll get to it, we'll see, we'll talk to you later.

Um, okay, so let's back all the way out here for a second because you're ready to go to war here.

Okay, a little bit. Yeah, because I just— I, I don't understand what's happening. Neither does he, and they're not answering any questions.

Okay, so sometimes people get offered positions. Uh, I'm trying to think of like, uh, if you went and got a job as a state trooper, right? It would say something like can make up to $110,000, base salary $60,000 or something like that. Um, but that number is a clock-in number. It does have an hourly wage to it. And at some point in the HR process, they'll tell you that. Or I have other buddies who work in industries where part of the management practice is to track hours. But they're paid a salary. And so I've never heard of somebody being paid a salary, but if you work 39.5 hours, we're going to take money away from you, right?

That's what it is. That's where I am having an issue with, is that they're saying if you don't meet the 40 hours, your pay gets docked.

But are they guaranteeing him the 40 hours? You're not Sorry, are they guaranteeing him the 40 hours? And so is it, is it a situation to where we're guaranteeing you the 40 hours, but if you step in and say, yeah, I gotta go to a dentist appointment or something, that you're not basically clocked in for those hours, then they're docked? Is that exactly what you're saying?

Right, so like, say he— because he is in construction, so it's very like based on the weather. Um, and so say, um, if he's late or if he's, um, done with the job early, uh, it'll be that 40 hours. Um, like, if he's done with the job early, he's not getting however much.

Understood.

I see what you're saying.

And he would have to use, like, paid time off to account for him leaving a job early because the job is done, and that doesn't make sense. I see what you're saying.

But how much of this—

I'm a little perturbed is that, I, I mean, if you're not making your 40 hours and you're docking my pay, by how much? What's the hourly there? And also, if you're telling me that in the opposite side of the coin, if I work 60 hours, you're not going to pay me 20 hours of overtime, right? Right.

So let's, let's— two things here. One, is there a chance that your husband didn't ask what the hourly rate is when he took this job?

Well, I'm actually looking at the job offer paperwork now, and it says, um, you will be paid an annual salary of $67,000 per year and paid in accordance with our every other week schedule. Okay, so that's verbatim what it says. In all of the paperwork, it says nothing about hourly.

Okay, so let's, let's do two things. Let's, number one, just focus on what you can control. You can do one of two things right now. You can call a lawyer and you can write a demand letter. That's number one. Number two, you can suffer through this crappy deal and he can immediately start applying for other jobs because— not because of, you know, it's an hourly or whatever. But because I'm not going to work for somebody who doesn't have integrity— and integrity is, I don't know if you're taking out taxes for me and I don't want to get hit with a tax bill at the end of the year. Also, I don't know if you're pulling out Social Security for me and I don't get hit with that bill at the end of the year. Like, that's just, that's just Business 101. Is he 1099 or is he a W-2?

He doesn't even know.

I know, right?

Every time he's asking any kind of question— okay, but hold on, I'm gonna put this on him.

This should have been determined agreements long before a contract was signed, ma'am. I got to know what, what I'm signing up for. And I got an offer letter. I would have said get it in writing. You got that. So, so he's entitled to that amount of money legally because they signed a contract with him. But number two, I'm gonna ask bigger questions because I would need to know, am I going to take $67,000? Do I need to pull 30% of that because I'm, I'm 1099, I got to pay my own taxes? Is that going to come out? Right. Those are questions that should have been asked during the interview and they weren't.

Right.

I do think, I mean, I will say like we were a little, we were very much in need of money. Um, you know, we, you know, obviously you can't live on like unemployment. It's unreliable. You don't get it every week.

I got you.

I got you.

But let's just control what we can control here.

Right. Yeah. And yeah, I definitely think we'll probably be looking for somewhere else. They don't seem to be managing much of anything very well.

Um, right on. And can I, can I tell you this? I'm uncomfortable with the whole thing here, and here's why. Why are you calling? Why isn't he calling? Why are you reading his contracts and his— like, why isn't he taking control of his job, his finances, his employer, right?

Well, I do— like, I'm a stay-at-home mom, so I handle our finances. Like, he goes, he brings in the money, he does the work, you know, and I do the child rearing, the finances.

Okay.

Household.

Um, And so like, I, I mean, I'm not very intelligent per se, but I do have—

don't say that—

you know, I just have like a basic understanding of like a salary versus an hourly, and it feels like they're really muddling it.

They are. They are.

Um, and it just doesn't— it's just, you know, the math isn't mapping.

Correct.

You're right.

Yeah. I mean, if I were in your shoes—

I mean, he has asked questions. He has tried to talk to the payroll people and he has tried to talk to HR, but But again, they just keep saying like, oh, I don't know right now, we'll come back to it, we'll come back to it.

And that's not right. I'm on your side. And if you're asking, is this right or wrong, I don't think it's right the way it's being handled. I think the question to go in is like, hey, am I salary exempt? Am I— tell me what's going on, answer my questions. If you're not going to answer my questions, and there's, there's no solve here, and that's frustrating. I, you know, I, I like what John said, which is you've really got the two routes. You can either lawyer up and, and really try to fight this and get what you thought you were signing on the dotted line for. I don't even know if I'd go that far. I think I'd just start looking for new jobs because the benefit of him having this job right now is something— at least he's searching from a perspective of, I have something, I have a gig, so I'm not desperate. And that's gonna help him have more opportunity to find what it is that he's really looking for. So there is like a silver lining to this cloud. But my biggest thing going forward is I think you, you both have learned the lesson of we have to ask our questions early and make sure we're getting very clear answers, making sure things are documented in writing.

And I have a feeling, I don't know, Leah, but you can, when you're in the interview process, you can start to sense what people's character is like. Are they wishy-washy? Are they putting you off? Is, you know, that sort of thing. And I think that you're going to, you can chalk that up to experience at this point and going forward.

And I get, I need a job right now, I'm gonna take what I can get. I support that.

Yeah, for sure.

But if your boss isn't a person of character, I'm gonna get out of there.

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So my husband is currently following a TikToker who is promoting this first lien HELOC, and I'm very hesitant about it. In fact, my family gives me the name Dream Crusher because I'm just not a risk taker.

But, um, dream crusher. Hey, here's my big problem number one, Brooke. Your husband's quote following a TikToker. That should be your first problem right there.

Well, that's what I say too, but he thinks that I don't really understand the process.

He's following a TikToker, right?

But I look at— but I'm looking at the numbers and I just don't feel— I just can't see how it could work.

So, so Tell us about it.

Yeah, go ahead.

Tell us about the first lean.

This is my favorite call the whole day. There's no way a call is going to be better than this one. Are you, are you, are you 16 and he's 17? Did y'all get married real young?

Well, no, I'm actually in my 50s, but we did. We have been married for a long time.

Please tell me your husband's a 50-year-old TikToker.

He is. He is.

He is.

I, I, every once in a while I wake up and I just think, as a society, we're doomed. And this is another vote for that, right?

Well, I think it's once you, you know, once you click on something, then you see all of the same things. And so this particular guy keeps coming across, and the way that he advertises, it sounds— I don't know, to him it sounds great. But this first lien HELOC serves as your bank account.

I know, I know, I know, I know why.

And just to be clear, if you typically— if you take a HELOC like in the order, it's like you've got your mortgage and then you got the HELOC under it. So if you were to foreclose, the money would first pay off the mortgage and then the HELOC would go next. With first lien, it reverses that order. So the home equity line of credit is first. That's the first thing that's paid, that sort of thing. My question is why? Why do you need this?

Why?

Why are you guys to the point of doing these types of things?

I don't think that we do need it. That's— but see, the advertisement is that, oh, you can pay this off in 3 to 6 years, which In my view, what's he using the money—

like, what's the purpose of the— what's the purpose of it? The grand purpose in his mind? We need to get the first lien HELOC because I need to get a boat, or because we're funding college. Like, what's— what is— why?

The why is the payoff in 3 to 6 years. I mean, we're trying for retirement. We're trying to get things settled before we retire. And so that's the attraction, is to pay off this early. But we don't have like this huge income like minus our debts that we have to even throw at this HELOC? Because that's what it seems like to me, that you need, you need this huge income, right?

So the, the problem here is you still owe X amount of dollars.

Yes.

And there's not a fat— there's not a, there's not a way to not owe that much money.

Well, we— our income is okay, that we, we only owe $220,000 on our house. It's worth about $500,000 to $600,000.

Okay.

We have it at a 2%.

Uh-huh. Like, I get that. I get that. But here's what's important. You owe $200,000. Divide that by 6 years, 72 months. And I can't do that math in my head like Dave can, but Like, do you have that much money to put towards this?

No.

Okay. There's not going to be a secret atomic way to make you owe less than $200,000 on your mortgage. There might be a way that you can reduce your interest rate, maybe. And so technically you owe $200,000 after 6 years, you're going to be paying interest also. So there might be a way to make it a little bit smaller, maybe. You get what I'm saying? Like, no matter what you're doing, you still owe $200,000 and you got 72 months that this thing is telling you you could pay it off. There's not a way to contract time or to contract money from what you owe, right? So your gut feeling is right. You know why? Because it's just math.

Yeah, well, and our mortgage is only 2.75. Right. Yeah, I go over to a HELOC. Yeah, it's a daily rate of like 8%.

And is it variable? Does it vary?

The HELOC apparently would be. Yeah.

Yeah. And that's scary too.

Why would you— this—

there, there's— I can see, and, and I'm trying to say this in a non-incredulous way, but truly I can see no good in this.

None.

I can see no good in this. And if the goal— if you guys have sat around and said, what's our goal? Our goal is to pay off the mortgage. Yeah, that's actually, uh, a very simple process. I'm not saying it's easy. I'm saying it is a very simple process. I pay my mortgage payment and then anything and above my mortgage payment, I apply it to the principal. And I do that as often and as many times as I can and as high amounts as I possibly can. And every time I do that, I'm affecting the amortization schedule. Every time I do that, more of my actual mortgage payment is going towards the prin— like, That is the way it works. That is how folks do it. That's how millionaires do it. And that is probably if I were to really try to form an argument against this other than just kind of like sheer logic and simplicity, I would go back to our millionaire study, John, and I would just talk about how we've studied what the practices of millionaires are. Everyday millionaires, Baby Steps millionaires. I'm not talking about billionaires. I'm talking about millionaires.

And what they do is they pay for cars and they never do car payments again, and they pay off their home mortgage and they avoid debt and they budget their money. These are the practices of what I'm going to refer to as the 401 millionaire, the average millionaire in America. This is what they do. And so for me, this sounds like a very complex, heady strategy to do something that's actually simple to do. Why am I going to add steps and add rigmarole to something that doesn't require it and honestly adds risk to the equation.

And, and let's, let's like, let's say your home mortgage was at 10% and you could get a first lien HELOC at 2.75. Somebody could sit down and make the case that I have just— and even though it's variable interest rate, and so if interest rates go up, thank God there's nothing going on in the world or the economy that makes me any somewhat nervous at all about the future, right? I'm being ridiculous right now. So, um, if you could somehow magically flip a switch to where you're paying 2.75% mortgage versus a 10%, I, I, I couldn't say you were crazy. I might say that's not something I want to do.

Yeah, sure.

I don't want to put my house on the block again. But what you're doing is you're creating essentially a line of credit You'd have to be superhuman to never spend this line of credit. There's no way you're going to get a better interest rate.

Well, the HELOC is acting as the primary mortgage, and I, I just—

but you can draw from it. So it's a credit card at a variable rate that's higher than your more— like, there's no possible win here.

Yeah, and I don't like the fact that, like, with the temptation is there that you can withdraw anytime you want.

That's right, exactly.

And has he Has he— and I don't know if he's gone so far as to say, I ran the numbers like this and I ran the numbers like this and here's how much faster we could do it, here's the exact amount of money that we've saved. I mean, obviously John or I— I mean, you would have to play a perfect game, I feel like, in order for this to—

it still wouldn't matter though. You got a 2.75%, that's also— you've already won the, the mortgage lottery.

But has he done that? Has he even done any due diligence as far as to say such things?

No, not yet. I have on my part.

Yeah. Challenge him here. Challenge him here. Write me a plan to where we pay off this house in 72 months at $200,000, the remaining balance, plus, plus our 2.7% mortgage. Here's our plan. Here's how much we'd have to pay off every month. Show me with your first lien HELOC math, how we would accelerate that by 6 months or a year or 2 years. Also with the variable interest rate that it could go up, it could go way up.

And with the temptation that we could spend against it.

Right.

Yeah.

It's just total madness.

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I'm thinking about TRS Live and I'm thinking about— we had some good times, man. We had a good time recording that show in front of a live audience. We went on the road back in April, and if you didn't hear, we traveled to 4 different cities. We did the Ramsey Show live in front of like 300—

uh, there's a rad theater there in Denver. One of the top 5 wildest things that's ever happened to me at a live event I've done thousands of live events for my— the wildest thing.

I know what you're going to say.

I don't, I don't know. Can I give it away, Kelly?

Yeah, sure.

The big thing that happened that we're not going to tell anybody.

It was so crazy. We all, we couldn't believe that it happened.

I know.

We were hoping.

I was super hoping it would happen. Let's just say it happened. It happened. Yeah, it was a super fun time.

It was.

So we dropped the episode from Charlotte. A couple of weeks or so ago. We just now dropped the Denver episode, and up next we got Phoenix and Anaheim. Those are coming in the next few weeks, so stay tuned for those. It was super fun. I think you guys will enjoy it hopefully as much as we did. I don't know about you, John, but for me, I love being in direct contact with you guys. Like, over the phone lines is great, but it's still over the phone lines. But if we can be in the same venue and we can breathe the same air, like, that to me is Electric. I love that. So be sure to go check them out, uh, the— on the normal Ramsey Show channel. So where you watch the Ramsey Show normally, on YouTube, Spotify, and the Ramsey Network app. Uh, any other memories?

I'll just say we may have had a spontaneous debt-free scream that led to a spontaneous engagement that led to a spontaneous marriage. You gotta listen to the show. Yeah, it was a blast.

That's good, good, good, good. Again, yeah, go check them out wherever you watch the Ramsey Show. They will be there watch them. They're fun. You get the same information just packaged in a more fun way.

Well, and there was some times that we would push back on folks and then like later on in the show they would come back up or their spouse, remember their spouse came back up, was like, hold on. And it got more fun and more fun.

Yes.

It, it was a blast.

It is. It's just different. It's one thing, like when, when you guys call in, we can assume maybe the faces that you're making or we like create a persona in our mind, but to see you standing there to see the faces that you're making in response to what we're saying. Uh, it is different and it kind of changes a little bit of how I give an answer and the whole audience boos my answer.

It's just fun, man. It's fun.

It's a different element. All right, Aaron is in Lincoln, Nebraska. Aaron, how can Dr. John and I help out today?

Well, I want to buy my husband a really nice truck. Well, we want— he needs a car and he's getting cold feet. And we decided you're the tiebreaker.

I love this question. These are our favorite questions, Erin. So you want to get the new car. Tell us, tell us all of it.

So we're in Baby Step 6 and we have spent 15 years, you know, he and I had $450,000 of student loan debt. Um, it's paid off, you know, we're in Baby Step 6, we're paying off our house, but He needs, like, he needs a new car and he wants a truck, a really, really nice truck. Um, has always wanted it. I think he deserves it.

And how much are we talking for this new truck? And like, what model? We want to know the— give us the gory details.

He wants the, the loaded GMC Silverado, but, but he'll use it. And we're the type of people that keep, you know, cars for a really long time.

Sure. What does something like that cost?

$100 grand?

The one—

I mean, $79,000, $80,000.

Okay, so I'll put $80,000. And, uh, you guys are Baby Step 6. How much is left on the mortgage?

So we have $400,000 left on our mortgage. Um, we are on track. You know, the number moves a little bit every year, but on track to pay it off in 10 years.

Okay, uh, back to that Silverado. Is this brand new or is this a year used? Like, what, what year are you looking at?

Looking at brand new. There's just not a lot of good used trucks on the market right now.

Is that true, John?

And I'll tell you, man, I want to hear, like, what's your total net worth? Like, like what your house is worth minus what you owe on it plus what you got in retirement.

So we're Baby Steps Millionaires in the sense of our house is worth about $850,000.

Okay.

Um, we make a really good income.

What does that mean?

$780,000 a year.

So you make $780,000 a year. You've got $400,000 give or take of equity in the home. And what do you have in retirement?

Um, combined between the two of us, about $1.5 million, but the market's been good. I mean, sure, sure.

You know, and that's in retirement funds.

$1.5 million, 401s and a brokerage account.

Okay. So you're almost worth $2 million then. Did I calculate that right?

Yeah.

Okay. So the parameters that John was getting at and asking that, and this is not just for you, Erin, you might not— you might already know this, but for those listening, when we're thinking about whether or not somebody can afford a brand new car, this is hot off the lot, we're looking at is your net worth more than $1 million? Generally, if it is, you can take that big 20, 25% depreciation hit that's going to happen in the first year or so. And you're basically saying, I can take that cash, I could throw it out the window, let it roll out the window while I'm driving the car on the interstate home, and I'll be fine. It's not going to affect my well-being in any way, shape, or form. Other thing that we look at, and this is not necessarily with brand new cars, but we look at what percentage, if we were to compare it to your take-home pay, we say things with wheels and motors shouldn't be any more than half of your annual take-home pay. Obviously, at $780,000 a year, which you guys are smoking it, like, that's crazy. Y'all are killing it.

This doesn't even come close, um, at all.

So here's what I'll say, Erin.

Okay, so here's one more awkward— well, not, you know, he lets me handle the money.

Okay.

You know, he— we sit down once a month. Um, so I— we haven't had a car payment in a really long time, but in our every, every dot, like in our budgeting, I've paid ourself a car payment.

Okay.

And so for the most part, you know, I don't want to finance it. Like maybe you don't need the most part.

You make $780,000. Aaron, Aaron, I'm gonna stop this conversation because to put it toward the mortgage. Well, I'm going to tell you the most wild thing of everything that you're saying that I hear has nothing to do with the GMC Silverado. The most wild thing that I heard you say is that making $780,000 a year, it's going to take you 10 years to pay off a $400,000 mortgage.

Pay off your house in 2 years.

That's what I took away from this conversation and said, that's bananas. And the car is like, whatever. The truck is whatever.

Why is it going to take you 10 years?

Well, we're just— we're— that is the word— we plan for the worst case scenario.

Um, no, hold on. Do y'all plan for the worst or do you?

I do.

Yeah, exactly.

And, and what do you mean by that? Like, what does that look like? Does that look like I just squirrel away all the money into retirement instead of paying off the— like, what does that look like tactically for you?

You know, saving for, you know, I got an elementary school age son, you know, saving for his college, which I feel pretty good about now. Um, you should. Help, you know, we had a little bit helping, you know, a now deceased parent.

Okay.

Um, financially, so, you know, there were some variables to where up until the last, you know, 2 or 3 years, you know, there were some— I don't want to call them expenses, you know, just things that you do. Maybe I got a little ahead, you know, giving—

but how much could they have— how much could it have knocked your salary down from $780,000 to $500,000?

Well, and so the last couple of years is the first time we've made the— you know, my husband was a medical resident, so we had to pay off the debt.

Okay. He made nothing. Yeah.

Um, and I was fortunate to where I run a business that, you know, finally in the last couple of years got off the ground. So, so making that much is a relatively new— you know, over the last couple of years.

Fair enough.

Kind of adjusting to having real money. Fair enough.

So listen, The— I'm gonna tell you, I drove an '06 truck up until a year ago, and at one point, just private conversation, me and Dave on the road, he was like, hey, what are you, what are you doing? And he was right. I was trying to make a point to myself. And so I'll tell you what I did. I went and got a fancy that same year truck, but I found one And it's, it's beyond my wildest imagination. It's like a truck, but it's like driving an iPhone, right? It's ridiculous. And I found one that somebody had driven for about 2,000 miles and they brought it back cuz they wanted a, an even bigger one. They were more insecure even than me, right? And, um, but that took $10 grand off of the same— it was, it was basically a brand new truck that I got for $10 grand off.

Yes, but you could have gotten You could have just up and gotten the truck.

But listen, yes, Erin, go buy. Tell your husband to get over himself. Y'all, you make $750,000 a year. Y'all have millions of dollars. Go get the truck.

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Welcome back to The Ramsey Show here in the Fairwinds Credit Union studio. I'm Jade, this is John. We're going to Tiffany in Houston, Texas. Tiffany, how can we help out today?

Hi, um, so me and my husband got married in March. We're a blended family, and about a month ago we were getting ready, on our way to go to the bank to combine bank accounts, combine finances, And my husband mentioned that he would like to— that he has been contributing $150 a month to each of his children for savings, and he would like to do that for all 4 kids now with our finances combined. And I asked, is this savings for just college, or is it for whatever? He said, you know, should they choose to go a trade route, it could be for a down payment for a house later, whatever. And then my question was, you know, well, how long have you been doing this? And he's been doing it for 16 years. And I said, well, you know, that's quite a bit more money than I have saved for my children. Why don't we make it even so that they can, you know, can have the same equal opportunities? And that created a big rift, and we have since not combined finances. So my question is, what is the right way to go about this?

Because I— it just doesn't settle well with me, um, because in my mind I think, you know, we should see each our children as our children. Neither of the other parents are involved. His children's parent, uh, mother left and ended up accidentally overdosing and has when they were 3 and 5, and my children's father has not been in their lives since they were very young.

And so he's been the only one contributing to this? It's not like— it's not like Grandma said, I'm giving you this money and I'm contributing for these two children? It's— he's just been doing this, right?

Okay, right. And in fact, he didn't realize he could have been getting death benefits for them. And when we were dating, I said, hey, you know, you could actually get this, and I got him signed up for it. And so now he is getting that income for them. He just didn't realized he could get it. Um, and so, um, it's really just, it created a big fight and, um, we're not fighting right now, but we're also not combining finances right now. And so I'm not sure what the right way is to go about this because he seems very protective of this money that he has saved.

Yeah. Let me hop in here.

Okay.

Jade, you, you, um, tell me if I'm wrong. I always want to look at an equitable starting line, right? So when y'all joined families and y'all joined each other, these 4 kids and you and him started at a new starting line, right?

Right.

But the finish line is going to be different because 2 of those kids had another starting line in a previous life.

Right.

And so I, I can't help but hear that you've got— it's more about ego for you. I don't have this much for my kids, and so it's not fair for them, instead of seeing the blessing that this is, which is they're going to have more than they would have had because we're going to be doing the same together moving forward.

How, how old are the kids? How old are his kids and how old are your kids?

So mine are 20 and 17, and his are 16 and 14.

Okay, yeah, and that even changes it even further.

Um, yours are older, his—

or your kids are out of the house, right?

Yeah, no, they're in college already. Um, but they are still living with us, just going local.

Um, I might disagree with I might disagree with John on this and not in the way that saying, saying he's right.

Let's fight.

Not saying that you're wrong. I just may have a different point of view on it. So, and I'll explain mine. John has explained his. If you want to add more, add to it. Cause I, I don't know. Like I said, varying different, different, different point of views. I don't know that John is wrong. I'll tell you mine. When I think about combining money, when I think about marriage, I think about two worlds coming together, uh, like a sandwich. And everything we all had was, is in the middle. So if it's like wheat bread, wheat bread, peanut butter in the middle, the peanut butter in the middle is all of the assets. And now it's smeared on all of us, right? Like we're just sharing it together. This is a horrible analogy.

Mm-hmm.

But, and, and so that's what you're thinking. You're like, hey, if we're pooling our income, we should be pooling our retirement. We should be pooling our assets. We should be pooling Everything together in the middle. Everything's the peanut butter. I thought that that's the way it worked. Wouldn't that also include things like 529s? Wouldn't that also include all of the assets? So I kind— I understand your, your thought process, which is, shouldn't we share everything? And shouldn't be— shouldn't it be completely like even ground? And to John's point, I, I think I see it.

I think it's even ground starting now.

Well, I think I see it as that is the new even ground, as okay, the new starting point is now we're— we are— we're either a family or we're trying to pretend like we're kind of over here, but I also am not over— like, there's part of that that I'm like, I don't know, I think I like the idea of if we're together, we're together. And maybe I'm a sibling in this, that before I had my own room, but now I have a stepsister and she shares the room with me, so 'Even though I've had my own room for this whole time, now I have a stepsister and we share a room.' Like, but I think we're saying the same thing.

I, like, maybe I did a bad job.

So I'm, I'm saying, for clarity, I'm saying that, yeah, I agree. Let's pretend there's $20,000 for his kids. I'm saying that now, yeah, I think I would be okay with it being 5, 5, 5, and 5.

Oh, okay. I, and I look at it as if he's got 10 grand saved for one and 10 grand saved for another and he wants to start continue putting money in their individual accounts, and now he wants to start putting money in your kids' accounts, like $150 across the board for each kid. Now we're going to up it to— instead of $300, we're going to put $600 towards each kid. That's where I would look at it.

Yeah, I think I would say both. I would go, okay, whatever is in this pool of like kids' money, I would have it equally distributed, and then going forward, I would put equal amounts and all— I, I believe that that's what I— now, I would do it differently, but yeah, I don't think it's a wrong or right thing. I think it's, can you guys meet in the middle? I, I am going to say this, and I— here's what— here, here would be my pushback. Um, I'm thinking about how I would feel as the kids on this.

And so if I've— if, if my mom got remarried and she— and I was 20, and she married a guy who had a 12-year-old that he'd been in saving money for that kid's college. I wouldn't feel as a 20-year-old that suddenly you owed me that amount of money that you've saved for him.

It's not even a thing. I think that's the attitude. Okay, I think we're getting to it. So I think part of it is attitude, which is I don't think you can have the, uh, the thought of I'm entitled to this and kind of be like mean or haughty about it. I think that spirit is not right.

Yeah.

But I do think if the spirit is, we are now a family and we're going to go forward like a family and we're all on equal footing together, that's kind of more of the mindset that I'd have around it. And, and so, and I'm not saying that's easy. I do wanna say that.

No, it's messy. So Tiffany, is there a way to take the dollar amount off of this thing and look at the individuals and what they need in this season of their life?

That's a good, that's good.

Well, and that's what we talked about and he said, you know, I've been doing this and I want to keep doing this for my kids.

Yeah.

He said, I wanna do the same for your kids. And my argument was, if we're looking at it as giving each kid an equal opportunity and, and because they have no idea that this is even there.

And it's hard because your kids are younger. And so even the idea of trying to catch up is not really there.

And equal opportunity's gonna look different. Different when it comes to support.

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All right, let's go back to the phone lines where we have David who's in Wisconsin. Hi David, how can John and I help today?

Hi Jade and John, how are you?

Doing good, what's up?

My wife and I are set to pay off our house in 3 weeks. Um, and we're curious on what that process actually looks like. Anything to look out for? Do we get an official deed? Is there anything related to our, um, insurance that we need to adjust when that step happens?

Number one, congratulations, man.

So awesome.

Thank you.

Um, uh, it, it's gonna probably feel both amazing and Quasi-anticlimactic.

Okay.

So are, are you given like a big lump sum? Are you just taking in the final payment?

We've been chunking it for 6 years, so it'll be a, a chunk payment, but it's not massive by any means.

Okay. I'll tell you how I did it, cuz I'm a nerd, but I like to go in the bank and shake the person's hand. But like Jade and I were just talking offline, she would probably just hit the button from her house.

I, I'd sit in bed. Mind you, I'm in Baby Step 6. I haven't paid off my mortgage, so I'd be sitting in bed with my coffee. I, I don't want to go out of the house. I just want to hit the button and, and refill my coffee cup.

So, um, it's going to be up to you to have some cool celebration that y'all plan, cuz you're going to walk out of the bank or you're going to hit the button and confetti is not going to fall from the sky. And so, but I want confetti to fall from the sky. You just got to set up the confetti, whatever that looks like. Okay.

So my wife, she knows we're close, um, but she does not know what's happening in 3 weeks. I got a date that we're gonna go to the bank and do it.

Amazing.

Any, uh, any like fun things or suggestions that you think would be fun?

I mean, you know her better than we could ever know her, but I would have a reservation at her favorite restaurant. If you have a weekend getaway, I mean, it's going to be life content, like It's gonna be depending on your life right now, but dude, plan something for y'all to go celebrate.

Absolutely.

If you have a couple of friends that have been walking alongside you in this journey, then invite them somewhere and you can meet for lunch or something. I think that would be really cool.

Yeah. Mm-hmm.

I mean, some practical things, like, I mean, you might wanna update your, your homeowner's insurance. Yeah.

I mean, it, that kind of stuff won't change. Um, you'll get the deed in the mail eventually, right? But they'll shake your hand and it'll just go through the process. You'll get a thing. I, I wanted to print out that said zero balance, right?

Um, keep that forever.

Yeah, just keep all those documents for just to hold it close to my heart.

Yes, absolutely. In a file, fire safe.

Your house is still worth what your house is worth, right?

Yep.

And so, um, that kind of stuff is going to stay the same. And the— you're still going to have, uh, you know, your homeowner's taxes, you're still going to have your homeowner's insurance and stuff like that. Like, that you're still gonna have to pay every month towards a thing, or you can make it annual now and just write one big ugly check once a year. You know, it depends on how you want to do that. But—

and there are some nerdy things you can do, like you can, you know, check the property records and make sure that everything is confirmed, like all the liens are satisfied, everything is documented correctly. Like you can do all that stuff. And I think that's good. You actually sound like the guy who would do that. So I think you should do— we talked about keeping all the documents, documents forever. Changing and just up— not changing, but updating your homeowner's insurance and making sure that if the lender was listed on the policy, they've removed the lender, they've updated like contact information, all of that stuff. Those are kind of nerdy things you could do. Obviously, you're going to be paying the property taxes and all that yourself. But I think that the bigger thing to discuss here is the celebration. The celebration. And really, I mean, we very rarely do we get this call while it's happening in process. So tell us, like, how much have you paid off? Tell us how long did it take? Tell us the goods of the journey.

Yeah, a 6-year journey. We paid off $333,000. This is our first home and just treated it like something we wanted to get rid of.

How old are you guys?

We're 28. What?

Holy cow, bro, you won! Dude, there's people in the lobby and they're cheering you on right now. You won, dude.

You started at age 22. You, you went out and got a mortgage.

I started listening to Dave when I was in college, um, and I'm glad I found him.

Oh my word.

Do you have kids?

We have one and one, uh, coming in a couple months here.

This is probably the, the— this is amazing.

Yeah.

And you guys know that. I'm so glad we asked the question. So 28 years old, did you have any other consumer debt, or you just— since you knew the Ramsey thing, you never had the consumer debt started right in on the mortgage?

Uh, $5,000 I borrowed from my dad, uh, to help move. Oh my gosh, in about a month.

And how much money were you making? And like, what did you start at and what are you at now?

Yeah, we've been married the entire time. Started at about $125,000, um, and closing in at $600,000 now.

Holy— what do you do for work? You guys are rock stars.

Yeah, uh, sales function. So just lighting the fire and getting after it.

Wow, wow, wow.

You're about to give your pregnant wife a big surprise. It's gonna be awesome. That's awesome. Yeah, I think you know her well. Set up something great. You— I mean, you make half a million dollars a year, y'all. You can have some fun with this celebration. And if y'all can get away— and you know what, you want to be a gangster? You take care of the child care and you pay for your, your mom to come down and stay with the one and you take your wife on a cool night away or a weekend away or whatever. But yeah, celebrate this thing big time, man.

So yeah, what's the advice you would give to people listening? And I know $600,000 is a grand income. Most folks don't make that. $125,000 is a little bit more tenable. Tell us, give us a piece of advice for people listening. Maybe they don't have that income, but what would you tell them that you feel like is true across the board?

If I had to put it to one thing, having a really good marriage. Um, it makes it really easy for us because we're both rowing in the same direction and it motivates both of us when we're helping contribute to our shared dream. Um, so I would say marrying up is my piece of advice.

I love that.

I love the, the statement I saw recently that a great marriage is both spouses secretly thinking they got the better end of the deal.

Yes.

Yes, right. I love that, man. That's awesome. So dude, you won. Um, you could do all that stuff Jade said. I didn't do any of that stuff.

Not necessary. That was getting ultra nerdy.

Also because, yeah, I, I tend to overlook details.

Yeah.

In fact, I wrote down a few things.

I'm gonna go check just to make sure, just to make sure something's on the check.

It's been a long time, man. I hope not.

But I, you know, John, I love that call because, I mean, obviously he probably wasn't thinking that he was going to be interviewed, but when you embrace the Ramsey principles, this is what's possible. And what he did, he achieved the other end of the Baby Steps rainbow. And, and that's what we teach here. If you can be, uh, as blessed as David to never have any debt to begin with, it's such a head start. But if you do have debt, still walk those steps out, guys, because the time is going to pass anyway. This was a 6-year journey for them. So if you're starting today, start at Baby Step 1, get that $1,000 saved. That's so important. And then if you have consumer debt, start knocking away at that consumer debt. That's Baby Step 2. You're going to pay off all of your debt except your mortgage using the debt snowball method. After that, save up 3 to 6 months. That's your safety net in case life happens. So you're not going back into debt after that. Yes, invest 15% of your gross income every single month. That's Baby Step 4. And beyond that, at the same time, yes, you can put Baby Step 5 money away in a 529 for kids' college.

Yes, you can start making extra payments toward whatever mortgage you do have. And once it's paid off, now you are in Baby Step 7, which is where David is going to be in 3 weeks, where he can live and give like no one else. That's the point. And if you're listening and you're like, hey, Jade, when were we supposed to even buy the house? That's back in Baby Step 3. We call it Baby Step 3B for the, the tribe who knows. That's when you can, as you're saving up your 3 to 6 months, you can also start saving up for a down payment. So that's how this works.

Let me call this out. One thing he did that's really important. And you said this, he makes $600 grand. Very few people make that much money.

Yep.

But here's what he also did. He was making $125,000 and he worked really hard, got, probably got lucky, whatever you wanna say. And he is making $600 grand. What he didn't do, which most people do, which what I would have done at 22 years old is my lifestyle would've risen to that of a guy who makes half a million dollars. When I got outta college, I had a small amount of undergraduate debt. My first job, I ended that first year after my first job in double the amount of debt because I just decided I wasn't gonna say no anymore. And my lifestyle went way past what I was making. If you can make your first amount of money and as you get raises, you keep doubling down and keep your lifestyle, keep your lifestyle consistent. That's how you really win over time.

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Results may vary and no specific outcome is guaranteed. All right. So if you haven't heard, Ask Ramsey is a free AI tool that's built and trained on our proven Ramsey principles. And today we're going to break down the most asked questions that we got from the week. So there were questions around things, John, like retirement savings, budgeting, But interestingly enough, the most asked question is, how do I choose the right investment options? So I know I want to invest. How do I know what to choose?

Okay, can we say this real quick? I want to like have some deep compassion for folks thinking about investing right now with all of the insane amount of noise out there. We took a call earlier about a first lien HELOC and somebody feeling like they're losing their—

they're far behind.

They're missing out on a mortgage hack or whatever. And we hear about crypto and this and that and this. Like, if you're confused about investing, just know you're not crazy.

Absolutely.

Like the world is trying to make you nuts and then sell you, um, something that is gonna quote unquote give you the way, right?

Yeah.

I think, I think you're, you're right, John. And I think that's an even better way to tee this up because there's a, there is, uh, confusing landscape out there. Yeah. You can turn on TikTok and there's somebody in their room in their slippers telling you how to invest. Yeah, you can go on Instagram and you might find somebody like me and John telling you what to do. You can go on Facebook and you might find an old guy, you know, like you can find— there's information everywhere and it can be hard to decipher and to know what's good and what actually works. The good news here is we've got 30 years of just proven financial turnaround. What we teach has been going on for so long and millions of people have done it. And it works. It's what John and I do. I think what Dave Ramsey does—

to me, the most important— like, I can say, like, hey, I sell this product, kind of like, um, execs and tech companies can say, look how many millions of our products we've sold. But then when you look at what they do with their kids, their kids don't touch those products. To me, the biggest, the biggest sales pitch for what we're about to say— and it's not even a sales pitch because we're not making any money off this— but like, is this is what we do in our homes with our money for our family and our kids' futures. What Dave does with his money, this is what I do, this is what you do. It's like, this is how we do our money for our families.

Well, and I, and, and I didn't plan on going down this road, but I think it's worth going down. What I, I can tell you personally, what I find appealing about what we teach, uh, what I found appealing, you know, 15 years ago, uh, when we first started our journey, and what I found appealing enough to come work for Ramsey is that it should be simple to understand, right? You do— you should not have to have a degree. You should not have to have somebody explain it to you 90 times. You should not have to rewind the video over and over and over to get it. You should not feel like it's only for the scholars and, and you're down here and they're up here. If you've ever been in a conversation where you felt that, right, you're talking to people and they're like, oh, let me dumb it down for you, trying to make you feel I hated that with all my heart. I hate that. Money is actually quite simple to understand, and it should be. And that's what I like about these principles, is that, okay, I can understand this, this makes sense, and it's easy to understand, and it's easy to put into practice.

It's not, uh, overly complex. And honestly, uh, give me simple all day, John. So that main question, how do I choose the right investment options, right? I opened up my 401, I'm staring at the, the Roth IRA right here, and there's a gazillion things I can choose from to invest my money. How do I do it? And so what we teach here is very simple. Again, we want you to spread your investments. We want— we like diversification. We want you to put 25% into each, into 4 different categories. So if I have— I'm just going to use the simplest terms. If I have $100, I'm going to put $25 in this account, $25 in this one, $25 in this one, and $25 in this one. And there's 4 types that we teach. The first is growth and income funds. You might hear these referred to as like mega-cap or large-cap funds. They're very predictable. These are giant companies that have been around forever. They generally pay dividends. They're extremely stable. This is kind of just like the Buick, like it's on the road, it ain't moving. It's a big body. That's what we like. All right.

From there, the next fund is a growth fund. You would usually hear this referred to as maybe a mid-cap or a large-cap fund. And these companies are growing a little bit faster than average. They're still big, they're still dependable, but they're having— they're growing at a faster rate. Okay. After that, the third account is an aggressive growth fund. These might be called small-cap funds. A lot of times these are tech funds or things like that. These have a little bit of a higher risk, but they have a high growth potential. We're looking at it and we're going, oh, this could really, really be something one day.. And so you're investing there again, a little bit more aggressive, not quite as laid back, right? This is like a fast car. This is a little bit more like a Porsche. Yeah.

What I would say, you're going to have a lot more fun on the ride.

Yep.

And you can die quicker if it wrecks.

That's right. And then we go to the international fund, global. These are foreign companies, global funds. And that way you're going outside of the U.S. market, right? Because if things are shaky here, they might be pretty good in the global market as a whole. And so it's a way to balance out all these funds. So if we are going to make that a vehicle, maybe that's like a Emirates. We're flying to Dubai.

All right.

So it's an aircraft. We can go everywhere in that. So that's the way we look at it for retirement investing. There's no set term. You need to stay invested for the long haul. So once you park your money in these places, assume that it's going to stay there until you're ready to draw it out in retirement. It's a long-term play. Okay. Key principles that we teach, and this is the same thing you're going to get if you ask AI and ask Ramsey, they're going to say, don't try to time the market, right? That's not how we teach here. We say do it every month, invest that 15%. It's like clockwork. It doesn't stop if the market goes up and it doesn't stop if the market goes down.

And I'll just say, I've tried it before. I've been wrong every time.

You've tried what? Timing the market?

Yeah. I'm going to hold. I'm going to— you know what? I think there's going to be a recession, so I'm going to not put in my investment. I'm going to put in later in the year. I've, I've, I've been wrong Every time.

Yeah.

And I live in this stuff. I live in it and I was wrong.

Yeah. I truly think the best way to do it is just like that dollar cost averaging every single month.

Set it and forget it.

Just set it and forget it. Let it come out of your account automatically. Avoid target date funds. They shift really heavily into bonds as you age and those just aren't making the returns that we want you to make. Bonds are never the answer. That's something that we would tell you. You need to be beating inflation with your investments. And so that's one of the reasons. Okay, so Ask Ramsey can help you take the next step when it comes to investing, and that's based on your specific situation. Ask your question today at RamseySolutions.com, or you can just click the link in the description if you're listening on podcast or YouTube. John, did we cover it?

I think we got it.

All righty then. Let's go to Madison, who's in Indianapolis, Indiana. Madison, how can John and I interest you today.

Hi, thank you guys so much for taking my call. So essentially, I did not have dreams growing up of being a stay-at-home mom. Um, now I flash forward, have been in a situation where, um, I went— I had my son, went back when he was 4 months old to get my master's degree. Um, so I did research for 2 years, didn't make good money as a grad student like all others And that put my husband and I in a time of like great financial stress. Money was very tight. I graduated in August of '25, and I was not able to find a job despite my best efforts. I had our second child, a daughter, in October. So I was home from the period of about August until January of this year. I went back to work. But I have realized how much I really do have a desire to stay home. We didn't have enough margin in our budget. Um, so since I started back in January, we also got a really nice tax return. So we were actually already able to pay off my vehicle. We had about $10,000 left on it and we paid it off actually last Friday.

Great.

So that was very exciting, but we are still $62,000 in debt. That's about $30,000 in student loans between the two of us. Um, $5,000 in credit cards, $2,000 on another credit card. Actually, we just made a payment yesterday, so it's about $1,500. Okay. On another credit card, we had to use the— I know, and then both the credit cards are no interest currently.

Okay, good, good.

Um, and then my husband has a car loan as well, which is about $24,000. Okay. Um, the only other piece of the finances before I get to like the question is we currently own our house Um, it— when we strip away our wants from our needs, it is good for our family. We hope to have, Lord willing, 3 or 4 children. Um, it's a 3-bedroom house.

Well, we're coming up to a break that we are— we need to take. I'm gonna hold you over because I want to make sure John and I can help you get the answer that you need to your question. So if you'll hold on the line just a little bit longer, we'll get right back Back to you after these messages.

All right.

So we're back to Madison in Indianapolis, Indiana. She called earlier. She's been a stay-at-home mom for quite a while. And she's— they've got a little bit of debt that they need to pay off. It sounds like it's around $62,000 of debt that they're working to pay off. She is on the line and wants to continue with the help. Madison, did I get it right?

Um, very close. So I was only a stay-at-home mom for a period, about 6 months. I came back to work to help get us in a better financial position. And the question is, how long until I can be a stay-at-home mom again?

Okay, perfect question. So we've got the $62,000 in debt, um, and that was broken down between student loans, credit cards, there's a car, and, uh, you also have the house. Now the terminology that you used, you said you own a house. It's, it's paid for outright, or do you still have a mortgage? Give me some clarity on the house.

No, we definitely have a mortgage. We still have— we owe about $249,000 on it.

Okay, you owe $249,000 on the mortgage. So how much do you guys— what's you guys' income? And break it down, like, what do you make versus what does he make?

Yeah, so do you want like what our checks, our bank account has, or what are like technically our salaries are?

No, tell me what you guys bring home in a month. Like, you can tell me we make this every 2 weeks, or you can say in the full month we make this combined.

Okay.

So my husband is biweekly and he makes about $1,972 per check. And then my checks are about $1,758.

Okay. So the grand question is, how can we make this work in an environment where you're no longer working? And that's closely tied to the debt, right? If you have $62,000 of debt, obviously, and this is just numerically speaking, you want as much money as you can going towards that debt, right? Um, so if you were to stop working now, that would be an issue, I'm, I'm assuming, right?

Yes, most definitely.

So have you guys decided— have you guys plugged the numbers into EveryDollar and actually said, okay, if we keep going at the rate that we're going now with both of our incomes, how long will it take, and are we okay with that?

Yeah, so it looks like it would be around 3 years. So by the end of this year, we expect that we would have this now down just below $50,000, which is great progress, but still $50,000 in debt to be on a single income. Um, so yeah, I guess the question would just be, um, is there— is it okay to stop before the debt is gone? Because almost half my income, actually half of my income, does go toward just child care.

Well, that's a, that, that is a values question for you guys. It's not a, it's not a wrong or right. It's completely values. If you guys say, you know what, in this season, we really value debt freedom because if we do this now, it's going to set up, you know, set us up to be able to get the kids' college funds rolling. It's going to help us pay off the mortgage faster. And when we look up and we're 59 and a half years old, we are going to be able to retire and we like the nest egg that we're going to have, right? You plan it out and you've decided, okay, for that reason, or And this is not— no answer is more wrong or right than the other. You could look at it and go, you want to know what? We could elongate this journey a little bit by you staying home. And maybe you look at it and you go, if we do this, it elongates it by double. And we play out the numbers and we still feel like we'd be okay. And yeah, we might have a little less here or a little less here, but we're okay with that.

That's the, that's the sacrifice that you guys have to make. But I would say this, in order to make that, I would run the numbers because money does talk and it does inform, is that really the life you want? Because if you stop working today, Madison, how long will that elongate your journey? How much more time will it take?

Yeah, definitely. Probably twice or three times the amount of time that it would take.

And Madison, can I tell you just an exercise me and my wife do?

Yes.

Whenever I feel like I'm backed into a corner, either, and in your case, I'm staying at home. Um, and we're going to have to get by on $3,500 a month, which seems, I don't even know how the math would work on that. Um, with what your husband brings home, or I have to stay working full-time and I never get to see my kids. And even half of my check goes to childcare. Right? So you've given yourself an either or option. An exercise my wife and I do when we feel backed into a corner is we just make up a whole bunch of other variables and dump them on the table just to remind ourselves that it's almost never either/or. And here's what I mean in your situation. Um, how important is this car to your husband? Can he sell it and get a $3,000 car because y'all decided we want you to stay home? Could you go one more year and he sell that car and you're debt-free? And because there's going to be some, right? And I'm just making up variables to put on the table just to prove to y'all there's other paths we can take that's not caustic option number 1 or caustic option number 2.

And if you sit down and say, we together really value me staying at home, or let me ask you a deeper question. You never dreamed of being a stay-at-home mom. Could part of the reason you want to stay at home is because you hate your job? And you're realizing, I— this isn't worth trading my time with my kids for. And so I'm going to continue to look for another job while I'm doing this miserable thing, or I'm going to look for— you get what I'm saying? Or a part-time job, or a— all the— all I want you to, to get from what I'm saying is there's almost always more than an either-or path.

And then there's the part of it where is— does the math even allow for it?

Yeah, I don't see how it allows for it in your life.

Yeah, because I do want to ask, what is your mortgage payment?

It's about $1,850.

Okay, so that right there is the— that is the major decider for me, almost, you know, beyond the values question.

Yeah, math doesn't—

math—

because where you are right now, you're fine. It's 25% of your take-home, you're good. But if you go down to just his income and you're making $3,800 or $4,000 a month suddenly you guys are 100% house poor. And to be house poor, Madison, with $50,000 of debt, that is curtains.

Like, that's emergency.

That's an emergency. And I don't think you would even enjoy your life the, the way it feels on a day-to-day basis to be in that sort of a bind. Does that make sense?

Yes. Yeah, that definitely makes sense. My husband is expecting to have a promotion this year, and that will give us some more margin, like come time when, um, you know, debt is paid off.

And I mean, is it double? Because it would truly need to be double because it, it would basically need to be what you are making.

Yeah, that's true. It won't be double. Yeah, it's just hard when you've already made decisions that you wish you hadn't.

Yeah.

And you're like, well, I'm not sure how to backtrack. What are we gonna do, sell our house and then move into a 2-bedroom apartment?

That's right.

Well, over $1,300 in our area, that's not going to get you where you need.

Listen, what you're facing though is is everybody faces that reality in one way or another. All of us face that. So I— this is no like finger pointing at you or you made bad choices. We all do that. We all look up and go, dadgummit. I mean, for me, Madison, it was— I look up and I go, oh my gosh, if we had avoided that student loan debt, we would've been able to do this, this, that, and the other. I can't go back and change it. I can only go forward from that point of knowledge and go, okay, that was— that wasn't the right choice for my future. I can't go back and fix it. What can I do going forward to make sure I am making intentionally the right choices for my future? And I think that's the crossroads that you're at right now. You can kind of keep the blinders on and go, but I really, really want this, and I'm just gonna kind of go forward and just hope it all works out. And then you're gonna look up again and go, dang it, like, we did not set ourselves up for success.

So if I had to advise you today, and you did call, given the circumstance given the $62,000 in debt, given the mortgage payment and the fact that you said, yeah, we're probably not going to move and downgrade to an apartment. And given the fact that you're not a stay-at-home mom looking for work, you already have a good job and you're already locked in. I would say ride this thing out, pay off the remainder of the $62,000, and that's going to give you mental clarity. Yes. And but it's also going to give you peace financially. And then you guys can reevaluate and say, okay, what does our life have to look like in order for me to stay home from here? Um, because it still, uh, might look like you doing something, because by then he will have had the raise. So maybe now you're just doing a little bit of part-time work to close that gap, and you can keep that same house. Do you see what I'm saying?

Yeah, I see what you're saying.

Or it may be— and these are hard conversations— he may quote unquote love where he works But when y'all sit down and say, here's what we value, he says, I gotta go get another job. And, or for this season, you stay at home and I'm gonna work 2 jobs because that's what it's gonna take. But it's just, yeah, dump all those variables on the table. But first ask yourselves, who do we want to be and what are our values and what's the quickest path to get to those things?

Yeah. And we're gonna give you EveryDollar because we want you to be able to see these numbers, see it very clearly. We're gonna hook you up with a year for free, um, and make sure that you get there and you can see a clear path that you can get to together.

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. Find what you need at RamseySolutions.com/insurance.

Welcome back to the Ramsey Show here in the Fairwinds Credit Union studio where we have We have Cassie calling in from New York City, New York. Cassie, how can John and I help today?

Okay. Uh, first of all, thank you so much for taking my call and just to get right to it. Um, the overarching question is at what point— I'm a business owner with my husband. Um, at what point to file for bankruptcy? So my situation has a lot of emotion and fatigue tied to it.

Uh, do me a favor, Cassie. Take as deep a breath as you can and hold it for 3, 2. All right, exhale it all the way out. All right, we're with you. You're not by yourself anymore.

Okay, no, you're good, you're good, you're good. I'm sorry.

No, you're good.

So, okay, so I recognize there's emotion and fatigue and—

Talk right into your phone for me.

Okay, sorry. So I recognize there's emotion and fatigue, right? So what I'm able to do, and I know I'm not doing it properly, my husband is the same way, and I honestly, I value more than anything a God perspective, and I kind of randomly came across the show 3 days ago. Okay, but anyway, so my husband and I have been together for 17 years. We left our jobs and we went into business together and went from not having money to eat to being able to gross $419,000 a year. It took us a long time, but in the 17 years, we saved $100,000 in cash. We bought land. We still have that land. And I'm giving you that perspective to kind of show you where we came from. And we were just not financially prudent at that time. Um, I don't want to focus on like blame, whatever. The most important thing is, uh, I'll obviously answer whatever questions you have, but where are you guys right now with your money?

How much do you owe?

Okay. Here's the issue. So, um, all of it is SBA EIDL because we kept putting the money that the business made back into the business. Uh, we didn't like buy houses or cars. We just had that land and we owe $783,000, no, $829,000 on that loan. The problem is the interest on it is accruing at $78 a day. Yeah. Yep. And now, so I'm able— so I went from being able to pull in $36,000 a month. That's what I— and I can do better than that. Like, it's just I, I can now do $10,000 to $15,000 a month, um, because that's what, uh, because COVID really affected our industry. I'm, I don't want to give too much information, but what industry is it? Consulting and, uh, and just Hospitality and adjacent industry. Okay, okay.

But I'm gonna say this, COVID was several years ago. I know it's still rippling through the economy in weird ways, but I want to bring you— and I'm doing this intentionally— I want you to come to right now in the present because you're living in the past, in the future, and come right here with me right now. How much do y'all owe? Y'all owe $830 grand?

Yes, sir. Okay, $830 grand.

And you and your husband combined not top line of your business, but what do y'all bring home each month right now?

Because we work together on the business, we always have.

Okay.

She's more like the front face and selling. Okay. So combined right now, I'm able to bring in $15,000 and, and now we've fixed a lot of kinks in the business together because we were kind of working apart for a little while there. And I can probably bring that up, but I recognize I need to stick to what can I actually bring, not what can we possibly bring, which was kind of the mentality before and why we were in such a mess, in my opinion.

What about— what's the— what about assets? Like, what's the business actually worth?

Oh, I don't— honestly, it's not— it's very— another thing I've learned, it's very me-based, right? I have the relationships, and it's not scalable.

There's not a book that you can sell. There's not, uh, equipment.

I put out Yes, I can. I'm— yes, there are. I don't know, there's probably like $100,000 in equipment that we could sell off.

Do you have a house?

No, no, we've always rented. We own land.

That's where we got—

How much land do you have?

An acre and a half.

Okay, what's it worth?

We paid cash for it. It's worth probably like $300,000, I think.

Okay.

Or maybe $200. I'm not, I'm not sure because we paid for it in cash back.

And that's okay. This is what I think we need. I think we need to do a little bit of research, and I think when we come out of the research, we might find some things that give us some light at the end of the tunnel. Because that's what you need. You need some hope right now, Cassie. Uh, you need to feel like there's action that you can take that's going to make this situation feel better and feel different than it does today. Um, and so that's what we're going to help you try to find.

Um, if, if you, if, if you're making $180,000 a year on your business, that's a good business. Okay.

Yeah. Can I— so here's what's going on and where there's like a little bit of, or there was disagreement, and now my husband, praise God, we've gotten on the same page.

Okay.

But while we didn't, you know, we're burning runway there, right? So, so the issue is, um, we have rent, business rent. Of about $7,211, right? Okay. And again, I know there's a lot of emotion there because the simple thing in my mind is we let go of everything. We let go of all these business rents because I can work from one office, like one area.

Correct.

But that— but then his argument, which I agree with, and I want to like honor it for its just value, is, okay, we do that, but we have two very small children, one and three. Where are we realistically going to have the mental—

well, wait, I'm going to jump— I'm going to jump in on that because I want to know straight up, I hope that you guys let the office rental space go because you, you don't need it and you need all the profit that you can get right now.

So we've started—

sorry, I hope that you did let it go. Did you let it go?

No, that's— I want to do that this month.

I think that's imperative.

You have to. You can't afford it.

It's imperative. It's $7,000 a month. That adds up to more money, uh, year over year, and you need that money, girlfriend. Like, this is not even a You're, if you're talking, if we're in a conversation and we're talking about bankruptcy, then we got to figure it out. Maybe the kids go to Auntie's house and that way you have the, the, the space in your home to work. But if it truly is just you and your husband and that you guys are the people making this engine run, there's no employees. There's no reason to have an office space that people are coming into. Absolutely. You got to let it go. Am I right about that? Or, or is it, there used to be There used to be employees.

We had a bunch of employees in two different places, but yeah, that has been cut down. We also— I—

let me, let me do this for you, hun, just on two decisions. Okay. So if you file for bankruptcy, it's a 7-year process, right?

That is a 7-year process. Okay.

So if you let this rent go and you multiply that by 5 years, it's $90,000 a year. It's, it's $420 grand. And if you sell this land at $300,000, that's $720 grand on two decisions.

Yes.

You see what I'm saying?

I, I do. My, my husband is telling me from one other perspective of, okay, we let go of all of that and then we don't have the mental space to do anything.

You will make the mental space. You don't have mental space now.

Yeah.

Y'all are drowning right now mentally. Two decisions, two decisions right now. And in 5 years this is over. It's over.

And, and it's not— and you'll have the peace of knowing it will be over.

That's right.

It might not— you might not cross the finish line for 5 years, but think of the rest you will feel walking away with a plan that, you know, if I just execute on this plan, I pull the two levers that John just said, I have a plan. And in 5 years I just keep riding that horse to the Old Town Road and I will be out of debt. You get to keep the business that is profitable Yes, you get rid of the land. Yes, you get rid of the office space. But in 5 years, I'm free and clear and I'm making this thing go. Oh my goodness, totally worth it. Figure out something to do with the kids. You can figure that out. You figured out the rest. 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. All right, here we go. The Y Reef Yrefy Question of the Day is sponsored by Yrefy. When you fall behind on paying back your private student loans, it can feel like your life is being held hostage. But Yrefy helps borrowers explore a fresh start with low fixed-rate refinancing and a payment plan designed around their ability to pay. Visit yrefy.com/ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Remember, it may not be available in all states.

All right, today's question comes from Savannah in West Virginia. Savannah writes, my fiancé and I have 4 children. Okay. Our only debts are a truck loan and our mortgage. I'm a stay-at-home mom and he earns $90,000 a year. He recently became very interested in investing, not in you or your marriage, but okay. I'm not against it, but I don't agree that now is the right time. I have the $1,000 in my savings account as our emergency fund, but he wants me to give it to him so he can invest it. Okay. I just don't know if he's doing the right thing with our money. What are your thoughts about investing while being in debt and having nothing saved for our children?

Oh boy.

Um, so, so many problems here. There are, there are many problems, but here If you don't know our way of teaching, let's just answer—

yeah, I won't pipe in with my drama.

Yeah, if you don't know the way we teach, you'd go, what's the big deal? He wants to invest, what a wonderful thing. And I, I agree, investing is good. It's a way to secure your future. It's a way to love your family well. But I do, uh, disagree with him that now is the time to invest because I think this is like good, better, best, and the best time to begin investing is when you've cleared your consumer debt. And the reason for that is two to threefold. There's many reasons, but I'll go to two to three. First reason is if you begin investing and you do not have savings, your investment becomes your savings account, John. And what happens when you need a new roof or when all four tires need to be replaced or the AC goes out is you go, oh shoot, I don't have any savings. So now I go to two terrible options. I either go to debt, I put it on a credit card, I put it on a HELOC, or I roll over and I look at, oh, that investing chunk of change looks pretty nice. And I mess around and I take a 401 loan or I take a 401 withdrawal.

And now I'm on the hook for that. And so it's so important to make sure you have the right foundation before you begin investing so that that investment can stay locked in the way it's supposed to for the long term. So that's part 1. And then part 2 is a little bit more— I'll be honest, you could take it if you leave— take it or leave it if you want to, but I believe it's the smartest way. When you pay off your debt first, if you pay off your debt before you begin investing, then you have the full power of your income working towards building wealth. Around here, we believe that your biggest wealth-building tool is your income, and you do not have your full income at your disposal when you're still making payments, especially if you're making payments on things that are going down in value like trucks and cars. And then there's other types of consumer debt, right? So that's kind of the crux of why I'm saying what I'm saying, which is I agree with Savannah in this case. Yes, you need to pay off the truck first, and then after that you need to save 3 to 6 months of expenses and then you can begin investing 15%.

And by the way, yeah, please do not take your Baby Step 1 $1,000 emergency fund and invest that because then you're up the creek without a paddle.

And I guess I'll just say this and we can move on. Um, what we're seeking here is ultimately safety, like that we have enough money in the bank when we retire, as we age, to take care of us, right? And safety will— like, if you pull safety all the way up the river, safety starts right here. And right now, the way you're describing your life is it's you versus your fiancé, your boyfriend. It's, I got this savings and I want to keep it safe. He wants to take my money and make it his investment. Like, you can't— y'all are not going to ever get where you want to both go, which is to a safe, peaceful place, if y'all are competing with each other. And so y'all need to get aligned on, are we rowing in the same direction in the same boat together, or do I have my boat, you got your boat, and he sees your boat as you and those 4 kids, and he sees his boat as wherever he wants to go? And by the way, you got some of my money, so give me your money so I can get my boat further along down the road.

You're gonna find yourself very, very exposed. And so that's why we tell people to get married before you start sharing your money. So we tell people to get married before you start sharing your kids. Because that legal document forces y'all into the same boat, and it forces y'all to have the hard conversations about which direction are we gonna row together. And if two people are in the same boat, both rowing in the same direction, you will get wherever you want to go way faster than two people trying to row in their own direction in their own boat.

That's right.

That's very good, John.

So there you go. I won't, I won't make any more judgments here.

There you have it. Yep. Okay, Jessica is in San Francisco, California. Jessica, you're on the line, my friend.

Hi, thanks so much, you guys, for taking my call.

Well, absolutely.

Full disclosure, I am really nervous, so please forgive me if I'm— oh my God, if I'm a little clumsy.

So no worries.

Have you listened to this show? I'm as clumsy as it gets. You're good, you're good.

Oh, that felt like a hug. Thank you. I'm very— I'm really new to Ramsey. I just downloaded the audio Book of Baby Steps, which I started yesterday on my commute home.

Welcome to our cult, Jessica.

I, I'm— yeah, so I have been listening to the podcast going back, um, the beginning of this year. Anyway, to my— to my— the reason I'm calling, um, I just turned 56 this week.

Happy birthday.

So thanks. And I'm really feeling a— I'm like a combo platter of really overwhelmed, massively scared and really, really embarrassed because I'm so late to the game. And I want to empower myself the best as I possibly can, um, so I'm not working until I reach my expiration date on the shelf, right?

Um, tell us what you're concerned about. Tell us why you're the combination platter.

You're going to be able to— yeah, my combo platter. I just really want to know, am I ever going to be able to retire? I, I, yeah.

Well, you're not alone. There's a lot of Americans that feel that way, that feel anxiety around not just can I retire, but when I do, will I have enough money to carry me through my entire, my, all of my retirement years? So let's, let's play with the numbers.

California.

Yeah.

It's just so in the Bay Area.

Yeah.

So expensive.

Well, let's play with the numbers a little bit and we'll try to see if, if we think you're, you're getting close or if there's hope for you or there's always hope. So. Tell us, you're 56 years old. Uh, yeah. What do you have in retirement savings so far?

Like nothing. I spent my entire 30s disabled and then I rehabilitated and went back to work and lived check to check in my 40s and then put myself through grad school. So, okay. Be able to double my earning. Um, and had started to save in a 401k and then I, I work in tech and we had a layoff, and so I was laid off for a year and a half and just went back to work a couple months ago.

So how much is in that 401k to date? Even if it's not much, tell me how much.

Yeah, $127,000.

Okay, which is not nothing, by the way.

What's up?

That's not nothing. You said almost nothing, and, and give yourself credit, you have $127,000. And how much are you earning?

$140,000 a year.

Okay.

And yeah, with about a 10% bonus. Great. Annual bonus.

Okay. And, um, do you have any consumer debt?

I have about— I have— I do. I only have— this is my only debt. I have lived debt-free with the exception of a car my entire life. I own my home. Um, I have $10,000 on the car. It's worth $26,000. I have a $2,000 emergency fund, even though Dave recommends $1,000.

I'll let it slide.

You can't even buy a box. You can't buy a box of Kleenex here in the Bay Area.

Listen, I'm not going to take you to task on that. So you've got the $10,000 car. You've got a little bit of an inflated Baby Step 1. Is there anything else that— I'm talking fast because I want to make sure we can help you.

Yeah, yeah. And I have $16,000 in savings.

Okay, excellent.

And I own my home. And I own my home, which is about $350K. Yeah, okay, I'm gonna— paid for it.

I'm gonna blow your mind on this. What I would do, I would take the $16,000 and I'd pay off the car today.

Today, right now.

I would do it immediately, and then I would continue to invest your $1,750 a month off of your salary. And if you do that from age 56 to age 70, girl, you're gonna have $1.2 million. So you need to stop playing and feel good about it. You got a paid-for —and you have a paid-for house, you're gonna be just fine.

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Dan is in Los Angeles, California. I feel like we've had several California calling in today. How can we help out, Dan?

Hey, thank you very much. I'm currently in a first-time situation that my house is on the market for 90 days, and I'm lowering the rate every— basically the rent every few weeks, and it seems like it's not gonna be—

Yeah, hey Dan, do me a huge favor. Talk directly into your phone for me.

I'm talking to the phone. Do you hear me better?

Yeah, it's a little muffled. So whatever you can do to improve that, we would all appreciate it.

Yeah, I want to be able to get right to your question.

Yeah, go for it.

Yeah. So, so my concern is if should I sell the house right now in a loss or should I keep the property with a negative cash flow, uh, with $2,000 from my pocket every month and wait a few years, um, until I can refi or The value of the property would go up and I can sell it in a profit.

So you're burning $2,000 every month on it?

I would.

You, you're not currently? Why are you saying you would?

Because the house is still on the market, is under listing, and the rent price is lower than my mortgage.

Okay. Right. And I'm saying your current, because of that, uh, You're currently burning $2,000 a month on it. I just want to make sure I understood that.

I'm burning more. I'm burning $8,000 right now.

Oh, but if you were to rent it, it's only going to bring in $6,000 because of the market value. I see. Okay. Got it. Wow. What kind of property is this?

It's a property in the Hollywood Hills. I bought it for $1.6 million. I actually put 30% down 2 years ago. Okay. And I moved to a new primary. And I thought, okay, let's rent this out. And I understood that I'm in the negative cash flow right now.

So why do you think that is? Because I'm looking and it's showing that for your, you know, for Los Angeles area, 45 to 70 days is like average days on market. You're sitting at 90 days. No, he's trying to—

he's been on the rental market. He can't rent it. He hadn't tried to sell it yet, right? Yeah, I'm trying to rent it.

Yes, correct.

So it's on the rent. You can't— you've been for 90 days. You can't get a renter. Exactly. So if you sold it, what would you lose? Excuse me? If you sold it, if you put on the market today and it sold tomorrow, what would you, what would you lose?

I believe I bought it for $1.6 million and I would sell it for $1.4 million with this today's market.

Tell us how, tell us how this is occurring in this way. Tell us what do you think the barrier is for finding renters, and tell tell us why you think it's going down in value. Did you overpay for it? Tell us what you think the problem is.

I, I paid more than $1,000 a square feet in the Hollywood Hills. Um, with today's market, from what I see, I think prices that's sitting on the market for more than a month or two, they just, uh, the owner just dropping the price. And the house is 3 bedrooms, it's 400, 1,400 square feet, so it's not for a big family, and maybe it's a little bit expensive for one person or for a couple.

Okay. Um, so it just wasn't a good condo.

Yeah. And right now the rent is, the rent is for $7,000 for 90 days, but I'm going to lower it to $6,000 and then I'm going to be negative cash flow of $2,000 or I'm going to put it on Airbnb and maybe going to be break even with the mortgage because my interest is 6.8% from 2 years ago.

Do you think that you could realistically do the Airbnb thing and be at a break even to try to ride out market a little while before you sell it? Do you think you could realistically make that transformation?

From my research, from my research, I could be break even. Yes.

I, I, I might do that in the interim. Otherwise you're $200,000 in the hole on this. Do you have that money laying around anywhere that you'd want to take that loss?

You said you put down 30%, so you put down $480,000 on it, right?

Yeah. $500,000. So it's a little more than 30%. Yeah. I don't want to take the loss. I believe in real estate that the price would go up even if I'm getting this negative cash flow. The appreciation would be better to hold this property for 10 years. You can't afford that, dude.

You're getting killed right now.

I mean, if you can— if you're— is this the only property you have? Do you have others?

I have others, yeah. Are they doing well? Cash flowing? Yeah, yeah. I don't have the same interest. I have 2.7% interest on the others.

Uh-huh. Uh, how much total debt do you have tied up in it, in real estate?

In real estate, um, um, more than a million.

I mean, well, yeah, yeah.

Like, how much? Like, give me a round number if you think you could. Like, is it $1.8 million? Is it $3 million? Is it—

it's, uh, it's about I have one property that is $1.6 million plus one, so it's $2.6 million plus— it's about $3 million.

Okay, and then how much is it all worth?

Uh, I would say maybe $5 million. Okay, um, million, million, million point six, so it's two and a half.

And then yeah, I think that if I were, if I were you you, not me, if I were you, I think that you understand this and I think that you might be able to make that Airbnb transformation and get this at least break even for a while. And you might be able to ride this out to where you're not, at least you're not making any money, but at least you're not burning cash on it until maybe it's in a better position to sell. I might try that for a while. And if you're not able to do the Airbnb, then yeah, I'd probably try to, I'd try to get out of it if I were you because this $8,000 a month loss is terrible. And then even being able to rent it and still being at a $2,000 loss is even more terrible.

I'll tell you, based on your portfolio, you're exposed in a pretty big way, right? Yeah. And so, Right. Because in here, the only reason I'm saying this is because of how, well, that's not even the only reason I'm saying this. I'm looking at it. The flip side is you, you have assets worth $3 million and $5 million. I'm sorry, $5 million. You're, you're leveraged $3 million against him, right? Yeah. Okay. So if you, if you went and sold every house you had today, tomorrow you would have a positive bank balance of $2 million approximately, right? Gross. Yeah. Yeah. Yeah. Mm-hmm. Yeah. Minus taxes and yada yada. I, I'd tell you what, for me, and I, I don't have a bunch of houses, so take this with a grain of salt. I'd sell that house and I would pocket $300,000 and I would have a very expensive $200,000 stupid tax. And mm-hmm. Now this is one of the prime reasons why, and, and man, God Almighty, we take a beating online because of how stupid we are. But this is why we say buy, buy with cash. So if you find yourself in these moments, you're at least not losing your soul.

Right, right. But like that, so that, that's what I would do. I would take the, take it on the chin cuz you, you're getting hit on multiple levels. You're getting hit on the, the home price has devalued. The rent price keeps going down underneath you and you got almost 7% interest rate on this thing. Correct. Yeah. You're getting punched and kicked and bit all at the same time. And you happen to be in a position where you did put a big chunk of money down. So you're gonna walk away with a $300,000 check. You'll have lost money on this particular investment, but man, you're hemorrhaging right now.

I may have missed a point on this because I thought you said that you were, I thought you told me you still owe $1.6 on it and it's worth $1.4.

He bought it for $1.6, but he put $500,000 down.

I bought it for $1.6, but with today's market, I believe if I'm going to put it on the market for sale, it's going to sit for a while. If I'm going to post it for $1.6 again, I believe I'm going to sit a few months and I would have to lower it to $1.5 and $1.4 from what I'm seeing today.

Yeah, I agree.

Because my existing property was on the market for $3 million and I bought it for $2.3 million.

So Um, it's very slim. If you can, if you can get out of it, to John's point, and you can get out of it without owing, yeah, great. If you're already— if you feel like if you list it for a realistic price and you'd already be upside down, I might hold it a little bit. Our Ramsey Show scripture and quote of the day, uh, James chapter 1, verses 2 through 3, one of my favorites. Consider it pure joy, my brothers and sisters, whenever you face face trials of many kinds, because you know that the testing of your faith produces perseverance. Love that. Harrison Ford said, I always see life this way: you just have to find a way to stick it out and to prevail. It's almost like Harrison Ford knew a little bit about James chapter 1, 2, and 3. All right, let's go to Charles, who is in Savannah, Georgia. Hey, Charles, how can we help today?

Hey, how are y'all? Thank y'all for taking my call. Yes, sir. What's up? Nothing. I was just, I was wondering about investments. I live, you know, I have a wife and a 10-year-old daughter. And, you know, we live pretty humble. You know, we live close to Savannah and it's a, it's a rural area. So everything's a little cheaper down here than opposed to Atlanta or New York. Sure. Somewhere in California, and we don't make a whole lot of money, but I've managed to save— Me and my wife had saved about $60,000 before my dad passed away 5 years ago. And he left us— He had an insurance policy of $125,000, and we save every month, and I'm frugal, so to speak. And, you know, I don't like losing money. You know, I work, my wife works, we save about $500 to $750 a month. Okay. We are about $40,000 in debt with two vehicles, which one of them we had to purchase. Usually we don't do more than one vehicle payment at a time. But, um, somebody hit my wife a few months ago and they totaled it out. So we did have to go get a newer vehicle.

So Charles, that, that going back to the money you said you had saved before you get too deeply into the $60,000 and the $125,000, is that the only money you have saved anywhere? No investing, no nothing like that?

Um, I do have a CD that's about $253,000 and I'm making about $10,000 $10,000 a year off of that the last 2 years. I do have a 457 Roth with about $17,000 in it. Okay. And I can— I contribute 5% each month. 5%. Okay. I work for an agency and I've got a retirement plan, so they don't match me, but I do contribute 5% to that every month. And I've got, I've got a couple ounces of gold and silver, which is that I bought, you know, 5, 6 years ago. So, you know, I've gained about probably $5,000 on that. And then I've got a little bit of cash. I've got about $10,000 in cash. Okay. At the bank in my safety deposit box. And then I've got about $10,000 in my safe.

Well, my goodness, Charles, you got money coming out your ears, my guy.

You called us and I thought you were like down to your last broom pole. Hole and you got money everywhere.

You do, you have it everywhere. I just don't know if it's in the right places.

It's not working for you like it could, but my goodness, you're doing good.

That's what I'm thinking. But you know, I— me personally, I don't need a whole lot, you know.

Well, I think you might need more than you think.

Yeah, and you keep saying that, but then you keep going to get more and hiding it places.

Yeah, because you feel good now, but there's going to be a day when you're not working.

Yeah, exactly. And like I say, I do have a retirement plan, but $325,000 in today's economy, I mean, that could be gone in a blink of an eye.

It could, but it could also be back. Yeah. And, and I do, I do want to say this because that what you're saying, I think, Charles, is hitting on what a lot of people feel that are probably listening right now, is they are afraid. It's like, hey, if I invest this money, what happens if the stock market banks. And the truth of the matter is we have to think about that. Like, let's think back. If we think back to 9/11, if we think back to 2008, the Great Recession, you're right, the stock market did tank. But what did it do 2 years later? It recovered.

I know. And it was bounced back better than ever.

Yeah.

And they say if you do it over a, you know, a 20 to 30 year period, you're going to gain regardless. Of course. But I'm just like, even on my 457 Roth that I have through my job that has got, uh, like I say, I checked it about 2 weeks ago, it's got like $17,000 in it, and I wish I would have started the day I started work. Yeah. Um, how old are you? But I'm 43.

Okay, here's the thing, Charles.

Um, while you plug these numbers in, Charles, let me just say this. You and I have kind of a like spirit, which is kind of an eye on what if this all goes down, right?

Yes, I, I appreciate you saying that because I've been watching y'all's videos, okay? And I have been— I work half days on Friday and I've been calling y'all every Friday for a long time.

All right, I'm going to tell you something that's hard to hear, and I had a buddy of mine that's, uh, a bank executive tell me this, okay? And he was right. If the stock market implodes and doesn't come back, let's say it goes to zero, the little rocks you have stored in your safe, that one shiny silver and one shiny gold, are gonna become rocks. The paper you got stored under your bed, is gonna be paper.

Yes, I know.

Okay, so here's the thing, like, here's the line he gave me when I was doing exactly what you're doing, and I didn't have gold and all that, but I was like, what about this, and what about this? And here's the line he gave me that for whatever reason it set me free, and maybe it will for you and maybe it won't, but he said, John, I don't have a meteorite plan. If the U.S. stock market goes to zero That's Ctrl+Alt+Delete, and it's going to be a, it's going to get Western real fast. Okay. And so I got you planning for what happens if a meteorite hits us. You know what? I'm going to solve that for when that happens. And you're not even buying backhoes and shovels and bullets. You're buying like gold and hiding this over here and stuff it under your mattress. And right. Like, so here's what I want to say. Give yourself the best opportunity with the information we got in front of us.

And, and, and what I would tell you, the best information based on the numbers you gave me, and you gave me a lot of numbers, so I just took the $253,000 in CDs and I pretended as though you invested it today. Uh, so that gives you, uh, with the $17,000, and I wasn't sure, uh, if the $60,000, I didn't even add the $60,000 or the $125,000 insurance. 'Cause I didn't know if that was what was in the CD.

No, the, the $60,000 is what me and my wife had saved together before my dad passed away. Okay. And I received, you know, $125,000. And we, like I say, we, we try to save at least $500,000 because at the end of the day, we, between the both of us, uh, we only make about $110,000 a year.

Well, we'll call that $60,000, we'll call that your emergency fund. And I'll do you one better. We can add the cash and the money in the safe. We can add that to it too, because I think you like having cash around. So I'm not even touching that. We won't even invest that. But if we took the money from the CD, we went ahead and invested it along with the $17,000. And let's pretend you told me, yeah, you guys put away maybe $5,000 to $7,500 every single month. That's the margin that you can save. If you just did that and you did that, Charles, from today until age 65, that puts you at $3.8 million. And that's enough for you, I assume, to do whatever you want wherever you live.

Yes.

And that— and let me just say, Charles, we would say, hey, invest 15%, you know, pump that number up. That's not even with you doing that. That's just with you saying, hey, I got $500 in margin. I'm just going to plug that in over there. And you want to know what? I'm cool with that because I will just be happy with this call if you begin investing. I will be happy if you take the money from the CDs and you invest it across the 4 funds that we teach here.. And I do want you to get connected with a Smartvestor Pro because these are people that we vet out. Okay? So that means we trust them. We trust that they can take your money and that they'll treat you with respect and they'll treat you with the heart of a teacher and teach you so that you'll learn and feel great about how your money is being invested and that that money can grow for you, not just for your current family, but for your legacy. And I think that that's That's about as good as it gets, John. So, that's what you need to do.

All right, guys, that does it for this hour. John did not reply to me. Remember—

I didn't think you were tossing me the ball here.

There's ultimately one way to financial peace. That's to walk daily with the Prince of Peace, Christ Jesus.