Transcript of Debt Is Always the Symptom of a Bigger Problem

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broken, common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studios, this is The Ramsey Show. I'm Dave Ramsey. Rachel Cruz, Ramsey personality, number one bestselling author, co-host of of the Smart Money Happy Hour. My daughter is my co-host today. Open phones at 888-825-5225. Thanks for hanging out with us. Phil is in Orlando. Hi Phil, how are you?

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

Better than I deserve. What's up?

Yeah, so I'll keep this as short as possible. I'm 28 years old. I've put myself into kind of a corner over the past couple of months after some bad decision-making. Somewhere around 200 grand in debt, uh, which is a mix of credit cards and personal loans that I took out, which I shouldn't have. I also have a mortgage, which is relatively new. I make good money, but ultimately things are tight right now, and I'm curious to get your thoughts on whether or not debt consolidation is a wise choice, or if I am better off Uh, just, uh, essentially figuring it out and, um, you know, climbing back into, into a better place.

What do you make?

Um, salary is about $140,000, but, uh, I make probably, uh, well, this year I'll, I'll probably net $400,000 after, uh, stock units.

Uh, and that includes cashing those in or are those restricted?

They are restricted.

Yeah. Okay, so what is your income that you can use this year?

Uh, yeah, well, this year, like I said, I mean, I put like $400 total, but you can't use the restricted stock units.

You can't sell them. They're restricted. That's the nature of the beast, right?

Right. Yeah, like $100, $150, uh, vestable share of, uh, sellable throughout the remainder of the year. Plus, yeah, I mean, $140 divided by 2, call it, call it halfway through the year. So I mean, I would, yeah, call it $200 coming in through the remainder of the year.

For the rest of the year?

Correct.

Okay. What do you do?

Uh, I'm a data analyst.

Okay. And, um, you, how much do you owe on your cars? Zero.

Okay.

And you ran up $200,000 in credit card debt and personal loans. That's it.

That doesn't include the mortgage, or does that include the mortgage?

Does not include the mortgage.

How much is the mortgage balance?

Uh, mortgage balance is just under $600,000.

Okay. Are you married?

Not married.

Okay. What did you do for $200,000 worth of mess?

Uh, it was a, uh, bad sprint of, uh, gambling plus, uh, poor decision making.

Oh yeah, that's fairly easy to come up with the last part of that.

Is there anything you can, like anything you bought that is sellable in this or is it all, it's all gone in things like gambling or, or other things?

Um, no, I mean, home improvements have definitely been a thing. I mean, I just bought the house, uh, maybe, uh, a little less than a year a half ago and definitely have put money into the home because we had some issues. But otherwise, yeah, sort of just bill payments, slash, yeah, threw money away, which is—

Okay, so here's the thing. Personal finance is 80% behavior, it's 20% head knowledge. So debt is never, including when I went into debt and lost my butt because I was stupid, Debt is never the problem, it's always the symptom. Yeah, okay, so this is the symptom of gambling and, in air quotes, poor decisions, whatever the flip that means. Okay, and, um, so it doesn't matter if, if we waved a magic wand and the $200 went away, it's coming back quickly if the gambling and the poor decisions haven't come to a screeching halt. Agreed?

Agreed, 100%.

So has it?

Yes, it has.

No more gambling, no more bad decisions.

Took longer. Yeah, it took longer than it should, but yeah, it's clicked.

Okay, all right. So you're a single guy, you have no bills except a house, and you have $400,000— well, $200,000 to $400,000 to get a hold of, and you owe $200,000. You don't need debt consolidation. You just need to reach over there and take a bunch of that money you've been wasting and pay off your debt. You'd be debt-free in a year and you lived on $200 grand.

Right, right. Yeah, I guess the issue is more so just the short-term liquidity and I've, you know, been getting bombarded with calls from some of these, you know, debt consolidation.

You have enough coming in to pay minimums. Oh, debt consolidation people are advertising to you. Well, so what? I mean, that's not a big deal. You could do this, but you could use like Guardian Litigation and they can put you on a 4-year plan and walk you out of this., but I wouldn't. Yeah, not when you have the income to pay it off in a year.

Yeah, it's your income, and the debt consolidation may get you quote-unquote a better interest rate, but it's not really going to matter in 12 months because you'll be debt-free anyways. So going through a company and paying for that is something that you can do yourself.

Yeah, honestly, I mean, if I were you, I'm going to sit down and go, I'm going to look at the stock options and what the release, the vesting and the release on the restrictions are. And have you got a pile of that stock laying there somewhere?

I, I, I don't right now. Everything that has vested throughout this year already has already been, uh, liquidated and sold. So right, right, right now, right now, yeah, like I'm pretty much—

translation, you lost more than $200 grand with this behavior.

Uh, agreed.

So if I woke up in your shoes— if— I'm sorry, I'm sorry to interrupt. If I woke up in your shoes, what would I do? Knowing what I know, having taught this stuff and walked with people in these situations, okay, you have this, you have this wonderful brain that allows you to be a data analyst, and I want you to apply it to a new company called Phil Incorporated that needs to be turned around.

Yeah, right.

And Phil Incorporated has revenues of $400 grand and liabilities of $200 grand. And so we're going to put Phil Incorporated on beans and rice, rice and beans, no life, $20,000 a month on these bills for 10 months, and we're done. That's what I would do if I was in charge of Phil Incorporated.

Yeah, that's kind of what I have. Yeah, that's sort of my approach as well. I just really— uncertain. I don't know anybody that's done, like, you know, worked with debt consolidation companies. Well, I mean, again, you could call—

we have one. The Guardian litigation guys are sponsors. We can send you to them, they can put you on a 3-year plan or whatever. But I wouldn't do that.

Yeah, and that's usually when you're in lawsuits and stuff too, you know what I mean? So like, yeah, I think you're fine. Yeah, you don't need that, Phil. Honestly, what's probably going to affect you the most is, is the ego side of you killing it, making a crap ton of money, living like you're making that much money and more, and ratcheting down everything. Like, that's going to be— that's a That makes you really put yourself in a completely different mindset, Phil.

I mean, it does.

Exactly. So that humility, which I think you already have, 'cause you've realized, crap, I'm not good at this and I've messed this up. So you have a level of that now, but it'll do inner work in you for sure to go backwards in lifestyle. That's not easy.

Well, and what I'm doing with this prescription is more than just mathematical. It's also behavior. Because if you go this intense, it's going to be— it's going to burn all that other crap that you were doing completely out. You're going to go, I never want that again, because you're going to submit yourself to a sacrifice to clean up the manure. And you never want to see manure again after this.

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David is in Memphis. Hi, David, how are you?

Good.

How are you? Better than I deserve. What's up?

Uh, yeah, I was just wanting to, I guess, figure out how to get more organized, uh, with my budget. We've, uh, we felt like we were doing pretty good, and then we ended up having to start putting two kids through daycare, and it's eating up a lot of our flexible spending room, I guess. That'll do it.

That'll do it for sure. So what's your income, sir?

Uh, mine is about $75,500 a year, maybe.

And does your wife work outside the home? Have you got daycare, I assume?

Uh, yes.

What's she make?

She just started a new job, so at the moment she's at $27,000 right now, but expecting a raise in the next few weeks.

By how much? What would that be?

Uh, probably close to between $3 and $5 increase an hour.

Okay. All right. And how much debt do you guys have?

Uh, so mine total. Is right at $212,000 with a mortgage.

How much of that's mortgage?

Uh, $184,000.

Okay. All right. Okay. So, so you got about what, $60,000 in debt? No, $40,000.

$40,000.

Yeah.

$40,000 in debt. Yeah. Okay. And what's the $40,000 in debt on?

All right. I got $2,200 in credit cards. I got $9,100 on a bad HVAC loan that I had to take when I bought the house. Then, oh, $1,900 on a zero-turn lawnmower. And then I have, uh, $14,000 in 401 loans.

No car loan?

No, sir.

Okay. All right, and what are you paying for daycare?

Uh, $270 a week.

$1,000 a month.

Okay.

For both kids.

Yeah.

Okay, um, yeah, you're right. It's a matter of getting organized and, um, you know, uh, we've got to stop some of these decisions that have put you into this debt and reverse that, get the debts cleared, because if you were on a game— if you're on a written budget, you and your wife are in agreement, and you had no debt except your house, you'd be in really, really good shape.

Yeah.

Yeah. And so stuff like the next time a zero-turn lawnmower speaks to you, you have to look at it and say, no thank you, I'll use the one I have. We're not financing it. No, we're not using a credit card to do anything. We're cutting them up tonight. No, we're not borrowing money. No, we're not borrowing money. No, we're not borrowing money. And that's a new thing you have to learn to say, like, over and over and over again. So any kind of a crisis or a desire or an impulse or a wish or a dream that comes up, it cannot result in debt ever again because it has made your life tight and miserable, and we have to get rid of it and keep it gone. Does that sound familiar?

Oh yeah.

Okay, cool.

Yeah, so what's the part of the organization that's been hard for you guys, David? Is it doing a budget and sticking to it? Is it trying to figure out what debts to pay first? When you ask about organization, what specifically are y'all struggling with?

Uh, I guess, uh, how to prioritize maybe. Uh-huh. Because it just, if something comes up, you know, it starts stretching really thin and We can get behind sometimes.

Yeah, just like monthly expenses that come up that you didn't plan. Yeah, for sure. Yeah, so I think that's one reason the budget is so helpful. We'll give you a Year of EveryDollar because it is knowing that you have a plan and anything outside the plan, there's kind of, you know, the simple word of no, of like, we just, we can't do that. We didn't plan for, baseball signups, that's an extra $300 or whatever. And you're like, nope, can't do that. Like, I mean, it just, it really kind of forces you, especially where you guys are, how tight everything is. Like, it really does kind of create a black and white scenario for a lot of these situations where before you could kind of finagle it and like, I'll just charge on the credit card and figure it out later. When you live on a zero-based budget, it really is directing you to your decision-making, which is fabulous. So you guys sitting down and doing that, and then starting to pay off this debt smallest to largest. And so, I don't even know, can you sell the lawn mower and get some cash back?

Uh, I think it'd be a wash on that.

Good, that's $2,000 of debt gone.

Alright.

Alright, this weekend, gone. Now, here's what Rachel's talking about. We're gonna give you this EveryDollar budgeting app. And we're gonna give you the premium version. We're gonna pay for it free, okay? And then you and your wife are gonna sit down tonight and you're gonna look at, okay, here's what our take-home pay is for me and my take-home pay for you for this month. And then we're gonna take this month's income and we're gonna give every one of those dollars an assignment in the budgeting app. This much for food, this much for house payment, this much for electricity, this much for water, insurance, yeah, this much for whatever. You go right down what your life, and you say, this is where the money is going to go, and every dollar has an assignment before it comes to you. And then when it comes to you, you simply do exactly what you had already planned to do on paper. And if something pops up, and it will, then you look at the paper, you look, you look at the digital app together, and you say, if we're going to do this thing that popped up, what are we not going to do that we take off of here so that we can do the pop-up?

Or we look at the pop-up and say, no, we're not doing it. I don't care if you popped up or not. We don't have the money because every dollar has been assigned. But I mean, if a tire goes out and you have to buy a $200 tire, then you look over there and you go, okay, I gotta increase car repairs by $200, and I gotta decrease something else in the budget by $200 so that this continues to match and we don't get behind. And so you, and you work on that together, and you need to have a budget committee meeting and go over this and stick to it once a week minimum right now until you get the feeling of organized. So you're telling your money what to do on that digital app, and then that app is going to tell you what to do so that you do what you said you wanted to do. That's how this works.

And it's easy to David, that with the premium version, you connect your bank account. So anytime you guys swipe your debit card, 'cause no more credit cards, when you're swiping your debit card out of the checking account, a transaction pops into that app and you drag and drop it so you can see literally how much you have left in each category. Like it is right there with you. And it really does, it forces, if you follow it, it forces you to stay within the bounds. But the great thing is, is there, it creates a level of peace too. And then you're gonna expose and see, okay, how much have we been spending out to eat? How much have we been spending you know, here or there, and you start to actually see your spending habits. And because you guys are in debt, you cut all those categories because you're doing nothing, I mean, but just survival at this point.

There's no shelter, clothing, transportation, utilities, and get out of debt. That's all. You're not going to see the inside of a restaurant unless you're working there as your extra job. You're not going on vacation. You're broke. You got to get this mess cleaned up. Not until you get it done. And you can get it done really quick once you start doing that, because you, you sell the mower, you cut up the credit cards, you look around the house, see what else we can sell. We look around, I can pick up a side job this weekend and make $2,000, throw it at this credit card and it'll be gone. I mean, you start getting creative on knocking these things out and then you get your life back at the end of the story. And the end of the story is only about 12 or 18 months away. At the end of the first chapter of the story, I guess. Because then when you're out of debt, you can build an emergency fund. And when you build an emergency fund, then you can start investing. And dude, you literally could retire a millionaire, if not a multimillionaire, if you follow this stuff through exactly like like we teach you.

And you go from disorganized at $27,000 a year looking for a $3 an hour raise and 2 kids in daycare and I can't breathe, all the way to millionaire. And it takes you 10, 12 years to do all that. We can show you how. That's what this app— and the app will guide you. It'll tell you what Ramsey says next. You got Ask Ramsey on the website for free. You can go in there and ask. And you call us back and we'll help you even more if we need to.

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Kate is in Sioux Falls, South Dakota.

Hi, Kate, how are you?

Hi, I'm great. I can't believe I'm talking to you.

You too.

What's up?

So I'm calling, uh, to get your advice on how we can help my parents. So my parents are in their late 70s. They're faithful Christians. They have been their whole life. Um, as they've gotten older, me and my siblings have been considering how we can help them to age well and, you know, whether we'll need to take care of them. My dad has worked a ministry job his whole life, and they've never had much money, but they're very private about money. So recently they've expressed several times that they don't have enough money to retire. I don't think they understand money at all, and we're also concerned that, um, they're giving a lot of money to various ministries because they're really looking forward to being in heaven, and they want to spread the gospel far and wide before they get there. They've also told us, and I do think they firmly believe, that they're going to be raptured before they die. So we, we all love them very much, but we're also concerned that they may not have enough to, you know, take care of them. And we also, we want to be prepared to take care of them if we need to do that, but they aren't willing to talk to us about it.

Is this something we just let go Or how can we respectfully love them for the rest of their years without any information?

Well, first, as a fellow Christian, I hope they're right. Come quickly, Lord Jesus. Right. But I, I, but I don't, I don't think we lay out our plans. The Bible that I have read doesn't teach me to lay out our plans. As if I'm not gonna retire because the rapture's gonna be my bailout. Instead, the Bible says, "In the house of the wise are stores of choice food and oil." You know, the Bible does talk a lot about God as our provider and that he cares about us and he has a plan for us and not to worry and all those kinds of things. And that's all very true as well. But the Bible then, on the other hand, it says if you don't work, you don't eat. That's in the Bible. And it says if you don't plant— if you don't plant corn, don't expect corn. You're going to reap what you sow. And if you sow sparingly, meaning very few kernels of corn, please expect very few corn stalks to come up out of the ground. That's a cause and effect thing in Scripture, okay? God's talking about this is the land in which we live, the world in which we live in.

And as Rachel said the other day on the show, God gave us a brain and we're supposed to use it to reason as well. And so spiritually planning for the Rapture, I agree with, and I'm on board for. Let's all get out. Where's the line? I'll get in the line, okay? But also while I'm here, and we don't know the date or the time, very clear in Scripture that we're not going to know the date or the time of his return, then out of Jesus's own mouth, those words were spoken. And so given that, then we have to plan as if we're going to be here. And then that plan works if we're not here or if we're here. Their plan only works if we're not here. So anyway, all the end of a sermon, end of doctrinal lesson. Okay.

Thank you for your TED Talk.

But yeah, yeah.

No, but it's true. It's true.

Now, how do we love these sweet, precious people who care about other people wanting to meet God, meet Jesus, and they're willing to live on almost nothing and barely get by so that they can accomplish that? What impact they can have on the world for the Lord, they are having, and their thumbprints are going to be all over people's names in heaven, and they're just wonderful people. So how do we love them? Well, and they're secretive, partly because—

Yeah, how do we take care of them?

Yeah, they're partly secretive They're partly secretive because they're ashamed. They're not ashamed of the gospel. They're not ashamed of their ministry mindset. But they know that they haven't done a good job with money and it bothers them. And so we got to—

it's almost easier in a weird way to have an excuse for the fear that, oh gosh, we're not— well, it's okay. We're going to— you cling on to something.

Yeah, we didn't do a good job. I'm going to blame it on the rapture. Yeah, you know, and so now, how do you help them gently and lovingly? Because 100% chance a 78-year-old with this mindset is not going to change, right?

98, we'll say 98%. Okay, we'll give you 2% hope.

Yeah, but I mean, I, I don't want to go in that they're going to change.

I don't want to enter the conversation thinking they're going to be transformed financially. Yeah, I don't think they are. I think they're pretty well set on giving everything away in Jesus's name. And I gotta say, that's a wonderful person. My goodness, what wonderful people. So I think you siblings band together and you just check in on them every so often, make sure that the property taxes are paid, that there's groceries in the cabinet. Don't open the cabinet, the only thing in there is dog food and they haven't got a dog, right? I mean, so That kind of thing happens in these situations. So, just check in on the refrigerator and how it's stocked. And, "Hey, we just bought a beef, and the 3 of us are gonna share it, and we're gonna bring a bunch of it over and put it in your refrigerator." And, "Hey, I just got a friend that's got some chickens, and we all bought a bunch of eggs. Here, I'm gonna bring you some stuff." And, "I just went by a Kroger, and they were having a sale, and Publix was having a sale, and Mom, I brought you a bag of stuff to put in there." And so, just make sure the electric bill is paid.

And you know, you guys can just kind of subtly poke around without getting them on a full plan like they actually should be.

Well, and thankfully, you know, and I guess the positive side of some of this too, Kate, is they're so low maintenance. They're used to living on basically nothing versus some people call in and their parents are living the high life and have nothing in retirement and they're gonna expect the same and they expect their kids to take, you know what I mean? There's like a whole entitlement side where this story could have been. But for them, their motivation and attitude, in a weird way, is, you know, I don't wanna say endearing, 'cause I don't think it's wise, but it's easier to help someone that has a level of humility and sacrificial heart. Do you know what I mean?

It's not entitled.

To do all that, yes.

Yeah, they're not brats.

Are you guys, Kate, are you and your siblings in a good place financially just to do a bare minimum, like what he was just explaining?

We are. There are certain of our families that are going to be more able to do it than others. I think specifically our family would be able to contribute more. And so those of us who may be able to contribute are just wanting to understand what they mean by the fact that they don't have enough money so we can prepare for how we need to help them. But we really haven't been able to prepare at all.

Yeah.

You could just do it in an honoring way and say, Mom and Dad, y'all have done such work work for the kingdom. And, um, you know, scripture says that, that your children will rise up and call you blessed, and we're standing here calling you blessed, blessed, blessed. And one way you're blessed is your children are standing here, and we want to love you. If you'll tell us some of the basic things, we want to help, but you're going to kind of tell us what we need to help with.

Yeah. Do you even know, Kate, if the house is paid off or anything? Like, do you have any range.

It is, yep. They have a small home, but it's paid off, and they have 2 paid-off cars. So that's a sweet good consolation, is that they have a place to live. We're not worried about that.

Yeah, yeah. Um, food, lights, water, property taxes.

Yep, yep. Check in on the food, check in on the property taxes. And then, uh, what about like— again, we have a little bit of concern that they're still giving a lot of money away. I just don't think there's much we can do about that.

No, but I mean, it's their money and probably some of the ministries that they're giving to. Yeah, probably some of the stuff they're giving to, they shouldn't be. It's probably irresponsible. But so what? There's nothing you can talk about unless they ask. If they ask, you can say. But if you can start a conversation and they then they say, well, honey, you think we ought to do this one? And you say, well, Mom, let's look at how they spend their money. Let's look at how they're, you know, oh, wait a minute, Mom, they spend 90 cents of every dollar on the guy that runs it's salary, and the hungry kids only get 10 cents of every dollar. Well, I don't think we need to be— Mom, that's not a very good deal for the hungry kids.

And Mom, let's make sure you're not hungry first.

Yeah, yeah. Take care of your own household first, or you're worse than an unbeliever. These are all scriptural things.

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Anna in Jonesboro, Arkansas. How are you?

I'm good. How are you guys?

Better than we deserve. What's up?

So I'm having a disagreement with my dad, and I want to know if I should sell my house to pay off my student loans. Ooh. Yes. So we bought it together. So that's why I was talking to him about it in 2020.

Yes. So you don't own it by yourself?

Not by myself, but he will let me make the decision. He thinks that you're going to tell me something different. I think you're going to tell me to sell it.

Hmm. Interesting.

Okay.

Yeah. So no, in about 2 minutes. Yeah, this is great. So, um, it's a lot, it's a lot of power. I'm kind of scared. Um, yeah. So how much student loan have you got?

I've got about $33,000.

And what is your income?

I make $54,000 and some change as an accountant.

Mm-hmm.

Okay. Working 40 hours?

Yes.

And you're single?

Yep. Single, no kids.

Okay. All right. And what other debts do you have? Other than the house?

I paid off my car in December early, so all I have left is $1,700 on a credit card, but I have $32,000 in savings, and I could pay that off today and still have some left.

Oh, well, bury the lead there. So you'd sell your house instead of cleaning out your savings, instead of dumping your savings and building it back up in 24 months.

So the reason that my dad is hesitant is because my mortgage is like $800.

No, no, no, we're asking you, why would you sell your house when you have the money in the bank to pay off the debt?

I don't have the money in the bank. I have $3,200, not $30,000.

Oh, okay.

Okay, well, that's a little different. All right.

Sorry, Mark.

You may have said 32 and we put a zero on it. I don't know.

Okay.

Okay. All right. $3,200.

I'm gonna pay off the credit card debt.

Okay, gotcha.

Yep. Yep. $1,500. Yeah. And then you were—

So you pay off the credit card debt, you got a little— you got your $1,000 left, then we're working on the student loan, and you make $54,000. And what is your house payment?

$885.

Okay. How long have you owned it?

6 years.

Hmm.

How much car debt did you pay off, and how long did it take you?

I think I paid it A year and a half off early.

Um, what was the total debt and how long did it take you to pay that total debt once you attacked it?

Uh, it was $13,000 and it took 5 years.

That's not attacking it.

Were you ever, were you ever at a point?

I lost my job when COVID hit.

Okay. All right. That's, I'm talking about what I was trying to get at was, did you pay off $13,000 in 5 months or something? And no, you didn't. You just piddled away at the thing. Mhm. Okay.

All right, Anna, if you looked at what you bring in each month and if you lived on nothing— you paid rent, some groceries, kept the lights on, and that's about it— like, I mean, you really had no life. No life. Yeah. What— how much extra would you have per month just with your salary?

Um, I take about $3,300 a month, so I would probably need like Depending on gas and groceries, like $1,600-ish.

Okay, what if we just said $2,000 just to play it a little safe? So that's $1,300 extra. And if you got, you know, a part-time job at night and weekends, which I know is not—

Bookkeeping.

Not fun.

Oh yeah.

Side hustle.

Yeah, yeah, yeah, yeah.

Big one. I've been looking into that.

Yeah, and you brought in an extra $2,000, you know what I mean? That's, that's $3,000 in 10 months. You'll be done a month. And yeah, and you just look at that in the calendar.

Stop your 401k temporarily. And did you get a tax refund last year?

It was like $200.

Okay, so you got that dialed in. Good. Okay, anything else? Any other crap coming out of your check, like crappy insurance that you don't need and stuff?

No, just health and dental, and that's it.

Okay. Health, dental. Do you have 401 coming out now?

I do not.

Okay. I don't know why you're only getting home with $35,000 or $38,000 out of $53,000.

$33,000 is what you said.

$3,300 a month, which is $38,000 a year. And so why are you only getting home with $38,000 out of $54,000? How much is your stinking health insurance?

Uh, all of my insurance together is $53 per paycheck, so $106.

Okay. All right.

Uh, this feels a little low.

Yeah, that's still a little low. I mean, because you're gross— you're grossing almost $5,000 a month, and you shouldn't be having $1,700 come out of this check.

No, I gross $3,300 a month. No, I get $1,600 per paycheck.

No, you take home $3,300 a month. $54,000 is your income, correct?

Yeah.

$60,000 a year is $5,000 a month. Okay, I can't get down to $3,300. There's something wrong with your check to me. But aside from that, I'm gonna investigate your check and see what's coming out, make sure nothing is coming out except health insurance. That's it. And taxes, and the appropriate amount of taxes, not too much. "Then I'm gonna pick up an extra job, side hustling, bookkeeping, and bring in another $1,500 to $2,000 a month. Then I'm gonna take the EveryDollar budget and get on beans and rice, rice and beans, and I'm gonna be clear of this $33,000 in debt in less than 14 months." And your dad wins the argument. Because I wouldn't sell my house. I would not sell a house where you've got a great payment like this and a great interest rate and you like the house, I would not sell the house.

And a great mortgage payment. I mean, yeah, your payment is great.

I would not sell it. I would not sell it for 14 months' worth of hustle. And I'd go, I'd lean in with 14 months' worth of hustle and clean the student loan out and get rid of it. The only reason you're selling it is you didn't have hope that you were ever going to get rid of it otherwise. And I just gave you a 14-month detailed plan, and Rachel did, on getting rid of it. And if you get rid of it in 14 months, it'd be silly to sell your house.

Mm-hmm.

Because how much equity's in it?

I just have so much. Well, that's, that, that's the thing is that the houses that are selling, that sold for what mine did around the time and are selling now are selling for between $200K to $220K.

And what'd you buy it for?

My loan, I bought it for $149K, put $7K down. So my loan was for $142K.

You're sitting in a sweet spot.

Don't walk away from this. Yeah, I wouldn't.

This is perfect. There's people all over America going, "I could have a $200,000 house. Oh my God." Yeah. I didn't even know they existed.

With an $800 mortgage payment.

They do in Jonesboro, Arkansas. And a single lady making $54,000 owns it. Yeah, that's— I'm going to— the house is the last thing I sell if it's the only way I have hope to get you out.. And I got a lot of hope, a lot of hope mathematically that you're gonna be out of this without it. So you can do this. Oh, and by the way, let's just fast forward. What happens to your life when you don't have a student loan hanging over your head and a credit card hanging over your head and a car debt hanging over your head and you've learned to live on this budget? Oh, we can start putting money in that Roth 401. Oh, then we start to talk about how fast How fast does your income at 15% of your income turn you into a millionaire? Pretty stinking fast, kiddo. It's about 18 years is my estimate sitting here today. So you're gonna retire with $1 million in your 401 18 years from now, and maybe in that same house, in a paid-for house that by then will be worth $600,000.

That's right, $600,000.

Yeah, I just tripled it. Yeah, 18 years from now. Sure, why not? "Yeah, why not?" It's a $200,000 house. It's already doubled once.

Just like that, right Dave?

Yeah, just like that. That's how you do it. Just like that. You just move your nose from one side to the other, like, "Ding, ding, ding, ding, ding, ding." Make it happen. Make it happen.

So—

No, but honestly, yeah, people selling their house as if their house is the problem. And for some people, their mortgage payment is huge. They have no margin. They're not able to get out of that mortgage. They have some equity. Yeah, and you're wanting to move anyways, sure. Like there's a, yeah, there's some reasons, but the amount of effort and time it takes for moving, selling, and then you're gonna have to go buy something else and it's gonna be double what, you know what I mean? You're gonna, that increase that you are on the better half on is gonna be there waiting for you for the new house. So it's not worth leaving. So sorry, Anna.

No, I want you, I want you to get a little dirt under your fingernails and get this done, baby. You can do this. I'm sorry, for your sake, your dad wins the argument.

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Welcome back to the Ramsey Show and the Fairwinds Credit Credit Union studio. Cheryl is in Boise, Idaho. Hi Cheryl, how are you?

I'm good, how are you, Dave?

Better than I deserve. What's up?

Thanks for taking my call. My parents are to the point in their life where they need extra help. They are 87, 88, and instead of putting them in an assisted living, I would like to take care of them, and that's what they would like. I am not old enough to retire yet. I have about 5 more years, but they're willing if I I retire, they're willing to pay me the same monthly wage that I make right now, and then they want to give me a $50,000 CD, which would make up— that's the difference of whether I retire right now or in 5 years. My question is, they do not want my siblings to know. They're okay with them knowing about the monthly wage, but they do not want them to know about the CD.

Why?

Because I have some siblings who I think— what they think would be unhappy about it, and they don't want the stress. They don't like confrontation. They don't want anybody to be unhappy. I personally think that my siblings should be happy because the monthly wage is way less than if we put them in assisted living. So my husband is a little— we're a little concerned about it causing trouble in the future, but my mom and dad said nobody knows about our CDL. It's under the table. Nobody will ever know about it because they don't, they don't know about that. So we're wondering what to do. Should we—

you do what you want to do, but I do not participate in deals that involve deception.

That, and that's what we feel like too. We're like, I don't like the secretiveness of it.

It's gonna come back and bite all of you, and it's gonna come out. It's gonna come out in the settling of the estate. And they're going to accuse you of having stolen from your parents.

That's, that's what we're worried about.

It's what's going to happen. I mean, yeah, absolutely. I mean, we've played this record on this show before.

Okay.

I mean, for sure, for sure. That's what's going to happen. And so listen, if everybody can't get along, here's the other thing. If they want you to handle the confrontation, I would be willing to do that. Hey, brothers and sisters, here's what mom and dad want to do. Here's what's going on. I'm taking a pay cut and I'm losing part of my retirement to cover the retirement. They're giving me a $50,000 CD and I'm taking a pay cut because I really want to go over there. It's a better quality of care for them. It's cheaper for the whole family, me doing it, than us putting him in a thing. So you get a deal. But I want to make sure you guys all know about it. You don't really get a vote. I'm just telling you we're doing it.

Okay, that's fair.

And if you don't like it, say, "I don't like it." Pound sand, but this is what we're doing, right?

Okay, so it's not, don't put it out there and say, "Are you guys okay with it?" I'm not taking a vote.

It's not their money.

I like that.

It's not their money. It's, this is what mom and dad have decided to do, and I wanted to just make sure you guys knew it.

That you're in the loop. That you're in the loop.

So that you're in the loop, and not a thing.

Okay, I like that way of approaching it. That way, yeah, that way there's no argument. It's just what it is so that it doesn't come out in the end.

Okay, I like that. We have a family member that had a small business. One of the brothers was involved in the small business. The rest of the family was not. And when the dad sold the small business, he gave half of it to the brother, and he told everybody, but he didn't ask everybody's permission. He said, this is my freaking money and this is what I'm doing. He didn't say it that way. He just did it.

Okay.

And then just said, this is what happened. And, and then you get to choose if you're the brother or the sister, then whether you're going to have a hissy fit about somebody else doing what they want to do with their money.

Okay. You know, that makes perfect sense. Thank you so much.

Yeah, I just— lots of clarity and kindness and legacy. What you described had no malice. No theft. No, no weirdness. It was a— you're probably coming out on the short end of the stick, except you really want to love your mom and dad well through this legacy stage of their life, and good on you.

That's perfect. That's, that's exactly— I just have always promised them, nope, I will take care of you, and I'm the one that's willing to do it. Yeah. And, and I get along well with them.

So yeah.

Yeah, and almost as factual as it can be too, Cheryl. It doesn't have to be all emotional, right? It's like, here's the facts, here's the numbers, here's what's happening, and that's about it. Low drama, low, you know.

And let me go ahead and just— this is happening all over America at this moment, this scenario. And for you brothers and sisters out there that the other sibling is the one stepping up and gonna do the doctor's visits and gonna be in the house making sure stuff gets cleaned up and gonna make sure the bills get paid, and they end up with more than you, and you're not there, shut up! Rise up and call your brother or your sister blessed and say, "Thank you." For taking care of my dad. Thank you. Thank you for doing this. And you get whatever you want. You're the one on the front line. The rest of you out there— I mean, because this is like a normal— I hear this almost every week among my friends.

You know what's crazy? I saw a study. I just saw this actually yesterday. That the role within siblings, if there's an older sister, she usually is the one that ends up taking the responsibility. That's like the number one, like predictability if you are the older sister.

The oldest child, period.

Sometimes it's the first one. Yeah, but usually the— it's usually the daughter. The daughters are usually the ones that kind of gather. The caregiver. Yes, that end up kind of doing that. And then talking about retirement, all of it was fascinating. But there's data coming out all around it. And there was a whole article on it. And it was, you know, Yeah. So, that'll be Denise for you and mom.

I'm on notice it's not gonna be you.

I know I will.

I'm so shocked.

I'll stop by.

I'm appalled. I had no idea.

I'll stop by.

You'll do a drive-by and give us a parade wave from the car.

No. No. But that is, you know, and even, you know, when we look at friends and even, you know, even Winston's parents, like, his— like, our papaw, my papaw, my mom's dad, dad is still living. My husband's mom's mom is still living, right? And it is, it's like a full force.

And who is taking care of them?

Yes.

And it's whoever's taking care of them. The rest of them need to support the one that's on the front lines and say thank you. Yep. And not be going, "Well, you're getting too much money. You got a CD." Oh my God, you petty people. Yeah. And it's not even your money. It's their money.

And if you split it between all these siblings that Cheryl has, everyone probably gets $10,000. And for $10,000, "Have your parents been taken care of?" You know what I mean? Like, it's not like it's a million dollars sitting in there and they're fighting over that. So, anyways, Cheryl, well done. I hope the conversation goes well. And I have John Delony in my head too, but there is a point when you do put a scenario out there of what's gonna happen, they are adults, your siblings, and they get to make a choice of how they respond. That's not up to you. That's not your responsibility to caretake their emotions either. It's what's happening, and they're gonna have to be adults and decide.

And if they decide they're gonna come at my 87-year-old parent after I make the announcement to them, then I'm gonna deal with them. That's the other thing. So, you have to step in between and go— 'cause your mom and dad don't do confrontation. Remember, they'd rather do deception. No, that's not a good idea. Not a good idea at all. 'Cause that confrontation's gonna come back, and it always grows. What is it Les Parrott, he says, "It has a high rate of resurrection.

It will come.

It will rise up. You have zombie confrontations wandering through your backyard, all from former dead things. Oh wow, that's— yeah, because you tried to bury it and it came alive.

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Today's question comes from Gabriel in Delaware. We recently sold our house and did not anticipate buying another one for at least 4 to 5 years. We have $350,000 that we want to invest into the S&P 500 and index funds until we are ready to buy again. Several friends who invest regularly have suggested that because it is such a large sum and we should do a dollar-cost average by investing 1/12 of the amount each month instead of investing it all at once. Do you agree with that suggestion, or would you recommend investing the full amount immediately?

If you understand what you're putting money into and you've looked at the track record of it, the S&P 500, the math would tell you to put it all in at once. The only reason to dollar-cost average is if you're emotionally not committed to this process and the first time Trump decides to bomb Iran and the market goes down, you freak out.

Okay?

Because he's gonna do a Trump thing. You can count on it. I don't know what the next one's gonna be, but there's gonna be a Trump thing. Sometimes it causes the market to go up, sometimes it causes the market to go down. And there's gonna be other things that happen in the world other than Trump that are gonna cause the market to go up and the market to go down. But here's an example. Let's say that you had $100,000, for round numbers, and you put the money in at the beginning of 2024, all of it, at the end of 2024, the market, unusually high, went up 24%, 25%. So you'd have $125,000 if you put $100,000 in on January 1st. And at the end of the year, you'd have $125,000 because it went up 25%. If you put it in a twelfth at a time, you'd have about $111,000. But if the market went up or went down, you wouldn't be as scared. But you did not have it invested the entire year, the entire amount, and so you did not get what the market made the entire year. Now, if the market goes down 10 minutes after you put it in, which is kind of like Murphy's Law, it's gonna, it's like God saying, "This is a test of the emergency roller coaster riding society, and see if you can ride the roller coaster or not," right?

Like, you're gonna have a test, right? 10 minutes after you put the money in, the market's gonna go down. And so you just gotta say, "I'm not gonna look at it, I'm just gonna put it in, and it's S&P 500, and so, you know, we'll see what it does," right? This year, year to date, as of this broadcast, the market is up 7%. And it's June. If it continues on that track, that's gonna be about 14, which would be fairly normal. It's averaged about 11.8, okay? And that includes the big dip after the Iran bombing, and I'm gonna come back up.

And we've had a couple of those. When you look at the chart, I mean, you can just Google S&P 500, right? You'll see something. But, but the amount of recovery time, which I don't know the exact date, but It's maybe 30 days, right? I mean, like, it's pretty quick on some of these.

It depends on what the event is, but most of the time, this stuff comes back very, very quickly, even the big newsworthy drops, okay? One of the ones I always remember is when COVID hit in '20. Go back and look at the '20 charts, all right? And from February and down into March, in less than 30 days, the market dropped dramatically. I mean, it didn't go in half, but it went way down. It lost like a lot. And everybody's freaking out, because they're freaking out about COVID and they're freaking about everything, and they're freaking out about masks. We hadn't gotten around to vaccines yet, but at that moment, but they came later.

Job markets were closing.

Yeah, people were worried about the businesses, worried about what's gonna happen with the economy, and the market dove. Okay, it hit bottom in April. We didn't know that at the time. How long did it take it to recover what it lost from the COVID scare in the 30 days prior? 57 days. It came back. So COVID wasn't even over, but we're up in September and the market has returned because the market figured out that there wasn't going to be 2 million deaths. Well, and the market figured out that a whole bunch of this was a bunch of hooey. Well, and no, they did. I mean, the market looked around and said, we're not all We're not all gonna die, and the economy is not gonna turn into a dust bowl, and, and, and, and. And so the market recovered. The market recovers common sense over time.

Well, and you think back to '07, '08, which was obviously the massive—

Huge drop.

And was that a year? How long did that—

I mean, that was— It took a bit. It went in half. The Dow Jones went from 13,000 to 6,500. Now, how quick did it get back to $13,000? I'd have to go back and look, but I think it was almost a year.

Yeah. So, that was probably the long, you know—

That was a long one, but it also went in half.

But even the Iran thing recently, right? That it dropped, it came back within like 2 weeks, or it was not long.

It was less than a month.

Yeah, it was not long. Because we had just put money in there.

And then every time there's a news cycle on it, you'll see it like this week, if you go back and depend on when you're listening to this, but I'm doing this real time. You'll see a little blip right now, and, you know, latest news cycle on the same thing. And, you know, because they're bombing each other again for a minute, right? So all this stuff— so all that stuff comes into it. All that to say, the answer to your question is invest immediately if you have a 4- to a 5-year window, because these wrinkles iron out if you give them time. No one gets hurt on a roller coaster except those that get off in the middle of the ride.

Ride.

Don't jump. Don't jump. Yeah, so if you think you're going to jump, dollar-cost average, because it keeps you from freaking out quite so much, because you're like, oh, it went down, but I don't have all my money in. And so, but if you're going to be one of those people that says I lost all my money in the stock market, which by the way is a lie— if you put money in the S&P, you have never in the history, in the last 150 years, lost all your money. Zero times that the market went to zero. So you didn't lose all your money. If you put it in at the top in 2008, you're talking about, and it goes in half, put $100,000 in, it's worth $50,000, you could say, "I lost half my money because I bought at the top and sold at the bottom. I'm the worst possible timer on the planet." You know, and so, but even then you didn't lose all your money. You lost half of it. And, and because you're the worst possible timer on the planet. So yeah, so if you just ride it, you're gonna be okay. So if you're willing to do that and you're willing to understand that, then you're gonna make really, really, really good money as a long-term investment in good mutual funds.

And an S&P 500 is a great place to park stuff when you've got a 4 to a 5-year window. Longer term, I'll go with different mutual funds, but I use the S&P for short-term parks like that myself. And just while we're on it, this is a fun stat. I pulled this up the other day because I got curious about it. '23, the market went up 26%. '24, it went up 25%. '25, it went up 18%. 3 very unusual years. This year, as I said, it's up 7%. So if you compound those numbers in— so in 4 years today, 3 and a half years to date, because we're all the way through those 3 calendar years and halfway through '26 when I'm saying this, that's a 100% return on your money. So if you put in $100,000, you put in $1 million in '23, it's now $2 million if you didn't add anything to it and just sat there. Now that is a very unusual 3.5-year period of time. Unusually good. I don't recall one, and I'm old and I've been doing this a long time. I can't— I can probably go back and look if there is another one, but I don't remember emotionally.

It doesn't come to mind anything that sweet in my memory. The 3 years in a row, 20-plus percent.

It's crazy.

Yeah, that's crazy. But I mean, I've got money sitting in the S&P and I got twice as much right now just because of that 3.5-year period of time. It doubled. Meanwhile, I've got my money in checking because I'm scared of the stock market. You'd probably need to do some learning because that's the kind of crap you're missing out on right there.

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Well, we wish we could get to every single call and question here on the show, but we We can't, there's only so many lines and so many minutes to be on the air with you. So, if you do have a money question, we have an answer for you. And it's head on over to the website and use Ask Ramsey at RamseySolutions.com. Ask Ramsey. Ask Ramsey is our free AI tool. The only data in Ask Ramsey is Ramsey data. We took 3, 4 years of this show go and put every call and dump the answers in. We took all the books we've written, dumped them in. We took all the articles, and there's thousands of them on our website, and dumped them in. There's no Reddit in Ask Ramsey. Some— that, that— and if you don't know what Reddit is, it's a sewer, okay? And so if you, you know, and so the way AI works is it can only spit out what you put into it. So if the data set is clean the answer is clean. And the data set in Ask Ramsey is 100% Ramsey clean. That's all it is. So you're gonna get an answer almost as smart-aleck as you would here on the air, and exactly the same stuff.

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They should— we should make a version someday where you can click what type of— like, do you want a Dave answer? Do you want Rachel tell— like, in the tone at which you get your answer, right? And it'd be like, I'd be like, hey guys, it's all— it's gonna be fine. Well, here, here's what you do. And Dave's like, you're stupid. Deloney's gonna be like, Rachel, how's your dad?

I like you, and I just don't think that that's smart. And Dave's She's like, stop it, you fool.

Yeah. And Deloney's like, how's your dad? How's the relationship with your dad? You know, Jade will be like, girl, let me tell you. I don't know, that could be good. I'll tell— I'll send an email after the show, give them my idea.

George will pull— oh, George, let me get the calculator out and we will figure this out together. He's gonna nerd out.

Loves that investment calculator.

All right, there we go. Michelle is in Raleigh, North Carolina. Hey Michelle, what's What's up?

Hi Dave. Hi Rachel. Um, I've been playing with Ask Ramsey and I always imagined George Campbell is the one to find.

Oh, that's all we needed, Michelle. Thank you.

Thank you. Well, it's a very, it's a very precise answer.

You will get a good answer, especially if it has to do with investing. So that's great.

But I wanted to ask you all this one, a quick background. I'm 32. My husband is 34. Um, we make about $100K a year. We have $230,000 in retirement.

Way to go.

Um, thank you. Um, my husband and I are both military. He just gave money or GI Bill to our 2 children, which are 5 and 2, and we have $10K in their 529, and I'm— we're investing $200 a month. Into their 529, but I just wanted to see, like, is that enough? Should it be more? Again, they would get 12 months of his GI Bill, which I think actually equates to more than just one school year.

So his GI benefits for children's college education is one year of his income?

No, so the GI Bill would cover 12 months of school for each child.

Oh, I thought it covered all of it. Oh, cool. Interesting. All right, so you got 12 months. All right, so, you know, what I would do is just say, all right, where are we going to be living, do we think, when, when we retire from the military? In other words, where will be the state school that we are the resident? You want to guess?

What state?

North Carolina.

North Carolina. You'll still be there.

Okay.

All right. So, you know, University of North Carolina or whatever, that's a state school. All right. And what is the tuition? $14,000 a year. What's room and board? Probably about double that. Probably about that much again. So probably $25,000, $30,000 bucks times 4. So $120,000 bucks. Oh, minus one. Year, because military's picking that up. So times 3 instead. So now we got $90,000 or $100,000. So our $10,000 at 2 years old, what's it going to turn into by the time we get there? Plus our $200, is that going to turn into, you know, $100,000? You're gonna be pretty close.

Yeah, but also looking at the rate of tuition increases, what the average has been year to year, because it's one of the wildest.

And I would underfund the 529 and overfund some of your other investments. That you could use at that point. Because what happens a lot of times is by the time you get there, 2 or 3 things can occur. One is they get scholarships for whatever reason. A, they applied for them. B, they're academically or athletically gifted. And if they get a scholarship, the amount of their scholarship can be removed from the 529 with no penalties or taxes. Okay, so, you know, but that money now is set free instead of being trapped in the 529 growing tax-free. So that, that's one thing that can occur. Another thing that can occur is you guys are sitting on a pile of money by then because you're doing a great job. I mean, we're talking 15 years from now, you know, what's that going to look like? You're going to be millionaires easy, and you're going to have other money laying around. And you might decide all kinds of different things. Oh, see, they decide not to go to college. They want to go and be in the trades and get a certification in whatever it's called 15 years from now.

We might call it AI today. And they want to be a tech person and they don't need a 4-year degree to do that. They want to be in cybersecurity and you don't need a 4-year degree to do that. You don't need a 4-year degree to be a programmer, for God's sakes, right now. Now, for sure, and so on, right? And so that's, you know, maybe they want to be a diesel mechanic and it's a 2-year certification. By the way, diesel mechanics right now making $120,000 a year, which is more than a lot of lawyers make. So, you know, let's just think through what is it they're going to do. They may or may not be 4-year University of North Carolina. I recommend college if they study something that's actually usable. You don't want a degree in left-handed puppetry. You'll end up being a barista. But you do need to get— but if you get a good solid degree in something that's usable in the marketplace, I still recommend college. So that's how you plan it out. You just look out there and go, "What's it cost?" And then you back out what you've already got covered, and then go, "I want to come up a little short because I'm gonna have other money." Mm-hmm.

Yeah, because the hard thing, especially Michelle, which is such a great position to be in that you guys are looking at Baby Steps 4, 5, and 6 like you're looking at college and you're able to fund it, and because of how young your kids are and how fast that money can grow, is that, yeah, that's a scenario where it can be overfunded. So you do want to just be watching the numbers and make sure. For a majority of people out there, that's not an issue for them, right? They're trying to save for retirement and their kids are 16, 17, and they don't have money for college. So you're on a good scenario, but you are one that you do want to be looking at. Like Winston and I, I mean, we funded a ton. Amelia's 11, and we slowed down hers just because of all this. You're probably done. Just to say, I mean, again, I don't know what she's gonna do. And financially, whatever's in there, that will grow for the next, you know, 6 years. And then if it's not enough, can we cash flow behind it? But that's because we've been doing the Baby Steps for 15 years too.

So it's all, but it's something to think about, especially 'cause your kids are so young, Michelle.

I love this question. By the way, thank you for your service. To the country. I'll give you one other thing. Go ahead and start brainwashing them on two things. I mean, parent them, okay? Thing number one is that you want to brainwash— I mean, parent them on is that they are going to engage in some kind of continuous learning after high school. They need to learn something beyond high school. If it's a trade, if it's college, whatever. So this is your college fund, this is your college fund, this is your college fund. Show them when they're 12, this is your college fund, which presupposes in their little mind that they're going to college. That's brainwash number one. Brainwash number two is where you go to school does not matter, so you're not going to school at a super expensive school. We're not paying for it. So we went to the University of Tennessee. We're in Tennessee, Sharon and I did. We taught our kids to say, "Go Vols!" early. "Go Vols!" presupposes you're gonna be a Vol. All 3 of them were.

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

Elizabeth is in Pennsylvania. Hi Elizabeth, how are you?

Good, how are you?

Better than I deserve.

What's up? Um, so my husband recently lost his job And he was working in the trades, but now he's considering reopening a landscaping and home services business that he ran a couple of years ago when we first got married. But he's started to pick up some side work, and it's showing some strong promise. He's making about double of what he would normally make in his weekly— for his weekly paycheck for his normal job. So our situation is a little bit different now than when we first got married. I'm a stay-at-home mom, and I'm nervous about him taking this business on full-time, which is what he wants to do. So he's pretty much stopped applying for jobs, and I want to support his, his goals and what he wants to do, but I'm just concerned about putting all of our financial security on a very seasonal business since it, you know, didn't produce a lot of income in the winter last time. And I'm just curious what your thoughts are.

Well, he's making— how long has he been making double? How long has he been doing it.

Um, so he just lost his job a couple weeks ago, so this is just like very recently.

Dang. So if he can—

good for him, that's impressive—

double his income for 6 months, that's the same amount he would make in 1 year, right? Why would I be nervous?

Um, I'm just— I'm— because last time when And like, I was his accountant. I did all those numbers for taxes and everything. So I just am getting like the accounting flashbacks to when he had his business. When we first got married, we pretty much relied only on my income because he didn't— we didn't save for the winter and everything.

I won't—

he didn't like know to do that, I guess, the first time around. And he does have that mentality.

Why did the business fail last time?

Um, so it didn't fail. We actually moved across the country, so he closed it down because we moved. We just recently moved back to Pennsylvania in the area, so that's why he was, you know, now with this job loss, he's thinking about reopening it.

Okay, well, a paycheck coming from someone else who's out hustling and trying to keep a business open is no more stable than you out hustling and trying to create some business. They're both unstable. They're only as stable as your ability to leave the cave, kill something, and drag it home. You just have the illusion that someone else does it. Oh, until they fire you or lay you off because they can't figure out what to do at their place, which is what just happened. So the security is an illusion. What I don't want to engage in on your— I want to come alongside you. What I don't want the two of you to allow to happen is that you ignore trends that are negative. Okay, if— but also don't want you to say, well, last time we didn't save up anything for the winter, and so it was tight, it was tight during the winter. Well, then don't do that again, you know. I mean, but if you're making double, why would you not figure out a way to handle that and handle winter, right?

I guess I'm just nervous that it's that trend.

You're nervous about something that hasn't happened.

Yeah, because we have a daughter and I have to think about her.

You're nervous about something that hasn't happened. I'm thinking about her too.

It happens the first time around, is what you're saying, Elizabeth. But now, can you not shift mentality and say, okay, going forward, as long as we're making double, I'm happy?

Is that not correct?

Yeah, I'm just I'm just, yeah, I guess I'm just a worrywart.

As long as we're making double, yes, you're a worrywart.

And then Elizabeth, I would say though, in the winter months, November, December, January, February, there's something else you could be doing for 4 months.

Two things: have a plan to create income during winter, and B, save up. Act like the squirrel. Put some money in the nest. Get ready for winter. If you're making double, set half your money aside, and then winter you're a fat squirrel.

Okay, so you would not recommend him applying?

No, not if he's making double. Oh, in 2 weeks the guy's already doubled his piss-poor job. I don't want another one of those jobs. I love this one. But get ready for winter. He has a baby to feed and a worried wife. So let's get ready for winter. Let's double down and You bank half our check. Let's live on what we were living on. But I had the horrible job from doing this last time.

Elizabeth, can you guys calendar out and when did business start slowing for you guys in Pennsylvania? Is that October? Is that September? When does it start going into winter months for you guys?

I would say like end of October, early November.

What kind of work is he doing?

Landscaping. Yeah, he's doing like landscaping and home, like home services, which is what he did before.

Define home services.

Um, it's pretty much mostly landscaping, but like in the, in the, we will do some snow removal and stuff in the wintertime, but that's very dependent on whether or not we get snow.

Okay, but he has that.

But what else can we do around landscaping? Tree removal in the winter?

Yeah, he does tree removal.

You can do that all winter. It's better to do it in the winter.

And maybe Elizabeth, for, for a period of time, maybe for this first year, just to settle some of this, that he's like, hey, I'll go go drive UPS for 3 months during the holiday season.

No.

What?

Just to say, "I'm gonna be making—" Listen, make double between now and September and set half of it aside.

But he can be doing something in the winter.

Yeah, snow removal and stump removal and tree removal and yeah.

And holiday driving if he needs to.

Whatever it is, but figure it out. But I mean, here's the thing, if you can make double, it's real simple math. 6 months gives you all 12.

But that doesn't— but you're— but Elizabeth, you're not— that doesn't— that's not— it's computing mathematically to you, but you're feeling something different. And why is what I'm wondering. Is it because he didn't do a good job? You guys didn't do a good job saving last year. Do you think you have the ability to save this time around?

Yes. And I mean, we've been— I want to say we've been doing like your baby steps and stuff, and we've been in a much better place financially. And I'm just nervous that to see that progress potentially stop if things don't work out perfectly.

How old is your baby? She's a year old.

Okay, and so, you know, you've got to look at him, and he has to hear loud and clear that we have to do this in a way that makes sure that the family is okay. Meaning we're going to make double and bank half of it. We're going to pay our taxes on time. We're going to have some alternative things that we do during the winter as a— to make sure that we don't even need a that savings. You know, and honey, if you're not doing that, I'm gonna go from worried to a problem. I'm gonna be a problem for you. If we are doing that, I'm gonna be your cheerleader and support you. But if you're gonna engage in a pattern that puts— it looks like this family's gonna be in jeopardy, me and you are gonna have a problem. So let's keep me cheerleading Let's work together and let me do my accounting stuff and we're gonna work real closely together. We're not gonna go along 4 months and not talk about this. We're gonna talk about it every month. We're gonna look at the trend lines on the revenue on the business like we're running a business and we're gonna say, okay, this type of business is making us more profit, this type is not, let's engage in that and let's start thinking about do we need to buy a piece of equipment for winter Winter snow removal, snow blower.

What do we got, attachment for one of the mowers? I don't know what this— how this— but let's just start running a business and anticipating what is coming, and let's do it together and talk about it. We're not gonna just go along and like, "I'm living my dream," and my family gets hungry. We're not doing that, and I don't endorse that. But I also don't want you to have the illusion that self-employed is less stable than employed, especially when you're making twice as much. It's more stable. So I like his— I like him.

He's a hard worker. I mean, that's impressive though.

He turned that around real fast.

Yes, yes, really fast. And he knows what he's doing. He's done it before.

The actual doing the thing he's good at. Yeah, she's got the accounting skills. That's right. So she can come alongside and they can have adult discussions about about how the business is creating profit and what we're doing with the profit. We're doing our quarterly estimates. We're not gonna get behind on taxes. We're making sure all bills are paid. We're keeping the profits, you know, set aside, getting ready for winter. We're gonna squirrel, squirrel money. That's what we call it in the South. Welcome back to the Ramsey Show in the Fairwinds Credit Union studios. I'm Dave Ramsey, your host. Thank you for joining us. Rachel Cruz is my co-host today. Jim is in San Jose, California. Hi, Jim. How are How are you?

Good. Hi Dave. Hey, what's up? I had a question. I had a question. I'm getting married and my fiancée is 50, I'm 60. We're both retired. And based on our wealth differences, we should probably have a prenup.

What is the wealth differences?

So she's got $3 million, no debt, and I've got $45 million, no debt. Okay, yeah, she should have a prenup. Prenup? Yeah, so in the, the question revolves around what's in the prenup, uh, what should go in it. So, you know, she, she wants to feel like we're building something together in our marriage going forward. And, um, she talked about slowly maybe moving some of my separate property into community over time, you know, like 5% a year, you know, over 20 years. Um, you know, at first I thought that was fine, um, but then I started looking at the numbers. How much of your, how much of your $45 million real Um, just a couple million.

Okay, so what is the rest of it?

So the rest of it is, um, stocks mainly. Okay. Yeah. And, and the way some people do it—

and you can do whatever you want, it's kind of like a will, you make it up and what if you both like it, you've got your deal, right? Um, but what some people do is, uh, we, uh, A, we exit with what we entered, $3,045,000. And any growth from then on is ours. Some people do that, or a percentage, you know, a ratio of some kind. Any growth from this point forward is 70% Jim's and 30% hers, or whatever. I just made that up, okay? And so, but if, if yours is only growing for you and hers is only growing for her, that does kind of leave a negative light on what she's concerned about, and she's concerned fairly, then we need to grow a life together from this point forward. The main purpose of this is that she should not come out of this with $20 million 2 years from now, right?

You know, that's what I was afraid of.

Like, yeah, that's the main purpose. So we, we exit with what we entered with and then have a formula for how the growth growth would be dispersed. Okay. And I don't think 50/50 growth is fair because she would— if she made— if you made 10% on your investments, you'd make $4.5 million a year and she'd make $300,000. Right. So, but I mean, if you want to be generous on it and say, you know, 70% of the growth from this point forward on our whole thing is mine and 30% on the whole thing is yours, or whatever, make up a number, I don't care. But I mean, so the two things you have to address is leaving with what we entered, and then how do we build a life together and address the growth, right?

Okay, that sounds— that sounds pretty reasonable. Yeah, but I would not—

I would not set up a roommate situation where what's yours is yours and mine is mine, and we have to decide who pays for the mustard in the refrigerator. Oh, that'll drive you nuts. Yeah. Do you guys have kids?

Yeah, we both have kids. We have teen kids and I have a couple older kids. So I set aside some of the money in a trust for my kids. So that's already separate. We're not talking about splitting that up. It's just I saw the 5% a year and that seemed reasonable, a little bit each year, but the problem is—

There's no reason to. Probably.

Yeah, there's no reason to. It only benefits her if we get divorced and it ends up being a lot of money in 10 years.

But if you took a percentage of growth, it's gonna have the same effect. Mm-hmm. If she gets a percentage of growth without changing the name on the asset, if she gets a percentage of growth from this point forward and you get a percentage of growth from this point forward, unless it's exactly in ratio of 3 to 45, 5. And I wouldn't do that.

You'd give her more, just to—

No, I mean, if you gave— yeah, I would give more than that. So, you know, so if you said, you know, we got $48 million to deal with, you get 3/48, I get 45/48 of the growth. That's a little heavy. I probably would lighten up on that personally. But so that's like she would be getting about 6%. Under that scenario, of the growth, but not of the asset.

Right, not the principal.

The principal is your starting point as of today. That's how most people address it. Now you can sit down with an attorney, they may have some other ideas if they're used to doing these things. We don't generally recommend prenups except in extreme situations, and yours, my man, is an extreme situation. Okay. And it's, it's really good to talk about it and and think it through. And here's the other thing, I would be sure I get under the numbers and address the concern. And meaning, that's a form of pre-marriage counseling, in other words, where you say, "Okay, what is it you're trying to address when you say you want 5% moved?" What does that do for her? What is it that you're wanting there? What are you trying to do? And if we did it this other way, does that address it as well? You know? Know, and you know, that kind of thing. So the thing I do— the thing I really— whatever structure you use, make it from this point forward that you're building a life together in some manner.

Yeah, yeah, I agree with that.

Yeah, that's the danger of a prenup where you just turn your marriage into a roommate.

Yeah, because I mean, you know, you could have another 25 great years of marriage with her, you know, and And 14 grandkids.

Yeah, yeah. Each, you know, and that aren't related to the other one at all. Yes. Except by this marriage. And so, yeah, yeah. I've got a friend that has 4 kids and he's on a second marriage, third marriage, and each— and she has 5 kids and they've all got kids. Mm-hmm. There's a bazillion people in these 2 combined families now. Right, right. And you've got to address that. 'Cause there's a lot, you know, just Thanksgiving becomes a thing. You know, you gotta think through yours, mine, and ours. And there's not a—

And that probably is the wisest way with the kids, like, in his scenario. Drop some in the trust.

But if the prenup says the first $45,000 is mine, and we're only dealing with the growth, then it can go to wherever he wants it to. And that can also be in the will, you know. Trust does that, but it's not 100% wise. That's very interesting, Jim. Good, good discussion. Prenups have become a hot topic around here off the air. I was just telling you, I was doing an interview.

They brought it up in the interview, and the guy doing it—

another guy's podcast.

Yeah, and he was like an anti-prenup, and he said now over the years he has shifted to more of a pro because— yeah, pro, pro, pro, pro prenup. And I do wonder if people— if there's like a discouragement of just marriage in general, like seeing the stats that, you know, half the time it's not going to work. You know what I mean? And like, do you prep for that? Where's the wisdom in that? Versus the attitude going in, preparing for the end of the marriage is not great. You know what I mean? Like, it just— well, the way you slice it is tough.

Yeah. The other thing is the marriage statistic that half don't work is incorrect if you start adjusting for a few variables. If you have 4 years of education, if you have $50,000 a year or more in income, if you are shared in your religious beliefs, if you fill in about 5 more things, and it goes to about 90% probability of success in marriage. So, it's, if you get married after you're 22 months old— no, I'm kidding.

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Garrett is in Washington, D.C. Hey Garrett, what's up? Hey, I'm doing not much, Dave.

How about you? Better than I deserve.

How can we help?

Well, I just have— it's kind of a vague question, but I'm just kind of looking for some advice on which way to go. I've got myself in some financial, um, waters, I guess you could say. And I guess one of the things too is, you know, during that way, I wasn't, I guess, open all the way with my wife about it. I mean, actually, I guess I just read Rachel's article about financial infidelity just the other day she sent me. I'm a wife of Dave done. So I'm just kind of, you know, looking for advice on which way to go. I don't know if we should try to do bankruptcy or risk other ways out, other living ways. So just looking for a little advice on which way to turn.

Okay, so, um, you ran up credit card debt that she didn't know about, is that what you're saying?

Um, yes, pretty much, yeah. How much? You know, we, um, there's probably $35,000, somewhere around that. The hard part is, honestly, I never really kept track. Um, I've been very bad at budgeting until about a couple weeks ago.

And why were you not telling her? Were you running all the bills and you just couldn't pay them all and you didn't tell her that you were putting on cards, or what was the deal?

Yes, pretty much. And then we've got, uh, Simon's very ill and his health insurance every month's $1,400. And then, um, my wife had an injury, a medical injury, um, 2 years ago. And so it's been hard for her. And so I just thought— I guess my thought was, you know, I was doing good, you know, trying to keep some stress, but I think I made it a lot worse.

Yeah, yeah. Okay, that's, that's one way this happens. Yeah, and it's just like, I'm trying to do it, this, doing the best I could, and I was trying to keep it off of you, so I didn't tell you, but that's a mistake. Okay, gotcha. And what's your household income, Garrett? It's right around $7,400 a month take-home pay. Yes, sir. Yeah. Okay, and does your wife work outside the home, or is this just you?

Just me. You said you had a special needs child? No, he's just— he, he's just having a lot of health problems. He needs to have some surgery coming up. And, um, how old is he? He's 28 years old. Yes, sir. Yes.

Yeah, your, your child is 28 years old and has health problems?

Yes, they've been going on for many years. We, we've been many places trying to figure out what the answers are and, um, you know, haven't really got the answers to, you know, is he, is he a functioning adult?

Does he support himself? Uh, he does as much as he can.

Yeah, he's having some issues right now with arms and things like that, which he's in a lot of pain all the time.

I'm, I'm asking, does she— does he live in an apartment and support himself? Oh no, she lives with us. Okay, so you take care of him. Is he— so he's disabled to the point that he needs— is he able to work?

Work? He's not. No, he's not. He's not even able to drive or do some of the basic things right now because of the pain he's in.

Okay. And this has been going on for years?

28. Yes, ma'am, it has.

It's been going on for a while, and it's to the point where it just keeps getting worse. And, you know, we're trying to find the— we've been all over the country trying to find some of the answers. I think we found he's got some issues with his ribs, and we're hopefully going to get those fixed, and maybe that'll get things on the right track Okay.

I'm sorry. What a deal. Okay. I somehow I had in my head this was a baby. Okay. And it threw me off. Okay. All right. Now, um, so the, um, $35,000 in debt on the credit cards that she didn't know about, what other debts do you guys have?

Um, we have a mortgage. That's pretty much the only other one.

You don't have a car payment or a student loan?

I do have, um, a student loan, but other than that, that's it.

How much do you owe on the student loan?

Um, I think it is roughly $14,000, I think, but there's two of them. There's one from like 10, 15 years ago. $14,000?

Yes, sir, on, on altogether. Okay. And any other debts? No car debt? No, sir. No. Okay. And what's your mortgage payment? It's 2580. Okay, all right. Okay, um, well, there's several parts of this and they're all interconnected, so we can't leave one out. Part number one is, um, you and your wife are carrying a burden with your son's health. You're emotionally carrying the burden. You're logistically trying to help him find solutions and get him to those solutions. You're not doing it by yourself. She's not doing it by herself. The two of you are carrying that together. That way is the only way we can carry the emotional weight of something like that, is together. The money is the same thing. She needs to carry the emotional weight of the money also with you. Okay? Yes, sir. And so the way that's going to work is— and it's also going to give her actually more peace peace because she's gonna know what's going on and she's not gonna suspect or wonder if there's a hidden credit card debt anymore because she's gonna be involved from this point forward.

All accounts, everything. That's exactly what you said.

Yeah, everything. So we're gonna put you on the EveryDollar budgeting app. We're gonna give it to you guys. And both of you are gonna sit down and spend $7,400 on that app and say, this is what this month looks like. Like, what we're going to do with this money. We're going to put this much on groceries, this much on the house payment, this much on the utilities, lights and water, this much on medical bills for our son, this much on whatever it is. We're going to just label out every one of those dollars is going to have an assignment before the month begins. We're both going to look at it. We're both gonna give it a vote. And when both of us vote on the budget, now we have a budget. And then we agree to live on that budget. If anything comes up that's not on that budget, we have to sit down together and change it. That's both of you carrying the money emotionally. Yes. And that's not that stressful. It's less stressful than what you've been doing. Unknown. Unknown and hidden is more stressful than known. Then you just look at this and say, I'm cutting up the credit cards, we're never borrowing money again, and you know, we have $50,000 in student loan and credit card debt that we need to clean up, and you know, we make $140,000 or $150,000 a year, and we're gonna go do that.

Stop your 401 temporarily. Stop saving temporarily. Do you have any money in savings? I don't know, sir. None at all? No. Okay, do you have any in 401s and retirement?

I do have a retirement plan, but I actually did the app and actually recommended stopping putting anything in that a couple weeks ago, and I stopped that then.

Okay, good, good.

So you're already focused on that. When you look at the math of all of this, if you guys can find an extra $2,000 a month, which sounds like a lot, but if you limit your lifestyle, right, and, and maybe even you can work a little extra, or your wife maybe gets a part-time job or something, just $2,000 a month, you guys are out in 2 years. So—

Yeah, I can work overtime all the time.

Yeah, it is possible for you all, but also with the asterisk of knowing that medical bills is part of the equation too. And so it might slow down the process a little bit, making sure that your son is being cared for, for sure.

But if you guys really just say, "Hey, no matter what, we're finding $2,000 a month." And no matter what, we're gonna live on what comes in. We are not borrowing money. Yep, yep.

And you stay out of that hole. Ever again.

You cannot get out of a hole while digging out the bottom. Yep. So, cut up the credit cards tonight in front of her. Sit down and do the EveryDollar budget together and lay this out. And you can walk straight through this. Mm-hmm. You'll be able to do it. And that gives her the benefit of rebuilding trust because she knows that we've got 100% transparency here. And the longer that we work together and have 100% transparency, the longer— the more the trust will be rebuilt. And because, you know, this was not in malice or you were buying yourself something. This was you were simply trying to keep stress off of her, and it had the unintended consequence of adding stress instead did. Wasn't your intent, but that's where it ends up. So you learned your lesson on that one. So now we just— all cards are face up, you know, there's no, no, no cards under the table. Everything's on top and everything's face up, and, and we're gonna deal with it together. And it's less— it feels like it's more weight, but it's less stressful than the unknown for her. So you help her by carrying the weight of the medical issues with your son.

She helps you by carrying part of the weight of this, and we've— we're a team, and we're gonna work on both of these things together and be successful. If you're a business owner who's serious about growth, you've got to be at EntreLeadership Summit 2027. Summit is our world-class leadership conference where you will learn from the people who have influenced the way we lead at Ramsey. You'll also connect with like-minded business owners who are facing the same challenges as you. To get your tickets for May 2027, go to entreleadership.com/summit. Buying or selling real estate's a big deal. For most people, it's the largest transaction they ever do. And so you need a pro in your corner, not someone who got their license 3 weeks ago. I don't care if your mother plays bridge with them. You don't buy a real estate with them unless they sell a bunch of houses. That's the deal, period. So get a high-quality, high-octane, high-protein real estate agent if you're gonna buy a property or sell a property, and then you'll have a good experience because you have somebody knows what the flip they're doing because it's not their first ride on the cabbage truck too.

If you're— if it's your first ride, you want someone's driven it before. Hello, not rode in the back. So here we go. Yeah, go to RamseySolutions.com .com/agent, and you can find a Ramsey Trusted Agent that we recommend. Real estate pros that we have vetted that are high-octane, high-protein, that get 'er done. Melanie is in Phoenix, Arizona.

Hi, Melanie, how are you? Hi, doing well. Good, what's up? Okay, I really want to buy a beach condo, and it's in Mexico. That's the thing, that's why I'm asking. I just want to know if I can justify paying cash for it. Do you have the cash?

I have the cash.

How much is it? $350,000. Well, that's cheap. Good. Well, no kidding. Okay, good.

Okay. And, um, what's your total net worth?

Ah, okay. Uh, oh, I didn't expect that question. I thought you were going to ask my income.

That's okay. My house is paid for.

My house is paid for, $600,000 or $700,000. My little condo's a couple hundred thousand. And then those, that's it for property. And then, you know, I have maybe, maybe, you know, that's the thing. My income is a little bit that, uh, but, uh, you know, a few hundred thousand.

And how much is your nest egg?

Pardon, pardon, the income is not a few hundred thousand. I know you're used to big rollers. My income's little, $60,000.

Okay, but your, your nest egg is how big?

Where are you getting the $350,000? From? Well, so that's interesting. It's actually from my father. It's, it's from my inheritance, and I thought it would be a beautiful thing to do with the money for the, all the kids and, you know.

Okay, so that's the total inheritance is $350,000, and you're going to put it all in a beach condo?

Well, I, I know that sounds terrible. Um, that was the house that, you know, but I, I do have a few, few hundred thousand that, you know, just making a little income.

How old are you? Uh, 64. Okay. All right. Um, where in Mexico, just out of curiosity, not that it really matters, but—

well, it does, but Puerto Peñasco. So really it's only an hour into Mexico. So you're driving the 3 hours in the U.S. and then you're crossing the border. It's 1 hour, 1 drive, kind of loaded with Americans.

So yeah, yeah. Yeah, okay. Now, if you just lost the condo after you bought it, is your life still okay? Yeah, yeah, everything doesn't burn down around you because you've got— you're pretty much in the same situation. Yeah, okay. I don't think you're gonna— I don't think you're gonna lose it. That's not what I'm suggesting. Now, in Mexico Mexico, American citizens are not allowed to own real estate. It goes into a Mexican trust. Okay? And the state runs the trust. It's a— they use a notary, and the notaries in Mexico are way different than a notary in the States. The notary in Mexico is like a big deal government job. And they build the trust out, and it's very complicated. It's like 73 pages., and it's crazy. And, um, you don't technically own the house. The Mexican government technically owns the house, and you're the beneficiary of the Mexican trust. Okay, right. Um, so it's a little weird, but there's billions and billions and billions of dollars of American money in these trusts in Mexico. The likelihood they're going to go through and take all these American monies away and not have an invasion from the north is very very low.

So there'll be a problem. Okay, so I'm not worried about it, um, uh, you know, uh, at all, uh, in terms of the— you being scammed or something like that, as long as you've checked out the particular condo you're going into, um, making sure stuff like the HOA fees aren't going to go through the roof and that kind of junk. Um, so, you know, make sure you got all that nailed down and that the condos—

the ongoing costs to make—

the ongoing cost to manage it may make the purchase price look small by the time you're through.

Mm-hmm. Well, I've kind of looked at it and it looks like— and I'm very conservative and usually push things up just because I don't like surprises— $12,000— I'm saying $12,000 a year for all the expenses and things like that.

And who's covering that? How are you covering that? You make $60,000.

Correct. But, um, so I was planning on renting it. So most people that rented, they were used to in the past years renting it like, you know, $50,000. Now it's way, way down. People are freaking out. They say now half of that, $25,000. But let's just say I really just want to use this for family, okay?

You want to cover the expenses with the rental and the rest of it's family use.

There you go. Yes, just, you know, just make what I can make and pay that.

Yeah, that's probably harder than the salesperson is making it sound. Okay. But it can be done. It can be done. Okay. I mean, I have friends with stuff in several different neighborhoods around Cabo and Puerto Vallarta and maybe even a few in Tulum and some of those spots. And they all get the pitch that the rentals are not easy. It's a process and it's basically a VRBO situation and it's kind of a pain in the butt, but you can make your expenses back if you lean into it a little bit. And you'll probably be okay. I think I would do it if I were you.

Oh my God, I told my whole family he's going to eat my lunch. Oh my God, I can't believe this. Holy Toledo. Okay. Oh my God. Okay, see, señorita. Okay, but, uh, wow. Okay, there is one little thing I will say is that just learn to say margarita and fiesta Okay.

Oh my gosh.

Okay, well, I don't really want to say anymore actually, because I don't want to argue with you.

I don't want to take a chance to change your mind.

I'm getting off the line.

I'm going to get off the line while I can. Goodbye. Yeah, I mean, adios, Dave. Adios, amigo.

Hasta luego. I'm heading to Mexico. Oh my gosh, that's so funny. But yeah, the emotional, uh, exercise of if you had the money there, and then it's gone tomorrow, are you still okay? And that's such a key point.

And these— It's not just an emotional exercise. It's also an actual, because if, you know, what people don't think about when you're buying something in a foreign country is it's not in the United States. People, the laws aren't the same, and people don't view the laws the same, and they don't view private property rights as the same.

And—

Oh, you were, okay, so you were— I'm not suggesting that the Mexican government is gonna jerk the rug out from under all of these tens of billions of dollars of American money.

No, I thought it was the exercise of put the money in the middle of the table and burn it. Can you— are you still okay?

I mean, if it goes down in value, it could go— that community could become cartel crime-ridden and the condo be not inhabitable. Right, right. That could happen. That could happen. That's more likely to happen than the Mexican government scarfing this under the name of socialism. But I just got back from Argentina, and 2 generations ago, the state came in and took private property away from everybody, left and right. And in the name of, you know, the little people needed the money, and so they took it away from the big people. Hello, socialism. And so we forget in America, because we've never experienced that, that that's pretty much commonplace in a banana republic. And so Mexico, I honestly believe, is very stable. I really don't think it's a bad investment. I think you'll make some money. Money. But you need to stop and think that this is a different culture. It is not Anglo, it's Latino, and there is a difference in the way people think, and there's a difference in the way the laws are written, the way the government functions, everything. And so the police force, everything's different. So you just need to be aware of that and embrace those differences, enjoy the differences, but don't go in there naively like, I bought a condo in Mexico and it's the same thing as buying one on 30A in Florida.

It ain't. Yeah. It's different. And so's the rentals.

deal money problems and figure out what to do next. Now you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to ramseysolutions.com and try Ask Ramsey today. That's RamseySolutions.com. Our scripture of the day is Psalm 113:3. From the rising of the sun to the place where it sets, the name of the Lord is to be praised. William Arthur Ward said, opportunities are like sunrises. If you wait too long, you miss them. April is with us in Lynchburg. Hi, April, how are you?

Hi, I'm good. How are you?

Better than I deserve. What's up?

Well, I, I was curious about how to prepare financially for our child that's on the way. Hi, um, so basically I was working and then in November we had a miscarriage, and so I decided to take some time to heal. And so I wasn't working when we were expecting this child that's doing 2 months now. And so we're just relying on one income right now, and we have our monthly mortgage of $1,000 $1,787, and the monthly income is about $3,000 to $4,000 depending on if my husband's able to work extra hours. So we're just trying to be in a better position. Um, we have used some of the tools that you have, like the EveryDollar app, to get out of debt. We just have, um, $7,000 in debt right now for an HVAC system.

Besides the mortgage. Congratulations on the baby, April. Um, and you're due in 2 months? Yeah. Okay. And how old are you guys?

I'm 31 and, um, he's gonna be 36.

Okay. All right.

What does he do for a living?

He works for Prepress, so it's like a printing company. He makes about $24 an hour.

And what were you doing, uh, before you took time off for the child?

I, uh, I was a career navigator, so I would help people, um, figure out what type of positions would be a good fit and help them get into training.

Okay. And what were you making doing that?

It was similar. I think it was about $21 or $22 an hour. Mm-hmm. Okay.

Mm-hmm. All right. Um, are you planning to go back to work after the child comes?

Uh, not immediately after, just because we don't have childcare.

Um, well, you don't have enough money coming into the house to pay this house payment. Yeah. Your house payment is, on his income alone, is not something you're going to be able to do. You could pull it off for a few months, but It's not going to work over the next 3 years. You're going to get yourself in a pickle. And so either y'all's income—his, yours, ours—is going to go up within the next 10, 12 months or so, or you guys need to start talking about selling this house.

Gotcha. So that's the other part. So basically, my mom Mom gave us $6,000 to buy down the interest rate when we bought the house 2 years ago. And then with this all happening, she contributed some more money for us to be able to finish the basement. And that's what we were going to use to help us with like extra income, but it was supposed to be finished in March and it's still not done.

Yeah, I would, I would be pausing any type of renovation and I just would make sure the mortgage is paid and there's food on the table. I think that's your priority versus finishing the basement. Yeah, okay.

You can't afford $1,800 a month with $3,000 coming in. That doesn't work. It can work for a little while, but it will not work long-term. And so if you're making the decision to stay at home, you're simultaneously making the decision to sell the house unless his income is going to go up dramatically in the next few months. Months, and I don't think it is.

So what would you say? How much income should we—

your house payment ought to be a fourth of your take-home pay, not more than half, and this is way more than half.

Yeah. Okay, gotcha. So either I, I go back to work once the baby's born, or he He told us it's a different type of position or additional income. Yeah.

And, you know, he's gonna have a lot of extra hours somewhere. Or y'all sell the house. I mean, it might be more important for you all to be— for you to be at home with a baby than to live in that house. I don't care which one you do. I just am not going to participate in you being in denial about this math. I want you— yeah, he needs to be making— I want you to face it head-on.

Yeah. I mean, around $6,000 would get y'all to that good place. Place from an income perspective with that type of mortgage. So if that's through you doing some work, right, after maternity leave and all of that, or his income going up. But yeah, it's gonna be, yeah, I mean, if he brings in $3,000, April, right? And it's a $1,700 mortgage payment. Yeah.

It's not a lot. Babies are the best thing ever to happen. Happen. But they don't get a pass on math. Okay. You still have to do math even with all the awesomeness of babies.

Right. And I'm sure the diapers are going to be expensive and other things too.

Yeah, that's probably not going to kill you, but it's going to put a pinch on everything.

Yeah, you'll feel it for sure. Yeah.

Yeah. But I'm— congratulations. I'm still happy for you. I still think this is awesome. I just want you guys to address this so that the house doesn't turn this financial situation into a nightmare.

Yeah, and your housing situation, April, I mean, even if you guys sold and rented somewhere for 3 years, that's okay.

It's not the end of the world.

Yeah, and then you go buy something later. Like, it doesn't have to be a home ownership conversation either, right? So, you guys wanna look at the totality of your life and say, "Hey, what are our priorities? What income will be coming in that meets those priorities? And then how do we live a life out of that?" That's kind of the backwards way of thinking about it.

And it's sweet that his mother gave you some money. But she gave you money, given this change of a baby coming, to put you into a trap. She didn't mean to trap you, but you're trapped. In the house, you mean? Yeah, I mean, if you don't— if you can't sell it because Mommy helped buy the house, Mommy gave us the money for the down payment, so Mommy—

or no, toward the interest, she said $6,000 toward the interest.

So we can't get rid of it because Mommy is— you know, we're locked in here relationally, but Oh, then Mommy, Mommy isn't a blessing then if Mommy's trapping you into a nightmare. No. So sorry, Mommy. Marcus is in Clarksville. Hey Marcus, what's up?

Hey Dave, thanks for taking my call. Longtime listener for Some Color. Great. I just, I want to hear from you. How you doing, Dave?

Better than I deserve. What's up?

Yeah, I love it, I love it. Hey, so I'm active duty military. I am retiring medically after 12 years, 4 months in 14 days of active duty service. Uh, we are moving from Clarksville, Fort Campbell to Florida to be an assistant pastor. Our monthly take-home pay is going to go from $12,000 to just over $7,000. Uh, we are wanting to buy a house, but my wife and I are at an impasse. She wants a big house with a large mortgage and a low interest rate. I want a small house with a low mortgage with an average interest rate. Rate, what should we do?

Well, you don't have a choice on the interest rate. Both are going to have an interest rate. That's— I mean, big houses don't have lower interest rates than small houses.

So are you thinking like a 15 versus 30?

Well, no, I'm meaning, uh, the lower interest rate would come from a brand new build, uh, that the builder would pay the incentive at a 3.99% rate, whereas the national average I think is mid-6%. So 3, basically 4% versus 6%, uh, 6%.

They're buying down the thing 4% on the whole package for the entire mortgage? Yes, sir. Yes, sir.

On an arm? It would be at $350,000. Is that an arm? Um, versus— what's that?

Is that an adjusted mortgage?

No, no, it is not an arm. It is not. No, sir. That is for the length of the loan.

Hmm. Wonder if they're getting desperate.

That's some, uh, there's some serious margin in this house. Average rate. Yeah, this guy's writing a large check with an average rate.

Yeah, he's right.

The builder's writing a large check, so this thing's got a lot of margin in it, a lot of profit in it. Okay, $350,000. Um, and then you're talking about buying something else. Now, do you own a home there in Clarksville?

We do, yes sir.

Yeah, and so we have I would recommend doing neither one. I'd recommend moving there and renting for a year and continuing the discussion until you get on the same page. The page you're trying to get on is not the size of the house. The page you're trying to get on is how much debt we're gonna be in and how long it's gonna take us to pay it off. That puts this hour of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.