Transcript of Discipline With Money Leads To More Control New

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Normal is broken.

Common sense is weird.

So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, it's The Ramsey Show. I'm Jade Warshaw. Next to me, Dr. John Delony on the ones and twos.

Let's get it going.

All right, going straight to the phone lines. We've got Ryan, who's in Tacoma, Washington. What's going on, Ryan? How can we help today?

Hi.

Hi.

I'm calling on behalf of my father. I'm very concerned for him. He's 79 years old and he's very financially gullible. He has just been recently scammed out of $3,600. The transaction just went through yesterday. I stopped a scam last year. Uh, there was— that involved him. He has a timeshare, of course, in Mexico that he was contacted about, and somebody wanted to buy it from him. And he's getting a call from somebody claiming to be a bank manager in Mexico that has an account with a large amount of money in it. And he's believing everybody, but he's not believing me. And I'm so concerned for him. He's, he's a widower. Um, he's alone home with his dog and a little bit lonely, and he just— I'm trying to find a way, and I'm calling for help. Are there resources available to me that I can help my father see that this is a scam, that these things are not true, that it is too good to be true? Um, the one that he was just scammed out of, he, um, was told he started an e-commerce business And it is a website. It's a live website.

And he gave these people a large amount of money to build them this website where they will basically put up these products and then they'll get shipped directly to, and he can sit back and just comfortably gain 30% profit margin on everything without leaving his chair.

Does he recognize the scope of this latest scam?

I still don't think he does. I, I, He's concerned. He's been very quiet about it.

Yeah.

And he, he's— I think he's a little embarrassed, but he won't be completely open with me.

Okay. Have you ever, have you ever been scammed?

No.

Okay.

Um, no.

Have you ever made a mistake? And here's what I'm looking at, looking for. Um, I— there may be resources, but I, I can't think of a better resource than a father's, uh, like the love of a son for his father. And so there, I don't know, there's gonna be a website or a, a new article, like the scams against aging, our aging population has increased so much. It's a multi, multi-billion dollar business and they're robbing seniors blind and you nailed it. It's a group of people who are increasingly lonely. Don't have resources and who are being fed rage and anger and fear all day long. And then somebody comes along and says, hey, I can give you a bit of this, right? The reason I was asking if you've ever been a part of a scam is for your dad, nothing's gonna be more embarrassing than falling for something, right? And this same group of people who stole this $3,600 is gonna loop back with a different scam and say, have you been scammed? Give us $500 and we'll make sure it never happens again. He'll fall for that one too. Like this whole thing, like you're, you're working with pros.

Okay. And so if you have ever made a mistake with money, been scammed outta something, leading with that first is often a way to mitigate shame. It's why Dave Ramsey always leads with the story of, hey, I promise you I've blown my life up financially more than any of y'all have. It gives everybody else permission to say, oh, you had $4 million in debt. I just had $100,000 in debt. Right? So if you can sit down with him and say, I've messed up before, Dad, I've been buried under this stuff before this happens. And then the next step is, and he may not do it, would you be willing to, like, these kids with their computers are so good. Would you be willing to, um, give me financial power of attorney? Would you let me pay your bills for you? And he may say no way, no how. And I know a lot of aging dads have a lot of ego and a lot of pride still, um, but I, I don't know another way around it, brother. We're hearing this more and more and more and more and more.

He did put me on his account, um, so that I could help him with that stuff. But in that, I set alerts, which, you know, he went to the branch and pulled $3,600 out cash. And I said, Dad, what's the cash going for? It's for his business account. He had to go deposit it into a Chase account for this business. And I said, Dad, nobody does business like that.

Yeah.

Nobody takes cash from one account. You just completely severed any line of traceability to this.

How much money does he have access to, your dad?

Well, his bank account, his savings is, as I see it, nothing in his savings, but he has a monthly pension and Social Security amounting roughly $4,500 a month.

And does he have a nest egg anywhere else?

That I don't know. Um, I think he's got an investment account. Um, you know, and he, he keeps getting this call from these, these people. And, and, and you're right, John, they are absolute pros and, and they, they, they keep They let a certain amount of time pass and they'll call in and, and, you know, hey, you know, we've got this account. I'm a bank— the last one was, I am a bank manager from Santander in Mexico City and we have this large amount of money.

Sure. Yeah.

Yeah.

Is, is there—

nobody does that.

Is there— could you get through and say, hey dad, I've been reading about a lot of, um, people with pensions and Social Security getting a lot of calls from all over the country, all over the world, um, with people trying to scam them, scam them out of their money. Um, would you be willing to like it, not make it about, hey, I heard you got scammed, but hey, I hear this is going on and they're preying on people like you. He might say, that would never happen to me. Who knows, man? I'm just trying to think, Jade. I'm trying to think of ways to connect relationally here.

Yeah, that's a good idea. 'Cause I was thinking about even if he has friends or people that are in his circle that maybe he does listen to, and you start with those guys and say, hey, I don't, this is big in your age group. Are you guys dealing with this? Because if you are, my dad's dealing with it. Maybe you guys can talk some sense into him because at the end of the day, yeah, you can do all the things. You can freeze credit. You can, you know, make sure your name is on the accounts. It already sounds like it's that way. But until you really have, um, it sounds like until you have full control over this and you're more so distributing money to him, um, sadly this could continue to go on and it's huge. John, you hit on it before, but the latest statistic is adults 60 years old and older have lost $3.4 $4 billion to scams in a single year.

Yeah.

Like in a single year. That's crazy. So maybe I, I don't know what kind of guy your dad is. Maybe he's an analytical guy and it's just like, maybe you print out some crazy stats and you just slide it over on the table and say, hey, just read this. Just please read this. And, and it's not you talking, but you let somebody else do the talking for you. Maybe you send him this episode and you say, dad, I was really concerned. I called, I called a few experts just to see, and what they said really bothered, like it was really troubling me and I, I wanted you to hear it too. And so Ryan's dad, if you're listening, you gotta let Ryan help you out. This is a— this thing is bigger than you.

And for all aging parents, yeah, it's bigger than you. If your kids come to you with some expertise or some care and love, man, let them love you, right?

Let them love you.

They're not— they want nothing for you but to help you. They gain nothing for it. And remember, the scammer is the one asking you for money, not your— not your sons and your daughters who are saying, hey, please don't do this thing.

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Back to the phone lines where we have Amanda in San Antonio, Texas. Amanda, how can we help out today?

Hey guys, um, I'm calling to, to get some wise guidance on what to do in my marriage with our finances. My husband is pretty irresponsible with spending on a daily basis, and nothing seems to change for a long, like, a longer period of time. And my next step for what I thought is to separate our finances and just ask him to pay a portion of our bills to me so I can handle our finances a little more responsibly. Um, I just don't know if that's the, the best next step.

Um, what do you mean when you say he's irresponsible? Like, tell us what those behaviors look like. What was the most recent thing he did that you would say, man, that was just so irresponsible?

Yeah. Um, so, um, mostly, um We're averaging $50 to $70 a day, uh, between 5 and 7 days a week, um, spending at gas stations.

Um, Mountain Dew and Corn Nuts. That's it, man. He's getting a drink, isn't he? He's getting a drink and a snack or like a sausage biscuit. That's what he's doing.

Well, yeah, it's, it's, it's breakfast, it's energy drinks, and a lot of it is, um, those liquid kratom shots.

Oh yeah, so number—

that's next level.

Yeah, I've, I've got a close friend who went through a gnarly kratom detox. That's the issue here.

Yeah, yeah, it's definitely, I think, an addiction at this point. Yeah, you know, I bring up my feelings about it, but they change for 2 days and then it goes right back to where it was.

So yeah, um, John, real quick, explain kratom for folks who are listening who don't know.

It's just a, it's, I considered it, I mean, in the same way, I won't even go down that road. It's something you can get at a gas station that alters your mind.

Yeah, it's a plant that is an ingredient in things that it's addictive just like any other substance. But a lot of people don't know that it is when they buy it for the first time.

Anything, if you ever go to a gas station to try to feel better, that's your first signal, probably not a good idea. Where else in your life is he not showing up for you?

Um, well, I think a lot of it is kind of trickled down from the kratom thing. I think it's, you know, frustration caused by that. I think it's, um, you know, just lack of intimacy as well caused by that. Um, but you know, it's just, it's, it's something every 2 weeks. It's a new obsession of I want to buy watches and now I want to buy Pokémon cards and Um, we're just draining money. Like there's, there's a nail on our tire. Yeah. We can't seem to keep it filled.

So I, I want you to treat this, um, this might be a, a, an, what I would call, uh, it might be an overcorrection, but I want you to treat this as though he has an alcohol addiction. He is regularly consuming a substance that is altering his ability to show up for himself and his marriage. And that is costing a bunch of money. It's causing relational conflict, it's causing relational disconnection, all that stuff. And so anytime you're sitting with somebody who is struggling in any sort of addiction, what you can control in that moment is you. And it's you saying, here is what I'm going to do next. And yeah, I, I would advocate for you right now to get your own checking account and to make sure you've got your bills paid and make sure you've got your house, your roof over your head, and make sure you can afford your own counseling bills because this is a bigger issue than the $50 or $75 a day. Um, he's blowing at gas stations, right? It's a much bigger issue. That just— that's just one of the alarm bells going off.

You had— do you guys have kids together?

Uh, we do. We have 3.

Okay, what are their ages?

Um, 8, 4, and, uh, 10 months.

Okay.

Is he still showing up at work?

Yes.

Okay.

Um, he He took a pay cut at the beginning of this year, you know, but loves his job. So that's, I guess, better than making more money and hating your job.

But, well, for a short time. But do you have— do you have— do you work outside the home?

I do. And my concern with having our bills split proportionally to what we make is that I make more money than him and I don't want him to feel less of a provider.

That ship is not about that at all. That ship has sailed. We're solving for safety. We're not solving for feelings right now. We're solving for safety.

And I think it's good that he knows that, "Hey, you've put us in a situation where I can't trust you." Yeah. And therefore, I have to be a woman and make sure that I'm keeping myself and the kids safe. And the way that I can do that is I can keep this money aside and I can use it to pay the bills, keep the house running. And when you're ready to get the help that you need, I would love for you to come back into the marriage and be a participant again in a healthy way. And I think that's just you saying what you're gonna do and controlling what you can do. And, and there's no apologies given for that because he's doing what he's gonna do, right?

Yeah.

And, and, and be forewarned, anytime you put up a boundary like this— and by the way, this sounds like a boundary to re-establish connection down the road.

That's right.

And to keep you safe. So it's not like you're like a, like an immature 26-year-old, like, I'm cutting off my parents because they gave me a curfew when I was a teenager. You're not doing that.

You've talked— yeah, because you told them bridge to come back on. You've said, that's it. When you are able to take responsibility, get the help you need, I, I'm happy to have you back.

Basically.

That's it.

We're all back in. Expect him to run full force into this boundary with everything he's got to see if it will hold. And if you give him, I expect this much money for rent, I expect this much money for bills, and he stops paying you, you're gonna have to, you're gonna be forced to say, okay, what next? Am I gonna hold the line here? Is he gonna have to move out? Um, like you, you go ahead and set that stuff up in your mind because he's gonna test those, these boundaries and see if they hold.

What do you make every month, Amanda?

Um, I make about $4,500.

Okay.

And what portion?

After tax.

Okay. After tax. And how much is the rent or mortgage?

Um, well, our, the house we just bought is, uh, $2,150. Okay. Um, And we're currently staying in half of a duplex that we own, and the remainder to cover that mortgage is about $500.

Are you renting out the other side?

We are, and we have renters lined up for this side when we move out in a month and a half to go to the new house. Correct.

Was the duplex another one of his scams?

Uh, no, no, I think it was a wise investment.

Okay, okay. Um, what about daycare? Do you pay for daycare?

Yeah. Okay. Um, we, we do pay for daycare. Uh, it's about $20 or it's $230 a week for our one, one child that's in daycare.

Okay.

When you say it's a wise investment, What are you going to clear after both rents come in on the mortgage and the insurance and the upkeep?

Yes, we clear about $900 a month.

Okay, so that's enough to cover daycare basically. And does that come to you? Are you able to get access to that money before— basically grab access to that money so you can make sure it's getting used to keep the household running?

Um, so some of it, um, and a portion of it is from like Section 8. Okay. And that goes to our joint, joint account. So I have access to that though.

Okay. And I would make sure that you, you keep that access because what I don't want is anything to come in the way of you being able to keep a roof over the heads of your children, them getting to school and daycare so that you can go to work. This is a four-wall situation. So let me just back up and explain. When you're up against it financially, there's four things that you need to be in control of. And prioritize. The first one is, yeah, you gotta keep shelter. So you gotta make sure you're able to pay the rent. You've gotta keep the utilities on. That's number 2. You've gotta make sure there's food, right? You gotta eat and you gotta make sure there's transportation. And in a close 5th, Jon, is things like daycare, insurance, making sure that those things are going. So that's your top 4, and then 5 and 6 that I would throw in there as well. And if you can just keep that ship running, and like Jon said, enforce those boundaries, I mean, this is not gonna be an easy season ahead, But I think for you, finding those areas of the things that you can control and the things that you can be responsible for when you put your head down on your pillow at night, that's going to be life-saving for you.

And to know that you're going to be mama bear with these kids and say, hey, there's a lot of crazy going on, but I am like the source of like steadiness and peace. That's the best that you can do for yourself and for your kids right now.

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All right, right back at it to James in Detroit, Michigan, the Motor City. What's going on, James?

How you doing?

Doing good. How can we help?

So my question is, uh, so about 2 or 3 months ago I kind of found the Dave Ramsey Show and I like what you guys preach, uh, as far as like working as a team. I'm married and I have 2 kids and, um, just lately I want to pay off debt and I got my wife on board. Um, I'm a police officer, um, and I just got a second job as well.

Great.

And, um, I got the So we did Baby Step 1, we're working on Baby Step 2. The only confusion that I have, and I don't know if there's a difference or not, is do I use those extra payments and as soon as I get paid, do I put that towards my smallest— sorry, I'm forgetting the word right now.

That's okay.

If I put that towards the smallest debt right away, or should I save up to an amount? So like say it's $10,000, do I put that— do I save up $10,000 and then pay it all off at once?

No.

Like you— okay.

No, you can do it as you go along. You can do it as you go along. So let's say, what month are we in? April. So let's pretend that for April you've paid all of your minimums, you've satisfied everything else on your budget that you need to satisfy, and you've got $500 left, you would then say, all right, just like I budgeted and just like I planned, I'm going to put this extra $500 on my smallest $10,000 debt. And now it's $9,500. And then you just go along like that. And the reason for that, at least in my mind, the reason for that is, number one, each payment that you make, it's, it's more exciting for you, right? Every time you pay down that debt, you're like, yes, I see the balance go down. You get like that shot of adrenaline. You're feeling good about yourself. And then the other reason for that is simply just kind of like, I'm going to just say natural behavior, which is when you start stacking up a pack of a pile of money that's just kind of over to the side, your brain wants to spend it on other fun things.

And so just hurrying up and assigning that and doing what you got to do, it kind of keeps you from, you know, being left to your own devices with that money.

And I'll throw in a third thing. If you get that payment down to $9,500 or that, that balance down to $9,500, that next month you're only paying interest on $9,500.

Yes.

And then the month after that you're only paying interest on $9,000, right?

So is it—

otherwise you're going to pay interest on $10,000, $10,000, $10,000, $10,000 until you accrue that. So the actual amount of interest you're paying goes down too.

And, and, okay, and just for the larger audience, what we're talking about here is the debt snowball method where you're listing all your debts smallest to largest. And make sure that you're doing this, guys, um, by by the balance, the full balance, the full amount owed. Don't list it by monthly payment. Certainly don't list it by interest rate. It is by full balance. And then of course, in the meantime, you're paying minimum payments on everything and you're throwing any and extra, any and all extra money at that smallest debt. And to James's point, we're going to do it as it happens. We're not going to wait and pile up that lump sum. So it's a very good question, James. Thank you for that. We've got Crystal, who's in Sioux Falls, Iowa. Hi, Crystal. How can we help today?

Hi, um, so my husband has been following you guys since he was in high school. We're 25, so for about 10 years, and we've both been living the Dave Ramsey lifestyle. We have no debt, um, our net worth is just shy of $690,000. Um, we own a home outright that's worth about $170,000 to $180,000, and we're buying some land to build a home, and we're just trying to figure out if we slow down on maxing out our 401(k)s, which we've been doing, to save more money to pay cash for that, which could take some time? Or I guess, what's the best option? Do we slow down on our 401(k)s to save more money and pay cash, or do we take out a construction loan? Or what's your advice there?

How much are you investing? Is it beyond 15%?

So my husband is maxing out his 401(k), which I'm not sure what it is right now, the $22,500, whatever it is. And I am— we're both doing Roth 401(k)s. Kase. And mine, I'm doing 60% of my income, which is the most that I can do.

Okay. So I mean, you could, you could essentially play this like, hey, we're going back to Baby Step 3B because I'm in you guys' situation. And I, I should probably ask, how much is it that you're trying to save up? What's the, what's the dollar amount?

So, and that's the thing, we don't really have like a set dollar amount that we're wanting to save up to. So we're buying the land in the next probably year and we have the cash for that right now.

Okay.

So it's mainly just saving for a building, which probably between $500,000 to $600,000. So I mean, realistically, yeah, I mean, realistically, it could take us, I don't know, 7 to 10 years to save that up in cash. I'm not exactly sure.

And you're going to sell the current home, so that'll be part of it, right? The one that's worth $180,000.

So, no. So our plan was to actually turn that into a rental.

I mean, you could, but it's going to cost you a lot of time. I mean, that's almost $200,000 there tied up.

So, yep.

What I would do, I would, first of all, we can't make a plan if we don't have real numbers. Or at least, right, you know, as close to—

this is how things get way out of hand on a, on a, on a build.

Yeah, we need, I mean, we need a budget. You guys get to set the budget and say, this is how much based on our research, based on our numbers, based on our timeline, we are spending $450,000 or we're spending $550,000. So I think that's thing one to this entire question, because then— so let's pretend just for the purpose of today, let's pretend, hey, the budget is set. It's $550,000 that we are spending on this build. Okay, now how do we get the money? Well, I personally, I'll tell you the truth, with what you guys have accomplished, I personally would have a lot of a hard time going into debt again. That being said, we don't— We don't poo-poo on folks for going into mortgage debt if they do it the right way on a 15-year fixed rate mortgage where the payment is no more than 25% of their take-home pay. Okay. Like, let me start by saying that that's what we suggest. That's what we would tell most folks to do because most folks don't have the money to pay outright for cash, which is technically the best way you could buy a house. Okay.

So I want to say there's nothing wrong with a mortgage. But in your case, I kind of feel like it might feel like taking a step back. You tell me if I'm wrong.

No, for sure. And that's kind of— so my husband and I are kind of on two pages. My husband would like to save up the cash, continue maxing out our 401(k)s and just, you know, slowly build up our cash. And then, you know, a year or so before we are estimated to have that cash, kind of start that building process.

Yeah. What's the timeline?

My concern is—

what do you need to have? What do you want to have it done by?

So like he says, like 2035. So that's like 9 more years. Oh, my concern. Yeah. So my concern though, this is where the discussion comes into play. So the current home we're in, that's worth the $170,000 to $180,000, is a 3-bedroom, 1-bath. We have no children at the moment, but we're hoping to start a family soon.

Okay.

And the kitchen's quite small. We have one bathroom. And so, I mean, like, I know it's doable, but my concern is I work from home and also, that's true. I work part-time from home.

I hear where you're going, Crystal, but you, here's the thing. We're just setting up an idea, a plan today. You can always reassess it, right? You can always, because the truth is there is no baby yet. There's no inconvenience yet. It hasn't caused you a problem working from home yet. So what I think you can do is look at this and go, okay, Let's set the plan first of what our ideal situation is and what the smartest play forward is. Then we can start to factor in, okay, here's some things that might cause that to affect our timeline. And then you can start making contingencies for that. So what I would say is, okay, $550,000 is what we're spending. We've got a 9-year horizon. Are you okay with 9 years or are you thinking more like 5 years?

I'm, I'm thinking closer to 5 years, but I just don't think we're going to be able to have like the 100% complete amount of— I think if we probably sold the current home we're in because we have the cash.

Yes.

Most of it at least.

And I like that for you. I think you run out. I think you run out both of these scenarios in your mind and with your husband, Krystal. I would do a 9-year play and I would do a 5-year play. Obviously the 5-year play would cause you to sell the current house that you were going to use for a rental. And then I would say, well, what happens if being in this house with a kid does start to pose a problem? Then maybe instead of taking out out a mortgage for, you know, $400,000, you're only taking out a loan for $150,000. Do you see what I'm saying? So you have options. This plan can morph over time, but I want you to start with a plan and start with an end in mind, and then you can make changes from there.

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All right, today's question comes from Denise in South Carolina, and it's a good one. Denise writes, I'm 76 and I have two children, a daughter that's 45 and a son who's 47. My will divides my assets equally, which is how I want it to be structured. My daughter is and always has been irresponsible with money. I'm now considering putting her share, about $500,000, in a trust to provide an income for her without giving her access to the principal. Is this the best way to provide for her, or should I just let her have the same payout my son will get and let her blow it all on concert t-shirts? Number one, don't hate on the concert t-shirts.

I know.

It's okay. I've got my own opinions on this. What do you think, Jade?

I think that it's her money, meaning it's the 76-year-old, it's Denise's money, and I think she knows her children, and I think she gets to decide how she's going to divvy it up. And if she has discerned that one of her children is responsible with money and can handle it, you know, being dispersed to them and that the other needs a little bit more guardrails, I think that that's her choice to make.

Yeah. You get to do what you want with your money.

Because you don't want it to be harmful.

Right, right. And the challenge here is I've gotten this question before and someone's like, my son is an alcoholic or my daughter struggles with drug abuse.

Right, right.

And this is one, I just don't like how she spends her money. She buys concert t-shirts and whatever.

Yeah.

And I'm sure, I know she's playing, but, um, you get to do whatever you want with your money. And that means if you're gonna take that responsibility, you have to take responsibility for being honest about what your plans are with your money before you pass away.

Yes.

And that means you have to be responsible for your daughter getting mad at you and not liking you.

Yeah. Don't let this be a surprise from beyond the grave.

Yes.

Otherwise you're son, who I'm assuming is responsible, um, gets all the blowback here. Mom's always treated you different, you know? And so your refusal to have this hard conversation about what you're doing with the money and how you're structuring it will, will like make in concrete that your son and daughter will never have a relationship either.

Mm-hmm.

Don't do that to anybody. And so if you're gonna have the courage to say, this is my money, I'm gonna spend it how I want to, great. I love that. And that means, is have the courage to do the relational hard thing, which is tell the truth. I like the idea of saying, here's what I want this money to go to. Um, and if you wanna put it all in a trust and say, I'll pay off both of your mortgages, I will like put this in retirement, I mean, in accounts for kids, cut your kids' college, for my grandkids' college. I like that. But, um, again, it's your money. Do what you wanna do with it.

Mm-hmm. Mm-hmm.

All right. I think that settles it. I like that response. Insurance. Let's go to Alex, who's in Tampa, Florida. Alex, how can we help out today?

Yeah, thank you guys so much for taking my call.

No worries, how can we help?

Yeah, so me and my wife are expecting our first baby in the middle of June, so pretty soon here, and we are currently on Baby Steps 5 and 6, and I just had a question as to what the best way to manage handling both of those steps are, um, while being proactive with both but putting one in front of the other. Um, we're definitely trying to get the house paid off soon, but Mm-hmm. Also wanna, uh, be able to set our son up for, for, um, a good life.

Yeah. I mean, obviously for those listening, Baby Steps 4, 5, and 6 are to be done simultaneously. So Baby Step 4, you're investing 15% of your gross income every single month when you get it. At the same time, you're also putting aside a designated amount, whatever you get, whatever you decide, uh, for furthering your kids' education. And that could be in an ESA, that could be in a 529, that could be, you just throw some money in a brokerage account. It's up to you. And then also simultaneously, you're denoting an amount that you're going to put extra on your mortgage. And again, with that, you get to decide how much and you get to decide the frequency on which you apply that money. And it doesn't always have to be the same. I like patterns. So, you know, I like to set up a recurring pattern. But Alex, for you, you don't— you can do this the way you want. So are you telling me that Tell me right now what the plan is and how you're thinking about changing it.

Yeah, so I, I mean, I think the plan is to just put, um, obviously, you know, an extra like $2,500 towards the mortgage each month, and then, um, you know, probably, you know, a few hundred dollars every month towards, uh, like a 529 plan.

I love that. I love that. Why does that bother you? What are you concerned? There won't be enough money for education?

Yeah, I think coming up with the amount to do, um, each month for like a 529 or for, you know, um, the baby in general is, is kind of a hard thing. We've been trying to come up with like a number, and I think that's one, one area we've been getting stuck with.

I mean, for college? Yeah, yeah, just, just take a million dollars and know that will probably cover semester one and books, right? Like, yeah, who knows what it will be in 20 years, right? Or 18 years.

There's some projections that you could run if you wanted to get super nerdy, but to John's point, it's still extremely— I mean, it's unknown, right? All of that's a big guess, but you could run out some projections and say, my kid's going to go to college and I don't know, I'm not going to do the math, but in 2040, what will the cost of tuition be then? Right. You could do some things like that and run it backwards. But then there's also the variables of you might have kids that aren't cut out for college or they want to do trades or they start their own business when they're 19, or they start implanting chips in our head in a few years.

Right.

Or we've all been beamed up. Like, there's a lot of things that could happen by then. So I think what you're doing, let me just say, I think what you're doing right now is working really well. And I think you continue to ride that train and unless you look up and you go, oh my gosh, it looks like he's looking like the type of kid who's going to go to college. Let's, let's amp it up a little bit. Right? Whatever the plan is, you can always make, make changes to that plan. And I think, I think that's the biggest part of this question. I don't know about you, John, but I feel like the biggest part of college, more so than having the amount set, I think conversations about expectations trump dollar amounts any day.

It does. As a planner who lived inside the college system, I came up with a number that I wanted to try to hit. And then I, regardless of what college costs are going to be, this is the number I can come up with. And then I, my son's just turned 16. He's a sophomore. We had con— big conversation. We have conversations all the time, but we had big conversation about 2 months ago.

Uh-huh.

In 2 years, regardless of what the cost is, this is what we're gonna have.

Yes.

And we even went down like as far to say, if you get this on your ACT and you get this much scholarship, I'll write you a check for this much when you graduate.

Yeah.

Right. You said it.

So like, I'll, I'll, yeah. So it, it's just being honest and, I, I'm in a fortunate situation. If you're in a situation where that number's $10,000 and I, I'll be able to come up with $10,000.

Yeah.

Tell your kid as early as possible, this is what I will have to contribute. And so if you don't wanna pay anything, then we're looking at 2 years free community college and we'll figure out the rest.

Yes.

You're gonna have to work 2 jobs, et cetera. Or like, so it's being honest about all of it.

Yeah. I, I love that. And that's exactly right. Even if you have $0 to put aside, my parents, and I've told this story before, I'll tell it again. They told me early on, they were like, hey, you don't have a college fund and we're not taking out student loans. Like, we're not taking out Parent PLUS loans and you're not taking out student loans either. And so that told me it was like, okay, I have scholarships. And they told me, they were like, you better be good at sports or you better be smart, basically, because you're getting scholarships. And that, that seed was planted and that was what I worked towards. Now, I was an idiot and I took out student loans just to pay for life. Yeah, but I had full rides to college.

Yeah.

Um, and so the point here is talk to your kids early and often about whatever the plan is for college. If you don't have money and you know you're not gonna have money, set the expectation, hey, you're going to community college because college choice is the number one factor for being able to go to school and go to college debt-free. So you're going to community college, you're going to a state college, you're working, you're doing work-study. We are not taking out student loans. You're getting scholarships. This is the way it's going to be done. And if you do that, they're going to then morph their life to go down that path as well.

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Welcome back to The Ramsey Show in the Fairwinds Credit Union studio alongside the incomparable, the fabulous, the lovely Rachel Cruz. I'm Ken Coleman, so excited that you've joined us here on The Ramsey Show today. And some of you are going, we are not Jade, we're not— what happened to Jade and John? And I have great news, they're both healthy They're right out here to my left in the lobby of Ramsey Solutions. We got a camera on them so that the audience who's been watching or gonna watch— oh, there they are.

There they are.

They're okay. They're safe. They're sound. And Rachel and I— We should have them in here. We should. Rachel and I just, I mean, about an hour or so ago, landed from Los Angeles.

Yes, we had an event last night in Seal Beach. We learned that—

Yeah, close to LA. Cape Cod is not LA. Seal Beach.

Seal Beach.

Outside.

Yeah, close to Anaheim, but had an event there. Last night. Awesome crowd. So fun.

Phenomenal.

It was kind of our last tour stop of doing Ramsey Show Lives, which was so fun. And yeah, we got up early, early, early and landed and we're back in the studio. And because we made the efforts and the intentional decision to do that, because we have some bittersweet news to share with our audience, Kim.

We do. We do. So, there's no other way to say it than just to say it.

Yeah.

But today, Today, this show will be the last show that I host of The Ramsey Show because my season at Ramsey is over and it's been a phenomenal season. And let me just be very clear. I am doing what I have coached people for many, many years to do. When an opportunity comes to you, you should listen and then you should weigh it. And you should weigh it based on, is this something something that I believe I have the talent to do? Is this something that I can enjoy? Will I love this work? And then finally, does it create a result that I care about? Can I measure all of those things and say, okay, this is something? And then you have to ask, is this a challenge that will push me? Will it push me in ways I haven't been pushed before? And what's on the other side of that? And without getting all the details, because of right now I cannot get into the details, And it doesn't matter, but stepping in a completely different lane.

Yeah.

Stepping into work that is an extension of what I've done, but no longer in a public personality role.

Yeah.

And so, here we are. And I want to say, I had to tell Dave a couple weeks ago, and it was such a sweet time. We spent a couple hours together. And I told Dave, and I want the audience to hear this. This opportunity that I'm so blessed to take would not happen if it wasn't for Dave believing in me. And that's huge. And we've had so much fun and we've helped so many people. And so, as we began to discuss, "Okay, what does that look like?" Dave, in his grace and his goodness, said, "Finish. Finish strong." And so, here we are. And so, we flew—

Which is so weird.

That's very weird.

It's been a couple of weeks since we've known.

Yeah, but today's weird.

And today, yes. And it is. It is so weird. It's so bittersweet because from the bottom of our hearts, I know our team and John and Jade are— Oh my gosh. I know, I'm trying not to get emotional. I don't want to get—

I don't, yeah.

Let me see, hold on one second. I'm sorry. I know, hold on one second.

Yeah.

Everyone—

She's now, you're doing it.

No, I was going to say though, everyone is so happy for you.

Thanks.

We really are, Kent. We are cheering for you. You're gonna kill it. But we're gonna miss you.

How am I supposed to talk?

I know. It's— Ken Coleman is one of these people, y'all, that he's like— we've all said it. George, Jon, and Jade, and I, and Ken, we've been on a text thread for the last like, couple years, obviously. And the word that keeps coming up consistently, Ken, for you is the glue. We say, "Ken is our glue." Like, Ken, Ken, every personality loves hosting with Ken, this show specifically. Like, on our schedules, when you get the email for the week, and you're like, "Okay, who am I hosting with?" We love hosting with each other, obviously. We all love each other. But when it's Ken, it's safe. You're just like, "Oh, okay, good." He's like your big brother, and you're like, "Okay." When we're on stage together, he can have chemistry with anybody on stage. He's a masterful interviewer, which is what he did even before he stepped into a Ramsey personality role. He's so good at connecting with people.

And it is—

that is a gift, y'all. If you have been on stage with people that are awkward and hard to talk to, it's hard. It's awkward, hard to talk to. Jon's raising his hand out there. No, but Ken can bring the goodness out of anyone that he is with. And the fact that we've gotten to stand and sit beside him for so many years, it's gonna—

yeah.

You're killing me.

There is. There's gonna be a hole, Ken, and we're gonna—

we—

Thank you.

We're dearly gonna miss you.

Well, I never had a sister. Always wanted one. True story. I was 9 years old one day, I said to my dad, I said, "I really want a sister." And I've got two. Rachel, we've known each other a long time. And the other one is out there in the lobby, Jade Borschoff. I mean, just like, I love these two. They're so, so great, great women, great friends. You know, it's, geez, I didn't know you were gonna do this.

I didn't know I was gonna cry either. We're just tired.

So here we are. We got up at 4:00 AM this morning. We don't even know who we are. I do wanna say this to the audience because we're gonna continue the show. We're gonna coach people. It was one of the loves of my life outside of my family and my friends is to meet people where they are. It is, It's the highest honor to have someone open up to you. You guys know, to trust you in a public setting. My goodness. And the privilege to just be a small little encouragement to people is, uh, man, and to get paid for it. And, uh, it's just been such a high honor. And, and that's the honor to Dave and I. And I, I'll tell you, I, uh, Dave and I cried, and then I went and hugged Miss Sharon.

Because you should tell them what actually—

should I tell them?

Yeah, dude, because that's funny when he comes.

Yeah. Oh, this will be good. Now we can laugh together.

Yeah, yeah, this is good.

So I spent 2 hours a day, we just walked through it all And then I said, I got up, we hugged, and I said, "Can I go tell Miss Sharon?" And he said, "Of course." And so, he walks me into the kitchen, opens up the door from his— he's got this fabulous smoking room above his garage, and we smell like an ashtray. We've been smoking cigars. He says, "Sharon, Ken wants to talk to you." And she said, "Oh, I'm in my housecoat, Ken." I love that she called it a housecoat, by the way.

It is a housecoat. That's a Southern thing right there. It's not a robe, it's a housecoat.

And I said to her, I go, "Let me see that because I think that's the robe that Stacy and I bought you." And sure enough, it was.

Yeah, Ken bought Sharon this gift.

I gifted Sharon and Dave my favorite robe. Of course, that's what one does for friends.

And she had it on. And you know, I was like, "How serendipitous is that?" So, I came over to her and she—

we had a sweet moment and got to give her a hug. And she was just so sweet and so kind. And so, this is again, It's really, really bittersweet. And I'll say this, folks, sometimes you get opportunities, you don't know what God's completely up to. And I don't know how it's gonna all play out. But, you know, it's time. It's time to walk through it. So to all of you who've said kind things, emailed, so many of our team are out there, they're making me cry. This is crazy. I love all of y'all. And we're gonna take a quick break, try to get ourselves together, and then do the thing that we love to do, do, which is meet you where you are today and coach you up.

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Attorney advertising. Results may vary and no specific outcome is guaranteed. All right, we're going to go to Hunter, who's joining us now in Chattanooga. Hunter, how can we help you today?

How are you guys?

We're doing well. What's going on?

So I'm a bit conflicted on what I should do as far as paying off my truck. You know, I've been listening to y'all since right after I bought it, and I know y'all say to attack, attack, attack. Back at the debt. But my uncle, who is like another father figure to me really, he says that he thinks I should wait for at least a year or two to build some credit before I completely pay it off.

Oh yeah, so keep the debt around so your credit score stays, um, somewhat at, at a good score is what he's telling you, right? Okay. Do you know um, how a credit score is calculated, Hunter? And do you know why you use it, why you would need a credit score?

I mean, I know it helps with like interest rates, I feel like, on loans, but I don't know. I'm not a genius. I'm 20. Yeah, everything, right?

Totally.

Yeah.

So, so the way mathematically your credit score is calculated, it has to do all with debt. So it's all the different types of debt you have, how how you pay on those debts monthly, if it's on time, if it's not. I mean, all of it is centered around debt because you're right, they use that score when you go into more debt. So our line of thinking here at Ramsey is to live a debt-free life, to not have debt. So you don't need loans. You don't need to get a personal loan or another car loan. You don't need debts because you live on less than you make. You have a plan. And that is how you live your life with money is debt-free. Now, one hangup people have is a mortgage. And a mortgage is the one type of debt we won't yell at you for. But you can do manual underwriting. So you can actually still get a mortgage with a credit score that is undetermined. So people that don't have a credit score, you can still get a mortgage. So all of that to say, Hunter, if you are a person that says, "I don't want debt, you know, I'm not gonna be going into debt," then you don't you don't need a credit score.

You know, my credit score's undetermined. Now, if you have a mortgage, obviously, that will still come into play. But all that to say, yeah, having a credit score is kind of a moot point if you're not gonna live with debt. But if you wanna live with debt and you know you're gonna be getting loans in the future, then maybe you would need it. But how are you wanting to live, Hunter? Not what your uncle says and not what other people say. How do you wanna live with your money?

Well, that was my fault. I didn't— you know, I've been listening to y'all, like I said, since right after I bought the truck. So I definitely don't want that. I don't like it. And I was also going to ask, how would y'all suggest paying it off? Because I'm at just over $9,000 left on it, and I have probably $13-ish thousand total. Great.

Is that your only debt?

Oh yeah, that's the one that I—

nice.

Yeah, well, we would tell you to pay it off today when you hang up because you're still going to have money left over in savings, right? And so that would be completing Baby Step 2 since this is your only debt. And now, you know, you're on your way to Baby Step 3 completion. And, you know, there's just no waiting on it since you've got the cash. What a, what a wonderful thing to be able to do, right? You can just get it out of your life right now. What's your car payment every month?

Uh, I want to say it's $271.

So now that's $271 raise that you just gave yourself, right?

Yep. So, um, yeah, I think you can, um, respect your uncle, and I'm sure he is a good man, but when it comes to money, we just have different philosophies than your uncle. So you'll have to choose under which, uh, which one you want to choose. A debt-free life, or are you going to keep a debt around to keep a credit score to stay in the the business and the cycle of debt.

And because he's a father figure, I would tell you, you can honor him. You can say, "Hey, Uncle, this is what I'm gonna do." And since you guys are so close, he's gonna weigh in on it. And you can honor him and say, "Hey, here's why I'm gonna do this. And here's why I don't need a credit score." And you can explain that to him. And I think all he wants is the best for you. And it doesn't sound like he's not gonna be supportive. It's just that he has influence over you.

For you.

And so, the way to do this is to just honor him, explain it the way Rachel just laid it out in your words, and I think he'll be fine. And more importantly, you're gonna be debt-free and a lot more cash in your pocket as you start to make your way through life. How old are you?

Just 20.

Oh, man.

You're 20? Oh, yeah, Hunter. This is a lesson, and I will tell you, so many people listening and watching right now, in their 40s, 50s, 30s, are like, "I wish I had done this at 20." If you can just avoid debt, Hunter, and you just, and you have a plan, you start saving and investing and start working the Baby Steps, I'm telling you, you will be a multimillionaire when you, before retirement. Like, it's wild the numbers that can happen.

So, that's your homework assignment, by the way, Hunter. Go to ramseysolutions.com and click on the investment calculator. Super simple, but you're gonna be in that position and just start putting in some numbers, realistic numbers, and watch what Rachel's talking about happen before your very eyes. You're in great shape. Thanks for the call. Let's go to Dotsy. Uh, well, we just left that area of California out there. There it is, near Anaheim. Uh, Dotsy, how can we help today?

Hi. Okay, um, sorry, I've been waiting a long time. I'm so excited. Um, so basically, my husband and I got out of debt in February of this year. One of the reasons we were able to get out of debt is we switched over to CHM Ministries for our health insurance The only problem is they have a policy that if you are pregnant, your due date has to be after 300 days of being a member. Well, it turns out we're pregnant and our due date is before that time, so they can't cover the pregnancy and birth. And so my question is, how do we cash flow this? Because we just got the estimate from our midwives about what the cost would be and it's $24,000. Mm-hmm. Which is not something that I think we can handle. Uh, our due date is in October, so we have 6 months.

Oh, wow.

To kind of come up with a solution. I was thinking home birth. I'm a low-risk pregnancy, thankfully. So I'm thinking home birth, birthing center, something that's not a hospital, 'cause that's where the main chunk is coming from.

Okay, so just give us a quick update. If you were to not have the baby at a hospital, how much would come out out off of that total?

Yeah, so I checked one birthing center that I'm actually going to go to a consultation today. That would be around, uh, $8,600 for the entire thing.

Could you guys get $8,000, uh, call it $8,500 before October?

I think so. However, it's still with pregnancy, uh, I know Rachel knows this and you have, uh, kids, Ken, but with pregnancy, Um, there's always the risk, even with a low-risk pregnancy.

Sure.

Oh yeah, for sure.

I would have to be transported to a hospital.

Yeah.

And so how do we prepare for those, that emergency?

Yes. Well, what I would say first, Dossie, is, is we want you and your baby to be safe. So whatever that looks like for you all in a situation is you need to, you need to go forward with the safest option, right? Life, life is the most important thing in this equation over money. Okay. So, You guys need to make the best decision for you all. But because of your circumstances, you're gonna have to know ahead of time, hey, if this happens, plan A, plan B, plan C, here's probably what we're gonna owe in medical bills. And it is so difficult because medical bills, you know, a lot of people face that. That is part of their debt snowball. And so, what I would say is whatever you can save between now and then, and save as much as possible, save over the $8,000. I mean, just as much as you can. "and then, I think my goal would be for you to be healthy, for baby to be healthy, and then, we pick up after, you know, everyone goes home and everyone's good, then we look at our financial situation then." But yeah, I— yeah, that is a hard one.

I wasn't sure about that. Yeah.

Yeah, because in a situation like that, I love that they went with Christian Healthcare Ministries, but there's— this is one of those deals where life has thrown you a curveball.

Yep.

And you're gonna have to, you know, make do on that. And that's tough. Hopefully, everything goes well. I love that you've done your research. I had no idea that there were like birthing centers. This is like breaking news to me.

Wait, what? You didn't know this, Ken?

Well, the way she said it, it sounds like it's at a strip mall or something. Like a birthing center, like you just roll into the parking lot and, you know, you're the 2:30.

So, it's basically like, it's not a home birth, not a hospital. It's like, it's the middle option that people feel feel.

Is it like a clinic?

Yeah, I mean, I think so. I didn't— I did not have— I didn't go to a birthing center for, but it's people that don't want to do traditional, which I appreciate, you know, medicine, and they want to do a different route, more of a natural route. I would say it's the birthing center.

Um, is the home birth even less money, I guess?

Yeah, you're just—

just some more—

just at home. Yeah, I mean, yeah.

So, uh, it's like Pioneer Woman type stuff.

That's why I'm saying, like, do the safe option of what you believe believe in, and then you can worry about the money after.

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All right, we're gonna go to Indianapolis where Beth is waiting for us. Beth, how can we help today?

Oh, hi! Um, congratulations, Ken, on your new venture. Thank you. Rachel, I love your show with George. It's really relatable.

Oh, thank you, Beth.

We should have had a cocktail today, shouldn't we? That's just the day.

I know, I know. I'm like, what a day to call in. They're both bald.

I know. I know.

I know.

We're going to try to— don't bring it up again. I might start crying right now, Beth. We just never know. You never know how it's going to go. Thank you for listening. How can we help?

Yeah. Oh, I'm just, um, I've really started to notice how close retirement is. I'm basically 56 in a couple of days. Um, And I only have $27,000 in my 401(k) currently. And I am just nervous and wondering if you've had experience with callers who've been in this position and if you followed up with them in 15 years to see if they're living comfortably.

That would be a good reality show. We should have done that. We should do that going forward. Okay. From a financial perspective, how are you financially? Do you have debt? Do you still have a mortgage? Kind of where are you at?

That's right, okay. I am on step 2. The only debt I have is my mortgage. It's $155K. House value is about $250, $270K.

Okay.

And I have a roof loan, $15K debt that I really stupidly signed up for a 20-year loan on. Um, I just, I just wasn't, I don't know, you weren't thinking. Yeah, totally. 3 years ago, sure. Now I am. Yeah. And I've run some calculators and I can save about $15,000 in interest if I attack it going forward. Um, so that's my plan.

Um, okay, so your $15,000 from the roof is really your Baby Step 2 because we don't count your house. Else inside of Baby Step 2. So it's really just that $15,000 roof. Uh, do you have any other savings besides this $27,000 that's in your 401(k)?

No, it's been, um, week to week for my entire adult life. Oh wow, well, single income, um, oh, um, $66K. Um, so, you know, it's not terrible. I've just been, um, the sole financial provider for a couple of— well, they're not kids anymore, technically. They're 18 and, well, okay, 42. Um, and she did do— I had my daughter in private school, uh, high school. She went to public school K through 8, but, um, it was just a much better fit, um, for high school. So anyway, yes.

Okay, so what I would tell you, Beth, is, um, Um, yeah, the— yeah, you'll probably still be working, I would say, for the next foreseeable future. Are you in a pretty steady position of your job? Like, if you had to work another 10 years, are you in a good spot?

Oh, oh, I'm so fortunate. I, I work from home for a major insurance company. Um, so it's, it's quite secure.

Okay, great. How much— um, so you are kind of— you are paycheck to paycheck, so there's not a lot of margin that you have to throw at this $15,000. So that's the first goal I would have for you is to get $1,000, put that aside in a high-yield savings account. You can open up with Fairwinds, actually, like there's a Smart Bundle. And so they have a great high-yield savings account in that Smart Bundle. So Fairwinds is a good spot and you can just put your $1,000 over there in that high-yield savings. And then we gotta figure out, okay, how do we work extra? What expenses can we cut? There may not be a lot. A lot to cut. So it's probably gonna be from the income side, which actually Ken probably could speak to some of that. But getting your income up and having a goal. I mean, Beth, if you could have a goal to make an extra, I don't know, $2,000 or something. You know, you just think by the end of this calendar year, if that $15,000 is paid off and it's done, then we can really start looking to cash flow an emergency fund and start throwing a ton at retirement because that's gonna be huge.

But the faster you get out of those $15,000 roof loan, that's right, the quicker you can get to saving more for retirement in that 401k.

One of the things I wanted to know is you said you've been living kind of paycheck to paycheck, and so I'm wondering, is there, is there anything you can cut? And I'm not going to make you list it out for us, but it's more of a general question. Do you feel like you could be tighter, or are you as tight as you can be on spending?

Um, well, I personally, for myself as the mom, I'm very Google, but I do give in quite often to my teenage daughter, especially the first 2 years of high school. You know, their eyes are big as saucer plates for everything they see on social media. Um, but I just finally wised up to myself, and for the past 2 years, you know, she's pretty much paid for anything. But, um, anyway, since she's 18, just to be honest, once— that'll be a huge—

so what kind of— okay, so let's just run some quick numbers. You don't have to lock these in, but what kind of margin would you now have? Even if we just said today, you're not— other than the basics, how much could you put extra towards the snowball?

Well, I'm planning, like, once she's kind of not— oh, when once high school tuition is gone and I'm not spending on her, um, I can probably put $800 to the roof loan monthly. And then after my other expenses because I think I would have about $300 or $500 left.

Okay, so let's just say for conversation, okay, and again, you need to do your own exercise on this after the call, but let's just say we, we came up with $1,000 a month, and I think we can find it in those numbers you just gave us.

Okay, I think so too.

Absolutely. So now all of a sudden that's $12,000 a year just in, just on what's coming into you now from your job. Okay, so now we move into, okay, what can you do? What, what is your profession?

I, um, I work for a health insurance company. Um, I, I just review hospital contracts. I've actually been with them for since 1998, which is why it's so probably shocking to you that I only have $27,000 in my—

No, no, we certainly understand. I guess what I'm trying to get at here is is, is if that's clerical type work or administrative type work, could you pick up, to Rachel's point, 15 to 20 hours a week at this stage of your life? You have the freedom because your youngest is 18.

Yeah.

So now, extra, extra. So here's where we're going. Could we make— and I'm putting out some general numbers, Beth, that aren't too big so that you can hopefully grasp this. But let's say you made an extra $2,000 a month. Okay. Now that's— see, now you're with us, right? So now we're talking $24,000 gross. On top of $12,000 a year. And to— and I just wanted to put real numbers to Rachel's advice because she gave you a wonderful plan, but you're going to have to get super intense because you are 56, or soon to be 56. And so we want to get that nest egg up. And so you want to be in a position where you're throwing a lot of money away. And let's say we get through the, uh, the loan, and now we get to the emergency fund, and now we're just straight Baby Step 4. Where you're just, you're just throwing money. You know, how much could you invest? You have to ask yourself, how much could I invest on the other side of those two steps? And now, uh, now you've got a chance to stack cash for the next 10 years.

Yes, and that is, that is my goal. And, um, I do have a couple of applications out for part-time.

Oh good, Beth.

Yeah, my life is about to be freed up. It's just going to be a whole new world.

And what's crazy too is if you keep throwing that extra money and maybe you get a raise with your $66,000 all that, you could have your home paid off in 4-ish years too. And so if that, how much is your mortgage payment a month?

Oh my gosh. Well, it's $1,100.

Yeah.

And my mortgage would go until I'm 82.

Yes.

And that does not seem right.

Yep, nope. So we're gonna pay, we're gonna continue kind of a little bit of this intense, you're gonna have some intense years coming ahead, Beth, because we gotta play a little bit of catch-up. And so after this, yep, after the roof's gone, on funding 15% of your income into retirement, throwing some at the house, get that house paid off in 3 to 4 years if you can, and then you can look up and be like, "Okay, now I'm gonna just like throw everything at this." And then, and I mean, we're throwing years out there, but you look up, you do all this in 5 years. [Speaker:JOE] That's right. [Speaker:KRYSTALINA] And then you work another 5 and you throw more cash at retirement. That's a decade long.

01:14:40

That's right.

01:14:41

That can change completely your financial future, Beth, because you're doing something completely different than you haven't— than you've ever have. So, um, yeah, call us back if you need us, Beth, but we're cheering you on, and the numbers are there. It's just going to be the kind of the sweat equity, if you will, uh, the hard work to make it happen.

All right, folks, buying or selling your home is a big deal. You know that. And there's a lot of clickbait stuff out there that can get you trapped, give you some opinions that are going to hurt you. A lot of headlines that aren't even accurate or up to date. And we're here to make sure that the latest trends are easy to understand. So if you want to know what happened last month, the average 15-year fixed mortgage rate ticked up a bit to 5.56, but still below 6%. Median home prices went up to $415,000 last month, which is typical in a spring market. So that gives you an idea of some of the headlines, and we want to make sure you're getting accurate information for the decisions you need to make. To learn more about the housing market trends, and you can get free tools that'll help you buy or sell, go to ramseysolutions.com/market. That's ramseysolutions.com/market. All right, Lauren is up next in Salt Lake City. Lauren, how can we help you today?

Hey, thank you guys for taking my call. So my question is, should I move out of my parents' house when I have debt?

Oh, it's a good question.

Wow, tell us more. How much debt?

So I— yeah, I'm a real estate agent and I've been a realtor for about 3 years. This is the first year that I'm consistent, so I'm like making money now. And I have about $10,500 in credit card debt. I don't have student loans. And I've been listening to your guys' show for a while, so I, I started the beginning of the year with $20K debt. And I know it's a lot because like I live with my parents.

Nice.

Don't charge me rent. And so I calculate like all of my numbers. I just have them here for you guys. So right now I have about $11,000 cash that sits in my business account just because I don't really know what to do when I get my cash, especially with my job and income. Like I would say I make around $40,000 to $60,000 a year, but it's variable. And like I said, this is my first year consistent.

Um, how many houses did you sell, uh, to achieve that number?

I'm just curious what number, what you made.

No, what you made. I know it's your first year. I was just curious how many houses you sell to make that income.

Yeah. So I live in Salt Lake City, Utah. Our median home price is $515,000. And for this year, I'm already at about 400. Houses, um, with one pending.

Okay, but what I'm saying is, is that going to put you ahead of what you made last year?

Correct. Yes, I'm already on track. Like, last year my income was all over the place, right, because I was kind of still working part-time at another job. I worked for a builder, and then I got right back into residential. So now I'm a solo realtor So from about December to now, I'm only doing real estate.

Great. And, and a modest guess, what do you think you'll sell this year if you were to project out?

Really? Yes, I think I will make around $50,000. Well, that's also me being like, you know, this is my first year consistent. I'm maybe a little scared, but I'd like to say $50,000 to $60,000 for the year.

Okay, perfect.

We just want to know kind of what your income situation is because it's important to how you get out of this and quickly.

Yep.

Okay, so you're, so you're keeping the $11,000 cash you said in my business account. Are there business expenses you have or is this more when you said, because you also said in the same breath, I just don't know what to do with all my cash, so I'm just putting it away. So when you say business account, what are you using this money for when it comes to your business?

Yep. So you're absolutely right. It just sits in my account and I have like automatic transfers that do my car payment, my phone bill. So you have a car payment expenses, you have a car loan? Yes, I do.

Okay.

How much is the car loan? Yes. So I owe $19,000 on my car. My car payment is $380 a month.

Okay, so it's not really a business account. It's just your— it's a type of checking that you're living off of, right?

Pretty much, yeah. Yeah.

Okay, so if I were you— how old are you, Lauren?

I'm 26.

26, okay, great. And you've already paid off $10,000 in debt already this year in 4 months?

—correct.

That's amazing. Okay, well done. Okay, so here's probably what I would do. You have $11,000 cash. If you do the Ramsey plan and you do the Baby Steps, I mean, by today, I would pay off the credit cards because your interest rate— how much is that on the credit cards?

Yeah, so my interest rate on my credit card is 27%. Yeah, ugh! Ouch! Yes, be done.

Be done, because you're paying so much in interest. Interests. Like, I would pay that off today, Lauren, and you're gonna have $1,000, which is gonna freak you out, and that's okay. Because you're making some money. And then I would be okay with you, Ken may have a different opinion, because of how quickly you have paid off debt, I would be okay with you staying maybe through the summer at your parents' and continue that same trajectory. And then come fall, even if you still have some on the car loan, because if you're kind of kind of at that same pace, you know, you'll probably have around $9,000 left on your car. I probably still would look to see, hey, let me go rent somewhere because there's just something good about being 26 years old and out on your own. So at some point I would have a deadline to say I'm gonna move out. It doesn't have to be tomorrow. And maybe you kind of through the summer. And one reason I'm okay with you staying a little bit longer is because you actually are doing what you said you're gonna do, which is to pay off debt.

'Cause we call, a lot of people call in Lauren and they're like, well, I'm living parents, we're like, "Okay, well, how much have you saved or paid off?" And they're like, "Not a ton, maybe like $1,000 over 3 months." And we're like, "What are you doing? Like, you're supposed to be saving rent." And you really are putting your money to something good that's being— that's productive, right? It's not just like upping your lifestyle. So, because of that sacrifice, I'm okay if you stay a little bit, but I don't want you to stay, I mean, past probably 4 to 5, 6 months.

01:21:44

I agree. Lauren, we don't— what you don't want to happen is that you fall into this rut of the comfort, and it doesn't have the same psychological intensity of being out on your own. And I think you need this right now. I like the safety, but I do agree 100% with Rachel. And I, I'd love to know, what do you think the real estate market is like right now, residential homes in that area? Is it, is it, is it, is it cooled? Is it, uh, just kind of, you know, moving along on an average pace? Is it above pace? Where is the market?

I would say it's an average pace. I don't— obviously, like, interest rates are going higher, but in Utah, I'm seeing people get 2 to 3 houses under contract a month. So I know our market is active. You know, we do have a really good career base in Utah, so people are making money. Good. Okay.

The reason I asked that is you, as a real estate pro who is full-time, you can make your yourself very, very wealthy. And, and so, you know, we talk about gazelle intensity on this show all the time, right? And in your case, I want to see you getting mentored by some real estate agents in your area that would be willing to take you under their wing, uh, and you are trying to fill up your pipeline with everything you've got in you. Because if you were to sell 5 or 6 houses in one month, what a major infusion of cash that would be. Yes or no? Yeah, yeah, absolutely. And then you get that going, and so you could fast forward this entire process, and you're only 26. So, um, because you're in a decent market, uh, by your own, uh, admission here, I would be working like crazy to sell house, list. I mean, I'd get in on every deal I could get in on, because every time you get a commission check, you are just moving through the Baby Steps. And I love that For you.

Love that for you. 100%. Yeah.

And you're in a great industry.

I don't think I mentioned. So I do. I did follow the Baby Steps. So I have about, I would say like $1,600 saved and that's not on top of the $11,000 that I have sitting in that account. So I'm trying to get something in there. I just didn't know what to do with that cash that I have on hand.

Yep. That's where I would, I would get out of debt. That's your number one goal right now is to be debt debt-free. So any money you have, and you have no expenses. Like there's no— That's the good news. You're not paying, you know what I mean? You're not paying rent, utilities, all of that. Now you will eventually, so you need to be thinking through, okay, when you do make that step, you need to do kind of a mock budget before, just to know, 'cause it'll slow down your debt process, right? It will slow down how much you're putting towards that, 'cause you're gonna be paying rent and all of that. But that's okay, because there is something about this dignity of being 26 and holding yourself, right? And you can, Lauren. You are, you can, you can afford it. So yeah, I think if you just make a timeline plan on when you're gonna move out, put some numbers and then make some big goals, like what Ken was saying, you can, I mean, you could go crazy and just say, what if I had this crazy goal of selling this? What would that look like?

And put it down on paper.

Welcome back to the Ramsey Show, coming to you from the Fairwinds Credit Union studio alongside Rachel Cruz. I'm Ken Coleman, thrilled to have you with us. The phone number to jump in: 888-825-5225. 888-825-5225. Daryl is going to start us off in Columbia, Missouri. Daryl, how can we help today?

Hey guys, I got a question for you. Um, I don't owe— me and my wife have no debt except for our house, and I'm debating on paying off the house and able— or in order to do that, I have our emergency fund that has $22,000 in it, and then I have another savings account that has $28,000 in it. And I know that doesn't equal up to $70,000 yet. I'm just— I'm going to have a few more jobs come in in the next couple months that'll get me to that point. And I'm wondering if I should you know, trade in my savings account to pay off the house, to pay off the mortgage.

Well, that's exciting, the fact that this is even a possibility. So how much is left on the house? $70,000.

$70,000. Okay, so you're calling us today wanting to know if you can get ahead of this deal when we know in a couple of months that you're going to have it to be able to pay it off. So it's the difference between paying it off today or close to, because you don't have the full $70,000 there. So that's an interesting question. What's going on? You just nervous you're not going to be able to get it done, or like, what, what's the equation?

No, uh, well, okay, so there's a few other things going on. Okay. Um, we've been in this house for 8 years now. We've actually gone through the process of dividing up my property, and I do plan on building a house, um, another house on the north part of our Along with that, I am also in need of a truck. But at this point, I've just kind of looked at our mortgage. I'm like, man, I've got $70,000 left on the mortgage and I've got this much in savings. I'm almost there to paying off the mortgage. I'm just not sure what the right next move for me is.

So is the $22,000 your fully funded emergency fund or is it the $28,000? The $22,000. 2. Is that 3 months or 6 months?

I think that's closer to 3 months.

Okay, okay. Yeah, I don't know, Rachel, just living on the edge.

Daryl's just like—

first of all, Daryl, you're doing it right. I, you know, if I'm you, uh, and you need a truck, um, and you've got this additional cash beyond, uh, what, what kind of truck are you looking to buy? What, what would the cost be?

I'm looking at truck in the cost of $30,000 $10,000.

Okay, so you're almost there.

Something finally that would be maybe reliable.

Okay, what's your truck worth now? Well, if you sold it or traded it in, probably not a ton, but what would it—

what would it buy? I had, I had an old Suburban that I drove around, um, and I just sold her for $3,000. For $3,000?

Okay, so you don't have a car right now?

I was happy to get rid of her.

I love that you affectionately called her her.

What a gal. What a gal that Suburban's been.

Her name is Veronica. I love that.

We knew she had a name. Let me tell you this.

I wasn't going to say this until Darryl said this. So, we had 2 Suburbans as the kids were growing up. You probably saw them in the parking lot from time to time here at Ramsey. And the first one was Betsy the Bird. And then, we had a— it was kind of silver. And then, we went to a black Suburban and we called him Bruce. So, I like that Darryl has a name, Veronica, for the—

Veronica's gone now.

But Darryl, how are you getting around right now since you you sold poor Veronica.

I have, I have another small car.

Oh, okay. Okay. What do you think here? I mean, he's so close to paying the house off, but he needs a car.

Yeah. I mean, how bad do you need this truck? Could you wait another 6 months, or do you— are you like, no, I need a— I need to get it now?

I'm on the fence. I'm doing— so I don't really necessarily need a truck for my job that I work at. However, I do have a side uh, job that I do. I'm a professional land surveyor, and so I do use my, my car. Okay, so let's just— and I go, is that okay?

So if we ran a couple of scenarios and said, let's say that $28,000 went to the truck, we're not going to touch the emergency fund, so that's off the table. So you're back now to kind of flat. So between now and in a couple of months, you said you have some jobs coming in. How much will you make off those jobs in the next couple of months?

Um, close to $10,000. To $10,000?

Okay, okay. So then you're down to $60,000 on the mortgage. And then how much extra do you throw at the mortgage every month?

We are doing— I'm looking at my wife right now, she's shaking her head— not much. I think it's a couple hundred extra a month. And our mortgage is only, you know, principal and interest is like $670 as a payment. Okay. I think actually we put $1,000 in there and, you know, all the other part of that goes to—

And what's the financial windfall that you mentioned a few minutes ago that you're expecting in a couple months, which would have gotten you over the $70,000? How much is that? Do you have an idea?

Oh, how much am I planning on making?

Yeah, you mentioned that that was the extra jobs, the extra money you were thinking. Yeah, is that the $10,000?

Yeah, that was that extra $10,000.

Oh, it's just $10,000. All right, I got you.

Um, okay, so that's scenario 1, Darrell. You buy the truck, and then you take the $10,000, throw it at the mortgage, and you just kind of keep chipping away at the mortgage. So that's option 1. Option 2 is you get a $20,000 truck. Yeah. Throw an extra 8 at the house, right? You can change that up a little. Or you throw all 28, and then you'll have the 10. So yeah, you're close to 40 at that point, only $30,000 left. So yeah, I mean, there's not really a wrong I don't think there's a wrong scenario here. I think it's kind of just what you wanna do. And we don't say to be intense during paying off your home. So you're okay. Yeah, you're so close.

If I needed a car, I'll just tell you what I would do. If I was in your situation, I had the cash for the truck, I'd get the truck. Unless I don't need it. And if you don't need it, to Rachel's point, then again, get it on the other side of paying the mortgage off. But you're in such great shape.

What is your wife, is your wife sitting there? Oh, she's sitting there watching. What does she wanna, do?

What does she want to do? Well, um, she's a little— she's a little nervous about paying off the house. Why? Um, uh, because it has— we have a good interest rate on it, and we're also obviously planning— we're also obviously planning on building another house.

I wouldn't worry about the other house. Is the other house for you guys?

Yes, I think we plan on moving in it and then either renting this out, the one we're in now, or selling buy it.

And I'll see— now that changes this conversation a little bit because do you really want to be a landlord? And how much you, you know, I mean, is that really something you want to do, or would you rather just sell the current house, your property, and, and then go build the new house? Like, what do you want more?

Those are good questions and I don't have answers.

Yeah, that's, that's why you need the answers.

In my head, you're jumping, you're jumping ahead. I agree with with that second house.

This is a steak dinner, candlelight, maybe a bottle of red, and you two sit down and weigh this out and go, okay, do we want to, to have the current home we're in as a rental property? Now it becomes obviously real estate investment for you. That's cash and you don't owe a dime on it. Uh, or do we wanna move quicker into building another house? Do I need the truck now? Like lay it all out there and get everybody's opinions in the middle of the table. You and your your wife, and then just do the old school pros and cons and come up with a list and then execute on it.

Yeah, because the truth is, Darryl, in 5 years, I think you're gonna end up in the same place. I think you're either gonna go down this road or this road or down the middle. However you get there, you're gonna get there. And so there's not really a bad option here. So yeah, it's kind of whatever you want to do with the $28,000. If you want to get the truck, get the truck. If you want to throw out the house, yeah, but you guys, you and your wife, uh, agree on it and say, does this get us to our long-term goals faster or slower? And that may, that may be the difference.

Real quick, Rachel, lady to lady, talk to his wife about that interest rate fear she has.

What would you tell her? Oh, I would have way less fear not owing anyone anything than having a mortgage payment. So that's my rationale.

Hey, good folks, Dr. John Delony here. Don't you think life is too short to hate Mondays? Listen, you're worth loving the work you do and where you do it. So guess Guess what? Ramsey Solutions is hiring. If you're ready to join an amazing team that's all about changing lives and spreading hope, we want to see your application right now. We're hiring for technology, sales, marketing, writing, copy editing, and creative roles. Check out all our job postings at ramseysolutions.com/careers. That's ramseysolutions.com/careers.

Ask Ramsey is our free AI tool that's built and trained on proven Ramsey principles. Excuse me. And today we're going to break down, uh, the most asked questions from this week. Rachel, we had some questions around retirement savings, paying off debt, uh, but the most asked question was around emergency funds. So the main question we got was, "Where is the best place to store my emergency fund?" That's a good question. We get that a lot.

Yes, you know, and I get this a lot in the social media world, like my DMs. I get a lot of questions about, because we always talk about a high-yield savings account is the best place because the money, you can get to it if you need it, but also it's making around probably 3%, 4% depending on the account, versus less than 1% just in a traditional savings account. So a high-yield savings account is where it's at. And we love Fairwinds Credit Union. We've been partnering with them and they obviously are the studio sponsor of the show. But they honestly probably have the best deal because they're doing a smart bundle where you get a no-fee checking account and then you can get up to 10 high-yield savings accounts. So for all the nerdy people, like a George Campbell who loves all his different savings accounts, you know, for each little thing that he's doing. And you can do up to 10 with Fairwinds, and you get, uh, the debit card access. It's such an easy interface, like their app and everything is great. So that's what Winston and I use. We use Fairwinds, we love them.

Um, and that's a great place to put your emergency fund in their high-yield savings account.

Love it. So, uh, if you'd love to submit your question, go to ramseysolutions.com or click the link in the show notes if you're listening on podcast or watching via YouTube. Let's go to San Diego go next where Tom is waiting.

Tom, how can we help? Hey, so I have a question. I'm 52. My wife and I are in a pretty good financial position. Um, I recently separated with my company about a year and a half ago, and I'm deciding if trying to start my own company over at this age or just go work for someone and take a couple years and be fine. You know, coming from running a small business, it's tough to sell and get out, so I don't know if I want to grow something like be back.

What would you grow? Do you know what you'd start?

Uh, so I'm a plumber by trade and a mechanical and builder, so it would be in the— in that field, which I have about 37 years of experience in.

I love that. And, and my guess is 37 years of working for a good company, right?

Well, actually, 17 years of it was being partners in a company. Oh, where I was the minority partner, and we had disagreements on where the company was going, and I wound This odd man out.

Well, but I'm guessing that you had, uh, eyes on all the books. You have a pretty good idea how to run a company that you're talking about, correct?

Oh yeah, I was vice president of operations. I built all the accounting software, all the integrations and everything.

So, uh, what I'm hearing, Rachel, uh, I'm hearing want to, and I hear, uh, you, you got the how-to. So now it's what is it going to take to get started? And I'm, I'm assuming you've run some numbers on that. So what do you think it's going to cost to start one of these companies? Oh, Tom, we got you in a wind tunnel here. Say that again, you broke up really bad.

Oh, I said the biggest problem is cash out of pocket for funding all these projects that owners don't want to pay up front, so you wind up with huge upfront costs. And my wife and I own 2 houses and have some money in the bank and don't have any debt, so You want to start playing that game at this age?

No, and I don't think, I don't think you have to play that game. I'm going to poke on that a little bit. Uh, are we talking about plumbing? What, what— let's pick, let's pick one. Let's pick one discipline. Let's pick one trade for this conversation.

So let's just put it this way. I specialized in healthcare, building hospitals and remodeling hospitals as a general, and as plumbing and mechanical systems.

Okay, but I'm saying this business, let's say you have all the cash in the world to start today, what is the business?

Probably plumbing and mechanical systems, you know, HVAC.

Okay, and it would be— and it would not be for residential, it would be, uh, corporate, correct? Yeah, mostly commercial. Thank you, I couldn't think— come up the word. So if it's commercial, so what you're saying is— yeah, and that's, that's really good money. And, and you're saying you would have to front because what they're doing is they're going, you go buy all the supplies, everything, and then invoices. That's what I'm my understanding.

Yeah, and the invoices are 30, 45 days before they pay, 60 days, you know, the contracts. They take a retention payment, so 10% out.

I got you now.

Yeah, and those are, and those are big jobs, the commercial jobs. My father-in-law owns a heating and air company, but it's— he does some, some commercial, mostly residential. But I mean, they have crews. So will you hire— if you went down that route, do you have people that you know that you're like, oh yeah, I could hire these guys for this crew and all? I mean, because you're starting— I mean, that's a, that's a big operation.

Yeah, that's why I'm like, or, you know, we have— we own 2 homes.

Okay, let's, let's go down that road.

And a half bucks in the bank.

You have how much? A million and a half. But is that retirement or cash?

It's, uh, 401k and cash.

Okay, well, we're not going to touch the 401k. No. Uh, how much cash? Parcel that out. 900. You have $900,000 in cash? Okay, between my wife and I. I understand. And then what if you sold one of the homes? What would you clear on one of of the houses?

Well, uh, well, the one in San Diego we probably wouldn't sell. $2.4 million. Well, but I'm trying to— on it outright, right?

But I'm saying to come up with some capital, I would absolutely look at selling one of those houses if the sale of that home gave you that startup that you needed, that startup cost. Yeah.

And if you want to do it, do you want to do— do you want to start all this?

I mean, I don't know, but that's a question. The risk-reward is what's got me perplexed on it.

Well, I know, and that's why we're in a pretty good financial position, right? Yeah, what is your big risk? What's your income right now?

Uh, so we have some income property. We have about $10,000 a month coming in.

That's your only income is their properties? You're not working right now?

I've been out of work for a year and a half, and I'm still getting paid off from my old company, which they're, they're buying me out.

All right, well, Tom, we're having the hardest time with your phone, so I'll boil it down to this. Um, appreciate the call. We can't make that call for you. What you you heard us do was walk through what your options are to come up with cash if you wanted to launch this company. But I thought Rachel was very insightful by just putting it to you, and you're still going, I don't know if I want to do it. And so I, I will tell you, Rachel, if someone presents this to me and I'm coaching them, I'm going to say, all right, Tom— and this is, by the way, your wife's got to be in on this conversation— and I think we have to look at the effort, the risk Yes. And the capital outlay. Those are the big 3. And there are emotions, there are logistics, there are consequences to walking through that checklist, Rachel. 100%. And if we walk through that checklist, those are the big 3. You guys can get as specific as you want, but if we walk through those big 3 and we go, I still want to do it. If this is you, Tom, and then your wife goes, Okay, I'm in.

Then I say, go for it. But let's mitigate the risk, Rachel. 100%. In other words, we gotta say, I'm risking this much, and at the worst-case scenario, we only lose this, and we're still okay.

Yeah, my only, you know, thought, and I think it's more of a personality thing, Ken, 'cause at this point, money-wise, they're fine. Like, he can go get another job. Yeah, they're good financially. Yeah, all of it. But at this point, it's a personality, passion thing of, yeah, I still wanna get up and grind it. Because when he first said plumbing, electrical, I thought, okay, you know, he could probably start a small plumbing company, get one or two guys under him, they can go do some residential. He's like, oh no, I'm doing hospital, hospitals and massive commercial properties. So starting that to me, in my head, went from a 2 to like a— You're right. A 9, 10, like that's a lot. But also it's doable if that's what you want in kind of the second half of your lifetime to grow something and sell it.

And you know, that's exciting.

If that's exciting and fun, that's great. Or if you look up and you're like, I'm 52, in 4 years I'm probably gonna wanna retire. But I may go work for someone, make some good money. Yeah. Still make some good money doing it and then chill. But that's a personality thing too, you know?

'Cause that's a lot of effort. Remember that effort bucket? That's a lot of effort. He's got a good paying job and he's clearing 10 grand in real estate property. Right, right. So Tom, I am a, listen, I'm always gonna be the guy that says, if my heart is telling me to do it, I'm going to try to mitigate the risk involved, because there's always risk. Mm-hmm.

But we're all for jumping into a new idea, aren't we, Ken? That's the theme of this show.

We are. The last person I worked for before Dave, John Maxwell, famously said, "You gotta give up to go up." And I think this is a situation where if you want to go up to start this business, you and your wife have got to be on the same page about what we're giving up up. Yes, there's always a trade-off.

Dave Ramsey here. Most people stay stuck with their money because they're not paying attention to it. Most people are living paycheck to paycheck, stressed out and broke. Don't be most people. You work way too hard to be broke and feel broke, and you deserve to have something to show for it. That's why we built the EveryDollar budget app. It gives you a personalized plan for your money that shows you how to free up extra money every month and use it to beat debt and build lasting wealth. Plus, you get real coaches guiding you through your plan step by step. Look, most people hearing this will just keep hoping something changes, but not you. You're ready to make change happen starting now. Go download EveryDollar in the App Store or Google Play and start for free today.

All right folks, how you doing in your insurance? You know this, the right insurance acts as a shield around you and your loved ones if disaster strikes. Also protects that bank account. We've got a free insurance coverage checkup that will allow you to figure out, am I overinsured or am I underinsured? Both are great revelations. We'll help you out. Go to ramseysolutions.com/checkup. ramseysolutions.com/checkup. All right, to Eric we go in Des Moines, Iowa. Eric, how can we help?

Hey guys, thanks for taking the call. Um, so I've gotta— I feel like I'm in a position to start investing, but but on paper it doesn't feel like it as well. So, I've got an income of about $156,000 to $200,000 a year, self-employed. My wife's a stay-at-home mom, got 2 kids, one on the way. Our primary home, and I have a rental property as well. So, rental property's worth about $425,000. The primary home is worth about $330,000. And the mortgages are $304,000 at 2.75%. $208,000 at 6.5%. And then I have about $54,000 in debt to my parents. Although I will caveat, I've got a great relationship with my parents. If anything were to ever happen, I'm confident they would just say either pause payments or they just forgive it. Anyway, rental property, it's cash flowing. My rent is— or I charge $2,500 a month and my cost every month is $2,000. $1.2 million. So I've got about $80,000 to $85,000 in cash sitting in the bank. So I'm trying to figure out, I feel like I should be putting money— oh, sorry, in a Roth IRA. It's got about $100,000 in it. Okay. So I'm trying to figure out, I feel like I should be investing more, but yeah.

You got a lot going on, Eric.

My gosh. Okay, so let's—

okay, first off, give you the quick version.

No, it's great. No, we needed all those numbers. My, my question is, is your rental property worth more than your primary home?

Yeah, yeah. So I bought a bachelor pad, um, before I got married. I got married, my— had a kid, and it was not a good fit for a, for a house. So yes, my rental property was my own house a while ago. Okay. And then— and how much do you owe?

How much do you owe on it? How much is left on the mortgage?

$304,000. $304,000.

Okay. And how much is on your primary home? How much is it worth? Or how How much do you owe?

$280,000 on the primary.

$280,000, okay. And the only debt you have consumer-wise is the $54,000 to your parents, right? No car loans, no credit cards, student loans, none of that?

Correct. All that, I did pay off my wife's student loans. That was a checkbox. So we did that. That's right. Now trying to feel a little bit more relief from that, but—

Yeah, so what's the— Anyway. You touched on this real quick. What is this burning desire with all the stuff you've got going on? You feel like you need to be investing for retirement. Is that what I heard?

Um, I've— yes, I, I used to be putting away a bunch of money, you know, when I had a standard W-2 job. I was investing. Obviously I've got $100,000 in a Roth and 401k. Yeah, maybe it's $120,000, I don't know the exact number, but, but I stopped doing that ever since I've become self-employed, right, uh, with this rental house and everything going on. I've We technically have the cash, but we're trying to save up about $100,000. My wife's not a big fan of the current house that we're in.

Yeah. How familiar with the Baby Steps are you?

Admittedly, I went through FPU a long time ago, but that was pre-everything, so not a ton.

Yeah. Okay. Okay. Gosh, okay. So I always run these scenarios, Eric, if I woke up in your shoes, okay? And you called our show show. So if I woke up in your shoes, Eric, here's what I would do. I'd pay off your parents tonight, and that brings your savings down to $28,000, which I would count as probably your fully funded emergency fund. You may want to throw a little bit more in there, but we can just set that in a high yield. We're done. Wife is not happy in the home. Um, and I would, I would run for simplification personally of where you guys are. I probably would look to sell the rental. You'll make about $120,000, probably $100,000 after fees and everything. The home you're in now, you'll have some equity. I mean, you could throw possibly $175,000-ish at a new home and you guys start, you know, having, you know, having that over here. And then you go and you start investing 15% of your income and you got— do you guys have kids? 3.

Well, 2 and 1 on the way. Oh my gosh.

And start working, putting some money away for college for them and just start working the baby steps. But that's me, Eric. Again, everyone has a different thing.

I think I can feel on you, Eric, the stress that you have in your life.

And a new baby coming too.

Am I feeling this or is it just bad pizza? What's going on? Oh no, actually I love this.

I love all of this, managing and keeping track of all this.

Okay, so you do love the— But you do, okay. Yeah. Feel it like what I'm feeling, but you do want to simplify a little bit. You, or you, or you're trying to at least strategize on how do I invest for retirement, and you just can't do all of this at once and do it well.

I, I'm worried that if I am— I, you know, I always hear, you know, if I had $100,000 early on in a retirement, it'll grow even if you don't invest anything. So I feel like I've checked the box of investing, but I feel like I should still be investing.

I've got— Yes, you should. You should.

Tax flow. But you're tapped out with everything else going on.

Yeah, the goal is to be funding 15% of your income into retirement consistently, continuing to build up that. So that's— but that's after you're debt-free with an emergency fund, which could happen tonight, you know. So, um, so if you walk through the Baby Steps, yeah, I think there's a non-negotiable here that the $54,000 needs to be paid off. And even if it's a great relationship with your parents, all of that, be done. Just be done with it. You'll have your fully funded emergency fund of $28,000. So that's a non-negotiable non-negotiable. Now, the next, the negotiable part, which is where we could maybe be different, and that's okay, is do you keep the rental property or not? But you need to be investing 15% of your income into retirement. And then looking at this rental property and what you and your wife want, what do you guys wanna be in 5 years? Do you wanna be landlords and, you know, still have this property and hopefully be paying it off? 'Cause you need to be paying that, you should be paying that off even before your primary home. Yeah. But yeah, it's just a lot of real estate and depending on what you want to do, Eric, right?

If you want more money in the market or some there, do you enjoy the rental property?

Yeah, well, luckily I've got great tenants right now, but I know that could theoretically change. Yeah, and I'm handy, so any repairs and stuff I'll do myself, so.

Yeah, so having a second home long-term is good with both of you. Like part of your portfolio that you're good with. That's correct.

I feel like that's what I'm investing in right now, but yes.

Yep. So, um, so yeah, the only change-up I would do is, is start putting 15% away into your— that's gonna be your Roth. And then do you have a 401k at your work? Yes. Yep. So those two, those two buckets need to start being filled consistently, 15% of your income. And then above that is where you start paying off these this real estate.

So, you know, I'm just reminded of this old saying, and you know, you love my old sayings. So, I feel like I gotta give you another one.

Oh, yes. Before we end, Ken, his old man, some of these things.

Here we go. If you chase two rabbits, you'll lose 'em both. And it feels like you're trying to chase all the rabbits right now. And you're doing, it sounds like you're doing a good job, not criticizing you, but I think you have to decide again, what are my priorities? 30s. What matters most to me right now?

How old are you, Eric? 32.

Yeah, my man, you are really young. And, um, you know, you, you, you can have it all, but rarely does someone have it all at the same time. And I— that's my encouragement to you. I hope you hear encouragement, not criticism, because I think that's what you're facing right now. Yeah, Rachel nailed it. You two need to sit down together and decide what do we want right now, and then what what do we want in the future?

And $600,000 in real estate debt, it's a lot. So whether you feel that or not, that's, I mean, that's out there. You know what I mean? So depending on how quickly you guys say, we're gonna keep these, but we're gonna pay 'em off in the next 4 to 5 years, you know, and get radical and do what we can to get rid of that debt, especially the rental property one. But yeah, I don't know, Eric. There's just always time to invest in real estate in my head. Do you know what I mean? And do it with cash and do it with cash. I agree. And there's just a lot of strain happening and in your life too, right? You got two little kids and a baby coming. On the way. Yeah, and I've been there and there's just something about solving for peace. When Dr. Giacalone says that. Let's go. Solve for peace and—

You know how to get that many times? Just simplicity. Simplicity, I know. But he's 32, I love it. He's trying to do it. The hustle's great. I love the hustle, but I, I would downshift it into simplicity, and I think that'll be the piece that you're looking for. Thanks for listening, and, and, uh, hope we helped you out.

Hey guys, Dave Ramsey here. Every day on this show, we help people work through real 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 comes from Psalm 90, verse 12: Teach us to number our days that we may gain a heart of wisdom. And the quote of the day, they snuck this this in on me. Uh, I don't even remember saying this, uh, but it's my last segment on the Ramsey Show. I know. So I guess we close with one of my quotes. So, dream big, ask for help, embrace failure, take the shot, and continue to climb one step at a time. Well, that's appropriate. Wow. Ken, so, uh, quick, quick, uh, rejoin. We, uh, opened up this this hour, uh, oh no, 2 hours ago. It's gone by that fast. Um, it's my last, uh, time on the show, uh, as a co-host, and I'm so glad it's with you, uh, ending 12 years of service alongside Dave, you, uh, so many amazing people here on the team. And, uh, so it's, uh, quite weird, quite surreal. It's bizarre. We already cried earlier. Boo-hooed.

Yeah.

So, uh, what a joy it's been. And I'm so glad that I— if, if I wasn't with Dave, who's out of the country, it's, it's with you. And so thank you.

I know, Ken.

Thank you for being here with me today. Thanks for all the, the great memories. We've had some incredible memories. It helped a lot of people. Yes. Yes.

And that's what's fun. Well, it's such a— it's such a unique thing when you get to work and do this kind of work, which is a little unique, together with people that you just love and you respect and you care for. And, you know, we were just talking, I think we met 18 years ago. You've known, I think, Dave longer. And, you know, and your family was walking in and seeing Josie. I mean, I just remember, you know, Josie being that big and Ty and Chase and Stacy, who we just love so much. It's like the whole package. And I think that's what's the bittersweet part when we're the ones being left. He's leaving us, so we're being left. But you do, it's just the familiarity of who you are and what you bring to the table. So, not only— do I want people to know, though, for real, that, thank God, all of our personalities, I can say this about. But for you, specifically, today, you are— you are what you get. And the people on this show that you, you know, that have followed you from the beginning of your journey here at Ramsey, or maybe they just joined in a month ago, and you've been hosting here, or Front Row Seat, who Ken is in front of a camera, on a stage, in front of a microphone, is him outside of this with his family, with his friends.

And that level of integrity is something you don't get all the time. Well, thank you. Especially in this kind of job. And so that, I wanna say that, Ken, but also just the, but focusing on what you have done these 12 years. Yeah. And everything from the books and the shows, I'm just curious from you, what has been, what's been one of your favorite things about your job? Like, what do you, what do you look back at and you're just like, "It's that." It's this, it's not even close.

It is when you experience a person on the phone on the phone, in this format, or at a live event, like we were at last night, in Long Beach, California, when someone gets vulnerable enough, 'cause they're not where they wanna be, many times in pain, and they trust us. I remember the first time I did it, it's almost like you feel as though you're not worthy enough to try to help 'em. And then you get over that, and then you begin to connect with them. Them. And the highest form of work for me has been just meeting people where they are. I look at a guy who's weeping, whether it be a small business owner or a lady, a single mom who's completely just underneath it. We had it on this last tour. And I think that when you get to step into those moments, you think that you're helping them and you get done with it, and you go, "Oh my gosh, that helped my soul." And here's where this ties in, is because I do believe we were created to work. And I think we're uniquely and wonderfully made. And I think when you can do that, and that for me, like I enjoy the pressure of being on the mic and all these buttons and, you know.

In and out of stuff.

Yeah, I love being fun. But I think at the end of the day, it's like what I've experienced at Ramsey that I will take with me and with so much gratitude that cannot be expressed. Rest is to do the work that I was created to do. And so the most rewarding is to talk to you folks. Um, I'll miss this terribly. Uh, I'll probably just find some guy in the grocery store and go, do you need to be coached for a moment?

And, you know, where are you with your— yeah, the proximity principle. Let me lay this out for you.

Can I ask some piercing questions for a moment? Uh, that's the highest, uh, honor I've had. That's the work I've enjoyed the most is just being a small, and I do mean small, part of watching people transform their lives. I mean, the work we do here is about people, and that's the most rewarding.

Yeah, I love that. I love it. Okay, so, we said, 'cause we boo-hooed the first time we came in. You started crying and just like, "Help me." I know, I came out of nowhere, and I was like, "I think it's 'cause I've been up since 4 o'clock this morning." I'm all emotional. But I do wanna end this segment, not only, you know, honoring you, Ken, and obviously, all that you've done, but also, the exciting next chapter in your life. And what's crazy about it, all of us personalities have kind of joked of like, "Well, he's living it out." He's like, he's been talking, this is what he coaches people to do. And then when it happens, you know, and you get to make this next step into something that is different, but something that is so exciting for you.

Yeah, I, because of the sensitivity of the announcement, I can say that I'm stepping into an executive role. And I will be taking the experience and the skillset that I have developed over time before I got to Ramsey and in honed it at Ramsey. And I'm gonna be helping communicate. That's what I love to do is to communicate. I love words. You know how much I love words.

Yes, we love—

Ken loves to talk. I love a good word. I do love to talk. He loves to talk. I do love to talk. And I'm gonna be in an executive role and it's a major step up. This is what I've preached to people. And this entire opportunity came to me, folks, through a personal relationship. Relationship. It came through the real-life proximity principle. That's what's wild, huh? Of just being around high-quality people. And you have conversations. Two of my favorite things to do is to connect with new people and to get to know people. And I ask a lot of questions. And I just didn't know that I was asking questions that created what is now an opportunity that— and I wanna be very clear here that God has completely opened the door. And then you're presented with— Okay, I've got a great gig. Yeah. But this is a great challenge. And I think it's probably core to who I am. I hope everybody that's ever heard me coach believes that this is authentic to who I am. When God opens a door, I think you walk through it. Mm-hmm. So, it's tough, very sad, but also excited.

The analogy I gave to our team is what I'll give to the audience. I feel like you feel like when you read a good book, you're midway through the book and you start telling all your friends and family about it. Oh, this book is so good, right? Yes, yes. And you're telling about it, and what you're doing is you're talking about the past, you're talking about what you've experienced as a reader on those pages. And then when you get home that night, you can't wait to crack the next chapter. And I think that's where I'm at. Um, and I, I would close with this. I— you know me, I got to close with a challenge. To this audience. You come to us because Dave so long ago said this is about hope, right? Hope. And here I'm getting choked.

Mm-hmm.

So my favorite scripture, Isaiah 40:31.

You can do it.

I got this. You can do it.

Take a breath.

Those who wait on the Lord, and some translations, those who hope in the Lord, shall mount up on wings like eagles. This is— the description here is soaring. There'll be seasons of your life where you're going to soar. And then Isaiah downshifts and he goes, those who run will not grow weary and those who walk will not do not faint. And I think that's such a beautiful scripture for this audience. My final challenge is that no matter where you are on these baby steps, you are doing this because you long for freedom. The Spirit of the Lord, the Bible says, brings liberty, freedom. And so I would want you, no matter how hard it is, wherever you are and however you're getting through these steps, don't miss what Dave based this entire company on. On in this show. Hope. Where does that hope come from? The Lord. He'll get you through. He's with you. He's beside you. He's in front of you. He's behind you. Trust Him. Please give it a shot. I'll let you down. He won't. So, as Dave has said for decades, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

It's been my my honor. Love you all.