Transcript of Don't Be A Slave To The Lender

Just sticking with your existing Medicare plan could be an expensive decision. Let Chapter review your options for free. Learn more at askchapter.org/ramsey. Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studio, this is The Ramsey Show. I'm George Campbell, joined by Dr. John Delony. We're taking your calls at 888-825-5225. Patrick is in Detroit. What's going on, Patrick?

Hey guys, thanks for taking my call.

Sure.

So, uh, in 2012, I, I bought my, uh, family's home for $80,000 at about 3% interest. And, uh, worked on it, put in sweat equity. And, um, about 10 years ago, I was, uh, I filed bankruptcy because I was buried in student loans. And I kind of got that in order. Of course, I couldn't get rid of the student loans, but got rid of other debt and structured things. And well, after COVID, I saw that I could sell the home I was living in, which I loved, and I'm sick about right now. To pay off those loans. So I did, and I did pay off those loans, and I was debt-free. And I subsequently rented for 4 years. Rentals are pretty high in my area. I rented for about $2,400 a month for 3 to 4 years and wanted to get back into owning a house. So I bought a house last January for $230,000 with no money down, which I'm sick about that too. I'm raising my son alone. He's going into his senior year. And I have more debt now than I've had before. I have a car loan. I have $230,000 in mortgage.

Um, I'm paying 6.25% on that mortgage. I make $100,000 a year. I'm 59 years old and I'm looking at retirement. Um, you know, I'm breathing down the barrel of retirement and, uh, I have only about $150,000 in a 401. And I'm, I'll tell you guys, I'm not, I'm not sleeping well. Yeah.

Thanks for calling, man. Thanks for calling.

Thanks.

That was a hard call to make. And I'm proud of you for doing that, man. Cool?

Yeah.

And we'll give you a path.

How do I get out of this mess?

We're going to give you a path here, but we're not going to beat you up. We're on the same team. Okay?

But if we're going to do it, we got to agree on one thing. We're not going to beat past Patrick up for his mistakes.

That's right.

You've been— you got a crick in your neck from looking backwards of all the things you wish you could have done, things you should have done, regrets. Shouldn't have sold that, shouldn't have taken on that debt. So can we agree that this is a new chapter for Patrick? 59 is gonna look different.

Yeah. Good.

One of your homework assignments this weekend is gonna be to write 2014 Patrick a letter and let that guy go. Set him free. Okay.

Yeah.

And then we're gonna write 65-year-old Patrick a letter about who you decided to become at age 59 so that he could have a different life. Okay.

Yeah. All right.

We'll get into the math here.

So you're a 59-year-old making $100 grand.

Yeah. Before we get into the math, I left something out. I do have $30,000 that, uh, is in my Great.

You are doing better than most of America, if it gives you any consolation. It's a low bar, but you're doing better. So, what is left on the car loan?

$26,000.

Man, sounds like you could be debt-free today, except for your mortgage.

Well, and there's a $7,000 loan that I had to take out to get some repairs done on the house that had to be done. But that's all the debt.

So you knock out the $7,000. Is that one loan, the $7,000 repairs?

Yeah.

OK. So if you knock that out, you're down to $23,000. You still owe the $26,000 on the car. You could knock most of the car out and keep that $1,000 starter emergency fund. What's the car payment and what's the payment on that other loan?

The other loan is about $175 a month. It's got like a 10-point— it's a $7,000 loan with 10.5% interest. It's about to be $0.

$1,000 a month at 0% interest.

Congratulations. Congrats.

So you freed up $175 today. What about the car loan? What's the payment?

Uh, it's about $550, $575 or something like that.

Okay, so $575. We're talking $750 freed up in the next couple of months if you do this.

So you just got about a $9,000 a year raise.

Of take-home pay.

Got it.

That, that leads me— yeah, that I, I get it and I would love to do it, but I am scared to death that I'll lose my job or something like that will happen and I'll have nothing. And I have my son with me.

Gotcha. We gotcha. But here's, here's what I know. If you lost your job, which every single one of us, that can happen to us, right? Um, you have your son with you, you're under the squat rack of fatherhood, of life, of responsibility. And you know, that would be a big kick in the gut and you would owe nobody anything except for your mortgage. And then the very next day you'd be at Home Depot, at Lowe's, at wherever else applying for jobs. And you'd make enough money to pay your bills. And you would show your son, you'd give him a ringside seat as to what a grown man with responsibilities does when he gets kicked in the guts.

Right?

You're projecting all the negative into future Patrick's life, but you're not projecting the reality into future Patrick's life, which is You're a good man and you work your butt off and you love your son and you love yourself, right?

Yeah.

And so you're gonna have $750, um, on top of whatever else you have in margin, and you're gonna rebuild that emergency fund right away.

Are you taking home about $6,000 a month right now? $7,000 a month?

Uh, yeah, I think so. I think that's about right. I don't— I'm in the other room so he can't hear me away from my budget. I'm taking home, yeah, I think so.

OK. And then what are your monthly expenses? What does it take to just cover the bills? We're not living luxuriously, but we're just 4 walls, food, utilities, shelter, transportation, insurance, debt payments.

I think like $5,000.

OK. So napkin math says you should have, if you do it right, $1,000 to $2,000 left over every month, and that's without freeing up the $750.

Yeah, you might want to up that a little bit, maybe more than $5,000.

Well, let's get it down to $5,000.

I'd probably have about a margin of about $800, $900.

But if we sat down together, we did your budget, do you think I could find that much room if we went, hey, you could probably cut that, we could do better here?

There's 2 of you guys.

Clean that up.

Probably.

Yeah, of course you could.

If your future depended on it, your retirement depended on it, could you do it?

Well, yes. Good.

Because it depends on—

this is part of the letter you're writing to 65-year-old you. We stopped spending on X, Y, and Z so that So that my son wouldn't have to take care of me when I was 70.

Right, right. Yeah.

You are way better off than you think you are. And George nailed it. You spend so much energy beating up past Patrick that you're not giving him any, any chance to be successful in the present and forward, moving forward, like moving on. And by the way, sit down with your son. There is— I just looked it up. There's the community college guarantee, the Promise there in Michigan. You might sit down and say, because of my situation, because of choices I've made, I can't afford for you to go to college. But luckily we live in a state where community college is free and I'm going to keep saving, work on myself, get myself completely out of debt. And I might be able to help you if you transfer to a second year to a 4-year college moving on, if that's what he wants to do. There's so many options for you. But it starts with you believing, I can make this work.

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Justin is up next in Dayton, Ohio. What's going on, Justin?

Hey, how you guys doing?

Doing well.

Thanks for taking my call.

Absolutely. What's going on?

So me and my wife are— we've been married for about 3 years, been pretty diligent about saving. We've got a fully funded emergency fund and close to about $40,000 saved for a down payment. Um, but she's wanting to quit soon, so I'm trying to change jobs to make enough that she can quit, uh, to take— to stay at home with our baby. And, um, just wondering if it's Like, if it's ever advisable to just get a 30-year mortgage in order to get into the market sooner and start building equity instead of just renting.

Man, I feel your pain on this one because houses do be expensive and you're like, the 15-year is going to be $600 more for the payment and that's going to take this much more in a down payment to get there. So what is the house you're looking to buy? How much is it?

I really don't know what we're in the market for. I mean, I would love to be under about like a $200,000 house.

Do those exist in your area?

They exist, but, you know, I think I'm willing to sacrifice on kind of the quality of the house or what the house has more than my wife is.

Oh, so she wants to stay home, live on one income.

I would not make that sacrifice, brother.

And have the dream home.

Yeah, I mean, I think she's willing to compromise on, um, some things, just, you know, the things that make a house more expensive, she really wants.

Um, it's usually how it goes.

Here's what you're— here's the trade you're looking to make. Okay. And this is just putting all the cards on the table. You have 3 different pressures on you right now. One, your wife wants to stay at home with baby. That's a great thing. Okay. Number 2, y'all want to buy a house. You had a picture of what your life would be. Your wife especially did of, We're gonna be a small family. We're gonna own a home. That's a great thing. Um, number 3, houses are incredibly expensive and the interest rates on houses are really high right now, especially on a 30-year note. They're really high.

Yeah.

And so you have 3, 3 pressure points here. And where I see people get themselves into crazy trouble is when they don't recognize that We have to prioritize these things and each prioritizing each one of those things is going to come with some sort of, man, I hate to use this word because it sounds so dramatic, but it's going to come with consequences. Like I really want to stay home with baby. And that means we're gonna have to rent for 2 more years while we save up. We're going to, I'm going to stay in the workforce for 1 more year longer than I have to. I'm going to make one of those construction paper chains and hang it in my bedroom. I'm gonna tear off one every day. But that's gonna accelerate us being able to get into a house so fast so that we have the rest of our lot, right? You get what I'm saying? Like, it's when people try to do everything all at the same time and then they start moving values around, they start moving their principles around, they find themselves just buying a brand new car cuz it seems easier.

Just buying a kind of a lesser house than either of us want just to say we have a house. By the way, that feeling will last less than one week. And you'll go, oh no, we need to fix the calendar, fix the, fix the kitchen, do this in the bath. Oh, there's a leak in the roof. And now you're stuck in a pretty ugly situation. So it's just recognizing we have 3 amazing choices, 3 great things that we all want in front of us, but we can't do all of them right now. And so we have to make some choices on what's, what we want more.

Yeah, makes sense.

What are you making every year?

Do you think it's, Um, between the two of us right now, we're about $75,000. Um, she's the bigger half of that, and I'm— I've been working for the same guy since high school, and it's just not grown into what I was expecting. So I'm moving jobs in the winter, um, just to finish out the year with it. It's a landscape business, so I'm—

Okay, because here's the thing, it's not the housing market's fault right now. It's an income problem. There's just a math equation here. If we go down to $35,000, $40,000 in income, We're not gonna be able to eat. This is not like a rent versus mortgage thing. So either way, we've gotta get the income up if this dream is going to come true. And I hope it does. I mean, you guys are young. How old are you two?

I'm 22. My wife's 23.

Okay. Average homeowner is now about 40 years old getting to their first home.

So even if it takes y'all 4 years, you're still so far ahead, man. And by the way, Like, for real, dude, like, this is just 2 dads talking to another brand new dad. Do not buy a house until you've got secure employment.

Yeah.

Okay, like, the last thing on earth you need is to be making $40 grand or $30 grand at a job that may or may not, this or that, or could be— dude, don't do that to yourself, but don't do that to your wife. Don't do that to your kid. Don't do that to the temperature in your home, man. And that means, like, cool, I'm gonna look for a job that I need to make $75 grand. I might have to go get some new training. I might have to like, so it's just putting the cart before the horse on a lot of stuff, man. But do we, like, I can't tell you, George and I, how big of a fan George and I are of all the things y'all are trying to do.

Right. Yeah. Thank you.

It's just slowing down and not letting your dream become a nightmare right underneath you because you wanted to do it all right this second.

Yeah. And I will say I'm, I'm making like $35,000 right now and I have an interview next week for a job. Doing HVAC, in which I'll start at about $40,000. And I've got friends at that business that are making north of $90,000 doing that.

So like—

Fantastic. I, I'm gonna go and make it work so that, I mean, I want my wife to stay at home. That's like priority one. And I think I just needed to hear something more concrete and that it is going to be worth it to save up and get, I mean, you know, have our feet on solid ground first.

And, and the math isn't in your favor. The, the rates are, are significantly higher on a 30-year to 15-year. Um, the, the amount of money you would pay over that 30 years, you wouldn't stay in this house for 30 years anyway. But yeah, it's just this, it's just, I, dude, I get it, man. I get it. That desperation. I gotta get my family a house. I gotta get in a house. I gotta, this kid's gotta have, I get it, man. I get it. It's just not there for you yet. And by the way, it's important that you and your wife have the conversation about She wants to stay home. She wants to own a home. And that means you're gonna be working 7 days a week.

There's sacrifice on either side here.

Right? And so she may come back and say, I actually want my husband too. What does this look like? What does a season of our life look like where one or both of us is grinding like this? So it's just asking yourselves, what kind of life do we want? And then what's the path to get there? But I love your hustle, man. You're a good man, dude.

Yeah.

When I was 23, I started this company, Justin. I was 40 grand in debt. So the fact that you guys have an emergency fund, you have 40 grand saved for the down payment at this age is so incredible.

Yeah, you're so far ahead.

You are not behind at all. And if you buy a house at 25, you will still be an incredible human being who is crushing it financially. There's no law that says if you don't have a house by 25, you're a terrible dad and husband.

I'd rather you be 27, have rented for several years, save up a big chunk of a down payment, and y'all go buy the house you actually want, not the one that you have to suffer through because Like you were so desperate to be a homeowner. Both George and I rented for a long time as married men.

I had roommates all the way up until I was married.

Both of my kids have lived in rented houses and they've worked out just fine.

Yeah.

So what is your rent right now?

Uh, it's $1,200 a month.

Okay. Um, now if we go down to one income—

Running from—

that's still another—

it's not important. It's not a bad situation, but we're actually renting from her parents. So that's another thing that I'm— it's not a bad situation at all, but I'm definitely excited to not have that anymore.

Sure.

For having your in-laws be your landlord?

Yeah.

That's a fair wish.

But if you're in— if your in-laws are great and they're giving you a good deal, then come up with a plan for in 1 year we want to be out, or in 18 months we want to be out, or in 6 months we want to be out. And It is the dude, George. The biggest pain is moving from rental to rental before you buy a house.

You feel like it's a waste of time, energy, and money.

Oh gosh, it's the worst. But man, if it sets you up, if it sets 28-year-old you up, 30-year-old you up, man, it's a pain in the butt now. But I promise you, when you're 30, you're gonna be glad that you slowed down and did it the right way.

It's just like a slingshot. This is, this is a slingshot. You're pulling it back and you're like, wait, I'm going backwards. I want to go forwards. And they're like, hold on, bud. Hold on, we're pulling it back, we're pulling it back. And when you release that thing with a strong down payment, she gets to stay home, you live on one income, there's no stress. Dude, you are going to skyrocket ahead of everyone that you know that's going, oh, I'm doing so good, I had a house 5 years ago. Where are they now? Might be selling that house because they did it before they were ready.

Mm-hmm.

We don't want that to be you, man. So do it the right way. I'm gonna send you a link to our free home buying course that I did. So hang on the line, we'll get you a link to that. And for the rest of you, we'll put a link in the description to that course for first-time homebuyers completely free.

Hey, what's up guys?

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Hello. Sorry about that. I have a good question for you guys. I make $120,000 a year, but I'm sitting on about $100,000 in consumer debt. To break it down, I've got $25,000 on a single car loan. Oh gosh, $45,000 in credit cards and $25,000 in student loans. I've also got about $5,000 left on a couch I financed for my wife Cheryl.

Oh wow, we're dragging Cheryl now into this?

Man, Cheryl and the couch, she's not even here, brother.

Exactly, I agree. And, uh, yeah, I—

Do you get used to this couch too? You might be sleeping on it after this call, brother.

Hope it's comfortable. Yeah, I am. I might be. Yeah, it's, it's definitely been a tough one for me. I'm just, I, I just think I'm, I'm just spinning wheels here. I feel terrible about all this.

Lee, what, what is $45,000 in credit cards?

Uh, let's see. Uh, I mean, is that all my debt?

Don't misunderstand. What did you use that money for?

What did you— yeah, is this you trying to prop up a lifestyle that you simply can't afford? Is it Exactly.

Yeah. Uh, I, I just, let's see. So I've got my car, uh, payment that I'm paying, which the car payment's, uh, expensive as well.

Um, now we're asking what caused all the credit card debt.

Yeah.

Yeah. I'm, I'm, I'm trying to get to the root of, um, like how does somebody making $120 grand a year, um, and does your wife work?

Uh, yes, she does.

How much does she make?

She makes, uh, about a little under than I make, probably around $110 grand.

Okay. So y'all make a quarter million dollars together. A little less.

Okay. That's not that bad.

A little less.

Okay.

Okay. And what I'm trying to get to is how do y'all owe $100,000 in consumer debt, half of which is credit card spending?

Well, that's the thing. I don't know. I mean, I've tracked all these subscriptions that we have for like our TV services and everything, and it seems like they're coming out automatically. And I don't know what to do.

This has nothing to do with Netflix. Netflix is not causing $50 grand in credit card debt.

This is a guy who— this is a couple who finances a couch.

Yes.

This is—

And our car payment.

But look, we're trying to show you the math on this. You probably— you guys take home like $15,000 a month, and that's not enough for you. You went to credit cards on top of that because you couldn't afford your bills.

Yes.

That's the problem. Was that clothes?

Is that vacations? That's what I'm trying to get to.

Is there a spending addiction?

Well, our house— our house had to be remodeled, and yes, my wife does have a small— I wouldn't say small spending addiction. Oh gosh, let's see. Our house had to be remodeled. We had a huge water leak, uh, about all of it went to our house remodel.

Okay. That's what I was trying to get to.

Okay.

That, that's the, it's different that our house exploded.

You put house repairs on the credit card versus—

I just have to get new clothes every week and my wife wants new furniture every other month. That, those are 2 different things for me. Just trying to help to get to the bottom of how we can help you best. Okay.

Okay. Yes, I understand.

Okay.

So is there one car payment and one that's paid off or do you guys just share one car?

We share one car. The, the car payment— she bought a car, she finances it. We are about— I'm trying to break down it. Uh, we have our car payment, uh, the loan that we have for it was $25,000. Um, and, uh, now we, uh, every week, uh, or every time we need to pay the car payment, we keep on setting it back because, uh, we aren't able to pay that. So I'm wondering if it would just be better to sell The car, or I don't know, it's hard to explain, but like, I'm wondering—

You can't make the car payment?

Why can't you make the car payment, brother?

We have not enough money to pay it.

Okay. We've got bigger problems here than we can solve on a single call, but you guys need to have a come-to-Jesus conversation tonight. Go look at your paychecks that showed up in that bank statement and then go find out where the heck all that money went.

Do y'all share a single checking account that both of your checks deposit into?

Uh, no. Well, actually she has her own. I have my own.

Okay.

And she will not stop spending it. I'm, I'm in the other room right now. I don't want her to hear anything.

Well, here, here's the thing here. I, I, I respect that you wanna, you're a good husband who wants to protect his wife's honor. I get that. But brother, there's a, what George and I are trying, have been trying to dig at and is becoming incredibly apparent to us is you have a huge situation on your hands.

Yes.

The, the, the money as you know it, as it's coming in and as it's being spent, there are tens of thousands of dollars unaccounted for.

Correct.

That happens in— and, and I don't, I don't wanna put things out in the universe, brother, but that happens when somebody's struggling with addiction, somebody's got, um, having an affair, somebody's just wildly out of control. And so hear me say as serious as I can and as lovingly as I can, you got a huge mess on your hands. And the only way forward is for you and your wife to get in a room and y'all to put everything on the table and say, we are about to lose our home and our car and we make $225,000 a year.

Yes, I, I definitely think I should have a talk with her. And, uh, I, you know, I've been struggling to figure out if she's been cheating on me because, um, she's been hanging out with one of her coworkers that she will not tell me anything about.

Yes. Your gut is— I hate to tell you, brother, your gut is probably directionally right.

Okay, yeah, and it's terrible because she's the one telling me that I have a spending problem when she's out here buying couches and, you know, and I don't know how to deal with any of it. I need to put all this on the table like you said. I like your idea.

Do you have a mirror nearby?

A mirror?

Yeah.

Yes, I do.

I want you to take a look in that mirror and say, it's not all my fault, but it's my responsibility. Because so far, nothing in this conversation has been Lee's fault. At every turn, she financed the car, she bought the couch, and she has her own money. And I don't know what she's doing over there, but man, if she could just get her act together, we'd be doing great. I don't believe that's the case. I think you both have some serious work to do on yourselves and on your marriage.

Here's what, here's what I would request at this meeting. Both of you pull your credit reports and you can do that for free. What's the website, George?

Annualcreditreport.com.

Annualcreditreport.com. You pull it for free and it will show you in real time who y'all owe money to and how much.

Well, that's amazing. I'll definitely have to check that out. And what did you say it was called? Annual—

Annualcreditreport.com. Here's the next thing. I— when there's a whole bunch of credit cards, because brother, you don't know what she's opened in her name.

Exactly.

And so I wanna know, as a married couple, where are we spending our money? And if there are certain credit cards she won't— like, you can't look at that, you— I'm never gonna tell you that, I'm not pulling my credit report, you don't need to know that— then you need to go sit with a marriage counselor, or you need to go see somebody. And you might end up sitting with an attorney cuz you got a big, big mess on your hands. Okay?

Exactly.

But George is right, you have to own what you do next, how you show up and treat her with kindness and dignity, even though she's not giving you that back. How you say, here's exactly what I want us to do together. Give her a clear plan. Here's the numbers I wanna see for us, because y'all simply make way too much money to not to be in the situation you're in. George and I talk to people all the time who have a lot of debt and who make a lot of money. But dude, you've got a hole in the bottom of your account somewhere that y'all are just shedding money. There's zero reason why y'all shouldn't be able to make your payments, even owing $100 grand, making as much money as y'all do unless you, unless y'all live in a $5 million house and your payment is $7,000 a month. Is that true?

No, it's about, I would say our payment for the house is around $5,000.

Well, that's a lot, but it's still a fraction of what you guys are taking home every month. Exactly. And that's just one tiny piece. Yeah.

Oh, you know what? That's a lot, but it's not outta whack. So yeah, that's a tiny piece. Y'all, you've got a big, a big problem on your hand, brother. The only way is to go directly through it.

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Up next, we've got Michael in Fort Wayne, Indiana. Michael, welcome to the Ramsey Show.

Hey, thanks for taking my call.

Absolutely.

I just want your opinion on something. My wife and I and our family, we're in Baby Step 4, 5, and 6. And just thank you for all the principles you guys teach. It's put us here. It's such a blessing. And we just had our youngest kid go to kindergarten So that enabled my wife to go back to full-time teaching after being out for 11 years. She's amazing. Just so thankful for her and just all she's sacrificing to do that. Um, kind of our motivation as a family for her to go back was we're super close to paying off our mortgage.

How close?

Super, um, like $40,000, $42,000, I think. We're almost at the finish line.

That's a car loan for some people. You got this.

Yeah, exactly. Exactly. So we're almost there. And so anyway, once you take out taxes and giving and then the 15% that we've done on my income, it makes the shovel a little smaller to get it done. We're wondering if we can get it paid off in like 11 months or a year, what would you guys think of still doing the 15% towards retirement from my income, just like we've always done, but holding off on it on hers till we get that house paid off? And then after that, just bump it all up about 15% just to get it done.

I'm interested to know— George and I may disagree on this, but I want to be as honest as I can here, okay? I did that exact thing.

Did you?

My wife and I circled up and said, hey, we're gonna pause this for 1 year and get this thing done forever. And yeah, for our, for, for me who's got a psychosis about owing people money, um, it was the right thing. But I, man, going on more than a year, going more than 18 months, it's really, and trust me from lived experience, it's real hard to put that 15% back. Right.

Yeah.

To start pulling. 'Cause man, that feels like free money and the discipline it takes to go back to investing. I, lived it. It's really hard, right?

Yeah.

What do you think? What's the principle, George?

Well, I'm wondering, what does your wife make a year as a teacher now?

So she's, she's bringing in $52,000 a year now.

And that one's got an automatic deduction, doesn't it, for a teacher retirement system of some sort?

So, so they've got an automatic deduction that goes towards the Indiana teacher retirement, but then they've got like a 401 on top of it. And that's what we were considering, you know, we'll do the 15% How old are you guys? How old are we? I'm 42, she's 36.

Okay, 36. So let me just do some math here. I'll pull up our investment calculator because what I like to do is go, okay, what do all the sides look like of this equation? So what you guys are saying we're gonna give up is $650 a month for a year, so $7,800, right?

Yep.

So let's say that we just— we had that $7,800 and it was growing for us for the next 20 years. Now you're 62, she's still a young sprightly 56, right?

Right.

I'm gonna give it 20 years to grow. I'm gonna say 10% average annual rate of return, no monthly contribution, just that pile of money growing for 20 years. That's really what we're giving up. That's the opportunity cost we're talking about in order to pay off the mortgage a little earlier. So I'm gonna hit calculate. It's $57,000.

Yeah.

So that's the The actual numbers we want to compare, not just, well, it's $650 a month, we're just giving that up. We're actually giving up close to $60,000 to make this happen a little bit sooner. What I would do is say, let's say that she did invest 15%. How much does that slow down the mortgage payment? When would you guys pay off the house?

From what I'm seeing, without doing the 15%, it would be 11 or 12 months. With doing it, it would be maybe 16. It's not that much longer. I know it's not a huge deal. We're talking 4 months.

Yeah. And then here's my other thing, and this is where my brain goes. I go, okay, how do we make up the gap? How do we put that much extra while she invests to still pay this off in under a year? What am I willing to do? Side hustles, work harder, cut expenses, make other sacrifices to not derail our financial plan. Because you guys have worked so hard to get here, and to unplug investing for a year just as a muscle, you're going to atrophy a little bit.

Yeah, that's what I was saying. It's, it's hard to come back, dude.

Yeah, no, I get that. I get that.

Versus going from 15% to 20, 30, 40% once you guys have that mortgage paid off is gonna feel easy.

Oh yeah, yeah. It's just like you're just adding a little more. Yeah. No, I get that.

Can she tutor over next, you know, next summer? Can you do, commit to doing something else? 'Cause that's really what we're talking about is a couple of grand, less than 10 grand is the difference here.

Yeah, we can look into that or not go on vacation this year or something, or, you know.

Well, and, and it, yeah, it's, it's the, and, and that's probably a good way to look at it is if we wanna accelerate this, there's gonna be some pain. Do we want that pain? Yeah. To be 20 years from now when we're like, man, we could have $60,000 more in retirement. Do we want that pain to be, we're, we're gonna skip a vacation and we're gonna go camping somewhere in Indiana instead of going on a big trip this year? What, what pain are we willing to endure short-term so that we never have a house payment? Because we wanna accelerate that thing. And you might land on, it's 4 more months. Let's just stay the course. Um, and hopefully also we gave you a good like ringside seat to, I'm an over-emotional guy. I know that.

Right.

And so I, and I'm a super nerd who's like, what do the numbers say?

Yeah, exactly. George is like, well, future me is gonna really be sad. And so the, It's just knowing, man, I wish, I wish with all of my heart I had what George has, which is the ability to feel uncomfortable and then always do the next right thing. I've been practicing that for a long time. I'm trying.

I'm trying.

I'm coaching him.

Right. He's, he's trying. And I'm sh— hopefully he wishes he had a little more fun like I do. 100%. Right.

So I wish I had hobbies like John does.

Yeah.

Yeah.

Yeah.

I, he wishes he had joy and laughter in his life like I do. So like, all that to say is I, I couldn't sit here and say, you can't do that. that, cuz I did it. That's exactly what me and my wife did. And she knew she's married to a person who's quasi-insane about owing people money. Like it's a lived ex— it's like a, it melts me. And so for her, she's like, oh, I get my husband back in a year. Yes. Whatever we gotta do.

Um, that's like John is the little devil on your shoulder. And then I have Dave Ramsey on the other side going, you move from intensity to intentionality in Baby Step 4 through 6.

So that's right.

That's what I'm hearing too, is, and I was intentionally intense, right? Like, dude, you're gonna be 43 and 37 with a paid-for house. Like, that's insane. So if it's 4 months beyond that, we're still gonna cheer you on and go, that is incredible. And the fact that you invested the whole time is even more incredible. So that would be my, my personal plan would be let's invest 15% of our full household income for now and see how we can still hit our goal of knocking this out in less than a year. And I almost can guarantee it. Now, I can't say it for sure. You guys will pay this house off in a year while investing.

And can I completely do a 180 of what I've been saying?

Yeah. Yeah.

I wanna throw a third option on the table. What if you and your wife sat down and said, we're not gonna do it in 10 months, we're not gonna do it in 14 months, we're actually gonna do it in 16 months. And we're gonna take a little bit of money each month. Now that you're back in the workforce full-time and we still have kids, we're gonna hire a house cleaner. I wanna take you to a nice meal once a week. I'm going to take the kids out and let you just exhale because now you're surrounded by kids all day and you come home to more kids. Like y'all begin to build in what kind of life do we want to have? Because in the same way in your home, like in my house, I'm psychotic about a couple of things. Your wife may be feeling the weight of I'm back full-time, but I also feel this pressure to keep my old identity and, and, and, and y'all ask yourselves, what kind of home, what do you want your home to feel like? And I would say even being part of, like, like George was saying, being intentional is we're gonna actually do something great.

We're gonna slow it down a little bit and we're gonna go out to eat.

Yeah.

We're gonna give each other a room to breathe.

She deserves it. She's, uh, she's amazing. Just, uh, the sacrifice she makes these first couple weeks of school.

So it's awesome. Yeah. And go, man, classroom is different than it was 10 years ago, brother. It's different. Amen.

Amen.

And so, um, yeah, she'll give her the love and care and support she needs. Ask her every morning of your, of your life, How can I love you today? And man, um, be all about supporting you. You sound like a really good husband. So we've, we've given you, uh, pretty much no answer, right?

I gave you the right one. John gave you an alternative. So I think we're both, you know, we're both something.

Yeah. George gave you the right answer and I gave you the 2 alternatives, the one I did and the one I probably wish I would've done.

So there are no sins being committed here, but the plan works if you work it. And so we say 4, 5, 6 are done simultaneously. And 15% is forever. In fact, once you pay off the mortgage, you just increase investing. But even if you had it, you're like, hey, we're good on retirement, we still tell people to invest because there's more impact to be made for your family, for your community, for the things that you want to do. It's a good problem if you had too much money in retirement. You can come back and yell at me later, even if you paid off the mortgage 4 months later on. Way to go, man.

Thank you. Okay, George, we hear from so many people that are trying to live out the Ramsey Plan, right?

They're getting out of debt and everything, but the hard thing is there's not many banks out there that actually support the way we teach people to handle money.

Yeah, most banks, they don't want you to win with money, so they charge a bunch of nuisance fees. There's all this fine print, and worst of all, They are pushing debt products at you nonstop.

Yes, but the good thing is, is that Fairwinds isn't like most banks.

They're not like the other guys.

They're not like the other guys.

Yeah, they are not pushing debt, and they actually want you to win with the Baby Steps.

And so what's great too is they created the Smart Bundle for Ramsey fans, which includes a high-yield savings account and no monthly fee checking.

Which is huge because it's rare to have a checking account tied to a high-yield savings account. You can get all of that with Fairwinds. And for the nerds out there, you can up to 10 different high-yield savings accounts for different goals. So you got your emergency fund, the car upgrade fund, the vacation fund. The world is your oyster. So beautiful.

And check out the debit card, the new one, the Live Like No One Else debit card.

Oh, it's beautiful.

So beautiful.

That's a conversation starter. It's so good.

Well, and when you swipe or you tap, you know, every time you take it outta your wallet, you're remembering that you are living like no one else and you're being intentional with your money.

I've been using Fairwinds for months and months now. I love their features, the app, the customer service. It is all so good and so aligned with the Ramsey principles.

Absolutely.

So y'all, we both bank at Fairwinds, and we love their commitment to Ramsey values.

So check it out. You can get that smart bundle. We're gonna drop a link in the description, or you can go to fairwinds.org/ramsey today.

That's right. That's fairwinds.org/ramsey, insured by the NCUA.

Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell here with John Delony, taking your calls. Calls at 888-825-5225. Thomas is in New York City up next. What's going on, Thomas?

Hey, how you doing?

Doing great. How can John and I help?

Um, so I currently am house hacking. Um, I am trying to move. I don't like my current living situation because I'm in a low-income area. Um, I feel like my 2 options right now is one, move out to an apartment and rent, But, uh, I would rent out my current unit. Or 2, which I was leaning towards, is, um, just buying another property in a better area but continuing to house hack.

So Thomas, I'm an old, old man. What is house hacking?

John hasn't been on TikTok ever. She doesn't know what this is.

I would not know how to log into TikTok.

Yeah. What is house hacking? So I live in one unit and I rent out my other 2 units. And I get rent for the mortgage.

Is that what the kids call it these days? House hacking?

Yes.

All right.

All right. Yeah.

That sounds miserable.

It is pretty miserable. I actually hate it.

So let me ask you this. So I was an early adopter back in 2000, like 9, 10 into this thing called biohacking. And yeah, I used to, there was no continuous glucose monitor, so I'd prick my finger every morning and I was always peeing on ketone strips and I was keeping like these detailed Excel spreadsheets. And then one day I was like, I'm biohacking myself into a life that I hate living.

Yeah.

Right. And so then I quit biohacking, you know what I mean? But so yeah, I think, I don't know, George knows more about this TikTok sensation.

What caused you to get into this house hacking situation? I'm assuming you're a guy in your 20s. How old are you?

27. Okay. What caused me to get into it? I mean, I just I want to become financially stable. I want to diversify.

But like, did someone tell you about this? Did you see a video and it sounded alluring and you started looking for multifamily homes?

I think I was on YouTube a few years back. Yeah, I didn't like how expensive rent was. And, you know, I've always heard that it's better to buy than to rent. So figuring out how I can buy.

Okay. What I want you to understand is that a lot of times, The things that seem really cool on the internet are often going to destroy your life. Now, you're not quite there yet, but you're getting a little bit of that taste in your mouth of the reality of this was not what was sold to me when I bought the course or whatever.

Mm-hmm.

And so, I want you to realize that it's okay to opt out and go, you know what? I'm going to go rent for a while and just sort of reset. I can sell this multifamily because I don't really want to be a landlord by default. Just because I thought house hacking was gonna be the move.

And both George and I have both rented, both married. I, I've rented, both of my kids have lived in rented homes at certain times and we kept plugging away and our life is, is changed now. You get what I'm saying? Like the fact that you're thinking about future you and you're trying these things tells me you've got what it takes to become financially secure. You're not scared of doing hard stuff. You're not scared of putting yourself in uncomfortable situations. You're not scared of like, like doing the next right hard thing. So man, you, all you need is a clear path that's actually gonna get you where you want to go, um, and not get a bunch of clicks on some, um, social media site, right?

Yeah.

So what are you making right now? What's your income and what is the income you're actually netting from What's your income from this multifamily, if any?

My income gross is $300,000.

What do you do?

Software engineer.

Amazing. $300,000?

Yeah.

You know who doesn't need to house hack? Guys who make $300,000. Thomas, you won, dude! You can pay your own mortgage like a grown adult. You don't need people doing it for you that live next door that also knock on your door when their toilet breaks. That throw parties.

I'm trying to put myself in the best position.

Thomas, you're in it.

Do you have any debt right now?

No, I have like $4,000 in student loans.

Okay. You can pay that off today? You have that money in savings?

Yeah, I can.

Great.

How much will you have left in savings after that?

A good amount. Like, uh, all of it.

92. Amazing. So think about this. Today, you will be consumer debt-free with $90,000 in the bank. What is owed on the mortgage on this multifamily?

I just bought it, um, like 18 months ago. Um, I almost got all of it left, like $650,000.

$650,000 is what is owed, and it's about worth $650,000?

Uh, I bought it at like $690,000. Right now, if I have to get Between $750 and a little more.

Okay, so you could probably walk away after fees with a little bit of pocket change if you sold it.

Maybe, maybe.

Okay, because right now they're just paying the mortgage. Like, basically you're, you're staying there rent-free.

Yeah.

What's the cash flow like? Because you have a big old mortgage on that.

Yeah, I mean, I'm like negative $100 after rent is collected.

So you owe $100?

Like, like after I get all my rent, I have to put like $100 of your own money to pay the mortgage.

Okay. So you basically have a very low rent right now, but you have to do work as a landlord and deal with all the risk and liability and all that fun stuff.

Yeah.

And somebody else regularly flushing your toilets.

Yeah.

Right.

So what is your actual dream? If I could erase this whole house hacking thing we restarted today, what does Thomas really want? Do you wanna live in a single-family home in a decent Decent neighborhood and start a family? Like, what's on the other end of this?

Yeah, a nice single-family home, uh, a nice neighborhood.

So buy that. Set yourself up for the life you actually want.

What's your— what was growing up, um, like, what was money like growing up for you?

Uh, money wasn't, um, that wasn't— I wasn't finding it. Like, yeah, money wasn't there. It wasn't— I wasn't broke. We weren't broke. Broke, you know, money wasn't—

Was it a source of tension?

That much? Yeah, I mean, we didn't— my mother did a good job, so we didn't feel it as children.

No, no, I'm not saying this as a character, anything, any shade on anybody. I'm just trying to get to a point, because where George and I are sitting, you're 25 years old, you make $300 grand.

Yeah.

When you're 27, you'll have banked $900,000. After taxes. You, you get what I'm saying? Like, bro, you're doing really, really well.

Yeah.

Now you're in the uncomfortable adult seat of slow and steady.

So imagine you go rent for a year, even if it costs you, I don't know, 2 or 3 grand. I don't know what it's gonna cost in your area for a place that you like. And you just live fairly frugally, live on less than you make. Should be easy on 300 grand with no debt. You bank 150 grand on top of your 90. Now you got some serious money. You got $240,000 to put down on a house that you actually want.

You're saying I should like just buy this nice single-family home in a nice neighborhood?

Buy the home that you want. 'Cause you don't need somebody to pay your mortgage. That's not the issue.

Yeah.

If you, if you buy the house you want and you start building the life you want, and a few years from now you want to get into real estate, that's awesome, Man, you'll be able to do that with cash. Buy the place. Yeah. And then put 2 different families on either side of each other, give them a great deal on rent to support them. And man, everybody wins.

Do you have a girlfriend right now?

Even if I'm not— yeah, I do.

Okay. What does she want for your future together?

Oh yeah. Nice single family home.

She wants that duplex life.

I think you know what to do, man, and you are in a great position to do it. But all it takes is putting this house on the market and going, well, tried that, wasn't for me.

Wasn't for me. And by the way, you should get into radio because your voice is way better than mine.

So smooth.

Golly, I would love to have a voice like that. This show is sponsored by BetterHelp. A lot of you are just trying to keep it together all the time. You show up to work, you pay the bills mostly on time, you smile at all the right times, but no one sees you when you're exhausted. No one sees you snap at your spouse or sit awake at 2 AM running through everything you wish you'd done and said differently during the day. Just because you're functioning doesn't mean you're okay. Talking to someone else is a great way to process what's happening in your life and get to the root of what you're experiencing. That's where BetterHelp comes in. BetterHelp matches you with one of their 30,000 licensed therapists, someone you can be real with and finally put down some of the weight you've been carrying. They can help you get perspective and see other sides of your situations and help you move forward with a plan for getting well. BetterHelp therapists all follow a strict code of ethics, and if the first therapist isn't the right fit, you can switch for No extra cost. Asking for help isn't weakness, it's wisdom and strength.

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James is in Raleigh, North Carolina, up next. James, welcome to the show.

What's going on, guys?

How are y'all?

We're doing great. How can we help today?

Awesome. Hey, let me just start by saying I'm a little bit relieved and a little bit disappointed that I'm not talking with Dave today because I knew Dave was going to whoop my tail.

We can do it.

We'll dial it up for you, man.

We've gotten our tail whipped by Dave too, so we know.

Look, John, I listen to you all the time, bro. I'm a pastor and I sit with a lot of hurting people, and man, I've gleaned a lot of— even I don't want to say tactics, but techniques as how to sit with people from you. So I appreciate you, bro.

You got it, man. Thanks for calling. How can we help, man?

Yeah, so my wife and I have been married 14 years. My wife is amazing. We have 6 kiddos, 10 down to 1. Uh, I am a pastor of a growing church and I also run a small business and it's kind of in a spot. We've allowed ourselves to get kind of back into a spot where we're in a— got a good bit of debt and, uh, we have an income issue, but at the same time I also have just a time issue. So anyway, we're trying to get started back on the Baby Steps and get out of debt. And so it's just— and looking for maybe a little bit of help with us as we're trying to get started.

What kind of debt is this and how much?

Yeah, so we got about $70,000 consumer debt. There's about $30K in a personal loan, $2,000 we owe to the local county. We're paying on taxes for our land. Um, we got about $5,000 over 2 different credit cards, and then $16,000 in a truck I bought last year, um, when I was starting the business. And then also $8,000 for an enclosed trailer I bought as well.

For the business?

What's a small business?

Yeah, so I do, uh, light remodeling, handyman, that kind of stuff.

What did you, what did you report last year? How much did you make?

Yeah, about $65,000. And it was about half the year I was doing it full-time, the other half of the year— well, really not even the other half. In November, I actually stepped— so really about 10 months of the year I was doing it full-time. In November, I stepped in as a lead pastor at a church, and so I cut back to about 2 or 3 days a week with the business. And I'm honestly not Not sure right now if it's worth it.

What is your salary as a minister?

Uh, $60,000.

Okay, so you were making $125,000. Are you making a grand a month doing this now?

With the side business?

Yeah.

Uh, it depends. Honestly, it's feast or famine. Like July, June, July July was maybe a grand. August will be about 7 grand.

Because you're— yeah, on the months that are bad, you're bleeding money from this thing just trying to make payments on the truck and trailer. And was the $30K personal loan for the business?

No, that was— we moved about 2 years ago and purchased a piece of land and put a mobile home on it.

What was the land for?

Just where we live. We sold our house and just lifestyle. We moved out of the city, moved out into the country to raise the kids that way.

Okay.

Yeah, so we ended up— we thought we could cash flow it off the sale of our other house, and it just— once we got in it, we couldn't. So we ended up getting a personal loan to finish drilling the well and that kind of stuff.

Does your wife want out of this debt? Are you guys ready to go back to debt freedom? Like, how bought in are you guys?

No, we're locked in. We're together. We're locked in, bro. Like, I posted my truck yesterday.

Wow. Well, here's the other— now I don't know. Here's the other—

I don't know what I'll do if I sell the truck.

Well, here's the other side of it is you, y'all sit, I mean, you can't get through this without sacrifice. Gnarly sacrifice.

Right. Right.

It seems to me, and push back on me, man, and George, you tell me if I'm wrong. You happen to have a key in your back pocket, which is I can go turn a key and I will collapse at the end of one calendar year, but I can make another $65,000 on top of being a pastor here. here and get my family cleared out of this mess?

Potentially. This is— I think this is where I'm struggling. I've got the church in the last year has, has doubled. Um, the Lord's doing— it's the cool work and it's doubled. And, you know, in the last 9 months I've done 5 funerals and walked with folks after they become widows because the spouse committed suicide.

And sure, sure, sure.

So you're saying that the church is demanding more time from you now so you don't have time for the business, which is producing the income that you need to pay off the debt. Is that what we're getting at?

And I have 6, right? And I have 6 kids.

So, so here, this is—

my kids are my first ministry. This is one of my wrestling with all of that.

Well, this is one of my, like, top of the top 5 hard conversations I have to have. This is one of the hardest, okay? This is up there in the top 5. You, you want to be a pastor. You might even use the language you were called to be a pastor. And by all accounts, like all, uh, what I would call, and I hate, hate using these, but by earthly metrics, you're pretty good at it. You're creating a world that people wanna be a part of. You're, you're not creating it. You're help facilitating a world, right? You're good at it. And you and your wife dug a $70,000 hole.

Yep.

And so at some point you're gonna either have to pause this dream and this calling because to clean up decisions that past you has made, or you're going to have to look at your wife and say, I've got 6 kids and this is my priority, and I'm going to show— give them a ringside seat. I'm going to show them what it's like to clean up a mess you've made. And like I say, you will be spent. You will be a wrung-out rag at the end of a year. Or you get with your church leaders and say, here's the situation I've found myself Right. But like, I hate that you're in this position, but you got a math problem in front of you. You get what I'm saying?

Yeah, yeah, for sure. And 1 million percent, like, we put ourselves in this position. So I mean, we're there.

Oh, I hear you.

I hear you.

You've taken full responsibility. So that's why we're not gonna beat up on you. And Dave wouldn't either, because you're not a guy who's not seeing it for what it is. You know what you did, you know the way out, and you're going, how do we do this? And we're giving you the roadmap. It's just not a fun to say, hey man, you got 6 kids and you're gonna miss out on some things over the next year as you clean this up. But the other side of this is you do nothing, you go into deeper debt. Now you got kids who are 2 through 11 and you got a bigger pile of debt. And so kicking the can down the road is also not gonna solve it. So the best way to get out of this debt is just go through it and go, all right, if I can make $70 grand doing this side business plus our income, we can knock out this debt in 12 months.

Yeah, yeah. And I mean, there is a— there's more work. Work's definitely not the issue. I mean, I can—

Sure, you can drum up more work out there.

Or you and your wife say, hey, this is a 2-year project and I'm gonna make $30 grand a year, and every penny in the side business is gonna go towards our debt. Every penny. Which means we gotta learn to live off our— my $60,000 ministry income.

Yeah, well, and, and something we did last year, which I'm— or this year, year, which was the right decision, but just kind of added a complication, is during COVID because of— I've been in ministry for a while, but was kind of the associate pastor. But during COVID we got food stamps, which, you know, of course I would never want to be on or even tell anybody I was on, but we were. And so, man, with as many kids as we have, we were getting $900 a month. And we killed that this year. We're like, we're done. I started the business now. We no longer eligible. And we're doing— yeah, we're going to turn everything in. We're walking on the up and up and we're going to sacrifice that. So I also got like a $10,000 pay cut in some sense this year from—

Because you're covering that now.

But, bro, yeah, but it was worth it. My wife and I talk about it all the time. Like, praise God, we are not—

Well, now you're in control.

Yeah.

And can I have permission to Jesus juke you, Jesus, shoot me. Okay, here it is. Proverbs 22:7. You know about 1,000 more verses than I do. The borrower is slave to the lender. And you knew that, but now it's a stark reminder that that lender owns your time that you could have been spending with your kids. So it's not the side job's fault, it's not the church's fault. It is, man, I'm so mad at the decisions I made and the lenders I have to pay, and I'm gonna get out once and for all and never go back in, which means cutting up the cards, selling the truck, selling the trailer, and working your tail off to climb out of this thing for true freedom. We're rooting for you. As your business grows, everything becomes more complex. There was a time when Ramsey Solutions had too many disconnected systems and not enough visibility across the business. We wasted too much time chasing information instead of making decisions.

That's why we got NetSuite.

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Live like no one else. Start EveryDollar for free in the App Store or Google Play. Sarah is in D.C. up next. Sarah, welcome to the show!

Hey, thanks for having me, guys!

Absolutely! How can John and I help?

I have a timeline question for you all today. I am fairly newly engaged and my fiancé and I are sitting down with the numbers. and we're keeping things separate for now, but planning on combining. So just kind of planning for all of that. And we are currently in a small rental apartment and want to know about saving for a wedding and a down payment for a house with kind of a few little asterisks to the grand scheme of things. So one of the major sacrifices that we've made to try to pay off all of our debt is Okay. Staying in a fairly small apartment that's not super conducive to raising children in. My fiancé is in the police department, so we actually live in a not-so-great area that I wouldn't feel comfortable bringing a small child into the home. But in return for his presence as a police officer and some work he does on the side for them, we don't pay rent. So, obviously, That is a huge blessing and has allowed us to pay down our debt. But I don't want to have children here. I'm about to be 31. And so we would like to start on children shortly after getting married.

When's the wedding?

Yeah, that's— no, we haven't set a date yet. Part of doing that is setting out our financial goals. Because we, like I said, saving up for the wedding is sort of part of this timeline question.

Okay. And how much debt do you guys have left separately?

So he is almost done. He has about $3,000 left in student loans. That's it. Paid off the credit card, paid off the car.

Awesome.

So he's set. He'll have that done in like a month or two. Great. I have $11,000 in my car loan and then I I have $214,000 left in my student loans, which sounds scary, but I started at over $300,000 total. So I've made a lot of progress.

Are you a physician?

I am an overnight emergency veterinarian. So kind of the second caveat to that is the longevity of my job. Um, you know, I love what I do and I wish I could do it for forever, but my body tells me that I cannot do overnight forever, especially in emergency. I'm worried about probably needing to take a pay cut when we start having kids. I could work as a regular veterinarian and probably still make $160,000 to $180,000 in this area, but it would be a substantial pay cut, obviously.

So I'll let George speak. I have some ideas, but we'll wait.

So the overall question you're asking is, when do we make the move? Where do we go? Should we rent?

So I would love to buy. That's the preference. But yes, if you have thoughts on that, that would be great. My question is when to stop aggressively paying down the debt, which I mean, I'm putting like close to $8,000 every month into my student loans right now. So when do I divert from Baby Step 2 to try to do the things that are needed for the next steps of our life? without putting it too much on hold.

Next steps being wedding, down payment, all that?

Yeah.

OK. Well, I'll give you the simplest answer, which is, you are not going to stop being aggressive on the debt, but you should pause and save up for the wedding and do something reasonable. Now, is it just on you two to cover all things wedding, or is family helping?

It's probably just on us.

OK. Then I'm going to do the smallest sweetening. Just call it an intimate It's cozy. You don't need 150 people there because you're basically paying for them to party at $100 a head.

Yeah, we've talked about that. We're planning on doing something small and reasonable.

OK. And the reason I'm not like, you've got to get married tomorrow, it's just that once you guys are married, you're going to have a superpower, which is combining your finances and your goal and your vision, which is going to move everything faster. Because if you had all of his income— now he's debt-free— throwing at your debt, well, now we can make some progress fast. It's not gonna take you as long. You're gonna get done in less than half the time. And so that's where the focus should be, which means we are renting for the foreseeable future until we are completely consumer debt-free. We have an emergency fund. We have a solid down payment. Because what happens for people in your shoes, you guys make great money, you have the baby, and all of a sudden you want to cut back and you can't because you have a huge pile of debt.

Yeah.

You have a huge mortgage. You have nothing in savings. And now you're frustrated.

Yeah.

And you're scared. And so I'd much rather you do this with peace and just rent for a while with your incredible incomes, even if it's for 3 or 4 years. That's okay.

I guess, does that— so I'm nervous and very hesitant to put off our family planning and children.

Oh, I'm not saying that.

Have a—

listen, I'm telling you to have a baby, and when that time comes, you guys should move and go rent somewhere, even if it costs you Or every single apartment or, uh, condo I've ever rented had some police presence.

Is there a possibility that there's nicer apartments, nicer places somewhere within a 30 or 45-minute radius of where y'all both work, that that would be a possibility?

So probably not. Like, I mean, yes, we could move and like rent somewhere different. Like that's definitely obviously a thing, but, um, not in the same setup where we would not pay rent. Um, or a subsidized rent. Um, they— so they do exist. It's a program like through the department. Okay. But, um, the way we got this one, and it was essentially like handed down to us from his best friend.

So what would rent cost if you didn't have any subsidies? If you just had to pay for rent somewhere reasonable, a nicer place, what would it cost?

Um, probably like $2,500 to $3,000. We live in a pretty terrible housing area. The housing market's awful.

Okay. And if you guys are married at that point, you guys are bringing home, my guess is maybe $12,000 to $15,000?

Our take-home combined is about $16,000 a month. Amazing!

Think about that. $2,500 out of $16,000. That's not the thing that's going to hold you back from paying off debt. And you have a higher quality of life, which means when you come back from a long day at work, you can rest your head somewhere and feel good about it and sleep Yeah.

Yeah. I know this, it feels like I'm climbing a mountain or sleeping under it currently, but well, and can I, can I, can I say some hard things?

'Cause I love you and I want you and your husband to have an amazing life and have 50 kids and have the, all everything you want. Is that cool?

Yeah, of course.

It would be really, um, advantageous to you. And it's a, it's a, it's a psychological exercise as much as it's a spiritual exercise. Write down all of the things, not need, all of the things you want.

Mm-hmm.

And what you're gonna find is you want a whole bunch of things and everything you've said so far you wanted, you want a nice house, you want a safe place for your kid. You wanna have kids right away. You wanna get married. All those things are amazing. They're all awesome. I support each one of those a million percent, but you also wanted to take out $300 grand to go to school.

Yeah.

And so that particular want that you gave into is now holding you back from all these new things that you want. And so let's sever ties with that old want as fast as humanly possible so we can get to the life that we want now. But trying, trying to cram the things that you want now into, um, an already existing mess Stress will make everything less peaceful, enjoyable, life-giving. And what ends up happening is we want to blame everybody else. You looking in the mirror and saying, I, I thought I had to, nobody told me different, whatever. I took out $300,000, so I'm going to live like a maniac getting this stuff paid off. I'm going to get married and have a really small wedding because I don't want to spend $20 grand on that. I want to spend $20 grand on 2 more months of paying off my student loans. We'll have a different party in 2 or 3 years, but we are going to attack this thing so we can get into the life that we actually want.

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Today's Question of the Day is brought to you by YRefi. If you've fallen behind on your private student loans, you don't need more shame, you need a plan. YRefi helps borrowers explore refinancing options with a low fixed rate and payments based on what you can afford. Go to yrefi.com/ramsey. May not be available in all states.

Today's question comes from Antonio in Florida. Antonio writes, She uses them to play the points and miles game, but I'd like to get rid of them. She's recently started realizing how much work it is to manage all the things that come with the credit cards and also wants to get rid of them, but is worried about destroying her credit score. Is that something we should be concerned about? No.

Thanks for the question, Antonio.

That was fun.

Oh, see, here's the thing.

I don't think our answer is going to be satisfactory. Because it needs to be a lived experience. Us just telling her, you're going to be fine, probably won't be enough. And I wrote about this extensively in my book, Breaking Free from Broke. A whole chapter on credit cards, a whole chapter about what I call the perfect spender, the points redeemer, the people who are like, I'm playing the game perfectly, why would I stop? And now, not only that, but why would I stop when it could then hurt me to stop because of my credit score? So what you need to remind her is that a credit score allows you to get more debt at good terms. So what else are you trying to go into debt towards, and how does a credit card actually help you move forward financially? And once you realize that it is a game, that it is a maze, and at the end you're like, where's the cheese? Like, oh no, there's no cheese.

They expired.

You just keep— there's another maze now. You just keep doing this until you die. And so I'm glad that you're realizing that this is a game, and that she's realizing hopefully that this is a game, and it's just, this was fun, But you're saying she wants to get rid of them. So here's the thing, you just get rid of them. Your credit score might take a temporary dip and then you move on with your life and you pay cash for things using your own money. And that is where you get so much freedom that you can't, I can't explain to someone how good it feels to not use someone else's money.

Um, well, let me, let me, cuz I was gonna say, um, Antonio, your wife's right. It will destroy her credit score. It'll go to zero. It'll implode. Exploded. I would say it doesn't matter, but you're saying it just a little dip?

Yeah.

I mean, if you immediately, like, you pay it all off, you close the account.

Oh, gotcha.

You'll see a dip in the credit score. Now the question is, it's not gonna be like that forever. 6 to 12 months after you have no accounts open, it becomes indeterminable. So if I went to check my credit score right now, it would just say, ain't nothing here, bud. We don't got any records of you.

Right.

I'm off the grid basically.

That's like me looking up like, what is my score on like a dating website. I'm not on them.

That's it. So I'm not— So the only major thing people get worried about that is legitimate is, well, how am I gonna get a house? And there's something called manual underwriting. We've talked about it a lot on the show. And it's like the old times before, you know, the, the late '90s when credit scores were all the rage. You just went into the bank or the lender and said, hey, here's my income. I don't have any debt. Here's my down payment. Here's my rent, you know, payments that were on time. My utility bills have been on time. And you can get a mortgage without having a credit score. And again, it's not theory. I've done it. And so—

I've done it too. And before every human became commoditized and reduced to—

3 digits.

A number, right? That some computer spit out and said, this is, this is your risk profile to us as a big, um, entity. Yeah, man. Manual underwriting. They actually look at you and your actual situation. Um, and Antonio, the, I'll, I'll tell you the 2 things that were convicting to me about credit scores. Um, thing number one is it has zero, nada, no bearing on your financial position. Meaning I could give you— I don't have this, but if I found it and I gave you $5 million, it would affect your credit score in zero ways. And so we, we've suddenly over time, this extrinsic metric called a credit score, we've allowed it to infiltrate not only our borrowing and lending world, but our self-worth as some sort of proxy for how are we doing financially. I hear so many of my friends and even family members say, well, I wanna keep my credit score cuz it's this. And they never say, here's how much money I have in the bank, or here's my net worth, even financial net worth. They just wanna keep this credit score up. It's not a proxy for how well you're doing financially at all.

It's simply a proxy for How much have you borrowed in the past and how good did you manage that relationship? That's it. The second thing is, and, and this is me getting all high and mighty, um, and George, you and I have talked about this, um, just privately. I, man, I was big on having a credit card, using it for the free points. I travel a lot and I didn't wanna pay for flights and I would pay it off every month and I lived like that for a long time. I remember the aha moment. when I got a bunch of points for a huge purchase that I got reimbursed for, that I thought, wait a minute, they're not my friend. They're not just hooking me up.

They're not a charity.

Who's paying for these flights? And as I dug into that, that's when I said, I'm out of this game because the people who pay for that, that flight are the folks who are struggling to pay their bills every month, who are paying overdraft fees. That's what's funding my free hotel rooms and flights. And I don't want to get a free flight on the back of somebody who's struggling. like that. So I'm out. I'm out. If I want to go somewhere, I'm going to pay for it. And if the, if the airline I use or the hotel I use, they have their own point system. Like if you use my airline system, my airline will give you free flights over time. Great. That's between me and them. But somebody who's struggling isn't funding my good times. I just don't want, I don't want any part of that kind of gross system.

I got the numbers for you here, John. This is in the book and in this chapter on credit scores and credit cards, lower income cardholders paid $4.14 billion in fees just that year. Those with higher incomes raked in $1.26 billion in rewards. That's pretty wild. So lower income people are paying $4 billion in fees and the rich do get richer because they're raking in those rewards. The credit card company is not blessing you. They're just simply redistributing that money.

Right.

From, and so in my head, there's a single mom who, whose husband just, or whoever, the guy just walked out and she's gotta get groceries and she puts 'em on there and that same month her hours get cut and they charge her $35, $75 late fee. That's what just bought my flight. I'm not— no way, dude, right? No way. I don't want to be a part of a system like that, so I'm just going to opt out, man.

Well, I'm riled up now.

Antonio, cut them up, cut them up and move on with your life.

Bella's in Sacramento up next. What's going on, Bella? How can we help?

Hi guys, I am so excited to talk to you guys. I've listened, you guys are like celebrities in our house.

We're all celebrities somewhere. We're not celebrities in our own house or on the internet. So thank you so much.

So yeah, I never thought I would be calling about my dad. Um, so my dad, who's always been very meticulous with money, like his checkbook, but he's old school, so he does, you know, have a credit card with points. He has multiple credit cards. Um, and now we're in the position of, um, having to make decisions for him because he's starting to suffer from dementia. And so Yeah, he's had this Sears card for I don't know how many years, um, racked up like 6 figures of reward points. Um, and I guess recently Citibank bought out Sears. And so when they began sending him statements, he didn't see his reward points that held so much value to him. Now he's suffering from dementia, so he doesn't understand now that it's not money, it's reward points. And so he's thinking Citibank stole like $120,000 from him.

Gotcha.

like that. You can't even have that much on a credit card. But I digress.

How much does he owe on this card?

So now he owes about $4,000. I tried to talk to them. He stopped paying it because he thought they were stealing his money.

Oh no.

I tried to talk to them and tell them, hey, we're trying to figure out a way to help resolve this. He doesn't have an income any longer. They're just not moving. And so now they just served him with a summons for court which doesn't have a court date on it. So I don't know if they're threatening him, but I just don't know as a daughter, like, what options I have to help him out of this situation. I've never been here before, so—

I'm guessing you don't have financial power of attorney.

Yeah, not yet. We're all in the— we're all in the process. Like, now that we're starting to really obviously see that our dad, who we've looked at, you know, looked up to, was like suffering from dementia, we're like, oh wow, we need to start getting things in place.

Yeah, get financial power of attorney as soon as possible. Okay.

Okay.

And you can try to settle with them explaining the situation. And I don't know how much the courts care about his health. The credit card companies just want their money. He's just an account number to them. And so you're gonna have to fight this and explain what's going on. You could settle. You could just let it go and they try to sue him and the debt stays on and whatever at that point.

Or you can go to court with your father who's got dementia and say, here's who they're beating up on, Judge. I don't know what that would get you. Or if you look and say, hey, he actually owes you $3,000. You and your brothers are gonna come up with that money and help clear that debt, 'cause he did take that money from them. We're gonna clear it. We're gonna close this account. That might be the path forward too.

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Visit angel.com/ramsey for details. Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell here with John Delony, taking your calls at 888-825-5222. Dan is in Minneapolis up next. Dan, welcome to the show.

Thanks for having me.

Absolutely. What's going on with you?

Uh, struggling a little bit here.

Talk us through it.

Um, so currently, um, I have a newborn baby, 10 months old. Um, my wife just found out she's losing her job.

Oh man.

And I just started a new Oof, perfect storm. Yes.

Was there severance with her job? What happened?

Um, so she actually is an online telehealth nurse, um, and they had a meeting one day with 200 employees on the Zoom call. Uh, the CEO of the company hopped on and said, hey, if you're on the Zoom call, you're all going to be losing your job, and if you have any questions, take it up with HR, and hung up the phone call.

Wow, what a coward. I hate that for her.

Then after that, I guess, uh, they had an employee group chat or whatever. Everybody was on there talking, and 3 minutes after the call, they, they shut down the group chat for them all to talk to each other.

And what do you do for work?

Um, so I actually, I just started a concrete, um, and asphalt paving business.

Is that full-time, or do you have a different job while you have the side business?

Yep. I do have my full-time job as well. Um, that I do like heavy equipment operating.

All right. I'm gonna, I'm gonna cross my fingers here. Please tell me as you started this new business, you didn't go also leverage a big truck and a dump truck also, and a front loader as well.

No, luckily. Um, you know, I just started listening to you guys, a little bit of background, um, about me. I grew up on a Native American reservation as a kid. My first memories, my dad was abusing my mom. Grew up learning everything from my mom after they got divorced. And then when I joined the military, she ended up actually stealing money from me.

Geez, man.

While growing up. So then I kind of ran off, did my life, lived lavishly, enjoyed our time and stuff like that. Well, after her and I got married, my wife and I, I should say, got married. I found you guys on YouTube, started watching the Smart Money Happy Hour.

Yeah.

Um, and the John Delony Show. Yeah. Became big fans of you guys. So then when I started my company this summer, I told my wife, I said, I'm just gonna cash flow the business.

Awesome.

So as of right now, my business has no debt, but we still have consumer and personal debt.

Dude, that— I know that's a tough season you're in, and that's— but you didn't make it worse, so I'm proud of you for that. Man, like, that's like— I have my fingers crossed because almost everybody in your situation does the opposite. So well done for literally just this moment, right? Yes, just this moment. Awesome, dude. Awesome.

So how much are you bringing in from your full-time job and the side business right now every month?

So my, my full-time job, um, every month, well, I make about $100,000, what I actually, um, pulled in on taxes last year. That was before the new job, and I'm just kind of getting the balls rolling, getting some jobs coming in. And for September here, it's looking like the concrete side job is going to be bringing in probably about $12,000 to $20,000 profit.

That's fantastic. How, how, like, reliable is that? Can you consistently make a certain amount every month doing this?

Um, in Minnesota, uh, pretty much just the summertime. So I have September and maybe some jobs in October, and then after freezes up, I'm pretty much on standby until next spring.

So we got 2 more months to really hustle.

Yes.

Okay.

And then tell us, you got a 10-month-old, right?

Yes.

Okay. What, um, I, I guess like nothing is good about what happened with— to your wife. The, the, the complete lack of humanity her employer showed, um, the way that was done, all of that cutting off her like human connection with her colleagues, like all of that was disgusting and gross every level, right? Um, yeah. And, and that's good. There's gonna be a season of grief for that. Your wife and you are gonna be right to be like skeptical of trusting businesses and, and bosses. All of that's right. And I'm trying to look for some light here. Your wife has right now what I would say is one of the hottest credentials, which is a nursing degree, right?

Yep.

And so what does it look like for y'all to sit down and say, how much debt do we have? We didn't wanna put, we, we, uh, she had a, a work from home job, which was awesome. Um, so your picture's gonna change, but for 1 year, if we put our daughter in, we get some childcare, could your wife go work full-time and get all these debts paid off so that y'all can then go about living on your $100 grand plus whatever else you bring in?

Yeah, that's a possibility. Um, I've been working hard ever— we got married in 2024. Mm-hmm. And starting in 2024, Her and I combined together, we had $213,000 of debt. That's no home. That was just a camper. We lived on the road while she was a travel nurse, my pickup truck, toys, and her student loans. Um, over the last 2 years, uh, we've been buckling down trying to pay it off and we're at $143,000 in debt right now.

Okay.

What's left?

I'm selling Go ahead.

What's left on the debt?

All that is the, um, we have 3 credit cards, uh, a car, or 2 cars technically, and then my truck and camper.

Okay, do we still need the truck and camper at this point? Are you using the truck for the business?

No, you guys might like this. I actually just shook hands with the guy and I'm selling the truck and camper tonight when I get off the phone here.

Attaboy!

How about that?

Yeah, so I mean, I'll be about $10,000 upside down on it, but we can attack that pretty quickly, I feel like. So that will leave us— after that sale, I think we'll be about $67,000 left in debt.

Dude, that's great. What are the cars worth?

God, you're awesome, man.

Could you continue this with the car? Like, just do the snowball of selling all the things with wheels and motors in your life?

Yeah, so with that deal, actually, um, I got a work truck for my company. I'm actually going from a $40,000 truck down to a $25,000 truck. $100, um, truck with rust on it, but it's like, I'll make more.

As it should be.

Attaboy, Dan.

Um, and then, uh, my wife's car, uh, we traded her— she had a 2024 car, we just traded in for a 2018 to make it more affordable, um, so she can get around as well.

Okay, so look, brother, like, if you go down to $60,000 in debt, that's literally her work— that's take-home for her if she goes all in for 1 year, plus childcare.

Yep.

And if y'all make, if, if, if she doesn't want to do that, you don't want that, that little baby, right? Is, is, is 10 months old for God's sakes. Um, doesn't know what day it is, right? Like, dude, if y'all, if y'all shake hands on 1 year of hell, 1 year of it not looking like you thought it was gonna look, you are free forever.

Yeah.

You'll do the business cuz you want to, not cuz you have to. Your wife could stay home if she wants to, or she can keep—

keep working full-time as a nurse because she loves it. And y'all, y'all, y'all get on with it, man. But you're talking 1 year of sacrifice, 1 year left, dude, and y'all are free.

Like, I would feel great.

You're free. And can I— I gotta tell you, Dan, I gotta tell you, you grew up in black hole hell. Right?

Yep.

And you as a man have turned and faced that hell. And your kids— I'm getting goosebumps— your grandkids are not gonna know what that's like because you turned and stared it down. It's an absolute honor to talk to men, and your wife is involved in this, men and women who are saying, this trauma ends with me, and from now on, my family's gonna be free.

Hey, George Campbell here. So you're thinking about buying or selling your home. It's exciting, but there's a lot to think about, and all those decisions can feel overwhelming. Well, here's the good news: you don't have to tackle the process alone. Ramsey's Real Estate Homebase is the place to find all of your free tools and resources for help to get prepared to buy or sell your home with confidence. You'll find calculators, start-to-finish guides, a podcast, and even an in-depth video series to help you navigate the process.

Hey, George, thanks for course having me.

hosted by yours truly. What's not to love? So if you're ready to take the next steps toward your home goals, go to ramseysolutions.com/realestate. That's ramseysolutions.com/realestate. Welcome back to The Ramsey Show. I'm George, here with Dr. John, taking your questions at 888-825-5225. Ron is in Denver up next. Ron, welcome to the show.

Hello, Dr. John Delony and George.

How are you guys doing today? We're good, Ron. How are you, man?

I'm doing great. Thank you so much. I just wanted to give you a shout-out. because without your advice and wisdom, I would have never moved with my wife because she is out of my league. So thank you.

Wow, Jon gave you the confidence?

Well, I'm so far out of my league, dude, that welcome to the club. It's awesome.

Thank you. Thank you guys so much for your time.

You betcha.

I'll just get straight into my question. So I just wanted to do a little debate between my wife and I, see who— see, I guess, which way we should go.

So, uh, I'm 30, she's 32, and, uh, we have a condo that we're about to sell.

Should be netting around $160,000 to $170,000. Our only debt is about $34,000 on a 401 loan and, uh, everything else is paid. And then we have on our home as well, we bought it last year. We have a 3-2-1 buydown rate to buydown and it returns back up to 6%. in about 2 years. And so what she's— we can comfortably afford the payment today, but my wife worries about what happens if we lose our job. Um, her family lost their home a while back due to debt. So it is a real fear for her and I totally understand that. And so what I want to do with it is build a basement, but she wants to recast the home. So we're just a little, uh, in disagreement.

Yeah. So just to make sure I'm on the same page, y'all have a home and you have a condo and you're selling the condo?

Correct. Yep.

Okay. And you're gonna net $160,000 and you're gonna immediately pay off this 401 loan. So you'll have about $125,000 left, right?

Yes.

Okay. And so how much is your mortgage on your current home?

Uh, right now with the, with the buydown, it's about $3,500 with And it's going to go up 1% every year, so that payment will increase?

Correct. So at the very end, at 6%, it should be around $4,500.

How much do you owe on, on your current home?

Uh, $580,000, and then it's worth around $750,000.

Okay.

And what's your household income? Did I miss that?

Uh, yeah, so right now our base salary is around $330,000, and then with bonuses we're around $450,000-ish depending on performance.

Incredible income. Okay, so what's the ultimate goal here? Like when you guys sit down, what, like a year from now, where do you guys want to be? What does your life look like?

Oh, we definitely, a year from now, I think definitely have the 401 taken down, have some peace, I guess. But, you know, I feel like we could have peace in the basement and pay off the 401.

So paying off the 401 loan costs you what out of your net profits?

$37,000. Yeah.

Okay, so you get your $170,000 out of the condo, you pay down $37,000, you still got a nice pile left. What is the basement gonna cost?

Around $50,000 to $60,000.

Okay, you pay that, now you still got money left. Then what?

And then she wants— because she— the thing is, she's really scared about, you know, just in case. We never know what's gonna happen with our jobs. And I, I don't feel as though we don't— there's, there's some good job security in what we do.

You'll have 6 months of expenses saved, right?

We do, yeah. We have about $40,000.

So why don't you get on— y'all make $400 grand a year. Why don't y'all get on a 2-year plan? And I don't know how y'all are gonna do this, it's gonna be tough, but y'all just live on $200,000 a year and take the other $200 grand and pay your house off in 24 months and give your wife freedom and peace.

Hmm. Like, I, I do like that.

You're, you're, you're 24 months away from this not even this being a nothing burger.

The recast makes you feel better, but it didn't really do anything. It's gonna lower the payment, but it does nothing for the balance.

Hmm. Okay.

So recast, you're gonna take a lump sum, throw it at the mortgage, and then you can recast it and it'll just reamortize. So, okay.

And by the way, if you did that today, your recast would be at today's rates, which are gonna be the penalty Point of the rate you have in 3 or 3 to 5 years or whatever it is.

Hmm. Okay. I, yeah, I guess I never thought about that.

But, but what if we just said screw all of that thinking and you look at your wife and say, I want to take $200,000 a year and pay our house off in 2 years after we put a basement in it. We take the other 60 grand, we put it towards the mortgage directly, bring it down, and then we're gonna pay the sucker off and then we'll get, no one can ever take our house That is that.

I mean, yeah, it sounds great. I think it's, uh, you know, it sounds very easy in our brains. Uh, it's just, you know, 2 years from now.

Here's the deal, brother. Here's what your wife is saying. I have the lived experience of not being safe and I want to feel safe. safe. And the way she's trying to achieve safety is moving money around, which is completely understandable. If you look at her and say, I'll show you safety. I'm going to be disciplined and safe, and I'm going to propose a plan that I want you to speak into. And together, you and me, ride or die, we'll get this thing paid off in 24 months, which means I'm going to not do all of my crazy whatevers, and I'm not going to spend on this and blah, blah, blah. I'm all in because I want you to walk into our home that nobody else has a stake to and just laugh because it's ours. That's what she's truly saying to you. I've been unsafe before. I've lost my house and I never want that feeling again. And she's just getting on YouTube or going to a local place and they're telling her, well, you could do this. And she's, you've got a wife who is, who's, who's in deep water. And she's saying, well, somebody reach down and grab me.

And what she wants is stability and a plan and a guy who says, I'm all in on helping you feel safe. in this home through action, not through feeling. You get what I'm saying?

I do. And thank you for that advice. That's why I got married to her. Thanks for your advice again. I'll let her— because she listens to this as well. So—

Do you guys do a monthly budget together where you sit down and she has full awareness of what's going on with finances?

Correct. Yes, we do it a little more than we'd like to. We do it once a week.

Oh wow. So she knows.

That's her for you.

Uh, it's, it's usually for me.

Okay, stop, stop. You're burying her. You're burying her. Your love for numbers is gasoline on her anxiety fire around numbers. I never thought about that. You get what I'm saying? Y'all make a plan every month and stick to it.

Okay.

And then if you wanna play with spreadsheets in the middle of the night like I do, like I know George does.

Oh my gosh.

Then do that.

My favorite kind of insomnia, spreadsheet insomnia. So you've got the plan, man. This is more, it's more emotional than reality. Cuz you got, your income is so high. Even if one of you lost your jobs, you're gonna be okay. Yeah. If you have no debt and emergency fund, the chances of both of you going without work for years is, that's paranoia at that point.

Right.

So you can decide, um, do you wanna give your wife a gift of putting $130 grand down on your principal of your mortgage and bringing it down really low and put off getting your basement for 3 years or 2 and a half years? Or do you wanna say, hey, this basement's gonna cost 60 grand, the other 60's gonna go directly to the principal, and here's a 2-year plan to pay off this mortgage. We're gonna do this together. Y'all sit down and have that conversation cuz that's more, George, that's the, that's the actual issue here.

Is there's no real clear plan about what we're doing and why we're doing it.

Yeah. It's just that every week, she gets dragged to the table to relook at numbers and what about this? And what if this happens? Which for her is just, oh, it, it's, it's more of it. Her body's like, I told you we're not safe. I told you this could happen. I told you, I told you, I told you. And she's lived it, man. And that's a very, yeah, man, that's a real experience. So good for you, Ron, for, uh, caring about her and for asking questions.

In my house, my wife has full, you know, transparency into the finances. She has the accounts on her phone, but I just become like a human version of that. And every once in a while she just goes, how much we have in savings? And I go, here's how much. And she goes, okay, that's it. It's just that that's what you want your finances to be.

Well, it was funny in my house, it's the opposite. Occasionally I'll be like, I'll tell my wife, hey, we have this much in savings. And she'll be like, have you not been sleeping again? And I'll be like, yeah, no, I haven't. So it's, it's me trying to make myself feel better by acting like I'm a tough, great husband communicating.

Yeah.

She's like, I, I know we're good.

Um, you can't save your way outta psychosis. Listen, I don't want to be the one to—

trust me—

be your armchair therapist here.

No, that's what my real therapist said.

Dave Ramsey here. For more than 30 years, I've been talking to folks on the air, and I can tell you that most people are broke, not because they don't make enough money, but because they don't have a plan.

You need to give every dollar you earn a job, because But when you do that, something changes. You stop guessing.

You stop worrying.

You stop stressing.

Our EveryDollar budgeting app will show you how to find extra cash, pay off debt, and finally start winning with money. But most people won't do it. They'll keep living paycheck to paycheck, keep hoping things will change without making a change. It's time to say enough is enough. It's time to take control of your money. It's time to start your EveryDollar budget for free today. Go download it in the App Store or Google Play. Buying or selling your home is high stakes because one bad deal could cost you tens of thousands of dollars. You don't want to overpay for your next house or sell your current home for less than it's worth, and that's why Ramsey Trusted connects you with vetted real estate agents who have the experience to guide you step by step to make smart decisions, not expensive mistakes. You can find a local Ramsey Trusted Agent for free at ramseysolutions.com/agent or click the link in the description if you're on YouTube or podcast. Heath is in Columbus, Ohio, up next. Heath, what's going on?

Hey guys, appreciate you taking my call.

Absolutely. What's your question today?

Hey, so, uh, I've got a situation with my in-laws. They are in their mid-70s and, uh, during COVID my father My mother-in-law gambled away all their savings. Oh, man.

How much was it?

Yeah, so they— I don't know exactly. They had worked their whole lives, and my mother-in-law, she got some inheritance from her parents when they passed away. Her parents were very well off, so I'm assuming it was several hundred thousands of dollars, but I don't know for certain how much it was. And, um, they've been working full-time, you know, for the last couple of years, but they're getting older. And, you know, my wife and I are trying to figure out like, what's the future and what's our role going to be in all this? I've got 5 small kids at home and we're bursting at the seams in our place. So, you know, unless we move or add on to our house, like them staying with us is not an option. And, but, you know, their other kids are not really involved. So it's, it's going to fall on us. The burden is going to fall on us.

Are the other siblings estranged when you say they're They're not involved?

Uh, yeah, yes and no. It's, it's kind of complicated, but they're really not, not in the picture, um, as far as— or in a place to take care of them in any meaningful way.

Okay, so your wife is the closest, you know, child they have that's actually still communicating with them?

Correct, yeah.

What does your wife want to do?

Um, I don't know. It's, it's tough. I mean, we're probably about 4 hours away from them, so it's not like we can get over there once a week to go help them out with stuff. But, um, you know, I think I think if my in-laws would be open to it, I'm sure my wife would want them to move closer to us or in with us. I don't know if that would be something acceptable for my in-laws. They're pretty stubborn.

Do they have a mortgage?

They do not.

What's their house worth?

I mean, they're in the middle of nowhere. It's probably, if they could get $100,000 for it, that would be a lot, I think.

I, I, I, I think the— I mean, you got 2 big challenges in front of you. One, will they even accept your help?

Yeah. Right.

And maybe they won't now. Maybe they'll be forced to in 5 years. Like, who knows? But I, I think that's a, that is a thing that's really hard to metabolize when we want to help people that we love and they are either too prideful or too scared or their ego's too big or any number of reasons, but they won't accept our support and love as we, as we can give it. Right. And so that's number one.

Right.

Number 2 is you and your wife have to just be flat out honest about what we can and can't do. Like, and, and like, cuz what happens a lot of times, especially in big emotional situations like this, um, is we just spend all of our energy on what we can't do or what we should do versus what we, and y'all need to have an honest come-to-Jesus conversation about, here's what we, we could do even if they would allow it. Could we have— could we come up with $1,000 to subsidize a 1-bedroom apartment in our neighborhood? That's all we can do. That's all we have. And we're not going to give the money to you. We're going to give it directly to the, um, place. Can we support groceries? Like, you get what I'm saying?

Yeah, I do. And that's, that's kind of, you know, part of the reason that it's, it's difficult for us is that, uh, you know, I do, I do very well, um, in my job and I've got a pretty significant amount of savings. And so, you know, if we were to add an addition onto our house or something, we could do that. But, you know, I struggle with, well, okay. I mean, I've got, again, I've got a bunch of small kids. Like I want to think about their future and I want to plan to be able to not put my kids in the situation that they're putting us in. That's exactly right.

That should be your priority.

And, and so, you know, but, but at the same time, like, okay, yeah, we could— I could write a check tomorrow and we could put it, you know, uh, an in-law suite addition on our house. And so that's just where, you know, I'm struggling with the right thing to do. And if, and if we— I, I don't think if we told them, hey, we want— this is our plan, we want you to come live with us, they probably would not accept it. But knowing what's probably going to happen in the future is that they're not going to be able to work at some point in the future.

Right.

If we had a place for them, them, then I think it would just be a natural choice for them to come live with us. Against their will. Yeah. They would just do it.

Well, it, it, that, that's where y'all—

Well, they wouldn't have any other option.

Well, so that's where, I mean, you've kind of given us a very clear path for you and your wife, which is y'all let them know when and if y'all need support, um, we're ready to sit down and have that conversation. And that, that conversation ends right there because they'll probably respond with, well, we're fine. You don't need to worry about us. Great. Cool. And then you and your wife have to live in the reality that probably at some point you will be responsible for some sort of care.

Yeah.

And, um, and so we'll start putting a little money aside over here. We might start looking at a different house down the, down the road. We might look at one-bedroom apartments in the neighborhood. Um, and by the way, a picture for your kids, it's easy for me to wrap my head around the, the only legacy I can leave to my kids is money. There also is a huge legacy towards, I watched my parents care and love well their aging parents, right? Like that's also part of legacy. That's also part of care. And so all of that is a tricky balance, right? And none of that comes in any sort of thing that y'all wanted or asked for, right?

For sure.

How much are they letting you into their own finances?

Oh, very little.

I mean, when they— ironically, Dr. Dolan, I called a couple years ago when everything kind of hit the fan, when they lost everything, and you and Dave gave me some, some great advice. But, and so, you know, we're back now because, you know, if they had— if they were to tell me they had $10,000 in their bank account, I think that would probably be a surprise to me.

Sure. You know, is he still gambling?

Um, they're— I don't think he's gambling anymore. Um, but I mean, they're working between the two of them. They're each working at least 40 hours a week, if not more, and they're almost 75 each.

Are they taking Social Security?

Uh, oh, they're not. Uh, my father-in-law held a, uh, cash-paying, uh, job his entire life, so probably did not report most of his income. So, um, they're, uh, they're— if they're taking Social Security, it's minimal.

So, okay. So y'all, you and your wife have to have the conversation of what does taking care of mean?

Yeah.

Is that gonna be $3,000 in a nursing home? Is that gonna be like, what are we, are we gonna help them sell everything so they can get on Medicaid? Like, what is that gonna look like for us? And you'll have, you as, as her ride or die, you as her husband are gonna say it like, you're gonna have to work to not have that calculator running in your head of, well, if we had taken that money and invested it, we could have given this to our kids, right? Because if y'all agree on a number, like do your best to say, I was a part of this decision. I'm a, I'm a guy who's not gonna let 2 elderly people just like get stuck in the system, especially if I'm being successful. Like I'm gonna grieve that and then I'm gonna go on and take care of folks in the amount and to the degree that me and my wife agreed. And then I'm gonna go on about my life and go from there. And it could be, I'm not, I'm probably pie in the sky here. It could be that, could it, could it be that they would be fun to have around your kids or is that a no-go?

You know, I think they, I think they would be, but, um, I just, you know, outside of something, uh, drastic happening, I can't see at least my father-in-law wanting to leave, you know, it's the town he grew up. He was born in that town.

But he made choices.

It'd be really difficult for him to leave.

He may not have a choice to stay, right?

He made a lot of poor choices.

Yeah, but he may not— he may not ultimately, because of his past choices, he may not get a say in whether he stays or not.

Yeah, that's true.

Which, which stinks. Hey, let me tell you this, brother. Your anger's right. You're right to be mad at him for how he handled his finances, for how he did whatever it is he did. That anger won't serve you loving your wife well. And y'all coming up with a plan together moving forward for, here's the reality that we have in front of us. None of us wanted this, none of us planned this, but this is what it is. And we are people who take care of our families. So here's what that's gonna mean for us. Here's what we can or cannot do.

You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance company.

coverage.

To protect your biggest assets, I recommend using Ramsey Trusted Pros. Whether you're looking for car, home, or any other type of insurance, Ramsey Trusted Providers have been coached and vetted to serve you like we would. Find what you need at ramsaysolutions.com/insurance. Welcome back to The Ramsey Show. Our scripture of the day, Colossians 4:5, be wise in the way you act toward outsiders. Make the most of every opportunity. Maya Angelou said, I've learned that even when I have pains, I don't have to be one.

Yeah, George.

I'm still learning that.

The great Maya.

I got to take that advice. All right, Sean is in Des Moines up next. What's going on, Sean?

Yeah, I'm just— thanks for taking my call. Um, just trying to get down to the bottom of, um, how my wife and I can stop living paycheck to paycheck.

I'm glad you're here. That's a big milestone, just to want to do that.

It's, it's tough. I mean, we get bills paid, but I mean, it— at the end of the week, it's— well, we're sacrificing something that we not necessarily need, but there's not a lot left at the end of the week.

How old are you guys?

I'm 32 and she's 30.

How long you been married?

Not even a year. We'll be a year in November.

Congrats! Okay, so what got you two to this point?

So backstory, I married my wife. She has 3 kids and we are soon to have one of Yeah. And when I was a kid going through high school, my parents had told me that my grandparents had kind of set up a fund that grew and grew and grew to give all the grandkids a certain allotted money for college. And that always kind of stuck with me that, you know, I'd like to do that to my kids someday. You know, in the last year or two, we've We've been getting our stuff paid, but it's, you know, I want to be able to do something like that for my kids someday.

So your stated goal is, I want to create generational wealth, and therefore I need to have some eventually, and debt is holding me back from that. So how much debt do you guys have collectively?

Um, some is mine, um, that was pre-existing. I bought a parcel of land, um, before we got married. So now it's her land as well now. So that's kind of hanging over our head. We have $165,000 on our house, $76,000 in car notes, and roughly $4,000 in credit card.

Could you sell that parcel of land today?

Not with a— there's a buyback clause. I bought it from my father. So if I were to sell in 7 years, then it would go back to my father.

But would he give you the money back for it?

I think he was happy to sell it to me. I think he was happier to see— the whole goal is to farm, and that was kind of his way of starting that. You know, I got it at a very discounted rate.

If you sold it back to him, how much of a check would he write you?

$800,000.

I mean, there's your generational wealth right there, brother.

Yeah, it's, it's a family piece that I've, I've been wanting for years, um, and that, that was kind of the push. Um, I traveled for work for many years. I did that for 9 years, um, and to be with my now stepkids and a kid to be on the I left that and joined another job, um, which paid significantly less but more time with family.

So what do you guys make now as a household?

$130,000.

Okay, well, uh, there's some clear writing on the wall here. The cars have to go. This is crazy to have $80,000 in cars making $130,000. Do you agree?

Yeah.

What are they worth?

Probably $25,000 on mine. I would say probably $40,000 to $45,000 on hers.

Okay, so you're probably $6,000 underwater?

Yeah.

So you scrape together $6,000 over the next month or two, you can get rid of both of these cars and buy some cheap ones, maybe save up for a few more months.

Yeah.

I mean, what are the payments on these things?

The payment on mine, so, and that's, that kind of leads me into the next thing. The land that I bought at a very discounted rate fell into a pretty good hole and had to use a line of credit against that. Still well below what it's worth, but that note is hanging over our head as well.

Okay, okay, but listen, you've talked yourself into a corner, brother. And I'm saying this, man, as a guy who obsessively— I, I check land prices every day of my life, okay? And I'm not even a generational guy, okay? So trust me, like, I, I love the impulse and the idea. But if, if Dave came here and brought me one of his cars that he's collected and said, I'm gonna give you this for 25% of its value, that's an incredible deal. But if I don't have that money, it's not a good deal for me unless I'm planning on buying it and flipping it.

Yeah.

You get like, here, here's what you have. You have 2 competing legacy dreams. One, I want my kids to have peace in their spirits when they leave our home, that they'll have some money in an account that they can go take on the world. And you have another legacy, which is I'm going to come hell or high water, put my family into financial ruin for this vision, but I will keep this this land, I will farm it regardless of what's going on in the world because that's who we are. And you have to pick which vision you and your wife want to live into.

She's very, she's very stuck on her ways, um, as far as, um, having really nice things. Um, I didn't— I grew up very fortunate, um, not wealthy by any means, um, very— we were farmers, you know, we had to make do with what we Sure. So that's been kind of a change, and I'm being humbled by it as well. Maybe putting things off to not pay for them or not, you know, spend the money that we don't have. Sure.

Well, Shawn, there's, there's 2 paths to go. It sounds like you're not gonna sell either of the vehicles, you're not willing to sell the land, so the only other option is you guys work your tails off 80 hours a week for the next 6 years to try to get this thing paid off. That's it. Or we can shortcut that by getting rid of these things that are going down in value, these vehicles that are crushing us. Who are we trying to look good for? Because so far you said you want to build generational wealth. You're creating generational debt so far. At every turn, you are taking on more and more debt to try to fund this lifestyle to look like you've made it.

Or sitting down with your dad and saying, Dad, I want more than anything in the world to keep this farm, but I can't afford it. I simply cannot. Like, in this new world that I chose, which is 3 young kids, a 4th on the way, a new life with a new, a new partner— I walked into this eyes wide open, and this— I can't make this work anymore. I can't keep living 2 lives, one as a farmer, as a generational farmer, landowner, having to take out lines of credit to keep farm running, and also be a responsible adult with these 4 kids I've got living this other life, um, with my spouse. That's a tough pickle to find yourself in, man. But the longer you avoid dealing with reality— the old saying is conflict deferred is conflict amplified— this problem doesn't go away. It just gets bigger and bigger and bigger and bigger. It's the sooner you and your wife can align on who we want to be and what is that vision going to cost us and how quickly can we get through that. That's the path to freedom, man. And none of this is easy.

It all hurts, man. All Oh, it hurts. I, I can't imagine, George, going to my dad and saying, you gave me this incredible gift and I can't afford it. Like, that would, that would break my spirit, I think. And it'd probably break his spirit. And it's the right thing to do for my new responsibilities, my 3 kids plus the one on the way, plus my wife. That would be the right thing to do. Or sitting down with my wife and saying, we, we make a good salary and we have this almost million-dollar piece of land. We cannot afford these 2 cars. We're gonna sell 'em and we're gonna drive beater cars Because money in the account, money in our future is more important than comfort today.

Right?

I, I, I mean, I don't know another path forward. It sounds like you, you want to want to get out of the cycle of living paycheck to paycheck. Because if you want to, you've got a path right in front of you, man. It's not gonna be a pleasant one, but you got a path. It's just gonna take a complete reorientation of how y'all do life together.

Right. And the hardest, the hardest part for me is knowing, you know, like you said, you sit down and have a talk with my dad. But the hardest part for me is, you know, that it's a significant amount of money to anybody. Um, my fear is that by selling that back to him, that it's going to put him in financial ruins. And that, that's, that's something that's just been over my head for—

I mean, you, you can't carry his burdens also.

This is hot potato, right?

My hope is that he kept that $800,000 that you gave him.

Man, hard choices in front of you, Sean. Make the right ones. That puts this hour of The Ramsey Show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.