Transcript of Don’t Trade Peace for Payments

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Normal is broke and common sense is weird, so we're here to help you transform your life and your money from the Ramsey Network in the Fairwinds Credit Union studio. This is The Ramsey Show. I'm Jade Warshaw. Next to me, George Campbell, and we will be taking your calls about your life and your money. For the next couple hours, 888-825-5225 is how you get on the line. We've got Daniel here who's in Orlando, Florida. Hey, Daniel, how can George and I help today?

Hey, guys, thank you very much for taking my call. I'm sort of in a dilemma and would like your guidance and expertise right now. So I make about $90,000 a year before tax. My wife is a second-year pharmacy student with 2 years left in her education.

She's not working.

We have $95,000 in liquid cash, $80K savings, $15K in a brokerage account, and $40,000 in my 401 employer-sponsored account. We have $26,000 in student loans. I have about $11,000 and she has about $15,000 in her student loans. We're currently living with my parents rent-free, which has helped us save tremendously. We've been married for a year now. Um, But my wife recently has been asking for our own space, right? For the sake of our marriage.

For sure.

And because of that, yeah, because of that, you know, I started looking into buying a house, a $350,000 house with a 20% down. But the conflict I'm facing right now is I'm fighting hard to keep us out of debt. Just this year, I paid about $4,000 out of my pocket for her semester. Of second year, so we don't continue inquiring more debt. But my dilemma is, you know, if we purchase a house and we put down 20%, that's our saving, right? It takes, it takes 50% of my net $6,000 net take-home pay on a single income. So my, my question is, how do we balance saving our marriage and getting her space without trapping us into a house poor nightmare?

I love that question. I think it's a fair question to ask. And I think she's in the right for wanting to have your own space. I think there's a couple of things to consider. Number one, just because you get out of your parents' house doesn't mean you have to move immediately into a home that you've purchased. The option to rent is there. And I actually don't mind that option because it does buy you some time and it buys you some money to save up the down payment that you want. Which gets me to the second option, which is you kind of arbitrarily landed on 20%. And my guess is you landed on that because we tend to teach that. Like there was a time where that formula really worked out. It's like, hey, save up, you know, 5 to 20% down on your down payment. But we all know that the housing market has inflated to such a degree that for many folks, putting 20% down does not allow that mortgage payment to be in a comfortable place in their budget. Especially where we teach it to be 25%. And I think I heard you say that you bring in $90,000 a month.

So how much, or I'm sorry, a year, how much per month is that for you?

So after tax, I would say about $6,000 net take-home pay. Hopefully I make $90,000 a month one day.

Right. But if you do what you said you'd do, I mean, and this is just a guess with the property taxes and insurance, but if you do a $350,000 house at 20% down, just looking at the Ramsey Solutions mortgage calculator, you're going to be around $6,000 a month, which is fair to say, you know, that's half of your take-home. You're gonna be at $3,000. Yeah. A month of half of your take-home.

Mm-hmm.

So I think what's happening here is we've, we've prioritized the home above all else. And right now it's like goal number 5. So goal number 1, you mentioned this, I don't wanna go into any more debt. I love that. So can you guys cash flow the rest of her, uh, school?

Uh, I think I can if I'm, Truly still living with my parents, right? I can pay off my—

But you have, again, you've got a lot of cash. You said you have $95,000 cash and $80,000 in savings.

Correct.

So we can use that to cash flow her schooling. But the problem is you've already earmarked it for that house. And so in your mind, you're going, wait, that's house money. No, no, no. That is money to help us build a financial foundation. And once we get to that part of the game, now we can apply it to the house. So right now I would be working on cash flowing school, Getting out of the $26K in student loan debt that you have. And then we can work on an emergency fund, 3 to 6 months of expenses, then the down payment. And then once you can get that down payment high enough to where the payment on that mortgage would be no more than a quarter of your take-home pay, now we're ready.

Right.

Which means in the meantime, we need to go rent somewhere that we can afford off of your income alone, which is gonna be about what, $1,500 to $2,000 is what we're talking about here.

Right.

So can you find a place nearby?

Yeah, and I've been looking. Truly, I started looking ever since she brought those concerns up. And, you know, um, so yeah, there is some available, uh, apartments to rent, uh, which, which again, I just wanted guidance from, you know, my mentor. So, uh, yeah, it's doable. Definitely.

The question is, how is she gonna handle that if you go, hey honey, listen, we're gonna cash flow school with all this cash we had that was gonna be a down payment. We're gonna rent for 2 years while you finish school.

Well, and I think you have to phrase it really the way that we did, which is, honey, dear, sweetums, whatever you call her, these are all the things that we've said are important to us. We care about school. We care about moving out. We care about having a house. We care about not going back into debt. But we need to prioritize those in the right order of what we do first so that we can do them all at some point or another. And that's all you're doing. You're just taking it and you're organizing it. You're not saying that something's not important. You're not saying you don't want to do one of these things. You're just saying we can't do everything at once. We've learned here, this is a Ramsey thing. We've learned that focused intensity over time on one thing creates momentum. So what George laid out is perfect to say, okay, first things first, we got to get you out of school and we can't go into debt to do it. So that's first things first. Second thing, okay, now we got to move out. And after that, now we got to save up.

And so I think that that's a fair way to put it. And I think that if she's, I believe just listening to you that she's a very intelligent, very smart woman. I think she's gonna understand that.

Certainly. I mean, again, I'm putting her needs above mine, right? These, that money saved was prior to our marriage. So I wanna make sure that, you know, we are a team, right? So back to your question, George, I think she would be delighted. I think just having to get out of, you know, having our own space, especially newwed, is a must, right? To continue building that foundation. But I think that's a great game plan, guys. Thank you very much for breaking this down for me.

Absolutely.

Thank you so much for the call.

And it represents a lot of what people are feeling out there going, I wanna buy a home. I don't want to, I'm putting air quotes on this if you can't see me, waste money on rent.

Yes.

And renting is one of the smartest decisions you can make, especially in a market like we have right now.

Yeah, absolutely.

Where houses are so expensive that to go buy that same house would cost you $5,000 a month in a mortgage versus $2,000 a month to rent it.

Yeah, absolutely. No one wants us, no one wants you to be in real estate more than us, right?

Yes.

We want you to be in real estate. We realize that it's a major part of wealth building. We realize it's a major piece of just stability, familial stability, and just feeling like you have your American dream. But there is a way to do it where it's a blessing and not a burden. And that's where rent shows up. Like renting, it literally is buying you time until you can buy.

Yes. So homeownership has a very clear spot in the 7 Ramsey Baby Steps. Baby Step 1, $1,000 starter emergency fund. Baby Step 2, knock out all the consumer debt. Baby Step 3, fully funded emergency fund, 3 to 6 months of expenses. Then Baby Step 3B, you save up for that down payment. Because what happens there, you've got financial peace. You got no consumer payments, you got an emergency fund. Now you can move in without stress, with a lot of peace.

Absolutely.

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Back to the phone lines where we have Matthew, who's in Portland, Oregon. Hey, Matthew, how can George and I help out today?

Hey, great to hear from you guys. Uh, yeah, I'm trying to figure out a balance for my wife and I where I currently work 6 days a week to pay off our, uh, large debts. And we have discussed about me going back down to 5 days a week, and we are trying to figure out how to make that work.

Wow.

How long have you been working 6 days a week?

Almost 2 years now.

That is a long time. And is she working as well outside the house?

No, we are fortunate enough that she was actually just able to become a stay-at-home mom for our new daughter. And so she's staying at home.

Cool.

OK. And how much debt do you guys have left?

We have $330,000, about all of it in student loans. Whoa!

Wow!

We started at $450,000, and in the last 10 months, I have religiously to the penny tracked every single expense and paid off $115,000 in debt.

In 10 months? So you're talking, you're throwing like $11,000, $12,000 at this debt every month?

Every single month, tracked to the penny. We've gotten 2 brand new cars paid off and a bunch of other small stupid debts that we had. And all I have left, no credit cards, no nothing, is just student loan debt.

Good.

It's plenty. We don't need any more. That's the good news.

What's your income? I gotta believe with this kind of student loan debt, There's got to be a nice, I'm hoping, a nice career with a nice income to back it up. Is there?

Yes. We, on my 6 days a week that I'm working before bonuses or anything, it is $228,000. And at 5 days, it would be $190,000.

Okay. Okay.

And what do you do?

Optometrist.

Okay.

Wow.

Wonderful. Is there room to grow in that field? What does that look like to be making more money if you were working 5 days a week?

Typically, the place I'm at now, it would be based around bonuses and the exam volume that I see would be making more money. And I've recently stepped into a manager role, and so that's what's led to the increase in the salary.

Okay. So, have you charted it out? Because you need to know what this looks like, right? You want to know how long am I in for? Have you charted this out at both work weeks, how long it would take at 190 and how long it would take at the 228 that you're at now?

Yes. At 228 right now, we would currently take about 4 years to finish paying it off. Given the reduction in my wife's income at the 5 days a week being as extremist as possible, it would be probably around 8 years to 9 years to pay it off.

Whoa!

Now, what was your wife making before she started staying at home, can I ask?

Yeah, she— so she was a schoolteacher at a private Christian school, and she was making around $38,000 a year before she became a stay-at-home mom.

Okay, so that didn't like majorly set you guys back, especially when you think about childcare. Okay.

I'm confused how going down one day a week doubles your debt-free date.

Yeah, that's crazy.

It's because we've got a higher mortgage payment, and if I cut down from 6 to 5 days, that is a $1,700 a month reduction in my income per month.

How much is your mortgage payment?

Mortgage payment, right now we're paying $3,700 for it. The minimum payment is like $3,400.

And you're not investing or anything, right? It's just pure cash?

Doing our 401 match and then $100 a month for our daughter for investments.

Okay, so the good news is there's a place that we can trim to find a little bit more. It's not going to be the be-all end-all, but I'm guessing what's the match, 4 or 5%?

Yeah, yeah, 5%.

So if we can bring that money back temporarily, because again, this is temporary and you guys are young, so there's plenty of time to get back in into investing when the time comes. But the truth is, and I mean, you're a dollars and cents down to the dime guy, so every bit of money, you know what I'm talking about, it is going to make a big difference. difference. So if you temporarily pause your investing, knowing that you're building the foundation so that later you can invest and do so with no worries, with no risk, I think that's worth it for you.

That's an extra $12,000 a year. So that's a full month you're gaining toward your debt-free date. And you said you're going down in income about $20,000 a year based on your take-home. You said $1,700 a month is what you'd be Yeah, losing roughly $1,700 is what I'd be losing. Okay, so you just gained $12,000 back by pausing investing right there. So now you're going, okay, there's an $8K gap. Can I do anything else to make up the difference? Because the goal is how do we keep you on this amazing momentum and not delay you by 4 or 5 years for your debt payoff journey? Because that's also— there's hard on both sides.

Absolutely.

Being in debt for 8, 9 years is a slog, and being at work an extra day every week for 4 years, also a slog.

And I mean, I want to encourage you, you know, Sam and I, we had made major amounts of debt and major amounts of student loan debt. And I'll tell you, I mean, I was a person, I worked 7 days a week for a long time, Matthew, for years. I worked 7 and 6 days a week, and it's not fun. But there's a part of this where, to George's point, you're choosing your hard, and the time is gonna pass anyway.

Mm-hmm.

And so, you have to ask yourself, which do I prefer? You know, when I look up in 4 years, do I wanna just know that I'm gonna be done, or do I wanna elongate this possibly, like you said, maybe not 8, 8 or 9 years, but significantly into the future. And I think when you frame it like that, you just kind of go, okay, what I would suggest, and this is just a suggestion, I would suggest you continue to work the 6 days because you doing that is going to be better than any side hustle. You're going to earn more money from that than any side hustle could bring in. But then what I would suggest on top of the 4 years, because your wife is like, man, this is not what I envisioned. I wanna be able to see my husband. So we need to try to meet her where she is there, and for you too. And I think you guys can do that by setting up some milestones and kind of setting up a reward-based system in this so that you're feeling not only the momentum from paying off the debt, but you're also feeling excitement when it's like, hey, for every, you know, you guys can set this up.

For every $15,000 we pay off, this is something that we do together. We go on a date or we, you know, get a sitter. Like whatever those things are that are gonna make you guys feel refreshed, I think that's good. Or, you know, you're working 6 days a week, but you decide, hey, there's one week, there's one Saturday that I don't work, right? One Saturday a month. Little things like that go a really long way. So, I don't think that it's all or nothing. I either work 5 days or I work 6 days. I think it's, let's set out to work mostly 6 days a week. Let's make sure that we're adding in some milestones. And that way, we're making this something that we can sustain. But there's no version of this that feels easy.

Right.

But you told me that you can throw $11K right now at the debts every month.

That, that's what we're averaging. And it's surprising to me that we're able to hit it, hit it this hard.

But yeah, think about this.

We've been roughly doing that.

I'm crunching the numbers right here. If you pause your investing, that's an extra $1,000 a month now to throw at the debt. You're now throwing $12K a month at the debt. You got $330K left. You're done in 27 months, just over 2 years. So instead of 4 years or 8 years, I'd rather see you sacrifice hard for a shorter period of time versus sacrifice But lay it a little lower, take the foot off the gas a little bit, and it'd take 8 years.

And I'd also be interested in, is there anything that your wife can do from home? You know, she's obviously right now, if you guys have a newborn, she's in the throes of it, but maybe 6 or 8 months from now, there's, you know, there's a little bit more mental load margin that can free up for her. And maybe that there's something that she can do from home or at certain hours per day. And again, every little bit counts towards this, so.

Well, I wonder, what are these cars worth? You said you have 2, New cars that are paid off.

Uh-oh!

Yep. We bought a 2024 Kia Sportage and I have a 2025 Honda Accord. We initially bought them for about $30,000 each a year or two ago. Those are part of the initial that I just paid off because it was the highest interest and got it done as quick as I could.

OK. I'm just wondering, let's say you're like, man, I could shave off 3 months of sacrifice and get it down to 2 years flat if we sold one of these and downgraded to a different car in cash. That might be something you look into.

Mm-hmm.

If you wanna speed this up. So there are levers you can pull. It's just you guys deciding as a couple, which ones are we willing to pull and for how long?

Absolutely.

And in my book, man, I'd rather be done with this sooner rather than later. Now you're making crazy money with no payments in the world.

Exactly. And you can enjoy your degree. You can enjoy your profession instead of working for the money. And I think that's the thing. When you have debt, it changes the way you work. And I wanna see you being able to work because you enjoy it, because you, it's something you believe in. Not because you have to make your next payment. Hey guys, it's Rachel Cruze. If you're working the Baby Steps, every major expense deserves a second look. And healthcare is one of the biggest expenses in most most families' budgets. And that is why I recommend that you check out Christian Healthcare Ministries. CHM isn't insurance. It's a health cost-sharing ministry. That means members help pay one another's medical bills. And they've been serving Christians since 1981. CHM programs start at just $115 a month. And here's why that matters. If you are paying more than you need to for healthcare, that money could be going toward paying off debt, building your emergency fund, or reaching your next financial goal. And your And the monthly cost isn't based on your medical history or where you live. Y'all, a lot of families find CHM gives them more room in the budget.

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I mean, we, we just started the rehearsals and this content is stuff that we have never talked about.

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Fabulous! Alright, Julian is in Memphis, Tennessee. Hey Julian, how can we help today?

Hey, so I've been saving up for quite some time. I'm 23 years old and I want to buy my first home. And I have an uncle who's, he's invested in real estate in the past. He was telling me I should get my first home should be like a duplex or a triplex. That way I could ideally have somebody else paying my mortgage. It would also be my first time buying a house. I plan on putting at least 10% down, but I know how, you know, I've listened to some of the podcasts and things like that. And I know how you guys feel about borrowing money. I mean, is it a good idea to do that considering it'd be my first time owning a home? And then also, you know, it'd be my first time investing in real estate. I figure I kill two birds with one stone, you know, by trying to do this.

So I had a guy— Dave and I were hosting together a week or so ago and a guy called in and he purchased a home the correct way where the payment was no more than 25% of his take-home pay. And he was able to cover the entirety of the mortgage on his own. But he then had a couple of roommates that came in and rented rooms and paid him.

Mm-hmm.

And we praised him because we thought, hey, this is great. That's a smart move. And then he took that money that he got from the rents, was going to save it up and use the money to pay off the house and then buy his next rental. That was his plan. So there's a way to do this that I think is smart, especially if you're young and single and you have the money to be able to afford this on your own. I do worry, and I mean, George, I don't know how you feel about this, but the duplex and triplex I do worry a little bit about that just because it's a lot. And those tend to not be in the greatest of areas. And so that's the part that gives me a little bit of an orange flag on there. So I want to know more about your numbers. I want to know what you want to spend and what, what money you actually have.

So I got like around $70,000 saved up. I've been saving it for quite some time. I have no other debt besides a vehicle payment that purchased about 2 years ago back in 2024.

What's left on that?

And, uh, uh, $9,000— well, $9,700.

Okay. And what do you make?

Uh, about $85,000 a year.

Awesome. Okay, so all the cash to your name, $70,000 is what we're working with here.

Yeah. And then, yeah, and that's, yeah, and that's, um, just the cash. I mean, that doesn't include the other investments that I have. I have 2 Roth IRAs and I have a traditional, and then through my employer I got a 401.

And what makes you want to become a landlord?

Just the passive income, you know. I mean, I've read some of your—

You ever have your tenant knock on the door that's next to yours to say, hey, toilet's busted, you got to fix that?

I haven't yet.

You got to stop the party next door because you can't sleep?

You know, I've considered that.

Or they stop paying?

Well, that's— I haven't experienced it yet, but I mean, I hope you don't.

But I'm just saying that's the reality, because what your uncle's doing and what you see on TikTok is a bunch of guys saying, here's the path to wealth. Just get a multiplex and then do that 17 times and all of a sudden you're a bajillionaire. And it just never works like that in reality. And the reality is Jade's right. These are— these don't go up in value the same as a single-family home. They tend to be in rougher areas. And I don't want you biting off more than you can chew just so that you're, quote unquote, they pay the mortgage.

Now, if I were in your shoes, I would follow the blueprint of the gentleman that called earlier. I'd say, okay, the primary point here is you need a place to live. So what if you bought something that had 2 or 3 bedrooms that you could afford? I'm not saying the $70,000 is going to get you there just yet, but this is just us dreaming. What if I bought something that was 2 or 3 bedrooms and I know a couple of guys, these are people who are reputable that would rent a room. And even if they don't rent it, I can still afford it. But this is an opportunity for my, for me to just kind of get my feet wet and what it feels like to own something of my own, what it feels like to collect rent. Do you see what I'm saying? What it feels like to fix something that's broken in the house. And then later on, Mm-hmm. if you save up cash because you've got people paying you, once you pay off that mortgage, because it's going to be, you know, nothing crazy, nothing, you know, as modest as possible, then maybe you can start saving up for another piece of real estate, right?

And we're kind of doing this slowly in a way that is serving you. And you're also able to learn from the situation that you're creating. You're not just jumping, you know, 10 toes in on something you've completely never done before with a triplex in, in, in a neighborhood of town that you're having a hard time finding great renters. You see what I'm saying?

Yeah. Yeah.

So if you want truly passive income, an index fund will do that. But if you're telling me you love real estate and you want to get into it, you want to become a landlord, that's a different story. So if you're going to do this, then make sure that this works without the tenant there.

Yeah.

That this payment is no more than a quarter of your take-home pay, 15-year fixed-rate mortgage. And before you do any of that, you're paying off the car today. You're setting aside an emergency fund for yourself, 3 to 6 months of expenses. For you, that might be $30,000. Now you're left with $30,000 for your down payment. And now we can continue saving for the next year and start looking. And look for a house that you'd actually want before you just go looking for an investment slash a place to lay your head. I wouldn't try to combine the two at this stage of your life.

Okay.

Are you gonna get married anytime soon?

Not yet, no. Probably another 2 years or so. Okay.

That's something to think about. If this is a long-term decision, you know, nice gal comes your way, I don't know that she wants to live there. She might have her own idea of what her single-family home or whatever townhome looks like. And so I would just tread with caution and with an uncle saying, dude, you gotta do this. I made so much money. It's always an uncle or a brother-in-law. So you're doing great. Like all things considered, to be your age and have that much in cash and now debt-free after this call is over, cuz you're about to pay off that car loan, you're doing so good. So I would stay on the path and I would avoid TikTok real estate videos. And that's what's gonna get served up to you now after we talked about this.

That's right. That's so true. And I don't, I just wanna say this because you know, I don't want anybody to walk around, you know, with a bad taste in their mouth like, Jaden and George, they don't like real estate. We do like real estate. And I particularly think that when you're this guy, a guy like this or a lady, you're young, you're unattached, you don't have kids. That is the time where you can try things, where you can do things that you maybe wouldn't be able to do, you know, 10 years of marriage in. I don't want to have roommates in the house at 10 years in, you know what I'm saying?

Yeah.

So he's in a phase where he can play a little bit. if he does it the right way. And I think that if he does this, it's a fair way to kind of get into maybe, do I like renting? What I want to live near? Because here's the thing, if you don't want to live upstairs from your, your boy, like your friend, you certainly aren't going to want to be duplex neighbors with Trevor, you know, who you've never met before. So like, I think that's a, just a really great way for him to dip his toe in and see.

And to not leave him hanging, I'm going to give you a free ticket, Julian, to our Investing Essentials virtual event next week.

Nice.

And night one, the second part of night 1 is all about real estate investing. And Dave goes through, here's all the different categories, here's all the ways to do it, here's all the formulas you need to make sure that you're making a wise decision. Because this is the biggest decision you've made so far in your life. So we don't want to jump into it just because we see one. It might not be a deal. It might be way overpriced.

Right.

And you can't get a tenant to rent there for what you want for it. And now all of a sudden it's not paying your mortgage.

And then you need to sell it. And now you're messed up because because maybe you didn't get a good deal and now maybe you're not even getting what you sold it for.

So, it's really important. So hang on the line. Christian's gonna pick up. We'll make sure we get you a virtual ticket to that event. And the rest of you can join us, ramseysolutions.com/events. We're pumped for it.

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Today's question comes from Olivia in New Mexico. My husband and I have experience in both residential and commercial property management, as well as in real estate. Instead of contributing to our IRA and Roth, can we purchase investment properties and consider paying off those mortgages as part of our 15% towards retirement? Or is the Baby Step 4 rule specifically that your 15% for retirement be only cash that goes into an investment account?

That's a unique question. I've never gotten that directly.

Well, here's the deal. Dave Ramsey loves real estate. He's got a whole lot of it. sort of accidentally a huge part of his net worth comparatively to his investments.

Right.

Because of how well he did at the time he bought it. So he has both. He always recommends diversifying. And so because of that, I'm going to do both. I'm going to invest in the IRA, the Roth, do 15% there, and any extra money outside of that you guys could use to purchase that next investment property in cash. But paying off the mortgage does not count as part of your 15%. Even though you're building equity, it's a part of your wealth-building journey. We want to make sure that we're investing for the future in a lot of different ways. And real estate income can be a great source of income in retirement, but I would love for you to have a nest egg on top of that too, especially because of the tax advantages. So both/and.

I like that answer. I concur. Alrighty then, Kimberly is in St. Louis, Missouri. Hey, Kimberly! You're up next.

How can we help? Hi.

Yeah, what's up?

Oh, I'm so excited. You have no idea what this means to me. Like, I have listened to this show for years.

Well, we're on a lot.

Yeah, we are.

How can we help?

Hopefully we don't screw this experience up for you.

I know, I'm very nervous now.

Well, I hope not. I mean, I'm in a very good— I'm in a wonderful place because of you all, so thank you for that. That's awesome.

I love it.

Um, my question is, is it ever okay to have like more than your annual salary in wheels and motors and toys? We— I lost my mother a little over a year ago, and she— we have always driven like no one else so that someday maybe we could drive like no one else. And she always said when she passed away, she wanted my husband to have a new truck. Well, we waited a year and we finally did it, but now I feel guilty because we have so much money tied up in motors and wheels.

How much did you spend on the truck?

Um, $75,000.

In cash?

Yes.

And what do you guys earn?

We earn about $130,000.

A year?

Yeah, but we have a lot of other things.

What does everything add up to with wheels and motors?

$181,000.

Oh, so you guys like toys.

You're gonna have to go down that list because inquiring minds want to know.

Dark curiosity. Are there boats, four-wheelers, RVs?

Well, part of it, a big $45,000 of it is a tractor, which was also basically part of our inheritance from her.

So you guys didn't pay for that.

Let's just count the stuff that you guys paid for.

No. So minus the $45,000 is all we get to pay for.

Okay, so $145,000.

$145,000.

Okay, $135,000 or so is what you guys have.

Yeah, that's really all. I mean, we have 7 cars.

Why?

My husband is a car collector, I guess, but they're like—

No, he's an addict.

Well, they're like Town and Country minivans that we bought years ago that he just keeps driving. You know, he's driving a 2013 Town and Country minivan with 300,000 miles on it because he just doesn't want to sell it.

So what about the other 6 cars?

My vehicle's worth about $25,000.

Yours is reasonable. We'll keep that one.

Yes. We have the work van, which is only worth $1,200.

OK.

We have another minivan that we use when we travel that's worth maybe $6,000.

We don't need that.

He has a very old truck that he uses on the farm that's worth maybe $1,000.

OK.

And then our daughter, who is in college at the moment, we own her car and we paid— it's worth about $15,000. I would say.

Okay.

That still feels like a far cry from your—

$130,000.

Yeah. But you got yours at $25,000. His truck's at $75,000. That's already $100,000 right there. Yeah.

Yeah, that's $100,000.

Okay. Where are you guys at in the Baby Steps? Do you have any debt?

No, we have no debt. We've been debt-free for quite a while.

Awesome.

And I think what happened is our net worth changed quite a bit overnight when we lost my mother. So that was a big change for us.

How much did you inherit?

We inherited— the total of the estate was, um, $2.1 million. Wow.

And so what's your net worth today as it stands?

$3.1 million.

Fantastic. Wow, what a legacy.

Yeah, she did do good. I mean, we had— we were, we were just at Baby Step Millionaires when she passed away, but I mean, all but about $40,000 of that was tied up in retirement and our home. So it wasn't like we had a lot of money at our disposal.

And your mortgage is paid off today?

Yes, our mortgage is paid off. It's been paid off for about 4 years.

So you're worth— just the invested portfolio is $3.1 million. Did I understand that correctly?

There is like $1 point— including our home, there's like $1.6 million in real estate.

Because I'm also thinking about, you know, when the day comes that you retire. I don't know how old you guys are, but I'm also thinking about what you would draw off of that nest egg. I'm kind of fudging a little bit and maybe thinking through some of that as well.

And how old are you two?

We're 50, 55.

Okay. What's the goal for retirement?

We would love to retire now, but obviously that's— I mean, our financial planner says it is somewhat possible because we inherited like a $1 million taxable portfolio.

So you could use that as a bridge account, you're saying, until you would access retirement?

Right. But the caveat to this, and part of the reason I think I feel guilty for the truck, is we have a dog who's in her senior year of undergraduate, which is all paid for. She had a full ride scholarship.

Good.

But she wants to go to medical school. I'm just gonna say this though, because I think it's, I think it is what it is. You don't feel good about the truck. And even though this person who you love so much said, I would love for your husband to have a truck, she didn't say you had to pay $75,000 for it. She just said it would be nice for him to have a new truck. Right?

Correct.

So for that reason, for those 2 reasons, I'm going, we implied $75,000. You guys implied that. And you have said these principles matter to us and now we're feeling it. And because of that, I think that you're inclined to do something about that. What would, what would it look like for him to go, I maybe don't have a $75,000 truck, but I sell this and I get a $40,000 truck and now I have this nice chunk of income to go towards my child's education, right? I think, yeah, there's something there that might give you a little bit more peace, but also, you know, preserve the memory of your loved one. Do you see what I'm saying? And also give you guys peace at night.

Yeah. And I think that's kind of why I hem-haw about it. And I'm like, you know, Dave, I always have heard him say, you know, if you put this money in the middle of the table and lit it on fire, would it affect you ultimately? No.

I don't know, because you're saying it You just, you laid out some beautiful ways that it is affecting you.

Yeah. I mean, it, I guess mentally, emotionally affecting me.

Well, the fact that it's affecting you is worth bringing up to him going, hey, what can we do to solve this? Well, one solution is we sell all these dang cars sitting out in the yard looking like a junkyard and he downgrades to a $40,000 truck. You keep your $25,000 car, not because it's in the Ramsey parameter. Now you're, you know, you've been absolved of your sins, but because it's not a part of your value system.

Yeah.

Yeah.

And so, it's more about that than anything else.

Yeah, I mean, he didn't drive for that truck, you know, I kind of, I guess I sort of pushed him, like, this is something my mom was very adamant about. I mean, she always, all the time said, I want you to do this.

What was the heart behind that, though?

I'm sorry, what was that?

What was the heart behind her wanting him to have a new truck?

Because I feel like he grew up very poor as a child, and we've been together for 40 years, so he is basically her kid. I was an only child, and I think he had always— we have always driven junk, older vehicles, Dave cars.

He still does, it sounds like.

It does. And she just said, that boy needs a really— I want him to have— and she did say, I want him to have a really nice—

And a $40,000 truck Your truck is a really nice truck.

She didn't say he needs a brand-new $75,000 truck, just something that isn't a piece of junk. And we went to the furthest part of the spectrum to go, alright, let's go to the dealership and hand over a nice, big, fat check.

Listen, if you were to keep this truck, if you were to keep everything exactly the same, your world is not going to implode. But since you called, and since you really do seem to be bothered by a purchase that you made, it sounds like you have a little bit of buyer's remorse.

It's living in your head rent-free. I think it's time to evict the truck. And move to something a little bit more reasonable, and you'll sleep better at night.

Absolutely.

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Well, welcome back to The Ramsey Show and the Fairwinds Credit We're headed right back to the phone lines because we have Timothy, who's in Newark, New Jersey, on the line. Hey, Timothy, how can we help out today?

Hey, guys, how's it going? Thank you so much for taking my call. Big fan of the show. Moral question for you guys. I bought a 2-family home with my sister quite some time ago, and unfortunately, I had to take legal action to sue to get out of the property. My question is, we don't really speak anymore, and we were super close growing up. Would you guys take any action to try and mend that relationship? Or leave it alone kind of as it is.

Why did you have to sue her? How did it even get to that point?

So my sister and I bought a 2-family house that we both lived in together and rented out another side. And I wanted to get married and start a family and didn't exactly want to be responsible for being a landlord anymore, doing the credit checks, fixing everything that was wrong with the house. I bought my own single-family house. Relatively close in the same general area. And we had conversations about me trying to get out of the house, didn't want to be responsible for it anymore, and she refused to sell it, either put it on the market or buy me out of it.

Was it because she was living there or she needed the income from the tenant?

Uh, she was still living there, so it was a mother-daughter side-by-side. She was living in one side, renting out the other side and collecting rent. And she told me that she either couldn't afford to move out, didn't want to, wasn't overly—

And you guys had no agreement about what it would look like to force the sale or to when, when and if we're gonna sell?

Oh, we did. When we first bought the house, again, it's a brother and sister, so it was more of a verbal agreement that we're only gonna stay here for a couple years until we figure out what we're gonna do with our life. We bought it super young. I was 24 at the time. She was 26. So just kind of buying our first house, figuring out how things were going.

Sure.

This was gonna be temporary. And the plan was for both of us to eventually either move out, sell it, or rent it out and start our own lives and our own family.

So the communication was terrible.

So far it's been, well, we had a verbal agreement.

agreement. It was a couple of years. Eventually we were gonna. And so that's all part of the chaos.

How many years did it last?

Uh, we lived in that house together for about 5 years.

Okay. So that feels like it suffices for, let's try this for a couple of years.

And you took her to court. Obviously she hasn't spoken to you in a year now.

About a year.

And you wanna remedy the relationship.

Uh, I do. Is that the goal?

Do you have any way to even get in touch with her, or she like blocked you, no contact, there's no way to even have a conversation?

So I'm the, I'm the younger sibling, so that's my older sibling. I don't exactly know how to approach it. There's no blocking, I don't believe so, but once attorneys got involved, everything went just through attorneys, so I don't even know how I would go about it.

But you guys live near each other?

At all? We're in the same general area, a couple towns away from each other.

Could you send a text and say, hey, would you be willing to meet up and get coffee next week? Do you think she'd even respond?

I don't think that she would.

Okay.

What if you just— I mean, you could try a couple of things. You could try writing a letter or sending an email. You could try calling her and just cold calling her. You could try leaving a message. Like, there's so many things that I think you could do. And I think of everything. Let me ask you this. I don't think so. But do you owe her any apologies? Or this is simply, I want to find a way to repair our relationship? Is there like an apology owed? So, or no?

If anything, there is. And I'm sure that most people on my side of the argument would say this. If anything, there's an apology that's owed by her to me. Okay. I'm the more understanding of the sibling. She's very stubborn and way more intellectually smart than I am. So when she thinks she's right on a point, takes it full bore. I actually gave up a lot of things in the sale of this house. I didn't collect rent for the 2 years that I owned that house. I wasn't living there. I let her keep it all. I let her do a mortgage assumption. So she kept the great rate that we had on that house when we first bought it. I didn't make her, you know, list it on the market. I actually took less money after we got all the appraisals back for the house. So if there's anybody that I feel like it would be me, but it's still one of the only family members that I have left. So I would like to have a relationship with her. And my first son was just born 6 months ago, and I would like for him to know his basically only family.

So I don't know if this is— that's kind of the catalyst of it. Yeah. Is that now the dust settles, got past him finally sleeping through the night, and I've had some time to actually think and breathe, is that I would like him to know who his aunt is.

Yeah.

But, okay, how do you mend a relationship with somebody when you're the one that's owed an apology?

Yeah, maybe you are, but I think that what you're saying outweighs that, right? This is the only family I have. I have a baby in this world and he should know his aunt, right? All those things outweigh who owes who an apology, I think, at this point. So I would kind of come hat in hand and I would say, I'm so sorry this happened to us. We set out to try to do something and it created this rift between us. And I hate that. I love you. You're my sister. I want you to know my family. I really hope that you would consider— I would love to repair a relationship with you. It's going to be hard for anyone to turn that down.

The extra layer that I don't think that she would be willing to is that she is also an attorney and was representing herself through this entire ordeal. So I think there's an extra layer of cynicism on her end.

Because she was— she didn't have the filter that you had.

Incorrect.

Okay.

And you technically won the legal outcome.

I, I did. She assumed the mortgage. I got paid half the equity that was in the house, which, I mean, that's a whole separate idea. I don't know what to do with it yet, but yes.

Well, you can only do what you can do. You can't force her to be open to this, but what you can do is start just planting the seed and be persistent, but also, you know, reasonable. You don't need to be knocking at her door like, answer, we gotta talk. But I would just say, hey, I miss my sister. I want my sister back. I know what happened happened. That's water under the bridge. I just wanna be a part of your life. I don't want us to not have a relationship over something that happened a year ago on a business transaction gone wrong.

You can also ask her to quantify it and say, what would you need?

What must be true for us to have a relationship?

Yeah, what would you need from me for us to be able to move forward? Maybe she feels like she's owed an apology, 'cause sometimes, everybody perceives things differently. And I'm not saying— I honestly can't judge who's right or who's wrong on this. And I— for me, it doesn't matter. But if she perceives that she's owed an apology, sometimes— listen, if you're married, you know this. Sometimes, you just have to apologize, even though it wasn't on you.

Just to— I apologize to my wife every day.

Come on, man.

Just to sort of COVID the sins of the day. I go, hey, I'm sorry.

When you get out of bed, I'm sorry, and then you just go on with your day. But you see what I'm saying, Timothy? There could be something there, if you know, If you happen to know where she feels she's owed an apology, even if you're like, man, I'm right, like, I did it, it could be worth it to say, I'm sorry for XYZ. It could be worth it. And if not, if you truly don't know, just ask her, what would it take? I really wanna know what it would take to be back in your life. I miss you. I love you. We've got X amount of years history. We're the only family we have. God, I would love to make this right this year. Just please let me know what I need to do. And I— she sounds like a tough nut to crack, but you can try.

But the key is you go first, you put the ball in her court.

Yeah.

And you, at least then you'll sleep better at night knowing that you made the attempt. And whether it's reciprocated and there's some healing, that's not in your control, unfortunately.

And at the very least, I mean, who can resist a picture of a cute baby?

That does help.

That's a very good point. But my other concern would be, how do you even find it to forgive somebody when they put themselves between you Now there's— now there's the part that I'm wrestling with.

That's the part.

And I think that your own bitterness and resentment, that can get in the way for sure.

I think that you may— you may need to deal with that, Timothy, before you come to her. Otherwise, you guys are going to start arguing.

It's gonna— it's just gonna come out eventually.

Uh-huh.

And it's gonna close the door once again.

Uh-huh.

So get with a counselor, make sure you work through your side of this and that you're truly okay And then extend the invitation so that you know that on your side, it's water under the bridge.

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Well, guys, if you're sick and tired of working so hard but having nothing to show for it, let me tell you something. If I were you, I would be sick of that because normal is broke. And we work too hard out here, George, to feel like, you know, you go to work 9 to 5 and you make your money and you pay your bills. And it's like to do all that, to give your time, to give your sleep, to give your effort. And at the end of the day, it's still just treading water.

It's just never enough. You're like, I just worked all week just to satisfy bills and payments to lenders. There's gotta be a better way.

There's gotta be a better way. And we found it. You know, we found that when folks start budgeting, it is like their whole world opens up.

The skies and the seas part.

Yes.

You can see the light.

You can actually see where your money's going. And most people are shocked to find like, oh my gosh, I had no idea. I know for us, when we started budgeting, it was kind of a scary time because we really realized, all right, no wonder we're going into credit card debt. We're in the red every single month. But even having that realization, so at least you know what the problem is so you can start to fix it. And other people have realizations where it's like, oh gosh, I had no idea we were spending that on going out to eat. I had no idea that we were spending that on groceries. And just having that insight—

And I had no idea how much margin we could have with a few simple tweaks just by paying attention.

I mean, I did a media hit the other day and we were just talking about ways to find margin. And I mean, it really is simple things. Most folks don't realize how much they're paying every month in subscriptions. But when you get into EveryDollar, which happens to be our budgeting app, when you get into EveryDollar and it makes you go line by line to fill in everything, that's when you start to go, okay, I've got Hulu, I've got Netflix, I've got Disney, I've got Paramount Plus, right? And surely you can cut one of those.

Yeah.

You know, that's when you start tracking and you start looking and going, oh my gosh, we've gone out to eat or we've DoorDashed in 3 or 4 times this week.

Yeah.

If you just cut like 10% in each category, that could be $1,000 you free up.

Absolutely.

And I mean, that's true. I mean, most folks, I've been here for 4 years and it's shocking to me how many people tell me they feel like they got a raise simply because they started budgeting. And so, I mean, I would suggest it. When you guys hear us take calls and we help people and we send them EveryDollar, we're sending them that because EveryDollar is the basis of everything we teach. Having that budgeting tool that's not only there to help you do a budget, but it's also reinforcing the plan that we teach. Guys, it's the most important thing that you're going to do when you start working this plan. So make sure that you download it. You can start it for free. It's in the App Store. It's on Google Play. Please get a copy because that— a copy?

Wow, you're aging yourself, man.

I know. I just turned in—

Be kind, please rewind as well while we're at it.

It's an app. And my point is, go ahead and go download it because it's going to change your life if you let it. All right. Justin is in Baton Rouge, Louisiana.

What's up, Hey, how y'all doing today?

Excellent.

Yeah, thanks for taking my call. So basically, uh, I'll be 40 this year, and honestly, I never really considered retirement most of my life. Uh, I've always believed, and I mean, I still do, that Jesus will return soon. But of course, I don't know that. I don't know when that will be. So if it happens to be 30 or 40 years from now, I don't want to be 60 years old, 70 years old, climbing around an So once we started listening to y'all this year, we did decide to open up over like about 2 weeks ago. We decided to open up a Roth IRA and we just went ahead and maxed it out. So we just went ahead and put $7,500 in there. Okay. Wow. Since we haven't, since we haven't done anything.

You went 0 to 60.

Retirement. What's that?

Yeah, you went 0 to 60 real fast. I love it.

Yeah.

And then me and my wife, we, we talked about opening up. Now she's She's 31. So we talked about opening up her one, but we haven't done that yet because I know, I mean, I'm assuming it won't let me put any more than $7,500 in there since that's the max.

Well, you each can have one.

Right.

Yeah.

So that's what we were thinking about doing was just opening up her one also. But the main reason for my call is whenever I open it up, I just put the whole $7,500 into the S&P 500 because we hear y'all talk about that one a lot. And then after we did that, we were thinking, okay, well, y'all also mentioned about putting it across 4 different types of investments, but I know so little about retirement or investments that I'm not sure like what the best resource is to find out what mutual funds we should put our money in and what are the 4 different— how do I determine what the 4 different groups are? I know one of them was international. And then the other 3, I don't really remember. One was aggressive growth. I guess there was like a long-term growth.

Yeah, there's aggressive growth, growth and income growth, and then you've got your international. So let's talk through this. I love that you're asking this question because a lot of people out there, it is confusing and there is a level of financial literacy needed to make sure that you understand what you're investing in and not just do it because Jade or George or Dave said to. And so the S&P 500 is the top 500 U.S. companies by market cap. Those would be large-cap companies. Those would fall into this growth and income category. They're pretty stable. They're huge. They're like a cruise ship. Then you get into the growth category, which is going to be more of your mid-cap companies. What you're missing out on right now are the other 3 categories of funds: mid-cap, small-cap, and international. You can do far worse than the S&P 500. You can become a millionaire, multimillionaire, just by investing in the S&P 500. What we're recommending is diversifying even further those 500 companies by saying, hey, we're going to not just get the large ones, but those little ones, the medium-sized ones, the international ones, so that over the course of time, it's all going to balance out.

You might get some great growth off the small ones over the long haul, some great growth off of international when the U.S. markets are down, and you'll be better off in the long run. But either way, you're doing a good thing. You're not investing in a single stock or crypto. Nothing wrong with what you've got going on right now. I'll gift you a ticket to our Investing Essentials event, because what we actually do Justin. Dave and I are going to look at sample mutual funds in a 401 and help you understand how to go about using the process of elimination to find the 4 that make sense. And we do it in 2 minutes.

Oh, yeah!

So Dave, we literally did the rehearsal yesterday and Dave went, well, you could have done that and still had time to go eat lunch. It doesn't need to take 3 hours of Googling and researching different funds. You're looking at a few key pieces like long-term return, the expense ratio, the type of fund. And so we know, hey, if it's a bond fund, we don't want a bond fund. If it's a target date fund, we don't want that. So now you've already ruled out half the funds in your IRA or 401. But the IRAs, you have options to the moon because you can choose any investment under the sun, which can be more overwhelming.

Now the one thing— Yeah, whenever I was looking at them— I'm sorry, go ahead.

No, no, no, you go ahead.

I was just saying, whenever I was— we opened it with Charles Schwab, and whenever I looked at it, I searched for the S&P 500, and then I just looked at the market, and I literally— it could have been Chinese to me. I literally had no idea what I was looking at other than just looking at the trends of them. But I would be scared to death to put my money in something that I didn't understand and had no idea what it, what it was going to do, which I know you can't necessarily predict that. But after listening to y'all and hearing about the S&P 500, that's what we were like, okay, well, we feel comfortable putting our money in I understand that. But then we would still want to— if I've only got about 20 years of investment, 20, 25 years to do that, for me, I would want to spread it across all 4 of them to the best of my knowledge where it's going to be the best return on investment.

Well, the good news is I think you're going to feel a lot better about select— knowing how to select those funds after the event. And if you still feel like, hey, I need a little bit more help, you can get with a SmartVestor Pro and they'll help you understand it and they'll make sure that they're guiding you in the way that we teach around here, the Ramsey way.

Yeah.

So I would definitely make sure to hit up that event. And again, if you still have questions, get a, get a SmartVester. But the one thing I might tweak is, you know, we always teach over here 15% of your gross income. So kind of just landing at, I'm just gonna max out a Roth, there might be more ways that you can invest. So I, I would challenge you to say, okay, well, what's 15% of my gross income and can I invest that every single month? But the good news is, even if we just plugged in the work that you've done, uh, the $7,500 that you've already invested, and let's say that next year you did the same thing, but you just split it month by month, right?

We got the calculator up right now. If you're watching on YouTube or Spotify, you can actually see Jade's using the calculator live to walk through this.

So again, I'll just go through it real quick. The $7,500 you've already invested for this year, but let's say next year you start breaking it out every single month, $625 a month. And let's say you do this until age 65. At 11%, which you would hope to make that even, you know, just in an index fund. I mean, if we calculate that, that's over $1.1 million for you and your family.

If you do nothing else, that's just your account. If you do nothing else, you never get a raise, you never invest more than that. And so I wanna encourage you that you're, you're doing great. You're doing better than you think. And you don't need to be a prodigy investor to have wealth. You just need to invest consistently into the right things and not overthink it. Jump in and out. As a frugal guy, I am always looking for entertainment that is worth what I pay for it, and that's not always easy. But Angel's newest movie definitely passes the test. It's called Runner, and it might be Angel's most action-packed movie yet. It's a buddy comedy about a former soldier teaming up with an unlikely partner to get a healthy liver to a sick girl in desperate need of a transplant. But if those stakes weren't high enough, the cartel is after them too. Runner stars Owen Wilson, my favorite Wilson brother, and Alan Ritchson, who's best known for playing Jack Reacher. It's got action, humor, heart, and as previously mentioned, a liver. And if that wasn't already enough value, when you become a premium member of the Angel Guild, you'll get 2 free tickets to see Runner in theaters, plus access to Angel's entire family-friendly streaming library and free tickets to every future Angel theatrical release.

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Alrighty. So George, you know, that call that we just took with Justin, it really does bring up a bigger teaching point that I think it's important to hit, which is a lot of folks feel like it's too late to start investing. But we just saw with, with Justin, hey, even if you're 40, you know, yes, he's going to invest $625 a month, but he still has the potential to be a millionaire. $1.1 million is what our calculator showed. But there is a benefit that if you can really capture what it is that we teach, the earlier the better, right? I mean, obviously the quicker that you can start taking advantage of compound growth, the better for everybody. So, let's rewind. In the words of Cher, let's turn back time.

I love it.

What if Justin had started at 21 years old, right? So, 21, no debt. Maybe you already have just $1,000 in investments, just like he had. He, you know, had $7,500. But now you've got 46 years for this money to grow, right? You've got a much longer timeframe, and it's not gonna cost you as much of your own personal money to build the same $1.1, in this case, $1.2 million $1.8 million of growth.

So it's pretty incredible. You wanna crunch the numbers live?

Yeah, I'll crunch the numbers live.

Okay.

So again, I, I really love this calculator and I would suggest it for anybody. It doesn't matter what your age is, but it's really great to kind of get on there and just play around with your life. So let's pretend, uh, there's already $1,000 of growth. Maybe it was money that your grandma gave you, whatever. You got $1,000 there. So let's start there. Now, if you're 21 years old and you just say, you know what, I'm gonna put around $100 in here.

That's $1,200 a year.

I mean, I mean, that's nothing.

We can all find that. We spend that on subscriptions every month.

Exactly.

Or DoorDash.

We're gonna have it grow for 46 years, 'cause this person is gonna retire.

From 21 to 67.

Yeah, to 67 years old. And again, I'm gonna keep it at 11%. That's a fair, I mean, if you go and just look at average annualized rate of return for S&P 500, you'll see that 11% is a fair rate of return. And if I calculate that, oh my gosh, $1.823 million.

And let's point out something way more interesting. Pull that back up on the screen.

Yeah.

The actual contributions made to get to $1.8 million, $56,000.

That's bananas. But if we grow back, if we go back in, let me go back and put back Justin's numbers in. So he had, we'll start with $1,000 and we'll put in $625. And then we'll say he only had 20 years.

Yep.

Oh, he had 25. He was 40 years old.

That's right. 25 years to grow. If we calculate that, he's at $1 million, but look what he $188,000 was his contributions.

The rest is compound growth. And that's what we found in our millionaire study. Their retirement accounts wasn't $1 million they put into it.

That's right.

Most of that, 80-90% of your nest egg in retirement will likely be compound growth.

Absolutely.

So it's up to you to do the first 10-20%, but the more time you have, the better, because every dollar goes a whole lot further when you're young. So this is not a knock on those who are older and don't have anything saved. It's just to show you that we better get on it. There's no time like the present, because waiting till tomorrow is worse.

Yeah. And so we've even got a chart that kind of shows you at the different ages. And if you're watching and you can see this, go ahead and screenshot it because it's so helpful. You know, what you— if you're age 20, what you put in. If you're age 25, what you can put in. And now this chart is, you know, using a 10% rate of return, but so it's 1% off.

And this is how to become a millionaire at every age. So by 67, what does it take to go from age 20 to age 67? $80 a month. Now, if you wait until 25 to get started, it takes $130 a month. You wait until 30 years old, it takes over $200. So on and so forth. And then you get to 45 years old, if you have nothing saved and you want to have $1 million in that nest egg by 67, you need to contribute $1,000 a month to get there. So it just shows you, man, if I had done this 20 years ago, I could have just invested $80 to get there.

It would have been easy work. And if you are 40 or you are getting a later start, start, it's still possible. The chart still shows you it's possible. You just gotta have a little bit more cash to put in the kitty. So guys, if you're interested in this, again, go ahead and pull up our free investment calculator. It's so helpful. I'll drop a link for that in the show notes, whether you're listening on podcast or on YouTube, it'll be there for you. So that's super fun. I find it to be motivating, George, me myself. I just like to see it.

Yeah, especially if you've got, you know, younger kids at home, teen you show them the power of that, now they're going, you know what? I was gonna go waste it on more clothes at the mall, but I'd rather open a Roth IRA, because I'm working part-time. I want to see that money grow for me instead of see it disappear. And that's what I did when I was 18. Every paycheck was gone, usually at the place I worked. I worked at Urban Outfitters. How many more skinny jeans did I really need?

I did that. I worked at New York and Company. At Goodwill somewhere, yeah.

Yes.

But I had a nice Oh, you're looking good. All those clothes are gone now.

I'm broke, but I sure look good in those skinny jeans.

Oh man, I know it. Well, download the calculator or just use the calculator. It's really, really going to help you. All right, let's go back to the phone lines where we have James in Charlotte, North Carolina. Hey, James, how can George and I help out today?

Hi there. Yeah, my question for today is when my work has become kind of exceedingly stressful, but I feel like I've saved a lot of money. Um, is it crazy to take like a 70% reduction in my salary to do like a barista-style approach to find a little more purpose in life and just kind of get some sleep back, some anxiety down, and find purposeful work as opposed to, you know, being a, you know, $224K kind of breadwinner for, for me and my wife? Um, this is my question.

Well, I would love to separate this. I would love to separate the dollars that you're making from this. And I'd love to separate the assumption that whatever you do will earn you less money, right? And get to the clear point, which is you just don't like your job and you want to be doing something else. We don't know what that is. It could end up being something very lucrative for you. Is that fair?

Yeah. I mean, I've been an engineering manager at a few companies and it's always been stressful. I've been very worked live. And I'd be looking to maybe do something like a physical therapy assistant where I'm, you know, helping people find mobility or, you know, get parts of their life back. I have a little bit of my own personal history there.

Okay, so you do have an interest that you have something that you're targeting on?

Yeah.

Well, how does that affect you guys? I mean, what's— I gotta believe that making $224,000 a year for quite some time, you've got a good financial Yeah.

So, my wife and I have about $1.3 million invested between 401s and Roths, a little bit in Roth IRAs. We weren't very smart about that when we were young. And then, a lot in just a brokerage account, probably about $800,000 there.

What about your home? Do you have a mortgage? Is that paid off?

We're about half paid off. So, we have $225,000 left on the mortgage on a $450,000 house. I think we got for $400,000-ish.

What would that do for you guys if you, let's pretend tomorrow you found a job in physical therapy. Suddenly you're making, I don't know, what does that pay?

$90,000?

$65,000, $70,000, $80,000. What is it?

Around $70,000.

Okay.

So now you're making $70,000 instead of $224,000. Where does that put your mortgage? mortgage in this situation as far as monthly payment?

Yeah. So my wife has around like $80K in salary, and that pretty darn close to covers our full living expenses. And she has the option to work summer semesters, which she doesn't really do right now. So we would get to the point where we have pretty negligible Like cost of living.

You'd be at $150,000 between the two of you?

Oh no, no, sorry. I was just giving my salary. My, my wife makes an additional, you know, $70,000, $80,000 on top of my salary.

Yeah, so you guys would make $150,000 household income is what it would go down to.

No, no, our household income is around $300,000.

No, no, no. If you were to take the job in physical therapy and make $70,000 and then she keeps making the $80,000, is that okay? I just wanted to make sure we were following you on that.

Because that's what we're talking about here is we're going down from, you know, So this household income making over $300,000 down to $150,000.

What is the mortgage? Can you just tell us what it is every month?

$1,800, I think.

Oh, OK.

Alright, so you need to bring in $7,200 to make this make sense. And you guys currently would bring that in even if your income went down. Yeah.

Mm-hmm.

That's a good way.

This sounds doable. And you've got that taxable brokerage account to fund any schooling or if there's a gap. You can buy yourself some time because you guys have done this really well. But I would just make it a goal to still invest 15%, retire with dignity, and not just go, well, I make $60,000 for the rest of my life, but I'm happy. I think you can get back up to making a 6-figure income and doing what you love.

Yeah, you're obviously a really smart guy, and I do think— don't hear me say what you do— work, you have to do work that matters to you. You're doing this for the rest of your life. But gosh, maybe one day you'll own the coffee shop.

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Well, guys, I want to tell you that your feedback really, really helps us. If you listen to the show and you take the time to leave a nice comment, if you take the time to share it with someone else, if you take the time to just, you know, when you're at work and you're chopping it up with your friends and you just mention The Ramsey Show, that does a lot for us. And not only does it do a lot for us, but it does a lot for other folks as well, because the message that's on the other end of this is hope and life change. And there's so many people out there, George, who think that it's impossible to get ahead, who think that, you know, the American dream is dead, who think they can never pay off their debt. There's just a lot of hopeless folks walking around. And when they get ahold of this message, it really does have the potential to change their life. I'm one of those people. I know you're one of those people.

people.

So, don't think that it doesn't matter when you mention the show. It really, really does. So, keep doing what you're doing.

Plant that seed. You never know what could grow.

Yes, plant that seed. I love that. Alrighty then, let's go talk to someone else who is experiencing the same hope that you'll be sharing. Abby, who's in Los Angeles, California. Hey, Abby, how can George and I help today?

Hi, how are you? I'm wondering if I should get rid of my my 2014 Hyundai Elantra and get a new car?

I love this question.

What are we thinking? What are we going to get?

Right. So I was thinking on getting like a basic Kia, just like the cheapest car to get that's like new. I'm thinking of leasing, not like buying.

You had me in the first half.

Saying cheapest, you're saying cheapest car and then saying a lease, all of these things, They're like, don't go together.

Cheapest, newest car that I rent forever. So what's behind this?

I'll tell you my thinking behind leasing. I'm, God willing, going to have many kids. So after a while, I'm always going to upgrade a car space-wise. So that's my thinking.

So you're married?

Yes, I'm married.

OK, cool. And you have no kids now, but in the future, there will be kids, and you don't want to get a car and then have to switch it out with another car?

Yeah, I don't want to keep on buying and selling and buying and selling.

Why? Tell us why you want to do that, because cars, they go down in value. You don't want to keep leasing something that you're overpaying for.

You're just prepaying the depreciation. The worst part of it.

upfront.

And that's if you don't have any extra damage or extra mileage that you pay fees for.

And not to mention, you're paying a payment for life, which means that's money you're never going to be able to invest. You're never going to be able to put it towards your goals. You're never going to be able to put that money, Abby, towards your kids' college.

Right.

So can we give you another path that might get you what you want that's not costing Yeah.

We can all agree you deserve a car upgrade. You've worked hard. The car is 12 years old. It's got a lot of miles on it, I'm sure. You're ready for something new. How much cash do you have on hand specifically for this car upgrade?

So I'll tell you, basically, I'm 19. My husband's 21. We got married last year. My husband has— we share a our money. So we have altogether savings, I think like $12,000 in savings.

Okay.

Um, and then my husband's been investing in, um, in retirement and everything since he was 17, maybe 18. Um, so I don't know so much about that, but I know he's been investing. He's also investing in stocks. Basically, he's investing in a lot. Um, so I have $9,000 in debt, but it's interest-free and it's not like something I need to pay ASAP. It's like from a family friend.

Oh, family friend.

Even more.

Okay.

Let's reframe this because what I'm hearing, I actually really love this call, Abby, and I'm glad that you called us because I think George and I are going to— you're going to look back on this call and you're going to say, this was a turning point for me. Because what I hear is a brand new marriage, the potential for a brand new family. You guys are already thinking about family planning. And you're exactly right, Abby. This is the time to start really good habits. Now is the time to start planning for the future, for the life that you see, for the values that you guys have. And so what George and I will suggest today is really going to help undergird that so you can do this with so much security and so much peace and not risk all of those good things. So what I would suggest for you, Abby, truly is our basic Baby Steps, 7 Baby Steps plan. And it's going to be perfect for you because you already have a major head start. And the fact that you already have some money saved, you don't have a a lot of debt, you're going to be able to walk into these 7 steps and really just kind of cruise through them.

And you're going to be shocked at how quickly you're going to be able to accomplish the things that you want to accomplish. Okay, so that's me setting it up. So the first thing that we teach people is you really just need $1,000, just a quick cushion in your life. You guys have that, you have $12,000. Okay, so baby step 1 for us, you've already knocked out $1,000 saved. But baby step 2 is we need to eliminate the consumer so that we don't have the risk in our life and so that we have all of our monthly income at our disposal to use towards our goals. So with that in mind, what I would do is of that $12,000 saved, I would pay off that $9,000 debt that you have today. Absolutely. Because even though it's zero interest, it is a family friend. And every debt, every day that you keep that around, it's affecting that relationship. Here we believe that the borrower is slave to the lender. It's biblical. I believe it. I've experienced it being in debt.

And it changes the relationship.

Yeah. Your uncle shouldn't be, you know, or your aunt or your friend should not be your loan officer.

And they see you taking a vacation, they find out you got $12K in savings and you still haven't paid them back, it's going to damage this relationship. And if you paid that off today, you still have $3,000 left over.

You got $3,000 left.

You still got money, and now we can save up an emergency fund of 3 to 6 months of expenses.

And that's baby step 3.

While we're gonna keep driving this car for another, let's say, 6 months, you'll be there.

Right. Right.

So you're at Baby Step 3, you got $3,000 saved. To George's point, you save up a little bit more. And now we can start to buy this car. But from there, and those are just the first 3, you've cruised through. And now, like you said, your husband is already investing. So now he can start investing 15%. That's Baby Step 4. This is you guys starting to build wealth for your family. Baby Step 5, you've got maybe by then you've got you know, your first pregnancy underway, and you can actually start to put money aside for their kids' college in a 529. And then you can start on a house.

Right.

Buying a house, paying down that mortgage. That's Baby Step 6, is putting extra on the mortgage. And this is the way, Abby, that we've seen millions of people start their lives. They go from kind of being frustrated, they go from being disorganized, to— they go from not having a plan to having a plan and feeling like they have control of their money. They know exactly where they're going. They know exactly what comes next. And these are the people who build wealth quickly and efficiently and with no risk.

Right. So also the reason I was thinking about getting a new car, so I do part-time teaching. So with that, I'm carpooling and that over the month, I calculated that that would gimme $400 a month, which I would be able to like pay the monthly installment.

But if you can do that, why not keep what you're driving and just bank that $400 a month? Now you got $5,000 after a year.

Yeah.

Because here's the problem, Abby. If you want to break out of this mentality, this is how broke people talk. How much down? How much a month? That's all they care about is the payment or the interest rate. The only zero you should be focused on is zero payments so that all of your hard-earned money and your family stays with you instead of just going back out to payments every month.

Right. So the reason I was thinking about getting a new car is because my car is slowly but surely breaking down. My AC is not working. And there are some engine issues and acceleration issues.

OK.

So put what I said aside.

Abby, for a second, put, put all that wonderful wealth-building talk that I just did, put that aside for a second, and let's just pretend, okay, all Abby wants is a brand new car. Can you at least guarantee me, can we at least pay, save up cash? Can we use, at least use the $12,000 to buy a cash car? Can we at least do that?

I don't know. I'm scared of like bringing down—

Don't be scared. Guess what, Abby? The new car is going to be a used car right after you drive it off the lot, right? And that one's going to have issues of eventually too. That's what happens with cars. And that's why it's even worse to have a payment on that car or rent it expensively. And so I'm just telling you, I can tell that you're not listening to us. We're, we're missing each other right now, but I'm begging you at 19 to not buy a brand new car. It is the number one wealth killer in America today. It's what keeps the middle class middle class. And if you can avoid this at your amazing young age, you're going to be so wealthy.

And so smart.

And be able to buy anything you want one day instead of looking back from now 10 years going, why'd I buy that stupid new car?

Yeah, Abby, if you buy this car, I, I'm guaranteeing you, I am coming from the future and I'm telling you, you're gonna look back on this call and you're gonna go, I can't believe I didn't listen to them. They gave me fabulous advice. They're 20 years older than me and I didn't listen.

We're old people.

You're old.

Okay, I'll take that.

Hahaha!

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Welcome back to The Ramsey Show here in the Fairwinds Credit Union studio, taking calls about your life and your money. Still on it with George Campbell. Let's go to Anna, who's in Boston, Massachusetts. Hey, Anna! How can George and I help today?

Hi! Thank you so much for taking my call. I was wondering— I'm in a situation where I've been married for 3 years. I have 2 little kids at home and I'm a stay-at-home mom. I thought by now my husband and I would have merged finances already, but every time I bring it up or say that it would really mean a lot to me that we could be a team, he just completely shuts down and ices me out. And officially we're married, but we have no— nothing else that's joint. No, I'm not even on our house. I'm not on the bank account. I'm not on anything. And I just really don't know what to do.

Why— if I were to ask you, why do you think that is? Would you say, oh, he's just really controlling? Or would you say he had a relationship in the past? What would you say is the reason, in your estimation, that he's Icing you out?

I think he doesn't control me in any other way. Um, he's really a very sweet person. It's not like a bad, horrible marriage or anything like that. Um, my gut tells me there's obviously something more must be going on. I feel like maybe he's hiding something because I'm the one who's actually quite responsible with money. Um, or I was when I had it. Um, He isn't so much. He's more of the spender. He doesn't save. We don't have an emergency fund. I mean, nothing. We're not doing anything that we should be doing. And before we were married and when I was working, I was attempting to do the Baby Steps. I was a long way off, but I was trying.

Mm-hmm.

And now since then, I haven't been able to do anything. So I just, I have to assume like maybe he has debt that he's hiding. I really don't know, but there's obviously, it's a very deep issue.

That's a fair— I think that's a fair assumption to make. And I think that it's okay for you to feel that way because you know him the best. He's your husband, and you're observing his behavior with the money and outside of the money. So that being said, I'm guessing that you have gone to him and said, I don't like the way this feels. It feels like you're hiding something. I, you know, it feels like we don't trust each other. Have you had that conversation? From that point of view?

Yeah, I've never said like, I feel like you're hiding something. I try to be— I try not to nag or attack or anything like that. I just tell him, I just really want to be a team member and a partner in our marriage.

But if you're honest and say to him, and I'll use some of Dr. John Delony's language, if you say to him, the story I've been telling myself is that you're hiding something, and there's something— there's this huge amount of debt that I don't know about, and you're keeping something from me. I don't want to keep telling myself that story if it's not true. not true. Like, can you help? Can you help me? And the other story that I like to tell myself is that we're married, and we're a team, and teams do things together. That's the one I want to be true, but I'm not seeing evidence of it, right?

Yeah.

And so, you're kind of like, laying out both, you know, these juxtaposing sides of yourself that are at war, and just let him know. And you kind of have the key to this because the ball's in your court. And unless you tell me that none of that's true, and you open up the finances to include your other team member, something's gonna have to really change here. And, and you be the strong one that's got a clear point of view and has a clear set of boundaries on what must be true to move on. And let's see how he responds to that.

Yeah, I mean, we have had fights and, and more civil conversations about this, and it seems like a pattern where, for example, I don't have like a bank— we don't have a shared bank account. So, if I want to get groceries, I have to ask for the debit card, and then I have to ask for how much money I can spend.

That's crazy, Anna.

And have you sat down with him and really shared like, hey, I am scared. I'm frustrated. I didn't get married so that I could have a daddy I need to ask an allowance for. I'm raising our kids. This puts me at risk. I don't know anything about our finances. If something were to happen to you, I'd have no clue where to start, and this is a non-negotiable of our marriage, that when we became one, it has to include our money too.

I've actually said all of that.

And he shuts down?

Yeah, he shuts down.

Then you need a third party.

He gets really defensive.

You need a third party to enter the conversation and go to— because this is a marriage problem at this point. The money is a symptom of something much deeper. And I don't know, I can't say from here that he's— there's, you know, financial infidelity or what he's hiding, or if it's just maniacal control. But whatever it is, it's very Yes. And your family, your kids deserve better than that, because they're watching. They're watching mom and dad and see how they operate. And they're watching mom scared, begging for grocery money. That's not a picture of the marriage that you intended.

No, not at all.

And so, if it's you going to a marriage counselor on your own, that's a good start. But he's gonna need to join at some point. Otherwise, it's him opting out of this relationship.

And that's, that's a very good point that George makes. I would definitely go to him and say, we need counseling. And if he won't go, you go on your own. And one of the things that I would want you to talk to with that counselor is, what are some things that I can put in place that will let him know that this is a serious deal breaker for me if it doesn't change? And how do I kind of enforce those in a way that he knows that this is serious? And in the meantime, how do I keep myself safe? And right, and talk about those things and what that strategy is, because it is important for you to be able to not just bluff, right? When you have these conversations, there has to be something behind it. Otherwise, he's gonna go, no, right? And you're just gonna take it and keep doing it, right? So there's gotta be a point that you decide at, this is my point where I go, I can't go forward unless you pick up the slack here and do your side of things.

Okay. Yes, I have tried to for a long time. I've suggested going to a counselor, but he also refuses to do that. So I figured that was the case, man.

It takes, it takes two to make the thing go around, and he's not doing it.

Okay. Yeah.

And it's because he doesn't want to deal with whatever is being hidden right now, and it needs to come to the light.

Yeah, that's what I wanted to ask, what, what you guys think.

I mean, I can tell you—

It sounds like something's being hidden.

100%. Listen, I don't know what, but when people are hiding things, it's because they have something to hide. I can tell you that. I don't know what it is. It could—

Right.

I have no idea. But we've seen things on this show anywhere from gambling to other types of addictions to just, to George's point, just purely control. It could truly just be a control freak in a certain area. But it's the bigger thing that I want to caution you on is we just get calls like this a lot, Anna. And women in these situations tend to let this go on far too long. And the way it ends is not good. The longer they let it go on, the worse the ending. And so, I really just wanna empower you to stand on your 2 feet and really just have a backbone in the things that you're saying, and really take action on the things that George and I are saying. Because I don't know about you, but I'd wanna know sooner than later who this guy is.

Yeah, absolutely.

And who he's— what he's gonna choose when it comes to Yes, it's terrifying.

But yes, I know you're right about that.

Because a marriage is built on trust and respect, and right now you have neither of those things.

Yes.

On top of no accountability, no transparency. So I don't care how nice he is in other areas of your life, this marriage is going south, and we need to rectify that. And if he's unwilling to participate in that, that's very telling. And so you need to get help for yourself. 'Cause you're in a really bad position right now being in the dark, and he basically sees you as a roommate taking care of his kids.

Yeah, and I just also wanna say it's a form of abuse. Financial abuse is a real thing. So I just wanna use that language so you know how serious this is. And please, Anna, call us back if you need anything. We're definitely here to help, and we're rooting for you.

Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime, anywhere. It's free time with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to ramseysolutions.com and try Ask Ramsey today. That's ramseysolutions.com.

The truth is, guys, that buying or selling a home is a major decision. And with so much conflicting housing market news out there, it can be really hard to actually know what's going on. But we're here to help you understand what the market is doing so that you can buy and sell with confidence. We recommend a 15-year fixed-rate mortgage. You've heard us say that over and and over. And the truth is those rates are currently hovering around 6% right now. But don't wait on a rate that you can't predict. Okay? Nobody can predict, predict this. And so we say go ahead and date the rate and marry the house. Remember, you can always refinance later. And just remember, no matter what the market is doing, only buy when you're financially ready to do so. We want this to be a blessing for you guys, never a burden. Now, also in, in other news here, median home prices did dip below $429,000 last month, which honestly, that's a 2.4% decrease from the previous year. So that's good news, especially if you're ready to buy. Uh, 1 in 5 listings had a price cut last month. Again, good news.

So you do have room, guys, to negotiate on the price, repairs, and closing costs. Here in Nashville, it's starting to turn into, uh, a buyer's market.

Absolutely.

So that's really nice. Uh, remember, if you want trusted advice on the housing market, weekly mortgage rate updates, or free tools to buy or sell with confidence, go ahead and go to ramseysolutions.com. Or you can just click that link in the show notes.

Love it.

Love it.

Love it.

All right, guys, let's go to Crystal, who's in Atlanta, Georgia. Hi, Crystal. You're on the line.

Hi.

Hi. Hey, thanks for taking my call. So I was a stay-at-home mom. The last year I became a single mom of 2. My youngest— neither of my kids are in school yet. I found a part-time job. I also started a business. I started a business, but it is not yet paying me, and I lost my job. So now I'm out of money and I'm out of credit, and I don't— I mean, I don't even want debt, but I don't know what to do.

Wow, sounds like a lot of life has happened.

Yes.

How long have you been a single mom?

A year.

Okay.

Is there any kind of alimony or child support involved?

I do get child support. There's no alimony. I get a small amount of child support each month.

Okay, how much is that?

It's $1,000.

Okay, so currently that's your only income?

Yes, for the last 2 months.

What is your rent or mortgage?

My rent, we have an apartment, it's about $1,300 a month.

Oh wow, so we're already going $300 in on the credit cards just for rent and we haven't done anything else yet.

Yeah.

Um, tell us about the part-time job and tell us about who's taking care of the kids.

So I had a part-time job at, um, like a school, a preschool.

Okay.

And my kids could go there. Um, but then I lost the job. So I also, at the same time—

What caused you to lose the job?

Because I didn't have childcare for my youngest.

Okay.

My oldest could go there when he was 3.

Um, so you physically couldn't go to the job due to childcare issues?

I could go to the job and my youngest could go there with me, but then she just got too old. When she was with me at first, I was babywearing her and she was super young, but then she was running around and it was just Understood.

So the 3-year-old, and how old's the oldest?

The oldest is— he's 3.

3. How old's the youngest then? I'm sorry.

She's 1.

1 and 3. Okay. Do you have any family near you? Are you kind of on an island, or is there friends and family nearby?

I do have a church community that has helped me. They've covered the I've earned before.

Okay.

So I, I have some people.

What we're, what we're looking for, I, I, the main key here is you gotta be able to work. So childcare is the number one unlock cuz people just giving you money, that's gonna run out real fast and it's gonna get old with people really, really fast. But if you can find a situation of childcare, um, that could really be helpful. If you can look on, maybe look into a, a group where there's a, a share where people are sharing the load and maybe you take weekends and watch the kids while the other moms go do something else, something like that, if you can find it. But the first thing, so I'd be looking for things like that. But the number one thing is let's start job hunting. Because the thing is, if you can find a full-time job doing the things that you know how to do, you can generate enough income to be able to put them back into daycare and then have some leftover money to actually make your life run. So we got to, uh, do you see what I'm saying?

And this isn't forever because once they're, you know, 4, 5, 6, they're going to be in school and that'll free you up even further and relieve that daycare cost.

But in the meantime, let me separate what I said because I don't want it to be confusing to you. You need to find that, that big job that's going to give you, you know, we're looking for something that let's try to make $50,000 a year, $60,000 a year. But in the meantime, you're gonna have to take something to fill in that gap. And that's where it could really be helpful to find some kind of co-op situation with these kids through your church. Maybe there's some other moms there. Maybe they offer a mom's day out, whatever you can do. Maybe there's an older lady at church that you're like, hey, can I— you're retiring. Do you need something to do? Can I pay you what I have just for this season? Right? This is the time to really lean on relationships as much as you can for time, for help with time, not money, if that makes sense.

Yeah.

Okay.

How much debt do you currently have?

Credit card debt, around $20,000.

Oh, how quickly was that built up?

Since I've been, since I became a single mom, so about a year and a half.

Yeah.

Okay.

So yeah, I don't want you to look up a year from now and be $40,000 in credit card debt at 27% APR and just wonder how you're ever gonna climb out of it. So the goal is to stop the bleeding, quit going into debt, cover our 4 walls. That's what you should be focused on right now is just food, utilities, housing, transportation. Do you have a reliable car?

Yes.

Okay.

I would be asking the church community, uh, asking all of my friends, hey, are there any open roles you know of? Because full-time work making salary would really be a blessing right now. And have you applied for any assistance in the meantime?

I have.

Good. Okay. So, I mean, these are what George and I have laid out for you. I mean, this is kind of the basics of trying to get yourself on your feet, but you have to be persistent. So we're going to give you find the work you're wired to do. It's going to have to kind of help you get the wheels turning on some of the work that, hey, these are roles that I could apply for. And it's going to help you know what could you be good at? What are you passionate about? And so we'll gift you that for free. We'll also gift you EveryDollar so that you can make sure that the money that you do begin to make, you can start to budget it. And EveryDollar is going to speak to you with our plan in mind. It's going to teach you how to manage money the way we teach, which is no debt. So all of those things are really, really going to help you. But I can't— I cannot, uh, stress it any more than this, Crystal. This is a season for you. It's not going to be like this forever.

You've got littles right now, and George made an excellent point. When they get school-aged, it's going to be like the parting of the Red Sea, and you're finally going to be able to have a little bit of help that you don't have to pay for in the form of them going to public school. And so if you can just hold on a little while longer and just keep pushing, this is probably the hardest season, but it's not gonna be like this. So, so don't give up. Try your best. I mean, make these calls tonight. That's your homework. I mean, tonight and this weekend, you're calling up friends, you're bringing them over to the house, and you're saying, here's where I'm at. And if you've ever wanted to know how you can help me, this is how you can help me. I need childcare. I need us to figure this out together. And get some friends around you who love you and who will really rally with you. Oh boy, oh boy.

If you're out there and you're in a situation like Krystal, we feel for you. There are going to be seasons where you're like, how am I even gonna put food on the table? So, it's a good way to just think through this. I gotta just cover the 4 walls. I don't have to do everything. Right now, I just need to make sure that the rent is covered, I'm current on my bills, I can put some food on the table, basic clothing, put gas in the car, keep it running, and cover the utilities so they don't shut off water and electric.

Yeah, that's so good, George. And I'll even put this out there. This is for me too. If you're at— if you're involved in your church, our eyeballs need to be open, and we need to be looking around for the folks in our community that look like Crystal that we can reach out and help, that we can see what they're going through. Because there's no reason that she shouldn't have folks helping her. So that's something that we can all do, because we all have Crystals in our community. There's probably a Crystal that's going to be at church at Sunday. So let's get to them first so they don't have to ask us. Let's keep our eyes and our spirit open for folks like this that we can really help out and be generous with.

Our big Investing Essentials event is next Tuesday and Wednesday. Don't miss your chance to be there. Investing isn't difficult, but it's not something you can learn in a 60-second TikTok video. So at this 2-night virtual event, George Campbell and I will walk you through my playbook for investing and wealth planning. We'll simplify everything from maximizing your 401 to reducing taxes and setting up wills and real estate and much more. Join us next week on September 1st and 2nd. Tickets start at $199. Get yours now at ramseysolutions.com/events or by clicking the link in the show notes.

If you haven't heard, Ask Ramsey is our free AI tool and it's built and trained on proven Ramsey principles. And today we'll break down one of the questions that we received this week, which is a popular one. The question is this, George, do I need an emergency fund when I retire? The short answer is yes. And honestly, it matters even more in retirement, guys. So when you're working a job, when you're working, a job loss or an income dip is temporary. In retirement, your income sources are fixed, right? If your Social Security withdrawals or pension— also, an unexpected expense can force you to pull from investments at the worst possible time, and you don't want to do that. Like, if the market is downturned and suddenly, I don't know, you need to fix a major thing in your roof, you don't want to have to pull more out of investments. It's nice to have a nice chunk of cash sitting there that can help you there. So again, even in retirement, the goal is the same as That is Baby Step 3. You need 3 to 6 months of liquid cash for, you know, those expenses.

Again, in cash, not in the market. So if you're unsure about how much to keep in your emergency fund, go ahead and go to Ask Ramsey. They're there to help. You can do Ask Ramsey and ask your question today for your situation at ramseysolutions.com. All you have to do is just click that link in the description. If you're listening on podcast or YouTube, Alrighty then. Katie's in Houston, Texas. What's up, Katie?

Hi there. I have a question about protecting equity in my house in the event that my boyfriend were to move in with me.

Oh boy.

Nothing sounds romantic like in the event.

And why would you have to protect your equity? Are Are you expecting him to contribute to your home in some way? Yeah, absolutely.

So let me, let me give you a little bit of background too, so it's not quite as, uh, bleak as it sounded by that short question. So we've been talking a lot about what our future might be like together. We've been talking about, you know, building a life together, getting a house together. And like, in our heart of hearts, I think we would get married and I would sell this house and I— we would buy a house together. But interest rates are at 7%, and I bought this house at a low interest rate. It has a lot of things that we really like, um, and a lot of things that are good for both of us. And he's expressed interest for his own goals in catching up on retirement savings. So both of us living here would pose a lot of advantages to us. But I'm of course concerned. I bought this house, I invested in it, and While I don't think this would happen with him, I would certainly want to protect myself because this was my investment and something I invested in. I hope that makes a little bit more sense. It does!

It's super simple. If you go, hey, if you move in, which I don't recommend personally, but if he does it, he's a roommate. He's not building equity. What happens when he breaks up? You're going to give him his share of half of his rent back?

Yeah, it's your house.

You don't have to share the ownership and equity of your house with Right, but what if we, what if we did decide to get married though? And then this was a practical decision.

Well, then it's his house too.

Then it's both your house.

So if he gets married, if he decides to marry you, well, now the problem's solved because the house is ours. All of the wealth is ours together.

Even if that was something that I preexisted bought?

Yes.

I had a house before I married my wife. I didn't say, well, that house isn't yours. That's my money. my equity. I just go, cool, it's ours now. That's the simplest way to do it. Now, you can set up a prenup and all the complicated things saying, hey, all the equity that I built, I get to keep that if something were to happen. You can do whatever you want to do. But the simplest way to go about this is you guys get married, then he moves in, then the house is y'all's house.

That's the easiest way.

So, you add him to the deed and keep paying the mortgage, knock that out, and the house is yours together. But it sounds like that's not in the picture currently.

Well, it seems like you guys are getting— I think you're mixing your worlds in the pursuit of wealth, which is, hey, what if it was just Katie and what's his name? We can make up a name. Greg. Let's say Katie and Greg, they're together because they enjoy each other. So they're boyfriend and girlfriend. Love that. And this is not the way I'd live my life, but it's like Katie and Greg want to move in together so they can spend more time together. Okay, fine. But somewhere along the lines, it also became a way for Katie and Greg to get equity and make money and invest more. And it got woven in with financial goals. But you don't get to do those things. And you shouldn't, you shouldn't do those things until you're married. Because then you have the legal protections, you have the commitment that undergirds that sort of trust. And so that's why George suggested what he did, because it's just cleaner.

It's not because I'm an old school traditionalist.

boomer.

It's to protect you, and because you have a better chance at a successful marriage and higher chance of building wealth if you guys do it in the right order. And can I be honest? The people who move in together, they call back 6 years later and they're still not married. And one of you is resentful, and it's usually the woman. And I go, why aren't you guys married? Oh, you're living— okay, you've been living together 6 years. And so he has really no reason, because he's all the benefits of marriage without the commitment.

And Katie was so, so true. Yeah, I mean, I gotta believe— yeah, that's so true. You, you will take away— and not to, not to say that you have to leverage these men into marrying you, I'm just saying there are certain— if everything's special, nothing's special, right? So, you're taking away what makes marriage such a special thing that's in a category of its own. Because it's like, well, number one, well, now we living in the same place. Number 2, now we have, you know, probably intimate behaviors that we would have maybe only had in marriage, right? There's nothing there. And now he's getting the benefit of, I don't even have to buy my own house. I get— and do you see what I'm saying? You're gonna make this tough for yourself. I think we've lost Kim.

No, you haven't lost me. I think my concern is just, I listen to your show a lot. And I see so many women who call call in at 50 and 60, and they've been— and again, I don't think this would happen to me, but they have found themselves in a really bad situation because they've taken this step and they haven't secured something for themselves.

And that's what we want you to do. No, we're on your side.

We're trying to show you that protections would be in place if you guys got married, to where you're not gonna lose it all.

If it sounds like— unless I understood you correctly, unless I misunderstood understood you. You're thinking, okay, Greg moves in and if he starts paying rent, you're thinking now he has equity in my house, but he doesn't. If he moves in as your boyfriend and he starts paying rent, he's just a renter.

And I would have a cohabitation agreement in place.

Yeah. If you guys break up, you own the house. You owe him nothing. Truly, legally, he honestly, he's the one that would be in the precarious situation. You would be in the position of strength. But if you guys get married and he moved in your house, it would go from being I to a we situation. Now, if that makes you nervous, that's another conversation. And that's something else that we can talk about. But truly, you are in the position of Katie, of power Katie. We're just trying to make it to where it's just clean.

We just see too much messy on the show. And you said you listen a lot. So you've heard all the Messiness. And so we're trying to steer you away from that because I don't want you calling back in 2 years from now frustrated, going, I didn't think this could happen. I didn't think it would happen. So I would tread with caution with the plan of we want to combine lives except for the part where we get married.

Yeah.

How long have you guys been together?

Just about 3 years.

Okay.

I'm telling you, Katie, George pointed out a big fact which is— I mean, I, I would put money on the table if this were a betting game. If you let this cat move in, don't expect a ring anytime soon. Like, you might get a ring, but the actual marriage date, you have just punted that down the field, and that is going to be another 3 to 5 years, if ever. And you'll be calling us back going, well, we've been together for 10 years, and he's— but we broke up, and he's saying that I owe him money because he helped redo the bathrooms and he helped remodel the kitchen and all. I mean, these are the calls that we get. So you are— give him something, leave something on the table that he has to take that next step in order to get. You're worth that.

And if you're worried because he's bad with money, that's a legitimate red flag that you need to address. I hope we gave you enough homework to do.

I think we did.

It's a lot to think about.

It is.

She's having an existential crisis now.

It is a lot to think about because sometimes I think people can think that what we're teaching is simply because of, um, you know, just a belief system. But it really is— it is a clean way to do life. It's a clean way to value yourself. It's a clean way to value your money. It's a clean way to protect yourself. There's more to it than just a personal value system. So hopefully you realize that, Katie. We love you. We're pulling for you.

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.

That's right.

plan. You need to give every dollar you earn a job, because 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.

All right, our scripture and quote of the day for the Ramsey Show, Psalm 84:10, better is one day in your courts than a thousand elsewhere. I would rather be a doorkeeper in the house of my God than dwell in the tents of the wicked. I know that's right.

I like that.

Alexander Graham Bell said this, when one door closes, another opens, but we often look so regretfully upon the closed door that we don't see the one that has opened up for us. Man, that's the real talk right there, Graham. Alex.

Alexander Bell Graham. Alexander Bell Graham.

ABG.

Yeah, you know me.

Yeah.

Oh, wow. All right, we went there. Now we're going to go to Oklahoma City where Sarah is on the line. What's up, Sarah? How you doing?

Hey, good. It's good to talk to you guys. Thank you.

You too. How can we help?

I'll make it quick. My husband and I, I'm 44, he's 49. We've started kind of late on our wealth-building journey. We were overseas after we got married for 5 years. So we've been hustling for about 13 years. I'm graduating from grad school next year, so I'll start working then. We have 4 kids, but we need to know how we are doing. So one of us, who I won't mention the name, but can relax and learn to have a little fun, but also how we can move forward since our income will change pretty significantly.

Well, I think you're in good hands. I feel like, George, this is your bag right here.

That's right. I'm a recovering tightwad, so maybe I can help out. I'm gonna let you go.

Yeah, I'm gonna let you fly.

Okay, so there's some competing goals here. You're trying to finish school. We're trying to get set up for retirement. We also want to live along the way. Is that what you're wondering? How do we balance this all?

Yes.

We don't want to retire broke. We also want to go on a vacation in the next decade.

Exactly.

Okay, I love it. How much debt do you guys currently have? currently have?

How much debt?

Yeah.

We only have our house and then my student debt. Our house, we owe about $90,000, and my student debt is about $30,000 right now. That'll go up a little bit next semester, but then that's it.

Okay. What's the household income?

It's about $85,000. Well, his gross last year was $112,000. His net was $84,000. It's around $7,000 a month when you Take-home?

Okay.

Uh, take-home, yeah, $84,000. Great.

What will yours be when you're done with grad school?

Um, I'm not sure yet. I'm, I'm getting a counseling degree, a master's in counseling, so it will depend on where I work and how much I work.

What's an average?

Like, what's the floor? I'm not gonna make below $65,000 and it could be upwards of $80,000.

Um, yeah, probably around there, I hope. Yeah.

OK. You said you're going to have to go into a little more debt. Is there a way to cash flow that instead of going further into debt?

Potentially, but I think he doesn't want to pull it out of savings.

There's the answer.

What do you have in savings?

Well, we have $35,000.

Of liquid cash?

Yes.

OK. $35,000.

What does it cost per semester for Next semester it'll cost me about $6,000 or so, I think.

So if you cash flow it, you're down to $29,000 in savings.

Yes.

Which, you still have $30,000 in debt. Is he doing any investing right now, or either of you?

He has his 401 that gets invested. I don't believe he has any extra aside from that.

OK.

So it sounds like you guys are just misaligned on the goals and what you guys want to do financially? What does he want to do?

There's some accuracy there.

Is he like, I want to keep saving and put more in retirement?

Basically, yes. I think his main frustration is like, we don't, we don't get to save enough. And I'm like, well, we have 4 people, we're living very frugally. Like, what do you—

do you know what you have thus far? Like, do you have any money in retirement?

Um, he has $124,000 in his 401.

Okay. So I want to crunch some numbers on just what it looks like to continue to invest. Let's pretend for a moment that there's not the $30,000 of student loan debt, just because I want to see what these numbers are. But I'm seeing a world where with the $35,000 of savings, you have a couple of choices. You can either turn around and pay these student loans off that are existing and drop that down. And then you could probably cash flow the $6,000 per semester on his income, $7,000 a month. I got to believe, believing that your mortgage is in the right place. And then from there, once you have that done, if you continue to invest just off of his income, I got to believe you're there at retirement with no problem.

Do you see how So think about this future. You guys use your savings to cash flow school, then pay off your $30,000 in student loan debt, and then whatever's left becomes your emergency fund. Keep saving that up till you have 3 to 6 months of expenses. Now for the rest of your working careers, you can invest 15% of that $175,000 to $200,000 income.

Right.

You're going to be OK in retirement at that point, and you're still going to be able to go on vacation. So we just need to do a few things in order. The next year is still going to be sacrifice, but then beyond that, you can really budget for all the things you want to do.

Right. So you would pay off the student loan instead of—

I would.

OK. Because I think my thought was, if I take my income from most of my first year, we'll pay it off and then we still have the $35,000 just in case we needed it for something.

No, the reason I wouldn't do that is because these student loans, number one, they're going to draw interest at some point and we don't even want to get there.

Yeah.

And yeah, so they're unsubsidized. And then the other problem here is the longer you keep this around, it's like a pet. You just get comfortable with it.

Mm-hmm.

And the time is gonna need, need to come for you to go, you know what? Enough of this. This, this is ridiculous. We need to change our life here. And so that's why I would go ahead and do that. So you pay it off, you have $5,000 left in savings. Now, you know, you could keep that there if you wanted to continue to build up that 3 to 6 months. But I believe on his income, you guys can cash flow $6,000 a semester on $7,000 a month, you 100% can cash flow college. I believe that, that that's possible. And then from then on, once you get out of school, well, now you guys are making $182,000 a year, and now we can crank back into a full-fledged— I'm gonna say a full-fledged 15% of investing.

That's eating your vegetables right there. So now we ate the vegetables, we can have a little dessert. We can set money aside for the vacation or the car upgrade. upgrade, whatever it may be, in a budget. But it sounds like you guys have not made a budget together since being married, where you guys both are looking at this thing and we agree, this is the game plan.

We have. It just has been very variable over the years. And so sometimes it's like, OK, well, we need to survive, so let's do this right now. And it's been—

It's based on emotion. It's based on how we feel that month, right?

Not always, but sometimes it's what we need to do to pay the rent or to buy the house or if something on the car needs fixed, because both of our cars are very old.

And that's where that budget— if you guys say, alright, what's coming up? We know we have that car repair. Let's set the money aside in the car maintenance repair fund. Let's make sure we're investing 15%. Let's make sure we have $200 a month going to the vacation fund. If you guys can agree on on all of that, then he's gonna be good with the fun parts if it's laid out clearly in the budget. And it's not a surprise of you going, hey, I feel like we don't go on vacation. We really need to go on vacation. All he's seeing is dollar bills fly away. So that budget is going to be your source of truth. And I think it'll help you guys compromise and come up with a game plan that works to where you know you're gonna build wealth for the future and you know you're gonna enjoy your life now.

Mm-hmm.

But the next year, we gotta We've got some homework. We've got to clean up the debt, avoid going into more debt, get the emergency fund, which means he needs to pause investing. I don't think I can convince him to do that on this call, but that would be the game plan to follow the Baby Steps that millions have followed.

And if he does that, it'll still work out. I mean, if you plug it into the calculator, I love this thing. If you've planned it, plug it into our investing calculator. You've got $124,000 there now. Once you're out of grad school and the smoke clears on all of this and you have your full income, income to invest. If you're investing $2,275 a month, which is 15% of your gross income once you start working, you've got another 15 years for that to grow till age 65. Gosh, I mean, that's almost $1.7 million.

So—

And you're 60 and he's 65?

Yeah.

That's not bad.

That's not bad at all. And in that time, you went back to school, you got your degree. In that time, you paid off all of your debt. You've got 3 to 6 months of expenses. You're going on That's a great life.

And that's if your income doesn't go up at all for 15 years straight.

Exactly.

Which we know is not going to be the case.

Exactly.

That's without the employer match, which I'm sure he gets.

Yeah.

You know, the theme for the calls today, George, I feel like is a lot of people wanting to do a lot of things at the exact same time. And it just doesn't work out like that. You have to prioritize and put things in the order that they are best suited to be done so you can actually accomplish them. things. One thing at a time, focused intensity over time will do the trick. Now remember, guys, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.