Transcript of Financial Peace Is Built, Not Borrowed

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broken. Common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studio, this is the Ramsey Show. I'm Dave Ramsey, your host. Rachel Cruz, Ramsey personality, number one bestselling author, co-host of the Smart Smart Money Happy Hour on the Ramsey Networks. My daughter, she's my co-host today. Erica is in South Bend, Indiana. Hi Erica, welcome to the Ramsey Show.

Hi Dave, hi Rachel.

Hey, what's up?

Hey, so my question is, um, I was just wondering what some steps were that you and Sharon took when you were, um, young and working hard, um, that your children did not resent you or your business once they were older?

Hmm, I did resent him. No, I'm just kidding. I'm kidding.

Too late.

It's a good— that's a good question though. Are you, Erica, are you working a lot right now, you and your husband?

Yes, so I'm a stay-at-home mom and my husband, um, is working a lot right now just trying to get us out of debt. We own 2, um, 2 businesses and they're both in the food industry. So there's a lot of—

that's a lot. Yeah, a lot of hours.

Yeah.

With that, how long have you guys been going at it at this pace? Has it been a while?

Um, I would say yes, 3 to 4 years.

Okay. So yeah, so you guys are in— you're in the thick of it. You're feeling it and you probably feel like a single mom. A lot of the time.

Yeah. Yeah.

So how much debt do you have left? How long, how much longer is this journey going to be?

Uh, we, business debt, we are at $486,000 and then our personal house, we're at $470,000.

That's all there is?

Yes. Okay.

Well, both of those are Baby Step 6. Neither one of those require hours to be 80 hours a week. Uh, if your 80-hour week is to get your business up and running, that's a different equation. What is it? You're not working 80 hours a week to pay off $400,000 in debt.

No, it's not so much, um, a money— from a money standpoint for us as it's just, um, finding good employees that can work.

Um, yeah, like, welcome to business.

Yeah, yeah.

And the food industry is—

I was so dumb when I first started nights and weekends. Yeah, a lot of it's a hard— it's hard. I was so dumb when I first started the business, I thought if you hired people they would work. But you have to hire people that are willing to work first and not just anybody. And that's the— so welcome to running your business. So the deal here is he gets away from these hours when he learns to run the business instead of the business running him.

Mm-hmm.

Meaning that he's got to get above cooking and get above food production and get above waiting tables and get above general management and start to put some people in the seats that can actually do that, I'll send you a copy of my latest bestseller called Building a Business You Love. And he's at the treadmill stage, which is where everyone starts. You feel like you're on a treadmill, you feel like you're stuck. Run, run, run, run. But the way you get off the treadmill is hiring quality people that are delegatable, meaning they're humans that you can delegate to because you can train them, because they have two brain cells and they have character and they have work ethic. And there's not that many of them. They're hard to find, but you can find them.

Okay.

And you must find them, otherwise he will— what he's doing right now is not sustainable. You can't do that for 10 years.

Yes.

You run out of steam. Okay, that wasn't your question, but that's the answer. Now then, back to the other thing is, if we're solving for the day that dad is not working 80 hours, then we just talk to the kids about that. We own our own business, and for right now, until we get the people in and get them trained, I've got to be there. And we had that period of time here when I was opening this business.

Yeah.

How old are your kids, Erica?

We have a 2-year-old and another one on the way.

Well, they're not resenting anything.

You're right, you're exhausted.

You might be resenting something. They're not resenting anything. They just want their diaper changed.

Yeah, they're still young.

Yeah, this is, this This does not need to go on until they're 12.

Not because of the kids, but because the business won't work. Your husband will run out of steam. It's not sustainable. He's got to build the business out in such a way that by the time the kids are of age that they might actually resent it that he's already home. That does solve your problem. But in general, to answer your question is, we communicate that this is a price to be paid on a temporary basis to win.

And for a 2-year-old, Ericka, I mean, I would say, you're— when he's home, he's home. Like, he needs to put his phone down. He needs to play, engage with the 2-year-old, you know? And with you guys in your marriage, like, I know during— and it's not at the length that it is for you over years, and years, and years. But I know even for busy work seasons, you're exhausted, and your spouse almost gets your leftovers because you've just been giving all day. And so, for you guys in your marriage, that's almost where I would— put my focus and my energy first and foremost. Because if you guys are connected, if you guys are in sync, and you guys are unified on the plan, then the household feels all of that, right? And so, I think because mom and dad were such a great team, and mom was, can I say, "Bad A"? I won't go for it. I don't know if we're allowed to cuss on the air, but she was. She was an amazing mom, amazing mom, and just took care of stuff, you know what I mean? In that season, when we were little.

And then, as we got to be more middle school, I mean, Dad, your job still required long hours and travel.

I was gone periodically, but not as much.

Book tours, yeah, yeah, yeah, but there were periods of that.

A book tour.

But it would be—

Gone 30 days, not even home.

Yeah, but that's communicated at that age, right? And we were older with all of that. But I think that the presentness of having a solid marriage, the kids pick up on that, and everyone pulling their weight, whatever that looks like. And then, for the kids, when you're just present in your home, and I'm guilty of this too, coming home and checking my phone and all of it, right? So, it's just like putting that away and being, and him being present with your 2-year-old is gonna be big. And then, you guys need to figure out a schedule at some level that's doable when you have this next baby, baby number 2. And so, to feel supported in that, I think is an important conversation.

Yeah. They're not— if he'll just turn on Daddy a few minutes a day at this age, they're not going to be resentful. They're not going to have any memory of it. But by the time they get age that they age out, you, the two of you need a plan. You need to see a light at the end of the tunnel that this business is maturing to the point that I'm going to have some team members that I can delegate to, that I don't have to fin it, do everything.. And that's called training, hiring the right quality people, getting the right people on the bus, the wrong people off the bus, as Jim Collins says. And then it's not micromanaging to teach them to finish your sentences. That's called training. I want this cooked this way. I want the customer spoken to in this way. I want eye contact and a smile. And when you finish, if you work at Chick-fil-A, it's my pleasure. And whatever it is, you train, train, train, train, train for the result you want. And the people that can't make the training, they don't get to stay. And so that's, you know, you as a leader learning to hire and learning to fire and start to build out your team with high-quality individuals.

And I've done that for 40 years and I got 1,000 of them in this building and I'm proud of every single one of them. I know that because if I wasn't proud of one of them, they wouldn't be in this building.

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So Rachel, you haven't heard this story yet, but the other day I had lunch I get lunch with— about twice a year, I get with one of my old high school buddies. There were 3 of us that ran around together, did everything together in high school. And when I went off to college—

Probably glad there weren't phones with cameras during those days.

Thank God there is no record of the things that we did. Yes, that's true. Beyond belief. But anyway, one of the 3 passed away of cancer last year, and the other one, I meet with and have a hamburger with at least twice a year. He lives right here in the neighborhood, right here in the area, and I hang out with him. And the other day I was down there having a hamburger with him and he said, I said, what have you been doing? He's single again. And I said, what have you been doing? He goes, I just went on 6 cruises in the last little while. He goes, I'm addicted to cruising. And I went, you got to go on the Ramsey cruise.

Is he coming?

He signed up. Oh, it's going to go on the Ramsey cruise.

Look at there.

So there we go, which I'm going to have to have him sign an NDA. But we gave him a good deal on the room, but we're going to have him sign an NDA because we can't have any exposure on the Ramsey cruise. But if you don't know what this is, if you're debt-free, the Live Like No One Live Like No One Else cruise is a high-end, very nice— this is not Walmart on the seas, this is the good cruise lines, if you know what I mean, wink wink. And this is the best of the best, the Live Like No One Else cruise. Hang out with all of us, all the Ramsey personalities will be there, and other celebs of miscellaneous, not to be mentioned yet. But we're gonna do new sessions on there, everybody's gonna be speaking every night, we're the entertainment, we're doing all kinds of get-togethers and hang out with you guys. New sessions this year on building wealth, live episodes of our shows, the world's largest debt-free scream. We did it last time, we're gonna do it again. And last year we did it, we did it, it'll be 2 years between the 2 cruises.

So we did it last March, year ago March, and this one will be next March. And it was, it was really fun.

It was great. It was a great week.

And just a little bit worried about being trapped on a ship with 3,000 Ramsey fans, right? That could be a long week for me. You know, that could have gone sideways. But honestly, I had a blast.

Yeah, it was great.

Sharon and I, we would just sit down and have dinner. We'd talk to people. It was just, we had the best time. We really did. It was a lot of fun. So you can secure your cabin. They're not quite sold out, getting close, with a $600 deposit and join us and my high school buddy. And we'll all be there. And click the link in the show notes.

The rednecks from Antioch on a cruise.

That's right.

That's what you need.

You might be a redneck if you're cruising with so-and-so and Dave, right? I'm not gonna throw the guy under the bus, but yeah, there we go. So click the link in the show notes, go to ramsaysolutions.com/events, book your cabin. It will be next March. It will be sold out. You will be really FOMOing. Now you do not come if you're in debt. This is only for Baby Step 4 and beyond. We're not hypocrites. We tell you when you're in Baby Step 1 through 3, you're not going on vacation. This is a vacation. But if you've hit Baby Step 4 and beyond and you save up the money and you want to go on this nice— this is Holland America. I mean, this is a good line. Caribbean cruise. It's gonna be amazing. And but if you've saved up your money and you want to hang out with us for the week, it's an incredible week. You're gonna learn a lot too, because the sessions are incredible that we're teaching.

So that was the funniest part, is it really is a vacation. You get to go to all these islands. And so we have all these sessions booked out with things that, you know, we teach from stage and a couple of things. And I'm like, yeah, you know, the room might be like half full. I don't know, most people I'm sure are out on the pool deck or at the island. I don't know, you just assume people are vacationing. Every session is packed, full packed.

It's like a pastor to do devotionals in the mornings and you couldn't get in. Yeah.

I mean, it was like everyone went to everything, which was so fun.

It was a lot of fun.

All right.

Samantha is in Toronto, Canada. Hi, Samantha. How are you?

Hi.

Good. Thank you. How are you guys?

Better than we deserve. What's up?

So my husband has been doing his dream business for almost 4 years now. And, uh, I just want to know, because he hasn't really brought in any income from it, how long is enough for me to support him in this over our—

you have a business that you ran for 4 years that doesn't make money. That's not a dream business. That's a nightmare.

Yes, in my perspective it has.

No, in his perspective. I mean, it's a business, it's not a hobby. We're supposed to make money.

Yep.

So what kind of business?

He's, uh, doing a couple of, uh, sports training. Um, he's part of the gym ownership and they've just been putting lots of efforts. Uh, even his partner's been doing some investments in it, but nothing yet. They have projections, but I'm tired of looking at projections of what could be. He's thinking of this business as our way out in the future, but it's It's hard to see in the future when right now for years we've been kind of struggling, right?

For sure. Are you working, Samantha?

Yes. So for the past, um, throughout the duration of our marriage, I've been the financial supporter and I was okay doing that. But once we had our first son 3 years, 2 and a half years ago, I'm still working. Yes. It put in a completely different perspective and then I have to go work back right away. And we've had many conversations of, um, why is the burden on me? When, and then his, and then we come up with compromises, but it still feels like it's, and then we're having our second. And then now my worry is that we're back in a situation where we were with our first and I'm, I'm going, I'm still at work. I'm doing, we made some compromises of our living situations. We keep our costs down. We're at, um, my parents. Um, so we're not really paying, uh, you know, for rent.

Um, yeah. Okay. So here, here, here's what needs to happen.

All right?

Mm-hmm.

He needs to sit down with his partners, and proper business acumen would dictate that we see a pattern of growth in the revenue and in the profits to get us to where we can eat out of this thing in a short period of time. So we need to see some directional move in the numbers that give us hope. He needs to do that, not you. And he doesn't need to do it for you. He needs to do it because it's good business.

Okay?

The byproduct is it's good for you because you get some hope too.

No, she's saying that they've been doing that. I know.

They've been doing projections, but projections that aren't hit. Okay? And so that's not— if we have a business unit at Ramsey that sets projections and they don't hit them, then we assess, okay, how much longer do we go with not hitting projections? And then we close it. If it doesn't hit projections. You know, if you don't have a reason to believe other than just, "I hope, I wish," but in business you need to see some things move. I need to see some trend lines in my sales. I need to see some—

Yeah, my fear is that they've been propping themselves up thinking all these things.

They might, they might, but I wanna—

And it's not been real.

But here's the difference. Here's the difference. You need to set a deadline. He needs to set a deadline.

Yeah, with you, Samantha.

And he needs to come back and say, "All right, we're going to go until this date, and at this date, we're gonna see some profit, and we're gonna see some trend lines towards that date between now and then." What's killing you guys is this sense that there's no end to this.

And you got a second baby on the way.

Well, that's tough.

Samantha, does he not have any— I know, but he's the dad. Dude, a part of me is like, not— I mean, I don't wanna offend your husband, Samantha, but I'm like, "Good God, go mulch lawns. Like, go do something to bring in income for your wife and your baby and your soon-to-be baby." Like, that's wild to me. For 4 years, not making anything. Does he have any of that in him? Like, is he mad about it and he's angry and he wants to change this and that? Or is he just like, "I love it. It's been great.

I don't know.

We'll see where it goes.

We're hoping the next thing's gonna hit." So the compromise that we had, um, because he wants to work around his schedule with the gym, he has to be pretty flexible, is that he went back to school. And in here in Canada, uh, the majority of the grants— like, we only had to take a loan with our income.

So that was back to school to do what?

Um, he went back to school just to gain some grants so that we can just sustain us just a little bit.

That's not an income. The boy needs a job. Yes, boy needs a job. He needs to— Rachel's right, he needs to go make some money. And they need to set a deadline by which this gym and this member, this, this dream is profitable. Otherwise, it's not, it's not going to stay open. I'm not gonna—

and I would challenge them, be like, hey, yeah, we have 6 months or whatever you guys decide.

And I want to see— 6 months comes to mind.

And I want to see 2 big changes in the business. Like, what are 2 drastically different things you're going to do?

If I own the gym, you're going to have do something that makes me want to keep it open 6 more months, or I'm going to fire all of you and we're going to close the thing.

I'm sorry, Samantha.

I'm sorry.

That's tough. That's a—

he needs to do that. And it's being exasperated by the fact that you are carrying a child and you're living with your parents and you're living with your parents.

I mean, all of it. It's a lot. And you have the right.

This needs to be— this needs to end.

Yes. To feel urgency.

Samantha needs an end date. It needs an end date. If it's not profitable.

Yep.

Now.

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It's called America. And already 2 times this hour, the side hustle and the small business has risen to the point that they give us a question or 2 this hour. So, couple things to remember if you're starting a side business or you've started a business, got a side hustle that's growing into a business. Here's some book recommendations for you. You ready? Write these down. The premier book in the last 30 years probably that most of us love, and we love the man too, is our friend Jim Collins wrote the book Good to Great. You need to read that book. You need to pick up the book by Michael Gerber. It's called the E-Myth, Entrepreneurial Myth, E-myth. And in that book, my friend Michael says that you will either learn to work on your business or you will forever work in your business, which you just own your job then. But if you learn to work on it, then you can take a vacation and it keeps running while you're not there. That's the proper growth of business, and that applies to both of our calls this hour. Our latest book, Build a Business You Love, is wonderful in this regard.

It'll help you with laying these things out and help you recognize the stages of business as you go along. And my friend Dr. Henry Cloud, who wrote the book Boundaries, also wrote a fabulous book called Necessary Endings. And everyone should pick that book up because how do you know when to end something, a relationship, a marriage, a career, a job, a business, a business unit, employment of a team member needs to end, or I don't want to work for this toxic boss anymore, needs to end. How do you know? Well, there's actual steps that you should go through in a decision-making framework, and Henry walks you through it. One of the core thing thesis in that is if you lose hope that it's going to get better, So a horrible example would be you're married to an alcoholic, and fourth time through rehab, and now they fell off the wagon again. "Well, I lose hope that that one's gonna get better, and this marriage has come to an end." That's an example. But if you think it's gonna be better, then, you know, real reasons, pattern indicators, not wishes, not words, but actual behaviors and things happening in the revenue if it's business, whatever it is, give me a reason to have hope, and then we'll continue.

Necessary Endings by Henry Cloud. That's the fourth book. So some good books to help you guys along. And those are where I get some of the thoughts, where Ramsey personalities get some of the thoughts we throw at you on side hustles, businesses, small businesses, our EntreLeadership materials. We coach about 10,000 small businesses. If you're interested in that, you can find all of that at RamseySolutions.com. All right, Gene's in Montgomery, Alabama. Hi Gene, how are you?

How you doing today, Dave?

Better Than I Deserve. What's up?

Uh, first of all, I just want to say thank you guys for all the work you guys have done. Um, I've been just started, uh, following you guys about a month ago, and, um, I've, I've got my $1,000 saved. I'm on Baby Step 2.

Great.

And I've listed all of my debts.

Great.

Uh, thank you guys, seriously. Back in 2024, I didn't— I messed up my taxes. And, um, I'm 1099, I'm a truck driver. And that year I just filed my taxes and I owe them and it's a $21,000 balance that I owe them. But I just started the debt snowball and I listed all my debts from largest to smallest. And I, I'm struggling to attack this $21,000 and I've been doing all the other ones I've paid off so far. I paid off 3 credit cards so far and I like this momentum. But listening to the show the other day, um, you told one of the other callers to attack the IRS first, but it's just, I'm staring at that mountain and I don't know if you guys could kind of give me some direction or should I just continue going from smallest to largest?

Okay.

How much debt total?

Uh, total debt that I have left over right now is $80,356.

And $21,000 of it is the IRS. And what's the rest of it?

The rest of it, $41,000 is the student loans. $10,000 is on my wife's car. And then I got $5,000 on my daughter's car. And I think, uh, where's the other one? And I got $8,000 left on one more credit card.

Okay.

And so you're going to be to that pretty quick. How much, how much have you paid off so far and in what period of time?

Uh, so I've been following you guys for the last 3 months and in the last 3 months I paid off $33,056.

Good for you.

You, Gene?

3 months?

Yeah, I'm, I, yeah, I'm a truck driver.

I'm, uh, okay, well, if you— are you going to be able to maintain that pace?

I hope so, in the name of Jesus. I really do, to be honest with you. I am— my wife is mad at me. I want to be honest with you.

Because you're going so hard?

Yeah, well, because I'm gone, because I'm on the road, and I haven't been home in like 2 or 3 weeks. And she's on board with me on this vision and goal, and she sees what I'm trying to do, but she does want me to come home.

Yeah, I don't blame her. That makes sense. You have to pace it, pace it out so you can make it. But that's a great start.

Mm-hmm.

So if you, if you were to maintain that pace or even close to it, you will be through the IRS and the other smaller debts very, very quickly. Agreed?

Absolutely.

Yes.

So this is only a question, this is only a question of, of is it going to be 2 months or is it going to be 1 month, or is it going to be 3 months or is it going to be 1 month? Month? That's the only real question, right?

We did $10,000 a month. He did $10,000.

Yeah, $10,000 and $8,000 and $5,000. And $5,000.

So it'd be 4 to 5 months.

Yeah.

Yeah.

Or you can do it now. Either one. So the only question is just, you know, so the trade-off between the momentum that you're feeling, which is very positive, and I don't blame you for wanting to maintain that, is that the stupid IRS has unlimited power They can just decide to screw up your life. They don't have to go to court. They can just start garnishing things. They can start keeping tax returns. They can— and they will. They can take your money out of your bank account. They don't have to go to court. Everybody else has to sue you, win the lawsuit, and then go to court. So they've got unlimited power, which is scary as crud, because they're also not real smart most of the time. So dumb and powerful is not a good mix. And that's what you're dealing with most of the time. Not always, but most of the time. And I mean, I get audited by these people like it's their hobby.

It may be too much work to do it, Gene, but also, we always say if there is a larger amount owed, you could go down to your credit union and get a personal loan for $21,000, pay off the IRS, and put the $21,000 back in your debt snowball so that you pay off your daughter's car, credit card, your wife's car, right? And then you deal with that personal loan of $21,000. So the credit union versus the IRS. You could do that.

The second reason we move them to the front of the line is that they are not bankruptable. The third reason— you're not gonna bankrupt anyway. The third reason we move them to the front of the line is that the interest rate and the penalty is very, very, very high. So all of those reasons cause us to interrupt the debt snowball. The only time, by the way, that we interrupt the debt snowball and move it to the front. But I don't care. It's not not the end of the world. That's the reasons we move it. If you want to— if you understand those things and you want to leave it there, or you want to go get that credit union loan and then you knock it out in 4 months instead of this month, that's okay with me. But you just— you're taking some extra risk when you do that. And, you know, when I'm coaching people that are struggling and they got 6— you know, they got Chase, MasterCard suing them, they got Citibank suing them, and they got Lexus Motor Credit suing them on a repo and they got the IRS, I'll take all of those other three versus the IRS every time and what they can do to you.

Mm-hmm.

The other ones and what they will do to you. So I— but I don't think any of them are suing you. I don't think that's where you are. You're under control. You're knocking this out. You've got momentum. So I'm not scared for you now. But this comes from years of coaching people that were really, really were struggling and behind the eight ball. And I just always want to get the IRS out as fast as I can. But listen, dude, you need to set set a date. If they're not gone by September 1st, you got to move them back up. You got to move in the front. So set yourself a deadline. I'm going to knock them out by this date, or I'm going to move them to the front of the line. Yep, one of the two. And then knock them out, and then go back to your debt snowball.

Yeah, and I appreciate your enthusiasm. I mean, that's incredible. $10,000, $30,000 in 3 months.

Yeah, that's boom!

Unbelievable. Maybe your wife and you say, for 3 more months I'm going to do this pace, and then you're going to dial it back a little bit because you guys You got some—

You know, we ought to have his wife talk to the gym owner's wife.

She'd probably be like, my husband's working.

I wish my husband was gone working and making money.

You would want someone like Jean.

I wish he would leave and go make some money.

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

Stacy's in Indianapolis. Hi Stacy, how are you?

Hi Dave, how are you?

Great, what's up?

Well, um, my daughter is 29, she's married, she's a nurse, just works part-time because I have a 2-and-a-half-year-old granddaughter. Her husband makes $57 an hour I'm disabled, divorced, and I used to work in insurance. So, I know you don't like this, but I bought whole life insurance. I want to cash in her whole life policy that I've had for 29 years. And just so you know, they each have their own life insurance policies outside of their work. She feels entitled to have that cash value. She thinks it is hers.

I disagree.

I think the money's mine. I could use the money.

What do you think?

Well, you're the owner of the policy and you paid every dollar for the policy, correct?

Yes, I've been paying $26 a month for 29 years.

And how much is the cash value when you cash it out?

$6,800.

Good God, you totally got screwed. Oh my God.

Yeah, like I said, I worked Insurance before I had to go on disability 15 years ago.

Okay, so how many kids do you have that have these policies?

2.

All right, so we're cashing them both in, right?

Well, at the moment I'm cashing the other one in because, long story short, my other daughter, I'm just not sure where her life's taking her, so I'm just kind of holding on right now.

I don't care. How old is your other daughter?

She's 4 years older, so should I just go ahead and cash out one?

Yeah, you better cash them both in. They both suck beyond belief. You've gotten screwed. Don't keep them. And you're— it's not your obligation to take care of the one that has her act together or the one that doesn't have her act together. These are 31-year-old grown women, and you paid for this policy. It is not their money. Okay, in neither case are you to take care of them.

Well, thank you. I just wanted to kind of have somebody else tell me that.

Yeah, that's not only—

that's not only moral, that's also what the law says. They're not the owner of the asset, you are.

Okay, you own it.

That's why they call you the owner.

Yeah, I should—

what, what age did you open up the policy for your daughter?

1 year old. She was 1?

29.

Okay, and you did $26 a month? A month. Okay. I was just gonna say, so you should have, if you just had that in an S&P, just for, and people for listening, it should be $58,000 is what you, yeah, if you put it in a real investment instead of a rip-off whole life policy, instead of $6,800, you'd have $60,000. And it says she would have put in $8,736. So she put in more than what the investment, that's, yeah, made.

Yeah, I had a negative rate of return. This is why you don't buy whole life life insurance and why you don't buy it on your kids, for sure.

So bad.

So, yeah, so bad. Whole life sucks. Have we been unclear about that on this show?

That is a good question, though, that her daughter assumed it's hers because her name was attached to the account.

You know, probably— I put Stacy's gone, but probably what has happened is that Stacy has told these kids their whole lives that she's invested this money for them. For sure. And, "Oh, that's my policy. You made an investment for me. Thank you. And you got this money because I've set this money aside for you." In my name. Yeah, it's in my name, but it's for you. And that's probably what she said all along.

Yeah.

And so, now they're going, "Yeah, but you told me, Mom, it was mine." I know.

Yeah, that would make sense.

That's probably—

There could have been some miscommunication.

Probably not some entitled brat. She probably just I just messaged it wrong. But, you know, but technically speaking, you own the money. And by the way, you laid the whole thing out on how she makes money, her husband makes $57, and you're disabled and all that. None of that matters to the discussion. It's either her money or your money, regardless of who is deserving, or who's hurting, or who is more healthy financially. Like the other daughter, I'm not sure she's gonna turn out yet. Well, she's 34. "Or I think we're pretty sure," you know? And so, second, she's gonna have to have an encore to get this straightened out.

She should.

34 is young.

I know, but you can have an encore at 34. And you need one, apparently, if your mom still don't know if you're gonna make it.

Yeah, so the victim language in it—

Exactly, doesn't matter.

—taints a little, maybe the attitude that the daughter's having too. I don't know. But yeah, just some thoughts, Stacy. But yeah, Yeah, the— it was your money you put it in under your name, technically your money.

But you know, you know, I might, I might take back my answer. If you promised her this money her whole life, then probably you ought to just keep your promise and give it to her. Morally, legally, it's your money, except that if you said, this is your money, this is your money, this is your money, that, you know, if I had a mutual fund I opened up for you and I said, this is your college fund, "we're gonna use it for college, and it's your money. It's your money. We're saving for your college," which I did, by the way. It was a Uniform Transfer to Minors Act, and the UTMA was in your name. And then you went to college. I ended up— we ended up paying for college out of our pocket. And then, when y'all graduated, we gave you your UTMA to start your life off as an adult. And so, but that was in my name. It was my money. And— but I had allocated that emotionally and relationally to you.

And we didn't know it, though. Well, I thought that—

You knew you had a college fund.

I thought you were paying for college.

So, there was a little bit of a—

"And I thought I was using it for college." Yeah, that's true.

But, um, so, how it's communicated is important too, of expectations.

Did you make a promise? Yes. Did you promise your kid this was their money? And if that was the case— And if you did, you gotta keep that promise.

Yeah, and that's the expectation. So, she would be disappointed.

So, I would take my answer back if that's the case, Stacy.

But if not, it's yours.

Yeah. And, you know, who is making money, who's not, is not relevant to the discussion. Mm-hmm. Jocelyn's in Houston. Hi, Jocelyn, how are you? How are you? I'm good. How are y'all? Better than we deserve. What's up?

Um, so basically I have two 401s that's like has $2,600 in them. I have about $7,000 in credit card debt that I kind of just racked up, um, being financially irresponsible. Um, but I want to know if I should take those out, um, to just kind of put towards that debt. I'm on Baby Step 1 and like just trying to get my life together. I'm 26. I live rent-free right now. What do you make? Yeah, just about $3,000 a month. Okay.

I'd pick up my hours and attack the credit card debt and leave this alone. And I'd roll it to a 401. It doesn't matter much. An IRA. It doesn't matter. I mean, I'd roll it to an IRA. I'm sorry. It doesn't matter much mathematically because it's such a small amount, but percentage-wise it's suicidal. Here's why. Okay? You cash out the 401s, you get a 10% penalty plus your tax rate. Let's call you in the 20% tax bracket. For the fun of it. Don't think you are, but you might be. That means that 10% plus 20% taxes, that's 30%. That's like borrowing money at 30% interest to pay off your credit card. So they're gonna take almost half the money if you take it out instead of rolling it to an IRA. So I think as a matter of starting to make good, finance-wise financial decisions, more than just the math, I would go ahead and roll it to an IRA and force myself to pay off the credit cards with hard work.

Yep. And just keep it in there and don't touch it and let it grow. And at retirement, maybe $100,000, $200,000 in there. I don't know what it'll grow to, but that'll at least be a little bit of a safety net too for retirement, which is great.

Yeah, and you just add to it as you go along. I've had some IRAs that were so small at different times, and I move them around, put them all together later, put them in a pile, and it has ended up turning into some serious money over time. But the big thing here is I just want your brain to get used to not looking for shortcuts at high cost. And this is a shortcut at a high cost, even though it's $2,600. So you're probably gonna lose $1,000 of that in taxes and penalties. And so you're still gonna get out $1,600, and $1,000 does not change your life one way or the other. It's not the dumbest thing you've ever done, but by any stretch or will ever do. So, it's really not that much money, but if you add a zero to it, it starts to be $10,000. If you add two zeros to it, it'd be $100,000.

Yeah, and what changes your life in this, Jocelyn, is your income going up. Mm-hmm. Making $3,000 a month. Mm-hmm. I would look to see where can I get an extra $1,000, $2,000? What does that look like from an income perspective? Because that's gonna get you through the $7,000 in debt so much faster, and then your emergency fund and beyond. So, it's kind of, your— that's your ticket out, not the old 401.

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Welcome back to the Ramsey Show in the fairway Alliance Credit Union studio. Rachel Cruz, Ramsey personality, my daughter, is my co-host today. Louise is in Tampa, Florida. Hi, Louise, how are you?

Hi, I'm doing good. How are you guys?

Better than we deserve. What's up?

So I had a question about me and my fiancé. Have a credit card, and I am always making sure that if we use it, we pay it off before statement date. He was telling me that why don't we let, um, why don't we carry a balance to build credit? And I'm— I don't know if that's how that works, so I kind of wanted to ask you guys, does that make sense?

How old are you guys?

We're 27, both of us. Okay. And when are you getting married?

We— well, we're saving money, so I can't say a date just because we're on—

that's one of our steps. I'm sorry, you, you have to have money to get married?

Wait, well, I mean, yeah, we can just go get it done and that's it. Yeah, but like the wedding, I would like, you know.

Yeah. Okay.

We've been saving for a while now.

Yeah.

How much y'all have saved for the wedding?

So, so far we have $20,000 and then we also have another $20,000.

That's our 6 months of, um, living.

So what kind of wedding are you gonna have?

Well, I don't know. Everybody— weddings are expensive. A lot. But I, I want to make sure that if I want something, I can have it.

Oh, I don't—

there's not that much money in the world. Yeah, I know that much money doesn't exist. I want, I want it, I can have it. That's not a— that's a, that's a 4-year-old. No, you don't get to do that. You set a budget on your wedding. You're a grown woman and you get married and you do it for $20,000 and you start planning it this weekend. Okay, back to your question. Um, now, so your fiancé is correct that if you were to run a balance on your credit card and pay it on time, it will cause your credit score to increase. Because your credit score is based on— it's called— it's by an organization called Fair Isaac, and it's called your FICO score. And it's based on how you interact with debt. How much debt you have, the type of debt you have, and whether you pay your debt on time or not. New types of debt. New types of debt. That gives— if you have too much debt or too little debt, that gives you your credit score. So your credit score, technically speaking, if you analyze how the algorithm works, is your "I love debt" score.

And the higher your credit score, the more you love debt. Yeah. So if your goal as a married couple is to get in debt and stay in debt deeply the rest of your life, the credit score will serve you well. But if your goal is to build wealth, then you would avoid this at all cost because you don't want to play kissy-face with the bank to build a score that shows how much you've been playing kissy-face with the bank. Instead, I want money. I want to build a net worth. I want to become wealthy. And the credit score is not an indicator of your financial health or wealth. It's simply, mathematically speaking, an indicator of how much you've been playing kissy-face with the bank. That's how it's determined. And so what he's saying is, hey, let's owe the bank more money and pay it off a little at a time so that we can make other banks happy. Wrong. Bad plan. You follow my logic?

No, yes, of course. That was what I was telling him. It's like, if you just want to be more in debt, then what's the point of doing all your steps?

Let's say exactly, um, you wouldn't do any of our steps if you're going to— if you want to stay in debt, you need to go do a different plan. Our plan won't work.

And Louise, this is an important subject, um, for you guys to get aligned on. When it comes to your marriage. Money fights and money problems are one of the— always in the top 3 reasons for divorce. And so, this is a big tension point. It may not feel huge. I mean, it's big enough for you to call, to be like, "Hey, this doesn't feel right." But if your value system is different with money, not that you guys have to be the same person, but that you're moving in the same direction financially because you're a team, and you're like, well, this is how we're running our household, if or when we have kids. Like, I mean, it continues on. And when you start in such a different place, it's a red flag for me. I would wanna be in the same place. And you may decide, Luis, getting off this call, you could totally decide like, I'm okay with debt, right? Like, we're not trying to push you, right? But you need to be on the same page. Clearly, a life of peace and building wealth is avoiding debt. And that is what we do.

And then your credit score means— my credit score has been zero for 35 years.

Rachel has never had— undetermined. Yes.

Never had a credit score in her life.

But then you have to pay cash for cars, you know what I mean? Like, like you're saving up for vacations. Like, you are choosing a life without debt, but you also are choosing a life of living below your means, of delayed gratification, but of a lot of peace and control and autonomy over your money, which gives you a large pile of money, by the way, because you're not giving it all to some stupid bank. Yep.

So there we go. That's how well— that's where wealth comes from. Yeah. The other thing I'm going to throw in, and you didn't even ask about this, but for God's sakes, cut up that credit card and close the account tonight if you're not going to get married. The two of you don't need to be on a credit card together. Yeah, super dangerous for you, super dangerous for him. The credit card balance runs, runs way up, and one of you runs off, the other one's stuck holding the stupid thing, and, and now you're going to get sued, and, or you end up paying a balance on for the, for the one that left. Yeah. And I know no one ever leaves. Bullcrap. You're not married married, okay? They leave all the time. So, get off that card. Do not be doing stuff financially and legally with somebody you're not married to. Danger, danger, danger, danger, danger, my daughter. Don't do that, please.

And especially since there's not an agreement and a date set, right? It's kind of this endless feeling of the abyss of like, "We're gonna figure it out." And then, when you live in that, which people do for years and years, you know, we talk to people, they have engagements, for 4 years, they live in that, they start playing house, you start commingling finances, you get down the road, it just, it starts to, it starts to be a problem. So, I would keep everything separate.

At which point I always go—

Until you guys get married. And if he is the one, like, you guys set a date, paint it.

Paint or get off the ladder.

If he is the one. And that could be in December, you know, it's not like you have to do it tomorrow, but put a date on the calendar that you guys work towards, just for some, certainty in the relationship.

But if you have the money to get married, set the date now, get married. You're not— this is not good for y'all. It's not good. We don't care. We make no money when you get married. It doesn't help us at all.

We're not in the wedding business.

Too bad. I wish— I need to get in the wedding business. I need to do something. As often as I tell people to get married these days, I need to.

It's your pre— I was gonna say priest. You won't be a priest. It's a wedding What is it when you, um, you're ordained?

You want me to officiate the wedding? Ordained. I'm gonna start doing weddings. Dave's Weddings. That way, I can make some money off all this advice. Then, I can have a conflict of interest.

Then, she can get the fiancé, and they can call in the next hour, and we'll get the wedding. You know what I mean? You can keep it rolling.

Well, we'll just fly you up here, and you can stand on the debt-free stage with your little bouquet. There we go.

There you go. Come in person.

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How are you? Thank you for taking my call.

Sure, how can we help?

Um, I'm facing, um, kind of a crisis I never intended. Um, due to some illness and due to some other things, I went into a, uh, government-sponsored forbearance program with the largest, uh, servicer in the country, and, uh, that was in 2023. Since then, I've gone back and forth several times trying to get back on to where I just pay my payment. And, you know, I've been told numerous different things. Um, and, you know, I was told, hey, you can do, you know, back-end payment. And so I paid, you know, trial payments, and then they send me the paperwork. The paperwork's not right, I send it back. And the long and short is, is I've gotten down now to where the last trial payment I paid I paid on the last day of November, screenshotted the email they sent, you know, confirming the payment, and then they came back and said that I failed the trial payment plan because of the payment being late. I filed a RESPA and a notice of error, contacted FHA. I've been through a lot of different steps to get them to acknowledge that the payment actually was made on time.

Because I wanted to get off of this, you know, cycle that's been going on almost 3 years now. And so I have a document in front of me that says if I don't pay them $43,000, they're going to foreclose on my house, which I have over 50% equity in. And I was looking for some kind of suggestion. Uh, I've done everything I can do up until this point.

So $43,000 is the amount you're in arrears, right? $43,000 now. Correct. Net of everything, and that number is probably correct, but what you're saying is that you had a, a forbearance plan, which is a plan to pay payments greater than the normal payment to catch up, and apparently that's gone sideways several times to get $43,000 behind. What's your normal monthly payment supposed to be? $1,200. So you're at least 40— 38 months off in only 3 years. How's that possible? Well, it takes them—

instead of the 30 days that they—

no, no, I mean, just think about it. From '23 to '26 is only 36 months. That's as if you haven't paid a payment the whole time.

Well, so that's the other thing.

They're holding, I think, 6 or 8 payments in escrow somewhere that they don't even account for during my trial payments. But then, you know, there's, there's 3, you know, they did 3 appraisals. I mean, they just rack up fees like it's, you know, going out of style.

Yeah. And they're charging you— are they charging you huge late fees as well? Yeah. And have they tacked on— have they tacked on legal costs in that $43,000 as well?

I—

it doesn't list it as a line item, but I can't even get them to give me a line item.

I can't get to $43,000.

That's what my problem Uh, you and me both. And when I start doing the math and every time I ask them about it, oh, you know, I don't know. The loan that they sent me after they told me they would just put the back payments in the rears of my current— of the mortgage I had, which I was never late on, uh, then they sent me a loan for 40 years that was going to raise my payment $15.

Yeah. Oh, that would be— that would probably be correct, actually. But yeah, well, it would be.

And so I called him and I said, this is not what we ever discussed. And the person that I talked to had no idea.

But are you talking, are you talking to FHA or to the loan servicer? I've talked to both. No, I mean, who, when you made that phone call, who was it to?

Um, so when I talked to FHA, they said, well, you can, you know, if you filed an appeal and a notice of error with, you know, with the mortgage servicer, let them answer and then we can work that through it. But basically the loan servicer is the one that decides whether they're the payment was late. I just, you know, and I explained to the FHA person, I said, I don't understand how you can send me an email that I have a screenshot and it's in my inbox in the correct month that it was due and tell me that my payment was late.

Yeah. Okay. All right. So the net, net, net is, is that you probably have in reality 6 payments or 7 payments or some amount laying in escrow. So, uh, $7,000, $8,000. $43,000 owed in arrears. So somewhere around $36,000 would get you caught up. Obviously you don't have that. And, and obviously we're dealing with bureaucrats at the FHA and incompetence at the, at the servicer. Who's the servicer?

It's Freedom Mortgage.

Yeah, okay. All right. Yeah, incompetence at the servicer, then that would be normal because they're massing and, and they massively don't give a rip. What a name too, Freedom.

Yeah, that's what they're giving.

The opposite.

I also have a 2.7% interest rate, so every time they try to do anything, they're like, well, you know, your payment will go up a lot.

So what, uh, what is your income? So I've been—

that's the other thing. The reason I went on forbearance originally was from Long COVID, and then I had— I almost— I had to go into the hospital and I almost died. And it took me a little while to heal. Well, they told me, well, you can't pay payments while you're on forbearance because it'll kick it into, you know, it'll kick it automatically into foreclosure. So every time I've tried to get back into kicking, you know, into paying for my mortgage, it's a 7-month, 8-month process.

Yeah.

And then to give me some kind of answer, and if it's not perfect, it goes right back into the loop.

Yeah.

What do you make now?

What do you make?

Uh, well, so currently I don't have a job, but I have the, I mean, I do contract work. I do other things, but prior to getting sick, my income was $230,000.

Okay. What, what will you be making in the coming months? Enough to pay a $1,200 payment?

$10,000 to $15,000 a month. Okay.

Oh, good. All right.

And then I have, you know, I have money that, I mean, I have, I have assets. I've just had them tied up from, um,, you know, a divorce that was 5 years ago.

So what assets do you have? What assets do you have?

So I mean, I have an account that has, uh, $400,000 in it, but I can't touch it until my ex signs the paperwork, which that's like the last thing, and she just kind of keeps dragging her feet on it.

Wait a minute, what is the $400,000?

It is a, uh, it's, it's a, it was a, uh, investment account that we had, you know, when we were married.

Okay, but it's frozen. So let me help. Let me, let me put it to you this way. I can't make Freedom Mortgage be competent or the FHA not be bureaucratic idiots, and you can't either. And so the best thing you can do is write them a $43,000 check. You owe them anyway. You, you owe— yeah. Yeah, you do. You make $10,000 a month.

I don't currently make $10,000 a month.

You said you're going to in the coming months. I asked you. Yes, correct.

Yes, no, I will.

Okay, then go make $43,000. They're not going to foreclose in 20 minutes. It'll take them 6 months to a year to get around to it. Have you noticed that they're slow?

Yeah, the one thing that concerned me is they sent me a letter saying that if you don't make it by X date, then we're going to start the process.

What's the date? Tomorrow. Okay, then they're gonna start foreclosure, right? Okay. Yeah, and in Alabama that takes at least a month, but I don't think— but it probably takes 6 months because they're probably gonna sit on their thumbs because it's what they do. They're thumb sitters. So really, I mean, you probably have time to cash flow this. In the meantime, call your ex. I'm going to the judge and saying I'm gonna smack my ex into next week I'm gonna have the judge smack her into next week and get her to sign the dadgum paper. Holding up $400 grand, I'm getting ready to lose a house because of it. So those are variables you can control. You're asking for some way to make your stupid butt mortgage company and your inept FHA behave. They can't. The things you can control, you need to go control and get $43,000 out of that $400,000 account account, or go get $43,000 out of some work you do in the next 90 days before the actual foreclosure date occurs and pay this thing current. That's what I would do if I were in your shoes. If you don't do one of those two things, you need to put your house on the market right now and sell it before you lose it.

But you need to go get some money and get stupid freedom out of your life. That's what this comes down to, because you have tried for three freaking years to negotiate with morons, and it doesn't work.

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Don't be normal. Get sick and tired of being sick and tired. Live like no one else. Start EveryDollar for free in the App Store or Google Play. Evan is with us in Tulsa. Hi, Evan, what's up?

Hi, how are you guys? Better than we deserve.

How can we help?

My husband's extended family likes to meet for their birthdays for dinner, and cards are exchanged with money at each gathering, and We're a bunch of grown adults and I feel like it's just a little unnecessary. And I just want to know how I can be the bad guy to get kind of put a stop to it.

Oh, I wouldn't do that.

Oh, wouldn't do that at all. Well, how much? I would have him do it.

I wouldn't do it. Well, he always makes me the bad guy though.

You know, that's the problem. You're going to be the wicked witch of the West. It's his family. He's got to deal with them.

Not you. Be that with the family.

So why do we want to increase it at this point?

Then why do you get invited to the party? That's a great question.

I wish they would understand.

Because you give money, that's why. Yeah, you bought your way in.

How much is it? I'm just curious.

Um, usually— and okay, I would also say my husband's a very generous man. Like, he's not one— he's like, it's fine, it's fine, whatever. And so usually we put like, you know, $60, $80 in each card.

Good God, thank you. That's weird.

Thank you.

Oh my gosh.

Okay, how many— okay, I, I just— I'm trying to picture how many people are at the table. How, like, how many brothers and sisters, spouses, parents?

He's an only child, and I think so they view their family only like cousins, aunts, as like—

oh, it's not even like his siblings?

No. Oh no, no, no, no.

So how many people are at this dinner?

Uncle, grandpa. So usually it's 1, 2, 3, 4, 5, 6, 7, not including us.

Okay, not counting grandkids, there's 8 of us. Rachel, Winston, Daniel. No, there's no grandkids. So there's— I know, not counting grandkids. So there's 8 of us. I can see all 8 of us sitting at a table. And the chances of us giving each other money is precisely zero.

The chances of getting a birthday card are pretty slim. You're lucky to get a text.

Yeah.

But so it's been a tradition forever and ever, but these are all 30, 40-year-old, 50-year-old people.

50, yeah, and 60 and 70. Yes.

Yeah. And there's a birthday tomorrow. That's why I'm calling right now.

Too late. You're in on that one. You can't fix that. That one.

Well, on that one, yeah, but like, how do I bring up like— you don't.

I don't mind getting together. You don't. Your husband has to.

And if he won't, it's not going to happen. No, but he just doesn't want to upset his mommy. No, it's not even his mom.

I think his mom would be completely fine with us doing it, but we're just people who go with the flow.

They don't want to cause any risk. Yeah, exactly. So I wouldn't cause a risk. I wouldn't cause a stink. I would not make it about them. I would not make it— his job though is to fix his family, not yours. Really, that's bad mojo. You do not want to get in that relationally. But he should sit down and say, "Hey guys, we're working on some financial goals and we'll be happy to pay our part of the dinner and come to dinner with everybody and celebrate. And we'll send you a nice text and buy you a nice card, but we're not going to give grown adults any cash anymore because we're working on some other stuff. We love y'all though. Hope it works out for you." And he just needs to raise his hand and say that. I did do that inappropriately. Actually, I had my wife's participation, and she may have actually done it. She should have done it. Her family, they all— there's 90 million of them, and they all gave each other Christmas gifts. And she's got like 5 brothers and sisters, there's 13 grandkids, there's people everywhere, all over this house. And we go down there, and you buy all these adults that you see twice a year, and I love them, they're good people, but you buy them all like ties or some socks, and it's just— or whatever, try to guess what University of Tennessee paraphernalia they need this year, or whatever it is, right?

And we finally, when we went broke, I told Sharon, I said, "The little kids under 12 get a gift. Everybody else gets a nod, or we'll draw names." And so she said, "Oh, that's a good idea. We'll draw names." And I said, "Okay." And I don't remember whether she brought it up at Thanksgiving or I did, but she raised her hand and she said, "Hey guys, we're broke. We're drawing names this year because we can't do everybody's gifts, and we'll buy the kids under 12 the baby's little baby gifts or whatever because it's Christmas." And we drew names. So it was a similar discussion. By the way, that went real well.

Everybody else went, "Oh yeah, we kind of thought the same thing, but we didn't want to be the first one to bring it up." Yeah, and if anything, Evan, and I know you're not major fans of the family, but if he wanted to give some like thoughtful gift or something, you know what I mean? Like, you can do something for $20 of like, "Hey, I saw this, you know, Uncle, you know, Uncle Rick, and I thought of you," and that's his birthday gift versus giving a check of $70,000.

$25 or $20, you know, $3.20 or something, $4.20. Yeah. Yeah.

Okay. Yeah. But let me say this, Evan, you're correct.

This is absurd.

But if it ends, it almost wouldn't be a hill, though, that I would just push and push and push and push because it happens 6 times a year. And it may be a thing you just, if you didn't want to address it, you got to just live with it. And it's a roll the eyes kind of thing. But he should, because it is kind of—

I don't disagree. It's weird. It's just a bunch of 60-year-olds giving each other $80. That's just weird. Okay, but yeah, but if you want to do it, it's okay. I just don't. I think it's weird. But yeah, and I just raised my hand and go, we have some other goals. We're not doing it. But your husband has to do it. Otherwise, you're just going to come off all stinky, stinky Evan. You don't want to be stinky Evan. Yeah, no, you always let— when you have a conflict with the other side, you let the other side handle the other side. That's, you know, because otherwise you end up being the stinky one, and it's just, it's not a plan. Not a plan. Linda is in Knoxville.

Hi, Linda, how are you? Good.

Thank you for taking my call, Dave and Rachel. Sure. My question is about a 529 account that has been growing since my daughter, who's about 6 years out of getting her master's, did not have to use much of it, and it has been growing and growing. She's single with no children.

Why do Why did we not use much of it?

She got a wonderful scholarship.

You can pull that much out without any taxes. The value of that scholarship can be withdrawn with no taxes or penalty. Is she too late?

It was 6 years ago.

You might have to go back. You might have to file an amended return. And, well, you wouldn't have to file it unless you got audited, but you know, you might have to go back and do that. But talk to your tax advisor about how to do it, but you can pull the amount, the value, market value of the scholarship out at any time with no taxes or penalties.

This was worth the call.

Wow.

Okay, well, since you didn't pay nothing for it, it definitely was worth it.

Well, no, I value— and, and your high school curriculum has a lot to do with why all three of my children are very financially stable.

So, wow.

So what was her— what was her scholarship worth? You What do you think? What's the tuition worth?

Oh, $15,000 a semester, so $100,000. How much is in the 529? Uh, $330,000.

Awesome. We can get a bunch of it out.

And then would you take the rest out and pay taxes on that?

You're going to pay a 10% penalty plus taxes on the growth on everything else, or you can move it to a sibling or a child.

Yeah, she's, she is the one who's earning the least out of her siblings. And so they're fine. And she is really wanting to look at getting a house. Um, and that's kind of what makes my heart hurt is there's money sitting out there.

Yeah, you're going to get, you know, you're going to get $100,000 out for the house easy. If you pull the other $200,000 out, you're going to get a 10% penalty on the growth only. I don't know how much y'all put in. End on— and taxes as well. If you're planning a summer trip, you're probably spending a lot of time getting everything ready because responsible people prepare for things that matter. Travel has a way of reminding us life can change fast. That's why I recommend Mama Bear Legal Forms. See, a lot of people put off getting a will because they think it's complicated, expensive, or they'll have to sit in a lawyer's office for hours. But without a will, your family is left trying to figure out who gets what and who takes care of your children instead of grieving. Mama Bear helps you solve that problem. They make completing your will easy, affordable, and specific to your state. The whole thing is designed to help you quickly get a will done without hiring a lawyer. In fact, you can finish your will in less time than it takes to pack your carry-on bag. So before you load up the car or get on a plane this summer, go to mamabearlegalforms.com and make your will.

Use the promo code Ramsey and save 20%. That's mamabearlegalforms.com, promo code Ramsey. Ann is in Salem, Oregon. Hi, Ann, how are you? Hi, pretty good.

How are you? Better than I deserve.

What's up?

Um, I, I was married for almost 43 years. I divorced my husband. I moved out into an apartment. He moved in, he's in the house now, and we can't get rid of it because he will not get out of the house. He's been there for like 2 and a half, almost 3 years. Um, I don't know how— he tells me he can't pay the rent and ex-taxes and everything and then move to somewhere else and pay that too. So I'm kind of confused. And how do I get him out of the house to clean up the house?

Okay, so it's not selling because it's junky?

Well, that outside the yard is pretty messy and stuff, but I just— and they do show it. One lady did offer $250, but she's a flipper. She wanted to buy it cheap and flip it, you know. And what's it worth? Wouldn't give us— probably about $360,000.

Okay. All right. 43 years in.

Yeah, I should have left a lot sooner, but I didn't. It's one of those things.

Wow. What, what, what is your income?

Um, I have every month is $2,297.

How old are you?

71. Okay. How much you guys owe on the house? Um, about $152,000.

Okay. What does he make?

Well, he's retired from the— from— I won't tell you where, but he's retired. And he— I get 40% of his pension, he gets 60%.

Your $2,200 is 40%?

No, my— it's like $1,654 is my 40%. Where's the rest coming from? Social Security. So I barely get by, and I have about $120 left for gas and food, which, you know, yeah. And I've got $6,800 in credit cards, which I—

so he doesn't really have— he's correct in that he doesn't have the money to pay rent and the house payment, right? Right, right. And neither do you, right?

We're kind of stuck.

I don't know what to do.

Hmm. And the plan in the divorce that he was gonna sell the house and you guys were gonna split the equity Yeah, or else he was gonna buy me out, but he can't refinance.

Yeah, he says he can't. I don't know, but he has—

I don't think he has the income if that's his only income. Yeah, it is. Yeah. And, um, well, I mean, so if you got your wish and he moved out, then your house gonna get foreclosed on.

On it, no, that I'd lower the price enough where somebody would buy it. But I'd like to— I like it cleaned out so I could, you know, paint a few things and make it look a little nicer. It doesn't look real good right now.

Yeah, okay, so it's on the— it's on the market at $360,000? Right now it's $350,000.

$350,000, okay. Um, yeah, he started at $440,000, which is Crazy.

Okay, well, I mean, um, yeah, the problem is you light a fuse that's 6 months to a year long before the house gets foreclosed on when he moves out. Mhm. And so you go over there, paint it, you clean up the yard, and if it doesn't sell, every single month you're going to be dropping the price, because you're going to have to get rid of it. You're gonna— you may wish you took the $250,000.

Yeah, I'm kind of thinking that I should have.

Well, I'm just saying, if you light this fuse, you're creating a pressure cooker.

Yeah, time's ticking.

When he moves out, now the clock starts ticking, the sand starts going through the hourglass, the pressure's on. You follow me? Yep. And I just— I want to be careful what you sign up for, that you know what you're signing, what trip you're here. What would I do? Obviously he is not gonna help by cleaning up the artery. I would have already. For his own sake, he should have done that because he would get more money in his pocket.

He's disabled too. He's had 6 back surgeries, and I don't know what he can lift.

Or— yeah, he's not— he's not doing anything. Okay, and for good reason. Now we're not going to accuse him of—

okay, uh, and can't— he can't afford to hire people to do it.

We don't have the money to. No, you don't. You don't.

So you have children? Grown children.

Yeah, where are they?

Uh, one's here in my town, but they both have back problems. Uh, one's in Roseburg and one's in here, Salem.

Okay, all right.

And so obviously they're not able to help, and they were probably affected by the divorce in terms of their motivation to help.

One is, yeah, yeah, definitely.

What's he paying in mortgage payments every month?

Um, about what I'm paying. Um, I'm paying $1,122, and he's paying probably probably about $1,200 or $1,300.

I'm just wondering, rent-wise, if there's anything cheaper.

I don't know if him moving out and you going over there at 71 with a paintbrush and a trash can is going to make this deal work enough that I'm thrilled with the bomb that we set a fuse lit on. May not move that much. Yeah, I mean, I don't know. I don't know the house. I don't know the deal. So who's— Um, do you know the realtor? Do you trust the real estate agent?

I do. Well, we bought the house from the same guy. Okay.

And what does the real estate agent say you should do?

He says, uh, just keep waiting for the right people to come by, which I don't agree with because we can't keep waiting. I was going to pay all my credit cards off when this house sold. Now I've still got credit cards.

Bills. How much credit card debt do you have?

Uh, $6,800.

Okay, yeah, that's not bothering me much. We'll get there. That's not a panic. You're eating, everything's okay. I don't— it's not ideal, but none of this is ideal.

Um, yeah, and no retirement accounts or anything? It's just the pension, right?

Just wondering if there's any other— there's no money in money?

Well, not that I know of. I don't— he's, he's not the truthfulness person in the world, but I don't know what he's got really. But I doubt if he has much more.

Mm-hmm. So sad. And I'm sorry. So what I would do would be to try to work with your ex to allow some access and begin to get some things cleaned cleaned up that you would do if he moved out while leaving him there and dropping the price. And if that doesn't work, then you're going to have to ask a judge to have him move if he doesn't voluntarily want to move, because he's going to stop—

what? Because I, I did call him one day. I was going to talk to him about the house. He hung up on me. He wouldn't even talk to me.

Okay, well then you're left with a judge, I guess. Yeah. So I'm thinking either we sell the price, either we drop the price, or, and/or you out. And if he won't do that voluntarily, the judge will have to tell him to do that, because he's in— I assume there's a divorce decree saying the house has to be sold, and the house is not actively being marketed, it's not in marketable condition, and so you can force that. But, and be aware, you may be playing some cards here that lights a fuse on this bomb that you lose the house. I mean, it's possible. Possible. If the real estate market slowed down for some reason, there's a jump in interest rates and nobody wants to buy anything, even the flippers are out of the market and that price drops on down. Yeah, you may be wishing you'd taken the $250,000. I'm kind of wishing you'd taken the $250,000 right now, but I don't think he wanted to take it either.

Yeah, well, if it's at $350,000, some— I mean, there's probably other flippers in the area for— I mean, hopefully you can get it. But the thing is, is if you don't get somebody to make a this commission transaction quickly, that real estate, that can go months. And that's the, that's the part that scares me where I'm like, I don't feel like you have that financial margin to go that long.

It's gonna have to be cash. Don't confuse this move with any of the 43 years worth of emotions. If there's any, I didn't detect it, but if there's any anger I'm revenge, I'm hitting back, or I'm trying to make this guy finally behave one time.

Yeah, no, or something like that.

You need to make this move because it's the right choice.

I think she wants $100,000, $100,000 of equity to pay off credit card debt and live—

exactly— live a little more comfortably. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey, your host. Rachel Cruz, Ramsey personality, my daughter, is my co-host today. Brock is in Manhattan, Kansas. Hey, Brock, Mark, what's up?

Hey guys, how you guys doing?

Better than we deserve. How can we help?

Uh, so I got married a few months ago and a few weeks ago we found out my wife is also pregnant.

Yay!

Yeah, I know, we're very, very excited. And we have a little bit of a debt problem. So she had a car payment that she paid off all on her own, and then after we got married, I helped pay off the credit card, which wasn't too much. It was about, it was about $2,000, but she also has about $177,000 in student loan debt. And I was wondering how we should attack that.

Is she a doctor or a lawyer?

Uh, I wish I could say either one, but she is either, she is an at-home daycare or she's a freelance nanny, basically a freelance.

What was her degree in?

Nanny. She actually never finished college. I, I know.

Oh no, she got a degree in what?

She didn't finish. She didn't get her degree.

Oh, was it a private school? Private?

It was, it was a D1 state school.

Oh, so out of state probably.

Yeah. And she— yeah, this is a bad situation. Oh man, bad's probably not the word.

Dumb might be the word. Um, wow. What— how close did she come to finishing?

Uh, she had a little bit left. It wasn't a ton, but it was, it was enough to where it was like, we can't afford to keep going.

Um, the degree is in what? What was she studying?

Like a bachelor's? She was, she was, she started out in, uh, like education. She wanted to be a teacher and then she decided that she changed her mind and wanted to be, uh, she was doing business marketing, what I'm doing now. But thankfully the Army pays for mine, so we don't have to worry about that.

What do you make?

Uh, I make about $54,000 a year and she makes about $36,000. Okay. And then I also have about, uh, I do have some savings. Thankfully I have about $35,470 in a mutual fund that just basically mimics the S&P 500. MP, and then I also have just under $30,000 in a money market. Okay. Okay.

And you have how much owed on her car still?

Uh, none. That's all paid off.

And the credit card's paid off as well. So the only debt left is $175,000.

Yes, sir.

How old are you guys?

I'm 20 and she's 23.

And you graduated from college as well?

Uh, I am about 65% through mine. I'm doing it online while I'm in the Army.

You're in the Army? Yes, sir. I thought you were in marketing.

Uh, no, that's, that's what I'm getting my degree in.

Oh, and is your school being paid for?

Yes, ma'am. So you're $54,000 is your Army service, your military in the service? Yes, sir. Yes, sir. And she makes $36,000 as a nanny? Yes. Okay. And you have $70,000— you have $30,000 and $35,000, $65,000 laying around? Okay. All right. All right. So yeah, what I would do is, um, I would continue to stack cash until the baby comes. And when the baby comes and everyone's healthy. I have bad news. Your wife is not going to be a stay-at-home mom. She's going to be working. She has $175,000 worth of debt she signed up for, and so she's going to be working for a while. So we need to get used to that idea. And because when you have your first baby, particularly, there's a tremendous draw to want to be home with the child unless someone has a tremendous professional draw into the marketplace. And so you guys need the $85,000, so let's pretend that you stack another $10,000 worth of cash. That's $75,000. And when the baby comes home and is healthy from the hospital, and mommy's healthy, and mommy goes back to work, we write a check for $75,000 and put it on the student loan.

And you have $1,000 in your account, and you attack the $100,000 $100,000. Yeah, with a vengeance. And you guys work extra, you do everything you can, you sell everything in sight. Um, when are you going to re-up with the military? I wasn't planning on it, but when will you— when will you leave the military?

I have 2 and a half years left. Okay, with a degree? With a degree. I will— I will leave with a degree. Yeah. Okay. And then I will also make more as I— as I stay.

I would hope your income will go up substantially.

It'll be a— it's going to be a 3 or 4 year.

Yeah, you're going to be a while to get through this $100,000 that's still remaining after the baby comes. Yes, sir. But you guys are going to get used to working a lot, both of you, to clean up this mess.

And it's a good thing that she is and what she does, because she can be watching her baby along with another baby or two, assuming, assuming the people that she's nannying for are good with that.

Yeah.

Yep, that's right. But so there's probably— there's some flexibility in it, because if not, she's going to be paying for childcare, and it's gonna be eaten into that, you know what I mean? Like, you're— it's not going to be that great of a situation.

I kind of sighed and facepalmed because I feel so bad for this baby and this young married couple. That was terrible that they're— that they have been screwed by student loans and by the whole lie that Congress has put out by continuing to issue student loans. Congress has screwed Americans with the student loans.

This generation, millennials and Gen Zs, yeah, they're just—

they're screwed. And you're sitting there, and who loans somebody $175,000 to get an almost degree? An 18-year-old. Yeah, only the U.S. Congress would do that. Only— there's only one organization that's that screwed up, and it's the U.S. Congress. And they can— oh, there's a student loan crisis, it's awful, we should forgive the student loans, Biden said. Well, yeah, but you keep making them, you bunch of bozos. So why do we need to forgive them if you're going to keep making them? You keep making these loans over and over and over, and, and some poor young girl goes across the state line 9, and goes to another state to get a degree, and oh wait, she didn't. Did you know that 54% of the people that start 4-year degrees finish them? That, by definition, means half don't, and you get where she is. And she married a young man serving his country— thank you, sir, for serving your country— and now they've got a beautiful baby on the way. What an awesome start to life, but they got this cloud hanging over their head full of the Congress set up. And, and we Americans have allowed this because we keep electing the morons that keep this stuff on the books.

They're called congressmen and congresswomen. Yeah, they're morons because they keep doing this over and over and over and over again. And then they talk about it like a politician— it's awful, this sort of shit. Well, you caused it. You can't talk about it being awful when you sit there and cause And moms and dads, you ought to have your butt kicked up around your neck and wear it like a collar if you let your kid do this. You really should. I mean, what kind of parent says, "Oh honey, go live your dream. Go get a degree in left-handed puppetry and go $100,000, $175,000 in debt." You parents ought to be smacked in the next week for your lack of backbone to stand up to your own teenager. No, you're not doing that. That's stupid. That's a parental answer.

Welcome to a Ramsey family meeting.

Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com. If your private student loans are default, when you've fallen so far behind the loan is considered unpaid, that's what default means, Yrefy might be able to help. They help borrowers in tough situations explore low fixed-rate refinancing options that fit your budget. Go to Yrefy.com/Ramsey. That's the letter Y, R-E-F-Y, dot com slash Ramsey. Might not be in all states.

Today's question comes from Sam in North Dakota. My wife and I are 29 with no debt and are currently saving for our kids' college. "when the rainy day comes and you have to dig into your 3 to 6 months emergency fund, do you pause investing and saving for college to focus on replenishing your emergency fund?" I would say, depends on how much you have to dip into it. Hopefully, you don't have to go through all the paperwork to pause all that, especially retirement, having to go into HR and pausing it to refill it. But if it's a significant amount, yes, you probably would. But in a perfect world, you would just cash flow some extra money and get it filled back up in the next month or two. To. But again, it would depend.

It kind of feels like this is a hypothetical. Yes. Because if you have a situation where, let's say you got $15,000 in your emergency fund, and you take $12,000 out, you're probably going to stop everything for a little bit and rebuild that, and you wouldn't even ask the question. But most of the time, what has happened in reality with people we're coaching, and and Dave and Sharon's house and Rachel and Winston's house is, you know, you have a little bit of an emergency or some kind hit, and you cash flow the emergency without even touching the emergency fund a lot of times. If not, your emergency fund takes a little hit, a $3,000 or $4,000, $5,000 hit or something like that, and you just cash flow the replenishing like you were saying. But if it takes a major hit, most people don't even ask. They kind of know, I got to get that rebuilt.

Yeah, like if you lose a job, loses a job, for instance, I mean, everything kind of goes on pause until we get the income back, you know? So, that would just happen naturally.

Exactly. So, yeah, you got— well, your 401 certainly would have been stopped. But yeah, you stop your 529s, you stop the other spouse's 401, that kind of stuff. You stop all investing while we, you know, get straightened around. And, but again, that you're diminishing your expenses or your money going out in order to not have to touch the emergency fund. Case. Elizabeth, Elizabeth is with us, that is, in Salt Lake City.

Hi Elizabeth, how are you? Hi, good, how are you doing?

Better than I deserve. What's up?

So I fear that my husband and I have gotten ourselves into a bad situation. We just moved into a new house before selling our old house, and then we also have some rental properties that are not currently rented. So we are basically drowning in in mortgage debt. And the house that we're in now, we've been in for about a month, and we're almost considering listing this house too and just seeing which one sells first, um, just to get one sold. Um, and so I just wanted to see, I guess, what you would do in our situation. So the other two are on the market? So one is not on the market, we're trying to get it rented. It's a duplex, it's a house with a baby.

Oh no, no, no, no, no, sell it.

Okay, so you're broke, you don't need a duplex.

Okay, um, we just don't know that we could sell it. We could make probably $1,000 a month on it. We just don't— I guess we haven't listed it, but we don't know that we could sell it to make enough money.

But I mean, I want you to sell it anyway. It's not— it's not an asset, it's a liability because it's not renting for enough to screw with. If you think you got $12,000 gross cash flow, you know what that means? That means annually you're probably losing money when you incorporate vacancy and repairs and legal fees for evictions and so on. Yeah, you're not making money. Okay, that duplex has zero fun in it.

So list that and then just keep our other one.

I get them both listed. I get them both listed aggressively so I don't sell my house.

Okay, um, the house that we moved out of, we have had it listed for 4 months and we've had almost no interest. Drop the price. Um, we've dropped it $25,000. Drop it again. Okay, just keep dropping it until—

yeah, and when you lose your butt on this, learn your lesson. Yeah, you should never have done this deal. Deal. Yeah, you turned yourself into a motivated seller. Yeah.

Okay. Yep.

And I hope you don't have to sell your house. You may have to sell your house though.

How much, how much short are you guys a month, Elizabeth?

Um, well, I don't really know. My husband does construct. He has a, he has a construction company, so he We some months make no money, some months we'll make $50,000. But we have about $100,000 in our savings and we are feeling like for the next few months, if we keep all these properties, we're gonna be taking out of our savings. And then we have some credit card debt too.

Yeah, how much credit card debt?

$30,000. Okay, all right.

Yeah, my hope is that you can get these two properties sold really fast without having to dip into the $100,000 too much. And then you can write a check when that's done and get rid of the credit card debt. And you guys need to— you guys need to quit living hand-to-mouth. Your construction business— I grew up in the real estate and construction business, and too many people in our world think we can out-earn our bad decisions and chaos. And I tried for a long time and I couldn't do it, and I don't think you guys can either.

Um, the problem with dropping the price on the house we moved out of is that right now, if we, if we sold at the price it's at now, we would make about $175,000. Um, his dad loaned us the down payment for this house, which was $150,000. So the deal was that he would loan us that until we sold the house, and then we would use that money to pay him back. So would it be worth it then to just keep dropping the price?

Yeah, you might have to write his dad a check out of your $100 $100,000. Yep. Okay. Okay. You've become— that it's that or sell the house you're in. I mean, I don't care, but you called me and said you're drowning. I'm trying to keep you from drowning. Yeah. And you have to get very precise, very clear, and sharpen your machete to keep from drowning and quit trying to hold on to all these different things with— I'm going to hold on to this. And the problem with this, and I got to hold— and it makes $1,000. And it's a stupid duplex, and my daddy-in-law, and you know, you just, you're gonna have to go, something's gonna give here. We better decide what it is or it's gonna decide for us.

Yeah, I think one of the bigger problems is my husband really wants to— we have a few other rental properties that don't, I mean, make maybe a few hundred a month, but he wants to have eventually a bunch of rental properties that are gonna go broke.

You can't—

yeah, you guys are gonna lose it.

Everything. Elizabeth, I wish I could just wave a wand and just create peace in your life. You guys are just running and running and running, and it's not worth the stress. He has—

he has bought off on this idea that if you buy real estate, it'll make you rich. Real estate will cause you to go bankrupt if you're highly leveraged in it and you have no money. I know I did it. I'm an expert on that. I have a PhD in that. And so, you know, Just, uh, man, you guys have—

what's the $30,000 in credit card debt? Was that just to keep something else? Is that lifestyle, or was that a specific part?

No, that's my husband, um, for his, for his business. He will like run up his credit card for a job that he's doing, and then when he gets paid for that job—

yeah, you're living— y'all are all living backwards.

If you guys, if you guys don't get your business organized and you don't sell off all this rental property, and you're probably not going to, you're gonna go broke. You're gonna lose everything. It's gonna come crashing down around your head. I've done this for 30 years. You have all the symptoms of somebody who's gonna be bankrupt in 36 months. You're not gonna make it if you don't get your freaking business act together and get your business acumen going where you actually know what you're making and quit running a dadgum construction company of this size out of your hip pocket with a credit card. That's just completely primitive. You're gonna have to add to your sophistication level to stay open, and you're gonna have to quit borrowing money up your eyeballs on all these real estate deals and acting like there's no tomorrow. And have to go to Dad and say, "Dad, what do I do?" I mean, you bought a duplex, you bought properties that are cash flowing $100. Translation: they're losing money every year. You're losing money on all of that. And then you bought a house without having the other one sold, and you're handcuffed to your father I mean, you guys have done like a whole laundry list of everything that's gonna cause people to go broke.

And if you guys don't rush and undo that laundry list, you're gonna go broke. Yes, I hope I'm scaring you. I hope I'm terrifying you enough that you go in and put for sale signs on everything and you hire a freaking accountant and get somebody in there to straighten this construction company up, mate, and make sure it's actually making a profit. I'm not even sure it is. We may just be swapping dollars the way we do things over there. You guys gotta stop this, Elizabeth, you're scaring me to death.

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Adam is in Green Bay. Hey Adam, welcome to the Ramsey Show. Hey Dave, thanks for taking my call. Sure, what's up?

Well, I thought maybe I could get Dave Ramsey to tell me it's okay to buy a new vehicle. Nope. That's a short answer, huh?

Are you— are you— do you have a net worth of $1 million or greater? Uh, not exactly. Well, it's either yes or no. There's a not exactly. I mean, it's a math thing? It's a no. Okay, I know. All right, then if you're buying a new car, you're losing too much in value. I mean, it's very simple. You can do whatever you want to do, but that's— I don't find millionaires that ask this question. People that become millionaires don't ask this question. They don't say, how close to the edge of being dumb can I get and still become wealthy? They don't ask it that way. They go, I want to stay way away from the edge. I'm gonna drive an old used car and build up money because cars go down in value like a Rock. That's where Chevy gets that. Yeah.

All right, but what's your, what's your, uh, what's the car? Yeah, well, I want to hear the numbers.

Yeah, well, um, we kind of have our heart set on a Toyota Sienna. Um, for— we're in Wisconsin, so the all-wheel drive is nice. This one can tow, which would be really handy for us. Got a couple small kids, we want to be able to have a little bit of extra room for toting people around. So that's the one we kind of settled on. And the trouble is, I would be very happy— my wife and I have talked about it— we'd be very happy to buy a used model for a few years old or maybe even a little bit older that has reasonable miles for a big drop down in cost. But the problem is with this one, man, you look at ones that are 2 or 3 years old and they're still going for virtually the same price as a new one. You gotta get to 100,000 miles or better and, you know, 6, 7, 8 years old before you really see the prices coming down. In our case, we'd be buying cash, you know, so we're not financing it. And even with paying the cash, we still have our emergency funds stocked.

What's your household income? So, uh, about $180,000.

And this is what, an $80,000 car? Uh, $55,000. $55,000. Okay.

All right. And brand new, they're going for what, close to that?

Yeah, well, that would be, that would be a brand new price, you know, tax title and all that would probably be a little bit more, but $57,000, $58,000, somewhere in that ballpark.

And what other car do you guys have?

Uh, yeah, well, my wife just got into a car accident, so we're kind of under the gun. Um, and, uh, I have, um, I have a Tesla Model Y, um, that's also paid off.

Okay, and worth what?

Uh, probably about $30,000. Okay, I'm just trying to make sure you're getting that.

I got a 2024 Toyota Sienna I'll sell you for $43,000 because I can buy it right now for $42,000.

Uh, anywhere near me?

Uh, I don't care if it's near you or not, for $10,000 you can figure it out. Yeah, yeah, I just looked it up online. It took me about half a second while I was talking to you. Okay, um, in other words, your whole price scenario is absolute BS. You've completely convinced yourself that the new one is the same price. It's not. Here's another one for $45,000 and another one for $45,000.

2024s. Oh, well, I should I should have, yeah, I'm sorry, I should have specified. I think if you filter out the, if you're only looking at the all-wheel drive and with the tow, the ability to tow, I think that's gonna change a little bit.

Okay, what are you towing? We have a pop-up camper and a trailer.

Uh-huh, okay, and what's your other car? Tesla.

A Tesla Model Y.

Oh yeah, you said that, I'm sorry, I missed that while I was looking up the Toyota, okay. And, um, all right, you can do whatever you want, but the thing that— the overarching decision-making paradigm is what you have to fight against. Um, and number one thing that you violated is— I mean, I haven't looked up— I honestly just typed in 2024 Toyota Sienna just to see what they're doing, and they're all in the '45, '41, '42, '43. There's like 7 of them on the first page. It came up 30 seconds later, and I haven't I haven't even searched yet, okay? Yeah. So I don't know about the towing part or the all-wheel drive part. And she totaled her car. Her car was what?

It was a Nissan Rogue, and we were kind of— we were already— the funny thing is we were leaving the dealership from talking about getting the new vehicle when she got rear-ended.

So, okay, all right. So problem number one is, and we all do this, so I'm not going to pick on you too harshly, I'm not gonna mess with you because you're asking the question in a proper tone and I appreciate that and thank you, I'll be nice. But the, so when I do the thing that you're doing, it's just, I'm rationalizing and I'm trying to figure out a way to get what I want. And you can probably afford it and it's not gonna bankrupt you, okay? So you do whatever you wanna do, but I'm not gonna tell you to do it because, you know, because you can buy this car $10,000 cheaper new. For sure, 100% chance you can. And you just hadn't found it yet. You haven't looked yet. You just hadn't opened it.

And the urgency to replace.

And the, you know, and, you know, we're moving up, for God's sakes, from a Rogue, which is a completely different vehicle. It's in a different class. The Sienna's a bazillion times a better car than the Rogue.

Right? Yeah.

I'm really glad she's going to get it.

It's a minivan.

I mean, and you know.

We love a minivan.

Yeah, it's a great car. Maybe there's another class of minivan that's the same. They'll give you the same stuff. You know, the Honda Odyssey or something, right? What's the one you got? Mm-hmm. Is that what you got?

The Odyssey. Yeah. And so that's a great car. It's the queen jewel of the minivans. Is it?

Or is it more? It's probably more. I don't know. Probably similar. I got no idea. But it's a good car, though. And I don't know about towing, and I don't know about all-wheel drive. And both those things are okay. Okay, but the second thing is this: you've got to adopt— everyone, including you, Adam, and including me— the mindset of saying, okay, the rich get richer and the poor get poorer because the rich people keep doing rich people stuff and poor people keep doing poor people stuff. And middle-class people keep taking out car payments on new cars that they can't really afford to pull a pop-up camper.

But he said he's gonna pay—

he's not taking out payments, but that's what middle-class And you're going to lose $10,000 when you drive it across the— when you go across the curb and it goes blump, blump. That was the sound of $10,000. That's what that sounded like. Blump, blump. That's exactly what it sounded like. And so you've got to get out of that mindset that that's OK until you have enough money to waste that much money. Now, I waste that much money. I buy new cars. But I've got several hundred million dollars in net worth. Worth. And so I can afford the blump blump sound. It's not that big a deal. The building I'm sitting in, $600 million. So, you know, you just— that— it's okay. But I want you to get there. I want you to be where you have millions of dollars.

No, whatever. You just threw out like insane numbers. Okay, all of us just talking.

The point is, the point is, the point is you build wealth by not buying things that go down in value. Yours is a unique situation.

With your income. You have a unique situation.

I do, but I got there by doing this stuff.

Yes, and also, you make a great income. I mean, like, yes, but for the, but for people that we talk to that are, that are doing this, that are Baby Steps Millionaires.

Oh, what, the people we talk to are different? They're not different. We're not better than them. Not that we're better.

What? You just said you are sitting in a $600 million building. That, that's not normal. That's okay. We're normalizing life, everyone. The average person who makes $64,000— The average millionaire doesn't buy a new car. Can I finish? Can I finish? 100%, but they don't have to sit in a $600 million building to do that. The average income in America is $64,000. The Baby Steps millionaires that we talk to do very simple things. They live on less than they make. They invest into their Roth IRAs and their 401s. They don't send $1,200 car payments to car companies. They pay themselves that money.

And they don't buy new cars.

All of that. Yes. Yes. Buy new cars.

So all that to say, yes, you do not have to. They became millionaires.

It is. That is how they became millionaires.

Same point. It's exactly— Are you serious? It's— I'm dead serious. Okay.

The average person isn't going to go and build a $600 million— No, that's not the point. And you said I'm— I—

The point is, I said I don't want to be a hypocrite and say don't buy new cars when I do. Yes. Without explaining why I can afford to.

$1 million and Anybody, yes, if you have a net worth of $1 million, you can buy a new car. I can afford it.

I can afford it. Sorry, America. I want you to be able to afford it. We're doing this. I want you to be able to afford it. 100%. And so, Adam, we were harder on each other than we were you. That's great.

You should not feel uncertain about investing, and you don't have to. That's why we created Investing Essentials, a two-night virtual event where George Campbell and I walk you through my playbook for investing and wealth planning. We'll simplify everything from 401s and mutual funds to passing on wealth so you can invest with confidence. Tickets start at $199. Get yours today at ramsaysolutions.com. Com/events, or click the link in the show notes. Our Scripture of the Day, Isaiah 43:18-19: Forget the former things; do not dwell on the past. See, I am doing a new thing! Now it springs up; do you not perceive it? I am making a way in the wilderness and streams in the wasteland. Albert Einstein said, "A person who never made a mistake never tried anything new." I like the Henry Ford quote too. He says, "Those of us who make mistakes have those who never make mistakes work for us." Buying or selling your home is a high-stakes proposition because one bad deal could really screw up everything. That's why Ramsey Trusted connects you with vetted real estate agents who are trusted by Ramsey because they're high-octane, high-protein. To find one for free, a Ramsey Trusted agent that is, go to Ramsey solutions.com/agent or click the link in the description if you're listening on YouTube or podcast.

Okay, there's some backstory and history that's worth going into to make sure that we settle that last little interchange, exchange. So number one, the bottom line is, is that wealthy people that we have studied, 10,000 millionaires in our research, do not buy new cars. Cars, even after they get their first $1 to $5 million, they're driving— the typical is out. He was looking at a Toyota, is honestly a 2-year-old Toyota. When I'm interviewing millionaires, I ask them all the time what they're driving, and they drive a 10-year-old Chevy or they drive a piece of crap old car, and I tell them to upgrade their car because they're still being too big a tightwad. They've gone too far. But that's the millionaires. People who want to drive new cars typically land and stay in the middle class most of the time with high car payments. That's what our our data says. So we're not going to tell you to buy a new car until you have $1 million and you can afford to take the loss. Then let's talk about me saying I've got— sitting in a $600 million building or whatever, and Rachel not liking that because it's not relatable.

I'm not— other people don't understand and they just blow me off because they don't listen to that. So the history is this: I've got several brand new cars that I bought, and I don't want to be a hypocrite. The first time on the Dave Ramsey Show, it was called back in those days, 'cause it was me.

I honor my elders, thank you.

'Cause it was me. No, I'm not, that's not the point. I said, back in the day, when the dinosaurs roamed the earth, I was driving a, what was that? I can't remember the number on the thing. The little Mercedes coupe. Blue, it was a blue. Little blue Mercedes coupe, and it had 230,000 miles on it. I bought it for $7,000. It overheated on the way to a live event in Chattanooga. I was driving from Nashville to Chattanooga. Chattanooga. The vice president of live events was in the car with me. We're on the side of the road and I'm pouring water over the water heater, the radiator, trying to get it to cool off and get water back in it to get to the live event. The car's worth, probably at that point, $3,000. I'd driven it in the ground. He's like, "This is ridiculous. You're a millionaire. You need to buy a good car." I said, "I can't drive a good car and be on the radio telling people to drive junky cars so they can get out of "Debt?" And he goes, "Yeah, you can. You need to be the proof that it works on the other side." Yeah, absolutely.

Live like no one else, so later you get to live.

I was so worried that Twitter was going to attack me.

That was before Twitter.

It was, it was. I was so worried that the people were going to hate me.

The family had opened up a YouTube channel.

Because I was inconsistent and I was a hypocrite. And I bought a 2-year-old Jaguar, which was a very nice car at the time, and upgraded considerably from like $3,000 to $20,000 in those days, or whatever it was. But I went through this great angst that it was okay for me to buy something nice when I had the freaking money. Yeah, so, you just said, "You felt the need to justify—" And so, I had to overcome that, and instead, I'm gonna be the poster child that goes, "You can go do this if you go do this." And so, that's why I still don't wanna come on the air and say, say, I buy a new car, I bought several new cars, and I can afford to lose that money.

So you're justifying saying, here's what I have so that I can afford it.

But I wasn't talking down.

No, no, I don't think you were talking down at all. I was just saying you don't have to justify. I think majority of people that listen, they know, they know, they—

well, no, some of them don't. And you'll read it in the comments later after this argument. But actually, it'll be— it'll be— you read the comments and I don't. But every now and then I will. James is in Chicago. Hey, James, How are you? Hey guys, I'm good. How are you? Better than we deserve, for sure.

What's up? So my mother-in-law's got a house that recently went under contract to sell for $335,000, and then so a couple weeks later it appraised for $360,000. They haven't closed on the house and they won't for another 2 or 3 weeks. Is there any recourse for to, to close that gap at all?

Okay, somebody missed trusted? The real estate agent?

I believe so. And you know, I hear all your commercials about the trusted real estate agents, and I think that was certainly the case. But— Moment! Was it one of our agents? No, no, no, no, oh, oh, oh, I'm saying it wasn't agreed on at all.

You think the agent screwed up in the original pricing and convinced your mother-in-law to sell her house too cheaply?

Cheap. I believe so.

Do you think the appraisal is actually accurate?

Yes, I do, because the house is— I was surprised when she said we should list at $335,000, and then she went and sold it before it even listed. It was just kind of a, you know, friend of a friend situation. I bet everybody jumped on her.

So it's $35,000 underpriced, or about 10%, and there's already some It's bought.

It's under contract.

Supposed to close any minute. You're right. Yeah. Well, I'm— the first thing that pops into my head, James, and I'm just gonna off the cuff, is, well, she sold her house too cheap. That's sad because she's given her word. She signed a contract, and I don't want her to get sued for specific performance under this contract. And then the second thing that pops into my head is I'm going to kick the incompetent real estate agent's butt. Um, but I don't, um, ethically I can't tell her to break that contract, right? I wish she had done a better job and listened to you. I wish she'd done a better job at selecting her agent. And I bet I'm going to hear that this lady is in— needs this money bad. Doesn't she?

Something like that. Yeah. Gosh, it would help if she had it, if you put it that way.

Well, it always would help. Yeah, right. Yeah. Um, is there anything else going on in the deal? Is the contract contingent upon a whatever, whatever, whatever, like a, uh, like the sale of a home inspection? Has the home inspection report come back?

The home inspection came back clear. There's nothing pending there. The only thing I can think of is if their loan falls through last minute. Yeah. I mean, there's— sorry, I'm trying to think— 3 weeks until closing. Yeah. So I don't know if their loan is approved. I have no idea. But if that falls through, we can relist and then we solve that problem. Exactly. Exactly. You know, and then—

and get a new real estate agent.

Yeah, certainly, certainly.

Um, yeah, I mean, unless there's something sideways in the contract deal that she can use, uh, to ethically get out. Like, I knew a guy who had his house on the market, um, and, uh, the radon inspection came back and found radon, and they wanted him to spend $500 to fix the radon. And he said no, contract's over, and canceled the whole thing because he wanted out of the deal, and he used that to get out of the deal. But he had a legal, ethical out because he refused to fix the radon, and he had the right to do that in the contract. So, you know, that's the kind of thing, like if they came back with something in the home inspection, you say, "Well, I'm not gonna do that." You can do that. That's part of the home inspection process. And then they would go, "Well, you know, okay, we'll take it anyway." No, we're not gonna fix it, and we're not— based on this home inspection, we're not selling the house. You could just— I mean, there'd be a way to walk out of it then legally and ethically,. But I don't think there is here.

You know, I'm not an attorney in Illinois. You might ask one to be sure, just to see.

I know. But I would— you— competent real estate agents are important. I know. And I would feel bad for that family on the other end who's in contract for something that you kind of go back on your word just from like a— I mean, it's worth it or it's, it's worth the— what I'm saying, like the new price is what the house is worth. I get it. We think it is. Yeah. "But that still feels wrong." Off.

Yeah, you gave your word. You sold the house. And people walk away from contracts like they walk away from everything in this society today too much. You should honor your word. And so, I hate it. I don't like it. I've signed up for things I wished I didn't sign up for, but—

And also too, it's a, you know, to sell a house today is harder than it was a few years ago. So, she may have even, even if it was at 360, had to negotiate down some anyways, right? So you may not have gotten the full $60,000 anyways. You would never know.

But yep, sorry, Jess. So you should get a high-octane, high-protein Ramsey Trusted Real Estate Agent, or you shouldn't get one at all. This is what you get. You make a mistake, it's a $30,000 mistake. It's huge. That puts this hour of The Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.