Transcript of Financial Wisdom Matters More Than Financial Timing

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Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is the Ramsey Show. I'm George Campbell here with Dr. John Delony. We're taking your calls at 888-825-5225.

5.

You call us up, we'll try to help you take the right next step for your money and your life. Hannah kicks us off in Orlando, Florida. What's going on, Hannah?

Hi, um, so we are— me and my husband, we are currently on Baby Step number 2. We're completely debt-free aside from our mortgage, um, so we are trying to get our 3 to 6 months savings built up so that way we can move on to the other Baby Steps. My question is, when we are setting up our emergency savings or 3 to 6 months What should we include in that? So I am a stay-at-home mom, but I also own my own business, so I work part-time and then I have my health insurance that we pay for privately. Should I include the health insurance expense as part of that since it is something that— it is really expensive for both me and my daughter? So we're just trying to figure out what we should include in our emergency savings plan itself.

Yeah, it sounds like you guys are wanting to lean towards 6 months versus the 3. That's sort of the spectrum that we have. And if you do have, you know, if there's single income or variable income or there's health issues in the family, then you want to lean towards 6. You'd rather be safe than sorry and not have enough to cover the gap. So 6 months is the goal. How much money is that?

Between like mortgage, like our HOA, car insurance, health insurance, and groceries, it probably would be, I would estimate, Probably about $15,000 to $17,000 for 6 months for us. And that's not including health insurance. Our health insurance for me and my daughter is about $600 a month, so it's pretty expensive, unfortunately.

OK, so let's add that in. So $600 a month, 6 months worth. Let's add another $4,000 for that. So now we're at basically $20,000 would get you guys by for 6 months to cover all of your basic needs. We can strip out the luxuries. We don't need every single thing in there. If you did have a legitimate intimate storm or a job loss, we're not going to live how we were living before.

Yeah.

OK. So $20K is the goal. You guys have the $1,000 starter emergency fund right now, and now you're working towards the $20K?

Yes. We currently have almost $12,000 in savings, and that's including pretty much everything liquidated that we have in terms of savings, including the $1,000 baby starter.

Wow. So you guys are only $8,000 away.

Yeah, we're pretty close. We've been pretty fortunate with just child care and everything like that. We haven't had to pay for much child care aside from like family friends just paying for gas and stuff like that. So we've been pretty blessed actually.

Well, and also, y'all have made some choices. So you, you have been blessed, you are privileged, you are fortunate, all those things are true, and you're choosing to do things a little bit differently, right?

Yeah.

And so, uh, own. Yes, we're fortunate and we've been lucky in some areas, and also we're working really hard. Um, I like to— George, tell me if this is bananas— I, I— emergency fund for me philosophically is if I walked in here and Dave Ramsey said, you're fired, get out, that me and my wife would be able to eat and take care of our bills for the next 6 months. But practically speaking, it was not this past week, it was the week before. Um, in one day I got up early before work. I took one of my family's vehicles and I have a 16-year-old, so there's 3 drivers. I took one vehicle to one, um, automotive shop. I took another vehicle to another automotive shop. I got dropped off at work. While I was at work, I got a call from the air conditioner guy that my entire, my central unit had to be replaced.

Ooh.

Like had, be taken off. And my wife called and said, the well's broken, like out in the country. Like, so we have no water in the house. All that was on one day. And it was annoying and it put me in a bad mood and I was just full drama queen. Ask anybody who was working with me, but also that's a good—

if you had longer hair, you could have flipped it.

Oh, I would've been flipping it.

Yes.

But that is what the emergency fund is for. So philosophically it's, I can sleep at night knowing that I have a 6-month or longer runway to, if the worst of the worst happens. And also practically speaking, the air conditioner goes out, the cars need to get fixed. The water doesn't, isn't coming on all in the same day. Our pets' heads are falling off. All of it happens in one day. Um, I have that in an account somewhere. I don't have to go borrow money for it. I can just pull from an account. I become my own bank, right? So that, that's how it works for me in my house. So I would definitely keep your health insurance in there because if your husband was to lose his job, that you don't want to be uninsured with two small kids for 6 months, right?

Yeah, yeah.

Two small kids do what two small kids do and they fall down and they hit things and they drop things and whatever, right? So you, you build that in, um, but also if the car blows up in 2 months, you're gonna repair that from the the $20,000 emergency fund you've saved.

Okay, perfect.

So how much longer until you guys are there? Is this a couple of months?

Um, we're really unsure. He actually just got a pretty impressive, um, increase with his hourly, so they gave him a $5 an hour increase. Um, and then I am going to be starting adding on another day with my job, um, probably in September or October. And my income is really variable so it's kind of hard to tell. I'm hoping that we can have that done by November. That's kind of what I'm hoping. But I'm also trying not to put pressure on us just because we do have a little one and they take up a lot of time and a lot of resources most of the time.

Yeah.

Well, I was going to say, the emergency fund is for 3 things: things that are urgent, necessary, and unexpected. If there's things in your life where you know we're going to have to do maintenance and repair on, let's just set up a sinking fund for those things so they don't feel like an emergency when they pop up. Separate those two things in your mind. In your budget, let's say you have maybe $200 for car maintenance and repair. Well, now, 12 months from now, you've got $2,400 ready to cover those things versus you having to pull from the emergency fund.

Yup.

And the last thing is keep it in a high-yield savings account. Do you guys have one of those already?

Um, we do not. Would you recommend that we move all of our emergency savings into that and just not have anything, or keep a very minimal amount in our bank account savings account itself?

Yes, I would keep a buffer in your checking account. For some people that's $500, for some people it's $1,000. So you guys decide how much buffer you want to keep in checking so you're not riding it to zero. But then other than that, keep the whole emergency fund in a high-yield savings account, and the one that we recommend is Fairwinds Credit Union. You guys can open that. It actually has a checking account with it, a no-fee checking, high-yield savings. It's over 3% right now, and a Ramsey-themed debit card. So you can get that at fairwinds.org/ramsey, and that will get you guys set up. Once you have that, Hannah, it is a game changer. Like, you just sleep better at night knowing that whatever comes your way in life, and something will come your way, you're just going to kind of swat it like a bug. It's the best feeling in the world.

It's a really nice feeling to know.

Yes, and you guys are so close. I mean, even right now, $12K would cover most of life's emergencies. That's a new HVAC unit. That's a car replacement if you needed it to be. So you're so close. Keep going. Baby Step 3 is such a slog. It's one of the most boring, unfulfilling baby steps, but it's one of the most important too. So keep it a priority. You guys are doing great.

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Ann is up next in Philadelphia. Ann, welcome to The Ramsey Show.

Hi, thank you for having me.

Absolutely.

Um, so my question is, how can I make large purchases like buying plane tickets or paying for car services without a credit card?

What a baller, Ann! How much are we talking?

Well—

What's the most you could spend and why is it an issue right now for you?

Yeah, so I have most— the way that I'm living, most of my income goes into my savings. I keep a very small amount in my checking account. I'm worried about purchasing things online with my debit card, just in case it could get stolen. And I don't have a credit card, so I currently will pay my parents back when they buy stuff.

You'll have them cover it. So this is more like fear of fraud.

Yeah.

It's not that the transaction can't go through. You're just saying, "Hey, it's a large purchase. If somehow this money got moved to the wrong place, I'm in a lurch." I'll tell you what I use.

I, and they're not a sponsor of the show, it's just a, a per— they may sponsor your show now. For privacy, for years I've used privacy.com and here's, here's what they do. Um, and like I say, they're not a sponsor. They're what I use personally. I put my debit card into their system and then it generates a card number for all of my online purchases. So I bet I have 150 cards for this weird guitar shop and this weird archery shop. And there's one for Southwest and there's one for American Airlines.

So imagine a custom debit card for for every single merchant you shop with.

And you could tell 'em the exact amount that they can draw and that's it. And you can do a one-time purchase, you can do a recurring purchase. So whenever I'm about to buy plane tickets online, Southwest never has my information. They have this number generated from privacy.com and it gives me that 3-digit code and the date. I feel like I'm doing a commercial for them, but I have—

No, it's, they really are great. 'Cause I used them for years and finally they came onto my show. So I think now privacy.com/george, you get $5 just for signing up, which is pretty cool.

So you can check that out. I am a, I'm terrified of ID theft. I also have ID theft insurance through Xander, but I'm scared of that stuff too. I don't like giving my debit card out. And so that's the exact site I use and it's free, privacy.com, it's free.

And anytime that there's like an Apple Pay option on a website, I use that because that again is encrypted. It's not actually sending over my debit card information. So that is, I mean, John and I are both guys who don't have a credit card and we make a lot of large purchases online and—

I travel a lot.

I do it without, flinching.

Yeah.

Okay.

Does that solve the conundrum?

Yeah, I'm definitely going to look into that. Um, could you clarify how, how exactly I put my— like, how, how do I transfer the money to this privacy.com?

So it doesn't actually transfer. All it's doing is it's pulling from your debit card. They're just sort of acting as a middleman with a different virtual card number so that you're protected against those breaches.

Amazon, Netflix— if, if Netflix gets hacked, they're not going to have my information. They're going to this one number.

So let's say I sign up for a free trial and I use one of these virtual cards and I say, hey, don't let any amount over a dollar come through. Well, when that trial tries to charge me, it just won't go through. It can't charge my bank account. It'll decline it. So that's the kind of stuff that you can set up with each individual card. And like John said, you can have it be a one-time thing and then the card's never used again. So that's helped me a whole lot with large purchases on top of Apple Pay. And, you know, there's, there's a bunch of other things, and I talk about it in my book, Breaking Free from Broke. I'll send you a copy of that too. In the credit cards chapter, I sort of lay out all the things that you can do and should do to live credit card-free and sleep well while doing it.

And let me ask you this question: why do you transfer all of your money to savings and not keep a buffer in your checking account?

So I get my direct deposit right to my savings account, and then I'll move some to my checking.

Is that as a discipline play so that you're not tempted to spend it?

Yes.

Okay.

So you're not, you're not like running out of money trying to pay bills during the month. You're transferring as much as you need to cover all the bills.

Correct.

Okay. Yeah.

So if you have to make a big purchase like a, like a car rental or a plane tickets or a refrigerator, just pull from savings and move it over into your checking account. And then that money will be there whenever, if you use privacy.com or Apple Pay or any other service like that. But I'm with you on the, on wanting to protect my debit card. And, and again, George, you, you're the one who taught me this. Debit cards have the same fraud protection that credit cards do. There's just a thing in my head about, it feels like the checking account is, is kind of like an arm's length extension from a, under my mattress. And it feels like I don't want everyone, I don't wanna give all these companies that I don't know, like a hand under my mattress to just take money out whenever they want to. Yeah. Well, they're, they're, I know it doesn't work like that, but But in my head it does.

And so when it's your money versus like the credit card company's money, you feel like, well, man, I'm really exposed here. But if your debit card says Visa or MasterCard, there's a zero liability policy with them. And there's also something called the Electronic Fund Transfer Act that covers debit cards in cases of fraud. So the key is pay attention, report it, and you'll be fine. Your money's not just going to randomly disappear. And I don't keep $100,000 in checking. I keep what I need for the month. So it's not like my entire world's disappearing. So there's a few good things you can do there and hang on the line. We'll send you a copy of the book as well. Great question. Micah is in Jackson, Mississippi up next. What's going on, Micah?

Hey, how are you guys doing?

Doing well. How can we help?

Um, yes sir. So, um, I am just getting started with, uh, using the Baby Steps to get out of debt.

Welcome to the cult, brother.

Welcome.

Yeah, yeah. Well, I, I was ignorant when I first got married. Some of— some people told me to do it and I was like, oh, whatever. And now I'm finally— you know, you get older and wiser and Gotta do things a little bit better. Um, but, uh, I, I, again, in my ignorance, I purchased a truck and now I'm upside down on it trying to sell it to get out of debt. And, um, I'm, I'm not sure. I've had it posted for sale for several weeks now, and I know it'll probably take longer, but I haven't had any bites on it or anybody interested in it. And so I'm just wondering what other course of action I can take to try to get out from underneath this thing, uh, quicker.

I got 3, I got 3 things you need to get before the day's over. You ready? All right, an old rag, a can of gasoline, and a match. That'll get rid of that truck, right? Just kidding, don't do any of what I just said. Don't do that. I was just playing with you.

Here's some real things you could do. Um, you could, you could contact like a CarMax and Carvana and just see what they will give you for it. That'll give you sort of your your floor. At least you know this is the least I'll get for it. If they're offering that, okay, trade-in value at a dealership is going to be way less. And then your best bet is that private party to get the highest number, but it could take longer. And so I would be looking at your listing going, are the photos good enough? Is the description good enough? Can I list it other places other than Facebook Marketplace and Craigslist? Can I ask around to my community or friends to see if anyone's interested in this? What is it currently listed at?

Um, well, I've got it listed for payoff, so I've got it listed at $29,000 for payoff.

Okay, so that's what's left on the loan?

Yes.

But what's it actually worth if you looked at Kelley Blue Book private party value?

Yes, so I could get $24,000 or $25,000 for it.

Okay, so you're asking really more than it's worth right now?

Yeah, that's the problem. I was ignorant enough to buy it, so I was hoping somebody else would be ignorant enough to buy it.

But, you know, like, there's a sucker born every day. Alright, well, I would try lowering the price to what it's actually worth, and so now the difference is on you. So you come up with the difference in cash. So if that's $5,000, you either need to save up $5,000 real quick by working extra, selling stuff, or go down to your local credit union and get a personal loan for $5,000, because that's better than being $30,000 in debt. Would you agree?

I do.

Now, do you have something else to drive, or do you need to then buy a beater car in the meantime?

Um, so we have my wife's car, um, but I would have to have something else to drive. And that's what, you know, that's kind of the thing. I want to sell it and then try to get something else. I, I know a bunch of people that have maybe an extra vehicle they would let me borrow from, from time to time, you know. But the good thing is I don't live but like 5 minutes from work.

And yeah, if you can go to like one car family—

bicycle, baby, bicycle.

I had a roommate that did that.

I was me.

He biked to TGI Friday's uphill.

I was a dean of students at the, at the, at a graduate school. I left left my suits in the office. I rode my bike to work. I was that guy.

That's rock and roll. That's how you keep your physique, John. It's pretty incredible. So those are a lot of things you can do, Micah, but I would not try to sell it for more than it's worth. It's going to take light years to get rid of that thing.

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If you're sick and tired of working so hard and have nothing to show for it, that is normal, and normal is broke, and it doesn't have to be that way. Our EveryDollar budgeting app helps you find extra money every month and builds you a personalized plan to beat debt and build wealth. In just 15 minutes, you'll find thousands in hidden margin, and you feel like you got a raise. So don't live normal when you can live like no one else. Start EveryDollar for free in the App Store or Google Play. Gail is in San Antonio. What's going on, Gail?

Hi, I'm a little nervous.

Um, take your time.

I just wanted to find out if it would be either ill-advised or morally wrong to divorce my husband.

Whoa, what's going on, Gail?

Um, well, We've been married 27 years. Um, I got married later in life. I was almost 40 before I got married.

Well, I'm 38 when I got married.

And, um, anyway, um, he, he is 2 years older than me and He refuses to work. Um, he, he got fired from his job back in March, has not gotten another job and is not trying to get another job. And I can't keep living like this. Um, we live on Social Security, um, his and mine. I've been disabled for 26 years, um, and he just started on Social Security, and, um, it's extremely tight. We have no savings, no retirement, no nothing, um, and I don't know what to do anymore. I can't keep living like this.

When you say you can't keep living like this, what is the this? Is it you can't keep living like this, the reality that you're 65 and you're staring down the barrel of another 20 or 30 years and you don't have anything saved, y'all got nothing, and that reality you can't keep living like? Or is it, is your husband being ugly and abusive? Is it, no, we're so—

things are so tight.

I can't stand the stress of not knowing for one day to the next how long we're gonna make it.

Okay, so the Social Security, his and yours added together, is not covering your, your bills, is not giving y'all any margin?

Well, I get $1,351 a month. Okay, he gets $811.

$811?

$811?

Yep.

That's it?

That's it.

Was he not working for a long time?

He is a musician and he worked for cash for most of his life.

Okay, so you guys are bringing in a little over $2,100 and that's it?

That's it.

Do you rent? Do you have a mortgage?

We live in a paid-for house. Um, it's kind of an unusual situation. It's, um, It's a house that is in a trust for me from my father's estate. We pay the insurance on it.

You pay insurance and taxes and you got, you know, food and do you have a car? Car insurance, gas, all of that?

We have 2 cars that are paid for.

They're 22 years old.

Um, um, alright, let me get into the nitty-gritty of this, okay? I'm gonna take an alternative route. Okay, paint me a picture of what happens. You— let's say George and I are like, yes, file for divorce today. And you get off the phone and you call a local attorney, you give them $5,000, and they file for divorce today. Then you've been married long enough, the judge forces you to sell this house, you'll split it in half, and you're— you've take whatever the amount of money is divided by 2, and you're holding that, and that's all you have for the rest of your life unless there's something else in this trust.

And now you're living off $1,300 and you got $1,300 bucks coming in.

Will that give you the peace that you're looking for?

Um, well, let me backtrack just a little bit. I've already talked to an attorney, okay, and when I had my will done, and because I wanted to make sure that my husband didn't get anything in my will, and, um, They ain't much to get, Gail.

I mean, like you're saying, the house—

Well, they assured me that my house, because it's in trust, is not community property.

In the state of Texas, anything in a trust from a will is not community property.

What's the house worth?

So he couldn't— between $350,000 and $400,000.

Okay.

So that's by far your— that's really your only asset at this point. The cars are not worth much and you got nothing in savings or retirement.

Trust the legal advice.

I—

but even then, there's still this, this new life. Let's say there's a new chapter where you're solo living in this house, it's paid for, but now you only get your income. Is that the reality?

I can make it.

I've already, I've already been putting this to paper for 6 months.

So why are you calling us, Gail?

You've already—

you've already left your marriage, like you're already out.

Well, I didn't know if it was ill-advised to do that or if it was morally wrong for me to do that, because I never intended to— you know, I thought it was going to be forever.

I got you. The heartbreak of that's there. I, I, I'm not going to outsource my morality to you. I, I can't be the one that gives you permission to make this life-altering decision. Because I'm convinced there's other things going on here that you're not telling me about, which is completely fine. And I get it, not wanting to put all the dirty laundry out on public. I get that. But you have to look in the mirror and say, I am making this decision. I do think there is a till death do us part for sickness and in health, for richer and poorer. And I also think fidelity is bigger than being a person of fidelity, um, cheating, if you will, does not just happen if you sleep with somebody else. I think being a person of fidelity inside of a marriage— not— you can cheat on your spouse with a golf course. You can cheat on your spouse by just sitting on the couch and not participating in the necessary lifeblood of a home. And so—

and that's how I feel I've been treated.

Then I— but you have to own that decision. I'm not going to give you that.

Okay.

Okay. What I want to tell you is you have left your marriage. You just haven't put it on paper yet. If you want to sit down with your, with your husband and say, here's where we are, here's what I'm about to do. If you want to rebuild something for the back half of the fourth quarter of our life, here's the clear path towards rebuilding trust with me. Here's what I need from you. But what you've told me is it's not financial because you can make it on your $13.50. There's something in the alchemy here where seeing him sitting on the couch collecting his $800 is bringing you to a point where I am going to end this marriage. So that tells me there's other things going on here that's not financial. It's not wondering what's, what's coming next. You gotta pay for a house. You gotta pay for cars. Like there's something else here. And he deserves, I believe, for you to be very clear and direct with him. And respectful and honorable, like treat him with dignity and respect. But here is the thing, or here's the things that have been going on for 20 years, been going on for the last year, um, that are— that I am, I am at the doorway to walk out of here.

Or more, more realistically, you're about to be out of here because I'm staying in this house because it's mine and it's in a trust and it's protected and you can't have any of it. And he will probably say, I'll see you in court, and they can duke it out there.

Okay.

Because what's he gonna do? He's gonna be a 67-year-old man homeless, getting $800 a month, right? If it's your way of forcing him back to work, have that conversation with him.

That's what I've tried to do.

I've tried to tell him that, you know, you can't live on $800 a month, and, um, you know, there's no way you'll survive, and I mean, we both have life insurance.

Mine is only $50,000 because I wasn't insurable.

Yeah, but that's, that's after you— that's, that's for after.

It doesn't solve any of our problems while we're alive, and that's what we're trying to help you do. So your decision to end this marriage solves one problem of one giant problem, and that's what we really want to help you solve. For what happens for the next 5, 10, 15 years, not just this year.

Whatever you decision move— make moving forward, be very clear-eyed about what happens next. Hey, I want to talk to you for a second about love and not love like in Titanic or something. And I mean responsible love, the kind of love that moves you to take care of the people closest to you. And one of the most important ways to show that kind of love is by having term life insurance. If you have anyone depending on you, a spouse, kids, anyone, you need term life insurance. Term life insurance gives your family real protection if the unthinkable happens so they can spend their time grieving and not worrying about how the bills are going to get paid. Zander is a broker who works for you, shopping the top companies to find the right coverage options for your needs and your budget. In many cases, there are options available with no medical exam and instant approval. My wife and I had term life insurance through Zander for years, long before I worked at Ramsey, because we trust them. Getting term life insurance is a way of saying I love you when you can no longer say it yourself.

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Joanna is in Edmonton, Canada. Canada, what's going on, Joanna? How can we help today?

Hi there, thanks for taking my call. I am just wondering if— we are in Baby Step 2— wondering if we should be paying or selling off our paid vehicles to help pay down this debt.

Okay, tell us more. How much debt do you guys have total?

$193,000.

All right, that's all consumer debt? That's not any mortgages?

No, the mortgages aren't included.

All right. Alright.

And what's your household income?

$380,000. Fantastic.

Alright. What are the cars worth?

Um, the truck is worth $40,000. The car, I'm going to say, is worth $30,000. And then we have 2 Harley-Davidsons and they're each about $15,000.

OK. And those are all paid for?

Yes, they are.

Wow. So what makes up the $193,000 in debt?

Um, well, we have, uh, $35,000 in credit card. We have, um, loans, which—

just personal loans?

Yeah, yeah, well, just loans. Like, we have a solar loan and we have, um, a line of credit, and we have a couple loans just for— we had had some dental work done and stuff like that, so medical. Okay. Um, and then the big one in there is the boat.

Oh, a boat.

What's left on the boat?

Yeah, uh, $100,000.

And what's this boat worth?

Uh, about $130,000.

Hey, God Almighty, Joanna, sell the boat!

Sell the boat before the cars you need.

You need cars, you don't need a boat.

Why don't— why aren't you guys willing to sell the boat?

You didn't even mention the boat.

Um, well, because it's at our cottage and And that's what we love to do when we're at the cottage.

Oh, so you have multiple properties, to be honest?

Okay.

Yes, we have two properties.

Joanna, you sound like somebody who makes a bunch of money. You and your, and your partner make a lot of money, and y'all don't like saying no to each other.

You're very improv.

Yes, and I, I, we don't get a lot of—

I wouldn't—

I was just thinking while you were talking, George told somebody to sell their horse one time, and he still has hasn't like still—

that thing hasn't lived that down. The boat just has a motor.

But so I'm hesitant to tell Harley people to sell their two paid-for Harleys.

I'm actually more scared to tell someone to sell a Harley.

Yeah, I mean, because this guy can beat me up. But I don't know a lot of Harley lifestyle boaters with a $150,000 boat. Like, you, you gotta pick a subgenre, Joanna, and go with it, right?

Yeah.

And this is the thing though, see, we don't ride the Harleys very much anymore because our lifestyle has changed.

Then sell them today.

Okay, so here's the thing. If you sold the boat and sold the Harleys, that's $130,000 plus $30,000, it's $160,000 of your $193,000 paid off.

And you make $380,000, so by Christmas you'll be debt-free with 3 easy steps.

That's true.

So that's option 1. Or you sell the cars and you only have the Harleys to get around in, which is probably not ideal in Canada, and now you still need to go buy new cars, which I'm guessing for your lifestyle is going to be a hard pill to swallow to go buy a $5,000 car.

Yeah, you can't drive an '86 used Camry up to your cottage to in your $150,000 boat, right? Like, like the flip of this is y'all make $380 grand if you sold this boat, which you love. I, dude, I love being out on the water. I totally get it. And you sold these motorcycles and then y'all buckle down for 4 or 5 months with this great salary y'all make and you're completely debt-free. Then you get to decide, do we want to stay boat people? And if you do, awesome.

Mm-hmm.

Y'all make $380 grand within one calendar year. You'll have saved up enough cash if that's where you want to like correct your, your, your spending power.

We're not saying never own a boat again.

Yeah, Dave has a couple of boats and they're more expensive than my house. They're awesome, right? And he does these— I don't know, he's almost killed me and George on them multiple times. Like, I love being out on the water, but it comes in an order, right? You just have to decide if we want— if we want to be free people or we want to be boat people more.

True.

How much do you guys have in savings?

Uh, we have just our $1,000, uh, emergency fund, and then we have, um, $10,000.

You got $10 grand. Okay, so here's my question: where is the $380,000 going if we're still taking on lines of credit and payments? Where's that money going?

Well, for those of Both debts have been for a while. They've been a long time there. That's why we weren't getting anywhere, so we got on your program. We've actually, since January, paid off $46,000, which—

Way to go!

I think is pretty good.

Take your monthly bills plus your minimum payments. How much is that per month if you guys buckled down?

We actually owe about $16,000 a month.

$16,000 a month is your burn right now.

Yeah, it's because we have two homes.

Got it.

And how much are you actually taking home every month?

$3,500?

Uh, no, we're taking home— well, he brings home about $2,000.

$2,000.

Okay.

Because $380,000, that's $31,000 gross. And you're saying you bring home $20,000. Are you guys doing any investing right now?

Uh, no, we paused that because of, um, the program. I got from retirement.

Wait, you only bring home $20,000? I guess Canada takes 60% of what you make.

But let's do the math here. You bring home $20,000. Your bills are $16,000. That leaves you with $4,000 if you're lucky to attack your smallest debt. So, we're going to do $193,000 divided by $4,000. It's going to take you 4 years at this rate if you just use the margin you have, making $380,000. That is soul-crushing.

Or you can do it in 4 months.

It is, yeah.

So you decide if you're willing to sacrifice for 4 years to just stay on this plan and knock it out. You can. I personally wouldn't. Making $380,000, you should be done with this thing so much faster, and the boat is the thing standing in your way of freedom.

Yeah, so my— I'm on board to do this. This is my idea, but my husband is a little bit hesitant.

And why is he hesitant? Does he not feel the weight of this like you do?

He does, but I kind of drive it more. So he's in agreement and we're doing the steps, but I think to sell the boat is gonna be a hard sell.

I think that's—

Although if I put it in perspective the way you just did, that might be different.

That's what, where I find couples are successful is if one of them is honest about the thing beneath the thing. 'Cause the boat will turn into a weird proxy war. Oh, we're just gonna go to the cottage and sit on the, on the bank and stare at each other. Like, what about, what about this? What about our grandkids? Like, it becomes this whole other thing. If you sit down and say, I want us to be a free household. I want us to be free. I don't want to, I don't want the government to own us. I don't want the, they already take 60% of our paycheck. I don't want creditors to own us. I want us to be in charge of our destiny. It's the nerd word of it. The psychology word is agency. I want us to be agents of our future. And we can get a boat in within a year. I also think y'all can contract your burn rate quite a bit too. $16,000 a month over 2 properties. Y'all are, y'all are living pretty large at both places, right?

Um, yeah, probably I'd say.

So for 6 months, for a year, y'all could contract those expenses quite a bit and say, what if instead of saying, here's what everything we want to do adds up to, which is $16,000. What if y'all had an exercise and this could be super fun. It could be lap full of laughter and poking at each other and making jokes, cracking jokes with each other, but say what, let's pretend our, all we had was $9,000 a month. Can we figure that out across two properties? I bet y'all could.

Mm-hmm. And, or yeah.

And, and then suddenly material, like $6,000 just comes outta the ether or $7,000 just appears.

Right.

So think about it this way.

Yeah.

The actual mathematics. If you sold the boat, sold the Harleys, that gives you $160,000 in cash to throw with the $193,000. Now we're down to $33,000. So now for 4 months, let's say by Christmas, we're going to throw $8,000 a month at these remaining debts until they're gone. Can you imagine how different Christmas is going to feel?

Mm-hmm.

That's the picture to paint with him.

I like that idea.

And you know the old quote, "The 2 best days of owning a boat are the day you buy it and the day you sell it." sell it. And I think he's not realizing how free he's going to feel when he sells that boat.

And you're not going to a summer cottage in Canada in the Christmas anyway, right? You can't drive a boat across— yeah, but you can't drive a boat across 8 feet thick of ice, right?

Can you rent a boat for 3 months?

Yeah, can you rent a boat?

Um, probably. I've never thought of that idea, actually.

There's a, there's a program here in Nashville where you basically pay a monthly fee and every week you can go over and pick the boat you want. You want a speedboat that weekend? You want a pontoon boat that weekend?

Couple hundred bucks a month.

You want a fishing boat?

Yeah.

And they service the boat, they fill it up with gas, they take all the, the headaches of boat ownership away from you.

And it's probably somebody who lives right near you who's also broke with a boat who would rent it for you for a couple hundred bucks.

And y'all would have the time of your life and have no maintenance. It'd be amazing. Amazing.

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Hey guys, thanks for taking my call. Can you hear me okay?

Yeah.

Gotcha, man. What's Awesome.

Well, it's an absolute pleasure to be speaking with you guys today, so I appreciate you having me on the show. I'll try to keep it brief. I want to honor you guys' time. The question I have is, is mostly a relationship question, but there's some finances involved. Basically, my wife and I, we bought a home down here in Florida about 4 months ago, and that was about the same time that we discovered you guys' Baby Steps. I'm active duty, I'm in the military. She works from home. And we've been working pretty hard to cut down the amount of debt that we have. My mom and other family and friends— it's kind of funny, like when you buy a house down in Florida, suddenly you have more friends and family than you thought you did.

It's very similar to Nashville.

Long time no talk.

Yeah, yeah, right, right. And so my wife, she's so, she's so much more understanding, I think, and graceful than I am about this. But my mom basically has joked around and been like, because she's obviously working through debt and stuff that she has, but she's always been like, well, I'm just gonna die with that. I'm not really worried about paying off my debt. I'll just come down there and live with you guys. And at first I was like, oh, that's really funny. But, um, but now she's like being kind of serious about it. And my wife, um, she has told me, you know, like we've talked about it a lot and she's been like, I think maybe you know, you should be a little more understanding and it's not going to be that bad if she did want to end up living with us. We have a 2.5-year-old little girl at home. And I guess I'm trying to figure out— my question is, is am I being not understanding enough? Am I, am I being too stubborn or hardheaded by not being open to this sort of thing?

No, I—

not at all.

I, I want you to be honest with yourself. And here's what I mean by that. There's the money part and there's the debt part, right? But you know, this is your mom. You've been with her longer than your wife has, you know what her moving in would mean for the temperature and the electricity and the angst and the whatever else in your household.

The vibes.

Yeah.

The, yeah.

As George and the Young Kids say, the vibes of the household.

Right.

So, right. You know, some people will let their mom move in and it would be the greatest thing ever because they would dote on your 2-year-old. You and your wife would have date nights whenever you're home. It would be awesome.

Right.

And also there's mothers and, and fathers who would move in and they would think that you're 7 again and they're gonna tell you what you're gonna do and when you're gonna do it and why aren't you doing it like this?

So, or your job is to take care of them.

Yeah.

And cook for them and provide for every one of their needs while they continue to be irresponsible with any number of things.

So, you know, the true, here's the, the, the total cost financially. Yes. Us relationally, um, the impact on your marriage. And so you know the full picture there. So be honest with yourself about that. The other thing I think that's kind of haunting you, that you can just cut to the chase— I would, I would, next time your mom's in town, I would take her out for coffee and say, Mom, are you officially asking to move in with us?

Yeah.

Because right now there's a lot of ambiguity and you're starting to create stories about what she means and what she says and how she's saying it. Just cut to the chase.

Yeah, I think that's a really good approach. And I've thought about that. The other thing I think I get kind of worried about is I don't want my mom to die with debt. And she's very comfortable with that sort of thing. And I know at the same time, because my wife and I are on the same page about this, it's not our responsibility or obligation to make sure that all her debts and stuff are squared away and paid for. But that's what we're working towards in our personal life right now. And I think that she has seen how we're doing with that sort of thing. We've had the ability to pay off over $100,000 of debt in the last year, which felt really awesome. And I think that, you know, she's kind of like, well, if I move in with you guys, you know, I won't have a mortgage and I'll just die with my debt and it'll be fine. And I don't want that for her and my wife doesn't want that for her.

So I guess that was kind of the crux of like my question today is like, if she doesn't care, then you can't impose that value system on her.

Yeah.

And you can't care more than she does about it. You don't need to take on that burden. 'Cause the truth is, I hope she doesn't die with the debt. And if she does, you don't need to carry that. That's not your fault.

She hasn't invited you into that conversation.

Right. And she's so like, she's not even, my mom has this tendency to like age herself. She's not even like elderly. She's like 55.

Yeah.

But is she working full time?

She is, yeah. She's been a nurse my entire life. God bless her. She's been doing it forever. And she is at the point now where she is a nurse practitioner, but she kinda works from home type of thing. Yeah. And does telehealth. And she has a great income, but she's also not really doing a lot about her debt situation. And so I'm trying to remove myself from being super worried about that all the time, 'cause it's not my situation. But our relationship has gotten better over the years. And I, I obviously don't want that for her. So I guess it's just a, a matter of like, you know, having the conversation with her then it sounds like. Yeah.

Well, where I've seen this go really awry is when adult kids try to lecture their aging parents on any number of topics, but especially about sex and especially about money. Like parents don't wanna hear that from their kid. But I've seen people be successful and I'm gonna be honest, it's, it's a more limited success. By you sit down and say, Mom, are you asking to move in? And if it's true, you and your wife have talked it through. If you were to say, we would love you to move in, and, but we have a picture of what that would look like. And here's the reality of our home. Um, we have a 2-year-old, and so we need some help with some childcare and some support. And we don't also have the money or the support or the time or whatever to get childcare for our kid, because you're gonna need a quiet place to work from home. Like, think through the logistics of that when you have that conversation. And then be honest with your mom in that same conversation. Mom, I have to tell you, like, almost like you're a person who just came to faith, except you just came to this, this new freedom in, in finance, right?

Which is me and my wife have dedicated the last year and a half of our life to not owing anybody any money. 'Cause we wanna be free. We've paid off $100 grand. If you, um, and you could tell her, I'm worried about your future 'cause you don't have any retirement that I know of. And if you want some skills or some tools, the ones that we're using, I would love to sit down and walk you through what we've done to change our life. And what you're doing there is you're giving her permission as a 55-year-old to, which can be hard, right? It can be hard to say, I don't know how to do a thing. And it can feel extra hard to look at your kid and say, I don't know, don't know how to do a thing, but you're doing it well. Will you teach me? There's just a, there's a, there's a, I don't wanna say it's a shame barrier, but you get what I'm saying? It just feels weird. It'd be if one of your officers called you in and was like, Hey, you have a great marriage. Can you teach me how to talk to my wife?

Like, that would be an awkward thing, right? So there's a, like a reverse power differential here. So you bridging it and saying, I got a new toolkit a year ago and these tools are helping us build something amazing. I would love to share these tools with you if you're interested. And then beyond that, you can't force her to wanna be a part of it. All you and your wife can do is say, as for our house, here's the values of our house. And one other thing I would add, is pre-plan a separation conversation. And what I mean by that is have a conversation for what if this goes sideways? Because I don't wanna lose my mom and I don't wanna lose a roommate and at the same time lose a mom. If we get to a place where it's not working out or it's uncomfortable, or your job is, is not jiving with our kids' nap schedule, like let's have a conversation. For how do we stay connected and have a great relationship and not be roommates down the road if we get there.

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See store for details. Isaac is up next in Little Rock, Arkansas. What's going on, Isaac? How can we help today?

Hi, Dr. John. Hi, George. This is really awesome. I guess I never really figured to talk to you guys. Um, so my question is, is I'm an automotive technician, um, right now I make around $100,000 projected for this year.

Wow.

Um, and I'm looking into moving into the like journeyman electrician field. Field. Um, but my hangup is, is I have a wife and two younger children. Uh, my wife and I are 22 and 23, and we have an almost 4-year-old and a 1-year-old.

Why do you want to change?

Um, mostly just, I guess it's very hot here in Arkansas, so we don't have AC in the shop, so it definitely makes it miserable, I guess, working in a shop. Um, and also it I want to move into a career field that can project more, and I would love to be a business owner one of these days. And starting a business in the automotive field is definitely more difficult, I feel like, than starting your own independent business as an electrician.

Do you feel like that, or do you know that?

Um, I know that. I have a lot of family members that are business owners. We have a family member, family member who has a friend who owns his own electrician company, who he started with his own van and just kind of went over, went from house to house helping people out until he grew it into like a multimillion dollar business. Um, and I know there's just a lot of overhead with opening an automotive shop with tools, equipment, and all that.

So when somebody tells, like, here's what I want to direct you towards, being fully honest about why you want to make this change. And here's what I mean. Um, I'm in, I'm in Tennessee and I grew up in Texas. You're in Arkansas. So we're in the same region-ish, right? The guys who just came in and replaced my air conditioning unit, the HVAC guys, and then the electricians, it was probably 120 degrees up in my attic, maybe 130.

Yeah.

Like, and if you wanna be an electrician and work out on all those data centers that are popping up all over Texas and Arkansas, um, it is hot outside. And when it's not hot outside, you get those wicked cold, burn cold winters.

Right.

All that to say is, If you're gonna be in the trades, you're probably going to deal with extremes, um, when it comes to weather, right? So trying to escape automotive because it's too hot, that, that's a guy who wants to get a new job and is trying to scratch and claw for reasons instead of just saying, what I really wanna do is be a business owner. I wanna make a jillion dollars and I wanna have a bunch of employees and help them take care of their families. And here's a path towards that. And that path is gonna require sacrifice. Otherwise, otherwise you're gonna get into another job and it's gonna be hot there. And you're gonna get into another job and it's gonna be hot there.

Yeah. In that case, you'd go get a desk job in a corporate building.

Yeah.

If you really wanted to get out of the elements.

Right.

And so the other thing I'd recommend you do is don't talk to a, a, a relative who's got a friend. See if you can go have coffee with the guy who actually owns that business. Cuz he'll do two things. He'll tell you about the beauty of it and the fun of it. And he'll also So he'll take all the shine off of it and say, here's the scratch and claw you're signing up for. Because building a multimillion dollar electrician business is a freaking grind.

And then the question is, what about all these other dudes who run their own electrician business who aren't making multiple millions? That's also a possibility. So we all, you know, don't get too starry-eyed of the grass is greener on the other side. But I love the idea if you're really into becoming an electrician. That's a great goal to have long-term, but it sounds like you guys have some priorities right now of paying off some debt.

Yeah, so I've always been driven to the electrical field of like the trades and stuff like that. I went into automotive mostly just because that's kind of what I learned, but my wife and I have $4,200 that we owe to my parents for help purchasing our house, and we owe around $11,000 in credit card debt, but I negotiated one of those down to $3,000 from $6,000. $1,000 for settlement. Um, so yeah, and then I guess the biggest hangup is, uh, we moved to Arkansas and we have no family or no friends here at all. Um, when we moved here, so we have not a great community outside of maybe our church community and our house is around $2,500 just for the mortgage alone a month. So it's definitely a huge chunk over that 25%.

What's your actual take-home pay?

Um, my take-home pay is— it varies because I'm on billed hours, so anywhere I make around $1,600 to $1,900 a week.

Okay, so we're talking $6,400 a month on a bad month?

Yeah, I would say so.

So it's about 40% of your take-home pay, maybe a little less if you have a good month. Uh, so that's— and that's not great. You need to be making more money. And I think going the electrician route, there's going to be a long period of time where you're going to get a pay cut.

Yeah, it, it, it looks around— I'll be taking half the pay until I get out of that apprenticeship field, and then I'll go up to like $100,000 again, and then more from there after like 5 to 6 years of being—

is that 4 years? Is that 5 years? How long is an apprenticeship?

Uh, 4 to 5 years in Arkansas.

But you wouldn't want to live in Arkansas and you need to sell your house because you couldn't afford to keep your house with a 50% pay cut and y'all would be around family.

Yeah, that's my hangup. Well, I guess it would be more of just like my wife being at home with kids because she's a stay-at-home mom. So it's whether or not she would be able to handle being at home while I'm going to night classes and doing the apprenticeship and everything too.

What does she say about it when you talk to her about it?

Um, she really wants me to, you know, to pursue that, but it's, it's very difficult right now because we want to get all of our debt paid off and save up to like the 6 months before we even think about moving a career or anything.

I think that's super, super wise.

Very wise. And you— the good news is you are so young, you've got so much time, and I don't want you to ever feel like, man, I don't have time. Like, I'm, I'm 22, I want to do this by the time I'm 25. It's okay if you become an electrician at You still got a good 30-year career ahead of you running a business.

Especially if you have $200,000 in the bank that y'all can draw down while you're taking this big pay cut.

Yeah. Can you imagine if you had a, a buffer and cushion to where you could do this with peace instead of desperation?

And you, and like George said, man, we sound like two old men. I get that. But my first year of marriage, we, my wife and I were in a different city. And after 18 months I realized, oh, my wife is completely alone here with no community. And so we moved. And I had to start a new career at a new gig. It ended up being the greatest thing that ever happened to me. And then one time we bought a house and I realized, we realized this is too much house for us. And we sold it within 11 months. I had to take a check to closing because I still hadn't, uh, covered the realtor fees with appreciation on the house. All here's what I'm telling you, that it's okay to recognize we made a mistake or we got in over our heads, or we need to make a huge change so that when we're 30, when we're 40, when we're 50, we can have the life we want. What's not a good idea is to, A, just jump ship with nothing. So you're wise to get your debts paid off and get a big chunk of cash in the bank.

And you're also wise to not chase sunk cost. Well, we already moved here, so let's just keep dumping money in this house we can't afford. And we already did this. So like, pull the ripcord if you need to pull the ripcord, man. Move back to where you're around family if you can get an apprenticeship there.

And I would just rent there. Yeah. And rent, sell your house, rent for a while until you know, here's my stable income as an electrician. And then you can do this whole thing over with a whole lot of peace. Right now, you guys aren't in too much of a lurch. You can pay this debt off pretty quick if you get after it. How long would it take you to pay it off making $100,000?

Right now, with the settlement I agreed on, it's going to be $500 a month for 6 months. So January is what I tried to urge in that. We're on Baby Step 2, so I have $1,000 saved up right now, and I have $500 in the account for the first payment. Um, so you have other debts too.

What do you owe?

Mom and Dad?

Yeah, you owe $14,000 total, or it's down to $6,000, so you have $10,000 total. How quick do you can pay off $10,000?

Um, I would hope within the next year.

That's a long time. You make $100,000.

Yeah, it's, it's a lot of lifestyle living that I'm trying to go through our budget and try and figure out where our money's going because I feel like it's kind of just disappearing and we're not really watching it as wisely as we should be.

Yeah, you don't need— like, it's not a 6-month, like, spelunking expedition. It's a, it's a long evening with you and your spouse, you and your wife sitting down in front of a budget. Like, and you don't need Claude to dig through the—

like, and we know 40% is the mortgage, so now there's only 60% to figure out.

Yeah, and now we're sitting down and just doing the math.

Diapers, formula, gas, food.

We have to buy organic foods. We can't go out to eat for a while because we owe money, right? So it's, it's not this big long PhD thesis. It's just sitting down and saying, here's how much money we have, here's where we can contract our expenses, and let's get on a budget together.

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All right, today's question comes from Todd in Nevada. Todd writes, I've recently become aware of betting sites like Caolshi and Polymarket where you can wager on the outcome of real-world events such as elections, celebrity engagements, sports, etc. What is the Ramsey stance on this type of betting?

Oh boy, the Ramsey stance on gambling via dopamine-based apps that involve stealing your money. Um, I give you my take on it. I don't know the, the big Ramsey stances. Is if you're going to do anything like this, uh, ideally don't, but if you are going to do it, do it with fun money after you're already out of debt, investing for the future. And this is basically your— you like a fun hobby.

Have you spent— Dave says if you can light that money on fire in the middle of your living room and it doesn't— it might break your heart, but it doesn't change the trajectory of your month or your year or your life, then it's like any other expense. I don't need another guitar, but I kind of want one. Um, if I wanna take that guitar money and go to Vegas and sit at a blackjack table, it's, it's an experience. It's fun. But, um, so that's kind of the, the overall stance on any sort of these kind of things. I, I do not have an app on my phone. I don't participate in these things, especially like Polymarket, because these things have become so rigged. Was it Trump announced the other day he's gonna start selling early access to his Truth Social —so you can know what he's about to post and begin to—

like, I just— Did you hear the story about the White House teleprompter operator? No. He knew exactly what was going to be in Trump's speeches. And so he started betting and he made over $100 grand.

Yeah. So he knew what was going to be in the speech. There's too many. The thing about betting on a sports event ideally is there's performance-enhancing drug testing. And of course, we know I'm an Astros fan. We know sports teams cheat. Right. But there's— there's supposed to be built-in restrictions so that the outcome is what the outcome is. When it comes to Polymarket stuff, man, it's so— it— there's too many actors in too many different places that can influence or not have early insights, et cetera. So dude, I, I stay away from all that stuff. I just don't, I just don't participate. Yeah.

I, here's my honest, and I'm pretty brutal on this. I think it's a financial cancer on society. This entire thing of, it's really a byproduct of what has been coined financial nihilism, which is people don't believe in the system anymore. More to such a point where they want to go to the riskiest investment possible, riskiest bets possible, because they don't feel like they can retire the traditional way like their parents did. So that's what we're seeing is a movement of young people flock towards these sports betting apps, whatever it is, whether it's Caution, Polymarket, FanDuel, BetMGM. They're just trying to get a little bit of dopamine, and the chance of getting rich is what's keeping them coming back.

And I I would, that's an interesting take, man. I haven't heard the phrase financial nihilism, although I hear the sentiment all the time, right? Just, they feel like the game is rigged. It is rigged and people are frustrated. So just YOLO it. I get it.

If I got $50, why invest it into the stock market? I'd rather just go on Polymarket, have a good time.

Well, the, my, not my psychological take, 'cause there's a lot of, some of the smartest people neuroscientists and psychological, uh, social scientists who participate in helping making some of these apps as, as addictive as possible, as hard to get off of, all that.

So there's— as difficult to make money on as possible.

There's a science behind all this. But I also think there's a broader concern, a broader cancer in our culture, if you will, and that is we don't do anything as a culture. People go home and they just stay there. And so there's a sense of be every— we have a culture of zombies who are dead in their own skin. And the most exciting thing happens on a TV show. That's the most exciting thing in their life. The most exciting thing that could happen is somebody's sports team. Think about that. We're going to pay some other guys to wear the jersey of the town I'm in and y'all play the game for me and y'all decide whether I have a good week or or not. I love sports, but it's this outsourcing of you go play for me instead of going down the street to a local softball league and getting invested and being overdramatic about you're cheating and this guy was right. So there's something about backing up and saying, if feeling alive to you is happening in the, in the darkness of your own living room, in the glow of a screen, that is a huge signal that you have created a life for yourself.

That has no life to it. And so turning the lights off in your own— turning the lights on in your own living room and asking, what brings me life? Like, what brings me excitement? It's why you and I went down the street a couple of years ago and we're like, let's just go do a standup comedy night. We were so nervous backstage. We were scared. We worked on our stuff, but it brought life to me. I talked about it for days afterwards. I was like, ah, I should have done this. It brought life to me. We made friends doing it. We were in the green room with other guys who were trying, other men and women who were trying to do this too. It's the reason we go hiking. It's the reason you go fishing. It's the reason why I love hunting. What, where are things in my life where I can inject life into them and get excited about real things in the real world and not be captured by this other thing? It's like a hack to inject life into your lifeless body here. And man, if you, if you're finding that you have, this is the only thing that brings you joy in life, man, that is a— you've built a terrible life.

So yeah, it's a ringing bell in your life to back up and say, dude, you get one ride on this one. You get one, one ride.

I can tell a lot about how your life is going based on your iPhone home screen. There you go. So if you've got all the betting apps on there, I'm like, man, this guy is, he's struggling.

Yeah. Go, go join a bowling league. Go join a local soccer. RIP Ken Coleman. Go join a pickleball league, for God's sake.

Ken didn't die, by the way. He's just not our coworker anymore.

I'm really sad. His empty desk is between me and George, and I still get sad sometimes. But like, go create a life worth living is what I want to say.

Beautifully said. Hope that answered your question, Todd in Nevada. Nevada, sorry. Don't come at me, guys. All right, Marianne's in Lansing, Michigan, up next. Marianne, I apologize for our rambling.

Thank you for taking my call. I appreciate it. Um, I am going to be getting married at the end of August this year, and I'm calling just to make sure that I'm making a wise choice. Um, we're going back and forth deciding if we need to rent, uh, versus buy. Now, um, renting for about 6 months after we get married will give us more flexibility to choose the right house. Um, my future husband wants to, uh, initially buy after we get married because he wants to see about building equity in a home. Um, and I just want to, uh, see if renting is a possibility just to make sure that we are in the right area, uh, before we buy a house.

Okay. Well, here, here's the checklist before you buy a home, especially as you're gonna get married. Number 1, we always recommend renting for a while cuz you're already combining your lives. There's already a lot of pressure there and newness. We don't need to add the stress of home ownership onto that. So renting for a while is great. Number 2, are you guys completely debt-free? Um, we—

he just has a car payment. He has just $2,000 left on it.

Okay. How much do you guys have in savings?

Um, savings total would be $80,000. Okay. And what's that earmarked for?

I'm not sure. Okay.

I'm just shocked he still has his car payment. Is it your $80,000 or it's his $80,000? $100,000? It's mine.

Okay. And he has nothing?

No, he has— he has something. I have to see the specific amount. It— he last time was $50,000.

Why does he have a car payment still?

He's— he was trying to pay it off slowly. He just got it. It. So that's why.

OK, I think you guys need some financial alignment. That's another huge piece of this whole puzzle. Before you guys get married, we need to make sure that our values are the same, because otherwise you're going to have some fun newlywed financial arguments. And they're not fun. This is just like a little surface-level one. Should we rent or should we buy right now? But you guys need to decide, are we going to be people who live consumer debt-free, who have an emergency fund, who have a strong down payment? Because this whole thing of, I'm going to build equity with 0% down and most of the money is going toward the lender on the front half of the loan. So renting is not a sin. It's not throwing away money. You're buying yourself patience until you can get to a place where you have some financial stability and do this out of a place of strength, not just out of, well, I want to build equity. And I was told once you're married, you should own a home.

You win, Maryann. Y'all should rent for a while.

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We wish we could get to every call and question here on the show. So if you have a money question and you want an answer for your situation, we've got you. Head over to our website and use Ask Ramsey. It's our free AI tool that's built and trained on proven Ramsey principles. You'll get an answer the same way we would answer it here right on the show. Probably even better if we're going to be honest. So ask your question today at ramseysolutions.com or click the link in the description if you're listening on podcast or YouTube. Ben is in Boston up next. Ben, welcome to the show.

Hey guys, thank you so much for having me. I've listened to you all for, for so long, so it's pretty surreal to be, uh, to be talking with you all right here. Well, thank you.

It's an honor for us as well.

How can we help today? So I wanted to ask, right now I'm lucky, I'm really blessed to make a very good salary. Also have a very high cost of living in the Boston area. Boston's not cheap, pretty high expenses. We also have two small kids, one on And while I've listened to you all for a while, pretty recently became serious about, you know what, I want to pay off my debts. I want to really, as you all say, start the process of living like no one else. Um, but we, so right now I do have enough funds to pay off my debts other than my mortgage. Something I've been excited about. The issue is I've heard pretty credibly that my company where I work is going to be downsizing soon, that it seems like the next 3, 4, maybe up to 6 months, I'm going to be losing my job. And from my research, I do think my next job will involve a real substantial pay cut, uh, most likely. So I'm trying to—

what kind of field are you in?

I'm in the legal field. Okay.

Are you, are you licensed in the legal field? Are you legal adjacent?

I am, I'm an attorney and I work in a pretty specialized area, a class action area. Sure. And I've been at my, in my current role for going on 10 years now. I'm going to work my way up there, become pretty senior. And it also, I've worked my way up to kind of know what's around the corner, which does seem like we're going to be. Yeah, it does seem like it's a very best case scenario. It's going to be a big pay cut. I mean, right now I'm making about $375,000 a year. All in. My wife is making about $65,000. Uh, from my research, unless if I really want to change things up, different field of law, completely different work-life balance, everything else, it seems like we'll probably be going down to like $175,000, $200,000, which is still, I mean, don't get me wrong. It's a, you know, on paper it's a good salary. We have high expenses. It's a different lifestyle. It's a different lifestyle.

Yeah. You know, you don't have to apologize, but it's a 50% pay cut overall.

So that's a big deal. Yeah. So how much debt do you have?

In terms of how much debt, and this is all based on savings, I could pay this off now, but it wouldn't leave me with much. I've got about $85,000 in student loans. My wife has maybe $30,000, $35,000 in student loans. Have $20,000 on a no-interest credit card, about $10,000 to $15,000 on my car. And there's maybe a few other little ones, but I'm I mean, all on them savings right now, I've got like $180,000 in savings with my wife. We have $180,000 in savings. And what was that earmarked for? It was, at first it was an emergency fund. It kind of grew. I was going to invest it a little more. We do have high expenses. We have 2 kids, another on the way. And so I mean, daycare alone is like right now in the $4,000 a month range, which is pretty typical.

For 1 child?

For, for, for 2 kids.

I was like, "Oof, man. I'm from Boston. I'm shocked by that." OK, so $4,000 a month, $2,000 for each kid makes more sense. If you paid off all the debt, would you have like $30,000 left in the emergency fund?

I would. And we do have some investments as well. Somewhere around the $100,000 range in investments. If we paid it all off, we'd have some money. We would not be broke. I wouldn't be worried about where we're going to eat the next month. But with this pay cut and such, part of me is like, "Maybe I should take a pause, wait to see where things shake out, when they shake out." Maybe I'm wrong about my research and what the options are here.

Well, my fear is it's always going to be looming, so you'll never pay off the debt. And if you do, now you're stuck with all these debts and the layoff. So if I'm in your shoes, the best thing you could do is pay off all the debt today. You're left with $30 grand, and then just stack money with all those freed up payments for the next 3 to 6 months. Now we're back to, you know, $60 to $80 to $100 grand with no debt. That puts you in a way better situation. 'Cause you're, you're trading an unknown future.

I'm gonna have a pile of cash to cover all of these payments and the expensive lifestyle that we have for, I'm gonna have no payments. So if, if my house gets hit, I'm gonna, I'm not gonna owe anybody anything. Right. And worst, and, and worst case scenario, my wife has to pause her job and stay at home with the kids so we can, cuz she's making 60, but after taxes and after, you know, driving back and forth and parking and all that. Actually, we, we about net out from the $4,000. We like, y'all have to make some significant, ask some bigger lifestyle questions. But I like the idea of heading into a storm knowing every, everything is shored up, not having a whole bunch of shovels to dig out all the gravel if, if a storm comes. And the other thing I haven't heard you talk about, dude, if, if, if I got word heard, George and I are, I mean, we're, we're brought into a lot of leadership conversations here. If I got word that I'm gonna be out of a job, that Ramsey decided we're gonna close down shows in 6 months, you better believe, man, I'm gonna be all hitting the street, talking to everyone I know, trying to ask, hey, what does your studio do?

What does your agency do? Do y'all have this? Like, I, I would want to take agency into my own hands as much as possible, not just sit and hope it all happens. If you're making $375,000 You might be a partner and you may be a part of equity split and all that, but you know what else you are? You're a real good lawyer.

Yeah. No, I appreciate that. And I think that all makes sense to me. I will say when I said my debt, I did not include my mortgage. We, we still have a, uh, a good amount of money left on the mortgage. And obviously, uh, right now we're not thinking of selling the house or anything like that. Hopefully it doesn't come to that. But I do agree. I mean, if we can get rid of all the shovels, but the mortgage, it, it simplifies things for sure. And I'm, I thought that's what you all would say, but I wanted to make sure.

The question is, are you going to do it, Ben? People want to know. What's he going to do after this call? Have we been convincing enough in 5 minutes to make you make this 6-figure move?

I honestly, I was leaning that way, but then I was just a little worried, you know, and I should talk to some people from Ramsey.

That's a classic lawyer answer. He didn't even answer. It was a yes or no question, Your Honor.

You didn't answer it and you made me feel good. That means you're a great lawyer.

We're gonna, we're gonna, we're gonna, we're gonna pay it off. We're gonna pay it off. Yeah.

Boom. Okay. So like, I wanna paint you a picture. Okay, Ben, you ready? Let's do it. This time tomorrow, except for your mortgage, you and your wife owe nobody anything in the world and you have $30,000 in cash, right? Yeah. And you make $375,000 together with your wife, you'll make a little over $400K a year. I mean, $400,000 grand. You and her shake hands and say, for the next 3 months, 6 months, we are going to contract our spending as much as possible. We're going to find joy in each other. She, she's pregnant also, right?

Is that what you said? Yeah, we've got another one coming.

Okay, so we're gonna circle the wagons on our house. We're gonna catch up on some shows. We're gonna go on walks in these super hot but sometimes super cool Boston winters. Um, you're gonna start spending time with the kids at a park. Y'all are going to just circle the wagons on your spending for a season, and you're gonna stack cash maniacally. So if you can bring—

you guys bring home like $25K a month right now?

If after we take out taxes, the 401K contribution, stuff like that, it's a little bit under that, but yeah, not far from that.

Okay, so let's say you could live on $10K even with daycare and the mortgage without any debt payments. Could you live on $10K?

It would be a little bit higher than that, honestly. If there's no daycare, sure, but if there is, it would be a little higher than that.

You take half of your take-home pay and just shove it in savings for the next 6 months. Yep.

And is it pretty— if you do get laid off, are you going to get some sort of severance?

I— you usually the answer is yes, but I think things are pretty unclear, so I'm not— I don't want to count on that just in case.

So I, I'm just trying to paint you a, a positive future here that you wake up in 6 months, um, so you wake up January 1st of '27, you have $110,000 or $150,000 in the bank, you don't owe anybody anything except for your house. You have a new third kid. They're healthy, they're awesome. And your boss calls you in and says, sorry, man, you kind of heard the words, but you're on the list. And so here's X number of dollars. Here's 3 months severance for you to go, whatever. And you've already put in the work. You got back in the associations. You started going to the, to the monthly, um, the, the, the Boston Legal Association meetings. You started shaking you started calling old friends from law school, and you have a new job already lined up, brother. Like, I'm talking a complete 180 from the world y'all are living, and you are free, free, free. That to me is a positive vision I would really latch on to.

Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell here with Dr. John Delony. We're taking your calls at 888-825-5225. Shion is in Dallas, Texas. What's going on, Shion?

Um, I'm good. How about you?

How you guys doing? Great. What's your question?

Oh, so I have, um, around $600,000 worth of Pokémon cards. I buy and sell them. I have $300,000 in my personal collection. I don't know if I should sell all of them or if I should like hold on to them as viable investments.

Wow. How old are you? I'm 18. How long you been doing this? I think since I was like So you are buying new packs, or are you buying cards and flipping them and holding on to them and they go up in value? How did this all work out?

Yeah, I was buying cards, flipping them, holding them.

Wow. So how much have you spent to get here?

Probably around like $150,000, $160,000. Wow. Are you working?

Where'd you come up with this money?

What are you talking about, George? This is work. You're— I mean, where'd you get $150,000?

No, it was slow when I started, right? So now I'm making like $60,000 a month buying and selling the cards.

Wow, that is why you said you have $300,000 in your personal collection, but you've got $600,000 holding. Tell me about the other $300,000.

Um, so I go to card shows and I have a table and I sell the cards to other people, and that's how you could—

you're saying you could make $300 grand if you offloaded all of the at the card shows?

I could make, for my personal collection, if I was to sell it all, I could make like $280,000.

So when you say personal, what's the other ones?

The other ones are the ones I'm already selling.

Oh, so you're already selling half of them, essentially. Yeah. And you don't want to sell the other half?

No, but I don't know if it makes sense because I'm in college right now.

So when the smoke clears on all of this, if you sold your personal collection today, you called one of your broker buddies and they just wrote you a check for $280 grand— let's do $300 for easy math— plus what you already have contracted to sell, you as an 18-year-old, if you did all of this, this time next week— and of course, dude, I don't know how the trade goes and how they move money around, but let's just pretend it was, it was cut and dry— this time next week, how much money would you have in your checking account?

Exactly, like around like $600,000.

$600,000 at 18? Yeah. Wow. Well, what's your, what's your sort of end goal here? Like, what do you want to be doing at 23?

I want to eventually start my own business.

Doing what? In the card world or something else? Yeah. So this is it, like, you are— you're obsessive about this. This is your passion. If you could snap your fingers, you'd be full-time trading cards? Yes. Okay, well, is it a viable investment? No, this is speculative. And so you could see, let's say, you know, obviously Pokémon is holding strong right now, but we don't know what 2 years from from now where things will be, if there'll be a 50% crash overnight one day. We just don't know. Yeah. Where that's not gonna happen in the stock market. There's a true sort of speculative supply-demand issue right now with Pokémon cards that does not exist in the stock market.

Or if there was a major stock market correction and I've gotta take my money to keep my property, my home afloat, I'm gonna not use disposable income or borrowed income. Or if there's a contraction, a credit contraction like happened in '08 and '09, I'm not gonna borrow money to buy cards on speculative value, right? But if this is what you want to do, I, I don't know, man. You got $600,000, you're an 18-year-old. Why are you in college if this is what you want to do? You're clearly good at this, is what I'm saying.

It's because my parents wanted me to go to college, and I have like practically a full ride right now. Okay, what are you studying in college? I'm doing business. Okay. The, the reason I made this call is because I think my whole portfolio of cards went down 20% in the past 2 weeks. So it got me like a little nervous to see what I should do in this situation.

Well, and that's why, like, if let's take cards off the table, let's say you're a plumber, being a plumber and owning a plumbing business is a great job. I would not buy plumbing tools for investing purposes. I wouldn't, I wouldn't buy a bunch of tools and put 'em in my closet and say, I wanna sell these one day so I can pay for my medical care when I'm 70. And so when George says this isn't a good retirement vehicle, that's exactly right. Cuz it's too speculative. At the end of the day, I have to sell a card to somebody who will give me an exchange of value for this thing that on its face, it's, it's a, it's a piece of cardboard. It has no value in and of itself other than what you'll pay me for it versus Versus oil, I can put into a million different products, right?

So this makes it even more risky than a single stock, 'cause at least that's a company that's producing things, that's creating revenue, that has shareholders involved. So that's a very different ballgame than what you're talking about, which is more alike to crypto than anything else. Now it's physical, so there's a little more, you can actually see it, hang onto it, and people are, like you're saying, there's entire conventions around this now. So I'm not saying that a year from now it's gonna go down to $0. What I am saying is at $18, You got enough things to be anxious about. So if I'm you, I'm gonna offload this, invest all of that money, and I just did the math for you. $600 grand, you just let it ride for 20 years, never add another dime, put it into an index fund, you could have $5 million sitting in there by 38 years old. Oh. Without ever losing sleep over it. And being as good as you are, could you not restart this game from scratch? Yeah. If I gave you $5 grand and said, hey, go turn this into a Pokémon Empire, A year or two from now, could you have $100 grand?

Probably more. Take me up on the challenge.

And, and here, here's two things I want you to think through. Number one, I've got, I, I was an obsessive baseball card collector as a kid. I, I don't know where most of them are at this point. Um, but I kept several cuz, and you know what the value of those cards are? I have no idea. They mean something to me, right? I have memories attached to 'em. Nolan Ryan was one of my favorites. Like, so I've got some of those cards. So if you've got some of the cards in your personal collection, that mean something to you, great. Keep those, man. That's awesome. Um, and you have, you started this thing. What did you start this thing when you were 10, 11, 12? You were started this speculative business in what may look back on history as one of the most extraordinary wealth runs of human history. And so the reason I'm telling you that is part of being a business owner is riding out tough seasons. And so there are, are months when my books sell great and there's months when my books don't sell great. That's part of being an author. And so I have to look at a, at a long time horizon, especially when it comes to valuables and collectibles.

They're gonna go up and down over time. And if gas prices go to $4 or $5 a gallon, then people are gonna have less disposable income to buy cards with. Right? So it's part of that is cuz you're 18 and you're starting this business and now you're starting to be like, oh, I'm, I'm playing I'm playing with grown-up money. This is real money, dude. And I don't have the, I don't have the long-term track record of being a business owner of dealing with what happens when 20% of my clients say, hey, we have other expenses cuz there's a recession or there's, I got other expenses that just popped up. And so part of this is as a business owner is you gotta be comfortable with the, the ups and downs, which is why retained earnings are important and keeping cash is important, all that. But like as a business, you clearly know what you're doing. And there's card dealers and collectible dealers all over the planet. That's awesome. But yeah, I would not do this for a retirement vehicle.

Collectibles, no matter what it is— cards, coins, sneakers— it can be fun, but it is not a substitute for real investments. Correct. Where there's, there's no cash flow, there's no diversification, and that's leaving you exposed. And you're starting to feel a little bit of that anxiety. And for that reason, keep it up as a hobby, keep making money while you can, but I would not have so much stock in 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/events or click the link in the show notes.

Katie is in Idaho Falls up next. Katie, welcome to The Ramsey Show. Hi. Hey, how can John and I help?

So I'm kind of in this spot because my husband and I have been looking for for about a year and a half to buy a home, but we've been renting for the last 5 years, and we— our rent has went from when we started, when we first got married, it was $1,200, and now we're sitting at $1,500, um, and they're expected to raise the rent to $1,900. And so I already know based on our income that we can't afford $1,900 a month. And we've already cut like practically everything that we can cut. And so we found a mobile home for sale and they want $120,000 for it. And I just don't know if that's a good idea or not because every house that we've looked into, an investor's either bought it right before we've gone into contract or, you know, we only got pre-approved for $200,000, and that's kind of— we don't want to spend $200,000 because then we're shooting ourselves in the foot because, you know, that means, you know, you're paying like, you know, $1,900 or $2,000 a month, and we can't afford that.

What do you guys make a month?

Um, we make about roughly like $2,500.

What do y'all do for a living?

We're in the tree industry. Tell me about it. So we do line clearing and, um, my husband works a long, long hours and then I stay home and kind of take care of all the, all the things that need to be taken care of at home for like, just like the finances and the home kind of stuff.

So collectively, both of you working in this business, you guys make about $30,000 a year. A year, and he's working 50, 60-hour weeks?

So he works like— he works the 4/10 schedule with overtime as well. So sometimes it's 50 hours and sometimes it's 48 hours a week. And then we do a lot of side jobs because we've been trying really hard to get our business going, but we've been having a hard time because because in Idaho there is like so many tree companies, and so everybody all goes and bids out together, and so it makes it difficult.

Let me say this, like, I want you to hear me say this stinks because your husband is a guy who's working his butt off, you're working your butt off, and y'all are really working hard towards a thing to build a thing, this business. And so I want you to hear me say that stinks because The story that you and I were told growing up is if you find the thing that you like to do and you find the thing that you're good at and you work really hard at it, the rest of your life will just work out. Yep. And so you and I got a bad story. Okay. Yep. And so hear me say, I, I, I wanna applaud your husband's hustle. If he was here, I'd give him a hug, man. Cuz I, I love to hear young men who are out there crushing it and trying and working, not scared of hard work that will do anything, any type time, working on weekends. I love that. And I love to hear a supportive spouse who's trying to co-build this business with them. I love it.

The reality I'll have in front of you— yeah, 7 days a week. Yeah, yeah.

Like, hold on, you know, the reality y'all have in front of you is you could both go get a job at Starbucks and y'all be making more money per year. And so the, the dream y'all have is a good dream, it's just not working out financially. You'll have a math problem. And so at some point you'll have to decide, we're gonna be folks who love this, the idea of this business. We like being with 500 other tree companies, all competing, all driving the cost of tree services down into the, into the basement. We love that. And we don't, there's really not a way for us to distinguish ourselves. Um, or, and we're, so that means we're gonna, we love this enough. Like if you're a songwriter or you're a standup comic, we love this thing so much that we're willing to have this other life, which is we have to change apartments every 6 months, 'cause when the rent goes up, we can't afford it. We gotta go somewhere else. Or y'all have to look in the mirror and say, we gave it our best shot. We are hard workers. Let's take our work ethic and our dreams and our desires and put 'em towards in another direction that's gonna reward us more financially.

'Cause y'all just, y'all have a math problem in front of you.

Oh yeah. So it's technically 2 incomes because he does this like Friday through Sunday, his own business.

No, I, I work for a power company, but those jobs aren't making y'all enough money.

That's still $2,500 a month total between everything.

No, like we have side stuff every now and then. Like we'll go into a job and it'll be like, like one job for 2 hours, but every now and then is not consistent income.

So we can't count that. We need stable, consistent income. So the problem truly is not rent. Yes, it stinks that they're moving the rents. The problem is your income hasn't moved in 5 years and you guys are on the poverty level.

But our income has. We started, when we first started this job, we were making, we were making about $13 an hour and now we're at $21 an hour.

I know, but you're not hearing what we're saying, Katie. Like when you see all the progress and how you've moved, that's awesome. You're still running into a math problem every month. And inflation over the last 5 years.

But we're not, but we're not in debt.

That's, that's great. That's great. That's great.

But y'all are about to be, not have a place to live because y'all can't afford $1,900 a month rent.

And if you go buy a manufactured home, here's what happens. The loan payment stays the same while the value of that home starts tanking, which means you're probably underwater on this thing within 6 months trying to sell it to somebody who probably doesn't exist. You're gonna, 'cause they're just gonna go out and buy a new home if they want one.

You're gonna have $120,000 payment on something worth $60,000.

Yeah, we— my question is like, because we keep looking at this mobile home, we've been looking at it for a while, and then, um, there was another house that had land with it and we were really excited about it, um, and it was only like— it was $175,000. And when we went and we met with like the officer, like the lender, whatever you want to call it, he had said, "Oh, you get pre-approved for $200,000, but you don't have to use it all." And I was like, "Oh, okay." Because I didn't really understand all that stuff. So when I asked him, I was like, "So what's the better thing you could do?" And then looking into the mobile home, it was like, "Oh, well, that's only $1,025, but you get a whole acre of land." And I I'm just telling you, please don't buy a mobile home.

It would be like buying a truck with a payment of $1,000 a month thinking it was a good idea.

And the truck will go down in value over time.

And you're gonna have a real hard time selling it. And you guys can't afford a $150,000 home. How much do you have in savings?

I have about, like, so between all of our savings, we have about $17,000. Great.

So we're gonna call that your emergency fund.

Well, I also have an emergency fund of $3,000.

$3,000? Yeah. Okay, you guys need way more than that for your emergency fund. At least $10,000 minimum is your emergency fund. If you want to beyond that start saving for the down payment, that's great. But like you said in the beginning, hey, we're trying to cut, we can't cut any further. You're right. The other lever we need to start pulling now is making more, because you can't spend much less than you are. And that's where you guys need to reevaluate this business, reevaluate the jobs, reevaluate where you live. Live. If there's not a lot keeping you here, can you move to an area that is cheaper to live with a better job that is more stable?

And, and here's the reality. Your husband is one chainsaw swing away from hurting his back and being out for 3 months. Like, there's a, there's a risk reward to these, to these jobs. And y'all need a big emergency fund. He is one stepping off sideways off the back of a, of a log and twisting his ankle and he can't go up for 3 weeks and y'all lose all that income. Like, so you're— it's a very precarious— and so I hope you hear me, and George, this is serious. Y'all are in a precarious situation right here. So that $20 grand, that's your emergency fund. Never touch that.

And now y'all are saving up, um, and even if you guys both were making $20 an hour, 40 hours a week, that's over $80 grand a year. That's a huge pay raise if you guys can separate this business out and go, we're both going to go our separate ways and get our own job jobs making over $20 an hour. That would change your life and give you the margin to start stacking cash to buy a traditional single-family home versus a manufactured home. And that's the problem— a manufactured home rarely goes up in value. In fact, it doesn't. The land may go up in value, which makes you think this was a good deal, but you're still stuck underwater on this thing. So please, please, please, we're begging you not to do this. It is not the solution.

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Buying or selling your home is high stakes because one One bad deal could cost you tens of thousands of dollars. You don't want to overpay for your next house or sell your current home for less than it's worth. And that's why Ramsey Trusted connects you with vetted real estate agents who have the experience to guide you step by step to make smart decisions, not expensive mistakes. Connecting is easy. Just compare agent profiles, interview your top choices, and pick the right one for you. You can find a local Ramsey Trusted agent for free at ramseysolutions.com/agent, or click the link in the description if you're listening on YouTube. YouTube, or podcast. Robin is in Fort Worth, Texas, up next. Robin, welcome to the show!

Thank you! Hi, John! Hi, George! Thank you for having me! Absolutely! My husband is 55. His name is Steve. I'm 41. We just hit Baby Step 7 last year. House paid off, completely debt-free. But right after, life handed us one heck of a Murphy. Steve was diagnosed with early-onset dementia. Oh, God! I'm so sorry! Sorry. And because of our ages, we have a multi-decade timeline to protect, and I need to know how to structure our wealth so that his care costs don't completely drain our retirement before I'm ready to use it.

Wow. I—

there's a lot here. My initial answer is I don't know if it— if that's possible. Okay. Um, that's a Sheesh, that's a mess. That's a mess. I'm so sorry. Um, what's the state of your finances right now? Like, y'all hit Baby Step 7. What does that— what does that mean practically?

We are— we're like $24,000 away from being millionaires, thankfully. Um, yeah, what does that mean?

Do you have like a $700,000 house you're about to pay off, or do y'all have $600,000 in cash? Right?

Well, I will say not all of it. I mean, it's not all liquid. Our house is like $250,000. We've got retirement and stuff and it's $630,000. And you're working full-time? I'm working full-time.

And is he still working?

He is not. He's on long-term disability.

OK. And did you guys have any long-term disability insurance?

Insurance? We did. So he's actually taking home 80% of his full pay.

That's fantastic. Excellent. You did a great job there. Was that through his employer that he had that set up? Yes. Incredible. OK, so how much is that?

So he's taking home $40,000, about $41,000 a year.

OK, great. So a little under $4,000 coming in there. And then how much are you bringing home?

I'm $102,000 a year. $57,000 a year. And those numbers are gross, they're not net. OK.

Well, you guys have a great income and you're completely debt-free, which sets you up to sort of create this slush fund for anything medical that comes up, especially while he's pre-Medicare because he's got 10 years until then. Yeah. So that's really what you're trying to figure out is what does care look like. There's a lot of questions we don't know of what this progression is going to look like, what the ongoing care is. So the best thing you can do is just get as much facts as you can and then know, here's what could happen a month from now, a year from now, 2 years from now, and be socking away that money to protect yourselves to not use the emergency fund.

We have been investing about $34,000 between the two of us in my Roth 401 and IRA and his spouse's Roth IRA. Should we change our investments and just stack up money like a storm mode until we know— I mean, I don't, I don't know what the future holds. Nobody knows what the future holds.

Well, the good news is we know that the long-term disability income will be there. Yeah. And so the big question is, at what point would you have to step down or away from work in order to help care for him, or what would that look like? I would at least have that conversation so that you know, hey, 2 years from now there's a chance that he might might need more intensive care. Am I gonna do that, or do I— should I keep working and we get private care for him? That's the kind of, the kind of math you're gonna need to grapple with.

And dementia, the, the more that— I mean, it's, it's being studied all over the world right now, but the more studies that come out, dementia is, is, is now not a singular thing. It's kind of like saying somebody's got cancer and the next question is, well, what kind? So have they given you any sort of prognosis based on the type of dementia he has, other than it's early onset? It came much sooner than, than, than is, than is quote unquote normal, right? Um, do they give you any kind of prognosis for in 2 years, in 3 years, in 7 years, or is this quick? Do they give you any sort of prognosis here?

It's vascular, but because of his age, there's really no timeline. Timeline. Okay. Uh, average timeline is 5 years, but that's estimating everybody in all ages.

Right. And that might be 80. If the vast majority of that pool sample is 80 or 90-year-olds, they're gonna have other, yeah, complicating factors there. So, wow, what a mess. I, I, I like the idea, George, and tell me if I'm wrong. I like the idea, and we rarely, we don't usually say this on the show, of splitting the difference of you continuing to invest because you, you're, you're 41. You, you statistically speaking, you're not even halfway home yet, right? Mm-hmm. And so you've got to begin thinking about life after Steve, life after, um, you're able to, to make six figures. And at the same time, y'all are gonna have acute expenses that are gonna like predictably expand over time with extra care. Do you need to have a quarter-time nurse living with you or coming in during the day? Is he going to go to a care facility? Like, so there's going to be that reality where you're going to need additional cash more than you normally would, right?

Yeah. Do you know if his long-term disability is taxable income or if it's tax-free? It depends on how the premium was paid. Oh, wonderful. Okay, so that's like net income, which definitely helps the numbers here. Do you currently have a financial advisor that you guys are working with?

Um, no, not Yet.

Okay, I would definitely contact them, cuz here's what they can do is map out all of the variables that you guys have. Here are the Social Security survivor benefits that you will have additional to any retirement that you have. All of these things will give you a clear picture. Here's all the insurance options we have to help with his care. And once you map all that out, I think you guys will sleep better at night knowing that there is less variable than there were before. That's the most you can do. You guys have done such a great job preparing for a storm because you're completely debt-free with a solid income and you had the right insurances in place. So I want to let you know you are doing so much better than most people in your situation because of the hard work you both did.

And Robert, can I recommend—

how recent is this diagnosis? Uh, it's just a little over a year. I mean, the diagnosis is this month, but he's It's, it's been a year. Okay. We've been waiting for a year for it.

I would recommend you getting with a group in your local community there in Fort Worth, there in the Dallas area where you can go once a week, once every 2 weeks and sit with a group of spouses who are going through the same thing. You're gonna need people who speak your same language and y'all can just look at each other and know, you know what I mean? Um, but yeah, one of the beyond the finances, What I want you to do is to— this is gonna sound nutty, but you can only provide care for him with what you have. And so it's gonna sound counterintuitive, but I want you to be in service to yourself first so that you can be of service to him and to what comes next. Meaning I want you to have a group of people that you can talk to. I want you to be serious about your physical health and your emotional health and your relationships so that that he can anchor into you in this upcoming season, whether it's 2 years, whether it's 5 years or beyond, um, because it's gonna— it's gonna be a journey. And if you don't have any water left in your pitcher, um, you're gonna have no way to fill his glass up.

Do you get what I'm saying? I do. Yeah. Blessings to you, man. I hate this, hate this for you. I hate this for him. I hate this for your whole family.

Thank you so much, both of you. I appreciate your guidance.

Yeah, check out a Smart Investor Pro there in the DFW area. I know there's quite a few of them, and, um, they'll sit down with you and with the heart of a teacher, they'll walk you through and you're gonna have to become a scholar in this stuff cuz you're gonna be doing it on your own. And by the way, if you haven't moved all the accounts in your name, if you don't have fin— power of attorney, medical power of attorney, financial power of attorney, all those things, you're gonna be a sole decision maker on a lot of this, on all of this moving forward. So getting some people in your corner that can give you good wisdom and counsel, um, is gonna be really important for you. Yeah.

To answer your question, I would keep investing your 15%. Anything beyond that starts to go into this sort of care fund and probably a high-yield savings account for now, and just stack it up and stack it up and stack it up so that we don't burn the emergency fund or our nest egg along the way. But we're, we're hoping for the best for you guys.

Dave Ramsey here. For more than 30 years, I've been talking to folks on the air, and I can tell you that most people are broke not because they don't make enough money, but because they don't have a plan. Man, you need to give every dollar you earn a job, because when you do that, something changes. You stop guessing, you stop worrying, you stop stressing. Our EveryDollar budgeting app will show you how to find extra cash, pay off debt, and finally start winning with money. But most people won't do it. They'll keep living paycheck to paycheck, keep hoping things will change without making a It's time to say enough is enough. It's time to take control of your money. It's time to start your EveryDollar budget for free today. Go download it in the App Store or Google Play.

Our scripture of the day, Exodus 20:8-9. 6 days you shall labor and do all your work, but the 7th day is a Sabbath to the Lord your God. Serena Williams said, don't let anyone work harder than you do. You hear that, John? You've already failed. I've been carrying the load today. Carrying it, man. All right, Manny is in Chicago up next. What's going on, Manny.

Hey guys, thanks for taking my call. Um, I'll try to give a quick summary, uh, before I ask the question. I will note that my plumber did give me an update earlier today, so maybe your answer will change. Um, I'm 27, I just recently bought a home. I do have, uh, 3 young kids and a stay-at-home wife, and I'm expecting my 4th child within the next 2 weeks, give or take some time. And, um Since I got into the home, I did have a savings account that dwindled down a little bit just from some small repairs, like an HVAC system that needed to be repaired for $3,000, and then small things around the house. Within the last month, my sewage drain, I think, has a crack in it. Oh no. Caused my entire home to smell like sewage, and now I have like drain flies.

Yeah, pretty much throughout my home. So what'd your plumber say?

So one, I had two different plumbers come just to get two different opinions and quotes. One of them said, um, it is a drain pipe that does have a crack. The, the house that I got was a remodel. Everything was pretty much new, including most of the above-ground plumbing, but the sewage stuff was all the original pipework. And he said he needed to get a camera scope in there, and he did see where it was. And it was under parts of the foundation under the ground. Are you on a slab? Yeah, so where the pipe is cracked, it's part of a slab. Yeah, or it might be right next to it or underneath it. Um, but the main thing is that because I'm having like drain flies and all these, these small issues that come along with this, I do have a previous employer's 401k that's about $23,000. I'm in Baby Step 2. My only debt is my wife's van. It's about $14,000. My actual savings is about $2,500 and I have $2,000 for a sinking fund for my personal car that may go, God knows when. And then a $1,000 emergency fund. The only other option that I would have to fund it if I don't use the 401 would try to be to finance it or or use money from, uh, my in-laws and I'd pay them back, uh, with little to no interest.

But I just wanted to get your guys' opinion because I know it's shunned upon to take from your 401k, even though I'm not putting anything in there now.

Yeah. Let me, let me ask you a few questions about the work. The, um, did he, did anytime I've ever had plumbing snaked, they show me the pictures. Have you seen the cracks? Not yet.

I'm going to have the second plumber. So that's what the first one told me. The second plumber is going to— the main issue is that what they told me today, when I was cutting my grass yesterday, I did see a puddle of water on one of the corners of my house. And my in-law, my father-in-law came and he helped dig up some of that corner to kind of see what it was. And it ended up being like, uh, like pretty much poop and stuff. Stuff backing up and flowing up. So as far as like the urgency goes, I do want to try to get it done just because I'm going to have a newborn.

Oh, of course, dude. You got two guys with kids, we get it.

And you got storm on storm on storm right now. Yeah.

Um, well, and it, it, here's what I want you to think through. If they, if they come out and they say, yeah, it's cracked and we have to dig up your entire yard from the street to your foundation and completely redo this whole It's all cast iron. It's old or old. It's rotted through. It's iron. It's useless. Um, there could be, we can drill a hole in it and pump it completely, pump it out for $600 and that will get you 2 months or 3 months. And then we'll come out here and pump it again and I'll get you 3 more months. And so the temptation is, and I totally get it, dude, both George and I, like we both get it. Is I want to just do all this right now. I need to get it all fixed right this second, whatever. But I always want you to remember, generally in these kind of situations, unless your house is falling over, there's, there's step 1, the perfect option. There's step 2, there's step 3, there's step 4. Yeah. Um, and so what do I have to do to limp along while I'm still gathering and saving money so I can do this whole thing right?

So it's basically what, what gets us by versus what gets it completely fixed. Right.

Yeah, so since I'm not on a septic tank, I'm on my city line. I'm in like the suburbs of Chicago. Sure. Um, based on what they find when it's dug up, well, how would you guys go about it then as far as—

well, I mean, there's gonna be multiple stages. If two guys come and give you the same, the same issue, if they both snake it and they're both like, yeah, brother, your, your pipe all the way to the street is screwed screwed up. Um, I'm gonna wanna call the city and see if they have any investment in this thing too. Is part of this line theirs? Um, I'm also gonna then, cuz then you start phase 2, which is, all right, how much is it gonna cost for you to fix it? And how much is it gonna cost for you to fix it? And I'm gonna call 4 other companies out here to see what they would charge. And I, I'm gonna be, I'm gonna do my due diligence to see how, how I can get this thing, not the cheapest, but how I can get it done with the most reputable company done the right way for the best price.

Okay, because, um, they did— the plumber that saw the issue today did say not to use like any of the washers, dryers, shower, or anything just because of the fact that, um, poop was coming up from that little corner and the drain was busted. Yeah, I'm just waiting to get an actual visual on the pipe. And is there somewhere you guys can go temporarily? Yeah, so my in-laws extended their hand for us to stay there for a couple of days. I would definitely do that.

I'd call the city too and have them— a city, uh, sewage inspector come out and look at it and see, because if it may be backed all the way down the middle of your street for half a block, and the city's got work to do. Yeah.

And I would also contact your homeowner's insurance. Have you done that?

Um, no, I, I did I do have a warranty, but they won't cover it. So I didn't think to contact— Why would the new home that you just bought, why won't the warranty cover that? The company said they don't cover any type of like sewage plumbing, only like above ground, which didn't make any sense to me.

Here's your home. Go find every piece of documentation for that warranty. Go pull up your declarations for your homeowner's insurance, upload it to AI and see if there's a way that this can be covered. 'Cause your insurance company might say, no, we don't cover that. Cover that. You might find that you appeal it and go, nope, they're going to cover it now. And they might then cover your displacement to go rent a home somewhere while it gets fixed. And so I don't want you to feel like there's only one option right now. I'm gonna fight this thing to offload it as much as I can.

It's a part-time job. And if you think of a part-time job that you might earn $10,000, you'd probably take that part-time job. This is the same thing. You may save yourself 10 grand. What, what did that first plumber quote you, to dig up the whole line from, from your house to the street?

He said, uh, he said depending— well, the line is under like 6 feet of dirt and it's in a crawl space under my basement or under my home in my basement. He said it could be at $6,000 to $10,000 just depending on how much line is cracked and how far down he has to dig.

Okay, so, so if you think about it, give yourself that exercise too. What does life look like? The numbers you just gave me for your car fund, for this, you've got $6,000 in your pocket right now.

Yeah, between your sinking fund, your savings, and that car repair fund, you got a good $5,500. So within a month you could have $6,000. And so you might not be in as bad shape as you think. What's the, the car loan is $14,000. What is that van worth?

It's probably worth about the same, about $14,000, $15,000. Okay. It's a 2018 Honda Odyssey.

And you got, you got 4 kids, so you need a van. Yeah, I get that.

But I was wondering if it's worth $30K and you guys can downgrade in van for now, that, that could solve some problems too. But I definitely would not touch that retirement account. I know it's tempting 'cause it feels like old money in your old coat pocket, but man, that's like taking a loan at 35% interest with the penalties and taxes you're gonna pay on that money. So it is not worth it. And if you just leave that money alone to grow for the next 30 years, it's, you're, it's really a 6-figure mistake you're making.

Okay. So can I talk to you just just dad to dad real quick, husband to husband. Yeah. I promise you this will pass. And it feels like it's all happening. You're having a new kid on the way. You got in-laws like saying you can come live with us. You've got a car that might die. It all feels like it's happening. Let's laser beam on the plumbing issue and get this thing cleaned up and let's celebrate this new kid coming and let's do everything we can to scratch and claw and pay for cash on this deal.

And worst, worst, worst case, if the in-laws want to be generous and help you guys cover this for now, go for it. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.