Transcript of How About You Actually Do Something About Your Finances This Year?

From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by my good friend, Rachel Cruz, and it's open phones this hour at 888-825-5225. Help us help you take the right next step for your money and your life. Isaac is going to kick us off in one of Rachel's favorite towns, Knoxville, Tennessee, home of the Valls's. What's up, Isaac?

Go Vallss, Isaac.

Absolutely. Go Valls. Good to talk to you all. Pleasure.

What's going on?

Yeah, so I'll start with the question, then get some info on. My question is, should I liquidate some of my taxable investments to provide a larger down payment for a house? And if so, how much? I'll start with some info. We're on the equivalent of Baby Step 3B. We've got the emergency fund, no debt. We live in a house. We're renting a house for about $500 a month. Wow. It would not be super... Yeah, it's quite a blessing. We're staying in my in-law's house, so great relationship there. Thank you.

That explains it.

Wonderful. Yeah, definitely. So it would be not ideal to raise a child here. So we'd like to get into a home before we start down that path. But we are not sure if we should use my wife's perspective income. She's not working right now. She's looking for a job. Not sure if we should use her future salary to account for the 25% take home pay recommended for a monthly mortgage. We've got 55,000 in liquid cash between a high yield on a treasury and an additional 115 in those non-tax-advantaged investment accounts.

Way to go.

What are those in, Isaac? I'm just curious. Is it mutual funds, stock?

Yeah, various mutual funds. Yeah. Okay.

All right. You're saying, should I use this money for the down payment? I personally would. What else were you saving this money for?

Well, it didn't really have any specific earmark past that. We're doing other tax It's a lot of those accounts like Roth IRA, HSA, and Employee Roth 401k.

Are you investing 15% of your income right now into retirement accounts?

Yeah. I think it's maybe a little bit over when we're all said and done with matching those accounts.

How much will you need for the down payment?

Well, in our area, 300,000 for a house is about the lower end. Anything less than that would require quite a bit of restoration. But in order to get that 25% of just my take home pay, because we're not sure what she's going to be making and if she'll be working long term or not, if we're able to have kids we'd like for her to stay home as possible. Looking at probably around the 100,000 or more mark, but it's a little bit of just trying to convince myself that I see all in the investment accounts and then put it into.

Well, that's the problem. When you invest for no reason, then you go, Oh, I don't want to use this toward the house. But if I told you when you started, Hey, this is going to be your home down payment fund, you'd have no problem cashing it out. Yeah. So if I'm in your shoes, Isaac, and I've done this because our first townhome was $300,000, and we saved up, and we put, I think it was 40% down on that and paid the rest off quickly. I think you're going to be in the same boat. If you liquidate this, you might have some capital gains, of course. Use some of the cash, leave emergency fund separate. Then if you could put down 50%, that'd be amazing.

Yeah. I think the reality that your wife is going to get a job, so finding on average what you think she's probably going to make. I would add that to the equation because she… What line of work is she in?

Well, she's got a master's in education, but we've decided for various reasons that she's not going to go back to teaching in a middle school. She is looking at a local university at UT, possibly working there or some other companies in town, just wanting to help. Help people do the work that they love. She's very much a supporting role person when it comes to work. Not necessarily exactly the job. It doesn't really matter too much. It's just who she's able to help is what's really important to her.

Okay, but she will be working, is my point. I do think finding on average, because I would add that in, because it's going to take you guys a while to find the house, go through all the process. It's not like you're going to have to have this money by tomorrow. It's going to give her enough time to find a job while you guys are looking. So yeah, definitely. I think you're in a great position, and I would take some of that money out of a mutual fund for sure for a down payment. Got you.

Then I do have one quick follow-up question. How much cash would you all recommend staying liquid? I heard that in the six months or so, after you get a house, it's going to be repairs, like $1,000 a month is a good estimate. And we also want to have enough to pay cash for a car if one of our two older cars goes out.

I would just create a sinking fund. You don't need to park 20 grand just for that. I would just start a sinking fund where every month you put away 100 bucks, 200 bucks to start covering some of that. Maybe the car becomes a $500 sinking fund, and 12 months from now, you got six grand. So you decide what's right for you guys and your family and when this car might kick the bucket or when you want to upgrade. But I think sinking funds are the easier way to do that. I wouldn't be too concerned about, Oh, my gosh, this house is going to cost us 50 grand right after we move in. Yeah.

If you need additional money, that's what the emergency fund is for, too. That you can use, Isaac. Some people. Sounds like you'll be like, How could I not use this? That's a game people play. Exactly. But if you need it, that's why it's there.

Yeah, I know.

Which I appreciate. Your savings muscle is incredible. And so the hard part for you is just letting go of that and actually using it for your future goals. Yeah, I think that's definitely the case. But you guys, how young are you all?

I'm 26, and she's 25.

You guys are unicorns. You're going to build so much wealth. I'm not concerned about letting go of these investments because you're going to build it right back up. And guess what? In a few years, you're not going to have a house payment. I can tell you're the guy who's going to knock out this mortgage. You're going to replace that mortgage payment with investing. And before you know it, you'll have another 100 grand saved up.

All right.

So way to go, man. Thanks for the call. Cool beings, guys.

Yeah, thanks for the time.

Love a Valls fan, Rachel.

They're all smart. They're doing it out there. They're all smart. It's here for the right team. You have wisdom. Wisdom everywhere.

Spoken like a diehard Vallss fan. Wow.

That is good, though. But I think it's a good point you made. And When you're putting money away, especially this is non-retirement, right? So if he's talking about 401k, Roths, 403(b), in that world, we would say, no, we do not cash out retirement. But these investments that are not retirements, but are, whether you're out there and you have company stock or single stocks, mutual funds, using that money towards something that's going to continue to up your networth and up your quality of life, which is a down payment. Almost a house, I feel like, is a great asset And this is why we always say to pay it off. If you have money to pay off your house when you're in baby step six, do it because it's assured that your money is going to something worthwhile.

It's a forced savings plan with a guaranteed rate of return. And once you get that paid off, that's an amazing feeling where you now have the margin to do even more wealth building. And so I think the hard part for a go getter like our friend Isaac is, I just want to keep saving. I don't want to let it go. But guess what? On the networth statement, nothing changed. That's right. You just moved money from here to this house.

To a different asset.

Yeah, it's a great point. And it's hard because you don't see the number going up like you did with your investments. But what you do have is a lot of peace when that mortgage payment is such a small part of your world because you put 50% down. Yes. And you took on a reasonable mortgage. What most people do is say, I don't want to touch the investments. I'll take the whole thing out in the mortgage, and I'll be fine. And then the mom wants to stay home, and they go, Oh, my gosh, I can't breathe. That $2,000, $3,000 mortgage payment now feels like it's too much.

Feels like a lot, yeah. And which is smart that they were even talking about. You can't control everything in the future, right? So there's things that you have to make decisions on today that are wise. So her knowing that she'll probably get a house, right? But even the family, some people are like, Well, should we wait till we start a family? All of this, right? But if you're in the market to buy, now is the time because prices are only going to continue to go up.

Yeah. If you're out of debt, you got the emergency fund, you got the pile of cash for that down payment, don't sit around because guess what? The Fed rates are going to go down, home prices could go up, and you're going to go, Oh, my gosh, I should have bought. I should have bought. Don't try to time market. This is The Ramsey Show.

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Welcome back to The Ramsey Show. I'm George Campbell, joined by best-selling author, Rachel Cruz. Open phones at 888-825-5225. Raphael is up next in Kissimme, Florida. What's going on?

Hello.

How are you? Doing well. How are you?

Good. My wife and I can't come to an agreement here on what to do with our motorcycle loan that we have.

Oh, this is a fun one. Rachel loves settling debates.

I love motor cycles, too.

Who do you think is right?

Honestly, I can't answer that. Okay.

Smart man. Yes.

Okay. What's going on? What's the issue?

Okay. I just think I have an employee stock purchase plan. It's going to best, I think in December, I'll have about $13,000 in there. I just tell her I'd rather leave that in and get a loan to figure out what the upside down is because I want to get out the loan as soon as I can. And instead of owing 23, let's say I'm upside down by $10,000, I can get a personal loan for $10,000 and knock that off as fast as possible.

And she's saying, no, liquidate the stocks and let's not go into debt, be completely debt free.

Yes.

Is this the only debt you guys have or is there more?

No, I have a personal loan of $20,000.

And you want to get more personal loans?

Yeah, I see.

I'm just walking through the train of thought here. Now, I love that you're wanting to trade down your big debt for a smaller debt, but I like your wife's thinking more of we could be completely debt free instead of struggling to pay this next 10 grand off while trying to pay the other 20 grand off. Plus, when you have that volatile single stock, I mean, that thing could drop. And so I love the idea of using this as a blessing. You got that stock at a discount, let's sell it, and probably be in minimal gains and be out of debt completely.

Okay.

What's your thinking in keeping the stock? Do you just like to see the number go up?

Well, so my thing is I make 80,000, 80, 85, and I just tell her, Wouldn't it be better once we, if I do get the loan and I knock it down with her. I guess I want to just leave the money in there so when we get that free, I can go buy, say, a cheaper $5,000 motorcycle. I'm really not that good with budgeting. Clearly, obviously, I'm in debt, unfortunately. But we want to prove our family wrong, that there is a way to be debt-free. She's on board. I'm on board, too. I just don't know how to tackle this.

Well, the best way to prove them wrong is to become debt-free and stay debt-free. Would you not agree?

Yeah, I agree.

Are you guys… Your wife, do you guys have your money combined? Because you said, I'm making 85,000. Is she working as well?

Yeah. She gets about $800 every two weeks take home. I get about 26 every two weeks.

Okay. What does she do for a living?

She's a full specialist, like in facials, nails, et cetera, things like that.

Okay. Are you guys… Yeah. Does she have any debt?

She does, but that's a whole… I would say if you wanted to throw her thing in there, too, we're looking at maybe 30,000 on top of that.

But I've been with her for seven years now. So 20 plus the 30. You had a personal loan for 20. You also owe how much on the motorcycle?

23.

So you have 43 there. I just got it a few months ago. Then she has What's her 30 in?

It would be like miscellaneous. One of them would be like Verizon. Another one would be student loans. Most of it is student loans.

But- Okay. Raphael, let me tell you this. I love and very encouraged that your goal, both of you, want to prove people wrong. And that's not the goal, to prove them wrong, but to prove them wrong to be debt-free, right? So you both want to become debt-free. You both want to live a debt-free lifestyle. So what we have found is fastest way to get from where you are, which is just the starting off point, to actually accomplishing that is a couple of things. First and foremost, you will win, I'm going to say three, four, five times faster when you guys work together as a team. Your language is still, well, hers over here, mine, my income, her income. When you start, you and her start actually looking at numbers together, that combination of combining finances, working out of the same bucket, seeing this together, tackling all of this together, regardless of who's quote, unquote, dead it is, you're going to get so much momentum by just simply doing that. It's unbelievable. And I'm telling you that because when you start doing a budget together, which we're going to give you every dollar premium after this call.

But when you guys sit down together and you start doing a budget together, and you start cutting expenses together, and you start making decisions about what you're going to have for dinner together because you're not going out to eat, things start to really pick up speed when there is an emotional attachment that you guys are a team. And again, that starts with the numbers. So that would be my first piece of advice, is to work at this more unified than you are now. And then number two, you're trying to do too many things to get the goal that you want. And it's way less complicated than what you're making it to be. So everything we talk about is to liquidate everything but retirement accounts to pay off debt. So that would mean liquidating the stock, putting it towards the debt. That would be selling some stuff, figuring out what you're going to sell the motorcycle, which is great. But when you start doing these things, and you guys are making around $105 a year, it's amazing the progress you guys can make when you are focused intensely on one thing, and that is getting out of debt.

It's not trying to do retirement over here. It's not trying to get some liquid cash over there. It's not trying to do 18 different things together. Your number one goal is to get out of debt. And that's maybe working extra, selling stuff, cutting expenses together. It's all of this snowball effect that occurs. And we just see people that they just get so much momentum because you're going to actually start seeing these wins, and that's going to fuel this behavior change, which is key. That personal finance, it is 80 % behavior. It is only 20 % head knowledge. So you're going at this more from a head knowledge standpoint and less of a behavior. And I want you to flip those two and just try it. Try it our way. If you hate it, you can go back to what you were doing. That's right. And in six months, if you're like, this isn't working at all, you can do it your way. But try something different.

Yes. Yes. Awesome. And just one last question. I heard you say you like Motorcycle, too. I was kidding.

Sorry.

Will this budget app, or will this teach me, once we do finish Baby Step 2, when am I allowed to go buy a $5,000 $1,000 on a motorcycle off of Facebook? When am I allowed to do these things that I actually enjoy?

It's simple. Once you have a foundation to where you have no debt and an emergency fund, that's when you move from this intensity to intentionality, where you go, All right, if I save up 500 bucks a month, In 12 months, I'll have $6,000 saved up to go buy a used motorcycle in cash. Do you see the difference there? Versus rolling up to the dealership and them going, Hey, we got a nice shiny one over here, and we can get your payment down. That's how broke people think. They think about how much down, how much a month. Raphael, from now on, is going to think like wealthy people. How much? Can I afford it right now? If not, we got to act like an adult and say, We can't do this right now.

Yeah, and that's after paying off all of your debt and having a three to six month emergency fund saved. Once you do that, you're good to go. You're good to go take a great vacation, buy a motorcycle, you and your wife together deciding on some of these big purchases. But that would be the time. It's going to be maybe a year or two Two and a half years. But I'm telling you, you'll do it with so much more peace and enjoyment and freedom than you will trying to continue to live this lifestyle.

And your arguments and debates will change It'll be like, Where are we going to go on vacation this year? Instead of, Okay, what debt are we going to pay off first and how are we going to do it? So the fights get better as you get to a better place financially, Raphael. So let me encourage you with that. If you follow the things that Rachel just told you, you are going to have so much freedom, not even two and a half years from now, a few months from now, just doing the budget, showing you the reality of what could be if you guys just got a handle on this amazing income you have.

Yeah. So hold on the line, and Taylor is going to pick up, and we want to give you guys every dollar premium and F We'll throw in Financial Peace University because I think- So kind.

Outrageous generosity.

I do think learning some of these basics, you two together watching these videos and going through this, I think it's going to be really, really helpful.

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With Helix, better sleep starts right now. Welcome back to The Ramsey Show. We're glad you're with us. I'm George Campbell, joined by Rachel Cruz. Listen, I know nobody wants to talk about it, but I think it's cool to talk about insurance. In fact, I made a free five-day video series called Confidence in your Coverage, and I guide you through the different types of insurance so your insurance can finally make sense. If you know me, I like brevity, I like it short, punchy, It's funny. So I'm not going to overwhelm you with nerdery. You're just going to get a one email a day for five days teaching you everything you need to know so that you have more confidence in your coverage. So you're going to get info, two daily goals to help you figure out what you need. And to understand it all, go to ramseysolutions. Com/confidence to get your free guide to insurance, or click the link in the description if you're listening on YouTube or podcast. That's ramseysolutions. Com/confidence. Katherine is up next in San Francisco. What is happening, Katherine?

Hello. Hi. Thanks for taking my call.

Hey, sure. Happy to help. What's going on?

Hi. So basically, I have a 401k from a previous job, and I was wondering if I should roll it into my current 401k, or I also have two annuities that are variable annuities.

Okay. How long ago was this job in this 401(k)? How long it's been sitting there?

It's been sitting there for probably about five years.

It's time, don't you think? It's collecting dust over there.

It's definitely time. It is.

So generally, the best thing to do would be to roll it over to an IRA and do a direct rollover. So what you don't want to do is withdraw the money. You don't want to see the money. You want to directly put it into that next retirement vehicle. And if you have a great 401k with great options and low fees, you could roll it directly to that new 401k. The difference is the IRA is outside of your employer and you have way more options, and it's in your control. We like the IRA for that reason. Was it traditional or was some of it Roth?

It was traditional.

Okay. You want to make sure you do a direct rollover to a traditional IRA, and that way you'll have no fees or penalties there. Taxes.

Okay, perfect. Then I do have some money in savings, but I have it in just some of those saving apps. I was wondering if anything I should roll it into a high-yield savings account or one of the money markets.

Yeah, high yield savings. Right now, we're actually outperforming money market accounts on most basis. But what I would do is, and what we've done, is look at an online bank because usually you can get a better rate of return, especially just for a high yield savings. So I like that option the best because money market accounts, for the most part, they act pretty similarly to high yield savings. But what I have found, at least in the last, probably, I don't know, 12 months or so, we saw better rates of return with a high yield, personally. But do some of your research and look. But yeah, just looking at an ally bank or some type of reputable- Because you're getting 0.01%.

Right now interest on your savings, I'm guessing. Yeah.

What app is it in?

Yeah, it's essentially like the acorns in capital.

Yeah. I would be a little bit more aggressive with it. I would look at an online bank, just a good high yield savings, and making sure that some of Some can come with limitations, meaning you have to have a certain amount in order to open it and all of that. But most of them are pretty good.

Yeah, you want to look for ones with no fees, no minimum balances, all of that. There's a ton out there.

Essentially, I'm wondering, is that money accessible when it's in those savings accounts? Because I feel like I'm going to be able to need to access it.

Yeah, it is. It may take one to two business days, we found, to take money out of our high-yield savings and transfer it to our checking account. Some of them will come with check writing privileges, even out of it, and a debit card, but you can only do up to five transactions a month. So yes, you can get to it for sure. But it's just a good place to put long-term savings. It would not be an account that you would use for everyday transactions, but something that you're like, Oh, yeah, that money can just sit and grow. If I need it one day, I can pull it out without fees.

Yeah, because the only reason I have savings right now is I'm about to move somewhere where rent is going to be higher. So I just was also wondering if eventually, if I went through the savings, which obviously, hopefully not going to happen. But then can I just close up the account?

Yes. Yeah. Just pull the money out and close it. Yeah.

About penalties? Okay. Awesome.

Yeah. Thanks for the question, Katherine. Next up, we've got Hannah in Chicago. What's happening, Hannah? Hey, how are you guys? Doing well. How are you?

I'm good. You guys are my favorite duo, so I'm happy to see you both.

Jackpot.

So my question is, I have a truck loan. I owe 6,000 on it right now. I can get about 9,000 for it, private sale. So I was wondering if I should sell it, clear the car note, and then be able to pay off my remaining two personal loans and be debt-free or continue working the debt snowball method.

What are you going to drive if you sell it?

I'm not sure. I haven't got that far, but I do work in town, and I do have a work truck. If my place of employment would allow me to drive that, I thought that might be an option.

Hannah, I probably wouldn't, considering how low of cost that this is. If you told me that it was 30,000 or something, but I'm like, If you sell this, you would cash out 3,000, and then you go buy a $3,000 car. The difference between a 3,000-dollar car and a 6,000-dollar car isn't crazy different, right? I think you'll be going into a similar type of vehicle. So I would just, from simplicity's sake, I would just put this in the debt snowball.

If you like the truck, the truck's not the major problem here. What's your total debt load?

I have a personal loan for 2,500, and then a very small consumer debt of 900. I'm almost there. I think I'm ready to be debt free, and I'm getting so close. I was considering it, but- Yeah, nothing's on fire here.

You're not in a desperate situation. I just don't want you turning around and going, Well, all the cars that are reliable are going to be 6,000. Now I need to come up the extra three. And so it's not a huge part of your debt, and I would just knock it out and keep the car. What's your income?

That's what I thought, too. I make 57 a year.

Awesome. Well, you'll be there in no time.

I know. You're doing great. I think so. Yeah. Knock out that 900 and that 25 first, and then just start attacking the truck.

Awesome. Thank you, guys. I appreciate it.

Absolutely. Happy to help. All right. Let's keep it moving. Jonathan is in Lexington, Kentucky. Jonathan, welcome to The Ramsey Show.

Hi, Hi. Thank you so much for all that you guys do. Happy to be on the show.

Appreciate that. How can we help today?

So I'm in a really, really good position, all things considered, debt-free, out of college, and making more than I'm spending. Where I live is a fairly low cost of living area. But my question is, now that I have 10K saved, everyone is encouraging me to use that 10K to get a loan for a down payment for a lot and build a rental cabin and then sell that, turn a big profit. What? Everyone?

Are you talking like three knucklehead friends of yours?

My broke brother-in-law. Yeah.

Okay.

Just feels like a very oddly specific goal.

Well, I'll tell you why. In the place that I live, it's very high in tourism, and so a lot of people have made money by virtue of rental cabins.

It's not like a- What's your primary home situation?

Well, I have a fantastic living situation, thanks to my employment. I don't pay anything for where I live, and I live by myself, so it's amazing. But where I live is heavily… It's a tourism area, and that's business year round. And so every rental cabin that's built is bought. And so the question is, with only 10,000, have an outright way- Yeah, you're breaking up, too.

We can't get… Okay, my fear, Jonathan, is I want to make sure you are taking care of yourself. So the fact that you're living somewhere that you're not paying anything or getting any equity. If you leave this job, you'll probably end up having to rent somewhere for a bit. So I, almost on the side, would take that 10K. I mean, how long do you think this job? Or is this a long-term play for you?

Yes. I'll be here for a long time, as long as I can, without screwing it up. Okay.

But I want Jonathan to own a home eventually, because I don't want you to get to 50 years old and not have any money to go and buy a home, and then you have to go take out a $300,000 mortgage. So I would be thinking about my living situation first and foremost, because that housing part of your budget eventually will be the largest part. So no, I would not take 10 grand and go into debt for a rental cabin, even though it's the best market.

It looks shiny. I mean, this is basically get rich quick for your area. I know it's worked for a few folks. You're not in a place to be a real estate investor quite yet. So just hang on, keep saving up, get your own place, and later on in life, we can look at that option. This is The Ramsey Show.

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Equal Housing Lender. 1749 Mallory Lane, Suite 100.

Brentwood, Tennessee, 37027. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz this hour. Today's Ramsey Network app question is from Melissa. What does Melissa have to She says, I am single and about to move into my first apartment.

My question is, how do I keep from spending foolishly since I'm now responsible for supporting myself? I would like to have an accountability partner to keep me straight, and I'm not sure how to find one. I have been hurt by people in the past, so I spend money to fill in the emotional gap. Wow, very self-aware. Melissa, I need to change that way of thinking, so any advice you have would be fantastic. Wow.

Well, therapy is, I think, a great start. I think we need to figure what's at the root of all of this and start to heal from that. I do love the idea of an accountability partner as another thing. That could be friends. They don't have to be your best friends physically. We have a great Facebook group, the Ramsey Baby Steps Community, and they're always encouraging each other in there, and they'll say, Hey, someone talk me off the ledge. I'm going to go add to cart over here. Then the budget is really... It's a built-in accountability partner.

Yeah, for sure. I think, obviously, there's pain from some levels of relationship. I'm not sure which kind that you've been burned by. And so I think sometimes that hurt and that rejection does come out sideways, and it looks different for everyone. And in your case, being, I mean, very self-aware, that, yeah, you spend money to probably keep yourself busy or to keep yourself feeling good. And I think there's a reality of understanding that what is the truth of what money does? And it's been scientifically proven that buying stuff does not fulfill you and does not give you literal happiness or joy long term. It just doesn't. And so I think there is a way to shift that behavior of understanding, yes, the facts, but you can't just willpower your way into that. I think there needs to be some good input in your life, and that's where therapy, George said that. I don't know. Even the word accountability partner, I don't know why, George. It makes me... I don't know. It's a little accountability partner. Have a good friend in your life who loves you a lot, who will ask you questions, who will dig in, who wants to know your story, sit with you in the hurt and the messiness of life.

They're there as support more than like, I'm going to keep you accountable, because sometimes that can feel preachy or something.

You don't want to hang out with that person. But here's the other side. Don't have friends that also spend frivolously and are always going out and are broke.

Put people around you. Yeah, that respect your boundaries and respect what you're doing.

And you also want to grow.

Yeah, that's right. Having just people in your life. But it's going to take time for you, I think, to build that trust because of, obviously, what's to you in the past.

The beautiful thing is about moving into your first apartment is you got bills now, so you have to go. The bills have to get paid. There's not going to be a whole lot of extra margin just to go spend frivolously. That's where the budget becomes even more important once you gain that independence. Good for you. Love the self-awareness. I know. That's impressive. Okay, let's get to the phones. Dave is in Charlotte. What's happening, Dave?

Hi, guys. I'll try to make this short and sweet. I have a 1.5 million dollar house that's in an area where the house is still normally less than seven days at or above asking price. And you guys have made me very cost-conscious, so it's hard for me to justify to pay a 6 % commission or $70,000 for a house that's going to sell in less than seven days, basically just to get it listed on the MLS. So what are my options? I know a real estate attorney said he would charge me $6,000 to do the actual close. But in terms of working with agents, can you shed any light on how I can minimize the permissions?

Well, they've changed the structure recently, and it's becoming a big bubbled effect within the real estate world. But I think a lot of agents are still abiding by that 6%, the 3%, 3% split. If you're using someone for their services, I guess it can be dependent on the agent now to a degree because of what they're choosing to do on the commission side because it has changed in recent months. But overall, you're using their services, so you will be paying some level of a commission, I'm sure. If you want to do sell by owner, you could do that where it's If it was just you doing it, then you wouldn't have an agent involved. But usually, we find, statistically speaking, you'll make less as a private seller versus if you actually use an agent. I would use an agent, and I understand the frustration commission around it, and some agents are changing their commission structure because of everything that's happened in recent months. You could talk to them and see what they would say and what they're requiring for their services. It may depend agent by agent.

Yeah, because I recognize there's some value to an agent handling some things, but I recently had an inspection done, so I think it would be a relatively very clean sale in a very short period of time. First, you need to pay somebody $70,000 for a week's work.

Would you buy the house for? It was excessive.

$550.

You're making a million dollars off of this?

Right.

That's pretty wild. Letting go of- I got it for 25 years. Yeah, you've hung on to it, and that's appreciated.

Why are you guys selling?

We're just downsizing and retired and moving to another house.

Okay, that's great.

Here's what I'll say about the agent. I think if you're just looking to get it on the MLS and that's all the agent's good for, then you need to find a better agent. A good agent is going to make up for what they cost you. If you went for a sale by owner, you might get 1.43. We don't know. If you work with a great agent, maybe you start a bidding war and you got 1.57, right?

Right.

So that's part of it.

I just went through a tax deal with this city. So I've done a pretty extensive study of comps in the neighborhood and in the zip code. So the data is pretty readily available in terms of how long it'll sell and how close to asking price. So that's usually the value that agent brings. But in this case, I'll just have to look at other options.

I feel like you should go in a real estate, Dave. You've done all the work, man. Yeah, I know it hurts. I'm the same way because I'm super frugal. But the one thing I'm willing to spend money on is a good agent for the largest transaction of my life, which I assume this is for you.

I understand that, but like I say, knowing the area so well and knowing what they're selling at.

There's ways you We can negotiate. Let's say your agent who's going to sell, well, that becomes your buying agent, and they end up taking one and a half % off. Yeah. That stuff happens all the time. I would get in touch. If you want to vet some, we've got Ramsey trusted real estate agents. Go to Ramsey go to adresolutions. Com/agent, and see who's out there. Interview them, see what they're willing to do, and see what they're willing to offer.

I'll reach out for a couple of them. Thanks for your time.

Absolutely. It's a great question. I love that you're thinking this way, and it's what's helped Dave build this level wealth.

Well, and to have a mediator between you and the buyer and all of that, right? I mean, it's just they take a lot of the grunt work out for you. They really do help.

Absolutely. Thanks for the question. André is up next in Houston, Texas. How can we How does that help, Andre?

Yes. I'm 28 years old with 20K in savings, and I wanted to know how to invest it.

All right. Give us a little bit more about your financial picture. What's your income?

About It's $29,000 a year.

Okay. Do you have any debt?

No, sir. Okay.

Is this all of your savings, the $20,000? Does this include your emergency fund?

No, not really. I have maybe a couple more stashed away in another bank account, but it's just maybe $2,000.

You have about $22,000 liquid cash in these accounts? Yeah. Okay. Well, here's the deal. Once you're following this Ramsey plan and you're out of debt, the next step is to build a buffer between you and life called an emergency fund. We recommend 3-6 months of expenses. For you, that might be, I don't know, 10, 15,000?

Are you single, Andre? Yes. Okay. Yeah. So you would probably be more on that three-month side versus the six-month. I would figure out for you what would be about three months of savings to keep you afloat if something happened to your income and making sure you have that. And then, yeah, the next step would be investing. I would look into things like a retirement-type vehicle with investing. So a Roth IRA. If you have an earned income, you can apply for a Roth IRA. And that's a great option. You can invest up to $7,000 in that a year, and that grows tax-free. So there's a lot of benefits. So that will count. That's just great. So I would probably start there. Does your employer have a 401(k) by chance as a benefit?

They have a savings plan. I think it is.

Okay. Yeah. So I would look into that, too. Maybe on Monday, go and ask them about that. And so I would do the match for the 401k. But I would get that emergency fund and a high-yield savings account, and then look into opening up a Roth IRA.

Thanks for the call, Andre. That puts this hour of the Ramsey Show in the Books. Thank you to my co-host, Rachel Cruz, all the folks in the booth keeping the show afloat, and you, America. Thanks for hanging out with us. We'll be back before you know it. To find a Ramsey-trusted real agent that can help you buy or sell your house the way we teach, visit ramseysolutions. Com/agent or click the link in the show notes.

Before we get to the next caller, I got some good news for you. Even when this portion of today's show runs out of time, there's still plenty more for you to tune into. Just head on over to the Ramsey Network app to finish today's show for free right there on the home screen. If you don't have the app, just search Ramsey Network in the App Store, Google Play, or simply click the link in the show for an easy download. You never know what call is coming up next, so be sure and check out the Ramsey Network app.

From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Rachel Cruz, who is also my co-host on Smart Money Happy Hour, which you can check out on the Ramsey Network. We're taking your calls at 888-825-5225. Call us up. We'll try to help you take the right next step for your life and your money. Justin kicks us off this hour in Santa Clarita, California. What's going on, Justin?

Hi there, guys. How are you doing?

We're doing well. How can we help?

So my question is, it's a detailed question. I'm curious what you guys give for advice when an amazing job is in a different location than a happy life, I guess, would be the primary question there.

And it's- So you live in California. Is this job elsewhere?

The job is in Santa Clarita, and the where I envision a happy life is about three hours north of there.

So it's a long- You envision a happy life? Or what does that mean?

So the location that's about three hours away is where family is, where my significant other is.

That's a difference maker. You buried the lead there. Okay, so what is this amazing job and why can it not exist in that area?

I'm a veterinarian. About a year and a half ago now, I actually moved to where I currently am working in order to take this job because where I was working before wasn't quite making even life ends neat, even as a veterinarian.

So you weren't getting paid enough.

Correct. Even then, The work-life balance just wasn't there. I was averaging like 100-hour work weeks.

Good night.

Now, I found an incredible job, but I I have found somebody that is… We've been dating for about a year now, back where my family is from and where I would like to eventually move to, but now I'm in the quandary of Probably not finding a similar job lifestyle that I have found.

Have you looked at vets in that area?

I have. They can offer similar, but it's not... I guess it's one of those things where it's hard to turn down what I am currently making and the fact that I only have to work four days a week. For what I'm currently making in order to- Do you think they would negotiate?

If you said, Hey, I'd love to apply. Here's what I'm looking for.

I think it would be reasonable, but I- Is the cost of living lower, three hours north? It's actually considerably higher.

Okay, so that'd be a tough life move financially. Yeah. Do you have any debt?

No, no debt.

Awesome.

I mean, I'm moving. If I'm you, I'm like, there's... I mean, I think part of having a happy life, I think a job is a big part of it, right? You spend on average 40 hours a week if you're working 40 hours a week, there.

Maybe 100 if you're Justin.

Yeah, we don't want to go back to that, Justin. But the other the other elements of your life, your family, relationships, I mean, all of that, you can't pay for. You know? Like, those are things that are priceless. And so what is going to create a healthy overall all life. I think, I don't know, for me, it wouldn't be staying in a city three hours away from the people that I love unless she's willing to... Will she move to you when you guys get married?

She would, but I think it's the same situation where her family and her job is where I would potentially be moving back to. So as far as the logistics, it doesn't make a whole lot of sense.

Sure. Is there a world where you move out there, you're working, it's not the dream pay necessarily or dream hours, but you eventually could start your own practice?

That would be something that I'm actually starting to do a little bit. I'm starting to create my own mobile practice in the basically back home.

I would start exploring the options. I'd start calling up and doing some Zoom interviews or next time you're over in the area, meet with them and stop by and get a vibe for what the options are, and then you can figure it out. But I think right now we're making a lot of assumptions about what life is going to be like either way, and I like to have a little more Yeah.

Well, I guess if I had more facts, and I don't know if salary numbers, anything like that, anything that that would be useful to add into this conversation goes, What are you making now in this amazing job where you make crazy money and work four days a week? Right now, it's about 440,000 a year.

That'll do it for four days a week?

Yeah.

What would you make?

Probably around 200 is what I'm getting as far as my interviews go and people I've talked to.

What does she make a year?

Right now, around 40.

Okay. Because I'm just thinking long term. My motivation would be, even before my own family, it's the significant other, right? If you're about to start a life with someone, and I'm assuming, Justin, you guys are wanting to get married. So this is where my perspective is. So if I'm wrong, you can shift me. But me and my spouse. So this is a different... I'm glad you asked this, George, because you're basically moving You're taking 200 grand a year to move for a $40,000 job, versus if you guys together said, Hey, after we're married, why don't we live here for two or three, four years? See if we enjoy this area. It would be worth taking a shot for this amount of money.

If you just stacked up hundreds of thousands a year and you were able to move and start your own practice three years from now. That's right.

Maybe you have a goal that will eventually want to be out there, but because of the situation that you're in right now. But again, that would be speeding up the relationship, and I don't want to do that on a basis of money either. There's some factors that come into play. I also would not move for someone that I'm not married to either or engaged to, at least. Now, I know your family's there, too, which is great. That could be a pool.

But maybe that's, Hey, once we get married, have kids, all right, we're going to move to be closer to the grandparents.

Yeah, or a certain dollar amount or a certain time frame or something. But I think that it's significant enough to have that conversation. Would she move at all where you are?

She would. I guess that's maybe a part of the major question is, we are currently both renting, and if we were to move one way or the other, I guess, when my question now is- Yeah.

You can afford just to keep renting while you guys go through the engagement process. And then once you're married, buy a house together. Don't do that before you're married. It's a disaster legally and all of that if you guys ever break up.

I would use the season you're in to just stack up so much cash so that whatever the next adventure is, it's going to be a breeze, even if it means a pay cut. Thanks for the call, Justin. Thanks for helping you walk through that situation. This is the Ramsey Show.

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Today's question comes from Nathan and Kentucky. I am 14 years old, and I was just wondering what is a good way to try and become at least a hundred dollar... Oh, gosh, a hundred million...

Wait, a hundred- A hundred million.

A hundred millionaire by the time I- I didn't know that was a term. I wasn't sure either. I was just wondering because I discovered you guys on TikTok. Look at us, George. I thought to myself that you all had good information, and I just wanted to know if it's possible. Thank you for your time. Wow.

I'm doing the math for our friend Nathan here, Rachel. It's not looking good. A hundred million. Do you want to know what it takes, Rachel?

I actually would love to know.

Okay. It takes, get this, you would have to invest from the age of 14 to the age of 30, and we're going to assume a 10% rate of return. Sure. From 14 to 30, you would have to invest every single month $220,000. So there's the true answer, Nathan. Nathan. But because now your hope has been stolen from us, let me give you some different advice.

Okay, do a millionaire. Do $1 million.

To get to a million. Okay, well, that's- That would be what?

Do you say $2,000 a month at that point?

$220,000 was for $100 million. If we take it down to $20,000, that's $10 million. That's pretty good. I'm going to go. Five grand a month would get you to $2,000.

So two million? Just about $2,000.

Yeah, just about $2,200 a month from $14 to $30. Okay.

All right.

That's still a lot of money for a 14-year-old to be socking away.

We're at least got a bullseye we can look for. Okay, so Nathan, I would encourage you to get beyond this label of, quote-unquote, millionaire, because I think a lot of people believe If I just had this amount of money- Whether it's one million or a hundred million. Yeah, everything's going to just be fine, and I'm going to be okay. And the truth is, financially, numbers-wise, there's a good chance, yeah, that's really going to help you. But your money habits are going to be a big part of this. And who you are as a person, Nathan, is going to have a big part in this. Because there are people, I would say, that have millions of millions and are still very discontent people, and they're still running this race, acquiring, trying to find some level of joy and peace in life, and they're not finding it through money because money does not bring that. It can bring stability. It can bring you the ability to do things with your life that is fun and have experiences. That is all true. But there is, I would say, a bigger character question there of why do you want to have this millionaire status, and to go ahead and bust the bubble that just because you reach that does not mean that life is suddenly going to be perfect for you.

I feel like that's the myth out there. Oh, yeah. If I can just do this, and by 30, there's that whole the fire movement, and it's like, I'm not going to do anything with my life.

If this doesn't happen by this age, then my life is over and I've failed. It's insane. So I rebuke all of the get-rich-quick, even if it's with decent intentions and you want to do it the less risky way, there's just no good reason that any human needs to make hundreds of millions or even I need to have a million by this age. And the truth is, Nathan, if you follow the Ramsey baby steps, you're going to get there by 30. Your net worth will be a million dollars or more just by staying out of debt, stacking up cash, buying a home, getting the house paid off, investing 15% of your income. Over time, compound growth is going to take over and do the heavy lifting for you. That's the not fun answer, but I do think we need a new book from Dave called Baby Steps, 100 Millionaires. I looked it up. It's called Senti Millionaires. Senti Millionaires, that's right. Oh, so it is a thing. Senti Millionaires. You have 100 million or more.

I am not cool.

I wasn't. Your word is not mine. That's all I'm saying. But thank you for the... Nathan, it was a good brain exercise, even if it wasn't a pretty wild question to ask.

It's great though. Good for you, Nathan.

But the fact that a 14-year-old thinking that way, he's going to be the world changer out there. Sure. Because it's going to take being an entrepreneur to make that money or even close. You're not going to make that as a W2 employee, likely. But I wish you the best. Maybe Nathan will be calling in at 30 being like, Hey, just so you guys know, I have 100 million.

I'm a... Wait, what was it called again?

A sentai millionaire. A sentai. Yeah, a sentai. Now, Alex Hormozey, the super beefcake dude we've had him on the show, and he's a Senta Millionaire, and he's an entrepreneur. That's how he did it. It's great. And he's about my age. So call me a failure. Many do.

You're still working, George.

I'm here. I'm doing it. Still got to feel so great. I just do it because I love it, Rachel. I haven't had to work in years. I'm kidding. All right, let's go to the phones. Einar is in Oslo, Norway. We're going international.

We're going overseas. Here we go.

What's going on, Einar?

Hi, guys. It's such an honor to talk to both of you. I'm great.

What time is it there?

Right now, it's 9:24 past 9:00 PM.

All right. Thanks for staying up with us.

Appreciate it. Thanks for the call.

What's your question?

Thank you. Okay. My question is, how do my wife and I decide the amount and the amount of our personal line items in the budget. I'm of the believe that equal isn't always necessarily fair because, for instance, a haircut for her is much more expensive than mine.

Unless you're George Campbell.

It is the opposite in the Campbell household. But yes, it's a good point.

Yes. You two are the perfect couple to answer this with a woman and man, husband and I spend their money as savers. Okay.

Yeah. I think that the amounts totally could be different. I'll be honest, Winston and I… Well, I think we may budget the same amount, but I spend mine every month.

Winston probably rarely blows through his fun money.

Yeah, he may. I don't even... Yeah. We probably technically could budget less for him, and he would be fine. I mean, he wouldn't need to spend it.

But it's yours equal in the budget?

I was going to say it is equal in the budget. You're making me question, why do we do that? Why do we not just correct it to what's reality in the crew's household. I'm not sure.

Because I don't think Winston would care if you lowered his amount. No.

If Winston wanted to buy something, like yeah.

That's how it goes. We're going to figure that out. That's how it goes. Once a year, Winston goes, I want to buy this, and he just does it.

Yeah, he spends all of his money.

Rachel's like, Oh, how much fun money do I have this month?

I would agree. I do not think that it has to be equal. I say that cautiously, hearing people that are listening or watching us now that are not in your position because you're saying that yours would be lower than correct? Correct. Yes. So I think that is totally fine. But I don't want some crazy spouse out there listening and being like, Oh, my gosh. Mine gets to be higher and you should lower yours.

What I heard on the show, they said the husband's should be lower.

Yeah, yeah, yeah, yeah, yeah. So I don't want to create conflict between married couples out there. But if the reality is that you are naturally a saver and you're not going to spend as much as she spends, then, yeah, I think it's reality should reflect the budget. So I would for sure, and I feel bad about that because you're right. Technically speaking, women, I think, do spend more. George is the exception here. You got the right co-host.

But here's the other thing. I don't have any hobbies.

Except for your dogs and your hair. Exactly. And coffee.

And coffee, but I don't go crazy there.

Do you spend more than Whitney, though, a month?

I wouldn't say in fun money because, again, I don't have fun. I went to a movie last night, and I was like, Wow, I'm really living. That's it. So, INR, can you Can you give us a number here? I don't know, what's the currency in Norway? Is it a kroner? Krone?

Yes, correct. But to keep it simple, we can just divide the total amount in Norwegian kroner by 10, and we got Got it. The dollar amount. Okay. We bring in around 6,000 a month. For the next month, we set up actually equal, so 200 each. But last month, we set up $450, $450, $450, $450.

And it worked out?

Yeah, sure. It worked out. But she feels guilty sometimes.

See, that's something we can deal with outside of this, but it has nothing to do with the budget. It's just she feels like it should be more equal, and she feels bad spending. But the budget is permission to spend.

It is, and it should be a reflection of reality. The reality is what she spends per month is going to be more than yours. That's totally okay. Regardless of who brings in the money, put it all together, you say, What is our reality of our life? And that's how we're going to budget.

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Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. The number to call is 888-825-5225. Diana is up next in San Jose. Diana, welcome to the Ramsey Hi, yes. Thank you. Absolutely. How can we help today?

I have a question. I'm 28. I have not been, and I've been saving for a house for about five years, and I'm not seeing No result. I just wanted to ask, what else could I be doing so I can afford a home in San Jose?

Where are you seeing a lack of progress? Is it in the savings account or is it what the amount of money will do for the housing market?

It's the housing market. I have a full-time job and I make about 100K a year. I have about 100K saving cash, but it seems too little to buy a house here in San Jose. And the reason I would like to stay here is because all my family is here.

Yeah. I mean, it is so difficult, Diana, because you are in what the top three highest real estate markets. I mean, the Bay Area It's like that, Miami, Manhattan. I mean, it is the most expensive real estate market. I mean, it is. So it's going to take you, on average, twice as long as someone living in Nebraska and buying a house. So even though you make 100 grand, which is great, it's not crazy money for out there, even. I mean, your cost of living is high, and the market is. So I think it's one of those things, Diana, that it is frustrating. And I think you're going to have to map out and just say, Okay, I'm in this for the long game. And it may be that I'm 32 when I own a home and not 29 or 30. Bumping it out multiple years is probably what's going to have to happen. I'm assuming you're looking at a reasonable situation for yourself because are you single?

Well, I have a significant other, but we're not married, and I don't want to buy a house together right now, maybe in the future.

For sure. Smart woman. I think a way to get into the market, if you can, is even a condo or a townhome. It may not be a single family home, just to get yourself in a position to even own something in that area, right? It may not be a single family home right now.

It might need to be further out of the area. Do you commute to work in San Jose proper?

Yes. My work is in San Jose, and my commute is about 15 minutes.

Fifteen minutes. Okay. Let's say you were going to do a half-hour commute. Would housing be cheaper out there?

Yes. Maybe in Garroy or Morgan Hill, I'm guessing, but it's getting more expensive. People are moving out of San Jose to afford a home.

They've got the same idea as you. They're going, Well, this is where I can afford, and therefore supply and demand. So here's what I would do, Diana. I would sit down and go, What are my non-negotiables? What must be true, and what can I compromise on? And that might be, Hey, I'm willing to get a fixer upper, but I'm going to live in the part I want to live in. Or it's going to be brand new because that's what I want, but it's going to be further out. Or it's going to be at the townhome instead of the single family. So I think we need to start going, listen, the reality is it's an insane area to live in. When you make 100 grand, that's amazing money For most areas of the country, and yet it's not enough to buy a home in San Jose for a single woman. You know what I mean? And that might change one day as you get married and your spouse makes 100 grand, and now we're making 200 grand or more. Well, now we can It's great over time. It doesn't have to be a forever decision, but I also don't want you sitting on the sidelines for another five years.

Okay.

Is that helpful?

Yes.

Okay.

I wish we were- Thanks for the call. We could have a secret life hack good news I mean, I'm telling you, California real estate, you all.

You get your Southern California, you get your Bay Area. It's just so expensive. I mean, in other areas are expensive, too, right? I mean, all of housing is up. We know that. But there are these pockets around the country that it's I mean, it is what it is, right?

I mean, you have a beautiful home, but if you decided to move to Beverly Hills or wherever, and you put that same money, you go, Oh, we need to get like a- It would be a fourth of it, probably. We can't fit the kids. You know what I mean? So there's just a reality to it. Yeah, totally. That's not fun to deal with. And so if you do decide, I'm going to work in this area, we also have to figure out how do we get our income up in order to go with the ultra high cost of living. We need an ultra high income in order to make this work long term.

That's right. And it's the math, which is not It's not always fun. Math doesn't have emotion. We do, or I do. I wish math had more empathy. George has some emotion. I need more math. No, but it's hard.

Rachel is the empathetic friend. It sucks.

I mean, man, it's hard.

All right, well, let's move on and hopefully have some good news. Barbara is in Atlanta. What's going on, Barbara?

Hi. I don't know if I have good news or not, but I'm really happy to be here.

We were hoping, but you are the good news.

We're happy to talk to Barbara.

We're glad you called.

Thank you. We're getting close to retirement. I'm 63. My husband's 66. We have $700,000 in an investment account, but we also have $40,000 in consumer debt. I'm really tempted to take some of that money and pay it off, but he's starting to draw Social Security next month, and it'll be about 3,500 a month. I'm wondering if we should use that to pay it off or if we should invest that and take out a lump fund and pay off our debt. We also have a little mortgage.

Okay. What's the 700 invested in?

It's with one of your smart pro investors. He's got it in a mutual fund account.

Is it with Is it in a Roth IRA or a 401k, or is it just a standard just growth mutual fund?

No, it's a 401k, and we have a smaller Roth.

Okay. But that is essentially, that's your retirement nest egg is the 700k.

That's exactly right.

Okay. So That plus whatever we get in Social Security, that's the retirement plan. We need to make sure that we can live off of all of that.

Yes. We figured out we can.

Okay. Have you talked to your smart investor pro about the best approach, mathematically, strategically, for where to pull this money from, whether it's from future income versus your investment account?

We talked about the lump sum, and he says he thinks that's a pretty good idea, but he hasn't really gone any further than that. I'm starting to think that maybe we have some options.

You definitely have options. I love the idea of not touching the nest egg. That would be my number one goal for you guys is to leave the nest egg to grow because we know on average, it's going to double about every seven years. So seven years from now, if you don't touch it, you got 1.4 million. Well, that's a very different retirement. I don't want you to decimate the nest egg before we even get to retirement. If you can use the 3,500 and you continue working, you guys are on a budget.

Are you guys still working?

Yes. Okay. How I'm not going to work another year, and I'll work probably two more years.

Okay. Well, how much are you guys making?

Well, we bring home $8,000 a month. That's our take home.

Okay.

How little of that could you live off of? What do you need to get by?

Well, we break even each month because we've got that consumer debt. You're spending eight grand a month right now? Yes, and we need an emergency fund. That's our whole problem because we're spending money We're putting money on credit cards for tires, and our dogs need surgery and things like that. So we need to get an emergency fund going, too. I'm really dedicated to working these baby steps, but I feel like it's late in life, and I don't really know if everything applies the same way.

Totally. Yeah. And it does. And what I would be thinking about, Barbara, is, yeah, could you pull money? You have 700 grand, so could you pull it and pay off this 40 grand and be fine? Yes, you could. Totally could. But the truth is, is the way you guys are living, your habits aren't changing by doing that. And by living paycheck to paycheck without savings is what I worry about you guys going into retirement, because with those habits, that magnifies the more money you have. And so I would rather your habits change here in the next year or two as you guys enter retirement more than anything. So I think it would be just a good practice. And like you said, you're in your 60s, and you're like, Is it too late? I'm like, No, it's not too late. But I do think it's harder to change a habit that has been in place for 40 years or however long you've been working and living. So I think it can be a harder change for you guys. But I think it's a needed one. And I think taking that eight grand and saying, What can we do to not just live off of that paycheck to paycheck, but what can we do to cut expenses, get margin, pay off this 40, get an emergency fund in place, do it all with your income here in the next two years, that would be a great challenge for you all because then your habits have changed, you've created a new way of functioning with money, and then you get to go into retirement with freaking 700 grand, which is amazing.

Yeah, that would be my goal. We're not retiring until we're out of debt with an emergency fund. And that means we're going to work until we have to. And that should put some fuel to this fire. Thank you for the call, Barbara. This is The Ramsey Show.

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Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz. Open phones at 888-825-5225. If you want to know the best way to manage your money, there's no get-rich-quick life hacks here. It is by doing a budget. It's We're looking at the reality of what you make and what you're spending and then trying to stick to it. And that's what we've done with our EveryDollar app. It's completely free. We've got over 10 million people using it. You can get it in the App Store or Google Play. And it's the same way Rachel How don't I manage our money. It's the same way I managed money when I was broke. And now that I got some, I still use the budget to make sure that I'm hitting my goals and spending what I should be. So go check it out in the App Store or Google Play. And if you're listening on YouTube or podcast, we've got a link in the description for you. Wes is in Philadelphia. What's going on, Wes? How can we help?

Hi, George. Hi, Rachel. I have a question. I am on Baby Step 2, and So my wife and I are on Baby Step 2. We purchased some property on a tax sale back in 2020. And then our plan was to, because it was only a couple of miles from our house to eventually build a house cash and rent that out. But plans have changed. We moved up north to Pennsylvania for my job, and I am now looking at selling that property. And while we're on baby step two, we are looking at selling that property to be able to either, A, pay down on our debt or B, help my wife start a business to be able to increase their income and then pay down the debt faster.

How much are you going to get from the sell of the property?

So Retail appraised value is about $21,000. It's not much land. But if I were to sell it to an investor, it would sell much quicker, and I would probably get between 10 and 15.

How much debt do you have?

Currently, consumer debt, we have 43,000, various, some credit card, some medical. I have a little bit left on my truck along with student loans.

How much do We've already... How much you guys make a year?

We've already paid down 49,000.

Nice. Well done. How much you guys make?

I make 140 with my salary, but I have the opportunity with bonuses and things to make up to about 180.

Okay. How much does your wife make?

She stay at home with her two boys.

Okay. What business is it that she's wanting to start?

Well, so something we've talked about is is for a family business that she would manage is a monthly family type of activity type of thing where we would put together a box of a kit. Oh, yeah. So one of the ideas would be maybe for a spring or a summertime activity, there be a small easel in there with a poster board and some water balloons and some water-based paint. And you fill up the water balloons with the paint, throw it out there, you have an afternoon of fun, and you have some artwork to put in the living room.

How many of these kits has she sold so far?

None yet. We're just in the thought process. We have not even listed the property yet. I'm just trying to look at what options type of thing you would go down.

So I would put this towards the debt, and I would do that because the business model, the business plan, it hasn't even been happening. It would be different If you're like, Oh, my gosh, she has all this business. She's doing this thing. And, golly, we're making this. And if we just put a little bit in there, she can make 4X. If there was actually a proven sustainable business, I may could talk about something different. But as of right now, because it's just a complete startup whiteboard, I would definitely get you guys in a position where you're debt-free. So that 10 grand, I would definitely take to that 43, make it 33, and start working your way down. And then I would get an emergency fund in place before you start that business. And then once you guys are debt-free with an emergency fund, then she can start that. And I would start it very slowly, move at the speed of cash, and slowly work her way up. Because I think sometimes we talk to people on the show and they have a dream, and they want to go get a business loan for 60 grand to start something that's not proven out, and they get themselves in a mess.

So just for future advice, I shouldn't ask for that, but I'll give that to you for free.

No, I appreciate that, Rachel. And that's the other thing is with us looking at selling this little piece of land, we would have that cash, and we were just trying to figure out which would be the better option.

Yeah, I would definitely put it towards the debt.

The secret sauce here is your amazing income. It's not the land, it's not the business opportunity. It's I make 140 to 180 grand. Let's take control of that thing. Because if you can start throwing six grand a month of the debt, this thing's gone soon. Yes. I think we've been hanging on to it too long.

Yeah. Well, we've been working on it for a little bit less than a year now.

They paid off 49, yeah.

They paid off 49, yeah. In a year. You'll do the next half in what? Nine, 10 months?

If we are unable to sell the property for whatever reason, the storm, Helene, that went through, I'm not sure if we'll be able to sell it. But if we're able to sell it, then we'll have it paid off before springtime. But if not, then it'll probably be summer to maybe early fall next year.

That's great. Cool. Good for you guys, Wes. Well done. That's a lot of hard work. I love the business idea. They have some of those subscription boxes, and I've gotten them as a gift. One of our kids got one as a birthday gift. That's fun. Yeah. Every month, they got this activity in the mail. It's exactly what you're talking about, Wes. It's great. I think, yeah, there's some fun outlets and creativity when you see a need out there to be able to start a business. I love it.

One day, she'll call back and say, I have 100,000 for my side business. What do I do with it? That's right.

Oh, my gosh. It blew up. Or 500 grand should my husband quit his job.

That's my favorite. All right. Ben is in Minnesota. What's going on, Ben?

Hi, George. Hi, Rachel. I guess I just have a question about my company-funded annuity Okay. And whether I should be investing alongside that. Right now, I'm technically in baby step three. I'm just looking ahead.

Okay. What are the options for retirement through your company?

Well, it's a company-funded annuity plan. So whatever I make a month, they'll put in 25% of what I make.

Regardless of if you put in anything. So you put in zero dollars, they're still putting in 25% of your income.

Yes.

That's awesome.

It's great. It's a national electric annuity plan, so it's a lot of linemen habit.

Yeah. And that's the only retirement- A lot of linemen. There's no 401k, so you're on your We have a 401(k)(2), and right now, I've always just put in 5%, which is the minimum.

Okay. I've just been doing that and just been living that way. But I'm just wondering if I should be putting money into a Roth, too.

Yeah. So once you have your Baby Step 3 completed, so you have your fully-funded emergency fund done, then, yeah, I would look to say… Because the 401(k) Okay, what's the match there? Is it 5 %? And that's what you're matching to?

No, they don't do a match. They don't have a match. Basically, their big thing is that... The big thing is the annuity plan for them.

Okay. Got you. There's no Roth option.

Then I would keep my 15 % in retirement. I would not let them do the annuity and all of that. I would not put my own money in it. I would, yes, go to the- No, they do it. Okay, great. That's awesome. Yeah, so I would go to the Roth first, max it out, and then go to the 401k after that.

Okay. The reason I'm really asking is we're going to buy my wife's grandparents house one of these days. They're in their 90s. I was thinking of flip-flopping maybe step four and five.

Well, there's 3B, where you start saving up the down payment, and you get to choose how much you invest during that process. But thanks for the call, man. Hey, if you're listening on YouTube or podcast, the show is about to end, so head on over to the Ramsey Network app to finish the show in a distraction-free experience. You can go download that in the App Store or click the link in the show notes. We'll see you over there. Hey, you're still here? What are you doing? You do know that the rest of today's show is playing right now over on the Ramsey Network app, right? All you got to do to finish the episode is search Ramsey Network the show notes to download the app for free. Yep, you heard me right, for free. Then right there on the home screen, you can watch the rest of today's show. Bada bing, bada boom. All right, I'm getting out of here. Enjoy. We'll see you on the app.