Transcript of It’s Time to Face Your Financial Reality

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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. It's The Ramsey Show. I'm Jade Warshaw. Next to me, Rachel Cruze, taking your calls about your life and your money. So give us a call. Jennifer's done that. Jennifer is in Las Vegas, Nevada, on the Hey, Jennifer, how can we help today?

Hi, thank you for taking my call.

You bet.

Okay, so basically I wanted to get some advice. I thought I was doing pretty good financially. Um, and I don't follow the, the Baby Steps or do any of that, um, but I watch you guys and I know it's, it's good solid advice that you guys give. But now, now that I'm getting older, um, I realized that I don't know. I don't even— I don't know if I'm ever going to be able to retire.

How old are you?

Um, I am 53 years old and my husband is about same, same. He's 52, almost 53. And, um, we bought a house probably 5 years ago and, um, you know, that was our dream and we had a lot of debt, but we've been plugging away and we were almost there. Like, to me, I was like, hey, I'm almost there. I have a little bit left. I got like 6 more months left on a car payment. I have maybe one credit card that I have like a couple hundred bucks on. So, that's like almost done. And then just recently, my husband had an issue with his teeth. Like, we've always known that he— I mean, he's always had like kind of issues with his teeth, but—

Mm-hmm.

We just kind of put it off, put it off. Um, and so finally it was really bothering him. He went to the dentist. They're like, sorry, buddy, we, we got to get rid of them because they're—

All of them?

All of them.

Oh my gosh.

How much did that cost?

So it was about $40 grand.

With like root canals and like the whole deal?

No, no, no, no. They just took all his teeth out.

Oh, so $40,000.

Was that your wake-up call financially of realizing Oh my gosh, we don't. Yeah.

And the hard part is you're 53 and it's like the hourglass sands, you're seeing them running out.

Yeah.

Yeah.

Yeah, yeah. You know, and I mean, like, to me, health is, sometimes it's a little bit more important than just how many things you have and collected, you know?

Sure, yes.

And so we thought about it for a while and we kind of knew it was coming, but we kept putting it off, you know?

Well, I mean, let's be honest. The dental thing and the health part of this, you're right. Like, there are certain things that take precedent and it's like, if it's healthy, you wanna lean all the way in. But that wasn't the cause of what you're feeling now. That was one of the many dominoes that started tipping over. And when you have, you know, 10 or 12 dominoes in a row, you feel the weight of all of those tipping over on you.

Right.

And so I think that's what's taken place. And to your own point, it sounds like it's kind of just been years, maybe even decades of, Kind of knowing what you need to do, but not leaning into it. And I think that's what you're feeling right now.

Yeah, I feel that, you know, because— and the thing is, I'm— I've always been the one in the marriage who's taken care of all the financial stuff, you know, paying the bills, all, you know, all that kind of stuff. And we've always been on the same page. It's not—

But where has it left you? Where are you guys today? Like, what's the picture?

Yeah, how much do you have in retirement?

Okay. So this is the sad part. Um, I have an IRA and I have a Roth and I have a savings account. All of them all together are about $24,000.

Okay.

And that's it.

What about him?

He has a— he, where he works, he just, um, he just been there for 5 years. He just hit his 5-year mark where he's been working. And so he is eligible for the pension.

Okay.

But I don't, I don't know what that's going to be, you know what I mean? Like, sure. From what he tells me, he doesn't have any money saved.

So, but basically what you're telling me is he got saved by this pension because there's nothing else there. That's what I took away from what you just said.

Yeah, because we've always put everything together. So like, yeah, the IRA and I mean, yeah, the, the retirement, it's like it's under my name, but it's both of ours, you know what I mean?

The total is $24,000 for all of you between— for the both of you between IRA, Roth, and savings.

So how much do you guys make a year, Jennifer?

So we— so he just got a raise. So now between the both of us, we both make the same amount, about $50,000 a year. Okay.

So $100,000 total.

And how much consumer debt do you have?

Other than like my car and this new loan?

Everything.

Everything. I'm going to say it's about Let's see.

Jennifer, I wanna call out something here because this is gonna help you off of this call. What you're doing on this call is I think what you've done for the last, for your working career from age 20, probably when you got your first major job until now, age 52, 53, is you look at something and your first instinct is, ooh, this might be kind of bad. And so instead of looking at what it is, you kind of say, oh, well, it's not that bad, we just did this. And you kind of COVID up the negative thing with the most recent positive. Oh, it's not that bad. I mean, after all, we did just go out to eat last night. Oh, that's not that bad. After all, I did just get a raise. Oh, that's not, right? And so even with the questions that Rachel and I are trying to get you to answer, we can't get the answers because you're trying to cover it up. Now's the time, like, put the chips on the table so we can help you. How much is the debt? Let's just say it.

Well, now it's about $43,000.

Okay. And that's between car, credit card, dental loan, anything else, student loan, HELOC, anything else?

No, no.

So you used some money that you had saved for the dental procedure? Because you told us it was $40,000.

No, that was all in. $40,000, that's how much the dentist quoted us. That's how much the loan was for.

Yes, okay.

But no, we didn't tap into our savings account.

Okay, so how do you have $43,000 of debt Um, well, it's $40 for the dentist.

It's $3,000 for another, uh, dental bill for me. And then, um, I have consumer debt. It's about $1,000.

What about the car? What about the credit cards?

Oh, the car. I'm sorry. The car is $3,000 for the car.

Okay. What about the credit cards?

No, that's it. The credit cards I owe— credit cards I owe $700 on one and I owe $300 on another.

Okay, so let's really, really—

can we just— can we level set for a second?

Level set it right now that what you've been doing has not worked.

Do you agree?

I mean, it— I mean, we're not like homeless, but yeah, I know.

Well, is that— hold on, hold on, hold on. Stop right there. Is the standard— because the standard is not homelessness. That's not the bar that we're trying to beat in life. The bar that we're trying to beat is your best self and feeling like when you go to work, 9 to 5, and sacrifice all that time and effort, that you're actually building something.

I kinda wanna just— I love you, Jennifer. If you were in front of me, I think I would just grab your shoulders and shake you and be like, Jennifer! Jennifer! You got about— you got a solid 15 years left. Let's move.

Let's go.

Let's do some stuff, right? Let's do some stuff.

And don't sugarcoat it. Don't sugarcoat this anymore. You know, we're not here to judge you. We're here to be your friend.

That's why— We wanna put you on a plan to get you out of mediocrity into a thriving, situation financially, where you're not having to cover up anything. That it's like, this is what it is, and I'm proud of my situation. So, Jennifer, if you stay on the line, Christian's gonna pick up. We're gonna give you Total Money Makeover, the book, 'cause what we're gonna start to do is we're gonna start to pay off this debt, starting with the credit card, the car. You're gonna go down the list. We're gonna save some of this money. Some of this money in savings that you have that's not invested, it's gonna be thrown at the debt, and you're gonna go through the Baby Steps. At the beginning of the call, she said, I don't really do the Baby Steps.

Well—

Now you do.

I kinda feel like you should. You know, just try something new, Jennifer. Try something new.

Like sands through the hourglass.

It is, right?

So are the days of our lives.

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Well, back to the phone lines where we have Andre in Los Angeles, California. Andre, you are on the line, buddy.

Hi guys, how are you doing?

Doing great. How can we help?

So I had a question. I'm a bit worried about my dad and the way that he uses his money. Um, I'm looking to get married maybe middle of next year, and I'm just kind of worried about his financial habits. Um, and so I want to have a conversation with him about it, but I don't know how to go about it.

What are the habits you're, you're seeing that you're concerned about? What's he doing?

He—

so just to give some context, um, my mom is like no longer around, so He, for example, he does not cook for himself. He orders out a lot. He eats lunch like he buys lunch every day. He buys dinner every day. And sometimes it's takeout, sometimes it's delivery. It's, it's just a lot of money on food overall. On top of, you know, he's got a mortgage, he's got other expenses as well.

Do you know how much he makes? Andre, do you, do you have a pretty good grasp of what's going on or it's just more of a feeling and you're seeing a pattern happen that you're nervous about?

Well, I know he, I know he can sustain himself. I just, I just, um, think that maybe the money that he makes can be allocated towards other places as well. But I think for the average person, he's spending like a little more than the ideal amount.

Is it mostly the money that's bothering you, or is it just the unhealthfulness of kind of the way his lifestyle is looking, or is it both?

It's a bit of both, actually.

And how old are you?

I'm 23.

23. Okay. And you're— are you living with him? Are you home, or are you on your own?

Yeah, I live at home with him. Yeah.

Okay.

And this is new— is this new behavior? You said your mom's not in the picture. Did they get divorced? Like, did something trigger this behavior that you're like, man, this is new, this is unhealthy? This is not good for his money.

No, um, she passed away, um, coming on 5 years now in December.

I'm sorry.

So, no, thank you. Um, you know, so I guess to him it's like, well, I have no one to cook for me, so my only option is to, you know, buy food.

Yeah. And, and how much does he make a year? Do you know?

Maybe like $100, $110.

Okay. And has he complained about money to you in general, about not being able to do X, Y, and Z, and I don't have enough for retirement or anything? Is there any other— anything that he's worried about?

He has mentioned about like money strains before. Um, so he's got the mortgage, he's got a car payment on a car that he rarely uses, which even To this day, I still ask myself like, why'd you buy that car if you don't even use it?

Yeah. Okay.

So, yeah.

So it's these small habits that you feel like are adding up and you want his money to be best used for him, not being wasted basically. Is that your main question?

Yeah, that's kind of about it.

You know, when I hear what you're saying, I think there's a lot of grief that's at work in what you're seeing. It sounds like, oh, you know, mom is gone. She used to cook the meals and he never figured out how to start doing that on his own. And you're there like watching firsthand, like, dude, this is draining your money very, very quickly. There's a car that nobody's using anymore, but we haven't sold it, we haven't gotten rid of it, those sorts of things. I might, Andre, approach this from that side of it more so than the financial side of it and just say, gosh, Dad, I'm noticing some things. And you know what would really make me like happy? I miss Mom cooking. And I feel like I would love for us to just make some meals together a couple of times a week and it would make me feel a lot better. Would you do that with me? And I think that that's something that both of you can benefit from without attacking this from like, hey, Dad, you're spending too much money on going out to eat. 'Cause I really don't think that's the root of this problem.

I think it's a grief thing and a gender roles thing that he's just missing his wife cooking the meals.

Yeah, and there's a bigger picture to it too of, you know, it's not the delivery food stuff that's gonna probably like take him out. Probably not. But long-term, of you saying to him, Dad, I wanna see you thrive. I mean, you're coming up on, how old is he? Is he in his 60s?

He's 58.

58, okay.

He says he wants to retire within the next few years. He's a businessman.

Okay, great. So, I think you can just say, hey, Dad, I know that this is coming up timeline-wise, and I would love for, and you could say, I'm happy to do it with you. I would love just to look at some of your expenses, 'cause I just wonder if you can actually put a little bit more away every month, that would really accelerate where you wanna be in 5 years. And we can look at some expenses and what those could be, right? And I'm sure food will be a glaring option. The car payment will be a glaring option, right? And so, it's more of a discussion and a suggestion for something bigger, right? As Jade's talking, let's solve and let's press into the grief. Let's solve for in 5 years, right? If you kinda just nitpick every little thing for him, especially as his son, he's probably gonna be like, what are you talking about?

Yeah, the powdered butt syndrome.

Yes, yes, that's right, that's right. So, I would go at it more from those angles than, Dad, you're spending too much on Uber Eats.

How do you think he would respond to that, what Rachel said?

I have tried bringing it up to him, but I think since I'm the youngest of his 3 kids, he kinda looks at me like, I mean, I'm sure he respects me as an adult, but I think he— I have 2 older brothers, so I think he would take it better from them, but I wanna get better at having those conversations with him.

I mean, there is a piece of this, Andre, we touched on, we said it quickly, but like that powdered butt syndrome, just that feeling of, hey, I was here when you came out of the womb, I changed your diapers, you don't know more than me about this. That really, and it's not even a pride thing, it's just like a, It is what it is. It is what it is. And so, don't take that personally. You'll probably feel the same way with your kids when the time comes. I just think it's very hard to bridge that gap and do what it is that you're trying to do. I think that if you can just say things to him that are more curious, instead of you trying to say, you need to do this, that could help. That could help you open up the conversation. Not so much that he'll have the conversation with you, but you never know what he'll go back and think about and, you know, start putting in place. So, if you just say, out of curiosity, Dad, are you still planning to retire in the next 5 years? Oh, okay. I was just thinking about making, you know, I was just thinking about, you know, making sure that you have everything ready.

Oh, okay, cool. You know, and just say things out of curiosity, not telling him, that could really help.

And part of becoming an adult is realizing that You can't change people. So, you may get to the end of all of this, which is a very real reality, that he's just not gonna listen. And so, you have to be okay with that as well, right? That the— that you saying these things is out of your own concern for him. And it can't be hung on the hat of like, this is gonna change him. And if I say it this way, then he'll for sure get it, all of it, right? Like, I think there's wise ways to go about it. But at the end of the day, too, I mean, and this is true for adult kids to parents, parents to kids, friends to friends. I mean, all of it, that you just— if you have an opinion about something, and you see someone who may be hurting, right? And you're like, I wanna be able to help them. And you present them with what you think is the solution. God willing, they hear it. And what a gift that would be, that you change course. But then, there's also that really harsh reality that— At the end of the day, they may not.

And it's not up to you to save them either, like, you know, at the end of the day too. So, it's— it gets so messy. But I so appreciate, Andre, your heart for your dad. You know, you see him and you're like, man, it's so bad. And I think you're right too, Jade, of it goes deeper than just the food delivery. It's like, he's hurt. He's probably hurting.

Yeah, I think there's some grief there. And I think in those moments, the best thing you can do is kind of lead by example. Like I said, whether it's the meals, being like, man, I really miss mom's cooking. I would love to cook some of the food that she used to cook for us. Like, I feel like that'd be— it'd be really good for me if you'd do that with me. Even, you know, I feel a little stuck in a couple areas ever since mom died. I think I'm gonna start seeing somebody, you know?

Yes.

Saying those things out loud instead of keeping them to ourselves, it really does help the people around us go, oh gosh, I— okay, that's not so bad that I'm feeling that way. Or maybe, I need to speak to somebody. So—

There's some healing in it.

Yeah, there really, really is. So, anyway, we're pulling for you, Andre. Like, this is— This is something that's going to take some time, and you're a good kid. But to Rachel's point, we can't always change the people we love. We— that's only something they can do.

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The truth is, we wish we could get to every call and every question here on the show, but that's just not possible. We have a limited time, so If you do have a question, a money question, and you want an answer for your specific situation, go ahead and head over to our website and use the Ask Ramsey tool. Now, Ask Ramsey is our free AI tool, and just know that it's built and trained on proven Ramsey principles. So you will get an answer the exact same way that you would get it if you were to call into the show. Go ahead and ask your question today at ramseysolutions.com, or you can just click the link in the description if you're listening on podcast. or YouTube. All right, Candy is in Arkansas. Hey, Candy, how can we help today?

Hey, so we recently sold our farm and our cows, and it's a good bit of money, you know, for us. And we, we actually close on the land next week, but we sold our cows, and I have my 401 with Edward Jones, so we Went to the guy that I used for that and we opened up a money market account. And, uh, we, we talked about when we close next week, you know, putting that money in the money market account. And because I told him I really don't know that much about, you know, the, the market, so I don't want to put our money somewhere we're going to lose it.

Are you planning on using that money for anything in the, in the near future? To buy more land or to—

We're going to use— yes, we're going to use part of it to buy land and build another house. We, we built our last house, we just had it blacked in, we did the rest of it. So that's what we plan to do again. Um, but he was talking about, um, putting money in, in several different banks in CDs and staggering, you know, the maturity of them. And I just want to make sure that Um, the land we sold for $1.6 million, and we sold our cows for $102,000, so $1.7 million.

How much will— of that will you use for the new land and the build?

Um, I would guess probably $500,000 because we're just gonna buy a little A little bit of land because we had so much land. It was just too much.

Okay, gotcha. So you'll have $1.2 million left after that project's complete, right? Okay. And how old are you, Candy?

I'm 60. My husband's 65.

60.

And I'm gonna try to— I'm gonna work my last year and a half, you know, so I can retire at 62.

Yep, that's great. And how much do you guys have in retirement now?

Um, I have like $60,000 in my 401k. He, he doesn't have a 401k or anything.

Nothing for retirement. So this is— would this be your retirement, would you say? $1.2 million, which you guys will live off of?

Yes. And he draws Social Security, I think like $1,200 a month.

Okay.

And then he draws an annuity for $700 a month till Because he has a kidney disease. And so when we put it over into that, he'll draw it for a lifetime till he passes away.

But it won't continue after he passes. You won't receive that benefit?

No, no, I would in the first 20 years. If he passes away, I'll do it up to 20 years, and then after that it will stop. But he'll draw it for his lifetime.

Okay. I want to go back to something you said that I thought was interesting. So you Have the money from the sale of all of this. And you were saying that your accountant or your— is it an accountant, your tax professional? Who is this person that is separating all this money for you?

He's the guy that we— that I use for my 401 here where I work. He works at Edward Jones.

Okay.

So we just went to him.

Now, why did he say that he was putting it in all that, those different accounts? Is he trying to like make sure you've got FDIC coverage? So he's just like limiting it at $250 per account. Is that what he's doing?

Yes.

Okay. Um, and what's the horizon on buying the, the new place, the new land and the new house?

I don't know. It's kind of, um, we've been looking for land and it's kind of hard to find it. Yeah, but the, yeah, the, um, the house that we've built that we sold, we're gonna rent it from him. Um, for like $200 a month for the first year, $500 a month for the second year, and then it will go to regular rent if we're still there the third year. So, you know, we're not just like in a rush to have to do it.

Sure, sure. Which is good. I think that's smart to have some patience for sure. So, Candy, if I were you, I mean, yeah, you're 60, husband's 65. I understand you're a little nervous about putting money in the market. I would not put any money in the market that you're going to use to buy this land and build this home. So I would not touch $500,000 of it. I mean, I would keep that where you want to. If you want to do CDs, you can, or a high-yield savings account, a money market account. But the rest of the $1.2 million, I would highly consider what your options are here. And the fear of the market, I would want you to research. I want you to do this yourself, because we can sit here and tell you and talk through it. But I want you to look at how the market has performed. And you will see some down months in 2026. You're going to see some up months. You're going to see it all. But it's around the average right now is probably 14% in 2026.

Uh-huh.

Let me check it.

And so, when you look, and again, when you invest, you want it to be for 5 years or longer. so that it can, the ups and downs can, you know, equal out, and then hopefully it's continuing to grow. And so, just the power of the interest rate is really important, Kendy. If you keep this money, $1.2 million in CDs, it's gonna grow at about 4%, okay? So, in 5 years, that'll be, that $1.2 really just grows to about $1.4. But if you have invested it, Okay. and not in like a single stock, okay? When I say investment, I'm talking about a mutual fund or an index fund. And so, it's spread out over 90, to 200 companies, or if it's the S&P 500, it's 500 companies, right? Like, it's, it's, you're putting your money in a lot, okay? Not just a single stock, in hundreds of stocks, literally. And on average, and I just plugged it in, so at 11%, which again, the past couple years have been way higher than that, not every year will be like that, but 11% for the past couple years is a little bit of a conservative number to use.

It would grow to over $2 million.

So—

Oh, wow.

So that would be in 5 years?

In 5 years. And then, if you just wanna do rough math, that money will double every 7 years. So, if you didn't touch it, which I know you might, because this is what you guys are gonna live off of, but in 7 years, that $1.2 is $2.4, and then so on and so forth. So, the growth that you guys can get and live off of is something that I would highly, highly consider. And CDs, And, you know, things like annuities and all of that, they're just very conservative. I mean, I would say, quote unquote, safe, but they suck as an investment. Like, your money could be doing so much more.

Wow.

And I know that probably isn't gonna change your mind completely, but I want you to talk to your advisor. And if he continues to tell you to put in CDs, I would look for a SmartVestor Pro. You can find one of those on ramseysolutions.com, because these are trusted people that are in this world of investing. And there's something powerful about saying, yeah, you're, you know, you're a young 60, Candy. Young 60.

You're a young 60.

You're not 85. If you were 85 and you're like, I'm scared to death, I'd be like, girl, do what you gotta do to sleep well and, you know, ride off into the sunset. But you still got some years ahead of you.

A lot of years.

That this money could be working for you. And for it just to sit in CDs, ugh.

Yeah, and I mean, I feel like—

I think the reason he suggested CDs was because of us. We were like, we're not ready to put it into anything because we don't really know what we want to do or put it in. We were just unsure. So that's the reason he suggested CDs.

And that would be the right thing to do. I mean, he shouldn't invest you in something you've said no to or don't understand. And so I think I can respect why he did that. But let this be the jumping-off point for you guys to really dig in and even sit down with him or, like we said, another SmartVestor and just say, help me understand, because I do know that I'm missing out on returns, and I don't wanna keep missing out, but I wanna understand it. I don't wanna just get in because the people that I listen to the radio told me to, or because, you know, whatever his name is, because Bob told you to.

And it is scary. I mean, if you're watching the news, and, you know, we bomb Iran, and it's like, oh my gosh, the market's got— right? I mean, like, it's just like, it can seem scary. And that's the frustrating thing is if you're if your investment advice is coming from the news, either side of the aisle, you're not getting the wins. They don't promote that because it doesn't give ratings. What gives ratings is scared doom and gloom moments that they can point the finger and blame the person across the aisle. So, you have to really look at the facts when it comes to this.

Thank you.

And it is so much more positive than I think you realize, Candy. But I want you to do that research and figure it out and ask good questions. And hopefully he has the heart of a teacher.

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Well, if you are a listener of The Ramsey Show, we're so grateful for you. And if you're wondering why we keep mentioning the Baby Steps, it's because they're the foundation of everything that we teach. So if you're new here, we want you to start there. Or if you've been listening for a very long time and you still haven't started working the plan, we want you to start there. Start with the Baby Steps. That's the best way to work the plan that we teach. All right, Tyler is in Minneapolis, Minnesota. What's up, Tyler? Hey, Ramsey team.

Hey guys, how's it going? My aunt and uncle have offered to do a contract for deed with me for their house, and I can't tell if this is, with my income and debt, if this is something that I should consider or if I should just kind of pass on that opportunity.

Tell us more about your income and your debt.

So I make about $23 an hour. And then I graduated college with about $75,000 in debt. I've paid— I have roughly $35,000 left on that. And so—

That's great.

Yeah, good job. So $35,000 left in student loans. Any other debt that we should know about?

Nope, that's everything.

And how much money do you have saved?

That's kind of where I feel like I'm looking for help is because I've been kind of throwing everything that I've had. I graduated 4 years ago. And so, everything has gone towards the debt. I haven't really saved up anything. And then, I feel like without health insurance or something comes up with my car, I have about $4,000 probably between savings and checking.

Okay. And you feel like it's a good idea to be a homeowner?

Um, well, so I moved back in with my parents, um, and back to my hometown. And so I just don't know. To me, it seems pointless to go and rent when my parents' house is an option. And then on top of that, my aunt and uncle, uh, who are offering me the house, they go to Texas every year for the winter. And so I've actually been living there on and off for the last 4 years, just taking care of that property.

What's the, what's the value of the property? Like what would the, Yeah.

So I would say that if they were just to sell it on the market, it'd probably be $450,000 to $500,000 in that area. Now, I would say that they're set up pretty good. So I don't know if they'd necessarily be looking to make a whole lot off of me as I pay into it or if they're trying to get me out of the—

There's no deal. They're doing this for market price.

Well, I haven't talked the details of what that contract for deed would look like. I would assume that it would probably be as low as possible. Or if that was the route I go, what would I be looking for in that deal?

So Tyler, what happens when the HVAC system goes out after you've bought this home? And it's gonna cost you $8,000. And then there's some mold in the basement. That's another $5,000. What happens?

Yep. That's a great question.

Yes. So, I mean, the point I wanna make is that you're broke. You don't have any money. And so people who are broke that buy homes become broker. And it's not a good thing. It actually adds to a lot more stress and a lot more debt because you can't keep up a home. I mean, one of the cheapest days of a homeowner is the day you buy the house. And then everything else, the rest of the next couple of years is you putting money into it. And when you don't have the money for it, there's no emergency fund, you still have this debt, you're just not at a financial place. And I say all this because I want you to become a homeowner. And it sounds like you have some good living situations that you can live there. for a little bit and take care of it. Like, I mean, there's time. There's no rush. I mean, you're what, 20, 26?

25.

25, yeah. So I would highly suggest continue to do what you've been doing. You've paid off $40,000, which is amazing, Tyler. So I wonder if there's a way you can up it, 'cause like you still have $35,000 left and I don't want that to take you another 4 years, right? So I'm wondering if you can do some extra work, do something on the property, you know, they pay you. I don't know what it is, but if there's some extra flexibility in your time to get this debt paid off ASAP, I mean, an extra, you know, $1,000 a month, you know, you're getting this paid off in more like 2 years.

Yeah.

2 and a half years versus 4 years. And if you do an extra, you know, if you do $2,000 a month, like you can start to see it actually, you know, see a lot of progress, but it's gonna take you, changing and being a little bit more intense. Because after that, then saving up some money, you know, for an emergency fund, having some money set aside for a down payment, at least 5%. Like, all of that is the order at which I would do it, which is gonna take you probably all of that another 4 years before you become a homeowner. But that's okay, because you'll be 29. And there's no rush. I mean, I think you would regret this decision. A whole lot faster. And then the whole thing with the deed, is that like the seller financing is what it's saying? So they would become the bank, which I would not do that either.

I'm just curious, do you have money saved that you were even considering this? Do you have a chunk of money at all?

$4,000, right?

So yeah, and they've kind of just proposed that to me as we're coming into them leaving again down to Texas.

And so I would probably try to save up whatever I could throughout the winter and then Yeah, but just to put this in, just to put this in fair terms, what you're talking about, if, if, if anybody on the streets were going out to buy a $450,000 to $500,000 house, and let's just say they gave you a deal and they did it for median list priced, what, what median listing price is right now? Let's say they did it for $424,000. Most people, in order to get that payment at a fair part of their take-home pay, they'd be putting down like 50% of their income. In your case, making $23 an hour, you'd be putting down like 63%. In order to make this a fair amount. And we haven't even talked about, do they own this property free and clear or not? Because if they still owe money on it, depending on their interest rate, they're at least going to want to like cover that. Do you see what I'm saying? So what they're going to be able to offer you would be limited anyway.

I do know that they own it 100%.

And we also know that's good that they own it 100%, but we also know that you don't have any money. 100%.

So, and honestly, I was kind of hesitant, you know, about it. It just seems like such a good deal. And not that they would be mad if I, if I turned it down or anything like that. I just wanted to look into it fully.

Yeah, no, it's totally fair. No, I so appreciate you calling and asking the question because families do this a lot. We get this call a lot that, you know, a grandmother or an aunt and uncle, a parent, and they have this home and they want to, They want their child, their niece or nephew, their granddaughter to buy it. And, you know, and again, I think it's because it's that family tie. It feels like, okay, I'll get a better deal with this family. And just because it's a good deal doesn't mean it's a good deal for you, right? And so, you really do have to separate and take the emotion out of it to think, golly, am I going to miss out? There's going to be other deals. There's going to be other houses that you can buy. And that may not even be the house you want.

Well, that's what I was going to say is like, That's the whole thing is, if they had not come to him and said, hey, we might have a deal for you, I don't think that he was like, you wanna know what? One day I wanna buy a house. You know whose house would be great? My aunt and uncle's. That's the house I wanna buy. That probably wasn't on his list of things to do. It just presented itself. And it was like, oh, this is in front of me. Maybe I'll do that, you know?

That's right, exactly. And that's how these deals happen. And for a lot of people, they walk right into them. And then they get 2 years in, and they're like, oh my gosh, I have no money. And then, if you're the seller financing, and you lose your job, then you can't pay the mortgage that month. And then, you have to go to aunt and uncle and say, sorry, you know? And if they had a bad situation, which it doesn't sound like they do, I mean, it just can be a domino effect that's not clean. And the cleaner something is, the more peace—

Agree.

There's gonna be more control, because we do want you to own a home. Like, that is part of the Baby Steps. Like, we want you in the home. in the market, but not when you're broke.

Yeah.

And you have no money. Broke people don't need to be owning homes because, oh my gosh, like it is so expensive. It is so expensive to keep up with it.

And there's time, you know, I think the most recent data said that people are not buying homes until their 40s. Like that's when they're making that first purchase. And so I think that's, I think that's okay. You know, it's very different from what we're used to because real estate's just more expensive now. It's more expensive for people. But I think it's okay. You know, I tell people all the time, Sam and I waited 10 years to buy our first house. and we're still here.

And you're gonna be okay.

And we're gonna be okay.

Yes, I know.

Nothing's gonna happen.

And the house doesn't fix your problems. So if you really are paycheck to paycheck, you don't have savings, you have a lot of debt, owning a home is not going to make your situation better.

No, it's not.

It's really, really not. And so have the patience, have the patience. It may take you longer than it did 6 years ago, but it is so worth it to have that peace of mind.

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Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. We're going to go right back to the phone lines where we have Nicole, who's in Portland, Oregon. Hey, Nicole, how can Rachel and I help today?

Hi, I've spent like the last minute just jotting down notes and stuff because I know that I'm going to be a jumble mouth. But, um, right now the biggest thing that I am going crazy about is my husband and I, um, last year he was making over $100,000 and we lived, you know, a somewhat cushiony life. Like we had our finances, you know, we lived within our means. Like if we wanted to buy something, we could go buy it. So, up until February last year, he had lost that job and I was a stay-at-home mom. And so, I remember I was in Tennessee at the moment visiting my parents. And so, I had went back to work, which is fine. Although it's hard with a child, you have to do what you have to do.

Yeah.

So, I did that. He got a job as a car salesman. He is only making about $3,000 a month, which is not really that great. they do things there is just so weird how they pay, but they basically essentially pay you to sell 8 cars. And then after 8 cars is when you start getting like the commission.

Okay.

And I was making like $3,000 a month as well. Um, but we— so I don't live in Portland. I live in, um, Sweet Home, which is an hour and 40 minutes from there. And it's a very small town. I don't have family here and we have a child and I had someone watching my son, but that babysitter had to be dropped And so now I'm working and I'm making $1,000 a month. I am trying to find ways to clean people's houses and stuff. I guess my biggest thing that I'm slowly— I think I'm learning is our monthly income right now is $4,800. Our total bills are $3,900. And although that isn't what we used to have because we had a cushy life, but I think I'm worrying about stuff. That is out of my control right now is what I think I'm realizing. And it's taking a toll on my marriage, like the financial piece. My husband and I, we just can't see eye to eye. It's not that we're fighting, but I'm just like top-tier stressed.

What, what are the biggest stressors that you're feeling? Just not having the margin? Are you stressed that you're having to work? Are you stressed that you don't like his job? What, what's the, the number one thing that's eating your lunch?

So I think the biggest thing right now is because we only have my husband's family to rely on and childcare, it's really hard, especially with the location that we're in. And I am afraid at some point it's going to be like, okay, we have no other people to watch our child and I will have to be a stay-at-home mom. But I am choosing, this one thing I did learn, I am choosing to deal with that when we get there. So as of right now, we do have childcare.

But it doesn't give you the hours that you need to be able to work. It's limited, right? Okay. And, and tell me again, is that because the, the town is so small and there's just no one to rely on, or is it strictly— are you strictly going to family for childcare?

Um, so I'm strictly going to his family. I don't have family here. Um, I don't want to say too much, but we did just have a babysitter, um, but found things out about her. Police got involved. And so this town is just not a good place to have, um, find just random people off Facebook.

Well, maybe, maybe, maybe Let's not go straight to that. And I think that could be, I want to say this, you have a bad experience, it will put a horrible taste in your mouth, but I don't want that to turn into the first girl that we used ended up being bad. That means everybody in this town is bad. I don't want it to go to that because now you're putting yourself in a corner and you're really limiting your options. How old is the child that needs childcare?

Uh, 3.

Okay. 3. And I just wonder—

I'm wondering about his job, Nicole.

Yes.

How long has he been doing this?

He has been doing this for about 5 months now. There was a couple months where he did bring in like a $3,600 paycheck alone.

Okay.

Which was nice.

Well, maybe— I wonder if that's part of it too, of you guys agreeing on kind of a timeline to say, hey, can we reevaluate, you know, give him 9 months, or I'm making up a timeframe, 9 months in this role to really get the cycle and to know how to do it well, right? He needs some reps. You don't wanna just like pull the plug 90 days in. But I wonder if you both could agree, because your uneasiness is that your income is having to supplement what he was making.

Yes.

And I think a goal of yours, I'm assuming, I may be putting words in your mouth, is that he would, bring in an income that would sustain the household and you don't have to work, then you don't have to worry about childcare or anything. That would be like the ideal situation, right?

Right. Yeah.

So I do wonder on his end of, hey, can we reevaluate our situation every couple of months just to give you an outlet to, for you to reevaluate too, Nicole, and to say, okay, it's been 90 days and we've done this. We've survived. Like what is working is working right now. We're okay. Nothing's on fire, or for you to have a place to be like, no, no, no, that's not working. It's horrible. It's horrible. And, and you know what I mean? Like, I don't know, for him to be able to have an out too in this specific job, if there's something else that he could plug into, he may not make $100 grand again.

I don't know.

Was he in sales when he was making $100 grand? What was he doing?

He was a supervisor for, um, like Georgia Pacific.

What's Georgia Pacific? Is that trucking?

No, it's in Halsey, Oregon. It's going to sound so funny, but it's where they make toilet paper and paper towels and they make for Costco and all that.

Like a factory?

Like a manufacturing.

Manufacturer. Is there, have you guys considered looking outside of your area? Because it feels like, just from listening to you, it feels like you're in a very small bubble and you're limiting your options because of this bubble. Can he look for management jobs at manufacturers across the country? And can you guys open up your scope? And if you say, oh, well, what about childcare? There's childcare everywhere. Like everybody—

Or family. Do you guys want to be near family?

So right now we own our own home. So we can't, I mean, we can't just pack up and like move.

Sure you can.

The job thing for him, the thing that I think is the biggest problem for me right now is like, it's just been nothing but like, excuse after excuse, like, oh, I don't want to go back to manufacturing job. Oh, I don't want to do physical labor. Oh, I don't want this. Oh, I don't want that. And so it puts me in a spot of like, okay, well, I'm just going to say it out flat, but it puts me in the headspace of like, okay, well, you just want things handed to you. That is probably the biggest thing right now.

So he didn't like the job that he was doing. He doesn't want to go back to that. That's good to know. Does he like this current job? Does he like it?

Or he loves it. And I love that for him. Like, I love that he has found a job that he really loves.

So explain the handed to him part.

He loves this job.

Do you feel like Like he loves it, but he doesn't work hard at it? What do you feel like is happening there?

Um, I feel like in a point in time in life, and although maybe he doesn't see our finances the way I do, and maybe he's not freaking out about it because honestly it's not really that big of a deal, but for him, like— I'm sorry, what was your question?

What part of it? You said he just wants things handed to him, and I said you said that he really loves his job. Does he love his job, but he's lazy at his job? Is that what you're sensing? Or does he love his job and he's working really hard, He's just hitting a salary cap. Like, what's happening?

Um, I mean, he loves his job a lot. Um, I would say that I know the people he works with and he's been working hard. I mean, there has been months where he's sold 14 cars. Then I think, which is—

I think there's something else at play. I think you're perceiving something that may not be true because you don't like the situation.

I think that's it. I think she wants out.

Yeah.

Yeah.

And I, I think that's fair. I think you're feeling like, hey, I didn't sign up for a situation where I was gonna have to leave my kid with a sitter and work. And—

But yet that's where you find yourself.

That's where you find yourself.

That's the reality for now. And so that's why I think some check-ins periodically so that you can, you, so that you don't hold it in, Nicole, and resentment builds on your end, right? And to have a place, even if it's like a counsel, you know, counselor or a therapist, a place to be able to talk about this freely, I think it's going to be really unifying for you guys.

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So you've probably noticed that in the majority of the calls, we love the solution of EveryDollar because it's the budgeting app that we created here at Ramsey Solutions. And it's the best way to work the plan that we talk about. It's the best way to work the Baby Steps. You have to have a budget in order to work the Baby Steps. And so it's for you. If you have been listening and you have not downloaded EveryDollar, you need to start for free today. You don't have to live paycheck to paycheck. You don't have to live feeling broke. Our EveryDollar budget app helps you find extra money. It helps you every month. It helps you build a personalized plan that's just for you so that you can beat debt and build wealth. It takes 15 minutes. You'll find thousands, I'm telling you, in hidden margin. You'll feel like you got a raise. Don't live normal when you can live like no one else. Start EveryDollar for free in the App Store or Google Play today. All right, Diane is in Raleigh, North Carolina. Hey, Diane, how can Rachel and I help today?

Hi, thank you for taking my call. I have been following Dave's program since 2019. I'm out of debt, got good retirement, but I've had an old car that I'm trying to hang on to a bit longer. I'm trying to get it, wait to get another car until I'm closer to retirement. And then hopefully it'll be about 200,000 miles. It's got 127,000 miles on it now. It's a 2019. But this year when it hit 120,000 miles, it has gotten expensive between maintenance, repairs, and I got some really good new tires. I spent $8,000 on this car, and I am kicking myself that I should have kept it this long.

What's it worth? What's that car worth?

Um, probably around $9,000 or $10,000. It's a Subaru, and until 120,000 miles, I was pretty happy with it.

Do you have money saved up today? Do you have money saved up that you can just upgrade car?

Well, I do. It would kind of wipe out my savings on my emergency fund, and I have I'm gonna have to get a new roof for my house here sometime soon.

But what's your margin every month?

Pardon?

What's your margin after you guys pay your bills? What's the margin that you have available?

Oh, I have lots left over. I'm making double payments on my house right now because I owe less than $11,000 on my house.

So could you just, could you just slow it down a little bit and start stacking a couple of thousand? It sounds like you got a lot. I don't know how much a lot is. But if you could put, you know, half of that aside for a car, and in 6 months trade up, does that— is that workable?

I probably could. Like, I'm trying to get like another used car, and I was looking at—

Yeah, definitely.

A car with only 50,000 miles on it would still be like around $20,000.

Yeah, but if you sell this for $10,000, can you save up another $10,000? Can you save $2,000 a month? If you slow down on the house, if you just make your mortgage payment for 5 months, could you save $10,000?

Yeah, I could do that, which actually, I could take $10,000 out of my account and still have my emergency fund.

That's what we're saying.

Do that.

I probably could still do that.

I think you just like going fast. You're like, I gotta get this mortgage paid off. This is like cramping my style right now. I don't wanna deal with it.

I'm so close to, and I'm doing better on my retirement than I originally had thought I was doing. And so, I'd like to reward myself too, which was another question I wanted to ask, but not Not this time. But so my car though, because it is a good car, it's just, it's costing a lot right now.

It's too much. It's worth $9,000 and you've put $8,000 in it this year and the year's not even finished. It's time to upgrade and you have the ability to. So I would.

And sell it while it's all fixed.

Yes, ma'am.

You know, for the $8,000 that you've put in with the new tires and everything.

In case something else happens.

I mean, seriously, I probably would. Because if something else breaks, you're gonna have to be like, oh my gosh, that's gonna cost $2,000. Is it worth putting $2,000? you know, you're back to the same conversation. So while it's going well, go ahead and sell it and get as much as you can out of it, 'cause you've put a good investment into it, you know?

That's one good thing to highlight. You know, here we do teach a lot of people's potential is lying in their vehicles. When people are trying to get out of debt, we're telling them to sell off their cars and drive a beater. We don't like car payments. We want you to own your car scot-free. But there is a moment where you can transition out of driving like that beater car And she's definitely at the point where it's like, sure, I can upgrade my vehicle. It's at no detriment. You're making— if you're making double and triple mortgage payments, heck yeah, it's time.

Yes, absolutely.

Yeah, it is time.

Yeah, we don't want you driving a crappy car for the rest of your life, people. That is for a season while you're getting yourself in a place where Diane is. Diane, Diane, upgrade the car. You're good.

Yes, ma'am.

Do it.

All right. Thank you so much for the call, Diane. Let's go to Marie, who's in Los Angeles, California again. Hey, Marie, how's everything out in Cali?

Hi, Jade and Rachel. It's actually starting to finally cool down. But I'm 27 years old as of today.

Happy birthday!

Thank you so much. I work full-time and I'm going to school part-time. I'm in Baby Step 4 and 5, but technically I'm not saving for my kids' college. I'm saving for my own. And so, I'm preparing to cash flow veterinary school in about 3 years.

Wow.

So, my question is, where do I store the cash while I'm saving for the 3 years?

Well, a good place to always keep short-term money that's not, you know, less than 5 years is in a good high-yield savings account. You'll get probably maybe close to 3%. So, you're not trying to make a ton on it because you're gonna be using it and you want enough time that it, like, if you had invested it, there may not be enough time for it to have the ups and the downs of the market to actually get some pretty good gains. So really anything less than 4 to 5 years, a high-yield savings account is great. And Fairwinds Credit Union, we've been partnering with them and they're amazing. There's something called the Smart Bundle. If you go to fairwinds.org/ramsey and you can get a no-fee monthly checking account and then up to 10 high-yield savings accounts. Not that you're gonna need 10, but one of those can be earmarked for vet school.

Yeah.

And then if there's any other savings you're doing, like to upgrade a car or something else, you can open up more. But yeah, to answer your question simply, a high-yield savings account is where I would go.

Okay, and do you recommend putting any money in the 529 or just everything in the high yield?

Yeah, I mean, at this point for a 529, I don't think it's probably gonna be worth it because it's only 3 years and you're waiting for that growth. Again, that money will be invested in the 529. And so back to that, you know, point that I don't know, there's just, there's some risk there if it's that short-term in the market, that if something does go down. And genuinely, I think about election time.

Yeah, yeah.

Like, you know what I mean? Like these years, like they can get a little unstable. And if you needed some of that money and the market was down and you feel like, oh my gosh, I, you know, it's gonna feel like you lost some money if you have to pull it out there. So, yeah, so 529s are really good for long-term planning for college. But for this short-term 3 years, I think I would just do a high-yield savings.

Yeah, I think that's a really good question. And I think that's one that the broader audience wants to know about. You know, it's like, when's a good time to throw the money in a high yield versus investing it? And that 5-year mark really is, you know, the way it's calculated is from inception. If you take a snapshot at any 5-year point, it doesn't necessarily have to be consecutive like these specific years. But if you take any 5-year snapshot, you can see that there was enough time for the market market, if it dropped, to fully recover and then some. So that's kind of where that comes from. And I think that that's a really good, smart rule of thumb.

Yes, yes. And I say all this and then, you know, Marie, if you do look at the market, the last 3 years have been amazing. It's like, you're like, oh my gosh, I could have taken advantage of that. But you just don't know. So leaving some time is usually wise because the worst thing is putting money in and having to take it out in 2 years and and it's at a low and you're thinking, oh my gosh, I'm gonna, it's gonna, I am losing money. If you pull money out at that point, you really are. So, yeah, have it ride out.

Love it, love it so much. All right, a couple of questions. You guys sometimes send us questions from Facebook, from the Baby Steps community. Keep doing that because we like to get 'em. This one is Tim from Instagram. We have a teen that will be driving soon. What are your recommended car brands that we should look at that will provide safety, and still be economical?

Oh, that's a good question. I really like that.

Yeah.

I'm gonna be honest, I'm not very knowledgeable on every car brand and safety feature and everything. But yeah, I would say obviously a used car.

Yes.

And if there's anything that they can contribute financially, it's always a good thing, especially for a car, 'cause they are so invested in their car at 16. So like, that's a good place for them to be putting some money So they feel, they feel some of that purchase and responsibility.

Yeah.

But yeah, anything, anything used. I mean, at that point, I don't know.

And I'm looking at what's been on the road. I'm like, when I look, when I look out on the horizon, give me a Toyota. Yes. Give me a Toyota, a Honda. I don't see a lot of Jeep Compasses anymore. You know what I mean? Like there's certain cars, it's like, don't get that. Yes. Do not get that. Do not get, Oh gosh, there's a lot of them. I guess I can't think of them because they don't exist anymore. They didn't stand the test of time.

They didn't.

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If you are a listener of the show, we would love it if you would like, subscribe, and share this episode, or really any episode that is your favorite. And go ahead and join the conversation in the comments. We would love to hear from you. Okay guys, Cindy is in Louisville, Kentucky. She's on the line next. Hey Cindy, how can we help today?

I don't know if you can, but I figure if anybody can, it's you guys.

We'll do our best.

I, um, I own my house outright.

Okay.

And I have no debt whatsoever.

All right. I've never had—

I had— I've never had credit cards. I don't believe in them. If I can't pay to buy something, I don't buy it. Um, my problem is I want to get equity out of my house. To put on a new roof and to do some floors in my house. I adopt senior dogs and cats and my carpets are shot. Um, I've only been here 2 and a half years. I came from Maryland. I've only been in my house 2 and a half years, but my carpets are shot and I want to get hardwood floors.

How much does that cost?

Um, I figure about $30,000. Total, for everything.

All right.

I have no credit. I don't have good credit. I don't have bad credit. I have zero credit.

Good. So, Cindy, you said— No, it's not good.

Nobody will give me money. Nobody will give me money.

Well, you mentioned that you're in Baby Step 7. You have a fully paid-off home. You said you've never had debt. You've never done it. What have you done with your money? Haven't you saved it up somewhere or invested it somewhere?

No, because my husband was very sick. sick for 30 years. He got sick very, very young, and we lived hand to mouth our whole lives. And so we weren't able to save money. Um, when I sold my house in Maryland to move here, I put it right back into a house.

Okay.

So there, there was no— there was no money to save. We lived on his Social Security Disability our whole lives. What are you living on now? Social Security.

Okay. And how much is that every month?

And, uh, $1,780.

Okay.

And I pay my bills. Everything's automatic because I don't want to, you know, I don't want to forget anything.

But it's—

But there's no nest egg, no savings anywhere, no cash.

No, no, there's a couple, couple few thousand dollars.

That's it.

But how much is a couple few thousand dollars and where is it?

It's in a savings account. It's like $3,000. Okay. And that's, you know, that's it. And I— what I did was I got a home— I got, um, I have a home warranty so that God forbid of something That'll pay to fix anything.

Okay. Could you use that for the roof?

No, no, no, no. It's just something— it's just something breaks, you know, the furnace, the dishwasher, the washing machine.

Oh, for appliances.

Okay. Okay. Yeah. No, it covers my plumbing.

So if you, you know, just moved though 2 years ago, how much equity is in the home if you just went Yeah, I don't know, a $300,000 house to that.

I paid it off 100%.

No, I know, I know. But I'm saying if you— how much is your house? How much is it worth?

$240,000.

Okay, so you had $240,000 in Maryland. You took the $240,000, bought a house here. So then for 2 years—

Yeah, my house was worth a little bit more in Maryland, but the problem was I had to pay to move.

Right, but we're saying how much—

I'm just saying, do you have a lot of equity in the home to pull from in the first place?

Yes, but nobody will give me the money because I have no credit.

How much equity is in the home?

$240,000. The house is 100% paid off.

Okay, okay, I got you, I got you, I got you. Yep, yep.

So I bought the house with cash. Yes, the house with cash.

And you're like, okay, I just want to get you some of the $240,000 of equity, and you're trying to get some of that that to—

I'm trying to get $30,000 to put a roof on because my roof— I'm not sure how old my roof is. The people I bought it from were flippers and they didn't know how old the roof was.

I'm a little—

before I have a problem, before I have a problem, I just don't want to have a problem.

Cindy, here's what I'm— here's what I'm thinking. I'm a little concerned at— with your situation because to your point, you've just got the Social Security. You can't afford home repairs. You can't afford if the lawn— if something happens in your yard, a tree falls, you can't afford that. I wonder if a better purchase—

I have no trees. No, I haven't.

One second, Cindy. One sec. One second. I wonder if a better purchase for you would have been a smaller condo where there's other things.

No, because I couldn't buy a condo. I had to buy a house because I adopt— I adopt senior dogs and cats.

Okay, so let me, let me speak to that because because there's a lot that's true here. You've got senior dogs and cats. You want to provide a sanctuary for them. That is, that tail is wagging the dog. And that's where the problem is because the math here, I mean, that was a pretty good pun.

That was a good pun.

The math doesn't lie here. You don't have any money. And I'm not saying that in any judgment against you whatsoever. It's simply true. And the longer you live in that house, there are things that are going to come up that need maintenance. The AC is gonna go out at some point. It's gonna need maintenance. The roof at some point is gonna need to be repaired. And you don't have the, the monthly income coming in to take care of those things. I realize you just purchased this house, but if I were you, Cindy, I'd be thinking about a condo.

Or a townhome.

Or a townhome.

That, yes, that's, that's $175,000.

Yes.

And you know, you, you bank, you know, $75,000 on this other side. Yes.

You need to, you have to.

Yeah. To have some buffer. Because you're very— it's all real estate heavy at this point. And that's not a great plan long-term. You need cash for things that are legitimate, like you're saying, a roof and everything. And so, if you go to ramseysolutions.com and check out our trusted pros and find a great real estate agent and have them run some comps in the area, and hopefully you get, you know, $240,000 out of it or maybe a little bit more. If you've been there 2 years, maybe it's gone up 4%. I don't know.

Yeah.

A little equity to pay the commissions on all of it. and find something that would fit your situation, like what you're talking about. And a townhome usually is probably gonna be the best bet, but it's gonna be smaller. But that's okay because you will have margin financially that I think is gonna cause way less stress and that you're not strapped for cash where you're having to go pull equity out of your home.

And that's the really hard part about this conversation. I wanna pull that out. No one is saying that we don't care about pets. We're not saying that we don't care about the things that you want, but the truth is sometimes there's forced priorities on our list. And for you, cash and having a little bit of diversity, which is what Rachel was talking about, not everything in real estate, is a number one priority for you. Whether you like it or not, it is the best thing for you to be, have a better foundation going into your later years.

Yeah, and you gotta think, Cindy, if you're gonna be doing this with all these pets, more carpet is gonna be destroyed. So, you're gonna have to replace it again in 18 months, and you need cash to do that, right? So, if you want to cash flow this lifestyle, which is fine, it just has to be realistic to your numbers, and it's not been. So, yeah.

And maybe you can go volunteer at a shelter. Like, find other ways to scratch that itch if you end up living somewhere where you can't have as many pets. I just— there's more than one way. Oh gosh, I almost did it again. There's more than one way to skin a cat.

Oh no!

That's wrong.

That's not right.

Tail wagging the dog. Skinning cats over here.

I know.

I'm doing the best I can. We love you.

We love you.

We're pumped for you.

And the best thing is, with all of it, Cindy, is that you do have a paid-out house. Your hard work and diligence has allowed you to maybe make a different move where you have cash in the bank and you own something still, right?

Yes.

Yes. So that's a— it's a positive where you're at. It's not a mortgage. You know, that's what I was thinking in my head as I was trying to pull up the equity. I'm like, you don't have equity. There is no mortgage. So yeah, you are free and clear, which is, that's a gift.

It's totally.

So use that to your advantage. And you've lived a long life with a sick spouse and, you know, that month-to-month feeling, you're used to that. But we're saying, change it up. Do something different where you do have some buffer. I think it's gonna give you a lot of peace in the long run.

Yeah. Well, thank you so much for the call. And what she's accomplished truly is, It's a part of what we teach. We want people to go into the later years of their life, we want you owning your home. For most of us, that line item, the rent or mortgage, is the biggest line item on our budget. And if you can have that solidified by having a paid-off mortgage, that's one of the number one things that you can do to really solidify your financial future. And she's done that.

Yeah, and with retirement along, saving for retirement, that Baby Step 4, 15%. So you're having both in tandem. random so you're not in a situation where all, all your assets are in one thing and there's no cash.

Absolutely.

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All right, let's head back to the phone lines. We have Alan, who's in Jackson, Mississippi. Hey, Alan, how can we help today?

Hello, how are you? I'm good, thank you.

You bet.

Look, I've got a problem with, uh, my home. I've had it on the market since the first of the year. I've actually gone through 2 realtors on it. Uh, the home is worth $265,000. Of course, I owe $177,000. Uh, nothing's wrong with the pricing I've had listed on it. Problem is nobody's biting. Nobody's made an offer or anything. And we moved out of it before we put it on the market. We were— We were suggested to move out. We were told if we moved out, it would sell faster. So my wife decided to move us out. I, uh, I still pay the mortgage, still pay the, uh, water and electricity. I still pay a yard guy to go by there every 2 weeks. Um, it's a really nice subdivision. I don't know what to do with it. I'm paying on it and nobody lives there.

Are there— it's in a subdivision. Are the other houses in the subdivision selling?

They are here and there. They've been kind of running into the same problem I have been with them being on the market for a long time.

Do you know the average days on market in your area? Your realtor should know that.

I was told it'd be 90 to 110 days.

Yeah, national average median right now, I should say, is 60 days on the market. That's nationally. So, you know, depending on where you are, that could be different. So for Jackson, Mississippi, could be 90.

Could be longer or shorter.

But not 9 months.

Yeah, it's been on the market for about, yeah, 8 and a half months.

Okay.

So in your area, we just pulled it up, it's actually 70 days on market in Jackson, Mississippi. So that, I'll be honest, Alan, that's telling me that there is something. It's either the price price. It's either the location, what it's next to, what's in the backyard.

The house itself, condition-wise. The house itself.

Uh-huh.

If you had to be brutally honest—

Or you have terrible realtors and you're just getting, you know, people. I would go to ramseysolutions.com and check out our trusted agents because these are really high-driven individuals that we recommend. So I would look and probably interview one or two of those in Jackson. And I would switch realtors too if there's nothing glaring that's super obvious that something's wrong, like what Jade's saying.

No, uh, and the only feedback that I've gotten— because my first realtor, yeah, didn't do a great communication job, so I just kind of cut that one loose and just moved on. And we, we, uh, went back to the realtor we used when we bought the house to begin with.

But if the only feedback you got was to empty the house out My next thought would be—

Let me finish. The biggest feedback I've got is nobody likes that all the bedrooms are upstairs. That is the biggest complaint I'm seeing. They like it, they love it, you know, price is great. It's not, you know, because my price is not astronomical. I'm not looking to make a killing. I don't even have it listed for what it's worth.

Well, I really— I think that—

Nobody likes the bedrooms upstairs.

What Rachel said, I think, is the exact thing that you need to do. I think you need to talk with one of our real estate pros, and they're going to be able to crack the code for you.

Because there's, there's plenty of houses I know that all the bedrooms are upstairs, right? And so, and I get that may not be everyone's preferences, but also I'd want to know how many showings. I mean, I bet out of 50 people, you're not getting 50 of those comments, right? I mean, so yeah, there's something's going on. There's not enough activity happening is what I would say. And they can help you actually pull some comps because maybe in the area, I don't know, of Jackson, it's maybe values have stayed consistent and you need to drop it a little bit. I don't know. They'll be able to pull some comps and help you.

Absolutely. Thank you for the call, Alan. Let's go to Allison, who's in Harrisburg, Pennsylvania. Hey, Allison, how can we help today?

Hi! I was a public school teacher for 10 years. I've since left the field to raise our kids. We'll be homeschooling them. I don't feel like I will ever be going back into public school teaching, but I have a pension that that's sitting there, um, and wondering if I should pull that. I'm only 42, so I would get, um, you know, dinged in that area. But if I should pull it to reinvest it in our retirement that we have, which would get a better rate of return, or use it to pay off our house. I'm just kind of wondering if the ding that I would get would be worth, you know, the value of those things.

I would not use it to pay off the Since it's retirement money. I am interested if you pulled the lump sum to reinvest.

Is it a 10% penalty? What's the penalty?

I think it's 10%. I don't know the exact number. I didn't look that up.

Okay. Yeah, so I would look at that. I always hesitate to pull out long-term investments that have that penalty because, but pensions, depending on where your investments are within the pension, is going to make a difference. Because sometimes some, some, you know, districts, they do it great.

Yeah. And it's well invested. Yeah.

And it's fine. But if you pull the numbers and see the investments and think, oh my gosh, I could be getting so much more because they put you in a really conservative type of investment that's not making a ton. And you run the numbers because you are so young that that ding now, you could make up for it, you know, in the market. Or if it's doing fine, A part of me would say you could leave it and then pull it all if you have that option at retirement age and reinvest it then.

Do you know what the return on it is?

They target 7%.

Oh yeah, that's not great.

And I'm, like I said, I'm not planning, it's just kind of like sitting there. We're not contributing to it since I'm not working.

Right, right.

And since I don't plan on going back and we have other retirement investments that have on the side through my husband's work, and then private things that I had invested in the 403 we had rolled over to an IRA.

What's the lump sum of it right now that you would receive?

It's $65,000 right now. I don't know what the penalty would be on it, but that's what's sitting in the account.

I might sit down with a SmartVestor Pro to see what their thoughts are on it, because I agree with Rachel. 7%, I'm kind of like, uh, I don't know if you pulled that out, you would take a tax hit, the 10% penalty, I'm sorry. And but then after that, you'd be invested in making 10%, 11%.

Mm-hmm.

And so you would make back the loss, you know, pretty quickly. I think I just, I'd want to sit down with somebody who knows more of the ins and outs on that. But that's what I'm leaning towards. I can tell you, I would not pull out that money and put it towards paying off my house because the truth is that money is earmarked for retirement. And that would be like us telling somebody to cash out their 401 to pay off their home. And we just wouldn't, we wouldn't recommend that. You need, you need that diversification going back to one of our previous calls. You want, you want that money there.

Yep.

That's a very good question. Was there anything else?

No, that was it.

All right.

Other than we love you guys. We love listening to you guys. You guys have helped us out immensely. So thank you. Oh, I love it.

Thanks, Allison.

Thank you so much for the call. I love it. I love that. Alright, let's take one last one. Renee is in Nashville, Tennessee. Hey Renee, we're a little against the clock, but I think we can do it.

Hello?

Hey!

Hey! So my question was, if me and my husband take an $89,000 HELOC on our home and use $45,000 of it to pay me and his debt off, Does it make sense? And we have 20— we have like $23,000 saved in our savings, but we didn't want to touch our savings.

The total debt that you guys both have is $45,000?

Yeah.

So why would you take out an $89,000 HELOC? What's the rest of that money going towards?

So I didn't want to do another HELOC. So the, the plan is to pay the debt off And eventually pay down on the, on the, on the $45,000 debt on the HELOC, but still have the extra money because we want to eventually rent our current home in Nashville out and move to Dallas and buy another home and use some of that HELOC to put on the down payment. Oh gosh.

Oh, Renee, you guys are doing way too much. And I think if you do that, it's actually going to cause you to go backwards. If I were in your shoes today, and I've been in your shoes with $460,000 of debt, I would take the $23,000 that you have saved. I'd take $22,000 of it and I would throw it at the debt, cut it in half. And then you and your husband, if you work like crazy people for the next year, you can have the rest of that $20-some-odd thousand dollars paid off and you'll be completely debt-free and you will have not borrowed against your equity.

Yeah. The problem with that is, Renee, is you start to move— when you move debt around, you feel like you've done something and you haven't. And then sell your home in Nashville, okay? Use that money then to buy something in Dallas. Rent in Dallas for a year. Sell your home in Nashville when that time comes.

Yes.

Don't be a long-distance landlord either.

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All right, welcome back to The Ramsey Show here in the Fairwinds Credit Union studio. I'm here, Jade Warshaw, next to George Campbell. If you were listening, I was with Rachel, but now I'm with George.

Some call it an upgrade, some call it a downgrade. I'll let you choose.

Let's go to Violet, who's in Arlington, Virginia. Hello, Violet! How are you today?

Hello! Hi! I'm on Baby Step 2. First of all, thank you for taking my call. I'm on Baby Step 2. I started in December 2025, and I've got $37,000 paid. I'm now almost done with all my consumer debt except for my student loans.

Wow.

Yeah.

That's awesome, by the way.

Yeah, I'm really excited, but my student loans are really big. There's a lot, and, but I'm ready to face the music, and I have a plan, and it's gonna take me a number of years, but I can do it, and I had some questions around it. My balance right now is $225,000.

Okay.

The balance has ballooned 'cause I had it in forbearance for 20 years, so it's really my fault that this happened, but I'm ready to face the music, I've been listening to the show. I heard your story, Jade. I know this is possible. I can do this. So I am going to start repayment next month.

Way to go, Violet.

Thanks.

I'm really proud of you. Just that alone, I really am proud of you because a lot of people would stuff their head in the sand and kind of ostrich this situation. But you're like, you want to know what? It's time to go. It's go time. So I'm really proud of you. So $225,000 in student loans. Tell us about where did the loans come from? Like, are you in your degree? Are you earning a good income? Tell us Tell us about it.

I'm 43 now. I'm a single mom, so I am working for myself. I am earning in my degree, like I'm a consultant in the work in the field that I've completed. So I have been burying my head in the sand, but I am able now to pay $3,750 a month on this. And I think I can get it done in 5 years. But my questions are that the first one is that I have been hearing a lot from others online that their repayments or their payments have been lost by their loan servicer. And so I wanted to ask if you experienced any of that or what kind of best practices did you engage in when you were making payments just to track all your payments and make sure that they were all counted?

I've not experienced that. The areas where I've found people experience that were on Public Service Loan Forgiveness where certain payments didn't count. or the payments were lost in that way. Like, hey, I thought I made this amount of, I thought I made 100 payments, but it's showing that I only made 70, so 30 payments were lost. Like, I've heard it in that framework, but I've not heard it in just my normal month-to-month bills. I'm making payments and they're just not being applied. I have not heard that.

Okay.

However, I do think that with what you're doing, you're not just paying minimums, you're actively paying well above the interest and you're hitting that principal, you should be able to calculate and see that math actually happening in real time. And so I think that gives you the advantage to just be, you know, hitting it with an onslaught of payments and just, yeah, continue to track it.

Well, that leads to my second question. So the $225,000 is comprised of 9 separate student loans, and I'm going to debt snowball all of that.

Great.

The first, the first 4 are between $10,000 and $14,000 each. So I know this sounds maybe against the principles of like the Baby Steps and the debt snowball, but I wondered if it would make sense for me to save up like through, you know, over 2 to 3 months to like make a lump sum payment and just pay that entire $10,000 or $14,000 just for those first 4 loans.

Why?

I guess I'm worried that my payments are going to get lost. I just don't want to pay this thing twice. Well, it's not going to get lost.

You have bank statements showing that money leaving your account. So that on top of just save the PDF from your loan servicer each month showing your payment history, and you can always request a payment history as well from the servicer via email. So I think it's a, I think it's, I'm not gonna call it paranoia, but I don't think it's the real issue here.

No.

I don't want you to kick the can down the road any further based on, well, what if the payment doesn't count? Let's just start throwing as much as we can every month instead of saving up lump sum and then hoping hoping that we actually throw it at the debt.

Yeah. And I mean, you can, again, to combat this, when you make your initial payment, make your initial payment first that satisfies the interest and whatever little bit goes towards the principal, and then make a separate principal-only payment within that same statement period. And that way you can physically see the loan lower by that amount. And like George said, with your statements, you're totally covered. I think that you are, I don't know, but I think that you're looking at this mountain and you're like, how can I tackle this? And it's like part of your brain is creating an excuse and the other part of your brain is like, I'll feel better if I just pay off a couple of lump sums at once. I think you're just trying to find a way to like deal with this in your mind, is what it sounds like. And honestly, just minimum payments on everything. Attack the small. What is the smallest loan right now? You said between $10,000 and $14,000, but what's the smallest loan?

The smallest is around $10,000. It's $10,500.

Okay, so you're gonna be done with that in 3 months.

Yeah.

And you're gonna be cutting into the next smallest one. I mean, that's really, really cool. And what you can start to do, Violet, is just these little mile markers that celebrate those small wins. And I think you probably already have it like this, 'cause I can tell by your personality, but have it tracked out ahead of time so you know, okay, the first loan is gonna be done. What are we, September, October? It's gonna be done in November. In November, I already have on the books that I'm going out with my buddy and she's gonna buy us both a cocktail and we're gonna celebrate that. And then have it for the next one. And those are things that you can do to really fire yourself up and get excited about this because that momentum is what's going to carry you through. Because 5 years is a long time. And George, let's talk about this for a minute because it's worth saying, you know, most of the people who do the Baby Steps, they're through Baby Step 2. It's like a year and a half to 2-year deal for most people.

That's the average.

But, and when you're doing that in 2 years, a year and a half, yes, you're balls to the wall, you're cutting, you're cutting everything out of your budget. You're living scorched earth. It's totally possible to do that. When you start creeping up on 5 and 6 years, you have to be strategic because you can't live in that state of mind for 5 years. It's very, very difficult. So maybe you do this, Violet, and you're like, I'm gonna do a 1.5, 2-year sprint and I'm gonna like sprint, just run it all off, leave it all on the court. And then after 2 years, I'm I'm gonna, you know, do something for myself. Uh, maybe it's something that you need to upgrade. Maybe it's something that you need to do to just kind of feel your income a little bit. And then you do another year sprint and then you kind of take a little bit of a breather, but 5 years of scorched earth, it will take a toll on you. So you need to be, be thoughtful and set those milestones ahead of time.

And you tend to speed up on the tail end.

Oh yeah.

So know that just because right now on paper, this is what it looks like, you're probably gonna make more money. You're probably gonna find ways to sacrifice deeper. And so all of that can speed it up. So I would go, okay, what does a 4-year plan look like? Well, that's $4,680 a month going toward these loans. What does a, let's say I wanted to do it in 36 months, 3 years, $6,250. So now you're going, well, I bring home $10,000. Can I live off of $3,750 if I really got intense? I think you might find the answer is yes.

Yeah.

And the shorter the sacrifice, you know, the more likely you are to finish this thing.

Also true. Yeah, that's so good. Anything that you can do to shorten this, if there's opportunities that come up, if you're like, you want to know what, maybe my rent could go down, or maybe— take those opportunities. Because to George's point, if you can shrink this thing by a year and a half to 2 years, that's everything.

Get your life back.

People ask me all the time, George, what's your number one money-saving I'm glad you asked. Nothing makes me happier than helping another frugal friend. So here's the hack. Get on a budget. Seriously, how are you supposed to save money if you don't know how much you're spending in the first place? And that's what makes the EveryDollar budgeting app a game changer. With EveryDollar, you'll get a clear picture of your spending, and from there, it's easy to see where you can get more intentional, cut back, and save more money. How much money are we talking? Well, the average EveryDollar budgeter frees up $395 in their very first month. And if you ask me, I think you're way above average. So why are you still listening to me? Go download EveryDollar for free and start saving more money right now.

Well, George, you already know this, but the people need to know that Ramsey is taking over an entire cruise ship.

It sounds violent when you put it that way.

I know, it's like we're pirates.

It's a mutiny.

It's not, we're not pirates, we're just taking a cruise together. It's called the Live Like No One Else Cruise. It's gonna be so much fun, guys. March 14th through 21st next year. It's 7 nights in the Western Caribbean. We're going to the Bahamas, Jamaica, Grand Cayman, Cozumel. So much fun. It is a full Ramsay takeover. This cruise is gonna have everybody on board. Myself, Dave Ramsay, all the Ramsay personalities, George Campbell, George Campbell's wife.

It's gonna be a party.

My husband.

Who isn't gonna be there? It's a shorter list.

I know.

And what's fun is there's no strangers on the boat. It's all like friends we just haven't met yet.

Yeah.

You know?

And we've all got many similar things in common. But we're gonna do the largest debt-free scream, which that was one of my favorite things that we did on the last cruise. Obviously, guys, there's gonna be lots of great content there. Dave's gonna be doing some new wealth-building content. There's gonna be live tapings of your favorite Ramsey shows. So much more. Remember guys, this is the only place that you're gonna be able to experience this level of Ramsey. So if you're a super fan—

This is the most Ramsey you can get.

It really is. And remember, it's a limited, how can I say, like it's an exclusive party.

Yeah, not all are invited. 'Cause you gotta be Baby Step 4. Yeah, this is the negative sell. This is not for you if you still have debt, you don't have your emergency fund. But if you are consumer debt-free, you just have the mortgage left, you're in Baby Steps 4, 5, 6, 7, You are welcome. We want to celebrate the hard work that you've put in, the milestone. Let's mark the moment. A lot of people don't get to do that. You pay off the mortgage and then you go, all right, guess I'm back to work tomorrow.

Oh, we don't like that. You need to celebrate with a cruise. And for those of you who are in Baby Step 2, let this be aspirational for you to go, you know, the next year or the year after that. But if you're interested, go to ramseysolutions.com/events to book your cabin. All you need is a $600 deposit to secure your spot. slot. Alright, let's go to Elena in Harrisburg, Pennsylvania. Hi Elena, how can George and I help today?

Hi, my father-in-law established a trust for our son when he was young, and we know very little about it except that it's for his college education. My father-in-law is very private with his money and he hasn't given us any details on it. My son is in 11th grade now and he does not know about the trust. And we don't know when we should tell him about it. And also, we don't know what all we should know about the trust at this point.

Well, George, I'm sure you guys covered so much of this in Investing Essentials. I feel like you're the one to—

Yeah, there's a— setting up a trust is a pretty aggressive move to save for a kid's college. So do—

what did—

why did he set it up in the first place? Did he talk to you and say, hey, I'm going to set this up for college? And this was back when he was a baby?

Pretty much, yes. Yeah, he was 2 years old. He just basically told us that's what he was going to do. And we know that he did set it up, and that's all we know.

So, no clue how much is in it, what's even in there. Is it cash? Is it investments? We have no idea.

Exactly.

And if you talked to him and just said, hey, Dad, he's a junior now. We're looking at colleges. We want to make a game plan to make sure that he goes debt-free. can you let us know what's in the trust and how we access it? He would say, none of your business.

I don't know if he would say that. I think it would be a very awkward conversation just because he's so private. He doesn't like to share.

But he made the trust for your son.

And that's the part that I would push on because this is your boy and you kind of have a right to know about something that has the potential— I don't know, but seems like it has the potential to have a major impact on him because you don't know how much is in the trust. You don't know when he would have access to the money. If it's 18, you would— you need to know those things. And I also don't like that your son would be blindsided because if there's— I mean, I don't even know if you can guess, Elena, but are we talking hundreds of thousands? Are we talking millions? Like, how much wealth does your father-in-law have?

He, he's very well off. He, he definitely can afford To do a trust. If I had to guess, I would, I would guess around $100,000, but I, I really have no number to go off of.

But the part that worries me is that you're scared to even ask him about this.

Yeah, I mean—

And why isn't your husband asking?

The conversation—

yeah, that's another question.

It would be, it would be, we would both go to him and ask him, and we could Just say, hey, we're starting to look at colleges.

We know you set up a trust for his education. Can you get us a copy of the trust document? Can you tell us who the trustee is? Can you tell us if there's distribution triggers, anything we need to know as we make plans?

Then you can also pick a school. You can pick a school that he cannot go to. Yeah.

Everything is predicated on knowing what's in the trust. Because if there's $10 in it, well, we got to make a plan for ourselves. And if there's $1 million in it, that changes the type of schools we look at.

Absolutely.

OK.

So I would just— I mean, he set this up for your son, so there's no— this is private. You involved— he involves your son.

Yes.

So this is your business.

OK.

And the time is of the essence here because your son is about to be looking at colleges.

Right. And I don't— that's the other thing. I don't know when to tell our son. I don't want it to dictate whether or not he goes to college.

I would wait until you know more info about the trust because you don't want false promises. Of, hey, granddad has a trust for you. Everything's going to be great.

Yeah, that's the order. Yeah, let's talk about that order of events. I think George is right. The first thing is you guys need to get the information. And the truth is, regardless of that information, we kind of need to treat that as like, if it's here, great. If it's not, great, because we don't know anything about it. But it shouldn't stop the conversations that you guys are having with your son regarding further education, whatever that maybe. You do need to have, I mean, you said he's in 11th grade. So hopefully the conversation has already opened up about, hey, if you are choosing to go to a university, here's what the options are. Here's what your mom and dad have. Here's what we expect from you. We expect that you have a part-time job and that you'll contribute a certain percentage of what you make. We're expecting you to start applying for scholarships, whatever those expectations that you guys have for him, we're going to do community college for the first 2 years, you guys need to start saying that to him now. We can't wait until it's time to start applying for schools and then him be like, well, I don't—

He gets into the dream school and realizes we don't have the money. So I would, I mean, if he's a beneficiary of the trust, he should have a legal right to the basic information of the trust. And so if your dad is unwilling to talk about it, say, hey, is there a trustee or an estate planning attorney we can talk to about this if you are uncomfortable for reason, because we need to get to the bottom of this before we can make our plans for college.

Okay.

Have you guys saved up on your own, or were you all banking on this being his education funding?

We, we have not saved up. Um, like I said, my father-in-law is definitely capable of creating this, this trust for him to cover his college. So And that's, that is a little scary for us because we don't know. And that's, that's why we want to start the conversation now, which is hopefully not too late. But if we do need to give money to it, then we know.

Yeah, that's what you want. You just want the basic facts. We can move forward. That's all you're asking of him.

Now, is your son— I mean, he's in 11th grade, you might know this by now, maybe not— is he the college type? Are you Are you seeing him as the type who will go to university, or is he more of an entrepreneurial, more of a trade school? What do you think?

At this point, he doesn't know, and he kind of goes back and forth between talking about going to college and not. And I think he's leaning more towards not going to college.

And those are some of the other things that I'd want you to be able to talk about with the father-in-law, which is if little Jimmy decides that he doesn't want to go to college, what are his options? because we don't want him to feel pressured to go a route that he wasn't going to go or to feel like this is the only— does that make sense? Those are all questions that you guys are— and they're just questions. They're not you trying to tell him what to do with his money, the father-in-law. It's just, hey, we just want to know what's going on.

This is crazy. This is some chaos he's created.

It is. I mean, we talk about all the time, I know Dave says all the time, when you're estate planning, you have to bring the others into the conversation. You don't want anything to be sprung on them. It's, it's unfair. And then it's kind of like everybody's left to figure it out and you're, you know, having a nice sleep.

Yeah, we're not asking for like private information about your life. That's fine if you want to remain a mystery man, but you don't set something up for a kid with him as the beneficiary and then keep it in the dark until the very last second. That's not fun.

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Alrighty. Our Ramsey Show question of the day is brought to you by Yrefi. Sometimes the hardest financial step is the one you've been avoiding. If your private student loans are past due, Yrefi can help you explore a low fixed-rate refinancing option and payment plans that are tailored to your circumstances. Go to yrefi.com/ramsey. Remember, it may not be available in all states.

Today's question comes from Dylan in Delaware. I'm 25 years old and my income is commission-based. This year I should earn close to $350,000. I have roughly $100,000 in student debt, about $5,000 in credit card debt, and my girlfriend has roughly $11,000 in student loans and credit She wants to get engaged soon, but as financially unstable as we are, it doesn't make sense to me to take that step yet. Should we wait until we're debt-free to get married, or get married and pay our debt off together? Goodness gracious, this is hilarious. Making $350,000 and you're unstable? Average Americans would like to have a word with you, sir. At 25 years old!

He's killing it! That's why I said cha-ching earlier.

honest, I don't think he wants to marry this girl.

He might not. He's maybe looking at her going—

Making excuses. Because the truth is, he could knock out all of his debt in a year. Making $350,000 and he's got what, $105,000 in debt?

Yeah.

That's gone in a year.

Yeah, and his girlfriend's debt is gone if they get married. You know, if they go ahead, let's say they do want to get married, they get engaged, they get married, her debt is gone in 2 seconds as well.

He's gonna burp $11,000 and pay off this debt once they're married. So, So yes, if you want to get married to her, get married, get engaged, get a ring. You'll do that next paycheck.

Yeah.

And get engaged and get married. And by that time, honestly, you'll be debt-free. And the day you come back from the honeymoon, you can knock out her debt.

So let's discuss that for a minute, because I think especially he's young, and I think if there's people listening who are, you know, in their early 20s, and they're like, I love Ramsey Solutions, and they haven't found that special person yet. Some people sometimes think that we're very if this person has debt, don't marry 'em. Or if you both have debt, you need to wait to get married. And it's actually, that couldn't be further from the truth. I think the bigger thing to think about when you're dating someone and you have a very clear financial perspective is to get to know what their financial perspective is.

Yeah, I mean, it's very telling, honestly, if the other person has debt and it's starting to change your mind. Now I get if it's hundreds of thousands and you're like, I know what I'm signing up for. But it's beautiful when you meet a couple in the debt-free stage and they said, yeah, we got married and, you know, she came in with all this debt, and we just attacked it together.

Yes.

I'm like, great, that couple is gonna make it through anything.

Yes.

Because if you are willing to take on your spouse's burdens financially, what aren't you willing to do for them?

Yeah.

That's such a big thing to do. So—

Absolutely. But if you don't have the conversation, and you're just thinking, oh, we'll get married, I'll pay off her debt, and you never found out that he or she was a princess to begin with, and now you're fighting the fact that they just keep spending and spending and spending. It's like, well, you never got to know their financial philosophy.

Yeah, you gotta make sure you're on the same page beforehand. Too many people go, we've been married for 3 years and I guess we're talking about money now for the first time. Like, this is a huge problem. Talk about it beforehand, 'cause those values are hard to align after you're married.

Yeah, we say it all the time. Religion is a big one. You wanna know, like, what do you think? Like, what guides your life? That's a big one. Kids.

How do you see parenting?

Do you want them?

And how many do you want?

Yep. How many do you want? Do you want them? How do you view parenting roles and things like that? Money is a big one. Am I leaving anything out?

And family-in-laws.

Family-in-laws. Gosh, maybe today's world, maybe politics.

I mean, that's where, if you think about most of the calls where there's dysfunction, they're around some of those things.

Yeah, absolutely. I love it. All right, let's go to Rose, who's in Washington, DC. All right, Rose, you're on the line. How can we help?

Hi, guys. Okay, so So I recently purchased a very expensive home. I rushed into it. It was an emotional process. I didn't have the best agent, and I got a little bit of awful advice, but also I should have been a little bit more patient. And so, but anyway, I'm in this expensive house that I can afford. And I am wondering if I— do I kind of cut my losses and sell this house in 2 years, stay in there for a little while?

Why 2 years?

Um, because I just moved in a few months ago. It hasn't even been a year, hasn't even been 6 months.

Okay.

And I'm now discovering that there are these very expensive repairs that need to be done.

In the, in the house that you just bought?

In the house that I just purchased.

Tell us the numbers. Tell us what you paid for the house. Tell us what your mortgage is every month.

Oh, house is $750,000. Okay. My mortgage is $5,200.

And what's the mortgage balance?

$750,000.

You didn't put any money down?

I did, I did, I did. I lied. I'm sorry. $712,000.

Oh, you put the bare minimum down.

So the mortgage is $712,000.

The more— what I owe— I put, I put about $66,000 down.

Where's that money?

I own— I have, I have— okay, so part of it was just money that I saved and then I took out About $33,000. I borrowed $33,000 out of my retirement, which I'm paying back right now.

Okay. But if you're telling me you put $60,000 down on a $750,000 house, I'm expecting the mortgage to be less than $700,000.

No. Well, my mortgage is $52,000.

I'm talking about the full loan, not the monthly payment, the balance compared to what you paid for it. Oh, sales price versus mortgage balance. That's what we're talking about.

Right, right, right. Um, I thought it was about 7. Oh, maybe it's a little under 7. A little under 7.

Got it.

Okay.

Your mortgage balance. Okay. What do you make every month? What is your after-tax monthly income?

So I'm averaging about $16,000 a month. I am commission-based. I'm in sales.

Okay. Okay. That's good.

That's good. So I don't make anything under $200,000, $225,000 a year.

So ideally you'd be making $20,000 a year for this to scale.

Or $20,000 a month.

I'm sorry, $20,000 a month. Thank you. And again, here's what I want to check. Is this after tax only, or are you doing after taxes, after investing, after healthcare premiums? Yes. When you get to that $16,000 number that you gave us.

After taxes, after insurance, after a little bit of retirement that I'm putting away right now.

So if we add back in tax, if we add back in your insurance premium, if we add back in what you're putting aside for investing every month, not quarterly, but by month, what will that turn that $16,000 into?

Probably about 18.

18.

Great.

All right.

Okay.

So now this is not, this is not too bad.

Nothing's on fire. Yes, there was mistakes made. You're frustrated with yourself. You rushed into it. The agent was looking for a commission. You didn't do your due diligence on inspection repairs. Let's put that in the past and just look toward the future and go, what's the next step? So do you have savings right now?

I do.

How much?

I do.

I have, I have a pretty I have 6 months. Well, because I'm in sales, I was like, that was my priority.

Good.

Good job. So I have 6 months' worth of my mortgage saved up.

Wow. Just of the mortgage?

Okay. Well, that's—

so you've got like $30,000 sitting in savings?

Yes.

Okay. What are the repairs going to cost? Have you got estimates on that?

Oh my goodness.

Different bids?

Yes. Yes, yes, yes. So I got anywhere between $7,500 to $8,000.

Great.

So you could write a check today and get the repairs done.

OK.

That's a pretty— I mean, I feel like you are real hard on yourself. You have the money to pay for repairs. Yes, the mortgage is a lot. I'd like it to be slightly less, your income slightly more, but you don't have to rush into selling this thing off.

And I don't know that you need to sell it off if you like the house. I don't know, and tell me if I'm wrong, Rose, my guess is this is the most expensive house you've purchased. This is the first time you've had a mortgage that's this high. And you're like freaking out because you're like, this, this doesn't feel right to have a mortgage that's $5,000. But you're taking home almost $20,000 a month. Like that's your, that's your, that's your pay. And so ratio-wise, it's a fair amount. If we're close to the 18, 19 that we think we are, ratio-wise, it's a totally fair amount. I think you're just feeling like, oh, Oh my gosh, what if something changes in my situation? What if my job changes?

Especially being commissioned with a trust.

What if, yes. I think that's what you're feeling. And if you are feeling that and you reevaluate in 2 years, like you said, and you're like, you wanna know what? I would feel more peace if I just downsize. I think that that's a totally fair place to be.

Or just aggressively pay it off over the next 7 years. Yeah, you could do that too.

That'll give you some peace too.

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All right, back to the phone lines we go. We've got Carson, who's in Dallas, Texas, on the line next. Hey Dallas, George and I are here. How can we help?

Um, so I am a freshman in college and my brother is a software engineer in Fayetteville. Well, I'm actually from Arkansas, but Dallas is the closest major city. Um, but my brother is a software engineer in Fayetteville, Arkansas, and we, we want to start a Christmas light installation business, and I was wanting y'all's opinion on it.

Okay, why Christmas lights?

Um, so this past summer I pressure washed, and I made a lot of— I played football in college and And I needed some money to save up to come down here, and I pressure washed this summer, and I made a lot more money than I was expecting to make, and I really enjoyed it.

What'd you do with the money?

Um, saved it.

Nice. How much you got in savings?

Uh, not much now. I think I have like $1,300 left.

Okay, so what happened to the rest of it?

Um, I mean, like books for school, then traveling. I live, uh, it's like 4 hours from home, so when I actually do go home, gas and then food, every— all the living expenses.

Okay, so do you have any debt right now?

No, I don't.

Fantastic. And so you want to start this business with your brother who's a software engineer. How does that play into the Christmas lights? Was he You gave him this idea and he was like, yeah, I'm in, we'll install these together.

So we've wanted to start something for quite a while, and we've researched a lot of different things and talked about a lot of different things, and Christmas lights was something that came up because we were talking about pressure washing. Because I would go up there and visit with him in the summer, and I would, uh, we'd talk about how much money I'm making and like what I'm doing.

Yeah, why not pressure washing? What, what made you land on Christmas lights?

Yeah, because it's, it's not all like the business for pressure washing is a lot— is down a lot in the, um, wintertime. And so that's when Christmas lights are up the most from like—

So would it be both? Would you do one? Is it seasonal? We do pressure washing on the other part of the year and then the Christmas lights on the other part? Got Okay. Now, what does it cost? Because I mean, I kind of have in mind what I'm thinking. I have a couple of thoughts here. Why do it together? Why not one of you just say, hey, I'm— why wouldn't you just say, hey, yeah, I think I want to start opening up this business and it'd be cool if my brother wants to work with me or work for me on it for a while versus it's got to be a partnership. We've got to do this deal together. Like, what's the benefit What would be the benefit to you of linking up with him on this?

So I would have somewhere to live. I would stay with him. And also, he would also keep his job for as long as he can. And depending on how much we scale the business is whether he's gonna just completely drop his job and You do know Christmas lights is like a 1 to 2 month gig.

So I wouldn't be dropping a full-time job for a 1 month to 2 month situation.

What if you just started out? What if you just moved up there and you started with the pressure washing and you just said, hey, can I stay with you while I start seeing how many pressure washing clients I can get? And you just make it your full-time job that I'm going to get as many pressure washing clients and I'm going to just build slowly using the cash that I have. I'm going to start with the pressure washer I have. And when once I get enough clients and I can save up a little bit more money, you know, and just go very, very slowly. And then as the pressure washing part starts to take off, now you have cash flow. Now you can start saving up for whatever infrastructure you need to do the Christmas lights. And I would largely be doing this on my own. I wouldn't hitch my, what is it? Hitch my wagon to someone else's cart.

Is that right?

Cart to the wagon.

I wouldn't hitch myself up with someone else If I don't need to, and I don't think you do. I think partnerships make this get really muddy really quickly.

'Cause what happens when he wants out? Because he's tired of it or would rather focus on software engineering or gets a promotion or moves?

Yeah, 'cause it's 2 people you have to be paying.

Buy him out?

Yeah.

So that's the part where you really need to look at forming a partnership agreement if you're gonna do this, so you're both on the same page with all the what-ifs.

Yes.

And then what must be true to start this business? How much is it?

Um, we're looking into it to start it. It would only be around like $4,000 to $5,000.

Okay, where's that money gonna come from?

Um, he has, he has money saved up. He has like, he has that money, but after that—

So now how does this work? He put in all the money and you didn't.

Carson, I gotta be honest with you.

So it's already lopsided, right?

I gotta be honest with you. I feel, and I'm not trying to point a finger. But I feel like you're kind of leaning on him for your deal. You're like, I gotta, I gotta move up there where he lives. I gotta move into the house with him so I'll have a place to live. He's got the money to do this. So it kind of feels like— hold on a second— it just kind of feels like you're too leaned on him for something you're trying to do with your own life. And he, he's got a job. He's software, software engineer.

Yeah, sounds like he's doing fine.

He's gonna have to leave his thing to do— does that make sense? I just don't feel I feel like this is set up— the foundation of this doesn't feel set up in a fair sense. And I feel like you're too leaned on what he can do for you versus you going out and doing something for yourself. Is that fair enough?

Yeah, I understand where you're getting to, but where I am right now, I am in a town of 2,000 people and the closest place is Pine Bluff, which is an hour and a half away.

Okay.

And there's 30 people there.

So why are you out there? What are you studying?

I'm studying finance and I play football down here. And the reason I came is because I get a large amount of school paid for.

Okay. So I think then let's, let's tackle one thing at a time. If you're there to go to school, go to school, like play your sport, do that thing. Pressure washing is not going anywhere.

If you want to do some side hustles like that, but I wouldn't go just starting a business willy-nilly. I would just make it a side hustle, try out a few people's Christmas lights if you want this winter, get a feel for it. And then if you love it and the margins are there and you're like, I could scale this thing, do it with your own cash before you bring brother into it as the sort of financier.

Yeah, I agree.

It's just gonna get— we've seen it get messy too often. And make sure you do it properly if you're gonna do it. You need to form an LLC, you need general liability insurance, insurance because you're up on ladders, you're messing with people's gutters on houses. You need to make sure you're protected.

Yeah, absolutely. And I tend to say, I'm sure there's plenty of partnerships out there that are doing just fine. But honestly, if you can just do this on your own, it's your first business, do it on your terms. That way everything is operating according to your values. You're not half— because what if your brother's like gets this grand idea that requires debt and you're like, I don't wanna use debt. And now you guys, do you see what I'm saying? Everything has to go through each other.

So, and it's, well, Carson's doing all the work. Brother's not getting on the roof. He just wants to be part of the business. And so now it's like, well, I'm putting in all the hours and you're just doing some accounting on the backend or whatever it is. It's gonna feel unfair at some point. Rarely does it feel like we're both putting in 50/50.

Yes.

Generally each partner thinks they're pulling the other's weight.

That's a very good point.

And that's where it gets messy and resentment bubbles. But it sounded like a great idea upfront. Like, this will be fun. It's a way for us to bond. I'd rather you bond over going golfing or something.

Absolutely. Cleanliness is what we're after, a nice clean plan. Well, let me go back and read the scripture and quote of the day because I opened up hour 4, George, without doing that.

People were wondering.

I know, I broke the chain here. I hope there's no bad luck or something in that.

It's fine. God is a gracious God.

He's a gracious God. As a matter matter of fact, Psalm 18:32 says, it is God who arms me with strength and keeps my way secure, in spite of the fact that I did this incorrectly. And then, Sarah Blakely said, I think failure is nothing more than life's way of nudging you that you are off course. And so, I have just been nudged that I did go off course.

You've been humbled.

I have been.

I love it.

Oh, my goodness gracious. All right, George, I love these quick questions from social. They're just a quick way to say something, you know, just a little shout-out. What's the recommended dollar amount percentage of take-home pay that you can budget for fun money after you complete Baby Step 3?

Oh, I'd make it reasonable. I'd be in agreement with my spouse. And you know, if it's $1,000 out of your $3,000 take-home pay, that's bad.

Yeah, it's not a percentage. It's a vibe.

Exactly.

All right, guys, remember, there's ultimately only one There's only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.