Transcript of It’s Time to Go Scorched Earth on Your Debt

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Normal is broken, common sense is weird. We're here to help you transform your life from the Ramsey Network and the Fairwinds Credit Union Studio. This is the Ramsey Show. I'm Jade Warshaw next to me. Rachel Cruz taking calls all hour about your life and money. We have Jim, who's in Phoenix, Arizona. Hi, Jim.

Hey, Jade.

Hey, Rachel.

How are you all?

Doing good. How can we help today?

Hey, I've got a weird situation. I want you all to help navigating. I received a large gift of silver from a family member, and it was given to me under the pretext of, Hey, I really want you to hold on to this. I think this will increase in value. I told them that we're working Baby Step 2, and they would be like, Oh, this is awesome. It's that's actually going to cover the rest of our credit card debt. But they really want us to hold on to it, and I'm trying to figure out how to navigate the situation.

Is it like, Hold it for safekeeping, or it's a gift, but we don't want you to cash it in just yet? Which is it?

Yeah, it was more like, It's a gift. We don't want you to cash it in. We think it's going to exponentially go up in value. And it's funny. I listened to Dave talk about not to collect your box.

Well, when did they When did they say you could cash it in?

It was a grandparent. So it was really a, you can hold on to this or you can do what you want. But there was a- Strings attached to a degree.

Which is funny because about two days ago, Silver went in the tank. I don't know if you... I actually had a friend I was debating about with Silver, and then he texted. He was like, Well, not a good day for my argument. I was like, No, it's not. It went down. That's funny. Well, okay. So I do think having a gift with strings attached is not fair to the person receiving it because it's not really a gift at that point. There's an expectation. And I appreciate their sentiment. And I'm just wondering... I mean, I think, Jim, honestly, I think you're an adult. And so I think you were given something. And you and your wife... Are you married? Did you say you're I am, yes. That you guys make a decision on how you think it would be best to use. Is it best to keep it because you never know or whatever this grandparent's saying? Or for right now in your life, this is what we're working towards to create financial stability, which is ultimately what this grandparent's wanting for you all is financial stability because they think that this is going to become something.

So, yeah, at the end of the day, Jim, I feel like it sounds harsh, but I'm like, I think that you're an adult, you were given a gift, and I think you guys use it as you best see it.

What you could do is you could let the grandparents know and say, Hey, I know that it's your desire for us to keep this. For us, it'd be better used if we sold it. So if that changes, whether or not you want to give it to us or not, you could put that on the table and say, Hey, if you'd like to basically revoke your gift back, knowing what we'll do with it, we'll be fine with that, but we wanted to be upfront with you that we would sell it. And see what they say. If you wanted to totally be above board. I mean, you're fine to do what you want now, but if you really wanted to take it to the next level, you could give them that option.

The only thing I don't know if this changes at all for you all. It really only affects my baby step two by a month and a half to two months.

How much is it worth?

It's worth about $8,000. We're checking about $6,000 a month towards credit cards, and Good night. Good for you all. Yeah. Got to get out of it quick.

I know. It was good. That's amazing.

Yeah.

So the time thing, again, if you weigh out what it's going to do to a relationship, if you really think it's going to harm something, you're like, It's not worth it. And so for a month and a half of our sacrifice, we'll sacrifice an extra month and a half to keep this thing. And this sounds horrible, too, Jim, but when this person passes and you guys look up in 10 years, I'm like, All right, we did this to honor We're Nana, but we are ready to let this go. To your point, it's not going to change your life either way. It's just a principle of we're going to put our efforts and our money and our time and energy into things that we think are actually going to be worth it in the long run financially, and this commodity is not.

Thank you. It's a good question. We know gifts should be given, and for anybody who's thinking about giving a gift out there, if you're going to give a gift, give a gift. And it's okay. I think if it's something that's a state planning, like a will or something like that, to have certain stipulations on something like that, that makes sense.

Like from a moral perspective or something. I don't want to harm my kids if they're misbehaving in life and then I don't want to hand them a bunch of money because that could magnify it. Things are on that. But just this nitpicky, Hey, I want you to do this, not that. It's like giving someone a whole life insurance policy and be like, I don't want you to cash it out. And you're like, Yeah, but this is not a smart investment. Right.

Or even the idea of, I don't know, a family member, let's say a family member struggling and you want to help with their rent. So you're not giving them cash, but you're like, I will pay your rent for you. I just feel like It is a interesting line to walk there, Jim. And I, for one, think that this is more on the side of you should be able to do what you want with this. Yes, absolutely. Thank you for the call. All right, Jessica is in Oklahoma City, Oklahoma. Hi, Jessica. Hello.

Can you hear me?

We can. What's up?

Okay. Hello. So to sum up, we are putting our house on the market next month, and our plan is to eliminate a mortgage by downsizing. If we can buy a home in the $3,500 to $400,000 range, we will eliminate a mortgage and all of our debt, and it will give us the opportunity for me to homeschool my kids if we choose to do that.

Cool. Oh, wow. The home you're in currently, what equity is in it?

So we are putting our house on the market at about 680,000. It's on 15 acres. Our big downsize would be in land, not necessarily home size.

Got you.

What will you make on the sale? What will you pocket?

We will pocket about 420 $20,000 after closing costs and taking away the mortgage, which is at about 215,000. If we bought a home in the 300, the 400 range, we would have $17,000 in education debt/credit card, but it's all one. And so we would take that and pay that completely off. And then so we would do... And we already have about 75,000 in a brokerage account that we use as our emergency fund.

Great. So what's the question?

I guess if our head is in the right place of doing this because it's going out of order of the baby steps, but it would- Because you're in what way? Because we're paying off our home early. Oh. It's just baby steps.

Well, what I would say is if you do this, obviously you're clearing your debt. I would save some money aside for a 3-6 months emergency fund. But other than that, that's it. It really feels like it's in that brokerage account, just pulling that out and having, since it's not a retirement, having some of that liquid, I think is where you're going to want to do there. Yeah.

And Jessica, I would not sell a home for $20,000 of consumer debt. So if there's a bigger reason why, like what you said, that you eliminated a mortgage so that you can homeschool your kids and stay home. That makes sense to me. But I would not make this move for a $20,000-Simply for debt. For a $20,000 of consumer debt. So if there's a bigger reason why, which I think you said there is, then that's great. And you're not out of order necessarily. I think you guys are doing awesome. So good luck.

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Charlie in Atlanta, Georgia. Hey, Charlie, what's going on?

Can you hear me?

I can.

All right. Thanks for having me on today. And I guess I may have a complex question, but we'll just dive in and see what details are needed.

Sounds good.

So I'm calling on behalf of my wife and I, and we're in baby step number two. We've been in it for a couple of years now. We started $254,000 with a debt. We're down to $145,000. But on our snowball, our next loan is a sticky situation. So my wife, her last year of undergrad, and all four years of my brother-in-law's college are consolidated into one parent plus loan.

Okay.

And so we are a portion of that loan. It wasn't really done right, but this is before we found Randy, and this is all before we even got married. But they consolidated it and it was like, Okay, and here's your... Like, They took it, and since it was four years of his college and one year of hers, they just took the payment and divided it by five, and that's what we pay. So we pay 211 per month. And so our original balance from a wife's loan was 25,000. That's interest included. And so we have that cash saved up. But the problem is, my mother-in-law, I think, but I don't think, they're trying to do the PSLF program and get it all forgiven. And they're still seven Ten years left of that. And so we don't want that. We have the cash to get out now. The problem is that they depend on our 211 per month to make the payment. And I guess my question today is probably more of a relational question of how... Because it's my mom or my wife's mom, so we're going to have her talk to them because I don't want to be the mean old son-in-law.

Sure. Smart.

And I guess just an insight on what are some tips or something maybe my wife can talk to her mom about this, maybe.

Because the loan is in is in the mother's name, correct? Correct. Your wife's name is nowhere attached to this loan, right? Correct.

We double, triple check, yes. But morally, they spit-shake that we would pay it off.

Sure. Right. And you have the money, the $25,000, the longer this loan sticks around, obviously, the more interest it gains. So for you, it is smart to say, Hey, if we have the money now, let's knock it out. You can give them the $25,000 that you owe. It's up to them if they want to siphon that out, $211 a month or whatever that is or whatever they want to do. But what you do need to do is make sure that the same way it was a spit shake before that you get in writing and just say, Hey, we're giving you the entire balance of what we owe as of February second, 2026. And that way no one can come back to it and say, Hey... And then you give it to him and say, Hey, if you guys want to do this loan forgiveness, that's fine. But any interest that accrues, that's up to you. We're ready to be out of this today. And I love the idea that your wife will be the one talking to the mother-in-law.

Yeah, that's exactly what I was going to say, Charlie, is I would sit down with them, have a check, and the writing thing is so smart. It's going to probably feel really weird. And her mom's going to be like, This is so what are you doing? But it's like, no, I'm just going to have the date, the balance of what is, and then tell the mom like, Hey, mom, listen. Just warning that sometimes these programs do not go the way you think it's going to go. And if it's not paid off, this is what the interest will be. But we are not going to be on the hook for it because if it was our loan today, we would be paying it off. I would overcommunicate it, have it in writing, give them the check. And to Jade's point, if they really want to just keep it, then it's like, Hey, you do whatever you want with that $25,000, but we are done. And credit to your wife, too. We take so many of these calls where there's some communication when the child is 20 years old, and then you look 15 years down the road and mom doesn't want to pay anymore or daughter is like, No, it's not really mine.

I thought, it's really messy. So the fact that you guys are definitely above board in the sense of you are keeping your end of the deal flawlessly. It's amazing. And so it's just going to have to be that communication of, Here's the check. Let's sign this together, just so it's said out loud. And, Thank you, Mom. Love you.

And I'd even frame it up, the whole thing of getting it in writing. And by the way, I take screenshots of the balance and everything, just everything. And the way I'd frame it up is, Hey, I don't know about you, but sometimes over time, I can just forget details. And this is just for all of us, as opposed to a, I'm doing this to hold you accountable, right? Just the idea everybody forgets what the balance was two years later. Nobody's going to remember the exact dollars and cents. No one's going to remember exactly what was said. It's just an idea of we all forget details. It's easy for this to get muddy. For me to remember, I'd like to do this. That way, you're putting all the onus on you and you're not indicting them in any way.

You're trying to point the finger at them. How would that conversation go, knowing your mother-in-law and her relationship with your wife? What we just laid out, how do you see that going?

The worst part about it is, I was fixing to have a follow-up question. And it's not be passive-aggressive, but I was wondering, getting it in writing, do you all think it would be okay to get a cashier's check and get it put in the memo, maybe? Yes. And the reason why I said that is because- Yeah, absolutely. I'm worried about... Because when we first approached this, I was like, Well, heck, we'll just go get it notarized. But it makes it look like... I don't want to make it look like bad guys for doing this.

No, it's not. It's just how these things are done. I was hoping I'd be able to...

Okay, yeah. And honestly, you asked how they would be received. I'll be honest, I'm worried that it might... Not that it'll be bad, but it'll catch them off guard just because there's a total different mindset there. I mean, dead is just a normal way of life for them and all that. Me and my wife, we're first-generation Ramsey people. My side of the family and my wife's side of the family, they're both the same. And so we're trying to get out of this so we can fix our family tree, as you're afraid.

Totally, yes. Absolutely.

I'm afraid. I'm not going to say it won't be received well, but it's- You're going to look weird.

Yeah, it's going to be weird. It's going to be weird.

Also, because like I said, they firmly believe that it's going to get forgiven. There was a comment even made back in the summer. They looked at the loans and whatnot, because we live six hours apart, so we got on vacation together, and we met them, and the comment was even said, Oh, how much left on that loan? Because we talked about paying off our debts and stuff, and her mom pulled it up and was like, Oh, it looks like seven years. And the brother was like, Well, it looks like you're in debt for seven more years, at least. And we're just like, No, not really. I'm not going to say it be bad, but it's going to have to be a teaching moment, and that's going to be hard because that's her mom.

Well, Well, I don't know if you do have to teach it. I think it's just I would keep it, and I know you're not the one talking. Values. Yeah, I wouldn't even get into all that. I would say, Hey, I was thinking back to when you pulled up that loan, and me and my husband, this is her talking, me and my husband talked about it. I think we're ready to be done with it. We looked at the balance, and based on what it is today, I think we're just ready to pay our portion off, and we'll give you a cashier's check so you can put it on there. You're not even talking about them. You're really not even talking about you. You're just letting them know you want to get out, and there's no detriment to them. I think at that point, as long as you know, as long as they understand, it's at no detriment to them to pay this off. I mean, Rachel, I wouldn't even get into- The why. The why and what you should be doing.

Unless they ask, then you can elaborate.

Less is more.

Yeah, for sure.

Okay.

Yeah. Yeah, I hope it goes well, though. But yeah, keep it short and sweet. Clear. I always say, kindness.

To be unclear.

To be unkind. So be clear, which helps with the writing. I like your advice, Jade, on, Hey, this is for Yes. For our records and what we're doing. Just so I can remember because I sometimes can forget. You know what I mean? You can put that off a little bit on you, and I think that's fine.

It's true. It's also true. I mean, to remember what the dollars and cents are, because what I see happening in that situation is If for some reason on down the line, it doesn't get paid off, it starts to feel overwhelming, it could be easy to think, Well, maybe they didn't pay their whole portion. Maybe, Well, I remember it being...

And if you're tied in with a loan with someone else, the brother's loan is in there. And if he doesn't pay for a year because he doesn't have a job or something happens, you know what I mean? It starts to build. It affects everything. It starts to build a lot. Charlie, great question. And hey, great for you and your wife. And again, I pointed out to the weird It's not a word, but it is. How they're doing life and money, that's normal. That's what most people do. So when you come against that and you're at this intersection of like, Oh, my gosh, we're budding up against normal, it's going to feel weird. And it might be a little awkward, but you're going to get through it, and then you're going to be fine. And I think you won't even think about it six months later, and it's going to be great. I'm so true. I think it's a smart move, and yeah, excited for you and your wife. If you're looking for a more budget friendly way to save on medical costs and stay true to your values, Christian Health Care Ministries is a great option to think about.

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So one of our favorite things is hearing people share their stories of how they're winning. And we just heard this from Claire and Winston, quote, This is me and my husband's third month budgeting with the EveryDollar app, and I'm amazed how much money we found. We went from feeling like we were living paycheck to paycheck to finding 3,500 extra dollars in margin every month to put towards our debt. We each had four credit cards and have been able to pay them all off, never going back. That's amazing. And you can do this, too. You You can take control of your money. You can change your family tree and live like no one else. Go download our Every Dollar budget app for free in the App Store or Google Play. Love to hear it. All right, Elizabeth in San Francisco, California is on the line. Hi, Elizabeth.

Hi. Thank you guys so much for having me.

You bet. How can we help?

So my question is, how do I know if I'm heading past Gizelle Intensity into the burnout space as it relates to paying off my debt?

Tell us more. What are you doing that makes you think you might be going too far?

First of all, I never really learned how to budget. I'm a medical doctor, so I make good money, but I just got out of residency, and I have about $600,000 worth of student loan debt plus consumer debt. And knowing that I don't want to be in this space of paying debt forever, I fully bought into the baby steps. I believe in the biblical principle. It's just I'm finding that when I get to the end of my paycheck and I'm having to wait three weeks because I get paid on the 10th and the 21st. So between the 21st and the 10th, I'm scrounding around for my last dollars to make it to my next paycheck.

Yeah, I know that feeling.

Yeah. And so I'm trying to figure out if I'm paying too much aggressively because I have this goal in my mind of paying off over $100,000 of consumer debt by December if I need to pull back a little and stop being so extreme.

Well, I'll give you some parameters. Something that you said definitely hit home for me when my husband and I were paying off debt. The feeling of having just a little bit of money in your account, I think that can be good. But are you budgeting a cushion? Just in case, if you're finding that you're going to the wire and it's causing you to overdraw or it's causing you to not pay minimums on other things, that's a red flag that you're just taking every cent and you're not planning for just a basic cushion. But if you're telling me like, No, Jade, it's not causing me to overdraw. It's not causing stress and strain. I'm just using all of it. I think that's pretty good.

Yeah, I I was overdrafting a lot up until October, and then I hit rock bottom. My friend's an FPU coach. She was like, We are going to do this. So now this is my first month doing my every dollar myself. Good.

Okay.

And you're putting the cushion. What's your cushion amount?

I would say I don't have a cushion right now.

Okay, you need a cushion. This is coming from your friend who has done that. And the overdrawing... Because it's inevitable, right? Zero-based budgeting doesn't mean zero dollars in your account. So if you're budgeting every single dollar towards debt and you're not putting a cushion, it is inevitable, Elizabeth, that something will come up, grandma's birthday, or just something that you forgot that will come out of your account and overdraft you. And then you're like, Oh, dang it.

That's happening every month.

Yes, that's happening every month. How much money are you putting towards debt?

So right now, Just in my minimum, it's about two grand. And then what I'm paying on top of that is another two grand, so somewhere around 4,000 to 5,000 a month.

Okay. Because how much are you bringing in a month?

Thirteen to 14. Okay. But I made grief-based decisions because of working in an ICU during COVID and getting PTSD. I was like, This has to mean something. And so I'm standing in a $6,000 a month rent right now and just paid off a $5,000 couch. Then when I finally hit rock bottom, I was like, Okay, I made a lot of good decisions. I'm paying this stupid tax till I get out of this lease right now.

When's your lease up?

And my lease is up in January. In next year.

Okay. So another year of... You have out earned the... I don't want to say stupidity, but you know what I mean, the bad purchase. And like I said, luckily, you have enough... You're You're earning a high enough income that you're probably not feeling it the way some others might feel it. But yeah, that's going to make a huge difference when you get back down to 25 %. For sure.

Right. Yeah. Have you calculated out? Because you have $600,000 in debt, you said. When you get that- Yeah, about 660. When you get that 6,000 a month back in the budget, how quickly are you able to pay this all off? And I'm assuming your income will go up over the next couple of years.

Yeah. So right now, my income goes up about... I'm I'm at 320 right now, and about 10K a year is my salary increase. And then I get about a 10K budget once I... I just started my job. I'm only four months in, but that's essentially where we're at. I've paid down almost 20K of my debt so far.

Okay. Just a question, and I'm sure you've run this out, but if you haven't, if you broke the lease, what would it cost you?

Oh, it's like 15.

15?

Mm-hmm. Hmm.

Well, that's two months of rent. Yeah. Versus continuing to pay- Yeah, 60,000.

Yeah.

I'd probably do that.

So should I save the money then to pay off? I might do that. Okay. So instead of worrying about paying off my other debt, just like, Okay, okay.

I would do that because think about it, if you can find a place that's, I don't know, 2000 or 18.

I already found five places. I searched once a week.

I probably would do that, Elizabeth. Yeah. Versus being stuck in this Because that's what? Almost $70,000. Yes, it's a lot. That could be going towards this over time.

I mean, if you saved $4,500 a month on rent, that's a killing.

Yeah. Okay.

Okay. Great.

I love that for you. And I feel like you're motivated. You are. She's like, I already found three places. I've found three places to live.

I wasn't asking in high school. Okay?

Say less.

In eight years of non-gratification, I can do this.

Yes, Elizabeth. Oh, my gosh. Well, you make a great income. You have a crap ton of debt, which I know you feel. But you can do this.

I love this for you. Okay, so we've got a clear plan forward. There's way more margin coming up. I love that.

Yes. Oh, yeah. I would do That's what we're doing.

I love that. So, so, so good.

Man, six grand a month.

It's a lot. It's a lot. So just for anybody who's listening for the first time, whenever we have people ask about their home situation, you don't want it to be any more than 25% of your take home pay. And That's not just with mortgages, that's rent as well. The purpose of that is to make sure that you've got your income at your disposal to do the things that we teach, regardless of your baby step, whether it's to be able to do all of it, to To be able to save 15% in baby step 4, 5, and 6, you can't exceed that, or else you'll wonder, How is everybody saving 15%? It's because our mortgage is and our rent is 25% or less.

Yes, which allows, again, so much of your income to able to do so many things, whether it is paying off debt, like where she is in Baby Step 2 or beyond that, what you're saying, with investing in even kids college, putting extra towards the house, all of it. Yes. But what I appreciate about her, though, is she She's not like a typical... We see some people get out and they out of law school, out of doing all the residency in the medical field, and they make $320,000 their first job, and that's a great income. It is. You want to feel it. You want to feel it. You want to go enjoy it, and you want to upgrade the car, get a nicer spot. You just want to... All these things, you want to be in it. And so her, though, I could hear it in her voice where she was like, No, I'm cutting. I'm getting out of this. Because it's crazy to think if she does this in three, four years, which is totally doable. Absolutely. At that point, she'll be making $400,000.

With nothing, with no debt. With nothing, yes. It's amazing. That's so true. And she did this with COVID. She went back and revenge spend, which was a real thing. But it's true when you make an income like that or really anything, if you've worked hard to get what you have, you almost feel like it's a reward to be able to enjoy it. And it is. But if you've made mistakes, you've got to go back and pick them up and clean up the mistakes, and that's just part of it. And so I'm really proud of you, Elizabeth, for doing that. Call us back when you're debt-free. Matter of fact, come see us in Nashville and do your debt-free scream live.

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Thanks for hanging with us. We're going right back to the phone lines where we have Amanda, who's in Santa Fe, New Mexico. Hey, Amanda.

Hi. Thanks so much for taking my call. I hope you guys are good.

Absolutely. How can we help today?

Hi. So I need more of a, I guess, relationship advice. I want to see how I can maybe get my husband to be as intense as I want to be on step number two, or maybe how I can be less intense and can balance out. He says I'm a little bit obsessing over money right now.

Okay. So he's viewing you as obsessive, you're viewing him as a little bit passive. Tell me some of the things that you want to do that he doesn't agree with.

So we have some crypto that I would love to take out so we can get through step two faster. I know he was not totally on board, so I made different plans as to how it would look like or how long it take to pay off our debt. If we took out the crypto, if we sold my car and I would get a cheaper car, or if we didn't do either, so we could compare the length at which it would take to get through step two. And then he's supportive of going to step two, but he was just like, You're obsessing too much over this.

He's not feeling the pain as much as you are. Yeah.

He's like, We're going to get through it. You just need calm down. You're spending a little bit too much time on it. You should focus on our family and our marriage instead of looking at this.

Wow. Okay, let me go on that side. Does your marriage need attention? Is there other things that need more attention right now?

I would say maybe... We just had a baby. We have a four-year-old and a six-month-old right now. So I would say maybe we could... We try to do date nights and stuff at home, and we go out for dinners maybe once a month or something. I guess I can see why we could spend more time.

Maybe I would start by... I'm going a different direction. I don't usually go this. So maybe you could start by getting a picture from him of what that looks like in his mind. What does it mean for you? I thought about what you said, what does it mean for you in your mind? What does it look like for me to spend more energy on our marriage? What does it look like for you, for me spending more time on our family? Because I'd like to meet you where you're at, and then I'm hoping that we can meet each other where we're at. And so if you start by, I don't know.

Wondering what that is for him. Because I'm not saying this is you, Amanda, by any means, but we do have some people that are so hard core that every conversation is around getting out of debt. Every purchase is looked at to the endth degree when the spouse walks in the door and it's like, Look, I saw this. And it's It becomes so obsessive to the point that there's nothing else in life but this. And listen, we're all about intensity, right? We want you. But also you're a whole person. And so you are in a marriage. You are a mom. You have these other roles that you can't neglect. So on the But on the extreme side, Amanda, where would you be with how I just described? Are you that person? Or are you like, No, I'm not that person. He just is way too passive, and I'm not that crazy. What would you say? Where you are?

Well, I I'm not crazy obsessive, but I do want to get through the debt payoff. And maybe he could be a little bit more... I guess because I'm the one that handles the finances, I would like for him to be on board and not be the one that's like, Oh, we shouldn't be spending on that.

Yes. You don't want to be the mom of him, right? And giving permission of what he can and can't do and what we can and can't do as a family. We, as two adults, need to decide that. So There's a core issue there.

It's a big issue.

He's not in there with you.

I like that. I think if I were in your shoes, my next step would be set up a date, like a date night. And the first date would be for you to learn more about what we talked about before. What does it look like in your mind for me to do these things? And then I'd set up another date and I would say, I know you didn't ask, but here's a few things that I would like to see going forward. And I think if I do some of the things on your list and do some of the things on my list, that's us meeting in the middle. And to do all of that around a date night, I think, is a great way to be intentional. I'll just be honest. I, for one, like the fact that you're running different scenarios of, if we did this, Here's how quickly, and if we did this. In that way, there's options, and I think maybe presenting it to him that way and saying, Hey, what I don't want to do is make the decisions for our family. What I don't want to do is be the one saying you can or can't do this.

What I thought would work would be me bringing options so that you can decide and that we can decide together and both feel good about it, as opposed to me saying, No, we're selling the crypto and no, you're selling your car, that thing. So it just really feels like hearing the heart around the situation for both of you would be helpful.

Yeah. And I do wonder, Amanda, if you guys are just missing a point of connection. And this sounds so simple, but honestly, I could see being in your shoes and feeling like, I feel so isolated over here. I feel so much responsibility. I have a new baby. I have a toddler. This is up to me to make all these decisions about the household finances. I feel like I'm on my own. I don't feel connected to my husband. If I had a husband who was paired with me, excited with me, asked questions, was involved, had thoughts, maybe different opinions than me because that's going to happen. But at least there's a connection point, and I feel a level of connection, where his level of connection, Amanda, maybe be something totally different. Right? And so figure out what that is for him, like what Jade's saying. So I think there's this missing element of you could be functioning more like roommates, and you're the CFO, and you know what I mean? Doing this role all on your own, versus it being a marriage, and we're in this together. And what we both need may look different, but let's say that out loud so that we at least hear each other.

And that's the part of marriage, is that you're not going to be the hero to your spouse's story by any stretch of the imagination, but you can at least choose to step into those things. Absolutely. And I do wonder if that would help you, because he does need to be part of these decisions with money. It does not need to be on your shoulders, Amanda, at all.

Yeah.

And you're probably... Yeah, and I'm sorry, I'm going to keep talking That's not the problem. Because I bet you feel the stress, though, because you're seeing the numbers day in and day out, and he's not. That's right. So he doesn't feel it as much as you.

And I'm like, Oh, we have this much left for our grocery budget, and he'll be like, Okay, I know he's supportive of that, but I'm the one that has to remind like, Hey, we have this much in our account.

We don't want to use our savings.

Yeah. You just want help, and you want 50/50 on this. And I don't think that's too much to ask. I truly don't. I don't think you're wrong. I don't think you're wrong at all. I don't think he's wrong for saying what his needs are. I think you guys just need to really talk about it and don't leave anything out. Just be honest and see where that leads. Do you think you could be honest with him? And if so, what do you think his response would be? Do you think there'd be any change?

I think I could be honest with him. The thing is that we used to do finances together, but I told him I didn't think I could trust him with the finances because I feel like it would be unnecessary expenses. So then that's why I felt like I had to take over the finances.

Because he spends He spends too much on unnecessary things. Is that what you said?

Yeah, maybe. So you wouldn't trust his methods?

Maybe not, yeah.

Okay. I guess, yeah. It's a philosophy.

I have it in my mind that I wanted a specific way with the finances, but I feel like it's just sticking to the budget and not purchasing what's not necessary.

It sounds like you both have two different philosophies. It sounds like for you, getting out of debt is really, really important or finding this financial security, whatever that means for you, is really, really important, and you're willing to really sacrifice to get it. It sounds like for him, debt is not as big of an issue. Therefore, why be intense about solving it?

You are definitely correct, yes.

Okay. So that's a whole different conversation, I think. Because if he doesn't mind debt, then you pushing to go harder, he's like, Why? Why? Why? It's just a moot point for him. So the conversation to be, Here's the way I'm feeling. Here's what this debt is making me feel. Here's my philosophy on debt. Where can we meet in the middle? Where can we align on this? Because the baby steps, they're not there to be the stumbling block for a marriage. No, no.

They're there to be unified.

To be unified. If it's causing so much friction, then you have to take steps back and go back to almost the precipice of where you guys went awry and spend a lot more time having those conversations, getting aligned mind before you start any actions on the baby steps. Tax season is coming up fast, which means a lot of you are paying more attention to your money and maybe realizing the holiday damage. So if you're trying to clean up the budget and start the year strong, cutting your phone bill is an easy win.

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Welcome back to The Ramsey Show in the Fairwinds Credit Union Studio. I'm Jade, the This is Rachel. We're headed back to the phone lines where we have Matt, who's in Orlando, Florida. Hi, Matt. How are you?

I'm good. And you guys? It's very nice to talk to you guys, finally.

Great. How can we help today?

Basically, I have racked up around 26,000 in consumer loans, and unfortunately, I have a immigration situation with the lawyer and everything, so I had to put a lot of money, a lot of loans. Towards the credit card. I just want to know, what should it be the best if I go for a debt relief program or I take the highest first? What do you recommend that I should do on this situation?

Well, I wouldn't go to debt relief simply because they're going to take all of your payments and pool it. Then in the time that you're not paying it, they're going to use that as leverage to strike a deal for you. You really don't need them to do that. That's going to tank your If you wanted to do that on your own, you could really do that on your own. So I would not get involved with the debt relief program. The 26,000 that you mentioned, is that everything that's including the immigration lawyer fees and everything, or is there more to speak of?

No, it's everything.

Okay. And how much are you earning right now?

Around 55, 60,000.

Okay, good. Is it just you, or do you have a family? Are you married?

I'm married.

Okay. Go ahead, Rachel.

Well, I was going to ask, how many credit cards does this consist of, the 26,000?

It's six credit cards.

Six credit cards. Do you know the balance on each of them?

The American Express around 10,000. The other credit card is around 2,000, 3,000. Okay, perfect.

Okay, so what we would tell you is to list out the debt, smallest to largest, actually regardless of the interest rate, and pay minimum payments on everything, stay current, but attack that smallest one first. And so what I would do, Matt, is if you guys can up your income, even if you can get... Gosh, if you could find 500 bucks of margin, $1,000 of margin a month, and then maybe work extra, and you get another thousand. Some of these 2,000, $3,000, you could be paying off every month. Do you know what I mean? As you go down the line. That's what's powerful about it, is you start actually knocking some of this stuff out, and then those payments that you were paying on those, roll over to the next debt. The 300, 400 bucks a month you're paying for minimums, now that's paid off. That's an extra, it could be 2,400 going to the next one. You keep that snowball effect going. But that's going to be the fastest way, the most efficient way for you to tackle these. No, I would not pay a debt consolidation company. I wouldn't go to a debt relief company.

I wouldn't try to combine the debts into one thing and take out a heat lock or whatever. People maneuver their debt around so much. The best thing for you guys is to take these six credit cards and you and your wife sit down and say, How fast can we pay these off ASAP? And it's 26 grand. So you can do this. I mean, I really do. I mean, if you can get two grand a month, you know what I mean? You got to pay it off in a year.

Yeah. I just have a feeling that every month that I pay, I usually pay a little bit more than the minimum. So every time I pay $200 and it comes back interest, $200. So I'm just paying the interest, basically. I'm moving a step forward, but not exactly.

I hear you. And it's going to feel like that on all of the debts that you're paying the minimum on, the one that's going to feel that you're making progress on is the smallest debt. So just know that everybody's going to have to be on hold at the minimum until it's their turn to be the smallest debt, because in that smallest debt, you're paying it off lickety split. So just For real numbers, after you pay the minimums on everything and your household is taking care of, how much extra money do you have every single month to put towards these debts, to put towards the smallest debt?

I would say $500, $600. I could put more, but then I leave money out of my pocket in case of an emergency or something.

Okay. So what we need to make sure is that you have $1,000 saved as an emergency fund so that you don't have to be worried about that month in and month out. If you have $1,000 saved, that's what we would call baby step one. That way that's there. You don't have to think about, what if I have a flat tire? You know there's money there. Then secondary on your every dollar budget, which, by the way, if you don't have an every dollar budget, Christian will pick up after this call and make sure we set you up with it. I want to make sure you have a cushion line item, meaning that you're budgeting a certain amount of money every single month. Just as something could happen, I don't know what, but maybe it's $50, maybe $100 that you just keep in your account just in case maybe a subscription slides through that you forgot about, so that you just feel good about the money that you budgeted for debt actually going towards the debt.

Matt, do you have $1,000 saved right now?

No, not really.

Okay. So that would be the first goal is to work towards that. So it may take you two months to do that. But in all of this, we want it to be really aggressive. So almost say, could I do this in a month and a half? Could I do this in one month? What do I have to do to get this $1,000 as quickly as possible? And again, it's probably going to mean working over time, getting a side hustle. But this is all on Matt for nine months. You know what I mean? You're not going to be doing this forever and ever. You're right. These credit card... Because are these interest rates in the 20% or higher even, some of them?

Yeah.

It's terrible. It's horrible. The faster you get out, the better off you're going to be, where some people can hold on to a student loan because it's not high interest, and they don't really feel it. You feel credit cards credit card debt you feel. So getting out as fast as possible, Matt, is going to be your goal. But I see a way out for you guys. I mean, I really do. And even if your wife can take a part-time job and even bring in an extra 500 a month or something, that stuff helps. That stuff changes.

Let's take a moment. I feel like this is the second or third call, and I want to just go back to basics on debt payoff. So first things first, you got to have baby step one. You got to have the $1,000. I have tried it without it back in the day, and it didn't work. Because to Matt's point, you're worried about, Well, if I put all my money on the debt, what if something happens? That's what baby step one is there for. So guys, you have to have Baby Step One in place. Next thing is the cushion. You got to have... A cushion is not an emergency fund. It is not a slush fund. It is strictly there in case something that you forgot about comes out. A way to think about it is what's the worst that could come out? I don't know. If you still have Amazon Prime, what is that? Like 120 bucks?

Right. And that hits or a Dropbox subscription or something hits once a year.

So think about like, yeah, maybe it's 150 bucks. If you're getting out of debt, and especially if you have, when I say lower income, if you're in the average income, you're making 60, 70, yeah, 150 bucks extra, that's a great place to start for a cushion. Now, if you're making a little bit more, you might need a little bit larger of a cushion because there might be larger things that come out. So you need the cushion. And the next thing is just understanding that when we talk about the debt snowball method, I've been noticing this, Rachel. When we say smallest to largest, it's by balance. It is not by payment due. I've been noticing People are doing it by payment. And I'm like, No, no, no, no. Balance. So the full amount that you owe, that's how you're listing them. You got to pay the minimums because I've also, and I've done this, you think, Oh, I don't have to pay the minimums. I just want all the money going at the smallest debt. No, no, no. Please pay the minimums. It is thankless. I will just go ahead and say it doesn't feel good, but please do that because it's going to keep those debt collectors off, and it is going to help keep the interest at bay.

Okay? So please do it. And it's going to give you more motivation to go quickly through the debt snowball. All the smallest money goes to the debt. So that's just a little refresher for you, for you to get yourself right if you haven't been doing it right up until this point. Well, Dave, on the show all the time we get calls about cars, used cars. What's one thing you want folks to know?

Well, really a couple of things. Number one is always buy used unless you got a million dollars. We don't buy new cars. If you're going to buy used, number two, you want it to last. That means regular, proper maintenance.

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Yeah, that's cbac. Com/ramsey. See store for details. All right, back to the phone lines we go where we have Anna, who's in Greenville, South Carolina. Hi, Anna. How are you? Hi.

I'm calling today because I just need some advice on what to do with the money that I just got from the sale of my home. So I'm a single mom of three. Got divorced a couple of years ago, but the house just... It was a nightmare, but it just sold in September. And so after I got the money off of it, I ended up making a I got over 100,000 off of it.

Oh, great.

The first thing I did is I went and paid off all my credit card debt because I had a lot of debt from the divorce process. So I have no credit card debt at all. No The only two things I still have on my credit, one is our student loans. I'm about $45,000 in student loan debt. But I am a teacher in a title in school, so I am on the public service loan forgiveness program, which I know you all speak about still trying to pay that off because those can be complicated. But I have talked with someone and I'm on the right path. I've been paying on it for five years. And then the other thing, I owe about $8,000 on my vehicle, but I have tax money coming in that should be more than enough to pay that off. So right now, I'm renting because that was the only option I had until the house sold that I could afford. And it is easier. However, I would really like to be able to buy a home to where I feel like I'm investing in my future for me and the kids. Instead of renting, I feel like I throw a little money away.

I know that that's not fully the case because I'm not having to worry about fixing things, but I'm pretty handy. I can fix most things myself. So I guess my question is, I don't think I'm quite ready because I'm not sure where I want to buy a home at the moment. But based on interest rates in today's economy, for me to have a home big enough for me and the kids, I would have to put $100,000 down on something just to get the payments to where I can afford them. Right.

So Anna, out of the $100,000 that you got, you said you paid off all your credit card debt. How much of that is left?

I ended up with like a hundred and twelve thousand, so I took that $12,000. I still have a hundred thousand.

Oh, wow. Okay, perfect. Okay. All right. That's great. I think you probably know our answer to a degree of what we would do with this 100 grand. If it were me, I would pay off the student loans in the car today. Then I would look to say, Okay, you'll around 40-ish, 48,000 left. I would take that, I would put it in a high-yield savings account, and I would just be making it a goal to be building that up. Because part of that 45,000 that's going to be left. Is that right? No, I'm sorry. The $45,000 was your student loans. Yeah, well, it gets to be around $45,000 or so that you'll have left.

Once you pay the car off. Yeah.

Part of that is going to be earmarked for an emergency fund and then start saving on top of that, though. It may take you another, probably two years, Anna, of renting to be throwing some money at this to be able to get to a spot where you're going to be able to buy the home that you want and to have... We always say to have at least a 5 % down payment. What percentage, when you say, I would need at least $100,000, is that to get your payment to 25 % of your take home pay?

Yes. Okay.

Yeah.

The Because a four bedroom home in my area, you're not going to find one under 300,000. And for me to be able to afford the payments for a month, I need it to be at least 200,000.

So a couple of things in this. Number one, it may not be a four bedroom home. Two of the kids may share a room. I shared a room growing up in a bathroom. You may decide, Hey, I'm going to value homeownership more than just the comfort of my kids space-wise. It's right. Some people make that decision. Some people don't. Some people say, No, we're going to save an extra year to make sure we get really what we want. But there can be decisions you make along the way. I just don't want you to ever feel locked in that I have to get this type of house in this specific area. This has to be it. I would broaden the horizons just to see if you're wanting to get into the house faster or maybe you have the patience to save another year or two.

Yeah, I 100%, Rachel, agree with your plan. I wouldn't I changed it at all. I would make it my goal. If possible, the best way to do this is on a 15 year. I'd make that my goal, too, if it's not already your goal. But the biggest thing that's going to give you peace is having this debt gone and having That three to six months of expenses really between you and life, especially with three kids, it's just a breath of fresh air to have that. I like the goal. I like that you have 100,000 cash, but that's exactly what I'd do with it.

Okay. Yeah, at the moment, I have some money in an MMA account that's gaining like 3. 5 % interest.

I really don't know much about the high-yield savings account. Is that what the 100,000 is in? Yes. Okay. Okay.

Yeah, so same thing. It's in a money market account right now?

Yes. Yeah, that's fine. Yeah, money market and high yield are pretty much the same. Same idea. Yeah, yeah, yeah. But that's where I would keep it. I wouldn't invest it because I think, Anna, you're going to use this money probably in the next three to four years. If it's anything longer than five, you could think about a brokerage account or an index fund or something that would probably make some more. But if you're going to be using it in the next three years, I would just keep it in that high yield and just keep saving on top of that.

I would, too, especially knowing that really a portion of that is technically your three to six months after you've paid off this debt. Having it liquid is a good place to have that as well. Yeah. Thanks for the question. Good question. All right, let's go to Braden and fill Philadelphia. Braden, how can we help today? Braden, are you there? Hey, what's up?

Yeah, I am. Sorry. No worries.

Hey, how's it going? Hey, how are you? How can we help?

I'm calling today because I've been doing the baby steps, but I've been doing, I guess, Ramsey-ish would be the word. It's not working out so much. I'm still paycheck to paycheck, and I've been budgeting. So I just had a couple of questions about some debt that my wife and I are in. And again, I guess my income off because there's a couple of options. I have a two-year degree from Penn College, and pretty much I could go back for four years I could do an additional two years and have a bachelor's degree in engineering. I'm not sure how much that would help, but I don't want to take out student loans on that either.

So you're facing an income problem and you're thinking changing careers is the situation, is the move?

Yeah, it would be more so the same field, but a different job. It'd be more engineering than technician work.

Okay. Do you know what it would cost you to go back to school, and how much more would you earn by doing that?

It's hard to say. I think each semester is around 12 to 15, and it'd be another four semesters. Okay. I'm not sure how much more I'd earn, really. It depends on I live in an area a little bit outside of Philadelphia, so I don't know what work would be around here for that long.

I think that's where you got to start. Anybody who's looking to switch career fields, and especially if you're looking to pay for school in order to do it, you've got to do that initial research to find out, number one, if I go back to school, what's the earning potential there? Do I have a potential to earn just $10,000 or $12,000 more, or can I double my income? Then from there, it's like, okay, if I feel like the jump in income could be worth going back to school, now I have to go back and say, Okay, how much does it cost? Where can I go that's the least expensive route? How long would it take me to save? Then you're able to weigh out those really important factors. I think you have a little bit of research to do there. I'm guessing that you're feeling this because you guys are in debt. Am I right?

Yeah. We got our kid now. We got another one on the way. He was super happy about what it's going to be.

Yeah. How much debt do you guys have?

I think, quick math, around 37, I think.

Okay. Is that cars, credit cards?

We have a car on there, a few credit cards of personal loans. Okay. And that's actually dad not including her house.

Okay. Yeah, Braden- We don't want to. Yeah, I hear you. We're about to go to a break. But I would say to you, I would encourage you and your wife, sit down tonight and just say, if we went scorched earth and did this Ramsey everything the real way, what would this look like to get us out of this mess? Because it's just floating around. And then I would make sure, too, before you're even talking about school, you need a hard fact that you need a degree in order to get these other jobs, which you may. But I would want to know black and white. Like, yes, you absolutely have to have this four-year degree in order to have this job. And this job, you're going to make $40,000 more. That's when you know it's a green light.

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Hi. I'm so excited to talk to you all. Thank you all for answering my question.

For sure. How can we help?

Okay, so I need you all to help me solve a disagreement between me and my husband about how much to spend to upgrade my car.

Yes, we love a marriage disagreement. Give it to us. You all are perfect to help me with this. We can do this.

Okay, so a little bit of background. We are on, I think, Baby Step 4. We don't have any debt. We're 28 years old. No kids. We We don't have any debt other than our mortgage. We have a small mortgage. And we recently inherited $100,000 from my grandpa.

And so of that, we're trying to figure out how much we want to spend to upgrade my car.

And it's definitely a... It's a want, not a need. So I'll preface with that. But my husband wants to spend, if anything, around $25,000, and I would like to spend up to $50,000.

Nice.

That's a big difference. What car are you looking at, Taylor?

Well, that's the hard part. We really can't look at cars because we're at such a difference on price, but it makes it hard. What we've decided on is potentially maybe a Volkswagen Atlas, but of course, the year really depends on how much we're going to spend.

Yes, for sure.

And of course, I think he's being frugal and he thinks I'm spending too much. And so we're just at a disagreement. And God's.

Totally. Okay, if the upgrade of the car... Let me ask this. The current car you have, are you like, Yeah, I'm going to have to upgrade at some point, probably in the next year or two? Or is it like you both have fine cars, but you're like, Hey, we got 100 grand, and I enjoy a nice car? Which one is it?

Well, she drives a very nice truck.

So I'll say that we don't own it.

It is a business truck, so it's not something that we own. I drive a Mazda CX3 2017. It has about 100,000 miles on it.

So it could definitely go for the next, probably three more years.

What would go? Okay, so rather you spend 25 or 50, what's the plan with the other money? Does it keep you from doing something else?

Not necessarily. We don't have kids, and we probably plan to in the next couple of years. And so I think my husband is just like, We could spend that on the house to pay it off or on other investments. In the next two years, we're going to have probably a lot more expenses than we do currently. And he just feels like seeing it grow. And he just sees that big number and is like, Wow, we could do so much with that. Which I totally understand.

What's left on the mortgage, by the way?

Around 200K.

Okay. And how much do you guys make a year?

200k.

Oh, wow.

You make 200. Yeah.

You probably know our parameters on this. Have you heard of it?

Yes.

Nothing more than 50 %?

Yeah. So But we always say that things with motors, really, the whole family combined, shouldn't be any more than 50 % of your take home pay.

Taylor is at 25?

Yeah, he's at 25. I mean, you could go up to 100.

No. I was going I would say, no, she's at 25. They're wanting 50,000. My math's right. If you make 200,000 a year, and she wants to spend 50,000, that's 25 % of the takeout. So she's way below.

She's way below. Even with He's at 12 % or something. Yeah, that's what I'm saying. You guys have $100,000 window to fill. And so- In cars. In cars. And so you- Yeah.

Okay, so here would be the deal. I would say, in order Would it feel good about you spending 50? Let's say he loses his job and he needs to go buy something. Could he buy something for 40 to 50 that he would feel good about?

Well, he works for his family's business.

Yes. Well, no. Hypothetically, though. Because- Okay.

Yes.

Hypothetically, yes.

If he could, then together, you guys are under the 50 % rule. If you have a $50,000 car and he has a $50,000 car, you're at $100,000 of cars making $200,000. Does that make sense? So you're good.

And you're saying as long as he'd have the ability to do what you're asking to do. Yes.

To stay within those parameters. Because again, God forbid, he loses a job- He needs a car. And he needs a car, could he do it within the parameters of the 50% total household of vehicles? And he could. He could buy a truck.

But do you take into account the inheritance at all, or do you just ignore that and think about just- Of how you got it?

Yeah, no, I ignore it.

That's just a cherry on top, the fact that you didn't have to save up for it.

Unless something in the inheritance says that they want this to go for your future kid's college tuition or something. You know what I mean? And you're going against and you're like, Oh, gosh, it feels weird to do that. We don't have any parameter. I'm saying yes. I'm saying yes. I'm on your team, Taylor.

Team Taylor. He's going to love You know what?

Maybe say 45 to give them a little bit of a buffer, 48. But hey, but seriously, research the cars because what you want in the year, you may find like, Oh, my gosh, I can totally get that for 43, and I'm great with it. You know what I mean? So the research is going to help, too. I think bring some of this, just the idea. And I understand, like golly, swan the pill of $50,000 to a car.

Well, is it used or is it brand new? Used. We would buy used. Okay, just double I'm not even thinking that. I am a green light.

I think you called the right day, Taylor. If you got George Campbell, I don't know what George would say. I think he'd say yes. But he'd say yes.

I say yes. So the key is now you have to get your husband to Listen to this episode. Exactly. I know.

Yes. And you got him- He just called in and you all agreed. You were going to go for it. And you're married to him, though. So you committed your lifetime. So there may be a little give and take, but we would say yes.

Oh, wow. Congratulations on the car. Oh, man. I love a call like that. Those are my favorite calls when we get to get in the middle and decide with them.

And when we get to say yes to people, because I feel like so many of the calls, it's like, Dude, you got to sell the car. You can't go on that vacation. No, you're broke. You don't have money. You can't do that. I feel like that's a lot. It's not fun. So when we get to say yes because it's fine.

Well, and I think it's a good reminder because a lot of people forget that we want you to be able to live like no one else. Obviously, We're telling people all the time, Hey, cut back, pull back, get a beater. And it's really great to understand that these moments happen, too, every day. Even if it's not an inheritance, maybe you've just worked really hard and now you have the money.

You have the big bonus or something. Yeah.

It's fun to be able to do this. Just the reminder, I think it's good to go back and remind folks who might be listening for the first time. We're sticklers about this, obviously, because cars go down in value. I mean, you said it, you drive a car off the lot, it could drop 30% so, so quickly.

In just a year or two. Yeah, it's crazy.

Especially with EVs now, they're very... It's huge. The parameters are there really just to make sure too much of your world is not going down in value. That's so, so important. Yeah, 50% is the rule. Then I asked her earlier about if she was buying a brand new vehicle because we even have a parameter there that really you should have a networth of a million bucks before you purchase something outright because, again, brand new vehicles drop in value so quickly. I've heard Dave You really want the feeling that if I took that amount, that value that it was going to drop, and I just put it in the street and burned it, I would feel nothing. You don't want to be attached to it in that way. There are parameters, there are guidelines, and they're there for you guys.

To help. Yeah, just to help you. And whenever you get a big sum of money, too, we didn't really touch on this earlier, but really, we always say there's three things you can do with money. You can give it, you can save it, you can spend it. I think doing all three in a situation like this, I think is important. So if we were still chatting with her, I probably would tell her, Hey, take some of this. Give a little bit of it. That's true. Yes. Put some in savings for the future. Spend some on you. There's a three-prong to this money stuff. In some seasons, you're going to be saving more for something, for a down payment for a house or whatever it may look like. Some seasons, you're going to have tons of generosity flow through you, and you're able to do a lot, which is amazing. And then some seasons, you're going to be able to enjoy your money. So it doesn't have to be an equal split between the three every single time, but just aware that that's how money flows, and it should be flowing at some level of all three of those buckets.

Yeah, that's what you're looking for. I love it. Congratulations on the new car. I hope that your husband gives you zero problem because we agree with you wholeheartedly.

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Today's question comes from Jenna in Michigan. She said, Your podcast This podcast inspired my husband and I to start the baby steps, and we have made so much progress. I'm expecting our first baby, and we'll be having a baby shower soon. As a new mom, I feel pressure to get the nicest, which means most expensive items, so my baby can have the best things. With all the talk about how there are so many items you need, what advice would you give a new mom wanting to be smart financially, but feels the pressure of needing to get the new things her friends say are important? Oh, that's a great question. We You asked two moms, so we can attest to this. I do feel like people go crazy on the first baby. You're about to have a shower, so I'd say, register to your heart's desire. Put stuff on the registry, see what you get. And then I know the money coming out of our pocket where we spent the most, and we did, we invested in a good stroller and a good car seat because those things lasted through three kids. If you know baby stuff, toddler stuff, stuff gets beat up constantly.

Oh, yeah. So we did. We bought the nice... I mean, we did. It was a very, very, very nice stroller car seat set. But everything else we went cheap on, to the high chair, the crib, all that stuff, did not... It was the thing, what's going to get the most wear and tear that I would want to keep for the next kids. That's how we made that decision. So I think it's the two things. I think it's being practical and buying the most expensive item sometimes is worth it because it is the nicest and it's going to last you. But then the other side of that prong is the keeping up side of feeling like you have to keep up. And let me tell you, you're going to buy something, and then six months later, they're going to come out with a better thing of that. It just keeps going and going and going and all the crap that is out there. I swear it's like the wedding industry.

It's like billions of dollars.

Spend so much, so much. So I would not feel the pressure It's easier said than done. Me just saying this over a microphone, I know it doesn't help you. But I do want to really... Once you get past it all, you don't even remember. You don't even think of like, Oh, my gosh, should I get the best bottles or pacifier? Whatever. You know what I mean?

I will say our stroller, I wish I had made a different choice to this day.

Did you? Did you buy a nice one, but you didn't like it?

It was the one everybody recommended. And I honestly didn't do a ton of my own research. I just went with what was recommended, and I hated the stroller. But I'm with you, Rachel. Sam and I picked four or five things that were really important, and they obviously happened to be the most expensive ones. But when we put them on our registry, we had the idea that most people probably aren't going to get you a $500 gift. So we knew we'll probably be on the hook for that, or maybe we could use our gift cards towards those things. But we knew we'll get the expensive stuff, likely, and everybody else will get all the other new dads. But the best thing I bought, and I want to hear what you think that is. The Sock, the Owelette Sock that goes on their foot. I don't know. It measures their breathing so you don't have to worry about, Is my baby okay? That's the main thing that I would get up in the night to just be like, I just need to make sure that they're fine. But it measures. It's a little thing that goes around their foot and it grows with them in infancy and it measures their O2 and it goes off if for some reason they've rolled over and they can't breathe.

Yes. Oh my gosh. Best purchase ever.

Yeah. Peace of mind. I'm trying to think. I don't even know if they had. I'm trying to think. I don't even know if I knew that. Yeah. Have we had that.

Maybe back in your day. I know. I was like, I don't know if they had that. I know.

It's so funny. Yeah. But there's so much crap, I feel like, that they just... It's so marketed, too. So just make a decision. And they don't care. And they don't care. And they don't care. And they don't consignments for clothing. That's what I did, too. I found a few places in Nashville that did consignment. That's where I bought so many of the kids' babies.

The baby is none the wiser. Make the things that make your life easier. That's That's what I'd say.

Yes. Amen. Hallelujah.

All righty. Craig, who's in Salt Lake City, Utah, is on the line. Hey, Craig, how can we help today?

Well, I've got a business, a construction business. Over the last couple of years, I've had a couple of jobs that have went a little south on me, and I've taken out a business loan from my bank, and I've also got a cash flow to ride the incoming, outgoing in my I had during between payments. Well, over the last couple of years, I've managed to get myself about $240,000 in debt, and my payments on the cash flow in the business are about 4,600 a month. And we took out an equity loan on the house to pay down some of it. But right now I'm sitting at about... With all my bills, everything, I'm about $9,800 a to just cover my overhead. And we owe just under 300 on our house. It appraises for just under 600. And I'm wondering if it would be a good idea to sell the house and pay off this debt, or whether I should just keep trying to pay it and make heads way, or I'm worried that if I sell the house, now I got to buy another one and I'm not going to get... My payment is only 1,800 a month.

And I'm not going to be able to get- Well, how much was the home equity loan How much is that going to cut into the 600 that it's worth?

Well, it was 109. Okay. Because the home equity loan is what we got.

And you still owe 300? Is that correct? Yes. So it's about 400,000 in debt. So you'll net out around 200.

Yes.

Okay. Walk us through the plan. Because if the plan is to take whatever equity, maybe you walk away with 170 after all of this. I don't know. What's the plan with that 170? Is it to clear business debt? Is it to roll it into a less expensive house? What are you thinking?

Well, my lease payment on my shop space is about 2,400 a month. If we sold the house, I take this and clear the business debt. But I still have to have shop space because I have a bunch of equipment I need to have running to stay in business.

Can you clarify for me, when you said earlier that you had $240,000 in the business, is that including the $109,000 of the heat lock or is that in addition to?

No, that includes that.

Okay, so it's $240 total, or is it $349 total? Yes.

No, $249 total with the house loan and the cash flow and my All the business loan.

So you would take the $170 and you would throw it towards all of the cash flow loan?

Yes. Okay. We're able to keep up with the payments. I mean, it's tough, but just those two, the business loan and the cash flow is about 4,400 a month. My business, I mean, I'm able to generate that, but I've had to let a lot of the employees go because I had to...

Cut payroll. …

Decrease my overhead. Yeah. Yeah.

And so now I'm doing everything myself. Greg, is the business... Do you see it having an upward trajectory, or is it flat-lining? Is it going down? Where do you project revenues to be in the next 12 months?

Well, I stay pretty busy. I average... I don't know. I would probably average in the next year, maybe 200,000 Okay. And volume.

So it almost feels like you grew too big, too fast. Like you created a world that you can't sustain. So you selling your house is making a huge... I mean, you've already taken out a home equity loan. If you sell your house and then turn around and take the equity and run it back into this business, and it's still not even fully clearing the debt, I'm afraid of that. Because it's only going to clear out some of the cash flow loan. You still have this business loan over here that has... How much will be left?

Well, we figured after the sale of the house, I would have probably about $40,000 in the business loan, and that would be the only loan that I would need to pay off.

I would sit down with your wife and unless you all had an aggressive growth plan to get a house again in the next five years. But, man, I'm not sure about this business.

I might sit down with somebody who could give you some input on the health of the business and maybe get connected to our Entree leadership coaching and see what they tell you about this business because I'm not convinced you need to keep it. Welcome back to The Ramsey Show in the Fairwinds Credit Union Studio. I'm Jay. Next to me is Rachel Cruz. We've got Lauren, who's on the line from Tampa, Florida. Hi, Lauren. How can we help today?

Hi there. My husband and I are expecting our first baby come spring, and we're trying to decide whether I will keep working full-time, move to part-time in a different role, or step away from the workplace totally. So we're just wanting some help, waiting the risk versus reward of one, leaving the workforce, what to do to reduce the hours for a season, just all that that comes with it.

Totally. Well, congratulations. So exciting. What would be the main motivation for you to change? Is it anything money-related, financial-related? Is it just your longing of wanting to be a working mom or not be a working mom? What's pulling you the most?

I think the main thing is leaving a baby with daycare for five days a week seems really hard. My husband, he works in law enforcement, so he's on twelve-hour shifts, right? And he might be moving back to night shift come springtime when the babies do. And so that's also a factor Could I be solo parenting for days at a time while he's working night shifts and then sleeping during the day and then I'm having to do overnights and daycare and all that on my own?

That's a lot. Where are you guys at financially? Could you live off- We have no debt.

Okay. Yeah, we have no debt. It's just our mortgage. We could live off of one income. Right now, we invest pretty aggressively. So a little bit more than two grand a month into retirement and a broke Ridge.

Is that 15 %, or is that more or less? Or do you know what percentage that is?

It's more than 15 % of our take home.

Okay. What do you all bring home a month?

Per month, we bring home a little bit more than 9,000 between the two of us.

Oh, yeah, that is more. Okay.

And what would it be if you stopped?

Well, that's a good question. I'm currently full-time engineer, and so I haven't had the conversation yet with my employer of what parts time would look like. I know I could not stay in my current department, so I would have to either switch departments within the company and take a pay cut to go part-time or just leave the company altogether and find a different part-time role.

What does your husband make? What's his income of this 9,000?

Well, he makes about 96 a year, and I make 94 a year.

Okay, about half. It's pretty split. Yeah. So could you all live off of 4,500 a month comfortably? Like, mortgage and food, and you guys are in a good spot.

Yeah. Mortgage and food, but we would have to really decrease our investing.

Sure. Yeah. Well, the good news is you're in a really great spot to just choose. Your back is not against the wall. There's nothing that's demanding attention. Financially, you're doing very, very well. The biggest red flag is usually, Can we afford the mortgage? This. I'm just curious, if you went down to 4,500, I know you'd be working part-time, but just curious, what is your mortgage every single month?

It's about 1,800.

I think that with you even bringing in a little bit, you'd be okay.

Do you want to work, Lauren, or do you want to be home?

I think, ideally, I would like to work part-time just to be able to contribute financially to the family, but then also have time at home with littles because they're the only little ones.

For sure. Yeah, for sure. Well, here's the great thing that I feel like I've learned in this, of having three kids and working, is different seasons are going to bring different things, and it's okay for you to make a different decision. So I feel like sometimes women feel like, I have to make this call, and it's going to be my life forever. And that's not the case. That doesn't have to be. You could choose, Hey, I just want to be home full-time. That's great. And then you may get in six months in. I had a friend just like this, and she's like, I'm going crazy. I want a babysitter so that I can go and do something. And to use my talent. She was really talented, and she missed that part of her. She really did feel like there was something God has given her, and that part she didn't have. And so she's like, I wanted to do both. And so she figured out a way to do both. But she changed her mind, right? Or some people say, I'm going to go back to work, and they get in. That happens a lot here at Ramsey You're with some girls.

They have a baby. And especially your first, you don't understand how it feels, and you think, I'm going to come back, and then you get back in the swing. And I'll just go back to work. Yeah. And you're back in, and you're six months in, nine months in. You're like, I hate this. I want to be home. Guess what? You can quit and do Yeah. So just know, because of this financial situation you guys are in, which is such a blessing, what a gift, is that you can make a different decision. So if your knee jerk right now is, Hey, I think I do want to work part-time. Yeah, start talking to your employer about that and start making plans around that. And then Lauren, give yourself permission that if you're in the six months and your husband's work in night shift, and life is just hard and exhausting, and you're like, Man, I just want to be home and do the home thing, you can make that decision. It's not an all or nothing.

Yeah. Now, what about leaving the workforce? I guess one of my fears is leaving the workforce as a woman for a period of time and then not either making as much as I make now or, I guess, never being as professionally leveled as I am now, if I am to even then come back.

Yeah, I could be wrong on this. So, Jade, if you have a different opinion, I think that is something that to a degree, we've created this fear in our heads to feel like we can't have an off-ramp, so we have to go, go, go, go, go. But I know many women who have off-ramped a career for 4-5 years and get back in when the kids are in school, and it takes a little bit to get back in, but they do it, and they've been fine. Now, that may not be the case every single position or every single company. But for me, that fear of it not being an absolute, there's not a lot. You know what I mean? It's more an idea that that can happen. That would not be my motivator because it's not a hard fact. It's a fear that's not always realistic.

Yeah, and I think it depends on what field you're in. It could be something that if you're keeping up, if you're just keeping up, whether it be certifications or you're just keeping up with new improvements, how that particular field is shifting, just being in the know could help. And there's a big part of this where there's also the assumption that, okay, let's pretend you're a stay at home mom for 10 years, right? And you're thinking, oh, my gosh, after 10 years, will I really be able to get my old job, be in my old field? Who's to say you would even want to do that type of work? So even you changing as a person to saying, hey, I may want to go back to work, but not necessarily what you were doing before. So also giving yourself the ability to evolve in the career space and maybe have a completely different act and do something totally different.

And what the world's going to look like, too, in eight years is wild.

Yeah. So to your point, the fear part there could really be unfounded because careers could change, you could change. Yeah. Yes. It's a lot to think of. This is a huge choice. And hopefully that Rachel and I just gave you a couple of thoughts just to push you in a direction. But it really is a big choice.

Yeah. And you're never in a corner, though, right? It is a big choice, but we have multiple choices you get to choose from any given month. It's your life. You get to make that call.

And none of them are for life. You always get to go back. That's right.

It's so seasonal. It really is. It's so seasonal. I know I pulled back some after I had Charles because I had three kids under five, and I was like, I can't do the travel I'm doing. And I did pull back, and I did. I watched people have books come out that hit higher than mine. My podcast, I saw other people's shows do better. And you do, you sit on the sideline for a season. And now that they're all fully back in school, I'm like, Oh, my gosh, I have the ability to do more. And it's great. You know what I mean? And I'm not saying my situation is exactly going to mirror every single person, but that is what so many working moms I talked to when I was just in Lauren's position before my first. That's what they always said. It's so seasonal, and it is. After being through a couple of these seasons with kids, it is. Life is so seasonal as a mom. So give yourself permission to be presently where you are, because I really do think that's where God and the Holy spirit has you.

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One of the best things to do for your finances is to have a really good tax pro in your corner that you can trust. They'll help advise you on the best moves to make for your situation or for your small business, especially if you've had some big life changes in the past year. Go to ramseysolutions. Com/taxpro to find CPAs and enrolled agents that have been vetted by the Ramsey team. Very, very good. All right, we've got Mark, who's in Indianapolis, Indiana. Hi, Mark. How can we help?

Hi. How are you doing?

Good. What's up?

Hi. My wife and I bought our first home recently about a week ago. The thing is that the seller had agreed to fix a few items from the inspection report. We've taken a look at the fix We've had a few issues going on this week, and we're not really sure if we have any recourse that we could do or anything that we could do after closing on this house now.

What are we talking about, Tell me what the items are.

So the sump pump was not operational in the basement.

What's not the pool? What'd you say? Sump pump. Okay, I'm sorry. Go ahead.

Yeah, the sump pump not operational, and they agreed to replace a sump pump, which they did. They did replace a sump pump, but in doing so, they did not connect the pipe properly. And the day that I went, the day that I went right after closing, there was water flowing everywhere.

Oh, my gosh.

The flooring of the basement. And then we also have a garage door situation that they put on a new door, but they They half-heartedly did it because there's still the old tracks and the old pieces from the old door.

So they used some crappy person that did crap work on the repair. Yeah, it's in the contract, right? For it to be Fixed, and they didn't fix it, and it's not fixed. So yes, yeah.

You forced that.

Absolutely. And it's just been a week, right, Mark? It's not six months.

Yeah, it's just been a week. So that's why we're wondering.

I would talk to your realtor and go back. Yeah, And absolutely. And you have evidence. Did you take pictures?

Yeah, I took pictures and I took videos. I sent it to my realtor, but it's just been crickets on that end. From your realtor? If someone's scared, yeah, from our realtor. So I'm not sure if they're just busy or they're just scared of getting- They're not wanting to be bothered? I don't know what's going on. Yeah, I'm not sure what's going on.

I'd show up. Do they have a place that you can show up to?

Show up to their- You have to do it. It's about a 30-minute drive, though. But we're willing. I would.

I'd show up at their realty office and say, Hey, I've been working with Bob, and I just closed on my house, and this is part of my contract, and it's not been done. And I've been trying to contact Bob, and he's not answering my text or my emails or my calls. That's what I do.

Okay.

Yeah. And then I- Is it likely we'll be able to recoup anything? Yeah, it's in your contract. But that was a part of the deal of this being a fair deal, and they did not do it.

And if they don't do it in the next 72 hours and answer, you're going to have to get it fixed. And when you get it fixed, you're going to bill it to them.

Along with a letter from your lawyer.

Yeah, it's in your contract to fix it, and they didn't fix it properly, so they have to go back and fix it. So, yeah, no, you definitely have a level of recourse. Now, is there a world that nobody answers your callmark and everyone disappears and you can't find anyone, is it worth pushing legal action? At that point, you'll probably pay more and longer fees than to fix it, right? There's a point of- There's a world that, yeah, you end up just having to fix it yourself. But I would go to every single measure possible to get this because that's so unfair. Just to do a crappy job on the fix, just to say, to check it off to get the contract through.

Terrible. The worst part is having to spend time and the effort and the brainpower on this. It's awesome. Sorry you're going through that, but thank you for the call. Next up is Katie in Dallas, Texas. Hi, Katie.

Hey, thanks for taking my call. I'm 44. My husband's 46. We currently only have 80K left on our mortgage. We have no other debt. We are interested in purchasing a newer home, bigger, more desirable area, which would leave us with a newer mortgage of about 250K after about a 250K $150,000 down payment. I'm just wondering if this is financially smart. I think number-wise, it's doable. However, emotionally, it feels a little bit more challenging to move forward with this.

For sure. How much you guys make a year?

Close to 200.

Okay. How quickly could you pay the 250 off, do you think? If you guys said, Okay, paying off the house is a priority to get this mortgage down, how quickly do you think you guys could do Honestly, I don't think it would happen very fast, maybe 7-10 years. Okay.

What do you have- It just feels- Go ahead.

It just feels like we wouldn't be able to, I'm going to say, build wealth as far as contribute more to the 529s, more to the 401ks doing this.

What percentage are you doing for... You're doing retirement now. Are you doing 15 %?

My husband and I are each both doing 10 %.

Okay. And how What do you have in there? What do you have in retirement so far?

About 550. Okay.

So that'll double. Yeah, I mean, that will double every seven years. So you guys, I think, will be fine at retirement. And people that are doing the baby steps, on average, they pay off their home in about nine years. So let's say that's you guys. Then your husband will be 55. You'll be 53 with a paid-off house. So I think the numbers, I don't think it's absolutely terrible, but big purchases like this, I always want to check my spirit in it and ask the motivation of it, right? Is it to be closer where you guys want to be? Is it for the schools, for the kids?

Is it- It is in a newer neighborhood, a bigger home, kids in the neighborhood that are friends with kids, my kids.

Yeah, totally. So I mean, yeah, that doesn't absolutely scare me. I just want to make sure you guys as a household can fund 15 % of your income into retirement. I don't want the kids colleges to go on complete pause because you guys wanted a newer, bigger house, right? So from a legacy perspective, I do think there is some level of saying, Hey, we are going to have to contribute and make sure the kids are good with college and do this. Can we do both? Because choosing one or the other feels maybe a little off.

I also ask myself the question because when I look at this, my brain goes immediately to, Oh, my gosh, you only owe $80,000 on your mortgage. Now, I'm just throwing this out there. The question I'd ask myself is, if our house were paid off, would I still be interested in getting, at that point, maybe a $200,000 mortgage on a house? Or would I be like, No way. My house is paid off. I'm good to go? That'd be the question that I'd spend a lot of time with. You might be like, Yes, Jade, I am ready to go.

Yeah, it does seem like we're almost towards the finish line, yet we've been looking at houses for the past decade.

Okay.

How much is your current house worth?

About 280.

Okay. And what are you guys looking to upgrade to?

The sale price is 495, but we will put down about 55 %.

Oh, yeah. Yeah. I think you guys are fine, Katie. I mean, as long as- It's not going to mess you up. Yeah. As the payment, no more than 25 % of your take home pay, so that you guys can invest invest in retirement, kids, college, all of that. So it may be a season of decreasing lifestyle a little bit. And pulling back from... I want the household to be investing 15 %, and you guys are at 20 right now. So just be thinking about that. So pulling back will help with this and to hopefully maybe get it paid off sooner. But with your age's income, what you're putting down, they're putting down 55 %. You're doing everything right and above right.

And in that perspective, the biggest thing is making sure, and I'm assuming that you guys already do have some emergency fund in place, but making sure you have the right amount of emergency fund, because now with a bigger house payment, that amount needs to go up to match that new lifestyle, obviously. So just some little things to keep in mind. I love that you mentioned the 529s and making sure that college is still a priority because very, very important. But other than that, I'm like, let's go. That's great.

Welcome to 2026. 6.

Last year is officially in the rear view, and you're fired up to finally make some changes with your money. New year, new goals.

We love it. But let's be honest, old you said the exact same thing last January and the January before that. And before you know it, those money goals fizzle out faster than the fleeting flavor of La Croix. So here's the truth. New Year motivation only gets you so far.

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So don't let future you down. Make them proud. Go download the EveryDollar budget app and start for free right now. So just a reminder, so much of what we teach here is not just to make your life difficult by saying that you need to cut back on your budget or you need to sell your car. The whole purpose of this is so that you can live like no one else, so that you can achieve financial peace. And of course, that does translate to numbers. The hope is that you'll become a Baby Steps Millionaire. And a Baby Steps Millionaire is simply someone who has used our teaching things, the Baby Steps, and all the methods associated with that, and they've achieved a networth of a million dollars or more, which when you think about a networth equation, guys, it's what you own minus what you owe equaling a million bucks. And so we actually have someone on the line who has accomplished that, and we want to celebrate them. We have Kelly, who's from Oklahoma City, Oklahoma on the line. Hey, Kelly.

Hey, how are you doing, Jade?

What's going on? A million dollars. Tell us more.

Well, yeah. So we have a net worth of 2. 4 million. And I'm 57 years old. My wife is 49, and we inherited zero dollars and zero cents. So every bit of it, we've done ourselves.

Wow. What's the 2. 4 consists of?

Okay. I got one million. We got one million in retirement. I rolled over at TSP. I was in the military. And then her 457. We got Roth. It's mostly an index funds. There's a little mutual funds in there. And then non-retirement, we got our emergency fund of 30,000. And then we put 260,000 in high paying dividend ETS. My wife is really into that and it's paying dividends. And then we've got 890,000 in a brokerage account. And then our home, which we paid cash for in 2015, is worth about 200,000 now.

That's amazing.

Well Kelly. That's amazing.

So what work do you both do? I mean, you mentioned the TSP and mentioned the military. Tell us about that. Yeah.

Well, I'm retired military and my wife is still working. She's a nurse. Okay. So she's been able to work quite a bit. Overtime is always there for her.

Yeah. That's always one of the top careers we hear from people that achieve a millionaire status. Is it? Yeah. In the medical field in that way. Okay, so how long When have you guys been married?

We got married in, let me think here, 2006.

Okay, great. So what would you say, maybe not as a married couple, but as a While working, what do you think the worst year financially? How much did you make? And then what was your best year? And same with her, if you know off the top of your head. I'm just curious.

Well, when we first got married, she wasn't working because she immigrated here.

Okay, yeah.

I was making 35, 40,000 a year. Okay. And we were deeply in debt. I was deeply in debt, take that back.

So you brought most of the debt into the relationship?

I brought all the debt.

How much?

Oh, boy. How much did I have in debt? Back then, it was probably I had student loans, car loans, personal loans. I had it all. Yeah. It was probably close to 90,000. Wow.

So going from a negative networth, building it up to 2. 4 million, what would you say the key? What were a couple of things that you did that you were like, This was a game changer for me?

I think the game changer was realizing that I had got myself in the mess, and it was me that's going to get myself out of the mess.

That's so true.

Yes, the personal responsibility aspect of it, that you're going to be the thing that changes it. Yes.

And then, obviously, you've got the spouse. That's such an important part, your partner in accomplishing all this. What would you say to the person? We get calls all the time who they're trying to decide, Should I marry this person? Or maybe they're newlyweds and they're trying to figure it out. What advice do you have for that couple?

For a couple? The one thing is you both have to have the same principles and values as far as money goes. If someone just doesn't mind being in debt and doesn't plan and doesn't set goals, I think that's a red flag because it's going to be a one-sided marriage, and you're going to be carrying the burdens.

Yes. Absolutely. Yeah. Absolutely. So you never gave us the top number. So the lower number was around 35. What did you guys get up to in order to accomplish this?

It was probably just Just recently, because with our dividends, and that's the one thing that changed, was the Robert Kiyosaki book. When I read that and it said that the wealthy don't work for money, their money works for them, that's what we've been able to do, is increase our money. Our income, by passive income. So now it's about $150,000.

Wow. Way to go.

Well done. Way to go. Well done. But during just your working lifetime, did you guys ever break 100 grand, would you say?

We did towards the end of my military career, but that was only within maybe two, three years ago.

Yeah. Did we break $100,000? That's what's impressive. And I think what a lot of people need to hear is that your income is powerful, right? It helps. But you don't have to be making $300,000 a year to become a millionaire. Absolutely. You could be making under six figures, right? Just like Kelly, you and your wife did. But it's the diligence. I mean, the amount you guys have in investments, whether it's ETFs or your retirement, you have almost a million in retirement. All of that. That stuff adds up. It's just the consistency and the diligence of what you guys did. Again, you guys weren't making 300 grand. You barely even hit six figures, but that's only in the last few years. That's not what created it. It was the consistency of the investing and you guys being wise and paying off your home and all of it. Absolutely. Well done.

So, so well done. And just curious, what role did the budget play for you? Were you budgeters, or how did you do this?

The budget is we tracked every expense. We really were diligent. We really were intentional. And I've known a lot of people, like you said, They make a lot of money, but they're broke. So basically, we made sure that after... Excuse me. We paid ourselves first. Like they always say, we put money into our investments first. And then what was left, that's That's what we used to pay our living expenses. So we had to cut back on certain things we did. We were buying our freedom is what we were doing.

I love that. Well, well done. Well done, Kelly. And to your wife as well. What's her name?

Her name is Egie.

Egie. Well done, Kelly and Egie. You guys are an inspiration. And what I really, truly love about your story is that so many people think if you walk the baby steps, you're going to be an old man by the time you're a millionaire. And I just love that you guys You guys are young. I mean, you've got your whole life in front of you. Like you said, you bought your freedom and you've got your time back. So well, well done. Thank you so much for calling in and encouraging everybody. So, so good. Thanks, Jade. You bet. Thank you, Rachel.

Well done, Kelly. Well done.

I love a call like that, Rachel, because it's so inspiring for people to actually see what's possible if you walk in.

Well, and especially him, right? He's 57, so we'll make up an age of when he started all I think he said it was about 20 years ago, right? So he's 37, $90,000 in consumer debt. And it just shows that you can still make the change, right? Yes. Wherever you are, you can still make the change. And he went from nothing, a negative. Yes. Deeply in debt, nothing. No one gave him a hand out. As he said, no inheritance.

Zero inheritance.

But it is. It's the consistency of what you're doing day in and day out. And we're not as blunt to say you have to do retirement first before lifestyle, necessarily. Sure. We are big on you want to give, save, and spend. But that idea that my future is worth it, that I'm going to make that the priority, not the lifestyle today, that's a different mindset than most people. Most people, they want to feel good today, right? And I get that, right? But at what expense?

Yeah, I agree. At what expense? And what it is, is not sacrificing what you want most for what you want now in the moment. And I love that. I think the number one advice that I give to people is, Guys, the time is going to pass anyway. If you're 30, one of these days you're going to be 50. And if you're 40, one of these days, you're going to be 60. And what you do with that 10, 15, 20 years, it matters. And usually, here's the thing, it really is just like a two or three year window that if you can just pour on the gasoline and do what you need to do for a very short period of time, it affects that entire 10, 15 year, 20 year window substantially. So please, please, please. Let Kelly, and I believe her name was Eiji. I like that. Let that be your inspiration.

If you've been on the fence, come on, get started today. Hey, guys. Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to ramseysolutions. Com and try Ask Ask Ramsey today. That's ramseysolutions. Com. All right, our Ramsey scripture and quote of the day, Proverbs 12: 11 says, Those who work their land will have abundant food, but those who chase fantasies have no sense.

Thomas Jefferson said, I'm a great believer in luck, and I find the harder I work, the more of it I have. So good. All right, Adam is in Detroit, Michigan. Adam, how can we help today?

Hi. So I am in an interesting My situation, I have a job offer which would move me out of state into Indiana, where we are looking to sell our house and use the money from our house, the debt, and then live with my in-laws for a couple months. I just wanted to get your opinion and some non-biased thoughts on if this is a good idea, what should I be thinking about financially.

Well, the first question was, if you use the money to pay off the debt, why wouldn't you just rent an apartment or rent a house? Why would you have to live with the in-laws?

They have a very big house. It would save us additional money where we could basically put my entire check to the side, where we wouldn't be spending just to spend. That's why I don't want to get into renting again. I think it would be a waste of money.

How much debt do you guys have, Adam?

Including my student loans, about 40,000. Okay.

And how much would this... If you did, was it you were selling? Correct. And how much would you get from that?

I would say after the sale of the house and the realtor fees and all that, probably about 90 Okay.

Okay. So you clear the debt and you're left with 50. That's your emergency fund. And the- How much do you guys make a year?

I'm sorry? How much do you make a year?

I make 100,000.

Why don't you just pay off the 40,000 and stay in your home?

Well, the job moves me.

Oh, that's right. You said that. Oh, I'm sorry. You're moving. I'm so sorry. I got you.

Okay, so once you take the job, you'll be making 100,000. You'll have no debt plus $50,000, part of which would be your emergency fund. How old are you guys?

We're both 29. We turned 30 this year.

Do you have kids? We have three kids. Oh, man. I just can't see why you would need to live with family because you'll have no debt. You'll have plenty of savings. Get your on spot.

Are you guys familiar with the area? Would you want to know when you buy a house, where you want to be?

Yeah. I went to college in the area. My wife is from the area, so we're very familiar. We have a lot of family and friends in the area.

Okay. My main thought was to take a couple months to basically save up for 20 % down on a house that we want. How long would you be there, would you say?

We said max six months. And that's why I want to be smart about how much I pay off, versus how much I keep to the side.

Here's where we always... I feel like, I don't know, especially Jade and I, we're on the same page with this. While we always caution against the idea of just moving back home or moving in with the family. Because for the most of the time, people just have this vague idea, Hey, I'm going to move back home to pay off debt. And then you dig into the numbers, and they've been home for six months. How much are you saving? Like, Well, I've actually gone $2,000 in credit card debt, or whatever. And you're like, How have you gone in debt when you're living at home and you're saving money? Because they don't really do it. They just have this idea of it. It's not driven, it's not specific, there's not a timeline. So the only reason I would somewhat entertain it for you guys in this situation is it's short enough, it's six months, and to move somewhere and move out and get a six-month lease might be somewhat of a headache. You know what you're going to be putting away. And I would just say, if you choose to do this, be diligent about it, because I do think living with family over the long term, it just can erode the...

You know what I mean? There's a tension point to it.

And it's five of you all. That's a lot.

I'm just saying. Yeah. So if you guys know for sure there's an end timeline, it's no more than six months. We're going to get... Because we're moving anyways. I don't know. I would be somewhat okay with it, Adam. But again, you guys have to be diligent because some people get in these situations and more than what we see, they just get lazy about it. Sure. And they don't really put what they think they're going to put away in all of it. So you just have to be diligent. That's my word of caution. Yeah.

I think the one thought process we had is my entire check, which is about 6,000 a net a month, I would set the entire six grand off to the side. It would just go into a separate account with the 50K that we have left over. And my wife's account would pay for the car payments and the car insurance and all that stuff.

Car payments? I thought that you would be totally debt-free.

I have two leases, so I didn't include those in the $40,000.

When are those leases up?

Her lease is up in May, and then mine has another two years on it.

Are you all going to be paying for it to own the car, or are you guys just done after the lease and you have to buy a new car?

We talked about possibly buying out her lease on her car and then finding from that money.

Those obviously add to the timeline. I would sit and plan that out because obviously, my next question for you before you said the lease was going to be, how much do you need to save up for this down payment? What's the exact number? And run that back. But now you have to add in, Okay, what is it going to cost to possibly buy out these leases? Or what's it going to cost at the end of the lease to now buy something in cash? Those are real numbers in the higher thousands to be aware of. And that could really set this on a longer journey. So if you had to spitball it right now, what would you say the cost car-wise is going to be for you guys?

It's a great question.

I know our monthly payments right now is about $800 between the two cars. Between the two? Okay, so your wife's is over in May. I mean, that's creeping up here in a little bit. What do you think you'll do?

I mean- Go buy a $6,000 car with one of your month's paychecks.

Yeah, I mean... But that, to my point, I guess what I'm saying here, to my point, is that's the thing. If you're living with in-laws, it could be really easy to say, Oh, well, we'll just... And end up spending more on a card because you don't have any other... There's no parameter to keep you in line. So just be aware of that. If I had to vote for this, and I think Rachel and I are split, if I had to vote for it, I think I'd vote no. I think I'd vote, get rent somewhere and decide if you like the area and be on your own with your three kids. But if you didn't do that, it wouldn't be the worst thing in the world.

Okay.

Yeah. The decision is not going to make or break you. It just could create bad habits, though, that you don't even realize because the lifestyle creep that could happen, again, hypothetical, but you're not paying for the... It's just that ongoing, which you guys know. You're adults, Adam. I mean, you guys have done... You've been homeowners. You know the deal. But it's just getting lazy on any of the numbers and then actually pushing things that you wouldn't have pushed otherwise, like getting a nicer car that you wouldn't have done if you were paying rent, living in reality.

It changes the numbers.

You're going to be living in reality, hopefully in 6, 8 months when you have a house. But making sure always, too, Adam, that you guys have that emergency funds and all of it. So there's some steps, and that may push the timeline.

So, yeah, you and your wife- That's the homework is figuring out what these... Create real numbers. Don't just make it something up in the clouds. Say tonight or sit down this weekend and say, Okay, lease is coming up in May. What's the plan? What are we going to spend? And make a hard concrete number and then decide about your lease and say, Are we really going to ride this car payment thing out for two more years? Or, Can we buy this thing out? And figure out whatever research, due diligence you have to do, get that actual number. Then from there, it's then Okay, realistically in this area to get the payment underneath 25% of our take home pay, what must our down payment be? You might look at that number and go, Oh, gosh, in order for us to do that- All of this is going to take longer. That could be 10 months or that could be 14 months. And then that might cause you to pull back a little bit and decide, do we really want to live with in-laws for over a year? I can just see this snowballing really quickly.

So just be on top of it. Yeah. And the hard thing with lease cars, too, is usually, not always, you usually can afford a lease payment of a nicer car than if you got a car payment, right? And so even the type of car, you guys, if you don't do the buy-out that you're going to get, it may not be as nice as the current car you're driving, too. So just be thinking through the scenario and don't let your lifestyle creep outweigh smart decisions.

So true. Well, thanks for hanging out with us today. And remember, there's ultimately one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.