Transcript of No Matter Your Income, You Can Still Build Wealth New

This is an ad for BetterHelp. May is Mental Health Awareness Month, and when life feels overwhelming, therapy can help you slow down, think clearly, and move forward. Visit betterhelp.com/ramsey to get 10% off. Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broken. Common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is The Ramsey Show. I'm Dave Ramsey. Jade Washaw, number one bestselling author, Ramsey personality, is my co-host today. Paula is in San Francisco. Hey, Paula, how are you?

Hey, I'm good. How are you?

Better than I deserve. What's up?

Uh, so my mother-in-law and husband put his name on all her assets before we got married because my husband's father passed away. Um, recently we have an issue where since my husband's name was on her car, she was sued for a car accident, which means that he was also sued. We're trying to dissolve those agreements both with her, but we're getting some pushback. We can't get copies, so we need some help getting some financial freedom from my mother-in-law.

Wow.

Okay, so you said there were agreements. What do you mean?

Uh, so they decided to put his name on all her assets.

Yeah, I got that.

The cars, the houses, the insurance. He signed all the paperwork, uh, to be on the mortgage, on the title, the deeds, etc.

You can't add yourself to a mortgage. Okay, so he did not do that. Um, Huh. Okay.

He helped her purchase a home, and so he was, uh, part of that.

Okay, then if it was part of the purchase, he could be on the mortgage with her. Okay.

Okay. Yeah.

Okay.

And then they refinanced the original home, and so he's on those documents.

Oh boy.

So he was obviously trying to help her, right?

Correct.

And why did they think he needed his name on everything in order to help her?

She did not have a trust in place, so she was fearful that if something happened to her, the family wouldn't keep anything.

The family wouldn't get anything.

It would go into probate, things like that.

What's she worth?

Of course it goes into probate. That's, but that doesn't mean the family doesn't get anything. All you need is a will. You don't have to have a trust.

What's her net worth?

Uh, do you know your mom's net worth? Uh, I would say I'm not quite sure.

Well, give us a ballpark. Is it—

I mean, she's a multimillionaire?

No, no, she is not.

Okay.

She works for an insurance company.

Okay.

All right.

And so the net result is that they— he was trying to do a really nice thing and she was trying to protect, but they did not get good advice. And so they did a whole stupid thing, which is put his name on everything. And that was really stupid. And that's the result. And now you got sued when she had a car wreck.

How much is she being sued for?

Uh, I believe about $50,000.

Oh my gosh. So she didn't have insurance?

She didn't have adequate—

she does.

It's going to go through insurance, but because my husband's name is on her vehicle, he is named in that lawsuit as well.

Yeah, he has to be. Yeah.

Okay. Yeah.

And now that we're married, we eventually want to buy our own home. Um, so our goal is to completely dissolve these agreements with her.

Yeah.

Okay.

So the $50,000 insurance is going to pay eventually. You just don't like that his name is tied up in it.

Yeah, she wants the name off of it.

So you want to go through and take his name off of everything?

Yes.

Yes, it's going to be very difficult. It's very complicated. Um, and you're going to need legal advice. Okay, so each item will be different. Okay, a bank account's very simple. He can go to the bank and have his name removed. Very easy. Okay, a mortgage is is impossible. He can't get his name off of it, so she has to refinance her home to get a new mortgage to get his name off of it, and you'll have to probably pay the cost of the refinance because you're the one requesting to do this. Very complicated. The car title, she can just sign— I mean, he can sign an affidavit and have his name taken off of the car title, but she'll have to sign all of it. Is she refusing to cooperate in this idea?

Um, she's okay to remove his name off the car title, but she does not want to refinance her homes right now, so she won't remove him from the home.

Yeah, that's fair, and I can understand why. Yeah, well, I mean, if you offer to pay for the refinance cost and the interest rate is the same or less, it would benefit her to refinance it.

Okay.

And, uh, but she didn't want to refinance it because she wanted to pay for it.

Right.

Um, and what—

and if he's—

I was going to say, what is, what is her current interest rate? Do you know?

Uh, I think it was around 3%.

Yeah, she's not going to refinance. That's not going to work.

Right, right.

Um, yeah, wow, that's tough.

All right, you know, what I would do is just make a list of stuff that has his name on it and say, what is the solution with each of these things? There's not one simple— you can't sign one simple document, it does everything. You have to go to each situation and have his name removed where you can. And until it's beneficial for her to remove, take, you know, interest rate-wise and so forth, she's not gonna— you're not getting off that mortgage. Wow. And your husband and his mom are both willing to do all of this, they just don't know how. Is that what you're saying?

Um, my mother-in-law would like to wait 5 years or so. Sometimes she goes back and forth with if that's what she truly wants to do, but the hope is that in 5 years she will refinance so that we can go purchase our own home. Mm-hmm.

Well, I mean, as far as the other property, other things go, she's willing to take his name off.

Yeah. Uh, car title. Yes.

Well, I mean, there's a whole bunch of stuff. You mentioned car title, you mentioned insurance policies, you mentioned bank accounts, you mentioned, right?

Yeah. So since he is, um, on both the homes, she says that she cannot remove him from the home insurance. We did remove ourselves. We're trying to remove ourselves from her car insurance currently.

Mm-hmm. Wow.

That's true. I mean, you don't, you, if you're on the mortgage, you want to be on the home insurance, right? In case it burns, you don't get stuck with the mortgage.

Right.

So your husband does want to stay on that insurance, that's accurate. So, um, okay. So really what we did is that they did— they were trying to do a smart thing and they did it in a dumb way, both of them, in a way that no one would recommend. If they'd gotten any estate planning advice at all, it would not have been hard to solve this. And so but there's no bad malice here. She's not— I mean, she didn't set out to do harm to her son, and he certainly didn't set out to do harm to his mom. So there's no— there shouldn't be any drama here. You just gotta clean— you just gotta go through and clean it up. Other than the fact that you got sued, but I mean, that's not her fault, actually. It's your husband's fault. He signed up on a car. That he shouldn't have.

I mean, the two houses is gonna be the pain in the neck.

Yeah, that's gonna be the hard thing is getting rid of that. And you know, just watch interest rates, and as interest rates come down, or you know, the balance on the mortgage comes down, pay off the stinking mortgage.

I gotta believe she's close to being done.

I don't know, something like that. But if you can get the interest rate to where it's beneficial to her to refinance, then I would be willing to pay the refinance cost if it was me. To get my name off of it. And that happens a lot of times where there's a divorce and they didn't bother to get the name off the mortgage, and then 5 years later, the divorced husband or wife's got a name hanging out over here. Then they'll have to go, as a negotiation, pay for the refinance to get their name off. Yeah, but this is a classic thing of what we call street law. Which is a bunch of people sitting around a campfire with an opinion about what you should do on something that have absolutely no freaking idea what they're doing. And this guy signed up for a mess.

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Hello, I'm doing well. I hope you guys are.

We are. What's up?

Uh, so my father— so first of all, I'm 38 years old, I've got a 19-year-old son, and my father and I haven't always had a great relationship, but we, we've got a better one now. And we agreed that he would help my son buy a car We can afford to buy him the car, but he wanted to step in and help out his grandson. And, um, we didn't really have an agreement set on how much the car would be. And, uh, he ended up buying him a Dodge Challenger, which, um, it was about $62,000. Uh, my father's car.

How old is your— you have a 19-year-old son with a $62,000 car?

Wow.

Yeah.

Is that more expensive than your, than your car?

It is. It is. I, I still drive my Prius from college, to be honest.

Wow.

Um, what does your, what does your 19-year-old son make? How much does he make? Does he work?

He actually does have his own income. He's still living with us, but he flips furniture on, um, him and his sister flip furniture on Facebook Marketplace. So I'd say he makes between $5,000 and $6,000 a month.

Profit?

Yes, profit. Wow. That's after he's gone and purchased the furniture.

Okay.

And bought lacquers and bought finish and painted and bought new handles for everything.

Okay.

Great. And so this bothers you. It's too much. You feel like it's too much car for a 19-year-old, right?

Well, let me, let me also make this clear. We, when he turned 16, we bought him a Civic, and in October of last year he totaled the Civic. Um, and he had done— he had begun to go into the car space. He'd done a lot of bolt-on, uh, and he had just finally gotten under the hood and started to do work on his car, which is why I think he was so eager to get a more powerful car. But That also has my wife and I worried because, you know, he's just totaled a car which struggles to get up to 100.

Did he total it being reckless or did he total it and truly, it was truly an accident?

Uh, we are not sure. If you, if you, if you, if you trust him, uh, a squirrel ran across the road.

But, um, yeah, because squirrels always total Civics. No.

Yeah.

Okay. All right. Um, yeah. Uh, Squirrel is the ultimate. Yeah. Yeah.

Uh, okay.

So I also want to make two things clear really quickly.

Yeah.

So the interest on the car, so his grandfather put down the down payment, which I'm still not totally sure how much it was, but the interest is at 21%.

And so your father "does not have good judgment on financial matters." That's being nice. Your father did an idiotic, stupid deal in an effort to be a blessing to his 19-year-old grandson, but instead cursed him by putting him into a car with a ridiculously high interest rate and that is way too expensive for a guy that makes $4,000 a month living in his parents' home flipping furniture. Okay, so your dad is out of the equation. He no longer gets a vote. Okay, whose name is the title in?

Um, my, my father co-signed for the car, but it's my, my son's car.

Yeah, okay. If I were to advise your 19-year-old son, it would be to sell the car as fast as he possibly can because he's probably going to lose some money on it depending on how much of a down payment there was. But I'm guessing there wasn't much of a down payment. This The car is too expensive for anyone that makes, you know, makes $5,000 a month. You shouldn't be having a car that's equal to your annual income, regardless of whether it's paid for or not. It's ridiculous. It's a fabulous vehicle. It's a fun muscle car, but that's irrelevant, okay? And he's at 21% interest.

Ooh.

And you're worried about his safety. I'm not as worried about his safety. I'm not 100% sure to be worried about his safety. I'm 100% sure this deal sucks. It was really dumb. And if I were loving my 19-year-old grandson well, or my new friend that's 19 years old, I would say, "My friend, sell this car as quickly as you can and limit the damage that it's going to do to your life. Your grandfather's sweet, but he's not smart." That's what I would tell your 19-year-old. As fast as he can get rid of it. Now, he don't want a salad, and he's got Bozo over here that can't do math whispering in his ear that this is okay.

Who's paying the payment, Bozo or your son?

My son is paying the payment, and my grandfather agreed to help him. And I, I, we, my wife and I together make enough to absorb the cost of the payment.

No, no, no reason for you to. I think that He bought a car he can't afford.

Yeah. And you're the parent and he still lives at home. So you do get to say, this is not going to work. You get to say that.

Yeah. And it's not, it's not a, it's not a, I'm mad at somebody thing. If I'm you, it's, honey, I love you. This is bringing harm to you. And I really wouldn't even bring up the totaling the car and safety thing. It's just way too expensive a car and way ridiculous interest rate.

Yeah.

It's just, it's just, it's financially stupid.

And if you're, if you've set up a standard in your household that we don't borrow money and we don't go into debt for cars, I think that fuels that argument even more, which is, I can't advise you to do this. This is just not how we live our lives and this is not how we've taught you to live yours.

Yeah. And I'm sorry I didn't keep my hand in the deal and keep it from happening. I should have stepped between you before you got run over by a Dodge Challenger at 21%. But you're totaling your whole life now as a result of totaling your Civic. And this is just not— there's just nothing smart here.

Oh gosh.

But this is a starry-eyed guy who, you know, I don't know what's going on with Grandpa, but, um, he ain't got any smarter as he got older. We can tell that.

I'm assuming the deposit wasn't enough to bring us back Probably not.

You're probably in the hole from being underwater. Yeah.

So, so do we—

well, that's up, that's up to you.

Go to my father and do—

no, I don't think your father's gonna do anything.

No, I think you have to. I think that's a stupid tax you guys are gonna have to—

somebody's going to pay. Junior's going to pay it, but Junior doesn't have any money.

Yeah, yeah.

I'm, I'm guessing you're gonna lose a little money on it, but I don't know how much he's gonna lose. A little money. You're not really technically in the deal. So you're not technically responsible, but I am gonna say you live under my roof. We're not playing stupid games and expect anything except stupid prizes. Yeah, this is, this is ludicrous.

Crazy.

This is like, look up crazy in the column and you'll see a picture of this car.

And well, the car note's probably almost $1,000 a month.

Yeah, at least.

Wow.

21% on $62,000? Oh yeah. Yeah. Hello.

Ooh-wee.

Or they financed it for 18 years. You know, it doesn't matter. We'll make sure we prolong this pain as long as we possibly can. Yeah. So, interesting thing that Proverbs 17:18 says, "One lacking in sense cosigns for another." The New Contemporary English Version, the CEV, says, It's stupid to cosign a loan.

Yeah.

That's what the Bible says. So anytime you're thinking you're being a blessing to someone by cosigning the loan for them, you're not. No, they're being stupid.

The whole reason you would need a cosigner is a bank looked at that person and said, "There's no way I would lend you the money.

I don't think that you can pay it." Yeah, I mean, bank looks at a 19-year-old who flips furniture and lives in his mother's basement, and says, "I don't think this is a worthy credit, so we're not gonna do it. And if you're dumb enough to co-sign for it, we're still gonna charge you 21% because we're gonna call this a high-risk subprime loan, and we're gonna gig you. We're gonna screw you." So, car dealer, we're gonna screw the 19-year-old. And bank, we're gonna screw the 19-year-old.

And grandpa says, "I'll help!" Wow, thinking he's being a blessing.

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Buying or selling a home is a big deal. You want a high-protein, high-octane professional real estate agent helping you with that transaction. Not somebody who got their license 3 weeks ago and is your friend from church. No, we want a pro. Somebody does hundreds of transactions and knows what the flip they're doing. Ramsey Trusted program is the only way to find the top agents you can trust to help make your home a blessing. It's a free service, Ramsey Trusted. So if you want to find a local Ramsey Trusted real estate pro, which has been vetted for production and quality, You can find that for free at ramseysolutions.com/agent or click the link in the description. There you go. Benjamin is with us in Bowling Green, Kentucky. Hi Benjamin, how are you?

Hey, doing wonderful, Dave. Thanks for taking my call this afternoon.

Certainly, sir. How can we help?

Uh, well, me and my wife are having just a mild financial disagreement and, um, we're trying to put the puzzles together to see where we should invest money or what we should do with it.

Cool. Um, how long y'all been married?

We've been married for 10 years.

Awesome. How old are y'all?

Uh, 38 and 37. Cool.

Very cool. So tell me about the disagreement.

Um, well, right now, um, I own a construction company and, uh, we've been successful. Uh, we've paid off all our debt besides our mortgage. And, uh, I really haven't tried to attack my mortgage just because I am locked in at a 2.5% interest rate. And rather than paying it off, I'm investing money in rental properties trying to make a passive income. I've invested in silver and just a few other things to where, you know, when time comes to retire, I've got a passive income coming in that's taking care of me and not too concerned about the 2.5% interest rate being— I don't think we'll ever see it again. We're at the point now to where I could pay the house off, but—

Oh, you have the money.

We do. We have the money.

How much, how much is the balance?

Uh, the balance is about $200,000 currently.

Well, you are doing great, Benjamin. Congratulations.

Thank you. I appreciate it. Okay. And, uh, that, that's our decision. She believes that we should go ahead and pay that off. And, um, you know, me personally, I believe we can purchase some more properties.

Why does she believe you should pay it off? What's her reasoning behind that?

Um, just stress more, just knowing that we don't owe on anything, you know, there's nothing tying us down. And, uh, my mindset is that we could invest in more properties. I can have my guys go in and fix it up. We could rent it out and the rent could pay for our mortgage. And then we've got more assets, you know, in time.

How long ago were you broke before? And you didn't have $200,000 and you had debt still.

5 years, I would say within the last 5 years. Yeah, we've really turned things around.

Yeah. And your construction business has blossomed during that 5 years too, correct?

It has. We've been truly blessed. Yeah.

Because it's been the time it should have. And that 5 years have been excellent for your business versus not excellent for construction, which has been some other times in our past. Right. But right now it's making hay while the sun shines. So very cool. Okay, well, you called us and I'm guessing you probably already knew what we were going to say.

Well, my wife knew what you were going to say.

Oh, you've been set up, Benjamin. You've been set up. Okay, well, let me give you a little background as to why she set you up then and be nice to you. Okay? Yes, sir. So when I was 23, my mom and dad were in the real estate and construction business and I got my real estate license when I was 18. And I love real estate investing. And when I was 23, I started buying everything in sight and anything that I could make a return on. And I have a degree in real estate and finance from the University of Tennessee. And so I was all in on this stuff. I'm 65 now, by the way. But I was 23. And so by the time I was 26, I had $4 million worth of real estate with a million-dollar net worth. And it was cash flowing like crazy. I mean, I made good money on it. But I had a lot of it on short-term notes 'cause I was flipping before there was cable TV or before there was Chip and Joanna. They weren't even born. And so, you know, this is where we were, right? And so I became a millionaire by the time I was 26 years old doing the kind of thing you're talking about.

But I did it super poorly, a little differently than you're describing, but I'm telling you this story for a reason. Then the bank got sold and they called our 90-day notes that we had outstanding, and that began a crash that took 2.5 years for us to lose everything we owned, and we were sued and foreclosed on and bankrupt by the time I was 28 with a brand new baby and a toddler. 10 years younger than you are now. And in that process, I started learning what Grandma with common sense says about money, and what the Bible says about money, and both of those say don't borrow money. But I, with my finance degree, was looking at it through the lens you're looking at it, at the math, and saying, "Well, I got a 2.5% mortgage. Why would I ever get rid of that? I'm trying to create this stream of rental income." But what I left out in my analysis, and therefore what you're also leaving out in your analysis, is risk. 100% of the time that you have debt, there is risk. More debt equals more risk. And so a way to emotionally feel that right now in this discussion is to say, hey Benjamin, what if your house was paid for and you had the opport— and you didn't have $200,000 in the bank and you had the opportunity to go borrow $200,000 against your paid-for home at 2.5%?

Would you go do that? And you might, because you've kind of figured out 2.5% you think is a great rate, and it is a great rate. But you also, if you look at it that way, you might also go kind of gulp.

Mm-hmm.

You realize what's at stake. Like your stomach kind of, when I say that, I'm gonna go borrow against my paid-for home, there's something in your stomach kind of moves around. You see what I'm saying?

No, I see exactly what you're saying.

It's a physical reaction to risk. And all that I did there was what's called a sunk cost analysis, and that is to reverse the discussion and see if it feels any different. And if you reverse the discussion, you say, "I paid for a house, I'm gonna go borrow." It's the same thing as, "I'm not gonna pay it off so that I can go buy rentals." Instead of borrowing on my paid-for home to go buy rentals—

I'm keeping the borrowed money.

I'm not gonna pay it off to go buy paid-for rentals. It's the exact same phenomenon. Mathematical equation, but thinking about it through a different lens makes your stomach go up in your throat instead of your brain going, "Oh, I've got 2.5%, I'm making money on that." So all of that to say, you called the show where we're always gonna tell you to pay off your mortgage. Your wife set you up.

Okay?

100% of the time. And I own several hundred million dollars in real estate that is paid for today. I recovered way, vastly recovered from my old bankrupt days, and, um, you know, and I love real estate. So I want you to own some rental property, and I think you're in a great business with the adjoining business with, uh, construction. But let me tell you what will happen to complete my sales pitch on this, okay? When you have zero debt of any kind your construction business will flourish even more. And here's why: there's nothing gnawing anywhere at the back of your skull saying, I gotta take this questionable job because I gotta have cash flow. Instead, you look at a questionable job and go, that, that juice ain't worth the squeeze. I'm going over— and you're gonna turn down crazy customers You're gonna turn down situations where you're gonna go out over your skis and you're pushing too hard. Instead, you're gonna— and I've experienced this in my business. I make different decisions in the day-to-day operation of Ramsey Solutions because I don't have debt than if I had to do deals to make payments. And it's increased my prosperity.

Those two things don't seem to be directly connected, but they are yet connected. Oh, here's another one. Physically, people have less physical ailments when they're not carrying any debt. It changes the composure or the composite of your body because your anxiety level is way down. So I'm gonna sell you as hard as I can to follow your wife's leading there. Agreed?

Agreed. Happy wife, happy Happy life.

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Jade, I feel like I'm supposed to, uh, recap one other thing, and that is that real estate— if you, if you come on this show, or if I'm having an interaction with you anywhere, and you tell me you want to invest in real estate as pass— to create passive income, what I'm going to realize immediately is that you don't know what the flip you're doing.

Because you said passive.

Because you act like real estate creates passive income. So if you've ever been a landlord, you know that it's— there's nothing passive about it. If you've ever owned rental property, there's zero passivity involved. So when people say real estate creates passive income, what that tells me is they've been getting financial advice from some moron on TikTok. That's what that tells me.

Yeah.

Not that they've actually been in the real estate business. Okay. I've owned rental real estate longer than most of you calling have been alive. And that means I'm old, but it also means I'm experienced. And you know what you get from experience?

Wisdom?

Scars.

Okay, I'll go with scars. I'll go with scars.

From doing stupid stuff. And so I've done— I've seen it all and done it all, I think, with landlording. Whether it's commercial properties that are retail with a pizza place or a CrossFit gym, or whether it's a condominium and the guy decides he's going to use his wife as a punching bag and he gets put in jail and she has two little kids and now they can't pay their rent and I'm the landlord. Now what am I supposed to do with her? Yeah. So this is— you want to call that passive? That makes you dumb. Or at a minimum inexperienced. Okay, so you don't know what passive means. Passive means you don't have to do any— you want passive, put your money in a mutual fund and they will just send you an email.

Great, great.

Tell you what happened. You don't have to do anything. That's passive. And so there's nothing passive about real estate, period. I even own a piece of ground that has nothing on it.

and it's still work.

And the tree fell across the neighbor's fence the other day, and he called me and said, "Your tree's blocking my driveway." It's not even passive. A freaking blank piece of ground is not even passive.

Shouldn't have had that tree on it, Dave.

So, I mean, it's like— and he was right, so we sent a guy over with a chainsaw and got the guy's driveway back, right? But oh my God, this idea that there's, you know— but so, Don't listen to someone who says real estate is passive. This is someone that's selling you crap or don't know what they're doing.

Yeah.

Okay.

It's another way to have an income stream.

It is an income stream. It is an alternative income stream. And I love it. I've actually more— a higher percentage of my net worth is in real estate, paid for, no mortgages, than is in mutual funds.

Yeah.

Okay. But I'm adept at and careful with and understand and have a management company that manages our real estate, you know. And so, but it's not passive.

What's your, uh, what's your opinion on Airbnbs and things like that that aren't just addressed?

That's not even rental property. You opened a hotel, you got in the hotel business.

Hotel business.

If you don't believe me, figure out how many maids you have to hire to change them sheets every day when those people leave.

Yeah.

And all the stuff that you don't even want to talk about that you have to clean up that was left behind at the bachelorette party.

Hello.

Condo, yeah. And they thought that, you know, what happens in Nashville stays in Nashville. Nuh-uh. You left some of it in Nashville, but it didn't stay in Nashville. So we still had to clean it up after you left. And apparently you don't drink that much, girl, because you left some of that. Yeah, no, this is— yeah, this is bad. So this is what Airbnb is.

That's like the—

it's gross.

As difficult as it's gonna get.

You might as well buy you a little Hotel 6. And go, "I'm in the hotel business." At least then you're admitting it. Instead of like, "I'm maximizing a piece of rental real estate by making it Airbnb." No, you're not. You're running a hotel. That's all you're doing. It's a short-stay hotel, a hostel at best, right? I mean, that's— so yeah. And be ready for disruption. Like, 16 states have already passed laws limiting And a lot of cities, New York City's coming down on it hard, is shutting down the ability to operate a privately operated, uncertified hotel called an Airbnb. They're shutting them down. And so VRBOs and Airbnbs are—

You think they're short-lived?

Well, I mean, no, I think they're going to be there, but you know, it's not going to be the answer to everything. And you know, for you to count on that stream of income and then your municipality go, "Ah, we changed our mind." fine. You're out of business. But you paid too much for the house because you Airbnb'd it in your pro forma. And you got screwed because you thought, "Oh, this is gonna work." Famous last words, right? So, you know, again, if you want to run a hotel, you can make a lot of money in Airbnb. But don't act like—

Don't get it twisted.

This is the other end of the spectrum from passive. This is like lots of work. And gross stuff. Yeah, it's just— yeah, I don't even— yeah, there's that.

Yeah.

All right, and then Caitlin is in Salt Lake City. Hi Caitlin, how are you?

Hi Dave and Jade, how are you guys?

Better than we deserve. What's up?

So a little background story: my husband and I are both 24 and we just welcomed our first baby a couple months ago, so we were kind of in stork mode, but now we're in that mode Well, thank you. We're on baby step number 2. My husband's an electrician, um, but we're trying to decide if he stays at his current job, which is a private-owned company. It's a little bit more stable, offers a better work-life balance, or he can move to the electrical union, which would mean significantly higher pay and stronger retirement benefits, but potentially less stability during slow periods and layoffs, and then more time away from home and overtime. So we're trying to decide the more stable path or, um, getting ahead financially.

Well, I think the net-net on the union with him not having steady might not be as much of a raise as it sounds like it is.

Yeah, exactly. And that's what we're trying to kind of trying to decide.

I don't think the net-net is going to be much, right?

More in Utah, there's a bunch of data centers coming in right now, and so they're offering a lot of incentive pay, like $10 to $15 incentive pay when working on those jobs.

But the data centers aren't going to be forever, so we're just kind of trying to decide Is it possible to work some of that data center stuff as a side hustle?

He could. He has to only be working at the union, but he could potentially go back to this private company once these data centers are—

Oh, so you can't be working private and union in Utah?

Uh-uh, you have to be union.

In Utah, it's not a right-to-work state.

Interesting.

Mm-hmm. At least that's what we think. We've kind of just been looking into it. He's currently making $38,000 at his current job, and then he would be making $43,000 with not with including incentive pay.

I, I would stay where you are.

Okay.

That's not enough. I think by the time you adjust for volatility, you're not going to make a net $5.

I agree.

Okay. Even with a pension, like we shouldn't jump for a pension.

I don't jump for pensions.

Okay.

No, we trust you.

So we will do it.

I'm going to stay where you are, but I am going to explore. There's a lot of work that needs to be done in the area is what you're telling me. And he has the skill to do the work. And I'm going to explore what I'm allowed to do as side hustles legally, right? And I'm not gonna lie to somebody. If the union requires you to be union, then I just can't do it at the union sites. But there's all kinds of side hustles. So let me give you an example, okay? If the side hustle market is being sucked up by the unions, if the electricians that used to do side hustles other ways are now doing data center work with the unions. That means all the jobs they used to do are available.

Mm-hmm.

You see what I'm saying?

That's a good way to look at it.

Or, or just straight up get on with the data center thing as a side gig, working weekends just for a short, you know, for 6 months and pile on and let's get the debt cleaned up right quick. How much debt you got left?

We have $86,000 in my student loans and I currently work full-time too. So we were in stork mode and now we're just kind of going to throw all of our savings. Yeah.

You're out of stork mode because you're home from from having the baby, right?

Oh yeah, we are already starting to come out of it.

So that's all in the rearview mirror. That's awesome. Congratulations on the baby. So what do you make?

Thanks. I make $90,000 a year.

And he does too, right?

Yeah, about $80,000.

Yeah, you're gonna be out of debt in no time. I would not make this adjustment. You're gonna lose too much quality of life. The juice ain't worth the squeeze. I'm using that a lot today.

I like it. Gotta be worth it.

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Hey Dave, doing good. How are you all doing today?

Better than we deserve. What's up?

Yes sir. Well, I just have a couple questions here. A little background story first. I was the owner and operator of a family business of 12. The business was over 12 years old, but I ran it for 12 years. And after COVID, it just got really hard for me to get any work.

Work.

So I had to take a different avenue, uh, for employment, which at the time I didn't have very wise counsel, or any counsel at that. And I did a lot of probably not so popular avenues to help with bills and different situations like that. So my overall question would be, I'm working on the Baby Steps, and obviously I would be at number 2, Maybe step number 2 on getting rid of all the debt. Uh, what is the best scenario, or I guess to kind of expedite that, so to say? I've got some unsecured debt and I have a HELOC that's kind of a gray cloud over my head right now that I'd really like to get taken care of before that draw period closes.

How much is the HELOC?

The HELOC is $94,000.

Did you roll all the debt into that or is there more?

I did. I have, I do have some unsecured debt outside of that, about $13,000.

Okay.

What's your first mortgage amount?

My first mortgage is $1,500.

No, no, no, the balance.

Oh, the balance. We're $260,000.

What's the house worth?

The house is worth around $850,000. Okay.

That's good.

And what's your household income today?

We, we, the household income annually is $75K and I'm the breadwinner. My wife is stay-at-home mom, homeschool mom. Uh, we just had our third child last year. So we got a lot of—

What did you used to make in the family business?

I used to make, um, average take-home gross pay was anywhere from $120,000 to $160,000.

Doing what? What kind of business was that?

I owned a caulking and waterproofing business. So pretty much anything that you can't see on a normal building, I was the one behind the scenes doing it. And, uh, but it paid good money when the work was there. Um, it just seemed like the right thing to do at the time because we were, we were sinking, sinking fast and needed to take something with a more secure pay. But I obviously knew when I took the job that it was going to be lower income. So I've tried to be patient where I'm at and work the ladder.

You can't afford the house you're in with the income you have is your problem.

Yeah.

What is your, what's your mortgage every month?

My mortgage every month is $1,500 a month, which is pretty good considering what the housing market is now with a 3.35% interest rate. And we're on year 10 of that.

Yeah. And the 94 Fannie Mae, what's the terms on the HELOC?

The HELOC is a 10-year draw period and we're on like year 4. I believe the interest on it is around 6%, probably a little bit higher.

Who's your bank?

My local bank that I deal with is First Peoples Bank.

And then will they just put that— will they just put that on a 10-year fixed? Take it off a HELOC, make it a 10-year fixed second mortgage? Because you got a 3.5, you're not gonna get— I normally would tell you to refinance. And take, you know, wrap the HELOC and the first together. But if you do that, you won't be able to afford the payment.

Right.

And that's kind of what I have been getting at anyway. Yeah.

On refinancing.

Yeah. And that's going to force the sale of the house, which might be the net result of this whole thing of you closing down the business. You may be in a house you can't afford. I don't know. You can afford the $1,500, but you can't afford $350,000 in debt. That's what's weird. So I don't know how you got a $1,500 payment even at 3.5% on $260,000.

Yeah, did somebody put down a bunch of money?

No, $260,000 debt, $1,500 doesn't support that. It's $18,000 a year.

We had— we live on family property, and the property was given to us, so we put the property on collateral, and the house is actually a We built the house in 2016. So at the time I was making really good money and, um, we went that route for our future. And here, here we are now. Let's see, we built the house in 2016, so we're 10 years into it, uh, 4 years with another employer.

And, uh, yeah, are you, are you in the, uh, are you in the same business that you used to be in, but now you're an employee?

I am not. I am not.

Could you start up the old business as a side hustle?

I do a bunch of side work. That's another thing I was going to point out is I do just about everything I can imagine to, to help pay off some of those, especially that unsecured debt.

Was that part of the $75,000 you said, or is that on top of?

That $75,000 is my salary through my employer now.

Okay.

So tell us what you—

I would restart your old business as a side hustle.

Side hustle. Okay.

And get— because I think you can make the most money there. You know that business and you know how to make $160,000 a year doing it. And there's plenty of work out there right now. Um, so, but, but you don't— I mean, I do it as a side hustle. You don't have to quit completely and you don't have to go all the way back. And you, and if you want to shut it back down after you get your HELOC cleaned off, that's fine. Um, but, and then I would start talking to the bank about putting that HELOC on a 15-year fixed or a 10-year fixed or whatever, and no balloons and no calls bearing down on you in the future. I don't want this thing to pop on you later. Um, but that gets, that gets the problem off of you. And then basically you're doing cleanup from the debt that was left over when you didn't transition out of the business fast enough.

Correct.

Yeah. And it's going to take you a little while to clean that up. But let's just say you made an extra $50,000 as side hustle, in 2 years you paid off your HELOC.

True.

That's what I want to do.

Yeah, that's 100% possible because that just puts you back at your old income. Yeah, if you do that.

Yeah, and then, then you got to decide long-term, you know, have I— what happened was you got, you know, you got sliced and diced by the COVID situation and you came in out of the cold. You wanted a place that felt safe in a rough and tumble war zone. I wanted a place where I could come— a bomb shelter I could come into. But it cost you because you're only making 75 and you used to make 100 and a quarter to 160. Yeah. So it's cost you $50,000 a year to have a safe place to heal. But so I want to also challenge you that that doesn't mean you need to be there 38 years.

Yeah, it's time to get back at it.

You may need to step back out and maybe the side hustle's a way for you to test your footing again and see if you've got emotionally ready to go back out in the cold. Because you're taking a beating on what you could be making.

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Kaylee is with us in Austin, Texas. Hi Kaylee, how are you?

Good, how are you doing today?

Better than we deserve. What's up?

Um, I was just calling because I am on step 2 of the baby steps. Baby Steps with paying down my debt, but I have a decision to make. I have— I'm 24 and I haven't gone to college yet, and I was wanting to go to college to get my business administration degree. And even though I'm in Baby Steps number 2, I was calling to see your opinion on if I should wait and just keep going with the Baby Steps and then go to college, or bite the bullet get— take on the student loans and go to college now.

Well, I definitely don't like the idea of you taking on student loans. How much will it cost for you to get the degree? Uh, $12,000 total or per semester?

The community college, and it'll be fully online.

Okay.

How—

what made you just to decide on that? How did you come about saying, "I want to do this." What's your path here?

I've always been kind of an admin girl, always been the person behind the scenes doing data administration and coordinating and stuff like that. After doing a lot of research, I found that if I get a business administration degree, it's broad enough of a degree that I can go from either hospitality to hospital services to maybe going in white collar.

Mm-hmm.

And so I figured getting this degree would be the best way for me to move forward.

Okay, so are you talking about a business administration degree? Are you talking about a 2-year program?

An associate's degree.

Yes, sir, I am talking about an associate's degree.

Okay, all right, I was making sure I understood what you're doing. Okay, and what do you make today?

I make gross $20,000 $2,400 a month.

$2,400 a month doing what? The same work? Administrative, administrative work?

Sadly, no. I'm actually a cook. I work at a daycare.

Okay. Cook at a daycare. How much debt do you currently have?

$8,771. Okay.

Listen, I'm not mad at a $12,000 degree if you, if you have research that it's going to be the path to get you in the spaces you want to get to. I do like the idea of you buckling down for for a few months and paying off the $8,000 first and then cash flowing this? Because I don't see why you can't cash flow this. How much, uh, oh, let's see, how long will it take you to pay off the $8,000 making $2,400?

Um, I'm actually about to hit a really good point in my snowball method. I'm about to pay one of my debts down, and basically I'll have it done within the next 18 months in total.

So if you can do $8,000 in 18 months, then can you do the $12,000 over the course of 2 years? I think you can. And I think you could probably do that in less time. You might be able to do the $12,000 in 18 months because the debt will be totally gone.

Hey, Kaley, are you saying $2,400 take-home?

So my take-home is roughly $2,200. So about $1,100 a check.

And you're living at home?

I live in an apartment.

What are you paying for rent?

Um, so rent in total is, uh, $1,200. I split it with my partner, with my boyfriend.

Have you— so are you making $15 an hour?

$15.50, sir.

Yeah, that's what I thought.

Okay.

So, um, it just feels to me like you could probably make more doing almost anything else. Like Target is paying $20 an hour.

Oh, good news.

Yeah, so I think you need to be looking to up your income and pick up some side hustles, both. I think your job sucks, your current job. It doesn't pay much.

It doesn't.

I'm very impressed that you've put together a sustainable life with $2,200 take-home pay in Austin, Texas. You are an impressive young woman. That is very responsible. You've been very careful. You've been extremely frugal. You are very— you know, and you're thinking into the future at the same time. You're an impressive young woman. So I want you— I think you're worth a lot more doing some other things in the meantime while you're getting this degree than they're paying you to cook at the daycare. Okay, so let's go, let's go job hunting in your off time and pick up two things. One is a better day job, and two is an even better side hustle that pays $25 or $30 doing something. I don't care what. I think you could babysit for neighborhood kids and make $30 an hour, $25 an hour, if you could find a nanny job, you know. And you know, anything that is these days in freaking Austin, Texas. So it's not exactly a poor market of some kind. So yeah, I want you to place more economic value on your hours than you have so far, because I can tell that you're worth it.

And so what I'm saying is I think between those two things you probably are gonna double your income.

Yeah, and then you're out of this super fast.

And that clears that debt really fast and puts $12,000 in your pocket to get your BA degree real fast, and then you're doing all of this in 12, 14 months, and you're rolling right along. And that's the path I would want to be on if I'm you. I got a feeling you're gonna be fine. You're gonna be fine. You're gonna find your way through this. But the question is just, what's the most efficient method for you to get through this? Because you're a survivor and you're a planner and a thinker. So wow, very impressive. Cool. Hey, thanks for calling. Andrew's in Norfolk, Virginia. Hi, Andrew, how are you?

Hi, Mr. Ramsey, I am doing fine. How are you?

Better than I deserve. What's up?

So my question for you today is, how do I save for retirement when I have a low income?

Why do you have a low income?

So currently I am working for a church. I'm on pastoral staff, and my income that I get to take home every month is low because they give me a lot of benefits when it comes to housing, phone, gas, paying for my daily—

What is your take-home? What do you make?

I'm taking home about $2,000 a month.

And what is your position with the church?

I would be their assistant or youth pastor.

Okay.

All right. We work with about 50,000 churches in the last 10 years. And the numbers that we have say that somewhere around 80% of the pastors in America are bivocational.

Have to be.

That means they have another job.

Yes, sir. Yes, sir.

How old are you?

I just graduated from— I'm 24 years old.

I mean, this is very similar to the last call in that way. You've got to be able to— you've got to be able to sustain a life. And I don't think you can on $2,000 a month, even if you lived at home, even if you you know, had a great benefit of, you know, whatever it is that they're offering you.

Are they furnishing housing?

Yes, sir. I get about a $1,500 a month housing allowance.

Yeah, okay. And I currently have a—

yes, sir.

Yes, sir.

In addition.

All right. Well, so here's the thing. So you have a $3,500 a month income. —plus him.

I'm not able to touch that housing for personal funds either.

I know, I know how it works. And so, yeah, you'll get into all kinds of tax issues if you do, and so will the church, so we don't want to do that. But bottom line is, it's as if you have a $1,500 house payment and you make $3,500. How can I get ahead? You can. You can, and until your income comes up. But the way you asked the question, it says, "If you're going to have this exact income when you're 54." Right. And therefore, we can't save for retirement. I mean, in the meantime, you may have to work a side hustle. That would— a bi-vocational pastor would not be that unusual. And so, the pastor that led me to the Lord, when he was starting his church, had a bread route. Bread route. And, you know, later on he was the pastor of a huge church and obviously was full-time at that point. But that's what I want for your future is God's call on your life. In the meantime, you may have a bread route, but you've got to have a long-term game plan that says, "I'm not going to have a low income the rest of my life." And then that allows you to invest and to be generous and to do other things.

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Alrighty, today's question comes from Scott in Oklahoma. He says, my 2003 Toyota has 226,000 miles on it, and I recently discovered it needs a replacement suspension system and an oil leak repair. The lowest quote I've gotten is $8,500 to fix all of the issues. The car is paid off, but I already have put $10,000 into it over the past 5 years. I make $50,000 per year and don't have any debt. I have the money to fix the car, but it would deplete my emergency fund. Should I get this old car fixed or should I put that money towards a newer car? I feel like this is a really simple one. I gotta believe that Toyota is probably not worth any more than $2,000. Yeah. So for that reason, I would invest in a new car for you. Um, if you're able to drive it a little while longer, I don't know if you can. I'd maybe try to save up as much as I can to put with the $8,500 so that you're not fully depleting that emergency fund, but it is time for a new vehicle. And you're paying cash.

This is not your down payment. Yes. So you're going to buy a $6,000 or $7,000 car. Which is going to upgrade you about 5x. Yeah. So yeah, yeah, you're in good shape to pay cash for a sizable upgrade and then replenish your emergency fund as fast as you can instead of doing the repairs. But— so the— go ahead.

What should have been happening, just to kind of go back in time, Scott, you know, you drive a 2003 Toyota with almost 250,000 miles on it. You should have been putting money aside. To upgrade this car over time, not just an emergency fund, because that's the part I feel like people forget about the Ramsey plan is I love that he has a paid-for vehicle. I love that he's living that life. But you've gotta remember that you've gotta have money to the side that you're planning on upgrading that vehicle. 'Cause you can only drive a 2003 for so long. Yeah.

That's assuming he hadn't spent the last 24 months getting outta debt and just now got to this point. That's, that's also true.

That's also true. If he just got to this point, then that's different.

But if he's been going along at this point, point and not saving for a car, then you're exactly right. Yeah. So, uh, here's a good formula for you guys, okay? What is the car worth salvaged today? And so you can sell this car with an oil leak because it's gonna— because 2003 with 226,000 miles, it's gonna have an oil leak. That's what you sell this car with, it's an oil leak, okay? And it's not going to have a wonderful suspension because it's got 200,000 miles on it. Exactly. So that, that, you know, that makes this a whatever, a $1,500, $2,000 car, okay? And so you sell it for that. If you did the repair, does it add the value back, okay, equal to the repair? So how the formula works on that is, let's say that this is a $7,000 car. If it's fixed but you could sell it for 2, well, 2 plus 8 8 is 10. So you would still not fix this car. It's overpriced. Because you're gonna have more in the car, what you can sell it for plus the repair is gonna be more than the car is worth after the repair.

And if that's the case, that tells you that this is a throwaway car, and you go buy you another throwaway car if you have to. In this case, he's got the money to move up quite a bit and move into a $7,000 or $8,000 car. If he sells this for $2,000, puts $6,000 in, he's still got some couple grand in his emergency fund to start rebuilding, right? And that's the kind of thing you're gonna do there. And then have a plan, like Jade was saying, to move up again in 2 years.

Right, because the $8,000 car is only gonna last you—

Start paying yourself $500 a month for 2 years. That's another $12,000. And you put that with the car that you bought for $7,000. The good news about a $7,000 car, it's not gonna go down a lot. 2 years from now, you sell it for 6, if you bought it right. And yeah, and now we've got an $18,000 car that we paid cash for. That starts to make a lot of sense making 50 grand.

Well, at any rate, really, because I think that of all the things we teach, the cash car is the most elusive of the principles. I think people who are driving cars with car notes, they're driving a, you know, 2026, 2025 vehicle, they hear you and I say things like, you know, the car payment is keeping the middle class broke. And they think, well, what am I supposed to do, just hand over $30,000 and have a new car?

No, you're supposed to hand over $4,000 and pay yourself $1,200 a month instead of paying Bank of America, screw me, $1,200 a month.

Exactly. That's what it looks like though, to stair-step up and stop cheating.

Yeah, if you pay yourself a car payment for 10 months, that's a lot. And what, a lot of people have a $1,000 car payment. Yes, that's $10,000 freaking dollars in 10 months. You know, how much patience do you have? I mean, you can do a lot of bad transportation for 10 months and get by with it. That's right. I mean, you could drive the hoopty of hoopties for 10 months, a $1,000 car, you know, its predominant color is Bondo.

Yeah, you know, a 2-car family can be a 1-car family for 10 months.

Well, you know, we had a guy working here at at one point that, you know, their second car was a car he bought at salvage that was perfect condition, engine and transmission, interior was perfect condition, but it had been in a hailstorm. Oh, so it looked like it had— Terrible. Yeah, it was really, it was really pockmarked all over. It was the ugliest, funniest looking car because it had the snot beat out of it. What does he care? And it looked like somebody walked and hit it with a hammer all over. Right. And but it worked perfectly. It was perfect, and the interior was perfect. The technology was current. But it was a salvaged car, completely. And he said, "For right now, instead of having a car payment, I pay $2,000 for what would have been a $15,000 car, but it's got— looked like somebody hit it with a hammer all over." We really made fun of the guy, but he was a classic Ramsey guy, right? And he did that for a year and paid himself a car payment, and then went and bought a regular car. And he has a story to tell.

A great— that's a great story. Exactly.

I love that. I come from a generation where we drove cars that were bad and we kept them so long that we named them.

I was gonna say, it's got to have a name.

It's got to have a name. The Blue Goose, right? Yeah. The Brown Shoe.

That's so funny.

The Brown Shoe, like the old woman in the shoe. Yeah, we had a station wagon named the Brown Shoe. Wow. It was seriously— it's got to have special special—

what I call special features.

Yeah, which are the windows that don't go down properly. Yeah, the door that won't lock, all that stuff.

Yeah, the tape deck that eats the tape or eats the CD. Nobody even uses tapes and CDs anymore.

Yeah, see, now, now you're getting old. That's what's happening, right?

Well, your car is so old.

Yeah, that's right. Yeah, it's a whole different kind of car. Yes, yes. Hey, all kidding aside, if you will drive like no one else later, you can drive like no one else. So Jade and I don't drive hoopties. I drive whatever I want to drive these days. And I can write a check and do it because I drove crap for a while so that I would never have debt again. And so it's not like we're saying drive a piece of crap car your whole life. But for a short period of time, a year, year, 2 years while you get out of debt, while you save up to avoid debt on the next purchase. You drive something that looks like a ball-peen hammer hit it all over. You drive something that's named the Gray Goose. You drive something the Brown Shoe. I don't care what you name it, but it's the pitiful old— and take pictures of it so when you're old you can tell your grandkids that are trust fund babies because you're a multigazillionaire, "Back in the day, Grandma and I drove that car and that's why you little brats have money." So you got to have story to tell, right?

You got— you really got to have a way to do this. So I had a 1980—

my first car was a hand-me-down from my sister. It was a 1984 Nissan Pulsar, and it only went forward. It couldn't go in reverse.

So you have to choose your parking spot carefully, which means you park way out in the parking lot sometimes. All the time. Because you have to pull forward, right? Yes. Oh my God, that's so great.

It had to be warmed up, like the transmission The transmission had to be warmed up for quite a while before it would even think about going in reverse.

We need to do a show where we ask everybody their worst car they've ever owned. Yeah. So my wife's first car when we got married was a Pinto. The ones that were blowing up. Yeah. Yeah. The Pinto and the Vega and the Gremlin have been named the worst cars of the '70s. That's funny. And my wife had one of them.

Are you sick and tired of being sick and tired? Working so hard but having nothing to show for it? Feel like a rat in a wheel? Well, you don't have to live that way. You can get on the Ramsey Plan. We will work you through this, get you out of debt into wealth. The EveryDollar budget app will lead right along the way. It'll give you— answer questions. It'll hold your hand like you were on this show and us telling you what to do. It's gonna build you a personalized plan to get out of debt and become wealthy. In just 15 minutes, you find thousands of dollars in hidden margin. You're gonna feel like you got a raise. Don't live normal when you can live like no one else. Start EveryDollar for free in the App Store or Google Play. Connor is in Riverside. Hey Connor, how are you? How are you?

I'm good, how are you?

Better than I deserve. What's up?

So I graduated from college last year and I got a job making $88,000 per year. I'm still living with my parents and on my current budget I can save $100,000 by the end of next year. And I want to know if I should move out at this point or if I should wait till I can save more to put a bigger down payment on a house.

Well, I was going to ask what the goal, the specific goal is, and it's to put a, a down payment on a house, how much do you need? Like, what's the monetary goal?

Well, in California, a decent house is around $700,000. Um, there's some that are less but worse neighborhoods. Um, so I try to buy on a budget to buy a house around $700,000, and I'm on track. If I keep doing what I'm doing, um, I can save $100,000 by the end of next year. Mhm. And yeah, the goal is to buy a house and to do it without having to to, um, take on a huge mortgage and to keep the payment underneath like, um, 30% of my take-home pay.

What are you doing for a living?

I do supply chain analytics.

You got a logistics degree?

Yeah, I have a bachelor's degree in business, um, majoring in supply chain. And you're only making $88 grand?

Yeah, well, only one year, one year in.

In. Okay. And I'm trying to make, uh, more money. I'm gonna go, um, for a master's degree. That's gonna cost—

you don't have to have a master's degree to make more money with a logistics degree. You're going to be just fine.

Yeah, I'm trying to do the free.

Yeah, you're sitting on $125,000 salary any minute. Um, wow. Uh, what good degree choice. Let me start there.

Yeah, yeah. What do you see yourself earning a year from now, which is the time that you want to live at your mom's house?

Do you see yourself to 125? At least I want to make more.

Can make more. Yeah. Okay, so here's the trade-off. The way you have analyzed this, and it comes from the way your brain works, which is awesome by the way, um, I'm thrilled with the way you're looking at things, is that there is no downside downside to living there, and the upside is I'm stacking cash. Because you get along with your parents, obviously, or you wouldn't even be asking this. You don't have a strained situation there. It's comfortable. And so it appears to be a no-brainer to stay here and live here for free and stack cash. The unintended consequence is that you haven't started your adulthood completely as long as your mommy is in the house. Yes. And when one of my children came home from college and their apartment was— their new place to set up house wasn't ready yet, they stayed with us for about 3 months, which was just fine because we love them and they were— we get along and there was no issue. And but I will tell you that as soon as that child moved out and, and, and paid their own bills and bought their own milk milk and had their own electric bill, it changed their posture.

It changed the way they walk, more confident, the swagger, the everything. Um, and, uh, yeah, it— and not to mention, for some ladies, uh, it would change your eligibility as date. Come on, Dave. Whether you live at your mommy's or not.

Yeah, I, I gotta say, I think there's two— through—

I'll say three things here that might be more important than the money.

That, that's true. But even, even the money, I don't think that your math is quite right because a $700,000, a $700,000 house that you've put $100,000 on is not going to get you where you need it to be, even making $125,000. $625,000. True. You're gonna be well above. I mean, I'm just plugging the numbers in on our mortgage calculator and I just, I think you need to rethink your math on that. That being said, I don't think there's a rush. You're 22, which means you'll be 23 years old. You don't need a $700,000 house at 23 years old. Yeah. In your first year of working, right? Yeah.

Like let's, or second year. Yeah.

Let's create some stability. Let's make sure that this is really the field we wanna be in. Let's make sure this is the area we wanna be in. And give yourself some freedom by just renting, get an apartment.

I love that for you. It's not horrible. Yeah, if I woke up in your shoes knowing what I know about money and life, I would move out. Even though on the surface, the economics don't look that favorable when you do that. Then I would also value your— I think you're worth more than you're being paid probably in the marketplace right now. The job market's a little slow right now, but, and then the other thing that comes to mind that you may or may not want to consider is that you might be able to make $125,000 in Kansas City. Ah, that's a good point.

Yeah, maybe.

Which would cost you half as much to live as Riverside, California. That's true. And the only reason you're there today, or at least one of the reasons you're there today, is because you grew up there. "And I'm not suggesting you have to move to be successful." "But there's something about when you move out that that option starts to be there that's not emotionally setting itself in your brain when you're staying at home." "Yeah, I agree with that." "And so, I want you to go out and have a life. And let's just see what—

let's live the grand adventure." "And then, you're also not comparing your current life to your parents' life." wife who has spent 65 years getting there.

Yeah, they've been, they've been trying to get— yeah, you can't— you don't need a $700,000— I mean, $700,000 is not a fancy house in Riverside. No, it's not.

But I'm just saying, it's still a lot of money no matter how you slice it.

Yeah, it's a lot of money. It's a lot of math, regardless of what it buys. So, um, yeah. Wow. Yeah, I—

now, if he had told me he had $100,000 of debt and he could live at home and pay it off in one year, I would probably change my mind on that. I would probably go, hey, if you can do it and you can knock it out and there's a clear timeline and there's a clear amount, I'd probably be fine with that. He is going to sacrifice some of the things that you said.

Yeah, I'm not sure that I have adequately, uh, thought through and quantified what living on your own is worth. Well, it costs more, but I think it's worth more than it costs. And I can't put actual dollars to that off the top of my head, like I can some things, to justify my position. So, my position might be weak.

There's gotta be— you gotta consider your age range, 'cause I think the older you are, the more it hits. You know, you can't be 33 living at mom's house.

Yeah, 19 is a little— I can give you a little break there. I'm like 21. Hey, he graduated from college at 19. Yeah, it's like 2 years early, 3 years early.

He's a little bit of a super genius.

Yeah, we got some savant stuff going on here. Yeah, that's interesting. I'm treating him like he's 22. That's a good point too. Interesting, interesting. This is a good discussion. Connor, you're a sharp dude. You're gonna be okay. You don't have to buy a house in 1 year. And there are benefits to moving out that you haven't considered. And that's a summary of what we we have yacked about and gone around the barn for the last few minutes. But it's good. I appreciate you letting us use you to have the discussion for America, because there is a— the old movie, Failure to Launch— there is a problem in America, particularly disturbing among males that are not leaving home. Now, you're not— the 33-year-old living at home, is a problem.

I, I, you know what, Dave, I actually do think it's both. I think it's men and women, but I do think that it is more frowned upon. And I'm not saying right or wrong, but I feel like it's because I'm a sexist boomer. We get more of the ick when we see a guy living.

Yeah, at home. And you're a sexist whatever if you're not a boomer. If you just said that. Yeah, I get ick with the guy being at home. Yeah, yeah. But it is, it is. But still, I mean, I, you know, go be like a grown-up.

It's okay to be broke and be on your on your own and be single and make your way, have dignity. And yeah, that's part of life.

But you're not, you're not 33, you're 19. So if you want to hang out one more year, we're not going to be mad at you. It's true. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Renee is in Los Angeles. Hi Renee, welcome to the Ramsey Show. Hi Dave, how are you? Better than I deserve.

What's up? I was hoping you could help with a disagreement me and my husband are having. So we'd like— I'd like to pay off debt. We have about $16,000 in consumer debt $100,000 in debt and we make about $11,000 a month. My husband would like to pull out from our, uh, what is it, stocks, um, to pull all out all of our stocks to pay off the debt, whereas I'm on the side of I think we can make a lifestyle change and pay it off in 3 months. Right now we have one income. He is able to work and he can bring in an additional $7,000 a month and we should be able to pay this off even faster.

Why isn't he working now?

Um, we just kind of have been living a cushy life, very, very luxury. There's really no particular reason.

How cushy a life are you living in California on $11,000? Uh, it just happens to work for us.

Um, the rent's pretty low and a lot of our expenses— we really don't have any car payments or anything else.

Okay, that, that aside, I just want to ask, does that bother you at all? I know that that's not pertinent to the question, but does that bother you?

Uh, it only up until recently, but for the most part I was pretty content with it. Everything was getting done at the house, so I had no complaints.

Okay, so how much stocks, single stocks, do you have that you could sell?

What are they worth? Not a ton, uh, only $28,000.

Okay, but that's enough to clear the debt and still—

that would be enough to clear the debt, yes.

Okay, uh, yeah, so here, yeah, here's the answer.

Interesting to me, I think you're both right. I think you need to adjust your freaking lifestyle. Yeah, and I think you need to cash out these stocks and pay off your debt.

He needs to work regardless.

The credit cards are the $16,000, right? Correct. Yeah. Yeah, so that's financial laziness. You make enough money to not have run this debt up. You just weren't paying attention and you wrecked the car. Yeah. Yeah, so yeah, so have you cut up the credit cards?

Yes, yes, this is actually old debt, so we've paid down about $30,000.

Oh good, okay, that's good. That's good. All right, so yeah, number one, we're not going to tell you to have single stocks. We're going to have that liquidated, put that in the emergency fund or put it towards your house or whatever, wherever you are on the Baby Steps, or put it towards this debt, put it on this debt if you want. But then number two, we need to be on an EveryDollar budget where you've adjusted lifestyle and the two of you are not, you know, you're not living beyond. You've been doing that though, because you've reduced debt. So you're already doing that. So you feel like you just want to stay on the plan. I'm not catching up. I'm recycling here.

It just sounds— I think what's going on is good. I think you've— it sounds like you've tightened up in order to pay the debt down to what it is now.

Is that right?

Correct. Yes. Yeah. Yes. So that's tightened up. That's the only thing is I'm holding on to the stocks. It's a private stock that I have in a previous company. Here's the thing, I do believe it's going to be like a high potential.

Even if you didn't have the debt, I would give you the same advice. I'd say I'd rather you sell that stock, and I'd rather you— let's pretend you were on Baby Step 4 and you could invest in mutual funds. I'd still take that money and diversify it in that way. So the debt really has nothing to do, uh, specifically with that advice. Advice. It's just at this point, this is money that you have access to that you can pull out, and there really wouldn't be a penalty on it. It's not retirement money or anything like that. So for that case, I would take it out. I would put, uh, $16,000 towards the debt. The other $12,000, to Dave's point, you can throw that in a high-yield savings account, have an emergency fund. Now we're setting ourselves up to really be able to invest the proper way if we do that.

Um, yeah, the, the stock, Renee, I had a guy offer me a position in a private company the other day that I could have bought controlling interest in, in a private, in a private situation like that. And when you're— I didn't take it. And the reason is that typically a situation like that is all or nothing, meaning this stock's gonna tank and it's gonna be worth very, very little and it's gonna be a problem, or it's gonna go to the moon and it's gonna be the smartest thing you ever did bit. It's never in between. It's not a predictable environment. It's a high-risk investment. But the thing is, if you can get out of it— if you can get it out—

I didn't do it. I'm saying, but if anybody could be in a position to just take the funding— I could have lost the money and not blinked.

But yeah, but the point is, the point is she doesn't need to be doing that. Yeah, and so you're only looking at the upside, and you're emotionally involved because it was the last company you worked in, and you, you think those guys are smart, and they may be smart, and it might go to the moon, If it doesn't, it's gonna go to zero. And if you didn't— if you had $28,000 in the middle of your kitchen table right now, would you go buy that stock or would you pay down the debt? I'd pay down the debt. 100%. And I'd cash out the rest of the stock and I'd put it in a stable investment that was much more predictable. So, I don't know if you're gonna do any of that, but that's what we would tell you to do. I'd cash out the $28,000. I would continue the adjustment on the lifestyle. You're both right.

Yeah, and husband needs to do something. Now, don't get me wrong, I love when people have worked to create flexibility in their lives, I think that's great. But I think he's gonna need a sense of direction and purpose, and that's what he needs. If he doesn't need it for the paycheck, he needs it for the sense of direction and purpose.

Jenna is in Oklahoma City. Hi Jenna, how are you? I'm good, how are you? Better than I deserve. What's up? Good.

Hey, so my husband and I have about $80,000 of non-mortgage debt that we're working through. We're on Baby Step 2. And my husband runs a landscaping business, and so our tax accountant has told us to save 15% of his gross revenue and throw it in some sort of savings account that we don't touch, just for tax purposes at the end of the year to cover any unexpected tax burden we might not be prepared for. But I have about $9,000 in that account right now, and I'm just wondering if I should be using that to clear any of our debt instead of just holding onto it for taxes at the end of the year.

You hold onto it for taxes. Mm-hmm. You've already, that money's already there. It's got the IRS's name on it.

And I probably would have done 20%, to be honest with you.

We recommend 25% of your net profits, not 15% of your gross. You may be saving too much for taxes. We don't know that yet, but don't screw around with the IRS. Got it. Yeah, keep your tax money sacred. It's not even there emotionally. Now, you may want to adjust the formula after you've done a year or two of this. But you do need to be setting aside and being— be paying quarterly estimates, and they're usually going to approach about a 10% tax rate on your net profits plus 15% of self-employment tax. Because, you know, if you're an employee, you pay 7.65%, but if you're self-employed, you pay both sides, the employee and the employer. So you pay 15.6%. 15.7%. So, you know, so you've got a 25% hit there of your net profits, probably is going to be pretty accurate for your quarterly estimates and then your total tax bill. Don't mess around with that money. Now, if you're oversaving and you can prove that mathematically, if you've saved $4,000 more than you need and you can prove that mathematically, then sure, take that money and throw it at the debt. But that money, that, please, don't mess around with it.

Your accountant really gave you great advice to make you start withholding on yourself, because it's one of the small business people get hit in the head like this the most of anything I see. They don't, they don't do their quarterlies, and then the IRS comes up and smacks them.

Hey, George Campbell here. We often talk about how being normal sucks when it comes to your money, but guess what? Normal isn't so great when it comes to your job either. Normal is staying in a job you hate, dreading Mondays, and working for people you don't even like. Mike. Sound familiar? Well, the good news is you can break free from normal because Ramsey Solutions is hiring, and we refuse to settle for the ordinary. In fact, we are anything but normal, and we are proud of it. And right now we're hiring for technology, sales, marketing, writing, copy editing, and creative roles. So head over to ramsaysolutions.com/careers and apply today. Time is running out to enter the Ramsey Cash Giveaway. You can enter anytime between now and May 31 to increase your chances of winning the $500 weekly prize and the $10,000 grand prize. Obviously, no purchase necessary. No salesman will call. Be sure to check out our sale though while you're on the site right now. You can kick off your summer with books and assessments for only $12 for hardback book. Wow. Yeah, I just jumped online and bought a— a friend of mine has a new fiction book coming out, and I just jumped online and bought it.

Uh-huh. Oh, your Navy SEAL?

Yeah, it was not $12. I'm sure it was not. It was a lot more than $12. RamseySolutions.com/giveaway. Hit that right now and you can enter. And you can also check out the $12 books. That's a good deal. All right, Jean is with us in Chattanooga. Hi, Jean, how are you?

How are you? I'm fine. Thank you so much for your ministry.

Thank you. How can we help?

Uh, someone, uh, used my stolen ID electronically to open a checking account in another bank and stole funds from one of the accounts that I have with a wealth management company where I have retirement and investments.

Wait, wait a minute. I'm sorry. They opened a checking account at another bank. How were they able to steal funds from your wealth management company?

They used the checking account electronically to go into the wealth management company. And so they had all your information to do this?

They evidently did.

And, and I never have managed any of those accounts by phone or direct— electronically. I've always done by phone or direct mail.

So why is your wealth management company not liable?

Uh, that's my question. Are they not liable because this loss I sustained was not associated with, you know, market value, value most of it?

Uh, it was— they got hacked. Yeah, their site got hacked by an identity thief. I think that's on them. Okay, I'm not sure, I'm not an attorney, but that's what it sounds like from a common sense perspective. Yeah. How much money did you lose?

$45,500. How old are you? I'm 84.

How much money was in the account total?

Oh, goodness. I would have to look that up, but I don't remember. A lot? Um, I think it was about $100,000. Let me see.

Why did they only get $45,000?

That's what I want to know. I don't know. I have $100,000 $69,790 in there.

So why did they not get it all?

I don't have a clue. Maybe they thought, you know, they could get some more money.

But you called your wealth management company. What did they say?

They, they were, um, I would never have known about it if they hadn't sent me a letter asking if I had changed my email and my bank account. And of course, right away then, they tried to reverse the the transaction. And, and by then, of course, the money was gone. So, so, but they—

is— did you leave the rest of your money there?

Well, right now I haven't changed anything, but I intend to. Yeah, I just don't know whether, whether I should change my, um, my management company before they refund my money, or whether I need this.

Well, you need to, you need to make sure. I'm going to have a discussion with them on the phone as soon as you hang up with us that makes sure that the remaining money is safe. Yeah, that's the first thing. We got to make sure that's safe. And then the second thing is, uh, when are you guys going to refund me the money that you lost because your account that I have with you was hacked?

Correct.

I'm going to ask them to refund this. I don't know that that's going to work. I, I— because I'm not an attorney, okay? But I think that they're going to be liable for that because their account got hacked. I mean, so let's pretend you had a savings account at a bank and a thief got into the savings account on the bank and stole the money. It's the same thing. Yeah, the bank would be— the bank would be liable. So I'm pretty sure this wealth management company is liable for this.

Now it's on both, and it's on— there's issues on both ends because if they were able to set up another bank account account with your information, then if they were able to use that to, uh, connect the two banks— they've got a lot of information.

Gene, do you know the person that did this?

No, I don't know who it was.

Okay, then you've got a reason. They got a lot of information on you.

They do. I know.

Okay. And, and let me tell you what I've done. I have subscribed to Xander insurance. Good, good.

Are they helping you, the ID theft people?

Oh, no, Xander is— it was after the fact.

I know, but did they offer to help anyway?

Hmm, they just— I don't know if they would or not. I didn't ask them.

Yeah, I'm gonna ask them to help you, okay? All right, as a favor to me. They're friends of mine, and my 84-year-old friend Gene in Chattanooga needs some help, and I'm gonna ask them to help you even though you bought the insurance afterwards. Okay, so I'm gonna put you on hold and the gang in the booth is gonna pick up and connect you with Jeff Zander, who's a friend of mine, and they're gonna help you walk through this and make sure your identity is secured first and foremost. And then secondly, if you need some help, we'll hook you up with one of our Ramsey coaches, Ramsey Financial Coaches, as a gift also, no charge. Charge and see if they can help you navigate with this wealth management company, because they need to be offering me my money back really fast if they want to keep me as a customer, if I'm in your shoes. Oh, definitely. Okay. So—

And I tried to, you know, I tried to get legal advice here, and I went to the Bar Association, and they gave me a couple names, and and I queried them, but they didn't even respond. So I guess I'm just peanuts, you know, to them.

Well, yeah, the $45,000 is peanuts, but you're not peanuts. That's right. Okay, you're okay. You're gonna be all right. But what we have to do is stop this from happening anymore, and we have to apply for and get the refund. And I think between our Ramsey Coaches and Xander, which is going to cost you nothing, we're gonna take care of all of it. We're gonna make sure you're okay, but you need to get on the phone today and make sure the rest of your accounts are secure with those people in the meantime while you decide what's gonna happen. So you hang on and our gang will pick up and we'll put our arms around you and see if we can help you, kiddo.

That's terrible. That's kind of scary. Yeah, that is. They got all of her stuff.

I mean, they not only knew enough to open an account, but they knew she had the other account. To link it. And how to access it. Access it.

That's very scary.

And these goobs release this money to a fresh email and fresh address that they did not already have on file, because that means they went in and changed cybersecurity at a minimum is horrible at this company. Yeah. Wow. She should have named— she's got the story straight if that's what's going on.

Yeah, drop the name of that brokerage so we can all know.

We'll wait and see, make sure, make sure what they do. But yeah. It's scary.

Yeah.

So when you have a brokerage company like that, like our SmartVestor Pros as an example, you build clients over time, and in that world you call it your book of business, and how much do you have AUM, assets under management. Management. And so a big, you know, somebody's been working for 25 or whatever years will have half a billion to a billion, $500 million to a billion dollars in assets under management. And if one of those clients had $200,000 out of your half a billion you're managing and was 84 years old, this would be her. That's the situation she would normally be And— but the way you get a book of business that size is you take care of people. Yeah. 84-year-old widows would be at the top of your list. You would think so. Hello. And so that's the proper way to run that book of business. The book of business grows when you love the people in the book well.

What's curious is serious is they only took $45,000. The $169,000, that makes— that sounds nefarious to me.

I'm still afraid a relative of hers is doing this.

I agree with that, Dave. Ouch.

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Renee is with us in Charlotte. Hi, Renee, how are you?

I'm great. Thank you for taking the call. I love I love the work you do.

Thank you. How can we help?

My question is regarding how much I should pressure my teenage daughter to apply for scholarships, college scholarships.

Why wouldn't you?

Well, we, I should reframe the question. I have been and it's not working and I don't know if I should start punishing her, taking away privileges if she, if she doesn't, uh, put forth some effort.

Does she work? Does she have— has she ever had a job?

She does have a part-time job, and she is, um, she's a— she just finished her junior year of early college, so she has done very well, and she will graduate high school with an associate's degree, and she only needs 2 years to get her undergrad. And she's under the impression that she can start applying during the school year of her senior year and get scholarships. I've done some research and have found that she should really start applying now, and she is not putting forth the effort.

Okay, are you, are you married? Yes. Where's her father in this discussion?

He agrees with me, but he's also not quite as assertive as I am.

Okay, so I think what I would do is gather some information and lay it out, the three of you. And, um, here's the way I would look at it. There was a lady that worked on our team for a while named Christina Ellis. Look her up, okay? She had a book out called Confessions of a Scholarship Winner. Uh, she applied for as a single mom's daughter and received $500,000 worth. Oh wow. And, uh, so she came and she's like the best I've ever met in the world. She worked on this team for a while here, and sweet girl too, very smart, very smart, and she ended up getting a graduate degree from Vanderbilt, all paid for. And so, yeah, I would gather the information she's got in that book, and here's the types of examples that she brought out, and I've heard her teach this from stage with me, okay? You know, if you spent 200 hours applying for scholarships, that's a lot. That's 5 hours a day for a lot, for 50 days. Yeah, part-time job. Like, that's your part-time job. And if you got $50,000 worth of scholarships That means that your daughter doing that would have earned $250 an hour.

Mm-hmm. I'm gonna present that type of information to your daughter and to your husband and then say, based on that, I don't care if you like it, you're not leaving the house again until you agree to do this. It's more important for her to do that financially than have the part-time job, the other part-time, or go to part-time community college and be ahead of school, you know. So, I mean, you cannot earn $250 an hour as a 17-year-old anywhere else, and that's the rate. I made that number up, by the way, okay? I mean, I don't know if that would work exactly that way, but that's the type of thing that Christina's— the way her mind worked about this was you look at it and you're being paid what an attorney makes. To apply for scholarships, only you're not getting them today. And so if you go to— if you get $50,000 in scholarships and your mom and dad have $50,000 in savings and you're going to get that savings in your pocket when you graduate as a result of having not spent it because you got scholarships, that's making $250 an hour.

Wonderful point.

Yeah, and so, but— and that changes it like I'm on your side. I want you to come out of college with $50,000 in cash in your pocket from your dad's and I account that we're going to hand to you because we didn't have to pay for college because you do this smart thing. And she's obviously a talented student. And I—

she is.

I got to believe that AI, it's easier than ever to synthesize your ideas and help, you know, prepare your thoughts for the different essays and prepare, you know, what you should be talking about.

You can write hundreds of essays in minutes. Yeah, with ChatGPT.

Yeah, I have been doing all the research and presenting it to her and telling her to get a bio essay and to chart out a schedule.

Yeah, but you're telling her what to do without her really grasping the why. And what I'm doing is walking around the other side and putting a big old carrot out there before I pull the stick out. Okay, I wanna— she hadn't been seeing the carrot. Because she's not dumb. This is a bright child. Yes. And by the way, she's not even lazy.

She's not lazy. Okay.

So these are— she's not got—

I was so shocked. Yeah.

She's not got character flaws. She just hasn't become a believer that this is worth the effort. And we've just got to help you present that to her and her dad and go, okay, now are you ready to— okay, let's put together a schedule and you're going to spend 3 hours every morning doing this until you reach 250 hours because it's going to pay you an of whatever, okay? The amount that you get divided by 200 hours. And when you finish 200 hours, I will shut up. If you've applied 200 hours worth of effort writing essays to get scholarships, you're gonna get so stinking many scholarships. And by the way, get good at it. Don't just mail it in, literally. Make it worth it. Literally, yeah, but I mean, work the thing, because Christina said, "I'm a single mom's daughter, and I'm a I'm a citizen-student, and I'm this. You have to use whatever your advantages are. I'm 1/16 Cherokee. I don't care what you are. Whatever it is, you lean into that, because you're going to find somebody that's got everything. I mean, there's all these little nuanced, weird— There's scholarships for everything. Scholarships. And it doesn't all depend on athletic ability or grades.

There's lots of them that come from all kinds of weird nuanced things. And so, yeah, and, you know, get creative with the essay. Be the most positive thing that they see coming in front of them, and they want to give it to them. Pretend like you're on the scholarship committee. What would you want to see if you wrote the essay coming in? What kind of essays are gonna make the difference and that you're gonna keep at the top of the stack? And all that kind of stuff. And treat this like it's a— like it's a straight commission 'Cause it basically is. But I think we need to get a big carrot out here. This is the prize. And so the effort is worth it to get the prize. And then applying for scholarships makes a lot of sense. But yeah, I think you're the only one jazzed up about it in your whole house. So we need to get the rest of the house jazzed. And the way we get jazzed is we talk about the why, not the how. That's the thing. Mike is on the line in Milwaukee. Hey, Mike, What's up?

Hi Dave, how are you?

Better than I deserve. How can I help?

So the question is, me and my fiancée are looking into trying to be able to put ourselves in a position to retire around the 55 mark. How old are you? Just wondering where— Uh, 35. Okay.

When are you getting married?

Uh, September. Oh, good. Cool. Okay, cool.

Okay, so you got 20 years to get ready to retire at 55 instead of 59 and a half, so you can't access your Roths or your 401s, right? Yep.

And that's what I'm looking for is what it should be invested in to carry from 55 to 59 and a half.

Okay. If we were going to guess, let's just put a wet finger in the air. What will you need to live per year when you're 55 if you don't work?

If I had to guess, uh, maybe $60,000, $70,000 just to be comfortable. I'd rather be comfortable.

All right, let's just call it $60K, and you need to do that times 5, so you need $300K. Yeah, yeah. If you don't work, why would you not work at all at 55? Why wouldn't you find something to do?

Just to have the option to do it.

Work optional is probably a better way to say it. Work optional.

Yeah, well, work optional is fine, but it's not— doesn't happen very very often. So what I would do is just go ahead and get out of debt, get your house paid off, and build wealth, and worry about that when you get a little closer. If you want to invest when you get a little closer, you just do that in a low-turnover mutual fund like an S&P 500, like a Vanguard S&P 500 or something like that. And that'll— that's a good way to do it. But I wouldn't fool with that today. First, you need to work the Baby Steps and get to Baby Step 7 before you even start are talking about this. You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance To protect your biggest assets, I recommend using Ramsey Trusted Pros. Whether you're looking for car, home, or any other type of insurance, Ramsey Trusted Providers have been coached and vetted to serve you like we would. Find what you need at ramseysolutions.com/insurance. Our scripture of the day, Proverbs 12:24: Diligent hands will rule, but laziness ends in forced labor.

Oof. Warren Buffett, rule number one, never lose money. Rule number two, never forget rule number one.

Got it.

Works for me. Check. John is in Minneapolis. Hey John, how How are you? I'm good.

Hey guys, thank you for taking my call. Sure. Um, so I'm trying to figure out if I'm losing my mind from wanting to walk away from a high-paying job, um, and start all over in something new that pays quite a bit less, at least to start. Um, so I'm in a financial sales position right now. Um, it's almost all commission, so I average around $250,000 a year and I know I'm blessed to be in a financial position I'm in. Um, but for the last couple of years I found zero fulfillment in this job. And been pretty unhappy. Um, the culture is very much like work first, family second, and there's not a whole lot of job security. Um, we're really pushed to work past the scheduled hours, work every single weekend. Um, and it's really starting to affect my relationships outside of work. What do you sell? Um, a financial product, mortgage. Okay.

So you're a mortgage underwriter?

Office. Okay, a loan officer.

Yeah, okay.

So is it the work or is it the, the— it's the environment—

conditions in which you're doing the work? Why can't you do that somewhere else that has reasonable culture and reasonable hours and makes a little less? And it's actually not the actual day-to-day work, it's the environment and the hours and the lack of pro— and the bad priorities that's driving you crazy, right?

Yes, and I've had quite a few workers that are coworkers that have left and went to other companies in the industry And ultimately, pretty much every one of them comes back to the company we're at because they said this is really the best company in terms of, you know, technology and stuff. But the culture has been like this and has really gotten worse over the last, I would say, 12 months. And what I'm worried about mainly is over the next couple years, I want to be in a position where I'm starting a family and I look at my coworkers and I see them really struggling to keep up in the job. And be there, be present for their families. And I just don't want to end up being the parent or the father that's not there.

Again, I am not buying the fact that you can make $250,000 at one company and you can't work normal hours and work for good people and have a better balance to what you're doing at a different company and make $150,000 to $200,000. At a different company. I don't believe that. I think your coworkers have given you a message that's not true. As if there's one place on the planet that this whole thing can happen and it works, and everywhere else it doesn't work. Bullcrap.

Correct. Yeah, and that's the— that's really the feeling that, you know, we get from leadership.

I don't care what leadership told you. You don't— you already don't have faith in leadership. Why are you listening to anything.

So what, what opportunities have you been looking at?

Yeah, so we have a family friend who's an electrician in our area, and he's been trying to get me to be an apprentice for quite a while now. Why? That's so a completely different path. Why?

Because this one company that you work for sucks, and so now you're gonna go be an electrician?

He doesn't know anything about my job.

Yeah, so why would you even ask?

Yeah, we're talking about you.

Why would I mean, okay, I'm an electrician and I know a guy that is a mortgage guy who's obviously making a lot of money. Maybe I don't know it's a quarter million dollars a year. Why would I even talk to that guy about being an electrician? That's just strange.

Yeah, he knows I've always been interested in working with my hands and I ended up just kind of falling into this job through an internship in college and it was always supposed to be, you know, I'll do this for a couple years and then move on to something else. How old are you? Um, I'm 29.

And how long have you been doing the mortgage broker deal?

Uh, about 8 years.

8 years. Okay, so you're looking at this going, man, I fell into this job, this is not what I intended to do, this is not what I set out to do, I need to stop this train and I need to get on the path that I really want to be on. Correct. Understood. Okay, um, how are you doing financially?

Um, I'm good. So I have in my checking account, I have about $15,000. Um, I do have an emergency fund with about $25,000 in it and a high-yield savings. Uh, no debt at all. Um, I'm very, very fortunate there. Um, and then I have a high-yield savings with about $115,000 that was supposed to be for hopefully a wedding here in the next year or two. Um, and then a down payment on a house and that sort of stuff. Okay.

So you're getting married in the next year. Any kids? No. Okay. Listen, I, I, I do think that you should do work that matters to you, work that you feel good about. It's all about how can we get there and is there a way that over time we can create the same value? Because the hard part for me is to know that you were worth $250,000 in the marketplace and then to go down without the horizon of being able to meet that peak again. That would bother me personally. If it doesn't bother you, that's okay. So tell us about the electrician. What's the route? What does it look like and what do you want to know from us?

No problem. So it would be a 5-year apprenticeship. It would be a union electrician. So I'd start at about $21 an hour. In 5 years when I make it through, I'd be a journeyman. Right now the pay's about $42 an hour, but that would just be my base pay. Doesn't include like any fringe benefits or anything on on top of that, like health insurance, money going into a retirement account. When I do the math, working the same amount of hours I'm working right now, which is 55 to 60 a week—

You don't want to work that many hours.

So we can't compare it to that.

Correct. You're right. So it would be a pay cut at the 5-year mark. If I, you know, make it through the apprenticeship, I'd be sitting around about $130,000 a year.

A year as a journeyman, and that's kind of the peak, correct?

Yeah. Um, unless I would move up to be a foreman and so on.

But you really hate this company. I think so too. This is like they have wounded you so badly that you're willing to jump into a pit of acid to get away from them.

Yeah. How do you know that you'll love being an electrician to the tune of a $100,000 pay cut?

That I don't know for sure, and that's what scares me the most, and why I called in to get your guys' advice on this.

I know— I don't— I'm not buying. I think you're running so hard away from something that you're not looking carefully at what you're running to. So if I were gonna advise a 29-year-old who made $250,000 a year who's in a toxic culture and he knows how to sell, I I'm not against the trades. I'm a fan of the trades. Right. Okay. But you have painted the best possible scenario for a union journeyman electrician, and it's going to take you 5 freaking years to get back to half of your income. Yeah. Could you not?

And that's just not logical. Could you not go to another mortgage firm first? Yeah. And test that out and go, okay, like, this is good. Because Dave's right. You're clearly good at what you do. and generally, it's not—

I think you could make $160,000, $180,000 day one somewhere else working normal hours and not being spit on every day or whatever's happening over there. And then see how you feel. You've got to get away from the place. I'm not disagreeing with that, but I think you've convoluted the career field as being horrible with the company as being horrible, and you need to separate those two things first before you make this decision.

Decision. It's hard to me when— and you'll probably be able to put better words to this, but when you're clearly really good at something and you're clearly very gifted at it, it's hard to then say, "But you're not gonna do that. You're gonna go to this." Do you know what I mean? You've got that talent and that gifting for some reason. I don't know.

It's hard to walk— Yeah. You know, again, it's, "This smells like an escape." escape. Yeah, rather than a journey. Yes. And, and I don't— I just, it just doesn't smell right. And so you asked our opinions, or, and we've given a whole 3 minutes of thought to your whole life. Okay, so it's not really fair to you.

But he doesn't have to choose between this and that. There are some other routes he can go through before he—

I think it's a false dichotomy that the only way to be happy is to completely leave. Yeah, everything that you're doing. Yeah. I would start by leaving the company that you're in and then see where that takes us first. And then I would decide from there. And then is there another way that I can do electrician and own a company that is electricians and so forth? That puts this hour of The Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with with the Prince of Peace, Christ Jesus.