Transcript of Rock Bottom Doesn’t Have to Define Your Financial Future New

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We know that money is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is The Ramsey Show. I'm George Campbell, joined by my friend Dr. John Delony, and we're taking your calls at 888-825-5225. Steve is gonna kick us off in Hartford, Connecticut. What's going on, Steve?

Hey, how's it going?

Doing great, how are you?

Oh, hanging in there.

What's your problem today? What's going on? What?

Jeez, George.

What's your deal, man?

Hey Steve, what's your problem?

Unless you just want to celebrate a win today.

No, what's up, man?

So, so I'm in an interesting situation. Back in 2018, I had purchased a house with my stepfather at the time, and it seemed like a good idea. We were splitting the percentages. It was going to get me into a house a little bit sooner. I had a growing family and they were supposed to only be there 6 months out of the year. Fast forward, 2 couple years ago. Uh, him and my mother had split up. Uh, and at this point in time now, my mother is, is living downstairs, uh, in the in-law apartment, uh, of which I am responsible for all the utilities right now. And it's really hindering my ability to, uh, make any progress on my, my debt snowball and make some progress in the Baby Steps. And I'm just wondering, you know, should I look to sell this house? My mortgage is super low. My mortgage is under $1,000 a month. Um, and I do have some equity in the home, but I'm wondering if it makes sense for me to sell, uproot my kids, find somewhere else to go, either raise my mortgage or even have to potentially get a rent, uh, or if I should have just a conversation with my mom, start trying to get some utilities from her.

Um, it's just, it's a sticky situation. I don't know where to go with it.

I'm so confused. So let me get the facts straight. You, your ex-stepfather is on the mortgage.

My ex-stepfather is— He's on the mortgage. We're gonna get real weird here. So my ex-stepfather is actually my mortgage holder and he owns a part of my house.

So he is the bank.

He is the bank. And part owner.

But he doesn't live there anymore.

He does not live there anymore.

So your mom lives there and you're saying you can't pay off your debt because the utilities that your mom isn't paying for are crushing you financially?

I'm saying that with utilities, the extra utilities that I have for the house, it's a, you know, it's a 2,500 square foot home. I live in 1,700 square feet of it, but I am responsible for all, all utilities and all expenses of the home insurance, everything.

So yeah, that's like, that's like $150 a month.

I just don't want you blaming mom for, you know, the $40 extra in water bills that that's why you can't get ahead financially.

So my electric bill during the, during the winter months is over $750 a month. I have electric heat, so my utility bills are in $700 to $1,000 range a month.

So what's the ideal situation? Your mom pays rent or your mom gets out?

Ah, that I don't know. I feel like I should get out of this deal. Like I said, my mortgage isn't high. My mortgage is only less than $1,000 a month, so I don't want to sell, but I also kind of don't want to be in this deal any longer either. I kind of want to be—

That to me, that's It's worth it to get out of this weird deal with your ex-stepfather.

That, but that sounds like the real issue. Is that, is that the real issue? Is your mom using $500 a month in heat in the basement?

No, it's, there's a little bit more to, to my mom's side too.

That's, yeah.

Don't necessarily wanna share here, but it's also kind of affecting my relationship with you.

There we go.

And my mother.

Okay. We just didn't wanna make this about the surface level, you know, dollars and utility bills. There's more there, which is cool. You don't need to share it all. And then on the, Could you— do you want to keep this house? That's step one. If you had it on your own, would you want to keep it? And if you could afford it?

I'm 50/50. I love, I love the neighborhood. I love where my house is. Um, I don't— with, with the in-law apartment that's downstairs, the house doesn't make sense for me to own it 100%.

Okay, but I mean, could, could you go to a mortgage company and buy your ex-stepfather out? Just get a mortgage from them, get a mortgage from them, buy him out, get him out of there, and then have have a hard conversation with your mom about whether she's going to pay rent or not, or she's got to move out because you're going to hire— you're going to get a real renter in there.

I, I could. Um, I can't, I can't legally rent it. It's not a legal in-law apartment, so I can't legally rent it.

Um, so you can't rent a room in your house?

It's not a room, it's a, it's a 1,100-square-foot in-law apartment.

But is there Connecticut laws that say it's not zoned for rent?

I don't know. It's not currently set up right now to have someone externally outside of my family live in it. It's connected into my house. There's—

it's okay.

Well, that's not against the law.

That'd be awkward or weird, but it's weird. It's weird.

Okay.

It could be weird.

And again, I've lived in Texas and Tennessee. I could rent my roof if I wanted to, but you may have different laws in Connecticut, but Yeah. If you don't want strangers walking in and out of your front door, I, I get that.

All things are pointing to you sell this house, you get outta this weird ex-stepfather situation. Mom then needs to go find her own place and you start a new chapter. That feels like the cleanest thing to do.

Yeah.

But that has nothing to do with you. 'Cause let's say your rent goes to $1,500. I mean, your mortgage comes to $1,500 a month or $1,700 a month. You're still, You're solving for the relationship issues that you got in this deal, but you're going to be dollar for dollar about the same, right?

Yeah.

What do you make a month?

Uh, I take home about $7,500 a month.

Great. So even if your mortgage, or even if you rented for a while until you figured out where you wanted to buy, you'd be just fine.

Yeah.

So this is all purely relational.

I do have 4, I have 4 kids, so I do, I do need some some space.

Are you single?

I'm married.

Okay. And does your spouse live in the same house?

She does.

What does she think about all this?

She's about the same as where I am.

She'd be happy to start fresh, new house without all these financial family ties?

Yes.

Okay. I think you got your homework. We're home shopping.

Yeah.

But I, I still wanna, I wanna challenge you on one thing and then I'll let you go. Are you, how old are your kids?

Uh, I got an 8-year-old, I got a 7-year-old, a 4-year-old, and about to be a 1-year-old.

Okay. So you're fully in it. You, you're gonna do 6. And again, I know people all over planet Earth live in different arrangements and that's awesome. But you're sitting in a 2,500 square foot house. You're gonna do life with 6 people in a, 1500 square foot house or a 1700 square foot house?

That's where I am right now. That's my, my living space is 1700 square feet.

I know, but you're telling me that's all you need and you've got too much house. Do you have too much house for you and your mom to be there, or could your family expand to use this, this basement space too?

We could expand to use the basement space. It just doesn't— it's, it's a raised ranch, so it doesn't really make sense. The downstairs, it'd be kind of hard to split my family up in in the, the space. So having both, I don't think makes sense for me logically to buy him out and want to own the whole thing.

Um, is he going to be willing to sell if you put this on the market?

Yeah, I'm sure.

What would he get out of it versus you as far as the proceeds?

He's just, he's just going to get his percentage.

Okay. Yeah, I would sell it today.

Yeah, I would take what you can get out of that. And if you can't afford to buy a home based on those proceeds, the one you want, then you just gotta wait and maybe rent somewhere for a while until you can afford it. But This whole thing is just so intertwined. I would just want out emotionally. Best of luck.

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Todd is in Pittsburgh up next. Todd, welcome to the Ramsey Show.

I thought you said God is in Pittsburgh.

He's also—

Todd is in Pittsburgh.

All right, God and Todd are there.

What's up, Todd?

Hey guys, thanks for taking my call. Um, my wife and I just got married December 27th. Um, we're in Baby Step 3. Uh, we now have 4 kids. We're a blended family, and I'm wanting to know what is the best the best way to invest in the kids' future when they are all vastly different ages?

Are you trying to decide what's fair versus, "Hey, one kid's about to go to college. Do we invest the same for the 4-year-old?" Exactly.

Their ages are 7, 10, 16, and 17. My wife didn't get help with college when she was growing up. I went straight into a family business in construction, so I didn't go to college. So we are clueless on how to even invest for the kids.

Well, what do you want to do for these kids?

I would, I mean, I would like to be fair, but I understand that because of the difference in age, it would be nice if I could, you know, just give them put up all the same amount for each of them. And like I said, we're just in Baby Step 3, but I'm just kind of looking ahead because we're looking for Baby Step 3 to kind of be a breeze. Um, and it's just, uh, nothing I really know about. I don't know if there's a certain type of account to put up for each of them or, um, or what.

I'll tell you, I had a similar situation, not, not with a blended family, but I worked in universities for 20 years. And part of working at a university for that long is you get some sort of, if not all of your tuition covered for your kids, if you work there. And then I left and took this job. And so my, I, I didn't have any college savings because I was working in colleges. My wife was working at university and that was just our plan. And so I have a 16-year-old right now and a 10-year-old. And so the way we've handled it is we came up with a dollar amount that we want to have saved for each kid. But that means I had to accelerate the savings for one kid and I'm slow playing it for, for the other. So if you look at my budget every month, I'm not being quote unquote fair. I'm holding back more money for one kid than I am for the other. But the number we're gonna try to get to is is gonna be comparable, right?

Right.

So, and I think part of this is pretty solvable for you all because y'all don't have any money for the 17-year-old right now. Right?

Right.

And so some of that problem takes care of itself. You might wanna look at the, at the two younger kids and say, okay, we wanna make sure this is different for them too. But your 16 and 17-year-old have found themselves like life just happened. And so y'all need to have some, honest conversations about what we can afford and what we can't afford and what debt has done to us over the years. And here's the options in our local area. Free community college, um, low-cost state tuition. Like you, you just need to have those honest conversations with a 16 and 17-year-old.

Okay. Yeah. So with the 17-year-old, he's getting ready to go to the Marines.

Okay, great.

That's, that's awesome.

And we helped him out with his first car.

Great.

Um, so which only ended up being $500 Ford Ranger, which has ran great.

That's awesome.

So that, that was, that was a good start. Um, now I don't, I just don't have any expectations as to what to do from here on out. And then if I do come up with a number amount, or you guys help me do that, um, where, where does that money go until It needs to get it out.

So if you want to invest that money, which if we're talking about investing, that's a 5+ year time horizon, which means it doesn't make sense for the 16 or 17-year-old if you're investing for education, for example, when you got 1 or 2 years ahead of you. But for the 7 and 10-year-olds, you could invest for college in a 529 savings plan, for example, or an education savings account. So you're going to earmark that money for college. It's going to have great tax advantages. And you'll have the power of compound growth for the next, you know, 8 to 11 years. So that's one place I would put some money if you want to help cover college. Now, the good news is, let's say they don't go. You can also change the beneficiary at any time to anybody. It's a pretty loose definition of family that you can change that beneficiary to. And with the new SECURE Act 2.0, you can roll over up to $35,000 over time into a Roth IRA for that child. So it can become kind of a bonus retirement account for them as well. So that's one way to invest. And I like what Deloney is saying here.

I would make it more goal-based rather than monthly contribution-based. So the goal is all of the kids go to school without debt if they choose to go to school. The goal is every child gets a paid-for cash card that's reasonable. Those are good goals. And then the number changes depending on the ages and what you guys can do. Right now, your emergency fund is the priority. Over saving for the kids. And followed by that, your own retirement is the priority before investing for the kids. So what's your household income?

Um, between my wife and I, um, probably about, uh, $180,000.

Fantastic, that's great. So we're talking, I mean, we got out of $27,000 or so invested.

What's that?

If you do 15% of that, that's Baby Step 4. So if you're walking through the Ramsey plan, you're in Baby Step 3, saving up 3 to 6 months of expenses. Once you've got that covered, now we start investing 15% of our household income into retirement accounts. So if you've got a match through your employer, start there. You have access to any Roth accounts like a Roth 401(k), Roth IRA. Let's fund that. And if you still haven't hit 15%, go to the traditional accounts and then any money beyond that 15% can start going towards kids' investing goals like college.

Okay, that makes sense.

And for short-term savings goals like you're talking about with a 16 or 17-year-old, a high-yield savings account will do the job. For that. That's gonna keep the money liquid. It's not gonna fluctuate with the market. And so you're much better off there versus the kid turns 18 and the market took a dip and now you're, you're stuck.

Yeah.

My, my 16-year-old's college fund is in a high yield savings account. It's exactly where it is.

Okay, great. And so that's better, of course, versus, uh, like a brokerage account or something like that. Correct.

Yeah. The brokerage account. Now that's something I utilize for my kids. That is for future goals that are non-education related. I have a 2-year-old and an infant. I'm saving up going, "Alright, I want to cover their wedding one day. I want to be able to help them get a car, maybe a home down payment, those kinds of things." So I'm going to invest outside of the 529 for that in just a brokerage account in low-cost index funds.

OK, great.

Those would be the 3 places I would put money: 529 for education, high-yield savings for any short-term goals, and brokerage account for any long-term goals. For the kids.

And let me just free you, brother. None of this is gonna be exactly fair. And what I mean by fair is there's no way you're gonna be able to find an another $500 great running car, right?

When the 7-year-old is 16 trying to get a car, a beater car is gonna be $10,000.

Yeah.

And hopefully you're making $280,000 at that time.

Right? Right.

And you're gonna be in a better place financially when that 7-year-old is going to college.

Right.

And so it isn't gonna be fair. You're gonna be doing much better by then.

And just, just go ahead and build in the psychological cushion for your oldest getting back from the Marines being like, are you kidding me? You bought so-and-so? And you'd be like, yep. Right. And that's just, that's part of being a parent. Right.

I, I think that's what I needed to hear the most. So thank you for that.

Yeah, you got it. Like, do the best you can with what you got when you got it. The only thing I'll ask is be as honest as you can with your kids in real time. It is a, It can be embarrassing. It can be shameful. You could feel not, you shouldn't be ashamed, but you could have feel shame like, hey, 17-year-old, or your 17-year-old's going Marines, but hey, 16-year-old, this is the situation we've been in and this is what we're gonna have to contribute. We're only gonna have $10,000. And so let's go through the honest options here and let's figure out what's right. Like it's just being as honest as you can and then look at your 7 and 8-year-old and say, let's make sure this never happens again. And so we're gonna start putting more away for them to have different opportunities, which is awesome.

Yeah, it's when they're surprised, that's when the resentment starts to build up, because nobody told them. They didn't know. They saw one sibling get treated a different way. So communicate openly and honestly with all 4 kids. Yeah, say, hey, here's where we're at financially, here's what we want to cover, here's what we can cover right now. Means you got to figure out a plan, 16-year-old, because we can't cash flow 4 years at an out-of-state school. It's going to look different for you. Thanks for the call, man. Great question.

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Thank you so much for having me.

How can we help today?

I just feel just so, so desperate for help right now. Um, I am in my mid-30s. I've been married for 10 years and we have 5, 5 kids together under 7. And, um, I thought we were doing really good with our baby steps, um, on 4, 5, 6, and then I just found out that he's been, um just hiding some debts that I didn't know was happening.

Oh man, how'd you find out?

Um, I just had a feeling something wasn't right, and when I asked about it, he was very defensive and, nope, nope, nothing. And I just had the boldness to keep pressing, and then he was like Yeah, like, this is why I haven't wanted to fully share an account, because my account is always negative.

And then what did he— did he actually give you the facts afterwards? Was he honest, or did you have to keep pressing?

So the numbers did change a little bit, um, and he did look a little scared. And I just tried to be very calm, very safe, so he would feel comfortable telling me the truth. And I said, I need, I need to see your account, which still hasn't happened. Um, so, and I want—

sorry, go ahead, go ahead.

And I, I said, I want you to see a counselor with me because we, like, we will figure this out and we need to stay together. Like, we have 5 kids. Like, I'm forever tied to him.

Okay, I'm gonna give you some hard reality, okay? How much, how much money does he say he owes?

It's, it's not much, but like every pay, about 40% just goes to whatever he's been spending. So I— his check goes into his account and 40% just gets eaten up, and then 60% I see for the household expenses and our All right, so, but he's still negative every, every pay.

Okay, so here's what you're gonna need underneath your feet, okay? Um, I call this financial infidelity. He's been cheating and lying to you, okay? And so first off, I want you to not think you're crazy for this blowing up your world. It did.

Yeah.

Okay, you're at home managing 5 kids, a family of 7, trying to feed them on allegedly 60% of the paycheck. Okay, um, you should feel like the rug got pulled out from under you because it did.

Yeah.

And you're also right to ask, what else have you been lying about? What else are you hiding from me? Because we had this little secret world that we built together and you were out of it. You stepped out of it. Um, you're not going to have any sort of ability to rebuild this marriage until you know how the depths of where these things go. I would recommend you pull a credit report today on both of you. Okay. He will have to pull his credit report. And if he says no, then that is, I can't think of a bigger red flag because, and again, I'm giving you the worst case scenario here. Okay. But when this happens in this way, it's not uncommon for what's being hidden is not just screwdrivers and motorcycles. But it could be hotels, it can be dinners, it can be addictions that you don't know about. Everything is now on the table. And so I want to pull a credit report and not just look at his account. I want to see who he owes money to. And I want you to pull your credit report. And this is going to sound caustic.

I want you to pull a credit report on all of your kids using their Social Security numbers because when we— people call into the show all the time and they don't realize how bad it is. And people start gambling or people get in over the head and they pull a credit, a credit card out on their 9-year-old and use that Social Security number to get a quick $1,000 here or quick $2,000 there. And so that will give you the big picture of who you owe to what, who your family owes to what. Hopefully you have nothing on yours and your kids have nothing on theirs and his is minimal. And what this is was a scared, embarrassed husband that took the easy way out, and he is ready to stand tall, take his medicine, and y'all can rebuild trust. Worst case scenario is you're in a way bigger mess than you know yourself to be in.

Mm-hmm.

But you can't, you can't go to an untrustworthy person and demand that now you be trustworthy and think you're gonna get any sort of nervous system stability from that because they've proven themselves to be untrustworthy over a long period of time. And so I need to see this stuff with my own eyes.

So how do I get a credit report done? Like, I don't know how to—

George has—

it's a simple website.

It's all free.

It's annualcreditreport.com, and you can pull free weekly online reports from all 3 major bureaus. It's Equifax, Experian, and TransUnion. And so you'll just go through the steps, enter it. You never pay for this. This is free. So just go to that website and you can get that all done. Annualcreditreport.com. And that, like John said, that will be the full truth and nothing but the truth. So regardless, I really don't care what he says. I want the reality of the situation. And again, if he's unwilling to do that, that speaks to much deeper things he's hiding. There's an alternate life here. And that tells me he doesn't want healing in this marriage if he's not willing to come clean, right?

And let me say this, I want to applaud you for, um, would you say you were calm so that he could feel safe enough to come forward? I, I want to applaud you for being in control, feeling big feelings but being emotionally mature. But you don't owe him dishonesty either, okay? Yeah, you're right to be enraged. You're right. You're right to be sobbing at the table because this man lied to your face and to the face of his, of y'all's 5 kids. And so you don't also owe him a silver platter that he can gently put out his receipts on.

Hmm.

Right.

And so what I, when I mean be, you're responsible for the emotional, like mature next right action. That means I'm not gonna hit him. I'm not gonna swear at him. I'm not gonna punch a hole in the wall. Everybody deserves dignity and respect, but you, you're dang well gonna know I'm pissed off. Yeah, you're gonna know that everything in my life, it— I'm questioning it now, right? And you're not crazy, and you don't owe him a false sense of yourself so that he feels comfortable coming forward with it, right? Yeah, that's not your responsibility to massage his ego through this.

Also, do you guys share an account, or is everything—

no, he wouldn't share So you have no access to anything financial.

He pays the bills?

He does pay the bills. We do have a joint, but he has his own as well.

So 60% he diverts to the joint account, 40% diverts to this secret account that's his?

Yes. Yeah.

OK, well, starting today, he's going to divert 100% into this joint account. OK. Or you separate if he's untrustworthy and he's going to destroy your financial life further.

Yeah. And Betty, that That's a great point that George brings up. You need to get really clear on your, what I call your or what statement.

Okay.

Because, because if he looks across the table from you tonight and says, I'm not pulling a credit report and I'm not giving you access to this account, period, you have to have your or what statement ready. Or me and the 5 kids are going to my mom's house. Or, well, okay, then I'll guess I'll just have to live with it. And you, you mentioned we have to fix this and stay together cuz we have 5 kids together. I need you to say, that's the picture y'all created. And that picture is over because of his financial infidelity. Now y'all have to rebuild something new. And I hope it includes him and you and those 5 kids in the same house, all working together to build something amazing. I hope that's the case. But you have to have the courage to say, or what comes next? And then be willing to, to live into your own boundaries there. If he looks at you and says, I'm not playing.

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Sarah is in Jackson, Mississippi, up next. Sarah, welcome to the show.

Hi, thanks for taking my call.

Absolutely. How can we help today?

So me and my husband got married 2 weeks ago and, um, we are debt-free. Thank you.

How was the honeymoon? Did you guys go on a trip?

Um, not yet. We've both been at work. We're both in the military, and so as soon as we get a time where we can take some leave, we're planning on taking a little honeymoon.

I can hear you smiling through the phone.

Well, thank you. We're both still very excited.

I love it.

Dude, I'm so happy. I love, love, love. I just think marriage is good, so good for you.

So what's your question? So, we have $98,000 in cash combined. We just finished combining our checking accounts and savings accounts. And so, we have that $98,000 in cash. And currently, we're bringing home $53,000. And we're trying to figure out how much money we should spend on a vehicle. We really need to upgrade one of our vehicles. So, out of that $98,000, we're trying to figure out what is like a good amount to put towards a vehicle.

And your annual income is $53,000 a year between the two of you?

Yes, currently. But we're expecting it to go up within the next 6 months.

Do you know an exact number or you're not sure yet?

In about 6 months, we're expecting to start making $100,000 between the both of us. Anywhere from $100,000 to $110,000.

Wow! That's awesome! So you're about to double your income.

Yes.

Okay. And what's the urgency of the purchase? Does this need to happen tomorrow or 6 months from now?

Um, it could happen 6 months from now. Um, so like currently, um, I'm driving a 2005 Honda Odyssey and it's great for getting me to and from work. And he has a 2014 Dodge Charger. And, um, we just know that, you know, they're both having some issues and we know that it's soon going to cost more to repair the vehicles than they're worth. So we've just been shopping around.

I would like you to know, I just learned about this in Sunday school, women who marry men with Dodge Chargers get an express pass to heaven. Oh, my husband's gonna love to hear that, because generally men with Dodge Chargers are not marriable, but you did it, and so congratulations.

Yeah, that's impressive.

I'm just playing, but congratulations.

Oh, here's, here's the parameter for cars. Number one, you pay cash. You're gonna do that, right?

Yes, we are.

Number 2, we're gonna buy used unless we are net worth millionaires to where we can stomach that major hit on depreciation that cars experience in the first few years.

Okay.

And then number 3, you want to make sure that all the things with wheels and motors in your life don't add up to more than half of your annual income. That's why I was digging at your income, and if it's gonna go up, well, that changes the numbers drastically because right now you should have no more than $26,000 in cars as far as their value goes. But 6 months from now, that number can change because it's a smaller part of your world. So now you could have $50,000 worth of cars sitting in the driveway. So that's where I'm trying to go, okay, can you wait 6 months to where you can get a nicer to you car? Because you have the money to do it. It's not going to hurt. You're not going to even dip into this $98K if you go spend $25K today.

Mm-hmm.

So what are you guys wanting to get? Because that really— basically, what is the car you can afford in cash today that you think would last you at least the next 5 to 7 years?

Okay, so we, um, we found— the reason we started asking these questions is we found a 2001 Ford Bronco with 12,000 miles on it for $32,000. Um, and so It's a little bit more than that $26,000, but we've got the $32,000 for it. We just couldn't decide. It hurts whenever you let go of $32,000.

Yeah, it will hurt. That's why I actually like it. Too many people, we've lost friction when it comes to purchases and all you see is a $400 payment that the car salesman worked out for you on his paperwork. What you don't see is the interest you're paying, the length of the loan, how you got screwed on the purchase, the extra warranties they threw in there because you're not going to feel it in your payment. And when you write a check for $32,000, you go, okay, let's treat this car differently. We're going to treat this purchase differently. We're going to go slower.

What is it about an '01 Bronco? Has it been redone?

Um, I'm sorry, it's a 2021.

I'm sorry. Yeah, okay.

I heard 2001 and I went, '21.' Okay. Wow, that's an expensive Bronco.

It must be like completely redone and restored. Those guys who go redo Broncos, they do amazing work.

They're awesome. 2021 Bronco, $32,000. Here's my catch. I would wait until your income actually goes up and this becomes sort of a celebration of your newfound income, but I would not buy it today because there's just too many variables.

Okay. Yes, that's some good advice because we're both so undecided about it. I told him, I was like, if we're having this much doubt about it, maybe we should wait Ah, he won the lottery marrying you.

Yes. Yes. And hey, George, tell me if I'm wrong here. I find that I get in trouble when I say I'm gonna, I have this much money to go, I'm gonna date myself. I'm gonna go, I have this much money to go spend at the mall. I've got $500 to spend at the mall. I need to get a pair of pants and some shoes and a shirt. I will figure out how to spend all $500. Where I've seen success is I have a boundary. I can't go beyond this $500, but I need to go buy a pair of shoes and some jeans and a shirt. And then I only spend a couple hundred bucks. You get what I'm saying? And so I would love for you guys to plan, to dream about what kind of cars do we want actually, and what cars are gonna last us for a while. And then over the next 6 months, you can keep your eye open for, because you might find this exact car in 2 months for $19 grand or $18 grand. And instead of saying, okay, we have this much to spend, cuz you'll figure out when it comes to automobiles, especially how to spend exactly 50% of your income.

And that's like a stretch goal, right? And you don't have to spend that much. And you two are awesome at driving used cars. That's, that's your life. It looks like your, your identity isn't in them. And that's awesome. Um, I would, I would sit down and say, what do we actually want to have together? There and then plan that way.

Okay.

And let me tell you, a $3,000 repair, as much as it would suck on a really old car, is still so much cheaper than $32,000. And so that's what I want to encourage. Too many people go, well, the repair— I had a repair, so we had to get a new car. Didn't want to deal with the repairs. And they just justify it in their minds thinking this thing's a clunker. So even if you have to buy yourself some time for the next 6 months until your income goes up and this becomes a no-brainer, Uh, it's worth the patience to do it right and go slow, but you're all— all things considered, it's all green flags in my book.

Okay, awesome. Well, I'll be sure to tell them, and, and thank y'all. Y'all definitely brought some clarity to the situation.

Happy to do it. Thank you for your sacrifice and service to both of you.

Oh, thank you. We are so glad we get to do it.

Yeah, and the last thing I'll tell you is you got the Honda, so you're probably gonna be driving that to the apocalypse.

I do have one rule in my house the wife should be driving the nicer car. I just, I don't like it when the guy drives a nicer car.

I'm with you. That's always, I've always had a weird thing about that. It just feels always, always, always.

So especially if she's, you know, toting the family around and the guy has like a sweet sports car that's just for him. I'm like, all right, you're a grown man.

Dude, 1000% with you.

The other thing is, and John, people get screwed on this. They go to the dealership and the dealer says, hey, you know, "5 grand more, we can get you into the brand new one. We got on the lot, look at this, got these extra features. And hey, if you do the financing, we'll knock $1,000 off." Yeah. Now all of a sudden you are buying a brand new car that was way more. They suckered you into the warranty and the paint protection package and the giant dock fee, dealer fee they just throw on there. And you're so starry-eyed, you just want to get out of there after 6 hours and go drive this thing.

And by the way, that $5,000 extra you spend on the new one one, you might as well set it on fire because the moment you drive it off, it's gone. You just lost it. It's now worth what you were about to pay for the used one, right?

Yeah, a new car will depreciate 10% the moment you drive it off the lot.

There you go.

And within the first 5 years, 60% on average. Yeah, that's pretty wild.

I love, love, love buying cars that are 5 years or older because of the, of the, the depreciation has burnt off so much.

Yeah, my last car, one owner, 4,000 miles on it, and I got 26% off of what I would've bought it brand new. So I went, all right, I'll deal with that. I'll take, and you know, I could have bought it new, it would've been fine, but I just like going 25% off feels pretty good.

And I've got cash, so, and I'm not afraid to buy.

You gotta have walkaway power. That's the key. You walk in with a check of here's our budget, either make it work or we'll go down the street. And eventually if they want, you know, to feed their family, they're gonna go, all right, we'll take it. Don't let them bully you, focus on the out the door price, Have your principles and values, stick to it, and you will make a wise decision when it comes to those cars. Love it.

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Welcome back to the The Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell, joined by bestselling author Dr. John Delony, and we're taking your calls at 888-825-5225. Rochelle is in Sacramento up next. Rochelle, how are you doing?

I'm doing well, how are you two?

Fantastic. How can John and I help today?

So my husband and I are considering purchasing a new home. Our house is currently up for sale. We've identified a property that we would like to purchase with the equity from the sale of our our current home, we would have a rather sizable down payment, looking to put down at least 50, if not 60%, on a new house. My husband has brought up the idea of getting a first lien HELOC with a sweep account versus a conventional mortgage, and he's explained to me that with this first lien HELOC with a sweep account, rather than getting into a 15 or a 30-year loan, we would be able to pay off a $400,000 mortgage in 8 years.

Sorry, I'm wondering, is he clarifying?

No, the speaker came on his phone. I apologize.

Oh, it's all good.

Um, so I was wondering, it sounds great. I've never heard of this before, so I was wondering what you guys thought about that.

So this in the, in the TikTok world is called velocity banking. He may have heard about it on social media. I don't know where, you know, this is it, but it's a trend where they call it like a mortgage accelerator. And the idea is there's this revolving line of credit, almost like a big credit card that's secured by your house, uh, but it's your only loan on the property. So you're right, it's your first lien in that there is no mortgage there. And so then what you do is you dump all of your income into this HELOC, draw it out for expenses, and if you do it perfectly, you can save a little bit on interest, which supposedly pays off the house faster. So that's what he is wanting to do. There's still a lot more risk with it, and it sounds sophisticated, and it's more complex, and that doesn't make it better. So have you guys priced out a traditional 15-year mortgage on this?

We've priced out a 30. We have not priced out a 15.

Okay, I would price out a 15. And see if you guys can afford that payment where it's a quarter of your after-tax monthly income. And if not, it tells me the house that you're looking to buy is too much house.

So your recommendation would not be to do a first lien?

No, I wouldn't do it with a sweep account.

No.

And I think the way he found this was probably online. And there's a bunch of people out there who are proponents of this. And again, it's called velocity banking. You can look this up on social media and it's gonna be some slick dude telling you how this is the hack. Here's the only hack that works. You get a 15-year mortgage, which is gonna have a lower interest rate than either of these. And then you pay it off aggressively.

Here, here's the thing that if you take out a, if you have a $400,000 mortgage and y'all put down 50% and you have $200,000 left, there is no secret loan that makes you not have to pay back $200,000. Plus interest. And so the only true way, like, so like we can do a 30-year note, but we can pay it off in 8 years. You're still gonna pay back that money plus interest. And so if y'all wanna pay it off in 8 years, that's amazing. Pay it off in 8 years. But that just means every month you're gonna be paying more towards the principal balance to pay it off faster. But there's not like a secret loan you can do. That you pay back $100 grand to pay off $200,000. You get what I'm saying? Like the whole hack is technically you can get a lower interest rate and technically you can take that lower interest rate that you're paying and pay off more principal. But the same thing applies, just paying it faster.

Understood. The way he was explaining it to me, and this is kind of where my brain starts to shut down and my eyes glaze over.

Um, same girl, same, the finance.

He's more of the finance person. He was explaining to me that it gets paid off quicker because they compound the interest daily.

Yeah, the way it's calculated, that's where the interest savings come in. But there's still all of the elements of a HELOC, which is a variable interest rate, which means the payment can go up. The banks can freeze or call the line, which adds more risk to it. It's a revolving line of credit secured by your home. And so all of that just makes me go, why are we doing all this? Why all this gyration? To maybe save a little bit of interest.

I, I 100%, especially with all the volatility in the world right now, like go back 10 years in your life. Can you have imagined now?

Right?

No, none of us could have. And so with all the volatility in the world, the chances of me touching a variable interest rate is zero.

Right.

Right. And so you can get in— especially if you got in today and the banks— and suddenly Jerome Powell comes up tomorrow and says, hey, because of X, Y, or Z, we're raising interest. Like, man, y'all are on the hook for it, right?

And there's far more of these ending up in foreclosure versus a 15-year mortgage. And so that's where I go, okay, why aren't we doing a 15-year mortgage and just putting extra on the principal? It's the exact same thing without all the extra risk and complexity.

I'll, and I'll, I'll go one more. I'm putting my baggage out in the world. So this may not be you and your husband, but if you give me a revolving line of credit and suddenly I don't like my floors, I'm gonna get new floors because it's not real money. It's just coming out of, coming out of the revolving line of credit. Oh, we need to fix this cabinet. We need to get a new fridge. Let's just go.

It's monopoly money.

Let's just go ahead and do it. It becomes not real money. And, uh, yeah, I, I'm just gonna lock myself in and pay it off. And if I want to accelerate it and pay it off faster, I'm gonna do that.

That.

I don't know that we can convince your husband, but I hope we convinced you, which I hope puts enough of a wedge between you guys that you don't do this.

And here, here's my rule of thumb, George. If somebody's explaining something to me, you know who I learned this from of all people? Ashton Kutcher.

Not on my bingo card.

And here's why. He was talking about, somebody was asking him once on a panel, why do you seem to have so much success with these companies you invest in as an angel investor? And I forgot all, I think Airbnb and Popchips and, and Uber. So he got in on the ground floor of all these things. And he said, he, I think he dropped outta high school or maybe he finished high school but didn't go to college. And he said his one line was, explain this to me like I'm a high school dropout or explain this to me like I'm a high schooler. And if they couldn't do it, I didn't invest. And so for me, when somebody's trying to explain to me a thing we're getting into and hey Deloney, I want you to invest in this thing. If my eyes start glazing over that, I'm out. If you can't explain it to me very simple, here's why, here's the terms, here's the payout, or here's the risk we're all gonna take together. If you can't do that in a sentence or two, I'm, I don't wanna participate in it.

Yeah.

Because, because it's not, it's not worth all the complexity. Cuz now the more variables, the more fragile the whole system is and the more dependent it is on other people to do what they said they're gonna do. And that what those other people said they were going to— I'm out. I'm out. It's too fragile.

Yeah. Well, there's a lot of people that talk about these things, and I see very few people actually doing it. I've never heard of someone saying, yeah, the way I paid off my house early was I did velocity banking.

I know zero people who have told me that, that line.

There's a lot of people talking about it, though. And so that tells me something. It's— it gets the clicks and the views, but it doesn't work in reality. And you don't see the people who foreclose on their home. They're not sharing that on Instagram. They're only sharing the wins. And so I'm always very cautious with any financial advice. On the internet that I don't understand. And we always tell people, don't invest in anything you don't understand. The same applies to crazy mortgage hacks. Here's a hack: get as small of a loan as possible on as short of a term as possible and pay extra towards it. I can understand that. I could explain that to my toddler and she would get it. There you go. So the real question is, how are you going to approach this with your husband in a way where you come to a compromise? And I hope that compromise is go with the thing that you both understand, that you both can handle. Hey, George Campbell here. Let me pull back the curtain on something you may not know. If you're in debt and collectors are threatening lawsuits, the worst thing you can do is ignore it.

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Today's question comes from Carlos in Texas. He says, my preteen son has his own YouTube channel and he's on pace to earn over $5,000 a month soon. Should he be tithing on this income?

Come.

How much should I encourage him to save or invest versus spend? He understands taxes, so we've got that part down. Left to his own devices, of course, he's a preteen kid, he would buy all the Legos in the world. Yes, of course. That's awesome.

This is fantastic.

That means he's a good, regular preteen kid and he's an adult in his life to help steward, steward how he spends his money.

Yeah. So he's making, I mean, if he's on pace to do $5,000 a month soon, that's $60,000 a —yeah. That a preteen is making. Right. Which tells me he's what, 11 or 12? Possibly. That's pretty nuts.

That's, that's great. So like right off the top, we can just do the math real quick. Um, some people, and I'm assuming tithing, it means you're, you're a person of faith. And so tithing, some people tithe off the top line, meaning you would tithe at 10%, $6,000 a year if you're making 60. Some people tithe on After taxes are gone, what do I, what am I bringing home that I can spend? They tithe off that. Every one of those things is a matter of you and your spirit. But I do, George, think it's important to teach kids, we save a piece of our money, we give away a piece of our money. Even if you're not a person of faith, generosity has all, I mean, it's wired into us. It's part of our psychological and emotional and spiritual health. You have money to spend. And George, I like the idea with a preteen kid, um, when it comes to spending. So after you've saved a chunk of money, after you've given a chunk of money, I like to let young kids, my kids kind of buy what they want to buy because they, that's the way they learn, oh, I wish I had that $100 instead of that completed Lego set.

Or maybe they get that completed Lego set and it's great and they learn what they like and don't like. But man, watching my 10-year-old navigate Hey, I got $50 and I wanna go buy a thing. Are you sure? Yeah, I really wanna buy it. And then the next time she wants to, she earns, saves up some money and she wants to buy something, then we could say, hey, where's that thing you bought last month or 2 months ago or 3 months ago? Oh yeah. Do you really want that?

No, I don't want that. They sort of learn.

So you, they learn by doing temporary effects of stuff. Yeah. Telling a preteen you don't really want those Legos. They're like, yeah, I do. And so I like letting them, when they have their spend money, kind of let 'em buy what they want to buy. Unless obviously not, not grand theft auto or something, but like within your family's values. But I like them to learn that lesson, but they should be saving some, they should be giving some. And that's, that's gonna be a personal decision. Yeah.

And at this age it's less about, you know, you gotta be legalistic about these percentages. It's more about, hey, are you kind of budgeting this money like a business, like a profit and loss statement? Right. So I would have him, jump on EveryDollar, make a free account, and put his $5,000 there and say, "All right, I'm gonna give 10%, $500 to the tithe. I wanna invest $1,000." Before I ever get to enjoy the money, I'm gonna sort of eat the vegetables, do the things I know are good for my future, good for me now, invest $1,000. Maybe you save $2,000. He probably has some goals to like get a car one day when he's 16. And I would spend $1,000. I feel like it's a reasonable amount out of $5,000 for a kid with no expenses. Let him do it. Let him see what's actually worth putting his money into and what's not. And even reinvesting into the business. Yeah. And maybe you wanna upgrade equipment.

That's right. There you go. And I, for a young kid, especially, I think for adults too, but for a young kid, I think it would be valuable. Let's say he's 12 to say how much, if, if you make 60 grand, which by the way, if you're living off YouTube, they change their algorithm every other week. And so best of luck to you, but College. What would we want to put $150,000 in a college fund? So let's reverse engineer that by month. What would we need to start saving now that would get us that amount of money? You want a car when you're 16, you're 12 now. So that's 4 years away. Let's say we want $20,000 for a car. What would we need to start saving now? So creating long-term sinking funds will teach him at a young age, like, okay, if I want something big like college, like a house, like a car, I gotta start planning now for those things when I get there.

And if you can teach him about taxes, about quarterly estimated payments, documents and self-employment tax, 15%. So he's won. Like, as soon as that check hits his account, 30% goes into a savings account earmarked for taxes. Yes. If he learns that now, he's never going to be calling in saying, I owe the IRS $150 grand because I didn't realize I owe taxes on this money. That's adults calling to the show doing that. So yeah, 12-year-old can figure this out.

I think I heard Dave say this once, that one of the greatest tricks the government ever pulled was the automatic tax deduction. That if every American had to write a check every month for the taxes.

Show up at the tax office and hand over a check or cash.

We'd be paying a lot more attention to what the government spends, right?

We'd be throwing some tea in the harbor again, I think.

Correct. So you want to change culture, you want to create a generation of libertarians, have your 12-year-old start making some money and saying, oh, you made $5,000 this month, $2,400 not yours. Like, why not? Well, you know. Ouch. We gotta keep these pet projects going.

That's a great problem to have. And again, we don't know how long this is gonna last. So enjoy the ride while it lasts and make sure that he keeps his head on straight and watches his mental health 'cause YouTube can be a wild place. All right, John is in Orlando up next. John, welcome to the show.

Hey, thanks for having me guys. How you doing?

We're doing great. What's your question today?

Okay, so I'm 52. I have a 9-year-old son I have 50/50 custody of. I make about $65,000 a year. 25% of that is being garnished Um, and that'll be going on for another year and a half. I have an additional $25,000 in IRS debt and $25,000 in credit card debt. Um, I have just come upon and found these trading cards, baseball cards that I had put away, and they are now worth a lot of money. Um, they're liquid up to about, I'd say over $200,000. Wow. Oh, I don't— yeah, they're like Shohei Ohtani rookie cards that are signed. Um, I don't have any savings. Um, it's a long— the divorce was bad.

Um, yeah, you, based on what you just told us, you went through a pretty rough season, huh?

Yes, it was really bad. I lost my dad, I lost my job of 12 years, then I got divorced. I bought— my son was born in in, um, I don't want to give the exact date, but in, in, in December, I lost my job the following January. I bought my first house 6 months before that that we moved into. And then I got divorced 2 years later. It was just, uh, I lost my dad, um, 9 months before my son, 10 months before my son was born. So it was a bad time. Um, so anyway though, um, made bad choices. The 401(k) was emptied out when I lost my job. I stayed at home. The best thing that happened was I stayed at home with my son for 9 months, and that was a great time, but we went through my 401(k) at that time. And due to that, and because I was in a different state at that time, they wanted the taxes on that money from the 401(k) distribution that was early. And I had also inherited some money from my dad, which they wanted from that too. Unfortunately, I wasn't in Florida at the time or else I would have been fine from what I've learned.

So anyway, what I want to ask is, I have this debt, I have these cards that are probably going to be even worth more money down the line, but I have this debt now and I want to leave something for my son. Um, and I can't just keep living paycheck to paycheck right now because it's— I'm like just at the end of it. I just can't do it anymore. Yeah.

So I'll tell you this, John, I'm gonna solve for peace in the present, not go, man, what, what could I have if I hung on to them for 5 more years? I'm paying off the debt, all of it. That's $50K. I'm setting up an emergency fund for myself of 6 months of expenses. I'm going to fully fund a Roth IRA for the year to set myself up for the future, and then maybe have some left over to enjoy and spend, and set aside some for taxes because you're going to have capital gains on that.

Yeah, my work does offer 4% match, which I haven't signed up for yet because I didn't know if I was going to go bankrupt before I realized what I had. Not anymore.

This is your fresh start, man. I would pay off the debt.

They offer the, the 401k pre-tax or the Roth IRA up to 4%. You can do the Roth IRA.

I mean, I love the after-tax option because then it's going to grow tax-free for the rest of your life. And so I would definitely pay off the debt, get the emergency Get the 4% at least. Fund a Roth IRA. And, uh, if you hang on the line, I'll send you my book, Breaking Free from Brokerage, to walk you through that whole plan. But I would sell these cards to give yourself a fresh start.

Never look up their potential future value again. Sell 'em and be done.

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Jordan, welcome to the show. Thank you. Thank you.

Sure. How can we help today?

Hey, I'm just trying to figure out how I get out of this momentum of just Just wanting to keep going, um, just with my life in general. I'm at like a point, I'm at like a breaking point in my life where I'm currently stuck in the city I'm at with the job I just, I'm not good at, and I'm 3,000 miles away from home, so it's kind of been a little hard for me. Yeah.

Hey, do me a huge favor, talk right into the phone, brother. Um, what, why are you stuck in Miami.

Um, so I recently bought a car from a dealership that they claimed had no problems up in Idaho, and I had a friend who does door-to-door sales, and he's like, hey, let's do some sales with me. I'm like, you know, what's gonna hurt doing that? I reached Nebraska, my car has transmission problems. I take it to Subaru, they can't buy it off me. So I had to leave it at a storage unit, fly out down here with the rest of the money I had. And now I'm just struggling with sales. I just, I'm just lost of what I need to do. Plus I'm in debt.

So, but I mean, when you say stuck, if you legally move tomorrow, yeah. Could you get a bus pass or could you like like just suck it up and call your parents and say I need a bus pass home and go home?

I don't have parents. Okay.

Could you work really hard for the next 30 days and get a bus pass and go home and get out of this mess?

That's, that's the issue. It's like, I feel like every, everything I do, I got, I got, for the past week I've been, I've been busting my butt. I've been out there 10, 12 hours a day and trying to make these sales. Doing door-to-door sales? Yes, sir.

What are you selling?

Pest control.

Are you making money doing it? What's your average week or month look like?

Um, so the average week is around $4,000. That's just in like, um, sale commission, which is only like $1,000.

Personally. $4,000 a week?

Um, for, um, I guess like the market, it's based on the commission. So we've sold $1,000, but that's for the company.

Okay, what are you taking home though? What ends up in your bank account at the end of the week?

$1,000 a week?

A little less, probably like $600.

So you're making about $2,400 take-home pay doing this? Yes, sir. Okay, and that's gonna stay that way for the foreseeable future? I mean, this is you busting it. Yeah. For $600 a week. What's stopping you from going to find a different job in Miami?

Um, well, the way they have it around here is there's those 5— it's like a hotel room with 3 rooms and it's just a rent problem. And I don't have— if I tell them like, hey, I need to find them a job, I don't know if they're gonna want me to stay. So it's either—

so you're living rent-free as part of the deal?

No, it's $800 a month.

So you could find a couple of roommates and go elsewhere.

Yeah, I think you think you're in hand of servanthood, man.

Right. I don't think you're as stuck as you think you are. I think you're just depressed. Yeah. Yeah. And you don't have the energy to get unstuck.

Right. Where's your parents, brother? What happened to them?

They passed away. When did they pass away? Last year. Okay.

Do you have siblings? They also passed away. So you lost everybody in your family?

It was a hit and run with a drunk guy. Bites on my truck.

Man, I'm so sorry, brother.

You got any friends in the area?

Uh, I'm with my best friend. He's the one who's kind of like— because I, I've been working in Idaho, um, just as like as a manufacturing company doing, um, like AR triggers just for a, you know, 16-hour, and it was miserable. And he was like, dude, we gotta get you out. We gotta, you know, get some life back into you. And I was starting to believe him because it's Miami. I mean, who doesn't have fun in Miami? And I was just like, yeah, man, let's do it, whatever. And then, as life can't get worse, this dealership screwed me over with my dream car that I saved up a lot to buy.

What do you owe on the car?

$21,000.

And what's it worth?

About $25,000.

Is that in its current condition, it's worth $25,000?

No, in its current condition, it's probably worth like $8,000 because there's transmission problems.

And you can't afford a new transmission, obviously. No. What other debt do you have?

And I'm living in a storage unit in Nebraska.

What other debts do you have?

I have a personal loan for about $3,000. I was hoping to use that to kind of just get me a little push forward while I'm in Miami. Um, I mean, so far it's not, it's not going horrible. I just need to find a way to get myself out of this mentality where I'm not good enough to, or where I feel like I'm not trying enough to to make these sales or keep going, bro.

I, I know you feel like you're at the bottom right now, but I'm telling you right now, I've been doing this for my whole career. You— it's— you had a massive loss in your life, and you got to go sit down with somebody. And I know you can say you don't have time or you don't even have the resources. I'll give you 6 months free with BetterHelp, but I think you're going to need some in-person sitting with somebody to metabolize the amount of grief and loss you've, you've experienced in the last year. Right. And I'm just telling you, therapy changed my life. I'm still here because of it, and it's worth it, and you're worth it. But you gotta go sit down and talk to somebody. You're not gonna be able to power through this because there's nothing to power through.

Right. It's kinda like treading through mud with—

That's right. That's right. And another loan's not gonna get it.

A dream car's not gonna get it. Even another job isn't gonna heal it.

Yeah. 16 hours. Another job might give you some margin. It might keep you from feeling like you're living in a failure factory, right? I couldn't do, I would be terrible at door-to-door salesman. I would do it if that's the only way I could feed my family, but I'd be terrible at it. I don't want you doing something that you're terrible at that is just compounding this vision of yourself in the mirror. Yeah.

And it's like, I do have a dream. I wanna help people. Like I wanna, like I've always talked with my parents about this because they've always noticed it about me. Me. I want to like, I want to help people, especially literally the situation I'm in right now. Like, that's what I want to do. I want to, you know, be able to tell my story or, yeah, you know, help them. So I want to be in psychology. That's awesome.

But listen, you, you can't give what you don't have, right? And so the best therapist I know, as friends and colleagues, myself, the people who are best at helping others have had their journey getting the help they needed.

Right. Right.

And it's you just opening your hands up saying, okay, I've tried a new car, I've tried a new job, I've tried a new state, I've tried a new location. It's time for me to get with a professional and face this head on.

Right. Right.

But I would tell you, I don't think you're broken. I think your body is trying to take care of you, man. And it's just saying, hey, we got a lot to metabolize and a lot to process and a lot to walk through. It sucks. Oh, so much, brother. Right. Okay. So hang on the line here. I'm gonna hook you up with, um, 6 months of BetterHelp licensed counseling so you can get started today. You can reach out to them today. Um, and then hopefully they can connect you with some resources in your local area.

Um, I'd also like to get 'em a copy of your book, John.

Yeah. I'll send you Building an Unanxious Life. I'll send you the audiobook and the regular book. Um, maybe you can listen to it while you're walking, um, door to door, but it's not gonna be the thing that fixes you in this moment. I don't think you're broken. I don't think you need fixing. I think you need healing. And I think you need somebody to sit with you for a season. But man, we're praying for you and we'll be walking along. We'll give you the resources we got. We'll send you EveryDollar too to get you, help you get your money screwed on straight. But man, for as hard as you're working for $600 a month, maybe a fast food job or something would help.

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Sean is in Daytona Beach up next. Sean, welcome to the show. Hi, thanks for having me. Absolutely. How can we help today?

All right, so, um, I'm, I'm a merchant marine. I've been a merchant marine for about 20 years.

Hey, Rich, do me a huge favor, Sean. Talk it— talk directly into the phone for me. Sure.

There you go. I am a merchant mariner. I've been one for about 20 years Awesome. Um, I, I have multiple jobs, but my primary is in the Merchant Marine. My other is, uh, I'm an over-the-road trucker and I do construction and that sort of deal too. But, um, basically what ended up happening to me was I was married for 10 years and I had moved up pretty high on the ships. I was doing about $110,000 a year for myself. And then my ex-wife wife was doing an additional maybe 50 or so. So we had the bills associated with the $160,000 a year household. Um, during COVID I got forced to step away from my job because I didn't get vaccines because I didn't trust it. And, um, also I wanted to retire to be home with my young child. So basically, I forcibly retired with about $100,000 in the bank. And then we got hit by a hurricane and I had to do a second mortgage on the home from the SBA to pay for the roof, the fence, and everything that got destroyed. And then we got talked into the solar panels. And while I was home, I was working 10 jobs and making about an eighth of what I was making on the ship.

So my ex-wife decided that because— and this is what she said to my face— because I was making less than her, she lost all respect for me as a man. And then she cheated on me with someone who made way more. And yeah. So the divorce happened, just settled the middle of last year, and I went back to the ship because I was not mentally healthy. And in order to keep my kid through the divorce, I basically had to swallow all of the bills for $160,000 a year household. And by stepping away, I lost my promoted position. So now I've gone from about $110,000 a year personally down to about 74. Um, so I have about $250,000 worth of debt, and, um, almost all of it is in the household. Um, but I, I'm just so stressed. Yeah.

All right, so how can we— you've been through a lot. Um, how can we How can I help?

Well, I, I just think I might need somebody to tell me that my, my 5-year plan is somewhat workable and that I'm not an idiot, but it's—

5-year plan to what? What's the goal for you?

Um, to be able to actually retire and actually go see my son. How old are you? He's 6. But he is barely older than me in the past. I'm 37.

OK, why do you need to retire in 5 years or else? Where did that come from?

Well, I don't need to. That's kind of what I would like to do. At least retire from this career. And do something else.

When you say retire, you mean you have enough assets that replace your income to cover your bills and lifestyle? Correct?

By, by retire, I mean, um, be able to shift, um, into a career where I can remain in the area of my home.

Got it. So you just want like an encore career that keeps you local, right?

Okay. I mean, that's—

I'm an over-the-road trucker and a merchant mariner. Okay, here's the thing. I, I, again, I know these conversations are really compressed. And so what I'm hearing is, and none of your plan is gonna work unless you make this change. Okay? Right. You have to take ownership of all the choices you've made. Cuz the way you told that story, other than your wife being like a horrific human, human, right? Other than that, every choice you made from, I had to get a second mortgage. I got talked into the solar panels, even though I had $100 grand in the bank. I had to do this. I had to do that. I chose, like, I want you to take ownership of, I made some choices that have landed me here, or I made some choices that gave me no margin. And then boom, I got hit with a literal hur— hurricane and a hurricane inside my and I had no cushion because I made some choices. And when you take that level of ownership, it's— it— this is all neuroscience, brother. It puts you back in the driver's seat of your own life, and it begins to—

I'm fully aware that I made some mistakes here.

Okay, awesome. So I, I'm hard-pressed to believe that a guy that works as hard as you do that has the skill set you have could not find a $75,000 a year construction job or a building job in your local community. Am I crazy?

Uh, no, you're actually— that, that doesn't work. I have looked. There's very few jobs in my area that would pay that without forcing me to go get an entirely different, uh, skill set.

Okay. You have like 7 skill sets, get an 8th one. Yeah. Yeah. What's stopping you? That, that's what I'm saying.

Like the picture you had of your life, it's over now. It's ended. Right. And so the question before you is, do you want to keep do living a life where you won't see your kid till you're 11? And I'm not, I'm not judging that. I just want you to take ownership of this is the choice I'm making, or I'm gonna sell this house and get a 1-bedroom apartment because this dream is over.

And well, I didn't really get to that part, but, uh, currently the house is on the market. Okay, great. It should sell somewhere between $215,000 to $230,000, which would give me roughly about $10,000 to $15,000 cash in hand.

Amazing. Is that after you pay off the solar, pay off the second mortgage? Yes. Awesome. Okay, great.

Amazing. I'm proud of you for that.

That gets rid of a large majority of the debt. What other debts are there in this $250K?

I just managed to pay off $25,000 worth of credit debt while I've been out here.

Amazing. That's awesome.

So I've still got an additional $5,800 worth of credit card debt. My ex-wife's car loan is still in my name, but she pays on that, thankfully. But basically what I'm seeing for my future here is I need to be a merchant marine because there's some my child's health insurance free of charge. No nothing. Got it. So that saves me—

I, I personally, I, I personally, like, you just laid out a map and I'm, I'm hearing a man stand up and get in the driver's seat of his own life. I'm gonna sell this house and, um, I'm gonna have $15 grand in the bank and I'm gonna pay off this $5,800 credit card. I'm gonna owe nobody anything. And then, dude, if you go make $50,000 as a school teacher it will come with health insurance. Personally, I'm gonna, I would choose less money and more time with my kid than I would never see my kid for this quote unquote free healthcare. That free healthcare is coming at a major cost to your relationship with your son, to your psychological wellbeing, to your overall financial wellbeing. And so you make some sacrifices like you're making right now. I'm gonna be a one-bedroom apartment dad right right now. That's the world. That's the cards I've got. And I'm going to be a teacher and on the weekends I'm gonna drive trucks. And in the evening I'm gonna repair, I don't know, people's front porches or something. Cause you've got that skillset. I'm gonna do what I gotta do to scratch and claw.

I'm telling you, man, that kind of hard work gets rewarded over time. But you're, you're, it's again, it's, you're making some amazing sacrifices and also So another foot is still trapped in this, well, I guess I gotta— and dude, I've got personal family and friends who are locked into a forever blue-collar life that's killing them because I get a good deal on health insurance or whatever. And that's just not a trade.

This $160 grand lifestyle, your income got cut in half. Yeah, you have a $74,000 lifestyle now. And so you're gonna have to make changes to your life, your budget, your career to have this life you want. We're rooting for you. We think you have more agency than you think.

Yeah, and you're doing it. You're doing it.

Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell here with Dr. John Delony, taking your calls at 888-825-5225. Carson is in San Antonio up next. What's going on, Carson?

Hi, thank you for answering my call. Sure. Um, uh, so I learned about Dave Ramsey last year and I've been following the debt snowball. Uh, I paid off over $40,000 of credit cards, um, cars, and wedding debt last year. Congratulations, man! Oh, thank you. Just breeze by that. Thank you. I only have two debt left, but these are really big. So I have $180,000 of student loans and also $180,000 of mortgage. Uh, they're both at 5.875%, so it's a bit of a marathon to pay these off. But, um, I did learn that my family has a history of cancers, like lung cancer, thyroid cancer. My dad actually went from seeing oncologists telling him that he doesn't have cancer to battling stage 4 lung and brain cancer a year later. Oh, I'm sorry. It's okay. But I also— his cancer was all genetics. So, um, I guess my question is, I'm a little bit scared, uh, or I'm scared to death that something might happen to me before I finish this marathon, right? And I do want to leave something for my, uh, wife and daughter. Um, I know Dave Ramsey wants, uh, he says to like pay off all the debt besides the mortgage first.

I just wanted to know, uh, because the federal student loans would potentially die with me if something happens to me, uh, so I just wanted to see if it's reasonable for me to potentially pay off, um, my mortgage first before my student loans. Wow.

That's actually, you know what, that's a good question. I will celebrate that question. That's an interesting dilemma that you find yourself in, especially because the numbers are so like, they're exact, right? Interest rates, dollar amounts, exact. How much do you make a year?

I make $130,000. Okay. Yeah. As a pharmacist. Yeah.

And how old are you?

I'm 28. Okay.

What ages did your family get diagnosed?

So my dad got diagnosed when he was 50, but I also have other family members that got diagnosed a lot sooner, like in their 40s and so on.

Okay. Because my hope and prayer is that you never get diagnosed, but also that if there was, if this was to happen, this is a decade or two or three from now. And therefore your student loans will be paid off if you stay at the pace you're, you're going for. Would the student loans be paid off in 4 years? Yeah, I hope so.

I'm trying my best here.

And then the mortgage is another 3 to 4 years as your income's probably up by then. Yes. So we're talking about 7 years, you're completely debt-free, house and everything, by 35. So that's the kind of goals I would be setting versus which one should I pay off. I still feel like the debt snowball because of— you probably have multiple student loans, right? It's not one giant one. Yes, that's correct. So freeing up those payments along the way makes me— I'm still team student loans, but I totally think your logic here is justified to grapple with it. I assume you don't have term life insurance. Did you try or did you not qualify? Uh, no, I haven't tried that yet.

I actually just heard about that not too long ago. I was looking into it still. Today.

Today, go to zander.com and apply and be honest with, you know, your health situation. We're not asking to commit fraud here, but if you can get term life insurance, you have solved the problem of what happens if something happened to me, how would my wife pay the mortgage? Boom, problem solved. 10 to 12 times your income in term life insurance on a 15, 20-year policy will do the trick.

Yeah, so you make it— this makes me feel like I get my life a little bit of meaning if I were to like, uh, have left something behind, you know?

Did your, did your dad pass away? Uh, not yet.

He's still battling cancer right now.

So I want you to remember what I'm about to say for the rest of your life. Okay? Okay. Are you a good husband? I try to. Are you a good dad?

I try my best to, yes.

Then you've left something amazing. Uh, thank you. And we have a, uh, what, no pun intended, but we have a cancer in our culture, which is we ask somebody, what are you worth? And we answer that with a number. And I think that's insane. It would be, it would be amazing to be 35, 38 and owe nobody anything and have a paid-for house for your family. That would be awesome. Awesome. And the truth is you dug a $180,000 hole for your family in pharmacy school. So I think you have a responsibility to knock that out. Okay. Also, this is me playing devil's advocate all across the board. Okay. Mm-hmm. I also don't trust in 10 years that that's still gonna be the case. At some point, the United States is gonna have to deal with a $2 trillion hole that is student loans, and they're gonna have to deal with with their $30 or $40 trillion deficit. It would not surprise me in the least. They've already made ba— uh, student loans not dischargeable by bankruptcy. It would not surprise me if they stopped them dead on. I mean, that, that they go away if you pass away.

Okay. That I have never even heard of that being a possibility, but here's what I'm trying to get you to do. Projecting 10 years out on what might is, is a good idea. But to drag 10 years from now, the crisis that might exist in 10 years and try to solve it in today, that is what we call that anxiety. Right? And so the fact that you're a good husband, the fact that you're a good dad, you've been burning through this debt, getting your family taken care of, and you're on a trajectory in 7 to 10 years to owe nobody anything, including your home. That is a huge, huge win. And you have some signals that you're gonna pay attention to. So you're gonna be one of those guys like me that goes and gets cancer screenings every year. I'm gonna pay extra close attention to my blood work, and I'm watching the AI advancements on cancer detection close, very closely, and they're getting astonishingly good at catching stuff really, really early. So I can imagine a world in 3 years and 4 years where you're able to know in 10 years, in 15 years, I've already got signs that we weren't able to detect now.

All that to say is, if you're going to imagine the worst case scenario in 10 years, the honest thing is to also imagine the best case scenario and then make informed choices in the present. Do you get what I'm saying? Yes. Yes. And so, man, recognizing I have a heightened risk of cancer because of the, the set of genes that I I got. That is you being honest with reality. And I'm gonna take every responsible measure I can. Also not counting on the government to do a thing in 10 years. That's 2 elections from now, brother. You tell me, right? Who knows? Right? So I'm gonna see that I, I'm not gonna rely on that either. Mm-hmm. And I'm gonna get really good life insurance with George and I both have with Xander. I was with Xander before I started working at Ramsey cuz I I trust them, right? And I'm gonna work really hard and get this stuff knocked out.

Okay. So I suppose I will pay my student loans first. I, I would.

And here's, here's one other variable. What happens if, and again, I'm, I'm just being ridiculous now, but what happens if your pharmacy closes or sells? If you have to move to Nebraska to do pharmacy there, the beauty of a pharmacy degree is you can do it anywhere. But that student loan's going to travel with you. Your mortgage won't, right? And so let's take care of the thing that's going to follow me around the longest, and let's knock that sucker out, and then let's get our house taken care of. But man, really great insightful question.

So your homework, one thing you do right, right as soon as we're done with this call, go to zander.com. You're looking at $1.5 million in a term life policy, 20 to 25 years. Get as long as you can with the health history of your family and that you'll sleep well at night knowing your family's taken care of.

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Up next, we've got Courtney in Miami. Courtney, welcome to The Ramsey Show. Hi, thanks for taking my call. Absolutely. How can John and I help?

Yeah, so I, I have a question, I guess, about what household contribution amount should be. So I've worked really hard, I paid off my student loans, I bought a car in cash. I bought a house and I paid off the house. Whoa. Um, yeah, so I've worked really hard. Congratulations.

That's an understatement.

I can't wait for the other side of this question.

Oh gosh. Okay. Yeah. So I guess the question is, I am engaged. Um, there are no plans right now for a wedding. We've been together 9 years, but we're, we are together and committed to each other. Um, and I guess the question is, I've, I've saved up enough to move to a more desirable area, and I can buy that new place in cash as well. And so what is— how do you divide the bills? Like, we're, you know, yes, you split utilities, and I know this is a weird situation, like, how— what's the contribution? You know, obviously he doesn't live with me for free, but what, what is that number? And we just—

I could I need some help.

You're not going to like the help that we give you.

So he's been living with you this whole time, essentially?

Yes, we've been living together.

How does it work now?

So he basically pays essentially rent. He doesn't like the word rent, but we split the utilities and the bills, and he pays about, you know, splitting the utilities and then like $500. But we're moving to a much better area. Area. Obviously, you know, the house is much more even though I'm paying for it. So, so I don't know how to divide it.

Here's the thing, I have spent the last 2 years of my life down a dark, dark rabbit hole studying romantic relationships, okay? Yeah. As long as you're his, his, uh, landlord and as long as you're his bank there is always going to be inequality in your romantic relationship. Okay, there's no way around that. Even you saying he doesn't like the word rent— of course not, because it's a daily reminder that y'all are unequally yoked. And the more you talk about how hard you've worked— you've been with him for a decade, so you, you leading the question with how hard you've worked infers to two just random dudes you're calling, he hasn't worked that hard, which is not the case. I, I know, I know, but it's, it's, it's the posture with which you're entering into this. And so the reason that we tell everybody to get married is twofold. One, your individual stuff becomes y'all's stuff, and if you're not ready to do that, then you're— then the romantic relationship you think you have is not what you think it is after 9 freaking years. The other reason we tell people to get married besides the spiritual stuff, like take the Sunday school stuff and move it aside, is because there is a legal separation baked into that, meaning there is a contract y'all sign.

There's some financial protection and you're protected. And so I, I, I, I can't in good faith tell you to do this thing when I know the data, and this is secular psychological data, I mean economic data says if y'all get married and your stuff and his stuff becomes y'all's stuff, the, it, it, it's, it ROIs in a spectacular way. 'Cause you have two people hanging onto the same anchor point and allows two people to take bigger swings at life with, um, with margin. But as long as he's paying you rent and he's Venmoing you for the Arby's meal y'all split last night, it's always gonna be yours and mine. And making a romantic relationship work that way long-term, even the data says that cohabitating couples who live together over a long period of time, they don't do as well health-wise, financial-wise, happiness-wise as those that say, I'm all, my chips are on the table. I'm all in. Yeah. And if you have hesitancy to go all in with him, I, that's a huge flashing red sign for me. Red flag is the, is the key word. Kids say.

Okay, in your own words, why haven't you guys gotten married? Forget a wedding and all that.

Yeah, so there's, I guess, a bright— a past with him. So he was married before, it didn't go well. Um, there's some financial stuff on his end, uh, past addiction issues that I'm not— I'm not ready to tie to. Okay, I don't know if I lovely.

Okay, then you need to have that conversation with them, because otherwise— I mean, I don't— I'm trying not to be ugly, right? I'm trying to like be— I'm— know that I'm on your side.

We are Team Courtney.

But, but y'all are playing house, right? Yeah. And, and he knows, let me tell you, he knows in his nervous system that you're not all in, and that makes you more his mom than his, than his family fiancée. That makes you more his landlord addiction specialist than his wife. Yeah. And I don't want to blame you for that. I want you to trust your gut, but I want you to trust your gut all the way in either direction. You get what I'm saying? Yeah.

Yeah, that's hard, but yes, it's real hard.

Tell me, push back on me. Am I wrong?

No. No. Yeah, no, you're right. I just— I think I'm thinking of it like we are, we are together but separate to an extent.

You have a, you have a, you have a great roommate with benefits.

Mhm.

I, I don't think you should make this move until you've solved this piece.

Yeah, 100%. And I'll tell you, I think you're worth being in love with somebody that you can go all in on. And honestly, I think he's worth that too. Yeah. And if you know right now I'm never going to fully get there with him based on his past, based on the things that flare up now, he deserves that honesty as opposed to a Venmo reminder, you owe me $500 every month. Yeah, yeah.

So I guess this is it. Yeah. And I, I was approaching it of like, what's the dollar amount? We, we disagree on the dollar amount.

Yeah, that's— I call that— that's the least of your problems. Yeah, I call those romantic proxy wars. That's not the real issue.

Yeah, for sure. Okay, thank you.

Yeah, and financially speaking, can George and I just both celebrate you? Amazing job. Thank you.

To do all this on your own is, is astonishingly impressive. Yeah.

How old are you? Thank you. I'm 39.

Awesome. Well, please also don't have the sunk cost fallacy of, well, it's been 9 years, like, this is all I know, I basically grew up with this, and now I just got to stay in it because it's easy and comfortable, which I'm sure it is, and I'm sure he's a great guy. But yeah, absolutely, you guys both deserve— if you're going to live another 50 years, let's do it with some intentionality and some commitment and build wealth together instead of having this, yeah, we're together but not fully. I just don't think that's a way to live life. And so I would solve for that before making the move. And I hope that if you do make the move, you guys are married on paper at the courthouse, you combine finances. There's no more rent.

I married somebody in my yard once. They came over, my, my daughter was like the flower girl. I mean, you, you don't have to have a— and we did it for free. Like, you don't— my manager took the photos. Like, you don't have to do a big elaborate thing, right? But there is legal protection there.

And if there's a red flag you can't move past, it's okay to call that out and say, hey, it's been a great run of a decade, but I think we both deserve somebody that we can fully commit to. Yeah. Okay. I know that's not the answer you wanted to the question. We didn't give you the rent amount I wish I could have been like, well, it should be 60% versus 40% based on the numerical— man, we are funrunners.com today, George.

Oh man.

And I, I mean, I am rooting for Courtney so hard. I like Courtney as a person and I want to see her win and I'm so proud of her. And the truth is she's proven to herself that she can build wealth regardless of the relationship and what's on the other side. But man, it's just so much more fun to do it with a true partner.

A ride or die dude. A ride or die.

Yeah, this is our money, this is our life, this is our goals. Instead of, yeah, well, we don't combine because I don't trust him to accomplish this financial goal that I have.

Yeah, I trust you enough to live here and not murder me. I trust you enough to fill in the blank, but I don't trust you with my checking account. All of me. Yeah, yeah.

Oh man, this is, this is not one conversation. This is going to be a series of conversations, maybe even some counseling to get to the root of this, to get to the fork in the road.

Honestly, Courtney was so honest, and I mean, that's, that's a brave thing she said. Like, I don't know that we need to get to the root. I think she's at the root. The hard part is, am I going to take that next honest step?

It's so scary. Yeah, it's just like free falling into this next chapter. But you're worth it, Courtney. Thanks for the call.

Hey guys, Rachel Cruze here, and I love summer. There is more fun on the calendar, more time with your people, and way more chances to make memories. But you know what else there's more of? Spending. Oh, between the extra groceries and gas and camp fees and family trips, it all starts to add up so fast. And before you know it, money stress starts to steal the fun out of everything. And that is why I love the EveryDollar budget app, because it helps you plan your money, track your spending, and find more margin in your budget so that you can put extra cash towards the goals that matter most. Enjoy your summer without the money stress. Download the EveryDollar app in the App Store or Google Play and start for free today.

The Ramsey Cash Giveaway is officially here. You can enter every day from May 1st through 31st. One grand prize winner will get $10,000, plus there will be one $500 winner every single week, and you can enter daily to increase your chances of winning. Plus, be sure to check out our sale going on right now. You can kick off your summer with books and assessments for just $12. Go to ramseysolutions.com/giveaway to enter. No purchase necessary to win. John is in New York City up next. John, what's up? Hey, how's it going? Great. How are you? I'm okay.

Um, I'm calling with not the most concerning financial issue, but something I'm torn about.

I could use a first world problem right now.

Yeah, yeah, yeah, yeah. I'm, I'm trying to decide if I should keep my pet insurance for my cat. The, uh, the monthly premiums are going up from $70 to $105 a month. Whoa. And, uh, I know, I know. Uh, you know, I mean, she's about 10 years old now. I got the insurance right when I got her and it was like relatively cheap. It was low. It's been steadily going up. And you know, last year when it went up to $70, that was, that was a big jump. It went from maybe like $45 to $70 and now it's $105. Yeah.

That's pricey in the pet insurance world. Yeah.

And it's, you know, I've been paying this for years.

And have you calculated how much you've paid out over the years?

I know, between out-of-pocket cost plus the insurance, I'm guessing you'd throw up if you did.

I probably would. I probably would. I've actually never used the insurance.

Yeah, exactly. You've never used it.

I, I would love for you, just for your own emotional well-being, just to map out how for the last 10 years how much you've spent on pet insurance and what would have to happen to a pet to justify that cost?

Yeah.

And by the way, George and I are split on this. We disagree on this. And so, but I, I like to just look at it, just the math. And I know, like, I love my dogs a lot, a lot, a lot, but just looking at the math, does it play out, right?

Right. Or let me ask you another question.

How much would you spend? Like, there's probably going to be a max, right? Is it $3,000 or $5,000 max they would cover, uh, the health insurance?

Yeah, the pension.

There's actually no cap. Okay, so they'll cover— if it's a $20,000 surgery the cat needs, they'll cover it?

80% reimbursement. Reimbursement. Okay. That's the deal.

So what is your, do you have a magic number that you would spend on a thing with the cat?

I mean, I can't see spending more than like $3,000 for some, and even that, it's just, it's, it's a lot.

Yeah. For a 10-year-old cat, a $3,000 surgery, like, and I, I would look into quality of life. Are you keeping that cat alive, alive for for you or for the cat, right? So there's all those kind of questions I want to ask, right?

Um, what's your financial picture look like? Do you have any debt? Do you have savings? Yeah, no, financially great, great.

No debt, got plenty of savings.

Okay, great. You're self-insured as far as this cat goes. If something happened, you could fork over 3 grand if you chose to. Yes. So the question is, is it worth paying now $1,200, $1,300 a for the just in case to avoid paying potentially $1,000, $2,000, $3,000. So that's where I go, I don't think this is worth it at this point. You're better off socking away $100 in a savings account at this point to cover if something happened, maybe a sinking fund for just pet needs in general, vet bills, all of that. 'Cause as they get older, there's a higher chance there's gonna be a vet visit.

Which is insurance companies never lose, right? So that's why they, keep raising the premiums. It's all about risk.

Their risk is higher as that pet gets older. So I personally would cut it in your shoes.

Yeah.

Is this your only pet? Yes. Are you single?

Uh, I have a girlfriend. We live together.

Okay. Does she like the cat? Yeah, she does.

As though that matters. I think it matters.

She hates the cat, that's even more reason to cut the insurance. But I personally would, John. Again, this is not a, a make or break for you. Now, if your pet had like a history of health issues that were costing you a lot of money and this insurance was a lifeline that was saving you a lot, uh, I would get rid of it. But in general, our, our recommendation on pet insurance is just to self-insure, sock that same amount of money away in a sinking fund and an emergency fund if there was an issue. Yeah, cuz the insurance— it's like the house always wins. And there's rare occasions where someone goes, no, no, there was a one time where my dog needed a surgery and it actually it actually really worked out. And so it's more about peace of mind. And I think at this point with the age of your cat, at this point, just let it ride. And when things come up, cash flow it. And if you decide you don't want to cash flow it, then you let that ride. And if it's the pet, you know, the cat's time, it's the cat's time.

'Cause I have seen friends who they'll pour unlimited amounts of money to keep their pets alive. And I'm like, man, this is, it's getting to a dark place where you're like, to John's point, are you doing it for you the cat. Yeah, totally.

I definitely don't want to be in that scenario, you know. Yeah, I definitely don't see myself being in that scenario. Yeah.

And here's the thing, there's been a lot of talk— Arthur Brooks has kind of led the charge here about the role suffering plays in our life. I can count on one hand the number of times I cried hard harder than when I put down— when my dog got so sick and that was the end for her. It was devastating. Like literally devastating to me. That, that dog was my, my original ride or die. And yeah, what I got on the back end of that hurt and that grief was, that's what commitment feels like. And that's what love feels like. And that's what deep relationship feels like. And sometimes we try to put these dollar amounts when it comes to your family. Yeah. Dude, no question about it. When it comes to our pets, it's like you enter into a short-term relationship and that thing looks to you for love and care and support and all that kind of stuff. And it's amazing and awesome, but there's gonna be grief on the back end of that. And sometimes there's people out there who wanna sell us things and try to extend that or push that off or pretend it's not coming.

It's coming. It's part of entering into a relationship with a pet, however hard that is to hear. And so preparing yourself for that emotionally, that day will come. Hopefully it's a long time from now. Um, and then getting a number in your head, this is what I'm willing to invest in this pet of mine. And I've always gotta check myself and make sure I'm not, my, my pet isn't living miserably so that I don't have to deal with this grief that's gonna come.

Right, right. That's a good word. So John, what are you gonna do? America wants to to know.

I, you know, honestly, I think I knew what I should do, which is to cancel it, but I just sort of needed the, uh, needed somebody to tell me to do it, you know. Um, I just, yeah, I know it's the logical thing. Um, my, my, you know, really my fear is that like I cancel it and then like tomorrow or, you know, like in a couple weeks something does happen that isn't going to be like this.

You go, dang it, why did I cancel it? It would have covered this.

I, I know. I feel like that's been how I felt all 10 years I've had this insurance. Yeah. But now it's at $105 a month.

Yeah, that's the sunk cost fallacy. You're like, I've already put this much in, I might as well keep going, right?

Yeah, there's a real like mental component to this.

Yeah, yeah, it is more mental than financial, and that's the hard part to grapple with.

Or it's not mental, it's emotional, right?

Yeah. And the, the financial part— well, let's talk about insurance for a second. The whole point of insurance is to is to transfer risk. So you can't bear the burden of your, a house fire taking your house and now you gotta replace it. So we get homeowner's insurance. And so that's the point of insurance. And at one point you're self-insured or the risk is so low and the insurance companies will just know, hey, we're gonna make money on this because the risk is so low. And pet insurance definitely falls in that category. And there has been a change in the last decade, John, where people just care about their pets more. Than our parents' generation.

Well, we're getting lonelier and lonelier as people.

We're not getting married, but we have our dogs.

Pets are filling that gap of human disconnection.

Yeah. Or we don't want the burden of kids and paying for kids, but we'll get a dog.

Yeah. Or we don't want the burden of leaving our house to go meet strangers to become friends. And so I got a dog that will come in and love me.

Yep. And this, I mean, this is speaking to my heart as a guy who gave more money to the emergency vet than I have given to anyone one place in my life. I could have furnished my house with the amount I— I helped them get a second home, I think, so they love us. But French Bulldogs are, as I've told you, John, are born broken. So we kind of knew going into it, you're kind of picking up a project here. I should have got a dog from the pound. That was a very expensive project. Dog from the rescue never has any issues. They live to be 1,000, happy, healthy. These purebred dogs, man, they'll get you. So hug your pets today, guys.

¡Hey, guys! Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime, time with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to ramsaysolutions.com and try Ask Ramsey today. That's ramsaysolutions.com.

Welcome back to The Ramsey Show. I'm George Campbell here with Dr. John Delony. Open phones at 888-825-5225. Our scripture of the day, Titus 2:7-8. In everything, set them an example by doing what is good. In your teaching, show integrity, seriousness, and soundness of speech that cannot be condemned, so that those who oppose you may be ashamed because they have nothing bad to say about us. I like that, be above reproach. Warren Buffett said, it takes 20 years to build a reputation and 5 minutes to ruin it. If you think about that, you'll do things differently. Amen. Kelsey is in Atlanta up next.

What's going on, Kelsey? Hi, thank you so much for taking my call. Sure, how can John and I help? Yeah, so I am currently leasing a vehicle and I am so excited to get done with it. My plan was to buy a beater car once the lease is up, but I, I have another 11 months to go on it. I'm currently $5,000— or 5,000 miles over already what I'm supposed to be.

What are they dinging you for that?

What's the fee? It's 25 cents a mile. So by the time I figured on average how much— yes, on average how much I drive— by the time I turn it in, I'm looking at an extra $5,000 I would pay for the overage on the mileage. So my question is, should I go ahead and buy a beater car right now? I'm thinking in the range of $5,000 to $6,000 and go ahead and park my leased vehicle, go ahead and just let that ride out And then I'll have— pretty much I'm allocating my money to spending it on a beater now instead of giving it to a dealer at the end of the lease. Would that make sense? Hmm. That's a great question.

Could you go buy the car outright?

Yeah, what's the early buyout amount?

I could. It would be a little north of $40,000. Goodness gracious! What are you driving? Right now it is worth $20,000. $39,000. It is an EV, and so it's depreciated immensely. Ouch.

So you'd have to pay $40,000 to get it, but then if you sold it, you're $11,000 underwater. Correct. Immediately. Wait, there's—

they're charging you 25 cents a mile on an EV?

Yes. Wow. That should be illegal. That should be— okay, what EV is this?

What's the make and model —year.

It's, it's a Volvo C40 Recharge and it's a 2024.

Oof. All right, I'd probably put this in the stupid tax category, but you're saying, hey, instead of paying $5,000 in penalties because you're going to continue to go over the mileage based on your commute— absolutely, yes. You're saying just park it. I'd rather just use that $5,000 to get me a beater car so that when all said and done, at least I, I have a working vehicle vehicle.

Yes, that's kind of where my mind's at. Of course, it kind of— it breaks my brain a little bit to have two vehicles at the same time, but circumstantially, this is kind of where I'm at.

Yeah, I mean, that is a pretty wild solution, but it's— it makes sense in my head. And I'm, I'm trying to think if there's other scenarios. I'm trying to go through like, what are all the options, and then what's the one that sucks the least? Have you talked to the dealer about this?

So I haven't talked to them about this scenario specifically. I have looked to see if I'd be able to have someone else take it over and they will not allow that. Okay. Um, by the time I—

what's the early termination?

I don't know the fee to be honest. I haven't looked at it because I'm just assuming it's so unreasonable. So I could look into that.

That's probably a great assumption. Gosh, I still can't get over, like, on a, on a, on an engine, a gas-powered engine, there's going to be wear and tear that's unique and different than on a, on an EV. I just can't believe they're charging you 25 cents a mile. That's— yeah, whenever I think they can't get worse, they get worse. It's impressive, right?

Leases are definitely my least favorite way to, uh, have a ve— I was going to say own a vehicle, but you don't even own it, you're just renting expensive.

What's your lease payment? Burn It's $663 a month.

So you're gonna have to pay that for 11 more months while it's just parked.

I'll have to pay it for 11 more months while it's parked.

I would try to level with them at the dealership. Not that they're competent, nice people, but I would explain the situation, say, hey, listen, if I buy it out, I'm $11,000 under day one after already forking over $40,000 that I assume you don't have in cash right now. Correct. The other option is is the termination, which I would find out what the early lease termination fees are in case— this is a wild in case— in case it's the cheapest option, the che— the lowest amount of stupid tax you could pay to get out of this thing since they won't let you do a lease transfer, uh, because the buyout is not an option. And so therefore you might at least then sort of get rid of the other options to go, okay, my best option is to just hang on to it, pay it, keep— stay under the, the mileage and save up for a beater car in the meantime. Do you have—

do you have $29 grand? Do you have $30 grand to buy it from him?

I do not.

Okay, how much do you have?

So right now I have $6,000, and that is a sinking fund, knowing that I am going to potentially have to pay that in fees when I turn it in. And I'm, I'm like very aggressively paying down student debt, so I just don't have that, that cash on me.

No, That's great.

What do you make a month? $6,584.

Okay. I love the specificity. That's great. And what other debts do you have?

So I've got a student loan and that is $21,844.

And that's it? Student loan and the lease? Yes. Okay. Yeah, I mean, it's going to be hard It's hard to do both, to chip away at the student loan debt, pay the lease payment, save up for the beater car. But I like the idea of limiting the damage in fees we're paying on this lease. At least if you do nothing else. And then I would see what your options are with the dealer. I would do a whole lot of research to find out, you know, what your rights are, what your options are before you make any big moves.

But my guess is it's pretty ironclad.

I mean, you signed the contract. Print and they're gonna say deal with it, right?

Yeah, and I'm definitely gonna take your advice to see if there's any way I can have some wiggle room that I just am assuming I don't have right now. But if, if that is not an option, would you suggest I just park it and drive a beater? Yeah, so I would do—

the math says that might be the best option. That's the wild part. As much as it hurts your soul to pay $660 $100 for parking a car? Yeah. Oh my gosh, I'm so sorry.

It's already hurting my soul. I'm like, if this can minimize the damage, I'm all game.

Well, the good news is you'll never lease a car again.

Oh, you better bet.

So that might have been worth all the fees in the world if it means, uh, you're avoiding a bad money decision. So I'm rooting for you. You're, you're gonna survive it, and it'll be a fun story. You tell your kids one day.

Kelsey, give us— give America who's listening, give them your opinion on the lease. On, on someone sitting there like, I don't want to buy a car, I want to go lease it, what would you say? This is your opportunity for a commercial.

It is the most financially irresponsible way you can possibly operate and quote unquote not own a vehicle. Do not do it to yourself.

Thank you for that. Very helpful. Appreciate the call, and it's a good reminder on leases, John. So a car lease, people say, well, John, it's not debt technically. There's no like loan. It's just a contract where I have to pay this amount and there's no way out of it. Cool. If that's what you want to tell yourself, that it's not debt even though there's a monthly payment attached that you have to pay, I'm going to call it loosely a form of debt. And the depreciation is built right into your lease payment. So you're paying the most expensive part of depreciation to the dealer. Well, and so think about—

I always like to ask myself, who's getting rich, right? It's the reason I quit using airline miles. And you know, I've talked about this off air, but like, I remember, um, getting a credit card with a ton of miles on it because I had to make a huge purchase that I was going to immediately get reimbursed for. And I remember thinking, hey, they're not my— this company's not my friends. Who's paying for these flights I'm getting, or these hotel sell points. And it was people who found themselves in financial straits or having to pay. And I was like, I don't want single moms who are struggling to put food on their table to pay for my free flights. I'm out of this program. So I, that is what got me inspired to say, who's getting rich off what I'm doing next? And the lease is one of the greatest inventions for a car company. They get a brand new car, they give it to you for 2 years. You give them, you basically buy down all of their depreciation depreciation. You give the car back to them. They have a gently used car that they have contractually kept.

Now they can sell that. Now they still make a profit. They still—

they sell a gently used car that's got very low miles, that's perfect, with no depreciation on it because you've paid it, right? It's brutal.

Well, that puts this hour of The Ramsey Show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

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