Transcript of Stop Letting Emotions Drive Your Money Decisions New

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Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is The Ramsey Show. And I am Rachel Cruze hosting this hour with Jade Warshaw, and we are going to be answering your questions. Questions. So give us a call at 888-825-5225. The phone lines are open and we are ready to talk about your life and your money. So we're going to start off with Scott in Pensacola, Florida. Hi, Scott. Welcome to the show.

Hey, how you doing?

Hi, we're doing great. How can we help?

Um, so I'm 20. I recently turned 21. I bought a house in December. I got married in January and I got a kid on the way due in September.

Whoa.

Big, big life events, Scott. Doing it all.

Oh, yeah. Well, I got about— oh, $27,500 on a vehicle loan that I'm $10,000 upside down on. And I got $10,500 on personal loans. Oh, $1,900 on a four-wheeler that I've sold and paid as much as I could off what I sold it for onto.

What was it, $1,900 on what?

Uh, four-wheeler. That's how much I got left.

Okay.

I sold the four-wheeler in January and paid what I sold it for onto the loan.

Got it.

And then I got about $2,000 in credit cards.

Okay.

And I'm on step 2 of the program, but I want to get rid of the car, but I don't feel like it'd be a smart— well, I know it'd be smart to get rid of the car payment, but I don't have anything to replace it right now. And I ain't got $10,000 to pay the negative on it.

Do you have any cash anywhere?

Uh, I got, I got $1,000.

The $1,000?

Okay, so you've got to pay for stuff.

Yeah.

Um, what about your wife? Does she have a vehicle that's reliable?

That is the vehicle.

Okay, and then what do you drive?

I got married, so I kind of, I guess I inherited her debt. I only have like $13,000, but her car and her personal loan.

And what do you drive?

Oh, I got a, an old truck that's worth $4,000.

Got it.

But I got a company truck, so I don't— it just—

okay, so that $4,000 is sitting there, but you also have a company truck?

Yeah.

So she could drive the old truck if you sell this car?

It needs a lot of work.

But that's not the question. Could she drive it? If you got rid of this car.

'Cause she'd drive it for 6 months. Uh-huh.

And you just do a little work on it? Yeah. So then I would, if I were in your shoes, I'd go down to the credit union and I'd get a $10,000 loan, 'cause I'd rather you be paying off $10,000 than $27,000. And then that way, when the buyer comes to buy this car from you for $27,000, you can put the other, or for, yeah, for $27,000, you can put the other $10,000 with it.

Mm-hmm.

And, have the whole $37,000 that it's worth.

Yeah, 'cause you just dropped your debt, you know, obviously by significant, I mean, you'll have $23,000 of debt left after you do that. And that's as much as what the car, you know what I mean? The car loan itself is. So yeah, it makes a significant dent. It's gonna be, it may be a little inconvenient at times, kind of annoying, but it gets you guys a whole lot closer to that goal of being debt-free.

Yeah, yeah, because then you've got the, the— you said the four-wheeler was $1,900.

That's how much I would have left on the loan.

And then the $2,000 on the credit cards. Was there anything else?

Uh, $2,000 on personal loan. I forgot that's in her name.

Okay, okay.

Yeah.

And how much do you guys make a year, Scott?

Uh, I make about $80,000 before taxes.

$80,000 before? Okay.

She makes probably $30,000.

—And she makes $30,000. What does she do? —Dental assistant. [Speaker:KRYSTALINA] Okay, yep. And she's pregnant, is that what you said? [Speaker:SCOTT] Yes. [Speaker:KRYSTALINA] When is she due? [Speaker:SCOTT] September.

00:04:17

Okay.

So I would make that exchange of the car. And then we have something called stork mode, Scott, that when you are expecting a baby, it's good to have a bigger emergency fund than just $1,000, 'cause you know there's an event coming that could cost more. So there's a part of me that would say, I would go ahead and do the truck. I would sell it, go ahead and get that taken care of. And then, from then on, between now and September, which will fly, it'll be here before you know it. I mean, that's what, 4 months? So I would stockpile cash in these next 4 months. I actually would not be paying down on the debt. I'd stay current on everything, make sure, but I would be intense, like you are paying this off, right? 'Cause you're on such a great rhythm. You've done Baby Step 1, you're on Baby Step 2. But I would put that money aside, just like in a high-yield savings account, and just don't touch it, and make sure she's good, baby's good, everyone's good. And then when she comes home, I mean, if you could save $8,000 even between now and then, right?

I mean, $2,000 extra a month, if you could put away, the four-wheelers gone, the credit card's done, and that $2,000 personal loan, right? Like you can start, and you could knock off some stuff pretty quick. In September, which is awesome. And then you would just have the $10,000 loan from the credit union and then the other $10,000 personal loan. So you have $20 grand and then you guys could be completely debt-free by the end of 2027. That's the goal, but—

Are you doing— Yeah, it feels kind of far out of reach, but it really ain't even that much. It's just overwhelming.

Are you doing any extra work? Are you side hustling or anything like that?

Oh, weekends, overtime.

Okay, yeah, I'd pick up as much as that so that, to Rachel's point, you can stock as much money up. And if I were you, I'd also look into insurance and find out, at the very least, you wanna make sure that you've got your out-of-pocket maximums covered, right? Those are the numbers I'd be looking at if I knew I was having a baby. I'd wanna have that covered for the family just to make sure that you have that. Say that again.

I said insurance is covered. I have really good insurance.

You do? There's no deductible?

Uh, $30 deductible. For the whole year? Well, I've never— I've been to the hospital a couple times. I've never had a deductible. It's only been like a $30 copay.

Okay. I want you to check into that. Check into— I want you to check two things. I want you to look at the deductible, and then I want you to look at the out-of-pocket max and just call them up and ask them, say, my wife's having a baby. I just want to know what's the deductible I'd have to meet before insurance kicks in, um, for this baby. And same thing for the year. I want to know what's the max amount of money I'd have to pay out of pocket if for some reason there were complications or anything like that. And just get those numbers. If yours is absolutely zero, I want that insurance.

Yeah, I was gonna say, he said, "I have good insurance." I'm like, "Sounds like it." Oh, Scott, that's great. Are you both on the same page, you and your wife? Do you feel like you guys are kind of tracking financially?

We haven't got joint bank accounts yet and combined everything. I mean, we're really jointly on stuff, like together. Sure, sure.

But you guys are both mindset of like, let's save money, let's get out of debt. Like we're gonna turn this all around.

Yeah, we wanna make a lot for our kids that we didn't have.

Yeah, it's awesome. Scott, you're doing a great job. You're such a great, you know, you're gonna be a great dad. You're a great husband. I mean, honestly, and let me just tell you, these quick wins are, it's gonna help build your confidence because it sounds like up until this point, until recently, you haven't been intentional and focused on your money. You know, you have personal loans here and there, credit card debt, car loan. You guys have just kind of been living normal. And now, I mean, You're pretty grown up. You're a homeowner. You're married. You got married. Like, I mean, all of this is happening. And I'm so thankful that you're starting this process now, Scott, at your age, honestly. Because if you guys do this, if you do the Baby Steps, you get out of Baby Step 2, you save up an emergency fund, you guys start funding retirement, right? All of this could be in the next 24 months. Right. And you start this now and you stay that consistent pattern, you guys will retire multimillionaires. Like, it will be so incredible, the family tree that has changed because of you and your wife and what you guys are deciding to start today.

So, keep at it. Call us back if you need us. We're here cheering you on.

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Next up, we have Susan in Madison on the line. Hi, Susan. Hi, thanks for taking my call. Yes, absolutely. Thanks for calling in.

How can we help? Um, so I am 33 years old on a single income with a razor-thin budget. I've set up an EveryDollar budget and an envelope system. I've been through Financial Peace University twice, but I keep falling into emotional spending I end up overspending pretty much every month. What would you recommend to someone who understands the plan but struggles to follow it consistently because of emotional or impulsive spending habits? And are there any structured resources or programs to help with that emotional side of it?

00:11:11

Yeah. So when you say emotional spending, can you give us a quick example of exactly what that looks like? Is it, you know, you're going to Target and you're getting a bunch of tchotchkes you don't need? Is it you gamble on DraftKings? Like, tell us what it is.

00:11:26

Yeah, so like for instance, I'm just going through some really intense family issues right now. So I don't know, to feel better, I go out and have a personal day to go to the movies or maybe go get my nails done just to have like a self-care day. But because my budget is so thin, I mean, I barely have enough money to go out and see a $10 movie.

Yeah. Are you working on the Baby Steps specifically? Like, are you working towards getting out of debt or building up an emergency fund? Are you putting margin somewhere that is a goal?

Yeah, so I have my emergency fund set up and I am working on Baby Step 2. It kind of feels like I've been on Baby Step 2 for like 10 years.

Oh yeah, well, that's exhausting mentally. If you don't feel like you're making progress, that'll eat away. At you. So, um, how much debt do you have left to pay off?

Um, so I have a personal loan at about $10,000, um, and then I have a credit card with about $3,000 on it. Okay. Um, I am in a sticky situation, which I know you guys never say to do. Uh, my mom purchased my house and she has been my bank. And, um, long story short, we're selling it right now. So that mortgage quote unquote will be, will be gone. Um, and then it'll just be the, um, The $10,000 loan and the credit card with about $3,000 on it. Okay.

Is there any equity?

Um, there is, but unfortunately the house never got put into my name like it was supposed to, so I don't have any legal standing to anything.

Oh, is she going to keep the money that you— have you been paying the mortgage?

I've been paying everything. Yeah.

And your mom's not going to give you a piece of the pie?

Um, well, it— I, I asked for it, um, and I never really got a full answer. And then through the grapevine of my sister, it sounds like, oh well, I'll put it in the account so I can see how you spend it. What? It's—

yeah, how much is the equity thing?

How much? It wouldn't be much. It would maybe be like $30,000 to $40,000. That's much.

That's much for someone who's in debt.

Uh, yeah, I would— it would clear my debt. Yeah, yeah, yeah.

Well, it would more than clear your debt because then you just say you have $10,000, uh, you only have $13,000, right? Unless there's more that we don't know about.

No, nope, that's it. Yeah.

Had she bought the house and it had— and you have not lived in it, and you've lived in it for a short period of time and paid it, or like, what's the story on the house? And I'm, I'm getting somewhere with this, that's why I want to know. Yeah, yeah.

So the purpose was for me to get into this house to build some equity, to kind of set myself up for financial freedom because I don't make a lot of money. Um, I make about $50,000 a year. Um, and so that was the, the point of me moving in. Well, it was a little bit more than I could take on, I think, um, for how much I make. And so we never really got a solid number down of how much I would pay her quote-unquote mortgage because she just paid in cash because she had money to pay cash. Okay. Um, so that number never got set, and right now it's a really small number of $300, but I'm paying property taxes, insurance, everything else to upkeep with the house. Okay, that's a little different.

So yeah, you've been paying $300 to your mother for how long?

Uh, 2 and a half years, about 2 and a half years. Okay.

Yeah, well, I'm wondering, cuz here's my thing, Susan, is any amount of money at this point is gonna help you. I mean, you just said, "I can't afford a $10 movie." Like, when you don't have that much, like, everything is important. So, I almost would do the math and be like, "Okay, for 2 years, this is what we've been paying." You know, it'll be like, I don't know, $15 between, you know, $12,000 and $15,000. Here's the property tax. Like, I would at least take out the money that you've put into the home, okay? And let's say it's a, say she cashes out at $30,000, and maybe for you, you've put in $20,000 with everything said and done, okay? That means, I could see a very reasonable conversation as, hey, Mom, the house went up in value. I have helped support it, not all the way, 'cause to your point, you were not paying market rate. She was giving you a great deal. But to a point, I have been putting money into this that has caused, you know, that the equity has gone up. So after realtor fees and everything is said and done, whatever is left, here's what I've put in.

Could I at least get that part out in the equity and you keep the rest of the equity? That would at least be a conversation I would have because $20,000, you know, that's pretty life-changing for you at this point.

Who put the down payment on the house? Or there was none.

Um, so there, there wasn't really a down payment because, um, her and her husband paid cash. I mean, they have like an upwards of like $20 million.

So, you know, I think I'm changing my stance on this because what it sounds like is you were just a renter at a really low rate. I don't think that you ever owned any part of this to really have access to any of the equity. I think that she bought the house, she bought it in cash, and she only charged you $300 rent in a, in a full-length home for 2 and a half years. I think, I think that you're a renter.

Yeah, I think you're just a renter.

Um, but back to the fact, even if the big—

our original, like, texts and emails and everything was— there was going to be your house and the title was going to go into my name, but there was never anything that upheld that.

If you were really doing that, you'd have to show that you— you— I don't know, I wasn't there, but if you didn't kick anything into the down payment or kick anything to the initial purchase of the house, even if she bought cash, and if you did not even at least meet the, uh, a regular mortgage, or do you see what I'm saying?

The rent, the market value.

Yeah. And there's nothing in writing here. It sounds like you guys did, and I mean, I'm not trying to be ugly, but it seems like you both did a poor job in really, uh, documenting the situation well for both of you. Oh, 100%.

And for that reason, I'd learned.

Yeah. So yeah, for that reason, I just let it, let it ride.

Yeah, that's probably fair, Jade. Yeah. Okay, so my question would be, why is she— why, why did this deal go south?

Uh, so she basically wants to take the money now and do something else with it. Oh, okay. Is what it comes down to. Okay. So, and because I don't, I don't have the law on my side, I just kind of have to now figure out what to do. Yeah.

So you're gonna take So you will have to pay rent and it's going to be more than $300. Yeah. So that will eat into your budget as well.

What is your budget? What's your monthly take-home?

It's about $2,600 a month after taxes. What's your—

what kind of work do you do?

I work for a healthcare organization. I do like backend, like admin stuff for providers.

Okay. Is there a way— $2,600 is slim, slim.

Well, and that doesn't feel like— Like, did you get a big tax refund? No. I think like $400. Is any money going into 401(k) retirement?

I think so. I get like the Wisconsin state pension. So it's just like an automatic thing that comes out.

That's part of it, yeah. But nothing beyond that, okay.

So yeah, with this equation, I mean, I want to quickly hit what you talked about on the emotional spending. Before we get into this, because that's a huge part of this. You really don't have the money to— you don't have the margin to emotional spend, and we don't have enough margin to put towards this new life that's going to come where you're paying more than $300 of rent. So income is the name of the game, and it might mean you looking at a different career path, certainly a different job in the short term, because we've got to get more than $2,600 coming in a month in order to solve this, because at the end of the day, it is a math problem.

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I have a question. I wanted to know what I can do to help my husband stop financially helping his parents.

Oh boy. Oh, we gotta— we help your husband help his parents. Okay, so what's going on?

Yeah, so, um, my husband is a contractor in Birmingham and his— we, we have a small business and he, uh, makes good money, but, um, his parents tend to kind of fall back where they need to whenever they know that he'll kind of just make up, make up the back end. Like, how much?

How much is he giving him every month?

A lot of money, like $8,000 a month. Holy smokes.

But your, your husband is giving his parents $8,000 a month?

Just about.

For how long? How long has that been going on?

This has been going on for probably 3 months. 3 months.

How much do y'all bring in a month, Samantha?

Um, we are 1099, so I don't really know how much we bring in a month. We filed $240,000 last year.

Why don't you know how much comes in a month? Do you guys have a personal budget that you guys plan your household from, or when you look in your checking account?

It varies because one month he probably won't make $10,000 and then the next month he'll make $50,000. Okay, okay.

Um, so wow, okay, so, um, I'm— I, I probably won't concentrate on this call just because from a time perspective on his parents' situation, that's, that's their thing. What— who's— yeah, really in the what I'm gonna say, in the wrong because he's not agreed with his wife on where their money's going, is your husband. So what are those conversations like? What happened? Did 3 months ago he said, hey, Mom and Dad are falling behind, can we help? And you're like, yep, absolutely. And he just keeps doing it. Was it even talked about? Did he ask you?

Like, what happened? He asked me and I'm okay with helping him out. Sure. You know, every so often. But my thing is when it's consistently an issue and you're consistently doing it and you don't, they, They don't make up the extra. They don't have to work if they don't want to, is my problem. Okay, so your problem— they spend all the money knowing that my husband's gonna make up for it.

So it's entitlement that you have an issue with. My question is, you said it's okay one time. Have you— has he continued to come back to you these other months and asked, and you've just gone along with it, or have you said no and he's done it anyway?

Oh, I've said no multiple times. Okay.

And $8,000 is a massive gap. Did something happen in their life? Did they lose— did one of them lose job, or what's happened in the last 3 months where they've needed this money?

They, they both work. Well, what's hap—

what's changed in 2026? Because you weren't doing this in 2025. So what changed 3 months ago? What, what happened in February that caused them to call you?

I think it's the fact that, um, they just spend all their money, right? But spend every bit of their money.

But what changed? Did you guys—

nothing that I know of has happened.

Okay, how long have you guys been married?

Um, 8 years.

And how long has the business been doing well?

Um, probably about 2 years. Okay. Something—

either they got wind of the fact that the business was doing well, something changed that suddenly this has become kind of just like a vending machine for them. But the good news is, to Rachel's point, that's neither here nor there. You get to stop this behavior. And either something's going on with your parents that your husband is not letting you know, that you're just unaware of, or it's just as simple as saying, I don't wanna do this anymore. And you setting up that boundary with your husband of saying, I've said no to this. I've said no to this on multiple occasions. You've continued to do this anyway. You're, uh, completely disrespecting me and I'm not gonna, I'm not gonna have that. Right? So, right. That conversation needs to happen immediately. Otherwise, it's gonna be you guys against each other. Yeah.

'Cause at this point, that's a marriage issue, Samantha, between you and your husband, that he doesn't listen to you, that he doesn't respect what you're talking about, and that there's no, it doesn't sound like there's a back and forth. 'Cause I'm not saying every husband has to be like, okay, whatever, to his wife, do whatever you want. And same with the wife, that she doesn't need to look at her husband and be like, whatever you want. No, there could be some back and forth here. But it's the stonewalled, "No, I'm just gonna do this with our money," and the action of it without any level of your buy-in, because yeah, it's $8,000 a month happening. And so, and the problem is that he needs to understand is that throwing money at a situation that isn't changing, to your point, is not helping them. It's not, 'cause this will continue to be a pattern for the rest of their lives, if they had anything to do with it, is what it sounds like. It's one thing, and again, I'm not against helping family, right? Like, if they had a medical issue or there was a job loss and you could financially fill in the gap and you wanted to, that's great.

There's been no job loss. How old are they? Um, 50s, mid-50s. Yeah, that's crazy.

And they have jobs, you said.

So I, if I'm you, I'm sitting down with my husband tonight and I'm saying, here's my thing, is I say I'm a stay-at-home mom, so I stay with our children. So my husband is the only person that brings in the money.

Doesn't matter, Samantha, it's your household. You're both married.

You both are. That's what I'm saying. Does he hold that over you? Uh, I'm trying— no, no. Okay, good. We have agreed, you know, that we've done it too many times recently, but I feel like it's going to happen again whenever it— they're just going to keep on and keep on and keep on and asking him. And I feel like it's just going to continue to go on. But why won't you talk about it and said no? And that—

and that's my question. I wanted to know why, when we, uh, pushed you on that, why you brought up the fact that you're a stay-at-home mom. I want to understand that a little bit more. Do you feel like you don't have the right to say, or do you feel like he has the right to make the choice, uh, to He doesn't.

He pretty much asked me because I pretty much— he includes me on everything except for this. Okay. And I don't feel like— I don't want to say I'm not included.

Well, it sounds like you're not. I mean, it sounds like he tells you what he's gonna do and that's the inclusion.

He's been behind my back the last two times.

Oh, he hasn't even told you when he's doing it? You just found out? "Right." "All right, you got a husband." "So, you got a husband." No, Samantha, you have a breakdown in your marriage of communication, of trust, of any level of unity. And he's done this. He just eroded trust, right? Which, in my opinion, is even worse than being like, "I'm gonna do this," and it's out in the open. It's the secrecy and it's the behind your back. So, Samantha, yeah, this is a marriage issue at this point. And I would raise— some red flags and you may feel like, oh, it may not be that big of a deal. Gosh, am I being too much? No, this is a big deal. It's a very big deal. He spent $16,000 without you knowing. And so to me, that's a communication and marriage breakdown. And you guys may need to go pull in a therapist, a marriage therapist, just to talk about not just the money portion again, but how we got here in our marriage, that he didn't feel the ability to come to you and/or he didn't. And we need to tackle those issues.

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All right, we have Sue in Grand Rapids up next. Hi Sue, welcome to the show.

Oh, thank you so much. I'm so excited. I'm glad you called. I have a question. We are trying really hard. Our daughter's in Grand Rapids. We're in Saginaw. I mean, we're like 2.5 hours away, and we want to move there. And prices for homes are high everywhere, but especially there. So we've got our home on the Ramsey Plan. Our home is paid off. Our cars are paid off. We just have our monthly expenses. My husband has us debt-free in the miracle way because he just now retired at 67. I've been on disability since 2000. I'm sorry, is it amazing? I know he's, he's amazing. Well, my dad, when he passed away, helped a little bit because we got a little inheritance. But now we're looking, we're going to buy there, God willing, and sell here after we've purchased over there. And we're not— I mean, you know, it's like when you don't know how much you're going to get for the one you're selling, which I know I'm 99.9% positive we're not going to get as for this one as we are over there. If we took our house here over there, it would be about 3 times as much.

Sure, sure. So my— I know. So the question is, we just got outbid again last night. Financially, maybe not, but they wanted us— the other buyers were willing to skip the inspection, and we bid— we overbid what they were asking for, but I'm sure these people did too, and they were— they had a cash offer. Yep, yep. So yeah, I mean, if we sold ours right now and if we got what we want for it, you know, we'd be doing cash offer too.

Sure. What's the difference in the numbers? What are you selling for versus what you want to buy for?

Exactly. And it's— yeah, we want to buy low and sell high.

Yes, but tell us numbers. Tell us what you want to buy the— tell us the current property that you have, what you want to sell it for, and then what you think you want to buy for.

What we have now, I'm— in a perfect world, well, the perfect world we get it done, um, but in a reasonable world we get $275,000. Okay, okay. Maybe $250,000, but I'm hoping for $275,000. Perfect. And the ones there we've been looking for, I mean, obviously want to go $250,000 and have more for moving costs and things, but what we've been looking at is between $260,000 and $320,000. And this one, we were bidding like 20— let's see, so $290,000, $300,000. We were bidding like $30,000 more than they were asking.

It wasn't the— was it there? But there was a contingency on it, right? Contingent on sale of your home, or no?

No. Okay. Oh no, we can't even do that now because, I mean, we just can't. There's nothing available like that.

So I think you just need some patience. I think you're frustrated. I think you have had your hopes up. You wanna be close to the grandbabies and you guys are ready to pull the trigger. You're ready to make the move. And 1 or 2 deals have slipped out under and you're just getting frustrated. So I would tell you, just breathe, have some patience. You are entering into a good market. It's actually more of a buyer's market right now than a seller's. The fact you're getting outbid, I know happens, but that is happening less and less. If anything, some houses are actually up for negotiation. That's right. That's right. And so, and you know, and we see, We have a real estate dashboard that you could even kind of check out, but it's great 'cause it does show not only like the mortgage rates and everything happening, but how many days on the market and all of it. But there's something about having the patience in this because if you don't and you feel a little desperate, you might do something, which I'm glad you didn't, something stupid of like waive the inspection, right? And then you go buy a house sight unseen almost and no inspection.

And you guys get into it and it becomes horrible. So I really do believe the deal's gonna come for you. I really do. I think you guys have been wise with your money. You have showed patience in the past and what you guys have done to build up, I mean, paying off a home and everything. So what you could do just to take the urgency down, if you wanted, just an idea, go ahead and sell your home and go rent somewhere for a year over close to them and just know it's short term. And then actually take your time.

He said, we're not gonna move twice. So I got that. Yeah. Okay.

Well then you guys just, you just need to have a little bit of patience because you know what you want. There are houses, I'm sure for what you're looking for in that area. And actually the, in the Midwest area, the average list price is $309,300 right now. So that's right where we are. You guys are, yeah, right where you are, which is perfect. So there, there should be some great options and maybe it's a little bit of a different neighborhood than you were thinking originally or 10 minutes one way than what you wanted, or I don't know. But Grand Rapids, I promise you, there will be homes that you're going to be able to buy. But I would—

May should be a better month. Do what? So May should be a better month, you're thinking?

Well, just from a real estate perspective, things are moving more. They move more spring and summer, real estate-wise. Yeah, just overall. So I would say keep your eyes open. And so I would just say patience. I think you guys You're in a good spot. You're fine. Just stay within your budget, offer what you can, and if the deal doesn't happen, move on to the next. There's no perfect home. Mm-hmm. But you're fun though. I appreciate you as such. So good. All right, let's head to Heidi in Knoxville, Tennessee. Hi, Heidi. Welcome to the show.

Hey, guys. Hope you're having a fun show today.

Yes, we are. Thanks for calling in. How can we help?

Hey, so I'm hoping you can help me settle a dispute between me and my 19-year-old son.

Oh, we love a debate.

We, uh, we had recently mentioned to him about possibly getting a credit card now that he's an adult, and he's been a Ramsey listener for a while, and he said, no, I don't want any part of that. And so we started kind of having a fun spar back and forth, and he's like, guys, you use a credit card, you should get rid of your credit card too. Hilarious.

Smart guy. Hilarious. I love it. So what do you want us to say? You want us to tell him that you're right?

No. Okay, good. Challenge me to call you guys because I was like, look, we pay off every month, we have a budget that we follow. If there's not enough money for something, we don't spend it. I don't understand what the big deal is, and I've listened to the show for a couple weeks now trying to figure it out, and I must be missing something. Why do you need—

why do you think you need one, or why does he need one? Because you just advised him to get one.

I think it was mainly because I just thought, well, in case something happens, he doesn't have a lot of money. We don't want to have to spot the money.

What if he did save up an emergency fund? Would you feel differently?

Yeah, if I knew you had that in place, that would be fine. I was more just confused why he thought that we shouldn't have one, even though So we don't use it per se as a credit card.

Do you have an emergency fund? Yes. How much? How many months of expenses?

We have 3 months of expenses in the emergency fund and then another 2.5 months just in our regular savings account.

Excellent. So, so it's fair to say that if, if emergencies came, you would have the money to cash flow it.

Yes, that's true.

I mean, yeah, so, I mean, a credit card, honestly, Heidi, the way we look at it is, not only is there data to back up that you end up spending up to 13% more when you're using someone else's money. And that's what you're doing, even though you quote unquote pay it off every month. But subconsciously, you don't realize it, but you are spending more. If you were just spending your money, Heidi, with a debit card, I guarantee you, you would be spending less. Yes. So, not only that, but also, what we find over and over again is life happens. And when a credit card is your backup plan, you fall right into the cycle that they suck you into of credit card debt. And people call in our show all the time, and they got $10,000, $15,000 in credit card debt. "Well, we've been trying to pay it off. You know, we try to pay it off every month, but then this happened and this happened. We didn't have enough money." And there they are at 20, 3%, 26% interest catching your slack of not being diligent and saving up and actually you being your emergency fund.

And so, and I know you said you guys have one, which is great, but when it comes to just the credit card industry, they have done a great job marketing the idea that you need a credit card. But when you spend your own money and there's no bank in your life and you have complete autonomy over your life and your money, and there's no bill, you're not paying You're not paying for the past anymore. When you pay in the present, you use a debit card or cash, you move on with your life. And financially, there's a freedom there versus being tied to a credit card. Hey guys, healthcare is one of the biggest stress points in your budget. It's confusing, and most of the time it feels completely out of your control. But there is a better way to handle it. Christian Healthcare Ministries isn't health insurance. It's a health cost-sharing ministry where Christians share each other's medical bills. And it's not a new idea. CHM has been around since 1981. It's predictable and proven, and they've shared over $13 billion in medical bills for their members. Plus, you get more flexibility. There are no network restrictions, and you don't have to wait for open enrollment.

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Hi Christy, welcome to the show. Hi Rachel, hi Jade, how are you doing? We're doing great. How can we help? Okay, so we started a small business, my husband and I, about 1 year ago, and it is a faith-based business. I make candles, and obviously we are in the red. Um, we filed our taxes for last year and we were in the red about $7,000 to $8,000. Oh wow. Um, which, yeah, which of course comes out of our, you know, income. So we've been having a little debate about whether we should— you know, part of this business that I wanted to start was, you know, to give back to God and to our church. So even though we're in the red, I want to still give money to our church out of our revenue, not necessarily our profit.

Okay, so, and by give money, do you mean like a tithe for your family, or you're, you're doing this as a donation of what you make to go back to the church? Just that's part of your business model, right?

As part of our business model, because we do tie to our church already on a weekly basis. Uh, this would be above that, but coming out of the business. Do you guys—

are you guys able to absorb losing $78,000?

Well, it's $7,000 to $8,000, not $78,000.

Oh my gosh, I thought you said $78,000, and I was about to say, Christy, Christy, we got to reexamine some stuff here. Oh my gosh, that helps a little bit. Okay, that helps a little bit. Yeah. Well, can you, okay, then my question is, can you absorb, I mean, let's say it's 10, let's say you give the church $2,000. So that means you're, if you're already in the hole $8,000, that would cause you to be in the hole $10,000 at that point. Can y'all absorb $10,000 loss for a hobby that you love?

I think we can. This is like another part of this piece. I wanna quit my job, not for the business, business, but to focus on our family. Okay. And, you know, be a stay-at-home mom. We have a 9-year-old, um, and really the only debt we have is our home. Okay. So, um, we, you know, we don't have any credit card debt. We own our cars. Our student loans are paid off. We— I've been on Ramsey Solutions since like 2007. Yeah, that's awesome.

Okay, how much, how much do you make a year? In the job you have now?

Okay, so my bring home is about $54,000, so we would be losing that. And my husband's is like $95,000 bring home.

Okay, perfect. Have you guys done a budget on the $95,000 that if that is your new household budget that you guys would be okay financially?

My husband has said that we will be.

Okay, have you looked at the numbers?

Nope, I have not. We're actually going to our financial planner today.

Oh, great, okay, well, they may be able to answer some questions too. Yeah, so I want you to be comfortable. I want you guys to do a mock budget and just say, okay, 'cause there's two issues here. Candle business, Candle Ministry, we're gonna call it, 'cause it's, you've lost money on it. And then stay-at-home mom. Okay, so stay-at-home mom, I would do a, yeah, do a mock budget of what he brings home every month and look at your realistic expenses and just say, yeah, we can totally do this. And you might be able to, Kristi, you guys have no debt, But you should be able to.

So I would, yeah. I think so too.

Yeah, make sure you feel good about that. And then the giving on the candle business.

It sounds like right now that's all the candle business does is take whatever money there is and donate it, right?

Because there's no profit. Well, a large bunch of our money actually goes to our 403(b)s, our 401(k)s, our IRAs, and our daughter's savings. Save a lot. Um, and we— he wants to pay our house off in like 9 years and we're already in it for 6. So I think technically with our, our cash like that, our, our reserve, like we have our, um, our 6-month savings and with our daughters, like we could pay it off next year. So, but then that would leave us with like nothing, right? No debt, but no emergency fund either. And it's like starting from scratch. But with no debt and my husband working and me not. So that's like, it's just this whole thing, like what— it's a lot of possibilities we have.

Well, I wouldn't use your emergency funds to do this because you need that in case of an emergency. So I would just— I don't think anything's on fire in terms of you feeling like you have to go at light speed to pay off the mortgage because you said— oh, you're welcome. But thank you, because he—

I, I mean, I'm like, if I stop working we can do it in 15, right? It doesn't have to be done in 9. Like, we could still manage to make that work and still be ahead of the game. Don't get me wrong, this thing in his head—

I'm right in, I'm right in the middle of you two. I like the idea of being very intentional about paying off the mortgage. And when I mean very intentional, I mean maybe not letting it go 15 years, because the hope is that you can do it, you know, in 11. Yeah, 9 to 11, right? Um, but at the same point, I would not go to the extent of saying, "We're gonna drain all of our emergency funds and, you know, stop investing in the 401(k) and stop—" I would not do that because that's a drastic take that none of us here would ever suggest you to do. I think you do it as the Baby Steps teach it, which is during this season, you continue investing 15% and you continue with the kids', you know, college funds, and you continue then, on top of that, putting extra towards your mortgage as you as you have it and as the candle-making business produces it, right? The ministry. Okay. Yeah, the ministry. And so, but don't unplug those other things to make this happen because if the research you've done on the budget is true, you should be able to live on the $95,000.

And that includes doing the things that we've said. That includes you continuing to invest, continuing to put aside for college, and continuing to put extra on the mortgage. Yeah. If you can't do those 3 things, then that means we need to reevaluate the budget and figure out where that money is and if it's truly possible like we thought it was.

Right. Okay. And so even with, uh, you know, being in the red on the business, you think like we could still, I mean, it might not look like $2,000, but even if it's like $500 or $1,000, I just wanna give something, you know, I, I would give above on the income that you actually make.

Yeah. This is a hobby, Kristin. Okay. That's kinda how you have to look at it. Like, like your husband plays golf and spends $8,000 a year on golf. That's right. Right. I mean, that's kind of where it's at. So, I feel like it would be bad accounting to continue to go in the red just for your good heart. It mathematically doesn't really make sense, right? And we're all about generosity and all of it, but God also gave us reason and logic that we have to plug into, plug our brains into, and that's not wrong. So, if you guys wanna be more generous on your actual income, income that you are making to your household, then absolutely, you guys can decide to do that. You may have to cut things in order to make that happen. But no, I think continuing to go in the red for something feels irresponsible to me.

I agree with that.

Okay. But your heart is good. So I want your heart, I want that to still be satisfied, right? The giving part of it is still beautiful and great. I would just look at it in a different bucket for it to make logical sense. Okay, yep, that makes sense. Yeah, and logic is, is a gift from God too, you guys, remember that. Like sometimes we go generosity and we can go high emotion with all of it, which is good too. But also God's given us reason and logic and that's a good thing to plug in. And so from a logical perspective, as we do math, that doesn't make sense to continue to give. But Christy, yeah, and I hope you get to stay home, Christy. And you guys have put yourself in a position where you get to make that decision, which is beautiful. Like that's what we're talking about. Guys, to get your money under control so you have choices and options in life. And when you look up and you're like, "Hey, I wanna be home for a season," you get to, 'cause you did the hard work of getting out of debt.

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Up next, we have Jessica in in Fort Wayne, Indiana. Hi, Jessica. Welcome to the show. Hi.

Thanks for letting me on.

Yes, absolutely. How can we help?

So I have a fairly new business. We've been open about 3 years and unfortunately had to get the big expense of replacing our entire roof and then also had some other structural things along with that. The estimate that we were originally given was about $75,000 for all of that. Which we saved over time so as not to take out any more loans. We did in that time, as they discovered more problems, approved for an additional $14,000 on top of that. But then we just received the final total and there was an additional $25,000 beyond all of that that they had done without any documentation or consent. Like they never mentioned to us that anything else was gonna happen. And when I asked about it, they just said, "Well, little things added up over time." $25,000 is not a little thing. And obviously, with us not taking out a loan and doing this all out of cash, that is even harder to, you know, have all that set aside. They did offer to reduce that total by about $10,000, which would remain— or it would leave us with the remaining $15,000 overage beyond all of what we had approved.

So my question is, do we just take that deal and kind of count it as the cost of doing business, or should we push back a bit more and say, you know, we didn't approve for this, you didn't ask our permission, and if you had asked, we wouldn't have given it because we don't have that money readily available. Is the work already done? I also don't want to be a jerk. The work's already done. Oh boy. Beautiful work. And that's what makes it hard is I, I don't want to be that business owner that then ends up getting a bad name because I'm fighting on paying for the work that was done, but they did the work without approval.

So yeah, no change orders or anything. I mean, they just like— no change orders, nothing.

No verbal discussion. Bad business. Very bad. Yeah, very bad. It's crazy because they are very reputable. We chose them knowing that they were the most expensive because we had a lot of trust in them, and we really enjoyed all of our time until we got that final bill. And they just don't have a great explanation other than things add up.

And, and when you looked at the itemized bill, you saw you saw the money go towards certain things that you know were implemented? Basically, it all—

that overage all came in some of the, the extra structural work. And there wasn't like broken down, you know, this much for such and such materials of it. It was just for this portion of the work. That's where the overage was. But the guy said he looked over it thoroughly and he doesn't think that there are any mistakes. And I don't think that it's a— like, I don't think that they're scamming us or anything, right?

I think that they just truly— bad communication, and they went ahead and started making decisions on your behalf without you choosing to. So, so yeah, Jessica, I don't know if there's much you can— I don't think there's much you can do at this point. I, I—

that's kind of what I was afraid of.

I don't think so, because the work is done. And unless you're gonna say— and unless you're gonna make them go through and like itemize that and push on it and have the ability to, to speak into it from that viewpoint. Do you see what I'm saying? Yeah, I think, but at the same point, I hate to tell you that because, and yeah, to spend an extra $25,000 over what you thought, because you said they're gonna, you said first they added $14,000 and then they added another $25,000, but then they refunded $10,000. So you're $29,000 over what you thought? Uh, no.

So, so, um, let's see, it was basically $40,000 over the original estimate is where we ended back.

Okay.

And then $14,000 of that we did approve, that they actually talked to us and said, okay, this is the change we need to make. We did like in the back, it had to be full thickness replaced. Okay. And so they talked about that, we approved to go that extra $14,000 beyond the $75,000. So you approved that final bill? Yes, but then the final bill was $114,000. And so that, that means like $25,000 of overage that we never talked about.

But then they came back and they said, we'll give you $10,000 back, right?

Yes, I sent them $10 back, so that leaves us with about $15,000 of the overage that wasn't approved. But I mean, and if we need to make it happen, we can, we can continue. Like we cut our salaries back to try to do all of this in cash and we can continue doing that.

I mean, I can tell you, I can, and Rachel, you're probably better suited for this, but anytime I've done a project in my house, it's always been a little bit more than, yeah, it's just like over budget, over time. I mean, that's like kind of the classic. It always is. Yeah. And so we always plan for that. And, and maybe it, I mean, that's just the way it is now. That's like projects, like renovations. But typically if I'm having something serviced or replaced, what they tell you it is usually is what it is. Yeah.

Yeah. Yeah. It's, we were just kind of shocked by it. Uh, yeah.

And to the tune of $15,000 at this point, I feel like they were fair enough to say, okay, you approved the $14,000 and then they said, oh, we're sorry, we comped the $10,000 back. There's part of me that I don't know if I would keep. I mean, you could push on it a little bit more, but I just don't know how much you're going to get out of this.

Yeah, I mean, you could push and just say, hey, this is the amount we've agreed upon. We did not sign off on the change orders of— no. And again, they may have gotten in it in the structural stuff. But to your point, they may not be scamming you, but they're like, no, we have to do this. And so it's just the— it's the communication. It's a communication aspect of it that's really frustrating. Really, really frustrating. And you got a top of the line company, and they, you know, I know those kind of companies, and they will get, they will have the best of the best of the best, and that's what you pay for. And you get what you pay for in a good way, but you also sometimes could be overpaying for something that you probably could have gone maybe middle of the road, and been is fine. You know what I mean? But that's hard. So, yeah, Jessica, I'm sorry.

The teaching, I guess, would be when you do things like this, really plan 15% to the 15% overage.

Yes, and you have to be on that communication with them. So, yeah, Jessica, I wish we had a better answer for you, but, oh, I'm sorry. All right, let's go to Hunter in Sioux Falls. Hi Hunter, welcome to the show.

Yes, thank you for having me.

Absolutely, how can we help?

Yes, so I am just starting the debt snowball, my wife and I, and I— sorry, I bumped into a financial planner, didn't get his name or who he worked for, but he recommended that I amend my W-4 so that my—

sorry, I'm Um, what are you doing over there?

And I was trying to stay busy while waiting to come on the line.

So no worries, no worries. So they said to adjust, adjust your W-4 taxes to what?

Um, because currently I have maximum deductions taken out and we do receive about a $6,000 to $8,000 a year tax return. Oh yeah, yeah, I should amend it so that it's a lot less so I get more money weekly to put towards the debt. That's right, correct. I would agree with him.

Yes. Okay.

And I know the tax forms changed in 2020. Uh-huh. Um, how do I go about doing that?

It's actually easier than ever. There's really, there's literally a line item on there where you can change the amount of withholding. You can just write it in. And so what you can do is think about, um, if not much has changed on your taxes, you can say, okay, um, what was my typical tax return? Our tax refund, and then you can go through and divide it by 12. And that's a really good way to get an estimate of what that is monthly and just adjust it up or down. And the lines, I mean, I'd have to pull it up on my computer, but the line item is literally on there for you to change it and put in the withholding that you'd like it to be. So you can change it from what it was to what you'd now like it to be.

I mean, you could get close to $600 back, Hunter, each month, which is amazing.

And by the way, that's what we would tell anybody to do who's getting a large refund, especially if you're on Baby Step 2, that money, I mean, we say it on here all the time, Rachel, your income is your biggest wealth-building tool. You need your income, especially if you have the target of trying to pay off debt, if you're trying to save money quickly, as much money that you can have in your pocket at your disposal to throw at that target, gosh, yes, get your hands on that money.

Yep, so we are with your financial advisor, Hunter. So yep, go in and do that. And we actually have a great blog on ramsaysolutions.com all about about taxes and adjustments and withholdings, all of that to get this right. So we'll put it in the show notes for all you guys watching on YouTube and listening on podcasts. But yeah, Jade, that's one of our— when you're starting Baby Step 2, when you're starting to pay off your debt, there's a couple of go-tos that we've learned over the years to check. Insurance, check your insurance rates. You could be spending more than you need to, so you can get some cash back. Be looking at your expenses and what you're spending every month. And one of them, is your taxes. You know, put money back in your pocket so it's not sitting over in Washington all year. And then you get an $8,000 check that you can use. You could be using that to get ahead financially. So, yep, Hunter, make those adjustments and yeah, get as close to zero as you can. And yeah, and tax season doesn't have to be a big pendulum swing one way or the other.

Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family, and then a curveball hits.

You know, we hear it all the time. Uh, a car accident, a cancer diagnosis, a heart attack, and suddenly everything changes.

Yeah, and that's why you've always said that having term life insurance from Zander is essential, because it protects your family if the worst happens.

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All right, let's head to Kansas City, and John is on the line. Hi John, welcome to the show.

Hi there, how are you? I had a, um, I'm in a situation where last summer I received received $175,000, just a lump sum. This summer I'll be receiving another $183,500. And the next year from January on to the 12-month period, I'll get paid $130 grand over that 12-month period. So I was just curious, I've spent about $75,000 to $80,000 between taxes and other expenses from that payment I got last summer. So I was just, I was, I had two main questions and the first one was, how to invest some of the money that I have right now. I already have— I put $40,000 in a 401(k) and have money going into a Roth IRA and a life insurance policy. And like I said, the question I had was how could I invest that money and also would I be able to comfortably and feasibly afford a $50,000 vehicle? Wow.

Where's all this money coming from, John? Is it work or is it a trust? Trust or something? Athletics.

Yeah, I'm in sport. Oh wow. So it'll keep coming.

You'll keep earning like this? Um, honest.

Yeah, I should have mentioned that. Um, it will go down. It won't, it won't be as much. I won't be, it will probably level out to be anywhere from $70,000 to $100,000 per year on average. Um, after, after this pay, after this, uh, this pay. Now do you do anything else to earn money or it's just that?

I do not.

Um, you know, with the money I have or I'm receiving, I thought about maybe a business or a house or just, you know, brainstorming things.

Yeah. Okay. So I added up the numbers you gave and I, if my math is correct, I could be off, but it's, it's close to half a million, $488,000. Mm-hmm. How much of that went to taxes and like what's left of everything? Like I know you have a payment coming next year. You said, um, yeah.

And so I've only received so far the $175,000 last year. Okay. I believe I've spent about $75,000 to $80,000 between expenses and taxes. Okay, so you have about $100,000 of that. Well, I should mention I put $40,000 into a 401(k), so that's not necessarily liquid.

Oh, okay, gotcha. And what about just your month-to-month expenses, like just your eating and your rent, and how are you paying for that?

That's through these payments for right now. And that's my monthly, it totals up to be about $2,000 to $2,500. And then the other thing I wanted to mention was I do want to like give some to charity and, you know, tithe. Um, so that will be like about around 10% of all of this will, will go towards charity.

Okay, so what I— then I'd probably— I mean, I would do this like any other budget. I would sit down and I would— because you're getting this every single year. So for this year you made $175,000 a year.

Could you get hurt or something and that, that you won't get the $183,000 next year, or is it guaranteed?

So that $183,500 will be, um, actually like beginning of June this year, and that's guaranteed. Also the next payment, the one in January, the $130,000 across 12 months that I will start receiving in January is guaranteed. And I could, it'll be up to discussion, but I could potentially even start receiving more money next year. And then even after that, we'll likely, it'll definitely start.

01:08:51

Gotcha, 'cause I, the thing with payments, and I feel like this would be the same if someone is in sales, right? And they have a massive, a $200,000 deal, $50,000 commission coming in, not to get ahead of herself and making sure that you actually have them. No, don't spend the money before it comes, right? So don't go out and buy a bunch of stuff and then wait for that money to hit. So you want to be cash flowing it well. So when Jade said, yes, setting up like a regular budget is exactly right. So you'll just know ahead of time, okay, in June, this big payment is coming in. So I need to know what I want to do with this. So yes, to answer your question, yes, you can totally afford a $50,000 car.

Yeah. Um, what about how are taxes being taken out? Are you responsible for that or are they doing that? Because I don't want you to get hit with a massive tax bill. Well, you said you're spending all this.

Yeah, because you said you paid $75,000 in taxes already, right?

Well, that was— no, I didn't. I paid, um, I paid $20,000 upfront in taxes and we have, uh, we filed for a tax extension this year, so I just paid that up front. But I hired like a financial advisor and he has a CPA that helps me with taxes and things like that. Okay, I pretty much pay them to file my taxes.

Taxes. Okay. So just overseeing that, making sure that's done properly. And then yeah, I'd, I'd go through and I'd budget it out and I'd try to make this feel a little bit more normal instead of feeling like I've got this, you know, windfall of money and I can just do a bunch of stuff with it. I take it and I'd say, okay, if I'm not gonna get money for the next 12 months, what is that every month? Is it around $15,000 or $16,000? And then plan it out like a normal budget, whatever your rent or mortgage is, whatever you're gonna pay for. And then you can budget amounts every, every month. I'm putting aside this much for my car, or I'm putting this much aside for, you know, whatever, what have you, just a typical budget. So you feel the normalcy of that and the kind of like the, the nature of how that feels month to month versus kind of trying to make every decision in one fell swoop. Yes. Does that make sense? Yeah, I think you can. Yeah, I think you can afford the $50,000 car, but there's part of me. How long have you been earning like this?

How long has this been going on?

This has been— so last summer was like the first big payment I received like that. And then like I said, I'll get one in about 4 or 5 weeks and that's beginning of June. Here. Um, and then it will be— and then like I said, the next— in January I'll start receiving that, but it'll kind of level out from there to like more of like a normal salary of like, okay, to $100 grand.

So if you take the $50,000 out of the $183, then yeah, you're just taking, uh, the $130 and you're budgeting your 12 months based off of that. And I would do it that way. Um, there's part of me that would love— how old are you? 24. There's part— I'm just gonna say this and you don't have to do this. This is just me being your buddy. There's part of me that I would take this money now and budget it that way and I would save up. I would teach myself to save up the $50,000 out of your budgeted money every single month and start exercising that muscle of delayed gratification because there's something to that at a young age and especially when you're receiving money money in big clumps like this, resisting the urge to dump it all on big purchases right away. Does that make sense?

And yeah, I'm very like— and that's one reason I'm calling is I'm pretty conscious about— I don't really buy luxury items for myself. This is kind of like the first thing I've been prompted to like really buy like for myself, so to speak, that's like a luxury item. Um, but my question on that is like, how would you go about, um, kind of saving on the, on the money I'm receiving? Is there like a way that— are you talking about investing in stocks or like—

okay, good Yeah. So we'll set you up with EveryDollar, which is the budgeting tool that we use. It's more than just a budget and it's going to not only, uh, help you manage the money, but it's gonna teach you our way of thinking and our guided plan here at Ramsey, which is the Baby Steps. So here we, we focus on doing a couple of things really well, but doing them in order and focusing on one at a time. Mm-hmm. So you can actually achieve it. So you're a person, it doesn't sound like you have any debt, right? Right, correct. So that jumps you automatically to what we would call Baby Step 3, which is making sure you always have— in your case, I'd have 6 months of expenses. We say 3 to 6 months that's just parked in a high-yield savings account. It's not invested. High-yield savings account, it's liquid if you need to get to it, but it's also set aside from your normal spending money. And then from there, you do Baby Step 4, which is you're investing 15% of your gross, which you've already started that, John, so well done.

So Yep.

Just make sure it's 15%. Yep. And then no more, no less at this point. And then if you wanted to, you're a young guy, you don't have children yet, so you can skip Baby Step 5 for now. But then Baby Step 6 is if you have a house, you're thinking about paying off the house, or if you haven't, you can start putting a down payment for a house, that sort of thing. And then after that, after you've paid off your house, then you can start investing more. But that's kind of our guided plan on how we think about moving through building wealth and making progress with your money. So it sounds like you're doing a lot of those things. You just needed like the tune-up of it. Yep, that's right.

Sure. Yep, so. Absolutely. Yeah, and then you had the giving aspect to throw in there too. So, and I think that that'll be in EveryDollar. And I would tell you, John, that when you give out of this, I probably would recommend having 2 or 3 places you give to, 'cause sometimes, sometimes, if it's one big donation, and especially if it's a smaller nonprofit or something, and you end up being the one propping them up for a while, because this is not money that's gonna be continual throughout the rest of your life, you know what I mean? Like, just be wise about the giving. But yeah, I think you can do it all.

01:14:26

So, you just said, give to a couple different companies, and what was the reason for that?

01:14:30

I would, because if you give this, if you give $18,000, $20,000, $30,000 to one, that's a huge windfall on them. And if they expect any level of that going forward, you don't wanna be the largest donation, right? So just something to think about, 'cause it's just gonna be a lot of money at once. So, yep. So John, absolutely. I think you can be giving, invest 15% of your income. You can go enjoy some of it. And I think you can afford that car if you want it. And then be thinking about real estate too and putting a big down payment on a home. At those buckets. It's a lot of buckets, but I think you can fill them over the next 12 months, uh, with all the work you've done. Buying or selling your home is a big deal, and with all the clickbait headlines out there and conflicting data, it's really hard to know what's actually happening in the housing market. And so we're here to make the latest trends easy to understand. So last month, the average 15-year fixed-rate mortgage rate ticked up a bit to 5.56%. But it's still under 6%, people.

So we're happy about that. Now, if you are financially ready, a small rate increase like that should not hold you back. So go ahead and jump in the market if you are financially ready. Now, median home prices went up to $415,000 last month, which is pretty typical for the spring market. And with more homes available and more buyers entering the market, it's a great time to buy or sell. So if you wanna learn more about the housing market trends and get free tools to help you when you buy or sell your your home. And to do it with confidence, go to ramseysolutions.com/market, or you can click the link in the show notes if you are listening on podcasts or watching on YouTube. All right, let's head to— is it, is it Iya in Buffalo? Did I pronounce that correct? It's Iya. Iya, I'm sorry. Yes, well, thank you for calling, Iya. How can we help?

So I have a question. I am about to run into about maybe $2 million, a lump sum, but I have bad money management. I give away my I spend my money. I am currently right now living in poverty. I am a nurse in, um, my town, so I have had tons of money. I go and buy high-end cars. I've bought houses, sold houses, given houses away, diamonds. Um, I cashed out my 401k about a couple years ago. But yeah, what's going on? I make really, really silly financial decisions. I've been Chapter 7 bankrupt 3 times. Oh, how old are you? 44.

Okay, and are you ready to break that cycle? You know it exists.

Yes, and I am extremely fearful. Like, when I get this money, do I like go and pay cash for another house? Um, like, do I finance the house? I just don't know what to do, and I don't want to fall into my old pattern, like, yeah, going out of town when people don't even know.

Do you know— have you identified identified the source of what that's coming from? Have you identified what causes you to— 'Cause it sounds like you're a bit of a rescuer. It sounds like you come to people's rescue who don't, you know, you're ena— It sounds like you're a bit of an enabler. Have you identified why that is? Yes. And where that comes from?

I've always been into, you know, shopping and things. My grandmother was very wealthy, so we shopped, we did well. My brother was murdered in 2013, and I started to pad my life emotionally with materialistic things, but I couldn't fill the void. So it just took me into overdrive. So like, we talking about me waking up at 6 o'clock in the morning and catching a flight to Texas just to eat, just to come back home that night. Like, crazy things that you won't even— you couldn't even think of.

Have you figured out how to remedy that in a, in a healthier way, or how to kind of heal through that?

Well, I have a grandson now, so he's I think I've healed it. I think I've, I've not healed the homicide, but I've navigated through it. So now I'm not, um, as gitchy to go and spend money. In addition to, I'm hurt now, so all of this great lifestyle went down the drain. I can't work right now because I'm hurt. Yeah, this is where this, this is where this $2 million is going to come from.

How long are you, how long are you unable to work? Like, what's the status of that?

That? So I've been out of work already for about 18 months.

Oh man, and the $2 million—

did you get hurt on the job and you're getting a settlement?

I did not get hurt on the job. I had a fall, but I am getting a settlement. Okay. For about almost $2 million. So I need to refund my 401k. I need to buy another property. I need to buy a car. Like, I need things to do, but I also want to open up a business. I want to open up a home care business. Okay, let's pause.

Let's pause. Let's cause, because you're, you're already starting to go back into that mindset, which is the moment I have money, I gotta spend it on something. And that's not true. So I want to open up, uh, the conversation with a really basic principle that we teach here. And we, it's so basic that we teach it to kids, which is when you have money, there's 3 things you do with it. You give some, you save some, and you spend some. Them. And you have to do all three. And you have to do them in the correct proportions. And if you can walk away with that little piece and filter everything through that, Aya, that's going to help you. Because you've gotta save some. And that's the part that's missing from your equation. So, those three things. And then the second part, which I'll call it the second part, but it's, it's probably the most important thing that needs to underpin all of of this, which is you've gotta decide, and I don't know what your relationship with debt has been, but you've gotta decide, no matter what, I don't borrow money. Mm-hmm. Okay. At all.

Ever. I'm done.

Not for business, not for other people, not for cards. We don't borrow money. Aya, say it. I don't borrow money.

I don't borrow money. Ever. Keep that.

Keep that so close to your heart. Keep that so close to your heart, okay? Because this $2 million can change— this will change your life. This will set you up for a life without financial stress that you've been in, you know what I mean, in these cycles. And so, we'll tell you kind of what we would do. But first, I would also say, so, Jade's big, big point, did you hear? Give, save, spend, no debt. I'm gonna tell you, you need to find someone. I don't know if it's someone, a good friend, a family member, someone in your church, church, but someone who is good with money, someone who has built some wealth slowly over time, and you look at them, and they're the kind of person that you're like, "I trust them, how they live their life, and the way they view money, but they've done well. I want them in my life." And I'm not kidding. Before you make any big purchase, I want you to call that person before you do anything.

01:22:04

Did anybody come to mind? Did anyone come to mind when she said that? That? Yeah, 2 people. Okay. Yes. And they need to know everything.

I, I mean, see, I'm serious. The deep— I hate the word accountability because it feels so like I'm going to tell you yes or no. I don't know. It's like a friend, but, but a good friend, a true friend who can be your financial friend, who's going to know all the numbers. They— you need someone in your life that is with you in this. And not because you're not capable of doing it on your own. I think you can build that muscle and you can. But for anyone out there who's single and doing this stuff, and especially if you're coming into $2 million and you're so self-aware enough to know, like, I'm not great at this. Have someone who's good to, to, to bounce ideas off of. Okay, so, okay, those are important. Now what are we going to do with this $2 million? Let's talk real quick. What is your car situation? You threw out about, about a car. What are you currently driving and do you have debt on it?

I'm not driving anything at the moment. I can't drive. I have, um, you can't drive? I have to have surgery, so I can't drive because of your health.

Okay, how soon, how soon do you think it'll be until a car becomes part of your life again and driving becomes part of your life again?

Probably about 8 or 9 months, maybe about 8 months.

Okay. Okay. So let's just hold off on that.

What about other debt? Do you have debt that needs to be paid off? Do you have any debt? Absolutely. Yeah.

Tell us, tell us, tell us all of that. I have probably about a $25,000 Navy Federal credit card that I need to pay off. Okay. Um, you know, just Capital One, Discover, but everything is high limit, $20,000, $10,000. $30,000. Everything is high limit and everything was maxed out.

Okay, so how many— if you had to calculate how much debt you have in credit cards, what's the total right now?

About $73,000.

Okay, okay, so we're going to cut those up tonight, Aya. Okay, we're done with credit cards. Okay, because Aya is a person that doesn't borrow money. We don't go into debt. Borrow money. That's right. So that means no credit cards. Cut them up. Okay, get your debit card out. That's what you're going to spend money on, is on your debit card. No more credit cards. They've been horrible to you. You see what it's done?

Horrible to me. Yes, bankruptcies later.

Not a blessing. Not a blessing. Okay, so now what about the 401k?

Was it a 401k loan, or did you just take the early withdraw?

Like, what did you do? No, I did an early withdraw. I ran into like a little health issue then, so I was able to cash it out. Not too many penalties, um, and I lived off of it for a little while. Okay, so that's not bad to work, but after that I had my accident, so now I've been out ever since.

Tell us more debt. Is there more besides the $73,000? Um, no, 73 should—

what's your housing situation?

I live somewhere where I don't love, so I'm absolutely—

you own a home? Do you own a home? No, you rent? You're renting? Okay, we're gonna take some of this money and we're gonna buy a modest, not a $2 million, not a $2 million home, a modest home. Yeah. To get us started in an area that we like. Okay. So those would be some big purchases, but you need to go over those numbers with a friend. Please have someone in your life that's walking through this with you. And cut up the credit cards tonight. Let that be one of the posts in the ground for you. Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm Rachel Cruze hosting this hour with Jade Warshaw, and we are taking your questions. All right, let's go to Maria in Lafayette. Hi, Maria. Welcome to the show. Hi. Hi, welcome. How can we help today?

So I'm calling because I inherited a decent amount of property from my great-grandmother. Her son, my grandfather, passed in 2014, so it went to me, my two siblings, my uncle, and my biological father.

Oh wow, so split between five people.

Yeah. Okay. I am— everybody's telling me I need to take this to court and fight for ownership over certain people's pieces because some people intentionally damaged the property to lower its property value to try to make it easier to buy me out. Some people have stolen from the estate in a total that's up to like $80,000. So everybody's like, you need to take them to court and get their portions, that way you'll own most of it. What's it all worth? It sells, you can get a fair price. Well, here's the thing, they got it appraised and with all the damage they did to the home, it appraised for $40,000, but it's a brick home in good condition on 20 acres of property with a tractor shed, a pond, two livestock barns, all fenced-in field, and all that together is worth $40,000 and a bridge going over it.

Are you saying all that together or just the home on the property is worth $40,000?

They want all of that. For $40 grand. Who's they? Uh, my uncle that is currently living in the home.

No, no, no, I'm saying market value. Like, if you appraise—

if you took it to a buyer, he got it appraised. The house with the 3 acres immediately around it is $40,000 because they damaged the home so much, and they're— they all smoke meth. Oh, so the entire house needs to be gutted because those vapors go in the wall. Yeah, yeah, yeah.

You're in a— that's a not a, not a good, not a good spot.

So, and they're also very aggressive towards me because their mother, when she passed, she left me everything because she's been no contact with them because of drugs, theft, everything else. So I got everything from her. So they're already very aggressive.

Pissed at you for sure.

How much does this matter to you, this $40,000 shack, meth shack?

You know, honestly, for real, me and my husband are in medical debt, so I'm trying to wonder if it's worth it to fight to get a fair price to try to get us out of debt so we can move on with our lives. How much debt did you say? Um, in total, without our mortgage, we're about—

with my student loans, all of it, all of it except the house is what I want to know.

All of it except the house, it's probably like $36,000. Okay.

And how much do you guys make? A year?

We make, uh, right about $120K a year.

Okay. And how much— you said that his mom left you everything. Has she passed away? Have you— did you get an inheritance then too, or not yet? She's just going to leave you?

She's— she passed. She didn't leave me any money, but she left me farmland that's in a 90— so in Louisiana, it's a 99-year lease. I inherited that lease, so it's still valid with the people who with it, which is fine because that's just passive income.

Okay. Gotcha. Okay.

Um, so, but also where they're at right now, none of them are paying the taxes. So I'm having to pay all the taxes on everything so I don't get liens against me. And since they're living in it, it's a whole legal process to evict them to even try to sell on the market. And they don't want to do that. It's like I have to make a poor decision either way. It's just a hard decision. I'm just trying to decide what, how hard it should be.

What's the process if you say, if you said, to a judge, I want no parts of this, and, and take me off. What needs to— have you, have you checked into that?

I have. And to just walk away from it for $0, I could just sign it over to them.

And I, I almost would.

Well, Maria, listen, if it's $40,000, because I bet the house— you're right, they're gonna have to gut it, or, or it's gonna be done.

I mean, yeah, uh, but it's also another 20 acres of land.

How much is that worth? Have you, have you appraised that?

The 20 acres that it's on? Yeah. Like, I was told by the appraiser— she didn't do an official appraisal of that, but she said for all of the property it'd be close to $120,000 just because of location and everything, not including the house.

Okay. And there's, um, so each of you, when it's all said and done, it, it just— in a perfect world, if everyone sold it, sold it, and you guys cashed out 5 ways, you each would get around $30 grand-ish. Yes. Okay. Um, so the question is, from a, from a— and they, they don't have the money to buy you out. They don't have $30 grand. No.

And, and are they the ones?

Are they the ones since I think 2014?

The other 4, are they all kind of off the rails? All 4 of them?

Yeah, like the uncle stays on drugs and—

yes, who's the executor of the— hey, who's the executor?

The executor, uh, was a family friend who, as soon as this was done and like everything— so the succession is done, he wants nothing to do with any— he won't even answer because he was like, all of y'all are nuts and I'm not dealing.

That answers my question, which is you're in this with a bunch of just like dirt syrilics, right? And you have to decide how much, like, there's mental energy and just, there's a lot of personal toll, emotional toll of this that you have to decide if you wanna even engage in.

And if you went the litigation route, how much will attorneys be and all that, that will cut into your 30 grand, you know what I mean? Yes, yes. So you gotta just think through from a, from exactly what Jade's saying, from a mental investment standpoint, an emotional emotional and a financial, at the very end of it all, what's worth it? And I wish a judge could step in and have you gone that route at all? Have you looked into any legal proceedings?

I have. Oh yeah, I sat down with a lawyer and spoke with a judge that she knows. And my options are sign over and walk away and then send them all a notice to say, hey, you owe me $700 in property tax 'cause in this state, when you owe property taxes, one person gets a notice and they're expected to inform the other people. Okay. He didn't inform them.

So you could do that, or?

I had to pay it, so I didn't get a loan.

What was option B?

So they said I could walk away and just try to get what I spent in property taxes since I covered all their share back. Okay, what's option B? Or option B, I can file what's called, I forget exactly what it's called, but it's basically a motion where you have to make a choice, buy me out or we sell and this is done.

Yes, I'm— do that.

Just do that.

Yeah, push forward on that one and just see what happens.

That one is expensive because they— how expensive— would argue it, and it would be—

well, they have, they have no money. They can't argue it. They can't hire lawyers. They don't have any money.

They can argue with you personally, but they can't do anything legally. How much does it cost to do that? Right quick.

Um, I was told to be prepared to drop at least $5,000 out Right. And then if they argue it, possibly more from there. Okay.

Well, do you— yeah, if you have $5,000 available, which you guys are in debt, you may not. I don't know it. I don't know, Jade. Part of me would just walk away.

I think I might walk away. I don't know when to hold them and when to fold them and when to walk away.

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Okay, today's question comes from Natalie in Georgia. She says, I'm currently on Baby Step 6 and earn over $100,000 per year. I invest 10% of my income in a Roth IRA. My monthly expenses are around $6,500. I live with my partner in a home that he owns, and we have no plans to get married. I pay him $2,500 a month, which is significantly less than what I would pay living on my own. We keep all of our finances completely separate. I don't want to buy a home, so what would you recommend I do instead to continue building wealth and long-term security? I want to make sure I'm following the spirit of the Baby Steps while also being realistic. Realistic about my, uh, situation. Okay, so just to recap, she makes a good income, she's investing for herself, her money is separate from the, the live-in boyfriend, but it's his house. So Rachel, there's a lot to unpack here. I'm first gonna answer this question based on her way of living. Okay. Okay. Which is, if I were you, you're not married to this guy, this is his your money's totally separate, then yes, I would just keep investing and building wealth.

And if there is no— essentially, you'd be on Baby Step 7. So you'd be investing well beyond 15% and continuing to build your wealth for yourself without his input or name attached to any of it, right? That's right.

Absolutely. And yes. Yep, I would do that. And then I probably— I don't know, I just thought of this as you were talking, Jade. My fear is because you're not married, there's no legal tie-in, right? Like, even even if your name obviously wasn't on the home, but you guys were married and you split, it's seen as a marital property. Like, so you would get some level of equity. You're getting nothing right now. And if he decides to walk away in 4 months, you don't, from a housing perspective, you've built nothing on that side of the equation.

So, unless you made some sort of a document that you both sign and make some sort of an agreement that could hold up in court.

Yeah, that if they break up, they have to sell the home. And like, yeah, there could be that. That, right?

Because I think there is— there are documents for that, depending on the states.

So I would honestly, I would— my only— yeah, you're doing good with everything else. My fear is the housing element of this for you. So either— yes, you need a formal— that's right, a formal document that will hold it up in courts to say if this long-term relationship— what do they call it? It's mar— it's, um, there's a term for it. I'll look it up. I'm blanking. Um, that if— yeah, if we, if we separate, if we break up "Still, like, what we've been building together actually can be seen as like common law marriage type thing." That's a possibility. And/or if that's not gonna work in your state, specifically in Georgia, then maybe on the side, you're just putting the money away and earmarked for the future and earmarked as a possible down payment on a home if you guys break up. So you can get, you can be in a good position from a real estate perspective long term. Term. Yeah. So, uh, that would be the only thing I'm concerned about in this. The biggest risk you have is from a real estate perspective that you're just paying rent, you're building no kind of equity.

Absolutely.

Uh, in, in your life, it's called a cohabitation agreement. There we go. And that's what you can do. But the bigger part of this, and this is worth saying, but home ownership is such a big part of wealth building. Yeah. And if you don't have that cohabitation agreement, then your portion of that wealth building effort goes away. And then if I were her, I would be looking for other ways to diversify my investing. Mm-hmm.

Um, to be able to get to it if you needed it. Yeah, absolutely.

Um, but now let's talk about this from a, from a Jade and Rachel perspective. Okay. Which I think we should, and this is not anything on judgment. This is just for you as a friend. Yeah. This show and, and we're the host. I question the commitment that's really here because if Sam Warshaw, that's my husband. If Sam Warshaw said to me, I love you Jade, you are the love of my life. However, ever. I'm never going to marry you. I don't want to marry you. And furthermore, I don't want my finances to even touch your finances. That, that gives me cause for pause, I'm just gonna say. And it causes me to go down into shutdown mode. And more so, I have many questions. Why you don't trust me? Is there something about me? Did I do something? Is there something about you?

Right? That's right, that's right. Absolutely. I know. And that's part of the world today, Jai, that I'm like, I just kind of like, do this— what's the dog where they like, turn to the side a little bit? Yeah, because— and not that everyone has to like, get married and have kids by any stretch of the imagination. But when you are choosing to basically be married without the commitment, that's where I'm like, "What's going on?" It just begs the question. "What is that?" Yes. So, yep, I'm with you. Jade. I think that's fair. That's the friends talking. Yeah, friends talking. If we were having a glass of wine, that's probably where we'd be like, "Gosh, Natalie, what's up with Jared? Jared kind of sucks. Why doesn't he want to get married to you? What's going on?" Jared. Oh, all right.

What a guy.

Let's go to Memphis, and we have Brittany on the line. Hi, Brittany. Welcome to the show. Hey, guys.

Thanks for having me on.

Absolutely. How can we help?

So my question, I'm 47 years old and about 6 to 2 months ago, 6 weeks ago, I bought a new car and then recently have decided I wanted to start my debt snowball. And now I'm like, what do I do with the car?

Yes. Okay. How much, how much is it? How much did you borrow on?

90,000.

90,000. I'm gonna spit my coffee out. She almost choked. Oh my gosh. All right, yeah. How much do you make a year?

Um, I make about $150,000. I bring home about $9,500 a month. How much is the car payment? $1,300.

Girlfriend, let me tell you. Oh gosh.

Okay, I'm sure Have you looked at, at all selling it? Like, what could you get? It's a 2-month. You'll have some depreciation for sure. But if you turned around and did it—

Yeah. Plus I was upside down.

Oh, got it. That's part of it.

But I think it was only about by like $5,000 and I did put money down. How much could you get out of it for? You mean this car now? How much would I end up probably owing after selling it? Yes. Yep. So I would probably— I'm going to say I haven't looked really in depth, but I'm saying probably $15,000 to $20,000 upside down.

Yeah. Okay. The— wow. I would still get out of it because to your point, if you're walking the Baby Steps now and you realize this is too much car for you, which it is, and obviously it's on debt, I would definitely make that transaction. I just wonder, though, do you have any cash laying around to put towards towards this?

Well, I have about, um, $15,000 in the bank. Okay, good.

What other debt do you have in my checking account?

I have $46,000 in student loans, and that's it.

I don't have any credit card debt. Okay, perfect.

Did you say $4,600 or $46,000? $46,000. Okay, just to make sure.

It was the first one. I wish it was the first one. Well, you make—

that's what I was laughing about, because I wish it was.

Yeah, you make good money. You have $15,000 in the bank, which is Awesome. So what I would do, yeah, I would throw a lot of that cash too, which is gonna hurt. You're still gonna have to take out a small loan. But I mean, I would, you know, I would look at, yeah, I mean, $5,000, maybe—

If you do a private sale, you might hit it right on the head.

Yeah, you might. On the $15,000. You may have to take out maybe a $10,000 loan from a credit union to get you like a $6,000, $7,000 car and a little bit of the difference. But yes, I would, because you'd have $10,000, then you have to pay pay off. And I think you could pay off $10,000 if you put $2,000, $3,000 at it a month. You could get this paid off in 3 to 4 months, that, and you'd be done.

Yeah, after bills and everything, I have about $4,500 left over every month.

Beautiful. Okay, good, Brittney. Yes, okay, so that's great. So that's what I would do. I would get out of this, 'cause that $1,300, even over the course of, gosh, a couple of months, has eaten into it. So I would, as quickly as you can, sell this car, take a loan out for the difference and a little bit more to get you around in a $5,000, $6,000 car. Yeah, and then—

And then you're paying $6,000 a month on student loans.

Yes, and then you're knocking it off. So, well done, Brittney. I'm sorry about the $90,000, but you can get rid of it. It's gonna be painful, but you can do it. When I talk to people on The Ramsey Show, 90% of the problems I hear come down to one thing: not having a plan. Plan. They're not living on a budget. They have no idea where their money's going. Money is just happening to them instead of them happening to their money. And guys, that is so normal, but it doesn't have to be normal for you. And that's why I want you to go download our EveryDollar budget app. EveryDollar not only helps you tell your money where to go with a budget, it also builds a plan to free up extra money so you can pay debt off faster and start building wealth. And the best The best part, your plan is completely personalized to your life. It's the same advice that you would get if you called the show, and it's right in your pocket. So, don't keep living normal. Go download the EveryDollar app, answer a few questions, and get your plan today. We wish we could get to every call on the show, 'cause we always leave the show with a couple people still on the board that we haven't been able to get to.

So, if you have a money question, though, and you're like, "Listen, I may not wanna call the show," don't worry, because we have a place for you to go. Go to our website and use Ask Ramsey. So, Ask Ramsey is our free AI tool, and it's been built and trained is what they call it. But you throw everything in this thing and it shows over over the past couple years, all of our books, articles, everything in this. And you can ask it very specific, detailed questions, and it will give you an answer as if you had called the show. It will be a Ramsey-approved answer and what to do, and it's fantastic. I just saw some numbers in a meeting this morning about it, and it's like going crazy. It's great. Nice. It's so great because we want y'all to figure out what to do with your money. And if you need help, it's there for you. So go to ramseysolutions.com or click the link in the description if you're listening on podcast or YouTube and check out Ask Ramsey. All right, let's go to Corey in Atlanta. Hi Corey, welcome to the show. Well, thanks so much for having me.

Absolutely, how can we help? So I am debating on buying a new house. My dilemma is I am almost in Baby Step 7. That's a goal I've been working towards for a long time. And I'm a little scared to take out a larger mortgage when this one's almost gone. Oh, man.

How much more of a mortgage would you be taking out?

So we are down to $27,000 left on our current house. And the new one, the new mortgage would probably be $350,000 to $375,000. Oh, gosh.

Yeah. Mm-hmm. And how much is your current house worth?

About $550,000.

Okay. So you'd be looking at like an $800,000-ish, $900,000 home. Yeah. $850,000, $875,000 range. Yeah. What's the motivation to move? Is it, um, just size or is it a different area of where you guys are in the city?

Yeah. Yeah. The primary motivation is to be closer to work. For the last 23 years, I've worked about an hour from where I live. —and you would cut probably 25 minutes off of it conservatively.

Yep. Wow. Yeah. How much do you make a year?

We make about $300,000. Okay.

And how old are you guys? We're 43.

Yeah, I mean, if you— I mean, you know, if it's in the parameters, like, this is just like the safest way. If it's in the parameters of what we talk about when it comes to mortgages, that the payment's no more than 25% of your take-home pay, you do it in, you know, a 15-year fixed rate, and all of it, it's still, it would still be a green light from a Ramsey perspective. It's so funny, I feel like this is one part, like the second, the home upgrade. Yeah, yeah. Like if George was sitting in here, I think he'd be more good with it. Dave is still like, I'll never tell you to borrow money. Yeah, I agree with Dave. But I, but yeah, and I think that you guys have enough of the motivation because you've been doing this, that I think you would pay this off off pretty quickly, 4 to 5 years. I think you guys could get aggressive and say, "You know what? We're gonna get rid of this." I don't think you're gonna like having a mortgage. I think you've made so much progress on the home now that if you got into it, you'd pull a John Delony.

John always talks about this. He's like, "I could not sleep until this mortgage was paid off," because they got a small one when they came to Nashville. So, I think that's gonna be you guys. But if it's in the parameters, I'm okay with it.

And I would say the same thing. If you hear any pause from me, it's only because because you had pause. You're like, "Oh, we're so close." And I can, I feel that for you. Like, I feel the feeling of like, almost—

We're starting back over a little bit. Yeah, yeah, yeah, yeah.

But if it's in your value system, then it's totally cool.

And quality of life, all of that comes into play. And again, you're not being unreasonable or irresponsible. Not at all.

Yeah, every day, when I'm driving home, and I drive by the location where the house would be, and I see the GPS say 25 minutes to home, home, I'm like, I just want to move. Home, do y'all have kids? Oh, this is all— this money is going to be flying out the door again. That's making fun. It's just, I've been debating this for a year and we finally found a house that actually like, oh good, is everything that we want. So now it's like, all right, the rubber meets the road.

Are we doing this or not? Yep, yep, yep.

I think if it's in those parameters, which I think it would be, um, for your income, yeah, I think you guys, yeah, would be able to to do it.

It's nerve-wracking.

Yeah. What are you— if you had to give yourself like a percentage, like what are your percentages? Are you like 80% I really want to do this house and it's just 30%, you know, it's just 20% that says no? Or are you like 50/50? Where do you think you are?

Prior to seeing this one that we really liked, it was very low because we've looked at like 50 houses and I've looked at how expensive they are and I was like, I would never move for this amount of money. And then we found this house and I was finally the first one that was like, oh, maybe, maybe I would move for this house, you know? Yeah. I would say it's, it's really like 50/50 right now.

What about your wife?

She, she's more fine than I am because the move will not change her commute at all. So she's like, if you really want to do it, we'll do it. If you want to stay, we'll stay. She's very supportive either way. Okay.

How long have you been in the job for?

Uh, 20 years. Oh, okay.

So you'll probably be there for a little bit longer. Continue. Yes. Uh, yeah, continue there. Yeah. Um, yeah, I'd be okay with it. And again, I think you guys are going to be motivated to get rid of this. Um, I think so too. And so, I mean, if you just said, what if we threw $100 grand at this, you'd be done in 3 years, which is insane on an $800,000 house. Like, you know what I mean?

Like, you're— you could get stupid on it.

Yeah, I mean, for sure. Honestly, you guys could really do it. Not that you have to be that intense, but I'm just saying your natural motivator, Kori, I think will be more intense than the average person because you've kind of tasted this like level of freedom that you're like, it's right there, it's right there. But from the quality perspective of getting almost 40 minutes back each way. It's a lot of time. That's a lot. That's a lot of time that you get back.

That's, and I will say it's worth calling out, like there's few things that are like trump money and time is one of them. Yes, yes, absolutely.

Yeah, and I have a young daughter too, so yeah, don't have too many years left with her. I'd like to get those years as much quality time as possible.

For sure. Yeah, well, take your— it sounds like you guys— the fact you've looked at 50 houses makes me think that you guys have emotionally been there faster than what is reality is catching up to. Um, so yeah, if it's a house you love and it's within the price range yep, I would say go for it. All right, let's go to Joshua in Illinois. Hi, welcome to the show.

Hi, thanks for taking my call. Oh yeah, so I have my fiancée, love of my life, that we're gonna be getting married at the end of the year, and she has about $60,000 in debt between student loan, credit card, and, you know, car loan. And myself, I have the enough money that I could just pay it off once we are, you know, officially married. But I'm just more wanting to know if it would be better for us to kind of like work it through like together, as if it was the baby steps, and kind of be a first thing in our marriage versus me just kind of paying it off.

I mean, I definitely would want to have that conversation of what is our philosophy going to be around money.

That's what I was going to say. Is she— is she committed to living a debt-free life? Because you don't want to go and pay everything off and then she goes right back in her old habits and you guys are on separate pages. Yeah, no, she's doing the great—

doing the Baby Steps, has the EveryDollar like app. And good, right now in her— in her current like situation, she works in ministry and doesn't make much money. But once we are married, she'll be moving in like with me and then like looking for other, like, work that will act like— she has, like, a master's degree in counseling, so, like, once she— she'll be doing that work and her pay will significantly increase.

How much do you get married? What was that? Sorry, when do you get married?

In October of this year.

Okay. And how much of the debt does she have?

How much debt will she bring it in?

Um, with what she's paying off now, I mean, it won't— it won't make a huge dent. Probably still, like, you know, $55,000, like, $60,000. Okay.

And how much money do you have cash wise that you're bringing into the marriage?

Uh, so between my like investments and other accounts, about $300,000. Okay.

Is that, or is some of that $300,000 tied up in retirement IRAs or 401(k)s?

Um, yeah, about $150,000 of it is in the like 401(k) and Roth, and then the other one's in like a TOD brokerage account. Okay, great.

Yeah. Well, the, Yeah, the path to become wealthy the fastest is being out of debt, staying out of debt, saving and investing. And the faster you guys can get on that plan together, I'm a green light. I just wanna make sure your values are aligned and it sounds like they are. So I don't really, yeah, no red flag for me on it, especially if you're both wanting to tackle and get out of debt. I'd say it's a gift that you've been so diligent, Joshua, and what a gift to start off your marriage debt-free.

¡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 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. Com.

Our Scripture of the Day comes from Psalm 145:8: "The Lord is gracious and compassionate, slow to anger, and rich in love." Clara Booth Luce said, "Money can't buy happiness, but it can make you awfully comfortable while you're being miserable." Okay, Clara, that's exactly what I'm talking about. I agree. I agree. I know, once I remember we had this big discussion before we moved. We built a home and moved in, in 2019. And I remember, I had so many nights in our old kitchen. And so, I was like, I just can't wait to be in our new house, you know, because the drawers would all hit. You know, I was like, like this, and then, like, we had 2 babies at the time, and food was all on the floor. I'm cleaning up the food, and Winston was like, "Babe, you know that, like, this exact situation is just gonna be put in a different kitchen." Like, there's still gonna be food on the floor and all that.

And I was like— the craziness continues.

And I was like, "I know, but at least I'll have pretty cabinets, like, that I can look at." I feel ya. It doesn't change you. You go with you. You go with you. It doesn't make you happier, but yet— it is a little more comfortable. You may like the cabinets a little bit more in the middle of the mess. Oh man. All right, let's go to Meryl in Asheville. Hi Meryl, welcome to the show.

Hey, thanks for taking my call. I have a pretty straightforward question. I have an old 401(k) that my— one of my first employers created for me straight out of high school. And when I went to college, it just kind of sat dormant and ended up closing, and now I can't contribute to it anymore. But we're going through through some different financial struggles. I am now a stay-at-home mom, so I'm not contributing the same way. I do work part-time, but it's not, definitely not contributing as much as I used to be. And we have a Roth IRA, which we could roll the 401(k) over into, or there's also the option of closing it, I guess, and using the money for, we have some major car repairs that just came up. So yeah, I'm just kind of curious what your thoughts are on what to do with the 401(k), or just leave it alone. It has a very good rate of return right now, and it has been increasing. I just can't help it increase.

Yeah, so I would roll it over just to a traditional IRA. You can just open that up. If you rolled it over into the Roth, I think that the tax implication will be there, so you have to watch out for that. And no, and I would not cash it out early because you'll be hit with penalties, um, yeah, in all of it. So I, yeah, just rolling it over to a traditional. And, and we would say for anyone who's leaving a job with a 401(k), just roll it over to an IRA, because— Okay. Yep, so that's for anyone because you want to be able to have somewhat control over what's going on. And it's not just sitting in the old plan of an old company that you're working at.

Yeah, and the reason behind not, obviously not cashing it in is it's still retirement money. So if you take it out early, you're going to be hit with the penalties on that and the taxes obviously on that as well. So direct rollover. Over. Yep, great question though.

Yep, that's one that a lot of people do have. And, and if you had the money to pay the taxes and you wanted to convert it to Roth, you could, but not—

but that's usually a Baby Step 7 deal though, right?

And I was going to say, and you probably don't have that considering you said we have car repairs and all of it. So that's right. So that's, uh, yeah. Thanks for calling, Meryl. Let's go to Rebecca in Orlando. Hi Rebecca, welcome to the show.

Oh yes, I appreciate, um, you taking my call and for any assistance "So I have had some recent vet bills. I now need to get a biopsy for my cat that's going to cost $2,521.16. I've not had a working vehicle since December, so I started saving then, and I've put aside $4,877.42. But with my other monthly bills and per the rate that I'm earning per hour, I'm afraid I'm going to have to dip into my car savings." savings to pay for this medical expense for my cat. And, you know, I do need a working vehicle. So I'm trying to strategically and intelligently navigate how to go about not only getting a car, but paying for this vet bill and any future expenses for my cat.

How have you been getting to work without the car?

I've been using rideshare, and sometimes I'm able to work remotely as well.

How much do you have saved for the car?

$4,000? I saved $4,877. Do you have a goal?

Do you have a goal you're trying to get to before you buy something?

Um, I'd like to get a Toyota or Honda because they're reliable, so I would prefer to have saved up between $8,000 to $10,000.

Okay, how quickly will you get to the $8,000 to $10,000?

Um, I had a goal of setting aside $1,000 per month, but it's been a bit tricky because I earn $18.50 $24 per hour, and then I get commission. But what's that look like every month?

Major— what's it— it varies.

I work for a major telecommunications company, and, um, commission, you know, on an average month, what do you make? I've been making for commission under $1,500. So my most recent check, um, I got a raffle and I got about $2,220.39.

But I just mean on a typical— like a typical average month, what would you say if somebody just quickly said, hey, what do you make? What would you say?

$1,500? Um, yeah, we'll go with that.

Yes. I'm gonna break some— and that's $1,500 a month, not a week, right? I'm paid biweekly, so yes. Okay, so $3,000 a month. Yes. Yes. Okay. Um, I don't think you have the money to spend $2,500 on your cat's biopsy. And mathematically, it's just not there. You can't spend a month's earnings on your cat. I wish you could because I love animals and—

We do. We do love animals.

You know? But yeah, this is not financially—

It's like, you don't have a car.

Yeah. And you've gotta pri— It's a question of priority at that point. Do you fund the thing that causes you to be able to work, which causes you to be able to eat and pay your bills, which is your vehicle, or— Do you see what I'm saying? And I'm not saying it's an easy decision to make by any means. I'm just saying that it is a necessary one, that every once in a while, we come to these points where we have to prioritize in order of absolute importance. And this is with anything, by the way. There is always gonna be other things that compete to be the top dog, right? No pun intended, top cat. But the point is, you've gotta— you've got to say, "No, no, no, no, no. This is it. This is the number one thing. And number two is going to feel— it doesn't make number two feel any less important," is what I'm saying. That's right, yeah.

And I think what's, you know— and it's always funny what hosts get which calls, 'cause George Campbell, he probably would say the same thing. But George would spend more on his his pets than all of us combined. He would. All of us combined. So yeah, if he was on here, he probably would have a little bit more, yes, lax, you know, whatever. But yeah, it is a, it's a hard decision, but we have to be wise. And this is where our emotions can easily trump our logic, right? That's right. And you could do that with a home purchase. People go into a home because they're like, "Oh, we love this." "Love it. It's exactly what we want." But it's 50% of their income is the monthly payment. Not logical. And so, we do have to be very, very thoughtful about what's going on. And yeah, and like you said, Jade, we love animals, and I would love for you to buy a car and then say, "Hey, let me save up and cash flow this expense coming up." Yeah, yeah. That could be reasonable too, so.

Yeah, and maybe get a second opinion with the cat. Maybe there's something you can do or there's something that's, you know, will buy you some time. But certainly, please don't go into debt about this. That's my number one thing that I want you to take away is don't hear Rachel and I say, "We don't think it's wise for you to spend your cash on this," and then please don't go and say, "Well, I'll put it on a payment plan or I'll put it on a credit card." We don't want you to do that.

02:04:58

And again, this is always an interesting discussion because we get all the people in the comments They think that we're not animal lovers, and we are. We love animals. We have a dog. We, I mean, yes, it is great.

But it is your livelihood on the line.

That's right. So, we have, yes, that's where we have to plug in. Like, we have to be smart about this. Like, there is a point of our emotions and attachment— Yes. —overdrives like common sense, right? And some people spend tens of thousands of dollars $1,000, and the pet does not get better. And then they, you know what I mean? Absolutely, yes. And they may or may not have the money for it. So, like, so there is, we just have to be logical in this, Rebecca.

So, and there is something to be said, I'mma poke this bear right quick, right before the show is over. Mm, love it. You have to be able to afford the pets that you have. Yes.

So, if you're not in a season where you have a lot of margin, it may not be the season to have I keep throwing George out, but George would say, "Sell the horse," you know? He would, he would. We don't have the money for, to keep up with certain things. He would. Like, there's a point, which is sad, but they will always come back around. Well, Jade, great show. Thanks to everyone in the booth. And remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.