Transcript of Stop Making Excuses and Start Making Progress

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studio, this is The Ramsey Show. I'm George Campbell, joined by Jade Warschau this hour, taking your calls at 888-825-5225. That's the only way to get on the air and have the conversation about your life and your money. James kicks us off in Nashville, Tennessee, just down the road. What's going on, James?

How do you find motivation to start all over again when you spent over 5 years following the Ramsey Plan and then life comes along with a tragedy and throws you right back to step 1 when you're about to start step 5? How do you ask your family to keep doing the same thing over and over again?

Oh no. Well, James, I'm sorry. What, what happened that caused you to go all the way from Step 5 back to Step 1? That sounds terrible.

Yeah, I was about to start Step 5. Um, my wife lost her job unexpectedly about 10 months ago. I was outside on the phone talking to her and a car swerved off the road and hit me. It was a hit-and-run and hurt me. So I was out of work for about 7 months and then she was out of work too. Uh, now we're both— I went back to work AMA a few months ago, and I'm back to work and she's back to work. And but between the bills and while I was out, she went back into debt a little bit. Not too bad, but hospital bills now that I'm completely stuck with because it was a hit and run. So how do I ask her to keep tightening the belt? I'm 53 years old and I've got $20,000 in my 401. That's it.

Okay, well I hate that this happened. I mean, that is such a freak accident that you would be standing on the phone talking to her and a car would hit you. I mean, I hate that that happened. I'm so sorry. You were out for 7 months. During that time, you guys ate through your emergency fund and then some.

Oh yeah.

And so now you're starting back. Is it just the $20,000 of debt?

That's not my debt. That's my 401.

That's your 401. Okay. How much debt?

Yeah, that's all. The debt now, we've got about $7,000 in consumer debt when we was at zero.

Okay.

Plus, the last I looked, about $60,000 in hospital bills that the insurance didn't pay for.

Okay.

Why didn't they pay for it?

My insurance. Because my insurance is not as good as some people's. They paid a percentage, but I'm still on the hook for 20%.

And there was no max out-of-pocket?

No, I don't know exactly what it is, to be honest with you, but it's somewhere in the neighborhood of $50K, the max out-of-pocket. It's not the best insurance in the world.

Okay.

Through an employer. Uh, and like I said, I went back to work early. I wasn't supposed to, but I had to. Now, originally we was making— we got out of debt, I guess it was like $162,000, something like that. And it's been about 5 years doing it. I talked to y'all once before last year and I was close. I was talking to you about the National Debt Relief, dump them and pay it myself. And I did good. And I kept my car like you told me to do. You said I could afford it, my Yellow Jacket. But then a few months after that, I had all it paid off and was pounding the emergency fund. I was almost at $25K, and then this happened, and now we're right back to step one.

I'm so, so sorry.

Um, I mean, I only have $10 in the bank.

But you're back working? You're back working? Are you back doing the same job that you were doing?

Yes, I didn't lose my job. Uh, okay, we were making about $135K. Okay, what are you making now? Her jobs. Now we're gonna be making, uh, I've got it wrote down. See, with my overtime that I pushed and everything, and to her new job, which doesn't make as much, we're gonna be about $111,000 with her job.

Okay, so the good news— I, I hear what you're saying, and I— gosh, I— George and I are right there with you. But I really want to shift the conversation to what's going good, because a lot of bad, a lot of bad happened. Exactly. And now the good news is you're back to work. The good news is you're back to your same job. You're making really good money. Your wife is back to work. And it could be, it sounds like it could have been a lot worse. Like you said, you could have lost your life. There could have been more debt, but we're here now. And the good news is you've paid off $160,000 in debt before. We know you can tackle $67,000. And the truth is it's not going to be $67,000 because you're going to settle these hospital bills.

And I'm worried about my retirement because I've only got $20,000 in retirement. That's it.

And George and I will get to that part.

Like I was told to.

Yeah, I understand. George and I will help you walk through that part, but let's just kind of shift the lens a little bit and go, okay, all that happened. Whew, that really is terrible, but here we are now.

And I want help.

We've got a decent shovel. And so let's attack this. Like I said, the good news, and I don't say that to sound trite, but you've done this before. And so you know what it takes. And your initial question was, how can I ask my family to do this again? And I think the way you ask him is you go, you know what, this time when we do this, not only are we gonna pay off the debt, but we're gonna understand our insurance, and that's gonna affect our emergency fund. We're gonna make sure that we always have our out-of-pocket max. We're gonna make sure that our 6 months covers that and then some. Do you see what I'm saying? So there's a way to build back stronger on this. And I think you're gonna be even more motivated this time than you were the last time.

I'm trying, but when I look at her face, I just see the same thing I feel— stress and worry.

Yeah.

But we're never going to get there.

You're gonna get there. It's gonna look a little different because this happened, and things happen all the time. We're going along about our merry way and things happen that are just a ton of bricks, James, and they just knock us off course. And from that point on, our life just looks different.

It does. I've had no surgery, but— and I'll deal with that, but I'm more focused on, like you said, I'm trying to— I just want to show her there is a light at the end of this tunnel.

Yeah, and there is. There is.

How long did it take you to pay off that debt the first time?

Almost 5 years.

Okay, and this one's a much smaller pile of debt, so this will take more like, what, 2 years?

I don't know exactly.

I mean, all the bills aren't in, but that's a pretty close estimate.

I know that much.

And you're 53, so at 55, you're debt-free with an emergency fund. Can we visualize that guy?

Uh, yeah, I'd be great with that. Like, my mom, uh, my wife is the better saver than me, and that's honest, but I'm great with that.

Then you lean on her for savings. Say, honey, you know me, left to my own devices, I'd spend every dime. So I need you to help keep me accountable. We're gonna pay off this debt. I'm gonna help settle these medical debts. We're gonna get out of this thing in under 2 years, and then we're gonna reset on our retirement, and it's gonna be We're gonna go hard in the paint, as they say. So you might be investing 20-30% of your incomes into retirement at that point.

Uh, see, we want to pay the house off and then—

What's left on the mortgage?

$148,000.

Okay, and what's the payment?

Uh, $1,038.52.

Amazing, because your income, you're taking home what, $6,500 a month?

Uh, about $6,000.

Okay. So that mortgage is very reasonable comparatively to your income. You're doing great on that side, which means you got a lot of margin left over to start throwing at these debts.

Uh, that and see what else was it. Yeah, because we just paid the car— we paid the car off right before I got hit, so good. I don't have a car debt, so the car's paid for. It's— I mean, we're driving '03 models.

That's fine.

Yeah, they're working, right? The— yes, they are. My truck's working, her car's working, and I'm ready to— I'm ready to sell the one that I wasn't going to sell Y'all told me not to because we can afford it, but I think maybe I need to now.

Desperate times call for desperate measures. If you're willing to do that, that tells me you're actually going to retire with dignity because you're willing to make the sacrifices now even though it hurts.

Oh yeah, I'll sell it.

Because I don't want you working at 70, 80 hours.

That's it right there, because I'll never make it. I'm pretty broke up, man.

Dumb, dumb decisions in life, a lot of it. We always say the best way to eat an elephant is one step at a time. For you guys, that's tomorrow we're gonna budget, the next day we're gonna budget, the next day we're making a payment on that debt. And if you just take it one step at a time instead of getting overwhelmed by the huge overwhelming big picture of how are we going to retire, you will get there. So hang on the line, we're going to gift you EveryDollar Premium to walk you through that process of making a plan for every dollar coming in and every dollar going out. As a frugal guy, I am always looking for entertainment that is worth what I pay for it, and that's not always easy, but Angel's newest movie definitely passes the test. It's called Runner, and it might be Angel's most action-packed movie yet. It's a buddy comedy about a former soldier teaming up with an unlikely partner to get a healthy liver to a sick girl in desperate need of a transplant. But if those stakes weren't high enough, the cartel is after them too. Runner stars Owen Wilson, my favorite Wilson brother, and Alan Ritchson, who's best known for playing Jack Reacher.

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Brennan is in Indianapolis up next.

Brennan, welcome. Welcome to the Ramsey Show.

Thank you.

What's going on?

I'm just trying to figure out how I can get my budget back on track. So recently I filed Chapter 13, um, actually at the beginning of this month, and it takes me approximately $215 out of each paycheck. Uh, I'm struggling to get the rest of my finances on track to be able to pay my bills on time at the beginning of the month as well as in the middle of the month.

Is it a logistics issue? Are you saying there's bills that are hitting, you know, before the paycheck hits, and so therefore you're going in the red?

Yeah, kind of a little bit of that. Um, so for example, I've got my, uh, basically like my rent due at the beginning of the month. Um, I've got utilities due in the middle of the month. I've got an attorney payment due, uh, right at the end of each month, uh, for a child custody case.

So when you pay it, when are you running out? Is it the bills that happen at the beginning, the bills that happen at the middle? Like, what's, what's happening? And have you verified that you have enough money for the month to cover everything for the month? It's just when it's happening?

It's, yeah, it's basically just when it's happening. I'm trying to figure out how I can try and get ahead of everything so I can break down each paycheck to pay a portion of everything. Right.

So how, how often do you get paid? How do you get paid?

I get paid every weekly.

Okay.

Or every week on Thursdays.

Every week on Thursdays. Okay. And then, so there's a feature in EveryDollar that's called paycheck planning, and it basically does exactly what you're saying. You can load in every expense that you have and when you're currently paying it, and then you can start to figure out, okay, this is the one that's setting me over. I need to move this. I can no longer pay the utilities on the 13th. I need to ask them if I can pay them on the 25th, right? And a lot of times, you can, you know, call people up and just say, can I move the due date on this, as long as it's within the same month? And they'll allow you to do that. And then another part of it is some of the things that are variable that you can control, like your groceries. Instead of— I don't know that you do this, but instead of loading everything up on the 1st, maybe you split up your grocery bill a little bit more so that you have the money there. Do you see what I'm saying? Just moving things around—

Yeah, I do.

And tweaking it a little bit so that you can, kind of figure out this puzzle. But when you lay that out in EveryDollar, you're going to be able to see exactly how much you're over and it'll help you go, oh gosh, I'm always $57 over. That looks suspiciously like my, my gas bill for that week. Right. And so those things will help you figure out what you need to do to solve that puzzle.

Okay.

Does that make sense?

It also gets hard. Yeah. It also gets hard, though. I'm stuck paying different bills for my parents also. So my dad, he just recently— so my dad, he recently had an amputation and is unable to work. So I've helped him pick up a lot of his stuff. And then my mom also, she can't work hardly either. So I picked up her phone bill.

Why can't she work? Why can't she work?

She's disabled.

Are they on disability? Do they have income coming in from that?

Very little. So they might get $1,400 each every month, and that basically covers their rent and utilities.

Are you the only sibling?

Uh, the only sibling capable of taking care of anything.

Yeah, but I don't think you are. You're in bankruptcy.

And that's why I am where I'm at.

And, and that's what I'm saying.

So we've got to—

we got to break this chain.

It's a little bit of everything that just snowballed at once. My dad was working and then he was diabetic and it turned into— he had an infection and it turned into amputation.

That's terrible.

So he's been unable to work for about a year and a half.

Where is he living? Is he living in a home? Is he living in an apartment? How is he living?

Him and my mom rent a house. Okay.

I mean, this is really tough, but there's part of this that it's very hard for you to get in a true position of being able to help if you don't put up a boundary and say, I got— like, I'm drowning here. I'm in bankruptcy. I'm literally— the boat tossed me off and I'm fighting for my life in the ocean. And if I keep trying to rescue you guys, we're all gonna drown.

Right.

Right? And so, at some point, it might be tough, but it's like, I need you guys to fend for yourselves, or the other siblings, or something, so that I can just get myself back in the boat here. And then, I promise, once I get every— like, I will come back for you. Like, that's kind of what you need to do.

Yeah.

Because you're in bankruptcy. You don't have the money. And if this is what's caused this, then 100%, you've gotta go, guys, I cannot do all of this. And there should be no shame in that. It is very hard. It's hard to handle one household, let alone your parents' household.

Right. And that's— it is hard. Between everything, I've picked up probably $600 or $700 in bills that I don't necessarily— that aren't necessarily mine.

How much do you bring in every week?

It fluctuates. So I do asphalt where I'm at, and it kind of Depends on weather, but generally between $800 to $1,200 every week after tax.

After tax. So you're bringing home about, let's call it around $60K or so?

Yeah, actually last year according to my income, it was actually about $70K because I do have a secondary job.

Good.

The asphalt is seasonal. It allows me to swap back and forth every year.

So if you're hustling, you could bring in $5K to $6K a month. And what's your rent?

Uh, $1,250.

Okay, that's reasonable. And so where's all the rest of the money going outside of the attorney fees and your Chapter 13 payment?

To parents, essentially. So the attorney payment is $350 every month. Cell phone bill is roughly $150. I pick up my mom's bill. Um, that's another $150.

You pick up her cell phone bill?

Why are your cell phone bills so high?

Why don't you get her like a Boost Mobile phone? Why don't you get her off of what she has and get her like a Boost Mobile and pay like $30 a month for that instead of $150?

So, and then it turns into, uh, another debt payment of the cell phone because it's through Verizon and not paid off.

Yeah, we don't need to be having financed cell phones. When we can't even put food on the table. So we can get some dumb phones for now.

Yeah, can we trade that phone in, get whatever cash we can, pay it off, and then just get you a dumb phone like George said? These are all—

I can attempt that, yeah.

Yeah, these are all the things I want you looking very closely at with a magnifying glass going, what can I do? So you pay the mom's cell phone. Tell us the other bills you're paying for them. Let's see if we can help you knock them out or get them very, very low.

Um, I do pay, um, the car insurance for everybody. Um, and that's about $400 every month.

Your dad's not driving right now, right?

No, but he does have the vehicle. It is financed and he's able to pay that payment. Um, right.

But let's, let's stop for a second.

Let's think about what you just said. We're paying a payment with insurance on a car that he's not even driving.

So let's, for the time being, because my guess is not— is he's probably not going to drive for a while. Let's get rid of that vehicle. Can we sell it? Can we get out of that, which will get rid of that insurance as well on that vehicle?

It's too far negative to get rid of. I've looked into that for him.

What's the underwater amount compared to what you could get private party and the loan?

It's worth about $6,000 or $7,000 and he still owes $23,000 or $24,000.

So there was negative equity rolled over?

It wasn't negative equity rolled over. Just the way the loan fell.

Yeah, a bad loan. What about mom's car?

On everything.

What about mom's car?

It's paid. It is paid for cash, but it's her own vehicle.

Okay.

But what if—

what if she drove dad's car? What if we sold mom's paid-for cash car? She took dad's car. Dad is not going back and forth to work, so he's just not going to have a car for a while. They can't afford 2 vehicles, certainly not on payments. They can't afford to live. They certainly cannot afford 2 cars. So let's get rid of mom's car. What can you get for that?

Maybe $5,000.

These are the decisions. If you're going to be in bankruptcy and helping them with their life and their money, these are the, these are the types of decisions you're going to have to be able to make and say, I can't do this. If we're going to rescue ourselves, we've got to make some deep cuts. I'm making deep cuts. You've got to make deep cuts. If you're not willing to make the deep cuts, I can't help. And so that's what this looks like. But, um—

The strong can only help the weak. And right now you're operating from a place of weakness. And I don't want to see you calling back 2 years from now saying, I'm back in bankruptcy again because mom and dad are anchors keeping me down. Everyone needs to figure this out for themselves. You're all adults, and right now you need to clear the decks and get yourself some financial foundation. This show is sponsored by BetterHelp. A lot of you are just trying to keep it together all the time. You show up to work, you pay the bills mostly on time, you smile at all the right times, but no one sees you when you're exhausted. No one sees you snap at your spouse or sit awake at 2 AM running through everything you wish you'd done and said differently during the day. Just because you're functioning doesn't mean you're okay. Talking to someone else is a great way to process what's happening in your life and get to the root of what you're experiencing. That's where BetterHelp comes in. BetterHelp matches you with one of their 30,000 licensed therapists, someone you can be real with and finally put down some of the weight you've been carrying.

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All right.

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Exclusive.

Very exclusive to those of you who have paid off all of your debt except the house, probably the house included. We got a lot of Baby Step 7ers on the cruise. Fun to meet them. But this is really to celebrate the milestone that you may have just glazed over, because you pay off the mortgage and then there's more bills to be paid the next day. You never really get a chance to mark it. And so we made this cruise specifically so that we felt like We had a moment together.

I love that.

And it was a lot of fun last year. So all-inclusive pricing starts at about $2,100 per passenger. That's cabin, food, entertainment, taxes, tips, all included in that.

That's not bad.

That's not bad at all. Not a bad deal for 7 nights. So, you know, we have a lot of people, singles coming on this one. We're doing an event just for them. Should be fun.

Are we?

I'm trying to.

That's news for me.

I wanna host it. I wanna be the Ryan Seacrest of the Ramsey single event.

You hosting the singles event?

I think I, just for my own entertainment.

Okay.

I need something to do. Join us! It's going to be a good time. Click the link in the show notes or go to ramseysolutions.com/events to book your cabin. Lee is in Phoenix up next. What's going on, Lee?

Hey, how's it going, man? Good!

How can we help?

I live in Phoenix, Arizona, a suburb of Phoenix. It's Gilbert. I'm debating if I should rent or buy. It seems like house prices are pretty inflated here, and the rent's cheaper even with 20% down. Just kind of want to hear your insight of what route I should take. Okay.

Well, I mean, and I would say real estate's inflated just about everywhere. It's just expensive in the housing market in general, but rent is not much better. Most people are paying around 25 to 30% every month for their rent too. And the problem with rent is that's gonna keep going up. So my question is, where are you in the Baby Steps and are you in a position that you could buy and you're just choosing not to?

Yeah. I mean, I have a possibility of, you know, baby step-wise, I pretty much, so I called y'all about 7 years ago. I had a whole bunch of car debt, credit card debt, did all the baby steps. So at this stage, you know, I have no debt and have a pretty good savings account and invest a lot of money each month. So financially, I'm pretty good there. It's just the biggest thing with rent. Like if you buy a house for $800,000, 20% down, it's like $5,000 a month versus you can do the same property for about $3,000 a month of rent. Well, that's kind of like my—

let's talk about that a little bit. So tell us, tell us how much money you have saved.

Uh, I mean, so I have 401s, I have about $400,000, and then like my own personal stocks, like crypto, is about $350,000. Uh-huh. And I have about $100,000 cash.

Okay, so you've got money and I love that for you, but nothing says you have to start with an $800,000 house. Is it just you?

No, it's me. We have a family, so I have 3 kids. So it's, uh—

And still I say nothing says you have to start at $800,000.

Yeah, I mean, $500,000, $600,000 in this area for sure.

Yeah.

And it's more of the same house at $800,000. You can rent for $3,000 a month.

You can, but you're not getting anything from it. And we're like, don't get me wrong, I think there's a season where it's cool to rent and it's really great to rent when you're not ready to buy and you're just trying to stack up that down payment or stack up that emergency fund or whatever step that you're on. But when you are able to buy, it's such a huge part of wealth building because every month that payment is going towards building your equity. It's not just going down a black hole that you'll never see it again. And with rent, that, that is the case. That's why we say renting for a short time until you can buy really is where you want to be. How long have you been renting?

2 years. I owned a house previously.

And then what's your income? What's your after-tax monthly income?

After-tax, probably close to $20,000-$25,000.

OK, so you can afford a healthy mortgage. You could afford a $5,000 mortgage, no problem.

Yeah. I'm in mortgage sales, so it goes up and down, of course. That's why I'm very conservative when I try to buy stuff, just in case the mortgage flips on me.

Sure. You could have a peaks and valleys fund to set aside. When there's a really good month, let's set some aside in savings to cover the down months. But what are your actual bare-bones expenses that you need to cover the household for the month, all in?

$10,000 a month.

Okay.

I'd be very comfortable.

So you got plenty of margin. So let's say you put $400,000 down on a $600,000 house. That's about $2,200 on a 15-year fixed.

Yeah.

And you're in the mortgage world, so you know these numbers way better than I do. So what's wrong with having a $2,200 mortgage?

Well, then the key is, okay, now I'm taking out my investments and that have been doing pretty well. And that's like—

Well, the problem is your investments had zero goal. You were just investing into the abyss. I only invest when I have a particular goal. So retirement is one investing goal. Down payment is another goal. So let's just— if you earmark this as down payment fund, do you feel a whole lot better selling this off?

Yeah, for sure.

That's what I would do. I'd get rid of the single stocks and crypto and go, I'd rather be a homeowner than Watching the crypto and stock markets, you know, shift.

And it's not even— it's not even getting rid of it. It's shifting the investment. You're shifting it from being in stocks, which is actually more volatile, and you're shifting it to investing in your personal mortgage, your personal, you know, residence. And that's something that's going up in value too. You're gaining equity in that. So it's not like you're cashing out all investing, if that makes sense. You're just shifting it and you're making money in a different way for your family.

Yeah, I understand that. Yeah, that's, uh, that's what I was thinking too. It's just like, I like seeing the money grow with the investments, almost like a game, and I'm playing.

Well, nothing's gonna stop you from doing that. I mean, with a mortgage of $2,200 a month, if you still wanted to play with a small portion of your money and keep doing stocks, no one— nothing would stop you from doing that, right?

But personally, I'd be maxing out all of my tax-advantaged retirement accounts first. Then, if there's money left over outside of that, if I haven't hit 15% of my household income, then you can move on to non-retirement investing. But I think look at the big picture. Look at the quality of life you want for your family. And I think you'll find that being a homeowner and having this house is going to be well worth the trade-off of selling off some of your portfolio to make it happen.

Absolutely. And I would just say, and I'm not saying this in a negative way, but The way the housing market is, if you have the cash, which you do, Lee, to go out like that, you are on the winning side right now. There's so many people who are like, I cannot get in this market. It's impossible to save this down payment. How is anyone doing this? And you've got the money, like capitalize and get yourself the win while you can.

All right, cool. Yeah, I appreciate it, guys. And I called you guys about 7 years ago. Helped me out tremendously. I appreciate it.

Thank you, Leigh! From being in debt, trying to claw out, to having hundreds of thousands invested, no debt. That's pretty impressive.

Way to go! Way to go!

Way to go! I'm excited. And Jade, there's a lot of people in Leigh's shoes. They don't have the hundreds of thousands. They'd like that part. But they're wondering, is it a waste of money to rent? And that word just hurts my soul. Because when they usually say that is when they're desperate to get into a home at all costs. They say, well, I don't want to waste money on rent. It's throwing money away. And it's not, you're buying yourself patience until you have the financial footing to step into home ownership with some confidence.

Yeah.

Instead of stress.

You know, well then the argument shifts cuz then you have a guy like Lee who's like, I don't wanna buy a house. It's too expensive to buy a house. It's cheaper to rent. So what that tells us is whatever boat that you're in, if you don't like the boat you're in, it's just easier to find, right? The reasons wrong with it versus like looking at the facts of the situation. And so I think you're exactly right. Sam and I rented for 10 years. That's a long time to rent. And it does. Sometimes you do feel like, oh gosh, this money is just going away. It's not building, it's not getting me anything. But it is. It's giving you shelter every night. It's giving you a place to lay your head. It's giving you stability. And it's also giving you the ability to save a down payment. And that's really, really great.

That's right. And the way I got to those numbers for Lee, by the way, is using our mortgage calculator. And it makes it super simple to punch in the home value, the down payment amount, the type of mortgage, the interest rate, property tax, and it'll give you the exact number. So I always like to Go down to brass tacks and go, all right, we're looking for 25% of her after-tax monthly income, no more than that going toward a mortgage. Once you can do that, regardless of the home price, the interest rate, you can— you get the green light to go get that house.

What'd you plug in for Lee?

I plugged in $600,000 home value with a down payment of $400,000 on a 15-year fixed.

Oh my gosh.

And I lowered the property taxes, got rid of HOA for this example, and it was about $2,200.

I love it.

So that's all it takes. So go check it out. We'll drop a link in the description to that mortgage calculator if you guys want to crunch the numbers for yourselves. You might be hopeful. You could be a homeowner sooner than you know it.

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If you're new to The Ramsey Show, you'll hear us talk about the Baby Steps. This is the methodology, the framework that we use to answer every single money question on the show. So if you want to learn more about those 7 Baby Steps, we'll drop a link in the description so that it's a little easier to follow along. Christine is in Rochester up next. Christine, welcome to The Ramsey Show!

Hi! Thank you for inviting me on. My question is, my husband and I— he's getting ready to retire in February. We went per the advice of some I have a traditional 401, and the financial advisor wanted me to let him take that 401 and put it into a Roth IRA. But I know there's tax implications, and we were just a little concerned because he basically wanted to take all of our investments and somehow make us like a payout each month. And we just felt a little strange about it. And I listened to you guys, so I told my husband I would try to get on your show.

Are you still working?

I am still working. I'm working part-time. I had some back surgery last year. I used to work full-time but couldn't do it anymore. But my husband is still working full-time, so I'm part-time, he's full-time.

And you're still contributing to that specific 401, or is it an old one?

I am still contributing to it. It's been there for about 30 years.

Oh, what's in it?

It's just about $250,000. When I first started doing it, I didn't think I— you know, you're young, you don't think about retirement. And I was only putting $0.75 a week in there. And so now I'm putting more, though. In the past 10 years, started putting a lot more in.

What Baby Step are you guys in? Do you know?

Um, well, we don't have— we don't have any car payments. We don't have any credit cards. We just have our mortgage. And my husband recently had an inheritance from his dad. So that's another reason why we went to an advisor, because we— it's a sizable amount and we didn't want to, like, just do something that— we wanted to continue to grow. That's why we went to see the advisor.

Okay, how'd you find this advisor?

Um, through some friends. They're in Pennsylvania and we're in New York.

Hmm.

And the advisor's in Pennsylvania.

Well, I'm curious, when they say a monthly payout, it scares me. And it's giving annuity, which is an insurance contract where you have a guaranteed payment. Is that what they're talking about?

He didn't mention annuity, but that's what we were worried about. He kind of took all of our different things that we have, because my husband has a TSP through the government. That's his job. And then I have a traditional 401. He kind of just wanted to take everything.

Well, the thing to know is that he can't manage your 401. And so therefore, I think what they're trying to do is basically convert it into manageable assets. But you can't just take your traditional 401 while you're still working there and just move it over to a Roth IRA.

You can or you can't?

You'd have to leave the employer.

That's why I asked you if you were still working.

Yeah, that— and that's why we were kind of like confused because, um, we, we just didn't feel like that was a good thing to do. Well, I gotta tell you, like, I can't do it.

It sounds like you are having some reservations about this, Kat, and I am too.

And it's not even in the same state that you're in.

Yeah, yeah. And that's another reason why we were sort of like, but he did well for our friends, really liked him. So they wanted us to talk to him. But then we were like, this is all our money in the whole world.

I think there's a couple of things that's going on. Number one, he's asking you to do something that you can't do. That's a red flag for me. Number two, he's wanting to do something that sounds suspiciously like an annuity. Which is something that we would never suggest for you. And he's wanting to do that with all of your money. And I just feel like that is a major— I mean, how many times have you even sat down with this guy and he's already suggesting such a major act?

We had 2 Zoom calls with him. Mm-hmm.

Yeah, I— it doesn't sit right with me. Does it sit right with you?

No, no. That's why I said I'm, I'm going to contact them because it just It felt a little queasy.

Then that's your number one indicator, Christine.

Just walk away.

That you need to just walk away. And if it worked out for your friends, that's fabulous. You're not missing out on anything just because something worked for somebody else. If you don't have a good feeling about it, that's good enough for me.

Okay, yeah, we did go to a more conservative type of firm that's in our area that is only a half-hour drive for us. And that person did not mention anything like that. He mentioned like, once we retire, we could turn it into like a regular IRA, but not a, not a Roth. He's a— he didn't even mention Roth.

I mean, if you had a traditional IRA that you were interested in converting to Roth, I think that's totally fine. I would just wait until you're in Baby Step 7 once the house is paid off. And if you wanted to convert funds like that, you could, and they would help you do that in a way that makes sense tax-wise. But yeah, I don't hear any of that coming from this guy.

It sounds like they're just promising this monthly payout to get you excited to work. with them, but my spidey senses would be tingling.

You know, he could, he could turn this $1 million into like $2 million in a couple years and it would be—

No, I don't trust anybody who's trying to guarantee me to double my money in a certain amount of time.

Yeah, and, and that was what— how we felt too. So thank you, you're, you're kind of confirming what our thoughts were. That's really good.

And I would reach out to it— to a SmartVestor Pro at ramseysolutions.com/smartvestor and getting that second opinion about your situation, and they'll explain to you exactly how they get paid. And most advisors who are quality these days, you're going to see something like a 1% AUM fee— assets under management. So they get paid based on the portfolio size. And so if they grow from $1 million to $10 million, well, they 10x their paycheck, too, as they 10x your net worth. So that's what you're looking for versus someone who's trying to guarantee you a monthly payout or sell you insurance products, which I'm seeing a lot these days.

Yes.

There's a lot of insurance agents posing as wealth strategists or tax-free wealth strategists, and what they're really doing is just peddling very expensive permanent life insurance and annuities. And those are the ones you get the invite in the mail for a free dinner at the local steakhouse.

Is that how they do it?

What's upsetting is I want the free dinner, and in the fine print it says, must be 50 years or older. I'm like, then why are you mailing me? You guys know how old I am. You have all the demographics in the world. Don't waste your stamps on me.

I can tell you I've never seen one of these, but I believe it's real.

They're very real. I'll take the steak dinner.

Where's the steak dinner? Is it like at—

Yeah, your local, you know, Sperry's, Perry's, you name it.

Oh, really? That's so funny.

It's a good time. But that's a good reminder when you're working with anyone who's touching your investments, you need to stay in the driver's seat. You need to be asking the questions. You need to be very comfortable and in control. And if you can't explain what's happening with your investments, Then you have not done enough homework. Don't just let them do it and say, well, I got a guy, he's handling it for me.

Right.

You need to know exactly what's being charged to you, how much it's costing you, what kind of funds you're in. They need to understand what your goals and vision are. And if it's not, if you're not in alignment, it's okay to say, this isn't working for me.

That's right. And if you feel like they're trying to kind of talk over you or, uh, what I would say, insult your intellect.

Like a little condescending.

Yeah, a little condescending. This is something, trust me, I know what I'm talking about.

Like, don't worry about it. It's complicated. Yeah.

I don't want to bore you.

Ooh, I don't like that.

I do not like that, George. Oh, man. Ugh, gives me the heebies and the jeebies, the willies and illies, all of it. But we do have a great article on questions to ask your financial advisor. So we'll drop a link to that in the description of this show as well, because I think it's well worth a scan.

Yeah, you're interviewing them. They don't have the job until you hire them, by the way. So just remember that.

So you ask them questions like, what services do you provide your clients? What's your investment philosophy? How will we communicate? And then you might find, hey, they're gonna reach out to you once a year. And if you're like, no, I need a little more touchpoint than that, or I prefer text and email and Zoom versus in person, make sure you find one that aligns with, with how you wanna be communicated to. And then how do you get paid? Is it assets under management? Is it an hourly fee? Is it a flat fee, like a project fee?

Right.

To come up with this whole plan? Is it commissions based on products you sell? And then how will, how are you gonna measure and evaluate my investment performance? That's another thing you gotta look into.

I like that, and I think it probably wouldn't hurt if you brush up on some of your lingo so that you understand the conversation and you're following it well and you feel like, you feel confident having the discussion. A lot of times if you feel like, gosh, I don't really understand this, you do start to just go with the flow of whatever they're saying. But if you feel like you can stand on your own 2 feet, that helps too.

Absolutely. Again, the link is ramseysolutions.com/smartvestor if you want to get connected to an investment professional who actually, you know, wants to help you complete your vision and goals instead of just sell you a bunch of products you don't need. Hey, George Campbell here. Listen, if you're behind on debt payments and drowning in debt, I already know what you're thinking. I can't afford a lawyer to help. And honestly, That's exactly what creditors are counting on. But here's what most people don't know. Guardian Litigation Group doesn't work like a traditional law firm. There's no massive retainer. There's no hourly billing that costs more than the debt itself. Guardian is a law firm built specifically for people in default, behind on payments, or staring down bankruptcy. And their model is designed so people in that situation can actually access real legal protection. From day one, you're assigned an attorney. If a creditor sues you, you have someone who can actually represent you, not a call center that isn't built to defend you when things escalate. The best path outta debt is still doing it the right way. Budgeting, working the plan, changing the behavior. But if you've already hit a wall and you need real help, Guardian delivers.

Their attorneys have settled over $600 million in debt for more than 55,000 people. So go check it out for yourself. guardianlit.com/ramsey. That's guardianlit.com/ramsey. Attorney advertising. Results may vary and no specific outcome is guaranteed. Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell, joined by Jade Warshaw, taking your calls at 888-825-5225. Emily is in Jacksonville, Florida, up next. What's going on, Emily?

Hi, George and Jade. How are y'all doing?

We're doing well. How can we help?

So, quick question. I just feel like I'm a little bit behind. I listen to y'all's show a lot, and I see a lot of people my age, about 32, that are all over the spectrum. But I just wanted an unbiased opinion from you guys about if you feel like I'm on the right track as far as finances and if my monthly allocations of my funds are appropriate.

Oh, monthly out. You're talking my language now. All right. So how old are you? You said you're 32?

Yes.

Okay. And you're worried you're behind compared to— everyone is a pretty big group.

Everybody else.

Every 32-year-old on the planet?

Maybe certain ones. But just in general, like, I got a late start, maybe.

Is it just you, Emily? Or is it— are you single? Do you have a family?

Just me.

Okay, so other single 32-year-old females out there, you're feeling behind?

I feel like maybe I am, but I could just be overthinking it. I don't know.

We'll tell you the truth. Tell us what you got. Let's put the cards on the table. Where are you at financially?

Okay, yeah, so I'm— I have a SEP IRA as I'm self-employed. I have a Roth IRA and an old 401. And those total with a brokerage account about $105,000.

Okay.

I have an emergency fund of $30,000. My home, I have about $125,000 of equity. I still owe like $215,000. I'm self-employed and my business account right now has about $50,000 in it that just kind of— I haven't touched. I don't really— I like to leave it there, I guess.

How much do you bring home from your— How much do you bring home from your self-employed business every month?

So I'm just a W-2 through my business. My salary is $105,000, so I bring home about $3,200 twice a month.

Okay. And are you investing? It sounds like you have a fully funded emergency fund. That's Baby Step 3. Are you investing 15% of your $105,000 or are you doing a little bit more since you have the employer side? What are you investing every month?

I am doing 25% into my SEP IRA. I was doing 15%, but then my CPA was like, you should do 25% to keep as much of the money as possible. So I bumped it up to 25% every month.

25% of $2,100? Say again?

Of the $105,000 salary. So about $2,100 per month.

Well, let me stop there and just say, first off, I think you're doing fabulous. I think that you're walking the plan that we teach. You've paid off your consumer debt. You've built up 3 to 6 months of expenses. You're actively investing more than 15%. We might find a reason to back that down here in a minute, but that alone lets me know that you're winning at life.

Oh, that's good to hear.

Yeah, because you've got— this is all foundational. And a lot of times people will try to build wealth without doing the foundational stuff right. And it's just It's more headache. But you're doing the foundation stuff right. You've protected your debt freedom with an emergency fund. You're building wealth the correct way. I mean, the next question I would have for you is, do you have the right insurances? Have you double-checked that your car insurance is good and your health insurance and all that stuff?

I have health insurance as a self-employed. It went up a little bit compared to when I was with a regular employee, but it's like $400 $20 a month. I have life insurance even though I'm single. I got a policy now just because I don't know what's going to happen in the future. And it was really cheap to get one and it was $1 million, about 10 times my $100,000 income. And then I have disability insurance as well. I actually just got a new quote through Zander.

And see, that's really helpful. So that, that is huge because a lot of people leave that kind of stuff out and it's a huge part of protecting the wealth that you do build. So I am going to go with foundationally, you're right on track and let's just plug those numbers And I don't know if you've ever played with an investment calculator, Emily, but we have a really great one at ramseysolutions.com and I have it plugged in and I just put in your current investments. It's $105,000 that you have. You said you're putting $2,100 a month and you're 32. Let's let it grow for the next 30 years until age 62 at an 11% rate of return. And I've got you at $8.6 million by age 62.

Wow.

Which means you're gonna be a millionaire a lot sooner than that, right?

And that's if you never get a raise, you always keep it at that level. And once you have a paid-for house, you're going to ratchet up your investing, most likely, knowing you. The good news is, as soon as you said, am I behind at 32? I went, she's got plenty of money and I feel it. Because most people that are even asking that question, it's sort of like the natural state you're in when you're doing everything right is, am I doing enough?

Yeah, that's pretty much it.

The average for under 35 for their retirement accounts is $49,000. The median is $18,000. So you are so far ahead of America, let alone debt-free with an emergency fund, with retained earnings in your business account. You are thriving by all measures. So I would tell you to enjoy your life a little bit. Are you enjoying spending and giving on top of the investing?

I think so. I still do my things I like to do, like my Bougie massage and my nails.

Good.

And I, I use the EveryDollar app, so I know exactly how much everything costs.

You've got the treat yourself line item in there.

I would make one tweak to this, Emily, that I hear. And I mean, this is so small, but it's just, I'm being nitpicky because I feel like I can with you. I might back the 25% down to 15%, and I take that 10% and I throw it towards the mortgage extra.

That's an extra $10,000 a year. If you do nothing else with extra mortgage payments. So that would be a great goal to say, hey, listen, while I'm single, no one else is dragging me down. What if I knocked out the mortgage over the next 5 years?

Wow! That's a cool goal!

Or before your 40th birthday, you're going to be completely debt-free.

Yeah, I put about $500 extra a month towards the mortgage, too, and then the $500 in the brokerage account. So y'all made me feel a lot better. Good!

You're going to be fine, whether you have $9 million in retirement or $8 million. It's going to be OK. So the question is, what does the rest of your life look like in the in-between? That's the harder part to figure out. Because you're really good with numbers, I can tell. Even if you invested 15% at a 10% rate of return, you'd still end up with $5 million.

Wow!

So rest assured, Emily's going to be OK if she continues these habits. So now it's more like, what are the next goals Before I retire, what do I want to accomplish? And that might mean we're paying off the house, we want to go on this vacation, we want to upgrade the car. And who knows? I don't know your future. I don't know if you want to get married one day, have a family, but all of that's going to affect your situation. But the better financial foundation you have stepping into that, the easier and more comfortable life's going to be.

Awesome!

I appreciate you guys!

Y'all are my favorites! Thank you!

Gold star!

I love it!

This is like Emily's the poster child. How do we clone Emilys all around the world?

But you made such a good point George, the people who are plugged in enough to what's going on with their money to be asking those questions are not the ones that we need to worry about. It's the ones who are just bopping through life and it's like you're living paycheck to paycheck. The pain is there and you're just ignoring it. You're not asking the right questions. You don't want to poke the bear. You're just like, maybe this will all be okay.

If she was 52 and asking, I feel like I'm behind, it might be a realistic answer of, yes, you are behind and it's going to be OK. But in Emily's case, I mean, it's mythology at this point. She's going to build incredible wealth because of the foundation she set for herself early on. And be careful who you compare yourself to, because right now we've learned there are invisible people who may or may not be doing better than us. So just run your own race and focus on your own goals, Emily. You're doing great!

Thank you!

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Hello, hello, thank you. How are you all today?

Doing great. How can Jade and I help?

I have, uh, yes, I have a question in reference to setting up a will. My wife and I have been married for about 7 years, but we have older kids from previous relationships, and I don't— I'm just trying to figure out, okay, so both of us would die at the same time, how to set up an executor to care of the property because overall the property's worth anywhere from $800,000 to $1 million. And I've been making double payments on it. And I think I owe about $250,000 left on it and it's going to be paid off in about 4 years. So I'm just trying to figure out which direction do I go into if we both die, if I die, um, how can I set it up to, um, to have stuff written into the will in order for people to be taken care of?

So what are you wanting to happen? Let's say you have in the will, here's who's getting what. Let's say you— how many older kids do you guys have between the two of you?

Uh, 3 total. I have 2, she has 1.

Okay, have you guys talked about who would get what as far as the estate?

No, we have not.

Okay.

No, because I just— I know that if I die, the property is probably too large for her to take care of. And I know I've talked to her before in the past about trying to set up a will, and I keep putting it off, putting it off, and I just got to do something because I would I'd hate for both of us to go and then the government kind of reach their hands into the pot.

Is the property the only major asset, or do you think that there'll be a lot of cash or IRAs or anything else a part of this estate?

I have about $100,000 in my savings account because I'm kind of semi-retired right now. My wife still works, and I'm just kind of— I have a life insurance policy that both, all 3 of them are on it. My wife has the bigger share.

What's that worth?

Uh, that's $250,000.

Okay, that would pay off the mortgage essentially?

Yes, sir.

Okay.

Okay. And did I hear you say $100,000?

I— yes. Yeah, I kind of—

How are you partially retired off of $100,000 in retirement?

Um, I, I'm a pretty good saver. I've been saying I'm retired military. Okay, so I get a pension there, but, um, everything I got is paid for, so I have a lot of assets. I got about 50 acres on the homestead. So overall, like I say, the property is probably worth about $1 million. And I just want to make sure— I know I've seen it in the past where people die and people get greedy. I just want to make sure that when I go, that people, that they're taken care of.

Are you trying to make stipulations that the property has to stay intact, or are you fine with them selling it in 3 and taking 3 equal shares? Like, what, what are your wishes? Because I—

well, I don't I don't want to— I'm not cutting out my wife in any way because I know she'll probably end up— if whenever she does sell the property, she would end up moving away. I just want to make sure that my kids are taken care of because I just don't want them not to be taken care of later on down the road just in case something would happen.

Now, you said they're older kids. How old are they?

They are— my son is 33 and my daughter's 26.

So they don't need to be taken care of in the financial sense?

They don't, but I would prefer them to be taken care of. I'm not a millionaire. I'm rich in other ways, but I want to make sure that the money that I put into this, that they get a little bit out of it.

So let me just walk through this a little bit because I'm trying to understand if this is something that you're doing together with your wife or you're doing separate. Because let's say you pass first, the land automatically goes to her. Uh, you don't want her to then say now she's— she gets to decide what happens with the land. You want that specified in the trust ahead of time?

Just a little bit, yes. I'm not telling her what she can and can't do with it. I would just like to have something— okay, when you go to sell it, if you sell it for X amount of dollars, I would like for my son and my daughter to get X amount of dollars.

So I think if I were in your— especially given the value of this, I think I would sit down with an estate planning attorney and say, here's what I'm thinking. I'd sit down with your wife too. Here's what we want. We wanna make sure that if I die, the land passes to her. And then when she dies, I just wanna make sure X amount of portion is cut out for each of our kids. And then from there on, if she wants to do something else with it, like, and you guys sit down and decide what you want. 'Cause I mean, and I'm not saying that you have to have this figured out today, but I don't think today you're even clear on what you want.

No.

But I do think that I would do this in a trust, and I think that I would do this with an attorney. I wouldn't try to do this online on a will by myself.

Okay.

And you, you can get started with a simple will just to have something right now. And we have a great partner with Mama Bear Legal Forms where you can do that. But eventually you may want to look into a more complex trust because the will will, you know, explain who's getting what. But if you want ongoing management of something like a property, You're gonna need to set up a trust. And there is something called a qualified terminable interest property trust. It goes by the nickname QTIP trust. Have you heard of that?

Uh, no, sir.

So that is specifically great for blended families like the one you're describing, so that it lets the surviving spouse use the property and income for life, but it locks in who gets the property after that spouse dies.

Okay.

So that you might want some kind of stair-stepped approach like that, and that's where the trust comes in handy. And we always say trusts are not for everyone. Most Most people are totally fine with a will, but if you have very specific things you're trying to solve for, you might want to look into a trust. And to Jade's point, that's where an estate planning attorney comes into play. So I'd find a good local estate attorney to walk you through this and help you figure out which one makes sense for you and what the cost is going to be.

And a big part of that too, once you do that, make sure you're sitting down with the kids and explaining what's in it, what your wishes are, so there's really no surprises when that time comes.

Don't let it be someone else's job to tell people what's going to happen after you're gone. That's cruel. That's cowardice. So just tell everyone who's involved in the will, here's what's going to go down and here's what happens when. That's how you love your family well. Melissa is in Chicago up next. Melissa, welcome to the show!

Hi there! Hi George! Hi Jade! Thanks for taking my call!

You bet!

What's going on?

I am new to Ramsey and the Baby Steps. I think I'm doing pretty well overall, but I currently rent. And I actually don't really even want to own a home, at least not for the foreseeable future.

Why?

But I guess I'm like, well, I can explain and I want to know how that'll affect my wealth-building ability. But I have owned in the past. I'm divorced. I have 2 little kids. I have owned in the past. I live in the Chicago area. So housing is so expensive. And I don't like the upkeep. Talk about losing peace of mind. I had trouble sleeping at night because I was worried about the next thing that was going to go out.

I can understand that.

So, I sold my house, my townhouse, a couple of years ago, moved to a rental, and I've been sitting on this cash that I got from the sale of my home. And I feel like I should have that earmarked for a future home purchase, but I just feel like I have bigger goals around my own retirement and my kids' college savings and just being able to live a comfortable life.

Where is the money now? Is it in a high yield?

Yeah, it's sitting in a high yield savings account.

How much is it?

I have about $102,000 in the high yield. savings account now. Awesome.

Okay, what's your income?

I make $183,000 a year, so after taxes monthly it's about $11,700.

I love the goals that you have and I agree with you wholeheartedly. I think you should have the goal of having a nice retirement, a nice, peaceful, comfortable retirement. I love the goal of making sure there's money for the kids' college. I definitely think that you should have that But I don't think that you should take your home equity money to accomplish that. I think those are goals that we accomplish month by month with our cash flow, certain percentages of our cash flow. So for instance, of the $11,000 that you're bringing home, earmarking a certain percentage, you can decide how much you wanna put aside to 529s every month. You can decide—

Mm-hmm.

That I'm gonna start investing 15% of my income into my 401.

Right?

And I think doing that, and then if you want to continue to set aside money and increase that $102,000 that you have in the HYSA, yes, I'd keep adding to that money. And if this season is not a season that you want the upkeep and the drama, I'm not mad at that. But let's put a time frame on it and let's set a really clear goal and say, when I have, you know, $400,000 in this HYSA, that's when I'm pulling the trigger and I'm making the next move up. And let's just put parameters around this so we're not just renting forever and ever. Amen.

Amen.

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Hi.

Um, it's kind of a complicated Okay. Uh, question. I am 34 years old. My wife is 30 years old. I had my house paid off since I was 28 before I met my wife, and we just had our first baby, and her mom and dad want us to move closer towards them, but I don't feel safe letting, uh, Like selling the house or moving with the— like, you know, because moving 30 miles closer to Chicago is quite, quite a bit more expensive than where I live.

So it's only a 30-mile move?

Yeah, we're within an hour of her parents, and she— her parents want us to be within half an hour, and I think it's a little—

Why don't they move? Why wouldn't they move 30 miles closer to you?

She's one of 5, so it kind of puts them in a central location of everybody.

How does this affect your jobs?

It would— so I have like a little excavating business, and my yard is within a mile from where I live. So I've explained to my wife, because I have to go back to the yard every night pretty much, And it's nice because it's nice and close to my house. But I explained to her, I said, if we move, that adds an hour or an hour and a half onto my day every day going back to the yard work. Otherwise, I'd have to relocate equipment and everything.

Yeah, I'm not doing that.

And what is the property increase? You know, what's your house worth today versus what you would feel like you would need to spend to get what you want 30 miles closer to them?

My house is probably worth like $400,000 right now, but the house I would need would probably be close to $700,000 because I would need at least a little bit of land so I could park a large truck and trailer and some equipment on it.

And so just to recap, the drive to the parents' house now is an hour, an hour and 10 minutes. Is that what I heard?

Correct.

And this is a problem because, because I don't know, I kind of like a buffer. Sometimes it's nice to have a buffer.

Well, I agree with you, but I don't know. I don't, I just, my question is, am I in the right to dig my heels in and say no?

Do you have the $300,000 extra to make this move and keep it debt-free, which is, it sounds like where you want to stay. You have a paid-for home. That's nice. Do you have the money to do this and it's just a work thing, or is it a work and money thing?

It would be a work and money thing. I only have like $150,000 liquid cash, and so— and I'm not wanting to spend any of that towards another house, you know.

What does your wife think? Is she desperate to make this move?

Not necessarily. She— if she spends a long weekend with them, then, and I'm not there, she comes back and she reinstigates the conversation that's been going on for about a year. And I'm like, you know, there goes long stretches where she's totally fine, where she's a stay-at-home mother now.

Yeah.

So we've got that locked down and she can be a stay-at-home mother. But I think with this move, she would have to go back to work and then that entails Childcare, and I'm scared of childcare costs.

So let's just—

to me, it doesn't make any sense.

Let's just pretend for a second. Um, let's pretend that you're like, all right, we take the $400,000. Uh, let, let's say you decide, hey, we're gonna make this move and we wanna take the $150,000 and put it with the $400,000. And so in the meantime, we're gonna save up our 3 to 6 months just to make sure we're not touching emergency funds to do this. And we're gonna go in and we're gonna put $550,000 down on a $700,000 house. house, and then we're gonna have a $150,000 mortgage. Let's just pretend you did that. She would have to go back to work because of the mortgage, or is there another reason you feel like she would have to go back to work? Because that doesn't feel—

Um, I guess it would be— it's part of my resentment that all that, all that money that I worked towards, that house was mine. And I— and she— the reason she wants to move is partially she feels that the house isn't hers because she hasn't contributed.

Okay, now we're getting somewhere.

This is a layer beneath. So is her house on the deed? Is her name on the deed?

No.

And why is that?

Because I had it prior before we were married and it was paid off before we were married.

But you can easily add her to that. That's just paperwork.

Correct. But I've seen— or I guess I'm in a field where divorce rates are high in the construction field.

Okay, so we're getting somewhere on this. There's, there's some issues here. So, because you can go 2 routes of this. If you said, hey, she doesn't feel like the house is hers, I lived here before she did, I picked this house, she just feels like— I, I would love to move somewhere that feels ours. That's one side of this argument. But then the other part of it is like, dude, you're married to this woman. You're clinging on to something you did as a single man, and you're no longer single. So add her— either let's add her to this deed because you're married to her, and let's show that you're like all in 100%, or you guys need to have some, some deeper talks, I think, with a counselor. Because I think I'd be feeling the same way if I were in her shoes. Like, he's not letting me fully in on this, um, if he's already thinking about what happens if we divorce. But you didn't have her sign a prenup, did you?

No, but I don't think that's the question. That's not my— I think my question is, is it proper for the parents to be getting, uh, meddling in my business?

No, it's not. It's not. But in digging through, we found others You're right. The initial question was, do I need to move closer to the in-laws? No, you don't. You truly don't. But in uncovering that, I think we're seeing the deeper issue of the reason she wants to move is she wants something that's both of you all's. And what you have right now, she's feeling iced out because you won't let her in on the deed. And she's thinking, maybe if we have a new house that we have together, we'll both be on it. Oh, and by the way, my parents want us to move closer. That's another reason that I can push him to move So she's using what your in-laws want to do as leverage for her to get what she really wants from you, which is a place that we live that we can call our own, that I'm on too.

Okay.

See what I'm saying?

Yeah, I, I— it— she's not a lot of like a money person. She's never—

I'm not—

I know you don't have to be a money—

you don't have to be a money person. Check it out, Charlie. You don't have to be a money person to want 100% um, buy-in with your spouse on the things that you're building together and a part of together.

She feels like I, I should feel so blessed to live in Charlie's kingdom he made for himself. And instead, she, she wants to feel like the queen of the castle too. And I think that she has every right to do that. So I think what we need to do is just separate out all of these issues. Yes, the in-laws are meddling in your business. Yes, this destroys your commute. Yes, this messes up your finances because you're adding a mortgage to the picture. It's okay to use those facts on paper. I just don't want you to sort of hide the stuff that's going on underneath just by using those as excuses.

And you don't even have to move closer to the in-laws. What if you guys, if you like the neighborhood you're in and if that works better for your business, what if you said, honey, I talked to these good people on the Ramsey Show. I think I understand. Would it be a good— can we compromise here? Can we stay in this area, which means we're staying in this price point, Which means we don't have to take on a mortgage, but can we get something that you and I select together? We're both on it and it doesn't cause us to go into debt any further. I think that, Charlie, that would be a very fair compromise.

Imagine you guys upgrade to a $500,000 house in cash and she gets a vote this time. That might solve, solve this all to where she's not itching to move and the parents are just giving her a reason to bring this all up.

Right.

Right. That's probably why when she goes on the long trip, she comes back and she's like, I can use this as leverage.

Yeah, I think you're right on that one.

But it's okay if you just say, I don't like my in-laws. That's a fine reason to not move closer to them. I know you're not going to say that on air, and I put you on mute so you didn't have to, but I imagine as soon as we did, he was like, yep, that's—

I vote for the buffer, George, every time.

Yeah, it's okay. It's a weekend trip instead of a, hey, Hey, we were just in the neighborhood, decided to pop by. Now it's, you gotta plan for sure.

And now it's Everybody Loves Raymond, and I'm like, an hour is a perfect, it's perfect. You can go over there, you have a good time, it's enough time nobody needs to stay over, you can go home.

It's not enough to tire you out on the drive.

Yes.

It's a good happy medium. Good luck, Charlie.

Look to the buffer.

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mamabearlegalforms.com with promo code Ramsey. One of the most helpful things you guys can do if you're enjoying the show is leave us some feedback. Drop a comment, hit subscribe, share the episode with someone who could use it. You guys are the best marketing engine we have to spread the word about the show and the hope that we're trying to bring people. So thank you for doing that. Victoria is in Denver up next. Victoria, welcome to the show.

Hi, Jade. Hi, George. Thanks for having me.

Absolutely.

So my question is essentially, my husband and I recently switched away from credit cards and just to our debit card out of our checking account. And we're just wondering if that really will save us a lot or if we'll still have kind of the swiping carelessly habit unless if we go to full cash. So that's my question.

Oh, so you're on debit now. You're like, should we take it a step further and go full cash?

Yes, which sounds very cumbersome, so you might have to get me on board.

Sure. There's only a couple of places that works in today's society. You're not going to walk down to your utility company and give them a wad of cash. A lot of things are going to be on autopay. The things that you can use cash for are likely groceries, maybe gas if you want to walk into the station.

And it does make a big difference on groceries, I will say that, Victoria.

OK, interesting. It's not a necessity, but—

We switched a few weeks ago.

So far, So far, I haven't really noticed any changes. I think it's more just, hey, is this doing anything? Or should I be getting my 3% cash back?

Are you itching to go back to credit cards?

I wouldn't say my husband is. I probably have a slight more itch than him.

There are credit cards with cash back.

Only because I think I haven't seen a spending benefit yet. I think I'm still spending similarly to how we have been. And we have pretty good spending habits. I'll say we maybe spend a little more on food than is in our budget, but for the most part, not too bad. Where are you guys at financially?

What are your goals right now? What Baby Step are you on?

We're doing really well. We're 29 years old each and on Baby Step 5/6. We have twins that are almost a year old, so saving for their college fund and then paying off our mortgage. But we have no other debt.

Great! And you're on track to do that. Funding college, putting extra on the mortgage. You guys are hitting those goals and you still have room to save for a car upgrade, a vacation, maintenance, all the other things.

Yes. Yeah, we're doing really pretty well thanks to a lot of the advice from this show. So thank you guys.

That's awesome.

I mean, I think that you guys, you sound like you're really like conscientious people and that you're, you're just intentional about what you're doing. It sounds like you have really good control over your spending. So I wouldn't expect to see like this marked improvement from you going to a credit card to a debit card. You two specifically, my guess is it would probably show up in like specialty purchases. Like if you were buying concert tickets or going on a trip, it might cause you to spend a little bit more on flights. It might cause you to upgrade the hotel room. Like that's generally where people tend to spend.

The discretionary spending.

Yes. That's when the percentage of what you spend generally would go up higher. I've even saw studies that say fast food, for whatever reason, when people go and buy fast food, they spend more on a credit card than they would on a debit.

You'll upgrade that meal on a credit card.

Yes.

And so I, my guess, Victoria, is that you guys are just responsible people. If you're looking for the 3% cash back, look into some of the debit cards that offer it if it really is that big of a deal. But I specifically wouldn't divert back just for the $30.

Okay. Yeah, I think we've been trying to become people that we admire, and we admire people who use debit cards. I love that. I was definitely curious. It's interesting to hear, though, about maybe cash could be more beneficial at the grocery store or things like that, so I might look into that.

It is for a couple of reasons. When you go to the grocery store with $150, when it's gone and no other plastic, it's like, hey, you have to put the eggplant back. I don't have the $1.50. I don't have the extra money. You just have to put it back. I do think that in that way—

I wish that's what people were like, dang it, I shouldn't get the eggplant today. It's usually snacks.

Plant is in season and it's expensive if you get organic. That's all I'm saying.

It's the BOGO Oreos for me, Victoria.

There you go.

So yeah, I would just try to— the areas where you feel like you could do better or that you know are tempting for you, I would just try to put boundaries up for those. And that might mean deleting the app off your phone or deleting the payment information for the debit card from that app. And then for the in-person spending, some people go, I'm not going into Costco. It's too dangerous. I'm going to do Instacart. See, I like to go into Costco, but Jade is like, I'll do Instacart because I'm not tempted by all the things in Costco. So you know you better than anyone.

That's right.

And so you and your husband can then set up a game plan for how are we going to make— protect the margin that we've worked so hard to create. And that's where a debit card really is a protective barrier more than it is this magic wand that's going to cut your spending in half.

The biggest thing is making sure we're budgeting our money every single month and we're sticking to the money that we budget. We're Like, that is the crux of everything we teach, is making sure you're doing all of that together.

That's right.

All right. Good question. Nate is in Toledo, Ohio up next. Nate, welcome to the show.

Hey, thanks for taking my call.

Sure.

My question today, my wife and I bought a house in January and we put about $60,000 into the house so far and moved in just 2 weeks ago. My question is, because of the amount of money that we put down at the beginning not being 20%, we're paying PMI currently. And I'm just looking towards the future and thinking about refinancing. Is there any guidelines or instructions that you guys would have for our situation looking at refinancing our home?

How far away are you from getting rid of the private mortgage insurance? How much more do you need to pay?

We put $10,000 down, so as far as our mortgage is concerned, we still probably have about $30,000 left to go.

I thought I heard you say you put $60,000 down.

Was that of work, like renovations?

Yes, that's the amount of value that we put into the house. just investing in materials and that to do.

So you knew it was kind of a fixer-upper. So you put $10K down. Yeah, you had $60K set aside in cash to cash flow the repairs and renovations needed.

Yep. Okay.

What was your interest rate?

Our interest rate is 6.25%, I believe.

Yeah. So I mean, it's not going to make sense to refinance for you until rates go down to a point that you go, man, that's going to make a significant difference for us. Whether it's a whole point, that'd be what I'd be looking for. But I think that my bigger play right now, instead of waiting for interest rates to go down, because I don't see that happening, I would be thinking, okay, how, how can we pay this mortgage down and get this PMI off our backs quicker? We got $30,000 until this monkey's off our Let's just get to work. And in the meantime, it's great because we're just paying down our mortgage too.

And the other thing to do is get an— you can get an appraisal because you put those $60K of renovations in. That might be able to get you out of this PMI because your house might appraise for $60 grand more, meaning your loan-to-value ratio just changed.

Gotcha.

So that's one thing to do.

I could talk to the bank with.

Exactly. And see if your lender can just drop the PMI versus having to refinance to get there. And I assume you're on a 30-year.

Okay, yes.

Okay, so it may not be worth refinancing for a while until we see some significant rate changes. I wouldn't just jump to a 15 to do it. So what you do is look at your closing costs on a refi. It might— let's say it's $5,000. Well, now you got to look at when am I actually gonna save that much or more? What is that break-even point? And that's a pretty easy calculation to figure out, to go, all right, it's gonna take us 7 years to break even. This refi is not worth it. But if it's gonna take 18 months, 24 months to break even, all right, that's gonna be worth it. Let's do that. We know we're gonna be in this home for the next 5 to 10 years. So that's the simplest way to look at the math on it. But you're not gonna magically just get PMI removed until you hit that 80% or less loan-to-value, below that threshold.

Okay. All right. Thank you.

Absolutely. Great question.

That is a good question.

And that's a, that's an interesting Interesting conundrum because they put all this money into the house. It likely improved the value. Now, did it increase the value of the home by $60,000 just because they put $60,000 in? Highly depends on what they did.

Well, it goes back to the teaching we used to have on buying a house, which I guess is still a teaching to put 20% down. And the main reason was to avoid the private mortgage insurance. But in today's market, I mean, gosh, most people are putting down well more than that just so that they can have the payment be less than 25% of their take-home after tax. And so the fact that they were able to only put 10% down and—

$10K down and still get in there.

Yeah, that's, that's telling me—

I don't know all the numbers, but it sounds like they're doing all right.

Yeah.

So way to go, Nate. I wouldn't stress too much about the refi, but you can always contact our friends at Churchill Mortgage and they can at least run the numbers for you, show you the math, and then you can make the decision. Welcome back to the Ramsey Show and the Fairwinds Credit Union Welcome back to the Credit Union Studio. I'm George Campbell, here with Jade Warshaw, taking your calls at 888-825-5225. Ashley joins us now in Minneapolis. What's going on, Ashley?

Hi! Thanks for having me!

Absolutely!

My husband and I are in our late 30s, have 2 young kids, we're on Baby Step 7, and are talking about spending $200,000 to put in an in-ground pool.

In Minneapolis?

Yeah.

All right, how much use is that going to get out of the year, do you think? Is that like a 6-month situation?

Yeah, yep, about 5 to 6 months. Well, it'll have a heater and everything, so it extends it a little bit.

Nice. Do you guys have the cash?

That's cool.

Yes.

Okay, and is this just earmarked for pool? Like, this doesn't derail any other savings or financial No. Wow. What's the home worth?

Um, about $850,000 to $900,000.

Love that.

So tell us, what's your— do you have pause, and why do you have pause?

Um, well, we're normally very frugal, and it's a lot of money. So I'm a little bit more all in, but my husband is hesitant because—

Is it because of, is it because of like resale value, or just, man, this is just a lot of money, I've never spent this much money on a thing before?

It's a lot of money to spend on something that isn't necessarily an investment. You won't, you know, it doesn't increase in value.

Have you looked at— I'm guessing this is all the bells and whistles. Have you played it out in your minds? Like, how would we feel if we did the $150,000 version of this? Would we feel like we were shortchanging ourselves or would we feel like it's not worth it? Have you played out those different scenarios in your mind?

Yes. I mean, we're not going, you know, high-end above and beyond by any means, but we're, you know, if we're gonna spend the money, we want what we want.

There you go.

I'd say so.

You have the vision already of what you exactly what you want this to be, and he's on board, but he's just sort of getting his breath taken away by the bill.

Yes. Yep.

What's the most expensive thing you guys have ever purchased outside of your Um, cars. What's the nicest car you guys have paid for in cash?

Um, roughly $45,000 to $50,000.

Nice. Did that take your breath away the first time when you were like, whoo, $50,000 gone?

Um, yeah, but it's also something you need, whereas a pool you don't need.

You didn't need a $60,000 car. I mean, it's utility at some point, but you got Because you guys are like, we've worked hard, we have the cash, let's enjoy it. And so that's part of it.

And you saved up for this. It's not like you had $200,000 laying around and you're like, ah, maybe we could just put a pool in. You saved up month over month for this.

It's not like you're spending your kids' college savings on a pool. You guys said we have a goal to buy a pool and now we have the money, but now we're getting a little bit cold feet.

Yeah.

Yeah. I mean, that's normal. I want to tell you, it's, it's wise. before you write a $200,000 check, to have a little bit of a gut check to go, should we be doing this? But to me—

Yeah.

I'm like your husband. I'm the guy who's like, is there a cheaper version? Do we have to do this now? I mean, the kids can't even swim yet. What are we doing? And so these are the same conversations I've had in my own house. But here's the deal. You have to realize that not everything has to be an investment. Your husband likely has hobbies and things he enjoys that are not an investment. They are truly a waste of money and it's a fun waste of time, essentially.

Yeah.

And so picturing the kids out there swimming, having the best time, the summers they're going to spend there for the next— I don't know how old— you said you have young kids. How old are they?

4 and 7.

Perfect. That's such a great age. So now you're talking— they have like 10 to 12 years before they don't even want to hang out with you guys anymore. And so now we're going, this is a worthy investment to create some amazing memories We're not going to look back 20 years from now and go, we shouldn't have got that pool. Derailed our entire life. No retirement now. And so you guys have eaten your vegetables and I think you deserve some dessert at this point. So it's a green light for me. I think you guys should spend the money on the pool.

Well, thank you. I like that.

You've already toiled with it long enough. I think the longer this sits in your brains, the worse it's going to get.

I think if you let this sit too long, I think you'll start to talk yourself out of it. And that would be a shame.

What would he want to do? Let's say he had $200,000. What does he want to do with the money?

Save it and invest it.

For what? And then what?

Well, so we don't have to work the rest of our lives.

There we go. Now, we actually have a math problem. Can we retire when he wants to retire, even if we do the pool? You might find that the answer is yes, we can. Now, is it going to be 6 months later because we built the pool? I wouldn't put this pool as an obstacle to early retirement if that's what he's trying to do.

OK.

I would set that as a separate goal and say, hey, we can invest on the side here for your early retirement goal and here's the date based on our math. And then make peace with that decision and you can have a pool in the meantime.

All right.

I just want to separate it out because I'm the same way. I'm like, you know what, if we compound growth and a good growth stock mutual fund, $200 grand could turn into $5 million by the time we're—

Absolutely.

You should run the opportunity cost. I agree with George, but I also think there's, you know, when you do this plan, there's a tightrope walk that you have to do because you do, you want to live your life in the moment. And when you've worked as hard as you guys, it's like that can be an ever-moving goalpost. Oh, well, now instead of using the $200,000 that we said was going to go for a pool, now all of a sudden another long-term goal pops up, and then another long-term goal. And before you know it, it's like, gosh, we just kept pushing it and pushing it. And now we're retired and we get to enjoy the retirement, but we never did any of the fun stuff when we were working. So just something to caution against.

Have you guys crunched the numbers for his retirement goals?

Yeah, he's more of the numbers person than I am. But yes, it would It would put him back about 6 months, I believe.

OK. In the grand scheme of life, would he rather go down as a legend, as an awesome dad, for building that sweet pool that his kids got to enjoy, or would he rather retire 6 months earlier? Be a legend.

I think the pool is a better idea. Yes!

I feel better!

Then I don't have to worry about— listen, my kids can't complain about trauma at that point. I'm like, listen, I gave you everything. We took you to Disney. Disney. We built a pool.

They're in counseling because they, they spent too many pool days.

Yeah, we got sunburnt that one time.

We got sunburnt.

We got to put on the sunscreen.

Yeah.

But it's a good reminder to all of those people in Baby Step 7. There's a lot of those listening right now who are in the same space, which is, we've worked so hard. Now I feel bad spending a large amount of money. But let me remind you the other part: live and give like no one else.

Yeah.

So live like no one else so later you can live and give like no one else. So sometimes giving helps you unlock some of the Yes. Because it feels— you feel almost selfish to spend $200,000 on yourself for a thing that's not going to, quote, produce income or increase your home value by $200,000. And I have to remind myself every day, not everything has to be an investment.

That's such a good thing.

You can just enjoy it. Sometimes you're investing into the memory dividends.

Absolutely. I feel like that plays a huge part in how we enjoy life and probably longevity. too.

Yeah, and a good book for him— this is not a Ramsey book, I don't agree with everything in the book— but it's called Die With Zero. And for a lot of people, this has helped them unlock the purpose of money and helping them use it now while they're alive, while they have young kids, versus in letting their kids inherit $5 million when their kids are 70. Does them no good at that point. Let's enjoy life now.

Hey guys, Rachel Cruze here, and I am so excited to tell you that the brand new 2027 Ramsey Goal Planner is available now. Yes, it is. Guys, this is the only planner with exclusive monthly content from John Delony, Jade Warshaw, and me to help you set clear goals and actually stick to them all year. But here's the thing, these sell out every single year, so don't wait. Order your new 2027 Ramsey Goal Planner for $49.97 at ramseysolutions.com/store.

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Today's question comes from Gabriel in Arizona. He says— Gabriel or Gabrielle?

Good question.

I'm going to go with it's a guy.

Gabrielle would be a girl. I feel like there would be an L-E at the end.

True that. Let's go with Gabriel. My financial planner wants me to continue investing But after watching Dave and speaking to my dad, I think I should hold off investing more until I pay off my debt. The only debt I have is $30,000 in student loans that are 0% interest until payments resume in October. I have $10,000 in cash in my bank account and I earn $110,000 annually. Should I stop investing temporarily? Well, Gabriel, I love this question because It shows that you're interested in your future. Anybody who's like, I want to start investing, I love that you're thinking about your future. That's a very smart thing to be thinking about. But I do think that there's kind of a good, better, best way to approach investing. And the best way to approach it is with the best foundation. And what I found, Gabriel, is that it's best to clear the debt out first, which is what you're wanting to do. You're eliminating that risk. In this case, there is 0% now, but you're You're right, interest is going to resume in October. And so at that point, gosh, you're paying for that debt even more.

And so let's take the full force of our income temporarily, and let's knock out this $30,000 of debt. You'll be done super fast. And then you can save up 3 to 6 months of expenses. The 3 to 6 months there, it's just kind of like an insurance fund against not only your debt freedom, but it's also an insurance fund against your future invested money. Because without an insurance, you know, without an insurance fund, without an emergency fund there, you're basically saying, hey, if something happens, the only money I can go to is my invested money. And you don't want to touch that. So let's make sure we have an emergency fund built up ready for you. And then after that's done, yeah, let's start investing 15% of your gross every single month into your 401 or a Roth IRA.

Amen.

Trying to do both at once is going to slow you down on both sides. So imagine you you take $9K out of the $10K you have in cash, throw it at the debt, now you've got $21K left. You throw $4K or $5K at that, you're done in 4 or 5 months.

So fast.

That's pretty incredible. And then you build your emergency fund 4 to 5 months later, and 8 to 10 months from now, you are investing 15% with no one stopping you. But of course, your financial planner is a little bit incentivized to get you to keep investing.

That's true.

So that's another part to remember. They're not looking at your holistic financial picture. sure they need to be listening for what your goals are. If you tell them, hey, my A1 is paying off debt right now, they should respect that and say, I'll be here when you pay off your debt. I'll be cheering you on. That's it. Alright, let's go to Rowan in Roanoke, Virginia. What are the odds? What's going on, Rowan?

Hey, how are you, George and Jade?

Doing great! How can we help?

My question is, I'm a broke college student. I'm at school for aviation. I have my pilot's license. That's what I'm doing. But I have to get to the airport, not this semester, next semester, multiple times a week. I had a car at the beginning of the year and it was a junker. I would say it was about $3,000 and it died. I need a new one to get to the airport. I have no other way to get there. It's too far to ride a bike. I need a vehicle of some sort, but I have a $10,000 personal loan because I had to take out a personal loan to get the pilot's license in the first place. And it wasn't enough. So I had to put $2,000 on credit cards. So I have about $12,000 in debt.

So far everything's had to— who's forcing you against your will, Rowan? Blink twice if you're okay.

Yeah, no one's forcing me, but in order to get my bachelor's degree in aviation at the school I'm at, I had to get my pilot's license.

So let me guess, let me guess, you have to finance a car to get to the airport now?

That's my question. Do I save up and I get another Let's say a $3,000-$4,000 car by about January, which is when I need it? Or do I finance a car? Or do I get a motorcycle or something, which I might not be able to ride because in Virginia it snows?

I don't know about the motorcycle, but I definitely love the idea of, yeah, let's save up and pay cash for whatever you can get in cash by January.

And that becomes your budget. And now you're going to be searching high and low. You're going to be making sure you're looking at you know, vehicle history reports and get an inspection before you buy it so you know you're not getting a lemon and let that get you from A to B for maybe a year or two.

Yeah. And I, let me just call out, I like that you're attempting to change your mentality of saying, I don't have to do debt. I have options here and I'm going to choose the option that gets me where I want to be without adding risk and debt to my life.

Yeah. So, Would you recommend that I get that vehicle, that $3,000 car, around January when I need it? Or should I figure something else out and pay off that personal loan first? Because I could probably get that paid off by January, but I wouldn't have any money for a car.

What would the figure something else out be?

And just have a small down payment.

What are your transportation options if it wasn't you having your own car?

An hour bike ride, probably.

I don't know about that on the highway. That feels like a recipe for disaster.

Yeah.

Yeah, let's not do that. Let's not do that.

Let's say first things first.

I'm OK hanging with you.

Hold off on the personal loan. Let's get you some transportation that's reliable. Then we can focus on the personal loan. How much money are you making right now?

Right now, not very much. I'd say I would make about $400 a week.

Are you able to up that, or is that the most you can do while going to school?

That's about the most I can do with my workload at the university.

That's about $1,600 a month. You're saying by January, you could have $3K or so saved up?

And a good chunk of that paid off on the personal loan. Or, I could just go for a nicer car.

I might be inclined, if you can get a $5,000 car over a $3,000 car, Look at what's out there and let that be the guide on what you spend. Because if you can get something that's going to last you a little longer, because how long are you going to be in aviation school?

About 3 more years.

Yeah, we want something that's going to get you through because you don't have the ability to make a ton of money, it sounds like right now. So let's make sure you get something that'll get you through the next 3 years and that you feel confident with. And if that causes you to delay paying off the personal loan by a couple of months, I think it's worth it for you to have a reliable vehicle.

So realistically, just make minimum payments on the personal loan while stacking up cash as quickly as possible for that car. And then once you have the car, now we can turn and start knocking out the personal loan.

Okay, so your preference is to spend a little bit more on the car to ensure that it'll last me the time I need it versus saving a little more and putting it towards the personal loan and getting that paid off so I avoid interest?

I think so. I think if you're looking at cars and you're looking at one and you're like, I see one for $3,000, And I just like, this looks like, but you see one for $5,000 and you're like, I feel good about that one. Get the $5,000 one. You know, it's not gonna, it's not going to derail your life or debt payoff by more than what, a month or two? And I think that's worth it for what you need transportation-wise for the next 3 years.

Okay.

But the goal is debt is off the table forever. So let's just go, okay, how do we get creative? and not call back and say, well, I had to. I think you're starting to change that language, which is awesome. If you can get this at this age, you're going to be unbelievably wealthy and avoid debt the rest of your life. So this is great. And Jade, fun fact, I once broke down in Roanoke in my cousin's Saab hatchback that I was driving across the country.

Do they still make those?

I don't think so, and I can see why after breaking down in Roanoke of all places. That's pretty good. But yeah, it's a great reminder, and I wrote down had to in quotes because that's always—

Yeah, I did too.

That's so funny.

Well, it tells me this, it's that if you can break out of that mindset of saying I had to, because what that says is life happened, I had no control.

No personal responsibility.

I had to be reactive instead of proactive. I could not have avoided this. If you can change that to I made the decision to.

Huge.

Change that. I made the decision to go and Now we're holding up a mirror and we can say, you know what? I want to be a different guy who says, I made the decision to save up and pay cash for that car and only upgrade when I have the cash later. Drive like no one else so later you can drive like no one else. Yeah.

I love that because then when you take your personal responsibility, you take it for the negative stuff, but then when you turn around and start making the right decisions, you get to take responsibility for that too, and that feels really great.

I made the decision to invest 15% of my income for the last 10 years. 30 years. That's pretty cool too.

Listen, guys, I've heard just about every excuse for why folks think they can't get ahead with money. So let's go ahead and settle this right now. You get the final say on what happens with your money. That's why you have to start telling your money where to go so you can stop wondering where it went. So if you're gonna start winning with money, you have to get on a budget. And the easiest way to get started and stick to it is with the EveryDollar budget app. It'll help you make a plan for every single dollar coming in and every single dollar going out every single month. And guess what?

It's free. So no excuses.

Download EveryDollar in the App Store or Google Play today. Everyone needs insurance, but it can be hard trying to find pros who aren't just looking to make a buck and agents who actually know their stuff. Well, Ramsey Trusted Insurance Pros are vetted and coached to make sure they're market experts who have your best interests at heart. So go to ramseysolutions.com/coverage to find the type of insurance you're looking for and connect with a Ramsey trusted agent. Tina is in St. Louis up next. Tina, how can we help?

Hey, thanks for taking my call, guys.

Sure.

Um, well, I, I, I'm, I'm Tina. My husband just passed away about 5 months ago suddenly.

Sorry. Um, how old was he?

Thanks so much. He was 60 years old. Wow. Um, so he was self-employed. Well, he had, um, we think, uh, he's had a blood clot. He had had surgery on his heart the year before, was doing great. And then he's self-employed, a tax accountant, has his own tax business, and he wasn't answering my text, and I found him passed away at the office.

So sorry, Tina.

Oh, thank you so much. He was self-employed. Sadly, for some reason, he had no will, and he had a lot of kind of hidden credit card debt. But my goal is I want to be crazy and attack and pay off all that debt. So I paid off all the credit card debt. I'm about to—

Why'd you pay it?

Pay off our house.

Was it in your name?

Well, it was in the business name.

Okay.

So I—

because it likely they would have written that off if you sent them a death certificate.

Yeah, they would have probably, but, um, I'm— I was kind of on the LLC as co-owner, so you thought they'd come after you. I need to— yeah, I needed to get that done. Now, we did shut down the business, um, since he was the brains of the business, um, made the decision. So—

You shut it down or you sold it?

Well, no, we shut it down. Um, uh, and I, and I work, um, a full-time job and 2 part-time jobs, so I'm okay financially paying for my current bills and I'm good there. But what my question is for you, I have an integrity question for So, one thing that was not under my name is Brian's office. And he also has a loan. Now, the office, very old. It's worth about $80,000. But we found out it's got some significant things that need to be done, plumbing, that sort of thing. And he owes $30,000. Both are solely under his name. Now, while I'm crazy about wanting to pay off all the debt and get debt-free, I also want to be God-honoring, and I don't want to do something that I feel like is dishonest. Like, I'd rather have— like, what I'm thinking of, because while I'm not in St. Louis, I'm in a little town south of it.

Okay.

Um, there's a lot of commercial real estate not for, uh, for up for sale for long periods. I'm thinking about just giving the office back to the bank and stepping away. Why?

Why can't you sell it for what Whatever it's worth, if it needs plumbing, the person who buys it will know that it needs plumbing work, right?

Right.

You're not trying to not disclose what's wrong with the property. You're not trying to hide it.

True. No, yeah, and it would probably have to be kind of a short sale. I haven't gone into probate yet because I've only got about $2,800 left, and that would be something I'd have to give solely to the lawyer. So I was thinking, I'm worried that I would have to keep continuing to keep this building going at $800 a month, which I just don't have. And doing probate, you know, I couldn't get the proceeds for 6 months. So those were kind of my things, but I just wanted to go— I wanted to get your guys' advice. I'm probably going to go ahead and get it into probate and have to stick out a little money to do that in advance. But I just wanted to think, is it God-honoring to— Or, you know, honest to give it back to the bank if need be.

I thought that you said that the office was worth $80,000 and that he owes $30,000.

He does, he does. I just don't know it will sell. There's so much commercial property in our little town.

Well, let's check and see. Let's get with a SmartVestor Pro and let's find somebody who specializes in commercial real estate and let's see what's the value.

You mean like a real estate Ramsey Trustee? Real estate agent.

Yeah, what did I say?

Real estate agent.

Yes.

You said SmartVestor, which we own that. I'm sorry. I'm going to the wrong side.

Thank you, George.

But I was gonna say, I think you need a team of pros in your corner. I would be contacting a local probate attorney, get a real estate pro, even a financial advisor like a SmartVestor Pro to help you through all this. Right now you're doing a lot on your own and there's a lot of big numbers here and you don't want to make mistakes where you could have looked back and said, gosh, why did I do that? I was just grieving and in a hurry and I just wanted it off my plate. Instead, you can rest and breathe easy. Can you make the $800 office payment for the next couple of months?

For a couple more months, yep, I can do that.

And then what's the long-term play? Let's say you sold this thing for at least what you owe on it and it was out of your hands at that point. Would that be a win?

Oh, that would be a definite win. Just kind of putting out fires and, you know, I think my house that, um, is actually— we're closing on tomorrow. We're shutting, you know, I'm selling it. Um, there's been a lot of hidden debt. I've had to put $30,000 into it, and that took out, you know, anything that I had into savings. So I think maybe I'm just a little bit traumatized by that. That's why I'm panicking about the offer.

I don't think you need to panic just yet. Let's see an appraisal, what it's worth. Because if, if you said it's worth $80,000 and it's really worth $30,000, well, then you're just breaking So there's no reason to surrender it at this point.

And it's either way, it's not dishonest. It's just a bad move.

Yeah.

Yeah. So right now you're not in too much of a pinch. You're able to work. That's fantastic. Do you have some savings right now?

Only about $2,800.

Okay. And how much debt is left, if any, tied to your name?

Basically none. Once this house sells tomorrow, I'm out from underneath it all.

What are you gonna What are you going to do with the profits of the house?

Oh, there's no profit, sadly. In December, we refinanced, and we had— a few years ago, we had taken out a HELOC, stupidly, and I realized it hasn't even been touched. So I'm actually having to pay almost $10,000 to get out from underneath the house.

So you're underwater on the situation.

Underwater big time.

OK. And now you're going to rent?

And I have to buy a new HVAC, yeah, and a roof.

And was there any life insurance at all, Tina?

Yeah, there was enough. It got enough to do the funeral and having to put like $30,000 into a new roof and a new HVAC for the house. Everything kind of just— the last of it, you know, I've got a cashier's check for the closing costs tomorrow. That's it. So that just kind of leaves $2,800 kind of left. But, you know, that's enough. And I make about $3,100 between the 3 jobs. take-home. And I, my, I got an apartment, you know, it's perfect for me, you know, and it, I, I'll have an additional $1,000 a month. Okay.

And then what's your retirement plan? Do you have a nest egg?

No nest egg at all. Um, we had, again, being self-employed, we took out probably about 4 years ago our, um, 401. I'm just basically right in the, I'm in the ashes just rebuilding. I'm 50 I'm 56, so I've got several years of working and I've got a great day job and a good little side job, so I feel comfortable. But I think after I get through all this office stuff, I think I'll be able to start putting back the 15% that I'll need. Good.

Yeah, that's the goal. If you can start doing that for the next, let's say, 14 years, you might have to work longer than you wanted to, but then at least we can retire with some dignity. Plus, if we get anything from Social Security, I don't know how much you'll get from that. Do you know if there's any survivor benefits from your husband?

Well, that was the thing. He was going to start, um, uh, doing that in like 2 months before he died. So because he wasn't actually receiving the Social Security benefits, uh, I, I won't be able to even see that for another like 4 years. But that's okay. That's okay.

So, well, it sounds like you're, you're not—

And I'm prepared to work till 70.

You're comfortable. You're doing okay. And so I would just take a breath and go slow and reach out to some pros and don't try to to do this all on your own. Number one, even if you weren't grieving the passing of your husband, it's good to have pros in your corner, but especially someone who can see your situation very clearly, map it all out, help you understand what they're doing and why they're recommending what they're recommending. That's the most important part versus you, like you said, just flailing, making almost impulsive decisions just because you're, you're scared or stressed.

Yeah, I, and I have to say, I might go back and look at that business. If he had a book of business, there might have been some value there, and I might just double-check that and see if there is anything worth, um, selling to another, you know, accountant in the area that needs the business.

Yeah, creating a lump sum to throw into that nest egg. That can't hurt.

Yes, absolutely. Good luck, Tina.

Whether you're a small business owner or an individual, doing your taxes is not It's like an algebra test where if you get anything wrong, the IRS can make you pay with actual money. But if you work with a Ramsey Trusted Tax Pro, you don't have to be a tax whiz because they are. They know taxes like the back of their hand, which makes filing super easy. So work with a Ramsey Trusted Tax Pro and get back to doing what you love, which probably isn't taxes. Visit ramseysolutions.com/taxpro and fill out the referral form to get connected to a Ramsey Trusted Tax Pro today. Our scripture of the day, Psalm 40:2. He lifted me out of the slimy pit, out of the mud and mire. He set my feet on a rock and gave me a firm place to stand. Samuel L. Jackson said, take a stand for what's right, raise a ruckus and make a change.

That's right.

You may not always be popular, but you'll be part of something larger and bigger and greater than yourself.

I'm not arguing with Mr. Jackson.

Who am I to argue? You know, he had me at, you may not always be popular. I said amen. Amen. Dylan in Saginaw, Michigan is up next. What's going on, Dylan?

Hi, how's it going?

What's going on?

Oh, well, I kind of got myself into a situation with a vehicle about a year ago. I, after the fact, know that was a terrible idea. And I'm underwater with it. And I'm trying to just get out of debt in general. And I feel like it's a very big bill in terms of everything I have going on. And I don't really know what to do about it. Man. Okay.

What's left on the loan?

Left on loan is $13,000.

And have you looked up the private party value you could get for it?

About probably $5,000 to $7,000. I would assume in this area closer to the $5,000.

Wow! What happened? Why is it so underwater?

Well, I have a business and I just put a crazy amount of miles on it within this— actually, within the first 6 months of me having it, I put about 60,000 on it.

Goodness gracious!

Wow!

Okay.

The intent was to pay into it and pay it down, but at the time, that was not a very aha moment, thought-out process.

So why not just pay off the $13K loan at this point and just hang on to the car?

Well, we don't have the funding to be able to do that. We recently have been listening and recently have been trying to get out of debt, generally speaking, and that just seems to be a very large bill in the way. And with how many miles are on it, it does need work. work. Payment isn't really that bad. It's $352. Insurance is about $290.

So tell us what you're working with every month and why specifically this one $13,000 debt is the issue. What's your monthly income?

My monthly income is $2,800.

Okay. And then, well, gosh, how much is rent or mortgage?

Mortgage is $865.

Okay. So we know the issue beyond the debt is the income, right?

Correct. Yes.

So tell us what you do for work. Is it your wife too?

Yes, but we have a newborn and we just think it's the smarter decision to save from having to have somebody watch the boys because she has a boy as well than it would be for her to stay and go about it that direction.

It depends on what she can make in the market, huh?

Honestly.

So if daycare is $2,000 and she can go out there and bring home $3,000, well, now you have a $1,000 margin to knock out the debt. But you're saying you don't think she can make enough to make daycare worth it?

No, not necessarily that, but also I work a scheduled job and then I also have a business on the side as well.

And all of that is bringing in $2,800 a month?

No, I have not necessarily included what I make in the business as also money going to personal things. It kind of varies. Last year was my first run of the year, or run of the time of really getting going on it, and it was about $45,000.

Okay, where did that money go?

Not in the right places.

So you told us you can't find money to pay off $13,000, and you just found triple that in your side business.

Uh-huh.

Do you plan— are you on track to make that again this year?

I haven't really done it much this year. It's been very more so my mind has been a lot of how do I get out of all of the situations?

Right. By working. And you have this—

doing it.

The thing you're avoiding is the solution.

You have a side hustle that— or a side job or side business that you're like, hey, I can make $45,000 a year on this. I proved it last year when I did it. And then you guys decide, you know what, we're going to start getting out of debt and you stop working the side business. There's got to be more to the story than that because that doesn't make sense.

Now, how should I, I guess, proportionately put a portion of profit to those things rather than putting it back into the business?

Well, let's decide how much do you absolutely need to pour. We didn't talk about what type of business it is, but what do you absolutely need to pour back into the business to keep it going? And then how much of it can you honestly say, this is profit, I don't need to reinvest of this. And whatever that amount is, then that's the amount that you're going to take out, pay yourself, and let's start paying off this debt.

Right? Right.

What that— I'm going to give you some credit here because I think that's easy for you to figure out. Something is causing you to not be moving forward right now, and I don't think it's that. What is it?

It is that I don't know the fine line between trying to compute family time and work time together.

Okay, there we go. So we've got a— we've got an infant at home. Your wife also has a son, and you're like, she's depending on me, she needs me here, but I feel like I need to go out and work. I don't know what to do.

Correct. And I don't— I— we've talked about it, and she, she's fine to work. She's okay with doing that. And we're both on the same page of we believe it would be more efficient.

Is she struggling? Is she struggling mentally where she's like, I, I need help, like I'm crying out for help? Or is this just, uh, taking care of a baby is a lot, I just could use a little help? Which one is it?

It's that. It's more of it's just a lot because also her other boy's 2, so it's a very busy, very busy house.

So I'm gonna say something that sounds really really harsh, but I'm saying it on the side of I'm your buddy and I'm your friend and I'm rooting for both of you and I want you out of this mess. Okay, ready?

All right.

You have to work and you have to work full hours. And she sounds capable. It doesn't feel like she's in a, you know, a rut or she's not post— having postpartum depression. It sounds like she's okay. It's just a hard season of life. And I think you guys both have to embrace, this is the season of life that's tough. We're going to be, you know, working our fingers to the bone. We're going to be burning the candle at both ends. She's going to be up at night with the baby. I'm going to be up at 6 AM going to work. I'm going to do my normal job plus the $45,000 side job because we make— we only have $2,000 a month after we pay our rent. And that's not enough to pay even for our car that's only $13,000.

Are there other debts There are other debts.

I went through and wrote everything out to get a good visual. All in all, with the $13,000, there's a total of $19,500, not including the house.

So that's $6,000 more. That's still reasonable. You could knock that out. If you just said, hey, for 1 year, my 1 goal is to knock out the debt and then sock away money in savings, 1 year from now, you'd be completely debt-free with $20,000 in Okay. Now, side hustles don't have to happen.

No.

And you can increase your full-time income. That would be my next suggestion, because your side hustle is almost outpacing your full-time job income.

Exactly, which is why I wouldn't stop doing it. What kind of work is it?

It's honestly the easiest way to describe it. It's just odd jobs. I partner with some property management companies, help do maintenance things along those lines.

So you're like a handyman?

Bouncing between, correct, bouncing between several different places all the time.

What's your full-time job?

Full-time is a cabinetmaker.

Okay, so you're just a very handy guy.

Fine, fine carpentry. Yeah.

Can you— what does the ladder look like in the cabinet world? I mean, can you level up and work on more luxury stuff? What is— how do we get from $2,800 to $4,800?

It's really hard to say because it is a very— it is a small business. There's a very small group of us. And it's just kind of one of those things where it's a— it's an art thing. So it's not really like a— it's a skilled trade.

So that's what I'm saying, you should be making more. If there's a supply-demand issue, there's only a couple of you, and it's art. I mean, you— not a lot of people can do this. I would be charging more. I don't know if it's an hourly rate that you charge builders or how it works, but I would look into that. Maybe even a handyman business on the side, and you could charge $50 to $90 an hour doing that. And I know that because I've paid these people $50 to $90 an hour to do all kinds of handyman work. And that can just be in your neighborhood. You don't— you barely have to leave the house for that.

I think everything that you need, Dylan, is right in front of you. I think this season of life kind of got you stunned and you were paralyzed for a minute. It's like you got the new baby, you're realizing there's debt. It just— you just needed us to kind of like on the TV shows where they smack you across the face and then you snap out of it.

Ah, he come to.

He's snapped out of it now.

I love it. Well, we're rooting for you, man. We believe you can do this. Let's just get to work and knock it out. Let's not belabor the process. That puts this hour of The Ramsey Show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.