Transcript of You Can't Out Earn Bad Financial Behaviors New

This is an ad for BetterHelp. Stress from money problems doesn't just stay in your bank account, it shows up everywhere in your life. Talking to someone can help you sort it out. Go to betterhelp.com/ramsey to get 10% off. Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weak. 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 Dave Ramsey, your host. Thank you for joining us, America. We're so glad you're here. Jade Washaw, Ramsey personality, number one bestselling author, is my co-host today. We're glad you're here. Open phones at 888-825-5225. TJ starts us off in Kansas City. Hi TJ, what's up?

Hey guys, I'm glad to have, uh, glad you have me on today.

I'm doing good.

Well, we're honored to have you. How can we help?

So, um, just in kind of a position where my family's living paycheck to paycheck kind of thing, and we've tried all kinds of stuff. We've gone through, uh, financial advisors and coaches at our banks and all that, and we're just hitting a wall where we We just feel stuck and know that some patterns or behaviors somewhere have to change.

So when you looked at that with the various coaches, did you find that there was a spending problem or did you find that there was an income problem?

What I heard most was, it looks like you need to generate more income. That's what I heard. But we never could, you know, What is your income? So I, I gross around $69,000 a year.

Okay. And what do you take home monthly?

Monthly? I net around $5,026, I think. Something like that.

Okay. What about your wife?

My wife doesn't have an income. She's, um, she homeschools our kids and takes her motherly responsibilities pretty seriously.

Okay. How old are the kids?

9, 11, and 5.

Okay. I agree. You probably are facing an income issue. You're below the national average there. And so you are going to feel that. I'm assuming there's debt involved as well.

Correct.

Yeah.

You know, those— that's definitely the, the biggest hurdle is if we could get out from underneath like one thing, it'd probably give us some wiggle room for other things.

Absolutely. You'd feel that snowball effect. So tell us about the debt that you have.

Um, we, we do. I, you know, I say own loosely, but we do own our house, um, through mortgage.

Okay.

We, we have a couple of different credit cards, a vehicle loan, and student loans.

How much?

For— tell us the credit cards, tell us the car, and tell us the student loans.

Okay, gotcha. So the student loans, um, are only mine, and they total about $62,000. The mortgage, the remaining balance is $200,500.

Okay.

The vehicle loan is about $19,000.

Okay.

And both credit cards are around about $8,500 each.

Okay, so $16,000.

You guys are normal. But normal sucks. Correct. Yeah, I mean, you got like the, the kind of same kind of debt most people have— card debt, credit card debt, a student loan that's been around so long. I think it's a pet. How long y'all been married?

Um, 12 years this August.

So the student loan's 14 years old?

I graduated in 2012 with those, and so it'll be 14 years old.

Are you using that degree, TJ?

Not directly. Everybody wants to have one, but so I actually work for, um, an antique store, uh, that specializes in antique books and firearms, um, very high collectibles.

What do you do? Just your retail clerk there?

Uh, kind of, sort of. I'm the shipping coordinator. I also do, um a lot of the research for the individual items and things like that.

What's your degree?

I graduated from a Bible college with a youth and family degree, a youth and family ministry degree.

Okay, so the part about you using your degree is you're not— no, which is okay, but you're not at all.

I'm using it in that it's a placeholder on a, on a resume.

Yeah, the reason I asked is because I, I do agree with what everyone else has said, which is you do need to get your income up because when you get your income up, you're going to have more margin available to you, and then you'll be able to use that margin, which is extra money after everything is minimum payments and everything else is satisfied. That extra margin is what you use to pay off your debt using the debt snowball. And you are absolutely right. If you listed these out from smallest to largest, so in this case, one of the $8,000 credit cards would be first. If you freed up one of those credit card bills, that's a little bit more margin that now you're adding to your life, a little bit more room to breathe that allows you to pay off then the next $8,000 credit card. You see how this works? So I agree with you. So the question is, how can we add more income? I'm— there's you who can go out and get some temporary side hustles, right? I think that you've got— something tells me you've got some extra hours in the day that you could do that.

Not ideal, but you've got the time. And then I'm also looking over at your wife who's got some margin for time. She's homeschooling. And I do want to call this out. That's a personal choice. That's a values choice. But as she's homeschooling, it's also meaning that she's not adding a paycheck to the mix. And that's a choice that you guys are making. So everything— if I'm looking at your situation, suddenly everything is on the table. Yeah. And we can say—

here's the thing. Nothing changes until something changes. So Jade's exactly right. And what the people that you've been with before have not told you and we're gonna be brave enough because we love you to tell you the truth is you're gonna have to get radical to break this cycle. Beans and rice, rice and beans. You're not gonna see the inside of a restaurant unless you're working there as your extra job. You're not going on vacation because you're broke people, and broke people aren't going on vacation. You're gonna get this stinking car paid off or you're gonna sell it. She's gonna pick up a side hustle, you're gonna pick up a side hustle. You guys are gonna sell so much stuff the kids think they're next. We are going on a mission to clean these debts up. Tonight you're gonna get both credit cards out and look at them together with a candle lit and have a ceremony, a plastic surgery party, and chop those stupid butt things up. And we're gonna get on an EveryDollar budget, and we're gonna get so fired up and wired up because I'm sick and tired of being sick and tired.

When you get that going, you'll get out of debt. But you will not get out of debt doing what you're doing, because what you're doing is running like a rat in a wheel getting no traction.

I do. I have two very specific nuanced questions that I think could at least like, um, give me a bit better of a passing.

Yeah, ask them.

One, the first one regarding the credit cards, I did recently do a balance transfer from one card to another. Regardless of how we feel about balance transfers, that specific card has a 0% interest rate until October of 2026. Am I better off paying towards the 0% interest rate?

It's your smallest debt anyway. It's your smallest debt anyway. So it honestly doesn't matter.

Um, I don't care. I don't care. I don't care about interest rates are not your problem. Cash flow is your problem.

Okay.

You need rid of the debt so you don't have payments. The number one thing, when you don't have payments, you're gonna have margin. That's what Jade's been saying.

The number one thing on your checklist, TJ, is tonight you sit down with your wife. You need to make sure you both have this equal level of intensity on what it's gonna take to get outta this. And the two of you are gonna brainstorm What are you going to do with your extra time to make money? And what am I going to do with my extra time to make money? And you don't stop the conversation until two of you— the two of you have lists of jobs that you'll be applying for in the morning.

Yeah. And 10 years from now, what are you going to be doing that's not a clerk in an antique store where you make $169, not $69? Listen, identity theft doesn't just happen just because you're careless. You can do everything right and still become a victim. Whether your information is skimmed online, stolen through a scam, or exposed in a data breach, which happens every day, then it becomes your problem, your time, your money, your paperwork galore. That's why I've told people for years to have identity theft protection, and the only plan I've ever recommended is from Zander Insurance. Zander monitors for signs of fraud, even home title fraud, and they send alerts when something looks off. Most important, if something happens, you're not stuck spending hours on hold filing forms and arguing with companies trying to fix it. Zander's dedicated restoration team steps in and does the hard work to help restore your identity. You can even protect your kids for free on their family plan. Go to Zander.com or call 800-356-4282 to protect yourself today. Identity theft is everywhere. Zander is how you fight back. Zander.com. Carl is in New York City. Hi, Carl, what's up?

Well, if I push the button, we could talk to you, Carl. I'm sorry, let's try again. What's up, Carl?

I'm making about $200,000 a year, and I'm having a real hard time budgeting. I was in trouble with credit card debt, which I have since put a Band-Aid on it, but I'm looking for a tool to be able to move forward so I don't fall back into that credit card debt.

Okay. When you say you're struggling to budget $200,000, what do you mean exactly? Tell us exactly what you mean by that.

You know, I just feel my day-to-day, um, puts me a bit upside down and then I wind up leaning on credit cards. Uh, just not disciplined enough, so to speak. And I feel that a budget and putting, putting certain monies aside specifically for the mortgage and and, you know, groceries and day-to-day things would help me save more and be able to become a little bit more independent or not, you know, so upside down. Um, I mentioned I had, uh, $27,000 in credit card debt and I went ahead and took a second mortgage, uh, because it was a lot better than 30%, right? Um, so I have an 8% loan now on my second mortgage, still have decent equity in my home.

And so I'm still doing the same thing now. Yeah, it's gonna get worse every time you do this. Yeah, you treated the symptom, not the problem. The symptom is credit card debt. The problem is you spend more than you make. Exactly. So why do you spend more than you make? What's it going to?

Well, historically it went to, um, just necessities, as I call it. I mean, maybe living outside of our budget, um, spending too much on dinners. Going out drinking, buying stuff for the house, cars, motorcycles. I mean, that list can go on and on, but I feel like I have a better handle on that now. I'm not doing that anymore because you're using a budget. Well, yeah, yeah, I had a budget, but it kind of fell apart. I don't have a budget currently, but I want to put one in place.

So how much debt do you guys have, Carl? Not counting your house?

I am happy to say nothing.

What about the— well, the $27,000 that you rolled into the second mortgage, and there's nothing beyond that?

No car debt?

That's correct.

No, no student loan.

That's all bundled in.

So what—

student loan—

how much is your house payment?

Uh, $20— it'll be $2,800 now with the home equity.

It was $2,000.

Okay, so if I take $200,000 minus $2,800 a month, there's a lot left over.

Yes, I agree.

You want to know what I said?

I, I know where it's all going, and you're not the first one to fall victim to this. You make a fine income. It's a great income. You guys probably feel like you make a great income, and you've given yourself the excuse to be sloppy because you think that you can out-earn bad financial choices, and it always comes back to bite you in the butt. And that's what's happened to you. So I think what's happened is it's not a budget problem. It is a, I, it's a self-control problem, right? Mm-hmm. Because you put those items, those line items, you say, I'm only spending $500 on going out to eat, or I'm only spending $1,000 on groceries. And the self-control problem comes when you start to butt up against that line item amount. And then you say, you know what, I'm just gonna do it anyway, right?

Yes.

I know I've overspent, I'm just gonna do it anyway. And so that's a, that's a personal problem. It's not a budget problem.

I don't disagree. You know, I don't disagree. There's one, Yeah, there's one more tidbit to the, to the equation. Yes, I make $200,000. Uh, however, um, I have a $100,000 base. The other $100,000 comes in two payments throughout the year in a bonus check.

Okay.

So it's that ebb and flow. So every six months, yeah, sure, I get the lion's share, but throughout the other months is where I get myself into trouble. And I feel that a proper budgeting tool, would help me become more disciplined.

And that's what I'm having a hard time doing. So let's pretend for a second that, let's just make up a number, okay?

Mm-hmm.

We're gonna put you on EveryDollar, the world's best budgeting tool that we've developed because we're the best at this. And you and your wife are gonna sit down and give EveryDollar an assignment before the month begins. Now, if we could pan back a little bit, you're gonna have to walk into this carefully, and I don't know exactly how you're gonna walk into it, but here's a plan. Let's pretend that out of the next budget, out of the next bonus, which is half of your income— and that's a strain, that's where the strain's coming from. That's a good, that's a good point of information, by the way. Thank you for telling us that. So let's pretend that you need $124,000, which is approximately, or let's say $120,000, $10,000 a month minus taxes. So I need $10,000 a month to operate, but I've only got $8,000 because I only got $100— $8,300 because I only got $100 coming in. You follow me? Yes. So out of the next bonus check, I set aside $20,000 to subsidize my monthly baseline. Follow me?

Gotcha. Okay, yeah, I'm writing it down.

And so, or you can set aside, if you want to make it even, $24,000. That'd be $2,000 a month. So out of my next bonus check, I set $24,000 into a separate savings account. Each month I move $2,000 over, plus I have my $100 to work with, and I set my budget on that. And then anything else in the budget, anything else in that bonus, can go to reduce these debts and to build wealth and to buy things. If we were going to go on a trip, we'd take it out of a bonus check after we pulled our $24,000 out. Okay, if we were gonna go buy a couch, we'd take it out of the bonus check in cash if— after we pulled our $24,000 out, you know what I'm saying? So, yes, you know, you get a $50,000 bonus check twice a year. We're gonna pull $24,000 out at least once a year, or maybe $12,000 out of each one. Okay, and then that gives me some other amount of money out of that bonus, and you already need to have it also allocated before it comes. Every dollar needs to be spent on paper and be in agreement with your spouse before it comes into your house.

And then stick to the plan the two of you wrote down, and you pinky swear and spit shake and make a contract.

So there's no magic tool. This is just something I can build myself.

I'm gonna give you the EveryDollar budget. That's the tool, because it's a system that'll show you how to work the Ramsey process. But what I just designed for you is a customized version.

Yeah.

But to deal with your volatile income, your, your, you know, because you probably can't live on $100,000, right? By the time you pay your house payment, your groceries— if you can, well, then you got another $100,000 to throw at stuff as it comes in, right? Which will clean up all these debts real quick. I mean, $100,000 to clean up almost every debt but your house. You know, you only have them. You don't have anything. Knock the second mortgage out the first bonus check, right? Right. And no more credit cards.

Cut them up. Did you cut them up?

You cut them up and use a debit card. We do not spend money we do not have in the wallet.

No, you got to cut them up. You got to take them out of the wallet and cut them up.

They have to be— they have to die. The accounts need to be closed. Debit cards only. The debit card will do everything the credit card will do except get you into debt.

Yeah, and, and also something cool happens when you cut them up. You don't have anything to fall back on, so you have to manage your money. You have to do it the correct way. Otherwise, when you run out, you, you run out and there's nothing else you can spend on. So that's good. Um, yeah, EveryDollar is going to help you. It's going to be great.

Yeah, hang on, we'll have Christian pick up. We'll put you in the premium version. We'll pay for it and get you started. It's a free app, people, that you can download, but the upgrade version, uh, has it automatic downloads from your debit card usage from your bank. And so it keeps everything up, keeps everything current automatically for you. It's a very powerful tool. And it actually has built into it all of the Ramsey System, the Baby Steps, and shows you everything you need to do. And, you know, when you lay it out and the first time you do it, you're gonna sit down, you're gonna say, "Where's all my money been going? Because here's $3,000. I can't— I don't know where it's been going." Yeah, everyone has that happen. You feel like you got a raise when you do a budget. Because the disorganization and the chaos, the impulse spending, the lack of self-control, the inability to say no because I make a lot of money, all that kind of— that was a really good insight.

Yeah, um, but stick with it. Don't just do this one time. In the first month, if you're in the red, quit. Stick with it. It takes most people 90 days to start locking in and really get the feel for it. So stick with it. Don't quit after one month.

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I'm wonderful.

Thank you for taking the call. Great to speak with you both. So, Dave, before I ask you my money question and your specific advice, I'll give you the quick family dynamic and my specific financial vitals. So I'm 52 years old. I'm single, no kids, no debt. I've been in debt. I went bankrupt 20 years ago. Fortunately, I'm in a lot better place. I make between $1,500 to $2,000 a week in cash. I work in the restaurant business, so it varies. I own my car. It's just me and my doggy. I have $60,000 cash in the bank, so I'm doing okay.

The bad news is I have no retirement.

Retirement. So the good news is, is that my father, um, who's— so I decided to move to Florida a couple years ago when I realized my father's health was declining with Alzheimer's dementia. I have an older brother, so the family dynamic is myself and my older brother. We never got along very well growing up and most of our adult life, but now with regards to my dad's health, uh, it's actually helped bring our relationship to, uh, you know, much stronger. And it's a blessing, and it's a blessing. It's a blessing for me as an adult son to be able to move to Florida to make sure my dad is okay. Um, we moved him into a— or I should say in assisted living and now in memory care. Fortunately, my father was always wonderful with money in terms of saving. My mom was a spender. Unfortunately, my mom passed and then so did my dad's second wife. So my dad is 84, as I mentioned. He has a long-term healthcare policy which is paying for his assisted living. So really, he, you know, we don't need to spend any money really a month to take care of his needs.

My dad's estate, we had a conversation, my brother and I, with his financial advisor. My dad's estate is worth Just under $5 million. Um, he's got about $900,000, $800,000-ish, uh, in an IRA.

And then he has, you know, two accounts with Morgan Stanley.

What we learned is that of that Morgan Stanley account, we kind of hit the stock lottery, Dave. My dad had a stock that he purchased for $22 a share, 1,000 shares, and it's now trading at over $1,000 a share. So we have about a million-dollar position on one stock. I think I know your answer, but I'm asking your advice. You know, do we, do we sell off some of the stock? Obviously, into a mutual fund. You know, how do we do it? What's the best strategy? And just kind of the question is ultimately my brother and I want to make sure that his estate is safe, which will then thankfully take care of my retirement as well as my brother and his family's.

So he has, you said $22,000 invested in what turned into $1 million.

That's correct.

Yep. He has a $22 cost basis. Yep. And we know that if we sold it, then there's, you know, long-term gain, there's long-term gain, but then, you know, if we keep it and then he passes away, we then get that, that new step-up basis, so on and so forth. But I know that 25% of his net income—

What you've got to weigh out is the risk of a single stock is substantial because whatever that company does, such, so does the million dollars, right? If that owner comes out and decides he's going to be in the Epstein files and the stock goes— the guy, the CEO— and the stock goes in half, then you lost half a million dollars. Okay, that's because you got it in one thing. That's the risk. Okay, the— yeah, uh, if you decide I don't want the risk, you're gonna have $150,000 in capital gains tax. He's gonna have $150,000 in capital gains tax. Y'all are managing for him. Okay, and as you said, on the— that's on the one hand. On the other hand, if we leave it alone We don't have any taxes, but we have the risk. And he passes away, there'll be no taxes on it. So it's a $150,000 decision. So I'm gonna weigh $150,000 in taxes against the risk that this particular company is going to somehow tank before this elderly, fragile man passes away. You sure what I'm saying?

My brother had—

yeah, we wouldn't sell the full position. The thought on our call on Monday was to maybe sell off like 20-25%, so we're talking about a much smaller tax bill of, you know, $30,000 or $40,000 on a $200,000.

So here, so the answer is this, is let's just be, uh, inappropriately callous, okay? Can I, can I just be mean a minute? It sounds mean because I'm talking about your dad, okay? But as long as he passes away before this company does something wrong, then you would not have wanted to move it. So the sooner he passes away versus the risk, the less, the less you would want to do that. And so I'm gaging his health and his situation mathematically, sadly, against whether we begin to move some of this away. And that's what you do. So who is the company? Is it Apple?

No, it's Micron.

Hmm, interesting.

Micron is up 900% in one calendar year.

Yeah.

If you look at it, I'm sure you're probably familiar with them. They do the AI chip and it's literally like, I call it a stock lottery.

So yeah, it's a very volatile position. Yeah.

So do you think selling off 20% of that and then putting that couple hundred thousand in a mutual fund, is it safer, kind of lowers our position and our risk a little bit, is that a smart decision or?

Yes. I probably would say I'm gonna sell off 20% every year until he passes. Yeah, that's kind of what my brother and I were talking.

Yeah.

Is there other different strategies, Dave, that are beneficial, like in terms of when we do decide to sell? Like I heard something about a covered call, or is that just gonna be—

No, I wouldn't get into all that. I would just say I'm weighing the stepped-up basis against the risk of a highly volatile tech AI company. This is not a steady— I mean, they're not a bad company. I'm not trashing them, but this is a sudden leap up, which also is, you know, more accustomed to a sudden leap down. If this was something boring, like Apple would be much more boring. Agreed?

Yeah, sure.

Yeah. So that's— I know at the stock price you're mentioning, that's what kind of what I thought it was. But anyway, but that one's been more of a steady thing where, you know, AI and microchip is just like suddenly on the scene and suddenly off the scene and suddenly it won't matter and suddenly nobody will care and it'll be worth zero. I— yeah, that scares me.

So I kind of thought that. On a separate subject, um, my dad happens to be a plaintiff in a class action lawsuit. Um, his second wife passed and, and there's a class action lawsuit that he's involved involved in. If my dad was to pass before we got litigation, because currently we're in litigation, we're basically waiting to, you know, see what the offer is in terms of our specific case with my dad's second wife. In your experience, would that still— like, if the plaintiff passes, meaning my dad, does that then— and then there's a judgment rendered— would that then go to my dad's estate, which is basically the trust that my brother and I have, or does that lawsuit go away? Just curious on that, so I had you on the phone, and thank you again so much.

I'm not a legal expert. I think it'll go to the estate, but I would ask an attorney to get a real opinion about that. My opinion is probably worth what you paid for it there, but I think it is. So let's recap, because we were talking gobbledygook there for a minute. Um, when someone has paid $22,000 for a stock that's worth a million dollars, if you transfer it, if you cash it out, obviously before you die, you, um, pay taxes on the difference, the gain. If instead it passes to your heirs, they pay taxes on the difference in market value and whatever they sell it for. And if you sell it within 6 months of death, it is presumed to be market value by the IRS. So zero taxes on a million-dollar gain at death, or taxes on everything over $22,000 on a million bucks. So basically a million-dollar gain is $150,000 swing in taxes. If they— if these two brothers receive this money with the stepped-up basis to market value, they have no taxes upon dad's death. But if the stupid thing goes in half before then, you'll wish you had paid some taxes.

And that's kind of what he's weighing out and what we were weighing out with him. But Yeah, it comes down to how much faith do you have in that particular company to stay stable? And how much faith do you have in, sadly, Dad's health? I mean, that's being very callous, but that's the mathematical analysis. And then you've gotta, you know, cry a little bit and have your heart in that and say out loud, "This is an awkward discussion, weird to talk about." But it's weird for me to sit down with my whole family and go over my estate plan once a If I die— wait a minute, people, I'm still sitting here. But if I die this year, this is what's gonna happen. The "If Dave Dies This Year" meeting. It's very awkward.

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Attorney advertising, results may vary, and no specific outcome is guaranteed. Gabby is in Gainesville, Florida. Hi Gabby, how are Well, I'll keep doing that. Gabby, how are you?

I'm doing well. How are you, Dave and Jade?

Better than we deserve. What's up?

Alrighty.

So, um, my husband and I just got married in January, and since before we got married, we were starting on the Baby Steps because we both had student loan debt and a bit of credit card debt. Um, however, my husband owns our house with his mother and with his mother, my mother-in-law, um, because they bought the house after he graduated college as an investment for him. And she plans on moving the ownership to myself within the next month or two, but she also plans on refinancing the house. But to do so, it's tied with my husband's credit score, and one of our biggest debt sums is his credit card. So she's been pressuring us to to, um, make sure we pay that down. But since we've been following the Baby Steps, we've been going with our smallest debts first. So basically my question is, should we focus on paying down his credit card so that we can refinance the house, or should we stick to the—

so how much is on the credit card?

It's about, um, $12,000.

Okay. And how much is, um, the other debts?

So my student loans are about $14,000. His student loans are 12. My credit card is 8, um, and his credit card is 12.

Yeah, you already gave— that's the one you already gave me, right? Yes, sir. Okay. All right, so they're all fairly close.

Yes.

And you're, um, and your household income now is what?

It's about $100K.

Okay.

When you do the refi, what's the interest rate moving So they've been waiting for the interest rates to drop. Right now it's at 7%, but they're hoping for at least 5, 4%.

What's it current?

I'm saying currently, currently 7. Yes. Yeah, because the market rate right now is about 5, right? You need to talk to Churchill Mortgage about your refinance, okay, and get a 15-year fixed rate because you should be somewhere in that 5% range. In the marketplace right now, and that's a wonderful savings as well. That would be great. So let me say something as preventative medicine. That's not— the answer is yes, pay down the credit card because they're all fairly similar, and this accomplishes a bigger goal. And it's not because she's pressuring, it's because she's offering. So I don't understand how we got here with him and his mom owning the house together. That's not bothering me as much. And what I want to make sure you hear is this lady is— we get all the calls that this went the other way, like she's being hard to get along with and she doesn't want to help you get out of it and she wants to stay on it. And you're thinking, you have to own this house with your mother-in-law forever. And that's who we— that's the call we usually get. This lady's going— is very healthy in saying, I want to put it into my new daughter-in-law's name as fast as I can.

That is the right mother-in-law answer. You have a peach of a mother-in-law. She's awesome.

Oh, I definitely do. It's just been a little bit stressful because we actually recently found out that we're also pregnant.

Oh, wow.

That's so awesome. That is so awesome. Very cool. Well, now she's gonna be super nice. I love it. Hey, good for you. Yeah, I, I want to give her some props because she's— she wins the Mother-in-Law of the Year award on this show. No, most the time the mother-in-law in this situation is a test pilot for a broom factory, and so this one is really doing a good job. And so I want to help her. I want you to appreciate her and to help her. And because she's really just handing you the keys to this thing, y'all gotta just get the paperwork transferred, right?

Mm-hmm.

Wow, that's great. There's no other money involved.

That's so cool. Yeah, we just gotta get the refinance, get her name off the loan. That's it. And then she deeds it over to him and to the new daughter-in-law. That is awesome. And that only costs $12,000. We make $100,000. I want y'all to work extra. I want you to sell stuff. Any wedding gifts that go back that you had duplicates of, turn them into cash and throw them on the credit card. Chop up all credit cards. Get on an EveryDollar budget. We're gonna give it to you as a wedding gift. The premium version and get you signed up. The two of you sit down and just wear that thing out. You're gonna come up with $12,000 in like 3 months. It's gonna be gone.

Yeah, that would be great. Yeah, just one more side point. Because I'm pregnant and we recently found this out, so we haven't hit all the bills yet, how do we attack the Baby Steps moving forward? Do we set aside part of— we've been paying off debt at least $1,500 a month since we started in January.

I want to get you— I want to get that credit card gone, and then I want you to stop paying off debt.

Okay.

I want you to stack cash until the baby comes.

Okay.

It sounds like you've listened to us before. We call it stork mode. Yeah. So while you're in stork mode till baby comes, we stack cash, and we don't use the cash. We're not building on a nursery. We're using the cash to pay off debt after you come home and the baby's okay and you're okay. Okay, after you come home from the hospital. But this is just an extra little pad while we're pregnant. But before that, the first 3 months right here of your first 3, your first trimester, we're knocking out that debt before we do go to stork mode, 'cause I gotta get this house transferred.

Yeah, and that's where the side hustling has to come in, otherwise the math won't work. If you're using that $1,500 margin to pay off $12,000 and that's it.

No, we gotta get to $3,000 or $4,000. And I'm gonna squeeze this budget down super tight. We're gonna work extra. And again, I'm selling everything in sight. I really am. Because if you can get this house transferred and be rid of this one thing, and then you stack cash till baby comes, you're gonna be in a really peaceful situation.

Yeah, margin's gotta double.

Yeah, that's very— for a short period of time, I want y'all to go cray-cray and knock this out. If you live like no one else, later you get to live and give like no one else. Janice in Norfolk, Virginia. Hi, Janice, what's up?

Hi, thank you so much for speaking with me. Last night my mother gifted me $53,000, and I am just wondering if I should put that toward my mortgage, which is currently $215,000 at the 2.5% interest rate, or my concern is that that all my parents' life they have been financially frugal, but they have not saved. They inherited quite a bit of money from a family member who passed, and since then have been a little bit less, uh, conservative with their money. So I'm worried that as they get older— I do know that they are currently spending more money per month than what they bring in with—

how much money did they inherit? Over a million. And that's why— $53,000, where'd that number come from?

Uh, it was a family thing. One person got that amount, and so to be fair, I also got that amount. I don't need the money, but the other person apparently did.

Let me help you. She's going to get hammered with gift tax unless she's got some estate planning going on.

Well, that is also part of my concern when I was looking up.

Yeah, individual can give an individual $19,000 before you get into gift tax. Tax of 55%. Mm-hmm. They don't know anything about any of this, and they just write checks?

Um, well, this is the largest check that I have received.

Yeah, so are you married?

No.

Okay, well, they can each give you $19,000, so that'd be $38,000. But everything above that, unless they file some paperwork called a unified estate tax credit and use up some of their estate exemption, which they can do pretty easily, they're going to get hammered with gift tax. You can't just hand out money unless it's a 501, unless it's a properly done nonprofit, and you're not. So mom and dad need to get some tax advice and quit being ignorant. They're about to get their butts kicked in an audit really bad because they didn't half learn what they were doing. So I don't care, out of a million, if they gave you a 53, they give somebody else 53, they're probably okay. I'd put it on my mortgage. I wouldn't worry about the gift. I just worry about mom and dad getting hammered.

They have less than $500,000. I'm sorry? So it's not— they don't have a million anymore. They have less than $500,000.

You're worried that they're going to come knocking on your door when they blow through all this money and now they're going to be—

No, I don't think they would do that because they would not ask me for that. But I feel, you know, compelled more or less.

If your house is paid off because you use this to accelerate the payoff, then when they are in trouble someday, you'll be in a better position person to help them. So I'd put it on the house.

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This is a paid advertisement. The Churchill Certified Homebuyer Program is available for qualifying borrowers and select loan types only. NMLS ID 1591, NMLSConsumerAccess.org, equal housing lender, 1749 Mallory Lane, Suite 100, Brentwood, Tennessee 37027. Welcome back to the Ramsey Show in the Fairwinds Credit Union studios. Jade Washall, Ramsey personality, number one bestselling author, is my co-host. Ricky is in Riverside, California. Hi Ricky, how are you?

I'm doing well, just a little nervous, but happy to be on talking to you guys.

You too. What's up?

I have a pretty stressful situation that my wife and I are going through. I've been animating in games, making pretty decent money for the past 4 years, and I've recently lost that job about a month ago. And now, just doing the budget over the weekend, it showed that we were short about $3,000 this month, just with the mortgage and all of our bills and just groceries and all that. So I've been trying to figure out what is the best path. And the only thing that I can think of is possibly selling our house. Um, but I've listened to you guys in the past and I'm not sure if like our situation warrants that or if there's anything else that I can do, but I'm just incredibly stressed. I'm sorry.

That's scary. So you were an animator, did you say?

Yes.

Yeah. And you were making what?

I was on average, it was $120,000 to $150,000. Recently, most recently I was making $130,000. I just got a job at Home Depot. Good. About 6 weeks ago. And, um, sorry, I'm sorry. Um, um, I'm making, uh, $21 an hour, so I think that's like, uh, $40K. Um, so I just, I don't know if I should.

Yeah, is your, uh, wife working outside the home, sir?

Yes, she works for the state of California. Uh, she makes about— her take-home pay is $4,000. Um, it would be higher, but they automatically deduct her retirement.

And what does she do there?

She licensed— she checked the licenses for foster care facilities.

So, okay. And what— why did the animation job go away?

Uh, it's just been— the industry's been really rough. Um, the, the one that I just had was just a contract position, um, after a layoff that I had last year. So this was the contract from September to the end of April, and right around the new year, I've been applying, reaching out to old coworkers, anybody that I can, recruiters on LinkedIn, anyone, anyone that had any sort of connection. I've had interviews. I had an interview recently at Apple. Just found out I didn't get it yesterday. And interviews at other game studios. I get close and then usually that final interview where I just don't seem to get it. So I just, I haven't been able to line up another animation job.

So you, but it sounds like there is jobs out there in this industry, that the industry isn't dying. You just hadn't landed after your last contract. You haven't landed the new gig is all.

In my opinion, I think it's, it's dying. During the pandemic it was doing really well because everybody was stuck home gaming, so gaming studios overhired Things leveled back out and games aren't doing nearly as well.

So there's— is gaming what you were doing before?

Yeah, I've been doing game animation.

How is AI affecting animation?

I think it's— I think it is starting to affect it to a degree. Um, I think like just like commercials are starting to use AI more, which that takes jobs away from animators. Um, I don't think it's really affected games yet, unless I just don't know, but it's affecting like movies and TV and advertising for sure.

Okay. All right. Um, hmm. But you're bringing in, um, $3,000 a month and she's bringing in $4,000 and you're still $3,000 short.

Yeah.

How much debt do you guys have? Not counting your house?

Uh, not counting the house, I did the math, it was about $160,000.

On what?

Uh, my student loans were $55,000. Um, my wife's are $20,000. We do have a car, uh, for $40,000. Um, and just a couple of like personal loans, like one for $17,000, another one for $10,000. Uh, another for $5,000. We owe $10,000 to the IRS from taxes not getting enough taken out of checks.

Okay. All right, so the levers to pull are, before I'd sell the house, I'd sell the car, and I'd sell it tomorrow. And get out of a $40,000 car, get into a $5,000 car. And I would let the student loan, put the student loans on hardship deferral temporarily. Early. I'm trying to get cash flow going here. And then you need— but if you're gonna pay something, you pay food first, lights and water second, house third, and cars and car gasoline fourth to get to work. So food, shelter, transportation, and utilities before you do anything, before those cards or loans, student loans or anything else gets paid, okay? But yeah, I'd get rid of the car immediately. And then I would set a, you know, pick up another second job to go with this one.

Yeah, I was gonna say.

And fill in the blank here, 'cause you're not working 40 at Home Depot.

And can your wife pick up a side hustle as well?

Maybe my wife, they, on Monday I had a breakdown at work, so they actually converted me to full-time on the spot, which was super nice. I'm working 40 hours now.

That's all though. I mean, you can work another 30.

Yeah, I can.

Yeah, I'm not— this is not a permanent solution. I'm trying to keep the water in the lake while we get a new position as an animator. Okay, and then what I would do— so let's pretend that you can strain and work 60, 70 hours, and she can work 60, 70 hours. We sell the car, we're on beans and rice, rice and beans, We're having a garage sale. We got so much stuff on Craigslist, the children think they're next. You know, we're really, really dumping stuff out of here, and we can barely hold on. That's what I want to get to. And I think you can get there.

I think you can get there.

But that's a temporary thing. And then I would say, if I don't land an animator's job and get my income back up to get us back to where we can breathe again, within X number of months, then we're gonna sell the house. And so, like, 3 months, 4 months.

Okay.

You can't sustain the thing I'm talking about for 6 years.

No, this is a short-term.

So we're saying, you know, we're gonna give this until after Christmas. We're gonna give this until Thanksgiving. But, you know, if we're thinking about selling a house, we would want to sell it after the first of the year. So if you could hang on for 6 months doing this, this. And if you haven't landed the animator job in 6 months, then yeah, you probably do need to do something different. You need to adjust your career. Okay. The other thing I would advise you, and I am not an AI expert by any stretch of the imagination, although Ramsey is spending a lot of time on it here, the people inside this building are, it is not the answer to everything. It is artificial. It is not real. But it is affecting, disrupting some of these industries. Industries. And if I'm in your shoes, I'm going to learn what it's doing to my industry, and I'm going to start learning how to use it instead of it putting me out of business.

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Sophia is in Maine. Hi Sophia, how are you?

Hi, I'm good, how are you doing?

Better than I deserve. What's up?

So I'm going into my junior year in college and I want to study abroad next semester, well, next spring. Spring in 2027, but it's a good chunk of money, and so I would probably have to take a loan out for it. So I'm wondering if it's a good idea to do that.

Should I take out a loan to go on a European vacation? Well, um, that's what studying abroad is, Sophia.

Yes, I know.

How much does it cost to study abroad?

So is it including literally everything— tuition, home and board, and even like spending money? They Estimated it around, um, $18,000 to $20,000.

Okay, $18,000 to $20,000. Do you have any sort of job or any work that you're doing right now?

Yeah, I made about— I, I go to school full-time, but I made about $25,000 last year. Okay, I think around that.

Are there scholarships for this?

Yeah, so all of my scholarships for my home university will transfer, so I'll, um, I'll get about like $8,000 covered.

Okay.

And then my own personal savings, um, I don't have to pay until October, and so I'm planning on saving like everything until then. So I think I'll be able to get like a good, probably another $8,000 on that.

Okay.

So we're getting close.

Yeah, we're getting close. But you, you are spending every single dime you can scrape up on a European vacation while you're a broke college student?

Well, I mean, I don't—

I mean, this has absolutely no economic or marketplace value, honey. Zero.

What are you studying?

You're not going to come home and go, oh, every employer in Maine is going to line up to hire me because I studied abroad for one semester. Zero chance. Yeah, this is a fun vacation thing to do.

How old are How old are you?

I'm 19.

Yeah, I, you know, if your parents are rich, that's fine. But I would not tell a 19-year-old person that I love to spend their very last dime to go on vacation.

How are your other semesters being paid for? Obviously, you've got the $8,000 scholarship. How are your other semesters at home being covered?

I go to college for free, so I don't have— I don't have any student loans at all.

I will say this, and this is Jade's opinion. I traveled right out of college for work. I was getting paid to travel. So that is a big differentiator. But I think traveling is one of the best things that you can do for yourself. It's a different type of education. I personally think that if you can cash flow this, I wouldn't stop you from doing it. But Dave, Dad has told us something else.

Jade and I can disagree and both be right.

We can. That's okay.

Yeah, we can disagree and both be right. That's all right. Yeah, I, I, Yeah, so I look at edu— here's the problem, okay? The— if you qualify this as a vacation and you say, I'm gonna spend all of my year saving up to go on vacation because I value travel, like Jade is talking about, and you want to do it there, and you put that in that slot, that bucket in your brain, I'll back off a little bit and not yell at Jade, okay?

$12,000 for vacation. Yeah.

That's what you're saying. A little bit. But the problem I've got is when people call this education.

Yeah.

Because there's very few things that you study abroad that add value to your resume equivalent to what they cost.

What about—

Like nothing.

Would you factor in school of life, life experience, being able to see cultures outside the United States?

That's a vacation.

Yeah, but there's education to that.

That's not— you can't call this— education is for the purpose of furthering your career. It's not.

That is a type of education.

Well, it should be, and especially when you start talking about borrowing on it. We're not going to do that at all.

No, certainly, yes, hear me say, no borrowing.

If you have to borrow, don't go. Yes. Period. We're in agreement on that.

Yes, we 100% are.

You know, here, I'll just come clean, all right? We have plenty of money at the Ramseys, and Rachel—

She wanted to study abroad?

She decides she's gonna study Spanish in Spain for one semester. She did.

Oh, really?

Yep, I paid for it.

Okay.

We had the money.

Are you mad because she doesn't speak Spanish to this day?

Zero strain. The girl cannot call the dog in Spanish. I'm just I'm just saying. Aquí. It's just absolutely— I mean, loco pedo. She can't even get there. I mean, it's just not a chance. Un loco pedo. It's just no chance she can get there.

I see why it's funky.

I speak more Spanish than she does. She went over there and had a great time in classic Rachel style. Wherever Rachel is, Rachel has a great time, right? But it was absolutely freaking useless.

Oh man, okay. More context.

And I look back and I go, I got to I got complete— as the dad, I got scammed.

You got swindled.

You did. Because they told me this was education. You got bamboozled. And what it was, was a Spanish party in Barcelona.

Okay, understood. So, I'm bitter. You're bitter.

I'm bitter. You're bamboozled. That's the problem. You're bitter. And Sophia, you walked into bitterness. That's the problem. No, all kidding aside, don't call it education, 'cause it really isn't. I mean, even if you're studying— It's an experience. If you're gonna go to London and study banking, thinking, that's okay. It does not add enough feathers in your cap for your future job to justify the expense. No. The ROI is not there.

It's an experience.

It's a vacation. It's an experience. I'll tell you, there might be one exception.

What's that?

Art.

Oh, okay.

If you were going to study, if you're studying fine art and you were gonna spend time with the great masters in Italy.

Yeah, okay.

That might actually add value to your resume enough to help you with some of the big houses in New York.

Okay, so Sophia, go to a couple of museums.

Because you've actually stood in front of a Michelangelo. I mean, you've stood in front— you haven't just studied it in a book, you know, or on a slideshow. So that might, you know, if you can spend time in Venice and see the light differences that are real, and I'm not an artist, but they're real, then that might— there's something nuanced like that, you might get your money back. But most of this most of this stuff is just bullcrap.

I would say there's likely not a career ROI, but you can expand your life. Yeah, your knowledge of different cultures.

I mean, there's some versions of going and getting a degree that are that, but we've now told people that, you know, you can spend $200,000 having this degree that is well-rounded, and you're a barista, and you're not well-rounded. You're the best-rounded barista I know, I know, correct? Most insightful on several subjects. No thank you. That's not a way to build a child's life. It's not a way to coach a 19-year-old, because this is how we end up with a student loan crisis. And Sophia called about a student loan.

Yeah, the fact that you were going to take a loan for this was bananas. I will say that.

Yeah, it's a fun discussion.

It is a fun discussion.

Hey, I learned something new. Rachel, go on vacation, you get thrown under the bus, kiddo. I'm just saying.

"Just feel the bus tracks, blum, blum." Well, you're talking to somebody who's been to 92 countries. So, I love travel. Me too. Now, like I said, the difference, I got paid to travel. I got paid to go to all these places. That's very different.

Well, you're working cruise ships.

Yeah, what do you want?

I mean, that's a different, that's a completely different thing than my college is taking me. That's right. And I am going to study.

Yeah, that's— it's just an experience. It's a trip.

It's a fun thing that you could do. Party. Yeah, it's beer pong overseas.

Oh boy. I can say this with— I never played one game of beer pong my entire college.

You didn't? Well, it was— they didn't— they hadn't invented it when I was there. I would have been champion.

You would have been the champion? Oh boy. Bourbon pong.

That's why we— oh, there we go. There we go, a whole new game. Oh guys, you have to be careful with education. It is, it is an irony in America that we're stupid about education. Let that settle in.

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Okay, today's question comes from Shelby in New Jersey. She says, my husband and I are both 35 years old and we recently combined our finances and did our first budget together. I paid off— close— I paid off and closed my credit card. He stopped using his credit card but wants to keep it just in case. Together we earn over $175,000 a year. Our own debt— our only debt is $25,000 on a car loan. We have the cash today to pay to pay it off, but my husband will not agree to pay it off any faster than just the monthly payment we pay of $400 per month. I want to be debt-free, but I want us to agree to commit to this way of managing money. How can I best go about this? So it sounds like your husband is living— he doesn't want to leave his comfort zone, right? Him closing up his credit card, that's uncomfortable for him because he likes it to fall back on just in case. And also, yeah, paying off car early, paying more than just the minimum payment, that sounds like it's setting him outside of his comfort zone.

If I do these things, I'm going to have to change something about my life. I'm going to have to pull back on something. And it sounds like he's not interested in that. And you're right, that is a problem. Um, the best thing that you can do about this is to share a deeper reason why, not just for the moment and not just so we can be debt-free. Those just so that we can be debt-free feels great, but there's a deeper why behind that. And I would challenge you to put words to what that is, uh, what it means for your family tree, what it means for your marriage, what it means for your personal peace. And that is what I would share with him first and foremost before we even start talking about the numbers. And then I would challenge him to share what his vision is for the and what his whys are. That way, all the cards are laid out on the table, and you can actually have a conversation about the vision for your family. And then now we can start plugging in, how do we get there together?

Yeah, you're exactly right. If we pan back and we say, is our goal to keep a car payment the rest of our lives?

Sure hope not.

Well, if you do that, then let's go on Ramsey Solutions and pull up the calculator.

Yeah.

And put in $400 a month. Month from age 35 to age 65. Yeah, in a decent growth stock mutual fund, that's going to be several million dollars.

Oh yeah, it is.

Hope you like the car.

Terrible.

Yeah, it's a $3 million, $3.2 million car. I hope you like it. And, um, yeah, so the only way that anything he is saying makes sense is in the next 30 days. In the next 30 months or 30 years, it does not make What did it come out?

$1.2 million. Yeah.

Unbelievable. Yeah. So, which makes the $400— I want to keep a $400 car payment statement— asinine. That's like saying, I want to be middle class instead of be a millionaire on purpose because I really like car payments. Well, what a dumb butt thing to say.

Yeah.

I mean, seriously, that's just dumb. So, you know, but you got to pan back and make sure that he grasps that. Instead of going, well, I think I'll just pay it out slow. Well, what are the implications of that? $1.2 million. Hello. So that's just dumb. And so you pan back and you start going, look, the people that build wealth and the kind of life that I envision us living don't have car payments. The people that I envision us living like don't have credit cards. They are living on debit cards and they pay cash for things. They don't have any debt and they use what used to be all those debt payments to build wealth with. If you live like no one else and later you can get out of Get Out of Debt, Build Wealth and Live Like No One Else. Well, I want us to go somewhere with this, not always keep a car payment. You're always going to have a car payment. Well, that's— might as well have a good car.

But that's what you're saying is so important, which is why you have to go beneath the numbers. Because when you're married, most people do some version of what they saw growing up or what they see the people around them doing. So if he grew up from a family where they had car payments the entire time time and it seemed like everything was okay.

Well, look at how the family turned out, right? Broke and living on Social Security, working at McDonald's or a Walmart greeter at 74.

But if he hasn't seen that fallout yet, because he will, but if he hasn't seen that yet and so far everything seems okay in his mind, what's the big deal? And then if you came from a family where we did, we paid cash for things and we paid things off, and you understood the implications of debt, those are two different backgrounds working together. And that's the emotional side of that you do have to have conversations about. You have to understand where the other person is coming from in order to then shift the conversation in the way that it needs to go.

But there's no long-term scenario that his idea works in. No. Zero. Zero. The only idea, the only thing scenario he works in is in the immediate, in the next 90 days. It feels good to not have to have $25,000 in the bank and not have $25,000 credit card debt. Card debt. But there's no 10-year period of time that you look at that and go, "Oh, that was really smart." It just does not occur. So when you pan back and you extend vision to this, you said vision earlier, and you add vision to the discussion, you say, "I want to talk about where this takes us, not what we're doing this month. But where does this philosophy take us?" Into the land of broke. That's where it takes me. And I want to go to the land of millions. Indians. That's a different land. There are more flowers there.

Hello.

Caesar is in Denver. Hey Caesar, what's up?

Hey Ramsey, how are you guys?

Better than we deserve. How can we help?

Hey, so I'm 21 and I have a pretty good paying job, but I feel like I've hit my pace ceiling.

At 21?

At my age and my—

You already maxed out?

Industry. In your industry, or just that?

What is your industry that you maxed out at 21?

Uh, so diesel mechanic.

What are you making?

I'm making $42 an hour.

You ain't maxed out. There's diesel mechanics making $120 out there, bro.

Working for themselves or other people?

Yeah.

Yeah, yeah. And I don't, I don't know whether it's time to go on on my own. I've done out on my own and—

no, I don't necessarily think it's time to go out on your own, but I think the particular line of diesels that you're working on in the particular industry that you're working on is not paying as much as some of the others are paying. Do it. I mean, Mike Rowe and I were having this discussion the other day. Diesel mechanics are doing much better than a lot of logging Yeah, yeah. And I feel like at 21 I'm making decent money within— like, you're doing great for 21 years old. $42 is no slouch. But you're, you're not, you're not, you know, you can make six figures in your world, dude. Now you might have to be running a mobile truck, you might have to be out there on the road a little bit, you might have to, uh, you might have to go get some certifications on some engines that you're not— that you don't know yet. Uh, you know, I don't know what you're working but what, and what the guys making $120 are working on. But I was just talking to Mike about this the other day and he was saying that this is one of the, and there's a shortage in your world too, by the way.

There's not enough guys and gals that know how to do it.

Just a quick search tells me the highest paid diesel mechanics often work in specialized fleet maintenance, field service roles, overtime, power generation. But if you do those things, you can make upwards of $120 plus.

Yeah. And that was Google in 30 seconds. Right? Or ChatGPT or whatever you did.

I mean, it was not like a detailed piece of research she just did.

But that confirms what Mike was talking about. So yeah, you might be maxed out. So what I would tell you to do is move in one of those other more specialized situations, power plant situation, something like that. Get your income up, get some more experience. Experience, and then talk about opening up your own thing somehow and running your own thing. People that own their own businesses generally, if they do a good job running the business, make more than the people that work for them. Yes.

Yep.

Doing the diesel mechanics.

Absolutely.

So there you go.

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And it gives you a personalized action plan with clear next steps. Where are you overpaying? Here's something to shop. RamseySolutions.com/checkup. It's free. Take the coverage checkup. RamseySolutions.com/checkup. Checkup. Susan's in Milwaukee. Hi Susan, how are you?

I'm good, how are you?

Better than I deserve. What's up?

Yeah, so my question is about how to handle conversations about differing financial values with family members.

Like who?

Um, like close family members.

Mom and dad?

Siblings.

Siblings. Siblings. Tell us the situation that's where something's coming up and you feel like you need to have a discussion?

Yeah, so, um, it's kind of come up a couple different times. So previously it's been about like vacation budgets, um, and we kind of set our budget and you can tell that it's maybe a little lower. Um, recently it was about a last-minute travel plan situation and they didn't feel like they could commit to a and I made the mistake of saying like, well, we can't afford to do like a last-minute plane ticket because those can be obviously more expensive. And their response was, oh, well, we talked about it and we'll just pay the extra. And for us, yes, for me. And, and it was— it's not— I spoke wrong.

It was not that we couldn't afford to, it's that we choose not to like, "I don't want to just turn around and say that." The difference is, listen, I got to tell you, Dave and Sharon love traveling. We do not get joy out of traveling without a plan or overpaying when you don't have to. And, and so everything is planned out to the nth degree. Even our impulses are planned. And so that's what we get joy from. Other people get joy about just landing somewhere, getting a rental car, and figuring it out. And that is fun for them. I don't travel with those people. Bingo. They would drive me bonkers. And there are some of those people I love dearly, but we don't travel alike. And I'm not staying in that place. I'm not sleeping in the backseat because you couldn't get a reservation. I'm not standing outside in the sun for an hour and a half because you can't get in a freaking restaurant. I've had the reservation for 4 months before I got there. And so, that's the difference. And it's okay. If you want to live free and all that, then do it, you know?

But Dave has a plan. You're not wrong. And so, either one's okay, and I just tell people that. And we have relatives and friends that are in both camps, that everything's planned out to the nth degree.

I mean, are they usually like that? Have you found in the past that, "Hey, we just are yin and yang when it comes to the way we travel?

Yeah, yeah. I mean, they're definitely more last minute. Um, they're also just willing to like, oh, it's not a big deal financially.

Yeah, I think Dave's right. These are not your travel companions. I think it's as simple as that. And it's no shade, it's just—

I'm going with you. I'm not going with you. If it's a fan— if it's a family thing, the way we're gonna go is if you plan it. Otherwise, the family ain't gonna be there.

Yeah, I think that's fair. I think that's totally fair because one, one of the ways costs us more money and we don't want to pay more money the way we function.

So you don't have to convert them to your way of thinking, nor do you have to defend your way of thinking. All you have to do is just say, no, we don't go that way. If we would love to do stuff with you, but here's the terms. We plan it out. And we, you know, we, when we stay within our budget. That way it's fun for us. It's not fun for us otherwise. And this is your sibling or his?

It's mine.

Okay, well, just look at your sister or brother and tell them that. No.

Yeah.

And no, you can't pay for it and make it all better, because it's still not fun.

Yeah, and I don't like the way that feels either.

No, I don't want that ick on me. So, thank you.

Well, and that's kind of how it felt, is like, we're doing well, and it feels like we're now the poor family relation, because we're not just willing to throw—

well, you don't care what they think.

That feeling is on you. That's not on them. You got to just decide that I'm not the poor family relation. I'm the family relation that plans.

And they can think whatever they want.

Yeah, because I know I'm not the poor family relation for sure. And I'm the one that plans. I mean, it's not— I just can't stand it. Drives me nuts. So it's okay if y'all don't want to go. It's okay. But this is how we go. If you're going to roll with this, how we roll. And we roll with the budget. We stick to our budget. That's fun for us. We stick to our plan. That's fun for us. And you know, if we want to do something a little different, we'll decide on the fly, but 99% of our stuff is detailed freaking out. And it's not okay if the details don't execute either, by the way.

Yeah, and here's the thing. If you truly like them enough to travel with them, then you should be able to have this conversation and it be all good when it's all said and done.

Yeah, yeah. So, you know, here's another plan, okay? Like, there's a different kind of situation than yours, but we take our kids and grandkids all for a week after Christmas somewhere warm, and Sharon and I pay for everything, and we have since they got married. That's our gift to them, and that is planned out way in advance. They can speak English, into it a little. But it's your plan. Generally speaking, we're going to our place, you know, and that's what we're doing. And I don't mind hearing from Rachel what she thinks she wants to do, and that's cool, you know. But we're paying for it. And there's no shade on that. That's our gift. But those are the terms.

There's a plan.

And, you know, we all agreed we're going too, by the way. Yeah. You don't come up and go, "You know, I don't think I'm gonna go this year." this year. No, you already told me you're going and it's already booked.

Yeah, it's paid for.

So yeah, you're going. And that's— I mean, we don't tell people what to do, we just tell them what to do, you know. But I mean, it's— but I mean, yeah, I think what's happening here is there's more than a travel or budget discussion. It's the shade that's being thrown.

Yeah, and it's making her feel a type of way. It's making her feel like she has to defend herself.

And yeah, yeah, I just take all that off the table. Table and go, "This who we is. You want to play with us? This is how— this is the rules of our sandbox." I like your usage of shade, Dave.

That's—

you're doing good.

I'm picking that up from you. I got cool kids around me, and the cool kids are teaching me these things. I heard you use it earlier, and I thought I'd just bring it back up and act like I knew what it meant.

You did good. Context was correct.

Boom, boomer, uh, boomer usage. There we go.

Good job.

Oh man, Eva Lou, or Iva Lou. Iva Lou is in Michigan, and I pray God I got that right. Iva Lou, am I close even?

You're close.

Okay, what's— how's it pronounced?

Iva Lou.

Oh, it is Iva Lou. Not close, I got it. I nailed it. All right, Iva Lou, what's up?

I want to know if service contracts for car repair through my dealer is a good or bad investment for my car?

Really bad. Horrible.

So I should, I should just plan on spending the money for the repairs for the next few years?

Yep. You want to hear the numbers? 12% of what you pay covers the repairs. 50% covers the markup marketing and the commissions paid to the salesman that sold it to you, and the rest is profit. 12%. So if you paid— if you paid $10,000, $1,200 worth of repairs is what it covers on average. These things are unbelievably profitable, and the guys love to sell them because they make almost as much selling that stupid extended warranty as they do the entire car.

Okay, they're, they're telling me a 7-year bumper-to-bumper will cost me $2,759.

Yeah, well, there's already a warranty on there that's bumper-to-bumper. They're extending it to 7.

No, the warranty is expired.

Okay, and how expensive a car is this?

Um, I purchased it in March of 2025. It's a 2023 Buick Encore.

Yeah.

And I paid $22,000 cash for it.

Okay. The vast amount of that $2,000 is not going to come out in repairs on average. So if you were going to start an extended warranty company, you would figure out the probability of the car breaking and you would set aside that amount of money on out of 1,000 Buick enclaves, how much is it going to cost me to cover it for 7 years? And you're going to figure out it cost me $500 to cover it for 7 years on average across 5,000 of them. Okay, and then you would figure out I got to pay the commissions and I got to have a profit. And that's how you run an insurance company. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey. Christina is in New York City. Hi Christina, how are you?

Good, how are you?

Better than I deserve. What's up?

Long story short, my husband's family has a vacation home that is currently owned by my mother-in-law. And a couple years ago, we offered to take it over, take care of it, pay for it, deal with the maintenance, tenants, um, because that's what my late father-in-law had wanted. And he had always told my husband that he eventually would, um, inherit this home because they built it together when my husband was like 5 years old. Um, but my sister-in-law did not agree with this plan and said they did not want this house to go to him, that they wanted it, um, to be split 3 ways, um, and that they wanted my mother-in-law to continue paying for it, you know, until she passes away, to like keep it all in a trust together with her other property. Um, but now my mother-in-law is getting older, you know, maintenance is taking a lot. It's another expense that she doesn't have the money for. Um, and now she's asking us all to split, um, the cost for the house, um, 4 ways.

No.

And my wife one.

Yes.

No, thank you.

And my one— no. Yeah. So, and my one sister-in-law already said that she's not doing it. So our question is, should we split it 4 ways, or at this point I guess 3 ways, but we will not own this house eventually, or should we just look for our own house?

You should look for your own house.

Okay. That's what we keep on thinking. So we should just—

this is called a dysfunctional family.

Yeah, isn't it? Yeah, yes. And you know, my father-in-law really wanted it to go to my husband. There were conversations.

I've had— doesn't matter. He didn't, he didn't cause it to happen.

I know.

If he really wanted it to, he should have put it in a trust before he died. Yeah. And then the sisters-in-law could pound sand. Yeah, which is what they need to do. They need to pound sand, but I don't think they're going to.

Yeah, yeah. So I guess for her—

so I mean, there's two sisters, right?

Yeah.

And one is already opted out. If the other one opts out, tell your mother-in-law to deed it to the trust now, to your son, to your husband, and then we'll pay the bill. If you'll go ahead and deed it to us now, we'll pay the bill.

Yeah, that's what we had said two years ago.

I know, we'll say it again though.

And yeah, why won't she do that?

Because my sister-in-law said no, they don't want that to happen.

I know, but they don't want to pay anything either. So Mom, since they don't want to pay anything and we're the only ones wanting to pay anything, why don't we do what Dad said to do originally and deed the stinking house to me and I'll pay for it? Yeah, but if you're not gonna do that, we're not in. So Mom, you get to choose. Somebody's gonna be disappointed. Appointed. Let's decide who.

Yeah, and if she doesn't do it, then we— I mean, this is what I can— let it go. It's just a house.

Just let it go.

Now it's her fault.

It's her fault, not yours.

We have 3— I know we have 3 children as well. What would you do so this doesn't happen to our children?

I would raise my children better. Yeah, where they're not brats.

But like, we are talking about like maybe having like a trust for the house that has like, I don't know, a certain amount of money in it.

How about your father? How about father, before he dies, communicates to his 3 kids, I built this with my son, I'm leaving it to him, this is what's going to happen, and you 2 will get other things, but you're not getting this. Instead, he never bothered to communicate communicate. Yeah, that's what a lot of people do. They wait till they're dead to piss people off. Go ahead and piss people off while you're alive. If somebody's gonna be mad, go ahead and do it while you're alive. This is how you do it. There's not an estate plan that works where there's no communication. Everyone should know every detail that involves them. Okay, yeah, so Rachel, Daniel, and Denise can tell you what happens with our lake house. We've all decided together while we're up walking, while we're upright, and then, then they can— and in this case, by the way, they're gonna own it together— and then they can decide to buy each other out. They can, they can sell the thing, they can burn it. I don't care what they do. I'll be gone. But it's theirs to decide. And if I'm gonna leave it to one of of them, or if one of them wants to buy the other two, want to buy the other two out, it's not going to make me mad.

They do whatever they want to do. I hate the lake, I don't want to go down there anymore. Okay, cool, y'all work that out. But, you know, if you clarify it upfront and often in your estate plan, you don't have the first reading of the will after death. You have the first reading of the will as soon as the will is complete. Does that make sense?

Yeah, I guess that's what my— yeah, that's what my mother-in-law is trying to do now, but she's not really honoring her husband's wishes.

No, what she's trying to do now is offload the expenses without offloading the ownership.

Yeah, and that doesn't work.

Yeah, I don't want the expenses unless I get the ownership. No, thank "Thank you." Okay. And so really, honestly, what should happen here based on— now I'm getting your opinion and you're pissed at your sisters-in-law, and I don't really blame you, so— but, but so I haven't heard their side. But from what I'm hearing, what I would say is that mom needs to say, "Hey, I offered you guys a chance to chip in. You don't want to chip in, and so I'm gonna step back and I'm gonna honor dad's original wish." wishes. I'm deeding it to your brother. You'll get other things in the will, and I'm going to go ahead and move it into a trust for your brother now while I'm alive, and he's going to pick up the expenses from this point forward. You will not be getting the lake house. I'll take care of you and other things, but I'm just letting you two know you had the option and you opted out.

Yeah, sadly it's only one of them that's opting out.

I know, but that's okay. Just step Yeah, you know, that's what I would do if I was mother. They don't have a choice. It's hers. She gets to do with it what she wants. If even if the story wasn't what the story was, she could just wake up in the morning and go, I'm giving it to you.

Yeah, she could. I think the problem with this too is there was information that you knew that the sisters probably never knew. They probably never heard that the lake house was supposed to go to your husband or go to you?

I think I kind of knew, but I'm, you know, they don't want to make any kind of changes.

He's dead, but I think he was a wuss.

He did like to keep the peace.

Yeah, he keep— well, he didn't keep the peace. What he did was he avoided conflict. There's a difference. You keep the peace with clarity. Avoiding conflict is just cowardice.

Yeah, and whatever conversations have need to be between the husband not you, because you're the in-law.

Yeah, I would not— you don't need to be talking to mom. You don't need to be talking to sisters at all, because it's not gonna go well. Jade is exactly right. Good advice. Good advice, Jade. Yeah, so your husband should call his mom and say, "Mom, this is what dad really intended. If we're not going to do that, we're not going to participate. I'm sorry. If you would like to do that though, if you want to go ahead and deed it over, I'll take it off your hands, and you won't have to worry about it anymore. And we will have fulfilled Dad's original wishes that we all know were there.

And just— there's no time to cover this, but you've got to view inheritance as the cherry on the top of the sundae. It can't be the thing that you're counting on to break you free.

Right, right.

You were counting on this as your house.

On the other hand, you don't want to be handcuffed to it either. Yeah. I'm going to be in an LLC with my sister who steals money. Was yesterday. No thank you.

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Good.

How are you? Better than I deserve. What's up?

Yes, sir. Um, so my question, I am a 21-year-old recent college graduate. Um, I'm starting out a career in aviation here in Phoenix, but my question more so revolves around, around a $5 million, uh, real estate portfolio that my late grandmother, she passed away a few, uh, months ago. She built it up, um, over the past 40 years by being a nurse and having a house cleaning company. Um, and so no one else really in my family at the moment is willing to kind of manage this portfolio that she built up. It's roughly a dozen houses, apartments, condos, et cetera, across 4 different states. And so I'm kind of looking to take that on. And the challenge being, I have a job here in Phoenix and my siblings and parents have jobs as well. And being that it's spread across all the way from Hawaii to Pennsylvania, we're looking at what is the best way to manage this.

If you inherited it, why are you—

yeah.

Oh, so it's, it's in my mom's name, um, but my parents are nearing retirement age. They don't want to take on any big ventures, um, or basically like, you know, have a huge hassle of managing this. So I have basically stepped up and told them I want to take advantage of this opportunity.

And why is it an opportunity?

How will you get— what's your benefit?

Well, my benefit is I, I've, you know, I've read a lot and seen a lot online how real estate can, you know, be beneficial in terms of building income.

What's your, what's your financial benefit to it?

You want to be a property manager because you read real estate online? No, I wouldn't say.

Yeah, I don't want to be like, I want to basically figure out how I can turn these roughly dozen properties and build it into something that's beneficial for our entire family. Family.

So you're thinking— I just want to, I want to make this very clear— are you thinking, hey, if I help this build from $5 million and maybe I, you know, double it or whatever, then when I inherit it, it's going to be even more? Is that what you're thinking? Or are you thinking you can just earn some sort of salary off managing this? Or is it both?

So, so it's more so not that I really want a salary, it's really I almost want to turn it into a family business, if, if that makes more sense.

You keep saying family business and yet you don't own anything.

Yeah, because I mean, my parents, like I said, my parents own it, but they have kind of like— I have talked with them and we've kind of come to agreement where they want me to basically take the lead on it because they're nearing retirement.

No kidding. How are you getting paid for this? That's dumb. They, they want to hire their 21-year-old who had other life goals to now be a property manager is what you're saying, because you're getting nothing out of this. No, I don't want you to do this because you read an article on TikTok and got excited about real estate.

No, if they don't like— even if you don't own it, if they don't, if they don't enjoy property, they can always sell the properties and invest the money.

Yeah, you don't own it, nor are anywhere in this discussion have you ever owned it. You've never indicated anywhere in this entire time. We ask you 4 times, are you going to own it? No, I'm just going to run the family business. Well, then you're just a stinking employee.

And I don't even think they've said that to you, that they're going to pay you money or a certain amount of money to run this. They haven't said that.

Yeah, well, I guess, like, I mean, following the logical line of progression here, I guess eventually me and my siblings are going to inherit it.

So, and your siblings are going to benefit from all your work because you're not?

Yeah.

So you think I should—

I think you're— I think what's happening is you're operating, Nate, on a set of assumptions, and they are massive assumptions. Yeah, you're assuming that you're going to end up with this, you're going to end up with this, and that you're going to have a bigger percentage of this, and that there's going to be a family business. You've got a lot.

Let's play this out. You go in there and you work for a few dollars, enough to support you while you screw with this, and you run this from $5 million to $20 million, and 10 years from now your parents die and your siblings now have one-third of $20 million that you built.

You're going to be pissed.

That is not a good plan.

Mm-hmm. So yeah, so I guess your advice would just be to like, you know, let your mom and dad—

yeah, let them—

your mom and dad want to say, in return for managing our property, we will pay you a property management fee and we will deed these 4 properties to you now.

Mm-hmm.

And then you do with those 4 properties something good for you. Meanwhile, you manage the others for your siblings' future because your parents aren't gonna do anything with them. Now, that would be one thing. Now, the second piece of this is— I heard a couple other things in there, I'm gonna change horses on you now that I dropped that on you— but no, don't just go in there and assume you're gonna— that this is all gonna work out because it's real estate. It's not. Now, then the other thing is you said properties scattered from Hawaii to whatever. That's another problem, and that is a bad— I mean, and there's only 10 or 12 properties. It's not like you got this huge portfolio. So you guys need to sell off some of this stuff that's stuck out there in the middle of Egypt somewhere and get, and get this, get the property centralized where you can run them. All the real estate the Ramseys own, with a couple of exceptions of vacation properties, are all within 40 miles of each other. And there's $600 million worth, not $5 million. All of my portfolio, it's It's all where I can touch it within a short drive.

And so, and that, that's what the kids are going to end up with in this case. So yeah, if you know, you guys need to do some estate planning and figure out endgame after you grow this portfolio. How do you benefit from growing the portfolio other than just the thrill of growing the portfolio? And in the meantime, how do you eat? Which would be the property management piece.

What needs to be— Dave, go even deeper on the, like, this needs to be in writing, this needs to be somewhere. You can't just talk about it over Chick-fil-A.

And then we also tell the siblings. Yes. You know, so Nate is taking over the property. In return, Nate is going to do this, this, and this. Okay.

We all know.

Okay.

Okay, so in our case, Rachel's husband Winston has a real estate company that he and I started. He has done other things with it on his own behalf that I have nothing to do with now, and he also manages all the Ramsey property and gets paid for managing the Ramsey property. He does not own any of the Ramsey property. The 3 Ramsey Gen 2s will own the Ramsey property, one of which is his wife, but He's not managing it for the family, vaguely hoping he'll get something. He knows exactly what he's gonna get. His wife is gonna get 1/3 of the portfolio upon Sharon and my death. And in the meantime, he's being paid commissions and management fees to run a real estate company, which he thoroughly loves, and I like working with him. So, it's all good. But that's a very clear clear delineation of what's where. And by the way, he kind of came at it like Nate did. He wanted to learn the real estate business. I know it. He wanted to get involved in it. I was one of his— I was his initial mentor. So over the years, I was one of his mentors.

He's had other people that he didn't just learn from me, but I kind of helped him get started. And I did. And so—

This guy needs a mentor. He can't just do it. Just jump into this.

I'm, I'm in aviation. Yeah, no, I'm in the rental property business in Hawaii.

That's— and it's going to be different in different— each country and each state that he's in.

Yeah, well, Hawaii is a different country.

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

Hey, Dave. I'm doing well.

How are you?

Better than I deserve.

What's up? Um, so I had a question I wanted to run by you. Uh, I turned, I'm 22 now, but back when I turned 18, I took out some credit cards and racked up, uh, to me a significant debt. And I finally now I'm just facing it. I'm 22 and I got a job, full-time job, and I've been working on paying it off.

Good. What do you make?

I make $3,500 a month.

Okay, working 40 hours?

Uh, yeah.

What do you do?

I work for a pain cream company, Nano Extreme Pain Cream.

Okay.

I'm marketing for it.

Yeah, and how much credit card debt did you run up?

Um, I ran up about $40,000.

Mm-hmm. Is that all the debt?

How much debt you got? Uh, $40,000, and then I have some student loan debt. Altogether, I had $70,000 in debt.

Okay, so student loans are $30,000?

Yes.

No car debt?

Uh, well, I was watching your show, and I ended up selling my car about 2 weeks ago, um, because I am able to ride into work with somebody.

Good. Wow. Very good. What'd the car sell for?

Uh, I sold it for $13,000, so I was able to put put that towards the car. Um, so I just paid that off, so I don't have a loan on that anymore.

Big move there. Excellent to go.

All right.

Okay, so the $70,000—

yep.

And then I had some bicycles that I sold. I sold those for $10,000 to pay off some debt. I ended up paying off, uh, 2 credit cards that totaled up to $8,500 in debt.

So look at you, man.

Get it. Get it.

So you're with $70,000 now.

Oh, $43,000.

Down to $43,000.

Yeah. But there's $70,000 total including student loan debt. Yeah. Okay.

So I have a friend, um, who offered to pay off all my debt and I pay him back.

Ooh.

Um, I don't really know if I want to do that or not because I don't want to ruin— I know money can ruin a relationship and I'm not sure if I want to go down that road.

It's not really money that ruins it. It's the, uh, change in the relationship that can ruin it. So who— you're 22. What kind of a friend has $73,000?

He comes from generational wealth. His dad's very wealthy, so he has lots of money just laying around.

Wow.

So he offered to pay it for me, and I have to pay him back, of course, but I'm not sure if I want to do that.

I would not I would not do that.

No.

Okay. I think you're making wonderful progress because you've done a couple of things. One is you became very focused and clear on your debt attack. And two is you've been very impressively willing to sacrifice. I'm very impressive.

And so, I mean, it's not what I want to do at 22, but I don't want to live my whole life like this.

Yeah.

Well, you don't want to live under the thumb of a credit card either. So you're wanting to get out. I'm going to fight my my way out. No, I think it's a kind offer, and I appreciate it. The problem is that when you borrow money from someone, you change the relationship to that of master-servant. The borrower is slave to the lender. And even if— and so if you're a slave, by definition you have a master. And even if your master is a very nice person, or is an unconcerned person, they still become your master. And it changes the air in the room. They start thinking about how much this guy works. They start thinking about if you're going on vacation. They start thinking about if you went to happy hour.

All of a sudden, they're thinking about it, even if they have plenty of money, quote unquote, "laying around." Yeah, because this is your friend, so he has front row seats to how you're living your life every day.

Yeah. So, I mean, it kind of sounds good on the surface, or it sounds— it's actually a nice offer. It's kind But it's going— more times than not, to your point, it ends in disaster, Keegan. So I will tell you this, if you can get some transportation of some kind, I'd love to see you pick up an extra job for 30 more hours and continue to accelerate the plan that you've already got. That's what I would do. But the secret sauce to this, Keegan, is not mathematics on the interest rate, you get a better interest rate with your friend. The secret sauce is not that at all. The secret sauce is Keegan. When Keegan changed, everything changed. And before Keegan changed, nothing changed. So once you decide you're gonna ride this thing, you're riding it. I'm proud of you. Keep after it, dude. I want you to look in the mirror and go, you're the answer to the problem, not borrowing from a friend. That's right. And that might include working another 30 hours a week week somewhere, which I really wouldn't mind you doing at all. Todd is in El Paso. Hey Todd, what's up?

Todd?

Hey, how's it going? Sorry about that, it's kind of muted a little bit.

My bad. No troubles. What's up?

Hey, so anyway, I was, uh, I've kind of gotten myself kind of like screwed over a little bit, I guess you could say. I was out, uh, getting, uh, I had a friend put me getting Pokémon cards, and I think I went a little too far over because I racked up— well, I talked to the lady on the phone before this— I racked up like thousands of dollars in credit card debt to help pay for my Pokémon cards.

How much is— how many thousands?

Uh, probably like $10,000 to $15,000.

Okay, how much credit card debt do you have exactly? Do you even even know?

No, I don't really pay attention to it like that. Mm-hmm.

Well, step 1: identify the problem in detail. You're lost, you're screwed, you need to find the map that has the little red arrow on it that says you are here. Here you are, it's $13,426 of stupid. I want to define my stupid very carefully and thoroughly. That's step 1. Step 2 is take assessment of the inventory of Pokémon cards and what and how you can move them. So you've been trying— you bought them, uh, to speculate on them and try to retail them back out. You tried to buy them at one price and sell them at another price, right?

Uh, correct.

And, uh, did you do that successfully ever?

Uh, no, I kind of just winged it because I saw other success stories and I was like, you know what, I'll use the credit card. You know, my logic was I'll use their money because it's not mine, and then if it doesn't work, then why were you—

then it's your money after all. Who knew?

Yeah, I, I have a feeling this is a symptom of something else. What caused you to be so desperate that you would do $10,000 or however much on, on a credit card for Pokémon cards?

Oh, that's just the American dream in my mind. I'm just trying to like make the next dollar.

Like, American dream is to go broke in credit card, Dad?

Well, when you word it like that, yeah.

Ah, this—

like, I wanted to—

like, what do you do for work? What's your job?

Uh, I kind of bouncing around employment. I'm kind of—

there it is—

looking for a new—

and there it is—

job a little.

Okay, that's what I was getting to. There was something going on.

Yeah. Ding, ding, ding, ding, ding. Okay, okay, so you believe crap like you heard like, "It takes money to make money." And so I'm going to be a Pokémon guy because 2 people I know did this once, and instead of working. So here's what I want you to do. I want you to get a 40-hour job, and then what I want you to do right after that is I want you to get another 30-hour job and pay these credit cards off. Meanwhile, call some of your stupid Pokémon friends and say, "Hey, stupid friend, you got me into a stupid mess." mess because I was stupid, and we're going to get this mess cleaned up and sell these stupid cards. Now help me with this, and let's get these cards moved instead of sitting around looking at them, because every day I got to look at them. If I'm you, I feel dumber.

Yeah, the American—

I've done dumb things, Todd. You did a dumb thing, so I know what dumb things look like. And dumb things, when you leave them sitting there in your house, they shame you. When you walk by, they go, you do it That's what I'm saying. They talk to you. They tell you.

They do.

Had a car parked in my driveway one time. It kept saying, "Dave, you're stupid. You're dumb, Dave. Look what you did, Dave." So, I got rid of that stupid car. I felt stupid every time I drove it. Yeah.

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Our Scripture of the Day, John 13:35: By this everyone will know that you are my disciples, if you love one another. Thomas Sowell said, some of the biggest cases of mistaken identity are among intellectuals who have trouble remembering that they are not God.

Oh boy.

Whoa. David is in Denver. Hey, David. David, what's up?

Uh, not much, Dave. How are you?

Better than I deserve. How can we help?

Yeah, I'm on Baby Step 6, um, paying off my home. I have no debt at the moment, and I've been in the corners of the YouTube finance world, and I found a video about biweekly mortgage payments and signing up for that program. So I currently owe $420,000 on a 5.98% 30-year fixed loan. And I'm 2 years in, and I was wondering, do you recommend that I sign up for the biweekly mortgage payments?

Uh, I would not pay a fee for it. Is there a fee associated with it?

Yes, sir. Uh, to enroll, Rocket Mortgage does require a single upfront mortgage payment, which for me is $3,500.

So I would have— they hold as a fee, they take that as a fee?

Wow.

Uh, no, I do— I guess not a fee. I think it goes towards the principal, sir.

Is your mortgage with Rocket?

Yes, sir.

Okay, are they charging any fee for the service of the biweekly? An actual fee?

I don't believe so, sir. I believe they just asked me to make a one-time mortgage payment to enroll, and then I am enrolled from then on.

Okay, that's possible. I'm not real trusting of Rocket because Rocket has a lot of shysters going on in there, so be careful careful. But let me— let's walk through it. Here's why I'm asking that question. All right, so basically a biweekly mortgage is half a payment, as you know, David, every 2 weeks. Yes, sir. There are 26 2-week periods in a year, so 26 halves is 13 wholes, right? Which means that a biweekly mortgage effectively pays a single payment extra per year. Correct. So mathematically, you would be within $15 of this by simply just writing a check once a year for an extra payment.

That's true. And so I kind of thought like, what, uh, there's no magic.

Yeah, the biweekly is not magic. It's just a way to trick you into paying extra principal.

I see.

And that's the only thing that does it. So if you just took your regular mortgage and once a year sent an extra payment above your regular mortgage, you'll be within $10 or $15 of the same exact result. So it takes a 30-year mortgage and turns it into about a 23. It takes a 15-year mortgage and turns it into about a 12.

I see.

But it's all done by an extra principal payment a year. And really, truthfully, you're on Baby Step 6, so you may be doing more or or less of an extra principal payment a year. Are you paid every 2 weeks?

Yes, sir. I do have a salary position. So does my wife. We earn about $186,000 a year.

So it would be kind of an autopilot thing to at least to get 1 extra payment a year. But I, with those numbers you're giving me, I want you to put more than that on there anyway, don't you?

Well, the problem is my, I have a 4-year-old son and I'm paying $22,000 a year for daycare. Daycare, and that just really hurts the budget. I do feel like I'm house poor.

I feel like I'm kind of, you know, if you're house poor, you don't need to increase your house payment.

Yes, sir. I'm just trying to pay this thing off as quickly as possible.

Um, currently the way you're going to do that is extra principal payments, not being house poor from daycare. So you got to decide which life is it you're living here. But either way, I want you and Baby Step 6, for your sake, to get the house paid off. And the way you're gonna do that is extra principal payments. If you want to do that by setting it up as a biweekly and they don't charge you a fee to do it— see, if they're charging you $500 to do this or something, well crap, no, I'll just send in an extra payment, right? But if they're charging you no fee and you want— you're paid biweekly and it's easy, yeah, let's do that. But let's also plan to do more.

Excellent. Before I let you go, I do earn $11,000 a month with my wife after taxes, and my mortgage is $3,500 $1,500, which equates to 32.2% of my monthly income. Uh, since I'm on Baby Step 6, I don't have any debt. Do you still think I can keep this house? I know you always say sell the house, it's too much, but I really want this home.

I think that you're feeling the squeeze, especially right now because you have somebody in daycare and that's a, that there's a seasonality there that's not gonna be like this for all time. So I think that's why you're feeling the squeeze. If there's something you can do to offset that in the meantime, I would do it. Yeah, but I'm not—

and that's putting the take-home pay you outlined is after you put money in 401, right?

Yes, sir.

That's not the number. No, that's not the number.

That's the wrong calculation.

That's the wrong calculation. When we say take-home pay, we mean just after taxes only.

Yes, uh, yeah, it's, uh, $11,000 hits our joint account a month.

I know, honey, but that's after they took money out for 401 and probably insurance.

Yes, sir.

Those two numbers don't count in the calculation, so you're not at $32,000. Oh, okay. That's what I'm saying. The only numbers that count in the calculation for take-home pay is after taxes. Gross minus taxes. So add back insurance, add back in your calculation, and then say, "Of that number, what percentage is it?" And it's going to be down close to 25%. So you're fine. I don't think you're hurting here. I think you're just, you know, observing the fact that you're not out of debt completely yet, and even when you are, it's not a magic pill. It's It's just a better place than being in debt.

That's all. Everybody listening needs to understand what you just said about take-home pay, which is it is only the after-tax amount.

When we say have your house be 25% of your take-home pay on a 15-year fixed, we're talking about only after taxes. Not after child support coming out, not after your car payment coming out and going to the credit union.

Not after the insurance.

Not after 401. Not after Aflac. Not after any of that stuff. Okay, so put all that crap— that's not what we're talking about. Good point. Aaron is in Minneapolis. Hi Aaron, what's up?

Hi, thank you for taking my call. So we recently moved to a country home. We thought it would be our dream home, our forever home that we'd raise our kids in, but after moving here we realized we hate country life. We miss living in closer to a city. We miss sidewalks, all the amenities. We have another home and we are renting it out, and we thought we would rent it out for a few years and then sell it and then use that money to pay off said country home. But now we are unsure of what to do because we do not want to stay in said country home.

Well, sell said country home and move back to the city.

What's wrong with that?

So our other home is 3 hours away, and Sell it.

Sell both of them and buy a house in the city.

That's what you think we should do?

Sure, if none of them are working for you.

I don't want a rental house in a country home, and I want neither. Why don't we say I don't want to own them anymore? So what am I going to do? I'm going to sell them.

And you could probably buy what you want, maybe in cash.

I don't know.

Get rid of both of them, even if we just recently bought said country home.

How recent? Why are you arguing with me? You called me up and said you didn't like I know, but you're going, "Well, I just bought it." Well, I know, but I don't like it. I made a bad decision. Unmake the decision.

Okay.

You didn't get married, you bought real estate.

Okay, thank you so much, Dave.

Yeah, it's hard to get rid of the married thing if you do that one wrong, but the real estate one, you just put it up for sale.

It's more simple than you think, I think.

Yeah, well, it's just— I mean, you may lose a little money, Okay, we made a bad decision with some— something about our vision for life was askew. And so, we may pay some tax for that.

Stupid tax.

We may pay some stupid tax for that. That's okay. It's okay. I've done dumber things than that, than thought I wanted something that I didn't. And— but I tell you what is interesting to do, Erin, in these situations, and anybody else, I've done it a lot to myself, when I find myself in a situation a situation like that called a mistake. That's a mistake. I want to backtrack and think through, "How did I get— what caused my brain to malfunction that allowed the mistake? What decision-making framework was I using that was flawed that caused me to, you know, okay, I was looking at Instagram people on homestead." Well, don't— okay, I've just figured it out. I don't need to be looking at Instagram to do anything that has quality in life, right? You know, and so what was it that caused me to get askew of what reality was? And so that I don't do it again.

Well, then it becomes research, not just something stupid you did.

It was an experiment.

It was an experiment.

I found something that didn't work.

That's right.

Like a test tube when I blew up the lab. Yeah, that kind of thing. Yeah. I put this hour of the That's another Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.