Transcript of You Can’t Outearn Your Stupidity

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Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studio, this is the Ramsey Show. I'm George Campbell, joined by my pal and co-host on Smart Money Happy Hour. Another great show on the Ramsey Network, Rachel Cruz, is here with us as well. We're here to answer your calls about life and money. The number is 888-825-5225. Miguel kicks us off in Dallas, Texas. What's going on, Miguel?

Hey, George.

How are you doing? Doing great. How can we help today?

Yeah. Hey. I'll be following you guys for quite a bit sometime now. I wish I'd started earlier, like most people, but- A hundred %.

Same.

Here we are. I'm working on step number 6, thankfully. But I do have a question because I listen to Dave say all the time how credit cards are the devil, and they are the That's the thing that one person can use. And I agree with all of that, except... So a really long time ago, like Dave, at a very young age, I did bankruptcy And since then, I learned to live within my means. But I've had a lot of credit cards since then. I just pay them off at the end of the month. I don't have any credit card debt. I haven't had for over 10, 15 years now. Good. So my question is, if I pay off my credit cards at the end of the month, and I am using them a lot so that I can get free tickets to travel with my family and stuff like that, Would you still recommend that I don't do that?

If so, why?

Or is it okay for me to continue using my credit cards as long as I pay them off?

Well, as of this recording, it's still a free country, so you are free to do as you wish, Miguel. And so is it okay? Sure. If it's working for you, go for it. But the reason you called in, there's something inside of you that maybe is thinking, Is there a better way? Could I be doing better? Could I optimize if I use my own money instead of using someone else's and paying it back every month, later on? Sure, you could make the argument and hypotheticals all day long. But the real thing here is you're using it to get free travel, correct? Did I hear that right?

Yeah, correct.

And so have you actually added up what it would have cost you if you had paid cash, done your own research, found the right flights that worked for your family? Like, okay, I got $600 in value out of this, and it cost me 200 for the card for the year. Have you done the math on that?

Yeah, it definitely pays off.

Like, for example, last year, I took my family to Europe, and I completely paid for our flight tickets. It was $4,000 worth just with points. I had to pay a little bit of tax on it.

How much did you spend? Oh, you said you had to pay it off the balance the next month?

No, that was just paid off with points.

Okay. You said you owed a little bit still for the flights is what you meant.

Okay.

Well, yeah, they make you pay some taxes, but it was $200 or something like that. Okay. And then how much did you have to spend in order to earn that many rewards, that many points? This sounds like it was a few years of spending.

Yeah, I haven't done the math, but it's probably a couple of hundred grand or something like that.

There we go. Ding, ding, ding. So, Miguel, the truth is, you could have saved up four grand out of a few hundred grand that slipped through your hands. Am I wrong?

Well, okay, so here's the thing.

I use my credit cards for everything.

I believe it.

I pay my bills.

I pay everything that doesn't charge me a fee for using a credit card.

Yeah, a lot of those bills will charge you three, four % for just running that credit card.

If they charge me even a penny, I won't use my credit card.

So I don't pay my mortgage or anything like that with my credit cards. But there are actually a lot of things that I can pay with my credit card.

I do my groceries with my credit card, all of my regular spending.

And that adds up to quite a bit throughout the years.

You've impressed Rachel. Rachel, if you could see her face, she is so impressed. No, she's not.

I'm just sighing. Well, here's the thing, Miguel. A couple of things. Number one, studies have been done, and it has been proven mathematically that you do actually end up spending more when you're spending it with a credit card. And it may just be groceries and all the things. But because there is zero emotional connection to your money, subconsciously, naturally, without you even realizing it, you end up spending more. So even with groceries, for instance, we've talked to people on the show and they say, Oh, I just would use my credit card for the things that we needed, the bills and groceries and gas. And then we have heard countless times, haven't we, George? People say, Actually, we ended up going without a credit card for six months to see if we could save money, and we actually ended up spending less. We don't even know how that happened. And I'm like, Well, because I know, because there's no emotional... So you don't even realize the amount of money that you're actually overspending. So over years of spending hundreds of thousands of dollars on credit card to get $4,000 of flights, what could have been saved actually may have been even more than $4,000 with the subconscious spending that you're doing and not even realizing it.

So that's one thing. And then number two, Miguel, and again, this is a personal conviction for me, and it may not be for you. I'm not saying it has to be for everyone. But what's so frustrating to me, and I think because we're in this line of work, and George and I talk to people every single day who do have credit card debt. And these banks and this whole debt industry has screwed over the American people. They have. They They have not helped people. They have hurt people. That's why we have a job. And because of that, the people that are hurting, the single moms that are calling in that have $11,000 in credit card debt, and they're trying to get out, or it's the families who lost... People that are struggling, and they are in credit card debt, And they're the ones paying the fees. They're the ones paying the interest. They're the ones making the bank rich to get people like you to get free points and free flights. It feels like off the backs of people who are struggling and hurting, I don't want a free flight out of that. I have the ability to save I give up and work hard myself and not have to deal with this industry at all.

And I have no bill at the end of the month. You know what I mean? I pay for my groceries. Sometimes I do Instacart and have them delivered. And then it's done. And then I'm done. And I'm like, I don't have to play this game with them. And so there's just something so freeing about it. And again, that may not be everyone's conviction, but when I see banks and I see their bill, all the things- You just know too much. This is gross. Yeah. And I'm just like, Man, you all have screwed over people. And people are giving their heart and income to these places, to these industries, and they're not allowing to be able to help themselves. And so I'm like, I don't want it. I don't want it. I will save up. I'm booking a girls trip, actually today. I was telling George, I was going to buy some tickets. And I'm like, I will go on Southwest and buy my, I think it's $196 one way to get- That's great. I will budget for that. And I'm like, That's fine. I will budget for that all day, every day, and I don't have to worry about it.

I don't know, Miguel.

Here's the experiment. This is fun. So let's say you spent 200 $100,000 to get four, right? That's 2% cashback. Fair? Here's the experiment. Use your debit card for a year and see if you spent 190 grand instead of $200,000. Well, that just saved you 10 grand. So you just gave yourself $10,000 in rewards by not spending more. That's the thing that I can't help you figure out on paper. That's something that you need to explore for yourself. Again, there's the moral side. I cover eight objections of why people won't stop using their cards in my book, Breaking Free from Broke. How about this? I'll send you a copy. You read the chapter and then call me back for a fun discussion.

Yeah. No, look, I totally agree with you guys as far as... Hello?

I was going to say, No, you don't, Miguel.

Rachel was laughing because you don't agree. You don't agree.

You're charging those credit cards up. But it's fine. I totally agree. But it's fine. We love you. We are great. We are great. Especially with the part that you don't feel the money coming out of you when you're using a credit My question is- I wish we had time for more, Miguel.

You burnt out the clock telling us about all the rewards you got going to Europe, my friend. But hey, call us back and hang on the line. I'll send you a copy of Breaking Free from Broke. I think it will meeting you with all the stats. This show is sponsored by Better Health.

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Andrew's up next in Cleveland. What's going on, Andrew?

Hey, how are you? Good. So my question is, what should I prioritize? I'm currently employed. I work in corporate finance, but the job's unstable. I've been in the field for a few years now and just come to realize it's not the career for me and I need to make a change. I was thinking about going into nursing, but I wouldn't be able to start a program, probably till summer. So given the unstable job situation, I'm not sure if I should prioritize building my emergency fund to cover the unemployment period or having to work at a severely reduced income, or I still have $8,000 on my car I need to pay off over the next few years.

Okay. What's causing it to be unstable?

I'm just not very good at it.

Oh, you're scared. You may get let go. I hear you. Have you had some formal discussions with your leaders and stuff written up and that thing that you know it's probably coming?

Not yet, but I feel like it's coming.

Okay. Okay, that's fair.

What work is it?

Corporate budgeting, forecasting. I've been in it for a few years. I used to be good at it, but I guess the last two years since COVID, I've not become I'm good at it, or I've just reach roles that are too senior for my skillset.

And you don't enjoy it either, which means you're really not going to try to get better at it when you hate it. Yeah. Okay. Is there something else in that field?

I'm trying my best, and I put in a ton of hours, but it just doesn't seem to help.

What are you making right now, Andrew, doing that?

Yeah, like 110.

Okay. Is there a role you could take, I don't know if you want to stay at that company or a different company, that at least is a little bit more enjoyable? You may take a little bit of a pay cut if it's of a senior role just to get you in a place where at least you're making in an income you can save for nursing school and can actually float you through some of the things you want to in the future?

Yeah, I would like to be able to do that. I just don't know if it's going to be an option. If this role doesn't work out, if they let me take something more junior at the current company or they'll just cut me off and then I'll have to try to just find something in the open job market. I have been looking, but had a couple of interviews, but no offers.

Okay. How old are you? Thirty-nine. Thirty-nine. Okay. And how long have you been doing this?

Like seven years. Okay. Are you married? If you get out of it, you soon joy it. No. Single, no children.

Okay.

I'd like to do those things, Which is why I'm trying to figure out a way to reset my career so I can get back on track in life.

Yeah, it sounds like there's a lot behind this. It sounds like you're like E. Or is your spirit animal right now, and you're just down and out. I mean, you got a bunch of debt, you don't like the job. Does it just feel like you're ready for a life change?

Yeah. Other than the car, I just have a mortgage payment, which is like 1400 a month. And luckily, living in the Midwest, it's a little cheaper than the Coast.

Yeah. So all you have is the 8000 on the car loan, and you have... What's left on the car loan? You have 8,000 in savings?

Yeah, 8,000.

And I currently have 23,000 saved.

Oh, wonderful.

That's great. Okay, how much is nursing school, Andrew? How much is nursing school?

I think it's about 20K a year. I do have 11 months left on my GI Bill that would cover half of it. And most programs are just under two years. So it wouldn't cover all of it.

So 20K is what you need. So 20,000 is what you need.

70 % of it. Yeah. Like I said, I wouldn't be able to start the nursing program probably till the summer. Why not January? You have to pass an exam, and I have to do some prerex, and it's just not enough time to do it before January.

Got you. Okay. Sorry. Okay. So, yeah, you've done your research. I mean, at least you know a pathway. So the GI Bill could still kick in, and it would take... You said it would pay for almost half of it?

Yeah. So that's once I get in the program, I'm more worried about how I cover my living expenses or prioritize things between possibly losing my job, probably December-ish to starting school in May or June.

Yeah. I mean, I don't know if nursing school, you're probably going to have to have classes during the day. I have a feeling it's going to be pretty time consuming. Yeah, I want to be able to work full-time. Can you work part-time? Work part-time somewhere. Work full-time, find a position, and then see if you can scale back when you start school.

Okay. Yeah, I can work part-time.

Or even in the medical I'd like to build, Andrew. Is there anything from an administrative standpoint with forecasting budgets and helping clinics? No, the accounting side. Yeah, something just to at least get your foot in the door.

I've been looking for project management jobs because I have that certification, and I thought HR would be lower stress, a little interesting, even though the pay is not amazing. But that's where I've been looking so far. Just like I said, I've had some interviews, but no offers.

Well, I would get some facts because right now it's a lot of unknowns, and it I was like, Man, why even go down this road? I would at least start the conversation with my leaders and say, Hey, is there a different role here that would be better suited for me? That'd be proactive. Before they start knocking on your door saying, Hey, man, you got to get out of here. So I would start being a little more proactive about it. I would pay off the today and then stack up that emergency fund, back up, and then start saving up for nursing school in the meantime while you have this great income.

That's a good point, George, because I do wonder if you can get a different role and at least have, again, some level of high income. I mean, even if you go down to 90, to at least be working until the summer, you know what I mean? And be making that grade of an income. You could save up so much money that could help at least cash flow while you're working part-time during nursing. But being proactive may be great. You may hate it, but you also know you're You're going to leave in the summer. So you're like, Okay, it's- Temporary. Yeah, it's 10 months, nine months, eight months.

Yeah. I'm just worried I'm not going to make it to the summer. So my company at your one year mark, you can switch roles. And I reach that in February.

I know, but ask. Ask. Be proactive. Can you just do us a favor? And be happy.

Yeah, bet on yourself, Andrew.

Right now, it's like- Excited that you want to earn a great income and you want to serve and help because in your head, you know it's getting me to nursing school what I really to do.

Yes, that's what I'm thinking. Let the nursing school dream fuel you to get good at your job for the next few months so that you can keep it until the summer. Do you see where we're going with this? It's just a temporary sacrifice. Just fake it. Put a smile on and go, I know what I'm doing. And then all of a sudden, they go, Man, Andrew really knows what he's doing over there. He's having a great time.

Andrew, do you have hobbies that you love? Do you have good guy friends around you?

Yeah, I play in a couple of local men's adult hockey league. I'm an avid runner I ski.

Oh, great.

Well-rounded guy.

Yeah, love that. I'm glad that, yeah, there's like a thing to be doing that's fun for you and gives you life and joy. Love it. Okay, perfect. I don't know.

I think we have a game plan here.

That's what I would do if I were you, Andrew. I'd be proactive Remember, you got to just get through the nine months.

We don't want a gap in income, and you got to figure out how are you going to get to Marcel's school.

And you have a good job, and your foot's in the door, and it's a great income. I mean, average salary in America is like 68,000, so you're well above that. So you're doing good. I know. I know.

I'm doing better than most people.

Yeah. So stick with it.

I'm just trying not to lose it.

Yeah.

But it's like in a relationship, if you have this attitude like it's all going to go down, it makes the relationship go down, doesn't it? It's a self-fulfilling prophecy. Yeah. And that's what I'm worried about with your job. How much of this is in your head? And they go, Man, it seems like Andrew's heart's really not in it. You should probably get rid of that guy. Versus a guy who shows up, does his work well, has a smile on his face. And again, you clock out at 5: 00 PM and go home and go to hockey. You can still live your life and enjoy it. But I think that's going to help your... If you fake it, it'll make you have a better attitude towards all of this, especially when you know this dream is right on the other side.

It's not like I haven't been trying to do well, but I've been getting feedback. I haven't. It's just not been formally documented. But I've been working like 10, 12 hour days the last few months. Goodness.

Is that normal around there? Or is this you trying to keep up?

It's me trying to keep up, and it's our budgeting season. So everyone's having to put in longer hours. Kind of both.

Yeah. And I think if you raise your hand with some of that self-awareness of like, Hey, I realize I'm not cutting it, which is a shot to the ego. That's not fun. No one likes to hear that when you don't feel like you're winning in a role. So finding something that you could win at, at least. You may not love it. It may not be your life's passion, but at least you have the skillset and the talent around it. Andrew, if you... Hold on the line. I do want to give you Ken Coleman's book, Find the Work You're Wired to Do, because I know your direction towards nursing, which I think is awesome. But even this quiz may trigger something in you to realize, Oh, my gosh, I could be doing this type of role in this company still, maybe.

Yeah, maybe it's in the medical field, but it's not as a nurse. It could be something completely different. Yeah, who knows? We don't want you to waste any time. We want you to get real clear, and Ken's material will help you with that. So hang on the line, man. We are rooting for you for just total life change across the board. I hope you call us back six months from now, 12 months from now, and you're like, I'm in a new season of life, and I'm loving it. Thanks for the call, Andrew. If you ever googled yourself, here's the two worst things you can find. Photo evidence of your worst haircut and your personal data floating around on some sketchy website. I mean, the bangs were regrettable, but your info being bought, sold, and reposted all over the World Wide Web, even worse. And trust me, it happens all the time. And that's why I use delete me. You guys, over 20 billion records have been leaked in recent years, and that info gets pulled into these people search sites. So stuff like your name, number, address, even your kids' names is out there for anyone to see.

But if you're trying to clean up your personal data yourself, good luck. It can be a part-time job just submitting these opt-out So if you don't want your personal info out there, you should be using delete me, too. Delete me has real people who track down your data, remove it from these shady sites, and make sure it stays removed. Plus, you get a report from delete me showing exactly what was found and what's been deleted. So take back your privacy with delete me. Right now, Ramsey listeners get 20% off at joindeleteme. Com/ramsey with code Ramsey at checkout. So do that today. Joindeleteme. Com/ramsey, code Ramsey. Matthew is in Louisville, Kentucky. What's going on, Matthew?

What's going on, man?

We're just hanging out and having a good time. What's your question today?

All right, man. I'm wondering, should I start thinking about getting me and my girl from an apartment and saving more for her for the future?

While we're really getting ahead of ourselves here. How long you guys been dating?

We're going on eight months now.

We might as well be eight years. You like this girl?

She's pretty all right.

Whose idea was it that we should live together?

Sort of my idea, because she already lives with me and my grandparents.

She's living with you and your grandparents. Okay. How old are you guys, Matthew?

I'm 19, and she's 19.

Okay. Are you guys working in school? What's your status?

I'm currently working for a blasting company, and she's currently working for Walmart.

Okay. Good for you guys. And she's living with your grandmother and you? Is that what you said? Your grandparents and you?

Yes.

And because it's too expensive for her to live on her own, give me, or is it relational? You guys just want to be together?

Basically, it was between her her and her dad. Her dad wasn't really the best guy, and she wanted you to leave him, so I gave her an out.

Okay.

So it was a bad situation. You said, Hey, come hang at grandma and grandpa. Is there cool with it?

Yeah.

Okay. How do grandma and grandpa feel about all this?

They love her. To be honest with you, she does more around the house than their own children do.

I believe that.

They love her.

Yeah. Okay. And your plan is, Hey, I want to live on my own, but she's got to come with me because she can't afford a place for herself? What's the reasoning behind this?

More or less, we just want to get a head start on life itself. She wants to get out of the house because there's also nine people in the same house-ish. On the property my grandparents live at, there's two buildings in the backyard that's holding their kids.

Okay. So, yeah, there's a lot happening. Yeah, I feel that. Okay. Yeah. So, Matthew, what I would tell you is, Well, we've seen on the show in Just In Life that the couples that actually go in an order that's a little bit old school, you could say, actually have higher levels of success within their relationship from a commitment standpoint. And so if this is someone that you're thinking really you could get married to her, I would encourage you guys that maybe she goes and finds an apartment on her own, and maybe you still stay with the grandparents for a little bit while you save some money. But this whole out of order living together before getting married, all the things, we just found from a relational standpoint, there are higher levels of success with couples that literally do an order of they get engaged, they get married, they move in, they have kids, that natural progression. Because, again, there's been so many psychologists and therapists and stuff that come out because there's a weird commitment thing that happens when you live with someone that you're not married to because there's always the exits, there's always a door.

Now, granted, when you're married, you can always get divorced, but there's a lot of- Legal protections. Yeah, bigger implications when it comes to that. So, yeah, I would just say if you really love her and you guys are thinking like, Hey, this could be the thing, which maybe you know, then I would pump the brakes on living together. And as you guys get down through this relationship not living together, there's probably... It sounds terrible, but it's true. There's an easier out if you need to end the relationship. I mean, you guys are both 19, and I got married young. I was 21. So I think it can happen. I'm not against getting married young by any means. But you also lock yourself into a situation with splitting rent. You add in all these elements of life when you're dating that almost feel like you're playing house. You almost feel like you're playing married, but there's not the commitment of it, if you will. So that's what I would just say. I was like a big sister to you, Matthew, if I was sitting down with you. That's what I would encourage you just from a life- That sounds really logical.

From a life perspective. But you guys are resilient. I'm like, She comes from a hard place. That's a tough situation. I couldn't imagine being 19 and having to make a choice of I have to go on my own. And she has a job. She's working, which we get calls on the show people are 35 and haven't had a job for nine months. You know what I mean?

Work ethic is a great sign of success for a relationship.

Yeah, for sure. So I think you guys have a lot going for you. I probably would just slow it down a little bit and be still thinking and dreaming about the future together, 100 %. But I would not I would not encourage you to look for that.

Yeah, let's throw out some alternatives. She has some girlfriends?

Not really, no.

No community. You're the only person she has in her world?

Yeah, me and my family, yeah.

Man. Did she Did you guys go to high school together?

No, we went to the same county, different high school.

Okay. Okay.

Okay. Because my suggestion is, and they don't have to be BFFs, but just get a couple of roommates, and you might need to do the same depending on your situation. At 19, It's just roommate territory. I had roommates all the way up until I was married, and I think it's a very healthy thing to step toward that independence without having it all fall on you. Because my fear is she's working at Walmart and you're making more than her and you go, Well, I'll foot the rent and you just cover some groceries. All of a sudden, it becomes this financial imbalance as well. There becomes some entitlements if you're going to pay my bills and I don't have to really go beyond this stage of my career. I'd love to see you both go, Hey, what do we want to be doing five years from now? We'd love to be married. We'd love to have more stable jobs. We'd love to be doing work that we enjoy. And so you can help her figure that stuff out now while you're dating to help her get a head start, but I wouldn't do that by getting an apartment together.

All right. Thank you.

Just one man's opinion. But I think you got a great heart. You both have been through some things. The fact that you're living with your grandparents at 19 tells me that there's been other family dynamics and dysfunction, probably in your life, too, right?

Something like that, yeah. And also, yeah.

And so I just don't want you... I want you guys to make these decisions from a place of strength. Right now, it seems like we're just running from the thing that we're in, and we're going from one bad situation to a slightly less bad situation. So I'm hoping for your independence, and I hope that this relationship progresses, and one day you put a ring on it and get married and then get a place together. I think you will find that it was well worth the struggle and the patience and the sacrifice. So thank you for that. Tammy is up next in Detroit. What's going on, Tammy? How can we help Today.

Hi. Thanks for taking me call. I have a question in regards to kids after they graduate, so they're turning 18. My husband and I are in steps four, five, and six. We've been saving for the kids' college fund for the past probably three to six months, so we do have some funds right now. In those accounts, I have an eight-year-old and a five-year-old. We did start a 529 for our eight-year-old, but looking at the way we're investing, I would like to hone in on what we're doing and what our plan is. My question is if we should fully invest everything in a 529 because our fear is that we do that and one or both of the kids end up not wanting to go to college or wanting to do something else. And then we have all of that money tied up in a 529 that we're going to get penalized for taking it out outside of a college plan. So my thought was if we did half in a 529 for each of them and then half in a mutual fund, even though I know the mutual fund is going to be taxed, if we take that out later on, it's a safe bet, though, to not put all of our eggs in one basket.

Totally. No, I hear you. I would say my husband and I, we have the same discussion. You know what I mean? Because you're like, college has shifted so much. Even since COVID, you're like, oh, my gosh. And the fact that tuitions... I don't know. It's an interesting time. When our kids go to school, that's in a decade or more. So it's that big question mark. I'll tell you what we're doing, Tammy. That very similarly, we're still funding the 529 because our plan is that I want them to go to College. If we're able to pay for that, that's a gift to them starting off, because I just think from 18 to 21. All the person I have a little bit of a different opinion about the college thing. Ken Coleman has a different one. But I just think it's a great step. I really do. If you're able to, because I think you learn a lot about yourself, I think that you getting a degree makes you marketable, all the things. If you're able to pay for it, I mean, really. But if that fear is still there, if you want to, you could slow down the 529, depend on a mutual fund, but just know you're going to be paying those taxes.

It does not have as good of a benefit. But if you guys get five years down the line and you're like, Oh, wow, they are going to go to school, you can throw more in.

Yeah. And you can roll over up to 35K with the new Secure Act 2. 0 from that 529 over to a Roth IRA over a period of time. So you're not out of luck there either.

In their name. Yeah.

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Nlmls ID 1591. Nlmls consumeraccess. Org, Equal Housing Lender. The all new Every Dollar is here, and now it's way more than just our world-class budgeting app. There's a ton of advanced features to help you make faster progress with your money. The average person finds thousands of dollars in margin in just the first 15 minutes of using the app. So go check it out. Start Every Dollar for free today. Get it in the App Store or Google Play. Cole is in Waco, Texas up next. Cole, how can we help?

Hi. So I have a little bit of a stupid tax that I have to pay.

No, we've all been there. What happened?

So I bought a car. To preface, the plan was to work my butt off for a couple of years, pay this car off, and go into automotive engineering school. With a awesome paid-off project car with about a 20K flush fund so I could work part-time and all that. Well, the 20K of that, I was given a coin that got stolen from me And long story short, the plan changed. I fell into depression for eight months or so, and I'm coming out of that and wanting to- Wait, it got stolen?

Wait. You said a coin?

Yeah. So I was given a coin. Like crypto? No, it was a 1995 West Point Silver Ego proof state 70.

A physical coin? My uncle.

Oh, like a physical coin that you paid $20,000 for? Yeah.

I didn't pay for this coin. My uncle bought it back 1995. He hung around, and he gave it to me and said that he would hold on to it, and he didn't. He sold it and took that money for himself.

But you didn't have- I was going to use that for a college fund. So you never had the money?

I never physically had it, but I did plan on having it.

But it was promised to you. I hear you. Okay.

And you didn't keep his word, and he went and sold it and used the money. Okay.

Yes. Got you.

And that relationship is That's long done, it sounds like.

Yes, for the most part. I still deal with them, but I don't talk to them.

Okay. Where do we stand today? How much debt do you have?

So I have roughly $33,000 in debt. Four of that is credit cards. 29, 3 is my car. I'm roughly a little less than $10,000 upside down on it. I have no savings or anything like So it's worth about 19, and you owe 29? Yeah, it's really worth about 21 at the moment.

Okay. Is that for private sale?

That's wholesale. That's wholesale.

Okay. So I might be able to get a little bit more out of it. Oh, yeah, you will. Yeah, you'll probably get 25 if it's an individual.

I just don't know how to get out of this car quickly, because also on 22 and insurance on it is more than the payment on the car.

Yikes. Okay. What do you make?

I was whenever I purchased the car, I was making 50K a year. Now I'm making roughly 33. Oh, no.

Yikes. All right. Do you have anything in savings?

Eight months span.

No, he don't have Zero?

Zero. I have about 11K and a 401K. That's it.

Yeah.

No.

I'm not going to touch that. What do you do for a living? What are you doing for work?

Right now, I'm detailing cars. I could do it on the side and stuff. I just haven't really tried that.

So you work for a detailer?

Yeah, I work at a dealership at the moment.

Okay. You make 33K doing that, and you're allowed to do it on the side on your own? Yes. On nights and weekends? Yes.

Okay. And what were you doing when you were making 50K?

Selling cars.

Selling cars. Got you. Okay. Yeah, I mean, I would be making a career change and selling this car. Those would be my two biggest moves right now. And if you can do the detailing on the side all day, I mean, I would be doing that, too.

Could you do five cars a weekend at 200 a pop?

If I... It would be finding the customers to do that. I could do that. Time-wise and physicality-wise, it's just finding the customers.

That's easy.

That's the easy part. You go into any local Facebook group, neighborhood group. A hundred %. You just do one good job, and they'll tell people and say, Hey- Or go to a company.

I drive through our parking lot, and I'll see two or three details.

They're mobile. People, yes.

I mean, people pay for it.

You start posting everywhere, and you're reliable, and you show up, and you're professional. You will have customers out the door, and you can have recurring, Hey, would you sign up for next month if I gave you a, cut you a deal? And they'll go, Sure, come back next month.

Yeah. And, Cole, what I would probably do, too, to get out... I mean, this car, what you owe is almost what you make in a year. And so our rule of thumb is always about that 50% mark. So you are Way over that. I would be in a little bit of panic mode just to get rid of it. I wonder if you could go down to your local credit union and see if they'll give you a $8,000 loan or something. Take four of it, pay off the difference of the car after you sell it for $25 to an individual, and then you'll have $4,000 to buy a really crappy car.

Will the dealership give you the worst car on the lot?

Most of the cars that we sell here are over $10,000. That's what I've been thinking is going to my credit union and asking them for an amount and getting a car. So that is a viable option in this situation, is trying to talk to my credit union.

Yeah. Yeah. So I mean, I would, though, because I would much rather you have $8,000 that you owe versus $30,000 that you owe.

And then you won't have that payment anymore.

You won't have the insurance. What's the payment right now?

I have a pretty decent payment for at the moment. It's 570.

Decently large. And then the insurance is over there?

Decently large, yes. And how much is the insurance?

So the insurance was larger than that for a majority of it. It was like 600, but I gotten it down to like 350 and some change.

Okay. What do you mean got it down? Did you remove some things from your policy? No.

I found an insurance guy that shops my insurance around and. Good.

Okay. It's a broker. All right.

That makes me feel better. But that frees you up. Got close to $1,000, Cole. A month, if you can get this. I mean, great. You'll have the payment to the credit union.

But- Dude, I'd be putting business cards in every single person's car I detail. Yes. And say, Hey, I do this on the side. Would be an honor to help you out if you ever need detailing.

Yeah. Are there nice upscale neighborhoods close to you?

Yeah, there's plenty of upscale stuff in your guy.

That's what I would do, too. I would be, Oh, my gosh. Yes. All day. We always say, Rich people are scared of leaves. That's right. And they're scared of dirt on their cars. So go do your work. They don't like dirt, so go clean their cars. I mean, I'm not kidding. There's so much. So much you could do because you have the talent for it. You know what you're doing. Do you know what I mean? You're not just making this up. Anyone could go do it. You do it professionally, full-time. But you're like, Yeah, you're good at this. And then, are you able to step back in and sell cars and get some income back up?

I thought about it, but honestly, selling cars, I don't like the idea of It's putting people in the situation that I'm in.

Okay, that's fair. That's fair. Yeah, yeah, yeah. No, I hear that. Okay, well, we got to do something. We got to do something.

That was the reason that I left, is because I didn't have that point that I was going towards, and the work that I was doing wasn't my favorite. But I think I'm going to jump into the detailing thing. Another thing was that my girlfriend and I are planning to move to a different city in roughly a year or less, and that's why I'm I'm really like, Okay, I need to figure this out.

Why are you all moving?

She is planning on getting a full-time job in San Antonio, and I really don't have anything left here that holds me here. I thought maybe the opportunities in San Antonio would be just as good, if not better, than here.

Yeah. I actually just met a couple from San Antonio.

It just seemed like a good plan to see, take our relationship to the next level also and- It definitely put some pressure on.

You move out there with her. Does this thing better work out?

Yeah, for sure.

So good luck. And also, remember this, you go with you. So don't think that your life is magically going to change just because you entered a different city. The person you are now is going to go with you. So make the changes now before you move. Get yourself in a position that when you land in San Antonio, you're a different guy you are today.

I already hit the ground running. I appreciate that.

Dude, I would start detailing so much that I have to quit my job because I'm making too much doing it on my own. That's what I personally would do. These guys are making six figures that are doing it full-time. They're crushing it.

Yeah. Yeah, go on there.

If you break out into clay bar and ceramic coating, and you start getting to some fancy stuff, you can charge hundreds and hundreds of dollars per job.

And I think you have the skills to do. And men love their cars. They'll pay for it, too.

That's right. Not me, but Rachel would pay for it. If you've listened to me for more than five minutes, you know that being normal with your money is not a good thing because normal is broke. I want you to be weird. That's why I love what we're doing with Fairwinds Credit Union. Our friends at Fairwinds just launched a brand new Ramsey debit card, and it says, Debt is normal, be weird, right on the front. I love that because every time you swipe it, you're choosing to live differently with no credit card payments and no debt. You see, Fairwinds has been helping people like you ditch debt, faster, and build wealth for years. They're not trying to shove credit cards or auto loans in your face like the big banks do.

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Insured by the NCUA. Welcome back to The Ramsey Show in the Fairwinds Credit Union Studio. I'm George Campbell, joined by my friend, Rachel Cruz this hour. 888-825-5225 is the number to call to join the conversation. Andy is down the road in Nashville. What's going on, Andy?

Hey, not a whole lot. How are you guys doing today?

Doing great. What's your question today?

Awesome. So my question is, I recently purchased a home, and I've accumulated quite a bit in debt, which I know you guys practice against. So to try and mitigate this debt, I'm thinking what I'll do is I've got a house on the property and a shop house on the property. What I'm really looking to do is to move into the shop house and rent out the bigger house. But it seems like some of the people I've got that are close to me have advised against this. I wanted to ask the pros, and they listen to the show, so I'm excited to hear what you guys have to say.

Okay, so give us some numbers, Andy. How much are you in debt?

I bought the house for $250,000, put about $30,000 down. So I've got about $220,000, roughly.

Is that your only debt? Yes. Is just the house?

Yeah. Actually, I sold both vehicles that I had at the time, and now I'm driving around in beaters. So, yeah, that's my only debt.

Okay. It sounds like you had racked up some consumer debt, but it's just a mortgage?

It's just my mortgage, yes. Okay.

And how much do you make a year?

Roughly $130,000 a year.

Okay. And is the mortgage payment overwhelming to you, or you're just wanting to do this just to get the house paid off as quickly as possible?

So I make the house payment in less than a week. But the main motivator for why I'm doing what I'm doing or thinking of doing what I'm doing is Because I'm a truck driver and I just don't make it home a lot. I'm only home about two days a week, so I'm trying to... Okay. Yeah. I've comped some similar properties in the area that are being rented, and I could basically come out even if I rented that and stayed in the shop house. I could have my bills paid for it for free, basically.

How much is your payment a month?

It's around 1,500 a month. Okay.

Are you married?

She's got to be in the house? I'm not. We're getting there.

Okay. Does she want to live in the house once you get there?

She... So we live in the house currently, and she doesn't want to move out into the shop house, even though I think it's nice enough for us. I don't think that it's up to our standards, necessarily.

Yeah. I mean, you're not making it sound super enticing. I'll say that. You say shop house. It doesn't sound like a place where a person should live. So.

Well, it's like an apartment. If you could imagine a little studio apartment, it's something of the nature of that, but it's beyond livable. It's nice, in my opinion.

It's just a lot smaller. Okay. Well, and she's the girlfriend. She's living there for free, I'm assuming. Yes, ma'am. Okay. So I wouldn't want to live in the shop house. If I was living with my boyfriend and he's like, You got to go to the shop house because I'm rent this out, I'd probably be like, Great. I'm going to go rent an apartment. And she needs to do what she needs to do. There's some relational risk here. I don't want to make the decision based on the girlfriend. If it was your wife, I'd be like, Andy, Andy, Andy. But it's a girlfriend. She doesn't have any skin in the game.

It just feels like the juice isn't worth the squeeze on this. You don't need to do it. Nothing's on fire. You have a great income and a very reasonable mortgage. Why not just continue on? What's the actual financial problem?

Well, as far as the financial problem goes, it's just the fact that I've signed a 30-year note on this house, and I'm thinking of all the interest that I'm going to pay.

So pay it off early.

And I could be... Well, I thought about doubling up the payments when I live in the shop house, and then we could see each other more as well, because I'm only home two days a week right now.

Could you double the payments now while still living in the main house?

I probably could.

Yeah. The only downside, I would think, is that, are you wanting this house long term, Andy? It'll probably be with you for a while. It feels a little weird to have people living in a house for two or three different families or people, and then you go back and move back into it. Does that make sense? I don't know.

It just didn't feel like any of this was intentional. It's just like, Well, I could do this. And your family's steering you against it. Why? What is their big quam with this move?

They're steering me against it because they know that I can afford it as is, and no one in my family has ever rented out a property before. But the way I look at it from a financial standpoint is if I live in a shop house, double or triple up on payments, I can turn a 30-year mortgage into a three or four or five-year mortgage.

Sure.

And then I can be off the road at that point as well. So for me, it's making sense from a lot of different angles. Yeah.

I'm not mad at it. I mean, I don't think it's necessary. What George said, I don't think this is an urgent move. If you had called and I would have been like, Oh, you have a shop house? Great. Wait, you should live in that to rent out your main house. That would not have been my advice to you anyways. But if you want to do it, that's up to you, and you'll make extra payments. But you're just got people living in there, and then something's going to leak and break, and they're going to be calling you on the road. You're going to have to figure out, Okay, I got to get a plumber down.

It's not hassle-free. It's not just easy money.

Right. I think a lot of people think having a rental, it's passive income is what everyone says. There's a level of a responsibility you have that you have to be on call. You have to be willing to work with these people, whoever's going to live in there. But one thing I do like, Andy, is that you're not desperate, because then you can actually probably go through an actual You'll take worse tenets, make worse decisions. Yeah, an interview process and get some good tenets. You know what I mean? You're not in a rush. I would never suggest you do it. I don't think you need to, but if you want to, then do it.

I don't think it's going to break you, but I don't think it's going to be the sweet, sweet free money that you're envisioning either.

Okay.

Do you have savings in the bank? Do you have an emergency fund?

Yes, sir.

How much?

I've got roughly 35,000 Good.

You've done really well.

Yeah, Andy. Well done. I'm proud of you, man. Seriously.

Thank you.

I just think I would set a goal for myself where I still get to live in my own house, and then I make extra payments. And so figure out a way to do that. And I think you'll cut your mortgage in half or more just on your own volition without ever becoming a landlord.

Okay.

That would be my goal.

That's great.

And once you're married, if she's working, she'll add to it, too. She'll help knock down that mortgage if you guys are both working.

I don't know how she's going to like that idea.

Of her working in the future?

Is she working now?

She is a gym coach for little girls, and they actually went to the Junior Olympics this year.

That's sweet.

That was really nice. I love for her to follow her dream.

Do you think I can make the team?

Well, you could try. I think she'd be happy to work with you. She likes anybody. She's good with people.

That's sweet. She sounds like a keeper, man. Best of luck to you this decision. It's not an easy one. I wouldn't take it lightly, but I think you have a good game plan here of just figuring out how to do this without becoming a landlord for now. Good luck. Statistics show that half of Americans don't have enough life insurance, or they don't have any at all. I don't understand this, John. Why don't people want to take care of their family? They think they're going to die or something?

Well, I used to be one of those guys. I didn't even think about it.

One of my buddies said, Hey, the only reason to not have life insurance is if you hate your wife and kids.

I immediately He immediately went and got term life insurance. That's a gut punch. You're telling me for decades, Dave, I've sat across people who've lost a spouse, they've lost somebody important to them, and they don't know what to do next.

Me too. You're going to have a crisis here. You You got two options while you're sitting and talking to a young widow. She's concerned about how she's going to invest all this money properly and not mess this up, or she's concerned how she's going to eat tomorrow.

That's exactly right. These are the two options.

Take care of your dadgum family, man.

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That's exactly what it's supposed to be. It's saying I love you to your family.

Term life insurance. Jeff Zander and the team at Zander Insurance makes it easy and affordable. I've used them personally for 25 years. They're the only people I trust. Go to zander. Com or call 800-356-4282. Jack is in Dallas up next. Jack, welcome to The Ramsey Show. Hi, how are you guys? Doing great. How can we help today?

I'm wondering how to pay off debt with my fiance.

That sounds dicey. Whose debt is it? Yes.

Well, a little bit of mine and a little bit of hers. I have a car loan, and she has student loans. She'll be graduating from law school in May of 2026.

How much is that going to be?

I think about 60,000. See, part of the thing is I don't know exact amounts. I have rough ideas, and I've seen it in the past, but we haven't actually sat down and talked about it since we've been engaged.

Okay. When's the wedding?

March 21st. We're actually in premarital counseling with our church right now, and we're doing the finances topic this Sunday.

Awesome.

There you go. So fun. Okay. So hers, you don't know how much she'll owe in law school debt.

Exactly. I imagine it's going to be around 60,000.

Are you saying 50 or 60? Sorry. 60. 60. Okay. And yours is how much?

32 on a car.

On a car. Okay, perfect. How much are you making right now, income-wise?

About 110. 110?

About 110,000. All right. And when she gets out of... I'm assuming she's not working right now.

No, she has a part-time job, but just to pay grocery and gas.

And she will graduate, you said. Sorry.

May?

Yes. Next May. Okay, so she'll be in school for two months while you guys are married, graduate, and then she will... How much do you think she'll make coming right out? Does she have any idea? Ballpark?

We're not sure. I've been ballparking like 70,000 or so. Okay.

Yeah, that's great. Well, I mean, the answer is really easy. As of right now, Now, you just be paying on your debt and try to get your car paid off. It'd be a fun game to try to get it paid off by the time you guys get married.

And the goal should be not going to any more debt.

Yes. So no debt for the wedding, no debt for honeymoon, all of that. But you just keep everything separate until you officially get married. Then when you guys have the wedding in March, come back from the honeymoon, then you guys can attack this as a couple.

Combine bank accounts, combine income, combine the debts, do the debt snowball method. Just whatever the smallest balance is left, we're going to attack that and make minimum payments on the rest. You guys will plow through this. With her new income and your fantastic income and under 100,000 of debt to pay off, you'll get through this in six months.

Got it. Do you think I should deploy? I have a little bit of a cushion. Should I deploy any of my excess savings into the car right now? I guess just pay as much as I can on the car.

Yeah. How much do you have that you could liquidate?

Let's see. I got 37K in retirement. Eight of that in a Roth. And then I have 12K in various cash savings right now.

Okay. So we won't touch retirement, but anything that's cash or non-retirement, you could.

Hold on. How's the honeymoon and the wedding getting paid?

That's a good question.

Well, So her parents are paying for the wedding. I am paying for the honeymoon. And so some of that savings will be going towards the honeymoon. So I guess really, I have 5K in savings. I am also living rent-free with my grandparents right now.

Oh, nice.

Oh, that's great. So you You could really stack away cash fast. That's what I'm thinking. Could you pay off this car before the wedding? If you got intense.

I don't think I could get all the way there, but I could probably get it down to like 15 or less, I would imagine.

I mean, you're making like what? 7k a month take home?

Basically, 67, 68. Yeah.

Okay, and you don't have any rent. So could you throw 5K a month at the car and be done in six months?

If I tried, That's really hard. Yeah, I struggled with lifestyle inflation once I got the job because I've been making the same income, basically, since I've got out of school.

Okay, this is what I was getting at, Jack. I find that when people are living rent-free, they tend to get comfortable, and their spending tends to go up, not down. So you just trade what you would have paid in rent, and it disappears into DoorDash and whatever else. So I would implore you, like your life and marriage is on the line, to attack this car loan so that when you guys are married, you have freed up that car payment, which is how much a month?

Five fifty die.

Boom. So now we have an extra 600 bucks of horsepower to throw at these student loans on top of our now dual income come May.

For sure. Yeah, get aggressive with it, Jack. I mean, honestly, because you all are going to be living that same lifestyle besides just rent, because I'm sure you guys will rent somewhere, to pay off these student loans. So you getting in the habit of being disciplined and learning to say no and all the things will go right into marriage. And you guys together, you live on... We say beans and rice, rice and beans, and then get the student loans paid off. And then you guys are making almost 200K a year. Oh my gosh, with no debt.

And then her 60K of student loans is knocked out super fast.

And it's going to be easier to sacrifice right now, Jack. It really is. When you guys get back from the honeymoon and your friend. It's just going to be this whole new exciting part of life. Right now is when I would do it as much as possible.

This is as low as the stakes are going to be. Life is only going to get more expensive. So while you're still, quote, unquote, single. I would use this time you have while she's in law school, super busy. You get busy, too, paying off that car loan, my friend.

Get an extra job. I mean, yeah, you all just go crazy and get it paid off. You can do it. How old are you?

24.

Oh, my goodness.

This guy. And then Jack. Yeah. And then you said you probably will have around 5,000 in savings that's not going to the honeymoon. Throw that at it. Just get this momentum going.

That knocks it down to 27, and now we start throwing 5K a month. You're done before the wedding, my friend, while still having enough to cover the honeymoon. This is a best case scenario.

All right. Thank you, guys.

Boom. Congratulations.

So exciting.

Excited about March. What a great month. Thank you. What a great month to get married. Is that when you guys are married? No, December. Okay. That's what I thought. I don't know. It just feels springy and new. I don't know.

It's great. Reburbed. Earth. Beautiful. All right. Emily is up next in Atlanta, Georgia. What's going on, Emily? Oh, your phone's all busted, Emily. Can we hear you?

I can hear you. Can you hear me?

There we go. Yeah, we're good now.

I'm so sorry. Thank you so much for taking my call.

Sure. What's your question?

I have a four month old son that we have started a 529 for. But I was speaking with my financial advisor a little bit ago, and she recommended a UTMA or UGMA account. I was just wondering what your thoughts were on possibly putting some money in a UTMA account, to pay for maybe their first car or something like that, or if I should put all that money towards SPAR 29.

Awesome question. How old are the kids?

I just have a four-month-old son.

Oh, sweet. Okay, so we got plenty of time. This is the best time to open up an investment account. Here's my thing, and this is not a knock against your financial advisor. I'm personally not a fan of the Upma and Upma accounts because that money is legally that child's money. So you lose control completely. Okay. And there's no way to restrict. And there's no way to restrict. Yeah, once they turn 18 or 21, depending on the state law It's basically like opening an investment account in their name, but the Upma is the umbrella that covers it, shields it from them until they're 18.

So what George is saying is if you start investing, investing can be crazy. Over 18 years, if you start throwing like 100, 200 bucks in a month, I mean, that stuff can just... It could be a lot of money for an 18-year-old. George is just saying, caution, because you could be handing over, I mean, tens, hundreds, thousands of dollars. Who knows how much? Yeah, depending on how much you put in there.

And how much growth.

But yeah, so for a car and stuff, I probably wouldn't, honestly. Now, mom and dad, they did for us. When we started working and actually could file a tax return and all of that, they opened up a Roth IRA.

Yeah, once you have earned income, it's great.

Yeah, and that was more when we were teenagers. But that thing is so helpful because it's crazy. Even just me opening that as a teenager versus even my husband when he opened his, when he was 23 starting to work. Even that, you're different. So there's ways to definitely set them up well to get some things going, like a Roth or the 529 as well. But things for them, purchases a car and that thing, Emily, honestly, I would probably have them involved in it. I would just have a high-yield savings account, and you guys just cash flow it when the time comes.

What I would do and what I am doing, Emily, for my kids, is I'm going to do a 529 plan for each kid, invest there. Then if I want money beyond that for, let's say, a wedding one day, a house down payment to give to them, I'm just going to do that in a non-retirement brokerage account that I have control over. That makes me feel a whole lot better than handing an 18-year-old.

Then you can just gift it if it's not beyond the gift deck, right? Exactly. Yeah, you can gift it to them, and it's not under their name at 18.

So that's a safer bet. I like the plan of 529 for college. Let's make sure we get that done.

Are you prepared for Mia and Henry to just be crazy haleians that you're like, I can't give you any money. I don't trust you, 18-year-olds. That's my fear. Is that what your fear?

What kids will I raise?

What are you going to raise, George? Who are they going to be?

Likely, they'll be so frugal. They'll be like, Dad, that's so much money. I'm I was like, I raised you right, kid. I raised you right.

It's a great question, though, Emily. You're a good mom to be asking for a four-month-old.

Especially for a four-month-old. That kid is going to be unbelievably wealthy. That's changing your family tree. Well done.

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Hey, guys. How's it going?

Great. How are you?

Good. A simple question, but I'm assuming there will be more probing necessary. I live I'm in a county where the housing costs are pretty high. My wife and I have closer, actually, to 25 % saved up for a down payment. But if that was to happen, it would have to be a 30 year instead of a 15. I know the show enough to know 15 is going to be what we're directed toward. But I'm wondering, how hard and fast is that rule thinking of certain areas where a 30 might be more practical, especially to get into the housing market?

Well, I'll start off with this, what we always tell people, and you're from California, and we usually end up saying it to people from California, that you're not It's from math. It is what it is. From a philosophy standpoint, our advice does not change because of where you live. The math is the math. So the 15 year to the 30 year, it is what it is. I would say, yeah, we will always stick to that 15 year just to lock you into a system that's going to get you out of debt as soon as possible. Now, does everyone follow that, Patrick? No, they don't. But I would not steer you any other way. But again, is it something that people do? But follow Ramsey?

There are worse sins. I don't think it's going to ruin your financial life to get a 30 year. But again, the amount of people who I find who actually pay their a year off, like a 10, very slim. The people who get a 15 year and paid off in 15, 100% of the time, they at least do that, if not way earlier. In our Millionaire study, we found that the average millionaire pays off their home in 10 years. That wasn't necessarily their first home, But they paid it off in 10 years. And the average baby stepper pays it off in a little over seven years. And so there's just this discipline and intensity going, I'm just going to do it in a way that limits how long I'm in debt against my human psychology, which says, just lower the payment, make it easier on me. So my encouragement to you would be, how much more would it take for you to do 30 % down to get that payment reasonable on a 15 year? Have you done the math on that?

Yeah, close to. I think so the majority of it is coming from IRA that we wouldn't be penalized taking it out other than capital gains taxes. If we just let it sit for a little bit more, I could imagine doing that. But yeah, and it would lower the monthly. That is correct. But it spikes up such that, I don't know, the 15 year just freaks me out. I'm content renting for the rest of my life in this county. That's not necessarily a given. It's just I feel like a lot of people end up there.

Well, no, it is expensive. I mean, you're- Yeah, you're in Southern California.

Well, in this market, it makes a lot of sense to rent right now comparatively to buying a home. And so I think that's what you're experiencing. But you're saying, is it your wife that's like, Hey, I really want my own home. I want some stability here?

Yeah, I think so. Well, I should know so. Yes, it is.

Okay. And the other thing, I want to make sure that we have the parameter down. Our teaching is 25 % of after-tax income, but that's before other deductibles like your health care premiums, your 401(k) contributions. And so that might help your math out in a good way. If you just take, Hey, here's our gross income, then here's net income after taxes, and then you can subtract out any other premiums that come out.

Yeah, that makes sense. We just went through a potential purchase that fell through for HOA reasons. I think I found that we probably could afford a little bit more than I thought. It just, I don't know, big purchases scare me. We're just about done being completely out of debt. We just have a car, and we have enough in the savings to buy out the car. We're moving right now to an apartment because the housing opportunity fell through. And so I just I want to keep the cash just until we move for any unforeseen- So what's left on the car loan? Issues. 19, five, and we've got About 35 in savings.

But that 35, you're saying is your down payment fund or is that separate?

No, that's completely separate. That's all liquid just between the money market and our own, just not accruing any interest savings account.

Got it. So if you paid off the car today, that would leave you with 15K for your emergency fund, and you could beef that back up over the next few months.

Yeah, correct.

I would do that. I like that plan.

Yeah. My only concern is I would like to have it once, and we're looking to move in two weeks. I would like to have it, and then once we move and get settled in, then pay it off right away. I'm looking to pay it off probably within three or four weeks. I just want to make sure that it's there while we're moving. I don't know, is that over concern? What's going to cost you $30,000 during a move to an apartment? Well, they are running credit checks and things like that. So that's one of the things. We're in the application process right now. So I wonder if it would look a little bit free from there.

If you want to make sure you have enough for- Well, usually it's last month's rent and security deposit for most places. Which is plenty.

They're not going to surprise you and be like, JK, you owe us $20,000 today. It's just not going to happen. So I think a lot of this is a little bit in your head, a little bit of like, I feel this false sense of security having this pile of money over here.

And again, just like the 15, if you want to wait four weeks to buy off the car, that's fine. I think the idea is that we're moving forward. But also, I don't want you to get stuck in a reality that's not reality either. So I would just challenge a little bit of that. But I think you guys are on the right track. You're doing fantastic Fantastic. Yeah, with all the money saved from down payment.

How much is saved in the down payment fund?

Right now, so the inner workings of it is it's an inherited being transferred into an IRA. So before I promote myself as really diligent, a lot of that was helped out.

Okay. Got you.

Yeah. So in terms of the- How much will you net from that once you cash it out after taxes? Yeah. And after we're doing the slow transition so that it doesn't change taxes, stuff like that. Probably within seven years or so, there will be, my guess is around between five and 550 into the non-inherited IRA.

Okay, but you're moving it slowly to avoid getting hit with huge taxes.

Yeah, and we don't need any of it right now, so this seems like the best option.

Well, you need it for a down payment. So how much are you going to be able to put down if you bought a house within the year?

I mean, that's the thing for me, too. I'm like, Man, I would just love to get as close to paying cash for a home as I can. We're already investing in retirement as well. So if we completely empty it out, we'll still have retirement left Dover that we're continually building, and then we'll have the asset of the home.

Patrick, I'm confused. You have your savings of 35,000, and then you have this inheritance that's coming. It's not here yet. So what were you all going to purchase the home with two weeks ago that fell through?

We were going to purchase that. Yeah, so I'm probably not being super clear. The inherited is currently in process and has been of moving to a Roth.

So how much is in it right now?

In order to avoid the taxes. In the inherited or in the Roth?

The one that you would have access to to put a down payment? Yeah. Yeah.

140.

So that was going to be your down payment?

Correct. Got you.

That makes more sense. What is the house going to cost that you're looking at? What budget?

Yeah, Yeah, probably. My ceiling is 750, but it's anywhere around there. I mean, my hope would be somewhere around 550 to six, but it's tricky in this county.

Yeah. And I'll say, real estate looks a little different everywhere, but for the most part, it's a great time to buy. From a buyer's perspective, it's more of a buyer's market right now than a seller. So even, Patrick, if you guys pump the brakes for another year, 18 months, and got more of that inheritance, all of that to give you some cushion, I wouldn't be in a rush to buy a house, but I would be more on your wife's side that you want to be a homeowner. I think that's part of your financial plan overall. Right now is the best time to get in if you're going to get in, if you're going to get into the market.

I wouldn't do it tomorrow, and I wouldn't wait six years either.

No.

So I'd find a game plan that works for both of you and just go hard at it. And I would follow the baby steps. Right now, it's a little bit all over the place. I'm doing four, and I still have two, but I have three already. And so I would just follow it through all the way, man. It's going to give you a lot of peace. Pay off the car. Pay it off today. You can do it. Buying or selling your home is a big deal. With all the click bait headlines and conflicting data out there, it's hard to know what's really happening in the housing market. We're here to make the latest trends easy to understand. Median home prices, that's the middle, dipped a bit last month to about $426,000, a typical season shift as we head into fall. And buyers have more options and negotiating power while sellers face some more competition, and houses are sitting out there a little bit longer. Mortgage rates dip slightly to five and a half % in September, which gave buyers some breathing room. But since rates are unpredictable, the best time to buy is when you're financially ready, not when rates drop.

Just like we say, hey, don't time the stock market. Don't try to time the housing market because you just don't know what's going to happen. So to learn more about the housing market trends and get free tools to help you buy or sell with confidence, go to ramseysolutions. Com/market or click the link in the show notes if you're listening on podcast or watching on YouTube. Sam is in Atlanta up next. What's going on, Sam?

Hey, good afternoon. I appreciate you guys taking my call. Quick thing. Sure. Well, I started a construction company about a year and a half ago, and it's been rough going. And since I'm running that company through bad business partners, I I found a business about $70,000 in debt. And I carry, on top of the $70,000, another $40,000 in debt. The business is bringing in about $10,000 a month. With that $10,000, I'm using about $5,000 to $6,000 per month to try to pass in this credit card debt that I've incurred with the business. And I'm at a point now, because I had a work truck, I had paid off, but it just took a crap. So I'm at this point now where I need to buy myself a new vehicle to try to keep this business going, to try to pay off this debt, or do I just close the business, get a job, look in construction with my experience, where I can make maybe 120K a year, and then just use that to pay off my personal debt of the $40,000.

Oh, that sounds good.

How easy is that to just go get a job in construction, make 120K?

With my experience, it's quite easy. You see there's a lot of skills that are lacking in construction. There's this very big need in construction for talented individuals. And I have been in the industry myself for about 17 years.

Cool. And Is there any hope for this business to be making 20K a month, in the next few months?

In order for me to make 20K a month, I would need to hire on some other individuals that I'm going to carry on the road.

So I guess why is the business struggling right now? What's the cause of that?

The cause of that is, during the last year and a half, when we were in the company, with being a novice to owning a business, I got bullied by some big general contractors. And what I know now is that they breached their contract, made me take about a $70,000 loss over the course of seven projects.

So You got hosed on these deals?

Yes.

All right. And is that going to happen in the future? I guess I'm wondering, is it time to close up shop because you're just tired of it? It's stressful, and you'd rather just work for someone else and collect a check? Because that's great. Or is there a room for this business to actually scale and grow and help you clean up the debt faster?

There's a lot of room for the business to grow. I know I'm much more well adapted today than I was when I first started the company. It's just this debt is gnawing at the back of my neck because my wife and I, we've been in debt for years, up until having this company.

Okay. So you're in a tough a lot right now, and it's hard to see your way out.

Yeah, and the business is bringing in 10K right now. So basically, you're bringing in 120, you'd be making 120. But when you own the business, you have other expenses. You got taxes, you got to be thinking through, you got to have the supply in the truck and all of it.

Are you paying yourself net? Are you getting 10K gross from the business? Is that what you're paying yourself?

That looks correct, yes.

Okay. That's the profit that you take home?

Yeah.

Okay. I would be applying and seeing what's out there, see if you can actually get that six-figure construction job before I close it down, just so there's not a gap in income. Yeah.

What do you want to do? What sounds enjoyable, what sounds hopeful to you? Is it an easier mental load to say, Oh, yeah, I could just go get a job and grind it out and pay this off? Or is it more, does it feel better to still own the business and have a little bit more control over your destiny?

I would really like to run my company. It has less to do with the the road. I just feel like I'm at a bit of a pinch point, because the money I'm bringing in with the business, just about, if not more than half of it, goes directly to trying to pass off this credit card debt.

Well, the thing is, that's not going to change if you go get another job tomorrow, and you make 10K a month. You're still going to need to throw five, six K a month at the debt. So how much of this is going to change? If you were to close the business tomorrow, would you be able to sell assets tied to the business? So client list, anything like that, that would help you out? Yeah. Okay, so how much could you sell? What could you net after selling all the stuff, the pieces of the business, whether they're physical or otherwise?

I can net around $40,000.

Okay.

Well, that's good.

So that gets you a ways in to this debt payoff journey. So that changes it for me. I'm going, All right, well, you can always start a business later on in life, can't you?

Yeah.

And closing this is fairly simple. Like, are there people working for you full-time, or is a lot of just 1099 contract work?

It's only me.

Okay. Yeah. I think here's the I don't want you to look at this like, Well, I failed. I'll never try again. Because we believe in small business, and we believe in people like you. But there's also nothing wrong in hanging up the hat right now to do what's right for your family, and clean up a mess, and then restart just with cash, debt-free emergency fund, and move slow into that next business.

Yeah, and cash flow it as you go. If you go back and restart it. What does your wife say, Sam? What does she think?

She wants me to stick with the company.

She does, yeah.

What's her reasoning?

We're both pretty determined individuals. We're both the oldest child, and so we've always just... We've never really had a network of people that support us. So we found ourselves being very, very self-reliant. And just because things... Her mentality, or our mentality, it's just because things are hard right now. It doesn't mean that they'll be hard forever.

Yeah, and I agree with that. I have a question. When you said you were throwing 6K of what you're bringing home at the credit cards, is the credit card part of the 70,000, or is that part of the 40,000 of other debt?

So that's a good question. So the 70,000 is the business debt under the business credit cards. And the $40,000 for the debt is my personal debt from the credit cards that we've used to try to pay groceries, pay gas.

Okay. Are you guys able to keep your household afloat with 4K a month?

Yes.

You can. Okay.

And another question is, are you going to go into debt next month to keep this business running?

I don't think so.

Because so far, it sounds like you've been using credit cards to keep your personal life afloat and keep the business afloat. So have you stopped using the cards?

Yeah. So what happened there is I was running these jobs, and things were going smoothly, and we were paying off the cards as we were going along. And then when everything went south, that's when we got stuck with the debt.

Yeah. Sam, does your wife work at all? Is she bringing home any money?

She does. She's a director for a marketing agency.

How much does she bring home?

About 120.

Oh, my gosh. Okay.

You buried the lead there. So you guys are making- Yeah.

Well, a part of me would say, Sam- 200 plus thousand dollars. If you guys want to stick with the business, but you have to have some hard values around it. Even if you have to go get a truck, you said, We're not going into debt for the truck. We're going to have to figure out a way to save up and pay for the truck. But if you're I'm doing 6K at this, I'm like, You guys can be out of the business debt in 11, 12 months in a year, and then throw a bunch of her money at the personal 40,000. You guys could be debt free in two years.

Okay.

Where's her 120 going? What are you guys doing with that income?

That goes to just pay our 200, about it.

I'd figure out how to live on 4K, and I'd take $120,000 salary, throw it at this debt, and then an extra $6,000 that you're bringing in. If you guys tighten some stuff up, Sam- You guys need to get on budget.

I think you guys have been spending like you make $240,000. Yes. Start acting like you make $50,000.

Yeah, and then you can keep the business, but cut up the credit cards. Be done with the debt when it comes to the business, Sam.

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Download it for free today in the App Store or Google Play today. Welcome back Do The Ramsey Show in the Fairwinds Credit Union Studio. I'm George Campbell, joined by best-selling author, Rachel Cruz. The number to call is 888-8255-225. Samantha is in Honalulu, Hawaii. What's going on, Samantha?

Hi. Thank you so much for taking my call.

Absolutely. What's your question today?

My question is that me and my husband, we completed F2 last year. We're currently debt-free. We don't own a home. We rent here in our home state. And we have two little kids. Combined between both of us, we make about 70, 75K a year. But every month, we're currently on Baby Step 3, every month, we We're only living with $600 less. And we currently have food stamps, we have WIC, and we're just debating if it's better to move to the Mainland to try to buy a house, get more income, or if we should try to just suffer it out here because this is where we're from and where our family's from. And we don't want to take our kids away from this, but at the same time, we're like, what life are we living if we're struggling?

Yeah. So Where's all your money going every month? How much is your mortgage?

Oh, so we rent here in Hawaii, but it's $1,500 a month. We are in a one bedroom. We all have rooms there.

Hey, Samantha, can Can you adjust your phone? It's popping. Are you able to take it off speaker, maybe speak a little bit- Change it up for us.

Okay. I'm not sure. Is this better?

Not quite, but we'll try it out. So you have 1,500 in rent. What's your other big expenses? If you had to list out in priority, like, Here's the biggest one, here's the next biggest one.

So our daughter goes to private school. That's 1,100 a month. We also pay $900 a month for babysitting. And we own our car, so we don't have a car payment or anything like that. But yeah, that's pretty much it. Maybe just food and a little bit of lifestyle. But for the most part, we're at the beach, so a lot of the stuff is free.

Wow. So you're on food stamps, but you got a kid in private school. That's pretty wild.

Yeah, just because the education here isn't the best, and because of her age, she doesn't quite qualify for kindergarten yet. So for her to be in school, she had to go into private school unless we were going to have her at a babysitter.

Like a daycare?

Oh, yeah. Sorry. Like a daycare. Okay.

And your other kid's in daycare. And so altogether, it's two grand. Yes. Wow. What What's the day care cost?

Honestly, I'm not sure. I didn't look into that.

And then what are each of you making? Because it feels like you're in a very high cost of living area. There should be more than 75K if both of you are working full-time.

Well, I work part-time as a flight attendant, and then my husband works full-time.

Okay. What's causing the part-time flight attendant? Are you at home with the kids part of the time? What's going on there?

Yeah. I mean, I try to be home as much as I can, so I don't work as much as I could just because I feel bad if I'm gone for more than a couple of days, more than two or three nights a week.

Well, I think we're going to have to make some hard choices here because you're going to feel bad living in a one bedroom apartment, living on food stamps. So we have to make some... There has to be some give and take here. So if that means you guys have to move and you can keep your income and move to a lower cost of living area and you have a public school- Yeah, and Hawaii is one of the most expensive areas.

But to George's point, usually, if you offset that, I mean, you think of New York, the Bay Area, Southern California, usually, income's for the most part, you know. For a family, for a household. You're going to make more naturally in that job market. And so, what does your husband do?

So he's a furniture installer. Technically, it's like windows and glass, furniture. Yeah, he works for a small company, a small private company. So he's applied to change his career. But at the current moment, he I really haven't gotten anything back because he doesn't have too many trade certifications or licensing. So, yeah, he's listening to some of the trade schools here. Okay.

How much hits your- Sorry, it's getting real How much is that here? Real quick, how much hits your checking account every month, Samantha?

Roughly about 5,500.

5,500. Okay. Well, what I would tell you guys is what you gave us was about 3,500. So you guys have $2,000 to spare, and that's to pay- Insurance, food, gas. Everything, yes. Everything. So something's got to give, Samantha. You guys can't... Like you said, you're not making any progress. And so your rent is not completely out of control, though.

I'm like- The rent is not the problem.

No.

It's the mix of the $2,000 going to the kids to get them in school daycare.

And part-time work.

And the part-time work. Because if we could up the income, we can solve some of this problem. I don't know that we have much of a solution here for the kids because they're going to be in daycare if you're working. So I think we got to get you working full-time in order to solve this.

How much do you bring home a month?

Right under 3,000. Like, 2,700?

Okay. Okay. Well, because- Still more than the day before. It's 2,077 by 700 bucks.

Yeah. But Where would you guys move if you were to move tomorrow?

Probably to... The only other state we have family in is Colorado. I think, too, because we're from this state, we don't know too much about the seasons. I think that's probably been our biggest barrier or our fear about moving, like driving in the snow or something like that. But no, I get what you're saying. I think it's just upping the income to make the sacrifice or to try to move.

Yeah, there's no magic wands I can think of here to go, Well, this is the problem. I mean, the kids are young. They need to be in a daycare situation unless you decide to stay home. But again, that doesn't solve the main problem here. You're still going to have a few hundred bucks left over if you're lucky. I think we also need to look at the lifestyle choices and make some sacrifices now until husband can get a better job, maybe you get a better part-time job or start working full-time, then you'll start to get some breathing room.

Yeah, because if you're paying $2,000 for childcare full-time, but you're only working part-time, is there some shifts there just to save some money, just to get any level of traction? But yeah, from being where you guys are from a high cost of living perspective. I think the number one thing is going to be income, Samantha, for you guys. It's easy for us to be like, Yeah, just go ahead and move. But you both are from there, which I guess assumes all your family's there. That's a big deal. You know what I mean?

Hawaii to Colorado is a pretty drastic change. And moving isn't free. That's going to cost you just to make that giant move. And you need to make sure you have the income to support Colorado, which not a cheap state to live in if you live in one of the major cities.

I was going to say Denver is expensive.

Salt Lake City is Yeah, that's in Utah. I know. The whole area. It's like anywhere you go out there, these major cities, you think, well, it's the Midwest. Those areas are wild.

Yeah. No, 100 %. But yeah, that $2,000, the extra that you guys have, and when I say extra, There's still stuff to be paid with it. But I would just, I mean, hunger down as much as you guys can. You know what I mean? Where can you cut costs and live in the reality of the numbers that you're in? I think that's the biggest thing. And you guys are doing that, but it still sounds like you're struggling, which means to me, a lot of it is either some of this 2000, who knows where it's going. But the biggest gap to me is income. If you're both working, I mean, full-time and a part-time, I would be maybe looking for something else.

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Today's question comes from L. C. In Georgia. My mother-in-law gifted silver coins to my husband and I several times over the last few years. We sold the first batches to pay off our debts. She made us promise to keep the last and final batch for when the... Sounds like me, for when the dollar has lost its value in a post-optalytic world. Wow. Currently, Silver Spot prices are doing very well, and I've been pushing my husband to sell so that we can fully fund our big emergency fund and start investing. He does not want to disobey his mother, but he also is extremely worried about our retirement years. We are in our late 40s and have less than $100,000 in retirement. What should we do?

Well, I'll tell you this. There is a much higher chance you will retire broke than there is you're going to need to cash in your silver in the Apocalypse. That's just one man's opinion. I can't prove that to you. I think Me Mom was very sweet to give these silver coins. But you're grown adults. You get to choose what you do with the money. And at the heart of this, she's trying to help you guys. That's the heart of it. She wants to make sure that you're taken care of, that you've got the money you need when you need it. Right now, you need it. This is going to help you to start investing so that you can build exponential wealth with compound growth instead of hanging on to your debts, not having an emergency fund. So if it's me, I'm going to say, Sorry, mother-in-law.

Well, and I would say, I don't know if She's given them to you yet because she said she gives them to you every several years. That maybe if she says, If I give these to you, you cannot sell them. And I would probably just, out of respect, say, Well, if this is a gift, we may choose to do what's best for our family if we need to. Do you know what I mean? Maybe there's a nod to... I don't know if you owe someone that. I don't know.

I don't know what denomination they grew up in and what they think is going to happen Apocalypse. That's a whole other story. Where are they at on the left-behind spectrum?

Pre-trip, post-trip, where are you? I think you're an adult, and I don't like a gift with strings attached. Do you know what I'm saying? It just feels weird that she's still controlling the gift after it's been given.

We don't know how much this is. And she did say it sounds like they have the final batch. They just don't want to sell it because they promised her they wouldn't do it until the end of the world. Which at that point, how good is your silver coins? What's that What's that going to do for you?

That's what I always feel like with gold people.

You need like fuel and ammo and food. Yes.

You're going to go for supplies and actual things, not like little bags of coin. I'd be like, I need a deer. She needs to watch more movies. Someone shoot a deer so we can eat.

If you get some deer meat in a deep freezer with a generator, you'll be way better off in silver coins. That's what we need. Where's Deloney when you need him? He would crush this one.

He would love it.

He'd be like, I'm with mother-in-law.

I always think if you had to have a small group of people to survive something, if it was like end of the world, who would you have? Because they have to contribute. Oh, yeah. Do you know what I'm saying? Yeah.

So you're saying I'm useless?

I would say you and I are useless, George. I don't know.

Does entertainment value camaraderie? Does that mean nothing to you guys?

Just a good community. Just keep the vibe good.

Keep the morale up. That's a big deal. Deloney brings the deer meat. Ken will play pickleball. I think Jade and Deloney would be our saving grace. I think they would help out a lot. Oh, man. That's so fun. Oh, man, not good. That's so fun. Thanks for the question. Ryan is in Charlotte up next. What's going on, Ryan? How can we help? Ryan, are you with us?

Yes. Can you hear me now?

Yeah. What's your question? Okay.

Awesome.

Well, I appreciate you taking my call. I hope you guys are doing well today. Do you want me to get straight to the question, or do you want a little bit of a backstory that leads up to the question?

What's your question? Let's just hear that first and foremost.

I am about to be going through a separation.

Oh, I'm sorry.

Yeah, I appreciate it. My wife doesn't want anything to do with my business. She wants a payout of $150,000 to walk away. And I have a couple of different options. I'm not sure what's the best. I can give her all of my IRA, which will cover most of it, and then I can refile the rest.

How did she get to $150,000? Was Was that within... Have you guys gone through lawyers and attorneys, and that's after the assets are divided? Where's this number coming from?

We have, yes. That's basically half the equity in our home and property.

Got you.

She started out at wanting 60, and then she wanted 80, and then she wanted 100, which is fine. We're married, she's entitled to half, regardless of the situation.

Who's keeping the house?

I am trying my best to because the land was given to us by some of my family in which we turned around the following year and we built a house on it.

To get her out, the 150 is the equity, her remaining half of the equity in the home? That's correct.

Okay. That's correct, yes. Of course, the land ties on to the rest of our family's property.

Sure.

I don't I don't want to sell it, but I'm afraid I may have to if I don't give her my full IRA, which it still won't cover- Could you take...

Is the house... How much is left on the house to pay off?

I'm at 145.

Okay.

Have you considered a cash out refi on the house to give her the money?

I have. The only issue with that is I have I recently sold a company that I started back in 2019, and I've started a new company. From what I've been hearing, I'm going to have a hard time getting a big refi because I don't have- Proof of income for a long enough period of time.

How much cash do you have? If you liquidated anything non-retirement, how much could you come up with?

I've got a couple of pieces of equipment. And without touching our savings, which she also wants half of that. I could probably come up with $45,000, $50,000, but then that's going to hurt me from continuing on the I don't think it's going to be anything on business with- On the business side?

Right, yeah. Yeah. I mean, it just... To see, even if you don't have fees with this IRA transfer, if you do a direct IRA transfer, that's going to be way better than just withdrawing that money. Yeah, I've- So she's wanting straight cash, don't do that from your retirement.

Yeah, if she wants straight cash. She don't really want it any other way.

Because that's going to crush you. That's like taking out a loan at 35 %.

Exactly, yeah. I've got 113,000 in my IRA. I know it's not much, but After everything, she'll be getting like 72.

But then you're restarting from zero and losing all of that growth on 100. If you plug that into an investment calculator over the next 20 years, you're not giving her 113 grand. You're giving her a million plus.

Yeah. My guy says in 30 years, by the time I'm 66, it'll be roughly about 2. 3 or so.

Exactly. I would be working with your attorney to fight against this and make sure that we do this in a smart way that doesn't destroy you for the rest of your life, because it sounds like she's trying to do. I don't know.

Well, no, she's not being like that.

She just wants half of it.

Yeah, she's not being mean about it or anything. She just wants half of the- Right.

I mean, that is the divorce.

In that case, I would sell the house, man.

I know. I know it hurts. I know, Ryan. I'm so sorry.

Financially and mathematically, it makes way more sense to let go of the house and the land.

The sentimental values, tougher, for sure.

Yeah, it is. I've definitely thought about that, and I'm not 100% against it. I just know that when I do sell that property- How much do you make a year? With the new business, which I've only been doing for a few months, I've been netting like $10,000 a month.

Okay. I would also see if you could work out a structured pay-off deal.

Yeah, that's what I was going to say. You don't want to go on forever and ever paying her, but I wonder if there's ways that you can liquidate some stuff, give her a little bit of a lump sum, and then be paying her some. You know what I don't really mean to be able to do both if you can. But I would sell the house before cashing off the IRA, just from a mathematical standpoint. But that's really hard, Ryan. I'm sorry. That's the heartbreak of divorce. It's a relational, obviously, complete guttet. It turns into a messy business transaction. Yes. And then all of it. So sorry, you guys are going through this.

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Thanks for taking my call. So my wife is She's considering a career change, but we've been trying to decide if it makes sense and if it's worth it. She makes about $85,000 now working in project management for philanthropy, and she's interested in going into midwifery. It would mean her potentially not being able to work for a couple of years, so lost income, but she potentially would make more on the other side of that.

Where are you guys at financially? What do you make?

So I make about $205,000 a year. We're in baby debt, four, five, and six. So we have six months saved and we don't have any debt. We just bought a house about a year ago, so we don't have a huge amount of equity in our house. So it does feel like it would be a stretch to make it on one income for that time and tightening the budget. And I need to sell some stock and things to be able to cash flow it. But it does seem possible. It just feels like something where giving up that income over that two and a half to three years, but potentially making 60,000 more a year on the other side of that is what we're trying to weigh.

I'm not sure. I don't know the answer to this. That's why I'm asking you, when she goes to school for that, to be a midwife, is it from a schedule perspective, she can't work at all?

Probably for part of it, she'd be able to work, but for some of it, probably she'd not be able to work. It's full-time for at least, I think for maybe the first year of it, she could probably work, but there'd be like a two-year gap or so where she wouldn't be able to work, to my understanding so far.

Okay, because she probably has to get the certification, I guess, is what she's going for, right?

I think it's just a heavy study load and labs and spending time in the clinic and that thing.

What's this going to cost?

So right now it looks like the program itself is about 50,000, and then there'd be some prerequisites you would have to do. So I think all told, like conservatively, we're thinking like 70,000. So it's 70,000 and then plus the lost earnings for at least probably about two years.

And you guys can cash flow that?

I believe so. I think it'd be tight, but I think we can cash flow it. And I think we have some. I have some stock I have through work that I think I can sell as I go that I think I could use to pay for it.

Okay.

So it's like there's the trade off of... That could also be going towards wealth building, and she could just keep her current job. But I think this is something where long term- She wants to do this.

Is she just done with project management? She wants to do this. Her heart's not in it?

I think if she found a different job, she could still enjoy it. Her current job, she's really not enjoying right now. And so it's really she's said, I know I want to leave the job I'm in right now, maybe I'd go someplace else and I'd make more money and enjoy it more and be fine and don't need to do this. But this does feel like maybe it's a good time to reconsider her career options and think about it.

Okay. Well, the only thing I don't like about the equation is just that she's running from something she doesn't like to something new. Because from what you just said, and again, correct me, because this is her passion, and this is what she wants to do, is help deliver babies. Then I would say this is why you guys do the baby steps. You know what I mean? You get to make calls in your life, and you get to change things, and that's amazing. So that's just her dying passion. But what you just said, I was like, Oh, where she's like, No, I still like project management. I just don't my current job. So if I changed jobs, I probably may not want to be a midwife. So I'm like, Okay. In my head, it would make sense to just try that first and see if that scratches the itch because You're at least getting away from what you don't like versus having to go through a two and a half year and to your point, all of it. But again, I say that with the caveat, unless she says, No, I want to be a midwife.

This is what I want to do. It's my passion. It's my love. Then I say, Go for it. You guys, it's going to be a tight two years, but I think that's great because she's doing what she loves. But she also loves project management.

You may not be able to ROI all the math on paper. I can tell you're an analytical, nerdier guy like me, and you're like, Well, I want to make it make sense on paper.

Yes. I've been trying to ROI this out. It's one of those where it pays off. If she stayed in her current job at her current earnings, it can pay off, but it would take six or eight years or something. And then there's risk with any new study and all that. But I get the point you're making, which is stop trying to overanalyze it.

So add into your equation her joy and see where that takes it, because then it just breaks the math. And you go, well, okay, I guess. Yeah, for sure. I'm sure my math. We're just going to have her do this. And the good news is, you make $200,000 plus and you're debt free. And so I'm not worried about the finances. Now, the mortgage side, if you could sell your stocks, maybe you do a lump sum payment and recast a mortgage if the actual monthly payment is stretching you guys. That might help you out, mathematically, to stomach this in your budget? Because what's your mortgage payment right now?

It's about five.

Five thousand. And your take home, just your take home is what?

Just my take home is ten and a half to eleven.

That's the part that scares me. Because then your mortgage payment is eating up about half of your take home pay. Now, that's without your investing in health care premiums and other things.

And it's only for a two year period. Yes.

To your point, can we stomach half our mortgage take home pay being swallowed up by the mortgage? Maybe. I also think the recast could help you there, where you take a lump sum of 40,000 from the stocks you sell, apply it to your principal, recast it, now your payment is three grand a month, 3,500 a month.

And I'll say it again because it's in my head. I'm like, This is a lot of things changing and moving for the fact that she just doesn't like her current job. So, again, I would have that conversation with her for sure. I mean, honestly, if she's as happy at both, it's just easier to go find another project manager job, and she's still happy.

You know what I mean? The truth is, there's project managers making $150,000. And so if the money is the thing that's alluring of like, Well, I could make more. I'd feel more valued. Let's at least explore that. But if it's just, Hey, you could pay me a half a million in project management would not be it, well, then we know.

Yeah, but that's not it, though, because I think... Yeah.

That's what I'm saying. If it's just not it, no matter what the money is or what the company is, then I think it's time.

Yeah, but she's saying she enjoys project management. She just doesn't like her current job.

There's 17 things I can enjoy. So it's just like we can't just flippantly jump from thing to thing.

That's what I'm saying. Yeah.

So- Make it a hobby. Maybe she becomes a doula on the side, and it's not going to pay as much, but she still gets to be a part of the process and support moms, and that could be a cool thing. So maybe there's other avenues to do this. Yeah.

So unless it's a diehard passion, I would do it for her. Yes. And I would make all these changes and all of what we're talking about. It's just a lot of work and time if it's not the thing that she's just dying to do, if she would still be content doing project management with another company. So I would push on that.

Make sure it's the dream and brings the joy before going in on the adventure.

A hundred %.

That's a great way of putting it. And then stop doing the math because you probably won't work it out.

Yeah. How old are you guys, Jim?

We're both 37.

Okay. Yeah.

Perfect. So if she even waits a year, but all the time she's 40, 41, she still gets to do this dream.

Well, that's why I'm a little bit tempted for her to just find something else and see if she still enjoys project management somewhere else, because she may, may love a company and And that be fulfilling to her and that she's great and content. You know what I mean? Right. So I don't know.

Either way, I think we're on our eat, pray, love journey here, trying to find the next thing for her. And I'm very hopeful she'll find it. She's got a great husband who's very supportive. You've got a great career. You guys have done a great job financially to set yourself up to have this flexibility, to have the options, to do something that it doesn't make sense on paper, mathematically, and yet you can still go, yes, we're doing this. That's financial peace.

I I think whatever she's feeling the most where she wants to be.

So, Rachel, if you were going to drop this gig and go do something else, meteorologist, what would you be doing?

I would be a political correspondent for a network. Oh, that's solid. Yeah. What about you?

Anything that doesn't require me to go back to school. That is, I think, I just am not. Hey, man, could you imagine studying again? I will not purchase a textbook for some insane price. I will not sit in a classroom. I'm with you. I don't want to turn in a paper.

That thing wants me to be like, Oh, I want to go back and get a MBA. I'm like, I'm good. I'm out on that.

Our scripture of the day, Proverbs 13: 11, Dishonest money dwindles away, but whoever gathers money little by little makes it grow. One of my favorites. Milton Friedmann said, Nobody spends somebody else's money as carefully as he spends his own. That'll preach, Milton.

Well said, Milton.

All right. Jenna is up next in Orlando, Florida. Jenna, how can we help today?

Yes, hi. Good afternoon. Thank you guys for all you do. So my husband and I are pretty new in discovering living in a Dave Ramsey way and learning about paying off debt. So we have quite a large amount of debt. We've processed it, we've gone through the emotions as far as having that much debt and probably the mistakes that we have made. We We have between mortgage, student loans, cars, we have over a million dollars. So really what we've been currently doing is just trying to- Would you say a million, Jenna?

Did you say a million?

Over a billion, yes. Between mortgage, student loans, cars, everything. So what we've been doing is we've been doing like $500 a week into our high-yield savings account, which we're really trying to save while trying to pay off bills, but we just don't know. I guess we're not sure- What to do.

As far as how we're able to pay off the part of. Okay. How much is the mortgage of the million?

It is 525.

525. So it's half of it. Okay. So what's the rest? The rest is consumer, so half a million in consumer debt. What does that consist of?

So 475 is my husband's student loan.

Whoa. Doctor? Lawyer?

Yes. Yes, he is a physician.

Physician? How much does he make a year?

So he currently makes 250.

Okay. How much do you make?

I make 70.

Okay. Is his income pretty steady there? How long has he been out of medical school?

He has been out of medical school 10 years now. So we've made the mistakes, big purchases, things like that. So we've purchased that, so now we're trying to see how to tackle everything.

Okay. So it's basically a student loan and a mortgage is what you're saying?

Yes. Also, we have 26 left on his car.

And then a car. Okay.

Got it. And we've been working on getting the credit card down, so we may have a thousand, maybe even two thousand on the credit card. So that could easily be done here shortly. So that's really not the concern.

Where's your savings at? You said you've been putting 500 a month towards high yield savings. How much do you have in there? Yes.

So we are currently We had 74,000 in our high yield.

Seventy-four thousand?

Good job. Okay, well, great. Well, that's going to be cleaning up all this stuff. So tonight, I would pay off the credit card in the car with that.

Are you going to do that, Jenna? Or is he going to do that?

We are. I mean, we weren't sure how to just completely deplete that to pay off the debt.

Yeah, since you're new to this, let's just recap so we're clear on understanding the Baby Step. So baby step one is a $1,000 starter emergency fund. You guys have long surpassed that, which is great. And then baby step two is to attack all of your consumer debt using the debt snowball method. So smallest to largest balance, ignoring the interest rates, just attack the little one with a vengeance, make minimum payments on the rest. So that means liquidating any non-retirement assets we have, including savings, outside of the thousand, and throwing it at the debt. But the good news is that clears a bunch of debts and a bunch of payments for you guys.

Right. I guess the next question is, because my husband, he's the opinion, let's just throw everything into savings and do minimum on the student loans and the mortgage, because that's just overwhelming at those numbers, or do we stop the savings and just- Stop all savings.

You'd even stop all investing. So if he has, if either of you have a company retirement account you're putting money into, even for a match. Just pause. Go all the way down to zero for the time being.

So here's what's crazy, Jenna. So here, I just want to give you a little picture, okay? If you guys went all in and actually did the baby steps, the way we teach, you do exactly what we say, okay? That means from what I'm gathering from the car and the credit card, it's 28,000 for what you guys have saved. Basically, if you'll have 45,000 left in savings, you throw that at the student loan, you'll have 435,000 left of the student loan. What you guys make, 340 a year, if you guys lived, and I'm going to give you a CUSH number, and I don't even want it to be this much. If you lived on a hundred a year, which I want you to live on even less, then that means you guys could literally put $240,000 towards the student loan every single year. You guys can have this paid off in two years. Two years, Jenna. Year and a half if you actually lived on like 70,000. Do what?

I said we get over Wumble and we run the numbers ourselves. So.

The problem is you guys are attempting to do a lot of good things all at once instead of just putting all of your focus and intensity toward those debts, using the debt snowball. And Rachel's right. I mean, we're talking 24, maybe two and a half years max. You're done totally with this debt.

You're done totally. And then the other crazy thing, which, again, I want you to still, after that, I want you to build up an emergency fund and invest in all of it. But if you guys lived on $100,000, you guys could have your house paid off in another three years. That's true. It's just wild to think in five years, you guys could have no debt. In five years, but you have to do it. And you guys have been living the doctor, wonderful lifestyle.

Nice house, nice car.

Yeah, everything's been great. And if you want to keep paying minimum payments on the student loans and all of that stuff, you will be exactly where you are in five years. Nothing will have changed. Nothing will have changed. So unless you want a different outcome, you have to do something different. And so, I mean, man, if I was you all in a heartbeat, in a heartbeat, I would do this.

You utilize that income.

And I'm giving you 100 grand to live on.

Very generous of Rachel, I might add.

Very generous. I would even go less. I would try to do 70 or whatever, right? I mean, seriously, if you guys go scorched earth, you could be completely debt free in four and a half, five years.

I love this plan. There's a lot of hope in this situation if you follow the baby steps.

Yes, absolutely.

All right, let's squeeze one more in here from David in Salt Lake City. David, get right to the question, if you could.

Hey, guys. Thanks for taking my call. I appreciate it. I just had a quick We've got 69,000 left on our home that we purchased in 2017, and we have the cash to pay this now. But my question is, should we pay it now? I understand I want the keys from having it paid. But from a tax perspective, we're in this tax game of trying to avoid paying a bunch of taxes this year because the business did really well. So I'm wondering if I should pay this now or wait until the beginning of the new tax year, and if that would be advantageous.

Call me stupid, but I don't understand what the tax purpose is of waiting to pay off your home.

So if we spend that or put that 69,000, it's counted as taxable income, if I'm not correct. Where is the money? Whereas if you put that in like a 401(k) or something, that way it's tax deferred.

Is this money in savings right now?

Yeah, it's just in a checking. So we have a high yield savings, and then we have a checking where it's just sitting.

Yeah, you're not going to be taxed on that.

You're taxed in a high yield, but that's- If you were selling off an asset If you were to look at that and you had capital gains, there would be taxes.

But if you're saying this money is already liquid in a checking or savings account, pay off the house today. It's not going to affect your taxes.

Sorry, it's in my business checking, so it's not like taxable income yet, I guess.

I mean, if that money's sitting in your checking- So before the tax- I mean, are you going to itemize deductions? I don't think this is going to affect your taxes. You can talk to a tax pro to double check, but I don't understand how using money from business checking, it's still your money.

Are you saying it's technically like you're going to be It's going to be earned income?

I'm putting on paper, it's like, yeah, it would- Like you've made an extra 70,000 more.

You've made an extra 70,000. And so you would technically- Whereas if we put 70,000 in our 401(k), or we have an independent 401(k), so we can put in a larger amount.

That way, it's tax-deferred. But yeah, I don't know.

Well, for the taxes, it would be what? Like I mean, if you were to pay taxes on that 70, on that 69- Of extra income. Yeah, it'd be what? I don't think it- I mean- Yeah, I think this is a lot of giration.

I would just pay it off, and yeah, you might have some extra taxes on that extra income, but I don't think it's worth just waiting till the new year. I mean, it feels like some tax hacks that you're working on here. I think the peace of mind and a freed up payment will do you way better. So that's what I would personally do. I don't worry about making too much money. I would just call it income, pay off the mortgage, and move on with my life, my friend. Way to go.