Transcript of You Can’t Shortcut Your Way to Wealth New

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is the Ramsey Show. Jake Washaw, Ramsey personality number one bestseller. Bestselling author, is my co-host today. Open phones here at 888-825-5225. I'm your host, Dave Ramsey. Chelsea is in Dallas, Texas. Hi Chelsea, how are you?

I'm good, how are you?

Better than I deserve. What's up?

Well, my, the simple question is, is should we sell our house to, which should let us completely pay off all of our debt, rent for a couple years, save up, and then buy again?

Pretty, pretty bad out there, huh?

Big move.

Yeah. Well, we bought this house, um, my previous house. My husband and I married in 2021. I bought a small home on 2 acres that because of COVID and everything that happened, it doubled in value. And so when we sold it, um, because it would only fit 3 of us and there were going to be 4 of us and now there's going to be 5 of us, um, we, there wasn't a lot on the market. We ended up buying something that was really at the higher end, but we were going to have about $40,000 in our savings account from the sale of that property since I basically doubled my money on it. And, and we put 20% down on this home as well. Okay.

So what do you owe on this home today?

We owe about $240,000, $242,000.

And what is it worth?

Market value is, should be somewhere between $270,000 and $280,000. $285,000.

Okay. And how much debt do you have?

We have about, between credit card debt and medical debt, about $22,000.

And that's all your debt?

That's all of our debt.

How much do you owe on your car?

We don't have any car payments. We tried to do pretty well.

What's the— what do you pay every month for this mortgage?

It's, uh, $2,200.

And what do you guys take home?

We take home, it just kind of depends. I, um, I work at my church 3 days a week and then I keep my niece during the week. Um, but as I said, I'm coming up on some maternity leave having a third. And so my income will be out of it. So my husband brings home.

What do you make now?

Uh, somewhere between $4,500 and $5,000 a month.

Okay.

Combined on my hours combined.

Okay.

And then your hours are getting ready to go away because of maternity. So you're seeing the pinch. So it's not really the debt, it's the house mortgage. Mortgage is going to kill you, right?

It already is.

It's already very high.

Yeah. Yeah. Well, and that $40,000 had to go, um, that we had, had to go to pay for court fees because I had to take my ex-husband back to court to protect our son.

That doesn't matter. I mean, I'm sorry for that, but it doesn't matter. What matters is you have a $2,200 mortgage with a $4,000 take-home pay, and that's getting ready to go down, right? And that's a— that's going to be your house payments can be 50% of your take-home pay. Now, when you say $5,000 take-home pay, do you mean, uh, after taxes, or have you taken out 401 and other stuff out of that?

Correct. That's what comes into our bank account.

Okay, how much is going to 401?

Um, he has a state job, so I think we do as much as we can to match what the state puts in.

Do you have an idea of what a dollar amount might be? Just an idea.

I don't.

I don't.

I'm so sorry.

What about insurance? Do you have a dollar idea of what that might be each check?

Uh, insurance is like $700.

Okay, a month.

He's covered. Yeah, he's covered completely for free, but it's like $700 whether you have one dependent.

So when we say $5,000 is coming into your check, but when we're talking about the ratio to your house payment, we mean just after taxes, not after 401 and after insurance. So we're gonna add back probably $1,500 to this in terms of running the calculation. So the $2,200 doesn't sound quite as bad then until you quit work to have a baby, and then it starts sounding bad again. So what is your plans after the baby comes home and you have a normal maternity?

After that, I will continue to watch my niece, and so all of my income will come back in about 6 to 8 weeks.

Okay. Okay. All right. No, I would not sell your house to pay off the debt. I would tell your husband to get 2 extra jobs and work through the extra debt. That's what I would tell, and he probably needs to do that anyway just to cover for your maternity losses right now. So that you guys can stay afloat for the 6 to 8 weeks. You get the other side of the 6 to 8 weeks, and if you've got an extra $1,000 or $2,000 a month coming in from working all the time, you can knock out $20,000 worth of debt fairly quick.

You can. You can. I'm gonna go out on a limb. I still think the mortgage is a problem. Even if you had— even if your take-home was $6,000, this is still high. This needs to be close. Your mortgage needs to be closer to $1,500 for what you're bringing in. And I think that if you have any other money goals, it's just going to elongate it. I think you bought too much house.

What's your husband do?

Yeah, he, he works for the state of Texas.

Okay.

So he's working 40 hours.

Yes. Yes, he does.

In order to keep this house, he's going to have to have a good lucrative side hustle for this to make sense.

That he wants to do for a long time.

And that's if you had no debt.

Right. Okay.

In other words, the house is the problem, not the house solves the problem.

Yeah.

And you called and said, do we sell the house to get out of debt? No, you might have to sell the house because you can't afford it.

Yes, that's a separate problem from the debt.

Yeah, but if I'm in your all's shoes, I would stop his 401 today, his contribution to the state, and I would pick up 2 extra jobs to cover your maternity downtime. And then as soon as you're back, you guys just go into full attack mode and cut up all the credit cards and attack them in that order, smallest to largest. Get rid of those, and when those are gone, then you've got to assess. You need to be bringing in the door, not counting insurance and 401, $6,000 to $7,000 for this to begin to make sense.

Yeah, and let's talk about it from the view— the viewpoint of the viewer. The 25% rule that we're talking about, there's a reason for that, because if your mortgage starts to eat up more than that, then you're not able to do the other things that we teach. You need to be giving 10% somewhere in generosity. At some point, you're going to need to be investing at least 15%. At some point, you're going to need to have margin to be doing that along with putting extra towards your house. And if you let your mortgage creep up to 40% and 50% of your take-home pay, all of that plus eating and just living a normal life honestly becomes impossible.

Well, and you end up— the next car is debt. Yeah, because you don't save for a car. The next vacation is debt because you don't save for a vacation. The next Christmas is debt because you don't have any room. You're pinched. It's why we call it house poor. You become house poor when your payment is too big a percentage of your take-home pay. Economists would say you don't have enough disposable income after you cover necessities.

We call it margin.

Yeah, exactly. And you need that margin to be able to build wealth, to be able to be generous, and to be able to build a quality life. And if you pinch yourself with a huge freaking house payment as a percentage of your take-home pay, it's very difficult to do. You guys are right on the line. If he's gonna get normal raises and does a good side hustle, you probably could keep this. But you're going to have to make that a part of your life. He's not working 40 hours and you keep this house. It doesn't work.

You're getting ready to hit the road this summer. You want to feel confident your car is ready to go, but when you don't fully understand what's going on under the hood, it's easier to either ignore something important or spend money you didn't need to. Because let's be honest, You're not a mechanic, and you shouldn't have to be. That's why we trust Christian Brothers Automotive, the official auto repair partner of The Ramsey Show. They bring clarity to car repairs and maintenance with their digital vehicle inspections. You can actually see what your technician sees, understand what needs attention now and what can wait, so you can make wise decisions without second-guessing. Listen, When you're counting on your car to get you where you need to be, you don't want uncertainty. You want confidence. And Christian Brothers stands behind their work with the nice difference warranty. 3 years or 36,000 miles, whichever benefits you more. Go to cbac.com/ramsey to schedule your service and get 10% off your visit. That's cbac.com/ramsey.

10% off up to a $250 value. See store for details.

Skip is in Minneapolis. Hi Skip, how are you?

Hi, you know, hanging in there. How are you?

Better than I deserve. What's up?

Yeah, so, um, I've got a, uh, a custody battle ahead of me. I've recently had to get a lawyer, um, and I've been working the Baby Steps. I'm in Baby Step 2. I've got my, my starter emergency fund a little more right now. I think I've got about $1,300 in that, um, but with, with my debt and with this custody battle on the horizon I'm just really trying to look for the best way to navigate this. Um, obviously I don't have all the money for a lawyer, which would put me further into debt, um, which is not what we want. Um, otherwise I'm looking at either bankruptcy or selling my house.

Okay. And what do you owe on your home?

I owe $193,000.

And what's it worth?

$100,000. It's, uh, worth between $299,000 and $324,000.

Okay.

So you got somewhere around $100,000 in equity.

Equity.

And how much debt do you have?

Um, I have roughly $60,000.

Okay.

All right. So simple math says if you sold the house and you paid off all your debt, you'd have $40,000 in a war chest to fight with, and you'd be a renter. Yes. That's one quick solution without getting into too many details, but that's just balance sheet transfer stuff. Now, What's your, uh, what's your income?

Um, I gross about $4,600 a month.

How many children do you have?

I have 3 total.

And how old are they?

I have a 12-year-old daughter, an 8-year-old son, and then, um, the one that I'm going into custody battle for is my 20-month-old daughter.

Are you trying to get full custody or shared custody?

Um, probably full.

Why?

Uh, so her, her mother is disabled, um, and then this past weekend, uh, had a mental health crisis and ended up in a treatment facility.

Okay.

Okay.

Are you married? Remarried?

No, I, I'm not to this. No, no, not to this relationship.

Okay, so you have, um But are you— but the two, the other, the older two children, where are they?

So they're from a previous marriage, um, and I have them 50% of the time.

Okay.

Okay.

So there's just the 20-month-old in question, and you're saying the mom is not a safe environment?

Uh, as of right this second, no.

Okay. It just depends on how scorched earth you want to go on this. Um, You know, uh, what's the nature of your $40,000 or $60,000 worth of debt?

Yeah, so I have, uh, roughly $26,000 on a Parent PLUS loan that I agreed to take on when I, you know, was initially going to school. Um, I've got $9,700 on my student loans. Um, I've got about $4,100 on a credit card. Um, and then $9,200 on a lease.

Mm-hmm.

Um, there's part of this, and I don't know, Dave, you could probably speak to this a little bit better, but, uh, if the judge is looking for fitness, it might look good for you to say, I, I've got $40,000 saved. I don't have any debt. You're rent, you know, you're a renter and you live in a really nice place. Uh, that could look good. It looks nice and responsible if that's what you're going for. Um, And I like that.

Well, and you got, you have the money to fight with because right now I don't know where you get $10,000 to hand an attorney right now.

Right.

And that's what you're going to need to get just to get started.

Yeah. I think I was quoted about $4,000 to $6,000. Um, if there's really no battle, you know, if she decides to just be agreeable to everything, otherwise I'm looking at upwards of $15,000.

Yeah.

And it could go on and on and back and forth really continuously.

Right.

Okay.

So, I mean, it's, um, I don't know where you're gonna get $10,000 unless you do this.

Okay.

I don't, I mean, your income's not that high. Uh, there's nothing in this. I mean, if you quit paying all the debts, that's fine. It's not, you mean you quit paying those student loans, you catch up. Half of America's defaulted on their student loans, so you can go back and pick that up later, but that's not a cash— that doesn't give you the cash flow to come up with $10,000 quickly. And you don't have anything else to sell that I've heard of. Do you have money in savings or investments anywhere?

I mean, so my investment, I ended up pausing it, so I've only got like $200 in an IRA. I've got $1,300 in my savings. After this month, I'll have closer to $2,000. Um, but that's— I mean, that's really about it. I don't have a vehicle. Um, I'm borrowing one currently. Um, so I don't have that.

How old are you?

I am 34.

Are you paying child support on the other two?

Uh, no.

Okay, because you have 50%.

Okay.

Correct. Ah, 20 months old. Um, the only way I know how to answer questions that are super difficult like this one on this show is, well, if I woke up in your shoes, what would I do? I've never been anywhere near something like this personally, so I don't know what I would do, but what I think I would do is that I would prioritize my financial investments and my financial advancement, my wealth building, behind the good of my child. Good of my child would come first. And that would mean I'm gonna sell the house and I'm gonna go get custody. And if it takes $40,000 to do that, fine. But I'm gonna have $40,000 in my pocket and I'm gonna be 100% debt-free and I'm gonna get an inexpensive, clean, safe rental for the other two kids to visit you at when you have your custody time and for this 20-month-old to be raised. And then you're starting again to save because you're gonna spend money on this 20-month-old on legal fees and, and to take care of this baby. And that's, that's what, you know, I think that's got to be the priority. The baby's got to come first.

I mean, it's like all this other stuff is secondary. And, of course, and I don't know, I don't see a hole in your story to reach into and get $10,000. And it's gonna take you 10. The 4 to 5 is— that's a— that's not gonna happen. It's gonna take— it's gonna take 10. It's probably gonna take 20 because she's mentally ill. 100% expect a problem. If she wasn't mentally ill, might be different, then there'd still be a problem because you're trying to take her child. But she's mentally ill, and so she's crazy. And so just expect crazy. I mean, you don't expect nothing else. So that, that's, you know, what we're doing here.

Wow, it's tough.

Skip, sorry for you, man. I'm sorry for that baby most of all. Yeah, take, take care of that. How do I say this nice?

Just say it.

If you're sleeping with your crazy girlfriend and you make a baby, this is what you get.

There you go.

I mean, was that nice?

Yes, that was.

Yeah. And if you're dating a girl, guys, and she says, I'm not crazy, 100%, that means she's crazy.

Well, she showed you something. You just didn't want to see it. At some point she showed you something, or he showed you, whoever. Got to take it when people show you who they are.

I want to— I want to love Skip and I want to help him. But I also want to say out loud for those listening that this is the result of decisions. Yeah, bad ones.

Yeah.

And this is where we get to now. We've got— but now there's a baby and it's not the baby's fault.

That's right. And you got to take them at all costs.

And so now we've got to man up and take care of the baby for the mistakes that have been made in this process. So, yeah, don't date crazy girls and for sure don't sleep with them. Hello.

And there's ways to prevent babies. I'm just saying.

Don't sleep with them. That prevents it. That stops it every time. It's 100% cure.

That is 100% baby cure.

It's 100% cure.

¡Hola!

Let me tell you something I see happen way too often. People fall behind on their bills and they wait. They hope it will work itself out. It won't. That's why I recommend Guardian Litigation Group. Here's the deal. If you've missed payments, collectors are calling, or if you're getting letters threatening legal action, that's not something to ignore. That's the moment to deal with it, because when you do nothing, it escalates. They can take you to court, and if you don't respond, they can win by default, and that gets expensive fast. Guardian Litigation isn't a call center. They're an actual law firm. From day one, you're assigned an attorney to represent you, so if things do escalate, you're not scrambling and you're not hit with surprise legal fees. Guardian Litigation only gets paid when the debt is is negotiated and you accept the settlement offer. This isn't about shortcuts. It's about dealing with the problem before it gets worse. Go to guardianlit.com/ramsey today. That's guardianlit.com/ramsey today.

Attorney advertising. Results may vary and no specific outcome is guaranteed.

Buying or selling a home is a big deal. We're going to be talking about real estate with the real estate expert, my buddy Brian Buffini, on tomorrow's show. So be sure you listen in on that or watch that or however it is you consume this show. And I was just on Fox a minute ago, Fox News, and we were talking about a Zillow report that's out that's absolute bullcrap. Zillow threw a thing out there to get a headline that says 227 cities in America, or whatever, some 220-something cities, the starting price for entry to buy a home is $1 million.

$1 million, yeah.

And then when you read the article carefully, They just threw that out to get attention as clickbait, because it's absolute bullcrap. So, I mean, 120-something of the cities are in California, which means that they took 7 cities that were all little villages around the edge of San Jose and they all have a million dollar— of course they do. You know, you're in freaking Silicon Valley. Of course the 7 cities that are around, that are actual municipalities that surround LA are a million dollars. But Abilene, Texas is not, Oklahoma City is not, Amarillo, Texas, Nashville, Tennessee is not a million-dollar starting point. So they made it sound like that it took a million dollars for somebody to buy a house, and that's absolute bullcrap. The average entry point in America is $199,000 right now. That's the average starter home. And the average home in America is $407,000 or something like that. What is it right now? Yeah, so it's $427,000, right in there. But I mean, that's the median price. That's the middle price of all homes in America, which means by definition, a million dollars is not starting.

That's right.

So bullcrap, Zillow. So that's the problem with stuff like that floating around from these people looking for clicks. If you want to know the actual thing that's going on, you can go to RamseySolutions.com/market, and you'll get a great real estate page that will outline for you exactly what's going on with interest rates, exactly what's going on with pricing, and so on. And you can start to figure out whether or not you make enough to buy a home in your locality. Real estate's like politics, it's all local. So what's happening in Manhattan is completely, almost completely irrelevant to what's happening in Kansas City.. And all that matters if you're in Kansas City is what's happening in Kansas City.

That's right.

And so you can't go, well, the average across America doesn't mean anything. You can say the average across the world, but you're including Tokyo and London, some of the most expensive real estate in the world. And that, that average is, is absolutely useless as a measure of whether you can buy a house or not. So that's not how you figure this out, folks. So Ramsey Trusted can connect you with an agent in your area that is Ramsey Trusted, that we have vetted for high octane, high protein. And if you're listening on the YouTube or on podcast, you can just click the link in the description. Or if you want to go online, ramseysolutions.com/agent, we'll connect you with a real agent that really knows their stuff, not a bunch of hoopla and bullcrap clickbait from some TV show. Or website that's just trying to get people to click on it. And that's fear porn is what that is. So just stay away from it. San Francisco— Francisco is with us in Atlanta. Hi Francisco, how are you?

Good, how are you sir?

Better than I deserve. How can we help?

I just need a couple— I need some help with taking some next steps with investing my money. I'm 20 years old right now, I'm a plumber. Um, and I just feel like I'm not taking advantage of my money the correct way. I feel like it's just sitting in the bank, um, doing nothing. Um, cool.

How much you making, man?

Uh, I mean, this is my first year, um, by myself in my van. I just finished my apprenticeship. Um, and it's been really slow over here. I don't know if it's just the company that I'm with right now. Um, I am looking, um, for other jobs because, um, I just feel like this company that I'm with right now is not, I won't get far with it. So this year I feel like I haven't even made like, I don't even think I've made, crossed the 30 grand.

And that's 40 hours a week?

So far this year?

Yeah.

So you're gonna make 60 a year?

I mean, completely, I don't know how much I would make.

Are you making $2,500 a month, honey?

Uh, some, some months, yeah. Some, some months now less.

That would be $30,000 in the first 6 months, and that'd be $30,000 a year.

Yeah, it's kind of— with this, it's been really slow. So like some weeks I work, some—

sounds like you need a new job.

Yeah, that's what I've been, uh, hunting for recently, finding a new job.

Okay, and how much do you have piled in the bank?

Uh, about 8 grand-ish.

Good for you. And how much do you have in debt? Uh, no debt.

I mean, I only have, um, credit card. I think I would like $800, probably pay it off like next month or something.

And cut it up.

Pay it off right now.

Pay it off right now.

Tonight. You have the money in the bank.

Okay, yeah.

And cut it up. Quit using it.

You don't need it for any purposes.

Your first goal is to be debt-free, and your second goal is to build an emergency fund of 3 to 6 months of expenses before you start investing. And so you're— you need to be 100% debt-free, no credit cards, be living on a budget. And we'll send you EveryDollar, our app that will help you build your budget out and build the system out that we teach here at Ramsey. And then you build that emergency fund. So take that $8,000, it needs to be $15,000 to $20,000, and you never touch that. That's just for a rainy day. It's just sitting over there. It's not an investment. Then you take— then you start investing 15% of your income. If your new company has a 401, do the Roth version, Roth 401. If it doesn't, then go to RamseySolutions.com and click on SmartVestor Pro. That's mutual fund brokers and financial advisors that we recommend. They don't work work for us, but they have the heart of a teacher, and they'll sit down and teach you about investing. And you can start your Roth IRA with them, and they'll show you how to do it, and they'll show you how it works, and you will make the decision, because they're not going to sell you something until you understand it.

Yeah, and speaking of making sure you understand it, let's talk about why we told him to cut up the credit card. Because what I, what I don't want you to do, Francisco, is just say, "Well, they told me to do it, I'm going to do it," and you not understand it. We know that if you have a problem, the problem is generally debt. The things that you're experiencing are usually symptoms of the debt that's in your life. And so you can't solve a problem while continuing to create it. So if you have credit cards and you're continuing to spend them, you're continuing to create the problem. You're just chasing your tail. So one of the primary things that you have to do when you start this system of living is you have to say, I don't borrow money anymore. And that has to be part of who you are with your money from here on forward, because you have to be able to have the fullness of your income at your disposal every single month to do the things that we're teaching, whether it's investing, whether it's paying off a house, whether it's saving for kids' college, whether it's saving up cash to buy a car.

You need income to do that. And if you're pulling, you know, you're throwing all your monthly pay, all of your income onto monthly payments, you don't have the income at your disposal to do those things. So that's why we teach it that way.

Exactly. And so personal finance is 80% behavior, it's 20% head knowledge. So the problem with my money is the guy in my mirror. If I can get him to behave, he can be skinny and rich, but he's got issues. And so I've got to get him to behave. And that's how this works. And part of that is I have to trick myself into wisdom. Tricking myself into wisdom is not having a credit card.

Yeah, just cut it up, then it's not there to tempt you.

If I don't have one, then it's not an issue.

That's right.

And by the way, your debit card, folks, off your checking account will do, everything your credit card will do, every single thing. Sharon and I have been— have traveled in other countries 6 times in the last 12 months, 100% on a debit card. We haven't had a credit card in 36 years.

And if you have fraud, it's the exact same protection. You call them, you say somebody spent money.

Oh, they did. They stole Sharon's card the other day.

Did they?

Somebody started buying a whole bunch of Louis Vuitton and it wasn't her. And we had to shut the thing down.

Wow.

The bank called and goes, are you buying like Louis Vuitton in 6 different cities? And we went, no.

Yeah.

Wow. You know what it cost us? Zero.

Nothing.

One of the biggest myths about money is that if you're winning with money, you're never supposed to spend any. That's not true. Some of the best money you'll spend is making memories with the people you love. That's why I was excited to find out about Young Washington from Angel. This movie tells the story of George Washington before he became a general or president. It's about failure, perseverance, and leadership, and it's the kind of movie that's worth seeing on the big screen. And here's the best part: Angel has made it part of a bigger and better deal. Instead of just buying tickets at the box office, you can get a premium Angel Guild membership for just $15 a month. You'll get 2 tickets to Young Washington, access to Angel's family-friendly streaming library, and free tickets to upcoming Angel theatrical releases every month. The truth is, the 2 tickets to Young Washington pay for the first month on their own. Celebrate America's 250th with a great movie this July 4th and a great deal. Sign up at angel.com/ramsey. That's angel.com/ramsey. Kim is with us in Columbus, Ohio. Hi Kim, how are you?

I'm good, how are you?

Better than I deserve. What's up?

Yeah, hi, my husband's job offers, um, a $2,000 interest-free loan to all their employees yearly. We've never taken advantage of it, but we think we should, and we're not sure which way to go, um, if we want to put that into an IRA or pay off one of our mortgages.

But it's a loan. You have to give the money back. It's a loan, right?

It is, but it is interest-free, so it'd be taken out of the paycheck throughout the year. So essentially, for us, it feels like we wouldn't notice it so much. So we didn't know if it'd be worth it or not.

Let's pretend that they charged you interest on it, just for the fun of it.

Okay.

I mean, like, let's just make up a number. If you went to the bank and got a personal line of credit, you might get it for 10%. On $2,000, that'd be $200. You're making $20 a month.

Mm-hmm.

You can't buy a biscuit with this transaction. You're burning way too many brain calories for no money here. Okay, there's no trick, there's no hack. You're dealing with peanuts, and you're not gonna get anything but more peanuts. Okay, don't screw with it for that. And it's a trap. You're gonna get caught in something like he's gonna get laid off or fired, and you have this loan outstanding, and then it's gonna convert to interest because you're no longer an employee, or whatever the crap is in the fine print that you guys hadn't even thought about. No, do not step up on the rug that's over the trapdoor.

George says this, and it's so true. Whenever the call starts with, I have an interesting opportunity, whenever it's, whenever it's framed as a unique opportunity, or like your friend is trying to get you into a multi-level. Yeah, this is not enough. This is not an opportunity.

Yeah.

Uh, Rob is in Washington, DC. Hey Rob, what's up?

Uh, just trying to— just want to say thank you for everything that you do for people, and, uh, so glad that you took my Thank you.

How can we help?

Um, I'm in an interesting position. I make a very high salary and I had an 8-year guaranteed contract. The company started going through financial issues, um, to where I started having to cover payroll out of my pocket and then credit cards started bouncing. And anyways, and so you didn't have to, you chose to. I chose to because I cared about the people that were my employees.

Or they're not your employees, they were that company's employees. You, they were your downline.

I understand.

I just, from a Christian point of view, I just—

No, that's not Christian. There's nothing Christian about that.

Whose payroll did you cover? How much did you spend on this?

It wasn't much. I mean, you're talking $17, $18 an hour employees, and it was every couple months. And then she started— then the company started bouncing my paychecks or paying me late.

And, um, are you—

my main question is, go ahead.

Were you board level? Are you bought in in any way? To this company?

That's where the contract is very interesting. Um, I'm a physician and I signed an 8-year contract with, uh, 5% interest, or interest in the company going up over the first 4 years to where I'd own 40% of the company.

And my—

and the contract was guaranteed for 8 years.

Okay, but they went broke?

No, they let me go because they couldn't afford to have me anymore.

They went without my—

without my salary, they're breaking even.

Okay.

Um, so my options are to— it's an LLC. Uh, the person that owns the company had no idea what they were doing, and they were getting— it's like a play project because her husband is very wealthy, but he is only on the SBA loan. He's not on the LLC or the corporate documents. Oh boy.

Well, the LLC doesn't have anything. It's not got any money, right?

No, it's just breaking even. It's breaking even covering expenses once I— once I'm no longer there. The reason that she— the letter that she gave me for letting me go was because of financial strain. It wasn't for any other type of cause.

So when you were hired and there was this 8-year, and after 8 years it's 40%, did you have to put money in to buy into that?

I did not. They searched me out No, because the type of physician I am, I'm getting paid significantly higher than any other college.

What kind of an income do you normally make in your field?

Normally in my field, they're probably making $70,000 to $100,000. I'm making $225,000 to $250,000.

As a physician, somebody makes $70,000?

Are you like a pediatrician?

No, I'd rather not. I don't want to give away anything about that.

Okay.

Anyway, the answer to your question is A, we're not lawyers. B, from a practical standpoint, if you are completely right, which you probably are, they owe you for 8 years— they owe you for 8 years of income. They have violated a contract. That's what you're saying. And you could probably win the lawsuit, and then you would have a judgment against a broke company that's not going to pay you a dime, right?

No, I know.

So why, why would you bother?

I'll be honest with you, Dave. I went through a bankruptcy like you did several, let's say 10, 15 years ago. And I've had, I always feel like I'm the underdog and I'm the type of person that'll work 7 days a week for you. I'll do the blood, sweat, and tears. And I'm having a hard time letting people get away with stuff anymore.

Yeah.

Well, they're going to get away with it because you can sue again, get a lien against an LLC that has no assets.

No, but can I ask you, since the husband is on the SBA—

doesn't matter if he didn't sign the contract, the LLC signed the contract. You're not going to get to the husband.

He did that to protect himself. That was intentional.

He said no, but he signed the SBA, so he wouldn't be on, on the hook for the SBA.

He's on the hook for the SBA, but he's not on the hook for you.

No, but it's still— instead of— because they're making enough right now to pay the bills. So that would allow them to pay the— all the loans off.

This doesn't feel moral, but it's completely legal.

No, I know what it is.

You're not gonna get to him. He has what's called a corporate veil. That's why they did business in an LLC. That's why any of us do business in an LLC. So if we get sued, the maximum thing you could get is the assets of the LLC.

You can't come after—

that's why all my real estate is in an LLC, because a drunk guy fell off the front porch of one of the houses the other night, decided he's gonna sue. And it's his fault because he was drunk. But I still got to deal with the moron, and he can't get to any of my stuff. All he can get to is the LLC that owns that house.

That's a moral question. How do you get over— a moral question— how do you get over— I don't want to say vindictiveness, but just feeling like you're getting burned and not sticking up for yourself?

No, I I completely— I don't know that you do get over it. It makes you angry and it hurts you, your feelings. And all you can do is distance yourself and then figure out, okay, what am I going to— I'm going to burn some energy. Am I going to burn it just trying to prove a point? Because you're going to spend $10,000, $20,000, $30,000 to sue them and win, and then you're going to get nothing. And it's going to be playing in your head for the next 2 to 3 years because the court system sucks and drags everything out. So it's not justice. You're not gonna get justice. And so you've got to decide, okay, what am I gonna spend my time and my energy on? I'm gonna spend it on something positive going forward, something that's helpful and hopeful.

So let's pretend— let's pretend he did sue and he sued him for a million bucks.

Yeah.

And they're doing business out of a commercial building, maybe that they own it, maybe it's worth $1 million. So if he sues them, the judgment wouldn't cause them to have to close down, sell the property and pay him.

Well, he said the LLC has no assets. It doesn't have a commercial building.

Well, he said they were breaking even.

Mm-hmm.

But I kept asking about assets. No assets. They don't have any money. They just cut their doctor loose and they're a medical operation.

That's true.

They're going down. They don't have any money. And they might have an asset. If they've got an asset, like a commercial building, then yeah, go after it.

Go after it.

You could get it. You can end up with the building, yeah.

Even the— I mean, he did say no assets, but there's gotta be something in there that they're—

No, there doesn't. They could have gone and rented office space, set up a medical operation, say a clinic of some kind, right? We don't know, 'cause he didn't give us the details.

It sounds like that though.

That's probably something like that. Like that. And so, you know, there's a bunch of used medical equipment in there and a bunch of broke people that aren't getting their salaries paid.

Okay, yeah.

And there's, you know, and a used office desk. And, you know, I wouldn't agree with it. I'd move on with my life. But it's very hard, to his point, because you're angry. It's unjust. Yeah, it's not fair and it's not right.

Okay guys, let me ask you something. What would it take for you to switch your bank? Because if you're still earning next to nothing on your savings, you need to check out Fairwinds Credit Union. And I know what you're thinking, it might sound like a hassle moving your direct deposit, updating bills, getting a new debit card, Feels like a lot. But here's what most people don't realize. Staying where you are could be costing you hundreds of dollars every year. Y'all, the average savings account pays less than half a percent. So let's say, for example, you got $20,000 saved. You might earn around $70 a year. But with a Fairwinds High Yield Savings Account earning 3% APY or more, that same money could earn you over $600. And that's real money that you can use towards the Baby Steps. So don't let temporary comfort keep you stuck. Check out the Smart Bundle from Fairwinds Credit Union. You get a high-yield savings account, a no-fee checking account, and the Ramsey Be Weird debit card. Go to fairwinds.org/ramsey to learn more and make the switch today. That's fairwinds.org/ramsey. Insured by the NCUA.

Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Justina is in Baltimore. Hi, Justina, how are you?

Hi, I'm doing good. How are you guys?

Better than I deserve. What's up?

My husband and I, we keep fighting, and I just want to know if he's right. We keep fighting about buying prepared foods while in Baby Step 2. Is he right?

What's a prepared food?

So like frozen meals or like prepared lasagna, or in particular I buy these chicken burrito bowls to eat while I'm at my second job.

Are you guys aligned on everything else?

Yes.

What's the problem, the quality or the price? Because that stuff is not expensive.

I don't think it's expensive at all. The chicken bowls are $13.97 and he says I can make them, but I prep —what are you spending on groceries?

What are you spending?

Oh, we spend about $200 every 2 weeks.

Okay, so $400 a month.

What's your household income?

Uh, I make $61,000 and he makes $58,000.

Okay, and you're attacking debt, obviously, with intensity. Yes. And so how much debt are you attacking?

Uh, we have $45,000 in student loans $37,000 in credit cards, and then $195,000 on our house. But unfortunately, his mother passed away, so we just inherited $104,000.

Which is gonna clear all your debts.

Everything but the house.

And you're not gonna be in Baby Step 2 anymore. Right. And so then it doesn't matter if you buy prepared meals anymore.

And by the way, it didn't matter before either. If you were spending $400, if you were spending $100 a week on groceries, that's really, really good. It's really low. It's really low. Now, if he says to you, you're responsible for the meals and I don't like this food, I don't enjoy it, can we please do something else? That's fair. But if he's saying on price alone, I would disagree with what he's saying.

It feels like that. Okay, let me tell you what normally happens when I've been coaching people in these situations, that we've found one thing that absolutely doesn't matter to argue about, but there's a whole lot of big things that we should have been arguing about that we're not. Right. Like he's still buying $2,000 guns or something and bitching about a $13 burrito. That's what I find a lot of times. Or you're buying something else that he's really frustrated about, but he's pointing it over here at the burrito instead. Yeah. Am I missing something? I mean, is there a Coach Purse in the story that I missed?

No, he's just a tightwad.

Maybe you got— you guys are in complete 100% agreement. There's no argument about everything else in your budget, and you're running a $400 food budget.

Yeah, I guess the only thing different in our budgeting that we want to do is I want to take Rachel's suggestion and add a stupid line item for those things that just pop up and he doesn't want to do.

He's a tightwad. Well, no, he's trying to be very, very intense. But, um, but, but we're— here's the problem. You end up— if you lose the wife, if you lose the spouse over a $13 burrito, you didn't win the war. You threw the baby out with the bathwater. Okay, now again, she's not trying to buy a $6,000 Coach purse. Okay, this is There's no Louis Vuitton in this discussion. There's no expensive firearms in this discussion, or whatever it is that we want to talk about— boy toys and girl toys or whatever. Okay, that's not in the discussion. So this is simply— okay, so what I'm going to coach him to do is this: you win the argument because it doesn't matter. It doesn't matter. Matter. $13 does not fix your all's life, right? Okay, so you win the argument, but he needs to, uh, learn the art of letting you win some battles so that we win the war of working on this together. It's more important— it's 99% important that both of you stay enthused and pointed at the problem. It's 1% important as to whether your Bible Right? You got me? So, you know, there might be a dollar or two technicality, and Jade's a better expert on food.

She says there's not. She says it's not out of line. But even if it was, even if it was $5 more in a $400 budget, right, he could win the math. But, but it's stupid.

Yeah, you're gonna lose your wife for $5.

He's right.

You're— it's gonna be cheaper for you to cook everything from scratch, but $400 is a fair budget item. Like, that's a fair amount to spend on groceries. It's very low. Very, very low.

Yeah, very low. As it is. We don't see that hardly ever. So, overall, you win the argument. But if I had him on the line, I would coach him and say, "Dude, more important that she's enthused and focused on the overall plan than the $13 burrito." What she's asking is not so far out there.

Yeah, it's like when I ask my husband to make up the bed, and he makes up the bed, but he does it a little bit different than the way I do it. And if I get on to him, then you get to make it up pretty soon.

He ain't making up the bed. Yeah, you know?

Yeah, it's almost like that happened this weekend.

Oh, that— oh, did we just bring up a real analogy? Real metaphor. Okay. Yeah, that's exactly it. I mean, yeah, you know, if you're gonna gripe about the way I do it, you get to do it. That's right. So you lose the battle. Battle of helping with housework over the wrinkle in the corner of the bed. It's the same thing. It's the same thing. So, let's get on the same page. Let's decide what's really important here. What's really important is we get out of debt, stay out of debt, we're generous when we build wealth, and we're on a plan together. This is what causes people to be wealthy, not $13 burritos or the lack of them. Either one.

You're really caught up on this burrito. Either one, yeah.

Well, I'll tell you what's flashing through my head, is those stupid bags of chicken breasts from Sam's. We lived on those things when we were broke. And I hate that thing to this day. Anytime I'm at a restaurant, fine dining or otherwise, "We have a chicken breast." "No thank you." "No way." Or we had— the other one was tuna fish. Yeah, I remember you said that. She would make tuna fish sandwiches, and I would take them to work, and they would be in the work refrigerator, and by lunch, they'd be soggy. Soggy. When I smell tuna fish, my net worth goes down. Now, just the smell of it reminds me of being broke. It's cat food. It's just— somebody else needs to eat that health food because I'm not doing it. It's that simple. I can't do it. It reminds me of being broke.

I totally get it.

It's just— I— the smell of it, I smell it and I feel broke. I feel that.

That's how I am with oatmeal.

The last time I ate it, it was like soggy tea sat there in the refrigerator, the bread gets— oh God, it's so gross. And so, that's the stuff he's gonna remember now. He's not gonna remember the $13 burrito or whatever when they're the other side of this someday and they're millionaires or baby step millionaires. And we had this stupid discussion over that. The other one that was funny was, Sharon and I had this huge fight, 3 little kids, 'cause I thought, same, I'm that guy. "Spending too much at the grocery store." And she's like, "All right, King Genius." You do it. "Get your butt in the car and let's go to Kroger." And we go up and down the aisle, and you know what I discovered? She was doing a pretty good job. I love it. And my level of criticism for her future deal-making on the groceries was none at all, 'cause otherwise I get to do it and I couldn't do any better anyway. But I had this opinion from afar, that I had this figured out until I got marched down the aisle of Kroger.

Very good, Dave.

If you run a business, you already know this: bad information leads to bad decisions. And right now, AI is everywhere. But AI is only as good as the data behind it. The best AI is built on the best data. That's why I recommend NetSuite. NetSuite is the number one AI cloud ERP, and more than 43,000 businesses businesses run on it, including us here at Ramsey Solutions. Their AI isn't bolted on, it's built in, and it connects everything that runs your business— accounting, inventory, customer data— all in one place. Because when your numbers are connected, AI actually works like it's supposed to. NetSuite's AI helps flag cash flow problems, spot inventory issues, close your books faster, and cut down on manual reporting. If your revenue is at least figures, go to netsuite.com/ramsey for a free product tour. That's netsuite.com/ramsey. If you're working the Baby Steps, the fastest way to— is by using EveryDollar. It's more than just our budgeting app. Now the plan is built right in. You track your progress, you get personalized recommendations, you get coaching for your situation that'll help you free up more money and work the plan out of debt into wealth even faster.

It's like having one of us walking with you every day, showing you the next right step and holding you accountable. Start EveryDollar for free by downloading it in the App Store or Google Play. Joseph is in Lansing, Michigan.

Hi Joseph, how are you? I'm doing good, Dave. Thank you so much for taking my call. It's a pleasure to speak with you.

You too. What's up, sir?

I'm a welder by trade and I am looking to start my own mobile welding and fabricating business. To get this off the ground, I am humoring several avenues to pay for the startup cost of this. The big cost— I already have the rig and I already have the welder, so the two main costs are taken care of. But there is a substantial amount more that needs to go into getting this thing ready if it's going to go out and do the job. The first avenue I'm humoring is selling— my wife and I both have our cars paid off, and I'm thinking about selling my 2017 Subaru Crosstrek, which Kelley Blue Book, last time I checked, will get me about $13,500. $125,000, maybe that ballpark. We are expecting our third child here at the end of July, and my welding rig is not car seat friendly. So we would be down to one vehicle for the kids if we made that move. The second avenue I'm thinking about is I have about $150,000 right now put away in traditional and Roth IRA. And I'm thinking about taking some of that out to fund this.

How much do you need? What's the dollar amount that you need?

I'm thinking from all the quotes and everything that I've been putting together, it's gonna be maybe around $10,000 to be serious, to have the right equipment on this thing. For what?

You've already got the rig.

Uh, power tools, toolboxes, cylinders, gasoline tanks, business cards for gasoline. I would just say that as well because it's a 1981 Chevy Custom Deluxe, so this thing drinks gas. So when welding rod— if you know anything about welding, there is nothing cheap about it, sir.

So, and you're a welder now, right? Yes, sir. What do you make now? How much do you make now?

I make just shy of $73,000 a year, so $35 an hour.

Okay. And so if you take this rig out as a side hustle and do some welding, is that in conflict ethically with your day job? No, sir. Okay. Are you already doing that?

No, I just got the welder back from the shop. You tuned up the welder, so I am not currently accepting jobs.

So I understand the rig as it sits today is less than ideal. Steel, but I also understand it will, it will weld. Yes, sir. So go weld something and get you some money from that job and use that money to upgrade your equipment. And then go weld something else as a side hustle and get you some money. I mean, crap, you can make $10,000 in your side hustle pretty quick. I know. And pour it all back into equipment and get your, get your rig ready. And then you spend 6 months to a year as your side hustle making sure this is actually going to work in terms of you're going to get enough business to offset, because you don't quit your job until you have this thing proven. Of course. So go, go weld something, man. Go get you some business today. You can roll up, weld something, and they will write you a check, right?

It is, sir. No doubt.

Okay. Okay. That's where you get the money.

I understand that, Dave. I'm just saying that like when I go out there and do the job, 'cause I do construction repair, like that's what I specialize in. And so I add wear plates and a bunch of other stuff to construction equipment. So like I need acetylene torches. Like if I just show up with a welder, just the welder on its own is, I'll be frank, sir, is not enough to do the job right and effectively. And I would be saying no to a substantial amount of work because I don't have the tools needed to go and get it done.

I'm not saying this is your 5-year plan, I'm saying it's your 5-week plan. Listen, I started this business on a card table in my living room. It made $300 million last year. 100% of the equipment in this place, and there's millions and millions and millions of dollars of it today, was bought bought with money we made in this place with equipment we didn't really like. And then we upgraded to equipment we liked with the money we made from the equipment we didn't really like. This is my 7th studio that I built that I'm sitting in. The first one wasn't even soundproof. We had to put up tape in the hallway, crime tape, that keep you from walking down the hall and talking because it would have gone over the air. That's less than ideal. Deal, to say the least. And that's how this show started, and it makes millions of dollars now, the show alone does. So start with what you got. Borrow your buddy's acetylene torch. Pick up some stuff from the vendor. You know, if you got to pick up some supplies from the vendor and tell them you'll pay them at the end of the job, they'll do that.

And then get your butt down there and do some welding. If you wait until everything's perfect to start, you're going to figure out that even your perfect plan wasn't Go make some money and use that money organically to pour back into the business. That's what I would do. That's what I would do. I wouldn't sell the Subaru with a kid on the way, and I sure wouldn't touch my 401, and I for sure wouldn't borrow the money to buy stuff that I'm not even positive yet exactly what I need. I think I know. I think you do know, but I guarantee you, you're not 100% right on your shopping list.

Yeah, there's something to cut back.

So, and by the way, as soon as you get a piece of equipment, you'll see another one that looks better. Welcome to the world of being in the trades.

Yeah, you have to have a version 1. You have to have a V1 to start.

Yeah, just start minimal functional, minimal functional, and get going, get going, make the thing make money. And that's how we start. And, you know, I've had to tell the engineers, we're wiring stuff in here, they come in with these bids to redo the studio on stuff. It's been here "Here, it's been here for 6 years." Okay, great. Looks okay to me, but the electronics are tired. I didn't know they'd been running. So, okay, but yeah, okay, good. So what— and then they bring in like, "We're gonna build a freaking Taj Mahal of electronics." No, we're not. Minimal functional, boys. Go back and figure it out. This is a business. We're trying to make a profit, not make a profit for the electronics store.

What you're saying is so right. You know, it's the same thing when Sam and I started our business. I didn't have a computer. I had my phone. Phone. And I— we couldn't afford for me to get a computer, so I had to do everything. Yeah, like this. And, you know, yeah, do what you got to do.

Yeah, but please, yeah. So first thing is go make some money to properly equip your truck, your mobile welding shop. And then once that's done, then go make enough profitable business in a short period of time as a side hustle to prove to yourself at least a minimum of 6 months worth to prove to yourself you can at least make more than you are making now. I actually think it's all gonna work. I think you're gonna go make a whole bunch of money. Absolutely. But I will tell you that we coach about 10,000 small businesses, and a lot of them are in and around the construction world. And one of the things those guys all laugh with me about, and I make fun of them all the time, is you guys will spend all your profit on tools. And trucks. Trucks. Well, true. I mean, because Chevy ran some Silverado through a mud puddle.. And so you think you gotta have a new Silverado on the construction site so some moron can back into it with a backhoe. And that's, you know, this is hilarious. Construction people, they're just boys with toys, and we just buy, and I need a backhoe, and I need a skid steer, and I need this, and I need, yeah, you don't.

You don't. Don't use up all your profit buying gadgets. And that's not what he's saying. No, but— But there's a tendency in that world to do that.

Yeah, even the business card, it's like, "You don't need that yet." You don't need a business card. Use your mouth.

I don't have a business card. You don't need a business card. You need an email address. That's all you need. And you need a text number. Yeah, a telephone. And a phone, but you do not need a business card.

Hey you guys, did you know that there are thousands of data brokers whose entire business is collecting and selling personal information? Things like your home address, your phone number, and even your relatives' names. You guys, that is just crazy, but that is why I use DeleteMe, because those companies that pull information from public credit cards, social media, and all kinds of other places. Then suddenly, all that information shows up on random websites. And removing it yourself means going site by site, filling out forms, and hoping they actually take it down. It takes hours, and then it can even pop up somewhere else again. But DeleteMe's team of privacy experts removes your personal information from hundreds of those data brokers your sites. And within a week, you'll get a report showing what they have found and what they have removed. And they keep scanning and cleaning up your data year-round. So take back control of your privacy. Go to joindelete.me.com/ramsey and get 20% off your annual plan. That's joindelete.me.com/ramsey.

Kayla is with us in San Francisco. Hi, Kayla, how are you?

Hi, Dave, how are you? Thank you for taking my call. Sure, what's up? Hi, yeah, I have a question. Um, how can I get my husband to be financially transparent with me as far as bank accounts, debts, and income?

So when you ask him, what's his response? You tell me what you say and then you tell me what he says.

So I am not included in the bank account. Um, I'm a stay-at-home mom, so when I ask him you know, uh, what it's in the bank account. He never gives me an exact amount. He always kind of goes around it and says, oh, we're okay, we're doing okay.

Does he get upset with you if you continue to ask?

No, he's for the most part a very calm person. He just kind of takes the conversation to a different, you know, direction. He tries to avoid all that.

So if you said, well, if you said, well, instead of you telling me the balance, can you just give me the login? That way I can check it whenever I want. What would it be his response?

Um, I believe his— I think he told me once that, uh, he would rather, uh, and be in charge of the finances so that I wouldn't have to stress about What?

And you say, well, it's not stressful for me, I just want to see it.

I've told him that and he avoids it at all costs.

How long have you been married?

We've been married for 3 years. Okay. All right.

Somewhere along the line, someone gave you guys a bad message about how a relationship actually works. And they told— someone told him and someone told you that your vote doesn't count. And your vote counts. So it just depends on how crazy you want to get to make your vote count, because my prediction is this: that as long as you continue to build up resentment and anger inside of you because he's treating you like a freaking doormat, the longer that goes on, eventually you're gonna blow And when you do, your marriage will be over and no one will be able to talk you into staying because you will have put up with this for 10 years or 15 years or 8 years or whatever, and you will have had it and no one will be able to dial you back in. I've sat in coaching sessions with couples and watched their marriage come to an end because they let this stuff go on and on and on and on and on, and finally they blow up. Now here's a, a, another take.

I think Dave is right. Here's another way to consider it. I think that sometimes in these situations when people want to prevent transparency, a lot of times it is because they have something to hide. And what's making me think that is because he's framing it in the way that you have the problem. Oh, I don't want— you'll be too stressed out, you'll be too worried. You'll be the one, really, right? When really the problem is he, he has the problem, and he's not saying, "I just don't feel comfortable. I just need to get a grip." He's making it sound like you're the person who has a problem. So that's a red flag for me. And I do think that this has to be brought to a counselor, because whether it's what Dave said or whether it's what I said, both of those are, are not— you can't continue down that path that way.

He's real calm and you're real wait until you're not. Oh, but this will come to an end because you're getting pretty frustrated. You just called a couple strangers on a podcast with millions of people listening and told your story. You're already pretty frustrated. Yeah. And, and so it's starting to build, and I don't want it to blow. And so, you know, I, I think, uh, you know, honey, if we can't come to an arrangement where I have the same vote you have about our money and we both know what's going on with the money "and my name is on the account and I have full access, there is gonna be stress in the house, but it's gonna be yours." 'Cause I'm about to create some stress for you.

Yeah, and another, I'll tell you what Dr. John Delony would say. He said, you know, when you have those conversations, frame it in the story that you're telling yourself and say, you know, "The way things are, the story I'm telling myself is that you're locking me out because you have something to hide. And the story I'm telling myself is that if this doesn't change pretty soon, I'm gonna I will blow, and that this will cause, you know, damage to our relationship that won't be able to be repaired. That's the story I'm telling myself. I don't want to keep going down that path, right? That's another way that you can frame it.

And so either, either we can come to an arrangement by Friday afternoon where my name is on the account and I have full access to everything, and you and I are making financial decisions together, or I'm going to go see a marriage counselor, and I'm going to ask you to go with me because I don't want our marriage to end, but that's where this is heading. This does not end well.

No, it never— it doesn't. It doesn't end well. And, and let me paint this.

If you're the guy doing this, you're not taking care of the little woman. If you're telling yourself that, you're so full of crap you can't breathe. That is an absolute lie. All it is is you're a control freak.

And we see the other side of it all the time. How often do people call in, they've been married forever, and they've allowed this to insisted. The husband passes away. The wife had no idea. No idea what's going on. No idea. And there's debt and there's this and there's that.

And by the way, she can't get on the checking account. They go and get a court order because there's no will, 'cause Bozo hasn't really been running the stuff right. Yeah. So, "Bubba, you're not taking care of the little woman. That's just bullcrap. That is not what's working." So, the little woman is like a full-grown person and they can carry half of the emotional stress of this household with you and should know what's going on. And by the way, the unknown is much much more stressful than the known. It creates much more anxiety when you don't know what's going on and you make up stories in your head about what's going on than when you actually know the truth. That's right. Oh crap, I thought it was a lot worse than this. I'm glad to see that we're in this situation, you know. So, you know, the unknown is way worse than a bad known for creating anxiety. Absolutely. You're not helping someone, but that's not the truth. He's really not trying protector. No, he's hiding. Yeah. He's hiding something. Or he's controlling. Yeah. Or both. Melissa is in Pennsylvania. Hi, Melissa. How are you?

Hi, Dave and Jade. Doing well. How are y'all? Doing great. How can we help? Good. Okay. I'm a little nervous. So, um, here we go. So we are selling one of our homes and we're expected to get roughly $120,000 in equity. Um, so we're on baby step number 2, but should we continue following, um, small to large, or should we pay off all of my student loans because rates are expected to go up?

How much do you have in debt?

Consumer debt is $59,571 and student loans is $124,825.

Oh, that is consumer debt. Okay. So you've got $100 and— uh, $184,000, $183,000. Okay. And you got $120,000 coming out of the house. What are you going to do for a place to live after you pay all this down on the debt?

So we actually have two homes, so we're selling that one and then we're gonna rent until— and then we're selling our second home. Actually, both are up for sale, and so then we're gonna rent.

Oh good, so what's the other one gonna bring?

Probably maybe 9— I think $9,000 because we've been in it less than 2 years, so we'll have to pay capital gains.

And then you'll have—

you won't pay capital gains on anything except the gain.

So how much did you say?

How much did you buy it for?

We bought it for $320,000. And what will it sell for?

It's on for—

it's on for $360,000, but that's 40% on the market.

So 15% of $340,000 is not $9,000. No, that's not— yeah, your taxes aren't as much as you thought they were. That's what I thought. Okay, anyway, it doesn't matter. Still didn't clear it. Okay, so, um, what's the $59,000 in debt?

Uh, credit cards and my car. We paid off my husband's truck.

How much do you owe on your car?

My car is $19,906.

Okay, well, the credit cards are a higher interest rate than the student loans.

I, I really don't think it's gonna matter. I would do it in the normal way, smallest to largest, because you're still going to have your income to put towards cleaning up the rest of the debt. And if you go at lightning speed like we suggest, it's going to be negligible either way.

You're going to pay it off really fast either way, but clearing up all the credit cards and the car debt, that's going to clean up a bunch, clear up a bunch of cash flow to be able to attack the balance of what you don't get to. You're only going to have about $60,000 left to knock out. Yeah. No, I would work through that snowball in order.

Hey, I want to talk to you for a second about love, and not love like in Titanic or something. I mean responsible love, the kind of love that moves you to take care of the people closest to you. And one of the most important ways to show that kind of love is by having term life insurance. If you have anyone depending on you, a spouse, kids, anyone, you need term life insurance. Term life insurance gives your family real protection if the unthinkable happens so they can spend their time grieving and not worrying about how the bills are going to get paid. Xander is a broker who works for you, shopping the top companies to find the right coverage options for your needs and your your budget. In many cases, there are options available with no medical exam and instant approval. My wife and I had term life insurance through Zander for years, long before I worked at Ramsey, because we trust them. Getting term life insurance is a way of saying I love you when you can no longer say it yourself. Go to zander.com or call 1-800-356-4282 to find the coverage that fits your family.

Jackie is in Harrisburg, Pennsylvania. Hi Jackie, how are you?

Hi, good, how are you? Better than I deserve. What's up?

I was wondering if you could help me determine a comfortable monthly payment for a house and how much I should put Not, not counting 401 and not counting health insurance, only having taxes out, whatever your take-home pay is with only taxes coming out, we recommend a fourth, a fourth of it on a 15-year fixed rate. And so if you're coming home with $5,000, not counting not counting 401 and not counting health insurance, just taxes coming out, you're coming home with $5,000, and that's the proper amount of taxes coming out of your check, then you would say a fourth of that would be $1,250.

Okay. And would you— and with my assets, I was wondering how much of it I should put down on a house, whatever the amount will get you to that number.

No, as much as you can that's not, not retirement.

Yeah, that's a good point. Yeah, yeah, I have a substantial amount of stock and I don't know if I should cash it out and put it on the house, like all of it. And just pay—

can you pay cash for the house?

Um, yeah, how much is the stock?

Oh, um, I have about $250,000 in stock and then a little over $60,000 in cash.

So $310,000, you could buy a $310,000 house for cash. Is that right?

I would still have to pay cash or pay tax on the stock.

So, yeah, but I mean, approximately, give or take, you're gonna be able to pay, you're gonna be able to pay up to $300,000 or so and pay cash for a house. What price range home were you thinking of?

Um, I wasn't sure. I got approved for $400,000. I could have probably been approved for $500,000. You could probably be approved for whatever.

Approval doesn't matter. Approval just means that the mortgage company wants to loan you money. That's like asking a dog if it's hungry.

Now, Jackie, uh, you have no debt, right? Correct. And you— do you have any other emergency funds, any cash sitting around?

Um, it would just be that $60K. Okay. And what do you make in cash? Um, my take-home is about $4,700 cash, like after taxes, like I net $4,700 and then I do have child support. That's about $2,800. So about $7,500 per month. How old are the children? Uh, they're just starting elementary. School. So I'm going to definitely need childcare at least for the next 5 or 6 years, which is about $1,200 a month.

Yeah, but you're going to be 10 years, you'll be getting child support, give or take. So, okay. Correct. Yeah, at least 10 more years. So here's the thing. Here's what we're, why we're bouncing around with all these questions. What we're trying to get you to is 100% debt-free as soon as possible. Because— house and everything— because if you had zero payments on a house and you have $7,500 coming in, you could build wealth very quickly. Okay, so in other words, your most powerful wealth-building tool is your income. And when you're not giving it to the bank, whatever the bank is, in this case a mortgage company, then you are— you have it free to up to build wealth with. And it becomes a lot of money, millions of dollars, fairly quickly if you don't give it all to the bank. So, you know, mathematically— and I don't live in Harrisburg, Pennsylvania, so I don't know— but mathematically, if you paid cash for a $260,000 house and had $20,000 or $30,000 in an emergency fund and you had no payments, and that would suffice for your children for the next several you could live there 4, 5, 6 years or whatever and be safe.

If you did that and you took $7,500 and you started putting aside several thousand dollars a month, you're gonna become a millionaire fairly quick. That's the most extreme side of what we teach. Now, if you want to back all the way down to, up to, you know, the maximum we would ever tell you to do, and I'm really uncomfortable in this conversation telling you it's even okay to do that, is a fourth of your take-home pay. So about $2,500.

I mean, I don't even think I would recommend that because—

I mean, it fits with our guidelines. It does. Fourth of your take-home pay. And so we're talking about $2,000 approximately a month on a 15-year fixed with $300,000 down. You know, that's going to get you a lot more house than I was talking about a while ago, right? It is. That's going to get you in like a $600,000-$700,000 house. So 3 or 4 times the house that I was discussing, and you're still fairly conservative. I think I'd go some—

if I were in your shoes today, Jackie, I'd probably be— if it were Jade in your shoes, I'd go somewhere in the middle. I might not pay full cash, but I might say I'm willing to finance a little bit. But what I'd be thinking about, and this is just based on some of the calls we get, I'd be thinking about, uh, what my life would look like if child support were to change in a major way, uh, and I were no longer getting that money. I'd want to be well within affordability, because we do get calls where that amount changes. And it's like, what do I do? I was dependent on this. So yeah, if I were in your shoes, I'd veer more towards the cash, but maybe I'm financing one or two, you know.

Before I even did that, though, I would go investigate and say, I'm going to look at houses for $270,000 and go, I'm gonna pay cash. Because I gotta tell you, that's pretty nice. You'll be really well Pretty nice. You'll be pretty wealthy. I mean, $270,000 house paid for, zero debt, zero stress. All you got to do is make money and save it and be generous with it and take care of those kiddos.

And that would still be somewhat of a temporary thing because you could then, I mean, gosh, you could move up in house.

You buy that house, in 5 years it'll probably double. Man, that's nice. And then you take that $500,000 and put some, a bunch of money with it and and move up. That'll get you a long, long way. People don't think that way anymore. Zillow tells you you can't do that.

You gotta start at a million dollar house.

You gotta start at a million dollar startup house. But except that the typical is— by the way, first-time homebuyers, the number one main price, the average home price for first-time homebuyers in America, $199,000. Wow. Nationally. Now again, I do not know the Harrisburg, Pennsylvania market. Here's the thing. I don't, I can't comment on it.

Here's the thing though, it really is an expectation thing. Cause if you, uh, if you watch any of the shows where they go home shopping, that, that you're already screwed. You are. But think about it. If you're in California and you are in one of those markets where just to start, you're spending $950,000, $1 million. What they get is nothing. Nothing. It's nothing, but they buy it and they make it work and they live there. So if you're Jack tacky. And you can be, you know, in a rural suburb or, you know, a suburb of Harrisburg, Pennsylvania, and you can get something that's— right, you could pay a lot less for it, but it's still that size that you would— right? So it's all— it's a thousand, you know, it's 1,500 square feet or 2,000 square feet. That— I'm just saying, I'm just saying.

So John on Fox a while ago, the anchor asked me, he said, what would you pay for your first house? He said, I paid $88,000 mine, and he's about my age. He's a little younger than me. Mm-hmm. And so I paid $67,500 for mine. I was making $18,000. But get this, here's what people don't think about: it was a one-car garage. It had no stove, no microwave, no refrigerator. It was on a hill. And it was really ugly. One bathroom. It had one and a half baths, and it was 1,200 square feet. Yeah, that's big. One-car garage, no stove. We had to go buy a stove. Yeah. No dishwasher, no garbage disposal, Formica top cabinets. Okay. The vinyl, the rollout vinyl floors. Yep, exactly. Exactly. The roll-out vinyl floors, because they were big then. Yeah. You know, and so, you know, "Well, it was only $67,500." Yeah, but a lot of you people would be going, "Well, it doesn't look like that on television. My Instagram account doesn't show a house like that." Because, you know, if you walked into a house like that now, y'all would go, "We're going to have to spend $1 million to fix it up." To renovate it.

That's true. That's why when you look at pictures from the '80s, everybody looks poor.

We thought we bought a house. House. Yes, we had a brand new baby, we bought a house, and we thought— and the next house we bought was $100,000, and it was 1,900 square feet, and it did have a dishwasher. Wow. And 2-car garage. Moving up, moving on up. So you got to think about the house I grew up in, man. I mean, it was 1,000 square feet, 1.5 baths, The little doors were hollow core doors. There were no secrets in this house. Welcome back to the Ramsey Show and the Fair Winds Credit Union studio. Jade Washaw, Ramsey personality, is my co-host today. Susie is in Lubbock, Texas. Hi Susie, how are you? I'm good, how are you? Better than I deserve. What's up?

Well, I'm under a solar contract and I was wondering if y'all knew of a more economical way to get out of the contract. I talked to an attorney and they want $8,000 to get out of the contract and they guarantee they can Do it.

Well, you got the wrong attorney. Okay. Any attorney that wants to make you a guarantee for $8,000 is not telling you the truth. There's no such thing as a guarantee. Um, what do you, uh, owe the solar company?

Well, it's a 25-year note right now. I pay $209.

What's the balance on— what's the payoff balance today if you paid it off?

I don't know.

Okay, how long have you had it? 2 years. Okay, and how much is it a month?

$209, and it goes up every year.

Okay, and is the solar company that sold it to you— they obviously sold the note to a bank, I'm sure, right? Yes. Who's the bank?

Uh, they— it's sold twice, and I'm not sure. It's not a bank, it's a— I don't know, um, I'm not sure.

Okay, um, it's a finance company of some kind that's bought the paper. Is the solar company that sold it to you still in business, or have they bankrupted?

No, they're in business, and they were Front was the name of the company on the note.

Yeah. Okay. All right. And why is it that you think you should be able to get out of it? Why did the attorney think he can get you out of it?

Because they misrepresented, represented it when they—

to me, your, your phone's breaking up, hon. They misrepresented what?

They misrepresented, represented the solar system to me when they, uh, installed it. In what way? I thought it was, um, I thought that he said that we could just— it was more like a lease, and if we didn't like it or it didn't work out, we could just call them and they would come get it. Did you lease the solar?

Is it a lease program? No. Okay.

No, it's not. It's not. Okay. All right.

Yeah, I, I, I— well, I mean, anytime that there's a fraudulent misrepresentation in the process, the company that sold it to you could be sued. And the, um, there's a rule that the Federal Trade Commission has passed that says the holder of the note is liable for the same fraud that the actual solar company is. In the solar business, there's been so much bad stuff go on that the Federal Trade Commission has a regulation now that if fraud was proven, if they prove that they lied to get you to sign this note, and they lied about the note, and you can prove that, and you prove that, then the contract would be canceled. Well, that'd be the hard part. I don't know how you're going to prove it though, because it's just your word against the salesman.

Right?

Right. You don't have anything in writing that says that?

No, what he said, I do not. I don't really— just got a note that was filed, and that's all I ever got from them.

Did you ever think while you're doing this that this was not a good idea, considering the way they talked about it?

Yes, I I did.

Gotta go with that gut reaction, that gut feeling. I know.

I think, you know, what I do want you to do, there's no, there's not an automatic switch you can flip that is the solar contracts are forgiven. There's no such thing. There's a couple of companies that went broke and the entire company was a shell game, a fraud thing. It was an embarrassment to the Obama administration, was one of them. And a couple of those companies, the loans have all been forgiven, but in mass, but under a class action thing and a Federal Trade Commission movement. But most of the several hundred companies have gone broke. Your company hadn't even gone broke because the tax credits went away. And when the solar tax credits went away, the solar business got really hard. And so I think you probably have been defrauded. I'm not an attorney. I have messed with attorneys enough to know that it's not easy. And any attorney that makes you a guarantee is a shyster. They're not— they don't have the ability to give you a guarantee. Our court system is not that efficient or just. If justice was done, a judge would walk up, look at this, and say, these people were taken advantage of, slam the gavel down, and 30 minutes later you'd be out of the loan.

That doesn't exist in our country. This is going to take years with an S. And, and it's not an $8,000 event because it sounds like you've got tens of thousands of dollars of note here. But I would continue to investigate it because I do think you probably have been defrauded, just on a practical basis. Now whether you can prove that in a court of law and get this done, I don't know. But I would talk to some more attorneys and interview some different ones. But please hesitate to do business with an attorney that makes a guarantee. "Oh, $8,000, I got this." That's somebody that wants your $8,000. Sounds like another scam. That's true, somebody wants your $8,000. It is going to cost you some attorney's fees, but they should be, if someone is efficient in how they do this, they should be lower than the payoff balance on the solar. And again, you're going to have to prove you know, you're going to prove the fraud. And I don't know how that's going to happen here, but I would learn— I would learn more about it by talking to a few more attorneys and try to get one that's a little more professional than the last one you talked to.

Linda's in Wisconsin. Hi, Linda, how are you?

Hi, I'm doing good. So glad I get to talk to you. Sure, what's up? Thanks. Well, I am wondering if I should be investing in the market given my current somewhat unusual circumstances. Tell us more. Yeah, so I'm 60 and I was diagnosed with cancer, um, several years ago, and I am in remission. Um, but when I got diagnosed, it was quite advanced, stage 4. Wow. I left my career of 30 years, um, to— and went on full disability so I could focus 100% on my health. Good for you. And luckily I heard of you, right, a couple years after that. I wish I had heard of you decades ago. I'd be in a different situation right now. But, um, so I do make pretty good Social Security disability. I do have margin. I own my home. I own my car. I have no debt, no children, no spouse, um, and I'm— and I have a small nest egg of about $115,000, um, but that's everything, you know. That's why I'm—

are you living on the Social Security Disability? I am. Okay. And you don't have another pension other than that? No. But that's enough to cover your monthly nut?

Yes, and I do have about $500 a month margin. Gotcha. At least.

Wow, that's amazing given your situation. Yeah, it is. I'm impressed. Congrats on the remission. Hang on, we'll come back after this little break and make sure you get a good solid answer instead of trying to give you a 10-second version with all you've been through. Dave Ramsey here. For more than 30 years, I've been talking to folks on the air, and I can tell you that most people are broke not because they don't make enough money, but because they don't have a plan. You need to give every dollar you earn a job, because when you do that, something changes. You stop guessing, you stop worrying, you stop stressing. Our EveryDollar budgeting app will show you how to find extra cash, pay off debt, and finally start winning with money. But most people won't do it. They'll keep living paycheck to paycheck, keep hoping things will change without making a change. It's time to say enough is enough. It's time to take control of your money. It's time to start your EveryDollar budget for free today. Go download it in the App Store or Google Play. Play. Continuing with Linda, 60 years old, recovering from stage 4 cancer and now in remission.

Paid for house, paid for car, no debt, $120,000 in the bank, living on her Social Security disability. Is that a fair sum summary of what you told us so far? Yes. How long you been in remission?

Uh, 3 years. Wow, congratulations.

Excellent. That's awesome. Just stop treatment. Yeah, so happy for you. Wow, thanks. You feeling better?

Um, sort of. Well, you know, I'm still undergoing lot of surveillance and close monitoring and things.

And yeah, the cure just about will kill you, right?

Right. Wow, it's incredible. Yeah, just the stress. And I, you know, I, my, my concern is that I, I'm only utilizing a high-yield savings account right now, and I, I'm quite risk-averse, you know, I'm very cautious.

Um, is that where the $115,000 is in a high-yield savings account?

Yes, exactly. Yeah. If I were in your shoes—

$350 a month. If I were in your shoes, I would learn some things about the market and about mutual funds from a SmartVestor Pro, and I would move— I'd probably leave about $30,000, maybe $40,000 in a high-yield savings for your emergency, and I'd move the rest of it into some mutual funds. Uh, to where you can get a lot better rate of return. So to give you an example, okay, the, uh, in, in 2023, the market went up 26%. High yield savings was 3%. In 2024, the market went up 25%. High yield savings was 3%. In 2025, it went up 18%. High yield savings was 3%. It's up 8% year to date right now. And if so, if it continues on that pace, it'll be up 16% because we're about halfway through the year. And high yield savings is 3%. So the difference for you, and it's not— it would not have been appropriate where you were, but if— and those are unusually good years in the market, so you don't expect that, okay? But if you make 10— let's say you've got $100,000 in there, which you wouldn't quite have that much in there, but if you make 12% on it, that's $12,000.

If you make 3% on it, that's $3,000. Yeah. And so that starts to add up. So I do want you to sit down with a SmartVestor Pro and begin learning about a good mutual fund. It could be that all you do is something simple as an index bond, which is a very calm— it does exactly what the stock market does. Okay, okay. And risk— so you own a home that has zero guarantees, but you are comfortable with no guarantees on your home because you were comfortable with the track record, the history of single-family homes as an investment. And that was wise. That's That's true. Okay. That's true. But you got no guarantee there, and you're risk-averse, but that's a steady, calm investment that has a huge track record. And so if you look at a good mutual fund that's been open for 80 years or 70 years, and it's got a track record, and it feels like buying a home emotionally, risk-wise, because you learn about it over time, and you're not doing it 'cause Dave said do it, you're doing it 'cause Linda looked at it, and Linda is wise, and Linda is intelligent, and Linda is going to put Linda's money in, and Linda feels okay.

You follow me? And you don't do it because the guy at SmartVestor Pro said to do it. You do it because you learned about it and you felt good about it. And then you're not going to perceive the risk.

Yeah, and I think we should give her tickets to Investing Essentials. Oh, that's good.

Just for free. Absolutely. Good idea. Yeah, I'll be doing that September 1st and 2nd with George. It's a virtual event. You can just log online. They're $199 tickets. I'll give you a ticket. We'd love to have you watch. Good idea. And we'll get you signed up, or we'll get you hooked up with a SmartVestor Pro too. Christian will pick up and help you learn how to do that on the, on the site. But take your time, Linda, and learn. Yes. Just like you did when you're buying the house and you got comfortable with the risk. Liz is with us. Liz is in Green Bay. Hi Liz, how How are you? I'm good. How are you? Better than we deserve. What's up?

I'm wondering how I can convince my dad to get on the same page with me about my 20-year-old daughter purchasing a home. He's trying to dissuade her from doing that, and I'm trying to convince her that it's a good investment.

Let's find out which of you is correct. Tell us more about the 20-year-old daughter.

So she currently lives with me. She does not want to go to college. She has made that very clear. She has currently— she just bought a car for $19,000 in cash, so she has no debt. She has another $20,000 in savings. She would get a $10,000 gift from me. She would get a $7,500 gift from my— from the company that she works for that is totally tax-free and forgivable after 3 years as long as she stays with us. And then she would also be eligible for a $50,000 us.

Do you both work at the same company?

We do. Mhm.

So if she— hold on, so if she leaves the company, she owes the $7,500 back? Correct. So let's check that one off the list. She's 20 years old. We don't know what she's going to do.

What does she do at that company?

Um, she works in the billing department. And what does she make? She makes about $45,000 a year currently.

And you want her to move out and start her life because she's been very successful so far and is a great kid. Your dad doesn't want her to do that. Your dad doesn't want her to buy a house. Why?

He wants her to go to college, and he's afraid that if she purchases a home, she will choose not to go to college. But she's not going to go to college.

You put it out as a foregone conclusion. Has she decided she's not going to go to college, or you decided she wouldn't go to college?

No, she's decided. I've gone to college, my other child's gone to college. She has determined She is— she does not have any interest in going to college. Okay.

What does she want to do for a long-term career?

Does she know? She's not 100% certain, but our company has a very upwardly mobile track for people in her position. Billie? Without a college degree.

Upwardly mobile track out of billing?

Correct.

Our current director of customer service started in I'll tell you what, I think she's doing a great job. She's got the cash car. She's got a job. I like the idea of her moving out. I think she's ready to move out. I don't think she needs to buy a house right now. I don't think she's ready for that. I'd love if she got an apartment and continued to rent and save because I think the $7,500 is off the table. I would not want her to take that.

No, I'm not down on that.

No. Yes, that's off the table. So she's got $30,000, but really she's got less than that because she would need 3 to 6 months of expenses for an emergency fund. In her case, I'd say 6 months of expenses. Yeah. And so for that reason, she's just not ready financially yet. And she, and let me add this, financially not quite yet. And I would love to see somebody rent for a while before they buy, to just go straight from mom and dad's house to I have a place that I own. That's a major, I mean, you know what home ownership feels like.

Yeah, move in, move into a one-bedroom apartment, buy your own milk for a while. A while.

Yep. Now she does pay rent to me.

I don't care, but it's not her place.

She doesn't have to worry about if moisture is building up in the crawl space.

You know what I'm saying? I want her to— I want her to be out on her own and none of you telling her what to do. And let's work on that for a while and then talk about buying. The second thing is I don't want her career to be decided as a track at one company. I want her to choose a What does she want to be doing making a lot of money at 30 years old, 10 years from today? And what must be true that's not true today about her? Because she probably needs some kind of continuing education. Very few people with zero continuing education after high school do well. Now, we have a lot of, quote, "high school graduates" that become very successful. That's true, but they have continued their education even if they didn't do it at a 4-year college. They go to seminars, they read books, they've got a constant track they're on of personal growth, and they're very aggressive. Dave Thomas comes to mind that started Wendy's. Yeah, right. High school graduate, okay? The Wendy's hamburger king. And not Burger King, hamburger king of Wendy's, right? And so anyway, yeah, so I want her to think about what she wants to be, and then if that company is the best place place for her to be, that, that's fine.

But just saying, oh, she's got a great track at the company, that's not a career, that's a job.

The problem with online investing advice? You hear so many different opinions and you're left wondering if you're even doing it right. And that's why we created Investing Essentials. Join me and Dave Ramsey at this 2-night virtual event to learn Dave's playbook for investing and wealth planning. We'll break down 401s, mutual funds, passing on wealth, and more. So join us September 1st and 2nd. Tickets start at $199. You can get yours today at RamseySolutions.com/events or just click the link in the show notes. Our question of the day is sponsored by Y Refi. If missed private student loan payments are keeping you from making progress towards your goals, Y Refi may be able to help you explore refinancing with a low fixed rate and a payment you can manage. Visit yrefi.com/ramsey. That's yrefi.com/ramsey. Might not be in all states.

Today's question is coming from Kevin in Oregon. He says, a lady recently called in the show regarding giving up her late husband's firefighter pension to get married again. You calculated her $50,000 annual pension income as equal to a $500,000 investment. My question is, where do you get, where do you invest to get a 10% return like that? All right. So he's wondering, and I think a lot of people ask that question because we quote, you know, if you invest the way that we teach, you know, you can expect an annualized rate of return of between 10% and 11%. And that is true. If you invest the way that we speak about, you can say that. Now I'll start by saying, if you just look at the S&P 500, S&P 500, which is just baseline index. If you look at that from inception, if you look at it from 1926, you're going to see annualized rate of return of over 10%. That's what you're going to find. About 11.8. It doesn't mean that every year it's that. I mean, just the last call, Dave quoted the last 3 years was in the upper 20s. So there's years where it's very high, unseasonably high, I'd say.

And there's years where, you know, we have dips and there's months where we have drops. But if you add all that together and accumulate all of that information, you're going to find an annualized rate of return of around 10 to 11%, 11.8%, which is what Dave just said. Now, that's S&P 500. We're telling you, hey, if you do it our way, you're investing in a mix of 4 different types of mutual funds, right? We say growth, growth and income, aggressive growth, and international. And when you do that, these are funds that are seeking to beat beat the average rate of return of the S&P 500. So you really should be doing even better than the 10 or 11% that we tend to quote around here. So that's where we're getting those numbers before. We're not talking about after inflation or this and that. We're just saying that's the rate of return. That's what it is. And so that's where that comes from. Dave, do you want to add anything to that? No, that's it.

That's the average annual rate of return. That's it is. And so the stock market has averaged— the S&P 500 is the most accurate measure of the stock market— has averaged 11.8% since it started. Um, and again, in 2023 it was 26%, 2024 it was 25%, 2025 is 18%. This year it's up 8% as of today, uh, and this is halfway through the year. So if it annualized that, that'd be 16%. So all of those 4 years will beat the average. But that means there's some years that don't beat the average. That's where an average comes from. But it still beats high-yield savings account of 3 or 4% every year, except occasionally it's down. Mm-hmm. But I mean, if you go back and look, the number of years that it was actually down, it's, it's almost none. Okay, 3 or 4 out of 25 5, that kind of thing. And so, you know, you just— that's what you're looking at. And, well, I've always heard— well, I know what you always heard, but you heard from people that didn't know what they were talking about. That's the actual deal. Go pull it up. Pull up the S&P 500 index and look at it for yourself.

You look at the charts, Google will pop them right up for you, and it's pretty simple to do. It's not, it's not really rocket science. So that— and so And the other reason I use 10% on something like that is it's really easy for everyone listening to visualize. Yeah. $50K is 10% of $500,000. You don't have to do a lot of, you know, fancy math to get there. I mean, you can do that if you got out of the third grade. And so I can put that out there and someone riding in their car doesn't have a car wreck trying to calculate this, right? Exactly. And so it's just, we throw it out there. But that's a, you know, again, some years might be 8 and some years might be 28, but the average is about 11.8. And so that's where that comes from. Samantha is in Charlotte, North Carolina. Hi Samantha, how are you?

I'm good, how are you? Better than I deserve. What's up? Okay, so my question is, I'm about $20K in debt, $17K of that being on a car loan. But I currently live in my mother's home, she owns it. I don't pay rent or mortgage, but she can be kind of controlling. And, you know, she has threatened like for me to leave at any time. And my question is, do I pause Baby Step 2 and paying off all this debt, or— and leave, or do I try to pay off all this debt first? How old are you? I'm 33.

And why are you at 33 years old living in your mother's home?

Home? Oh, um, well, I was in a domestic violence situation until my mid-20s. Um, I got divorced with 3 young kids. Um, and then I moved in with my parents when my dad was sick and dying. Um, he passed away, and then my mom's sister's husband also passed away, so they moved into a home together, and my mom gave me this home, but she never signed it over to me.

Okay, got it. That makes a lot more sense.

Okay, and how much do you make a year?

Um, about $45,000. And how old are your babies now? They are 9, 10, and 11.

Okay, and you got an awfully expensive car, don't you?

Um, yeah, I messed up on that really bad.

Yeah, you did.

Hmm, well, I can't tell from— I mean, it sounds like you've gone from one toxic relationship to another to another, um, and, um, now the latest one is your mother.

Yeah. Why is she— why is she threatening to kick you out? When you say she's controlling, what's that mean?

Um, on the day-to-day, she's not so bad. Like, she tells me I can do whatever I want, that this is my house or whatever. But then, like, if I were to make any kind of decision that she's not in alignment with, she's like, well, then you can just leave.

About the house or about your life?

Anything. Um, give me an example. Um, okay, uh, we have a vacation coming in August that we really can't afford— well, I can't afford to go on, but she's paid for everything. I'm afraid to even tell her I don't want to go because I'm afraid that will cause backlash.

Okay, I see. Okay, um, your mom has a lot of money. Does she Is she wealthy?

Um, she's middle class. She's doing okay.

Um, so here's what I would do.

I would leave.

Yeah, life's too short. You know, at some point in your life, have to be able to make a decision without a domestic violence partner or an abusive mother. At some point in your life, you've got to reach a point that you get some healing, and you need to get away from this.

What do you take home every month? How can we find you something you can afford?

Yeah, yeah. Um, monthly I'm about $2,600.

Yeah, but you're going to be in a super cheap rental of some kind that's going to be uncomfortable. But you're gonna— you just got— you got to choose which hard thing you're going to do. Hard thing is putting up with your mother, or hard thing— hard thing is putting up with a rent a rental place that's not pleasant, 'cause that's where you're going. Or the other hard thing is put up with your mother. Now, what I might do is this. I might catch her in a good mood and say, "Mom, we've gotta change the way we interact. And after everything I have been through, I cannot sit on an unstable situation where every time you get mad, you threaten to throw me out." out. And so if you're not going to deed this to me by the end of next week, I'm going to have to move mom. And give her a shot. Give her a shot at deeding it to you.

Right. Um, I've previously tried that. Um, the home needs repairs. Then leave. And I brought it up to her and leave. I was like, okay, then leave.

If she, you know, if you're not going to play through on that, Samantha, if you're not gonna stand up and say, either give it to me and I'll deal with the repairs and I'll deal with the house and it'll be mine, but I can't live in a situation emotionally anymore where someone's constantly pulling the rug out from under me. Where every time I go to sit down, somebody pulls the chair out like a second grade prank. My life. I can't. I've been through too much to live like this anymore. And if you're not going to deed it to me right now, I'm gone.

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

Our Scripture of the Day, James 5:16, "Therefore confess your sins to each other and pray for each other so that you may be healed. The prayer of a righteous person person is powerful and effective. Les Brown said, "In the end, it is the person you become, not the things you achieve, that is most important." Well, we wish we could get to every call here on the show and every question, but we can't. You can't get through on the lines most of the time. And, um, but hey, we appreciate those of you that do. If you can't get through and you got a money question you want to answer over your situation, head over to our website, use Ask Ask Ramsey is our free AI tool that's built and trained on only proven Ramsey principles. It's going to give you a Ramsey-only answer. You'll get an answer the same way we'd answer it right here on the show. Ask your question today at RamseySolutions.com or just click the link in the description or the podcast or on YouTube. Katie is with us in Seattle. Hi, Katie.

How are you? Hi, I'm good. How are you guys?

Better than we deserve. What's up?

Great. Okay, so I have— my husband and I have a bit of a quarrel. So we're on Baby Step 2, and we're trying to decide how you decide what a necessary— what's a necessary expense, because we're differing on something.

What are the things you're differing on? It's really one thing.

Most of the budget, when we've gone through, has gone well. But we have someone who cleans our home once a month because we both work full-time, like we both push 50, 60 hours outside of the home. We have 4 children and it's just—

How much is that expense?

The cleaning? It's $320 a month.

And what's your household income?

Um, $240. Okay.

How old are the kids? They might be your cleaning service. That's why I'm asking.

I wish they were. Less than 1. Okay. Um, 9 and we have an 11-year-old, but—

You mean you can't get less than one to do any work?

Wow, that's shocking. I wish. I wish.

No, she's cute. Wow. Who's taking care of less than one while you're doing 60 hours a week?

We have daycare, so we just try to work our schedules so that, you know, the other one is—

Okay. And is the 60, that high amount of hours, that's to pay off debt, right? That's a temporary thing, or is that just the nature of your jobs?

Right now, the nature of our jobs, mine should be be easing up in the next couple months just because it's not— I'm feeling very burned out. But, um, my husband's will be for the foreseeable future.

What's the, uh, what's the amount of debt again, not counting the house?

Oh yeah, um, we have $87,000 in student loans and then another $40,000 in consumer. $8,000 of that's a car and then the rest is credit cards. So just one car? Uh, we have two cars, but the other one's paid off.

Yeah. Okay. Okay. With your income and your hours, $325 is not the end of the world. It's not going to keep you from winning. Yeah. Okay. And the fact that you're stressing over it means you really are squeezing this budget. Trying. Okay. That means, that means that's a good sign because it means you guys are considering everything. Yeah. You know, you're, you're pushing the pendulum to the other side. Because you make a lot of money, and if you push it way— if you, if you really are squeezing everything else out, you're gonna knock this debt out really quick, aren't you?

I think we could have it done. You know, we have daycare and all that, but I think still in under a year easily.

Yeah, yeah, yeah.

And so, and $325,000 doesn't change that.

That was my thought.

And it isn't a representation— the way you've described this now, Granted, you're making the case for the $325, so we'll have to consider that. But yeah, but, but even, even with that said, the way you're discussing it and the fact that you are discussing it tells me everything else is probably squeezed pretty good.

I would like to think so. We're— it's really been over the last couple months and we're just— every month we tighten down more and more.

Now what you could do is you could, you could, if you really wanted to get extreme, you could test it because I'm guessing $320, is that somebody coming once a week?

Yeah. No, it's once a month.

That's once a month? You need to find a different cleaning service. That's what I'm gonna tell you, 'cause that's expensive. But I was gonna say, if you wanted to test it, you could always go back. If you test it and everything just goes crazy and your house is a mess, you could always go back. But if you wanted to test it and say, can we get through? Can we make this work? You could. Yeah.

Not saying you have to. Because I think you have cut out eating out. Out, right? Yes. And you have cut out vacations. You have cut out vacation.

We're not going anywhere. Okay.

And so the two of you are working together and you're pushing everything through. And again, it's, does the math matter or does this represent something emotionally in the behavior that matters? And I would say no on both of those after talking to you. So that means I keep them.

Let me go back to this a second because I'm, I'm a mom too. I have two. I don't have I have 4. But when you said once a month, it did hit me different because what you— the part of the cleaning service that you want is the things that you're not gonna touch, right? Like, it's— you want them to clean the blinds and you want them to, you know, vacuum in the couch. Those are things you don't have time to do. But the day-to-day stuff of doing the dishes and sweeping the floor and vacuuming, you have to do that stuff anyway. So I kind of, for that reason, I kind of do feel like, because you still have to do the laundry, right? Like, you got to wear clothes. So I kind of feel like you don't need this. If you said they're coming once a week and that's what's keeping things going, that feels different than they're— because what are they doing once a month?

Uh, they like deep clean, so they get like, you know, baseboards and floors and windows. We got—

yeah, I don't— children. And I, I actually think— I think I disagree. I think I think that you could let that go for a while. And if there's a little bit of dust on the blinds, I think you would be okay.

So, Katie, we're absolutely no help.

We're not.

Because Jade is on your husband's side, and I'm on your side. So, we're no good at all. We're no help at all. I think it's good either way, truthfully. You agree, yes, you are. There's not a wrong answer. There's not a slap my hand on the table and go, "You people are stupid." She does have an alarm.

11-year-old though. She does have an 11-year-old who can, uh, deep clean, get the Swiffer up on the ceiling fan. That's all she needs.

Wow. Send them to the salt mines. I like it.

You, Dave, come on now. You know the stuff you were doing at 11. I don't have to tell you what I was doing at 11. We were cleaning. We were the cleaning service. Yeah, that—

well, that's true. Not the 1-year-old, but yeah. No, just the 11-year-old. Again, I I'm always good if somebody is smart enough to ask the question, they're probably okay. It's when they don't ask the question, the ones listening that we just gave permission accidentally, that scares me more than Katie.

I agree with that. I do agree with that.

So, Katie, you and your husband talk it through. You could try it with or without, but what's probably gonna happen is you guys are gonna continue to get more and more and more intense, and you're probably gonna cut them for 3 or 4 months and finish off the debt. And then when they come back, you'll appreciate it. And it'll probably be something like that that you decide on. But again, I don't think there's an absolute— one answer's in the stupid column and one's in the smart column.

I agree. I'm surprised. Usually you're the more frugal one.

Yeah, I am, but I'm always looking at ratios.

Yeah, that's true.

And they do $250 a year. If they were bringing home $3,000 a month, maid's gone. No, No-brainer. You know, but they're making $250,000 a year. Yeah, yeah. And so, you know, and she's not working 20 hours a week part-time. She's working 80 hours, 60, 80 hours. She has a high— That's the other thing. She's not there. So, you know, but if you call me up and go, "Well, I have a remote work from home." Oh, shut up and clean the house, you know. For real. Really, I would have been down, you know, like a whole different thing. But I'm just listening to the whole picture. And the rate ratios. And that's very interesting. It's an interesting discussion. It is very cool.

Usually we're telling people, yeah, cut back subscriptions. If you're investing, pause investing.

You won't regret it if you cut her. No. And bring them back, like, bring somebody back later. You'll be okay. You'll be okay. That puts this hour of The Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.