Transcript of You Don't Get Ahead By Coincidence New

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Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is the Ramsey Show. Alongside the fabulously incomparable Jade Warshaw, I'm Ken Coleman, and we're here for you. 888-825-5737. -525 is the phone number to jump in. 888-825-5225. Partner, you ready to go?

Let's go.

She's ready. Denise is joining us in Toronto. Denise, how can we help today?

Hello, thank you so much for taking my call. Sure. Um, my question: I am needing help to create financial stability when I am starting over in life at the age of 51, and I'm in a difficult situation going through a divorce, and I feel like I don't have time to waste with taking steps forward financially. And so I need a plan. Um, I'm guessing you need more information than that.

So let's start with, are you employed?

I am employed.

Yeah. How much do you make?

I make $45,000 a year, which after taxes where I live, um, Comes out to be about $2,500 a month.

Okay, can you live on $2,500 a month?

I am, yes, I'm making it work.

Okay, so that's a good starting point. And the reason I'm stopping this momentum here, Jade's gonna jump in and walk you through some really specific stuff, but let's just pause for a moment and let's take a deep breath and realize what you just told us. It's not ideal.

Right?

It kind of sucks, but we can live. And I think that's really important to hold on to, Jade, as she's about ready to go into a new life. So, you're going to be okay and make it. Now, let's bring Jade in. Let's talk about how we thrive.

Okay? Sure.

So, give us more of your financial picture. What do we need to know that we don't know?

Um, I am renting. I pay $1,500 a month in rent, um, for a 400-square-foot apartment. And just to backtrack a little bit, coming out of the divorce, it's possibly going into court soon, um, for zero transparency and dishonest disclosure of his income. So there's a lot of difficulty there, and I'm not sure I'll recover or get anything Sure.

How are you paying for lawyers? How are you paying for that?

Right now I have $4,000 in legal fees and my lawyer is either going to be paid after a settlement or what is owed to me is possibly recovered. But there's no guarantee on that.

What is owed to you?

Oh, there was a 10-year separation. Where he was being dishonest about his income. And so there's $237,000. Oh, wow. That should have been paid to me, but he's been very strategic. And okay. And so, I mean, there's a lot of backstory there, but even as I went to a lawyer to get help, he walked away from his job, lowered his income. So there's two of those things.

There's $237,000 at stake. I don't want us to focus too much on that because the truth is exactly, you don't know if you're going to get it or not. Uh, I do want to be, have have some thoughts about this, these legal fees coming up, uh, because you might be on the hook for that. Is there other, any other debt to speak of?

Uh, right now I have about $2,000 in credit card debt, of which should be paid off by— I should pay it off by the end of this year, no problem. How?

Okay, I want to camp out on that because I'm seeing somebody who has $1,000 to spend on groceries, gas, and everything else in life. How are you paying off the $2K, no problem?

Um, I've, I'm just putting aside money every month.

Okay.

And I, I feel like at the end, like I'm living very small.

Yeah. How much margin do you have?

Um, so after everything is said and done, my cost of living can be around $2,300 a month.

Okay. So you got $200 in extra margin, but you called because there's a sense of urgency around really your future.

My, my future. And my question, you know, I look at and I watch the shows. I'm, you know, I have $1,000 in savings now. I'm kind of looking at the steps forward, but should I be investing? You know, is retirement possible for me?

Yeah, let's, let's talk about that. So I want to kind of dial back and put this in order of, of importance. So the first thing is, I love the fact that you've got $200 of margin. To Ken's point earlier, that should help you sleep at night knowing, hey, I'm not in the red. However, we both know it can't continue like this. And honestly, the ways forward— there's nothing else to cut out of the budget, there's nothing else on that end. This is an income issue. Therefore, this is a career issue. And so my question for you is, the type of work that you're doing now, is that the type of work you see yourself doing in the next 2 to 3 years?

Yes. Um, so I'm currently a church office administrator, and I've always been in ministry my whole life. Um, but I'm looking at that, and I'm looking at being self-sustainable financially And so I'm even thinking, but right now it's keeping me afloat.

But is there a way for that? Is there a trajectory for that income to increase over time?

No. And that's right now. Yeah.

That's where I'm at. Because if I'm, if I'm just being conservative with you, if I, if I say, okay, best case scenario, she takes that $200 and she starts investing it immediately from age 51 to age 71, that's $151,000. Like, that's not going to sustain you. And so we have to have a very real conversation and reality about what it actually takes monetarily for you to be able to retire. And the answer to that is income.

Yeah. How would you describe, Denise— I want you to take the ministry language out of it. You'll understand why I'm asking this in a moment.

Sure.

I want you to describe what you do right now.

I work in administration, and so I'm running an entire church right now because we're without a pastor. So I, I do music, I do graphic design, the social media part of it, everything.

Do you do operations?

Yeah, yeah.

Okay, here's why I asked you the question. I think this is an important exercise for you to describe what you do. Now, your situation is it's kind of a— you're doing everything right now, so we need to extrapolate, kind of pull back from that a little bit and go, okay, if there was a pastor there and the adequate staff, what would you be doing? And here's why I think this is important. I know you love ministry, I know you've been in ministry, but right now ministry is not the best financial option for you. And if you could go get a job as an office manager or maybe a project manager where we're making $55,000, $60,000, I mean, I'm just, again, I don't know the Canadian workplace, I don't know the marketplace, but I know that I'm saying things that are adjacent. You have the skill set and the experience to do those things, true or false?

True.

Okay, right now the number one thing you need to do is you need to replace your job. And this is not, "I love my church. There's no pastor. If I leave, the church is in trouble." That's not your problem.

Right.

There are two ships in this conversation that are taking on a lot of water, the church and you. And I'm not worried about the church. The church will be fine. I am worried about you. So I think Jade's absolutely right. We need to juice that income by $15,000, $20,000, $25,000.

Yes.

And now that gives me breathing room. I can pay off the lawyer debt. I can self-sustain and begin to move on. And then I can invest and work in the Baby Steps. So hang in line. We're gonna give you Total Money Makeover. That's your plan. That is your plan going forward. And we're very sorry, by the way, that you're going through this. And understand, you're in a season of grief right now. And so getting through the grief is number one. What will help you is more money.

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Next, we go to Minneapolis where Jennifer awaits. Jennifer, how can we help?

Hi, um, I am coming into a bunch of money, uh, through a settlement, and, um, I just— I don't have any financial background. I don't know what I'm doing. Like, I'm gonna go through the Baby Steps very quickly once I get that money. But then I have no clue what I'm doing here. Hmm. Wow.

So I can tell this money right now feels a little bit like a stressor, and I can understand that. How much money is it?

So the floor is $250,000 and the ceiling is $5 million.

Whoa.

Wow.

That's a big stretch. Can you give us some variables as to what you know which would determine where it lands in that massive range?

Basically, it's whatever. Like, there's a history of settlements with this particular company. The highest one settled for $180 million. But it's not like that's not 100% my situation.

When will you know?

My attorney told me it'll settle this year.

Okay. Okay. But you know for a fact you're getting $250,000 at least?

Minimum. Yes.

And you know that for a fact?

For a fact.

Okay. How much? So, so tell us your financial situation. Give us a picture because you've said, hey, I'm not financially literate. What is that equated to? How much debt? Tell us what's going on.

Okay. So My— the most I've ever made in a single year is $42,000. Um, and like, so we just did our taxes last year and we did $31,000 between the two of you. Yeah.

You and your husband?

Yeah.

What kind of work is that?

Um, well, initially he was, he was working at a foundry and then, um, he moved across the country for a better job, which was also a foundry, but just more money.

But what about you?

I don't work.

And you've never worked?

I've worked, like, I think in my life I've worked a total of maybe 3 years.

Why is that?

Um, it's, it's hard to tell, like, one, one thing because it doesn't make sense on its own. Like, everything's kind of a snowball effect.

So So there's not a strong working history, has, and the income that is brought in is low compared to, you know, median standards out there in the US.

Yeah.

Tell us, tell us about the debt. Tell us about what your lifestyle has looked like.

Okay. So our debt combined is around $55,000 total. That's the car payment, that's credit cards, other financial obligations that we have. Like what? Another one of those snowball things. I owe federal restitution for $39,000.

Taxes?

What's the plan?

That's okay. Everything stops. There's a screeching tire sound here. What is the plan on the $39,000? I'm assuming you're in some type of agreement or payment plan. Yes?

Yes. Yes. I have to submit like our financial situation once a year to to the DOJ and they review it and then tell me what I have to pay monthly. Um, they put a hold on my payments for a year because we were not doing well.

Okay, okay. So you gotta hurt— you got—

so at least we have something working there.

Okay. Um, going back to your initial fears, um, yeah, the best thing for you is going to be to learn as much information as you can, and you called the right place to get that. Um, yeah, my, my fear for you going forward, if you don't choose to change and learn more about is debt. Okay? Because what can— it doesn't matter how much money you make, you can't outearn financial illiteracy and you can't outearn stupid choices with money, right? And you can't, you know, settlement out of it. None of that'll work. You'll blow through it. So, right. The biggest thing that I want to get you connected with is before we get off the phone, I'm going to send you some resources and I want you to just full force go into them. I'm going to send you The Total Money Makeover. We're going to get you hooked up with EveryDollar. And inside of EveryDollar, there's a lot of teaching materials, but I want you to go old school. And I'm also going to give you Financial Peace University because that's really, that's like the intensive version. And I want you to do that.

Yeah, I watched Financial Peace University when I was 20, so I'm— that's why I was familiar with the Baby Steps and everything.

Good. Then I want you to go back and refresh it because even the best of the best of us need to go back and get a refresher on that. So what's going to happen when this money comes in? Absolutely. You're going to take it and you're going to pay off the restitution. You're going to pay off the credit cards. You're going to pay off the car. But the precursor to the Baby Steps working is twofold. And these are the things that you've got to lock in. And if you don't lock them in, nothing I tell you is going to work, okay? So, here we go. Number 1, you have got to decide today, I don't borrow money. You have to stop borrowing money for any reason. I just don't borrow money. Because what'll happen is there'll be something that you want and you'll go, well, I can put a lot down, and you'll just kind of creep over that line. So you've got to decide, I don't borrow money anymore. That is going to keep your income yours, and it's going to keep the risk off your back, and it's going to keep you from sliding back into those behaviors that you're afraid you're going to slide back into.

So you've just got to put a hard boundary there. Boundaries are good. Okay, that's thing one. Thing two is you've got to become a budgeter today.

Okay, so just for some context, like we budget everything. We budget everything. We don't buy extravagantly. Like, the debt that we have on our credit cards is for necessities that we could not cover.

Okay, can I jump in? Can I jump in, Jennifer? I know you're hurting, and Jade's right what she said, but can I tell you something? The reason you guys are hurting is because you don't have enough income.

Yeah.

And I absolutely believe that you believe that everything you put on that credit card was a necessity. But I have a hard time agreeing with your classification of it. What is a necessity is, is you and your husband both in the United States of America, in the Minneapolis area, should be making combined minimum $60,000.

Yeah.

You know it and I know it. I don't say that in any way with a hint of judgment. So please don't feel judgment. But you called us to help you, and I'm telling you, Jade's 100% right. But when she told you the truth, your response was, well, we do budget. We just had all these things happen and we had to go to a credit card. No, what you need to do is be making more income so that when things happen, we can cover it. Okay.

Right.

So the Baby Steps get us to that place and Baby Step 3. So I'm going to tell you, I'm going to give it back to Jade, but I wanted to jump in and say, I wouldn't wait until the settlement comes Thank you.

I was just about to get that.

I think you need to go get a job today. I don't care if it's the late shift at the local gas station. I don't care if it's stocking shelves at Walmart. I don't care if it has anything remotely close to dignity attached to it in your mind, because good hard work is dignified. I think you guys got to change your life and take some ownership of this situation and go, we're no longer going to get in a situation like that because we do know how to budget. But your problem is not budgeting. Your problem is you don't have anything to budget.

Yeah.

And I want to take that a step forward and tell you, though, I'll tell you my why behind it. I'm sure Ken has one. I don't want you to think the only way you win is by coincidence.

Yeah.

You know what I'm saying?

Right.

I don't want you to think that the only way you get ahead is something hap— you know, happenstance takes place. And thank goodness, right? I want you to have the confidence to know that you can get out there, to quote Dave Ramsey, you can kill something and drag it home. You can go out there and make it happen. And the way things are, life is kind of happening to you. Oh, he went here to do this foundry and he went here to do this foundry. And then the accident. And then the this and that.

No, no, no, no, no.

You've gotta start taking life by the horns and you've got to start saying, okay, I'm the master of my destiny here and I've got control. And I would love, love, love for that to take place before a dime of this money rolls in.

Okay.

You know what I'm saying?

But here's the deal.

Yeah.

On the settlement, we're gonna tell you to walk the Baby Steps out. Are you familiar with the Baby Steps?

I am.

Okay.

So it doesn't matter if it's $250,000 or $5 million. The baby steps. That's what you do. But you have got to take some ownership now. We're not just going to sit around and wait for the settlement. Because let me tell you about settlements. They have a sneaky way of taking way longer to get paid out than maybe that you were told. And sometimes, Jade, shockingly, they don't end up being the amount that we were told.

Hey, those lawyers, those fees, those taxes.

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Josh, how can we help?

Hey guys, can you hear me okay?

Yes, loud and clear.

Hey, thanks so much. Um, you guys helped my wife and I get out of $100,000 worth of debt. Uh, we called last year, we were in Baby Step 2, and now we're on 5 and 6. So here I am.

Thanks for calling.

Yeah, yeah, Jade, you told me to just pay off my car, and I, I didn't want to do it at first, but I just did the next day, and here we are. So way to go.

Um, good things happen when you listen to Jade. Okay. Just going to tell you, everybody listening to the show, you need to listen to Jade. Okay. All right. Go ahead, Josh.

Jade will do it. I'm telling you. Um, we, we have two young boys and I'd like to set up a financial future for them. I set aside right now $250 a month for each of them. It could be more, but right now it's going into a UTMA account. But I realized that one day they're going to wake up at 18 at that rate with $60,000 and I just hand the keys. And so I will do my best to make them as financially literate as possible. Do I put it in a 529? They might not go to school. Do I put it in a mutual fund in my name and then we can have a conversation? But it's— I want it to be used for school, but I can't tell them how to spend it in a UTMA. So yeah, is there something that you recommend? At that rate, I probably will put more than $250 a month for each of them, and I just don't want to I don't want to give an 18-year-old, you know, sure, 18. So, well, just for calling to see what you guys recommend.

I agree with you. I shy back from the idea of giving a large sum of money to an 18-year-old, especially when at that point, yeah, they're on their own. The money is now in their name and you can't really govern it the way you'd like to. I would, I would be partial to throwing it in a 529 account instead, especially at the rate that you're investing. I don't think that you're going to overfund Certainly not overfund college, but I don't even think you're going to overfund higher ed in general with that type of money. If they want some form of certificate, if they want to do some, you know, something in the trades, I think that that's a good sum of money. And you've got to remember that it is transferable. So there, you know, you can transfer this on to like, even if you or your wife needed to use this money for furthering education in your fields, it can go on if that that, you know, child wanted to then keep that money for, for their kids. But just know that over time that money can be pulled out and it can transfer to an IRA at a certain point in time.

So it's not like forever lost. It's just allowing that transition to take place. But I don't think you're going to overfund it. And I also think that as time goes on, if you want to pull back that number or if you wanted to split the difference, I think you can get creative and say, okay, I'm going to put half of this in a 529 and I'm going to put half of it in a mutual fund in me and my wife's name. And then you have a little bit more control over it, but then you're getting some of the tax advantages of the 529.

Okay. And you don't— what happens, I mean, if in the scenario where both of them actually don't go to school and use it, you can put it in an IRA, can you pull it out? Does it get penalized or anything if you then did pull that sum of money out?

So at any point you can pull the money out. If you pull it out for non-education purposes, you are gonna be penalized. It's a 10% penalty. So just know that.

Oh, okay.

But it does roll over over time. I can check that for you, Ken. Keep him busy. I'm gonna check when it rolls over.

Yeah, well, what I would say, Josh, is she's gonna pull that over for, but you, you're in a situation where don't overthink this, you know what I mean? And your kids are how old?

They're 4 and 6. Yeah. So we've got plenty of time.

You do, but here's the other thing I was gonna tell you just to be thinking about as you're trying to figure out what's the right amount. Education is changing so rapidly right now in the United States. I can't even imagine what higher education looks like in 12 to 14 years. I'm not kidding you. So I think it's going to be radically different. I don't see the traditional higher ed format. That's just me. It's not a hot take for me, but it's a hot take for some people. But I'm telling you, I'm paying attention to these trends. So So, you know, looking at the current cost of tuition and trying to figure out, my point is pick a solid number that's gonna get 'em where they need to be based on maybe where things are today. Don't overthink about what it's gonna, how much it's gonna cost. 'Cause I think if anything, the cost is gonna go down. I think it's gonna be decentralized. So I, at some point we're gonna hit a breaking point and I think we're really darn close. So that's the part I wanted to give you that I hope is some good context in choosing the amount to invest.

Jade, you got what you were looking for?

Yeah, there's a lot of different parts to this. So number one, the 529, it needs to have been in existence for the current beneficiary for at least 15 years. So in the case of your children, that would be the case, right? They've had this money. They've decided not to go to college. They've held on to it for a while. And then that's going to have to be rolled over to a— from a 529 in a minimum of 5 years. So there's some nuance there. I think you can dig deeper in that to decide. But I honestly, like I said, I think if you split split this out. And I think that if you, like I said, do part of it 529, part of it in a mutual fund, it gives you more control. And I don't know about you, Ken, but you kind of get to know your kids and you kind of get to see what trajectory they're on.

That's my point. It may be trade school.

Yeah.

You know, uh, you know, if the kid wants to get into technology, I think that's going to look wildly different, you know. So don't stress over this. Be wise and know that you've got a lot of options. Anything remotely related to some type of training or education is going to be able to be used. Yeah, that's right. So talk to a SmartVestor Pro about this and make the best plan. Don't— I, but I would, I guess what I'm getting at is I wouldn't oversave.

No, I wouldn't oversave. And like I said, you can check out the SECURE 2.0 Act. That's the one that talks about you can move those monies to a Roth IRA. There's a $35,000 lifetime limit. $7,000 annual limit. So just kind of think through that. Like, what would that look like to move this amount over this amount of time? Yeah.

Yeah, yeah.

Thanks, Josh. You're a good dad. You're doing great. You know, broader issue here, I touched on this a minute ago. I'm gonna revisit this for our audience. As you start looking at the Baby Steps, okay? And so for people that are going, okay, I'm late 30s, maybe I'm, early 40s, and we're just getting into the Baby Steps. Baby Step 1, $1,000 for that rainy day, right? Kind of garden variety emergency. Boom. That's important. Baby Step 2, smallest debt all the way up to the largest debt momentum. We're going to knock it out. Game changer. Super important, right? Baby Step 3, 3 to 6 months of your expenses in the bank. Now we're feeling really good at night when we go to bed. Baby Step 4, now we're planning for the future. 15% towards retirement. And then some of you're going, I'm so far behind with my kids. Baby step 5 feels like a really rough emotional confrontation.

Yes.

All right, I'm just calling it out.

Absolutely.

Here's what I want to say. Don't fall into the trap that your kid has to go to a super expensive school, to a name brand school, or that they have to have a student loan for any amount of professional success, because that is the cultural pressure. And if you take the cultural messaging and pressure and you put it on top of somebody who's going, we're so far behind, we're just trying to get through Baby Step 3, and my kid's going to go to college in 2 years. I know what that can feel like. You talk a lot about the emotions behind money, and I wanted to call it out. I want to give you the last word on that. I want people to think about there are more ways for your kids to get the training that they need more ways than ever and more cheap. That's all I want to say. I want to throw it out there.

I'm going to tell you right now, setting expectations early and often. My parents told me from a young age, you don't have a college fund, you better be good at sports, you better be good at grades. When you set expectations like that early and often, that is more important than a college fund because then you go, okay, I got to get scholarships, I got to have a good, a better GPA, I got to be willing to work, I got to choose a school that is within the right price range to actually make this work because we're not doing student loans. Expectations trumps a college fund any day of the week.

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All right, Caitlin is up next in Shreveport, Louisiana. Caitlin, how can we help?

I am looking for the best way to consolidate my debt and to raise my credit score so in the future I can buy a new vehicle and a new house.

Okay. Now, how familiar with our show are you? Are you new to us?

Um, only in the last year and looking at Baby Steps. I've completed a couple, but out of order.

Okay, tell us, give us the update.

So I already have over $1,000 in savings. I'm actually edging towards $10,000. That's just because my dad raised me to always save money and make sure you always have at least 6 months' worth of your bills to be covered.

Okay.

And then I also have the 15% that I put back monthly into retirement.

Okay.

Is that through a 401(k)?

Um, 401(k) and an IRA.

Okay.

Anything else?

That's pretty much it.

And what about the debt? Because you mentioned consolidating your debt.

Um, yes. So whenever I turned 18 and I went to college, I found out that my birth mom had used my information on a house loan, a vehicle loan, and 2 credit cards.

Oh Lordy.

So I have the 2 credit cards that are on my collections, which is really the main thing that has affected my credit the most.

Not the mortgage?

If no, because thankfully I found out after having a conversation with my dad that my dad ended up paying for the house and somehow my name was just attached to it for the first 3-ish years of my life. Like, I still get unclaimed property tax from the state of Louisiana for that house.

But it's nowhere on your report anymore?

No, not at all.

And the car?

Not at all.

No. Okay, so it's just these credit cards. How much is— how much is it?

It's right at $1,500, and then my total debt is only $3,000 because the other $1,500 is medical debt, but I've paid off the other 80% of my medical debt just because of my health issues.

How much was it to begin with? Well, as far as paying off my debt, so it was, it was $8,000 to begin with, the medical debt?

Closer to like $10,000 to $12,000. Here's what I don't understand.

How is it that you're being held liable if it's been proven that your birth mother used your name to fraudulently take out credit card debt?

That's what I don't understand either.

Have you talked to the credit— well, first of all, have you proven this? Is there some type of legal judgment and ruling that, that it's been acknowledged by somebody in authority that your birth mother did this?

No, I just I got her to admit to it.

Did you get it recorded?

No. I really don't have much to do with her anymore.

Sure. Well, gee whiz. I mean, my gosh, I totally understand. All I'm trying to do is to see if there's a way out for you not to have to pay a nickel of the $1,500, given that you didn't even—

And that's how I actually got the house and stuff like that off of my credit, which it still affected my credit from there, but I'm edging up to like 580 compared to the 330 that I started off with.

Okay, so let's, let's take a timeout and talk about that for a minute because I know that you are familiar with Ramsey, but I think there's a key point of this that you're missing and I want to talk about that. So over here, we don't really care about credit scores. And the reason that we don't care about credit scores is because credit scores are just a measurement of how you handle and deal with debt. And since we are anti-debt, there's no use for a credit score. 'Cause if you think about it, Caitlin, credit scores, they measure how much debt you have, how frequently you use your debt, what percentage of your debt you use, how long your debt's been around, what is the mix of debts that you have, right? It's just a measurement of debt. And so over here, the whole point is, hey, let's get rid of debt because the borrower is slave to the lender. Let's use our income and budget our income to live within our means and pay cash for the things that we want out of life. And so, when that happens and you begin to pay off your debts, when you pay off this $1,500 medical debt, when you pay off this $1,500 credit card or get it expunged, then what's gonna happen, and if you decide, "Hey, I'm just not gonna borrow money," your credit score is gonna disappear.

It takes about 6 to 12 months for a credit score to completely disappear. If you look it up, it'll either be zero or it'll be indeterminable. That's what takes place. And when that happens, it's not a bad thing. It's actually a very positive thing. But most people will come back and say, well, wait a second, what does that mean, Ken, if I want to get an apartment? What does that mean, Ken, if I want to, you know, buy a mortgage? And so we're here all the time to explain to people it's actually a wonderful thing when you don't have a credit score because an indeterminable credit score is just as good as a high credit score. It means the same thing. So if you go out to buy a house, the only thing that's different is the method in which they approve you for the mortgage. Instead of doing normal underwriting, they would do what's called manual underwriting. That's the only difference. And so that's the number one thing that I want you to take away from this conversation is you don't have to spend your time, effort, and energy chasing a credit score because all that's going to do is land you in more debt.

And I can tell you've got a good head on your shoulders. Your dad taught you how to be a saver. I can tell you're not a person who goes out and takes out a lot of debt. Your mom screwed you over royally. That's messed up. But I think you have a good head on your shoulders, and I think you understand this.

And that's— yeah, I agree. It's just the only thing from where I'm from, obviously, is like everybody's always preached like you can't do anything without a credit score.

You're wrong.

Anything without a credit score.

Yeah, but what if— what if like you were hanging out in a crowd that said it's like everybody around you said it's totally okay to eat Tide Pods? Would you would you do it?

No.

You see my point?

Absolutely not.

I know it's an extreme example, but you can't say, well, everybody around me— now here's the deal, we understand that, and that's why Jade just walked you through very meticulously why we don't think a credit score matters. So now you have to go, okay, and I understand your reaction, you were kind of like, okay, that's all well and good, but everyone in my life's gonna go, you need to do that. So let's talk about the next step, Jade, which is how she saves up for a car.

I do want to do that, but I want to take that a step further because I want you to go home and chew on this. The reason that you're like, oh, well, all my friends are eating the Tide Pods. The reason is because that's what's being advertised, because there's money on the other side of that. Think about that. It makes sense. Companies want you to take out debt. Therefore, it is in their best interest to create a score around that, something that consumers want, something that feels gamified, right? There's no money on the other— on the other side of a zero credit score. There is no financial institution that benefits from you having a zero credit think about that. Therefore, there's not gonna be any commercials about it, boo. It's not gonna be out there, but it doesn't mean it's not real. Ken and I have nothing to gain from this.

No, not at all.

So, we're sitting here telling you, I, let me tell you, until I bought my house, I went years without a credit score. And then when it was time to buy the house, we did manual underwriting. Now I have a mortgage, so I have a credit score. But think through that. And anybody listening, I want you to think about that. Banks are attached to the end of this. Banks want you to borrow money. Banks want to be able to, do you see what I'm saying? So think through that because wherever there's a paper trail, that's where you figure out the origins of something.

Kaitlyn, would you like to pay cash for a car? If you had the money saved up, how would that feel?

Amazing. Yeah. And that's actually the way that I was always raised.

Great.

Because my dad never even had a credit score up until I was over the age of 20. And I'm now 27.

Right. So this is possible. So now the question becomes not how do I get my credit score in a place where I can buy a car? Well, if you're not going to finance the car, the credit score doesn't matter. Last car, the car I'm driving right now, I bought it from a local dealer.

Cash.

And I walked in literally with cash. And guess what they never asked me for? They never said to me, well, Mr. Coleman, what is your credit score? Because the minute I said I'm paying cash and I have it in a little briefcase here and I got an envelope and I'm literally— what I'm offering you with this car is this amount of money. The guy, first of all, was stunned and it took him a second to make sure he heard me correctly. And then he went, all right, sir.

Yes.

There was no credit score conversation.

It's fast.

So, Kaitlyn, I just— we're trying to reset your true north. Yeah. You know what I'm thinking? It's like we're pulling you out of the Matrix. You know, the Matrix says I got to plug in to you need debt to be able to live. We're saying you don't. And so what do you want, a $12,000 car, $14,000 car? Would an $8,000 car do what it needs to do for you right now? Boom, we set a target, we save up the money, and we go do it. Same thing with a house. What's the right down payment?

And by the way, when you do that, you're setting yourself up to be wealthy for life. Think about it. What would it mean if you invested that car payment?

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Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Ken Coleman. Jade Warshaw is alongside. We're really happy to have you with us here. We're here to help you, help you win with your money, uh, in your work and in your relationships. The phone number to jump in is 888-825-5225. 888-825-5225. 825. We start out with Joelle, who joins us in Wichita, Kansas. Joelle, how can we help?

Hi, um, how are you guys today?

We're doing well. How are you?

Oh, I've been better.

What's going on today?

Okay, so I am in Baby Step 3. I thought I was finished, but I think I'm gonna be starting, um, my house flooded. Well, so I have a crawl space and my main water line burst under my house. No. And it's cost, um, so far I'm at over $40,000 worth of damage.

Oh man.

Yeah. And I have $12,000 in my emergency fund, but not enough to cover all of these damages.

And this is—

um, I don't—

you don't have insurance?

Well, I do, but they're trying— they're arguing on whether or not they're going to pay because my house is old, so the pipes are old. So, um, I'm just trying to figure out if insurance doesn't cover, what is your guys' advice on where to go next for all of these bills?

Has the work already been done?

Um, some of it, yeah, had to be done immediately. Um, the plumbing had to be done, the restoration company had to come, them and start getting the water out, the humidity out, dry it out to try to get, you know, to prevent it from getting ruining the subfloor and the beams and all of that good stuff.

What is the specific communication been with your homeowner's insurance on this? I mean, I'm sure someone's giving you the runaround on the phone, but have they, have they been able to cite to you some type of specific line in the homeowner's policy policy that says they don't have to pay. I'm wondering if they're just trying to bully you and manipulate you versus have they proven to you that they don't have to pay?

Well, so the most recent communication has been that they want to talk— they don't want to talk with me anymore, they want to talk to the plumber. And so I let him know and he was going to do his best, but the pipes are old, so— and I, I haven't— I mean, my house is almost 100 years old, so yeah, they're going to want to know if this was some—

a problem that has been escalating over time that has never been dealt with, or if it really was a sudden catastrophic event, or whether this was a slow leak over time.

Yeah. And according, I went to my local where I pay my water bill, our local city place, and it definitely was a catastrophic event. So I am going to fight it.

Yeah.

But while I'm fighting it, if I have, when these bills come up, because I had the HVAC issues there, the So the estimate for the issues is $30,000 because the return air vent is under my house and it was full of water. The HVAC system outside was full of water and stuff is now short circuiting and everything is still wet in there. I don't— it's just been a mess.

Read it back to me.

And I have another guy.

So the actual water damage from in the interior, like once they dry it out, obviously there's cosmetic things that you're going to want to fix, like flooring and walls and all that stuff. Wall, uh, but then there's the actual technical damage to the HVAC. That's $30,000. How much is the— to fix the inside of the house minus the HVAC?

Nothing. There's no damage in the house. Oh, um, it's all under— it's all under.

So nothing touched your living space? No, that's good.

I caught it fast enough.

Good for you.

Yeah.

Okay, I, you know, I, I don't know what Jade's gonna say about this, but I come at this. So I'm going to go what I think is probably extreme and then I want your take. Go ahead. Joel, if I'm in your shoes, I'm getting an affidavit, a statement from the local water company where they say this was a catastrophic event. I'm getting that like instantly. I am calling the plumber and all these other people saying, I need you guys to go on the record here, uh, as to how you see this thing going down and what was going on. And I, I appreciate the fact that the insurance company wants to talk to your plumber, and I think that's great, but you never lose sight of it. In fact, when the plumber calls, the plumber has you on the line.

Yeah, okay.

Because I want that insurance company to know that Joelle is not going into the night quietly, because Joelle's been paying premiums on time because you said she had to, to be insured. And now when she has an actual catastrophic event, you jerks are trying to manipulate her. So they need to know that Joelle's not going quietly, and they need to know that you're— that you would be happy to go to counsel and get counsel. And you need to say enough things and ask for enough things where they realize Joelle is taking care of business. What provision? Show me the line in my policy that you are citing when you're questioning whether or not you guys are supposed to pay for this after I pay my deductible. And I, I just would be hypervigilant because once they realize that Joelle is willing to go all the way on principle because she's not going to be messed with, I think it changes things. But I, I'm going to stop there because I do value Jade's, uh, wisdom on this. That's what I would I would do.

I— Yes, I'm with Ken. I would 100% fight this. But I'm here to help you deal with worst-case scenarios. So I want to talk about what is your income right now and what's— what's your monthly margin look like?

So like my yearly income? Is that what you want to know?

Tell me what you make a month.

Probably $5,000.

Okay. And of that $5,000, you told me you have $12,000 saved. How much margin do you have every single month?

I would say 2.

Okay, so what my goal would be, let's pretend you're on the hook for some, if not all, of this money. And so you're looking, oh man, I got to shell out $30,000. You've got 12, so we got to come up with another $17,000 or $18,000 very quickly. So my first thing that I would do is I'd be finding, I'd be looking for ways that I can cut back to where I can start to save up as much money as possible. I'm looking around, is there anything I can offload to pick up a, you know, however much money is possible? Maybe it's 2 $30,000, maybe it's $800, right? So that's kind of just a practical way of looking. But what I'm also gonna do is I'm gonna get an HVAC guy out there and I'm gonna tell him the situation and I'm gonna say, tell me, put yourself in my shoes. I don't have $30,000. How can we phase this thing so that we're doing this in small chunks so I can pay you? Is it first we're gonna dry everything out? Is there a way that we can do, uh, when we're setting up the return air, can we do priority zones first, like, you know, the master bedroom, that one's first, and then maybe the kitchen.

And is there a way that we can phase this thing out so I can pay and so that we can do things that are most important first, you know? And that's what I'd be asking, 'cause everything happens in phases.

That's right, that's right. And listen, these contractors that you're working with, they know your situation.

And they've seen it a million times, I'm sure.

And so, adding to Jade's worst-case scenario, worst-case scenario, you look at them, you go, look, I don't do debt, so I'm not gonna put this on a credit card, but if you can work out a cash payment plan, I will do installments. And you treat this like you've had to go back into the Baby Steps, and that's what you do. But you're not actually borrowing. You're just gonna go, guys, I'm gonna pay this, but I'm gonna pay you as I can. And I'm gonna take that $2,000 in margin, or where I can take, and I'm gonna pay you guys off. And that way you sleep at night. And that's what I want. Pointing to here is that, yeah, you don't need to go into debt to pay this stuff off. You just don't.

Okay.

All right.

That was, that was what I was worried about.

No, you're okay.

And that's your choice.

But fight, fight, fight, fight. Deductible only is our goal here.

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All right, let's go to Beth in Rochester, New York. Beth, how can we help today?

Good morning, or good afternoon. We have been following the Dave Ramsey plan, my husband and I, for about a year now. We have Baby Steps #1 and partial of #3 laid out. We were about $40,000 in debt, not including our remainder of our $200,000 mortgage. And so we're probably sitting at around $21,000 in credit card debt that's mostly been incurred from myself covering weddings, baby showers, and other things like that. I have about $400,000 sitting in my savings 401(k), and I wanted some advice on whether it makes sense to pull out a loan out of there to pay back myself versus paying these high interest— I think the credit card, it has like a 28% interest fee on it— just to get, just to get that out of the way, to plug away at the remaining bill, you know, getting out of debt.

Well, didn't I hear you say that you had partial of Baby Step 3 completed? And I'll put that in quotes.

Yeah.

So how much money there?

So we're down to one vehicle now and we have about $6,000 in there. The tricky part of this conversation is my husband doesn't agree with credit cards at all. Um, and we have two children where I've kind of supported, again, uh, helping support weddings and baby showers across the past two years. And I've successfully paid off $20,000 of it alone. And I probably could be out of debt with the other $20,000 by October of this year. Uh, we, We roughly make about $230,000 a year combined, but he's not willing to contribute to the debt because he didn't create that portion.

Why doesn't he like credit cards? Why is he against them?

For the situation we're in now of, you know, it's an easy fix to pay for something that you don't think you did, to pay something up front and then not worry about how to pay for it later.

Okay, um, I wanna— there's, there's many ways that this can be attacked, and there's many things that I'm hearing going on. I think that I'm going to start with the 401(k), and I'm going to work my way backwards. So I would not borrow this money from the 401(k). Uh, the reason for that is you're just putting yourself at risk. Obviously, if you borrow this money from your 401(k), now it's attached to your work. So if you choose to leave your job at any point, that money is going to become due immediately, and you'll have a calendar year in most cases to pay that money back. And if for some reason you're not able to pay that money back, then it becomes viewed as an early distribution. And so you're taxed on it at your income tax level, but then you're also paying a 10% penalty. And it's just not worth it to unplug your retirement for this purpose. So that, that is the reason why that's off the table. So let's check that off the list. Ken, I want you to lean in on this because what I'm hearing, Beth, is if my, if my spouse says something that they disagree agree with, and they're saying, "Hey, I really don't want to do this.

I really don't feel good about this." My first initial point is not, "Okay, then I'll just go over here and do it on the side anyway." Correct.

Yeah, I felt the same thing, Beth. This is not a win. This is not a win financially, right? It's not a good move for all the reasons Jade's laid out, but it's really a bad move relationally. And your husband has got a real clear principle on this. And the truth of the matter is we agree with with him, right? And so, yes, but what we want here is not about boo Beth, yay hubs, right? That's not what this is.

It's—

this is a relationship issue that you need to solve now. It hasn't been solved up to this point, and now you're tempted because you don't have the same principle that he has. He's not tempted. In fact, my guess is, is your husband's got an alternate plan. Is that true or false?

Yes.

What's his plan?

Well, ultimately here, uh, that, uh, we're gonna scale back even further than where we are. Um, and that I, you know, whether I find an additional job or whatever, whatever I do, uh, and I turn all, all credit cards over to him, which I have. Um, I have until the end of the year because we make a decent salary.

You make it out of this? No, not decent. You make $230,000. The median is like 80. So you're doing extremely well.

Yeah, so Jade's right. This, you need to trust your husband on this. He's actually got your best interest, you collectively, you, the two of you, he's got your best interest at mind. He's right. Don't fall prey to this kind of thinking. This is a mindset and you just gotta go, "All right, you know what? I'm not where I need to be. I'm gonna trust Jade and Ken. I called them today and I'm really gonna trust my husband." Yes. And you need to get on the same page engage with him on these money principles, and it's going to be a much better journey going forward, and you're not going to get into messes. So as simple as I can say it, just run his plan out. You guys can solve this. You got the income to be able to solve this. You don't need to take out a 401k loan. You don't need credit cards. You just don't.

And I think that's—

and that's exactly what he said.

Well, he's right. He's right. I hate to keep telling you that he's right, but he's right.

Well, and, and let's put this into real numbers, because if you tell me, oh my gosh, we have, you know, $15,000 a month, $14,000 $1,000 a month at our disposal. Now my next question comes, okay, what's happening to that money? Because that is most people, I can guarantee you this and I'll try to shut it down. But the folks in the comments right now are like, what's going on? If I made that much money, yeah, yeah, yeah. Now I'm not saying listen to the haters because that's all they're doing is slipping haterade. But what I am saying is that is a reasonable amount of money to work with that don't get me wrong, nobody should be using credit cards, but especially you shouldn't be using credit cards because you've got this wonderful income. So what I'd be wanting to do is sit down, and if you guys don't have a budget, my bet is the husband has a spreadsheet somewhere. Oh, he does.

Actually, I have it. You have it? I have it, which is the oddest part. Yes.

So, you might just want to look through it, Beth, and there's probably some things that can be tightened up. There might be some slush fund that needs to be given a clearer definition of what really are we using this money for? Because You know, $21,000 of credit card debt, it's a lot. But I just think in the grand scheme of your income, those weddings, those baby showers, those one-off things that you were talking about, there's absolutely no reason that that should not be a line item in the budget. You know, your firstborn's baby shower, put it on the budget. What are you gonna spend, $300? You know, we're funding this, or we're funding that.

I think Jade's onto something, Beth. If I could pry a little bit longer here, what, with the income that you have and your husband's aversion to credit card debt, what is What is the thing that you're afraid of that is making you use the credit card for these purchases as opposed to cash flowing?

I think transparency, right? Letting him know how much I'm actually providing to our grown children is probably one of the biggest things.

Because he's a bit of a tightwad.

Yes. It's like he, like, you know, he doesn't believe in vacations. You know, he's content if, you know, we don't eat out. Again, we make this income, we're sharing one vehicle. And these are things where he's comfortable with because he wants to, you know, he wants to—

and you're saying, why do we have to be so tight?

Yes.

Got it.

With our income and, and the career I have in sales, my— all my coworkers are traveling the world.

Yes.

And I'm like, well, and I think you're right on that, on that front.

I think you're right. I think both of you, there's a give and take here, Ken.

So if I'm understanding you, Beth, thank you for being so honest because you're an awesome person. Um, is this a bit of like rebel kind of, "I'm going to be a rebel and show you. I'm going to put it on a credit card so that you can get a dose of reality," Sparky?

Well, since we're being transparent, I'm the primary breadwinner, so $140,000 of that is my income. So part of me feels like I work really hard. I should have a say in what I'm doing with this money. But then I— and again, I invest. His job is a little bit different, so he's late to the game with a 401(k). And I've been investing in mine since I'm probably 49.

This is a classic nerd spender behavior. Yeah, but This is actually a little bit more than this.

You're so tired of him squeaking around the house because he's so tight. You're just like, this is a little bit of a middle finger, isn't it?

It kind of is.

I know it is. I just wanted you to say it.

You're like, you can't stop me. I'm gonna do what I want to do.

And Beth, and Beth, you are such an awesome sport, and I hope you feel that there's no judgment coming from me, but I'm glad you—

and I don't want to say that to him, right?

No, but you said it to me, which is great.

Oh, here we are. But this is like a therapy session.

You said it to me. No judgment coming for me or Jake, but I wanted you to admit it is the middle finger because I think you're going to have to resolve that. You gotta go, okay, that shouldn't be my response. We agree he needs to loosen up big time.

Yes, yes he does, he does.

But you can solve this. You don't need the debt, you don't need the middle finger part of it either. You guys though need to get—

And no 401k loan.

No 401k loan, you're gonna hate yourself for that, trust me.

Don't do it.

What you need to do is have a candlelight dinner with Squeaky, and let's get on the same page finally in our marriage, and let's tell each other how we really feel. I will do that.

All right?

You're awesome.

Thank you so much. I appreciate your advice.

Yeah, Beth, you're great.

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All right.

Hey, Folks, when it comes to EveryDollar, the thing that we're telling you about all the time, we love getting real stories because this is no longer a budgeting app, right? This has got the coaching involved and it's got the entire Baby Step program baked into it. And we love real feedback from people that are using it. Here's a fan quote: EveryDollar is excellent. It really helped me to get my personal finances in order. Now that I'm married, my wife and I use it together out of our joint checking account. It really helps us maintain a common vision and a set of goals. And Jade, we love that because these are real people giving us feedback on how they're actually using it. And we'd love for you to kick the tires, and you can do that for free today in the App Store or Google Play. And again, it is the entire Ramsey plan, the Baby Steps. Even for those of you who've just barely heard that phrase, you maybe listen for or watch it for just a small amount of time, it is This is the plan, and it's baked in there, and you've got the coaching access too, not just the budget functionality.

Jade, I know you're the queen of EveryDollar. Oh yeah. Anything you want to add to that?

I, I, I, when you say kick the tires, that was the best thing you could have said. Give it a try.

Give it a try. Nothing to be lost. Let's go to Hope now in Washington, D.C. Hope, how can we help?

Hi, thanks guys so much for having me on your show.

Sure.

Um, so I just want to get you guys' opinion on what to do. Um, I'm a stay-at-home mom. I'm just like at a little bit of a loss for path to homeownership. Um, so I'm like, do I, do I need to go back to work? I mean, do I, you know, I don't know, compromise on the 15-year loan, do a 30? I mean, what, I mean, what in the world do I do? Um, our, our rent right now is 43% of our income. We have no debt. I mean, once they savings at 4. Um, we're, we're doing pretty solid. We've got, we've got the good emergency fund, everything solid there. We're not like necessarily, um, like paycheck to paycheck. I mean, we do have $250 a month we put towards our savings, but every time I like run the calculator, I'm like, this is going to take 15 years. Yeah.

What's the income? Sorry, sorry, Ken.

Yeah, that's what I was asking. Go ahead.

Yeah. So, um, my husband makes $90,000. Um, he's, uh, hoping to make, um, $120,000, $130,000 $130,000 in the next, you know, few months or so. Um, but right now he's at $90,000.

What would, uh, have to happen for him to jump up to $120,000, $130,000?

Get a different job.

Is he looking?

He's been working on it, yeah.

Okay.

Have you started running the numbers on what the new take-home would be if he were to get to that range?

Yeah. Um, and this is like, this is the scary part. This is why I'm like, oh my gosh, I got to talk to you guys. Um, so I ran this through ChatGPT. I know that's like not the right way to do this, but, um, you know, the median median house, um, in our area for like starter home is $550,000. Like, that's insane. Yeah. Um, and just ChatGPT, I like was like, use Dave Ramsey, like do the reverse math, like tell me what we need. And like basically it was like came back with like we need to make at least $250,000 to be in that under 25%, uh, of our, of our income ratio at a 15-year mortgage, you know. And, and I just 20% down, and I'm like, oh my gosh, it's going to take forever.

I get it. So what we need to do is reframe, right?

Okay.

So the question becomes, what is realistic, uh, as it relates to drive time, you know? And I, I, I don't know if you're actually in DC or you're Northern Virginia or Maryland, but I'm a Virginian and I can tell you, yeah, Northern Virginia is like, in order to go to hell, you have to go through Northern Virginia, you know, on, on the inner state, you know. So, but I think you start there. What is realistic? Can we change the area that where we live, or would that just make life even worse?

I mean, it's a good question. And I mean, we've, we've really talked about it. The problem is, is, um, we have a— well, not the problem, I guess, but the blessing here is, is that we have a really, really, really great church community. I mean, this is like, I've never had such a great community. And so it would be so—

okay, I get it.

So I'm gonna rapid response to you because Jade's going to get involved here, but I'm going to do some rapid responses. To see where we are, okay? Because then that frames the plan. All right, I bet you there's something that's a little bit smaller than you would ideally like to have that is less than $500,000 but would still be a house or some type of thing we own. True or false?

Yeah, absolutely.

What's that number? What are those? What's the range? Are we now $350,000?

Well, yeah, I mean, so $350,000 is what I was trying to do, but I'm not kidding, I literally, I told that to my realtor. I said we wanted to follow the Dave Ramsey plan. I was like, we want to find a $350,000 house. Did you say house?

We'd be willing to do a townhouse or even a larger apartment, like a larger condo.

Yeah, I said a larger condo would be good, but you know, with the HOAs and everything, our realtor literally laughed at us and then fired us.

Okay, but hold on a second. I appreciate the response, but I mean, you can go on these real estate sites yourself and look for stuff.

Absolutely.

So my point is, we've got to see what is possible, and right now a $500,000 $1 million house is going to take a while for you. That's the real, real.

Yeah.

Okay, but so now we need to adjust. Okay, so now it's not like, I'd love to climb this mountain over here. Let's say I came home and I told my wife Stacy, I've got bitten by the mountain climbing bug. First of all, she would take me to the doctor. It would never happen.

That's never gonna happen.

But let's say it did for a moment, okay? And she goes, okay, what are we talking about? And I said, Mount Everest. That's the one I'm going for first. And she goes, okay, I need to know more. And I went down the rabbit hole of what it would take to climb Mount Everest, and I would find out that it would be the emotional equivalent of what you felt when you looked at a $500,000 house. I'm just keeping it real for people out there.

Yep.

All right, at which point, wouldn't you tell me, Hope, maybe I should start with— maybe you go to Hawaii and hike Diamondback?

You quietly burst their bubble, right?

But don't— wouldn't you say to me, Hope, Ken, you should probably change your expectations because Mount Everest is probably a ways down the road, but you could still get the same feeling and the same accomplishment and all the other things, but maybe we should work up to that? Would you say that to me, Hope, if you were talking to me?

Probably.

All right, so I think that's what I'm trying to get at here. What we got to do is we got to crawl before we walk. And so we we hate rent, but you know, husband's going to increase income. And I heard you say this at the start of the call, yes, you should go to work.

Agree.

Because if you can bring in $50,000, $60,000— and I'm making that up out of thin air— but that changes the game.

Now all of a sudden, here's the trade-off, right, is that we don't have family in the area, so there's no one that can watch our sons. So we'd have to go get— I'd have to trade off to go do daycare.

Not true. Can I give you a solution?

Yeah.

You have an awesome church community. That's what you said.

Yeah.

I'll bet you, in a short amount of time, with that awesome church community, we could find a grandmother who's bored out of her skull, and she wants to get away from her husband for 6, 7 hours a day, and she would love to watch your son and do a little bit of laundry, maybe even some meal prep. And just before you think I'm crazy, Hope, this is what we did when Stacy was working full-time. We had 3 kids. We found the sweetest, nicest lady who was still healthy and active, and she loved helping us out until Stacy and I got home. She helped with the homework. She did some light laundry, and she was thrilled. And yes, and she was a fraction of the cost of daycare.

How old are your kids and how many are there?

Just the one.

I just have— I just have one, and he's 8 months. I mean, I want to have, you know, lots of kids, and I'm hoping to homeschool at some point.

That's cool. Because here's the thing, even if you weren't looking to buy today, if you just called and said, hey, my rent's 43% of my income, I'd go, oh, you gotta go back to work.

Yeah.

Because it's gonna make it impossible, to your point, with the $250 margin per month, it's gonna make it hard to really do anything, uh, long-term that you wanna save up for that's gonna cost any amount of money right now. Let's look at it like just pragmatically here. You're, you said you're in Baby Step 4. You guys are investing right now.

Yeah.

Okay, if you're investing 15%, that's gotta be close to $1,100 a month that you're putting aside. Am I right or wrong?

We are working towards that. So I think we're at about 7% of his income right now is investing in retirement.

Okay, you guys are young.

We've got $25,000 set aside for a house right now.

Okay, so what I would do, I would also, for the short term, I would either mix that and say, you know, We're only going to put, you know, 4% and so that we can put more towards this down payment. Or I would completely cut it off. I'd cut that off for up to 2 to 3 years while you save for this down payment. But I'm completely with Ken. You need to be working. I'd temporarily pause retirement so that you can start saving up for this house. And I would change my expectations. It took Ken, it took Sam and I 10 years to be able to save up for a house. And let me tell you something, to this day I never go, oh, the one regret in life is that I had bought my house 8 years earlier. I've never said it, and you'll never hear me say it because it's simply not true.

And now they got a great house.

Our Ramsey Show question of the day is brought to you by Yrefy. Defaulted private student loans can leave you feeling stuck and overwhelmed, but Yrefy helps you explore refinancing options with a low fixed rate and a payment based on what you can actually afford. Visit yrefy.com/ramsey. That's yrefy.com/ramsey. It may not may not be available in all states.

Okay, today's question comes from Vanessa in North Carolina. She says, hey, am I wrong for not helping my sister and her family financially? She's a stay-at-home mom with 4 kids and a husband that works whenever he feels like it, which isn't often. They blow what little money they get as soon as it hits their bank account. I own a home, I have a paid-off car, and I have money saved in retirement. I've already shelled out over $5,000 to help them. Their most recent need is $1,000 to pay their electric bill because they are behind on paying it. Is it okay to say no? Now, Ken, we just came from Denver, Colorado, where we had an amazing Ramsey Show Live event. And in the event, you have a wonderful bit that you do where you bust out the powdered wig.

I do.

And you—

Kelly, you should see that wig. We've done it. It's the giant wig. Think of the colonial judge or the British judge. Just want to paint a picture for people.

He's got the gavel.

I got a gavel.

And the base for the gavel.

And I rule and then I hand it to you and whoever else is with me that day.

So if you're driving, if you're on a walk, if you're in the kitchen and this is on YouTube, if you got it in your AirPods, I want you to imagine Ken Coleman in his beautiful shoulder-length powdered George Washington wig.

It is beautiful.

And Ken.

What would I say?

I'm going to ask you, is it okay Is it okay for her to say no to her sister?

Yes, it is okay. Not only is it okay, it is what you should do.

Absolutely.

This problem is not yours, number one. Number two, this is not a problem that you or anyone else can solve. So, number three, then you need to just move on. And it's the popular refrain from maybe the most popular Disney movie of all time, "Let It Go." Let it go. There it is, folks.

Yeah, absolutely. And here's the thing, you've already shelled out $5,000, so they think that this is a dispensary that they can keep going back to for more. And that was your bad. And it's okay for you to right that wrong and go over to them and say, you know what, I understand why you're coming to me for this money. I've given you money in the past. That was actually my mistake. And I've decided that I'm not able to contribute any more. More. And that's that.

Yeah.

Best of luck to you.

Yeah, it's tough. And we say that, and I think a lot of people listening, watching today, maybe feel that we're just kind of, well, it's easy for you guys to say. Yeah, it's very easy for us to say because we have taken so many calls on the other side of this where this has gone on and on and on and on. And everything here is a choice. Yeah. And this creates, by the way, so you think if you don't help out out sis, that it's gonna ruin the relationship. And what I'm telling you is, if you keep helping out sis, it will ruin the relationship. So, the relationship is going to be ruined one way or the other, so let's go ahead and save ourselves a little bit of money. Now, if you really wanna be cold-hearted, that's about as cold-hearted as it gets, but since you got me in the stuffy, you know, judge's robe and the wig and the gavel—

What say you?

I have no emotions on this, 'cause we have Am I right? We have been on the other side of this when this thing doesn't work.

Absolutely. And here's the thing, like I said, this is all at the hand of their choices. If you had called me up and said, "Ah, the kid, somebody ended up in the hospital," or da, da, da, da, da, something that was completely out of their control, yes, my heart softens immediately, especially if you have the money to spare, especially if they have proven to be people who are responsible, right? There are parameters that I think it's okay to step in and give a helping hand. Helping hand. But this is not that scenario. It is not even close, by the way.

No. And I, I just, Jade, have zero sympathy. I mean zero. And I don't mind being called out on this, but I'm just being real. I have zero sympathy for somebody who works whenever they want. They're just kind of when he wants to.

No, that's messed up. As a man, that's not a man.

I'm sorry. If you crushed it financially and you work when you want to, I go, I had a boy, everybody wants to be on that team.

That's different.

But this is very different. We can't even pay the electric bill because homeboy won't get out of the Lazy Boy and go work. I have zero sympathy. I'm never going to help somebody who won't help themselves.

I agree with that.

So I'm going to take you back to the founding of our country. I'm feeling very, very frisky on this. Come on, give us a foursome. Here's the deal. John Smith— this is a fact, this isn't just in your fourth grade history book, okay? The founding of Jamestown. If you didn't work in Jamestown, they didn't give rations. No work, no eat. John Smith had it right. I'm gonna borrow it from John. And so, you know, you don't work— what do the kids say? You don't eat. You just ate and left no crumbs or something. Is that a thing?

That's what you just did. You ate and left no crumbs.

That's what I thought.

Yeah, because you said it right. You put him in his place.

Yeah, but it's never a good idea to pat yourself on the back with a comment. But I was just really—

well, you made a pun out of it, which is even better. Good job, Ken.

Don't work, you don't eat. It worked in James Towns— at Jamestown, it'll work in your house. Chris in Austin, Texas is where we're going next. Chris, how can we help?

Hey, so I've got a truck right now. It's pretty sweet truck, love it, had it for a few years, but I took out a loan for it and now I'm on Baby Step 2 right now and I'm still upside down on it. So my question is, do I sell my truck and pay the stupid tax, or do I continue to pay it down and refinance it?

Interesting. Is this your only debt?

Uh, as of right now, there's about $5,000 on top of it from credit cards and personal loans that I took throughout the years trying to pay this debt down. It initially started, uh, at about $22,000, and then I took a consolidation loan and got it all the way up to $35,000, almost $40,000, because I was I was dumb and racked up those credit cards again. But now I paid it down to $2,000 left on the credit card and $3,000 left on the personal loan. And that was over the last year when I started listening to you guys.

Got it. Okay, okay, got it. Okay, so, and tell me about the truck. What do you owe on it and what's it worth?

So I owe $46,000 and it's worth about $30,000. Oh, you're telling me.

Oh man. Okay. What's your income?

So I make about $96,000 total.

Okay. So the good news is, you know, you paid $46,000 for the truck. You make $96,000. You're kind of like right there at the halfway point. We always say you shouldn't have more than half your income invested in things with motors, things that are going down in value. You're right on the line. If you wanted to, if you said, Jade, I can have this thing paid off in 2 years, I love the truck, my income is only going up, I might say, yeah, I like that. But this represents something to me that I think it represents to you.

I agree.

Which is a time in your life where you made not smart decisions.

Oh yeah, there was a good period after I got out of the Navy where I was just broke. So I agree. I agree with that.

And I think that you might be in need of a fresh start financially. And I think this could represent that. I think when you pay off the last of this credit cards and the last of this personal loans, and when you clear out this truck, I think it gives you a fresh start. And that sounds really good, right? Yeah, I think it does. If I were in your shoes today, not for mathematical reasons so much as a principled reason, I would sell this truck. and I would probably go down to a credit union. Honestly though, I don't care how you, how you get the loan for this difference. I'd find, I'd get a loan for the difference and maybe another $5,000 on top of it so that I can have a $20,000 debt instead of a $46,000 debt. And I would clear out this truck and I'd drive like a $5,000 beater, uh, until you can clear out the remainder of that debt with your $96,000 income and a few side hustles. To boot. What do you think about that?

Well, I definitely have the capability of doing side hustles, so I, I don't disagree with that at all.

My kind of guy.

Listen, I agree. I can't add anything to it. I, uh, but you've already touched on it, and I, and I want to just acknowledge you and cheer for you. You've already acknowledged that you need to experience this pain. When you use the phrase the stupid tax, right, you get it. You're like, I, I'm gonna have to experience some pain to egg A, get out of this, and B, remind myself never again. I've got scars in certain parts of my body. One I've got on my hand, I always refer to. I'm looking at it right now. I'm touching it. One of the dumbest things I ever did doing yard work. Cut my hand so badly, had to go to the ER, stitches, everything. And it was just a boneheaded— I was moving too fast. And I promise you, Jade, from that day forward, when I'm doing yard work, I am a lot slower, chilling out.

Yeah.

Because that was a very painful day. And I think, Chris, this is beautiful. I think it's gonna change your life if you do exactly what Jade does— told you to do. Then what's gonna happen is you're gonna get out of it faster, but more importantly, you fully experience the pain. 'Cause let's be honest, nobody wants to drive a $5,000 truck. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio alongside Jade Warshaw. I'm Ken Coleman, excited to have you with us today as we take your money calls. 888-825-5225 is the phone number. Let's go to Chris in Portland, Ohio. Chris, how can we help today?

Hi, I was wondering, when is it appropriate to bring up finances or debt when dating? I'm divorced and getting back out there and kind of just curious.

That's a good question, and I got to tell you, my favorite question of the day. And the reason it's my favorite question today is I don't think there's a firm answer to this, but I love that Jade's alongside of me too, because this will be fun.

Yeah.

Okay, I'm gonna take the male perspective colored in my philosophy.

Okay. All right, go ahead.

I think as a male, if I'm dating someone, when do I bring up money philosophy and money issues? Issues. I think I bring it up a couple of dates, so we'll say 2 dates after I feel like that I want to pursue this lady. Like, this is a— this feels like I'm going to invest for the long haul because I think this is going to cash out. So once I've determined that I think there's long-term potential, I'm talking marriage, Then I think a couple dates later. So there's no rhyme or reason other than I'm a feel guy. I'm all feel. So I'm going, okay, I'm not gonna do it right away, but maybe a couple dates later, maybe we're doing a longer date. Maybe it's a, we spend the day somewhere and it comes out in just natural conversation. Not a, you know, we've just finished the spaghetti and the tiramisu's on the way. And I go, all right, I'd like to talk about money. Like, I don't want it to feel like we've shifted shifted gears, and I want it to feel real natural because this is a values conversation. Now, that's what I mean by I'm trying to give the, the male version with my philosophy swirled in.

That's what I think.

I don't like that.

That's— that sounds— I hope that sounds specific because it is to me. Yeah, but I don't know how long that is into the relationship, but I wouldn't bring up any kind of money thing until we know that we're interested in a long haul Yeah, I mean, I think part of it has—

I love Ken's response.

I—

and let me start there. So, I like what Ken said. I actually might start immediately, but not in the way that you think, not in a conversational way. I might, you know, 'cause money is touching everything, you know, it affects your daily habits. I might be very intentional with some of my habits showing on the date. So, for instance, For instance, if I, you know—

Okay, this is great. Take me to first date.

First date is—

What are you gonna show that's not—

You know, like, let's say we go to the movies, right? And while he's doing the tickets, I say, you know, I'm gonna head over here and get some concessions, right? And I start, as I'm coming back with the concessions, I'm folding the cash and putting it back in my—

Nice.

So it's like, oh—

And what is, by the way, what's the concession item you're getting?

I'm getting the large popcorn. Popcorn because there's free refills and you can have the shareable buckets.

So, you're gonna do the— whether it's the right hand or left hand, you've got the bucket kind of cradled and you got the cash in your fingers that he can see?

Uh-huh.

And I'll be like, "Hey, hold this for a second so I can get myself." And then I take it back?

I don't mind that. That is subtle.

It's a subtle hint, right?

I don't know if most dudes pick up on those kind of— 'cause we're idiots.

Yeah.

We don't— guys can't find the mustard. I've been married 28 years. I can't find the mustard in my own refrigerator ever. So, I don't know if that works, but I like it.

In a conversation, we're talking, so, "What do you like to do?" And I throw in, "Ah, you know, I love taking a vacation. I wasn't able to go with my girlfriends this year because it wasn't on the budget, but next year..." Right? I just throw in a little, sprinkle it, a little seasoning, Ken.

And tell him, "Okay, let's continue to play this out.

What are you looking for when you drop that?" At first, all I want him to do is, if he's seeking to learn about me, He's picking that up. He's noticing that, right? Because on the first day, all you're doing is observing the other person's behavior. So simultaneously, while you're dropping your hints, you're also observing. Did he pay with a credit card? Did he, uh, mint? What are the little things he's mentioning? His truck, is it brand new? Because if he's driving a brand new truck, you can assume one of the two things. He's either loaded or he's broke.

That's good. That's a good call.

You're picking up on these things. And I agree I agree with Ken. I don't think ever early on would I sit down, you know, with my glasses over my nose and it's like, okay, now we have the money talk.

Never.

It's like talking about kids on the first or second date. My gosh, you're gonna scare the crap out of somebody that might be the one.

Now let's talk about—

Now what was the context?

Do you have something to hide? Do you have something that is kind of like a bombshell or like, ooh?

Oh, do I? No, no. I feel like I'm in a really good place. So I don't want to get into a serious relationship with someone who, like you said, you know, just took out a loan for a $40,000 new car.

Right.

Because that's not— that doesn't match my values. And I don't want to—

Yeah. So you're in great shape. You're just saying, hey, I want to start getting out there and dating, or I am dating and I kind of want to figure out— Yeah. Well, I got to tell you, I really, really— this will come as a big shock to the audience— I love my own advice here. I just— I think you're right. You get to pick, you know, the time frame. I just wouldn't scare them off. But I, but I don't think you have to wait, you know, months to talk about it. But I, I like your combo. I like how you came in on— I, I like Jade's— like, she feels like in a, like a ninja, a little detective. She's kind of like sneaking around, a little throwing star here, a little throwing star.

Yep. Yeah.

So I don't know, Chris. That's our—

that's, uh, now there is—

have you had a bad track record with guys? Is that this is about?

No, so I— this is me just getting back into it after, um, you know, being married for over 10 years. And, uh, this is my first relationship since, or, you know, since college.

Absolutely.

So this, this is the whole dating scene is very—

what was it like?

I have two young children.

Yeah, young children.

And so I want to—

Yeah, you're wise. I'm curious, what was the money situation like in your first marriage?

I mean, it was joint and everything. He struggled to keep a job, honestly. And I'm nearly debt-free now. I have, you know, basically $1,500 that I owe my parents on a car that I bought from them, and that's all I have. Good for you. So that's a couple months. Yeah, it— I, I'm hopeful for my future. And I want a partner who values the same thing.

So yeah, we are too. And I think you're gonna find that. I think that you've got to, like we said, you do your detective work, but you also hold open the chance for people to change.

Yes, I agree.

You know, because— and it's not to say that you get into a relationship to change someone. I don't want you to hear that. But what I do want you to hear is as you do start discussing these different philosophies on money, I love— and Ken's the first to say this— I love the idea of asking questions and just listening instead of you being the first to say, well, here's my views on debt, blah, blah, blah, blah, blah, right? Just ask questions. And when the time pops up, you know, maybe he does go to pay with his American Express and you say, you know, we've been on a couple dinner dates. I noticed like you got that American Express, huh? And just like bring it up and ask him, so what's your philosophy on that? I've never had a credit "And just say it in such a light way, no judgment, just literally conversation." I love that.

You know what? I just got one, Chris. This is kind of a fun one. You can use us. Do the old, "What kind of podcast do you listen to?" That's very normal now. Let him go first, right? And by the way, this is a twofer on this one. You get two tests on this one. "Hey, what kind of podcasts do you listen to?" And if he tells you and then he doesn't ask you what you listen to, Listen to— what's going on, narcissist?

Hello?

But if he does ask you, you tell him and you see how that goes.

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

Com.

All right, let's go to Jessica, who joins us now from Washington, DC. Jessica, how can we help?

Hi, um, I want to— I have a I have a question about paying down my debts. My husband's not on board and he wants to make minimum payments, and I wanted to pay it off with my saved up money.

Okay, how much money saved?

Jessica, if you don't mind, could you speak a little louder? I know this may be nerve-wracking and all that, but I want to make sure we in the audience can hear you. So, uh, go ahead and answer Jay's question for her.

Uh, but I have about 45K.

You have $45,000 saved and you want to pay off the debt, and the husband's like, no, let's keep that in a chunk and just pay minimum payments. Am I understanding that?

Yeah. And, um, he doesn't have access to that money because I wanted to keep it.

Do you have separate accounts?

We don't, but I contribute some of my come and go to the common account. And then I have some, some money that I'm just putting away.

Where is the $45,000? Is it in a savings account?

Yes.

How much is your total debt?

Um, I have around $13,000, uh, plus $45,000. So it is about, um, $60,000. $68,000 plus $15,000 from my mom, so about $60,000 to $70,000.

Sweetheart, I'm gonna tell you, you gotta speak up, Jessica. I am struggling. I know our audience is as well.

I'm sorry.

It's okay. And I know you're probably nervous. It's just that we want to help you. We just don't understand you. So your total debt, is this you and your husband? The stuff is in both of your names? Is it so, or is mix?

Yeah, it's between our, our names.

And is the total $68,000? Is that what I heard?

Yes, and also $25K student loan from his side.

So $25K plus the $68K?

Yes.

Okay, okay, okay. Um, and you—

so that's $83,000. I want to make sure we're completely on the same page. You've got $83,000 total would take care of all of your debt, yours, his, everybody's? Correct?

Yes.

And you have $45,000 in a savings account that he knows about or doesn't know about?

He knows I have a savings account, but he doesn't know the number.

Are you concerned about what'll happen? What are you more concerned about, uh, him finding out that you have the $45,000 or you going to bat on this idea of paying off the debt?

So I, I don't mind him having access to it, but I just don't trust him when it comes to spending. So I, I feel like if he got access to everything, we would make, um, bad financial decisions and we don't have anything to save us.

Okay, that's the biggest— that is the biggest issue in the room right now. Um, the debt is, is a big deal, but the biggest issue in the room is if, if you tell me I don't trust my spouse to know about money because they're just gonna spend it, that's the, that's the thing I want to tackle first. Because if you can't you tackle that, no plan in the world is gonna help you pay off debt or save money or build wealth, right? Would you agree with that?

01:38:04

Yeah, I agree.

01:38:06

'Cause you won't be able to work together. So put Ken and I in the room and tell us what would happen if tonight you sit down and you say, "There's something I wanna share with you, but I'm just being 100% honest with you. When I consider sharing it with you, I'm afraid," because I don't know if you'll be able to handle it, and it's brought up bigger issues in the trust that I have for you and the lack of trust that I have for you. And you start to kind of run this thing out. What's his response going to be? Is he going to be able to have a conversation like an emotionally mature adult, or is this going to turn into something crazy?

Uh, we will have nice conversations. I've tried it multiple times, but the problem is when when it comes to implementing the plans, we don't do anything about it.

I'm not talking about implementing the plan. I'm talking about what you said when you said, I don't trust him to know about this money.

Yeah, would he go in and take it?

He wouldn't take it. He wouldn't— he wouldn't force me to.

So he's actually a nice guy. This isn't like—

he's a good guy.

So this is actually good news. Um, this would have been far more complex if you were worry about anything other than just a normal conversation. Uh, do you, do you handle the finances for, for your entire household? Do you handle it?

We— so I don't even think we're handling it the way it should be handled. We're just spending money and we don't know what goes in.

I understand, but I'm saying, who pays the bills?

We paid off our joint accounts.

Yeah, but who actually hits send on the payment? Who goes into the app, hits send on the payment?

Uh, it's usually me. I have autopay for most of the bills.

And that's what I'm getting at. Here's where I'm going with this, Jessica, and I want Jade to weigh in. Where I'm going with this, Jade, is if he is not a jerk, and it sounds like he's not, and he's not dishonest, sound— that's good. And they've had pleasant conversations, just nothing's changing.

That's right.

But he's letting her lead on the administrative part of the finances. And that's what heard, I still think they have a conversation, but I think if this dude is kind of like hands-off, and when she says, "Hey, I'd like to do this," 'cause she's an awesome wife, and she's being transparent, and he's kind of like, "Ah, that's not how I wanna roll," but he's not like fighting her on it, I think it's a meaning to go, "This is what I'm gonna do, and I want you to trust me, and here's why." And then see what he says. Is that too strong?

No, I don't. I'll be honest with you. I'll be straight up. She should never have. What I'm hearing is just some immaturity on on his point. I don't think that, like, to Ken's point, I don't think he's a bad guy. I think he's a little immature when it comes to money. I think even the way you guys have the money set up where it's like there's a joint account, but we also have our personal accounts over here, because he could have money to the side that you don't know anything about, right? And so I think the conversation needs to be in line with this. I think we need more transparency because I think it's breeding mistrust and I don't like that. I'm starting to feel it. I don't know if you're feeling it too, uh, but I don't think that we can get on the same page with our numbers until we decide that we trust each other fully with our finances. I think that's, that's topic number one. And then I think topic number two is you expressing how holding on to debt makes you feel. Because if we go straight to the numbers, I don't think it's going to get through because he's clearly not a numbers "but if you can get to the heart or the emotion of the matter, that might help it sink in." And then, if you can seek to learn a little bit about why, where he stands on this, like, "Why does the debt not bother you?

Why have you distanced yourself from the money?" Because the more you know, that's power in the real, right? That's knowledge is power.

01:42:02

And I think that's wise, Jessica. That's great advice because here's what I think. I think you can influence him.

01:42:07

I think so too.

01:42:08

To come to your side. Page, because it doesn't sound in any way like this is something that can't be solved. We've taken calls before where the husband is just like almost abusive on something, you know, verbally or certainly financially. And I think in this case, I love Jade's advice. I think you— I think he just has one mindset on it. You got to start talking about it. And I think you got to kind of own it.

Tell me what the mindset is. He just doesn't want to give out money. He'd rather have it saved.

And then, well, but here's the problem.

It's a comfort thing for him to have that money.

Well, yes, but Jessica, here's what you have to help me understand. We're $68,000— no, it's more than $68,000. $83,000. $83,000 of our so-called money has got to go out. We are completely underneath of it. And I don't like the way it makes me feel. And here's how this goes if we don't pay it off. Here's how this goes if we just pay minimum payments forever.

Oh, grit forever.

I think he has to be confronted with that. And then all of a sudden, he goes, "Oh." But I mean, you've got to lead him on this. Unfortunately, he's not leading, so you have to lead him.

And it is a math problem at the end of the day. Like I said, I don't think he's a numbers guy. But once you do tell him about this money you have saved, because I think no matter what, you do have to tell him that you have this money saved, then it is a math problem. You say, "Hey, you may think we have some, you know, some amount of money that we don't," or some amount of debt, but the truth is we have $83,000 of debt and I've got $45,000 saved that you didn't know about. And even if we paid every dime toward that debt, we'd still owe $38,000. We're underwater and we're sinking and I'm concerned. And it's time for you to be the man that I think you are, because I need help with this and I need your support. And I don't want to feel like I'm doing this alone.

When people hear my story of paying off debt, they say things like, "Dang, that must have been so hard. I could never do that." And I tell them, "Sure you can. It's a short-term sacrifice for a long-term gain. But do you know what's really hard? Working your whole life and never having anything to show for it. Never having the long-term gain. Just feeling broke and stressed and maxed all the time. And sadly, that's the hard that most most people choose. Listen, you're capable of transforming your situation and living a life of freedom, but you need the right tools to do it. Like our EveryDollar budget app. In minutes, it'll build you a step-by-step plan that's tailored to your money situation. And every day, it finds ways you can free up extra money in your budget so you can get rid of your debt and actually build wealth. So make the choice today. Short-term sacrifice, long-term gain. Choose the tool to help you get get it done fast. Download the EveryDollar app and start for free today.

All right, Jade, I know you care about insurance. Oh my gosh.

My favorite.

You know, we just had this big ice apocalypse or whatever you call it, ice-pocalypse in the Nashville area a few weeks ago. I lost trees, bunch of my neighbors lost trees and we were all talking.

Yeah.

In the street, looking at the carnage about insurance. That's just something that's recently been on my radar.

Yep, that's right.

We all get it, we wanna be covered. And for you, some of you are probably over-covered. In other words, maybe we can find a couple hundred bucks that goes towards the Baby Steps. Some of you are under-covered and it could derail you for a season on the train to the Baby Steps, right, or through them. And so we have the Ramsey Solutions coverage checkup. This is free, and it just allows you to plug in some numbers quickly, gives you a nice report that tells you you're either overcovered or undercovered, and gives you an action plan. You can get that at ramsaysolutions.com/checkup. That's ramsaysolutions.com/checkup. Cash Checkup. Let's go to Megan, who joins us in Edmonton, Alberta. Megan, how can we help today?

Hi, um, I have a very odd question. Basically, am I wrong for wanting to kick out a family member out of a house for my own benefit? And I know how that sounds.

I mean, we need to know more.

Yeah, yeah, yeah.

What can you tell us.

Okay, I'm going to try and make this really streamlined. It's a very complicated situation. So my dad died like 15 years ago, and my mother recently passed away, and she has a rental property. Okay, my cousins live in the rental property. It's just, it's just her and her husband, and they were basically talking about how they were not going to stay there. They wanted to leave, and that was all fine with us, um, because the property is owned now after inheriting it. It's owned now by me and my two sisters.

Okay.

My two sisters don't want anything to do with the house, so they want, they want me to buy them out, which is fine because, um, our house currently, me and my husband, our house currently is too small for our family. So we were actually going to move into, um, the rental property because it's bigger and can accommodate us.

Okay.

So we were like, no problem, we'll buy you out.

How How much would that cost?

About $350,000.

Okay, keep going.

Um, so we were going to rent out our current house because we only owe $50,000 on our current house, and we could rent it up and down. It's a two— like, it's suited, so we could rent it for two units.

Okay.

And then we would have no mortgage payment. Like, the renters would pay the $350,000— technically $400,000, I guess, if we paid off this house if that makes sense.

Okay, I'm with you. So where's the hangup? Where's the bottleneck?

The hangup is my cousin doesn't want to leave yet.

Are they living rent-free or are they paying rent?

They are not paying rent. They are paying the cost of ownership of the property. So like the property taxes and utilities and whatever.

No wonder they don't want to move out.

I know, I know, but it's— here's the thing, it was— it's a really long story, but short— long story short, they had an agreement with my mother. Like, I don't know if there was some, like, my mother owed them something or whatever, but they have basically like a 5-year lease where they don't have to pay anything except the upkeep of the house.

How long has it been of the 5 years?

2 years. So technically they could stay for 3 more years. Now the problem is, that's in writing, fine. Like, me and my sisters— yes, so me and my sisters, we like agreed that they, as long as it's not a cost to any of us, that the cousins can stay. That's fine. Okay. But the problem for me is our house is too small. It's too small. And so, got it, my husband and I want, want to buy another house. We want to move, right? But the problem is if we go and we buy a house, then let's say tomorrow the cousin— we buy a house, the cousins say, oh Okay, uh, just kidding, we're gonna leave now.

I see the problem.

I won't qualify to pay out my sister's, do you know what I mean? So I'm like, do I go buy a house?

What's on fire? What's on fire that you need to— like, that I know you— your house is not big enough, but why is that? Did you just have a— did you just have babies? What happened that suddenly I have to move now?

I have one baby and I have another one on the way, and we have a bedroom house.

Okay, so I'm gonna say something radical here, and okay, the radical thing is the kids share a room, and you do that for 3 years.

It's like the rooms are like— I'm in a very small house.

How many square foot?

Like 750.

Okay, yes, you are correct, that is a, that is a small— here, let me lay out your options Because if I understand, and if I'm wrong, stop me, okay? Because you did give me a lot of details. The cousins have a lease, and if the shoe were on the other foot, you would want your lease to be honored, and it's in writing.

I don't have a problem. I don't have a problem with them honoring the lease. What I have a problem with is the fact that they're so like, I'm gonna move tomorrow. Oh no, I'm not. Well, I don't know if I'm gonna stay or if I'm gonna go.

Well, they can't do that for the next 3 years.

6 months.

They get to do that for the next 3 years because they have a lease.

And that puts us in a— that puts us in a really hard spot for the next 3 years.

Well, that's the part where I want to decouple. I think that you need to decouple your plans from that.

Yes.

Or you have to just decide, I'm not letting them take me on an emotional roller coaster. I'm just saying I don't have access to this house for 3 years. And I'm just telling myself that if for some reason it comes open earlier, fine, whatever. But I'm not going to let them take me on an emotional roller rollercoaster. I do think, now this is, like I said, it's groundbreaking, but I do actually think that you would be okay in this small house with maximum 3-year, you know, the maximum age for your newborn is gonna be 3 years old and that they share a room for a while. Mm-hmm. 'Cause the other option, which I don't think that you would like, is to buy something else because you do know that this other house is on a horizon. And what this reminds me of, is just the old kind of like sacrificing to win mentality.

Yeah.

If you really, really want to be in that house, Megan, that rental property that was your mother's, there's probably going to be an element of sacrifice involved to get there because it's gonna be a sweet deal once you're in there. Right?

Yeah. We talk about this a lot.

Would it be wrong to like offer them my house? Like you guys are just two people, like move into my small house and let us have the four-bedroom house.

You know, like, you could offer that, but that's kind of, uh, presumptuous. Is that the word?

I get— what do you think the relational reaction is to that if you were to do that?

Uh, what do you mean?

Well, I'm with Jade. It feels presumptuous. So how would that go over if you said it that way to, to them? How would they respond?

I don't know.

If you say, hey, I want your house, I don't want you to be able to do the, the lease because I'm on timeline here. So you guys leave your house, come move into my house, pay me rent. I mean, that's—

no, no, they don't even have to pay me rent. I'll honor the same deal. I just— we just need a bigger place. And like, we don't want to— we don't— we just don't want to go— we've been looking at houses and we just don't want to go buy a house and then have it be like, oh, just kidding, now you have to buy your sisters out and now you can't qualify because you bought another house.

Well, here's the thing, you don't have to do anything because let's go back, you don't have to buy your sisters out.

Out.

You don't— this is a deal that you've constructed in your mind that is like the perfect solution, right? In your mind, the perfect solution is I buy my sisters out, I kick the cousins out, we get into the house, we get— we do this sooner than later, right? Like, that's your fairytale ending. But the truth is you don't have to move into this house. There's other houses out there, possibly. Uh, the truth is the timeline is a timeline that you've constructed because you're uncomfortable in the current house. That's just the truth. This is like like bare bones truth. I'm not saying it's uncomfortable, by the way. I'm sure it sucks, but I'm just saying that's the truth. And then the truth is you're, you're starting to now, because you're getting a little desperate, you're starting to construct a reality where the cousins would be totally fine moving out of their house, moving into your house, and you're so desperate to the point that now you're like, hey, I won't even charge them rent. I just think we're getting in dangerous territory here.

And I understand what you're saying, but it does drive me— oh, I, I probably left out a small, probably large detail They own another house, the cousins, that they could be living in. They own a different—

that would have been nice to know about 8 minutes ago. We're going into a break.

But either way, either way, either way, you're putting your future and your destiny in the hands of other people. And whenever you do that, it is frustrating because they're not going to do— you can't control them. And they've got a 5-year lease. Sorry!

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All right, our scripture of the day is from Psalm 16, verse 11. You make known to me the path path of life. In your presence is fullness of joy. At your right hand are pleasures forever. And our quote of the day from Jordan Peterson: It's a luxury to pursue what makes you happy. It's a moral obligation to pursue what you find meaningful. That's a good word.

I like that.

I do like that.

All right, let's go to Christine, who joins us in Orlando, Florida. Christine, how can we help?

Hi everyone, thanks for having me on today. I have retired parents in their late 70s. My brother, who's 45, moved in with them at the beginning of the pandemic and hasn't left since. My parents are supporting him, and, you know, they're, they're getting older, they're starting to have health issues, and I do not want to be responsible for him after they're gone. But I'm having a hard time reconciling the, I guess, moral obligation versus practical obligation.

Why would you be responsible for the brother? What type of— what, is there something wrong that he's requiring support?

No, other than he just has never worked. And oh, it's what— yeah, yeah. And it's one of one of those things where I'm afraid if no one takes care of him or supports him, he'll end up homeless. And, you know, bad things happen when—

is he on drugs?

He's not. It would be an easier conversation if he was.

So I guess my question is, why are you drawing the conclusion that he's totally helpless and will end up on the streets if he's 40, able-bodied, healthy? That would then just be his personal choice then, wouldn't it?

It— you're absolutely right, it is. And it is absolutely his choice. It's, it's the, you know, tug of he's my only— he's really my only family once my parents are gone.

Um, and do you really think that rather than— let's, let's just play this out for a second. Let's— I mean, unfortunately, let's pretend your, your parents, they're beamed up, they move on. Let's pretend you've put your foot down and said, you know what, you know, you can't move in with me, Bobby. And do you really think Bobby will end up— do you truly in your heart of hearts think that he will say, okay, tonight I'm sleeping in a box?

Just about. Um, the reason he moved in with my parents is because he was sleeping in his car and my dad didn't want that for him.

And you're sure there's nothing else going on with him?

I am sure. Um, there may be some mental health issues there that have never been diagnosed.

"Okay, that's helpful to know." Yeah.

This is tough because of what you just said there. Yeah, that's different. It feels like you've gotta get a little bit more plugged in on this, right? Like, I think you have to get hands-on and find out, to the best of your ability, what is going on with him. In other words, if he's just a slacker, for lack of a better word, my response is different. If there's some legitimate— I gotta be careful how I say this. Like, if there's some legitimate medical diagnosis, diagnosis that put him in a position where he literally cannot take care of himself, that's a wholly different conversation. And it doesn't sound like you know.

You know, when I— I would suspect, and again, he's never been tested, but my suspicion is that he's somewhere on the autism spectrum.

Interesting.

I am as well, but, but I know that there are very intelligent, successful people on the spectrum who, you know, still take care of themselves. And I don't know why it is that he has taken this route. He, he made comments years ago to my husband when we were dating— this was years ago— that, you know, he didn't think he had to work that much because someday my parents would die and he would inherit. But my parents aren't that type of inheritance, you know, if that makes sense. Sense. So his concept and relationship with money is completely unrealistic.

Well, I, I'm going to go back to what I said a minute ago. I don't know that I can give great advice because I don't know much at all about what's going on, because you don't know. So I think you've been detached. So I do think that this is the right time for you to dig in.

I agree.

Become completely completely aware of what's going on. So, you know, you have to assess the situation, at which point that allows you to make a good decision. I think you're a good person and I think you have common sense. But I mean, you know, are you the only sibling? You are?

I did.

Okay. Yeah, that's a big heavyweight there. So, I would want to know what's really going on. I would want to talk to him, by the way. I'd get— so I would get— I'd do two things. I'd sit down with the parents and have your parents tell you what's going on and ask them what their expectations are. Not because you feel you have to do what they say, but I would just wanna read the room and I'd wanna know what mom and dad said. I'd wanna be looking for, are they making excuses for him? And I think you'll pick up on that pretty quickly. Have they enabled him? Okay, I'd wanna know that. Then I'd wanna sit with brother and get his take and go, what's your plan if mom and dad are gone? Like, let's have these conversations. And let's do it in a way that tries to get everything out on the table, Jade. Like, let's get all the pieces of the game board out.

I'd push for evaluation too.

I would. That's a great— that's a third thing. So, there's a checklist of 3 things, at which point you now have a lot more information than you do today.

Yeah, yeah, absolutely. And I think the challenge is, I mean, you're right. These are conversations that have to happen. My family has always been pretty close to the vest. My mom's favorite saying was, you know, "We don't air our dirty laundry in public." so it's hard to kind of get them to come out of their shell. But it is reaching the point where something's going to give, and it's going to give disastrously, or we can be prepared for it.

You're right. Yeah, I think Ken is spot on with that checklist of 3 items, and then from there on you can really evaluate your options. I don't know that there is a world, um, because if he's getting evaluated, let's pretend it comes back and there is something there. Yeah, I mean, I'm not going to try to get into it, but I— there's a lot of nuance in what you're able to to, you know, do and not do and accomplish and not accomplish and what sort of care you might need or what type of therapies you might need. And so that opens a whole other world of possibilities once you get this information. And I think today you're a detective.

Right.

I agree. So that you can decide what's my role as a steward, you know? So the question becomes, what happens? Let's fast forward to because you called, what do you think? Let's assume, and Jade kind of hit you on this, but how would you react if they were again gone? What would you do today knowing what little you know?

Yeah, if it were to happen today, I'm afraid I would just shut down, to be honest, with regards to that situation, because it has been so polarizing and emotional within our family. My parents, I know, frustrated with him living there, but every time they try— they have tried to talk to him about it, it— he shuts down and they don't really get any answers. So it's really hard to navigate, but it's— something's got to give.

Okay, so what does shut down mean? Meaning that you act like it doesn't exist and he— you're— he's dead to you kind of a deal? Shut down, or what?

I guess shut down in terms of maybe just, yeah, walking away from the situation, um, just being overwhelmed, not knowing what to do, um, how to handle him when he's been, um, supported and enabled, um, his whole life.

Yeah, this is why, again, we got to go back to— I think what you would have to do is not shut down, but hopefully you do this now so if this happens you're ready. You know, is he in a situation where he would be a ward of the state or some type of— I, you know, and that's a little—

it's gonna probably pass through Medicaid. Like, if if they play their cards right, yeah, there should be something there for him, which is so important to do those first steps.

Yeah. Okay, well, that's what I wanted to know. I wanted to— and so, that tells me that— so, the reason I asked that question is because I wanted to know where your head is and your heart. And it sounds to me like your head and heart are aligned, that you don't think you should help him. And quite frankly, you don't want to. That still may not be be an option, right?

Right.

You may have to, uh, on some level. And so I think—

right, right.

So I think that's why you're going to have to do this digging that we talked about, and then that'll help you and, you know, kind of inform your plan. But gee whiz, I want you to have a plan if it's anywhere close to have to. Yeah, that's the goal.

That makes sense.

So I hope that helps. I'm so sorry you're dealing with this.

Uh, thank you. But listen, that's very helpful.

Good. And here's the deal, don't Don't do anything out of guilt. Do everything out of values. Big difference. Big difference. Well, folks, remember this. There's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.