Transcript of Your Bank Account Shouldn’t Define You 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. I'm George Campbell, joined by my pal and co-host of Smart Money Happy Hour, Rachel Cruz, and we're taking your calls at 888-818-1111. 888-825-5225. Naya is gonna kick us off in Cleveland, Ohio. Naya, did I get that right, or is it Naya?

Naya.

Yes, first try.

All right, we're off to a great start. Naya, how can we help today?

Hi, um, so I was just wondering kind of, um, what me and my husband should set up our budget on. Just to give you a quick backstory, me and my husband, we eloped. We got married early because we wanted to just have a good foundation going forward into our wedding as far as finances. Um, I I work in real estate, so the insurance rates got super high for me. And I was like, well, let's elope, get on a normal insurance, and then put the rest of our money so that we could cash flow our wedding versus pulling from either of our savings. And we've mostly been able to do that except for this final cost of the food based off of the headcount. But I just started reading your The Total Money Makeover book.

Yeah.

Our original goal was to buy a house, probably within the next year, a year after the wedding. The wedding's this coming May. But after starting your book, I realized that we may not have enough to start it based off of the 3 to 6 months in savings. Currently, we have about $30,000 in savings. Most of it is in a high-yield savings account, and we don't touch it whatsoever, again, except for pulling for the final count for the food. And I thought that was a good amount moving forward to you know, get a house. Um, but our 3 to 6 months' worth or 6 months' worth of savings is about $24,000. So I was like, oh, maybe, maybe we don't have as much as I thought. And so I wanted to know your guys' wisdom on, okay, how much do we need, um, to start saving for our house? Um, we're both completely debt-free.

We paid our ways through college.

Um, we don't have car loans or anything like that. And currently we rent.

Awesome. Well, you guys are doing great. I want to encourage you. Everything you've laid out, I'm like, they are crushing it. And I'm glad the book just kind of gave you a little pause to go, hey, we're going to be broke if we just jump into a house with close to nothing down and nothing in savings. So you're right that we got to get through this wedding first, then we'll see what's left money-wise, make sure we got the emergency fund, then anything beyond that becomes our down payment savings plan. Okay.

Yeah.

How much will the food cost for the wedding?

Um, right now we're looking at about $3,500. It could go up depending on the final RSVP, but we're assuming we're going to put out $3,500 and everyone keeps telling us that last minute expenses are going to come up. So in our mind, we're just, even though $3,500 is the amount that we think we're going to spend, we're thinking of $5,000.

Sure. Yep. I think that's a great plan. So, so out of that you'll have $25,000 left and you said $24,000 is a 6-month emergency fund for you guys. Correct. Okay. Yeah. And what you could do just to, just to kind of press play on this and like keep moving forward because you guys, well, you're in housing. I'm trying to think of your careers, how stable they are. Would you say you guys are in a pretty good spot?

We're in a pretty good spot.

He works in, well, I work in real estate and then he is an engineer. I mean, he has a very stable job.

Okay. So what you could do honestly, because we say 3 to 6 months of expenses in the 6-month side, I always like more, I'm more comfortable with that if there's, you know, 2 people working or 1 person working, multiple kids, there's a lot going on. That 6-month cushion usually feels good. But you guys, you know, you don't have kids, the responsibility there, you're wanting to buy a house. So if you wanted to go to the 3-month, the $12,000 versus $24,000 6-month, I would be okay with that. So you could say, hey, we have $12,000 earmarked after the wedding for our emergency fund. That's a check, that's Baby Step 3. And then Baby Step 4, Step 3B is that down payment, and you guys will have $12,000 to kind of jumpstart you guys into a house to get you there faster if you wanted to. More conservative people would lean to the 6 months, but because of your situation, I'd be okay if it's closer to 3 months of an emergency fund.

Okay, okay.

And is there any— again, I just started listening to you guys and reading the book. I didn't know if you guys had any more suggestions. We always just know to live below our means, but All of the things that I'm learning in The Total Money Makeover is more than what I've ever known. I didn't know if you guys had any tips.

Well, as far as home buying?

No, in general.

Life tips. I mean, there's a lot. That book will cover a lot.

You're right.

Living on less than you make will get you very far in life. You can actually build a whole lot of wealth just doing that. But there's a lot of minutiae when it comes to the offense and defense with getting the right types of insurance and not having too much insurance. You also need to look at investing. We need to be investing 15% of our income. Match beats Roth beats traditional. And so all of that gets laid out in the Total Money Makeover to help you live out those principles.

Yeah, but where you guys are, I would say that, you know, working together as a couple is going to be big because money fights and money problems, it's one of the leading causes of divorce in America. I mean, it's just, it tears apart couples if you are not on the same page with money. It's a really hard marriage when you're both on completely separate pages. You just continue to have conflict and butt heads. So, So I would say that's a big goal for you and your new husband to say, hey, let's, we're gonna work together, we're gonna be a team. Our income when we get paid comes into the household into a checking account and we see that as the household income, right? Not just mine and yours. Like, this is our money. The more you guys can work as a team and start functioning, the relational side of money, that's a big thing you guys can be working on and talking about. And out of that, you're gonna have goals together, right? This house, this is a great goal for you all to say, hey, let's look at the numbers, look how much we need for a down payment of at least 5% on a 15-year fixed rate.

How much cash above that $12,000 do we need to save? And so you guys will find a kind of a number, a range for that. And then as you do a monthly budget, which you guys need to do together, if you hold on the line, we'll pick up and give you guys EveryDollar for free for a year.

A little wedding gift.

A little wedding gift.

Oh, wow, nice.

Yes, so that you guys can start budgeting together because that's another part of all of this is actually being intentional with your income, not just, living below our means and just kind of doing it, but you're actually doing it with intentionality, right? That you actually know where your money's going. So there's bits and pieces to all of it. Again, I think that book is a perfect guide to all of this.

And you'll reference it back. So just focus on the one thing you need to know at this time, and then you can circle back on the investing side and saving for college one day. So don't feel like you need to learn it all right now. Your singular goal now is get through the wedding debt-free, and then whatever's left over, that becomes our emergency fund plus home down payment. And I would earmark it in a separate separate high-yield savings account so that it doesn't get commingled with the emergency fund. That just helps me not feel guilty when I go to use that money for the home down payment. And then just figure out, hey, how much can we realistically set aside each month? Have you guys done that yet? To go with our future incomes, we can set aside $3,000 a month.

We are setting aside, right now with the wedding, we're only setting aside about $800 a month because we're wanting to pay for most of it through cash flow. But realistically, after the wedding, we have decided we'll set around $2,000 to $2,500 aside each month.

$7,000.

Great. Okay, so that's about $25,000 a year. So in 1 year you'll have $25,000 for the down payment. In 2 years it becomes $50,000.

Well, plus the $12,000.

Plus your $12,000. Rachel was very generous with that.

I know, I wanted you to—

What really will happen is you guys will be making more money as a married couple who is very intentional, and all of a sudden you'll be saving $3,000, maybe even $4,000. And all of a sudden this will speed up the process and you might have $50,000 to $100,000 saved up in no time. So don't rush it. Do it when you're financially ready. Nobody's yelling at you if you get a house at 28 versus 24.

Yeah, renting is not bad for now. And you guys are doing awesome. Just like George said, you are on the right track without even knowing it. I mean, yeah, you're in the right direction.

Statistics show that half of Americans don't have enough life insurance, or they don't have any at all. I don't understand this, John. Why don't people want to take care of their family? They think they're going to die or something?

Well, I used to be one of those guys. I didn't even think about it, and one of my buddies said, hey, the only reason to not have life insurance is if you hate your wife and kids. And I immediately went and got term life insurance.

That's a gut punch.

And you're telling me— and for decades, Dave, I've sat across people who've lost a spouse, they've lost somebody important to them.

Me too.

They don't know what to do next.

Me too. I mean, you're going to have a crisis here. And, you know, you got two options while you're sitting and talking to a young widow. She's concerned about how she's going to invest all this money properly and not mess this up, or she's concerned how she's going to eat tomorrow. That's exactly the two options. And take care of your dadgum family.

Term life insurance can replace income, pay off debts, cover funeral expenses so your family can actually have the opportunity to just be sad. Yeah, to just miss you.

That's exactly what it's supposed to be. It's saying I love you to your family. Term life insurance. Jeff Zander and the team at Zander Insurance makes it easy and affordable. I've used them personally for 25 years. They're the only people I trust. Go to zander.com or call 800-356-4282.

Beth is up next in Chicago. What's going on, Beth? How can we help today? You with us?

Oh, yes, I'm here.

I'm sorry. Okay, crisis averted. How can we help?

Hi, so my question was regarding a prenup. Um, my boyfriend and I have been dating for about a year, so we're speaking about marriage, and he had mentioned that he would never get married without a prenup. And I've always been against the idea of a prenup. I do understand the logic behind them, but— and he's worth a lot more than I am financially. He has a lot more in assets and all of that. So I just feel like if a man says that he won't get married without a prenup, it makes me feel like it's an unsafe marriage for me to enter into because he's planning for divorce, basically, or preparing for it, if that makes sense.

Have you shared that with him, those exact words?

Yes.

How did he respond?

Well, he said that he feels like I'm being ungrateful because he would be willing to, you know, take on me and my two children, and I shouldn't question.

So this is an act of charity for him, and you should ask for no more. He's already doing the most by letting you into his life.

That's—

I mean, that's kind of the—

that's how it makes you feel.

Does that feel on brand for him? Like, was that a shocking answer? You're like, wow, that's not what I was expecting you to say. Or was it like, yeah, it's kind of like his, like, MO?

Well, I was, I was pretty surprised when you said that, and it was a little upsetting.

Mm-hmm.

And I, I don't— I mean, I understand that money is important, obviously, but there are things that I value more than money, and there's no amount of money that would be worth a divorce to me, or like dragging my children through a failed marriage and all of that.

So is this second marriage for both of you or one of you?

It's a second marriage for me. I was married young, um, but we were married for about 6 years, and when I was getting ready to have our first— our child, he decided he didn't want to be married anymore. So I've been a single mom for the last 11 years, and this is his first marriage. He's never been married. He has no children.

So he's, he's only—

he's been alone his whole life.

Okay. And, um, and you have one child, you said?

I actually have two. So I had a second child. She, she just turned 3.

Okay. Okay. Not with him though, correct?

Right.

With this boyfriend. Okay. So, so, um, how much more is he worth than you, would you say? $10+ million, $1 million, $500,000, less than $500,000?

I don't know exactly. The number that he gave me was $2 million, like between retirement and assets, savings, all of that.

Okay.

And what is he wanting to protect going into this marriage exactly?

Anything that he has right now. So all of his assets and retirement and all of that. He says it wouldn't be fair if we were to get divorced, it wouldn't be fair for me to get half of everything he's worked for. And I understand the logic, and I'm not saying I want half of everything. I'm saying I don't want to go into this marriage, like, talking about divorce because I'm 36 years old, and if I'm gonna be getting divorced in 5 years, I'd rather not get married.

Right, right. No, no, I hear you.

I think you guys are just missing each other communication-wise, and he has his reasons and you have your reasons, and neither of you are getting to the root of it and understanding each other.

Well, and my problem, Beth, is, you know, I don't think he's necessarily in the wrong, 'cause I will be honest, our teaching around prenups, it kind of varies a little bit. Like, we don't really have a hardcore teaching. I think we were more hardcore no prenup for a long time. And as the years have gone on and different situations, different, you know, divorce law in certain states, like, you know, there's an understanding if there is a significant difference in net worth, that if you choose to protect it with a prenup, like, you know, it's not necessarily, wrong, right? For in his sake. So, I'm not gonna say that he is wrong, but where I do think he's wrong, and what I get the ick about, is the way he's responding to you in it. And it makes you feel like he's valuing his money over you. And that's how it feels. And so, that's the problem that I have, right? His response to you at the beginning of this call, what you said, I was like, "Oh my gosh." That's why I asked, like, "Is this like his— is this how he is?" 'Cause he kind of sounds like a dick.

A little bit of a jerk, right? Versus someone that's gonna take care of you, where you're like, "I don't like the way this is making me feel." You know, and Bethany, you could own it all and say, "This may be more my issue than yours." And I wish he came with some empathy on the table and say, "I completely understand how that— how this does kind of feel off, because I could only imagine being a single parent, raising 2 kids, and then, I'm putting this paperwork in front of you that feels so like litigious, and it's just, oh, it's not a good feeling, but here's where I'm at," right? Like, if he like met you in the conversation with that, it and valued you in it, I think you may be feeling better, but it's like he keeps doubling down in the ickiness of what prenups do to people, the grossness. He doubled down on that. Do you know what I mean? Like, he didn't help the prenup, like the prenup, you know, fight and that. Does that make sense?

He didn't set it up well. And what happened here is the prenup is a tool. It's not evil. It's just a tool. And he's using it as a weapon to say, "Well, you should be on your— I'm great." Yeah, that part gave me the ick for sure. But I think there is a compromise here where you can, instead of you getting defensive, just say, hey, I'm open to hearing more about what you're thinking when it comes to this prenup. Can you share some details about how this would be set up? I would love for this to be fair to both of us.

And— yeah, sorry, George, go ahead.

That's it. I mean, that's it. That alone, he's like, oh, I can be disarmed now and not have to bow up.

Sure.

Yes.

And if you knew going forward how you guys are going to work together, in your marriage with money, like that may be helpful too. And that's where sometimes prenups can get a little bit convoluted. If you start comingling finances, which is what we talk about, that you need to be working together and you are one. While his retirement, all that will still be in his name, but we see it from an emotional standpoint as this is our household finances together. Once we get married, we say we are one in every aspect. And I would want to hear that from him to know that like, when we say, "I do," and we do this life together, I wanna know, not only is it gonna— is our expectation is it is forever, right? That's what we're going in saying. But also, that we're gonna be one in the subject of money. And he's already started the conversation off as already it's split, right? Like, "We're gonna be two," is how it feels. So, I just wanna make sure, in the marriage, you guys are working together, and that you are being taken care of, and that he's being taken care of.

Like, you know, you both have that give and take in the marriage when it comes to money. And I don't want it to be one-sided. And sometimes, not always, people with that prenup mentality sometimes continue it on in the marriage to continue to isolate the other spouse, to say, "Well, this is my money. This is your money. I'm working hard," right? If you look down 2 years, and if you wanna be a stay-at-home mom, and he makes, you know, enough for you to do that, but yet, he keeps saying, "It's my money over here," that's not a marriage.

00:18:19

You have to ask for an allowance. I mean, that's where it gets toxic. So, I would get a full picture of what money's going to look like in this marriage. And if the prenup makes sense as a part of that, great. But if you guys are unaligned in every other area with money, that is a huge red flag that we should not move forward.

Yeah, that makes sense.

So get clear with them tonight. Sit down and say, hey, I wanna know more about this. Would I be a beneficiary as long as we're married on your retirement accounts and on the real estate and any future wealth, any appreciation of the house and of your retirement accounts, any wealth that we create together from here on out? Would I be entitled to half of that? Those are things where you start to understand and get in the minutia of it. You might go, oh, okay, that makes sense. It just sounded harsh on the front end.

Right.

Yeah, and he didn't help his case though, the way he treated you, the way that sounds too. So, yeah. Yeah, so I think you go in with some caution, but a lot of clarity, Beth. And I would not sign anything until you feel comfortable though. So I don't want you to feel intimidated in any way.

Never feel pressured into like, well, this better happen now, ultimatum. That's another red flag.

Yeah, yeah. And I feel like if he would break up with me over a prenup, then that is him choosing his money.

You dodged a bullet there if that happens.

I would agree with that too.

You should be thankful. You should write him a thank you note if that happens.

Yep.

To spare you. Oh my goodness. Well, we're rooting for you, Beth. I hope you guys can come to a consensus that is fair and equitable for all without the ick. That's the goal here.

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I just had—

so I I have some money that a couple years ago I put in with a family member who has some investment stuff that he was doing. And it's not a huge part of my savings or anything, but it's just a little bit. And I guess it wasn't really worked out in the initial agreement what his cut of the money was going to be as he managed the investments. And so we're working on that now. And what was mentioned to me was a 2 and 20 structure. With a 10% hurdle. So, we get the first 10%, and then anything above that, he would get 20%. But then somebody else mentioned the 25%. And to me, that 25% number— What kind of—

is he a financial advisor, or is this some back-alley deal?

It's just a family member who talked to some finance people and worked out some investment thing, and he's been doing that and making pretty good money.

Dude, this is sketchy all around.

What kind of investment is it? Is it in the market? Index funds or mutual funds?

Yes.

It's based on the S&P 500 for the most part.

So this is highway robbery. The standard in the industry is around a 1% AUM fee. That's assets under management. Sometimes it's 1.25%, maybe upwards of 2% in a crazy scenario.

And he wants—

but 20%?

Uh, yeah, that's just anything above 10%. But like anything above the 10%, like if we make over 10% profit on the year, he gets 25% of anything over that.

As he should, though.

Does he work for an actual like registered investment advisor, like an actual firm? No, you keep saying like, well, he's got some guys, like he's like a middleman, and he's— I would get your money away from this guy ASAP. Who's this family man? Is it an actual, like, real— like a cousin, a brother?

Uh, yeah, an uncle-in-law. If he's not like running it through anybody else, he's handled it all himself, but it's just something that he—

okay, so he's a DIY investor and he's just offering his services to you for a steep fee?

I mean, we haven't really agreed on the fee yet.

What happens if he loses all your money?

I lose that money, but it's not a huge part of my—

How much are we talking? How much have you given him so far?

It's only $10,000.

OK, so what I would probably do, Dan— when did you give him this money to invest?

About 2.5 years ago.

OK, how old is he?

Uh, 40.

And does he do this regularly? Like, is this like a side—

He'd been working on it with his own money for a while before he like opened it up to anybody else.

And again, is it for him? Is he using like a Fidelity or a Vanguard? Like, does he have a brokerage?

It's through a brokerage. I think it's E-Trade, maybe.

Okay, so it's basically— it's something you could be doing because he's not really moving money around, is he? He just picked an investment and put it in.

But you'd be better off just doing this with an actual professional who's licensed. Right, OK. How much money did you originally put in 2.5 years ago?

I put $10,000 in 2.5 years ago. It's up to like $15,000 now.

OK. I was going to say, if it's still at $10,000, this guy needs to go to prison. I mean, the market has done really well the last few years.

No. 1, I would untangle this whole deal. The whole money family minutia, it's not, it just never really ends up good. So I would just say, hey bro, I just want our relationship to be clear of any level of entanglement when it comes to money. I just, I'm starting not to feel great about it. You've done nothing wrong. I freely chose to do this, but I've been, you know, reading some books, doing some stuff, and I just think— Are you married?

Yes.

Yeah. Me and my wife, we've been looking at our entire financial picture, and so we're going to kind of consolidate some stuff, move things around. So I probably will just cash out with you, move on. That's what I would do and not even worry about it. But if you feel like you can't do that and all of it, then I would charge him what the average market rate is if you had an investment professional look at that, which is 1%.

Or just say, hey, I've got it. I've got my wife and I. We decided we're going to work with an actual financial advisor at XYZ firm. And we're going to move our money over there. And if he gets real upset, that's a good clue that this was a bad idea to begin with.

OK.

But I'm glad you're at least upright now. He hasn't embezzled the money. Usually, this call ends with, "And all the money's gone, and I can't get in touch with him." Now, that would be weird.

Would that not be crazy, Dan, if you went and told him that?

It sounds like he likes this stuff, and he does DIY, and he came up with some deal that was like, "Alright, I'll make a little bit of money to manage this for you." I don't even know if this is legal. This sounds crazy.

I think it's kind of set up like an investment club type thing. So, it's mostly fine. I have input into it. But yeah.

Well, why don't you just do it, Dan?

Well, I don't know exactly what it is. I don't know how to do whatever it is he's doing. He's not just putting it in a stock and leaving it. He's doing some covered call type stuff, I think.

Oh, boy. Okay, there's some more risk here. I personally, I would jump on ramseysolutions.com, click on Smart Investor Pro, and you'll sleep better at night knowing that all this money could disappear. Because here's the thing, you could lose it all and you have no stake in the game. You can't come after him.

And the fact you can't explain what he's doing, never put your money in something you don't understand. So you've got to figure out what he's doing. So just for your own sake, Dan, don't give someone $10,000 and be like, I don't really understand what he's doing, but he kind of knows what he's doing. You don't know what he knows. You don't even know if you know what he's doing.

Did he make any Did he make any promises? Was he like, "Hey man, I'll double your money"?

No, no, nothing like that. He gave up, yeah, he just said it was doing pretty well for him and he'd been making, I don't remember what the percentage was that he said at the time, but it was a decent amount. And I was like, "OK. I'm not going to put all my money there, but I have some I can put there.

It's fine." Well, at least you're not too late. Hopefully we talked you off the ledge to get out of this weird situation. It's always a family member. That's the part that I'm glad at least it wasn't a whole life insurance thing where he's like, he said he's managing my money and it's really just a life insurance salesperson who works at Northwestern who sucked you into this deal. Totally.

Yeah.

Yeah.

It could be totally fine, Dan. We may be being dramatic, but from the relational aspect, I would not. Yeah, I just wouldn't commingle money and family.

I'd rather be a stranger I can yell at.

You just put it in an index fund and you'll probably be getting, I would think, the same returns as what he's doing, honestly.

All right. Jack is in Lexington up next. What's going on, Jack?

Jack?

You there?

Jack?

We were so close to talking to Jack.

Alright.

It was a good effort. Let's go to Joe in Raleigh instead. What's going on, Joe?

Hey guys, how you doing?

Good.

How can we help?

I have a quick— well, kind of quick question. First of all, thanks for taking the call. I just graduated school. I'm from Indiana, moved down to North Carolina. I have about $65,000. $100,000 in student debt. I got my master's, my MBA. And then I have about $7,000 in a car. My work actually kind of, we have a car allowance that kind of gets paid for. I'm getting married in 2 months. And my fiancée, we're very blessed. She has had money put aside for her. It's about $120,000. And it's going to be our money. We're going to combine our finances. We've talked about what to best do with that money as soon as we get married and combine our finances. Part of me thinks, yes, I should just— we should just use that money and wipe out all the debt that would now be ours once we're married. But also being a good man I am, I feel like I don't want to just take her money and do that, but it will become our money, if that makes sense. And yeah, we could use it on— I could use some of it and then pay the rest off on my own.

But I feel like you guys would probably just say just use it. But it's been set aside for her for a while. Her dad and grandparents blessed her with that. So yeah, curious to hear what you guys think.

Absolutely. Use it and set yourself up. I mean, this money was created for, you know, for her to get a leg up in her financial future, and now she's got you. It's a wealth multiplier. So yes, it feels like you're taking a step back temporarily, and it stinks because you're like, man, this was— I mean, half her money's gone now that was set aside for her. But you're just setting yourselves up. This is a great foundation to to go off of. So absolutely I would do it. And you would do the same if she was in your shoes. And so it is your money, y'all's money, our money.

And you're not using all of it. I mean, you're using a good bit of it.

You have like $50K left.

I was gonna say, yeah, $48,000 left, which could be the, you know, starter or the fully funded emergency funds, right? Part of that could be there and then some of it for a down payment for a home and you guys keep moving along. So the goal is to get to wealth as quick as possible and getting debt outta the picture helps you get there faster.

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Open phones at 888-825-5225. Spencer is in Hollywood, Florida, up next. Spencer, welcome to The Ramsey Show.

Hello, thanks for having me.

Sure. How can Rachel and I help?

I was just calling because me and my fiancée, I'm age 25, but me and my fiancée are looking to get married. In August, but I'm having like a dilemma with her and her mom. Her mom wants to stay with us, but her and her mom doesn't have a good like relationship really that's happening. And we're kind of like in between on what we should do. Like she doesn't want to abandon her mom and like leave her because she's a single mom with two other little sisters. And we're just having that I guess you could say that guilt of not bringing her along with us.

Okay, so the mother-in-law is asking to move in with you all once you get married?

Yes, that's correct.

Okay, and she has two other daughters?

Yes, and the thing is, she has, um, her aunt that lives in Jacksonville. She's in the Navy, but that's not really like, I guess you could say, a designated area she wants to live Okay, why does she need her oldest daughter?

Um, is it financial? Is it that she helps take care of the two little ones? Like, what is her primary motivation to live with you all?

I think it's the combination of all the things you said plus more, I guess, for like, I guess you could say more comfortability. And she, she really, she really takes on like all the responsibilities. When I'm thinking about it.

Your wife does?

Yes, correct. Yeah, I was helping her mom and everything. Oh, I guess that, that's like, uh, I guess if she leaves, that's like, I guess, you know, a gap that she has to, um, feel as a single mom.

And what's the relational side? You said there's a bad relationship. Who's it between?

Well, when I say like bad relationship, it's like, I guess, like you could say like hot and cold. Like, um, it'd be like, I guess you could say one day like they're getting along, and then next day is this, I guess.

You're bringing some drama into the house by inviting her in is what you're saying?

Yeah. And I'm, I guess like my standpoint, I'm like in the middle of it, so I don't want to play like on both sides. And you know, and I respect both of them. And I feel like I kind of gave her ideas, like saying like, you know, you could love your mom for a distance and maybe like going to Jacksonville, it's not a bad idea. But at the same time, I feel like, 'cause I never lived with her mom, so I'm saying like maybe it won't be a bad idea if she comes live with us for a little bit.

But the little bit turns into a long bit. And the long bit turns into, well, this is where we live now and it's a generational house. And that's fine if everybody agrees to it, but it sounds like you and your fiancée are both like, this is not it. This is not the life we pictured.

Yeah. I mean, I guess with me, I don't mind, but for her, she's the one that— Spencer, you don't mind? You really don't mind?

You don't mind your mother-in-law? So you guys openin' the fridge together and the two little kids running around with your new wife? You don't mind?

Oh, well, not really when you say it like that.

There we go. Yeah, it's okay to admit you do not want this. It doesn't mean you're a bad person. It doesn't mean you don't love her. But there's a reason people get married. The old leave and cleave. There's a sense of independence that we're creating a new life for us together, not dragging everyone along with us and funding their life, as well.

Yeah, and the guilt trips your mother-in-law will give to her daughter, 'cause it sounds like the enmeshment of their relationship is super deep, and there's not clear boundaries. And your fiancé has basically become, in a way, another parent to your mom, to her mom, you know what I mean? Like, it's like the roles have flipped, and that's not—

Not healthy.

It's not, yeah, it's not the way the progression's supposed to be. And I know life isn't perfect, and there's messiness, and things happen, absolutely. And I'm not saying you abandon abandon her mom or anything. But it is not wrong for you both to say, "Hi, we are both in our mid-20s. We're gonna choose to start a life together, choose to start our own nuclear family. And we're choosing to do life together. And now, I'm leaving the home mom." And that's not crazy, right? And she may have a hard situation, and you guys can choose how much you wanna help in that, if you want to. But there's no responsibility there. She's the daughter. Her, right? Her mom is in charge of her own life. And so, when she depends and is so enab— and is so dependent and codependent on her daughter, that's not good. And so, if your fiancé decides, "Yes, I do not— I don't want my mom moving in with us," I think is not only a wise move, but it's gonna be a really hard conversation. 'Cause when you put boundaries up with someone who's not used to boundaries or new boundaries, it's gonna piss her off.

Like, it's gonna be really hard. It's gonna be really hurtful. And she can do it in a really kind way, but she can't control how her your mom's gonna respond. But that is going to be messy, messy. But that doesn't mean— just because it's hard doesn't mean you— it's not right. Yeah.

So, and this needs to be between her and her mom.

Yeah.

So that you don't need this triangulation where now it's like you're in the middle going, "Oh, what do you want to do? You be the tiebreaker." You don't want that.

Yeah.

Now, you support your wife in these setting up the boundaries, but you don't need to get in the middle of it either.

Correct, correct. Yeah, that's why I just listen to what she tells me, and I give My advice to her, stay out the mix, you know? And when I come over, it's like, that's nothing like that.

Can I be honest, Spencer? I think she wants you to take a stand. I don't think she wants you to be Switzerland.

Yeah.

She wants you to bow up and say, you know what? This isn't okay. And I support you in you stopping this before it gets out of hand. And then go, hey, we're not going to leave you on the street. We want to come up with a plan to make sure that you're covered, that the kids are okay. But that doesn't mean you're going to move in with us. There's other options, right? If you guys weren't getting married, what would she do?

Yeah, so I guess the plan was she's supposed to, um, move to Jacksonville with her other sister.

I guess that's the plan. It's great.

Yeah, keep it, keep the plan.

It's a great plan. Love it.

Great. We love the plan.

You should be so supportive of that plan. You should cover the moving costs for her to get to Jacksonville. That's how much you love this plan. You see where we're going with this?

Yes.

I need you to steer—

what's your hesitation, Spencer? What's causing you to not just be like, yes, absolutely?

Oh, well, I mean, I guess the only hesitation is really, um, is it—

I guess what she tells me, she— I guess it's always like mixed emotions, I guess you could say.

Like, that's fair.

One, one day is something different and the next day is something else. So one day it's like you're saying like like, you know, I feel bad for my mom. She did stuff for me and like, you know, like, okay, what if they had like that idea? What if we did get a house and she came? But then this idea that I would say, oh, about like, okay, one month, one year, um, turns into many years and that's not something you want.

And is she working full-time?

Yes.

Okay.

I think, and I think her mom just got out of actually, um, surgery, knee surgery. So she's been out of work. Well, she still has her job, but she's— I've been out of work for about a month now.

Okay.

Yeah, and you guys can be helpful, right? We're not saying you just like abandon a relationship by any means, but co-mingling your whole lives together, that's a, that's a totally different step. And she doesn't need to feel good about her mom taking care of her. That's why you choose to be a mom. You take care of your kids. Like, that's what you do. They don't owe— they're not indebted to you because you took care of your kids.

Yeah, that's selfish too. I'm gonna have a kid so that they can take care of me in my old age of 42. How old is she?

Um, at least in her 40s.

Okay, yeah, she's not elderly. If this was someone who's like, hey, they need care, this is different. This is a barely a middle-aged woman who can work full-time. And yes, it's a hard life to be a single mom with two young kids, but it's not impossible. We hear calls all the And so she needs to figure out how to be independent because that's what's actually best for her.

Yes.

Okay.

So you're actually doing this out of love, not out of spite. And I think you need to convince yourself of that.

Spencer, you need to take an energy, a 5-Hour Energy shot before you— Boom. Get a little aggressive in there, you know?

Sometimes I'll slap myself in the face just to wake up and go, all right, get in the game, bud. Let's do this.

You got this, Spencer.

Oh, well, I'm hoping the best for you guys in setting up this boundary conversation.

Call us back if you need us. Yes, Spencer.

And call us back if you do let her move in and then it's 2 years later and you can't get her out and she's not paying any of the bills and it's chaos in your house. We'll also try to help you then.

We will.

It's just going to be less fun.

We'll always do.

You try this. This is the preventative medicine versus the emergency surgery of, we need to evict my mother-in-law and her 2 siblings.

I know, right? Right.

That's a nightmare scenario. And what if you guys want to move and she's like, well, no, we need to stay here. My job is here. I can't So you guys are really locking yourselves in with some handcuffs if you do this, on top of the drama and the stress. I wouldn't be doing that as a newlywed couple. If you've been married 30 years and she's elderly and needs care and you decide to take her in, that's different. But you're gonna create a zoo that you did not sign up for.

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Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell, joined by bestselling author Rachel Cruze, and we're taking your calls at 888-825-5225. Mike is in Philadelphia up next. What's going on, Mike? How can we help today?

How are you?

We're doing great. What ails you?

Good, good. So, all right, so I have been pulling my hair out past couple days about a new truck.

That's how Dave Ramsey ended up like that, man. Be careful. Oh, pull that hair out, doesn't come back.

Just real stressed.

I'm close, I'm close to it. I'm fully gray, you know. I, I used to have a nice base of, uh, browns on. Now I'm all gray about it.

So that's life.

Listen, my car, I've had it on the road for years now without a car payment. I love it. I'm the 1% of the world who doesn't have a car payment, I like to say. And now, unfortunately, the car is on a lift at my buddy's shop on life support.

Was this a big surprise or was it like, yeah, it kind of was getting there?

No, wasn't a surprise. No, it wasn't a surprise. I think this thing was coming, but I was in denial. So, you know, Infiniti with 250-something on it, I get oil changes left and right, premium gas, but I take care of it. And I was really hoping to squeeze just a couple more, you know, miles out of this thing before I had to make the jump to a new car. But of course, here we are, you know, life, life springs us on our heels. So I have one of two ways to go. I spent all day yesterday on the Toyota Tundra lot looking at the Tundras and seeing how ridiculously expensive they are versus going to my buddy's shop right now, throwing the whole tax return nut on the repairs and driving off and just hoping to squeeze just a couple more miles out of old Barry, is his name.

Old Barry.

So Old Barry Strongman.

Oh man, love a Barry.

It's been good. Berries are always good.

Yeah, Barry has been fantastic to me, and I think he's still got some life left. Okay, the friends and family are like, listen, bro.

Well, we don't listen to them. We don't even listen to them. Okay, so, um, Mike, how much money do you have to buy a Tundra?

So I have, I would say, about 6 saved up.

Um, 6,000.

Yes, correct. I'm planning on throwing $3,500 down on it.

$3,500?

That's correct.

Down? I thought, I thought we were an anti-payment. I thought we were a 1-percenter of not having the word down is in our vocabulary.

Uh-oh.

I know, I know.

I think Barry's gonna feel disappointed in you, Mike.

What's the repair cost?

So Barry, all in right now is, uh, $2,300. And then now I just got surprised with new part plus $800, so whatever that is.

$3,100. Okay.

Okay.

So what's the car worth after you do all this?

Listen, we're at 20— 250-something thousand miles. I don't know. I don't know.

I mean, is it worth it?

What kind of car is Barry?

It's a 2010 Infiniti M35.

Okay. Yeah. Um, Mike, do you listen to the show a lot? Do you, do you, do you, uh, Um, yeah, do you listen to The Ramsey Show a lot?

No, no, I actually just started following, um, the whole group pretty recently. Oh, okay, okay.

You were the 1% without a car payment before you knew it.

Well, you called a show that helps people get out of debt, not into debt.

Trust me, I'm aware. And that's, you know, but I, I have heard the rare stories where, you know, they're like, yeah, sure, why not, you know, you have this, this and that going Why not?

Oh, we do tell people to buy cars, yes, new cars when they have the money to buy them. So, people will call in and they're like, "Listen, I got $600,000 in a high-yield savings account and I want a new Tundra." Then we'd be like, "Mike, go get you a new Tundra. If you have a net worth over $1 million, go buy a nice car." Mike, you're kind of broke, you know?

And can I be honest, Mike?

You need to stay in this country. You and Barry and $6,000. You don't need to be walking around on a Tundra Tundra lot, Mike?

Yeah.

You'll be a Tundra guy one day but—

Right now it's champagne taste on a beer budget my friend.

No we can't! Do you know how much a payment's going to be, Mike? I bet it's what $900 close to $1,000?

Easy.

$3,500 down is a drop in the bucket for a brand new Tundra.

Hey do your math. Let's let's... Mike is new so show him.

Like a car loan payment calculator?

Okay okay yeah sure.

Yes. So listen, Mike, this is what your car payment would cost you as Barry's sitting there on life support. But he's got another, he's got another life.

Okay. What's the price of the car?

How much would a new Tundra be?

I know, you know.

No, no, no.

I believe it.

Well, we don't need that. Just say like, just say.

I do need to know.

Oh, you're gonna do a loan. I was gonna do investment.

If he invested.

Sorry, George.

She's just yelling at me over here. Mike, gimme a break.

Will you pull up the investment calculator?

Oh, got it. Okay. I see where you're going with this now.

Yeah, this is where I'm going. So Mike, if you went and got a new Tundra, okay? And you were like everyone else, else in the world and you put away— how much do you think a payment is? Probably—

can we call it $900?

$1,100? How much do you think?

Yeah, let's call it about $950.

All right, $950. How old are you?

How old are you, Mike?

Uh, 36.

36.

36. Let's go to 62.

So let's say you're like everyone else, Mike. You go, you get this new Tundra, and you pay a car payment, and you do it over the next, you know, 5 years. Then you're done with it. The Tundra is 5 years old. You're done with the payments, but you're like, you know, I want the new Tundra. You didn't save anything. I mean, Tundra. So then you go get a new one and you stay in a cycle of car payments, because that's what ends up happening. So if you paid a car payment every month now until you're 62, that's your life. Versus if you keep Barry alive, you start saving up and you pay cash for your cars and you invested a car payment, you paid yourself that car payment, how much money would he have at 62?

At 62, you'd have $1.4 million. Of that, you only put in less than $300,000. Compound growth did the heavy lifting. Lifting. So, or you could spend $50 grand on a car that was worth $40,000 that's now worth $16,000 and be paying payments 6 years later.

Correct. Now let me ask you this, uh, you know, the option to at least to buy, you know, brings that—

oh no, that's even worse, Mike. Who sold you on that idea? The guy at the dealership?

The Tundra guy?

Just wondering.

Right, right, right. You know, I, I had a going. So, but I figured, listen, it's, it's worth a shot to call in and just see what, you know. I, I know, and especially me, like, I've been paying my, paying my debt down like crazy.

How much debt do you have?

And I'm almost getting ready to do that, uh, debt-free scream.

Okay, yes, you're going to ruin this moment.

The right direction. Keep moving, Mike.

Couldn't come at a worse time.

One foot in front of that. But you know what, Mike, you have the money, you have the 6 grand. $3,000. So you're able to fix Barry.

Cover the repair, you still got $3,000. Then how much could you save up every month once you're completely debt-free? How much could you save in a car fund?

Well, let's see. My emergency fund is back up after this payment. The emergency fund is back up and replenished.

Yep.

I mean, I could—

Could you put away $1,000 a month? $2,000 a month? What are we talking?

Yeah, yeah, yeah. I mean, 'cause I don't have rent or a mortgage.

And what's your income?

So that's $85,000.

You make $85,000 a year. So you could buy up to a $40,000 car if that was your only thing with wheels and motors on it. With cash.

With cash.

And you just told me you could save $2,000 a month.

Yeah.

That's $24,000 a year.

Yeah, at the end of, yeah, think about it. In one year you could have a $24,000 car.

And if I were you, Mike, I'd go find a $24,000 Tundra a year from now.

Yes.

That's used, that someone else said, "Ah, I'm done with that. I want the fancier, newer one." 100%. That's the right way to go if you want to build wealth, Mike. But if you want to look good and feel good for just 3 seconds, you go get that new car with a big old payment. But man, I don't want to see future Mike regret that.

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Attorney advertising. Results may vary and no specific outcome is guaranteed. Chantal is in Sarasota, Florida, up next. Welcome to the show, Chantal. How can we help?

Hey, so my question is, I am a new mom and I had a baby about 7 weeks ago, and my question is—

oh, thank you.

Um, my question is, does it make financial sense at this point? I'm really strongly considering transitioning from full-time working from a relatively well-paying medical job to a stay-at-home mom with losing all benefits and all those kinds of things from my current employer, also while considering my husband's employment kind of decreasing grossly year over year, um, I'm just kind of lost at what to do at this point.

Medical sales.

And sales just aren't coming through?

Well, it's a very seasonal area where we live in Florida, so, you know, most of the year, you know, relatively busy, but in the summer months definitely drops off quite a bit. So kind of over the last 2 years, kind of bring home has been decreasing just based on volume. Overall.

Okay, what was, what was he making? What is he making now?

Um, I would say the range between $400,000 and $600,000.

Oh wow, well, that's a healthy range.

Yeah, we're a little on the lower end. Yeah, a little on the lower end, kind of on the trajectory for this year.

Okay, does he see volume picking up next year to get back to that half a million or $600,000?

Um, probably not until 2027, um, when more hospitals kind of—

so next year? Next year?

Yeah, probably in the latter half of next year, I would say.

Yeah. Does your lifestyle support you guys living on $400,000 a year?

Um, I mean, we— he has 2 kids from a previous marriage, so there's 3 kids total now. Um, and I have been the one carrying like the health insurance and all of those kinds of things up to this point.

Um, his company doesn't provide that? That's not a benefit?

Uh, no, because he's an independent contractor, um, and a Navy veteran, so he gets all his, um, care through the VA.

Okay, and family's not included in that?

No, it's not.

Okay.

Do you actually know your total household expenses in a given month?

Um, it is— mortgage is probably $2,100-ish, in that range, and we owe maybe about $240,000 on the house.

Okay.

Um, you know, then just like your regular electric.

Would you say you guys spend $10,000 a month to keep the household running?

Um, between all of the things That's probably generous.

Is that child support included?

There's no child support.

Okay, well, I'm, I'm doing math here going 10 grand a month is $120 grand a year in take-home pay. So even if you made $250,000, you'd still be able to cover all of your household bills easily on his income alone.

Yeah.

Now the part to factor in is getting marketplace, marketplace, uh, health insurance, which you can check out our friends at Health Trust Financial at ramsaysolutions.com. And they can search for you to find out what it's gonna really cost. It might be $3,000 a month you got to budget for to cover health insurance for now.

But I think you guys can afford that.

But even if your bills are $13,000, if you're making $400,000 in a bad year, you're gonna be okay.

Yeah, I mean, and I think the biggest thing for me is transitioning from my contribution to all of that, which last year I brought in about $250,000 to going from all of that to zero.

Now is that $250,000—

feels like, you know, like I'm not doing my part, you know, as a partner.

The hardest part about staying home, Chantal, is disassociating your work identity from your human identity as a mom. And that part is legitimately hard because this is all you've known. You've worked really hard to build this career, haven't Yeah.

So yeah, invested all this, you know, master's degree for the last 13 years, been working my butt off.

Yeah. And it got you here. It got you to an amazing life.

Yeah.

And it's, I think what you're gonna have to do is grieve that over time and go, man, I work really hard for this and it's not the right next thing for me.

Right.

Do you have this new baby now? And so that's your new thing that you were contributing to as well as the household. And that, I think that has so much nobility and merit to it, even if it doesn't doesn't come with a big paycheck.

100%.

And I say that as someone who's— my wife stays at home and had an amazing 9-year career here at Ramsey, was at the top of her game and dropped it all to be at home. And it was a really hard decision for her emotionally, but it wasn't hard financially because we set ourselves up. And you guys have done the same with this amazing income you have.

Yeah, um, I think the other portion of that is, you know, I have been working towards, you know, obviously investing in retirement, 401k, Roth IRA, trying to set ourselves up you know, at first some point that we'd be able to transition. So, you know, I'm gonna lose all of that too as far as like corporate contribution.

Sure, but you'll roll over any retirement stuff you have. You can roll that over to an IRA. It'll continue to grow.

And you can do a spousal—

spousal—

Roth IRA. You guys may have to do the backdoor considering how much you make. I do have one question, Chantal, then I want to get back to what you were saying. Is the $250 you're contributing part of the $400, or he's making $400?

He's making $400,000.

Okay, good. Okay, I wanted to make sure our math was right. Okay, perfect.

Yeah, you guys are, if you don't build wealth making $400,000 a year, you really screwed it up.

You don't have a financial problem, she'll tell you you have an identity problem is what it is. And the hard thing is, is so much of the applause of our world today, the scorecard at which we place our worth is our income, what people see success as. Success, position, like all of that is what is applauded in our world today, which is really sad because a lot of that ends up being empty. Now, if you can flip that and say, "Hey, that is not who I am. This is a skill set that, you know, was God-given and I've worked hard at it, and that's a great part of me, but that is not— that's not who I am. It's maybe a part of me, but it's not my full identity." And so, taking that apart, I think, is so important. And for you and your husband to sit down, and I would love I would love him to affirm this in you, that this is our household income. Like, yes, you are contributing to it, but regardless of who makes the money, when it hits that checking account, we are in charge of it together.

Like, you have as much say still into the money, even if you're not bringing it in. That's a healthy perspective. And it's gonna be hard for you because you are very intelligent, you're very hardworking. And I'll be honest too, I mean, I felt this way when I went on maternity leave. Even, you might go a little stir-crazy. You might be like, "Oh my gosh, I've been making peanut butter and jelly sandwiches for so long," or, "I'm nursing," or, "I'm washing burp cloths constantly and swaddle blankets." Like, there's a monotony to a new world that you've entered into. And so, if you have to find a little outlet to kind of like, find that part of you that is so gifted, that's great too. But honestly, embracing the season you're in, it's gonna go so fast. And I know everyone says that, and I even hate to say it, 'cause I rolled my eyes every time people I've never said it, but it does. I'm like, it just, it flies. It flies. And so your contribution, if you're wanting to stay home and that's where you feel like your spirit, your soul is pulling you, listen to that.

Listen to that, okay? 'Cause it is.

Yeah, they're only so little for so long.

Yes, and it's gonna be exhausting.

You can get a job again one day if you miss it.

Yes.

That's the good news. You're so talented.

And you're gonna be tired. Like, it's a different kind of tired. I think it's more tiring too. 100%.

Oh my.

Versus functioning with adults, you know, and having adult conversation. Like we are now. So, yeah, you'll miss some elements of your work life, for sure. But if there's ways you can still have yourself fulfilled in those things, whatever that looks like, is great too. So, man, but I would say, listen, listen to your heart and be home with that baby, if that's where you're being pulled.

I much appreciate y'all's help.

Yep, absolutely.

Good luck with the transition. And congratulations. I know, 7 weeks in, I'm surprised you're able to call in Apparently.

Oh man.

That's the most impressive part.

It's exhausting. So tiring. So tiring.

Yes.

Those baby years, they're beautiful, but they're exhausting.

I'm in it. I got an infant now. I got a toddler. And I get home and I'm like, I thought I was at work. Now I'm at work. That was a joyride compared to what's going on over here. I know.

And I know parents are all different seasons, but it does get better and better.

I know.

Like our season right now.

That's another one of those, I roll my eyes, but it's true.

I know.

And now I'm like, it's perfect for us. Like a 5 to 11-year-old. I'm like, stay right here, y'all. It's so fun.

Don't grow.

Don't grow.

Don't become dramatic teenagers. Hey guys, George Campbell here.

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Today's question comes from Toby in Missouri. "I'm 25 years old and self-employed with an average salary of $100,000 "$100,000 a year. I have a net worth of $400,000, and my fiancé will be out of school and getting a job within a year, starting out at $95,000 a year. I have saved $200,000 to put down on a house for a down payment. Should I buy my dream home for $450,000 in the best neighborhood in town, or a house that costs $200,000 in an okay neighborhood, knowing that we want to move into another neighborhood in the next couple of years? We have no student loans or car payments, and we'll be getting married later this year?

Ooh, okay. A lot of variables here. It's like a little riddle. A lot of timing.

I'm going big.

Yeah.

Well, I'm wondering, can you wait to buy the house until you're married?

Oh, for sure.

Why the urgency right now to get the— I would get the $450,000 house, but I would wait until you're married.

Yep.

Because then you know that you know that you know both incomes are there. Because what if, God forbid, maybe the wedding gets pushed and you're stuck with a mortgage payment that's a little tight for your $100,000 income, which is amazing. Amazing, but you take on a $250,000 mortgage, I don't know what the payment's gonna be compared to your take-home pay.

That's right, yes. I would assume that after you get married, you guys will be making $200,000. You put, and maybe rent for 1 year, right?

Oh yeah.

Before you jump into the new neighborhood. And save an extra $50,000, $7,500, right?

That's incredible.

To add to the down payment. And if you put $250,000, $300,000 down on a $450,000?

Oh my goodness.

Beautiful.

The options you have will be amazing. You'll pay off the mortgage fast. And then fast forward, let's say your fiancée wants to stay home one day. And we just took a call about that.

Just like that, yep.

Guess what? It's a no-brainer. You're like, "Yeah, our mortgage is $1,000 a month or it's paid off. No-brainer to do this." Or you jump in right now with that mortgage that's a fixed payment and it gets tight if she decides to stay home. That's the kind of stuff you need to think about with a home. It's a long-term decision. So I would wait. I think renting is wise for 6 to 12 months. Months, then jump on it and get that dream home, my friend. That's a great question. He's in a good place.

Yes, 'cause we do, I mean, if you guys didn't have like a, you know, a big goal of like, oh, we wanna be here and a $200,000 house was sufficient and you're like, no, this is perfect, this is what we're wanting, then that's great. But if you know you're gonna be moving up in home in 3 years, then I wouldn't, I wouldn't stay or step up.

You don't wanna be jumping in and out of homes within a 3-year span.

Because you have the money.

Yeah, it's expensive. There's realtor fees, there's closing costs. Hassle to move. You want home appreciation to actually, you know, have some foothold here, and that's gonna take at least 3, 4, 5 years.

Yep.

Uh, similar to the stock market, because in a given year, the home price could actually dip for a little bit. And so I think you're doing it the right way, Toby. I would just be patient and wait till you're married to, uh, pull the trigger on the home. That's awesome. All right, Patrick is down the street here in Nashville, Tennessee. What's going on, Patrick?

Hey, how are y'all doing today?

Great, how can we help?

Great, so I'm 26 years old and I just landed a job straight out of college with my degree. I make about $73,000 a year. I don't have any credit card debt. I do owe on a vehicle and I've got about $63-ish, $64,000 saved in a CD account and in savings.

Okay.

And my CD account is about to renew here in the next month and I'm really just wanting to know, is there somewhere else I can put my money to really let it grow? And then how can I start to utilize these savings for the future?

Great questions. You're doing really good at 26. What is left on your debt? What's the balance?

So I only owe $25,000, just shy of $26,000 on a vehicle.

Only? That's a lot of money where I came from.

It is.

It is.

And I'm more than willing to pay it off, and I'm comfortable paying it off right here, right now.

Do it.

Do it while you're on the Get on the phone with us.

Prove it.

I've been putting it in the works, but I just want to know, I've got a considerable amount of money left over and I just really want to be able to put it to work, especially since the job I'm in is a good salary and it's only going to increase throughout the years.

Are you doing any investing right now through a retirement plan?

I'm not, and I want to start.

OK. Let me run you through some napkin math here to help you. You've got $63,000 in CD and savings. I would not renew that CD. I would get out of that and just park it in high-yield savings. You're going to use $26,000 of that to pay off your car loan, right?

Yes.

So that brings you down to— $37,000. Now we need an emergency fund, unless you have other savings outside of this. You need 3-6 months of expenses saved up in an emergency fund. You can park that in the high-yield savings. How much would that be for for you?

I think for 6 months it would probably be about $24,000.

Great.

So we're going to take $24,000 out of the $37,000, which leaves you with $13,000. That's really the number we're working with. And now think about it. You've got an amazing financial foundation. No payments, 6 months of expenses saved up, $13,000 to now invest. And what I would do first is just fund a Roth IRA for the year. That's $7,500 right right there. Are you tracking with me on what that is?

Uh, you know, I'm new. I've heard Roth IRA, but I'm not gonna lie, I'm not familiar with it.

No, it's all good. I'll give you a quick explainer. So an IRA is just an individual retirement arrangement. It's just an account that's outside of an employer where you can invest money with some tax advantages. And so there's traditional IRA, which means you're going to get, uh, you're going to get some tax benefit now, but you'll pay taxes later when you draw it. On the growth. And the Roth version says, "Hey, what if you use your after-tax money, essentially your take-home pay, to fund it, but then you don't pay taxes to Uncle Sam ever again?" So I love that tax-free growth the rest of your life. I mean, you're a young guy. That's some amazing opportunity. So funding that for the year, the maximum is $7,500 for 2026. So you can open up a Roth IRA, fund $7,500, and you'll still have some money left over, which is incredible. And then beyond that, you've got to think about, what are my future financial goals? Do I need Do I need to upgrade the car? Do I need to save up for a home down payment? And so you wanna think about short-term goals, high-yield savings, long-term goals, let's invest it.

Yeah, and Patrick, at that point, you know, we have what's called the 7 Baby Steps. So it's $1,000 emergency fund, get completely debt-free, everything but the house, and then a 3 to 6 month emergency fund. So you've done all of that because of the savings that you've done so well stockpiling that cash. And then Baby Steps 4, 5, 6 is what you're gonna move forward with. And Baby Step 4 is funding 15% of your income into retirement. So that Roth IRA would be included in that 15%. So from now on, Patrick, you need to be investing 15% of your income into retirement. So that's Roth IRAs.

That's about $11,000 for you.

Yep, $11,000 a year, okay, needs to be going in an investment. So Roth IRA would be included in that. Does your employer have a 401(k)?

I'm still fairly new and I'm figuring all those numbers out. I do know that we have a pension after, if your age and your years served equal a certain amount, that's guaranteed.

So if there is an option for any kind of retirement within your company, then, you know, that would be great. And any kind of investment.

So sometimes there's a match as well to where they go, hey, if you put in 3%, we're going to also match 3%. So you doubled your money, 100% return just like that. So that's the first place to go. And then beyond that, like I talked about the Roth options, that's after-tax money, but it grows and you can withdraw it without taxes again. And then beyond that, if you run out, you can go to traditional options as well. And I'll walk you through this, Patrick, in my book, Breaking Free from Broke. I'll send you a copy. There's a chapter called Wealth is Patience, and you, my friend, have all the time in the world to be patient. You're a young man who's doing great.

Yeah, you're, you're on the right track, Patrick. So just remember, stay outta debt. Invest in the long-term. CDs, percentage-wise, you're getting what? What do you think of CDs right now?

Probably upwards close to 4%, but not quite.

Okay, okay. Better than I was thinking. But yeah, you're going to get better returns investing your money in the market. But again, doing it wisely. And George, in his book, will walk you step by step by that. So make sure to read that when that comes to you, Patrick.

Can we do some quid pro quo, Patrick? Can you promise me you'll pay off the car if I send do the book?

Absolutely, I'm planning to do it, and I knew that was going to be the first thing they were going to tell me.

Yes, well, dude, think about how much is the payment on that thing? What's the car payment?

It's about $513 a month.

You just became $6,000 a year richer. You just got a raise just like that, Patrick. Man, I'm happy for you. Hang on the line, we'll send you a copy of Breaking Free from Broke. Enjoy.

¡Hola!

Rachel, a key theme on the show here is getting control of your money takes intentionality, and the application of that requires a budget. There's just no other way to do it if you're not paying attention to your money. And so we created an app for that called EveryDollar so that you can actually take control of it, find the extra money, use that margin to help you build wealth and get out out of debt. And the newest version of EveryDollar builds you a personalized plan to beat debt and build wealth. The Ramsey plan is baked in. In just 15 minutes, you'll find thousands in hidden margin. You'll feel like you got a raise. So don't live normal when you can live like no one else. Go start EveryDollar for free in the App Store or Google Play.

You know what I was just doing during the break?

What are you budgeting?

Tracking your transactions? Tracking transactions. Yep.

She practices what she preaches.

I really do.

Yes.

How did it feel? It feels so good.

So good.

You got a little dopamine hit?

Well, the Costco one hit, and that was—

Oh, that one never feels good.

That was not fun, but it's in the budget. It still doesn't feel good.

Costco, though, science will study Costco for years to come as to how they convinced everyone to spend hundreds while somehow thinking they saved money.

I know, and my kids get locked in on certain snacks. Like, there's like a little protein drink.

It's like, it has like a little monkey on the front.

They're so expensive, but they're $9 off.

So I was like, you know, I thought about that. My daughter gets her little pouches, and my wife likes the crunchy, clean ones. They're like $2 a pouch. So when she doesn't finish one, I'm like, "You're going to finish that pouch.

Dad paid good money for that pouch." "We're going to put that in the refrigerator and you're going to reuse that pouch." I know.

That's life. Alright, John is in Virginia Beach up next. What's going on, John? How can we help today?

Alright, well, my wife and I have just finished paying off all of our credit cards, which is an excellent feeling.

Nice. Good job.

We are moving on to our bigger debts next. We have a student loan, a HELOC, and we also have a car note that we're paying off. My question is, the student loan is the next largest one, and it's— her student loan is through the government, and it's in forbearance right now until I think 2028. So there's no minimum payment that's required on it right now. Do I start paying on that since it's the next smallest one, or do I go to the next biggest one, which is the truck note, and like paying additional on it?

That's a great question. So what's the total balance of the debts?

Um, student loans right at $14,000, the truck is right around $20,000, and the HELOC's right around $47,000.

Okay, what's the smallest student loan up next?

Um, so her student loans got all consolidated into one, um, back under the previous president's administration, so it's all wrapped into one payment.

Okay, well, here's the deal. Interest is still accruing in forbearance.

Sure.

So even though they're like, hey, you don't have to make a payment, that balance is ballooning because you're not knocking down the principal at all. So I would absolutely treat it like any other debt and just attack that one first at $14,000. How quickly can you knock that one out?

Probably in about a year, maybe 16 months at most.

Okay, so 12 months from now you're moving on to the car loan?

Correct.

All right, and then the HELOC's next. All right, you're on the path. Yeah, I would absolutely knock out that student loan. The problem, the thing I hate about forbearance, is it makes people think they are like, "Whew, I got some relief." Yes. And they look at the balance 6 months later and it's so much bigger than it was the last time they looked at it.

Yeah, that was my concern. Thankfully they're low interest. I think it's a 4.5% interest, which obviously is low, but the interest is still accruing and adding to the balance when I'm not making payments on it.

So I just wanted to make sure that that was the —right next move and pay it down.

The interest could not be low enough unless it's gone. 0% with no payment is the only one I'm OK with. Exactly. I would knock it out just as aggressively as if it was 40% interest. That's the spirit that will get you out of this fast and not be a grueling 4-year journey. Can you knock the rest out in, let's say, under 2 years?

Probably.

Maybe a little over 2 at most, but I don't see why not. That's the spirit, John.

Well done, man.

Well done. And you got the credit cards out. That feels good.

Those ones are real icky. Not fun. Hopefully you cut them up. All right, Keegan is in Sioux Falls, South Dakota, up next. What's going on, Keegan?

Hi, thank you for taking my call. Sure, what's going on?

So I am a full-time law student and I'm living with my parents while I'm school.

They are supporting me, you know, providing me with food and housing.

I'm going to graduate with no student debt, and I'm wondering what I can do to pay my parents back once I graduate.

Wow, that's amazing! First of all, way to go going to law school debt-free. How did you do that, by the way? Because we get a lot of calls of people saying it's impossible.

Well, you know, my wife and I are big fans of you guys, so we wanted to I wanted to try and do this debt-free, so I studied hard for the LSAT, got a high score, and I managed to get a full scholarship. Whoa! Wow!

Well done, Keegan!

So just be a boy genius like Keegan and you can avoid debt. Just be as smart as Keegan and you can do it. That's incredible. OK, so did your parents set up any arrangement with you? Did they talk about any financial aspect of you living with them and them covering food?

No, they are just doing this out of the kindness of their heart.

They want to support me and they know that this is a goal of mine.

Mine.

And so they have no expectation that I pay them back, but you just want to. I just want to.

And I don't think they would take just a check from me to say thanks.

So that's what I was gonna say. You write Dad a check, he's gonna rip it up, I'm guessing, right? Yep. But will you still, still feel like you did your part in attempting to pay them back?

I think that might ease some of my, my burden. Yeah.

Well, you know what, you're giving them the flex of saying, oh yeah, my kid's a lawyer. That's what every parent wants, man. You're giving it to them. The check cannot touch that. They're just proud of you, aren't they?

They are.

They're very proud.

And I know they don't expect anything, but I thought maybe, uh, I take them on a vacation or something.

But that's a fun idea.

Yeah, I think that's great.

Force them into an experience.

You know, sometimes it's hard, Keegan, even, you know, as an adult, to accept accept the generosity of others, it kind of puts you in a humble position. You know what I mean? Feel a little vulnerable. To have to, yeah, accept that. And so, there's something beautiful about that, that your parents had the ability and have set you guys up well, and that you guys have been so smart. I mean, it's unbelievable, the decisions you guys have made. So yeah, I think there's for sure ways that you can be creative and, you know, take them on a trip or, you know, whatever that looks like. I think that's great. For sure.

Or if you like notice around the house, man, that grill could use an upgrade. Once I graduate and I get a job, I'm just gonna surprise them with a great grill. You know, so there's things you can still do to be generous.

Yeah, and there's stuff like that too, you know, depending on where they are financially, you know, that as you guys start to build wealth, that, you know, it's a beautiful thing to be generous to people that don't expect it or don't feel entitled to it, you know? And so that's part of living like no one else. Later, you get to live and give like no one else. And giving to your family is one of those things that you absolutely can do. So yeah, I'm all about that. I think that's great. I think it comes from a good place in your heart that there's— and there's no, you know, weirdness of feeling like, "Gosh, I, you know, they're expecting this, or they have to." It really is just your— you saying thank you to them. And I think that's beautiful. Yeah. Thank you so much. Absolutely. Thank you for calling. I'm inspired by this. I know.

And I feel like paying it forward is one of the best things you can do. You do this for your family, you set them up so that no one in your family tree ever goes into debt. That's a pretty incredible legacy to leave. That goes way beyond repaying them an unknown amount. You're like, what does this really cost? I don't know, I'll try to check for $5,000 and call it good.

Yeah, right, right.

I don't think they're needing it or expecting it. It sounds like they're in a great spot financially. Yes. So they're not put out by you staying there. But it's impressive. The whole story just makes me go, that's how to do it. If there was ever a poster child of it can be done, and that's how to do it. He said, "We've been following you guys a long time and we just decided I don't want to leave law school with debt." So, what did he do? He found a way. He worked his butt off to get a great LSAT score so that he got a full ride. Is that difficult? Sure. Is he privileged? No. He just worked his butt off. He was smarter than you because he worked harder than you to be smarter than you.

That's how it works. I think I probably could work that hard and probably still wouldn't get it.

I would love for Rachel.

I want Rachel and I to take the LSAT just to see who fails worse.

We should just take the SAT or the ACT. Again.

Yeah, honestly, you could give me a Common Core math problem for a 5th grader and I'd fail it.

Listen, it is humbling doing homework with a 5th grader.

You're like, "Oh, man." Even solving for x at this point in my life would add some anxiety. It's pretty, yeah.

When the fractions come in, you're like, "Oh, man.

I got to remember how to do this." It's crazy that we didn't end up using it. I know math teachers out there are really angry with me right now, but who's using the Pythagorean theorem?

Well, not that, but we use math every day on this show. We're sitting here.

Basic math?

Basically dividing by 12 all the time. How much you make a year, divide it by 12.

I've got an investment calculator at RamseySolutions.com at the ready. I know. So take that. Oh man. We need Dave back here with his financial calculator, the old-school one at the desk. Oh yeah, just— Back to analog, Dave. Let's go back. He's gonna keep that thing alive. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm George Campbell, joined by Ramsey personality Rachel Cruz, and we're taking your calls at 888-825-5225. Michelle keeps us going in Phoenix. What's going on, Michelle?

Hi there!

Thank you for having me on the show. I'm excited.

Oh, we are too.

Don't be nervous. Rachel will guide you through this. Okay. I'm the anxious one.

Where do I start? You tell me.

What ails you right now? What's the main thing on your mind? Oh my gosh.

Well, my husband and I have made stupid decisions and we are— I just turned 58. My husband is going to be I'll be 57 in August. How do we overcome our large debt plus our house and the bills that come with that? But we have debt. A good-sized amount.

If you just kind of parse out the consumer debt versus your mortgage debt, how much consumer debt do you have?

Oh gosh, let's see, that's about $10,080, $10,020, $10,040, almost $50,000, about $48,000.

$48,000 roughly. And what's your household income?

We have $98,800 before tax and insurance. Oh, and also I have a school— I will have school debt because I'm going to school. I was dumb going to get my master's and I graduate in a month thinking it was going to help me and I should have done it when I was younger.

So that's on top of the $48,000? Yes. How much more?

I think, well, to be honest, I was kind of confused when I looked at the FAFSA. It looked like it was $18,000, but then when I looked at my school's website it said $48,000.

Oh boy. Okay. Yeah. Yep. All right. That puts us at a grand total of about $76,000 in consumer debt. Making $98,000. Okay. At least now we have facts and figures. That's all we're trying to do right now is sort of get out of the emotion and overwhelm and just go, okay, what's actually the reality of our situation? Right. So break down the other $48,000 in debt.

A credit card for $10,000— or about $10,790. Personal line of credit, about $11,560. Air conditioner— so we had to buy 2 air conditioning units for our house last year because they broke in the middle of the summer, and we were at wit's end, didn't know what to do. So we ended up having to get a loan for that, and that's about $25,083. $40,000. Yeah.

And then the school debt. Are either of you able to increase your income in the foreseeable future?

To be honest, that's what I was hoping I would be able to do. And it, it, to be, I, I didn't have any luck and it could be the way I interview. It could be my age. It could be everything wrapped into one. That's why I thought getting my master's, which is something I wanted to do years ago. Um, but I started and then I stopped back in '21 when my mom got I got sick, and then I thought, I'm going to finish it, in hoping that would help me. So we ended up getting jobs that are hard labor, and for our age, I'm actually kind of, you know, I was kind of embarrassed that I had to go back to a hard labor job, but you gotta do what you gotta do to pay bills, you know? But I have been there for 2 and a half years, so I was hoping to grow in that company since I've already been there. Will the MBA help you?

Will that give you a raise?

Not necessarily, not the job I'm in right now, but I was hoping it would help me get promoted but the job is kind of, it's kind of a different company, how they promote within.

Well, if I were you, I'd be going, how can I use this MBA to double my salary so that I can get out of debt before I retire? That's really the goal now, is can we get out of this thing in the next 3, 4, 5 years, maybe stack up retirement. Do you guys have anything in retirement?

No, well, and that's the other thing, that was one of the stupid things we did when we moved from Minnesota to Arizona, We used my husband's retirement and pension at that time. And then we were pretty good, but then we were making dumb decisions.

What do you mean you used it?

For the move?

You cashed out? Well, we moved.

Well, no. Well, we cashed it out, but we bought a place that was paid for. And then we ended up selling it thinking that would be the way to go. And it wasn't the way to go. We should have kept it because it was paid for.

So, but now you have a mortgage.

And now we have a mortgage because we had to have a bigger house. This is the whole thing. We had to have our daughters and grandbabies live with us. It was kind of a—

Michelle, the key word in your life you need to get rid of is "we had to." That is what has caused you to be broke at every turn. "We had to, we had to, we had to." Yeah. You have to retire with dignity. That's the only have to at this point. So everything else is out the window.

Yeah, out of the $98,000 that you guys bring home a year, what number do you bring home and what does he bring home?

Mine is $40,408. I wrote it down before so I could be ready for the call. Yeah, that's great. And then his is $54,392. And of course, that's all before tax.

Stocks and everything. Okay.

And we're not doing 401(k).

Okay, tell us about the house. How much do you owe on the house? Um, what was it?

$343,658. You owe $340,000, and how much is it worth? Um, maybe about $500,000.

Okay.

What's the payment on that? Yeah, $2,270. And what's your take-home pay every month? Is it close to like 5 or $6,000?

About that, I think, total together. Because I think he brings after, and he pays the insurance, so $600, mine's like $500, so $1,100 per week, maybe, give or take.

Do you still need this bigger house?

Not really, and I've talked to my husband about that, but he's really set in his ways and hard to change, but maybe it will.

And he does hard labor at 57?

Yeah, we work at the same, same company. Company.

Well, he's going to be set in his ways until he realizes he can't keep this up for 10 years to climb out of this mess, right? And then he's going to be forced to. So if I'm in your shoes, truthfully, based on what you've told me, I would consider selling the house, clearing all of your debt. That way your income can now be used to fund retirement, and you guys just rent for a while. And if your income goes up and you can own a home again, that's great.

Okay, but right now Yeah, you could clear $150,000 out of the home. Man, I don't know, there's a part of me, I don't know, George, that if you could go, I mean, and it's gonna be a different type of lifestyle, Michelle, so I just don't know if how you guys would feel about this. But if you could find something, a $200,000 condo or $100,000, I mean, if you could get a $150,000, I mean, I don't even know. Yeah, downgrade, pay cash. Pay cash, and then that frees up $2,500 a month that you guys could throw at this debt.

'Cause that's almost half your take-home pay going out to this mortgage alone. So you're not gonna be able to, Make headway on your debt.

And you guys need to start being creative 'cause you're gonna be working for another decade. And if you can't stay in this job, then you guys are gonna have to start getting creative and think through where else long-term could we be to be making even more money if possible. Obviously I know that's ideal.

There is another thing too that we, so my mom just passed and we did get a little bit of inheritance from her. So we ended up buying a condo and paid cash for it as an investment property. What?

And you buried the lead, Michelle, go live in that thing. Forget your rent. Renters. Can you go live there?

I wouldn't want to, but I mean, you got to do what you got to do sometimes.

Yeah, you told me you're willing.

How much is that worth?

Probably about $150,000. So either move into it or sell it, and then you can maybe stay in this home. Yes. The mortgage is still too much for your take-home pay, so it doesn't solve that problem, but at least it clears your debt.

True. Yeah, I would say I'd I would sell the house and I would go move into something smaller and I'd sell that investment property. Michelle, you guys have $78,000 in consumer debt and no retirement. No, sell it, pay off this debt, invest the rest, and be done. That's how we do it.

It's your choice. You can try to work until 70 and maybe get out of this thing and still have a mortgage, or you can do it our way and find a path to freedom way sooner. That's what I would be doing I was in your shoes. I ain't doing hard labor. Look at me.

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Buying or selling your home is a big deal, and there's a lot of clickbait headlines out there, conflicting data, and it's hard to know what's really happening in the housing market. So we're here to make the latest trends easy to understand. Median home prices stayed steady last month at about $439,000. The number of homes for sale hit 1 million for the third month in a row. So buyers have more options and negotiating power while sellers face more competition. The average 15-year fixed rate dipped to 5.86% last month. So if you're debt-free, you got a fully funded emergency fund, a solid down payment, now is still a great time to buy or sell your home. So to learn more about the housing market trends and get free tools to help you buy or sell with confidence, go to ramseysolutions.com/ market, or if you're listening on podcast or watching on YouTube, click the link in the show notes. Steven is in Nashville up next. Steven, welcome to the show. Thanks for taking the call. Absolutely.

What's going on? So a few years ago, a friend of mine came to me and asked to start a business. It's a landscape service, you know, project-based business, and things have been going well. You know, we've been growing, making money, and then out of the blue, so said that, you know, he can't do— doesn't want to continue the partnership anymore. And we have an operating agreement, so I said, okay, well, we'll go about it the way that the agreement says, get evaluation done. And I kind of did that, whereas he is saying no, the business isn't worth anything, it's only worth what we own. And I believe that's different based on, you know, the goodwill and the cash flow and, and the profit that we've made. And we've kind of reached a stalemate at this point, and I don't really know where to go from here as far as, um, how to kind of leverage the situation to kind of get this clean and over with.

You know, I got a big—

does he not want to pay to get evaluation because he thinks it's worth nothing? Is that the deal?

No, he doesn't want to pay for the company. He kind of just wants to dissolve it and then start the exact same thing on his own, uh, you know, the second that that's done.

What does the valuation cost?

I mean, $1,500 to $2,500 depending on—

And have you done that already? Have you gotten an evaluation?

I've got an informal one, and then I spoke with an SBA lender that's a friend of mine and gave him our tax returns and said, hey, I was trying to buy out my business partner. What would you guys approve, you know, on a loan? Because obviously they're not in the business of making bad deals. They set a valuation of around $775,000. So, making my 50% shares anywhere from that $350,000 to $360,000 range.

That's a big gap from it's worth nothing to it's worth $750,000. Now, I would not go into debt to buy him out. If you wanted to continue this, you could do some sort of profit sharing agreement.

Sorry, I'm a little confused.

Is he just wanting to leave? He wants out and wants to start his own. He wants me out.

Oh, he wants you out. Oh, I'm sorry. He basically wants to run a solo business.

He was gonna just leave.

And I was like, well, just let him leave and you keep the whole business.

Yeah, what does the operating agreement say if the business, one of the partners wanna get out?

It says obviously get evaluation done, you know, then multiply that by your shares. We're 50/50 owners. And then you can either do it through an SBA or if the operating agreement says a 20% down and then 4 quarterly installments for 6 months. 60, you know, 60 quarters. So basically 15 years, which is kind of egregious, I think. And that puts me at risk in case, you know, he defaults. Um, and I would, you know, that whoever's on the other end of that, uh, I wouldn't imagine that that's a—

Do you guys have any debt in the business currently?

Yeah.

Uh, like equipment and machine loans, probably a little over $100,000, I think $120,000.

$30,000. Hmm. Well, I mean, if the agreement says you get evaluation, then I don't see how it's illegal for you to take that out of the business checking account and go get evaluation. What's stopping you from doing that? I don't—

that's not the, that's not the issue. It's that whatever that valuation comes back as, he's going to say, no, it's not worth that, I'm not paying that, why don't you just buy me out, and then I'll— there's a 2-year non-compete attached to our operating agreement.

But well, if it's worth nothing, then you don't You don't have to buy him out. Isn't that what he's saying?

That's what I'm thinking.

I don't understand. Let it be worth nothing and go, all right, there's nothing to give you.

And then he can leave and start his own thing, right?

Yes. Now, the other part of it that comes into it is I picked up my, essentially my life and moved out of Nashville down to, you know, we're kind of in his home turf where he grew up. I'm from Ohio. Football brought me down here. So I'm in an area that really the only reason I moved down here was because we were running a business that was, that was doing well.

And, um, so are you capable of running the business on your own or hiring someone to help? Sure.

Yeah, no doubt. I'm definitely capable. But if he's going to turn around and start another—

well, where do you want to live, Stephen?

Uh, about, you know, in the Nashville area.

We're about an hour and some, you know, an hour and change south of Nashville.

So you would rather live somewhere else. So then why don't you go get new clients elsewhere?

I can do that. Um, obviously, you know, selling the house that I live in now— I got my first child due in a month, not even a month, less than a month. Um, my wife's, you know, we do health insurance through her job here. Uh, the logistics of it all are just not great to leave with no form of compensation or buyout.

And In that case, um, I'm guessing nobody would actually buy your business.

I mean, no, probably not in a very desirable location. And is that what—

and that's his argument, is that it's not worth—

yeah, he says it's not worth— obviously if we sold it to an outside buyer, it would be tough for them to do that. Now, all the contacts that we've built in the last 3 years, if he is still going to continue, is he going to poach all the current clients? He— I mean, yeah, essentially, yes. If we were to divide ourselves right now and I start my own company and you start your own company, we're going to be competing, you know, for the same clients.

He's gonna be like, hey, I started my own thing, come, come over here. Sure. Yeah, you, you guys need to come to a consensus on what these next steps are, otherwise this is going to be a bloodbath. Exactly. And there's debt I'm worried.

Now the debt part is— whose name is the debt in?

Yeah, uh, it's an LLC, you know, so we're— we each have 50% of it.

Okay, so if he leaves the business, he's still liable for the debt?

Yes.

And has he thought through that?

Unless I were to say— unless I were to— well, no, he doesn't want to leave the business. He's not going to leave the business. He wants to get me out of the business.

I thought he wants to start his own. Yeah. And you don't want to do this? You don't want to do this anymore, right?

I do, but I'm not— I don't want to— I'm not going to do it by myself down here where I'm—

and he can't afford to buy you out to do this solo? I mean, he could.

He's saying that he won't though.

Yeah, that's what I'm so confused about.

Okay, well, you got a couple of options. Either you guys just dissolve the business, you start your own thing, he starts his, uh, you sell the assets, pay off the debt, and just say what a bad deal that was. You go your way, I go of mine and you gotta outperform him in your new gig, you know what I mean? To get it competition-wise, because you're not willing to move. I just asked you in the middle of the call and you're like, well, I got a baby on the way, a house, my wife. So you're not moving.

You're stuck regardless of the business.

So you either are gonna do this business or do a business like this, or you gotta go find a different job or you go move and do this business. If you feel like the competition is too much.

You know, I would move if, you know, we each took six-figure salaries last year and essentially nothing's going to change for, you know, for my partner, whether we dissolve or he buys me out, like he's still going to continue like, like business as usual. And so without me in the picture, there goes a six-figure raise. So I'm figuring if I could be compensated somehow for, you know, giving you 50% of this company back.

Yes. But Steven, that makes it, doesn't make sense if he wants out. If he wants the business by himself, then yes, then he needs to write you a check. I 100% agree. And if he's not willing to write you a check, then you can say, I'm not leaving the business. Then he has to decide he's out and he may go start his own thing. And then yeah, you got competition in the area, but it is what it is. Mm-hmm.

So yeah, but I still have the infrastructure and everything of our business, correct?

Yeah, yeah. So you gotta say good luck, bud.

On. Yeah. And then you can—

that's kind of what I was thinking that it was going to end on, is, well, if you're not going to buy me out, then we're going to continue to be partners. 100%.

This is a classic, we can do this the hard way or the easy way. But yeah, the debt tied to it's a whole nother thing you guys got to figure out. Maybe you guys form a new agreement saying, hey, we're staying in this thing until the debts are paid, and then here's how it's going to get divvied up. I think maybe you rip up the current one and draw a new one up that makes makes sense for both of you because the current one is not, not really working.

A ship that does not sail partnership. Nailed it.

That's a hard thing to do, and it ruins the friendship. It does. On top of it all.

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. 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.

Welcome back to The Ramsey Show. I'm George Campbell here with Rachel Cruz, and in the third chair, we've added a special guest. We've got Matt Clark, President and Chief Operating Officer at Churchill Mortgage. You've heard of Churchill because they've been our trusted mortgage partner for more than 30 years now, and Matt has over 2 decades of experience at Churchill. He's got some deep industry knowledge, so we wanted to bring him on to help explain to our audience what the heck is going on in the housing market. When are the rates going to magically come down, Matt? Where is your crystal ball?

Well, if I had a crystal ball and I knew where rates were going to go, I wouldn't be here right now. I think that's the biggest question for us.

You'd be on an island somewhere.

Be on an island somewhere.

Oh, it's so hard.

Rates are just unstable right now with everything that's going on in the geopolitical climate, with the war in Iran, with oil prices. I mean, rates are very sensitive to those things. And so it's really hard to tell what rates are going to do. They're quite unstable. Rates are Rates are kind of like trust. They get worse really fast and it takes a long time for them to come back down and get better. And so I just think right now people just need to recognize that they gotta be patient and there's no way to really predict what rates are gonna do.

Yeah. Would you say you're pretty confident they'll probably, like, would we ever see in our lifetime the like 2% again? Like, do you think that's probably from the past? Would you assume?

Ever is a long time. Yeah. I'm not banking on them coming down to the 2% again.

Yes, to what it was. Yeah, yeah.

Do you find that there's some golden handcuffs out there with people that are hanging onto their 3% rate and so they're never gonna move now? They're like, well, now I'm stuck here. This was my starter home and now it's the forever home.

Yeah, I do. I think we call that rate locked, that people are afraid to let go of that rate. And at the end of the day, I think if they can afford and they want to buy a house right now, even though their rate may go up. If it fits their budget, it may not be a bad idea.

Yeah, absolutely.

Well, speaking of budget, first-time home buyers, that's the most frustrated population out there. 'Cause they're going, dude, how do I step into this jump rope going 90 miles an hour? I'm going to get hurt. What do you say to them when it comes to rates moving around, how much that affects their mortgage payment?

I would tell them to focus much less on the rates moving around moving around and much more on, is their budget ready for them to be a homeowner? And as soon as they feel like their budget is ready for them to be a homeowner, to jump in.

I want to talk about preapproval. It's something we don't talk about a lot on the show, but it's one of those things where you go through the process and you're like, I didn't understand I needed to do this. So talking about preapproval. It's an important part of it, yeah. And Churchill has something special called Certified Homebuyer. We do.

I mean, when I think about preapprovals, I think there are really 3 different types. Types of quote unquote approvals that a lender can give you. There's, they have a phone call with you and collect some general information and tell you, yeah, I can approve you for X amount. And that's a prequalification. And they take that piece of paper and they bring it to their real estate agent. And that agent presents that when they make an offer on a home. And quite frankly, it's not really worth a whole lot because it's not gone through any evaluation. We most likely haven't collected a lot documentation. Then there's your standard pre-approval where you collect some information, you run credit, you see what the financials are, you look at income statements, you look at W-2s, and you make a high-level credit assumption based on some automated models, and we send you out with a pre-approval. And then there's what we do at Churchill, which is what we call a Certified Homebuyer. And with a Certified Homebuyer program, we actually fully underwrite your credit and send you off with a fully credited approved approval, which allows you to really shop with confidence.

And we put on top of that a rate secured program where we lock you in for an extended period of time, 90 days. Oh, wow. So that it takes the uncertainty of that approval away because, you know, if interest rates go up, you're already protected and you get to keep that lower rate. You get to keep that lower rate. And if they go down, we just lock you in when you find a house at the market rate. So you get the best of both worlds. That's impressive. And on top of that, we throw on a $10,000 guarantee to the seller so that if you present an offer to a seller with a certified homebuyer, we guarantee that seller that your credit is good. The only thing that could go wrong there is appraisal or title work. And if something happens, we pay the seller $10,000. Wow. So just to back up that process. That's impressive.

So on a spectrum, let me recap this. You have the, this person might be good for the money. You have, they're probably good for the money with a standard preapproval. And then you have the, they are definitely good for the money with the Certified Homebuyer Program.

And you're able to go into that. So, you know, we have a lot of new listeners to the show. I feel like even most of our callers, they're like, I've just got onto you guys. So people that are looking to get into the market, but they're doing the Baby Steps. So they're working their way out of debt. They now have an emergency fund and then they have some money for a down payment. Okay. Okay. At that point, you know, their credit score may be tanking as we speak and/or it's undetermined if it's been long enough, right? They don't have a credit score. So, that is one thing that's a little different with Ramsey that we say, yes, you can still get a house without a credit score. And we always recommend you guys, 'cause you guys are always the place that we say to go to, 'cause not everyone can do it, not everyone will do it. But what does that look like to get a mortgage without a credit score?

First, I want to make sure people hear this clearly. Getting a mortgage without a credit score does not mean credit credit score doesn't matter if you have one. Yes. It doesn't bypass your current score. It doesn't bypass your past score if you have one.

So the tanking one, not good.

You can't really buy a home. Tanking one is a challenge. But when you come to us with no credit score or what's called an indeterminable score, we look at trade lines. We look at your ability to pay your bills. And so you have to have more than just living in mom and dad's basement, not paying any bills on your own. You actually have to have some sort established history of taking care of your financial responsibilities. Things like cell phone bills and other utility bills or other types of monthly payments that we can use to create an alternate credit profile and move you forward on a no-score loan.

And that's on top of 12 months of rental payment history. 'Cause a lot of people say, well, I live with mom and dad. We never had an agreement about it. And you guys go, well, we don't know that you can pay a housing bill on time.

12 months of housing payments, part of that process as well.

Is in that. So that's the important part, but it can be done, which I think is a great thing.

Yeah, I mean, I've done it. I know that that's not saying much, 'cause everyone goes, well, yeah, it was easy for you to say. No, I got out of debt, didn't have a credit score, and you guys are the specialists in no-score loans. I imagine you've probably done more no-score loans in the modern world than any mortgage lender out there.

More in the modern world than anyone ever, and we do it better.

I talk to real estate agents, they go, you can't do that. And I go, yeah, I can. Yeah, I can. You've not heard of Churchill Mortgage? Where you been? Watch me. Oh my goodness. Well, I do wanna hit on closing costs, 'cause a lot of people, we talk about the down payment, payment so much. Yes. But then people forget that there's other costs associated. So what should people expect to pay when it comes to closing costs in general? This can vary widely.

Yeah, closing costs consists of a lot of different things. One, there are lender fees. Every lender has their own administrative fees, processing fees, underwriting fees. Then you have things that are going to be consistent across the industry. You're going to have to pay for an appraisal. You're going to have to pay for titling. Insurance. You're going to have to pay for credit report fees. There are state taxes and tax transfer fees that you have to pay for. And so when you think about rate and you think about getting to the closing table, there's a lot of things that will impact what you have to bring to the table in your closing costs. The key is getting that transparently put in front of you early on so you're not surprised at the end.

And you can get those estimates from your loan officer and say, "Help me understand all of the things I'm going to be paying for." so that I'm ready.

Yep, yep. You wanna be confident. 'Cause all of these HOA fees, all of those things end up surprising people at the end. Yes. Which creates problems for them not having the amount of cash to come to closing with.

To be able to do it all. Yeah, so the full picture is so key. So someone that is entering into the market for the first time, they may feel kind of intimidated and they're like, oh my gosh, am I ready? Can I do this? Like, what are a couple of tips you have? We'll say for first-time home buyers and maybe people that haven't, you know, maybe they do, they locked in the 2% and they're like, We're never gonna move. And they're like, okay, actually we're gonna look for another house. And, but it's been decades since they've bought something new. What are a couple of things that you're like, okay, this would be good from your seat. You're like, these are things that you probably need to do.

Well, one, talk to somebody who's gonna be patient with you and ask you the right questions. Find out what you're trying to accomplish and where you are. I remember so well when I bought my first house, 23 years old, I had a child, another one on the way. I was desperate to buy a house. I found a realtor. They put me in touch with an agent, a loan officer. They had a relationship. Relationship with, and all they wanted to do was tell me how much I could buy. And I ended up not knowing anything. And so I let my anxiety cause me to make a bad decision and bought a house that was more than I could afford with a mortgage at a rate that I knew nothing about other than they told me I could afford it. So get the facts. Ask the questions.

That's good. Well, Mal, thank you for being here. If you guys are ready to start your home buying process, process the Ramsey way, Churchill Mortgage can help. They're the folks we trust, and they have a special offer for you: $500 off your home appraisal credit at closing, only at churchillmortgage.com/ramseyoffer. Go check it out. Thanks again, Matt. Thank you.

Thanks for being here.

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Our scripture of the day, Ecclesiastes 5:10. He who loves money will not be satisfied with money, nor He who loves wealth with his income. This also is vanity. Chris Rock said, "Wealth is not about having a lot of money. It's about having a lot of options." Well said.

Yes, I agree with that.

Both Solomon and Chris Rock bringing the heat. Love it. Alright, Charlie is in Phoenix up next. What's going on, Charlie?

Hi, thanks for taking my call. I appreciate it. Sure. I've been retired for about 6 or 7 years. I'm 67 and retired about 60. And we're currently worth about $2.4 million in annuities and IRAs, um, Roth IRAs, and our house and emergency fund about our high yield savings, about $300,000 and emergency fund about $50,000. But, um, so my call is that, and oh, and we were debt $53,000 and in Social Security, we make about $56,000 in Social Security a year between my wife and I. And we have our annuity that pays about $25,000 a year. And which we haven't even started taking yet, but that's what the current balance would, I mean, the current flow would be. And then also on the side, I officiate high school and college sports and make about $25,000 to $30,000 doing that.

Wow. Nice. That's an impressive side hustle.

Yeah.

So, but I have, we have these assets, but I'm still, I'm more collecting than I am spending. That's my problem here. You want to start decumulating instead of accumulating.

I can't seem to let go.

And it's like, my wife and I took a road trip just a week or so ago, and I hooked up for like 5 additional, um, volleyball games. It's one of the sports I ref, um, so I could pay for it, even though I could pay for it, you know.

Gotcha.

Yes, you're like, it doesn't represent reality, it's just you're stuck in your scarcity loop right now. Yeah.

Um, yeah, I'm just wondering what's a good way to try to change that. Um, you know, like my wife says, well, I say I need something, you'll just go out and buy it. And I was like, well, I I gotta go get a gig before I can buy it so I can pay for it.

Did you grow up with money? No. Are you the first one in your family to be a millionaire and be at this place?

Me and one of my other brothers. He's probably worth about $4 million, probably. My other two brothers and sisters probably aren't that close. OK.

So you guys have all done pretty well. Yeah, they— Do you guys have a great financial advisor that you meet with maybe yearly to look at everything?

Yes, I have a Dave Ramsey approved person and he just retired, so he transferred me to another guy. So I have, I just got with him at the beginning of this year. Oh, good. And so I just talked to him a couple weeks ago and I told him I wanted to get together and talk about making cash out, just like we went on a cruise last year and I go, okay, I gotta get all these gigs before I can go and pay for it.

Right, right, right. Oh, well, I think the idea of you working and still having a passion for something is just good for you as a human being, right? I still think there's like, you know, you still have this reason to get up and shower. Yeah, that's great. So there's kind of the two ends of the spectrum here that you got to think about. One is just the facts. That's why I asked about the financial advisor, because sometimes when you actually see the numbers and say, okay, we can spend X amount extra per year because you're bringing home probably around, what, $8,000, $9,000 a month between when you're reffing, you know, those games and the pension and everything coming in. And so anything above that, you know, what could we, in a safe way, spend extra? And you can look at that number and say, okay, great. And if you wanna continue to spend that, that's fine. But what I would say though is I would, this is the emotional side. So you have the tactical, you have the plan of what you can spend. And then what I would say is you don't have to spend all of it, but you need to be spending something extra every month.

Month, Charlie, because with money, you need to be giving some. You've done your savings.

02:00:48

I tithe. I do tithe.

02:00:49

Yes, that's great. Yeah, so you do, yep. You're giving, you're saving, and spending. Those are the 3 things that you need to be doing with money, and they all need to be balanced. And the spending is what's off for you. And so, you kind of almost have to rebuild this habit of letting go of some money and not having this tight control that you have. Because, you know, it's wild, because on one end of the spectrum, money can be such an idol for people that worship it it and they spend it. And there's like the vanity side, right, of just the scripture you just read, George. But then, on the other end, it almost becomes an idol because it has so much control over us out of this fear that something's gonna happen and I'm not gonna be okay. And that fear, it's not rational, right? You got $2.4 million sitting there. And so, we don't wanna be unwise with that, but there needs to be some freedom in your life, Charlie. And right now, the equation of the freedom, to me, is letting go of some and spending and enjoying it. And so, if there's things that you can do that are fun with you and your wife, and you're like, "Hey," or, you know, I don't know if you have grown kids or grandkids, but, you know, find something meaningful.

I'm not saying you have to go buy a bunch of crap and just like have a bunch of stuff. But if there's things you can do to enhance your life or to make things easier, if you guys need someone to come clean the house once a week, you know?

02:02:06

Buying your time back is one of the best ways to spend your money. Buying experiences with people people you love. Dr. Arthur Brooks says one of the best things you can do with your money.

So we do have— we have 3 kids and 17 grandkids. Oh wow, how fun!

There's some reasons to spend money.

Life, that's great.

Yeah, well, when they become 4th graders, we take them on a 3,000-mile road trip.

Oh, that's so fun. Yes, yes.

One coming up this year, the destination Yellowstone.

We go white river rafting, we're going rodeos.

Oh, I love it. But, uh, yeah. And so I just gotta— my wife tells me that I just need to get out of that mode of saving. I had to go from a saver to a spender. Yes. And it's been a hard transition, even though when she wants to do something, I'll go, okay, I'll go get a couple gigs and we can pay for it, you know?

Right, right.

And so what if you just cut the side hustle for 6 months and said, I'm not going to do it and I'm going to to spend money.

Would that free you? And that's a hard— that's a hard thing because I'm in a leadership role on one of the side gigs. Oh, they need you now.

Like, hey man, you're running the show and you enjoy it, right, Charlie?

In general, I—

yeah, well, this is my 50th year officiating.

Whoa, that might be a world record.

That's amazing. That's impressive.

I don't know about that, which I appreciate your advice. And you know, I do listen to you quite often. You talk about side gigs and delivery and stuff back. I would encourage you to tell people to look into officiating wrestling, or officiating in general, because I do make $30 to $50, $60 an hour doing that.

Oh, that is good. Is it wrestling?

Is that what you said? I do, I do mostly wrestling.

That's okay. 50 years and 25 in volleyball. Okay. And I pro baseball at one time also. Wow, awesome.

Good for you.

Well, I would have a little dream date with your wife and, you know, buy the apps, buy the desserts, the stuff that makes you feel guilty and do it without guilt. And then have a little dream date where you go, hey, if we were to spend X amount of money this year, where would we divvy it all out? And then put it in the budget and go, hey, we decided, remember we pre-decided that we're gonna send the money over here and we're gonna buy this thing here, we're gonna go on a trip here. We're gonna do it. So you sort of force yourself to flex that muscle and eventually you'll feel less guilty writing those checks and swiping that card and all of that.

Yeah, 'cause it's all about balance at this point. And you gotta, You guys have done a fantastic job, Charlie. I mean, unbelievable. What careers did you and your wife have to accumulate $2.4 million in net worth?

My wife was a stay-at-home mom until our youngest went to, I think it was high school. So she did 16 years as a dental assistant. Yep. And then I was, I don't have a college degree or anything. Thing, but I was a computer engineer for IBM. IBM mainframe engineer for like 30 years.

OK. Good for you. That's amazing. Absolutely amazing.

And one thing to do with that SmartVestor Pro, Charlie, that I think will be helpful is they can walk you through your current withdrawal rate of, hey, you're spending $50,000 a year out of this much of your nest egg. That's a 1% spend. You can go up to 3%, 4%, 5% without ever running running out of money. And they can show you the actual dollar amount of, hey, you could up it to 2% or 2.5 or 3 or 4, which is $100,000 and still never run out of money. I think some of those facts from a trusted investment advisor will free you to go, oh, you know what? We can loosen up. I don't have to take on 9 more gigs. I can do it because I want to, not because I feel like I need punishment.

But I need to. That's right. That's right. Well, well done, Charlie. Carly, you guys are a success story. Absolutely amazing.

Good problem to have. That puts this hour of The Ramsey Show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.