Real Estate the Ramsey Way - I Bought a House With My Ex, and Now It’s Being Foreclosed

Episode Date: June 2, 2025

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Dave Ramsey here and welcome to another episode of Real Estate, the Ramsey Way, where you'll learn how to make smart home decisions, avoid costly mistakes, and navigate homeownership with confidence. Janelle is up next in Rale. Janelle, how can we help? Just needed to get some advice. I did the ultimate no-no. I bought a house with somebody I wasn't married to.

I, after about a year of having the house, I needed to move out due to some circumstances when we broke up. And now the house is going to go into foreclosure. And I'm just trying to figure out what are my options here, what to do. I've also accumulated about $25,000 in debt due to these circumstances and trying to figure out how I can get out of this. $25,000 in debt to who? credit card loans personal loans well it wasn't well i guess you can call it a personal loan it was

water softener bill for the house that's the circumstances that was that's one of the loans that was that's part of my debt now what happened are you on the mortgage yes i'm on the mortgage we're both on the mortgage and you're both on the deed and we're both on the deed he's still in the house i moved out You moved out and he decided to stop paying? Yes. But you've been paying? Well, yeah, we were paying before. When I moved out, he was paying, and then now he decided to stop paying.

And is already in foreclosure, or it is in the process of getting there? It's in the process of getting there. We're four months behind. We have been trying to sell the home, but have been unsuccessful with that. Unsuccessful in that no one's even looking at it, or you've had showings, and they're giving you feedback that you can process. We had showings, but no real interest in the house. And it's a brand new house.

Are you working with a real estate pro? Yes. And what is their logic for why nothing's moving here? Is it priced too high? It was, they feel like it's, well, it was priced too high, but because there was a new community being built in the area, that was kind of affecting us as well, because they were able to bring their prices down, give lower interest rates and that sort of thing. Have you lowered your price?

Yes. As far as we can go, we're now in the process of asking the mortgage company for a short sale to see if that's even possible. Do they know that you have the place listed and you're trying to sell it before the foreclosure goes through? Yes, they do know. Okay. I mean, that's going to be your best bet is just trying to sell this thing ASAP, even if you

lower, even if you have to lower the price instead of going through a short sale or worse case that foreclosure. But even if we lower the price, the bank has to approve us going below what we owe on the house. What do you guys owe on the mortgage? 465. And when you moved out, he obviously could not pay that mortgage on his own. Was that the case? I'm assuming no, yes, I don't know. He paid it for six months, so. Okay, he was floating it and then could no longer float it. What's the communication like with your ex right now? We don't communicate unless it has something to do with the home. Oh, my goodness.

All right, and just one more clarification question. You've been paying your half of it. Is that how you guys have been doing this, splitting the payments, and you've been making your payment? No, I don't pay anything towards the mortgage. I moved out. I had to find another place to stay, so I'm paying where I have to live. Okay. But your name is on the, okay.

You understand why it has to. Yeah. You have a legal obligation to pay more. You are legally obliged to pay that whether you've moved out or not. So, wow. I don't see a way out of this unless you guys can find a way to sell it before it forecloses. Mm-hmm. And I don't know that you can or want to float the payments to help get out of this or have the ability to.

No, I don't have the ability to. What are you making right now? What's your income? About 112. And where's all that money going? that's a good income to my expenses what's your rent

2400 okay and what else because you're bringing home probably what eight grand no probably about six okay well after tax

I guess you're saying after tax after tax it's about six okay are you doing any investing right now uh yes I mean I invest in you know my 401k and stuff like that yeah we need to pause all of that

you need to act like everything is on fire and you need to work on getting out of this house mess and paying off your debt. So we're not saving right. Do you have any savings? Yeah, I have some in savings. How much? I have about four in savings. $4,000.

And what's owed to get current on the mortgage? About $12,000. Okay, and he doesn't have anything saved? I would assume not. I can't save for sure. I would do some homework and find out where you're at in the foreclosure process and find out how much time you have to at least try to get current on payments

so that you can get out of the foreclosure process and have time to then sell. Okay. And that might mean you both put some skin in the game and go, all right, I'm going to put in three grand a month and we're going to get caught up on these payments. Which means you need to get rid of all of the expenses in your life. Anything that isn't food, utility, shelter, transportation must go right now,

including investing. Okay. Well, do you, well, I have these credit cards that have like high interest rates. Do you suggest taking a loan from the 401k and paying it off? No more debt. If it has the word loan in it, if it has the word consolidation or relief or settlement, run far away. Your income is the solution here, you, which means you need more income. You may need to get a second job, a third job, for a short amount of time.

You've got to get these house payments current so that, again, to Georgia's point, you have time to sell this house. You don't want to go through foreclosure. Can he get a temporary roommate, a friend of his, to live in the house too and pay rent to help get above water? I don't know. That's what I mean, like I said, we don't have communication. I would suggest that that's what he do. You're going to need to start communicating. You guys entered quite the partnership here to then just flee the coup. I get that you guys don't love each other and you don't like each other, but you need each other right now. And that really is awful. I get it. but you guys have got to partner up on this thing to get out of this deal. You're on the hook for $465,000.

Yeah, I know. I know. And this could wreck your financial life. This is where I wish we could get him on the phone. I think Ramsey Show needs to go the next level and get this dude on the phone. And we mediate this deal. Oh, my goodness. That could be a new show.

That's the show that people need to see. I'm telling you, we could help. You guys need to be adults and sit down. and figure this out. There's no more blame. I agree. There's no more blame here. There's no more you did this, you said this.

This is, we're idiots because we did this and we've got to figure this out. And then we learn and we lick our wounds and we move on from each other. But this is going to make this breakup 10x worse. Am I right, George? Yeah. Play this out. Well, there's just, you're kind of stuck right now until you guys figure out the

move and they're sort of the ABC. The best option is to sell it for the most you can get for it. And then you're probably going to lose money on this deal, I assume. No one's walking away with cash at the end of this. Exactly. We accepted that. I'm afraid that this guy, he's just mailed it in at this point. He's given up and he's just going to let everything just burn down.

Is he gainfully employed? As far as I know of yes. How would she know? They don't talk. I think you need to have a come to Jesus meeting and say, I got to know everything about what's going on in your life, and you're going to know everything that's going on in my life until this is all over. But we need to make a game plan. Yes, okay.

I'm so sorry you're going to go to, just chill. You can talk to a real estate attorney and dig into that, but that's going to cost you too. But I really hope this doesn't end in foreclosure. And you have an amazing income. Use that to your advantage to catch up and get out of this thing with as little damage as possible. Today's Ramsey Network app question is from Mason. And he asks, I would like a reasonable explanation on why you only recommend a 15-year mortgage. Why shouldn't I take a 30-year-out and dump extra cash into an ETF earning 10 to 12 percent?

And at the end of 30 years, I'd leverage my house and pay it off. Also have around $700,000 to spend from my investments. Mason, you're smarter than us. You got us on this one. Man, hadn't thought of that before. Yeah, where to go, man. Wow, we'll just change our whole policy. No, so Mason, the, the biggest goal when it comes to your money, one of the, well, not the biggest, one of them starting out, is to become debt-free as soon as possible. And so for a lot of people, this journey of even paying their house off, which is obviously the largest asset most people have, it's going to take around nine years.

And so there is a psychological change that occurs when you know here is my payment. And even though my intentions are good on a 30 year to either pay it like it's a 15, put what would have been on the mortgage, but now I can invest that money instead. You know, all of those are good intentions. And what we see over and over again is that human behavior can definitely trump what we had plans. And things come up. life happens. And if you think over, you know, 10, 15, 20 years, 30 years, there's a lot of life to happen. So the probability that you would actually do this, right, and do it every single month consistently, is probably pretty low considering the, we're talking about 30 years, 30 years.

So the idea of doing the 15, I mean, it's just, there's, mathematically it's faster. It forces you into a faster payment plan. And then when people are doing the baby steps, and they get to this step, they're paying it off in nine years versus 15. So you'll be paying it off earlier. Now, some people I know get a 30 year because the rate is better. The payments is more reasonable for their budget, right? There's a lot of different reasons. But again, it's putting systems in place that the rhythm of your money in your life will get you to where you want to go as fast as possible. And that's the 15 over the 30. And what's wild about mortgages, too, is, you know, even an extra payment, one extra payment on a 30-year mortgage on a half a month,

million dollar house at like a four percent interest rate, you pay it off four years faster. And you save, it was like, I think close to maybe $60,000 in interest, one extra payment a year. That's on a 30. So if you imagine a 15 and doing that an extra year or doing four extra payments a year, right? Like you can just see the map. It's just, yeah, and when you're talking about a house and you're talking about a mortgage and interest and time, it's just big. So when you can like condense it and do it as fast as possible, you're going to be better off. Well, And I think it's important to call this up. And I've noticed this among, like, George and, like, we just call them the finance bros,

but like the guys with the spreadsheets that they roll out 30 years, and they put all these assumptions in there. They've never read Nesemtileb, and they have never experienced the pain of when the whole thing collapses, right, when it crashes. And when the roller coaster goes way, way, way down, or when you lose your job or your wife gets cancer, or when your kid passes away, or you have to move, or you get laid off or whatever.

And I think if your goal in life is to squeeze every last potential gap between an interest payment and a potential earned return on some sort of fund that you're trading, knock your lights out. Knock your lights out. And we'll be here when you wreck. When you have taken call after call after call of somebody saying, hey, they're taking my mom's house away because she, fill in the way. because she fill in the blank. Or my wife and I have to move to go take care of my dad because he fell and now we have dot dot dot.

Or my wife wants to stay home and we can't afford them. Or we can't afford. So if your goal is to always be looking for the spread and try to cover the spread, this isn't what we're trying to sell you. What we're trying to sell you is a total, total rejection of that way of thinking.

We're trying to sell you something that the American household no longer has, and that is peace. That is the ability to sleep at night. I will gladly, gladly cash out the gap between a 30-year mortgage and a 15-year mortgage right now, which isn't a ton right this second. In fact, I think the 30-year mortgage rates may be less than the 15-year because they're trying to sell those because they can hold on to them longer. I would gladly sell that over this imaginary 30-year return I would have on this little bit of money.

If I constantly did this every month for 30 years and nothing bad ever happened to my family. That's right. Yeah, yeah. I would gladly trade that gap. knowing that no one could ever take my house away, period, ever. And I call it my sleep tax. It's my soul tax. I just walk around knowing you can't take my house.

No matter what happens. My mom gets cancer. My wife passes away. They cannot take my house. And so if that's not what you're into, there's no math problem that we're going to sit down and map it out for you. Right, right. And that's the thing too about paying your mortgage off early,

because we hear kind of similar argument. Oh my gosh, why would I pay it off early? why would I not just invest that money? Or if I have this money, it's making more in the market versus my 2% interest rate that I got 10 years ago. Why would I ever unplug something that's making that much to throw a debt that's only like a 2% to 3% interest rates? And it's the exact same thing because peace and calmness

doesn't show up on a spreadsheet. It just doesn't. And we had our money in marriage weekend last weekend here with about 600 couples or something. so and there were a lot on Baby Step 7, which means they've paid off their house. There was a good amount of them. I was just kind of surprised when I was asking what Baby Step everyone was on. There was a good amount of Baby Step 7. And I was like, oh, wow. And I said, okay, so for those of you that paid off your house, keep your hand up if you regretted it. Zero. Zero hands were still up. Yeah.

Because it's like, no, when you really don't have a mortgage payment, you're not like, dadgum it. And if you are still, you can always borrow back on your equity and go and invest it. I mean, like, you can always get back into debt. And because there's something to be said about us as people, our human soul at a very, very deep level rests in a place that does not show up on an Excel sheet. It just doesn't. And so we talk more about the person than we do the math on the show because we really believe in the people. We believe in you. If you're listening or watching, you are the solution to your problems.

You are the one that's going to make choices in your life, like empowering who you are as a whole person, not the little, financial geek, you know, over here, you as a whole person as a son, as a daughter, as a husband, as a wife, as a mom, as a dad, as a friend, like all these elements of you, money is just a part of it. But on this show, it's the thing that ends up being magnified into a lot of our dysfunction is what we end up seeing. And so you can't forget, you are a person, you are a whole person, and that piece is part of it. It's not always the math. And to you leverage people, you only go read Wendell Berry. You'll need to go read Nassimtile, people who love risk because I love risk, but the goal of risk, I actually do. I'm kind of a conservative risky, but I love it.

The thing that the modern kids that are all into like, risk and leverage, I'm going to go, is you can't leverage something that if the risk doesn't pay out, you lose it all, right? And there's no better way to risk when you have a house, when you are your own bank, and when your kids school is taken care of bro then go to Vegas then you can play right then you can start doing these things but this leverage there's a fulcrum to leverage and if your fulcrum is your home dude they're gonna come take your house

the market doesn't ride bowls forever they will come take your home and that just tells me you watch a lot of Instagram and a lot of TikTok and you know how to make use chat gpte to make some cool Excel algorithms you don't understand what it's like to sleep in a house that you don't owe money on. Yeah, that's right. This is what it is, man.

They can't take your house away. I'm all about leverage. I'm all about risk. I love it. But I don't risk my wife's house. I just don't. Yeah. And when you get that through your mind, then you can play these.

Well, then I'm going to leverage my house and pay it off, but have around. Play that game after you have, you've covered the ground floor. And I think that's part of the misnomer too of, you know, that the 700 grand, you know, that he has, you know, typed out. You know, there's something about also just. just chasing money to a degree that there is a level of emptiness out there, y'all. Money is not a god. It is not an idol. It will not fulfill you. Like, it's not. But it also will destroy you if you don't have peace around it. So getting yourself in a healthy position mathematically is very smart. That's what we want you to do. But then on top of that knowing that it has a

placement in your life that you're not constantly chasing because the finish line, the finish line, Mason, is always going to move. It's always going to move. So contentment is key in this as well.