The Ramsey Show - App - ANYONE Can Win With Money Regardless of Your Past (Hour 2)

Episode Date: October 29, 2021

Debt, Home Buying, Budgeting, Business, Relationships As heard on this episode: Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/3rZTUAx Tools to get you started:  Debt Calculator: https://bit.ly/2Q64HME Insurance Coverage Checkup: https://bit.ly/3sXwUn5 Complete Guide to Budgeting: https://bit.ly/3utmVXi Check out more Ramsey Network podcasts: https://bit.ly/3fHhbVE

Thank you. Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studio, this is The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm Christy Wright, author of the new book, Take Back Your Time, The Guilt-Free Guide to Life Balance. And I'm joined today by my good friend, fellow Ramsey personality, and host of the Fine Print Podcast, George Camel. And we are taking your call.

So give us a call, 888-825-5225. We love answering your questions. We love hearing your stories. And if you've got a question about money, we were saying just in the last hour, maybe you've got a question about the baby steps. You're new to listening to the Ramsey Show and you're not even sure what the baby steps are or what step you're on or what step you should be on. We would love to walk through that with you, explain them why they work and help you get

started on your path to becoming debt-free and finally controlling your money where you don't have to live paycheck to paycheck and you have a lot less stress. So give us a call, 888-825-5225. And we're going to kick off this hour in Scranton, Pennsylvania with Mike. Hey, Mike, how are you? Hi, Christy. Hi, George. Great to speak to you guys. Yeah, great to talk to you. What's going on? Question about open enrollment at my employment is happening right now. And if I recall, I enrolled in FPU last year, a year and a half ago. And did they recommend not or denying the dental plan and the vision plan just to help? I'm trying to cut back and save as much as I can.

So I'm trying to save some money. That's a great question. I actually don't know. George? Yeah. What we teach here is that you can self-insure when it comes to dental and vision. It's usually not that expensive, and that's something that you could – do you have an HSA?

What kind of plan are you choosing this year? I've been using the same plan basically as long as I'm employed. But last year I just didn't take the dental and vision. And I was thinking about it again this year because it's coming around. I'm like, oh, what did Dave say? What did Dave say? What's the cost of that? If you elected to choose it, what does it cost every month for the premium?

I mean, it doesn't seem like it's a lot. It might be like $3, $4, $5 per paycheck. So it might be like, you know, $6 to $12 per month. So as far as that, that's like a dental plan thing. And what does that cover exactly? Because I mean, if it's three or five bucks. Yeah. So when you do the math on that and you go, all right, I'm twelve bucks a month times twelve, that's one hundred fifty bucks. And what is that paying for? Two cleanings. If I remember correctly, it's almost kind of a wash. It's like, it's the exact as if you would pay it cash. If I remember a lot of times. So if you've got some major health issues, teeth issues, things of that nature, that's something that you can look into is

getting that. But at that rate, if you're just looking to get it for the cleanings, it may not be worth it. And so we just say, hey, take that $12, park it in your savings account, and if you've got an HSA health savings account or you have a high-deductible health plan, you can use something like that to fund those things tax-free. So those are great options. It sounds like you're not in a high-deductible health plan right now. No, no, I'm not. I just have two kids. I'm a single dad with two boys. And they also have like a flexible spending plan, but I think that's ridiculous also because if you don't use it, you can't get it back anyway, so I might as well just keep the money in my own savings. Yeah, we tell people to self-insure on stuff like that.

So if I'm you, I'm just socking away money every month in a sinking fund for those health care costs for you and the kids and then pay for that out-of-pocket when that comes time. Yeah, thanks for calling, Mike. Hope that helps. All right. We're going to go to Atlanta, Georgia with Christine. Hey, Christine, how are you? I'm doing well. Thank you.

Yeah. What's going on? Thank you so much for everything that you guys do. You've been a blessing to me this past year since I've been listening to the podcast. Awesome. Thanks for saying that. What's going on? Yeah.

So right now I have to make a financial decision about selling my second property. So this is a property that I bought back in 2007 when I was first divorced from my assistant. And I have been renting it for the past five years, but it's being rented to my sister. So I'm in a predicament. I'm completely debt-free. I'm completely debt-free. I'm following the baby steps. I believe right now I'm on baby steps four, five, and six, except for this debt that I still have on the second home.

Yeah. So what was your reasoning for selling the second home, you said? I don't want to sell it. That's sort of where I'm at because my sister is renting it. Christine, can you speak directly into the phone? It's hard to hear you. It sounds like you might be driving. It sounds like the window is down or something.

Okay. Sorry about that. That's okay. There we go. All right. Wonderful. There's Christine. So basically what's happening is that the second home is being rented to my sister and my sister's not right now in a

financial capacity to be able to really afford a home. And she has, you know, kids that are living there as well. So I don't want to sell the home. I have equity in the home. It's worth $230,000 if I was to sell it today. And I owe $86,000 on it. And I've drastically reduced the debt on the home the past three years since I started my baby step journey. I've paid it down about $37,000. Cool. Is your primary residence paid for? No, it is not.

My primary residence is worth about $420, but I owe $190 on that. Okay, and that's all of your debt is the $86 and the $190 on those properties? That's it. Other than that, I have no debt. I paid off my credit cards. I paid off my car, and I paid down as much as I can out, the debt on that second home in the past three years since I've been following the baby steps. Way to go. So are you charging your sister rent? Is she paying rent right now? I am charging her rent, yes. She's able to pay that? Pretty much,

yes, she is able to pay that, but it's the equivalent of my mortgage payment. It doesn't pay for the HOA dues, so that's something that I have to go ahead and pay on my own. You're losing money on this right now is what you're saying. I'm losing money, but it's not a significant amount. But then again, I'm trying to follow the baby steps and I'm trying to make a decision about what to do and whether I should continue to eat up this cost or not. Yeah. This sounds like it's going to be a hard conversation with your sister and go, hey, I want this. I want to be a blessing conversation with your sister and go, hey, I want this. I want to be a blessing for you and I want to be able to provide this.

But here's my financial situation and I'm losing money right now as I rent this thing to you. Well, and I think I think the other thing is it doesn't have to feel like this extreme, Christine, like you're kicking your sister out on the street. You could give her a three month,-month heads up. And it sounds like if you're really charging her rent, market rate rent, and she can pay rent, then she can pay rent somewhere else if the right thing for you to do is to sell your house. You can do it in a way that is honoring to her, that gives her plenty of heads up, that this is not the only place that she can live.

And if you give her a good transition time, then I think it will not feel so abrupt to you or her. But if this is the right thing to do for you, then like George said, I think this is just a hard conversation you have to have. Yeah. You think she'd be open to that conversation and saying, hey, I want to help you through this three-month, six-month transition period, help you find another place that's affordable that you can make rent on.

Would she be open to that? I think she would be. I would have to give her maybe more than six months because she's transitioning careers right now. But yeah. Well, it all started. Go ahead. Yes, this would definitely set me up to maybe pay down my home mortgage, you know, my first mortgage on the house that I'm living in right now. And be able to start investing and putting more into my 401k because right now I can only afford 8%. Yeah, you're going to get there. I think it just starts with a conversation.

It may go better than you think, and it may actually even be easier than you think. And she may transition faster than you think. It starts with just having a conversation, but I know you can do it. Thanks for calling, Christine. This is The Ramsey Show. People all over the country are discovering a faith-based and budget-friendly way of meeting healthcare costs through Christian Healthcare Ministries. Christian Healthcare Ministries, or CHM, is a nonprofit organization that helps members

carry one another's burdens with healthcare expenses, and they have successfully shared each other's medical bills for nearly 40 years. See if CHM is right for you by visiting chministries.org. CHM is a proud sponsor of Dave Ramsey Live Events. Here at Ramsey Solutions, we're on a mission to transform so many lives that disruption spreads like wildfire. What does that mean? Well, just imagine a world where it is weird to have a student loan instead of everyone assuming

that's the only way to get an education. Imagine a world where it's normal to pay cash for your car. Imagine a world where credit cards are the cigarette of the financial industry. Now imagine being a part of the team that's making all of that a reality through the work you do every day. At Ramsey Solutions, we have a thousand people working together to create

digital products and services that will transform people's lives. Our goal is to disrupt the toxic money culture that exists in America today. If you want to join us on that crusade, we're currently on the hunt for developers. Or if you're a UX designer or SEO and content marketing specialist, we'd love to talk with you. Find out about all the available jobs by texting WORK to 33789. Text WORK, W-O-R-K, to 33789 to find out about all of our open opportunities. It has been so cool, George, to see some of the people joining our team because you really do have people that are joining the team that have a story. We don't hire people that are vanilla,

that come in there like, I don't know, I need a job. It's like, you are not for us. We are on a mission and we're looking for people to be on that mission. And that creates a really powerful culture here inside these walls where people are actually passionate

and excited to go to work. Imagine that. They actually care about the outcome. They actually want to make it better. And yeah, it's a really, it's a powerful ripple effect from the fact that we're on this crusade that affects our hiring. It affects the culture. It affects the team dynamics. It affects the passion and of course the quality of the output. So I love that we are looking for more people like that. That's work, text work to 33789. George Campbell and I are hosting the Ramsey show for you today. Give us a call, 888-825-5225. And we are going to take your calls. We're going to answer your questions. So let's go to Lexington, Kentucky with Angela. Hey, Angela, how are you?

Hi, I'm good. How are you guys? Good. What's going on? So I was calling to kind of pick your brain about, because you do all the business stuff, and I know it's more centered towards women, but I figured you could help me.

My husband does seasonal work, and he um like mows and landscaping and so it's calling to see how best to save for his seasonal business and a little background i was a stay-at-home mom after getting out of the medical field and and then we ended up pregnant and so i went to work part-time at a restaurant until the baby's born then was stay-at-home mom um and then when he started his business i went back to work in june or july and um so his mowing is over for the season this week like this is the last week unless he has any clients that their grass is just you know extra healthy and grows um so my whole paycheck is going to save for his business but

my concern is having to use any of it for bills if he doesn't get a job prior to next month's bills coming in. Yes. Okay, when you say your entire paycheck goes to save for his business, what is that money going to? It's going into a savings account, just a regular savings, not anything with interest accruing or anything like that. But we have to have all of his equipment because we're out of debt um we're i guess on baby steps three because we only have our um thousand dollars saved since we're saving

for the business um and we don't really have any extreme expenses we um live with his mom and um she owns the house so we don't pay rent or anything like that, just the utilities and things. And so my whole paycheck goes into the savings. What are you saving for, though? What are you saving for in his business? Is there a particular piece of equipment that he needs before next summer? What are we saving for? Yeah, so he bought some equipment for this season um in march

um but he just bought stuff to get him started and it's not gonna you know be sufficient for next season especially with him wanting to grow his business and so there's a particular brand of mower that he wants it's um skag and and so it's like pretty much top of the line. Everybody has their take about what type of mower. And so he's done all the research, and that's kind of his thing. How much money does this business bring in per year? I don't know because where I work and then try to homeschool and then have the baby, I was working with him for a little bit in the beginning before I went back to work.

So what's the household income? What's y'all's household income together? So I make $15 an hour, and then his really depends because he doesn't have, like, a full-time help. So it depends on who's helping him and kind of how experienced they are based on what they here's what i'm getting at does he need a top of the line mower if this is kind of a fledgling business that's trying to get off no no i can answer that for you george no he doesn't i'm gonna be i'm gonna channel my inner dave ramsey angela listen let me tell you what i'm hearing you done riled christy up he's got a business that's not making

money and he's funding his business with your paycheck at the expense of y'all's family expenses so that he can have a big fancy mower. No. Does that sum it up? No. We're not going to do that. And we need to separate these finances.

The business needs to fund the business. The profits from his mowing this summer needs to fund the savings for that equipment. Now, if you want to live on your paycheck, that's fine. If you want to have a goal, if he wants to have a goal, a trajectory of saying, okay, I'm going to build up the business this much, and we want to supplement it in the short term. But at some point, this business needs to stand on its own,

and the business needs to be supporting you, not you supporting the business. We've got this flip-flopped right now go ahead I apologize if it if it came across that way no so his business was supporting us okay so the perfect yeah so his business was um you know paying bills and all of that and plus supplying any other uh business expenses that he had so employee payroll gas and like whatever expenses for the mowers and things like that that he needed or any equipment during this season that he needed so my my paycheck is solely to pay for new equipment for next season, but it's not going to be like brand new, fresh, off-the-market type deal.

We're looking on Facebook. Gotcha. So my question was just how best to go about saving for that and I guess looking out in marketplace and things for the best deals. Yes. We got a great deal on a truck, low original miles. It needed a mower. We got a great deal on a low mile mower and a mechanic to do it for a great deal.

And so the truck is going to be less than $6,000 total all in. And you guys are cash flowing all this? Yes, we are cash flowing it. That's why I was calling because that's kind of my question is like, I guess, maybe I've worded it wrong. I'm not sure. No, you're doing great, but we're running out of time, so let me give you your answer, Angela. I think this is going to sum it up. Yes, he needs to look for a job in the off-season.

He can also find ways to use his skills in the interim season. So leaves, people are going to need a lot of leaves. You're in Lexington. There's lots of leaves in Lexington. He can look at using his skills, his equipment for leaves for that season, which would buy you a couple months probably. You can also do seeding, all that type of stuff in the fall. There's lots of things he can do that are not just lawn mowing. That's one way to do to buy some time. He should look for a job in the off season. The other thing is in the future, I want the business to support the savings for the business where the business funds the

business in addition to your household expenses, your paycheck goes to your expenses. We're just going to separate those for tax purposes, for peace of mind. You can actually have a report card of how the business is actually doing. And then in addition to that, he can save from the business during the summer in order to support him in the off season. So the main takeaway I want you to have is the business needs to fund all of this. Business funds future equipment purchases. Business funds your life and expenses. Business funds savings for the off season. And when the business starts to do that, then you have a real profitable business.

It's fine if your savings is boosting it in the interim, but I want a goal to where we flip this. The business is supporting you and that paycheck that you have is going to your household. It's going to make life a lot easier. But yes, he can get a job. And you guys just save next summer for that next offseason so we're not in this position next fall. But thanks for calling. You can do it. It's going to take a little work. All right.

This is one of my most favorite parts of the show where George and I get to talk to people that have become debt-free. We have Daryl and Artesia on our debt-free stage. Welcome, guys. Thank you. Thank you for having us. Thanks for being here. This is so exciting. So I'm guessing this means you are debt-free. That's right. We're debt-free. Oh, my gosh. Congratulations. Okay. Let's get the story here. How much debt was

it? It was $93,555. Well, $93,555.16. We're not missing that 16 cents, Daryl. Every penny. All right. And how long did this take you? Two and a half years. Okay. And what was your range of income during that time? We went from $130,000 to $170,000. Nice. Nice job. What do you guys do for a living? So I am a Salesforce administrator. And I'm a mental health therapist.

Awesome. So cool. Great careers. And where are you guys from? So you want to get this? Yeah, we're from Memphis. Originally, we moved here to Middle Tennessee for school. And after school, we moved to Dallas, Texas. So we've been in Texas for almost two years now.

Awesome. Where'd y'all go to school here in Nashville? We went to Middle Tennessee State University. Cool. Awesome. Okay, so take us back. Two and a half years ago, y'all were $93,000 in debt, roughly. What happened that changed your life, changed your plans?

I was forced against my will. I can't wait to get this part of the story. Yeah, so basically I had been following the Ramsey teachings for years at this point. Back in 2015, I did read Total Money Makeover, but I never really took that jump on to get motivated. And it was before we were married, but I used to actually, in a car,

make her listen to the Ramsey show. Just to kind of like edge her a little bit. That's right. YouTube people see it. The radio listeners aren't seeing that eye roll. That's a strong eye roll there. I'm here for it. Yeah, but once we did get married, got engaged, we went through marriage counseling through our church with Pastor James

McCarroll in Mercerburg, First Baptist. And he gave us, or gifted us, FPU. And then when we went through FPUPU that kind of gave us the jump in the start to actually start and do it the right way okay awesome okay Artasia let's have it what was this like from your experience of not being excited about this yeah I was not excited I don't think I got excited until we went through FPU okay because then I could really see it it wasn't just my boyfriend at the time telling me, hey, we've got to do this. There's this guy, Dave Ramsey.

He says we can pay off our student loans. And I'm like, what? There's no way we can pay off student loans. But once we sat down and I think it was the first budget that we did. And, of course, I'm adding all this cool stuff onto the budget that we had to eventually take off. But that first budget gave me that boost of, okay, we're bringing in a nice amount of money. Maybe we can pay this off, but it's going to take more than a few years is what he was telling me. It's going to just be a few years, but it ended up being two and a half years.

There you go. How long have y'all been married? This is our third year married. Okay, awesome. Awesome. What kind of debt was this? So it was student loans, credit cards, and cars. A little bit of everything.

A little bit of everything. Mostly student loans. Wow. And was it pretty split between you two? Or was it heavily weighted? It was actually pretty even. Okay, that's good. So you both had some skin in the game here going, we got to clean this mess up.

Yeah. I got a question for you, Daryl. So you said you had read the Total Money Makeover before. Okay, what was different for you from reading Total Money Makeover to going through Financial Peace University? How was the experience different? I think this time I had an accountability partner. So I had, and I also had all these different people in my ear. And also a fraternity brother that kind of was just guiding me and saying, this is something that you should do.

Okay. It can set you up for life. That's cool. We hear a lot of people's stories and they intersect our path on different ways. Some it's Total Money Makeover. Some it's Financial Peace University. Some just listens to the show.

It's always like hearing, especially since you kind of had both of those, what that experience was like. All right. So two and a half years ago, you guys decided to pay it off. We've got a plan. We've got the years. What was that process like in All right. So two and a half years ago, you guys decided to pay it off. We've got a plan. We've got the years.

What was that process like in terms of making those budgets and making the sacrifices? And y'all were getting married in the process of all this. Yeah, it was rough. Yes. Yes.

Especially in the beginning. Very transparent. It was rough. Yeah. I think in the beginning, well, I know in the beginning we used to kind of butt heads about what we wanted on a budget, what we thought was important.

Because pampering is important. I was like, that's important. Why can't I keep this? What was the hardest thing to cut out of the budget where he was like, no, we got to cut this. I'm sorry. For me, it was gift giving. I'm the oldest of four. So I'm used to taking care of my siblings, Christmas, birthdays, all of that.

Like I did it big. But when we started doing this process, he's like, OK, I don't care who it is. We're going to have to put a cap on the amount that we give for gifts. And I was like, everybody gets the same. Do you put a cap on love, Daryl? Do you? Do you? For two and a half years, yes.

Yes. So that was the hardest part. And then giving up travel, those experiences of travel, that was really, really difficult. Yeah. Wow. Let me go out on a limb here and guess that you are the free spirit, Artesha. Yes, that's me. I can relate.

I can relate. All right. So who were your biggest cheerleaders through this whole process? I know you mentioned a couple people there. Who else were cheering you guys on? Yeah. So we had our parents, of course. We had siblings as well.

And I have a list too. That's great. So while he's pulling that list up, I'll go ahead and mention we have a couple of our church members over here beside us. That's rooting us on. They were cheerleaders for us through Financial Peace University in the Christian Excellence Ministry at our church at First Baptist. Wow. That's awesome. That's huge. That accountability piece and having people in the corner. I mean, you guys First Baptist. Awesome. That's awesome. That's huge.

That accountability piece and having people in the corner. I mean, you guys had everyone in your corner you could get. It normalizes what most people think is crazy. You mean you're going to live without credit cards? It's like when you get people around you and you're like, okay, I'm not that crazy. I mean, I am, but at least these people, we're all the same kind of crazy, right? Absolutely. Now, we still had that, too.

We had a few people tell us, that's not our interest. We'll let you do it. We'll let you handle it. Even after we paid off the debt had a few people tell us, that's not our interest. We'll let you do it. We'll let you handle it. Right. Even after we paid off the debt, they're like, oh, that's good for you. Yeah. You do you. Yeah.

And you never know because they may be coming around in a few years and going, wait a minute. Can you tell me more about that? Absolutely. Might just be a light for them. What would you guys say is the key? There's a lot of pieces to the puzzle. But if you were to boil it down to one thing, like this makes the difference to getting out of debt I think for me it was a mindset shift so remembering that anyone can do it if you follow the steps anyone can do

it it doesn't matter your demographics where you come from it doesn't matter if you follow the steps and take on that education that you're receiving through the program. Anyone can do it. So changing that mindset of what does financial freedom look like. And then put yourself there. Anyone can do it. That's powerful. That's powerful. It starts with just believing that it's possible. If you don't believe it's possible, you won't try and do the work.

And you guys did. All right, y'all. You're debt free. How does it feel? It feels great. It feels amazing. I didn't think it was possible. But we did it.

I think it still kind of doesn't feel real to us right now. Yeah. And now here you are. And listen, Christmas is around the corner. You can travel again at some point. You can give those gifts and have your self-care days. Artasia, that's awesome. You guys have worked so, so, so hard for it.

All right. Well, we've got a copy of The Legacy Journey because that is definitely the next stage in your chapter, in your story. We've got a copy of the Total Money Makeover. Maybe give it to some of those people that say, good for you. Just in case you ever want to come around. It could be good for you, too. That's right. Cross on over.

And we are just so proud of you guys and so, so, so excited for you. So excited about what's going to happen next because you've done this hard work. All right. We have got Daryl and Artesia from Dallas, Texas. Paid off $93,550.16 in two and a half years, making $130,000 to $170,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free!

Woo! Yes! Look at that happy couple. Oh my gosh. And they're so cute. If you're listening on the radio, you can't see that they have denim jackets on, which is just, I love a denim jacket. I can't believe I'm not wearing it today. I wear a denim jacket at least a couple times a week. Yeah. Can't go wrong with that. What an inspiring young couple.

More of that on Friday. I'm here for it way to go there Artasia incredible couple oh my gosh and it's just it's really fun to hear how everybody's um the way that everyone gets to the baby steps might be different you know maybe a friend maybe Financial Peace University maybe a marriage counselor maybe maybe a threat you can't marry my daughter unless you go through this class I've heard that that's always a fun one yeah it's gonna be a good family uh you know or a total money makeover live event back in the day, or, you know, Facebook posts. There's so many different ways that people might

be introduced to this concept of living debt free, which is weird out there in the real world. But we are out on a mission to normalize it where people can live with no payments. And Daryl and Artesia are doing it. They can levitate. They're so free and light right now. They are proof that it can be done. Oh, that's amazing. We'll be back very soon.

This is The Ramsey Show. Peace out. I'm Kiki Wright. Jordan Campbell and I are hosting the Ramsey Show for you today. 888-825-5225. If you have a question for us, we are here for you. We're going to go to Irvine, California with Jacob on the line. Hey, Jacob, how are you? Hey,

I'm doing really well. How are you guys? Great. What's going on? So, I'm recently married. We just had the wedding that we've been planning for a long time with COVID. Congratulations. Thank you.

Everything went perfectly well. We're very, very pleased. But financially, we kind of spilled everything we had into it. The budget was kind of thrown out the window, probably three, four months closing to the date. But everything went fine. We have debt that we need to address, and we're renting in Irvine, California. And ultimately, in a year or two, we want to try and purchase a home. We'd be first-time homebuyers.

So we've kind of got a big chore ahead of us um so i wanted to ask once we really jump on all the debt get that out get all that out of the way um what what's your guys advice for a first-time home buyer in california particularly now because the climate is just it just does not seem stable yeah just inflation everything that's been going on in the news um and value property values out here are just so high yeah um and we're we're kind of anchored by family so i've already tried to make the argument uh we should probably leave the state uh buy a home somewhere else because it'd be easier for us to do. But we're kind of anchored here by family on both sides. So we're not going anywhere anytime soon. Gotcha. Okay. How much debt do you have, Jacob, to combine? So we're at like $35,000.

Okay. That's everything, credit cards, student loans, everything. Yeah. I can't really take credit anymore, but I mean, now that we're married, I took on her debt willingly. I love my wife, but she went away to school for a little bit, changed her mind. So we've got like about $25,000 in student loans from her, and then the rest is like credit cards. And what's y'all's household income combined uh we're very very fortunate we're doing really well we're about 100 to 110 000 okay great that is not as bad as i thought jacob when you said you just had a wedding where you threw the budget out the window i like i got he was really over telling this i was like oh no this

is this is bad and it's not that is bad, and it's not that bad. Jacob, it's not that bad. That's what we're telling ourselves, but we don't want to be complacent. That's good. No, I'm glad. I like that you're asking. I like that you see it that way, that you're focused on getting out of debt, and I like that you're taking that approach.

So, George, walk them through the baby steps so we can talk about the order of this. What is driving this one- to two-year timeline to get a house? So it's just the fact that if we're going to save 10% for a home out here, it's going to be $50,000 or more coupled with the $35,000 that we need to take care of. So we need to save $85,000 in what time frame? And based on kind of how we're living and renting. And we hate renting because we're literally burning our money and getting nothing for it. That's just kind of what it looks like. Well, you're going to have to actually save more than that, Jacob.

Yeah, so what I'm hearing is there's a little bit of this impatience of like, well, there's inflation and California is expensive and, you know, we're married now. We have a good income, so we should be able to get a house, right? That's what I thought. Well, here's the thing. I think renting right now, you're not burning money, you're buying patients. You guys are a newlywed couple. There's nothing driving you to have to get a house.

And right now we've got to clean up this debt. And as you know, you said, hey, we need to pay off this debt, which hopefully you're going to do first, right? Yes, that's the plan. And then there's a piece missing here where you need to have a fully funded emergency fund. How much money do you guys have in cash and savings right now? Around $2,000. We're paying rent at the end of this month. We literally just landed two weeks ago from the wedding, paying off vendors, finalizing all that kind of stuff.

And we really just burned, we burned everything. Like any kind of personal savings we had merged with our wedding savings account. Wow, a lot of burning going on here. Okay. Yeah, that's what we were left with. You're basically just starting on Baby Step 2 now, which is cool. So this is the debt snowball. And so you only have two debts.

Is it a credit card and the $25,000 on the student loans? Yes, both our cards are paid off. We pay rent, but other than that, yeah, credit cards and then student loans. Okay, so we are going to attack this credit card with a vengeance. We're going to make minimum payments on everything except for that smallest balance. We're going to list them in order from smallest to largest, ignoring the interest rate. I know it sounds crazy, and we're going to attack it. And with your income, if you guys get focused, you can get rid of this debt within a year easily.

Does that sound right? Yeah. Is that your timeline? Yeah, absolutely. I'm thinking six months. Love it. Hopefully. And then with that other year and a half, you're hoping to save up $50,000 for a 10% down on a half-million- dollar condo, I assume, in your area?

At least some kind of townhome. The area, if we're going to be realistic and we're going to buy something that is a relatively new property in the area where we're at, it's probably going to be in excess of $600, $650. $650, okay. And that's kind of on the low end. So realistically, if we wanted a down payment, and she's told me because she's been looking too, and we have friends that are realtors and first-time home buyers, they get benefits and maybe we'll only have to put down $3.5.

No, no, no. We're going to change those numbers. You called the wrong guy, man. You asked me for what the parameters are for a newlywed couple, first-time homebuyers. Don't fall for these programs, man. There's all kinds of built-in traps in here. And one of the biggest traps is putting as little down as you can. That's not what we want to do here.

We want you guys to be financially free. So here's what I want you to do. 15-year fixed-rate mortgage with a down payment of 10% minimum, ideally 20% to help you avoid private mortgage insurance, which is just protecting the lender, not you. So that's an extra few hundred dollars that you're throwing away. If you don't like throwing away money now, just wait until you have PMI and you're a homeowner. You're going to be spending money all kinds of places. So 10% to 20% down, 15-year fixed rate mortgage. And at that point, you want to make sure the payment is no more than a quarter of your take-home pay. So start doing the math,

running the numbers. We've got a great mortgage calculator at ramseysolutions.com. And here's what that means. It might mean, you know what? Two years from now, we can only afford a place that's 400 grand. And a year after that, we can afford a place that's 500 grand. And so you might say, hey, we need to wait because we really want this place that's $650,000. And that's more of a four-year time horizon. And then you've got to be okay renting and realizing that's buying you patience and it's setting you up for financial success down the road. And the thing that I want to point out, Jacob, is when we give you advice, that is what we teach here from Ramsey Solutions on how to buy a home the right way, we have absolutely no skin in the game on whether or not you do it. It does not benefit us if you buy a $300,000 home or a $3 million home.

It doesn't benefit us anyway whether or not you get into payments up to your eyeballs that you can't afford or your house poor and you can't even eat anything or you don't. And so I just want you to know that our advice to you is for your benefit. We're not getting any commission off of any programs that we're pitching you. And so the reason that this is so important is because I want you to learn from how this feels coming home from the wedding, which I'm sure it was a fantastic wedding. It was also one day that you spent a bunch of money on it. It sounds like more money than you wanted to.

And so what George is walking through here are the baby steps that is the best way to buy a home. First, $1,000 savings. You guys have that. You have an excess of it. So take that other $1,000 savings. You guys have that. You have an excess of it, so take that other $1,000, put it on your debt. Second, list all your debts, smallest to largest, regardless of the interest rate.

Attack that small debt. Begin to pay those off as quick as possible, just like we said. Then you're gonna save three to six months of expenses for any emergency that might occur because I guarantee you being a homeowner is full of emergencies you didn't plan on like air conditioning goes out or whatever.

And then above and beyond that, you're gonna save your 10 to 20% for a down payment. So we're looking at a longer timeline than you expect and probably a smaller house budget than you expect. But you called asking for advice and this is it. And if you do this, you are going to look up and be in such a better position financially. You're going to be able to afford the payments. You're not going to be throwing away hundreds of thousand dollars in interest,

and you're going to have a 15 year mortgage that you're probably going to pay off earlier than that. And so that's the reason that we teach what we teach. But I want you to stay on the line. You're newlywed. Let's give you a year to Ramsey Plus. Take the class in there called Financial Peace University. Watch the video lessons with your spouse that will give you even more in-depth advice on how to follow the baby steps and how to buy your first home when you're ready. Thanks for calling and congratulations on getting married. I know you can do it. All right. I want to thank producer James Child, associate producer Austin Selby, and my co-host George Camel and You America for listening. This is The Ramsey Show.

Hey, it's Kelly, associate producer and phone screener for The Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit theramseyshow.com and register. We would love for you to come to Nashville and tell Dave your story.