The Ramsey Show - App - Are You Ready To Go Scorched Earth on Your Debt?

Episode Date: January 17, 2025

From the Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Ramsey personality, Dr. John Deloney. We're taking your calls at 888-825-5225. We'll do our best to give you the right next step for your life, your money, your mental health, your relationships, whatever is going on. Shannon's going to kick us off in Phoenix. What's going on, Shannon? Yes, hello.

Hey. What's going on, Shannon? Yes, hello. Hey. What's up? Oh, okay, so I'm calling because my ex-husband and I bought a townhouse for our children to live in during college, and then four months later I filed for divorce. Our divorce was final, but in the divorce, they didn't split up the property because my oldest daughter was on the title in the mortgage. So then after that, I had to get a real estate attorney. And we're now at the point where

we have a legal agreement for my ex to refinance the property and get my name off the property. Or if he doesn't do that by March 1st, then we sell it. But this is being contentious. And my issue is for my daughter. He's telling my daughter that she has to be on the refinance of the property. And I'm just want to give her the right information for her financial security for her life if it's a good thing for her to be on the mortgage of this $600,000 property. Is she in school? She is a junior and she also is a real estate agent and she is making about $50,000 a year. Yeah, that's not even in the same plan.

It is a $600,000 mortgage. I know. She was artificially propped up with you and your ex paying the mortgage. Yeah, she shouldn't be on it. Right. Yeah, no. I don't know why she would be on this. It's just like y'all are paying for her dorm room.

It just happens to be not a dorm room. It happens to be a condo that you as the parents decided to buy for yourselves and that's yeah because what's going to happen is he's going to get mad or something's going to happen he's going to quit paying and a 21 year old college grad is going to have a gets foreclosed half million dollar mortgage yeah she's going to get foreclosed on she can't afford that yes and and that's what i thought but he's um um citing to her and saying to her that we signed a legal agreement and that she has to be on she didn't sign anything did she he didn't my attorney said that um uh here it is he said she is not a part of the settlement agreement,

that her signature acknowledges that she's aware that it took place, but it doesn't bind her to any terms of the settlement. So whose name is on the deed and whose name is on the mortgage? All three of ours. Yikes. So the greatest gift you could give this young woman is to sit down with your daughter and say you need to go find yourself an apartment to live in and get out of this thing and i think she can afford her own apartment i think she's at the stage in her life where that's what she can do and wants to do but her younger brother and sister also want to live in this

townhouse and that's between that's between them and their dad i know i would get out of this it has not been a blessing so far it's not going to be a blessing a year from now. And by the way, why did you file for divorce? Financial reasons. Because he's not a person of character? Yes, because he does things like this to me constantly, and I've wasted a whole bunch of my personal money, so that's why I got out for financial things we kept getting into

that me and my family had to pay to get us out of. So we call that financial infidelity here. And there's no reason to think he's going to suddenly start acting with character and integrity on these exact same matters with other people. He's just looking for the next victim. You left. I agree. And we have this legal agreement that he has to refinance by March 1st and December 15th. I got an email from a title company and he's now wants to assume the mortgage because I definitely know that he'll save a lot of money on the interest rate. Yeah, but you have to get off in this young child. Can he even afford this if he assumes the mortgage and it's just on him?

He's just going to rent it out to a stranger off the street at market rent or what? What's his plan? Right. I don't know if he can actually qualify. I think that's why he needs our daughter to help qualify. Well, he can't force her into this. Yeah, that's predatory. Tell your daughter, please don't do this.

I know I tried, but it's, yeah, he's just very convincing. And he's had renters in and out, but can't keep renters in there. And there was even one time when there was a renter who was an ex-con, and he didn't do a background check living with my two children. I know, but listen, listen, you're looping on something you've already made a decision on. Yeah, I agree. Like you just telling yourself the story again about one other time he screwed up and one other time he screwed up and one other time he screwed up is a choice for you to be miserable right here in the present. Don't do that anymore.

What you can do is affect what happens tomorrow. And you can sit down with your daughter and say, this is a bad deal financially. You're going to be attached to a $600,000 mortgage. Your father, who you love and is your dad I'm not gonna talk bad about him but facts are he is not skilled in financial matters and so I'm gonna tell you as your mother please do not attach yourself to a six hundred thousand dollar mortgage to somebody who especially with somebody who is pressuring you to do something that you can't afford. This is not a mom and dad.

This is a math problem. And he's using her as a pawn in this scheme. And if she chooses, knowing all of that, to still go through with this, that's on her to deal with. That's right. And he's going to have to deal with it when he realizes a 21-year-old cannot help pay this mortgage. And you can tell her, you're a grown-up. You can do what you want to do i um will be with you you can call me when this thing goes sideways and you can smile at her yes or you can say you make 50 grand a year go get an apartment i know you're the mom and you love her and she's what 20 now 21 now 21 now so you're in that weird awful bum slash really

awesome transition where you get to stop telling her what to do. And you get to just sit down across from her at a diner and say, I'm going to try to use the power of influence. I love you. And here's what I would do. Or here's the things I've done and it was didn't know what else to do. I've kind of tried those things and her dad is very convincing and she wants to help. I got it. She's a really good kid but well she's a kid who's grown up being a people pleaser because she had to. Yes yes. And the only thing I could the only other thing I could tell you to do is to give her a ask her just run the numbers with you. Yes. And this is not going to be the last time she bails dad out if she goes down this path. And she's going to learn the hard way, and it'll probably destroy their relationship long term.

I don't see a world where this just ends up perfectly, and they're all happy with what happened financially. That's right. I agree. Yeah. And let me just say this, George, to all the, not to you, but to all the parents out there. Yeah. If you ever, ever have to go tap the credit, pull a credit card out in your kid's name, sit them down and try to convince them to use their success, their wealth.

As a pawn in some scheme you're running, you're a scumbag and you need to stop. It's your child. It's your kid. If you want to do stupid stuff with your money, if you want to do stupid stuff with your character, nobody can stop you. This is America and you're an adult unless you don't break the law. Don't drag your kids into this stuff just because you have an ego. You can destroy them with you.

Please don't watch some Instagram reel or TikTok where they're like, just buy a piece of property for your kid while they're in college. It's a wealth hack. Here's what happens on the other side of that. Relationships are broken. There's no wealth hack here. Don't do it. Let your kid just live with seven roommates.

That's how it should be in college. God bless. This is The Ramsey Show. If you're ready to get your finances in order once and for all in 2025, you've got to join us January 23rd for our free live stream. It's called Take Control of Your Money. It's hosted by Dave Ramsey and Jade Warshaw, so you know it's going to be good. You're going to learn how to stop living paycheck to paycheck, how to free up more breathing room so you can pay off debt fast, apply your money to what really matters, and get ahead. Plus, Rachel Cruz and I will join for a Q&A at the end where you can ask your money questions live. Here's a bonus in case that wasn't of any interest to you. Rachel Cruz and I will join for a Q&A at the end where you can ask your money questions live.

Here's a bonus in case that wasn't of any interest to you. When you sign up, you'll be entered to win our cash giveaway. Five people will win four grand each. So go sign up for the free live stream by going to ramseysolutions.com slash live stream or click the link in the description if you're listening on YouTube or podcast. It's going to be a good time. Amanda is out in Kansas City up next. What's going on, Amanda? Hey, how are you guys? Doing great. How are you? Doing good.

I just had a question about investing. I want to know the best way to disperse the 15% each month. Um, I recently just quit my job to be at home with my son. Congrats. Yes. Yes. Thank you so much. I recently just quit my job to be at home with my son. Congrats. Yes, yes. Thank you so much. We are debt-free as of last fall, finished off a student loan.

Cut up credit cards. We have every dollar premium. So we're very much on a very strict budget. But my husband invests 7% with his employer. And then both of us have... You broke up on me. Both of you have what? Oh, we both have Roths that we contribute to. We're just not really sure where to go. We've been contributing to that for about five years, and then we opened up a custodian account

and a 529 for my son. So just trying to figure out the best way to do all of that kind of at the same time. Okay. So you're in this four, five, six land. We need 15% of our income going to retirement. That's the priority. We're going to put our own mask on first. Anything beyond that can start going to kids college fund beyond that toward extra on the mortgage. And so are you guys investing 15% of your household income right now? We haven't, like, totally looked at it because what we have been doing is putting a little bit into our son's account, a little bit into the Roth, because we just kind of started on this journey of obviously doing a one-income family. Okay. So what is your household income?

It is, we bring home about $3,600 a month. And I also have a $1,099 work-from-home job, but it's very inconsistent. I can make $300 one month. I can make $1,000 one month. Okay, so the take-home pay is about $43,000 a year. What is his gross income? About $66,000. Okay, so $66,000. So if we take that number, now we're going to go, okay, 15% of that's $9,900, which means every single month you guys should be investing $825. And here's the way to filter that. Use this strategy. Match beats Roth beats traditional. Does he have a match through his employer? Yes.

Great. And then beyond that, does he have a Roth option through his employer? I don't know, but we each have Roths through our own financial advisor. Okay, so you have a Roth IRA. You have a spousal IRA now as a non-working spouse. So you can contribute to that. Does that need to be changed to a spousal one? I would check with your advisor on if the actual account needs to be changed. But just legally, I want all the stay-at-home spouses to know that they still have an option to invest through an IRA as long

as the other spouse has earned income. So it's kind of a cool hack there. But with your income, you're not going to get super far. I mean, you know, $9,900, that'll max out the IRA, one of them, and you'll get the match. You'll probably end there. Okay, perfect. So we shouldn't worry about putting it into both accounts, the Roth IRAs. It doesn't really matter. 5,000 in one Roth. Let's say you put 5,000 in one, 5,000 in the other. If you put 10,000 into one, you're going to have the same rate of return, same exact dollar amount if you're invested the same way. Got it.

So it doesn't really matter strategically, you know, if we're going to fill this one up versus this one. So beyond that, beyond the 15%, I like the idea of putting money away in the 529 account. And then you guys have a mortgage? Yes. Okay. About a thousand a month.

Okay. My guess is you probably don't have a ton of extra wiggle room beyond investing and paying all your bills to then throw at the mortgage. Correct. Yes. Okay. So my goal for you guys would be how do we get our income up so that we have margin to throw more at college and more toward the mortgage payment? That's your next goal. Once you get that 15 dialed in. And if you guys can't get to 15 and the bills are too tight, we need to cut some spending and increase income in order to get there.

Okay. Okay. Got it. And then, hey, I want to ask George a question on your behalf. Is that okay? Yeah. So George, we often say on the show, you need to do this, you need to do this. But sometimes I think people hear that as you need to do it, you need to do this. But sometimes I think people hear that as you need to do it all right this second. So tell me if I'm crazy, but it sounds like in this particular family situation, they've got this goal of paying off the house. They got this goal of fully funding these 529s and they want to invest 15% and another family value that they've put on the table is we want to go to a single income, right? So might it be that over the course of this first year, we're going to just knuckle down and suck it up,

and we're not going to have a ton of extra money, but the goal is mama and baby full-time at home, seeing how this thing plays out. And then we begin to maybe husband can work a shift or two extra, but then you start to get a sense of this is our reality. then you begin to say okay i'm going to pick up some other shifts or maybe when she the baby turns two then we can do some part-time stuff and but it feels like you have to you don't have to all at the same time especially when you're trying to navigate we just brought a baby home to the house oh yeah no there's definitely a seasonality to this and a lot of people might go hey we're paying for daycare right now. We can't put extra on the mortgage.

And that might be a reality for the next three or four years. But I think it's important to sit down and go, okay, if we don't, it's four years of no movement. Is that worth it to us? And if it is, four years of we can only go on one date a month. Or we can't go on vacation, but we're going to fund retirement. Right. So this, and Lane Norton always says, everything is a trade, right? Everything's a trade. So it's really important that one person stay home.

It's really important that we homeschool the kids. Cool. Is it more important than a vacation? Because if y'all make that intentional trade, you don't wake up in five years and go, we never go on vacations. You wake up in five years and say, we made some sacrifices because this stuff mattered to us. And I think it's that lack of intentionality and that lack of understanding.

There's just ceaseless to this thing. Absolutely. Right? Yeah. Now, Amanda, how does that hit you? That's exactly kind of what we've been thinking. This obviously isn't forever and I'm going to keep my license up so I can, not license, but my certification up. So when I, when the kids are, you know, in school age, then I go back to work. And so, yeah, it's definitely just a season of life. I was just making sure that we weren't not saving as much as we could in a healthy way. I love that. I love it. But 15% is that benchmark.

And it's not a wet finger in the air. We found Dave's been doing this for 30 plus years. If you're investing less than that, there's a risk that you might not have enough in a retirement. If you're investing way more than that and the house isn't paid off and the kid's college isn't funded, your kid's going to go into crippling student loan debt and you're going to have a mortgage for the next 30 years. So there's a balance to it. And we found that if you invest 15% of your income, for most people, until the house is paid off, you're going to have at least a million, probably multi-millions in that one nest egg. And so it's a beautiful picture, especially for a young family like that.

That's a great way to go. But you're right, John, this is a tough part of the baby steps. Once you get out of one through three, because we found baby step one, 30 days, boom. Baby step two, get out of debt, 18 to 24 months. Baby step three, get the emergency fund, six to 12 months. That's great. You can knock all this out in two and a half years then baby steps four five six forever this is a 17 year journey man like how do we balance that it's like it's like the there's a great theologian who's once said the worst part of being a christian is that it's every single day right it's like you can't ever like memorize all the whatever the book of genesis and be like i'm good it's like cool um did you take care of the homeless on monday right and did you take care of the least of these and serve the widows in your

community on tuesday right it never stops or you a guy cuts you off in traffic and you exhale and you pray and you say like hope this guy gets to the hospital before his wife passes and i didn't flip him off and you're like i'm becoming a better then the that flips you off, you got to do the whole thing over again. Right? And so same thing with exercise. Same thing with diet. Same thing with being a good spouse. Same thing with your money.

There comes a moment when it's like, oh, this is every day for the rest of our life. And if that's frustrating, welcome. It is for all of us. For me, for George, for all of us. Welcome to humanity. I think you get through baby step three and there's this sense that, okay, now we don't have to think about it anymore. And it's like, no, you've got to think about it for the rest of your life. And it just sucks.

But at least you're thinking about the future instead of paying for the past. That's right. So it's a different problem to have, a better problem to have. Yes, but you always have to be intentional. Absolutely. And that's where the budget comes into play. You've got to get control. Once you get good at that budget, after about 90 days, you get it dialed in, you start to breathe a little easier because there's less unknowns floating around your head.

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Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. The phone number to call is 888-825-5225. Haley is down the street in Nashville. What's going on, Haley? I am doing pretty good today. Are you able to hear me pretty well? Yes, we got you. Perfect. All right, then. Perfect. What's your question? So I am wanting a great startup advice on how to start paying off my student loans. I am 25 years old and I am on the end of my road to become a licensed therapist. And during between the ages of 21 to 23, there was a lot of struggles, unfortunately, to the point I was possibly stealing food, the risk of homelessness. And when I had found out about refund checks, I was accepting multiple loans just to live off of those

refund checks from ranging of $4,000 to about $7,000. And now being 25, I have about $135,000 in student debt. I'm not out of college or graduate school yet, but I'm wanting to go ahead and start tackling this. Yeah, that was a real common thing I used to see. They've kind of curbed it over the last few years, but there used to be lines of students that come out and register for classes, get the loan check, and then cancel their classes, and it would just float them to the next semester

and then float to the next semester. So here's the crummy part. You're not going to like our answer. You're going to have to work really hard and make a whole bunch of money to pay that stuff off. Okay. I mean, I know that sounds so annoying. I remember one time in grad school,

I asked a guy who came in, and you've probably done this too, who was in a counseling class. And I just, he was a professional, had a big successful practice. And I said, hey, how do you make six figures as a counselor? And the room kind of gasped because you're not supposed to ask that question because it's supposed to be all altruistic and kind. And I'd do it for free. Yeah. And he looked at me and he said, you're not gonna like my answer. Just like I said to you. And I said, okay, go for it. And he said, you've got to work really, really hard and you've got to be really, really good at being a counselor.

And you've got to take clients on Sundays. You've got to take clients at 6 o'clock in the morning because that's the only time they can get in there before work. And you've got to work really, really hard. And if you become very, very good at what you do, people will pay you to come help them. I absolutely agree that is that is one thought i was having because unfortunately in the state of tennessee a typical counselor's salary is only about 50 to 60 000 a year so i'm in tennessee that's why i went here's what you have to choose you have to choose to not be typical and so the typical the typical counselor follows a particular track and those are my friends that's

my community that's my world and so i don't i don't hate on that one bit but if you want to get your head out above the clouds you got to do some things that are going to put your head out above the clouds which means you got to do things differently you got to do groups you got to you got to do early mornings on sundays and late nights on saturday nights and you got to do things that other people don't want to do or can't do. And probably other jobs in between your sessions. That's exactly right. While you're building your client base, you got to do other jobs.

And not have enough arrogance to say, well, I'm a licensed counselor. I don't do Uber. You have to have the ego to say, I'm about helping people. And I can't help my clients if I'm worried about how I'm going to get my bills paid. And so I'm going to work like B-A-N-A-N-A-S all across the board and there's no job too small for me and I'm going to get it done. And then what you'll find is you become an amazing therapist because you begin meeting clients where they are at six o'clock in the morning at five. I used to see clients six o'clock in the morning at five i used to see clients six o'clock in the morning that's the only time she could meet and so i was like cool i'll be

there i absolutely do love that how much how much further do you have to finish this program i will be done with my classes by may and then i'm starting my internship May 26th to November 2nd. And then you've got several years of it. Is that a paid internship? No, this is an unpaid internship, but I already have a full-time job at another treatment center. When does that start? How much does it pay? Is that starting in November? No. So I'm currently working a full-time job right now, but my unpaid internship starts May 26th. Okay. So you're going to have a season

where you're just going to have to scratch and claw and make it work because you're working full-time, you're doing a great thing, and you've got to get your internship hours just to graduate. And then you're going to have to do your 3,000 hours after that, right? After you pass your exams. Yes. So what are you making right now? I make roughly about $42,000 a year. Good.

And what will you be making at this new job? Do you know? Roughly about just the same. Because right now, as a mental health technician, that's just what I work as. It's going to be about $22 an hour. So after all this school, you're going to make the same? Is that what you're telling me, or am I hearing it wrong? Okay, so for a therapist, it would really depend ultimately on the agency to where hopefully I can

try to make about $55,000 to $60,000. That's my dream to start off with. Yeah, but that's only at the agency. You're going to have to also see clients on Saturdays and Sundays and Monday mornings and Tuesday nights. Yeah. You owe $100,000.

$135,000 making $50,000 is going to take you a decade to pay off if you're lucky. Yeah, can't do that. And that's not a plan. I want to see you debt-free in a few years, not 10 or 12. So that means, like John said, getting that income way up and also not going further into debt. So here's the advice that you may be shocked to hear. I would not begin paying off your debt. Your goal should be to stop the bleeding and to not go into any more debt. So have you already paid all the way through this program or do you still owe more? I have not paid all the way through yet.

How much is remaining? I believe, oh gosh, it's still, you're talking about my student loans itself? Well, you owe $135. Are you going to go take out more student loans to finish this program? No. So you're done? We're done taking out debt? Yes.

Are you using debt in any other area of your life? Do you have a credit card? No, I do not have. Well, the only credit card I do have is care credit just for my dog to take him to his yearly debt appointments. Okay. And you don't have any other debt outside of the student loans? No car payment? I do have a car loan.

How much is that? That is about, I have the exact number right here. I have about $10,000 left on that. Okay. And what's the monthly payment? That is about $350 a month. All right. So when you're ready to pay off the debt, when you're through this program and you haven't taken on any more debt and you've got this down, then we can begin paying it off. And you're going to do this in order of smallest to largest balance, ignoring the interest rate. And I'm guessing all these student loans, you probably have like 11 or 12 student loans if you broke them all out? Yes, correct. Okay, so don't do any consolidation here. Focus on attacking the smallest debt, whatever's next. If the next debt is a thousand bucks, let's attack that with all the extra margin we can get with our newfound

income from working extra. That's how you're going to pay this thing off, but again, it's going to take a whole lot more income. Okay, and the good thing is, is that I also got, I don't really know though how to quite use it. I did get a life coach and spiritual coach certification to maybe open up another side business as well. That's what I'm talking about. You're going to have to be a, I love that you're getting the experience in the field at a treatment center. That's some of the best experience you could possibly get. I, I love that you're getting the experience in the field at a treatment center. That's some of the best experience you could possibly get. I love it. Cause you're going to be, you're going to get to interact with wealthy clients and clients that don't have any money. You're going to get to see everybody, right? And you get to see how systems work and you're going

to get to work with top-notch physicians and psychologists and crummy counselor. You're going to see everybody. That's fantastic. But yes, you're going to have to use every hustle move you've got to see any kind of client all day, every day. You're going to be exhausted, but you've dug yourself $130,000 hole. And so we're going to use all of your certificates, all of your extra things, and you're going to meet clients where they are all across the board. And you're going to work and you're going to work and you're going to work and you're going to become very,'re going to work. And you're going to become very, very good. You're going to get this stuff paid off quick. Hang on the line, Haley.

We're going to send you Financial Peace University. Watch all nine lessons. It's going to put a pep in your step and give you the financial literacy you need to actually get through this. This is The Ramsey Show. There's a time in your life and at the baby steps for renting, but you don't want to do it forever

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about these fires in California and how they actually impact everyone. So we wanted to hit some practical things, some financial pieces to think about, and even people who don't live there. It could affect you too. Yeah, and man, there's two big things here, and this is just

me getting personal. One, I've got friends and colleagues out there in the affected areas, and not even directly in the personal. One, I've got friends and colleagues out there in the affected areas, and not even directly in the areas. I do have some friends there, but also in the peripheral, right? And so I'm somebody, I grew up in Houston where there was natural disasters.

And so anytime there's a natural disaster, I get, I just, it lights me up on the inside, right? I become a seven-year-old little boy who remembers 10 days with hurricane alicia we had to eat on a on a camp stove and i remember that just the helplessness and yeah and the thought of being a dad and standing with my wife and my two kids and our house is burned like it's just harrowing for me that's number one number two given the job that i have, the larger picture, man, is we have these challenges with regulators. We have these challenges with local ordinances that you can't do all sorts of things that would make areas

safer to live in. And we're driving out insurance. And at the end of the day, and this is a hard pill for all of us to swallow, a bank's not going to loan you money for a mortgage if it's not um insured they're not going to loan you we don't want people taking auto loans but they got to protect their collateral they got to protect it right so if you take out a mortgage the first thing they ask for is you got to have the house insured right and so um this affects not only the people who are who've lost their homes and it's just tragic this affects all of us. And so just a couple days ago, I sent an email to you guys and to Dave and like, hey, I'm worried about the state of the insurance market, right? And so, man, I'm glad that you put this thing

together, George. This is awesome. Just to walk people through what's happening and then what can we do? Yeah. So like you mentioned, these increased claims from natural disasters that depletes funds, which leads to higher rates, even in low-risk states like Maine and Vermont, and that broadens the financial burden beyond California. So there's a lot of factors that have compounded this, like you mentioned, regulatory constraints that prevent insurers from raising rates to cover their increasing costs. There's already rising costs from inflation, reinsurance, natural disasters, and then the insurer's inability to remain profitable under current conditions.

Remember, they're a business business they need to make money you know this is not in defense of the insurance companies but if they get bankrupted by having to cover all these claims they can no longer do business and imagine if you had a cheeseburger stand and the cost of beef quadrupled on you and your local government said you have to charge this for a burger well then you can't sell right so like um i never thought i would say this but i've i've i understand the business of insurance like if the government's saying you can't do this and the government's not doing the things for the infrastructure to support if there is a fire break that that breaks out or whatever challenges then you can't do business there right it's a mess And it's got a lot of people looking at their own insurance and wondering, what does this cover?

As everybody should be doing, by the way. This is a good time to check into that. So there's standard coverage limitations. So typical homeowners insurance covers events like fires and theft, but often excludes major natural disasters, these acts of God. And then there's supplemental policy. So depending on your location and risk factors, you might need additional insurance like flood or earthquake coverage to ensure comprehensive protection.

That's a big deal in California, earthquake coverage. Of course. Or if you're on the coast, right? If you're in Florida, you're in Texas, you're on the coast, and there's an increase in frequency or an increase in intensity in storms, yeah, you're going to have to get additional riders if they'll even provide them, right? Exactly. And without the adequate catastrophe insurance, you could face substantial out-of-pocket expenses for repairs or rebuilding after a disaster, as many Californians are dealing with now. They didn't have the right coverage. They didn't have the right policies.

And they're left to foot the bills. Or they had them and they got canceled on January 1 or whatever rumors are floating. I mean, it's a mess. So here's the tactical recommendations. Number one, like we said, review your current policy. Understand what is and isn't covered under your existing homeowner's insurance. And call the hotline and check in with the customer service and go, can you explain to me what this actually means? And then number two, assess your risk. Consider the likelihood of various natural disasters in your area and determine the necessity of additional coverage. Can I say this? We have a kind of an internal rule that we don't say I told you so. This is one of those moments when we beat the drum over and over again, don't have a house payment that's more than 25% of your take home because you never know when you're going to have to go get a new writer. You're like, dude, we are super exposed. We

need to go get a fire writer. We need to get an additional policy to cover a flood. And because these 500 year floods are happening every year now, if you are, if 50% of your take home is taken up in your house, you can't float that extra 600 bucks a month or the extra 400 bucks a month, whatever it might be. And so that's why we always say, make it 25%.

You might have to get a smaller house, but man, when these things pop up, you have some margin. Think about this. The mortgage doesn't go away just because your house did. No. You still owe the bank that money.

Right. And you've got to find a new place to live. Exactly. So very, very scary. The third thing you can do, if you're in a good financial spot, you're out of baby step two and three, you've got no debt, you have the emergency fund, you can raise your deductible. And that will help lower your premiums.

You're willing to take on a little more risk from the insurance company, and they reward you with a lower premium because you're going to have to pay a little bit more before their part kicks in. Another one, take advantage of discounts. So some insurance providers have discounts on policies with teenagers if they have good grades or a safe driving record. You can qualify for discounts by installing certain safety features like burglar alarms or if you combine your policies. And that's the next one is bundling these policies can save you up to 25%, which is huge. And then of course, this is the big one, compare quotes, shop around with an independent insurance broker. I know you love your buddy from

college who works at the name brand place, but he's a captive independent, he's a captive agent, so he can only sell state farms insurance. And so I like to shop around from the top companies. I use an independent broker to do that. And if you guys want to learn more about this, you want a Ramsey trusted insurance pro that can tailor the coverage to your specific needs, we've got a site for you to go to, ramsaysolutions.com slash insurance, and they'll help you figure out if you have the right coverage for your situation, and only giving you what you need and making sure that you get the best price. And man, we were just in a meeting, George, you and I and several other of our colleagues, and it actually made me, it gave me a little bit of light at the end of the

tunnel. They said that this particular service through Ramsey Solutions has been getting lit up. People are going back and checking their policies and they're calling Xander, they're calling some of these brokers and saying, can we get some help? And they're getting the help that they need. So that's that. I guess there's some silver lining here that maybe this situation is causing people to get the right coverage. Yeah. So that they they're protected. That's the point of insurance is to protect. As you build wealth and you're playing offense, you've got to also think about the defense. Right. What are you doing to protect the wealth that you're building? Because all it takes is one emergency like this. Or if you don't have health insurance and you have a health crisis,

they can bankrupt you. That's right. You've got to make sure you have the right insurance in place across several areas. And there's a lot of trash products in the insurance world that you also don't need. And our Ramsey Trusted Insurance Pros won't steer you to those products. They're only going to give you the stuff that Dave would talk about on air that everyone needs. So this is one of those things I get pretty passionate. It's simply, and I've said it ad nauseum, so I won't continue to beat the drum too much, but I've just sat with people who have lost a spouse, and they're older, and they look at me, and there's a very particular hollow look in their eyes, and they'll say I got to go to work on Monday or I don't know where anything is.

And so I beat the drum about you got to have a will. You got to have a will. Please hear me beating this new drum. All of us beating this new drum. Go check your insurance coverages today. And get term life insurance. If you have anyone in your life that relies on your income, that means kids, a spouse, you need term life insurance, 10 to 12 times your income. And if you're a voting member of your community, find out about infrastructure and resources. Do we have water? We do control

burns. Do we take care of some of these things one times, when times are good, so that not if, but when things go sideways, we're going to be okay. Because, man, you don't want to find out standing at the end of your block when the whole block, I mean, just. And another reminder, and this is something you've railed on, John, is know your neighbor. Know your neighbor.

Be friends with your neighbor. If something goes down, can you go over there and knock on the door? And they're like, oh, absolutely. And we're so disconnected in today's world that you're lucky to see your neighbor. Yeah. Let alone know them them talk to them

have their number and uh that's been a beautiful thing that's come out of this is just the level of community and people coming out of in droves people have lost their homes are helping other people who have lost their homes and so that is you know you in the darkest times we also see the most beautiful parts of humanity that's right and um if you find yourself in a position where you're in vermont you're in a position where you're in Vermont, you're in Texas, you're in some place and your family's safe

and you're doing well, see if you can get online, if you can find some places where you can give and be in support of our brothers and sisters out there in California who just lost everything, man.

Generosity is a great way to feel connected to these things that feel out of our control. Put some skin back in the game. That's right. I love it. Good stuff, John.

Thank you to the Booth folks keeping the show afloat. And to you, America. That's what I call them. That's as good as I can say. There you go. Nicest thing I can say about those guys. And we'll be back before you know it. This has been The Ramsey Show.

From the Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Camel, joined by the host of The Dr. John Deloney Show, Dr. John Deloney himself. The number to call is 888-825-5225. If you want to join the conversation and get your question answered, that's the way to do it. April is going to kick us off in Gettysburg. What's going on, April? Well, hello. First of all, I'd like to say thank you so much for having me on your show. I feel truly humbled by it. That means the world. Yeah, thank you. Back before

Thanksgiving, I discovered your show and I started listening actively. And I thought, you know, my whole setup of how I did money and business was very much off. And I thought, you know, my whole setup of how I did money and business was very much off. And I thought, I got to start rearranging things and get on the baby step. My husband and I are on the baby steps. We secured the first step and we were also getting, listening to some of your advice about having all of our accounts merged. So we had put our savings and our checking account together in both names, and my husband had had a separate account that he'd had for probably about 25 years. And I told him, I said, you should really put me on that account. This way we can, you know, put some money in that too.

And it was a good thing I started listening to your show because it really helped me discover really what was going on. I'd always been pretty active, proactive with my own money as much as I could be as much as I knew how to be. But on the 2nd of December, my husband had called about his other account, which the longest time it had been pretty dormant. I think he had, well, exactly. He had $100.26 in there for the longest time. And the bank had told him that he was overdrawn $3,000. And he, of course, called me immediately and told me, how can this be? I said, you need to call the bank back and ask what's going on here so he called the bank and they had told him that the teller or whatever

had given out three thousand dollars and it got written off his account because his account was one number off from a customer that had it withdrawn from his account which really made no sense to us we couldn't understand how You're telling me they like fat fingered the wrong account number and withdrew his account by negative $3,000. $3,000. But it gets even crazier what we've been going through with it because they said that this had happened back in May of 2024. And here we are in December. And they'd said well we closed your account in july july 8th and we were like we never got notice of this and my husband wasn't as proactive with this other account because he figured clearly oh it's there i don't have to worry about it and i just thought

oh no so we've gotten a letter um from them know, saying even a copy saying we're sorry there was a mistake and even showing us the teller's number and the individual's name of who got the money. But it didn't solve our problem. They said the bank then told us they would send us a check for one hundred dollars and twenty six cents, which is what my husband had in the account. He told him, I'm not doing business with you folks because this is nuts. Okay. But they had put my husband into check systems and also gave him a negative credit report across the board. And we were just like, I can't believe this is happening. I feel like you guys have been burning too many brain calories on this. Yeah, way too many.

You take the check, you dispute it on the credit report, and we move on with our life, and we never do business with this bank again. But, you know, that's not all, though, because we got the check for $100.26. We thought, okay, it's over. We're done. They're going to fix it. That's not what happened. Then, December 19th, they sent us a check for $2,899.74.

And we're like, what's going on here? And a paper saying that, you know, you're still in check systems. You can deal with this with them. And we're like, what? So I contacted an attorney. No. Because if you add the $2,899.74 with $100.26, you come to $3,000. So they were still making us look like we had a black eye, my husband.

Okay. We were like, what's going on here? Did you talk to the bank about that? They told us, oh, no, we can come and we'll even come to your house and pick the check up. I said, I've never heard of stuff like this before. What? Is it a big, big, big heard of stuff like this before. What? Is it a big, is it a big,

big, big bank? Is it a mom and pop? Now it's a big bank. Yes. We were just shocked by it. So here's exactly what's happening. I'd be willing to bet my,

my truck's not very nice, but I'd be willing to bet my truck. This is what's happening. They're a humongous bank. One teller either screwing with the system, but more than likely he made a mistake, he or she made a mistake. And they doled out 3,000 bucks to the wrong account.

Fine. There's no person at a humongous bank. It's all automated. And I can almost guarantee you that whatever email address your husband signed up on that account 15 years ago or whatever, he's got emails from that bank that were automated and just cranked out he's got emails from that bank that

were automated and just cranked out. Or he got letters that he just didn't open because he knew he had a hundred dollars in that account. Everything on those big banks is automated, automated, automated, automated. Even the refund check that accidentally got automated to you guys. And so A, stop doing business with a big bank. That's why I like a bank. I was texting my banker today, right? I like that. I like having their cell number. And I'm an old Luddite when it comes to that kind of stuff, but I like knowing the person to call.

And like George said, you guys are wasting way too many brain calories on this. You don't need to get an attorney. You need to dispute it with the credit report. We did, and they did send them a letter, and they said they're still going to clear it with check systems, so we're waiting for that to happen. Yeah, they will. You're just dealing with a bunch of zeros and ones.

You're not dealing with people. But here's the thing. I'm going to go back. Companies make mistakes. Big systems make mistakes. That's why we tell everybody, check your stuff every month. Well, we had moved

and we had given our new address, but nothing had ever come here. And the old address... We or your husband says he did. He actually changed his address with the bank. Yeah, I don't think he did.

Yeah. Not with USPS, but did you change it with the bank? He says he did. Yeah, but probably not, right? Oh, he said he did. I know.

I don't think this is worth fighting with him over. I don't think this is worth... No, I mean, we're not fighting about it, but you know what I mean? It certainly makes you feel a certain type of way. It's very jarring and shocking. That's right. That this could happen. And you see it's like $3,000.

It's like, wow, how did this happen? It sat there for so long. It's just computer on computer and a humongous bank that's worth two trillion dollars they're just going to write it off and go it's not worth it's not worth they've done the actuarial table it's not worth their time to mess with three thousand dollars they just peg your credit and they write it off and they move on none of this is malicious or personal it was just someone who was inept yeah it, it's a system. Well, I can say I'm just glad that I did tap into your show and got more proactive with checking. Good. And also, I don't let money just sit around.

I want my money to have a goal and a purpose. And so if it's not your checking for bills, put it in a high-yield savings account. Okay. Have you done that yet? No, I haven't done that yet. Great. Get paid on it. okay have you done that yet no i haven't done that yet yeah i'm just getting started like i said before thanksgiving just discovered your program and just getting started so here's the deal can i flip this whole thing around for you sure you're awesome thank you for saying that you're awesome you started digging into some challenges and you drank the ramsey kool-aid

welcome to our cult we're going to hook you up with financial peace university you and your husband can watch that we're going our cult. We're going to hook you up with Financial Peace University. You and your husband can watch that. We're going to pay for it. And we'll hook you up with every dollar app that y'all can share together. And y'all can start keeping track with all of your money. So hang on the line here. We'll get you hooked up. But let's flip this whole thing around. Wow. Y'all caught a $3,000 error and the bank's trying to fix it for you. That's amazing. That's awesome. You're getting back on the right track. So I'm glad y'all started digging into this stuff because now we're on the right path. Focus on the future. This is The Ramsey Show.

Rachel, do you ever get these sketchy text messages that are like, hey, you need to update your address and verify so we can get you the package you didn't order? Yes, I have. George, sketchy and never trust them. And that's why we recommend Delete Me. They help with that. Yeah, they do. Delete Me actually goes in and removes your information from data broker websites. And it is an incredible service that everyone needs.

And there's a lot of shady companies out there that solely exist to sell your personal data to bad guys. And that means your info, like your email address, your home address, your kids' names, your name, everything is just out there for scammers and spammers to find. That's right. And then once they remove your information, then they're going to send you a detailed report telling you where they found your information, when they removed it, how many hours they've saved you. I mean, it is incredible. So detailed and it's beautiful.

I love these reports. So far, get this, they've reviewed 27,000 listings on my behalf, removed me from 240 data broker sites, and saved me 77 hours of time. It's incredible. Absolutely amazing. And Winston and I now get fewer texts, weird emails, spam calls, all of it. I love it. So you got to be sure to check them out. Ramsey fans get 20% off their annual plans. Just go to joindeleteeme.com slash Ramsey. That comes out to less than nine bucks a month. Super affordable.

It's amazing. So again, that's joindeleteeme.com slash Ramsey. Make sure to check it out, you guys. Welcome back to The Ramsey Show. I'm George Camel here with Dr. John Deloney. What up? 888-825-5225. Don't be shy.

Give us a call, and we'll talk about your life and your money. The call is toll-free. Who needs tolls these days? When's the last time you made a non-toll-free call? We were at a meeting earlier, and someone's like, who still says toll-free? I don't think most of the people on this. I think if you're under 30, you don't even know what that means. Here's what it means. That I paid per text when it came out.

Like you got this many texts a month. And if you sent one extra text, so you could get a text from somebody you're dating like, but do you love me? And then that next text costs you like $30 because you'd gone outside of your text. Honestly? To call somebody not in your zip code, you had to pay for long distance. I had a long distance card. I think we should go back to paying for texts and calls, especially calls.

Make those more expensive. No, especially texts. You call me, let's get off the phone as soon as possible. Calls are free. Human to human connection, free. Text message, you have to pay $8 per text. Then we'd start, stop getting this, yo, what up? How are you?

Emoji. George liked this text stop i'm done with it lol all right here we go the ramsey show question of the day is brought to you by why refi student loan debt is a swamp thousands of people find it hard to escape from so don't be another statistic in the student loan swamp for distressed private student loans there's why refi we trust why refi because they help you with a low fixed interest rate you couldn't get anywhere else to help you get out of debt. Learn more at YRefi.com slash Ramsey. That's the letter Y, R-E-F-Y dot com slash Ramsey.

May not be available in all states. All right, today's question comes from Kimberly in Washington. When I was a child, my parents stuck out a whole life insurance and a Gerber grow up insurance policy on me. Together, they're worth about $50,000. I'm 28 now married with no kids and my father is handing off the insurance payments to me to assume now. Oh, what a great gift.

Hey, I bought this thing for you. Now you get to keep paying on it. Now that you're, you're older, you don't have any kids. So you could, but now it's sentimental.

You know, it's like, Oh, but you had that when you were just a baby. It was Gerber. You'd hold your life insurance policy and play with it. The squished up pears in a jar

with your face on it, whatever. These monthly payments added together are around 40 bucks every month. I don't know what to do with these. My husband and I are currently on baby step two

and easily able to afford these payments. I just don't know if they're worth it. You care what he said? It's not worth it. No, I'd get out of this. I know, but it's so,

the warmth and the memories. But my dad took it out for me and I want to honor his. No, stop. You're a grown adult. You're not a Gerber baby anymore. They're worth about 50K. If that's the cash value.

You can chew now. Opt out. Hit the, you know, surrender the policy, take whatever cash value has built up and then use that money for literally anything else. Invest it, pay off your debt, filter it through the baby steps. But I would not continue to pay this monthly premium for a subpar product. You can do way better on your own and instead take that money. And if you don't have a term life insurance policy, start that. So get term life in place and then cancel the whole life policy, and that term life policy will be way cheaper with better coverage than your whole life policy.

I don't know how these work. Is there a diminishing? So if it's a $50,000 payout, if she cancels it and takes whatever cash is in there? Well, you lose the death benefit, the face value of the policy. So let's say the face value of the policy was $100,000, but the policy is worth 50K right now, cash value. That was built up over those 28 years. So the face value doesn't change, but the cash value will build up over time. And it can deteriorate because sometimes all the

commissions and fees you have to pay can then eat into it. So they're going to take your cash value to pay the premiums if you can't pay. Yes. So there's no way out of this thing. Just surrender it and realize that it was a very kind mistake. It was a well-intended mistake for your parents to take this policy out. And reminder, life insurance is not for babies. It's meant to replace your income to protect the people you love. So a baby doesn't need life insurance unless your baby is a prodigy actor that is the breadwinner for the family.

Sure, you can get life insurance for your baby, but anyone else, not for you. Also, I'm feeling more and more now, George, on my show, we got some data that this particular Christmas, jillions of people are canceling their families. Like so-and-so voted the wrong way or so-and-so made me listen. That's a whole other show.

But Kimberly, on behalf of your dad, I guarantee you that when your mom found out she was pregnant and told your dad, your dad got excited and he wanted to think about your future. And he went and talked to his, his insurance person. He went and talked to his his insurance person he went and talked to his um his his retirement person and that guy or that woman gave him this

advice and he did the best thing that he was told to do so he's a good man trying to take care of you when you were born that's awesome and now that you've got more information and you've you've got different advisors in a couple of knuckleheads on a podcast. Now you know something different. So good for your dad for looking out for you when you were young. I wish he'd gotten some different advice, but he didn't. And here we are. Let's go make the next right move and high five your dad for loving you this far. Absolutely. And if anyone out there is interested in term life insurance, the people that I trust, the people that John trusts, they provide it for our families. Go to zander.com and get term life in place 10

to 12 times your annual income. You can do a 15, 20, 25 year policy depending on your stage of life. But the goal is to be self-insured after that policy lapses. So 20 years from now, we're set. We've been following this Ramsey plan, investing, getting the house paid off. So we have our own nest egg that replaces this insurance policy, but get it in place today. It's very affordable and a great product. And Zander will shop the top companies for you. And one more double click. Yes, Xander's the sponsor of the show. More importantly than that, Xander's who take care of my family, my wife and kids, George's wife and kids. This is who we use in our house. I trust these folks and I know them on a personal basis, and so I like standing behind them.

Absolutely. Good word. All right, let's go out to Sam in Charleston. What's going on, Sam? Hey, good afternoon, gentlemen. How are you all today? Doing great. How are you? Good, good, good. I've got a question. It's in regards to my 401K. So I have a 401K from a previous employer with about just a little bit shy of 500k in it. Haven't worked for them for about five years. But my question is, I'm thinking about possibly rolling it into a Roth IRA to avoid the taxes when I retire. And I'm just kind of wondering what kind of tax penalties am I looking at? And is it even worth doing at this point? Well, it's not going to be a penalty. It would be a conversion. And so you're going to have to pay taxes on that $500,000 in order to

convert it to Roth. And so that would be, the only time you would do that is once you're in baby step seven with a paid four house. Are you at that spot yet? Gotcha. No, sir. No, not yet. Okay. So what I would do though is roll it over, do a direct rollover. Is it all the money traditional 401k? Well, it's kind of half and half. So I've got traditional 401k, and then the other half is straight company stock. So, I mean, the return on that stock has actually been really good. Last year alone, I reaped a 25% increase in it just because of the stock split that we've actually had.

Okay. Well, I'm telling you right now, it's a risky plan. And I'll tell you, the market overall did 24%. So you could do that across if you just invested in the top 500 companies in America through an S&P 500 fund, you would have seen a 24% return. So I would move out of those single stocks. I don't know, are those inside of a retirement account or is that just non-retirement stocks that you could cash out? No, I could definitely cash it out.

Okay. So the traditional 401k, do a direct rollover to a traditional IRA. That way you don't pay taxes on that. Okay. But that way it's in your control. And I'll just have to pay taxes after or when I get ready to retire as I withdraw, correct? Exactly. Or you can convert it before then and pay the taxes. You might do that strategically, you know, a little bit per year versus doing all $500,000. But that's up to you and your tax pro

and financial advisor. You can dig into the numbers and see when that would be worth it once you're in baby step seven completely debt-free house and everything but the single stocks i would cash out and know that you will pay taxes on that hey i'm gonna ask george a question on your behalf is that cool sure so george if you have five hundred thousand dollars in a traditional and you're gonna do a a backdoor Roth and roll it, do they take the taxes out of that $500 or do I need to have a check that I can write the cash amount? Do you get what I'm saying? Oh, I see.

Well, you're actually rolling it into another retirement account, so you need to have the cash. So that $500 is going to go $500 to $500, but I'm going to have to write a check for... The taxes. Okay, so then I can just pull it. So the conversion, when you get to $500,000, you're going to have to have a chunk of money. You can do that with non-retirement because you're actually cashing it out, turning it into dollars,

your stocks into dollars. And so then you could take a portion of that to pay the taxes. So this is where, that's why it's a baby step seven thing, where you need to have saved up all the cash to cover the tax bill. But they're not going to pull it from what's being held. Exactly. But it's a great question, Sam. You've done really well, man. Way to go. This is The Ramsey Show.

Hey, you guys. I'm not a fan of the big banks, and you probably already know which ones I mean. But I do like credit unions because they're non-profit organizations that focus on their members and i'm proud to endorse fair winds credit union because they share the ramsey mission of helping people get out of debt and live generously in fact they design products to help keep you from going into debt in the first place fair Fairwinds has been in business for over 75 years and they serve hundreds of thousands of members worldwide. You can feel secure because your deposits are federally insured by the NCUA up to $250,000. It's easy to join and Fairwinds partners with more than 5,000 credit union locations around the country

so you can bank in person wherever you live. But if you prefer the online experience, you can log on to Fairwinds and do anything you could do at a physical location. So go to fairwinds.org slash Ramsey to learn more. And while you're there, look at the combined checking and savings account bundle they created just for Ramsey fans to help you take control of your finances. That's Fairwinds, F-A-I-R-W-I-N-D-S dot org slash Ramsey. Welcome back to the Ramsey Show. I'm George Camel here with Dr. John Deloney. If you missed it,

we announced our two-night virtual event, Investing Essentials, hosted by Dave Ramsey and yours truly, George Camel. We know that investing can be overwhelming, it can be confusing, and a lot of you are getting your investing advice from a 60-second social media post. Not the way to do it. So with this virtual event, we're going to walk you through how to maximize your retirement plans, how to choose the right mutual funds to get the most out of your money, how to invest with confidence. Plus, Dave Ramsey will unpack his personal playbook on real estate investing, explaining how he made millions in property investments and how he did it debt free. And I'm telling you, this is stuff that he's never talked about on the show.

It is straight nerdville. There's formulas, there's graphs, there's charts, there's ups and downs. Friends become enemies, enemies become friends. It's a beautiful story. So check it all out. It's happening March 4th and 5th. It's completely virtual. You can watch from home.

Two nights. Tickets start at $199. Get yours today at ramsSolutions.com slash events or click the link in the show notes if you're tuning in on podcast or YouTube. Here's what I love about this. This is where America gets to meet the Dave that we know. And we know, and he would never say this, on the show, Dave's like, Oh, you know.

I'm just a hillbilly. Dave is like Good Will Hunting. And Dave has explained. He solved the formula on the board. To'm just a hillbilly. Dave is like Good Will Hunting. And Dave has explained. He solved the formula on the board. To me how bond rates are. I remember I've been around academics my entire life. Some of the smartest minds on the planet. About a singular sliver.

And I remember listening to one of his explanations on a whiteboard. I was like, I don't know what he's talking about. So here's what I love about it. Everybody on the internet is just like, you need to do this and this and this. And if you poke one centimeter into their bull crap, it just turns to ash. It turns to dust because it's not real. They have no substance behind what they say.

It just sounds good because it gets clicks and views. That's exactly right. Dave has lived it. Dave's lived it. But not only that, he can show you how the math works and all the things he does. sounds like he's just ripping it off the cuff he's not and so unfortunately over the last 10 years dave's advice has kind of gotten dumped into in certain platforms into just another swipe up right just another instagrammer who's

this is him going i call i'm i'm telling you exactly how i do it and why i do it and here's the math and it's astounding can i be honest We had to pull teeth to get him to do this because he said, nobody wants to know this stuff. It's so nerdy. And then people went, no, we want to know. This is the biggest event we've ever done. We want you to go deeper. And so that's why we created this event. Awesome. I love it. I love it. I love it. Whether you're just getting started with investing or maybe you're at that step where you want to become a real estate mogul, you're going to get something out of this. So join us, go to ramseysolutions.com slash events and join us for investing essentials. Amanda is in Harrisburg, Pennsylvania up next. What's going on,

Amanda? Hi, Dr. John. Hey, George. I'm excited to pick your brains today. Pick it. All right. So I wanted to know what you guys would think of me going back part-time after my maternity leave is over. I just had a baby last month. Wow. Congratulations. How's it been? Thank you. First kid? It's the best. Yes. First kid. IVF baby took us four years, and we are so happy to have him. That's wonderful. So why do you need a couple of dudes' advice on this? I just want to make sure that you guys think we're financially okay.

I watch you guys every single day, and I was like, I'm going to call in the Ramsey and see what they think before I make this decision. So let me ask this. If money was no object, would you just stay home with baby and not work outside of the home? Yes. Okay. But you're saying, hey, I might have to work part-time in order to make the budget numbers work. Correct.

And we are in baby step two, so I just wanted to run things by you guys, see what you thought, and I'm going to take what you say and run with it. Okay. Before we give you the numbers, can I ask you one personal question? Of course. I'm going to ask you a question that you're not allowed to answer, and so I'm going to ask you to be brave on account of the millions of new moms who are listening to this too, okay? Okay.

Often there's an identity crisis when it comes to, I used to be a professional. I had this. I really, I had a great career. I found a lot of purpose in that career, but I really want to have a family. I want to have a baby.

And then I have this baby and you tell yourself a story. I've got to do this because I'm going to really want to do baby. And then I have this baby and you tell yourself a story. I've got to do this because I'm going to really want to do this. And then you have this baby and you're at home for a few weeks. And then the creeping or a few months or a few years in that creeping, I really found some purpose at work too. And then you get in this, there's this,

there's an entire ecosystem designed for one thing to make moms feel guilty. So you have to buy stuff, but then you say, or think the words, I kind go back to work and then it's like oh well if you were a good mom you would stay at home all the time and or i can't believe you left your job so tell me what you want to do forget the numbers for a second if you could would you just want to stay at home with my baby okay so this is we also have a farm, so I would like to dedicate time to that. Right now, I can't really help out with that. Yeah, dude.

E-I-E-I-O. Get the farm. That's awesome. But, so, this is a math problem. Yes. Okay. That super helps me. All right, great.

So, let's play this out as if you're at home, not working. What is the income coming in every month? If I wasn't working, my husband makes around $65,000 to $70,000. All right. And what are your monthly expenses? $2,500. That's it? That includes food, utilities, shelter, transportation, insurance, clothes.

That's amazing. Yep. So why can't you guys do this today? We could. I guess I feel a little bit guilty. There it is. Doing the gazelle intensity since October of 2023, we've been able to pay $89,000 of debt off.

Amazing. What's left? Everyone told me that Dave Ramsey was outdated, but, I mean, it works. It works. He is old, but he's not outdated. Amazing. What's left? Everyone told me that Dave Ramsey was outdated, but I mean, it works. He is old, but he's not outdated. Yeah, it works. Okay. So how much debt do you have left? We have $27,000 left. We are throwing another 10K. We're pulling it out of our stork mode that we did. So we're paying another 10K off next week. So then we would have $17,000 left. Okay. Yeah. We storked it for three months. So then we would have $17,000 left. Okay.

Yeah, we stock rented for three months and was able to save up $20,000. Amazing. We've been going hard. So 17K, how quickly will you guys pay this off with you being home? With me being home, well... Are we talking six months from now, you're debt-free? It's actually, we're thinking by June, we could do it. Amazing.

That sounds a lot like six months. I nailed it. Okay. So six months from now, you're debt-free. Now we're working on the emergency fund. Can we save that up in another six months? Probably three and a half. Wow.

Okay. So we're talking before the end of the year, you guys are debt-free with a fully funded emergency fund. You've freed up the debt payments, which was how much? What were you guys paying per month or currently? We were paying over $6,000 a month in debt. What? Using, yeah, I was working a lot.

My husband was working extra. Okay, this is when you had two incomes. That makes more sense. I was like, that's more than your take-home pay. Okay, great. So here's what I would do with your husband tonight. Go to EveryDollar and craft a new budget just using his income, going, how is this going to work? Do we have margin left over to save and invest and give on top of that once we're debt-free? Great. And guess what? If it

comes down to it and he goes, I need to work a little more in this season, that's fine. Or if you need to work five hours a week because you want to, and it's going to help, that's fine. You get to choose. But what I wouldn't do is give up the dream because of guilt or because you feel like, do this out of your values. And if your values say, I want to stay home with this baby, then figure out what must be true financially to do that, and then make the sacrifices necessary. And can I tell you, Amanda, unfortunately, you are in a moment in your life where there's not a move you can make where you're not going to feel guilty. Or that someone else won't judge you for it.

That's the world you're in right now. And so if you can exhale, like George just said, and do what's best for y'all, and I want to high five you you worked three years like maniacs to get to this exact moment when you know what you can do whatever y'all want whatever you want and just knowing oh i'm gonna if i go back to work at part-time i'm gonna feel guilty for leaving my baby and if i stay at home i'm gonna feel guilty that quote-unquote i'm suddenly not a breadwinner, which is silly. I don't have marketplace value. Yeah, yeah, yeah. You have existential, like, your value is astounding.

But you're going to have a feeling about it, and so you're going to have to practice doing the next right thing for a season. Also pick up my buddy Nia Ruck, R-U-C-H. She has a new book out called The Power Pause, which is about this exact moment for when you're staying at home and you're crafting a career after that. I haven't read it yet. It's been sitting on my desk, but the reviews are astounding. It's called The Power Pause.

Pick up that book, and you might not feel so alone after reading through that. But, George. I'm going to suggest one more, John. Yep. Because my wife stayed home and struggled with this, Amanda. Read In Praise of Stay-at-Home Moms from Dr. Laura. That one was very, very comforting, very firmly. Look at you shouting out Dr. Laura.

The OG. The OG. The OG. So I hope that helps you. It's the right choice if it's the right choice for you. So just move forward. Don't look back. Don't think about what if.

And crunch the numbers to make sure you can do it. But I'm telling you, based on napkin math, it's possible. This is The Ramsey Show. What does the future hold for business? Ask nine experts and you'll get ten different answers. Economic growth or a recession. Business taxes will go up or down. AI will help us work or it will replace us all.

But there's no such thing as a crystal ball. That's why more than 40,000 businesses have future-proofed themselves with NetSuite by Oracle, the number one cloud enterprise resource planning system. Ramsey Solutions uses NetSuite, and you should too. Whether your company's earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. With one unified business management suite, there's only one source of truth for the visibility and control you need to make quick decisions.

NetSuite's real-time insights and forecasting help you see into the future with actionable data. And when you're closing the books in days, not weeks, you can spend less time looking backward and more time focusing on what's next. And speaking of what's next, download the CFO's Guide to AI and Machine Learning at netsuite.com slash Ramsey. It's free at netsuite.com slash Ramsey. It's free at netsuite.com slash Ramsey. Welcome back to The Ramsey Show. I'm George Camel here with Dr. John Deloney. Call us up at 888-825-5225. Hey, The Ramsey Show annual listener survey is now live, and we want to hear your favorite parts of the show, what you like, what you don't, what you want to hear more about. Whatever it is, we want to hear from you.

And there's two ways to participate. If you're willing to help us out, text the word survey to the number 33789. That's 33789. Or visit ramsesolutions.com slash survey. If you're listening on podcast or YouTube, just click the link in the description. And if you sign up today, you'll be entered to win a $500 gift card. So that's worth it. You give us your opinion, you get to change the future of this show,

and you might win a gift card. I'm going to call that a win. And also, say nice stuff about us. Yeah, don't go in there just to trash John. He gets enough of that. He works hard on his hair, and so it's just not a good thing to put in the survey. If nothing else. He gets enough of that. He's, he's, he works hard on his hair. And so it's just not a good thing to put in the survey. If nothing else, if nothing else, there we go. Exactly. Let's go help out Christy in Houston, or as John calls it, H-town. H-town. What's up,

Christy? You have to say it like that, apparently. Christy, how are you doing? Hi guys. How are you? I'm doing great. What's going on? Yeah, so I was hoping I could get your advice. My husband and I bought a home about two years ago, and we did not realize the extent of repair that it needs, and the area is a lot more unsafe than we anticipated. So we're planning on selling the home and moving to an apartment. And so we just wanted to know if you guys think this is the best option for us right now. I hear no red flags. If you want to move, you want to move.

You made a bad decision. It didn't end up working out. There's no harm in selling it and renting for now until you figure out what's next for you. What would it sell for in its current condition? Our realtor says it could be hit or miss. He said a quick sale would be about $2.30. If we left it on, it could be $2.50 and upwards. We just won't know until we list. Okay. What's the urgency? Is it very livable now? Are you guys safe? Can you stage it, market it, do all the right things to try to get the most bang for your buck? It is livable now, but maybe a couple months ago, we had to do some floor work ourselves in order to make it livable

because of the rod in the foundation. So it's not completely fixed. There's areas of the house that I would probably avoid, but it's not unlivable. It's not unsafe. I mean, we could list it and get a decent amount. What'd you pay for it? We paid, we got $223, but it's a home from my father. So he gave us a gift of equity.

So we owe $181 on it right now. Okay. So you'd probably walk out of this thing with $20,000 to $40,000 if you're lucky after fees. Okay. And you would just, do you guys have any debt right now we are we have one thousand dollars left to pay hopefully by the end of this month amazing do you have any savings we don't so we would be starting other than other than the thousand dollars um right we would be starting our emergency so you'd you'd leapfrog to baby steps four five and six where you're debt free with a fully funded emergency fund you'd rent rent. And then beyond that, I'd begin saving up a down payment. And your next purchase is going to be very different. You're going to do it out of a place of strength. You're going to

know what you're getting into before you get into it. You're going to choose a better neighborhood. You're going to choose a home with less problems. And so I feel good about you guys selling this thing. Do you have a good realtor? Do you trust them? Yes, he's actually a family friend. So I've known him since I was about 12 years old, and I'm 30 now. Okay. Well, you can trust them, and they can be a terrible realtor. Are they really good at their job? Are they going to get you top dollar for this?

I believe that he would do every effort to make sure that we did. Awesome. And we have a whole real estate home base. If you want to check it out for more resources on this, you can jump on ramsaysolutions.com slash real estate. And there we have articles, how-tos, calculators, courses, you name it to help you guys through this home selling process. But it's a hard lesson to learn, Christy,

but you guys are getting out of this thing mostly unscathed. I mean, you're safe. You're going to make a little bit of profit. I'm going to call that a win and a lesson learned. Yeah, and I guess to free you from any existential dread you have, if you had bought this house and it was the greatest move you ever made, it's still okay to sell it.

If you're all ready to move and you want to downsize, move to an apartment for a season, knock your lights out, right? Yeah. So either way, I think there's a lot of emotion in it, George, and it's like, I feel like I'm quitting. We gave up on the dream. No, man, you learned.

You learned. No one to quit. We thought we were going to be house flippers, and we hate this, and so we want to back that thing up and get out of this. Awesome. Knock it out. Go do it. Love it.

All right, let's go out to Laura in New York up next. How's it going, Laura? Hi, thank you for taking my call. Sure. How can John and I help? So my husband and I are in credit card debt of about $60,000, and I wanted to know the best way to pay it off. What did you spend the $60,000 on?

It's just over years. Over years of just... Living on more than you make. Exactly. So... How old are you two? We're thinking 54 and 59. All right. Okay. And you want to know how to get rid of the 60K? Yes. What were you thinking about doing? I have a feeling you had some ideas. Well, we were thinking, do we take out a consolidation loan? Do we transfer them to credit cards with 0% interest? No. Keep going. This is fun. I'm having a good time. No, so I don't know. I don't really know. That's why I need to know. Don't do any of those things. So here's the deal. There's

a few things you can't do, and I'll tell you what you can do. What you can't do is move the debt around. That's a consolidation loan. The other thing you can't do is take out more debt to pay off your current debt. That sounds as insane as it is. So looking to a HELOC or borrowing from retirement, these are not options. So if you said these are off the table, what are my husband and I going to do to get rid of this debt with our current savings, things we can sell, and our future income? That is the only way out of this thing instead of just feeling like you did something and creating more problems down the road. Okay. So what's your household income? monthly it's

about 18 000 a month it's amazing laura 18 000 a month so here's you know what this tells me you guys are living high on the hog right now you're spending 25 000 a month even though you make 18 that's how we get into $60,000 in credit card debt. So here's what you're going to have to do. You need to chop your lifestyle down to nothing. As in, we put food on the table, we cover the utilities, you cover the mortgage. Do you guys have a gigantic mortgage? What's eating up $18,000? Well, our credit card bills and no, mortgage i think is about three thousand my husband has that information so you have fifteen thousand dollars non-mortgage income every month right and it's disappearing into what because the credit card bills are how much what's the minimum payments on 60 grand in credit card debt so So they're all different credit cards. I know, but you added up the payments. How much are you sending to the

lender every month? Is it 800 bucks a month? 4,000 a month? I'm not sure. My husband pays the bills. Okay. You need to be able to have all this information. So Laura, I can feel it, hear it in your voice. You need to be a part of this. Because your household is running without you, but you're responsible for the fear and the stress in that house. You get what I'm saying? So before you do anything about HELOCs and that kind of stuff, you got to sit down with your husband and say, as your wife, I am scared every night I go to bed

because I don't know the state of things. And if he's a good New York husband, I'll say, I got it. It's under control. It's fine. And you have to have the courage and hopefully he's got the courage and you have to say, I need to walk alongside this thing. I need to be with you. This is us.

We're in this together. Do you guys have anything in savings or anything you could sell? Any other property? Non-retirement accounts? Nothing. Do you have anything saved for retirement? Yes. Well, in our 401ks. Are you guys currently investing? Yes.

Okay. So your husband's going to need to get on board with this, but if you guys paused all of your investing and you lived off of a very small portion of your 18 grand, what if you could throw 10 or 12 grand of this debt every month? Guess what would be gone in four months five months done okay that's the solution you don't owe anybody anything y'all are rich you don't need a consolidation loan a HELOC you don't need to borrow from retirement you need to just start using your income to your advantage and using it to knock out the debt sometimes oh you're sorry George sometimes people make this kind of money and they think they don't have to pay attention and then you look up you can out earn your stupidity for a long time 60 000 you gotta pay attention right you gotta pay attention

and this is literally a six month problem and it's all gone it's all gone but i think this is a relationship issue i don't know that he has the same urgency as she does he's not feeling the same way correct that's going to be the tough part, not actually getting out of debt. Once you get them on board, this thing's gone. Hey, check out the rest of the show on the Ramsey Network app.

Go get it in the app store or click the link in the description to keep enjoying more of the show. From the Ramsey Network, this is The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney, and we're here to help people build wealth, do work that they love, and create amazing relationships. The phone number to call is 888-825-5225. We're here to help you take the right next step for your money, your relationships, your mental health, whatever's going on. Jamie's going to kick us off in Kalamazoo, Michigan.

What's going on, Jamie? Hey, I'm so excited. Thank you so much. You act like you won a game show. It's just John. I kind of feel like I did. So I apologize if I'm overly excited. No, we appreciate that.

Thank you. George is like a walking Xanax, so we need some joy in here. So it's good to have you. That's awesome. So what's up? So my husband and I owned a small business for about 20 years. We liquidated that about, and I worked for it here and there, but didn't really compensate, didn't get a wage or anything like that. Well, we liquidated that

business about a year and a half ago. Fast forward to now, once an entrepreneur, always an entrepreneur, and we are starting a different small business now, and I'm going to be more involved. Can you get paid this time? Well, this is what I'm wondering. Should I get paid? Should it all be under my husband's compensation? Kind of just trying to figure out what's the most effective way to use the money we make. Yeah. I would have you both drawing from this business, you know, a living wage. Is it making money already? Well, it's probably about two months out yet. Okay. What do you think this business is going to make and what's your overhead look like?

We are thinking anywhere from $100,000 to $150,000 a year. Overhead, probably, oh, golly, maybe $20,000 to $25,000 a year, depending on some things. Is it just you and him working in the business, or are there other team members? Nope, it's just going to be he and I, which is, yeah. Okay, and you've done this before. You enjoy this. Well, this is a new endeavor for both of us, but I will be working the phones and different things like that, which I enjoy doing, so yes. How hot are these phone lines that this is the full-time gig? Well, this is what we don't know yet.

What kind of business is it? He is going to septic, pump septics. John knows about that life. Yeah, George doesn't even know the words you just said. That's fantastic. Yeah. So you think you're going to make $150,000 a year, that's what y'all are going to draw,

or that's what you think this business in total will make? No, the business in total will make we know the business in total will make we don't know what to expect it might be a slower year you know to work up to that i just know i pay the folks who come out and pump my septic they're awesome and they make it amazing and i pay them handsomely so yes y'all might y'all might can do really well doing this is your husband going to be the pumper? He is. Yes. He's going to do that because he just wants to work alone and do some work. Who's going to do the laundry when he gets home? Probably I will. Wow.

You're probably going to do a lot of laundry in the fireplace, but that's going to be cool. Good for you guys. Do you guys file your taxes married filing jointly? Yes. Okay. So, you know, depending on what the business does, we kind of have to wait and see, but I would be drawing a salary from that. Maybe it's you decide, hey, we're going to do $5,000 a month if the business does this. If the business hits this

threshold, we're going to pay ourselves more. Or maybe there's an yearly end bonus that you do. But the key is to do it debt-free, have some retained earnings that you're setting aside each month, covering your overhead, and then you guys can take the profits home. Okay. Well, should we do it separately? Should we each get a separate paycheck? Sure. Yeah, you can. I don't know of, you know, I'd need to talk to a tax pro, and I would recommend you get one to look at, you know, what are the ramifications of splitting the salary up between the two of us? Are there any advantages to doing that? What are the taxes look like if we split it versus not? I would definitely look into the details of that. I'm not the expert on that one, but a lot of business owners do what you do and they don't pay themselves at all. They don't pay themselves enough And it's just not worth it. Why get into business to just make nothing? Right. And so I would definitely change your tune on this one

and agree and have, you know, in writing, here's what's going to happen with this business. Do you guys have a business plan that you both agreed to? Or is this just sort of a handshake agreement? Let's go pump some septic. No, you know, we're working towards that. We're working through all that right now, honestly. Yeah, I would get with it. So that's why I was interested. I'm almost positive there's some tax implications by having an employee or a co-owner. And so, yeah, I would definitely check with a tax attorney before you did that.

You go to ramseysolutions.com slash tax, and we've got a whole network of tax professionals that can walk you through that. And they'll know your state laws and all the ins and outs. But I'm happy for you guys. That's an exciting journey. And it sounds like you guys like each other. Well, it sounds like they like each other and they like the adventure of starting a new thing together. And I love that.

And let me tell you, there's riches in the niches, John. The jobs that other people don't want to do, like pump septic, not as cool as being a YouTuber, but guess what? That's the future. The trades are where all the money is going to be. Because it's going to be harder to get an AI hologram to pump your septic, right? I'm not buying a Tesla robot to do that. It's going to take a human being who knows what's up.

Although, dude, if a Tesla robot can pump my septic, it's kind of... John's open to it. I think I've got a place for it. I don't know where... I didn't know where they were going to be, but that would be awesome. Here we are. Let's go out to Macy in Charlotte, North Carolina, up next. How can we help, Macy? Hey. Thank you for taking my call.

So, I was just wanting to know what your advice would be on how to handle families who, I guess, don't respect the boundaries like on Christmas gifts for our family? A little back story, I've been going to my husband's family's Christmas on Christmas Eve night every year for about five years.

And it's just so overwhelming to go to their Christmas. In years past, there's been so many gifts, you can't even see the floor around you. This year, there were only two kids in the family. My son, or our son, he's now 22 months old, and a nephew who's three. And we, me and myself, my husband, my husband's two cousins and their husbands, all ask them not to do gifts for their adults and only to do gifts for the kids.

My husband and I specifically ask if they do get any gifts to just be like outside toys for our child because we have a very small house and don't have a room. We don't have room to put all the stuff that they want in there. To store it in the house. That makes sense. And so they're going all out on gifts, and you're saying, hey, we don't have the budget, that's not a value for us to have gifts going hog wild for the entire family, and they're not respecting it? Correct. So instead, this year, they only gave the two kids to my son and a nephew presents while the whole family was there.

And then they told me, my husband, and our son to stay later. And then they brought out just as many more presents for all three of us. Why does this stress you out? Because at the end of the day, you have a 20-month-old. You can put these gifts in the trunk, and the kid never sees them. You can give them away at a local shelter and be done with it. This is something in your guts. I guess we're running up against a clock.

I think you've got to make peace with either they're just going to buy a bunch of gifts, and it's going to be up to us, or you guys can hold firm in your boundary and say, Hey, we asked you not to do this thing. We're not going to come next year. We're not going to be up to us. Or you guys can hold firm in your boundary and say, hey, we asked you not to do this thing. We're not going to come next year. We're not going to come. And unfortunately, those are your two choices. Go ahead. I guess it really bothers me because they can't afford to buy them.

Gotcha, gotcha. So they're going into debt. You don't like any of this. But you can't control their people. If they want to go into debt to do this, that's on them. I wouldn't accept that guilt. Yeah, that's not your guilt to carry. So sorry you're dealing with their people. Yeah. If they want to go into debt to do this, that's on them. I wouldn't accept that guilt. Yeah, that's not your guilt to carry. So sorry you're dealing with that, Macy.

Not fun. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Camel, joined by bestselling author Dr. John Deloney. Open phones at 888-825-5225. We're headed to Memphis up next. Piper joins us there. How can we help, Piper? Hey, thanks for taking my call. I want to ask a question to see if my thought process makes sense to you. I am currently in baby steps four, five, and six, but unfortunately I am now getting divorced and to keep the kids stable. I want to buy my spouse out of the house. When I looked at our retirements at the end of it, I will owe him about $285,000.

So my thought was to forego my part of his retirement and allow him to keep that and buy him out of the house at a $55,000-$45,000 split so that when I refinance the house, I'm going to have a lower mortgage because I'm not going to have to owe him as much, which will keep me in a better place. Can you just write him a check for $180,000 and be done? I mean, I know you don't have that kind of money, but if you took that money out? So, I mean, we have quite a bit of equity in the house. Oh, so when you refinance it, he gets a chunk of that. Okay, so you would owe him 180 plus a big, big place.

Okay. Yeah, is your plan to do a cash out refinance to give him that cash? Yes. Okay, and then that would leave you with a bigger mortgage. Not by much because we don't owe very much on the house. Oh, you've got a lot of equity here. Okay. I have a lot of equity. So the house would list at 675 and we only owe 110.

Okay. And then how much would you be paying him? Realtor fees. I would pay him. You'd owe him $250,000 plus your $180,000. I would pay him out like $126,000 from the refi. And so your mortgage would then become about $136,000 or $236,000? Right. Okay. And you're saying you can afford that payment with today's rates? I can afford that. That you would qualify for that on your own? It's a little bit tighter. Correct. Okay.

I mean, if you can qualify for it, I mean, are we talking, you know, 25% or 50% of your take-home pay going toward this mortgage? No, it'd be a quarter. It would be a quarter. Yeah, that's a good plan. If this clears up your divorce and lets you part ways, yeah, that's a good move. I love the stability for the kids. I just don't want you doing this if it's going to add stress to you financially. The kids are resilient.

They'll make it in a different environment. But if this is where you want to stay put and you can afford to do so, I think this is the right move. Are you all doing this on your own? Yeah, so you don't have any concerns if I forego his retirement? No, because it's six and a half deals and another. If you're giving him $100,000 of your piece of the equity in the house, and he's keeping, yeah, otherwise you're just swapping it, right? Mm-hmm.

How would the retirement money work? Would he actually have to cash out of his retirement to write you a check for that? Somehow our financial broker would have to divide the funds and put half of his in mine. And so I just want to let that go and build retirement on my own. Okay. How old are you? 47. And what's your income?

143. Amazing. And do you have anything in $143,000. Amazing. And do you have anything in retirement right now? Yeah. So I have almost $300,000. Amazing. Yeah, you're good. So if you keep investing beyond that, you're going to still remain in Baby Steps 456.

You invest 15% of $143,000, add it to the $300,000 plus compound interest for the next 15, 20 years, you're going to be golden. You'll have multiple millions of dollars in that one account, which is awesome. You'll have a paid-for house, so that should be another goal, and then obviously helping fund the kids' college if you're able to as well. Yes. Okay. I just was concerned because retirement, some people had, my financial planner had told me they weren't one-to-one and that I might need to reconsider this, but this plan feels better to let go of his retirement and focus on the house. And that's, that's, I've got one lingering concern. So in these kinds of situations,

when, when there is a gross inequity, meaning I've sat with especially women who were in abusive situations, they said, I just want to be done. I'll give him every, I just want to be done with this. And they end up in a really precarious situation financially. So in your situation, in my head, I'm always solving for peace. What is the way that we can untangle this the cleanest, the fastest, and have a period at the end of all the sentences here, right? And so if that's the case, then great. What I would want to dig in, if it's not one for one,

and I'm not smart enough to know that, I would dig in and see how far from one to one is it. Well, that's where i had gotten to agree i just made it up in my head but i'm going to take 55 of the house and he's going to take 45 yeah but where'd you get that number i just made it up i would rather you guys split the equity and then minus him 100 um and you you you give him 100 grand in equity after the split and not do some arbitrary not do some arbitrary percentage. Yeah, do you guys have a mediator or an attorney involved?

I have an attorney involved right now drafting it up, but the hard part, what I have found is when it comes to this decision, an attorney's not quite helping me, my financial planner's not quite helping me. They're all putting me toward different people. Yeah. Cause nobody wants to be, nobody wants you to turn around and sue them. If you think you got a bad deal, that's what that, you know, if you find out this, was there a divorce decree? That's what they're working on right now. That's what you're working on. They're working on it. Okay. So where did you get 55, 45? Because I took if the house was going to be split 50-50 and

somebody had told me that the retirements are not one-to-one so I just said give me 55% of the house. I feel like we need to crunch some numbers here. Yeah, do the numbers on that. So you're going to end up with 565, is that what you said?

I guess minus realtor fees. Yeah. Yeah. So there'd be... So let's pretend there's no realtor fees. You're going to get $675,000. You have $110,000 in equity.

So you'll end up with $565,000. You divide that by two. Yeah, you get $280,000 left. You divide that by two. Yeah, you get 280 grand, right? Left. You're going to give him 100 of that. I'm sorry, you're going to keep 100 of that because he's going to keep his 100. Do you get what I'm saying? If you go 55-45, you may lose a whole bunch of money in this deal. Do you have a financial advisor, Piper?

I do. And I did get him as an ELP, but he doesn't quite view the house stuff the similar way as Ramsey does, so I've always been a little bit more cautious on the house pieces. Well, I'd have them run the actual value of the retirement plan because they can do, with their financial calculator, run the actual future value of that money to give you a better picture of what this equates to. Okay. So I just want you to do a little more homework before we

just write this down and sign it and go, all right, we both agree to this. But I'm with you that if this is a big value for you and you're okay to forego it and the future value of what could be with the retirement and you'd rather have more peace now and stability for the kids, I just crunched the numbers for you. You're going to have anywhere from $3.5 to $4 million if you just do what I said. You got $300,000, you're going to add 15% of that for the next 15 or 20 years. At age 67, you got $3.5 to $4 million in that one account. Good. So then I don't even have to really overcompensate to get back where I was, because I'll be fine just continuing where I'm at.

If you can survive off $4 million, I think you'll be okay. Well, and hopefully the quote-unquote get back where you were, again, that's why I wanted to find out how close to not, how far apart a one-to-one ratio it is, dollar for dollar. And for those of you all listening, one-to-one, I'm just saying it may not be a dollar in home equity versus a dollar in retirement. It may not be equal, but I could even convince myself in your situation, since I've got such a great salary, I've got cash, I've got my own retirement accounts that I'm trading a hundred thousand dollars in stock for a hundred thousand dollars in real estate equity, like in terms of making

an investment for the future. Right. So I wouldn't even lose sleep over that. I'm worried about if it's a five to one or a four to one ratio, then that's going to be, you'll need to compensate for that. And I'm always nervous of someone just saying 55, 45, it's going to be easy. Because then you get into these, well, who's winning and who's losing and it gets emotional instead of just financial. So run those numbers and make sure they work and ask your ELP about the one-to-one on that deal. Don't ask his opinion or her opinion on we're going to sell the house or I am going to refinance this house. But just ask the opinion on the dollar for dollar. But, man, I like solving for peace in this one, especially in your situation. Welcome back to The Ramsey Show. I'm George Camel, joined by Dr. John Deloney.

Hey, there's a lot that goes into buying and selling your home, and all of those decisions can feel overwhelming, and you shouldn't have to tackle the process alone. And that's why we created Ramsey's Real Estate Home Base. It's a place with all the tools and resources you need to get prepared to buy or sell your home with confidence. We've got calculators, start-to-finish guides, how-to articles, a podcast, a book, a video course, all packed with actionable steps to help you navigate this buying and selling process. So go check it out, RamseySolutions.com slash real estate, or click the link in the description if you're listening on YouTube or podcast.

Rebecca's up next in Lexington. What's going on, Rebecca? How can we help today? Hi, how are you all? Thanks for taking my call. Absolutely. I have a question about the emergency fund, the fully funded emergency fund. My husband and I are sort of not in agreement on that. He and his financial advisor believe that the cash reserves he has in his retirement nest egg can serve as our emergency fund. They refer to his cash in the barn. I don't think that's correct, but can you help me explain that to him, why it's not correct?

So he has a portion of his investment account that is not being invested. It's just sitting in cash. No. All of his money is invested with a financial planner. Okay. He doesn't believe we need an emergency fund. He's saying he would sell off his shares or funds in order to cover an emergency? Yes. From his retirement account, or is this outside of retirement?

And that's because he has... No, from his retirement account or is this outside of retirement? And that's because he has... From his retirement account. He's got a financial planner who doesn't want his portfolio size to go down a little bit to give your family peace of mind on a day-in, day-out basis. Yes. It's like asking your dentist to check for cavities. He'll probably find one. He'll find something.

Or something that could eventually become a cavity. Yeah. So let's drill, baby. Dr'll probably find one. He'll find something. Or something that could eventually become a cavity. Yeah, so let's drill, baby. Drill on those teeth. Yeah, now your question was, how do I convince him? That's a tough thing to do. If you figure that out, will you write that book and you'll make a trillion dollars. If you figure out, if you just

like write a book called, I figured out how to convince my husband, dot, dot, dot, you'll your great grandkids will never work. That would be amazing. So where are you guys at financially, Rebecca? How much money do you guys have in retirement? What's your income? Do you have any debt?

Okay. In retirement, I have about $580. He has about $650. Okay, let me stop you right there. Let me stop you right there. That's problem number one. If you all have separate accounts separate separate checking accounts separate retirement accounts then there's no surprise to me that you feel uneasy at the state of your household because y'all are not y'all aren't y'all

aren't um operating together you're really sophisticated roommates. Right. And I don't know about you, but there's been seasons in my life when my marriage is in a tough spot, when I'm really lonely at my own kitchen table. Mm-hmm. And that's where you've got to start. How old are you two? We're both retired. I'm 68 and he's 71.

Okay. And you guys are completely debt-free? Do you have a mortgage? Our home we live in is paid for. I am debt-free. He is not. Oh. So y'all are not debt-free.

So there's some more individual language there. Did he go into debt, you know, against your wishes? Did you know about this? Well, we've been married 15 years. Some of the death he had when we got married, but we went through Dave Ramsey's class, and I thought we were on the same page before we married, and it just didn't work out that way.

And so I've sort of been making my own way. Do you guys have your separate checking accounts? Yes. Okay. So, I mean, at the end of the day, let me ask you this. Underneath all of this stuff, what's your one singular fear? Because there's a question behind this question. My biggest fear is it will run out of money.

Okay. Is that a real fear? Or is that a fear masquerading as you're really concerned that you're not together in your own marriage? Because right now you told me you're a millionaire. Yes. Just in those two accounts, that's $1.2 million. And you have a paid-off house. Mm-hmm.

Well, we have one. He owns a home that he rents but it's not paid for. And you don't get any of that income that just goes into his account and he does what he wants? That goes to him, yes. So what income do you have? I have

I have a Social Security. I have a monthly pension from my job, my former job. And I also draw from my retirement account. You are drawing to cover your side of the bills or what? Yes. Okay.

What does your Social Security and pension add up to each month? It adds up to $6,500. Why is that not enough to cover your bills? It is enough. It is enough. Well, you're saying you're drawing from your retirement on top of that. No, no, no. That includes my draw from my retirement. Oh, got it. What about if you didn't draw from retirement? Then my income would be about $4,500, which would cover my bills.

Here's what I would do if I was in your shoes, Rebecca. I'd travel a lot to see my grandkids and things like that. Sure. Yeah, I'm not mad about using retirement funds. I'm just trying to figure out this nightmare of a situation where you're covering half the bills, he's got half, but he has more income over here that you're not allowed to touch. Is that other house in your name? I mean, is your name on the deed? No. Are you a beneficiary to his retirement if you were to drop dead today?

Yes. Yes, I am. Who would get that house? Well, based on our will, it would go to me. Okay. So here's what I think you need to do. I think you all need to take him out for breakfast one day. Mm-hmm.

And I think you need to tell him that you want to have a fourth quarter conversation and what I mean by fourth quarter is statistically speaking I hope y'all got another 25 or 30 years but statistically speaking y'all are in the fourth quarter right right I understand that yes and so y'all get to decide what you want this thing to look like and so if you say I want to have a fourth quarter conversation what do we want our house to feel like what kind of traveling do we want to do do you want to buy anything and i think you lead off with using i statements not you statements but i statements i want us to be aligned in the last 15 20 years because what i don't want to do is with if you were to have a heart thing all of a sudden i don't want to have to go fight the bank to get into quote unquote your account i want to be able to go to our account and vice versa and i want us to begin

to put our names on our stuff and he might tell you forget it i'm not doing it and if that's the case if he says forget you then you have a hard choice to make are you going to say cool then i'm going to get an emergency fund and protect me um in the event that somebody needs some emergency money um or you're going to do something more drastic I don't I don't know another option but you're you're worrying yourself sick right right I do I'm very anxious about our financial situation but but your financial situation is fine y'all are fine y'all aren't going to run out of money unless y'all just go bananas. I think what you're worried about is you're not aligned with your husband. I think that's the cornerstone of your anxiousness.

Because you're a millionaire. You've got to pay for a house. You're good. You're drawing $6,500 a month. You make more money than millions of Americans make. You're good. And if an emergency happened, are you guys going to split this? HVAC goes out, you guys owe $10,000. Are you paying $5,000

and he pays $5,000? Does Venmo's you? How does that work? No, in the past, when those things have happened and they have happened, he's just taken money out of his retirement account. Out of his, what I call his old 401k that he has with a financial advisor. Okay.

And so the key is with the emergency fund, we recommend that it's liquid. And by definition, if you have to sell shares to make it happen, and depending on what the market's doing, he's going to go, oh, I don't want to sell now, it's at the bottom. That's what makes it difficult. And so having it liquid in a high-yield savings account, making 4% instead of the potential of 10 or whatever, that's going to give you peace of mind. I would begin saving that up for yourself if he's not going to do it. But the convincing comes from a conversation about feeling safe. I want to feel safe in my

own house. And I want to feel like you and I are aligned in the last 10 to 20 years of our life. Will you join accounts with me? Thank you for your help. You got it. Best of luck to you. That's a hard conversation. This is The Ramsey Show. Welcome back to The Ramsey Show, our scripture of the day.

Psalm 84, verse 11. For the Lord God is a sun and shield. The Lord bestows favor and honor. No good thing does he withhold from those whose walk is blameless. Martin Luther King said, you don't have to see the whole staircase, just take the first step. That's wisdom. Tyler is up next in Crossville, Tennessee. How can we help, Tyler? Hey, guys. So this is going to be a quick background story. I'm 26, married, got three kids. And as Dave always says, you know, I'm sick and tired of being sick and tired. My wife, she's a stay-at-home mother. I'm strictly on a commission based income. And my problem is making a budget on a commission based income and sticking to that budget. You know, I find myself, the money's ran out, you know, about two days after I get the

check after paying all my bills. And even if it hasn't, you know, I make a little bit of extra money. We always find ways to spend it. And I'm just tired of not putting anything back and feel like I'm not moving forward in my life financially. Well, welcome to our Ramsey cult, Tyler. We're glad to have you, brother. And we got the tools to get you squared up. Are you going to be all in? All in.

A hundred percent? Yes, sir. All right, man. That means making a real-life budget that you and your wife agree on, spit shake, and go, here's the plan. Have you guys ever done that? We have. We just feel, we just, you know, have fallen short months and months,

you know, after each other, and we just never really stick to it. You or her or both? It's both of us. Where would you say, if you had to prioritize, hey, here's where the dollars are floating to, what are the top few things? Prioritize is definitely our four walls, you know. After that, it's groceries and gas. And then after that, it's, you know, making sure our kids have everything that they need. But it sounds like you're saying, hey, I'm kind of getting a little loose here with the spending,

and it's going to eating out or gas station runs. Where is that money going when you're saying, hey, we're spending whatever's left? Yeah, you're exactly right. You know, we find ourselves, we have a little bit of extra money. We'll make a trip to the mountains and stay a night or go out to eat, go here, go there. And we kind of find ourselves using the kids as in the youth to spend all this extra money as if, oh, they'll have fun. Are you guys using a credit card?

No. No, sir. You don't have a credit card? I have credit cards, but I don't use that money. I actually cut them up probably about six months back and quit using them when Dad got with me on the Ramsey plan. So how much do you make as a commissioned salesman? Net last year, it was $96,000 net. Okay. Can I ask you a personal question?

Absolutely. Do you come from money? Not at all. You're the first guy in your family to make $100,000, aren't you? Me and my sister, yep. Okay. So it's super common. Let me tell you this.

You're not crazy and there's not something wrong with you. Is that cool? Yeah. And you're not a bad dad and you're not a bad husband. And your wife's not a bad wife, okay? I want you to think of this as like if you suddenly got dropped into the NBA tomorrow and they put you on a free throw line with a bunch of people screaming and cheering,

you'd probably miss both those free throws, right? Because you haven't practiced. It's a skill. And so you've never seen a grown man responsibly handle six figures. You've never seen a couple responsibly negotiate and stick to a budget, right? Right. So it's a set of skills you got to practice. All this starts with you stop beating yourself up because every time you do this, then you go back to the budget and you think

you're a loser and you think the Ramsey guys would hate you if we actually found out how bad it is. And then you go to work and you hustle and you make some money and the whole shame spiral starts over again, right? Yes, sounds like my life. All right, and here's part two. Somehow you think that the thing you missed growing up was dad spending a bunch of money on you. Stop. Are you a good dad?

I'd like to believe so. You love your kids? Absolutely. Do they have shoes and clothes and food? We got everything. All right, then stop. Don't make it their fault that you and your wife are choosing to act like children with your money. Because if you went to Walgreens and bought 100 water balloons and filled that bucket up

and you all had a water balloon fight one weekend, they'll tell that story at your funeral. They're going to forget all this money you've spent buying junk food for them at a gas station. And one of those costs 99 cents and one of those is eating your budget alive at 25 and 35 bucks a pop. Fair? Fair. Okay, so we're not going to use our

kids as an excuse anymore. And then George will walk you through it. This is about having a plan for that quote-unquote extra money. That's why we call the app EveryDollar. At the end of a month, you shouldn't have extra money because you should already have it designated. Here's where it goes if we end up with it. If you have a good month, sweet, it's going into X fund, period.

Do you guys have debt, Tyler? Absolutely, period. Do you guys have debt, Tyler? Absolutely, yeah. So I'm about $6,000 in credit card debt between three vehicles in total, about $57,000, and the house I owe about $200,000. Why do you have $57,000 out there in auto loans on three vehicles? Because you're a first-gen guy making six figures. That's why. Right? Yeah. So I'm actually working on getting rid of one of them.

You know, I listened to Dave say something about if you're upside down, go into the bank, have them release the title for X amount of money and get a personal loan for the rest. I'm working on that on one vehicle, which would knock out about $18,000, and then the other is $ 36,000 on my wife's Yukon XL, and then I have a motorcycle I owe about 35 on. What is a Yukon XL? Basically a Suburban. I know what it is. Why do you have that? You can't afford that. Yeah, it's about 570 a month. She just thought her other third-year SUV wasn't big enough because she does have a service dog that she has to take with her everywhere. Here's the deal. Personally, I would sell all

the cars, and if you need a bigger car, you can find one that's used that you can afford in cash at that point. But part of the reason we're here is not because of your commission income. It's because you guys saw shiny things and said, we'll take the payment. I can stomach it. I make good money. And you probably grew up in an environment where you saw other people driving that car and you fantasized that their life was somehow better than yours because of that car.

Yep. And you got your first checks, you know, went and bought the new car. And then it got bigger and then it got bigger. You know what I'm saying? And this isn't a slight on you, man. This is just, it's just a set of skills yeah it's the truth but selling these cars would set you free and if you're underwater on a couple

of them and you get the you know the loan for the difference could you guys be a one-car family for a little while um no probably not because my wife is back and forth to the doctors um when i'm at work so she would definitely need transportation and I commute about 45, 50 minutes to work every day. I personally drive a 2012 Honda Civic with about 300,000 miles. Now you're talking. Now you're talking. Okay. Let me answer your question before we run out of time here. For anyone out there with a regular income, here's how it works. You're going to budget based on the lowest estimate of what you'd normally make. You can adjust it later in the month if you make more. Then you're going to create a prioritized spending plan in every

dollar of what gets paid first. So four walls, like you mentioned, that's the priority. Food, utilities, your housing, transportation. Then what's the next priority? If we make more than that, all right, we're going to cover clothing for the kids if we can. Beyond that, we're going to cover the insurance. Beyond that, beyond that. But here's the deal. You guys are deeply in debt, which means every dollar beyond the four walls needs to be going toward that debt. And it's going to have a home. You're going to have your minimum payments listed out, attack the smallest balance first,

and any extra money you have for that month, you're going to throw at the debt. And here's the deal. If you make a lot of money one month and no money a certain month, you can create a peaks and valleys fund. If you make $10,000 one month but your expenses are $4,000, let's pocket the other six into that savings account to cover the leaner months. Do you have any $0 months? No.

Okay. What was your lowest income last year in a given month? Probably about $4,000. And is that enough to cover your four walls? That's enough to cover the four walls. So on your worst month, you're going to be okay? Correct. So we just unearthed that it's really not a budgeting issue.

It's a behavior issue. It's, hey, we need to spit shake. We said we're not going to spend this. We're not going to make any purchases that we didn't both agree on. No trips to the mountains, quote unquote, for the kids. And you go first

and show your wife how serious you are by selling these cars and going, babe, we're not in a good position. I'm sorry that I've propped up our life artificially with debt. I want to be a man of this household who does things differently, who creates peace in this house.

That's the only way out, my man. Thanks for the call. That puts this hour of the Ramsey Show in the books. Thank you to my co-host, Dr. John Deloney. All the good boys and girls in the booth keeping the show afloat. Thank you guys so much. And you, America, thanks for listening. We'll be back before you know it.