The Ramsey Show - App - Don’t Be Middle Class Fancy (aka Broke) (Hour 1)

Episode Date: February 5, 2024

Девочка-пай Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by the one and only Jade Warshaw, and we're taking your calls at 888-825-5225. I know y'all are DMing us all your questions and I say, call the Ramsey Show. Okay, I can't sit here all day in the DMs. This is where we answer the world's questions. So call us up and we will help you. Zachary has chosen to do so to kick us off. He's in Madison, Wisconsin. What's going on, Zachary? Hey, how's it going?

Good, how are you? Good, good. I was just calling to get some input. I'm currently a travel nurse, and we don't have, like, a retirement plan for travel nurses, and my wife, she doesn't have a retirement plan, and we don't have any debt right now. We have about 200,000 in savings. Um, and we don't have much of retirement and we were looking to buy a

house, but we didn't know whether to just put all of our monies that we have in savings into our retirements or to try and buy a house. Right now we have a Roth IRA. I have about $50,000 in that, and then she has like maybe $20,000 in hers. Okay. How old are you two? 29, and she's 28. Great.

Well, the good news is you guys got plenty of time to build wealth, and the fact that you have this amazing foundation, no debt, and $200,000 tells me that you're on to something here. So the fact that you have this amazing foundation, no debt and 200 grand tells me that you're onto something here. So your luck is not lost. And those Roth IRAs are retirement plans. So you do have those options at the very least right now while you're doing this travel nursing. I imagine you're going to eventually be in a more stable situation with work. Yeah, hopefully this year. And so then you'd have retirement plans, right? Yeah, for me, not for her. She works for a South African company, so she doesn't get any benefits. So you may have different options in the future.

For now, maxing out those Roth IRAs is a great move. I'm guessing you have a six-figure income. What's the household income? Um, about 160,000 between both of us now, the rates are going down for travel nurses. So. Yeah. Well, that's still going to be plenty of money that you could be investing. And the way we look at home ownership versus investing, you're kind of in this baby step three B. So you want to be, you could be investing, you could just put all this into a house. I would recommend a mix of both. Have you looked in your area? Do you kind of have your eye on what you might want and do you know what it costs? Well, I'm looking for like $350,000. My wife keeps sending me ones for like $500,000. Well, I mean, at the end of the day, you know, the guidelines that we teach is you want to go in looking for a 15-year fixed rate conventional mortgage.

And you don't want the payment to be any more than 25% of your take-home pay. So that's kind of what your aim is. And, you know, if you were looking to put $150,000 down on a $350,000 house, I'm sure you'd be just fine. Because I do want you to keep, you said you had $200,000 saved. I do want to make sure you're saving out three to six months of expenses and that you're not thinking, hey, I'll just dump this whole $200,000 into a mortgage because, you know, houses come with upkeep. What was that?

I said houses come with upkeep and ACs go out and the roof gets busted and water leaks in the kitchen. And so you want to make sure you go in with three to six months of expenses into that just as an emergency fund there. And do you recommend moving over any of our, like, save money? So the retirement doesn't include, it's not included in that $200,000, so it's all liquid in the $200,000. Do you recommend setting any of that aside to put into, like, a longer-term retirement? I mean, you could max out your Roth IRAs.

That's $7,000 for each of you. So that's $14,000 right there. You could, but you don't have to. I mean, you guys are 29. If you said to yourself, listen, I'm going to, like I said, I'm going to keep out $40,000 of this for three to six months of emergency. And from this point on, I'm investing 15%. You could do that. How long did it take you to save the $200,000? I'm curious.

Because kind of as a rule of thumb, we also say say if it's going to take you more than two or three years to save up a down payment, you should probably start investing something. So how long did it take you to save this $200,000? About four years, just because of the travel nursing money. And I'm kind of with George. I'm in George's camp. I would definitely set aside. I think there's just a nice mix here. If you took 40 for your emergency fund, put 14K, max out the Roths and the rest can become your down payment. That leaves you with 146 to put down. And then you can start crunching these numbers to go, hey, we can afford a $400,000 house right now, or we can wait another six months and bump up to 450 if we keep saving.

And so you guys are in a position where you have those kinds of options. But I would at least start the search. And you can get connected with a Ramsey-trusted real estate agent who sells a whole bunch of houses, and they know what they're doing in this weird, wild market, even in your area in Wisconsin. And they can help you get your homework going to see what you can actually afford

and even start getting some game plan of what you're going to do and what you're going to buy. Yeah. Okay. I appreciate it. Yeah. Do you have the $200,000 in high-yield savings right now? I have $98,000 in high-yield savings and $35,000 in a mutual fund and then another $34,000 in Robinhood. Oh boy, get it out of Robinhood. Yes. You're about to get hoodwinked by Robinhood, my man. Oh man. I know.

That app makes it so easy. Those apps are made to take your money, not make it. So be careful. Yeah. I would move it all to high yield savings, including your emergency fund, and you could be making 4% to 5% guaranteed without making a stupid decision. Indeed. Because of an app notification.

Which ain't bad, especially if you're not ready to pull the trigger on anything in the 4% to 5% guaranteed without making a stupid decision. Indeed. Because of an app notification. Which ain't bad, especially if you're not ready to pull the trigger on anything in the next several months. Like, listen, you may as well put it somewhere where you can get a little return on it. Every hundred grand that sits there for a year, you made $5,000. So, pretty good couch money right there, my friend. Yeah. Okay. All right.

I'll start looking into it. Thank you, guys. You got it. I appreciate it. All right. I'll start looking into it. Thank you, guys. You got it. I appreciate it. You bet. Happy to snap you out of the paralysis analysis. That can happen. I mean, what a problem to have.

$200,000 sitting there. We want to buy a house. We know we should be investing. But hey, no debt to pay off. Listen, that's a good place to be in. Gives you different options. A much better situation to be in as opposed to, I'm in debt. I'm $200,000 in debt. My house is too expensive. I don't have anything saved in

retirement, which we hear that every other call. I got a DM, speaking of which on Instagram, this guy was like, hey, here's our situation. We have these goals. We have no debt except the mortgage. And I said, what's the mortgage? He said, it's a million dollars. And they made 160, which is a great income. But he said 60% of their take home pay was going toward the mortgage. That's known as house poor. Exactly. And so that's what happens when people make these decisions before they should, because they got a little starry eyed while zillowing. Yes. And they went, well, woe is me. The housing market's crazy. Let's just buy our dream home now. Yeah. And the dream home becomes a nightmare. Don't do that. That's...

I can't breathe thinking about a million dollar mortgage. With 160,000 income for sure. 60% of your money out the door. That's called living to work. That's middle-class fancy right there. That's living to work, not working to live. 100%. Looks good to the outside world, but you can't even breathe inside of that box. That's costing you way too much to live in. I wouldn't leave my house. I'm like, I pay too much of my money to ever leave. Yeah. No, I'd be up and out of that. Move with patience, my friends. Out of debt with the emergency fund, then get a solid down payment. Do this so that it's a blessing, not a burden. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Camel, joined by Jade Warshaw this hour, and we're taking your calls at 888-825-5225. Chris is up next in Cincinnati. Chris,

welcome to The Ramsey Show. Hey, thank you. Thank you for taking my call. Absolutely. How can Jade and I help? So my wife and I are expecting our first baby in July. Woo-hoo! Yeah, super excited.

And we've been paying off debt very consistently, putting back a lot of money. We are looking to get rid of the motorcycle that I currently own, which I am upside down on. And in our order of debt, it would be second to the house. So I was wondering if I should, since we were trying to get rid of it, if I should skip the credit card and truck payment and move straight to that and chip away at it, or if I should just continue to follow the order? I would follow the order. I mean, the point of listing the debts from smallest to largest is not, it's more psychological than it is me getting my hands on more money in one moment, because you want to feel those wins my question for you is this motorcycle what do you owe on it and what is it

worth um so i blame myself for this but it it is worth 17 000 and i owe. Ooh, lordy. My goodness gracious. Okay. What's the payment on it? Just curious. $6,994. Oh, my lord. Okay. What's the truck worth? The truck is worth $30,000. And what do you owe on that?

About $30,000. Let's get rid of that truck. This poses an interesting conundrum here. You got another car? We have a Jeep Wrangler that is paid off. We're getting rid of the truck. What's the truck payment? The truck payment is $575.

Oh, golly. Woo. Golly gee willikers. Like, this is crazy. And what's left is the credit cards. Is that it? Yeah, Warren, we just paid off one credit card, and we only have one left, which has about $4,300 on it.

Okay. Okay. So that's your smallest debt. That's going to knock out instantly. Yeah. Do you have any savings? We have about $10, good here's george let's see if we're on the same page you've got a jeep um or do you both you and your wife work outside the home

uh yes okay i think this is possible because especially when you don't have kids yet and your wife's probably going to be going on maternity leave if if not already soon here um i would sell this truck for thirty thousand dollars and you've got 10k i would throw that towards if you wanted to just pick up a cash car if you needed it you could but you don't necessarily have to because i have a sneaking suspicion mom is going to have a baby she's going to be at home for a little while they can probably make the one car thing work for a while he could knock out this $4,300 credit card and have some money to put towards the upside downness of this motorcycle for when he does sell it yeah with the baby on the way here's I'm really trying to think what I would do in your shoes oh you do have the baby I would if you sell the truck I like what Jade's saying is we're going to use the 10k and maybe take six of that and get a used car for now okay for you to get around and

you leave her with the jeep um until baby's here and then stack up cash until baby and mom are home safe once that happens you may have enough to get rid of this upside down motorcycle okay once baby and mom are home safe and you've got a bunch of money stacked in savings right so that's probably what i would do in that order um and if you could find an even cheaper car i'd love you to knock out the credit cards and then just stack up money until mom and baby are home listen george is being nice because i would tell you to go with one car i'm just i would never tell you to do something i never did and when i was pregnant we had one car because we sold the other one so i'm just saying it's an option to you it just depends on how quickly you want to go and you know can she drop you at work and you know do that

whole rigmarole carpool whatever you got to do to get by for a little while. Mm-hmm. Right. So you've got some options. Yeah, you've got options. But keeping the toys with wheels, that's not one of them. No, that ain't it. What's your household income?

I think in 23, it was just over 100 grand. Love it. All together between the both of us. And is she going to continue working outside the home after baby's here um i'm not like right away obviously but i think that her plan is to eventually return she's a nurse in a nursing home um and i believe her game plan is to go back to work okay Okay, cool. Are you guys doing any investing right now? No. No, I wasn't sure if we should.

You shouldn't. Not yet. You're right. I just want to make sure you weren't, because if you were, you'd pause that, and that would free up some money as well. Okay, yeah. Man, I think this truck is going to free you up of that $575. You can then start throwing in the savings.

Yeah. And think how quickly you could. I mean, the $10,000 aside, because there is a world where you just keep that $10,000 sitting there until the baby is born. You don't do anything. And that's probably the best choice here. But even with that $575,000 cleared up,

think how quickly, you know, once baby is born and once everything's, you know, back up and running, think how quickly you could pay baby is born and once everything's you know back up and running think how quickly you could pay off this credit card close the gap on that motorcycle there's just it's so much money you know that even just if they did this today six months without that payment it's 3500 bucks exactly and so that's at least as much as you could save just by getting rid of the payment that's no other sacrifices. Right. Okay. So it would be smart then to, once that is all out of the way, what you guys just talked about, to chip away at the bike

and tell it's down to what it's worth and just sell it and break even as far as... Yeah. I mean, the other option you could do is go out, take a smaller loan against the difference with a credit union to get out from under this sooner. Yeah. Leaving you with a $13,000, $14,000 loan because you don't even need the motorcycle.

You don't need it for transportation, so you don't need to go get another one. So at least you'll be $14,000 in debt instead of $31,000 in debt. Right. That's going to make your snowball a lot bigger payment-wise, too. So I would go down to your local credit union and see if they would give you the amount for the upside-down portion. But just to clarify,

the key to press go on all this when you put the keys in the ignition is when the baby comes home safe. That's when we're turning the keys to start doing real things, right? Right, yeah. Okay.

Sweet. I love it. Yeah, congrats. You know, I want to give you guys a little baby moon gift, if you will. I'm going to gift you guys Financial Peace University and every dollar to give you guys a little bit of hope, a little pep in your step as you make this journey, grueling journey, of not only getting rid of this debt, but also third trimester.

That's a real one. That's a real one. Man, tempers flare, George. There's a lot of emotion that final trimester. Most of them were geared toward me. Any man. Yeah. Not just you, George.

It wasn't just you. I will say, I enjoyed the nesting phase because I like organizing. So I was like, finally, game on. You're like, I can do this. Let's do this thing. i feel sorry for just about any man in the in the third trimester it's real you know what i did enjoy was she got real into sugar in that third trimester and so it was like ice cream and oreos but don't eat hers because then it's atomic status i learned i need to get my own pint get your husbands this pint. Husbands, this is the real advice. Like you're here for the financial advice, but you stay for the third trimester advice.

Yes, do not dip your spoon into her ice cream. That is- Lesson learned. But that is a good financial piece that people don't think about. We call it stork and storm mode. That's right. Only time to pause the baby steps,

pause the debt snowball, is if you're in a major storm. I'm not talking about a flat tire. I'm talking about a major medical event, a job loss where you got to go, hey, we got to pause and save up. And babies fall into that category because when things go right, it's wonderful. But it's when the medical bills start to stack up and you're in the hospital for more weeks than you thought. And, you know, you didn't think about insurance not paying out 100 percent. That's right.

And what your deductible and out-of-pocket max is. And so all of that adds up. Yeah, because in his case, I mean, $10,000 saved sounds like a lot of money. But if your deductible is $5,000, you know you're going to hit it when you have a baby. So it's worth talking about, you know, making sure you've at least, at the very least, got that deductible in cash ready to go because you're going to be handing out some cash when you have a baby. Before you hit that max and you go, thank God. It's on the insurance company now.

That's important. More of your calls coming up. 888-825-5225. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Our question of the day is brought to you by Neighborly, your hub for home services. Go to neighborly.com slash Ramsey and download their winter maintenance checklist. It's free and it's full of tips to get your home through the colder months with no issues. Again, you can check it out at neighborly.com slash Ramsey. All right. Today's question comes from Lucas in Kentucky. He says, I'm 18 years old and earned $42,000 a year. I got into an accident this week and totaled my Camaro. I'm expecting the insurance settlement will be about $10,000 and I still owe $6,300. The problem is I want a new car. Don't we all? I'm into muscle cars. Aren't we all? And found a 2023 Mustang for about $46,000 I bet you did yeah I know it's a lot but I can get a loan at seven percent interest in 84 months with payments

of $650 a month my parents said it's too much thank you parents for what I'm making and for being so young I'd like a second opinion from you. Listen, we'll give you a second opinion, a third, fourth, and fifth, because I'm sure the Booth guys probably agree with us. Jade might give you more than an opinion. It might be a whooping by the end of this one. This is not a good situation. There's nothing I would love more than to put a whooping on Lucas, but he's 18, and he needs a little...

Did they stop teaching basic math in school? Did we just like skip to the pythagorean theorem and calculus because in many cases yes like making 42 000 and you're gonna buy a depreciating asset that's worth 46 000 he doesn't see it that way though he sees it as i'm making 42k i live at home i have no bills i've you know the world is my oyster and i can easily make a 650 payment that payment. That's what he sees. And so I get it, but he asked for an opinion. He's like, the problem is I want a new car. We all want a new car. And we all love muscle cars. Nobody looks at a Camaro and goes,

I hate that. I prefer my cars flabby without muscle. That's right. If you're offered, if you win the prices right and you're offered a 2023 Camaro, everybody's going to be happy with that. Here's the confusing part, though. He says, I know it's a lot, but I can get a loan at 7% interest for 84 months and the payments will be $650. As though this is some kind of opportunity for stupid. I actually did the math for him, Jade.

What is it? He'd be paying, get this, over $12,000 in interest alone. He didn't think about that. So this $46,000 car, you're really buying a $58,000 car. Oh my word. Making 42. And by the way, once you pay it off, it ain't worth close to 58. It's probably worth 25. That's a good fact. Because new cars on average lose 60% of their value in the first five years. That's right. That's right. Goodness. And he's going to sign on to an 84-month...

You know what's funny? These car dealerships are so smart, Jade. They talk about loans like they're babies. It's like, how old's your baby? She's 84 months old. Just say it's a seven-year car loan, because that makes you think twice. Yeah. In terms of months, we're like, I don't know, 84 months?

A month is only 30 days, Jade. This will fly by. I think he thought he's parlaying this settlement into a great opportunity. He's like, listen, I'm getting 10,000. He owes 6,300 still. I only owe 6,300. It sounds like after he applies the-

It sounds- Well, the way I read it was, he's getting 10,000, he owes 63, so he'll come away with $400 or000 or $4,000 or whatever. Yeah, that he can use as a down payment on this car is what I'm thinking. I don't think it's that he'll owe $6,300 after the fact. But even still, no matter how you slice this,

it's stupid. And I get so many people think, oh, I got in an accident i'll just replace it with a brand new car and you know for what i've been through i should be able to get what i want you know and that's not it if you've got thirty seven hundred dollars or four thousand bucks just buy a car in cash and slowly trade up think of this as an opportunity to not go into debt again um because i'm guessing the camaro that you had before, clearly you had payments on it because, you know, there you have it. He owes money.

So let's look at this, Lucas, as an opportunity to kind of break that debt cycle and see what life is like without a car payment. Think about all the things you could do. My guess, like I said before, is you're living at home. Think how quickly you could save for the car that you want, making $42,000 a year. At 18, that's amazing. Instead of trying to level jump. I wish I was making 42 at 18. Yeah. This kid's very smart in a lot of ways. He is very smart in a lot of ways, but you have to be ultimately smart that you don't kind of go, oh, you know,

get too big for your britches and think, listen, I'm doing good for myself. I can just jump into debt because debt is, it's interesting. When I was that age age I remember thinking people who had car let me be real I thought people who leased cars were like ballin wanna be a baller that's what I thought I'm like if you're leasing a car if you've got a credit card and you've got like a like a $15,000 limit I thought that that's what you were supposed to aspire to and i learned the hard way that all that is is a facade and what's behind it is stress anxiety payments and i guarantee to get ahead i guarantee their instagram bio says entrepreneur and i'm like okay you're unemployed and you live with your parents bro like let's not pretend. Like that you own owning a vending machine is you being

an entrepreneur. Okay. I mean, goodness gracious. Y'all wear me out. You sound like you're talking about somebody specific. Some days I wonder, like, am I a boomer that accidentally was put into a millennial body? A little bit, but that's okay. I'm right there with you. Kids these days. Anyways, Lucas. Get off my lawn. Don't do this, please. Don't do this. You make 42K a year, save up and pay cash, get you a little hoopty until you can upgrade in cash. That's what I did. Uphill both ways. That's what I did.

Good job, George. Good job. It wasn't long ago I was driving a $6,000 old Civic bumper half hanging off, and I was proud of that thing. That's good. You paid cash for it. I had goals. I love it.

So there you go. There's your question answered, Lucas, if that really is your name. All right, moving on to the phone lines. Bethany is in Salt Lake City. Bethany, how are you doing today? Good. How are you? Doing great. How can we help? So we just very recently found out that I'm pregnant. Woo-hoo!

Thank you. We're definitely planners. So far far what we've been doing is we've been trying to put all of our savings into various thinking funds, but mostly focusing on a deposit for a house. But now that I'm pregnant, I'm wondering if should we totally pause on the house and only focus on building like a baby thinking funds and the health, like our health bills funds, or should I equally doing all of them? I'm just not quite sure what to do. The baby is definitely priority in my book. And that may delay the dream of home ownership. It may not. We just have to wait and see. But are you guys debt free with an emergency fund right now? Where are you at financially? Yeah, so we're debt free. We're a single income household. My

husband works. We have about four months saved on the emergency fund and about 25 grand in our home. Cool. So those are separate funds? Yeah. Okay. I just continue to save up and that all becomes savings in general. And then once baby and you are home safe, we can unpause the dream and see where we're at with our savings account. And if you've got, I'd want six months with a single income family, I'd bump that emergency fund to six months. Then whatever's left over becomes your down payment fund. We should take money out of the home. Like I figure, I mean, I'm not far along now,

so I figured we'll try and do what we can. But if we get closer, should we take money out of the home fund to put in those other places? To make sure you have a six-month emergency fund? Yeah. Yeah, it's just a matter of labeling it differently, right? Okay. Because the money is the money. You got 50 grand total, whether it's 25 and 25 or 30 and 20. You know, the goal here is to have six months.

I would put that in a separate high-yield savings and then have a different high-yield savings account or bucket for the home down payment. Okay. Does that make sense? the home down payment. Okay. Does that make sense? Yeah, it does. Good. Well, congrats on the baby. What's the due date? It's going to be end of September.

Nice. Fun. Love it. Exciting times. We're very excited. Yeah, hope that helps and hope you guys become homeowners one day as well. That's two really fun pieces of adulting. For sure.

Having the kid, getting the house. But here's the thing, Jade. A lot of people go, we have the baby now. become homeowners one day as well that's two really fun pieces of adulting for sure having the kid get in the house but here's the thing jade a lot of people go we have the baby now we need the room we need it i'm like because babies take up so much space it's a tiny little bassinet in the corner they're fine my child my first born son who will remain nameless on here he um we had his whole bedroom done his crib and everything he never even was in that room nobody told me that baby lives next to your bed for the first few months yeah at least six months this joker didn't even go in his bed until six or seven months so this idea that your two bedroom isn't enough because you had a baby and now we need to upgrade

to the five bedroom house it's crazy yeah it's. It's crazy. It is crazy. But it's exciting. And I think you just feel like, oh, I want to get the baby. New stage. Yeah. Yeah. That was a big phase for us. We got the board and batten in the room. Got to paint it a little blush pink. It's very exciting for me. She's never even been up in there. She doesn't even know colors yet. Let's be real. Might as well be agreeable gray to her. There you go. There's your Sherwin-Williams reference for the day. More of The Ramsey Show coming right up. Don't go anywhere. 888-825-5225. You call us, we'll talk about your money, your life, whatever is going on. Celeste joins us in Guadalajara, Mexico. About time, Celeste. How are you doing over there? Hi. Hi, nice to meet you guys. So I'm a grad student right now. I'm visiting my folks, and my question actually is about them. So they're asking for advice on whether they should take out a loan for a car, a used car, or whether they should dip into their savings.

Why do you think that they would prefer having payments over using the cash they have? I, so, um, I guess I'll say it in pesos. Um, but, uh, they have about 400,000 pesos paid up and then a new, uh, well, sorry, a used car, um, a six, seven-year-old, uh, car would be about, um, 250,000 pesos. Um, the reason I say this is because they're, they're debating is because my, my, this is their, pretty much their only savings account. I mean, he, my father is the only one who works. My mother does not. They own two cars. One of the cars is pretty much on its last legs.

And my mom is looking for a job and trying to find a way to reliably get to work. Okay. So, yeah, so that kind of stems from that. So I think their worry is that they would not, it's been about five years. It took them five years to accumulate what they have in savings, you know, for, to have an emergency fund, they would have to dip into. Why did it take five years? Do they have any other debt?, they would have to dip into. Why did it take five years? Do they

have any other debt? They don't have any other debt. So, um, my, they own three properties. Um, they're all paid off. Uh, both of the cars are paid off. Um, and, uh, I don't think my father wants to, um, sell any of them. So, um, I think his idea would be to use the money that they have now and not take out a loan. I think he's pretty resistant on it now. And why are they asking you about it? I'm just a concerned bystander. Okay. So did they bring it up? Did they say, hey, Celeste, we're wondering, do you think this is a good idea? Or did you say, hey, I overheard you guys talking about this.

I wouldn't do it. Yeah, that's the second one. Okay. So they didn't ask for your opinion. You're just concerned for their financial well-being as a great daughter. Yes. Okay. Well, I just did the conversion here from Peso.

So they have about $23 plus usd yes and they're they're looking to spend about 14 000 of that usd yes okay and they would leave them with 7 000 i mean that's still they can then rebuild their emergency fund with the payment they would have been making on the car they just use that to replenish the emergency fund yeah Yeah. And just on a, theoretically speaking, I consider, I would consider, and again, we're having this conversation with you, not your parents. So you're probably right there with us. But if I'm looking at risk, I'm thinking, okay, going into debt is creating a bigger risk than depleting my savings by half to avoid debt. And i almost feel like they've got the equation swapped and they're thinking depleting my savings is a bigger risk than going into debt and that would

be completely wrong because usually your debt the debts in your life are what create the emergency feeling not lack of something goes down it's like oh i gotta pay the debt off i need the savings yes so you don't have debt you lower your risk and so And so you're asking us, how do you talk to your parents about this? You could tell them, listen, I care about you guys. I know you don't need my opinion, but I care about you guys so much that I'm begging you not to take out this loan because it's going to put your future at risk. And you can show them some math. Some people need the math.

Some people need the emotion. Maybe it's a mix of both where you say, listen, this is what this car is really going to cost you with interest. Here's what you could do with that free to payment. And worst case, he can sell one of the properties if something huge goes down. But my bigger concern is why it took him five years to save up an emergency fund. Is the income low? Well, he's got these three properties too. Yeah. Well, one they recently inherited from my grandmother's passing. Um, so they're renting that one out. Um, the, my, my mother doesn't work, um, currently. Um, and my father makes about 50 with the rent from that property. Um, and his job, he makes about 50,000 a month in pesos.

Okay. So that's about three grand almost. Yes. Okay. So that's the part I'm looking at here is, okay, that's how many months of his income is going to take to buy this car. And when you do that math, it's a little more, it puts into perspective and you go, all right, it's $14 fourteen thousand dollars divided by three that's almost five months of him working to get this car which is not bad and it tells me in five more months he can replenish that money if he doesn't have a payment it's going to free them up and if their expenses are low and these rentals are cash flowing hey right yeah i mean but that would be minus like whatever monthly expenses they have.

Sure. Do they have a lot of expenses? Not currently. Both my brother and I are out of the house, so it's mostly just them right now. You said your mom's looking for work. She is, yeah. Good. So how are you doing financially? Because what I'm looking at is I'm thinking, I'm thinking about my younger sibling because I'm trying to liken it to what you're at. You're the kid trying to tell their parents what to do.

So I'm thinking, okay, my younger brother, he's seven years younger than me. What would make me take his advice of him saying, hey, I heard you were about to go buy a car, Jade. Here's what I think you should do, go buy a car Jade here's what here's what I think you should do right I'm trying to flip that on its head and think okay what would I want I'd want him to be doing better than me financially and I can see it I'd want to be able to look at him and go he seems like he's got it together like he's always talking about paying

cash I've never seen him talk about debt matter of fact I don't think he has any debt like I'd want to be able to visibly observe certain qualities that make me go. This is somebody who has their financial life together. So my question is, how are you doing? Right. I'm actually a graduate student right now in the States. So I'm taking care of myself. My brother's in college.

He's also, you know, putting his way through school. So, I mean, I currently don't have any debt other than seven grand in student loans that is on pause right now since I'm still in school. Sure. So that's kind of where I'm at. Okay. You know, you can attempt this i don't know what your relationship is with your with your parents but you know all you can do is is float it out there i think like george said you've got to say it in a way if you're not saying it in a way that's like here's what i'm doing um or here's what i've learned then the chances of it sinking in is going to be little to none um and i think the best way that you can relate it to is probably your own debt and the mistake you feel around that. Like if you say, listen,

I took out the $7,000 student loan and I'm now realizing it would have been better for me to pay cash and here's why. And I don't want you to make that same mistake with this car payment because I know how I feel and And you guys, you know, that's the only way that you're going to be able to shift this in their mind, as opposed to just saying, hey, you should really use the money you have saved. Right. Okay. That makes sense. Are you a Spanish speaker? Yes, I am. You should check out and have them check out our friend Andres Gutierrez. He's like Spanish Dave.

He used to be one of our personalities here, and he does a great job explaining these concepts to that community. And he has his own show on YouTube and radio and his own version of Financial Peace. So be sure to check that out. I think maybe he'll connect with them better than I can for sure. That's a good point. And that could be a good resource for them. Absolutely. Thank you for the call.

Thank you, guys. Bye. George, that was a deep cut. And that could be a good resource for them. Absolutely. Thank you for the call. Thank you, guys. Bye. George, that was a deep cut. My man, Andres. I was just thinking about him. I was like, man, they're talking pesos. I'm doing calculations here. We got to send him to Andres.

I feel like that's the only word I know. So you know how Dave does the scissors with the credit cards? Andres has a machete. So he's got a giant machete that he uses to cut up cards. He's got a wooden block. And he's got a giant machete that he uses to cut up cards. He's got a wooden block and it's so entertaining. And he's a solid dude doing great things out there in the San Antonio area. You're telling me he puts the credit card on a cinder block and machetes it? It goes on this wooden thing and the credit card sits in there and then he'll just swipe

them with machetes. That's dramatic. It's very intense. That's very intense. But you need intensity to convince people to get out of debt. They thought we were intense. My goodness. There you go.

That's about as cultured as I'll get this hour, Jade. That puts this hour of The Ramsey Show in the books. Thank you to my co-host, Jade Warshaw. All the dudes in the booth, we got them all today. Austin, Ben, James, Zach, Nathan, Andrew. They're all hanging out. And thank you, America. We'll be back with you before you know it.

This has been The Ramsey Show. Bye.