The Ramsey Show - App - Don’t Believe the Lie That You Need Credit To Survive!

Episode Date: October 21, 2024

From 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 Jade Warshaw, and we're taking your calls at 888-825-5225. You can't tweet it. You can't exit. You can't DM it. You got to call if you want to be on the show. That's how it works, 888-825-5225. I just had to put it out there, Jade.

Well, there is the Ramsey Network question of the day. That's true. That's the only other way to get your question answered on the show. We appreciate all of you listening and calling in. Matthew kicks us off in Vancouver. What's going on, Matthew? Hey, guys. Basically,

just trying to get some motivation or figure out if or how I can start over at 40. What does starting over mean? Creating a life. Again, getting a house, getting some savings. I mean, starting over sounds like there was a rock bottom.

Like life happened to you? Was there a divorce? Did you lose everything? What happened? Yeah, basically all of the above. Lost my business due to COVID, which left me with significant debts. Also a divorce around the same time.

So the ex-wife sold the house and took the proceeds. Still trying to recover all that. So basically, 40 years old now. So you lost your business, you lost your marriage, you lost the house, and now you're going, where do I go from here at 40 years old? Exactly. Yeah. The last three years, I think, I've just been surviving or trying to survive. Every check sort of goes out the window. What have you been doing for work? I'm an electrician by trade. Okay. And is that this type of business you had during COVID? That's right. Yeah. Okay. And so it sounds like you're

starting to rebuild that or are you working for someone else now? No, I've been working for somebody else for the last few years. Okay. Is that the way you want it or do you want to rebuild the business? I'd like to have my business again. I don't know how anything is possible at this point with no credit, and I'm currently whatever debt that I had. Well, you don't need credit to start a business. True. That's true. And we're not taking out any loans to do this business,

so you don't have to worry about any of that. So let's walk through some of the numbers here, because I think when we are deep in the throes of grief and loss and feelings and emotions, sometimes the facts just help us go, okay, it's not as bad as we think. And you're 40, you're not 70. And so you've got a lot of time to build a whole new life and create a new chapter for Matthew. And I'm excited about that. So tell us some of the numbers. Well, I make about $80,000 to $90,000 a year.

Not bad. That's pretty great. Okay. How much debt? Debt? I had $116,000 from the business and some personal debt that was wrapped up now in a consumer proposal. So I have to pay back I think $27,000 now. On top of the $116,000? No it's like a debt consolidation. Yeah it's done so the creditors agree on lower amounts so it was all agreed to about $27,000 in total that I actually have to pay back. Okay. So the $116,000, the $27,000, anything else?

Nothing I'm aware of, no. And where are you living? In Canada. I mean, are you renting a house right now or an apartment? Oh, yeah, renting. Okay. Now, when you said business debt, is that on credit cards or is it on a personal loan?

They were suppliers for my company and they called on all the stuff that was owed and the company didn't have anything to pay. I had personal guarantees on those things, so it turned into personal debt. Okay, so you're making $90,000. That's not bad for a single guy. Are you using a budget, or are you just kind of working out the numbers in your head every month? Yeah, I'm just in my head. It's basically, the bank has this automatic thing where it sort of puts money into a small little savings account automatically,

but I always find that I have to dip into that to survive. How much money do you have to your name right now in savings or in your checking account? Savings, none. Checking, probably like $100 for groceries the next two weeks. Are you doing any investing right now? No. Okay, good.

So what I think my guess is, and I don't know, we can ask you the payments. I mean, for the 116 and for the 27,000, what is that in payments every month? It's 460. 460 total? Yeah. Okay, and what's your rent?

Or I'm assuming you're renting. 600, yeah. Okay, so what that tells me is there's a lot of money somewhere that's, I don't know where it's going. Only you know where it's going, but I have a feeling if you were to... Yeah, I have wage garnishment for child support. How much? They take $1,800 every month.

Okay, we're still not quite there. So now you've outlined about $2,800 a month that you're spending. Is there anything other major that I should know about? Not really, just the standard vehicle. I don't pay anything for my vehicle. I have my insurance for the vehicle is $460 a month as well. And then I have fuel on top of that. Okay.

I have a feeling if you were to plug all of these numbers into an every dollar budget, you'd find that there is margin there. It's just a matter of being intentional with what we do with it. Because in this case, I mean, the only way out of this is to start paying off the debt. And you can start side hustling. You can start picking up other clients. The good thing about your trade is I don't think anything's stopping you from going out and getting other

clients to say okay i can help you with your yeah what's the agreement with your employer for you doing electrician work uh they're fine with it i don't have a proper vehicle i can't even call any tools around or material right now i they've been talking about getting a truck and then if i get a truck i can obviously go and do some service calls and side work, and they're fine with that. Okay. That's what I'm wondering. If you pick that up, even in your own neighborhood and outside of that, and start kind of marketing it, you know, Facebook groups, word of mouth, you name it, and say, hey, I'm available. Here's my rate.

It's $65 an hour for me to do electric work. Here's the kind of stuff I do. I think you'd pick up some business right there and start making six figures. Because the key here, Matthew, is margin. Only way to get it is to spend less and or make more. And I suggest you do both with the mountain of debt ahead of you. But think about this. If you can throw $3,000 a month, that's $36,000.

This thing's done in three or four years. Okay, now what if we could do $4,000 a month toward the debt? grand. This thing's done in three or four years. Okay, now what if we could do four grand a month toward the debt? Well, we're going to shave off some time. So my goal for you would be to figure out what you need to do to get this debt paid off in less than three years. Yeah. Hey, what were you making in your heyday when you were doing your own business before COVID? I was paying myself and the family. I was taking home i think 120 000 a year okay here's the thing you're not too far away from that and that's the same guy right like the same matthew that did that then is the same matthew that can do that today you're just a little older and truly just a little

bit wiser so there's no reason that you can't get you know back into the game covid was such a random probably never ever going to happen in our again in our lifetime again thing and i kind of that you can't get back into the game. COVID was such a random, probably never ever going to happen in our lifetime again thing. And I kind of feel like it just knocked you out, but you're down, but you're not out. You just need to go, you know what, I've done this before. I can do it again.

Well, all hope, I guess. I just see my bank like zero in it every month for the last three years. We're going to change that. Get a thousand000 saved. Savings. And I had a bankruptcy years ago when I was younger for medical reasons. And now when that happened, they garnished stuff.

They went into my bank account. They seized assets. Matthew, you have been through it, man. But I want to tell you, this is a comma, not a coma. So you can't let it hold you back. You got to get back up and just do this thing. And that means getting to work. This is The Ramsey Show.

Statistics show that half of Americans don't have enough life insurance. Or they don't have any at all. I don't understand this, John. Why don't people want to take care of their family? They think they're not going to die or something? Well, I used to be one of those guys. I don't understand this, John. Why don't people want to take care of their family? They think they're not going to die or something? Well, I used to be one of those guys. I didn't even think about it. And one of my buddies said, hey, the only reason to not have life insurance is if you

hate your wife and kids. And I immediately went and got term life insurance. That's a gut punch. For decades, Dave, I've sat across people who've lost a spouse. They've lost somebody important to them. Me too. They don't know what to do next. You're going to have a crisis here. You know, you got two options while you're sitting and

talking to a young widow. She's concerned about how she's going to invest all this money properly and not mess this up. Or she's concerned how she's going to eat tomorrow. That's exactly the two options. It's saying, I love you to your family term life insurance, Jeff Zander and the team at Zander insurance makes it easy and affordable. I've used them personally for 25 years. They're the only people I trust. Go to Zander.com or call 800-356-4282. Welcome back to the Ramsey Show. I'm George Campbell, joined by Jade Warshaw this hour.

888-825-5225 is the number to call, and we'll try to help you take the right next step for your life and your money. Well, we're headed into the holiday season, Jade, and it's time for a lot of people to get their money in the right place before we make more bad decisions. So join the EveryDollar team for a free live training Thursday, October 24th, 1 p.m. Eastern, 12 p.m. Central Time. You're going to get clarity with your money, and it's free to register for this webinar. Just go to ramseysolutions.com slash webinar or click the link in

the description if you're listening on YouTube or podcast. We've had over 100,000 people register for these live trainings in the past and it's now it's your turn. Yes. One of us, one of the Ramsey personalities is there live coaching you through the concept of how do I take control of my money? How do I make this thing called a budget? What is it going to do for me? And it's pretty interactive. Like you get to go on there and, you know, if you want to ask your question, they'll pull you up. And so it's not just us talking at you. You get to be a part of it as well. And it's really more of a conversation. So don't miss it. All right. Let's get to the phones. Nolan is in Orlando. What's going on, Nolan? Hello? Hey, how can we help?

Hey. So I'm 21 years old. I made some bad decisions when I was 18. I financed a vehicle, a new truck, and I feel like I'm just swallowed in the truck payment. I can't breathe. I want to be able to rent an apartment and then, you know, get to the buying a house stage. And I feel like I'm running out of time and I have so much debt

and not enough money. I'm living paycheck to paycheck and I just want to live by myself, you know? Yeah, for sure. Listen, I admire that. I think it's a good thing. Tell us more about this truck that it's got you in a chokehold. What's the payment? So I have the whole thing pulled up here on my phone. It's $679.83 a month. I financed it September 24th, 2021 for 75 months. Okay. And I still have 46 payments remaining. I still owe 30 grand on it and it's worth about 20. Oh no. Okay. Shoot. Um,

okay. So you're paying six 79 on it. I imagine the insurance is pretty expensive too. What's your income right now? My income right now is about six to $700 per week. Okay. And what is that? What are you doing?

I do like carpentry work and kind of like odd jobs. I do car audio, kind of a little bit of everything. Do you work for someone or is this a solopreneur? Yeah, it's just a solo thing. I do just random jobs and I have one guy that kind of I work with and he kind of organizes the outside stuff. But you don't have any rent, right? You're living with parents still. I am living with my sister right now and I give her $400 per month for rent. Okay, okay, okay. So after everything is said and done, do you have any margin?

Because I'm thinking, okay, $1,000 going to this car, $400 to your sister, that leaves $1,000 left. You got to eat, that leaves $700. Am I leaving anything out that's major? The insurance, the phone payment, I'm completely independent. Okay. So we kind of talked about this on the other call with George. The equation is simple to understand, but not necessarily easy to do, right? The only way to get out of this is you're either going to lower your expenses, or you're going to get your income up, or you're going to do both, right? And your expenses are pretty low. I mean, other than you getting out of this truck, there's not much better

than $400 a month for rent. And for a guy making $30 should not be driving a truck that's worth $30. You know that now. And so we need to get out of this truck. The goal is not to try to pay this thing off. The goal is to just get rid of it. And you need, obviously, the amount you're upside down on. So we need $10,000. You have a few options there.

Either save up the $10,000 plus enough to get a beater car, or you go down to your local credit union and get a loan for 15K. You have the difference in the 10. That means you can get rid of the truck and sell it. Then you have five extra thousand dollars to buy yourself a little beater car to get you around. And for new listeners, we never recommend debt, but this is the only time that we would say, hey, it's better to be in $15,000 of debt than $30,000 of debt. So this is the only time we'd say, hey, go's better to be in $15,000 of debt than $30,000 of debt. So this is the only time we'd say, hey, go to the credit union, take out a small personal loan,

because ultimately, although it seems like we're getting a loan, we're still lowering the debt substantially. So that's the purpose of that. The only problem is, is my sister wants to get a house and she's renting this house and it feels like she's doing it just for me so I have a place to live and I feel like I'm holding her back so and every time we have the conversation her and I she's just like you're gonna have to figure something out because I'm gonna be leaving here soon in the next few months. Listen that that sounds like a very real issue and you might be holding her back which is all the more reason that you've got to get going on there so there's nothing stopping you from getting off this call and going straight down

to the credit union there's nothing stopping you from researching your options as soon as you get off this call and then after that you're freeing up a thousand dollars of income what does it cost in your area to rent with a with? It's $400 per month. Okay. Well, there you go. So it's just you shifting from one roommate to another. Yeah. Okay.

And Nolan, the key here, the glaring thing is your income. I have really bad credit. Have you been behind on payments? Why is your credit bad? Yes. So I had two credit cards. When I first turned 18, I got them midnight the night I turned 18. And I put $1,000 on each of them. And then when tax season came around, I paid one of them off

completely. So I just have like $1,000 in other debt and then about $2,000 or $3,000 in hospital bills. Okay. Do you still have the credit cards or did you cut them up? I cut them up, but I did recently get two new ones. Why? Why? I'm trying to improve my credit, but I don't know.

Stop. Clearly we're not good at this game, bud. Okay, we got to cut up the cards and say no and use our own money. That's how we're going to get out of this and this is how we're going to build wealth. Will you promise me you will cut those up and never sign up for a credit card again? I promise I'll cut them up. Because here's what're going to get out of this, and this is how we're going to build wealth. Will you promise me you will cut those up and never sign up for a credit card again?

I promise I'll cut them off. Because here's what's going to happen. As you pay off the debt, as you get rid of the car loan, your credit score will naturally improve, and then eventually it'll disappear. And you'll find out that it was a terrible scoreboard for winning financially, as we now know, at 21, after a series of poor decisions. But guess what? You're not running out of time. I don't know what it is, but young people out there, Jade, feel like, well, I'm 21 and I screwed

it up and now there's not enough time and I need to buy a house and I want to be an adult now, but I made vast decisions. Nolan, you've got so much time on your hands that you wouldn't know what to do with it. The key is you got to start making the most of it. I think you kind of hit an avalanche. It's like you were going along and all of a sudden all the mistakes kind of compiled on each other and now you're feeling it plus you're feeling the heat from your sister saying you got to get out you got to get out and so i think you are feeling a sense of urgency but listen take it as a blessing because you needed a little fire under your butt to get this thing done so and most people your age are broke so at least you're not alone in that but the key the glaring

issue nolan is your income. You've got to be making more than $600 a month. I mean, if you went and made $15 an hour, you'd give yourself a raise right now, just working a retail job. So either we have to figure out how to scale this business and double or triple our income within the next six months, or we've got to go work for someone else. Yeah, how many hours a week are you working doing these odd jobs?

About 40, maybe 50 hours per week. And that earns me about, I think it's about $3,600 per month. It's $600 per week. So what that tells me... That's $2,400 a month. Yeah. And what that tells me is something's got to move because if you're maxed out on time, if you're telling me you're working between 40 and 60 hours and I mean, you're only one human being, you can only do so much. So that tells me that what you're doing is not bringing in the right amount of money. So you might need to change what you're doing, or you don't have the right price set, and you're not charging enough. So start playing with those numbers because you're one person. You got the same amount of hours as everybody else. So let's make it happen. Absolutely. Thank you, guys. You got got, I'm going to send you a copy of my book, Breaking Free from Broke Nolan. It walks through all the things we talked about. There's a whole loans on a whole chapter on car loans,

a whole chapter on credit cards. Please read it. And I hope it gives you a terrible taste in your mouth to where you go, I'm not doing this. And then I'll show you a better way in the book. I'll show you how to get margin. That's the margin is breathing room chapter. So I hope that gives you some hope that you're not running out of time, but time is of the essence. And at 21, you can rebuild. Dave Ramsey filed for bankruptcy when he was way older than you and he rebuilt. And so the key is we don't want to make the same dumb mistakes over again.

Make it at one time. You'll get a pass on that. You make it two. Uh-oh. Then they call you a fool. Yes, that's right. Fool me once. Shame on you. Fool me twice a pass on that. You make it two. Uh-oh. Then they call you a fool. Yes, that's right. Fool me once, shame on you. Fool me twice, shame on me.

Shame on me. There it is. And parents, hey, stop telling your kids to get a credit card as soon as they turn 18. Stop. Stop it. It's not helping them. Nolan's future is stunted because of this move. My 18th birthday, I'm going to get my first credit card.

Midnight on the 18th birthday. Got to get that cash back. Let me get birthday, I'm going to get my first credit card. Midnight on the 18th birthday. Got to get that cash back. Let me get some airline miles. Let me get my credit score up. And here we are at 21, trying to rebuild. I'm so sorry. This is The Ramsey Show. Welcome back to The Ramsey Show.

I'm George Campbell, joined by Jade Warshaw. Jade, we were talking during the break about something that we've been seeing, a scary trend that's been happening for 30 years now, but it's only getting worse with time. And that is the idea that the credit score is the scoreboard that you need to win financially, and it's ingrained in us at a young age. I mean, to the point that that last caller on his 18th birthday at midnight, it's like, I got to get my first credit card. And I don't blame him for that. That's culture telling us. They're saying it's a necessary rite of passage to becoming an adult.

Yes. To the point. To get your first credit card out of 17. Yeah. George, we had a caller call in last week. I think I was on with you. Maybe it was Ken, but she was so sweet, you know, and she just was like, hey, I'm just calling. I want to know what's the best credit card I should sign my son up for. He's going to be 18 years old. And so, of course, you know, I told her the information around credit scores and how really it's just your interaction with debt, how much debt you have, how long you've had it, the different types of debt you've had, what percentage of your debt that you're actually using to what's available. And that's how they measure your credit score. And so as we do, we pulled that clip and posted it on social media. And the responses were wild

to me because it just shows society has done a really good job of just masking the idea that you can be free and just completely taking up all the space saying you must have a credit card because in the comments if i can just read can i guess that what they were i'm guessing it's like these people who you would think are paid by the credit bureaus and credit card companies to defend them yeah i love this one it says hey this is an idyllic response this is not a real world response and in my head i'm thinking i have nothing to gain i'm not taking your interest i'm just some girl on a radio on a podcast trying to help you out we're not getting paid by the debit card companies to take down big

credit right okay then this one uh it says jade it is necessary you're coming from a place of privilege oh that one that one must have stung in a weird way it did because i'm like what's the privilege i i started with thirty thousand dollars and four hundred and sixty thousand dollars of debt such privilege i don't know so then this one says jade it is required the word that i kept seeing over and over is it's required and i was like man the brainwashing it has worked it's taken well that's why like, man, the brainwashing, it is worked. It's taken full effect. I devoted a whole chapter of my book,

Breaking Free from Broke, just to credit scores because I had to help people understand the very first thing before we talk about any other debt is credit scores. And it's the only three digit number that Americans obsess over

as much as their weight. It's crazy. And when you look into it, I walk through like, here's what the credit score is actually made up of. Payment history, amounts owed, length of credit history, new credit, and the mix of credit. Your potpourri of debt, if you will. So you have to be in repayment your entire life.

You have to play their game perfectly and keep your debt, keep it a long time, keep going into debt, have a nice mix of debt, make your payments perfectly, and we'll give you this blessing of a score, which does what? Helps you get more debt. But do you see what George is saying? In order to satisfy those requirements, we have to be in a repayment mode our entire life. That's seriously jacked. And it's crazy because that has nothing to do with how well you're doing financially. You can have an 800 credit score and you might not have 800 bucks in the bank. Right. And as we've seen from, I mean, callers call in, I have a great credit score, but I'm in crippling debt, living paycheck to paycheck. The bank doesn't give a rip about you. They don't. And people think, wow, what a blessing it is to have Capital One offer me more credit on this line of credit or offer me a higher credit score if I do X, Y, Z. Yeah, they can give a rip about your freedom. I get the intent behind it. Parents are going, well, I want my kid to be able to

buy a car. Jade, what do I do? Maybe avoid buying a car that is way too much for an 18-year-old to have and just pay cash. And the truth is, if you are already in a car payment, which most of us were, or most of the listeners probably are, I started in two car payments and we said, okay, now that we know that credit's not really helping us, it's not a crutch. Let's sell off one of these vehicles, which we did. And then we paid off the other one over time. It took like two or three years to pay the car off. Then we had no car payments and we had one car. And then we said, okay, the next time what we're going to do is we're going to save up a little bit extra. We're going to put it with the trade in and we're going to buy our next car in cash. That's how you get out of it. And then from then on, you just buy

your cars in cash. Every time you trade in, you add a little bit to it and that's how you trade up. So there's that. What about renting, George? Because that seems to be the other. Oh, this is a big one I dug into. I did a whole video where I called, I contacted the rental car companies. I looked at all the fine print. Every single major rental car company has a debit card policy, meaning there is a way to rent with a debit card. Here's the stipulations. And usually it's a higher deposit. Sure. And so you just plan for it. You pay for the rental in full and plus the deposit. And so it's really not that big a deal. And there's so many alternatives around it, but people always in their head say, but what if no my friend said one time that's the worst right

it's so it's just this idea that we're depending on what somebody else said for but for some reason they don't care about what we said and then renting an apartment okay renting an apartment well little jimmy he needs a credit score to rent an apartment i've rented multiple apartments even houses with landlords without a credit score again i an apartment. I've rented multiple apartments, even houses with landlords without a credit score. Again, I called these people. I called departments across the country. I called landlords. They said, well, are you employed? I said, yeah. Do you have a criminal background? No, I'll pass the background check. I said, but I don't have a credit score. They said, okay, that's fine. We'll just need an extra money for the deposit. And a lot of times they just want to see other trade lines. If you can show, I pay my utility, here's the record. I pay my phone bill, here's the record.

I just don't borrow money. I think that makes you look more responsible. And the same, very similar process for how I got a house without a credit score. Yeah. Talk about that. I didn't pay cash. I got a mortgage without a credit score. So did I, by the way. And people go, well, no lender will do that. And we're like, have you not heard of Church Hill Mortgage? They've been partnering with Dave for 30 years now, and they specialize in these loans. And all it is, it's a real person looking at your real financial situation instead of being lazy,

letting the computer automate it based on your credit score. Yeah. And they go, okay, well, have you paid bills on time? Yes. Do you have consistent income? Yes. Yeah. Okay. Here's a mortgage. And let the record show because a lot of people think, oh, well, it's easy for you guys. You work for ramsey of course you can get it done i had a zero score before i was even a thought to come work here and i bought a house with a zero credit score before it was even a thought to come work here so don't try to let that be the we just want what we want is for you guys to open your mind and accept that there is a way that doesn't require you being in bondage. It doesn't require

you being manipulated by debt. And I get it. Isn't it weird how, and I know I'm crossing a little bit of a line here, but sometimes when you've been abused for a while, you start to protect the abuser. And I feel like in this case, we've been abused by debt and credit. And in America, debt is this drug and we've just abused's the devil you know and now we're starting to defend it no not my credit score I need that don't take that away I'm like guys let's let's take a breather here and I think there's like a thousand loopholes like my life is 10 times harder every day because I don't have a credit score it's really does not affect my day-to-day life um and people say well Jade I need a credit score for my job the application requires it they're checking your credit score to see if you've been delinquent, you've had bankruptcies.

That's right. If you have no score, it's not going to affect your job. People try to use that one on me all the time. And that's a good point. That's a very clear delineation we want to make. A zero credit score is not a bad credit score. A zero credit score simply means I have no dealings with debt. And if I did in the past, I paid it all off. And once you pay it off, it takes about six months to a year for it to roll to zero. Indeterminable. That's a great point. People contact me and say, hey, I heard you talk about the no score loan on

the mortgage. I want to do that. And I say, well, do you have a score? They say, yeah, it's bad. That's why I want to do this. I go, no, this has to be a no score loan, not a low score. Yes. So big difference there. And again, we don't care about the score, but we don't want you to have a bad score. That means you're missing payments. You've been delinquent. That can hurt you financially. That can hurt your ability to rent or buy a house. And so we want you to have no score, which means you got to get rid of the debt. And it's amazing what happened, Jade, when I dropped this scoreboard of having the credit score back in 2013, I paid off my debt. And like Dave said, it'll disappear eventually. It does.

It did. And then I realized, oh, I can just like use my own money. People think, well, George, you just need to be a credit card person. You just need to be disciplined. And I go, well, why don't you just be disciplined enough to use your own money and only buy things when you have the cash? And they go, well, you're missing out on the rewards. I go, I've done the math, bro. I got to spend $100,000 to get $2,000 back. You got to spend a lot to get that, yes. That is insane. And so I guarantee you, I can show you how to save $2,000

with your everyday spending using your own money. Create your own reward system and stop helping Capital One sponsor the next Taylor Swift tour. Love that. And build big buildings downtown while you can't afford your groceries. So debt and credit, not necessary, not required, and not needed is what we're saying. All you need to do is take control of your money and it'll take care of the rest. You're going to be okay.

I promise you. Just try it. 30 days. Attempt this. No credit card spending. Use your own money. See what happens. And watch your credit score disappear and realize it was a terrible scoreboard in the first place. 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 Fairwinds Credit Union because they share the Ramsey mission of helping people get out of

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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. This is the Ramsey Show. Open phones at 888-825-5225. Tammy's up next in Nashville, Tennessee, just down the road. What's going on, Tammy?

Okay. Hey. Hello? Hey, can we help? What's going on? Yeah, so I have a question. My husband and I have been following the Dave Ramsey plan for many years, and we're now getting within 10 to 12 years of retirement.

We currently have $2 million in our retirement funds. Awesome. Yeah, if we were to add no more to it, which is not our plan, we estimate that we would have about $8,000 when we retired. But my husband and I are in a debate. He is five years older than I am, so he's going to retire at 65. And he feels that I need to keep working until I also reach 65 so that I would have health insurance. And I agree that I need health insurance.

But when I'm looking at the amount of money that we would have in retirement, I'm saying, why couldn't we just pay that so that we could both retire and go live like no one lives, right? Like that's the goal. Yeah, you can get health insurance outside of an employer. I mean, you can just go marketplace. And, you know, with the ACA plans, it's not as astronomical as I feel like it used to be. Very few people are, especially if you guys aren't, you're not going to have kids on the plan.

It would likely just be you. Is he going to be on Medicare? Correct. Or he would be on my plan until then I resigned, and then we would both go on Medicare together. It just depends on what the math and the insurance looks like at that time. Sure. Well, that's some easy homework to do. I mean, you can go figure out what health insurance would cost outside of an employer and go, okay, we need to budget an extra $600 a month for health insurance.

Okay. That's exactly what I said. Oh, so Tammy wants to play this call to go, see, you're wrong. I called a random person. Well, actually, no, because I mean, I'm happy that I'm right, but I don't want to make a bad financial choice given how hard we've worked to get where we're at today. Absolutely. And that's where the wisdom comes in. We're going to do our homework and make sure we know exactly what it's going to cost to make this move when we make it. And did I hear you say right now you have $2 million

and you're going to retire in 10 years, or that's the plan? Yes, ma'am. Yeah, I mean, the thing, and you said that that would be $8,000 a month. Is that what I heard you say? When you said that'll give us $8,000 or $8,000? No, $8 million. $8 million, okay. We have our retirement fund between now and when we retire, like if he were, he's 54.

So if he were to retire in six years, we're estimating that it should be around eight million. I got it. Okay. I just misheard you. I was trying to clarify that. Yeah. Okay.

Yeah. And that's, we believe that's if we didn't add anything to it, but we can, we're going to continue to max it out. Good. And then we should have our house paid off in two years. And then we will just be banking all of that money. Just max out all of your retirement options. Right, exactly.

And I just feel like we're going to have cash on hand in the bank. We won't even have to touch our retirement when we both retire. We can live off of the cash. So I just wanted to make sure that I was thinking properly that we could go to the market. And if the market's saying X dollars, then let's just put that back now and plan for that. Just plan for it in your monthly budget. If you know it's going to be an extra thousand, well, then we need 9,000 a month instead of eight. And you're going to be an extra thousand. Well, then we need 9,000 a month instead of eight. You're going to be fine. Yeah. With 4 million, $5 million. I mean,

this is, this is going to be chump change in your world. Well, that's, that's what I, that's what I thought, but I just wanted to get somebody else's opinion. And do you all have any resources? I kind of feel like we followed the plan, but I kind of feel like once you get to like step seven, it kind of falls off and it doesn't really, in my, and maybe I just haven't followed up enough, but like for retirement or you're getting close to the retirement years, what should you do now? If I were you, if I were you, I'd get with a SmartVestor Pro because they're going to be able to look at your situation as it is, and they're going to help you work with your goals

to create the situation as you want it to be for when you retire. And so you can hop on ramseysolutions.com slash smartvestor. Yeah, it'll take you right there. Yeah, it'll take you right there. Then we do have an investing hub as well. If you go to ramseysolutions.com slash investing, we've got a lot of resources and calculators and tools to help you figure that out. The problem is, Tammy, telling someone this is how it has to be in retirement would be a crazy thing to do because everyone's situation is so different. The plan stays the same for here's how to get out of debt. We've had 10 million people do it.

When it comes to retirement, well, do you have money? Do you have debt? That largely will dictate what your life's going to look like and what your goals are for retirement. If you want to spend 10 grand a month on travel, your retirement plan needs to look different than someone who's going to be mega frugal. Or if you want to retire before 59 1⁄2 and you want to make sure that there's money available to you without penalty. But the fact that you guys already have $2 million and you still have another decade of work ahead of you and investing and maxing out, you're not the ones we're worried about.

Let's put it that way. That's right. Right, but we followed your plan. You're living proof So that's how we got to where we're at. It works. It's a very simple formula, Tammy. You get a paid four house and you have a big nest egg, your life's going to be okay. You've got plenty of margin. You're going to outlast your retirement. You're going to be able to leave an inheritance to your children's children. You guys are a great example of that. So way to go. And I'm happy that you're right. I'd rather be right with Tammy. I don't want to be on the business end of Tammy.

Nick is in Fairbanks, Alaska up next. What's going on, Nick? Hey, so I just moved to Fairbanks. I'm looking at buying a cabin right next to work with no running water for around $65,000. Who hurt you, Nick? What happened in your life that you went full hatchet? You were like, all right, this is it. No running water. I got my plant fitness membership. I'm taking my showers.

I got showers at work, too. So, I mean, I'm still maintaining that hygiene. We believe you. We believe you, I'm still maintaining that hygiene, but we believe you, we believe you. But why is this the option? Are there no options with running water? Um, I mean, like there are, but this cabin is 13 minutes from work and otherwise I could get a more traditional home with a mortgage, but I'm looking at 30 to 45-minute drives to work. We're approaching winter. The roads are terrible,

and I just can't wrap my head around a 13-minute drive to work. Are you like a handy guy? Like, is this right up your alley to take this cabin and turn it into what it needs to be? There's going to be a learning curve for me. It's going to need time carrying renovations, but... You're telling me there's nowhere to live within a 40-minute radius of your employment? Correct, yeah. Where do you work? I'm a geologist. I'm a geologist, so I kind of work a little bit in remote areas, and mining is a big thing around here, so...

What happens, what needs to happen to the the cabin straight away for you to be able to live in it and like go through the winter honestly the cabin is livable right now if you throw in a wood stove but you don't have any water um no but i mean like you get one of those five-gallon Gatorade jugs and, you know, you're good. You have electric, so. You do. Even Bear Grylls is like, I'm getting running water, dude. I'm not living this line of life.

I mean, I just feel like in today's world, I don't know why you would choose that level of suffering. What will it cost? What will it cost to add plumbing and running water? Because is there no plumbing or is it just that the plumbing is not working? Tell us more. No plumbing. So not designed for it. If anything, I'm not going to drill a well.

If anything, you would give us this term. Can I just ask like a logistics question? Like bathroom facilities? Yeah, outhouse. All right. If this was like your weekend getaway, I would be like, hey, dude, all for it. Do this in cash. This is awesome. What a cool little thing. But for your normal everyday life, how old are you? I'm 26. Okay. What are your further life goals beyond the cabin? What do you want to do in five years ten years um honestly i want to stay in alaska do all the alaskan outdoor adventures that i that we all see

on the discovery channel and honestly i think this cabin can turn into an airbnb at some point when i'm ready to buy a more traditional home. With no running water, you think I'm paying money to stay there? Alaskan tourism is really, really big market. Okay, here's the deal. I don't want you to mix your general life every day with a cool investing opportunity. That's when we start to make poor decisions and justify them. I would look into any opportunity to live somewhere with running water, even if that means a 30 minute commute. That's me personally.

I cannot in good faith tell you to go through with this purchase. I think the Airbnb market wants bathrooms. Even if you are going to Alaska, it's like, I want to go out in the wilderness by day, but at night I want to take a hot shower. If I want to camp, I'll use the facilities.

But if I'm paying money for a place, I'd prefer a toilet. You're not going to have a girlfriend without a toilet, I can tell you that. Well, that's a weird way to end, but that's it. This has been The Ramsey Show. From Ramsey Network, this is The Ramsey Show, where we help people

build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, joined by bestselling author, Jade Warshaw. We're taking your calls at 888-825-5225. Doug is going to kick us off this hour in Kansas City. What's going on, Doug? How can we help you today? Well, thanks for taking my call, number one.

I really appreciate the time. Sure. I need to know if it would be in my best interest for the IRS to attach a lien onto my 401k. I feel like best interest is a very generous term there. Why would you even suggest this as a matter? Okay. A lot of stuff to unpack. I'll try to be concise.

Okay. My partner developed brain cancer several years ago. Got on social security disability. Cashed his checks, gave it to me. I deposited to my bank. Okay. He passed away after six years of this. And the IRS went back and said, since he was not on my account, that that was considered income. So. Because you took the social security

checks? Yes. Got it. Okay. They said it was considered as rental income and now it threw me into a different tax bracket into the 28 tax bracket at the time okay with penalties and interest it came to 71 854 dollars is that have you verified that that's correct or is that just what the irs is saying no i had an attorney work on it for this has been in the works for four years now okay keep going i got hit with this in 2020 uh two months after my partner passed away i'm so sorry and thank you it's been but anyway um i am so very blessed in many other ways that this is just kind of a little Murphy moved in several years ago and now we're getting ready to kick him out. So the IRS wanted to, I'm paying them $1,100 a month to get this debt paid.

That leaves me with $214 a month breathing room. What's your full income? My full, I make $72,500 a year. Okay. And what of that do you bring home just so we don't have to figure the taxes? $3,937. Okay. Thank you. Keep going. So they're taking over 25 of your income yes essentially garnishing your wages correct okay so i called the irs the other day and said

this just is not working um the company that i work for is absolutely one of the best companies in the world when i started there i just put all my money into the company stocks, which I know you're not supposed to do. And the average I paid per stock was $71.22. The stocks are now $900. Wow, so you've got a lot over there. Is this tied up in a retirement account, or is this just in a... Yes, it is. It's in a 401k.

Just in the company stock portion,, I have 1.4 million. Wow. Wow. Just single stocks. Single stock. And then I have in the other diversified amounts, I have a little over 610,000. So basically it's 2,086,000 into my 401k. But it's all locked into the 401k, which means if you were to access the single stock, you would be penalized.

Okay. Okay, I'm 57 and at 59 and a half, would I be able to sell some of those stocks to pay my house off. And now I wouldn't be charged capital gains, though. It would just be my regular. That's a traditional 401k you have? Yes. That would be as ordinary income, not capital gains. Okay. And I would be okay because at that point, and I'm actually almost 58, so in a year and a half, if everything goes right, my 401k, I'm averaging over the lifetime of my 401k 12.8%. So 12% of the 2 million would be, you know, a little over 200,000. So I'm not really losing anything from this point on if I cash out $100,000 to pay my house off and to finish paying off the IRS. I would definitely do the IRS thing, 100%. If you didn't pull for your house

without the IRS garnishing your wages, how quickly could you pay off your home? Well, with this $1,100 breathing room, I've got $62,000 left to pay on it. Awesome. And it's worth about $340 right now. Nice. What if you do what Jade said? You waited until 59 and a half. You made your payments to the IRS. Then at 59 and a half, we cash out the stocks as much as we need to to pay off the rest of the IRS debt. Let's continue working and use future income and margin to pay the house off.

Then we can look at what retirement looks like. Okay. You're probably in your early sixties at that point. And you didn't touch the nest egg to pay off the house. Well, I don't live an extravagant lifestyle. So even the money that's in there, I will never go through, much less the compounded interest. So I've set up a charity, and then I'm going to move money from my 401k to the charity so I can send underprivileged students to school and give them all the goods and grants and stuff like that. Wonderful. So I just didn't know if it was a smart move. I'm just freaking out because I don't want to owe anybody money and I'm going to have this $40,000 looming over me.

And if your attorney said, hey, this is legit, you have to pay this, then there's no way around it. Let's just attack it with all the intensity we can. But I wouldn't have them put a lien on your 401k. I wouldn't do a 401k withdrawal. I wouldn't do a 401k loan. No, I would not. I would simply just make the payments on time.

And then when you can get more money from that 401k without penalty, I would just knock it out. And if you can find a way to bring in a little extra income for the next year and a half, just so you have some breathing room, I think it'd be worth it to do that. And to George's point, not touch this until retirement. Okay. Thanks so much for the call, Doug.

That's a tough one. Can you imagine getting hit with the IRS bill that much? Like out of the blue, you don't even see it coming. And just so everyone knows that's listening and watching out there. When you have IRS debt, back taxes, whatever it is,

that goes to the very tippity top of your debt snowball. And the reason is they can destroy your life. Well, clearly, because even his payment, the payment that they negotiated together was still over, like you said, over 25% of his take-home pay. And that, on top of all your other bills, that makes things very tight. So it's not a place you want to be. Yeah. And there's no way around it. There's no like, you're not going to negotiate. Like what you owe is what you owe.

You got to pay it. And it stinks. And it's one reason you got to work with a tax pro. A lot of people wait until it's too late or they run a small business and go, oh, I didn't know I had to pay tax. You just thought a small business just gets to avoid paying taxes. But there is part of that, though, that just because you get a bill from the IRS, you do need to do your due diligence

because they don't always get the math right. Yeah, and a lot of scams out there where people claim to be the IRS and they scare you with fear to go, hey, you owe us this money. And the IRS goes, no, that was a scam. You just gave money to a scammer and you'll never get it back.

Yeah, they almost, I don't think they ever will call you. Almost every contact I believe is through the mail. And I always go, all right, let me call the IRS myself with the number on their website. Call them because you can even spoof numbers now. It looks like it's coming from a legit number or a legit email. But if you send an email out or you call that number, it's the legitimate institution. I Google them.

If I get something, like I got something from Ally Bank and I thought it was a scam, I just Google it and it'll tell you if it's a scam or not. Good wisdom there. 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.

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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. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. The number to call is 888-825-5225. Well, Jada, we just launched a brand new tour. Dave and Dr. John Deloney are hitting the road. They're coming to a city near you. It's the Money and Relationships Tour.

And this is a cool event because the audience shapes the conversation every night. You get to select the topics that matter most to you, whether it's budgeting, relationship dynamics, achieving your financial goals. You get to drive the night. And they're heading to Louisville April 21st of 2025, Durham on April 23rd, Atlanta April 25th, Phoenix on May 5th, Fort Worth on May 7th, and finally ending the tour in Kansas City on May 9th. So join Dave Ramsey and Dr. John Deloney live in person. You're going to laugh, learn, you might change your life. Get your tickets to the Money and Relationships Tour at ramsaysolutions.com slash tour. And if you're tuning in on YouTube or podcast, just click the link in the show notes.

All right, Jade, we've got a Ramsey Network app question here. And if you didn't know, when you download the Ramsey Network app, yes, you can consume all the Ramsey content for free, get exclusive stuff. But there's also a spot to submit questions. I love that. And occasionally we'll take those on air. This one comes in from Chris. All right. He says, my wife and I are planning to sell our condo in Wyoming and purchase a house in Indiana. My wife is a stay-at-home mom and I earn $110,000 per year. We have $90,000 saved and expect to profit a minimum of $175,000 on the sale of our condo. Our only debt is a car payment of $600 and a balance of $30,000. Should we use all of the equity in our house and savings for the down payment on our new home?

Just about, let's see, you've got $90,000 saved. Yeah, I mean, once you pay off the house, you've got the $90,000. That would make up three to six months of expenses and then some. So now we've knocked out baby step two and baby step three. And then after that, you start investing. And so, yeah, if you wanted to put all of this really on the new home, you could, as long as you keep out three to six months of expenses. Yeah. If you walk through those baby steps, I mean, they're going to have $265,000 in savings once they sell. So if you

take that and you go, all right, we need $1,000 saved, got that. Next up, let's knock out the $30,000 of card debt. Knock that out. Now we're down to $235,000. Now we need three to six months of expenses. Let's call that $35,000. We're going to put the rest of the $200,000 onto the new house as a down payment. Love that. That's exactly what I would do. Simple. Sometimes the simplest answer is the right one, but we want to overcomplicate it. We go, well, I don't know if I want to put it all in the home and I want to just knock out the mortgage. There's something about having money in your hand. You're like, maybe I should just keep it here in my hands. Yes. Or I could invest it and make more, or you could not owe anyone anything. I love that. How's that? That's a good

plan too. Yeah. All right. Let's get to the phone lines. Nathan is in Kansas City. What's going on, Nathan? Hi, how are you guys? Doing well. How can we help today? So I just had a question. It's more of a relationship question. About a week ago, my girlfriend gave me an ultimatum on which candidate I should vote for in the upcoming presidential election. When you say ultimatum, it's like, vote for this person or I'm breaking up with you. That's indirectly what she said. Can we know who she wants you to vote for yeah i mean i don't just for the team yeah sure that's that's fine so she uh she wants me to vote for kamala harris okay somehow i knew that i don't know why i don't know somehow i just knew that okay and you're like no i don't want you guys was it like a friendly discussion about politics when it started or has this been a recurring thing does she get fired up

about political issues um as i found out the other night yes very much so so you discovered a new value of hers that is not a value of yours are you are you politically charged as well on the other side or are you just like i don't it's not my thing no it's not really my thing like i don't i don't care who you vote for. Like, I'll go have a sandwich with you afterwards, you know? Okay. But she kind of cornered you and said, hey, wait, who are you voting for? Well, so here's the situation.

We've been, I'll try to keep it as brief as I can. We've been together almost three years. We actually leave for Mexico in less than two weeks. Maybe. Yeah, where I plan to propose. Oh, man. And then so how it came up was, is we're going to be turning in absentee ballots. And she just asked me, hey, who'd you put on your ballot for the political party? And, you you know i was vague with my reasonings why because you had a sense you had a feeling that she was going to be pretty strong um i otherwise why would you hide it well i don't i don't i don't feel like i was i don't think that i was hiding it

but i mean i'm just saying like, if you didn't think it was going to be anything, you probably would have been more forthcoming. But something, you know her well enough to know that you could probably guess maybe who,

because I'm just thinking when we vote, it's generally a reflection of something we value. And whatever that value is, we've probably displayed it to the people in our lives. I would, I mean.

The people closest to us. So prior prior to this i could have guessed that um well actually i she had expressed that she was um interested in the i think it was the independent candidate uh what was his name robert f kennedy uh-huh um yes um and that's who she was interested in. Okay. I mean, I don't know if I failed by not having a discussion about politics early in the relationship. I just, I didn't think that was, I thought that was something you could agree to disagree on. And you can. That's the thing. It's not a, like, you have to agree on politics or else. But if she is this intense about it, then this is a red flag that this could be a rift later on in the thing. It's not a like you have to agree on politics or else. But if she is this intense about it, then this is a red flag that there this could be a rift later on in the relationship. one issue what's the single issue that you really feel that we're divided on because it might not be

do you know what I'm saying because I think right now you're thinking of it as like this candidate versus that candidate but it might be something that she's like I just you know I grew up poor and the fact that these you know it could be something that's linked to who she is and that if you guys speak about it in a direct sense as opposed to um like the the candidates right like try to talk about it and keep the candidates out of it and say okay what is it that you're hoping for and i'll tell you what i'm hoping and you might find that you have more in common than you have not in common okay and you might be able to find that common ground i'm not saying that you're gonna 100 agree but you might at least be able to find that common ground. I'm not saying that you're going to 100% agree,

but you might at least be able to find some common ground because the truth is like a lot of the issues are very, very polarizing and they do require a deep conversation in order to find common ground. That is the truth. So I would get to the bottom of this and I would avoid the headlines

and what's happening in the media because what's really happened, Jade, is they've weaponized it all. And it's if you vote for them you want democracy to die and if you vote for that person then it's all going down and i just that none of that is going to happen and so i think i don't know her level of emotion around it but i think getting to the bottom of it and then figuring out okay are you going to be able to respect my autonomy in this relationship to vote as i see fit and if not if you don't respect that boundary then this relationship may not work in the long term because there's going to be another election well and to be fair like to be fair she's allowed

to have very strong convictions and so are you and if you guys find hey we're not aligned that's okay like it can just be like you know what i hate that it got to this point and we realize we're 100 not aligned on some things that are really really important because the truth me just being jade right now sam my husband sam and i we're aligned and i can't imagine not being aligned that yeah i mean we say that politics religion family those are some of the key things you that you tend to have to be aligned on now people can make it work when they're not aligned we people have mixed religions and mixed politics they can but i don't know i can't speak to how easy or difficult it is yeah there's going to be more difficulty and you guys have to be both healthy people yeah and if one person is unhealthy there's not going to be

a future ahead so you're gonna have to have some tough conversations but i would not move forward with this relationship and propose until we get to the bottom of this because if it's true the ultimatum you vote for anyone else it's over then i think we need to figure out what's next religion politics money how you raise the kids how you want those are yeah have you had these conversations, Nathan? So we've had the conversation of the four things I think you talk about before getting ready for an engagement or marriage, right? It's the how many kids

you want to raise. It's the in-laws. Well, this is the next one, man. It's not going to be fun. And I hope it works out. I hope this is not the line in the sand she draws, but that's a weird one. This is The Ramsey Show. There's a time in your life and in the baby steps for renting, but you don't want to do it forever

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into a baby steps millionaire. So get started on the American dream of home ownership today at churchillmortgage.com. today at churchhillmortgage.com. That's churchhillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLS consumeraccess.org. Equal housing lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Phone number to call is 888-825-5225. But in the meantime, on the debt-free stage, we've got some special guests. Eugene and Jennifer are with us. Hey, guys.

Hey. How's it going? I'm guessing by your Debt Is Normal Be Weird shirt and your debt-free sweatshirt, you guys are debt-free. Absolutely. Yeah. Where are you from? We're from Warminster, Pennsylvania. It's about 20 miles north of Philadelphia. Awesome. Thanks for joining us to celebrate

your debt free scream. Tell us how much you paid off. We paid off $173,000. Let's go. How long did that take? 48 months, four years. Wow. And what was your range of income during that time? $125,000 to $185,000. Nice. Wonderful. What do you guys do for work? I'm a project manager at the local utility company in Philadelphia. And I also did some side hustles, grocery delivery for Walmart and Amazon Flex. Wow. Not scared of work. I love it. So what happened? What happened four years ago that you guys just said, that's it, we're going after it? Yeah. Well um i guess it started when our uh when our fourth was born carolyn um i was kind of in a midlife crisis trying to look for ways to get more money i was looking into um you know investing uh people trying to i even went and bought uh

two i i spent two hundred dollars on something to try to invest in sectors, but that didn't really go so well. You're looking for a quick, a get rich quick scheme. A get rich quick scheme. Jennifer is shaking her head yes, he was very desperate. And Jennifer, what were you thinking during this time? Was money stressful for you four years ago or was he taking this on sort of solo? Yeah, he was solo. You're like, I'll let you taking this on sort of solo yeah he was solo

you're like i'll let you do this on your own yes wow okay so you decided to make a change what kind of debt was this 173 it was her house what okay plot twist so kid number four rolls along you get desperate to get some get rich quick scheme and then you find dave somehow what happened yeah so um you could probably tell this story better than me, but she usually watches God People Stories. It's a podcast. Billy Graham podcast. Yeah. And she showed me Dave Ramsey was on there. And I'm like, who is this guy? I did run into some of his YouTube videos, but I'm like thinking, oh, he's too normal. He's telling you to invest in retirement. I'm already doing that. He's like, get rich slow. I need someone faster, Dave. Come on. Exactly. And it's like, that's not sophisticated enough. So I started looking into these. I bought

some investing books. And as I mentioned, I spent $200 on trying to invest in sectors. And I actually opened a brokerage account and put $40,000 in it. But in three months, I ended up losing $2,600. And it wasn't fun. Yeah. Wow. So was all 173 the house? Yeah, it was the house.

So I guess, yeah, when we started, there were a couple things that led us to actually doing this. We ran into some people at church that were doing Financial Peace University. They were starting up a class. So I guess right before COVID, that's when we went over to their house. We watched probably three lessons. And then after that, of course, the pandemic hit. But then me and my wife were fired up. And we got to do this. We got to buy the Ramsey Plus membership. And then after that, of course, the pandemic hit, but then me and my wife were fired up.

And we got to do this. We got to buy the Ramsey Plus membership. So we went in, binge watched probably the remaining nine lessons to get kickstarted. And that's kind of when we started being on the same page. And I'm like, our only debt left was the house. Luckily, we had no consumer debt. Ever since I started my job, I was consistently investing 10% into retirement. So I'm like, I'm glad we got that going for us.

But we weren't organized. We weren't doing a budget. It was just, we made a lump sum payment for the credit card at the end of the month and paid for the previous months. This month, it was just a mess. And you're like, we should be doing better. If we got on a budget, we could find more money and get this house paid off. Yeah. So what was the tactical piece of this?

Did you guys just go, all right, we're doing the budget. How much can we throw at the mortgage every month? Yeah, for the most part, I just got me thinking, I'm going to set a goal for myself. I'm going to pay this off before I turn 40. I think I was 36 at the time when we refinanced our mortgage and then, yeah, just kind of ran it through an amortization schedule and then figured out if we put $400 extra a month for a side hustle, then we can pay this off.

When you see it like that, it really changes things. And, you know, for you guys, you did this in four years, which is fairly quickly. Explain what that felt like, because we always say, you know, the first few baby steps you're going through with intensity, you're going fast, fast, fast. And then baby step six, it's more intentional. And so you guys were kind of right in the middle of that. So what was the hardest sacrifice or was there a sacrifice? He pretended it was a baby one two or three really he just stayed intense he stayed intense yeah and you were fine with that you were like all right i'll go along i wasn't initially yeah how did this affect the the family the kids they even know what

was going on no we we stopped eating out all the time we really got on a budget and they didn't like form a mutiny against you guys like what happened okay they're too little to know or care they just go okay chicken nuggets for dinner whether it's from you know chick-fil-a or the oven who cares yes exactly that's it that's simple wow he wouldn't have paid off before his 40th birthday and today's his birthday congratulations and happy birthday thank you so what's it feel like? You have no payments. Have you had that first cycle of where the month comes and there's no payment? This is the first month really that it's kind of hit us.

Oh, wow. It's that fresh. And it just stays in your bank? What do you do with this money now? Hopefully you're not going to do sector trading anymore. This trip was our first. This was it. You traded a mortgage payment for a little vacation

in Nashville. Yeah. Wow. Can I ask what was the mortgage payment? It was, I'm trying to think, it was $1,600. And then, you know, with all the taxes, it was like two grand. Wow. $1,600. Wow. Back into your pocket. And then you're like, hey, can we throw an extra thousand, 2,000? Like, what was the biggest payment you made at once? I get my bonus every year, so probably about $10,000. Awesome. And seeing that principle go down and seeing less interest go to the lender, making them more rich, it is an incredible feeling.

It will carry you to the end. So proud of you guys. Absolutely. What's next? What's the next big goal? What's the next big celebration? I think we want to get a bigger house just because we've been living in the same house for 15 years, our starter house. So now, you know, with four kids and everything and a teenager, it's time to move up. And now we can do this, you know, within the Ramsey guidelines, get a 15-year fixed rate

that's no more than a quarter of your take-home pay. And my guess with your nerdery, this thing's getting paid off fast. Instantly. You'll be back for a second debt-free screen four years from now. That's what I'm thinking. Way to go. What do you tell people the key to getting out of debt is? I think, yeah, consistency and just for me and Jen, it was just our why, why are we doing this? It wasn't until we watched financial peace together where we were like United and you know getting this done you know even though she's a she's a home school mom we she had for you know with the four kids but just being on the front having her as the support while I'm doing this was just instrumental and you know being able to give to you know

ministries not being not being you, restricted by payments from the bank, obviously being able to free to do, you know, our money and then, you know, following God's will. Yeah. You just have more options now. You get to do what you want. No one's telling you where that payment's got to go. Absolutely. Oh, that's incredible. How much is the house worth? It's about 500,000. I just looked. Whoa. And what's in your retirement accounts, everything? I just looked before this. About $700,000 in retirement and investments and all that stuff. Baby steps millionaires right in front of our eyes being weird.

That's incredible. Well, we have a gift for you. We have two every dollar premium vouchers that are good for one year. You can use them. You can pass them along, get someone else started. We're so proud of you guys. Thanks for joining a gift for you. Two every dollar premium vouchers that are good for one year. You can use them. You can pass them along, get someone else started. We're so proud of you guys. Thanks for joining us. Thank you.

You ready? Are we bringing the kids up or what? All right, bring them up. Quick names and ages. Melanie's 13, Eugene's 12, Carolyn's 5, and Rosie's 9. I love it. All the way from the Philadelphia area to do a debt-free scream. You guys ready to scream?

Yes. Okay, here we go. It's Eugene and Jennifer, Melanie, Rosie, another Eugene, and Carolyn. $173,000 paid off, house and everything in four years, making $125,000 to $185,000 with the side hustles on his 40th birthday. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Woo! We got a

little Eugene as the champion shirt on, and I think that's what they are today. They're champions. They happened to their life. They didn't just wait. They didn't hope. They got on a plan. They followed through. They were consistent. They were on a budget. And it's possible for you, America. 40 years old, on his birthday, completely debt-free. That's something to celebrate. This is The Ramsey Show. are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the

bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative to health insurance, Christian Healthcare Ministries. CHM is a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of over $11 billion in medical bills since 1981. And CHM has also helped them stay true to their values and avoid miles of red tape. And CHM support goes far beyond meeting financial needs. They'll also help meet spiritual needs. Members become part of a family who will pray with them and for them when they experience a medical event.

So listen, y'all, there's no better way to take care of healthcare costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org budget. That's chministries.org slash budgets. That's chministries.org slash budgets. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. 888-825-5225 is the number to call if you want to jump in.

Arnold is in Baton Rouge up next. What's going on, Arnold? Hi, George. Hi, Jade. My wife and I love you all very much. Oh, thank you. That's very kind. Excited to talk to you. So we are in a FHA mortgage, which we got before we discovered Dave Ramsey. We have no consumer debt. We're both engineers and we're paying off our house quicker. Good.

And we're sitting at a six and a half percent interest. And we have a savings built up where we're ready to pounce whenever interest rates like actually go down in the next year or so, as they say they are. Our current mortgage payment is seventeen hundred and sixty one dollars plus escrow brings it up to $2,584 per month. But we got called from our current mortgage provider, which is like the third one by now, because, you know, it's a game of hot potato. They just sell off the loan and forget about you. Yeah, yeah, it is what it is. And they're offering something called a FHA Streamline.

And when you Google it, the law says it has to be a net positive for the person getting the Streamline. And they said that they will cover the closing costs of that quote-unquote refinance. That's great. And all I got to pay is origination fees, which is about $200. And my PMI even goes down some. Now, the numbers they're giving don't seem to match. These are the people that have my numbers, and yet they're telling me this monthly savings which would be about two months to gain back the uh um origination fees um depending on how i if i go 15 or 30 which we do 15 obviously okay but they're giving numbers that just don't add up so like what do y'all know about this is

it too good to be true um that's a legitimate product. It really depends on the numbers and if it makes sense. And what you're laying out right now, if it is true, that it's only going to cost you $200, you're going to break even on that very quickly. And that's what you want to look into with this. So is it going to, number one, lower your interest rate? Do you know what that new interest rate would be? Yep. 6%. So half a percent. Not enough to refinance, refinance, but $200, yeah. And you're keeping the same loan term? Does it make it a new 15?

I'd have to go into a new 15 or a new 30. The loan's about a year old, and we've already knocked off about four years off of it. And you don't have much equity, it sounds like. About 15% currently because the value has gone up a bit. So by the next year, we should be at about 20%, which would be great for refinancing for real. Is the streamline part just the idea that there's not a closing or is there something else that's being streamlined? I don't know. That's why I was asking y'all.

Yeah, I mean, the streamlined, that's just, you know, there's less paperwork. So you get a lower interest rate without all the paperwork and the credit checks that usually come with the standard refinance. So the main benefit because of that are reduced fees, and you don't have to provide as much documentation. Listen, that's exactly, truly, I mean, I continue to do your research, but during this time, I would be looking for incentives to refi because a rates, you know, will go down, but then you don't know, are they going to go down even more after that? And so you kind of don't want to be caught in this feeling of, oh, I just paid closing costs. I paid all of this and

now rates have gone down again. So I would be looking for some sort of incentive that lets me refinance down until I get to the best rate without having to pay a bunch of closing fees. So it doesn't sound scam worthy. It sounds like it's a legitimate product and they'll make a little scratch and you'll save. It could be a win-win for everyone. And if you want a second opinion, I would reach out to Churchill Mortgage just to say, hey, here's what they're offering. Can you look at these numbers? Make sure I'm not missing anything. And we've got great folks over there that we've partnered with for over 30 years now, and they're my go-to. I've got a mortgage question. I'll reach out to my buddies over there and say, hey, will you look at this? Tell me if I'm off here. Or hey, a caller had this

question. What's your experience with this? And they're very helpful, very knowledgeable. So thank you for the question and good luck on paying off that mortgage. All right. We've got our question of the day brought to you by YRefi. Private student loans are different than federal student loans like Sally Mae, but they can hurt just the same. YRefi refinances defaulted private student loans and builds a custom loan based on your ability to pay. So to stop feeling the pain of defaulted private student loan debt, go to YREFI.com slash Ramsey. That's the letter Y, R-E-F-Y.com slash Ramsey might not be available in all states. Okay. Today's question comes from Rachel in Wisconsin. She says, I want to be

financially prepared to ask my husband for a divorce. He purchased our home the year before we got married and we've been married for five years. We used the $75,000 of profit from the sale of my house to update our home. We have combined finances, so we both contribute to the mortgage every single month. However, we never added my name to the deed or mortgage. I'm worried because I don't know if I will be entitled to any of the equity in the house. We have children together and I'm scared to leave until I know that I will be financially secure to start over with them. Okay.

Yeah. If you had said that, you know, we're boyfriend, girlfriend or whatever. Or married six months. Yeah. But you've been married five years. You have protections. just being married. There are financial protections in place and no judge is going to say, well, you're on your own. You didn't, your name wasn't on the deed. What can you do? They're going to go, all right, what is equitable here? What makes sense based on

the situation? And in most states, it's kind of, I can't say all states, but in most states, it's automatic that if something, once you're married, that you're both. Marital assets. Yeah. So it becomes joint assets. So, again, I don't know your situation. I would be working with a divorce attorney to figure out what makes sense here, depending on, you know, you said you have children together. I don't know what the deal is going to be with custody and alimony and child support and all of that.

But it's not going to be, well, you're on your own and you're not getting any money from the sale of the house. You might have to force the sale. Maybe you keep the home and the kids are there half the time. I don't know. But I'm sorry you're going through this. This is not a fun situation. We say that divorce turns marriage into a business transaction. And I'm glad that you're at least looking into what it takes to be prepared and if you're going to be financially secure. But the truth is being debt free and selling this house is probably going to maybe the best thing depending on the financial situation. But I hope it's not too late. The way she's phrasing it, it sounds like there's no hope

for this marriage. Yeah, I yeah, I don't know what's going on i don't but something about her saying i want to be financially secure to start over with the kids makes me think that she's kind of like trying to get out of situation here but i would talk to a lawyer i would just try to do a consult um for as cheap as possible just to find out what's the law in my state and what does it mean and what's the what are the likelihoods here just based off of general information yeah because income is another part was she right at home with the kids and he was making a bajillion dollars or were they making about the same yeah that's going to come into play so oh i'm so sorry rachel not fun at all all right if you're listening to the show on youtube or podcast some bad news it's about to end good news you can continue watching and listening to the show on YouTube or podcast, some bad news, it's about to end. Good news, you can continue watching and listening on the Ramsey Network app in a distraction-free experience.

You can go further. We've got calls picked for you. You can filter by topic. You get all the Ramsey shows in one place. You can ask questions over there. So don't miss what's coming up next. All you need to do is click the link in the show notes or go watch the rest of the show in the app for free. And Jade, we just had a great staff meeting update from the Ramsey Network team about all the things they're doing in the app,

what's going on in there, all the exclusive content. And can I tease that you are a part of a project that I'm hearing might be exclusive to the app? Oh, really? I don't even know about this. You tell me. Well, I'm just, I can't say anymore. I'm sworn to secrecy by contract, but I'm very excited for the exclusive content they're going to be putting into this app on top of all the Ramsey Network shows that are already free. The app is totally free. We have no plans on ever charging for this app. So go check it out in your app store, Google Play, the app store on Apple. My husband watches the show in the app, and he was saying the other day, he's like, it is a much better experience.

There's less interruptions, less commercial. Like, it's just, it flows. That's the plan is, you know, the third-party apps are great. We're not mad at them. But to have an experience that we can control and curate is really, really cool. And people are flocking over to it, including some exclusive interviews. So go check it out in the App Store because the third hour is exclusive to the Ramsey Network app. We've got some good calls coming up.

We've got John in New York. Catherine also in New York. Do they know each other? We're going to find out. How do I talk to my parents about the money they owe me? Stick around for that. We'll see you in the app. This is The Ramsey Show.

From 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 Jade Warshaw. Open phones at 888-825-5225. John is going to kick us off in New York City. What's happening, John? Hey, thanks for taking my call.

I appreciate it. Absolutely. How can we help? So I just paid off about $32,000 in consumer debt between an auto loan and credit cards by getting rid of the car and paying off the credit card debt. And I'm currently kind of now getting ready to go to like the next step in the baby steps, building up a little bit of a nest egg and paying off some other student loans that I have. And I have a loan out with my parents.

It was a couple years old, haven't talked to them about it since. And I'm now kind of trying to figure out like how to broach that conversation with maybe talking about a reasonable payback plan for them. You owe them or they owe you? They owe me. What was the original agreement? It was $4,000 and they'd pay back as soon as they could. And that was a couple years ago and we haven't really talked about it since.

As soon as they could is not the concrete agreement you want to be a part of. And you've received zero? Like no payments, nothing? as soon as they could is not the concrete agreement you want to be a part of. And you've received zero, like no payments, nothing? Yeah, no, no payments. Are they broke? Like how are they doing financially right now? I think they're building their way back up, but they fell on some pretty hard times at the time of the loan.

Do you know what the loan was for? What'd they use it for? It was for a utility bill. Okay. Oh, wow. So they were way behind on utility bills and said, can we borrow four grand? I made the offer. Okay.

Okay. How old are you? 26. Okay. And you said that was two years ago? Yeah, it was about three years ago. Okay. So here's the thing.

I'm not big into loaning money uh at all and especially to family in my opinion there isn't really a loaning of money it's i just give you the money right yeah and i wonder if i had the money but i just don't know yeah but i think it could it could behoove you to consider this because here's the reason why. The reason why I don't lend money is because it causes issues, especially with family. There's like the, but you said this and what'd you spend it on? And now I'm watching your lifestyle to see if you can actually afford to pay me. And that is kind of weird. And then, cause if I go over on Thanksgiving and I see you bought a new recliner, I'm going to be asking questions in my mind. So it creates this kind of resentment. It creates a lot of

unspoken questions. You might consider changing this into something that you gifted them. You might consider it. It's just what I'm saying. What other debt do you have? I've got student loan debt, about $30,000. Okay, so $30,000 to go. How much do you have in savings right now? About $4,000. And what's your income? $56,000. Okay.

So based on your current path, how long would it take to knock out the student loans? I might be going to medical school. So in the U.S. Whoa. So you may just hang on to the loans? I may, yeah. What's medical school going to cost? That would have to kind of—I'm not exactly sure right now.

It would depend on the financial situation when that happens. Are you pre-med now? What have you been doing, or what are you doing for work? I work in cancer research. Okay. So you're in the healthcare field already. How much longer do you think for med school? Do you have any experience so far? Yeah, I'm applying right now. Okay.

Have you decided that you're going into student loan debt for medical school? Has that been what you've just kind of decided? No, I'm hoping to get a military scholarship, but I mean, that's nothing you can count on. Okay. That's good to know. I was just trying to understand your philosophy around student loans. Cause why were you, why are you not going to attack the 30,000 with the same intensity that you paid off the other $32,000 of debt? Yeah. I mean, that's kind of the plan that would uh do with any loan or any extra cash that i have i'm putting some of that money that i got back from selling a vehicle uh i've seen loans okay let's let's talk about your parents what's the relationship like right now that's good we just

haven't talked about the loan is it just kind of under the rug like they don't bring it up you don't bring it up i think so we don't talk about bruno okay who's more awkward you or them i think it's probably pretty equal okay so what do you think would happen if you're like hey i just wanted to check i'm getting my finances in order i'm you know considering um med school coming up i've just paid off 32 000 of debt and i've got 30 left and i'm just trying to see what my money looks like. Do you guys have any plans to pay back that $4,000? And if so, when do you think it would be? Just casually asking. Yeah, I don't know. It could be, we don't have the kind of money to pay that back. But I haven't even approached that kind of a conversation to be honest. And if they said that,

what would your reaction be? Like if we role played that out and you asked me and I said, honey, I'm sorry, we've got a lot going on. We just don't have that kind of money right now. What would be your reaction to that? I'd just let it go, to be honest. Okay. So when you say let it go, you mean indefinitely? Yeah, I think that would be my only choice. Yeah. Okay. Yeah, let it go. Do you think, if we're going to gonna be honest would there be a shred of resentment towards them yeah probably considering i'm you know not well off myself so what lesson have we learned from this i never loaned family money ever again i wouldn't loan anybody money to be honest i would just if somebody falls on hard times and you want to be generous and help

them just give it. Yeah, so here's what I would suggest. Yeah, you can ask them about it. I don't think it's going to hurt anything at this point. Just ask, hey, what were your plans? And it's not you loading them with a bunch of pressure, just saying, hey, what were your plans? Were you planning to pay it back? If not, just let me know so I can,

I don't want to count on it if you're not planning on paying it back. And maybe just call out that this is an uncomfortable conversation. We do that in our business brand, Entree Leadership. If you sit down with a team member, hey, I'm going to preface this. This is not going to be a fun conversation. And that'll kind of at least set the tone.

Hey, elephant in the room, I gave you guys this money a while back. I know neither of us have talked about it. I need to know where we're at with this. And even, I love that, George. And maybe even also say, I want this to be the first and the last time we ever talk about this. So whatever we decide today, that'll be that. I won't bring it up. You don't bring it up. And whatever we decide, that'll be that on that. I think that will also help it to kind of resolve. But you can also help them with your own story and say,

listen, I've been following this plan. I've been able to pay off 32 grand of debt. You guys know I'm not making bank out here. And if this helps you, I'd love to just gift you the book that helped me. Would that be something they would be into? Are they not looking through actually a pretty dramatic shift. We're trying to change their own habits and lifestyle in the last year and a half. I'm just not where I am. I'm just not sure where I am on the total goal of paying back debt. Yeah. Yeah. And honestly, something that could also help you, John, is because you said, and I get it, I'm not trying to minimize this at all. You said, hey, if they don't pay back, I might have like a little bit of resentment. You know, I wanted that something that might help with that is just to fully own the fact that you offered it you said

it and just to say hey I should have known that there was an opportunity that that it wouldn't get paid back as much as you can kind of take on that responsibility you'll do less you'll have less resentment or animosity towards them about it over time? Yeah, that's a good suggestion. Yeah, it's tough, man. I hate it. $4,000 is a lot of money. I don't care who you are. I always go back to the quote, choose guilt over resentment. I'd rather you feel guilty for not giving them the money than be resentful that you did.

And now they've never brought it up once and will likely never pay it back as long as you're alive. So that's tough. I'm choosing guilt. It's a better way to live over resentment because you're alive. So that's tough. I'm choosing guilt. It's a better way to live over resentment because that is a poison and that will grow. I'm so sorry, man. This is The Ramsey Show. Welcome back to The Ramsey Show, 888-825-5225. That's the number to call if you want to jump in with your question about life and money. Catherine is up next in New York City. How can we help, Catherine?

Hi. How are you guys? We're doing well. How are you? I'm good, thanks. So I'm having a little bit of a predicament. I've been thinking about this for a while. I'm a 19-year-old hairstylist. I live on my own. I don't make a crazy amount of money. What do you make? Monthly I make about $1,200 before tips. Okay. What do you make after tips? I would say roughly like $1,700. Okay.

So I got a car last year. So I was driving driving last year i crashed my car after three days of having it um and and i'm just wondering now if i should get my if i should get my car back to the bank um because i got another car and i had trouble for a while finding insurance, and I was able to get insurance from USAA. Every other place will not insure me. Did you have insurance when you crashed? I did. Okay. It was under my mom's, and I got insurance by myself.

I pay about $500 a month, and it's becoming a little outrageous. It just goes up and up every month. Are you near New York City proper or are you further out? I'm further out. I'm upstate. Okay, so you need a car. I need a car. I work 9 to 5. My boyfriend of three years also works 9 to 5,

so I'm thinking of just giving my car back, working with my boyfriend's schedule to get to work on time, and then buying a car outright and putting it under my vehicle. Why say voluntary repo, though? You're talking about doing a voluntary repossession versus selling it. What's the car worth? Like $6,000. When you crashed it, did insurance write you a check for anything? So this is a separate car yes

what do you mean so walk us through what happened you you get the car three days later you crash what happened to that car it got um it was done did you owe money on that car no they actually gave me like 700 after so then insurance writes you a check for how much? $700. Okay. And was that enough to clear what you owed on the car? Yeah. Okay. So you're 100% scot-free off of the car you wrecked? Yes. Okay. So then you turned around, they wrote you a check for $700. You paid that one off. Then you turned around and you got another car. Yes. How did you buy that car?

I financed it. So I put $500 down. It was $13. Okay. So you bought it for $13. And then what do you now owe on it? Or what, I'm sorry, what's it worth? It's worth like six grand if someone were to buy it.

Got you. So you owe $11. It's worth six. And what's the payment? The payment's what's strangling you, I guess? Not the payment itself. I pay 270 a month. It's the insurance. I pay about like over $500 a month. Because of your age and driving record. Got it. Yeah. So that, there's part of this that it's kind of a tough truth which is insurance is expensive and then when you get in wrecks it gets more expensive um and the the real truth here though is your income you're you know you're 19 years old you're out on your own but 1700 is just not it's not a living wage poverty level yeah so we need to figure out a way to make more money. Even if that's with side hustles,

that might be a different job. I mean, when you think about it, if you went and made $15 an hour working retail, that's 30 grand a year. You'd get a raise. And then you could do hair as a side hustle. And you could probably- I work 40 hours a week.

But do you see how that doesn't add up? Everybody's got the same 40 hours to work. work maybe eight or nine dollars an hour right now if you actually broke it down okay it's hard to make it listen with with hair and things like that if if you're depending on how you're doing it the margin doesn't add up because for 40 hours that's a lot of your time girlfriend for you to come home with $1,200 and then you're just depending on hopefully they tip the right way. I think that there's a way for you to combine hairstyling and a full-time job that's going to pay you $18 or $20 an hour.

Do you get to choose when your appointments are? Like if you open the books, you know, just Saturdays and Fridays or something like that, could you pack in all of your hair appointments then? So it's my first year of doing hair, so I don't really have like a big clientele. I work at a chain salon at the moment. Okay. And you're working 40 hours. My guess is most of the time you're kind of standing around.

You're not actually taking clients then. Yeah. We have quite a few walk in so that's where i make most of my my revenue i work off of like commissions so so you kind of have to treat this in this way um a profession like this you almost have to treat it as though it's your small business and the way we teach that is we say get it get a nine to five and then work your small business on the side, work as a side hustle. And as it starts to create more and more income, you're getting to the point where that can take

the place of your full-time job. And right now you've kind of got it backwards. Even if you went and got a normal retail job for a year while you paid off this debt and built an emergency fund, that would be a better move for you financially versus staying in this rep. But I don't think you should do a voluntary repo on this car. Definitely and why is it only worth 6k um that's what it says like online when i see how much the actual car is worth did you do kelly blue book value for private party sale or was that a trade-in value that was a trade-in value okay that there we go if you sold this private party you'd be a lot closer to that 11k that you owe so i would do your homework there and what kind of car is it

it's a 2016 nissan centro i would think that that would hold value a little bit better but do what george said and check the private sale value of it because it's very possible that you could get a lot more for it and the key is even knocking out the payment you still have a big insurance payment that's likely not going to go away for a while. Exactly. Until we have more, you know, you get older, your driving record stays consistent and positive. The problem is the income here. But what I don't want you doing is depending on the boyfriend of three years. I want you to go out and I want you to make this happen. It's going to cause you to build confidence and you won't have dependency on anybody else until you're married. Next up, we're going to Gene in Columbus,

Ohio. How can we help, Gene? Hi, I got a question on retirement. I'm nearing retirement. I was totally sold on Dave's idea of not going conservative, saying all high-quality growth stocks. But the nerves there are, you know, if we hit a recession, our market drops 50%. And I heard an idea that I didn't know the wisdom of. The idea was because the typical bear market lasts 6 to 18 months, longest 3 years. One person said stay in high-quality growth stocks except set aside 2 to 3 years and really conservative, so you never have to sell when the market goes down. I'm not sure how to do the math on that

to find out if that's a better deal than just staying in high growth the whole way and weathering up and down. So you set up a separate account with more conservative funds? Yeah, they basically said, if you think you're going to live off of, you know, 60 grand a year out of that,

then take 180 grand and stick it in a conservative fund that's in treasuries or a real conservative fund. Yeah, I've heard this concept before, and it tracks. I mean, they're saying, hey, even a high-yield savings account, I mean, if you're making 4.5% and it's stable, and that kind of becomes your retirement emergency fund, so that if the market is down 20%, we're not pulling at the worst time, and instead we live off of the high-yield savings%, we're not pulling at the worst time. And instead,

we live off of the high yield savings and we replenish it on a great year. So what do you do? You recommend a full three years or what would you... I think three years is a little bit overkill. Personally, I'd go one or two years, depending on your situation, what's in your nest egg, what your income is, is it feasible? But I don't think it's a bad idea to have one or two years of expenses tied up in something a little more liquid and a little more stable once you're actually in retirement. How old are you? I'm 60. How much do you have in your nest egg? Got a little over half a million right now.

My goal is to, by 65, have it to 900 to a million and then plan on doing some, you know, just side less stress hustle and let it double again before I really start drawing on it. What do you think your monthly expenses would be? Or yearly? You know, I think we want to do some travel. So I think the monthly expenses are going to be $7,000, $8,000, $9,000 probably. That feels like you're living pretty large based on the nest egg. So either we're going to have to work more, get the income up, but I still think it's wise to have

a buffered up bigger emergency fund to weather the storms. And I still think staying in the 100% equities is going to be a better bet long-term. When you look at the returns, once you go to a, you know, 40% in bonds or something like that. It's really going to limit how much you hurt, but it's going to limit the return as well. So that's, again, it's all about your risk tolerance, my friend. Thanks for the call. This is The Ramsey Show. This is The Ramsey Show.

I'm George Campbell, joined by Jade Warshaw. Listen, confidence in your coverage. It's a free five-day video series featuring yours truly. I will guide you through the different types of insurances so your insurance can finally make sense. And if you're like me, you have a short attention span. So I made these videos like one email a day, five days, real short video. And George will explain this to me. So I finally understand it instead of pretending like I understand it. You're going to get great info, two daily goals with each one to help you learn what insurance you need and understand your coverage. Again, totally free series you can get at

ramsaysolutions.com slash confidence. You'll get a free guide to insurance or you can click the link in the description if you're on YouTube or podcast. All right, let's get to the calls. Thank you, Jade, for being proud of me. I worked hard on it. JN is in Tulsa. What's happening, JN? Are you with us? Hi. Yes, hi.

Thank you so much for taking my call. Sure. So I'm in a situation where I'm in Tulsa, Oklahoma, and about two years ago when I had my divorce my son and my ex-husband moved back to Iowa that's where they're from so that and I have been going back and forth quite a bit because my job is still here so now I'm in a much better financial situation than I was in two years ago. Just really want to have a private space every time I go back to Iowa. So I'm wondering if I should buy the house in Iowa, even though that I'm not going to be there for a good chunk of time. How often do you go?

About every three weeks. And how long do you stay? About a minimum of four days to seven days. Okay, that's a lot. Every three weeks for four days. I'm doing the math. So every three weeks you stay a week? About 68 days a year based on my math.

Well, for a lot of the holidays, for like all the summer break, all the Thanksgivings and Christmas and big holidays like that. And he'll, he come to me. So we'll meet somewhere in the middle. How old is he? He's six and a half. Okay. What have you been doing up until this point?

How do you manage that? So I had friends in Iowa, so they had guest rooms and all that. So I had a couple of good friends that I stay with or grandma's house. Okay. And is grandma's house no longer an option? It is an option. I just think that it will be really nice to just have a private space for me and my son. Well, let's see. Can you afford it? Tell us, tell us through like your numbers. Um, so my, uh, outgoing number, like my bills and everything added together is about $3,500 to $3,800 every month.

Do you have debt? And that's including all the bills and including groceries and gas and all that. Do you have any debt? I have about $5,500 on my car, and that's the only thing I have. What about your house? Do you own a house or are you renting? No, I rent right now. Okay.

So my rent is about $1,125 plus all the utilities and everything. Is it possible that there's something you could find that's almost like a sublet? Or where it's like, hey, I rent a room when I'm here, something like that um if i'm just renting like one room out of the house i probably just would prefer to stay at my friend's or my or grandma's house you know um so like the whole point of i'm thinking about buying a house there

is so that we'll have a private space there. But my plan is if, because I don't want to be paying like both places over there and opening houses. Of course. Yeah, yeah. And there's no way that you would just make the move. Right, right. Okay. I don't think it makes financial sense at this point. I'm doing the math for you. How about this as an option. If you just rented a place, let's say an Airbnb, right? Or a hotel, 150 bucks a night, 68 days a year, that's 10 grand a year. So if I'm you, I'm just going to set up a sinking fund where I put a thousand bucks a month into this account. That becomes my travel to Iowa fund. And I'm going to get a place when I go. Maybe it's the consistent place. Maybe it's a different place every time. Choose your own adventure. But I don't think it's worth sinking $400,000 into a condo just

so you can have a private place for you and your son for that portion of the year. Well, my thinking is if I can manage to rent it out, like I would Airbnb that house out while I'm not there. Let's not turn this into an investment opportunity. That's how bad things happen. People think, well, I could make money off of this. Yeah, because who's managing it? You're however far away. Eight hours away? Yeah. Yeah. And then you're trying to manage this, you know, HVAC goes out and you're trying to manage all of this long distance while paying the mortgage payment on top of your rent.

And maintenance fees. Yeah, I agree with George. I know that you're trying to be creative and I think you're just trying to look for ways to make this work, but I think George has the right solution. You either are renting an Airbnb or VRBO, whatever that is, at a rate that you can afford and you're putting money towards that every year in a sinking fund or if you like i said if you find some arrangement where it's like hey i'm i'm kind of staying in somebody else's vrbo and i said you know i say ahead of time here's the days i'll be and because maybe you book a lot of days you get a nice discount something like that i think that i'd be looking for because i want you to type your money in something that you live in full time so i don't want you sinking all this money while you stay renting in a place that is

vacant yeah that's another thinking on my end too should like either I'm thinking about like buying a house out in Iowa or if I should just buy a house in Tulsa where I can be working off you know paying off my mortgage over here. I prefer that. You're there a heck of a lot more. I mean, do you have any money saved? I have about 35 grand. Okay. Why don't we pay off the car today? Why are you hanging on to that? Yeah. You got 35 grand. That still leaves you with 30. That's a fully funded emergency fund. Leave that. Don't touch it. You'll have no debt. Now we can start saving up for a down payment for a house for Jan in Tulsa.

And on top of that, you'll have the margin to go, all right, I want to put in 800 bucks a month into this high yield savings account and I'll just pay for a spot. And maybe down the line, you are making great money. You're in a great situation and you do decide to get a place. But I think for 10 grand, if I can make that happen every year, six and a half, let's say another 12 years of that. Okay, I'm willing to do 10 grand a year for 12 years to have a place to see my son. What keeps you in Tulsa? I'm just curious. Is it your job or you have a lot of family there? It's mostly my job. What kind of work is it? So I do like video production.

I do a lot of like shooting commercials and shooting weddings and all that. Okay. It's your own business or? No. I work for a corporate company. Okay. I see. Cool.

I mean, yeah, the only option is maybe you scout out some jobs that are in distance. I think you can make $45, in iowa doing video work so i would also explore that it's going to be the financial it's an option that makes sense i mean that's where your family is it sounds like no i i i'm actually i don't have any family in new york got it okay my thought here truly uh j jn is how can we simplify this because it does seem like a lot you're basically dual residents for the next i don't know eight years of life and that just feels like 10 years of life that well six and a half it just feels like a lot and so i i'm looking for ways that you can maybe streamline this so that it's not this,

so it doesn't feel like a burden and so that you can put down some real roots. Yeah, yeah, exactly. Because I'm like really conflicted about like if I should make Tulsa or Iowa, my primary residency will not buy the house because I can only choose one or the other. Mm-hmm. I'd strongly look into just moving to tulsa it sounds like that's where your heart is because you want to be with your son more often it's going to make financial sense because you can plant roots and kind of hit two birds with one stone having your own place that then he can join

instead of paying the 10 grand a year to go visit but i would not do this long distance i'm going to buy a house eight hours away while I continue renting, but it's only used 60 days a year. I'll try to make it make sense with Airbnb. You're going to be calling back. You will be calling back a year from now saying, I made a bad decision. I'm trying to Airbnb this house.

It's not working. I'm losing money while I'm renting eight hours away. Please help. Thanks for the call, Jan. This is The Ramsey Show. Welcome back to The Ramsey Show, our scripture of the day, Matthew 6, 20 and 21. Store up for yourselves treasures in heaven where moths and vermin do not destroy and where thieves do not break in and steal. For where your treasure is, there your heart will be also.

Rebecca Johnson said, money is the opposite of the weather. Nobody talks about it, but everybody does something about it. Here we go. I can't hear the word vermin without thinking it's funny. It's a funny word. It's an old timey word. Very Yosemite Sam. And biblical somehow. There's the Venn diagram. What do they have in common they both used vermin love it let's get to the phone samuel is in austin texas up next what's going on samuel hey how's it going uh can you guys hear me okay uh-huh yeah you could do better but you know we So I went into debt with a car, and this was two years ago. The question for you guys today, is it morally okay to ask my wife to pay for this car with her savings? When did you get married?

Two years ago. I got the car in April. We got married in May. That's convenient. Yeah, it wasn't was the plan for you guys to combine your finances when you got married uh yes and the reason i got the car was i was in an accident and so we were left with nothing to drive around they didn't write you a check uh no it was my fault okay so you've been married two years have you guys combined your money up to this point or has it been kind of just separate without you guys oh yeah we we we combined um she doesn't work as much as i do i think in total we're probably at like 50, 40, 50 each year. Okay, but what you're telling me,

and your question would denote two separate answers, you're telling me that your money is combined. But then you're telling me, should my wife use her savings to pay this off? So that lets me know it's not combined. We're combined as in like we pay the bills together. Her savings is a part because she's in savings since she was like 18, 17 that she started working. And so I think I feel wrong to ask her.

And I did ask her, I think maybe about a month ago, and it became an argument because I don't have anything safe. The only debt that we have is this car. What's left on the car? $20,000. $20,000? And she has a car too that's paid off? She works with her mom, so her mom picks her up every day. So you have one car in the family?

Yeah. How much savings does she have? She has $16,000, $17,000. $16,000 or $17,000. So it's really not even enough to pay off the car if she wanted to. Yeah. Okay. So there's the glaring issue, and I know George sees it too.

The glaring issue is that you guys are really separate, and it's really hard to build trust when I'm over here and you're over there and I've got this thing that I've been working for my whole life and it doesn't really include you you know what I'm saying and I kind of wish she was on this call because I don't want to talk bad about her she probably feels really great about that savings but the truth is when you become married, two become one. And until the two become one, it gets really weird and very transactional. Right, George? Yeah, this is, I think it's the wrong question to ask. Is it moral to ask my wife to pay off my debt?

There's not a moral issue here. It's what does the conversation need to look like for us to combine our money to where we go, all right, the next best move is to pay off our debt with our money. That's where I'd love for you guys to get to. Otherwise, this is going to just be another checkbox on her resentment scorecard for you. I've gone, remember, you blew my savings on that car and then you went and still did stupid money mistakes. You always do this, right? That's what it's going to turn into because you never change your habits. So when we talked about it, the reason that she doesn't want to to turn into because you never change your habits so when we talked about

it the reason that she doesn't want to do it because she said i'd be 100 on board but we do have a daughter who she kind of like she feels like if i ever have an emergency i have this money instead of having bills and getting loans to pay off if anything happens so you guys need to go counseling here's why because she's in a just in case mode she's like i want to make sure i have this parachute here just in case i gotta pull the lever and so that points to either something that's happened in the past that she's not dealt with fully or there's current trust issues that are actually going on between you and her that maybe you don't know about, but it's something that she's been ruminating on.

So something's going on deeper here. And I don't say that to be negative. That's just what money does. Money shows you what's really in your heart and what's really what's going on. And so this is good. It's as good that you guys are seeing this. You're two years in.

It's good that you're going, okay, there's something wrong here. I'm feeling like this. I'm feeling I have to ask you for money. There's a lack of trust. Now is the time for you guys to dig in that with counseling. Because going forward, you're not going to be able to accomplish much if you don't deal with this. Because most goals, when you're married, most goals are kind of underpinned by finances, right?

Because it takes money to do stuff. Yeah, it takes money to do stuff. And if you guys aren't aligned on your money, then there's no way you're going to be able to be aligned on the goals. Because let's just pretend your goal is, I don't know, our goal is we want to get to the point that we take a nice vacation every year. All right, then the way you guys are going, you've got to save for your half, and she's got to save for her half and what happens if somebody doesn't make it well i guess we can't go on the vacation like it gets very weird very quickly you see what i'm saying well i think it's just the whole car thing because we've gone on vacations and no you don't see what i'm saying you don't you're taking it for face value. I'm talking about as a whole. This is something you've got to deal with because the car,

her not wanting to do that or whatever, that's a symptom of a bigger problem is what I'm saying. What is this car worth? It's worth like seven to eight. Did you roll negative equity into it? What happened? Well, I got the car two years ago.

I just recently crashed uh again it was honestly just a stupid stupid mistake you crashed again um no no when when i crashed uh our only car i went in and i got this car and um it was supposed to be like a good thing, but it ended up just not being a good thing. No, I'm saying why is this new car that you got after the crash only worth $7,000, but you owe $20,000? It's only been two years. It was a bad investment. I wasn't supposed to get the car because it was a bad investment at the time.

Like I said, I made a stupid decision, and I thought I was on top of the world. No, I'm confused as to how the value went down. Because when you bought the car, it was worth at least $20,000, right? Yeah. What kind of car is it? Well, no, no, no. It's a 2013 Cadillac. Samuel, I'm confused.

How much did you pay for the car? So I originally got it for $20,000. Okay. So you put nothing down and you got this car? I actually put $4,000 down. That's wild. I'm so confused, my man. I'm not tracking with you.

How is the car only worth $7,000 today? How did it drop $13,000 in value in two years? I'm not sure. I Kelly Blue Book it the other day, and it was from $7,000 to $9,000. Okay. Something ain't adding up here, because I'm trying to figure out how much you're underwatering. I think you need to get rid of this car to show your wife that you're serious about changing. Because right now you're using her like a bank to bail you out. Bank of wife. Guess what? She's not your mom. She doesn't want to be your mom. She married you to have a partner in life. And right now we're still making childish decisions. And that's probably what's contributing to her having her safety harness

ready to go at a moment's notice. So I think that we need to address this conversation in a different way, not is it moral to ask my wife to pay off my debt? It's you going, hey, babe, I've really messed up. For the last two years, I have not been the man in this marriage that you need me to be. I've been making childish decisions and I'm ready to change. Part of that is I want to get rid of this car and get something more affordable that isn't taking up a lot of our world. Will you help me on this journey to live debt free, to have an emergency fund and to build for the future? Because that's the future you deserve. That's a different conversation, isn't it?

Right. Yeah, for sure. So I think that's the next conversation to have. And I think part of that is the counseling. We need to get to the bottom of what is holding her back from combining finances. But I think that's the next conversation to have. And I think part of that is the counseling. We need to get to the bottom of what is holding her back from combining finances. But I think we both have a part to play in this. That's marriage, and we need to own up for the part that we played. And please, please, no more decisions that involve debt. No more decisions that aren't fully have her involved, too. That's another piece of this.

She hasn't been involved in any of this. Bring her into the conversation and your marriage will be better for it. That's it for this hour of The Ramsey Show. We'll be back before you know it. Take care.