The Ramsey Show - App - Don’t Have a Toddler Mindset About Your Money (Hour 1)

Episode Date: October 20, 2023

🎵 Live from the headquarters of Ramsey Solutions, it is The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I am your host, Jade Warshaw, joined by George Camel. And today we are taking calls about your life, your money. So give us a call. The number is 888-825-5225. George, let's go directly to these phone lines. Let's do it. We got Austin in Omaha, Nebraska. What's going on, Austin? Oh, not a lot. How are you today? I'm doing good. How are you? I'm doing very well. Thank you for asking.

You bet. I just feel blessed to have the opportunity to speak with you about our financial situation right now. It's my honor. So we've been watching a lot of the show recently, and we're actually 100% out of debt right now. And we're feeling really fantastic about it. And we're also having some anxiety about what do we do next? Because we have our emergency fund saved up. We allotted 2000 per person. We've got six months worth of living expense saved up for our current situation,

which we're renting. But we want to get into a house and we don't know at this point in the game, do we just sit and stack cash and then wait until we can just go buy a house outright? Or do we stack enough cash for down payment and then get into a house as quick as possible? Yeah, that's a really good question. I have a question for you before I give you my answer to your question. When you said that you had an emergency fund, you said $2,000 per person. Can you elaborate on what that meant? Oh, sure. Our understanding was that we needed to have for like small medical emergencies about $1,000 per person. And then on top of that, we needed six months worth of household bills and expenses. Interesting. We saved $2,000 per person

and then on top of that six months worth of household bills. Okay well that's an interesting thought. The way we teach it here at Ramsey is just to save three to six months of your basic household expenses so that if you were to come on hard times maybe you lose a job you have a medical emergency that would be enough to you know get you through until you're back on the other side of things. So, you know, the $4,000 extra you have saved, as far as I'm concerned, you can throw that over to the down payment and start, you know, you've got $4,000 saved already to go towards that. And as far as whether or not you want to buy a home outright, or if you want to save, you know, $20,000 or as much as you can save to put down, that's really up to you and your wife. What are, you know, what's the going or as much as you can save to put down, that's really up to you and your wife.

What are, you know, what's the going rate for a home that you think will be right for your family? Well, wow, that's really, that's a tough question. We've been looking at the different values of houses and then plugging in the numbers. And, you know, if we were going to go on the 15 year fixed, like we're seeing that you're teaching, then our approximate price range is going to be right around $175K. Are there homes for $175K? Pardon me, sir? Are there homes for $175K in your area? There are. I mean, it's our first house. We'll be first-time homebuyers. It's nothing that we're really going to want, but we know that we're going to have to have.

Well, here's the deal. If you're like, hey, the $250,000 home is the goal, well, all that means is patience. We're going to save up more down payment so that we can afford this and stay within those parameters. Yeah. What's your income? Combined, we are slightly over 100K a year. Okay. And how much can you throw every month toward down payment

savings currently? Well, we haven't discussed exactly what we could throw at specifically that savings, but our margin after our budget is $1,746.99 a month. Great. Are you guys investing at all right now? No, we withdrew completely out of our 401ks actually just as of yesterday, so we could start channeling all of our money straight into a high yield savings account. So you're wanting to do Baby Step 3B full on. Hey, we're not going to invest at all, but for the next year or two, we're just going to pile up cash to get into that home. Yeah, that was the idea. We just weren't sure if we should pile up just enough to get in or what the... Well, at this rate, I wouldn't aim

to try to pay for a house in cash because it's going to be a moving target and it could take you 10 years. So I'd rather you get to the point where you can do that 15-year fixed rate, 25% of take-home pay going towards the mortgage. That's when you know it's the right time to buy. Okay. That's actually the exact discussion we had last night. I think what we need to find out tomorrow is whether or not we're going to be here in the apartment for two years or 10. Yeah.

And if it's going to be more than two, I would start investing. I would too. You could do both simultaneously. Maybe start out by saying, okay, like George said, for the next year, year and a half, up to two years, we're just going crazy,

putting all of our money to this down payment. But maybe once you hit that two-year mark, if you're not ready to pull the trigger and you're like, you know what? We've got this much saved. It'd be great if we saved X amount of dollars more. I'd go ahead and start investing and then try to reach that savings goal at the same time.

That way you're not missing out on valuable time and compound interest. I'd go ahead and start investing and then try to reach that savings goal at the same time that way you're not missing out on valuable time um and compound interest what do you think about that pretty powerful force right absolutely so when it's going in the right direction so just doing some math for you in the right direction yes 1700 bucks a month is 20 grand a year so in two years you'd have 40 grand and let's say it's a $200,000 home. That's 20% down. That would give you $160,000 mortgage. And you can use our mortgage calculator on our website to start figuring out, all right, are we going to be within this range? And if it's 26%, we're not going to yell at you. The whole point of that is not to be legalistic. Sure.

It's to make sure that you're not house poor and you have 50% of your take-home pay going towards a mortgage. Amen. How's that hit you? That hits me like a pretty solid plan. Excellent. Awesome. I love it. We got him out of analysis paralysis mode. That's right. That was a great call. I think, George, a lot of people are in that situation with the market the way it is. It's almost like even when people have done the math, it's like we can save for this. Or a lot of people I've talked to have already saved the money and they're just sitting on it because they're afraid

to get into the market because interest rates are high. Inflation is high. Student loans are coming back. And it's like, do I pull the trigger? Is it smart to buy a home? It's like there's all this uneasiness around a subject. So true. Well, it's interest rates and the housing market's insane. The best time to buy a house is when you're ready financially to buy a house. And so that's why we have those parameters. You don't have to wait on the sidelines and wait for some magical perfect interest rate or wait for the housing market to crash. You might be waiting a long time.

A long time. And by then you're mad at us because you're like, the house prices are triple now. I'm like, right. Sorry. And I know a lot of people are worried. You know, obviously interest rates on average have hit over 8%. And it's like, no, you know, I'm just going to wait. I'm going to wait. And I'm like, no, if you have the money, go buy, like get into the market. If interest rates go down enough that it makes sense for you to refinance, you'll always have the opportunity

to do that. But you don't, like you said, you don't want to sit on the sidelines, get in the game because whatever property you have, if you buy smart, it is still going to go up in value over time. And you've got to get into the market so that you can start being a part of the game and adjusting how everybody else is, right? If you just sit out there and you're renting forever, not to mention rent goes up too, you know? That's true. And a lot of people were freaking out. Remember, it wasn't long ago, we had bidding wars and before it even hit the market, it was gone. Well, the market's cooled down a little bit. Now you can actually take your time. You might be able to even have a really great offer below asking price and get it. And so if you're on the sidelines, it's time, hit up our friends at Churchill Mortgage, get pre-approved,

start the process, start house hunting with a Ramsey trusted real estate agent. All of these things are going to help you get out of that analysis paralysis. That's right. Your rent, your mortgage, that payment is usually people's highest payment, right? And you don't want that fluctuating your whole life with rent. We know that home buying is the key to building wealth. This is The Ramsey Show. Hey, you guys. Health insurance costs 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 health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budgets at chministries.org slash budgets. This is the Ramsey Show. I'm your host, Jade Warshaw. To my right is George Camel. Give us a call. The number is 888-825-5225. And we will discuss the things that are on your mind as it relates to your life, your money, your career, what's going on in your world. But before we get to that, we've got our neighborly question of the day. Our question of the day is brought to you by Neighborly, your hub for home services. When emergency repair needs pop up at home, the last thing you want to do is spend time searching for the right providers. I know that's right. The Neighborly app helps you find the top local home service providers like

AirServe, Mr. Rooter Plumbing, and more. Don't wait until something goes wrong. Be ready now. Download the Neighborly app today. Today's question comes from Mark in New York. He asks, I'm currently around $360,000 in debt, $260,000 on the house, and $100,000 in credit cards. I feel beyond help with my debt. I'm struggling with what to do. The minimum payment on all the credit cards equates to more than I make on a monthly basis. It feels hopeless. I don't know how to get out of the situation. I've put my family in please help all caps oh mark i can't breathe just reading that question man i'm so sorry to hear that i mean a hundred thousand dollars in credit card debt that's a very special type of debt and that i

mean very high interest and uh it's gonna take a while to climb out and jade you had six figures in debt so you can speak directly to this but it's different when he's going i take a while to climb out. And Jade, you had six figures in debt, so you can speak directly to this. But it's different when he's going, it's more than I make on a monthly basis. Yeah. Which means we got to make more. He's got to make more. And I think mentally, if he can just for a moment, separate his home mortgage from the whole total. It's less overwhelming.

It's less overwhelming. And the good thing is your home is making money for you. The market will accumulate making money for you. The market will accumulate more equity for you. So let's put the home of 260 on the back burner for now. You'll get to that much longer down the lane. And let's look at this 100,000. Now, here's what I would do because George was right. Sam and I were in a position where our bills were far more than what we had to pay. And so you have to get on the phone. You have to get on the phone with these folks and say,

look, here's what's going on. Unless you make this payment X, Y, Z, you're not gonna get any money. And so you've gotta call these people up and let's for now negotiate very small payments because we're gonna make minimum payments on everything and our debt snowball, right? And we're gonna put any and all extra money

to the smallest debt. So not only do we need to find extra income, we've got to find margin to actually put more on a smallest debt. So first things first, you're getting on the phone, making those calls. And here's the thing. I hate credit card companies. They're going to tell you, no, that's not possible. And the only way is you've got to make one payment today and just give us your credit, give us your bank account information and we'll do it. Don't do any of that. Do not give them your account information.

Do not set up a plan. Just say, hey, it's either this or you're not getting it at all. And you want to know what? They might not get it for a while, but you're going to get through this. And what you also need to do on the other side of that is you've got to find more income. George, it doesn't say what his income is. We got no clue. We don't know what his minimums are. But the other thing you can do is call and ask them to lower the interest rate and say, hey, listen, I'm trying to pay this off. I really am.

What would be a huge help is if you could lower this interest rate so that I can give you the money that I owe. I love that. And thank you because you just jogged my memory, George. I remember getting on the phone with Capital One and saying, look, if you look back through all of my payment history, I probably have X amount of dollars in late fees and over, you know, over usage fees. Can you just refund some of those? Can you just do me a solid? And they did. And a lot of times they did. A lot of times they didn't. But here's the thing. It doesn't hurt to ask. All you can do is ask. Ask for a lower interest rate. Ask if they'll forgive some of the fees. And finally, ask if you can have a lower payment temporarily because you're on a plan, you're paying off the debt. And after that, you just got to get your income up. Yeah. And I don't know what kind of debt. I mean,

a hundred grand in credit cards is a insane amount. So I don't know what you purchased on that. If it was we're trying to get by before it was couches and cars and who knows what, but I'm going to go, what out of that money can I return? Can I sell to try to undo some of this stupid tax that I've created here? That could help as well. Last ditch effort. He could look at selling the house. I don't like that. It feels like a, it's almost the scapegoat option of like, I didn't really have to change my behavior. I could sell the house, use equity and pay off the debt. I would rather see him increase his income and climb out of this thing versus get rid of his house. I agree because, and I'm not trying to be judgmental, but when I see a hundred thousand

dollars of credit card debt, it makes me ask serious questions about your behavior and what's been going on in life. Like I've got a lot of questions. And so I would love to see him walk through that. I wish we knew what his income was, but whatever it is, it gots to go up, right? It's got to get higher. Call us up. We'll talk more. All right. Let's go to Monica. She's in Hanford, Stockton, California. What's going on, Monica? Hi, how are you guys doing today? Doing fine. How are you? Good. So my question is kind of like a career question. I am a dental hygienist of eight years.

And as much as I love what I do, I love educating patients and bonding with patients, especially when they have fear. It's turning towards more of becoming a sales person and kind of pushing things on patients when I don't necessarily feel I need it. And I took Ken Coleman's career assessment because I am on maternity leave, but I'll be going back in November. And I've been having some doubts going back. With his career assessment, it highlighted that I am good at being an educator and coaching. And since I started your guys' plan, I've actually gotten really into it. And becoming a financial coach seems to be like a good idea to me. So I want to know, how do I transition? Even though I love what I do, how do I transition even though I love what I do how do I transition from that and then possibly balancing out and becoming a financial coach yeah you know I'm having two

thoughts um number one is I'm just wondering about the actual office that you're working in as a dental hygienist um I had a I had a buddy who loved dental hygiene and the way her office was training all of the hygienists, it did turn more into a sales role. It was like they were all like continually pushing things and products on the customer. And she was like, I don't like this. And she found another office that didn't do that. And so she was able to focus on the attributes of her job that she did love. And for her, it was just as simple as switching offices. So that's my first question. And I even wonder if that's step one. And then as you do that, you can start to build the financial coaching thing on the side and get that to a place and start building into that and putting time into that.

And then if you're like, hey, I really love this, it starts making money for you, you'll have that moment where you can kind of switch over because there's a bridge there yeah that's yeah that's good advice um I've tried different offices and it seems to keep gearing in the same after a couple months gearing in that in that way of we need more production, we need more production. But yeah, I could keep looking and keep trying different offices. This is probably, out of the eight years, my sixth office. Wow. Have you let your leader, your dentist know, say, hey, listen, I'm not comfortable pushing this stuff. I'm happy to do dental hygiene. That's what I signed up for. But I can't in good faith push these credit cards and

payment plans onto people. And have you brought that up to them? I have mentioned it. Anything that I kind of mentioned to them, it seems to just, okay, we'll address it later, and it goes underneath the rest. Well, what happens if you just don't push the credit cards? What would happen? If I didn't, they'd probably recognize that i'm the one person not doing it and probably talk to me from time to time but having that

outside pressure of feeling it just seems i don't know unethical i don't know i don't like that yeah i think it's not needed there's a there's a difference between knowing what the patient needs and me feeling strongly about that and educating them and having and doing it with the best for them. Absolutely. No one's saying you got to treat them based on their needs, not what a general here's the package deal. Get all of it. Well, you work with integrity and that's great. I mean, that's the type of person I'm looking for in a dental hygienist right there. So I think that that's incredible. The thing I'm worried about is I don't want you leaving this job without something prepared for you. So whenever we talk about going from a situation where you've got like the steady income, George, and it's like, hey, I want to build this business over here. You've got to play those cards correctly because you don't want to just quit. And then you're like, that is not the position that you want to build a business. We don't want this to be a giant leap of faith.

We want it to be just a step off the dock right into the boat. Right there. So build that business. I'd start pouring into that now. Start getting your feet wet. Start getting the training you need and start building that up so that it's there when you're ready to make the leap. This is The Ramsey Show. All right, this is The Ramsey Show. I am Jake Borshaw.

This is George Camel. And we, every month, do a series of budgeting webinars. Because, George, some of the biggest questions we get is, how am I supposed to budget? My income is irregular. Or how am I supposed to stick to my budget? Or my spouse sticks to my budget, I don't stick to the budget, or vice versa. And people need help with this. Oh, 100%. And we can't go through this on radio. And so to have an hour where you can visually see us going through EveryDollar, showing you how it works, showing you how to create that margin, the response has been amazing. Incredible. Like, it's amazing how many people sign up for these webinars month in, month out. We usually do

about two a month. George, you host some. Iachel cruz host is up hosts them and we have one coming up october 24th it's a rachel cruz every dollar webinar i might sign up for that just to get some tips okay that's what i'm thinking and i'm thinking you need to sign up for it too if you've had any questions about budgeting and i'm telling you they're great they're completely informal they're over your lunch break you can do it while you eat your jimmy john's while you eat your firehouse subs no one is going to judge you if you have lettuce in your teeth. Rachel's favorite.

I found this out. Schleitskies. I don't know anyone who's ever said that word, who's ever been there, but she's a big fan. Look, EveryDollarBudgeting. All you have to do to sign up is go to EveryDollar.com

slash budgeting to save your spot. I love it. Let's go to the phone lines. We got Kim in Baltimore, Maryland. What's going on, Kim? Hi. So we have been about two months into our debt snowball. We're making really good progress. But the thing my husband and I are butting heads about is whether or not we should stop contributing to his 401k because his employer matches his contribution. Yeah, that's a toughie. He feels like we're losing out on free money,

but I also feel like, hey, this is, you know, really going to impact our snowball here. 100%. Hold on, he's giving away money to lenders every month. He's clearly not that concerned. That's true. So let's just make it clear. If we're going to start doing math, we're losing out on this money.

Yeah, to the debt. And so this is a tough one. I totally understand. I empathize with those who are nerds like me who are like, why wouldn't you take the match? It's 100% return. You guys are always telling people to start with the match and how great that is.

But we also know that getting out of debt is hard and it takes some behavior change and you need momentum and you need progress. And when you draw that line in the sand, you go, you know what? That extra $400 we were investing, what is the match? Can you tell me the number?

So right now, he's already agreed to drop it down to the maximum that they will match. So it's at $400. So we put in 400, they put in 400. Okay. Can I tell you that if you just invest 400 bucks a month, you may have a great retirement, but what if you could invest $1,000 a month, 1,500 a month? That's what happens when you free up those debt payments and pausing your match, going down to zero, lights a fire under you to then get out of the debt so you can get

back to investing to then invest way more than the measly match yeah so that's hard if i just told him that to his face he'd still go yeah but uh it's free money right yeah no i completely yeah yeah you know i agree with george wholeheartedly some you know when we find ourselves in debt we look up and it's like oh man, man, I made a mess. I've got to get myself out. Sometimes we have to pay the consequence of that. And in this case, it's you don't get to invest yet. You know, you get to clean up your mess.

Then when the time comes, you get to put more in, like George said, than you ever dreamed of. And the time here's that here's the key. And I want everybody listening to get this. And Kim, this is not you, but if you're going to dilly-dally with these baby steps, if you're going to, you know, I'll put a little here and a little there, and you've paused your retirement, you are jacking yourself because you're not going quickly. The point is, I'm going to do this.

I'm going to do it with intensity. I'm going to do it quickly. Most people are done in under two years, right? And so in the grand scheme of things, when you're finally able to invest 15% and more, you know, in baby step seven, you are going to more than make up for whatever you lost in your match over those two years. But if you're the person who's, you know, kicking that can, you got your hands in your pockets, and it's like, well, today I'll do it. And then tomorrow I won't. It depends on, you know, what's on sale. Then yeah, you're going to jack yourself. But the key here is intensity. I think, Kim, that's what you've

got to go home and explain to your husband is like, look, I get it. It's a match. It's free money, but we've got to clean up our mess first. And the quicker we clean up our mess, the quicker we can get to the things that we want to do, the fun part. And let's be honest, investing is the fun part. That's it. Kim, how much debt do you guys have? So right now we are at a combined total of $22,000 in debt. We've got $6,000 in a home improvement loan and $16,000 in credit card debt. Okay. And currently we're, after all of our medical expenses, gas groceries, all that stuff in our mortgage we're putting two thousand a month toward our debt great so we're looking at and we're currently looking at an 11 month payoff but if we can add that 400 in we're looking at a nine month payoff and and what

if one or both of you get a side hustle and what if you decided you know if you make the sacrifice and go down to zero percent i'll make a sacrifice in this area. So I've got some skin in the game too. And all of a sudden you have four, five, six, $700 going towards this debt you didn't have before. Now you're out of debt in seven months instead of 11. And you see that progress to go, hey, seven months from now, if you follow this to a T, we'll be back to investing way more than we were seven months prior. And then start doing the math on what credit card interest is doing to you as you lose out on the extra $400 you could have been putting towards that payment. Yeah.

If you want to do some math, we can do math. We did the debt snowball way back. Ten years ago, we first got married, paid off $40,000 in student loans, and then we just fell off, as you often do. And I'm like, okay, you know what we have to do. And we didn't contribute to a 401k while we were still in student loan debt. And he knows that. I'm like, why was that OK back then? I think you were younger. I think you were younger. And he was like, yeah, we've got time. And probably now that you guys are, you know, you're into this and it's further, he's like, oh, you know, he's starting to look at the future and go, we've got to get, there's things that need to happen.

And he, it sounds like he's got good motives. Like he wants to do what's right for his family. He's thinking through it logically, but we can't just land on logic. We have to think about behavior and emotion and what got us in here. We got to do something about this because you've been through it before. So the fact that you fell back in, you got to tell him, listen, this is insane that we're back here. We made progress and we took a step back. Once and for all, we're going to be done with this. And that means going all in. Yeah. I love that. That's a good call, Kim. Thank you for the call. I think a lot of people face that. And I think that's probably one of the toughest parts of the baby steps for the most

controversial. Yes. The amount of flack we get. i can't believe they tell people to stop them listen life isn't all always just about a number and a match yes we've got to look at the big picture and the big picture is most americans are investing three or four percent to get the match and that's it and that's what they do their whole life and we're telling you hey for a year or two go down to zero so you can go back up to 15 and can i be i'm gonna be i'm gonna put some folks on blast right quick because here's what I think. Here's what Jade thinks.

I think people don't want to stop their investment contribution because if they can say yes, but I've got X amount in savings or X amount in retirement, then they don't feel so bad about this debt that they have sitting over here. And it's like, well, I still, you know,

I still have a positive net worth because I've been investing to my 401k. I'm like, yeah, but you still have $40,000 in debt or $60,000 in debt. And so I think for a lot of people, it's their little Jedi mind trick to make them think they're doing better than they actually are. You know what this is though? It's really a toddler mindset. The toddler says, hey, why eat my vegetables when the cake is buy one, get one free. Let's just skip to the dessert, Jade. You've got a great deal on cake right now that's right why do i have to eat my vegetables well you're gonna be real out of shape and have a tummy ache that's right and that's what we are

as a country right now yeah the entire country is just broke and in debt not investing enough yeah up to their eyeballs in consumer debt we're at record levels across the board credit cards a trillion dollars auto loans 1.58 trillion Auto loans, 1.58 trillion dollars. Student loans, 1.57 trillion dollars. And yet we're complaining that you can't build wealth in America today. And we're telling you, what if you got out of debt and invested more and you could retire with dignity? I love that. Even more than dignity. I'll take my BOGO cake, Jade. No, thank you. You know what I call that? I call that skinny fat, George. Have you ever seen people who are, they look skinny, but their diet,

man, their diet is total crap. They eat McDonald's and they just, but somehow because they have good metabolism or whatever, they're still skinny. And I think that when you are investing, it's like, oh, I've got this money stacked. I've got savings, but you've got this pile of debt over here.

It makes it look like, hey, I'm in good shape. I do what I'm supposed to do, but really your diet is crap and you're eating McDonald's and you've got a bunch of debt stacked over here. And when you sweat, it's sweating out of your pores. Why do you think I'm wearing all black today, Jade? It's very slimming. It is very slimming. You don't know what I'm hiding under here.

I don't want to know what you're hiding under that jacket, George. So much McDonald's, you know me. That's only for Whitney to discover. This is The Ramsey Show. You're listening to The Ramsey Show. I am your host, Jade Warshaw. I'm joined by George Camel, who is host of The George Camel Show on YouTube, which, by the way, is popping off, George. We just hit 100,000 subscribers the other day, Jade.

I saw that. We did it. Now I got to beat Deloney and Rachel. Yes, you do. Some friendly competition. I love that. We're having fun. Yeah.

If you have not already, hop on over to YouTube and smash that subscribe button for The George Camel Show. And by the way. You were on the show. We had you on a really fun interview. That's right. That was super fun. People love Jade on there. So you need to come back.

I got, yeah, that was a lot of fun. Thanks for having me. There it is up there on the screen, The George Camel Show, if you're watching on YouTube. And for all you who are loyal listeners to this show, The Ramsey Show, thank you so much for listening. And we hope that you will share the show with others the same way that i just shared george's show sharing is caring sharing is caring and we want all of our friends friends to be rich and out of debt as well so share the show so that they can get this wonderful

that's they call this gatekeeping jade when you don't tell someone interesting yeah don't gatekeep is that let people know that debt freedom is possible yeah that you can invest the right way not fall for all these tiktok traps interesting don't gatekeep i'm trying to be young and relevant well jay-z said you're not rich if everybody is if you're the only one rich and nobody around you is oh that you're not really wealthy it's got to be contagious it's got to be hanging around other rich people that's right you got to be sharing the knowledge sharing the wealth sharing the blueprint and that's what we want you to do uh if this show has changed your life if you like it maybe you just find it entertaining tell some people about it hit that

little paper airplane button on instagram or share it through youtube or just like old school just like talk about it while you're having lunch and tell somebody hey there's just this this new podcast i've been listening to and it's awesome awesome. It's called The Ramsey Show. We would appreciate that so much. It's free, and of course, like we said, it's spreading that good good all around the world. So in the meantime, let's go to the phone lines. We've got Marie in Durham, North Carolina.

North Carolina, what's going on? Hi, guys. Thanks for taking my call. You're welcome. How can we help? So I have a question. I just recently paid for taking my call. You're welcome. How can we help? So I have a question. I just recently paid off all my debt, about $80,000. Woo-hoo!

And I didn't go through the baby steps like a normal person because I didn't start until late. But I have, so I also have like a uniform transfer to minor account that my parents created for me when I was younger. And I'm under the impression that it's just like mutual funds now. My goal would be to buy a townhome or something in the near future. And I have about $57,000 in there. I was just wondering if it's a good idea to use that money as a down payment on a house. For me, I think that that sounds wonderful. You said that you didn't walk through the baby steps in the traditional sense. That's fine.

You don't have any debt and that's great. My next question before you bought a house would be to make sure that you've got three to six months of expenses set up. Do you have that? So yes, I also cash like cash wise, I have about $30,000. 25 of that is in a high yield savings account and the rest is just in my checking. I paused investing in my retirement and I have about $7,000 in there. I don't know if I should resume now. So the $25,000 that you have in the high yield, is that three to six months? What portion of savings is that for you? So that would be three to six months of savings for me.

And my goal, so I have $30,000. I would want to save at least $20,000 for my emergency fund before I buy a house. And I have that. So if $20,000 gets you to three months or four months or whatever that part is within the three to six months, which for you, let's take that a little bit further. Okay. So it's just you, what type of work do you do? I'm a nurse. Okay. So pretty steady work. You're probably okay with three months. If four months makes you feel better. I'm not mad at that. Um, typically the way we determine that is if you're in good health, if you have a stable job, uh, if you're somebody who's married, what do you, what do your job situations look like? That's

kind of how we determine that three to six month situation. And I feel like you as a nurse, I'd probably stick somewhere between three or four months and I'd feel good about that. George? Yeah. And on top of that, have you looked into the tax implications of withdrawing the money? I do know there will be tax implications. And I didn't even know if just pulling the money out would even be a good idea. It's been sitting there for so long that I just don't even know what to do with it. I am assuming they saved that money because they wanted to be a blessing for you later in life as you begin your adult life. So I think there's no time like the present. If you're looking to get into a home and that money is going to help you do that faster

and you've followed the principles, I mean, you're debt free with an emergency fund. And so now is the time to begin that down payment savings. And if you want to stack up as much cash as possible and liquidate that account, pay the taxes, use all of that towards a down payment in the next year or two, that's great. Okay. Yeah, that was my plan. Yeah, because if you add the, you know, if you add the 10,000 that you had as an overage in your savings, I mean, you're at 60, well, you've got

taxes on this too. Minus the taxes, but still you could be looking at 50 grand down payment, which is awesome. How old are you? 30. Okay. You got so much time. This is awesome. This is, yeah. Consider it a gift. I love that. I love it. I love when we get to say yes to people. Well, yeah, the whole, you know, the UTMAs and the UGMAs, fun names, they're meant to save for your child so that when they're an adult, they'll have a little pile of money, which is awesome. Yeah, I'm not mad at that. That's very generous. Well, let's see what William's talking about in Anchorage, Alaska. William, thanks for calling in. Hey, how's it going? We're doing good. How are you?

Oh, not too bad. I was just wondering about credit score after paying off and closing accounts. I heard somewhere one day, Ramsey, said that the credit score will go to zero after like six months or something. Yeah. I was trying to research that. I couldn't find anything on it. So once you finished paying off all your debts and all of your debts are paid off and all of your accounts are closed, then that will start the process of your credit score slowly rolling to zero. So you're going to see it go down first. It's not going to just totally evaporate. You're going to see it go down first. And I'll be honest, that is a little bit emotional. And then after time, it'll be zero or indeterminable. For Sam and I, let's see, for me, I think it took like seven months. And for Sam, it took a little bit longer. I've actually heard

people say it's taken almost a year in some cases. Six to 12 months is the average. And so if you can also go pull your credit report for free at annualcreditreport.com. That's the one site where you can do this for free. And you can pull that and see, hey, look, I got no lines of credit open because a lot of people think they closed the lines of credit. That's right. The credit score hangs around and they find out, William. I'll tell you this. I was messing around and looking on creditkarma.com, checking my credit score. After we had paid off all the debts on my name, I'm like, ooh, I was so excited to see the score roll to zero. And it took there forever. It just sat at like 300 or something. And it was just like destroying my self-esteem. And then we started looking at the process of buying a house and when they pulled my credit like the real way it was zero. Yeah these sites they're it's kind of like a zillow where they're

pulling information from somewhere else that's the official source and it's not always accurate. But more than that here's what you gotta keep in mind William and anybody else. Sites like Credit Karma they want to sell you debt. So they benefit from saying, oh, your credit score is 300. Let us tell you how to get that score back up again. Oh, yeah. They'll notify you. Hey, you should open up this line of credit from us. Yes. That will help you get your score up. And we have this new card and there's new loan and this credit card we partnered with. Yeah.

It's just riddled with loans and debt. And so anytime that you go, well, Mint.com is free. I'm like, yeah, because you're the product, bro. It's not free. You're going to get bombarded with debt and marketing. And that's the sad underbelly of how these companies work. It is. So beware and just know, hey, be patient. And like I said, it is emotional, George, when you see that go to zero. And let me also be clear. I actually made a social post about this. A lot of people, they're like, I paid off all my debt, but I'm keeping that one credit card open just as a little, you know, safety net or whatever. But I'm like, no, that's not going to work. Yet again, George, when it comes to this plan, you either got to take it or leave it. Because if you start doing shady stuff like that, it's not going to work for you. Everything we teach is being able to live a life without a credit score. And if you keep that one card around that you're not utilizing, you're not using, it's only going to make your credit score go down. Give it up. You can live without a credit score across the board, renting cars, buying a house. It's all possible. And we're living proof.

That's right. We're living proof. It's time to give up the ghost, give up those credit cards, let that score go on ahead and go to zero. zero credit score is just as good actually it's better than a good credit score zero is what we're looking for this is the Ramsey show hey it's George Camel if you like what you heard in this episode and want to know more about getting started on the Ramsey baby steps go to ramseysolutions.com and click on the Get Started button. We'll help you figure out the best next step for you based on your specific situation. That's ramseysolutions.com and click Get Started.