The Ramsey Show - App - Don’t Make These Stupid Mistakes With Money (Hour 1)

Episode Date: January 18, 2023

George Kamel & Jade Warshaw answer your questions and discuss: How much to spend on a new vehicle, "We're having a hard time tracking expenses" from the blog: Baby Step 1: Your Budgeting Guide Keeping two jobs vs. only one job that pays better, "Should I pull from single stocks to pay off debt?" from the blog: Should I Use My Investments to Pay Off Debt? Making stupid mistakes with money, "Should I get a construction loan?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Pod's moving and storage studio, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm George Campbell, joined this hour by Jade Warshaw, and we're taking your calls at 888-825-5225. That's 888-825-5225. Ben is kicking us off in Idaho Falls. Ben, welcome to The Ramsey Show. Thanks. Thanks for taking my call. Absolutely. What's going on? Hey, so just a quick question I wanted to get an opinion on. My wife and I are looking at vehicles and just wondering for a second opinion on how much to responsibly spend with also trying to get something reliable that's going to last a long time. Cool. Do you guys have any debt? We do not.

Awesome. And what's your income looking like? About $60,000. $60,000. And you said this would be your second vehicle, right? Correct. Okay. How much is the first vehicle that you have what's it worth probably about 3,500 oh okay so you guys are frugal frugal have you been saving already we have but not specifically for this I just need a vehicle for my job specifically a truck and just kind of wondering how much I can, you know, plan on

spending responsibly. Well, do you have, do you have any, you don't have any savings saved up three to six months or anything like that? We do. So we actually have about 50,000. Oh, okay. That was originally just toward, that was actually just towards the house and, and just savings. Okay. So you've got your three to six months bundled up with just kind of general miscellaneous savings. So what I would do is I would separate the six month mark. Like I would separate out what you need for three to six months of expenses. In your case, let's go for six months. And then what would you have? What is the extra on top out of that 50K that you could potentially spend on a vehicle? Probably 10 to 20, depending on how much we wanted to continue to put into our Roth IRA.

Okay. Judging by the sound of your voice, it doesn't sound like you want to spend a whole lot. It sounds like you're kind of a frugal guy and you're just trying to get something to get by. Am I reading that correctly? Yeah, I have a hard time justifying spending a lot on stuff like that that goes down in value. Yeah, that's cool. My kind of guy. Nothing wrong with that at all.

So the question becomes, what kind of truck could Ben get with $20,000 cash? Something great. And there begins your research. Yeah, start researching. Look and see what you find. Maybe kind of have a round number in your head already. Maybe you've thought $8,000 is fine, $10,000 is fine. Start looking in that range.

And if you like what you see, then go for it. But if you're feeling like, you know, this is really not getting me where I want to be, you know, up at a couple of thousand and start looking in that range. But you're really just, you know, process of elimination here. Set a low bar and then just go from there and see if you find anything that fits. Because truth be told, and I'm just giving you permission to spend here, you could spend, you know, if you said you have $20,000 beyond that six month point of savings, you could spend it. There's nothing saying that you can't spend that money on a vehicle. So there's your permission to spend.

But if you don't want to, you don't have to. You get to choose here. And that's the beauty of the baby steps. When you walk them through and you do it the right way as you have, then you have the freedom of choice, which is great. There's no problem in my, I don't see any problems here. This is all freedom of choice. So this is a good thing. And the only parameter I would say that we recommend is to not have everything that has a motor in it, add it all up. Make sure that's not more than half of your annual income. And so for you guys, that would be 30K. So your car is worth, let's call

it 4K. Well, you've got some wiggle room there. So we could spend roughly $26,000 on this car, and it wouldn't be a large part of our world. And so there's going to be some compromises, especially because trucks are just so freaking expensive. Have you looked into the truck that you actually would want? Just different models that I think would be reliable, yes. Okay. And that's another thing you can search is the reliability of the year you're looking at with that engine. And you can see all the recalls and all the issues it's had.

And whatever you decide to go with, always get a pre-purchase inspection from the mechanic of your choice. And one other thing you might want to consider here, I don't know what shape the other vehicle you have, the one that's, you know, 3,500, but that might be something to consider. If that one's kind of on the fritz, or if you think that the time is coming

to replace that one soon or upgrade that one soon, you might also want to continue to factor that into your choice as well. Right. Yeah. That makes sense. So hopefully that helps you out, Ben. Yeah, way to go.

I mean, this is a good problem to have. It's usually people calling in that are broke who are like, well, I'm going to go spend 60 grand on a car, on a truck with payments on it. Yeah, no, this is a good problem to have. It's usually people calling in that are broke who are like, well, I'm going to go spend $60,000 on a car on a truck with payments on it. Yeah, no, this guy's smart. Ben is smarter than that. I like that frugal mentality. He doesn't want to part with that hard-earned money. Nothing wrong with that.

We love to see it. All right, let's go to Zahava in Brooklyn, New York. Ooh, I like that name. Welcome to the show. Hi. Hi. How are you? Good.

Let's get straight to the question. We're up against the clock today. Okay, so I've only been listening to you for a couple of weeks. show. Hi. How are you? Good. Let's get straight to the question. We're up against the clock today. Okay. So I've only been listening to you for a couple of weeks. My husband and I decided we're going to look into our budget, see how we're doing. We are not in debt. Things come full circle, but it seems like our expenses are kind of everywhere. Some things come out of the bank account, like the mortgage. Some things come off the credit card. Some things we end up paying tuition. The know, the cleaning lady gets cash and the daycare lady gets a check.

And we put gift cards for the, you know, day camp. And how do we consolidate to really see how much we're making, where every dollar is going? Also, in terms of what we're making, sometimes I'm on a W-2, sometimes I'm on a 1099. And my husband works in Jersey while I was in New York. How do we get everything together? Yeah, you know, I would suggest getting on everydollar.com.

It's the budgeting software that we created here at Ramsey Solutions. And it's amazing. I've been using it since 2017. And in there, not only can you track all of your expenses, not in real time, but pretty close to real time. What it does is it automatically connects to your bank. And so all the transactions that you make with every dollar premium will go directly into your every dollar budget and you can literally

track them so anytime you go to Publix or the grocery store track it under your grocery budget anytime you pay for daycare or whatever you track it under the daycare and you can really start to see how you're spending and it's great because it'll break out those expenditures into percentages. So you can see, man, I'm putting 15% of my income towards X, Y, Z, or I'm putting, you can really see how you're spending. And for you, since you sometimes have the irregular income, they have a really great feature on there that's called paycheck planning. And so it literally allows you to bring balances over from the previous month. So if you and your husband did really well that month and you didn't spend all the money, you can bring that balance over. And then if you have a coming up month, you can see how that's going to track with you. So you can

plan when you're going to spend your money, what date you're going to spend it on. And it will tell you, hey, you're close to going in the red or, you know, your spending looks good. It'll tell you green or red. So every dollar budget, that's what you need to get onto, Zahava. And that's part of our every dollar premium. So we're gonna gift that to you, Zahava, for one year and start tracking it. It may take a few months to dial all the expenses in,

but those checks, they're coming out of your bank. And so everything at some point has to come out of your bank and that will help you gain control of this. We're rooting for you. Love it. This is The Ramsey Show. welcome back to the ramsey show i'm ramsey personality george camel joined by jade warshaw this hour the number to call is 888-825-5225 you jump. We'll talk about your life and your money. Tanisha joins us up next

in Washington, D.C. Tanisha, welcome to the show. Hi, thank you. How are you? We're doing great. How can we help? I was calling to ask about whether I should change jobs or not. What's making you think that you maybe should change? Well, I've been doing Ramsey-ish for about a year and a half. And I paid about almost $20,000 in like credit card debt. And now I want to tackle my student loan. So I have two jobs. But I don't, it's not sustainable. So I'm like, but I mean, but I was able to pay the debt off. So I'm like, should I push jobs? Should I keep it? What are you earning between the two jobs and how does it break down so with one job I'm making a little under 49 and the other job I make about like 17 like 17 a little over 17 50 an hour so

I don't know how much it is usually I don't remember so the first one is 49 000 a year is that what you were saying? Yeah. Okay. And then the other one is $1750 an hour. How many hours a week are you working it? My main job, the one where I make $49,000 is 40 hours. But the other one, it varies between 20 to 40 hours every two weeks.

20 to 40 every two weeks. And are you in control of the 20 to 40? Or is that like, hey, we're just giving you what we have? Do control of the 20 to 40 or is that like hey we're just giving you what we have do you have the ability to oh okay i'm in control of it okay do you like both job jobs um i don't like my main job i like the flexibility of it what are you doing for work for your main job what kind of work is it i'm a research assistant in cardiology and I don't do patient facing. I'm just like, I'm at home four days a week and I go in one day a week and it's just, it's imaging research. What do you want to be doing in an ideal world? Let's say you could

make as much as you're making or more. Is there something where you're like, man, I really want to, I want to be working with people instead of behind the scenes. I want to be doing this over here. I want to be working with people, but I don't know how. I really don't know. You seem like a people person. Are you not? I am a people person, yes. So don't tell me you don't know how.

You're good with people. You don't know what the next step is to take to jump into that career. And we can help with that part. And our friend Ken Coleman has some great resources that we'll hook you up with today. One is the Get Clear Career Assessment. And this will take you about 20 minutes. You'll fill this out. It'll give you a report that will not only give you some career options, but it'll actually show you how you're wired as a person, which goes way deeper and will really be helpful. I'm also going to give you his book, From Paycheck to Purpose. Yes.

Because right now you're just doing this for the paycheck, trying to get out of debt. But what happens once you're out of debt, and you still don't like your job? And that's the thing. Sometimes, you know, you do work a job that you don't love, or you work two jobs in this case, just to get to an end point. But we don't want that to be where you stay long term. How much student loan debt do you have? $68,000.

And is that the extent after that's done? Is that all the debt or do you have more beyond? That's it. That's it. Do you have any money in the bank right now? I have $1,000 saved. Cool. So if I'm you, what I would start doing, I mean, you're on the right step. You got your $1,000 saved. We're going into baby step two. You've already done a great job getting rid of that 20K of credit card debt. You know, in the meantime, I would be working as much as I can because at thing one is getting

this debt paid off. And while you're, you're doing three things simultaneously, you're working the 40 hours or however many part-time hours at this 17, 50 an hour job as you can. While you're doing that, you're reading Paycheck to Purpose. While you're doing that, you're doing the Get Clear assessment. And hopefully, you know, in the next, oh, two years or so, we're out of this debt and we are on track to a new career, something that you love, something that you know that you're doing work that matters and you're going in every day going, I get to work with people. I love this. Does that sound good to you, Tanisha? That sounds good. Yeah. Yeah. And in the meantime, there may be a way for you to go, hey, I'm making 49 now,

making 17.50 on the side. What if I could get a job that pays me 65, that I can do 40 hours a week, and then I could still do a side job, and I could really speed up this debt snowball process, getting rid of this debt. I like that. That gets me more excited for you and that's exactly what I would be doing. I would be applying other places or the other research related roles that I could step into now that I have some experience where I could get paid more. I like that because there's definitely side hustles that you can get that you're making more than $17.50 an hour. I mean, you know what I'm saying? Look at your skills.

Are you able to do any overtime with your current role? My main job? Yeah. No. Okay. So for capped out there, let's start looking, updating the resume, looking at other jobs that could pay $60, $70 to replace that side income, and then we can still use the side income to get rid of the debt faster.

Let me ask you this. Is there any other place that we can pull from to help you get out of this debt? What's your car situation? Oh, I live in the city, so I take Metro. Okay, so we're not looking at that. I don't think it's wise for me to get a car right now. Mm-hmm. And what about, so you said you live in the city, so I'm assuming that you've got high rent? Or is there anywhere there that we can... I live with my parents. I live with my parents. Oh, great. So you have very little expenses.

Yeah, I just pay $300 in rent. Okay. Look, Tanisha, keep going at it. Keep doing what you're doing. I like George's idea of finding side hustles that pay more so that you can go further with your time, make more money, spend less time. I like that idea. Keep hacking away at this debt. The average person is out of that debt snowball within 24 to 36 months, and you're right on course for that. So keep going. Hang on the line. We'll get you that Get Clear career assessment as well as the book From Paycheck to Purpose. All right, let's go to Jacob in Peoria, Illinois. Jacob, welcome to the show. Oh, thank you for taking my call. Absolutely. A question on a truck loan I have.

All right. I've always been someone. Hey, speak directly on your phone for us, Jacob. You're breaking up on us. Yeah, sorry about that. It's all good. Is this any better? Yes.

So you got the truck loan? Yeah, I had a truck loan for about $12,000, paid for half the truck, took a loan on the other half. I've never been a debt guy, and I just hate it. I don't have the cash to pay it off right now. But I do have a brokerage account that has around $60,000 in it, and just single stocks that I've just accumulated over the years. And so I didn't know if I should sell off some of those. All that's kind of down right now.

So that's hard for me. But I just wanted to kind of get some of your input on that. Yeah. I mean, when it comes to the volatility of single stocks, as you now know, I would cash out at least in the amount of this truck loan. And if you want to hang on for a few months beyond that and see what the rest does, if you can climb back up, but long-term I'm cashing out of this thing and I'm putting it into a less volatile investment. I'm putting it towards my future. Do you have a fully funded emergency fund? Yes. Yep. I do. Yeah. I have a, yes.

So how much do you have in savings right now about seven seven thousand so not much more than um not much more than just the six months of expenses so if you cashed out let's say six thousand of those stocks uh and six thousand from your savings that would get you free and clear out of this truck loan and then let's say you cashed out another 15 or 20 from the stocks and you built that fully funded emergency fund tomorrow. I love that. I feel like you'd be sleeping better at night having no payments and having a pile of liquid cash in the bank.

Yeah. I love that. That's a really good idea. Now, just be aware you may have taxes on those gains, and so I would be working with a tax pro. Yeah, if I need to think through that as well. What's your income? My wife and I together we bring home about $110,000 a year. Great income. Those stocks are is that your only investment or you guys also into 401ks or IRAs? Yeah, I have a 401k through work. I'm actually

investing at 15% plus a match on that. So I'm pretty good in that area, I feel like. And my wife also, she's still in school. She works part time as well. Yeah. I mean, with these single stocks, we usually say that with stocks, we don't want it to be more than like 5% of your whole investment picture. So if there's a way, I liked George's idea of basically going back and kind of working those steps in order, making sure you're out of debt first, and then, you know, pulling from those stocks to refund your three to six months. And, you know, by then you'll probably put those stocks back to where they need to be,

which is around 5% of your net worth. And you won't miss it, my friend. You're going to love debt freedom, having liquid cash in the bank and investing long-term for your future in those tax-advantaged retirement accounts. And we can get to the brokerage stuff later and have some fun. But right now, let's build this financial foundation for Jacob and his family. I love it, man. Thanks for the call. More of that coming up. 888-825-5225. This is The Ramsey Show. I'm George Campbell, joined by Jade Warshaw this hour. Open phones at 888-825-5225. Well, if you're listening to this show, you know that

we've all done stupid with money around here, Jade and I included. And sometimes it's fun to laugh about it. And the important thing is we don't make that mistake again. We grow, we move on. That's right. But there's this Yahoo article, Jade, that I thought was kind of hilarious, kind of sad. 17 things people spent big money on that they're kicking themselves over looking back. So I wanted to cover a few and get your takes. Yes. You ready?

Let's do it. Let's do it. All right. This one was an interesting one. Someone said a timeshare. Oh, well, we already know about that. Okay. So this guy said,

I went to the seminar for a three night stay at a beach resort and they got me. They were phenomenal salesmen, but they lie out of their beeps. We spent thousands over years, only used the timeshare once. We hear that all the time, George. They only use it.

Look, they almost got me one time in Las Vegas. Dang. I didn't know that's what it was, and I ended up on this bus getting ready to go to wherever the timeshare thing was. They took you hostage. Yeah, and then when I tried to get off the bus, they would not to wherever the timeshare thing was. Yeah. And then when I tried to get off the bus, they would not let me off the bus, George. So I know how this guy feels.

I'm not getting in Jade's way. That's a bold move. I had to get medieval on him. So yeah, this person goes on to say they paid a lawyer to get them out of the contract. Now they're free. These things are scams. And if you don't believe me, how terrible of an investment they are, which by the way, you don't own anything. So not really invested in anything. You can find them on eBay for a dollar. People are desperately trying to get rid of them. Well, he's fortunate that he was able to get out of his because it ain't easy. Let me tell you. All right. Here's another one. Someone said, I bought a mobile home as a starter home. No one ever explained to me as

a young adult, the importance of investment and future planning. Mobile homes, of course, do not hold nor increase in value. So you never build equity. It's akin to renting, except you have to cover all of your own repair costs too. It's a terrible financial decision. Do not buy mobile homes, kids. Just don't do it. Good advice there. Yeah, it's going down in value. Let's see. I see this one down here. This is about credit cards. George, this is, you are my favorite, favorite topic. He says, I opened a credit card in college,

bought something. I don't even remember what it was and completely forgot about it. I never got a statement. And three years later, I suddenly have collections agencies calling me nonstop over a $20 debt with hundreds of collection fees. It took me years to get my credit back to not crappy levels. Wow.

Been there. Been there. And we did it all for the free t-shirt back in college. Been there, done that. On the college. How is it even legal to let these people on the college campus? I don't know, dude. Gosh.

We've all done it. Now, here's one I have never done. This is an interesting one. Someone said, I agreed to take over my ex-girlfriend's bills so that she could pay off her debts. Oh, Lord. Five years and over $100,000 of my money later, she was in more debt than when we started and cheating on me. Don't ever do this. Just make her be an adult or dump her.

It's never worth it. This needs to go on Maury or something. Yeah, yeah. They need to be on Maury. That is some drama. Oh, it's never worth it. This needs to go on Mori or something. Yeah, yeah. They need to be on Mori. That is some drama. Oh, that's terrible. And ex-girlfriends. I can't think of one ex-girlfriend that I want to give a dollar,

let alone cover all of her bills. You know what? People will do anything. Love is blind. I think when he was paying the bills, they were dating. They were. I think you're right. I think they were dating, and then it came back to bite him in the butt.

Because she's cheating on him after he's given her six figures don't guys you don't yes wine and dine your ladies but do not pay their debts do not don't do it don't co-sign please yikes that was enabling right there she she took advantage of that homie yeah i don't dig that let me let me let me read this one this one she says uh financing a car and then leasing a new one so she financed the used car leased a new one never again i bought my current car in a new light condition and paid it in full with cash i love never having to deal with i am with it i love never having to deal with car payments that's great once you get fleeced you ain't never going back. Can I tell y'all a secret? Do you know that when I was dating Sam, he, this goes along with this dumb stuff,

he bought my used car. We were engaged, but I had a car and he thought that I should have a better car. And he bought me a Jeep Liberty. And luckily, once we got married, we helped snowball it together. These are bad choices, people. What a romantic Sam is. I'm saying this to say, this is got married, we helped snowball it together. These are bad choices, people. What a romantic Sam is.

I'm saying this to say, this is the dumb stuff we do. Nothing says love like a financial transaction. Like co-signing. Yeah, right. This one got me. Someone said, lending my credit card to family. How few brain cells do you need to have to trust your family with a credit card? It's like giving a kid just monopoly money to go spend

george i'm scared i'm scared can i okay we got to share our stupid ones all right what's your okay can i tell you guys this is the dumbest thing i've ever done because it was just extra dumb i went to college george i had two full i had a full presidential scholarship, which means everything paid for. And I had a full volleyball athletic scholarship. Wow. My bills were paid for college. And do you know that the financial aid folks talked me into taking out student loans so that I could pay for just life? They said, Jade, you're going to need new clothes. You're going to want after the games, you're going to want to go out to eat with your friends.

And I took out student loans. Are these people getting a kickback for this? This is insane. $34,000. George, that's what I did. You must have lived it up in college. I don't remember it. I remember going to Walmart, spending $60 on groceries, just like everybody else.

I don't know what happened to the money. That's nuts. Beat that. Well, I once shipped a pair of Air Force Ones on Craigslist to a guy in Nigeria because he said it was for his cousin. And this was not like a Nigerian prince thing. I listed my Air Force Ones for sale, a nice pair of shoes. And I got an email from a guy who seemed legit. He was like, hey, I want to get this as a gift to my cousin. He lives in Nigeria. I'll pay you extra for shipping. I'll give you an extra 50 bucks. And I was like, sweet. And he was like, hey, I'll PayPal you right now. I got the email from PayPal. What? That showed the transaction. I went, great. I'm going to go ship these today.

I went back a day later. The email from PayPal was not an email from PayPal. It was a forgery. And I clicked through the email address and saw that it was all a lie. The money never actually hit my PayPal account. And these shoes were gone in Nigeria. So this is like a Nigerian homeboy. This is like a Nigerian cousin. And I fell for it. Now here's the crazy part. The shoes showed up six months later back at my door and it said, return to sender. What? So whoever was running the scam, it must have been a bad address or I don't know.

I don't know. George, that's hilarious. That's a crazy story. Couldn't tell you what happened to those Air Force Ones. I love it. Here's a crazy one though that we didn't hit. Someone said, not mine, but my dad's. He bought $500 worth of collectible Star Trek dinner plates in the 80s thinking they'd be worth a ton of money in a few years. They're not.

Oh my gosh. I feel like someone out there- That's like Beanie Babies. Someone out there who's a big Star Trek fan with some money, they might be willing to buy that. I might know some people. I might know some people who's willing to buy it, not me. Wow. Wow.

Well, here's the deal. We've all done stupid with money, and we want to hear your stories from our listeners. And so if you have a stupid tax story where you made a financial mistake, you had some regrets and you're okay with us laughing about it, please email us at ask at ramseysolutions.com and in the subject line, put stupid tax. Ask at ramseysolutions.com, subject line, stupid tax. We'd love to hear it because I think, you know what it it does it creates some levity around money oh yeah it makes it more comfortable to admit our own mistakes and everyone thinks they're

they've done the stupidest thing with money and then you read another story you go nope yeah george everybody has done something stupid with money it's the people who refuse to admit it that's still broke oh it's the people who refuse it because if you can't admit it that means you haven't learned and if you refuse to change That even better you do stupid over and over again That's a choice. Yeah. Yeah, you got to start learning from these mistakes. Ouch So here's the good news. I stopped doing stupid when I saw through this broken system that was meant to keep me broke I went through financial peace university. You did this as well. This was like 10 years ago now

And I became so much more aware of my money, how other people were trying to get my money, what I could be doing with my money. And it gave me such peace and confidence because I realized, oh, I don't have to be the smartest guy in the room. I just have to do a budget and stay out of debt. That's so true. It's the simple things, George. It's, you know, I think money culture tries to make us think it's so complex and it's only for the wealthy and it's only for certain people.

Yeah, then there's the dude bros. But it's those simple things, living on less than you make, getting on a budget. Can you believe it? Paying off your debt. Who knew? Easy can be hard,

but it's simple. You don't have to be smart to do smart stuff with money. And that's very encouraging for people like me. And me. Wow. That's good stuff. Well, hey, more of your calls, maybe more of your stupid texts coming up right here on The Ramsey Show.

888-825-5225. សូវាប់ពីបានប់ពីបានប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពី This is The Ramsey Show. If you've been wondering, can I build wealth even in this economy? We've got some answers for you. There is a ton of noise out there right now with inflation and massive layoffs and rising interest rates. And we understand that you're fearful and you want some hope. And that's why we're coming to a city near you with our Building Wealth live event. Dave Ramsey and our team of Ramsey personalities will be doing this Building Wealth Live Spring Tour, where we dig into all of the hot topics that you're wondering about. We give

you a proven plan to build wealth and keep it, even in this economy. That is the guarantee right there. And each one is going to have its own flair and unique lineup. So in Indianapolis on February 16th, it'll be Dave, myself, Rachel Cruz, and Jade on February the 23rd. We'll be in Austin, Texas. It'll be Dave, Ken, Dr. John Deloney, and Jade. Then we'll be in Salt Lake City on April 24th, where you can see Dave, Rachel, myself, and Christina Ellis. And for our last stop, we've got Anaheim on May 2nd with Dave, Ken, Dr. John, and Christina. So we're switching it up. And so I'll miss you all in Austin and Anaheim, but we'd love to see you. If you're near one of those cities, you can get there.

It is going to be a good time. Tickets start at just 49 bucks, or you can get a four pack starting at 175. So bring some friends, borrow some if you have to, it's going to be a good time. Go to ramsaysolutions.com slash events to reserve your seats today. Exciting. I can't wait. I'm just elated about this tour. It's been so fun. The crowds have been electric. And it gives me hope too.

Because if you just watch the headlines, you're like, oh gosh, this is all going south real quick. And then you meet these people and they're like, oh yeah, we became Baby Steps Millionaires this year. We paid off all our debt this year. We finally saved for that big down payment goal we had. You're like, it's going to be okay. It's going to be okay.

Surround yourself with hope. That's right. Hope dealers. Check your inputs. Not the Joyce dealers. Check your inputs. Are they the right ones you need to have in your life? That's good, George.

Let's go to the phone. Scott is up next in Corpus Christi, Texas. Scott, welcome to the Ramsey Show. Thank you. What's going on? Well, I called just to see if I get some advice if I'm making a correct decision on constructing our new home in today's economy. What's got you worried? Just investing. Right now, the home is for $566,000 with a 6% interest rate on a 15-year fix, which would put my principal and interest at $4,700 a month. But my goal is to pay the house off at a five-year point. And to do that, I will need to take pretty much what I've been putting into savings to do, you know, to pay that off in five years.

What's your income? My income is $240,000 a year. I'm guessing you don't have any debt, Scott? I have zero debt, zero consumer debt. Have you been contributing? I'm guessing you have a decent savings three to six months. We have 104,000 savings. And I'm guessing you've been contributing 15% to retirement, maybe even more. That's my question because we have, I have not been putting anything into retirement or investments. Okay.

My individual contractor. So I've been taking really what I would invest and paying college tuition for my kids. So that's where that money has gone. So I have, you know, right now, zero retirement. Okay. So I love that you want to pay off this home loan so early. However, you know, when working the baby steps, we suggest you do baby steps four, five, and six simultaneously, but also in order. So you kind of skipped ahead and you went to baby step five and we're funding

the kids, the kids college. And now you're trying to skip ahead again and get to six and start paying off your home early. But it's, you know, you got to get to the retirement because here's the thing, you're going to retire regardless. The kids may or may not go to college. You know, you got to make sure you've got that money sitting aside for retirement. Now you mentioned you're, you've got your own business or you're an independent contractor. I want you to get with a SmartVestor Pro because they're probably going to want to get you into a solo 401k or some sort of SEP situation set up so that you can start putting aside money for retirement. And in your case, I would start with the 15%. And then if you have money above that, then you can start paying off

the mortgage early. So it sounds like the, you know, at the rate that you were hoping to pay off this, this home, and because of your income here, you, you have enough money to do all three of those things to invest the 15%. If you decide to go with the SEP, the contribution is going to come from the employer side, and they can, you'd be able to contribute up to 25% of whatever you take in salary. Or if you decide to go the solo 401k route, you can contribute either as the employer or the employee, which is nice. But like I said, get set up with a SmartVestor Pro. You can go on our site at Ramsey Solutions and find that. But that's thing one. And then after that, you're going to find that you probably do have extra money in your budget to start chugging away and paying off that home mortgage early. What do you think, George? Well, Scott, are you saying the loan is going to be $566,000 or is that the home price? No, the price to construct the house. I don't have the mortgage yet because we're going to build. My land is paid off. So the build price that I would finance is $566. Okay. So I'm wondering, can we slow down just a touch, save up more to put down so that we can get that mortgage, that loan lower? Because right now,

I mean, $4,700 a month, is your take-home pay close to $15,000? My take-home pay is right at $20,000. It is at $20,000. Okay, so that $240,000 is your take-home. Correct. Great. Well, that will leave you with a whole bunch of margin to still pay this off early. And as long as you're able to cash flow college and you're putting that 15% away, anything beyond that will help you get there. And the kids, you know, they're going to be through college in the next four years, it sounds like. I have one that's not in college yet. So it's staggered. Yeah, one right now that's got two years left.

Okay. Well, I would get this plate spinning because we want you to start getting the power of compound interest working in your favor in those retirement accounts. And while getting that house paid for is an awesome goal, you're going to get there. And if you do it in six years instead of five, big whoop, you are so far ahead of most Americans. Are you already a millionaire net worth? No. Okay. So that would be my goal for you before retirement. Let's make sure we've got a nest egg plugging away, growing for us, and we have money in the bank. We have a

paid-for house, which is going to lower all of your expenses in retirement, and that will put you on the path to retire with dignity. How old are you? I am 53. Okay. Yeah, that's great. You're going to do just fine. You know, the average person who has a 15-year fixed rate mortgage, they're paying that off just in a little over 10 to 11 years. So no matter what, you're going to pay this thing off early and you're going to go into retirement without a home payment, which is ultimately the goal. Oh yeah. And I mean, you've got a fabulous income, Scott. And so that gives me great peace. Now, if you were making $100,000 and you had a $5,000 mortgage payment, I would be in tears for you. And that would be frightening. But as long as

you think that income will stay at $240,000 or above, and you can sustain that for the next five to 10 years as you get the stuff paid off and start working on retirement, and then start just plugging as much money away as you can so that you're not having to work at $. That's right. Which is most people. So you're in good shape. Way to go. That gave me a great joy to take that call from Scott. I love that. Again, it's the choices. He was a little out of whack with the baby steps and that's okay. His income is great. He's thought this through. It was just kind of, you know. And he's crunching the numbers. Most people go into and go, I'm going to do a 30 year with as little down as possible. And I'll just pay it off over 30 years.

And I'm going, dude, why do you want to hang on debt for three more decades? You know, that's one of those conversations, George. I just, that's the big ticket thing is, oh, I want to have the 30 year mortgage and then I have more spending power and I can leverage my spending power. I just, that ain't it.

Cause think about it. At the end of the day, there's still 63% of people living paycheck to paycheck. The people who say that they're going to take that extra savings and invest it. They don't do it. Nope. Don't tell me you will. Cause I know human behavior. The stats tell us, George, I'm going to go for the Oreos before the kale. It's just how we are as humans. It's how we are. And so I'd rather force that decision and go, I got a 15-year now. Let's pay it off like a five. That's right. Scott's doing it.

That puts this hour of The Ramsey Show in the books. My thanks to Jade Warshaw, all the folks in the booth, and you, America. We'll be back real soon. 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.