The Ramsey Show - App - Don’t Use Your Kids as a Piggy Bank (Hour 2)

Episode Date: July 18, 2024

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual, amazing relationships. I'm Dave Ramsey, your host, Ken Coleman, Ramsey personality, number one best-selling author, host of The Ken Coleman Show, is my co-host today. The phone number is 888-825-5225. Ava's in Colorado Springs. Hi, Ava. How are you? I'm okay, Dave. How are you today? Better than I deserve. What's up? Well, thanks for taking my call. I'm a little nervous, and it's kind of a lot, so I'm going to try to summarize it because I know time is of the essence on phone calls like these. My husband of over 30 years has left me the third time in five years he's left. And he's told me that if I do not give him, help him get a HELOC on the house for over $100,000, he'll file a divorce for divorce and um i i'm

just really scared and i'm not exactly sure what to do um i don't want to do that and i i won't do that um i won't use our house you know in that way and i'm just i i have a little bit of savings, but I don't have enough to maintain the bills and pay a lawyer. Are you living in the house? I am. He left. I was, yeah, he left. I'm sorry. I'm trying to figure out how to maintain everything.

He just started a new job, and so... Why does he want to heal on? He says it's because he wants to buy some land and a race car, a sports car. I'm so sorry. Yeah. I'm just not really sure how to proceed because I can't I don't have enough money right now to hire an attorney and pay the bills because he is no longer getting a paycheck because he just started a new job he used to get you know auto pay and then this all just happened when does

this pay start at the new place now um he hasn't given me any details. I've asked specific questions via email, and he has not given me specifics. Okay. And you don't work outside the home? I do, actually. I make quite a bit less than he does. Anywhere between, I mean, last year, so I'm a realtor. Last year, my business took a loss. This year I'm probably tracking, you know, to make around 40 right now

and, you know, hoping and working towards more. Okay. Do you have family in the area? I do. Good family or toxic? I have really, really good family. I just don't want to, you know, I just want to, I don't want to put this on other people. It doesn't feel fair.

Do you have children that are grown? Grown, yeah. Where are they? Here, and then one is out of state as well. Are you in a good church? I used to be. I am not currently, but I am in the Word. I read my Bible every night.

I read my devotional every day and pray. I wasn't trying to judge you. I was just trying to figure out who's around you that can love you well. That's all I was trying to figure out. Yeah, I understand. You've got kids, you've got family, and you could plug back into a church, or if not that church, to have people around you to walk with you through this. Because you feel very alone, I can hear it.

It's unsure how to proceed. If I hire an attorney, I won't have enough money to pay the mortgage. If I don't hire an attorney, I feel like I'm going to end up in a really bad place. You need to call today and get an appointment hire an attorney, I feel like I'm going to end up, you know. You need to call today and get an appointment with an attorney because part of his paycheck when he gets it is going to go to you immediately during a legal separation in Colorado. Okay. So this idea that you're somehow, that he gets to keep all of his money

and go play wherever he wants to play when he's been married for 30 years is not true. It doesn't work that way in any state. So I'm not an attorney, but you've got a lot more things you can do to get the short-term cash issues, which are scaring you. So when he starts getting a check, some of it's going to be yours immediately

if you get a good attorney. I want to follow up, Ava. Is this a pattern of a threat associated with the other times that he's done this? He's done this before. Is it always kind of after he threatens you or in conjunction with some type of a threat, a manipulation? I think a manipulation is a good way to put it i think he yeah i think he's i think it's this is i think this is emotional extortion

and i think he's full of crap and i i'm with dave i'm gonna i'm gonna i'm not in any way i agree with all dave's advice i'm gonna say something uh kind like I'm going to act like your brother, like you're my sister. And this guy, this guy, I think, is a punk. I think he's a coward. No real man does this. This is straight up manipulation, emotional extortion. I'd call his bluff because I see a pattern here. You said three to five times he's done this, I thought. Is that right?

Dave, you've done this longer than me dave am i off on this i feel like there's something where she could call his bluff while she does what so the bottom line is there's nothing he can do except give you some of his money immediately yeah i don't think he has anything over you so you know other than you want to than if you want to stay married to the guy, which if you do, there's going to be extensive counseling needed. Yeah. Because I would not send you back into this situation again. I agree. And you're certainly not going to cave,

and you already told me you weren't going to cave to this ridiculous demand. I would never do that. It is ridiculous. So what is the home worth? I would say it's worth between $1.3 and $1.4 million. What do you owe on it? Under six. Okay.

All right, cool. So, you know, you're going to get a lot of money when it sells, and you're going to start a new life with a broken heart because things didn't turn out like you thought they were going to. And there's some grief that goes with that. That's very real. And you're probably going to get a substantial portion of his income coming to you. It's called alimony.

Okay. And guess what? He didn't get a race car. That exactly right which i just hate i hate that a lot that was sarcasm and so yeah i would remind him ava what dave's telling you like okay i'll play then get your alimony payment figured out and get everything figured out on this yeah you know we're going to sell the house and you're going to get a portion of that i'm going to get a big portion of your 401k from the last job yeah that. I'm going to get a big portion of your 401K from the last job, and I'm going to get a big portion of your check going forward called alimony.

And so you're going to wish that you hadn't thought of this idea when you're done. Yeah, that's not what I want. The problem is he's not a keeper. I wish he was. Unless you have dramatic repentance on his part and some real strong counseling this is not a key it's not going to work out and i'm so sorry yeah heartbreaking it for 30 years wow well actually it's probably you said started five years ago it's probably 20 years of last 10 have not been good years but the um i'm sorry. And then you're going to go make millions of dollars in

the real estate business and you have a wonderful life and he's going to realize how bad he screwed up. And gosh, I'm so sorry. Yeah. Go get an attorney today. The attorney will talk to you without putting down $10,000. And when you tell them where he works and they can get in touch and they can start getting some of his money they'll they'll help you gather up the money to get there you got a lot of equity to get their retainer ken coleman ramsey personality is my co-host today alice is with us in Houston. Hi, Alice. How are you? Hi, sir. Good. Thank you. Good. What's up? Okay. So I'm on baby step two and I have a very expensive car. It was 67,000. It's a 2024. It's electric. So I don't have to waste any money on gas. That's the one good thing about it. But I still owe 41 on it right now.

I owe 151 on my house. And those are my only two debts. I take home 70,000 from work, 20,000. My boyfriend lives at my house and pays half the bills. And then $10,000, my kid gets social security disability from his father. And so he got a back payment of $25,000, and it's been almost a year now. And I've had that put up. He also has, like, savings since he was little. He has $5,000. This is my kid. So $5,000 from me saving, $25,000 from his dad's social security.

And then I have another another kid she only has one in like a two thousand so do i use their money to pay off my car or do i just leave their money alone because that's technically borrowing money and just make my money and pay my stuff i can pay off my car really fast you said the car's worth 67 $67,000 and you owe $41,000? I bought it for $67,000. When I look at KBB, it's between $45,000 and $48,000. And you owe $41,000 on it? And you make $7,000. Yes, sir. I take home $70,000. Yes, sir. I'll get out of the way fast. I do not at all like the way that feels,

taking your kids' money to clean up your mess. It's ridiculous. It's awful. No, no. Because you bought a car that you can't afford. I'm trying to make sure. You bought a car you can't afford. Okay. I got it.

Yeah. Sorry. Yeah. We teach, listen, here's the thing, Alice. Things with motors and wheels go down in value rapidly. And so one of the guidelines we use for wealth building is don't have more tied up in things with motors and wheels all added together. If you've got boats and motorcycles and side-by-sides, whatever it is, add them all together. They should not be more than half your annual income. And if they are, you have too much going backward to prosper

because you're losing your butt on everything with motors and wheels, including what you're driving. And so you've got more than half your annual income tied up in this car. It's worth 48. You only make 70. Well, actually it's your take-home so you probably make 90 so you're right around half so if you want to keep the car you're probably right on the bubble but you really bought a car you shouldn't have bought that's the bottom line and so uh either sell it and move down or pay it off very quickly but no i would not use your children's money. Just because, you know, if you were calling me up and you said, you know, I'm raising these children and this social security money covers the cost of raising the child and, you know, we're doing some other things. I have many times told people to use that money, okay?

It's not their money technically. It comes in their name. But when, you know, what you get from Social Security, even if it's back pay total, is not what it costs to raise a child. So you spend more on the child than they're getting. So if you use that money in your monthly budget, I usually tell people that's okay. But I'm not going to do that if I'm in your shoes to pay for something I shouldn't have bought in the first place.

That's more for survival and for month-to-month bills that I'm talking about. And this is far from survival. This is a luxury item that you couldn't afford, and now we're trying to clean it up with their check. No, I would never do that, ever. Alex is with us in New York. Hi, Alex. How are you? Hi. Hi, Mr. Ramsey. I've binge-watched a lot of your shows this last year,

so when we decided to buy a house, we decided to do the Ramsey way and throw all of our money at it. But as the closing approaches at the end of the month, I'm getting nervous that we will basically have no money left and, quote, have all the eggs in the same basket. I'm wondering whether we should take a mortgage or should we just use all our cash. How much is the purchase price on the house? It's $990. And how much money do you have?

I think about $1.1 right now. Okay. So you have like $100,000 left over and you own a million-dollar house. Yeah. left over and you own a million dollar house. Yeah, but like you said, a good growth fund would increase at 7-10% per year and houses doesn't seem to appreciate the same rate.

So like people have been telling me especially recently to not put all the money in the house. I don't know if that's why. There's a lot of broke people with opinions about other people's money. So what people have been telling you, I couldn't give a crap less about. So you had decided up until people got involved to pay cash, right?

Yeah. What was it that was motivating you to pay cash? Well, I mean, we actually never took how much debt for anything. Why? What was your motivation? Why pay cash? I don't know. To save interest.

Okay. So we don't have to pay interest. And payments. And payments. What's your household income? That's $350. Without a house payment and no other payments in the world, you should be able to build cash very, very quickly, shouldn't you? I hope so.

Well, no, I mean really, mathematically. It's not a hope. It's a math formula. $350 minus no payments equals a lot of money. Right? There's still property tax and stuff. Where did the 1.1 come from? Savings.

Oh, so you already know how to do this, and yet you're arguing with me. No, no, no. No, I'm telling you. You know how to save money. You saved up 1.1 on 350, and now you're going to have no payments on your housing, which you don't have now. You're paying something on housing now. And so I'm saying it's really easy to stack cash and you're going i don't know well yes you do you saved up 1.1 you already know how to do this and you can it's going

to be even easier without a house payment yeah alex let me tell you what i think's happened here i think your values led you the right direction your values have driven you to a unbelievable position of having 1.1 cash for a home, and you ran into somebody who has some influence in your life, and they're starting to mess with your head. But your values and your gut were right on the whole time, and now influences are messing with you. Isn't that what's happening? Maybe.

I think so. Yeah. I'm here to tell you that's exactly what's happening. Also, it's a very huge purchase that makes me... Yeah, but remember, you just told Dave the reason you didn't want to have a mortgage is because of the payments. If you put a mortgage on it, it's still a huge purchase. That's true. As a matter of fact, it's two huge purchases, a mortgage and a house.

Yeah. Yeah. Listen, either don't buy the house and walk away from the deal or pay cash. If I were in your shoes, sir, that's what I would do. And you are going to have millions and millions of dollars as a result of that advice if you listen to me. Because without a house payment, with a house payment or with rent, you've already saved up with your income 1.1. You're already in a stellar saver. And so, you're going to rebuild this so you have another million dollars in cash laying around so fast so fast let me just please do it

please do it wow it's interesting i guess when you walk out uh the first time and you have to step on something that you didn't that you've never stepped on before you have to step into something you've never been before that's right it's naturally um it's first time he bought a million dollar property that's a lot yeah and his friends played into they weren't trying to manipulate but they played into that fear by giving him an option and now you can kind of rationalize they fear an option they shamed him might have been yeah like what kind of idiot are you getting a mortgage man nobody does that nobody pays cash what are you listening to some hillbilly in tennessee come on man and that allows him to

rationalize the fear then you go i don't know no no i'm suddenly unsure i'm the guy with 1.1 million in cash and i I'm unsure. Yeah. Come on, Alex. You got this, man. You got it. You can do it. This is The Ramsey Show. Ken Coleman, Ramsey Personality, is my co-host today.

Today's question comes from Gary in Louisiana. I'm in my mid-40s, and I'm a senior executive at a publicly traded company. My wife is also successful in her field. We have no debt except for our mortgage, which I can pay off from expected bonuses and maturing vested accounts. I'm starting to burn out and have side interests that could become full-time work for me. Is there a rule of thumb for how much cash cushion you should build before you jump off and start your own business? For instance, should I have a certain number of years of living expenses in savings? I feel a bit silly asking this question because I feel like the answer is go, go, go, but I'm also in my peak

earning years and don't want to be foolish about the amazing resources I've been given at my current job. Well, a rule of thumb for me on how much money, I like to give people advice to have, if you're going to jump into your side business, I'd want to have 12 months of living expenses in the bank. And that's because I just don't want people to have the pressure to survive when going into working for themselves. It's hard enough to be a solopreneur or to run a business without the pressure of trying to eat. In this case, in your situation, because of your financial situation, I'd also say I'd want the side hustle to be making 70, a rule of thumb for me would be a minimum of the side hustle earning 75% of your current income.

That would be minimum for me, not ideal, minimum. So minimum 75% of income and then 12 months of your living expenses in the bank so that essentially you've got that pipeline of business built up in that you're making a good chunk of your current salary. And we have a very strong account of retained earnings is what we call that here at Ramsey Solutions in that business account. That would be for me a bare minimum. Other than that, I think it's too risky. And again, I just don't want the pressure of this side business feeding me. I want to know that it's mature and it's proven. Yeah, when I get desperate shortly after that, I usually get stupid. Yeah, you change your words.

People say stupid things about starting their own business, like take the leap. Jump into it. So what Ken is describing is you pull the boat up next to the dock, and you step into it. And then you actually won't need any of your money you have set aside because you're going to be earning almost as much. And soon after that, we'll be earning more than you used to earn because you got the business growing on a trajectory and it's almost there already, but you can take the step, not the leap or the jump, by pulling the boat close to the dock. But too often what we see is the boat is 100 yards out, and you come running

down the dock and leap like you can make it or something, and all you get is wet, okay? You're just jumping in. That's all you're doing. It's dumb. And so that's not what you're describing, Gary. You're describing wisdom and thinking through this and all that. But in other words, I wouldn't start. I wouldn't say if you had five years saved up and zero income production on the side hustle and you quit a perfectly great day career hoping. Yeah. See, that's a leap of faith. That's unwise, and that's kind.

It's actually foolish is what it is. So you don't do that because you could burn through any amount of money if you have no replacement income. So the more replacement income you have the less pad you need let's pretend let's be crazy for a second let's pretend that his side hustle took off all of a sudden before he realized it and he was making 150 of what he makes now how much savings would he need none that's exactly right you're getting a raise right you wouldn't have to have a year set back you would not have anything setback.

But if you're going to go with that 75% guideline that Ken's talking about, then I completely agree with the one year. And six months of that's your emergency fund. Six months is set to the side just to cover cash shortages where you're going to burn if you have any cash shortages. And of course, the other thing you've done wisely is you're out of debt and you guys are, you know, your wife has a good career, which also will help you make this step. Yeah, I agree. What we're preaching here is moderation,

patience, hold, you know, just don't. If you were, if you're running a business already, guys, I, you know, like we've got profit centers all through Ramsey. We have different things we do here, publishing, live events, broadcast, all these different things here. They're all different profit centers. We don't leap here. That's right. You know, I'm already running a business, and let's just go see if we can lose $10 million. Heck no, man.

No, I mean, what we do is we do look we trust that we want to prove the concept they call it proof texting that's right right i want to test mark it i want to prove the concept before i bet the farm on it and you're that's all you're doing with your business you're proving the concept by actually making money doing it it's no longer a freaking theory it's not a dream. You're a dream killer, Dave. No, I'm a nightmare killer. I'm all about you living your dreams, but I'm not going to help you with your nightmares. And people jumping when they have zero income on the side hustle, that's a nightmare. It's unwise. And it's not that Dave doesn't, yeah, I'm completely entrepreneurial.

I'm the biggest capitalist pig you will ever meet. I love capitalism. I love taking a reasonable risk for an awesome return. I do it every day, and I want that for you guys. Lisa's with us in Toronto. Hi, Lisa. How are you? Oh, my gosh.

Hi, Dave. Hi, Ken. I'm super excited to be talking to you. I love your show. I listen to it every day. So I have a question, obviously. So I am 53 years old and I just downsized into a home that is leaving me mortgage-free. So I'm really excited about that. I have no debt except for like $2,500 because of my move. And I have a boyfriend, and we are talking about him moving into my home. And a couple of options that we're thinking about. One is that he pays for half of the house

and then he's on the deed or the title, whatever. But he's super, so we're both divorced. I have my kids every other week. He's super gun shy because we've both been burnt. How long have you been dating? Five years. When do you get not gun-shy? It's been a thing.

I'll be honest. I mean, I get it if it's five months, but, dude, painter, get off the ladder. Yeah, I agree. Okay. No, you do not deed your paid-for house to Mr. Gunshy. Yeah. Not a chance. Okay, so this was the other, because he was talking about he pays for half.

I don't care. You do not want to own a house with people you're not married to okay that's what i freaking nightmare so so what i was thinking get married well there's that there's that solves the whole issue so um so another option would be and i don't know if I like this one any better, but him moving in, selling his house, of course, and then, you know, we split the bills. And then if there's any house improvements,

then we each pay for half and, you know, take it out of like a separate bank account so we can keep track of it. And then if things go terribly wrong, then, okay, here's your half of what you put into the house. You don't have to worry about how much the house has increased in value. I'm exhausted hearing that. Did you hear what you just said? I did. I did.

This is an awful lot of work to say that we still aren't ready to get married. Yeah. So here's what I think. You called to ask. I'm sorry, but I'm duty bound to love you well. I love you, but I'm ready. I think you guys, what this is bringing up is you need what the old teenagers used to call in the 80s, a define the relationship moment.

That's what I was thinking. I think we need to decide what we is. Okay. Y'all are trying to be something halfway, and it's not working for you. It's way too much work. I think you either need to get on or get off. Let's decide. Are we going to get married?

If we are, then we can talk about combining assets and incomes, and that's what married couples should do. People who are shacking up should not do any of that ever. he should not move in if he's not going to get married this is the ramsey show ken coleman ramsey personality is my co-host today well don't miss your chance, and the window is closing. The rooms are running out to join us on the Live Like No One Else cruise. We're going to be on a very high-end, very nice Holland America, fairly new, almost new ship. 100% of the ship will be Ramsey people. It'll be all the Ramsey personalities the whole week, including Sharon and I. My friend Stephen Curtis Chapman, Dove Award winner multiple, Grammy Award winner multiple, will be there performing with us. Manit Chauhan from the Food Channel will be there.

Dina Carter, famous country music artist. Remember the song Strawberry Wine? She'll be with us. It's going to be a great cruise. It's the Live Like No One Else cruise because after you've gotten out of debt and you're on baby step four, five, six, or seven, that's when you start doing things like vacations and you live like no one else so that later you can live like no one else. We want you to come. We want you to be part of it. The stops are incredible. It's a full seven day cruise, Turks and Caicos, St. Thomas, Puerto Rico,erto rico bahamas absolutely incredible march 22 through 29 of 2025

so it's coming up here in about nine or ten months and uh we goodness we would love to have you with us but it's almost sold out you've just got a handful of rooms left and we would love to have you so put down a 600 deposit and you can hold the room before they're gone i highly suggest you do that quickly uh book yours at ramsey solutions.com slash cruise we'd love to have you ramsey solutions.com slash cruise lindsey is with us lindsey's in salt lake city hi lindsey how are you? Hi, wonderful. Thank you. How are you? Better than I deserve. What's up? Thank you for taking the time to help me. Um, I, um, am a recently widowed, um, 50 year old, and I am trying to figure out, um,

if I should go back to school to increase my income and have financial stability. How long ago did he pass? February. Oh, my goodness. How long were you all married? 30 years. I'm so sorry, honey. Thank you.

What happened? He went into, sorry, I'm. It's okay. He went into respiratory arrest. So it was very unexpected and sudden. I'm so sorry. So you were at home full time before that? No, actually, I have always worked. We have three kids, and always kind of balanced the kids and work, but I am self-employed, and it's so...

What do you do now? I'm a physical rehab therapist. Okay, and how old are the kids? 22, 20, and 16. Okay. So you've got a teenager at home. I do. Okay. What's your financial situation? Any kind of life insurance, debt?

What's that look like? So I have $200,000 sitting in a 5% interest account at a credit union. I have $90,000 in a 401, and I have $30,000 sitting in a savings at a credit union. And no debt. The house was paid for? It's not paid for. I owe $225,000 on it right now at $3.37. What do you currently make? What do you currently pay yourself out of your business?

Yeah, about $50,000 a year is what my business makes, and basically I take that. It's a very, very small business. And so we always relied on his. Sure. What was his income? $90,000 a year. Okay. Have you run some numbers on your budget to kind of drive this question on, should I go back to school to increase my income? In other words, what do you believe you need to increase your income by? So you go from 50 to

what? Do you need that for margin? I mean, give us the real, real on this. So the real, real is I've been doing what I do for 25 years and we knew that my hands could only take it for so long. And we knew that was kind of winding down. My goal was to take my experience and my passion for what I do and turn it into being a hospice nurse. So still working with people and helping them. And I was going to obviously be able to take my time to do that. So this is more of now I need to stop doing what I do because I have no security in what I do. There is no guarantee in my job physically or financially. What kind of time frame do you think you have on your hands? The physical ability to do this.

I mean, I was planning on kind of starting a transition this year. Okay. So I've got a thought here, but one other question. Have you looked into what it would cost? And I don't mean name brand school. I mean, what's the cheapest that you can get qualified to be a hospice nurse? Yes. So it would be a community college and the program to do that would be, I believe it was $16,000. But I have to take all the prerequisites to get into the program. So it's going to be a couple of years before I even do that. Okay. So two years and $16,000 total? Okay. Well, so here's the deal. That's the RN program though. Got it. But Lindsay, you've got the cash so the the hardest part of this deal is paying for a degree like this and you've got it so we check the box on that and you can keep

working during that time and i almost wonder i i know i hear your fear muscle kind of flaring up here and i get it i just wonder if you shouldn't look into being a therapist for someone else so that you don't have this added pressure of going out of the cave, killing it, and dragging it back. I just wonder if that's not a viable option to where you at least take that stress off. You're fine financially. Even if you were to continue making 50, you're okay, correct? Correct. I just wonder if that transition-wise, you know, takes the mental stress off. How long have you been making 50? Years.

Right? Yeah, years. Years. Okay, this is more secure than it feels like right now. That's true. That's a good point. Because your world is crumbled. Yeah.

I know I physically can't continue to do it, though. Yeah, but I'm not asking you to. You can do it for two years, can't you? Hopefully, yes. Yeah, while you go get your school done. So the net cost, you're going to live on $50,000, and you're going to work, and you're going to go to school, and you're going to get your nursing degree. What's a hospice nurse make?

It's probably going to top out at about $60,000 a year. Okay. I mean, you're going to get a full nursing degree, correct? Correct. Okay. So you can do any kind of nursing. Hospice is one thing that you're interested in, but certainly you're not obligated to only do that. And as you know, nurses can do as much as they want to work.

You can get all the work you want. And you can make $100 if you want to. So it's up to you, though. I mean, so if your hands can make it two years, which they were going to have to anyway, or you're going to have to just live on your husband's income before, right? Right. Correct. have to anyway or you're going to have to just live on your husband's income before right right correct if you were going to just quit and do this but um or if you make it one year and then you use some of the 200 to live on in year two while you spend 16 and finish up the degree

but yeah i'm with you i think it's a smart move i would go do it yeah absolutely okay and then do i leave the money that i do have um just sitting where they're at right now yes okay to make this transition as soon as your new income is stabilized write a check and pay your house off but that's the new career and that's two years from now uh correct well probably closer to four i'm sorry i thought we were saying two well the the program the rn program is two years long but i have to take all the prerequisites to get into that program and then by the time i get through the program and graduate it'll be about four years from right now okay all right yeah go back and re-verify that it's going to take you that long to do the prereqs.

Maybe you can knock them in a year. I would roll up my sleeves, no pun intended, and get those done in a year if I can. I like your plan overall, though. I'm sorry for what you've been through, and you're thinking very clearly for someone that's in this situation. So, very good job, and we're here to help you. If you need anything, you call us, okay? This is the Ramsey Show. Thank you.