The Ramsey Show - App - Getting Rid Of Your Mortgage Will Accelerate The Rest Of You Financial Goals! (Hour 2)

Episode Date: November 4, 2022

Rachel Cruze & George Kamel discuss: Why the Debt Snowball is designed to help you succeed with paying off debt quickly, How paying off your house during retirement gives you even more freedom, What to do when your lease is up on a vehicle, How managing your expectations are important when it comes to home buying, When you can switch from Gazelle Intense savings to intentional investing, Why paying off your house as soon possible is the best set up for success. 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 pods of Moving and Storage Studio, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I am Ramsey Personality, Rachel Cruz, sitting beside Ramsey Personality and my co-host of the Smart Money Happy Hour, George Campbell. And we are here taking your calls. It's a free call anywhere in the country at 888-825-5225. So give us a call. We'll talk about your money, your life, your relationships, your jobs, anything and everything, you just give us a call. All right, starting us off this hour is Craig in St. Louis. Hey, Craig, welcome to the show.

How are you guys doing? Doing great, doing great. How can we help? Well, here's my issue. I'm babysitting too, and we're going through this test, and we're at the part of the program where we um we're at the smallest bill and technically we our church had a capital campaign and we um that we would contribute um so much over the five years and we're down to 38 on that, but that's zero interest on anything.

We got a payment plan of $150 per month for that until it's paid off. I'll basically have that if we stayed on that way paid off in two years. Again, it's no interest. But I've got a truck payment that's $8,500. And that's the next one, next step up. I've got three other credit cards and I want to try and get all this stuff taken care of. But I wanted to know, should I, I've got, I'm also a real estate agent and I've got a transaction that's going to be coming up that could pay off a big chunk of the $8,500, or I could just totally pay off the church contribution. Which would you do?

Okay, it's a great question. Well, we teach, yeah, the debt snowball, and it's about paying your smallest debt off first to your largest, regardless of the interest rates. And so we're not really playing that, you know, the interest rate game here. It's really about knocking out those smallest debts first, which are really important. Okay, you mentioned credit cards. How much was that again? Did you say 300?

No, I got three credit cards. Three credit cards. What are the balances on those? Two are 12 and one is 15. 15,000? $12,000 and one is $15,000. $15,000? Yeah, $12,000 and, two are $12,000 and one is $15,000. Okay, okay.

So total about $39,000 on those. Woo! Right. We've been living la vida loca, Craig. What have we been doing? What was the majority of the spending on those? Just living life and it's just

we finally hit to where we're done with it about six or seven months ago and we're just collecting on those. We've stopped using the cards but we've just got to go through the steps and use them

and pay them off awesome and we're doing a little by a little so we're doing it like you said we're going trying to go gazelle and fence on on the smaller stuff and it's working but it's just uh it's taking some time just wanted to know which one which one you would do first for sure well yeah i would knock out the church first because it's the smallest, and then I'd be knocking out the truck next, and then hitting on that $12,000 card, the next $12,000, and then the $15,000. Yeah, just stick to the debt snowball. How much do you guys make a year? About $170,000. Okay.

Love it. Great income to clean up this pile of debt. For sure. How quickly do you think you'll do that with some gazelle intensity and doing the dead snowball? We're also, our daughter is finished up. She's got a year left in college, and we got a 529, and we've been paying cash for that. So we're anticipating probably to take anywhere from two to four years. Four years? I'm just kind of going off. That's how I think it would take. Man, I just think making $170,000, and if I'm adding up your debt correctly,

if you told us everything, you got about $51,000 in debt? I also have a mortgage still and an equity line, and I'm counting that in there too. Oh. How much is the equity line. And I'm counting that in there too. Oh. How much is the equity line? Equity line is 50. 50? Okay, so I would add that into your debt snowball too, Craig,

because if it's less than half of your annual income, I would add that as well. So we're talking closer to 100K of debt outside of your mortgage. Right, right. And you can use, are you using EveryDollar? Are you using the DebtSnowball app that we have? We are following, I don't have the EveryDollar app, but we are definitely doing a budget,

and we are definitely following smallest to largest and doing that way. Sweet. Well, we want to gift that to you to help you along this journey. So hang on the line. Jenna's going to pick up. We're going to gift you every dollar premium. It'll connect to your bank. It'll help you get an even better plan for every single dollar coming in. And along with that, we're going to gift you one year of Financial Peace University to motivate you, encourage you, equip you with some knowledge. It's one of the best ways to stay motivated.

When you've got a big chunk of debt like that and you've got a two-, three-year slog ahead of you, I think this is really going to help. So watch it with your family. Watch it with your wife. And, man, call us back when you're debt-free. It's going to be a great story. Yeah, and, Craig, looking at these numbers and adding that extra $50,000, So, yeah, it's bumping up to $100,000, $101,000. Making $170,000, though, you know, living on nothing. The joke around here is like rice and beans, beans and rice.

You don't go out to eat. You're not going on vacation. Like, y'all are doing nothing until this debt is cleaned up. And, man, focusing so, so much on it And then even say, okay, what are the things that we can, what are ways that we can cut our expenses and also make extra? Like, is there a period of six months where you say, all right, starting in January till May, we're going to be working extra jobs and seeing how much we can bring in. And then we're going to reevaluate. I mean, the more you sacrifice and the harder you work, the more you work, the more hours

you put in to be making money, the more to throw out this debt and the faster you'll get out. So Craig, I'm excited for you guys. I can hear in your voice that you're like, we are done. We are done. And it's amazing what that sacrifice of getting out of debt that baby stepped to, how powerful it is. And you have, yeah, two, three, three and a half years ahead of you. So it's going to be a marathon. It's not going to happen overnight. But we hear those stories all the time around here.

What's interesting, Rachel, I wonder sometimes the high income earners, it's harder for them to do this plan because it involves a level of sacrifice where you have to swallow your pride and you have to drive the crap of your car and you have to do the side job and people are going, whoa, I thought they were doing great. I saw him delivering pizzas. Yeah. Wow. And that hurts. And so for the high income earners, sometimes our plan can be harder in a sense for them emotionally and mentally. No, it's a great point. Financially, it's great because you have a giant shovel.

That's right. That's right. But it's hard because you have to live like no one else it's that emotional side of it that's right it's the humility to say man we screwed up and we're gonna do what we have to do to get out of this regardless of what other people are thinking and it does it sucks to be like we're gonna go backwards well the house of cards comes crumbling down the life you thought you were actually living when it was really just on payments. That's exactly right. We're excited for you, Craig. Way to go, man.

Remember, when you pay off those credit cards, cut them up. Get rid of them. Don't let the temptation be laying around. 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,

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at chministries.org slash budgets. welcome back to the ramsey show i am rachel cruz co-hosting today with george camel we're taking your calls at 888-825-5225 here on the Ramsey Show. Up next, we have Keith in Louisiana. Hey, Keith, welcome to the show. Hi, thanks for taking my call. Absolutely. How can we help? Okay, so I just recently retired in February. I'm 62 years old, had a career for 42 years, and finally stepped down and retired. I followed Yelp Baby Steps. I've been following Yelp for about five years now and followed the Baby Steps. I also went to a sport investor and got an advisor. Good, yeah.

And I went through that process. And I feel I'm on baby step six now. So my question is, I'm still left with my house note. I still owe like $120,000 on my home. I don't have a big house note, but I still have that, let's say, monkey on my back, which is bothering me. So just trying to figure out what I should do to maybe pay it off. Awesome. Well, I'm proud of you, man. That's incredible. So you found us five years ago, which was in your late 50s, right? Correct. Yeah, I was a slow starter, let's say. I had some issues getting started. We had Hurricane Katrina in the way

and things like that. Well, you're an inspiration to many, Keith, because a lot of people go, well, I'm 57. What hope is there for me? It's too late. I'm like, 57? You still have a lot of life to live, and you decided it's not too late for me. I'm going to retire with dignity, and I want to pay my house off. So where are you at financially?

Do you have money, a nest egg? Do you have retirement money? I have a nest egg, and I have retirement money. It's generating monthly income. Is it like a pension? I have a... I took the lump sum. Okay.

It's at a monthly pension. So walk us through your kind of net worth. Okay. What's in the nest egg? Partly I have $1.7 million. Amazing, Keith. Awesome. What's that in?

It's diversified. They have it in a little bit of everything. I have my advisor. I'm not very good with this still after these years, but they have it diversified enough to where it's generating some money for me. Well, no one mistakenly acquires $1.7 million. So you've done some really intentional stuff along the way. Have you talked to your advisor about the best strategy and use of this money? You know, if there's Roth portions and there's traditional portions, what's best to use first if you were

going to take some of this money and pay off the house? Yeah, I haven't talked to her yet about it um we we meet quarterly on we very often actually calls me you know pretty often when things change and they move stuff around if they need to at the market um yeah that's great so yeah i would talk to her keith because she's a smart investor pro so she's very familiar with uh the ramsey babys. And so she'll know that, yes, you still have this 120 house payment or mortgage. But what's great, Keith, is it's just $120,000 compared to $1.7 million. So you are in. But it's got me so nervous, though. Yeah, I know.

But I think you can pay it off very quickly. So I would recommend in the next, yes, that next quarter telling her that, because remember this always, regardless whether it's a smart investor pro or you're using a tax professional, these people work for you, Keith. This is your money. That $1.7 million, you did that. This is your money. And she's there to advise you because she is in the ins and outs of the investment world. And so it's always good to have someone on your side like that.

But what you're feeling is that urgency of like, I just want to get this paid off. And so paid off, tell her, I want this paid off. So what is the best way to get $120,000 right now to me so that I can get rid of this mortgage because financially you are in a 1000% great place to do that, Keith. And then you're able to let the rest of that 1.6, you know, be able to continue to grow. And what a fabulous job though, Keith, you did, you've done a remarkable job. So congratulations. And I'm excited to have your house paid off asap retirement and you are yeah you're gonna be able to enjoy so

congratulations and again that's a little bit of a shout out to our smart investor pros they are all over the country you guys and they are investment professionals that have the heart of a teacher and they know the ramsey baby steps so they really do walk with people when it comes to your investing because it's an intimidating part of your financial picture. When you're talking about Roth IRAs and 401ks and mutual funds, it's like, well, what's capital gains? When do I get taxed? When it's my income bracket?

If I'm gonna be moving and selling houses, they are able to look at your entire financial picture and really, really help you with that side. And having people that that's their job, it's the ins and outs. It's like what they eat and breathe every single day. It is so helpful. Yeah. We both have smart investor pros because I'm not in the ins and outs. I don't know what's happening in the industry. And they're thinking about things at a different level strategically. What if you move this over here and you could actually use this charitable deduction? And I'm going, oh, I had no idea. That's amazing. And so

they're so knowledgeable beyond just helping you just choose an investment. You have to look at your bigger financial picture, your legacy, your net worth. What is the best use? How do I steward this really well and strategically? And they know all the ins and outs. They know the laws.

They know the codes. I mean, it's incredible. So if you don't have one, go to ramsaysolutions.com and go to Ramsey Recommends and connect with one in your area today. It gives you such peace and such confidence. Absolutely. All right. Up next, we have Laura in Philadelphia. Hey, Laura, welcome to the show. Hi, how are you?

We're doing well. Thanks for calling. Okay. So I'm 30 years old, so is my husband. Most of my 20s was spending money. And my poor husband, he is not a spender. When he does spend, he could spend big, but he doesn't. We're up to making $130,000 together a year before bonus. Um, my question is we have,

so we sold our house, um, this year actually, and we moved back to state and, we paid off about $40,000 worth of debt. Nice. Congratulations. Yes,

it did take a big chunk off, but we still have $50,000 worth of consumer debt. Our one car is almost paid off. We have about $2,900 left on it. So I have that part of our snowball. My other car, we bought it brand new. it's a lease um my lease payment is almost five hundred dollars a month i am sick and tired of it i finally had my i had it moment um and i called the dealership they will take it back we are over miles we still have a year left on the lease um and they would take it back and we wouldn't know anything, but we wouldn't get anything out of it. So we would have to go buy a car in cash. Um, and it would be, you know, a date car. And, um, so yeah, I, I'm just really nervous because we do have a two-year-old

and I, you know, my husband was a mechanic. He's in a corporate office now in management. But he, I mean, he does have the tools. He does have the knowledge to fix a car. Good. What's the early buyout on it? Have you asked them? So if I wanted to buy it out today, my residual value is right around $34,000. Okay.

And that's pretty much what they're going to buy it back for. So if you bought it from them, what would it cost? And if you could resell that after? So that's what I'm scared of too because I did think about that. It's a Toyota 4Runner, so it does hold its value. I've just been seeing that in the market as I've been following it. People that give it back, it's the most money you can lose on a lease, which is already a terrible way to get a car.

But if you did the buyout and then you sold that car, do you guys have the cash to do that? No, and that's why I was very scared to do that. I didn't want to buy it out and get into a larger finance payment and then get stuck with it and not be able to sell it. Yeah. This may just be one of those stupid tax scenarios where you go never again. That was a dumb move and it hurt and I don't want to feel that pain again. So you may just need to give it back at that point and get you a used car with cash that you can fix up for now until you're out of debt. And then we can upgrade later, making 130. You guys are going to get out of this thing fast and upgrade. So we're rooting for you. Way to go. Are you sick of planned obsolescence?

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Blinds.com 100% satisfaction guarantee means even if you mismeasure or pick the wrong color, they'll remake your blinds for free. You get free samples, free shipping, and with the new promos they run every month, you'll save even more. Use promo code Ramsey to get the best deal. Today's question comes from Meredith in Wisconsin. I'm 27 years old and trying my best to do the baby steps so I can buy a house with as little debt as possible. But I feel like in today's market, it's nearly impossible to find a decent

house that's affordable. How can I accelerate my savings to buy the house I really want that's currently outside of my budget. This is a tough one, Rachel. There's a lot of people, especially in their 20s and 30s, frustrated right now with how the housing market has been the last few years. And with wages not increasing at that rate, they're going, this isn't fair. Now the average house is 400 grand and I'm making 30, 40, 50. how am I ever going to save up a down payment in order to get the house that I really want yep well I think that's the phrase there it's what I want right and so it's not always about what you want it's what you can afford

even if it's not a lot and I and it and it does like it it sucks that you look back and you're like if in 2019 it was a different world and here we are in 2022. And it's not that prices have, you know, significantly dropped. It's slowed down. The market has, which is great for buyers. You have a little bit more room for negotiation and all that, but it's still a lot of places have still held that value, even when it spiked up.

So, you know, I feel like I'm going to sound cold, George. No. Usually that's your fault. Usually it's me. I'm very happy about this. Usually you're the one to do this. Take note, America. But I'm like, but what sucks is like math doesn't care.

Heartless, Rachel. Math doesn't have emotion. And so we can sit and complain about it because it does suck. Like, I mean, yeah. But if you just sit there and complain, then what else are you going to do? So you have to be able to say, okay, here's the reality. Here's the reality.

I'm not going to be able to buy in that county that I wanted to right now. I'm going to have to, you know, go 20 minutes further out than I was expecting to get that kind of house. Or I'm going to have to stay in the area I want to buy in, but my house is going to be significantly smaller

than what I was expecting. And so again, that's not fun. None of it. You want it. You want what you want, but when the numbers aren't there, you have to deal with, okay, what, where are the numbers playing out for me if I really want to buy a home? And I mean, it's not fun, but that's the truth. That's what you have to do because it's not going to be a great thing. You know, being a homeowner, it's wonderful. And we want everyone eventually to, because it's a really smart place to put your money financially. But it also is so emotionally driven sometimes for people that they jump in without doing the due diligence of having a secure foundation of

not having payments, not having debt, having an emergency fund, being wise as they get into it, making sure again, even what they're buying isn't out of their budget. And it's hard, but it's what you got to do now. Oh, yeah. It makes me think of that old adage, cheap, fast or good. You can only choose two. You know, if you want it cheap and fast, we can do that, but it won't be good. That's good. You know, and so there's a level that you have to compromise sliding scales when it comes to housing of, all right, I really want that house. Either it's going to take more time to get the house that I want, or I can do it faster, but I'm going to have to go 30 minutes into the next county and it might be a condo instead of the single family home. Right. And it might need a few upgrades that I have to make a few years from now

because it doesn't have the kitchen that I wanted with the backsplash. And so we talked about this on Smart Money Happy Hour in our first episode about how HGTV ruined a generation. They ruined our lives. Because the expectations are just... Great houses could look like. Yeah. And now we're like, everyone hated their house after watching Chip and Joe make a house beautiful. Like, I want to do that. And so there's a level of patience that we need, resetting expectations. And on top of that, she's asking, how do I accelerate my savings? And me and my wife, we did this when buying our first home, which the Nashville area is super expensive. We live in one of the wealthiest counties in the nation here in Williamson County, Tennessee. And we decided,

all right, we're going to get a townhome for our first home. We don't need a giant single family home for just the two of us. And so we did that. We increased our income. I was taking on side jobs. I was building websites. I was hosting outside events. I was doing all kinds of things just to bring in extra income to save up for that down payment. We did no spend months.

We cut a lot of luxuries and subscriptions and things that we would have loved to do as a newlywed couple. But we went, you know what? The house is a priority over that vacation and those are the kinds of things you have to really grapple with in order to have the things you want yep for sure you know it took Winston and I close to a decade almost 10 years to get to the point that we're like okay we're gonna upgrade to the next home and it was a long goal it was a long goal that we knew. Even toward the end, we weren't quite where we wanted. We were cutting stuff. I was taking on any kind of

speaking thing I could. I was saying yes to everything. There's a kind of gazelle intensity to it. Of that, yes, toward the end, which was great because we needed it and that's what we wanted. That was our goal. Here's the thing too, George. It's not worth having a home for someone that's what we wanted that was our goal but here's the thing too george is it's not worth having a home it feel you know for someone that's looking mostly for your first time home buyers

again we want you to get to that place where you can own a home because it's it's just smart financially but it looks so glamorous from the outside and when people make a move a bad financial move into something they can't afford i I would say the mental health, the stress, the anxiety, it offsets what you thought this house was going to be and how great it was. It's like, oh my gosh, I would rather go back to where we were and rent and not have the stress that we have now. And so there's a give and take there when you go and you move into something you can't afford.

It doesn't create a glamorous experience. Here's the takeaway you can tweet this rachel thank you home ownership is not the antidote to your lack of happiness it's not it's not going to be there because home ownership has a lot of costs and on top of that most people that do it prematurely they're also in debt in other areas so now you have the car payment you have the student loans have the credit cards, you have your buy now pay later. And then let me say this on the emotional contentment side, George, you take you with you into the new house too. Wow. Rachel is ice cold today and we love to see it. And there's something about it because I went through this too where I was like, I just want a different kitchen. Life would just be better if we had a bigger kitchen. You know, I had all these thoughts. No, would just be better if we had a bigger kitchen.

You know, I had all these thoughts. No, life would be better if you went to therapy and got control of your marriage. How about that, America? And so then I look at him like, oh my gosh, but like, it's still you moving in. Even if it's a bigger kitchen, it's still all that discontentment that you have in other parts of your life too.

So it's not the end all be all. Well, Rachel, there's a hilarious TikTok out there that I think sums up the frustration that America's feeling. Do you want to see it? I would love to end all be all Rachel there's a hilarious tick-tock out there that I think sums up the frustration that America's feeling do you want to see it I would love to see it okay let's roll that how is any young person ever gonna own a home it's maybe hate old people I see a few of you in here tonight I hate you because every old person in a city like LA or New York or London is the same they're like like, my house is worth $2 million, but when I bought it in 1981, I paid 11 raspberries for it. And every young person's like,

I have nine roommates! We each pay $11,000 a month. Every single one of us is a lawyer except for ted and every single old person's like i'm a librarian with a home at the beach oh my goodness that while it's an exaggeration that is hilarious because there's some truth to that yes well a lot of the pressure is coming from parents who by the way raise their kids to go follow your passions at all costs and go three hundred thousand dollars into student loan debt. And then they're like, why are you married? Why don't you have a house yet? Where are the grandkids? Give us the, and they're like, dude, I can't even breathe. I can't get to next

week, let alone buy a house. And so this doesn't just fall. This is not to blame a generation. This is to go, listen, we've made some mistakes. We have to accept responsibility and we have to accept the reality that home prices are insane. Now, we going to do that's right what's next and having options that's another thing you know and you can add school college on top of this the tuition how insane it's gotten i mean all of it so all this stuff has and so what it does it forces you to look and say okay what what is the wisest route because it's not just like oh you have to own a home tomorrow or you have to go get a college degree. It's not that black and white anymore. It's like, okay, what can I afford in this moment?

Where do I want to be in five years? And so working towards something as well. But it is. It's hard. Guess what? I have to get out of debt first and have an emergency fund and then save up the down payment. And yes, that might be three, four, five, six years from now. But when you get there, you're going to have a piece about it. You did it with intentionality.

No ragrets. Right, Rachel? George. It'll never die. God bless you. God bless you, my friends. Good stuff. This is The Ramsey Show. ស្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប្រូវាប់ពីប� paying off debt is smart investing and saving is smart but there's one key to winning with money that people overlook all the time, and that's protecting your finances from emergencies. And that's where insurance comes into play. So now

there are about 10 different kinds of insurance coverage that you might need based on what your life looks like today. So we built a tool called Coverage Checkup to show you which types that you need to add, drop, or adjust. We'll even rank your coverage list by importance, email it to you, and connect you with a Ramsey-trusted insurance provider so that you can put a plan in place fast. And seriously, you guys, it takes five minutes, and it might be the most important five minutes that you spend today. Donald H. wrote in and said,

for anyone who has not completed this checkup, do it now. You never know when something will happen and you never want to leave your family in a bad situation. That's exactly right. So visit ramseysolutions.com slash checkup. That's ramseysolutions.com slash checkup. And don't let an emergency sneak up on you. Protect your family now. Yeah, insurance is an important part of this, George. It's offense and defense. You don't need to know a lot about sports to understand that metaphor. But you can build wealth, but keeping it and protecting it is a whole other ballgame.

I'm so proud that you used sports analogy, George. Well, with your Tennessee Vols doing well, Rachel, I decided to learn. So you gave me some spark notes earlier during the break. I did. About the top four teams. Can Tennessee make it to the SEC Championship even if they lose Georgia? Possibly. We'll see.

All right, we're taking your calls at 888-825-5225. And up next is Dustin in Pittsburgh. Hey, Dustin, welcome to the show. Thanks, guys. Great job on the Smart Money Happy Hour podcast. Aw, thanks, Dustin. Appreciate that, Dustin. Great job on the Smart Money Happy Hour podcast. Aw, thanks, Dustin. Appreciate that, Dustin. Appreciate that.

Yeah, so I've got a question about where I'm at in the baby steps and whether or not I should continue to be gazelle intense and contribute to the match in my 401K at work while I'm doing these steps. And they're kind of falling between baby steps three and four. So I'm 24 years old. I'm on Baby Steps 3 and I'm probably going to finish off my three-month emergency fund by the end of this year. Cool. So my next few goals are to buy out my car lease and that will take roughly one year of saving. The second goal would be to

buy some rings and marry my girlfriend. We're going through FPU together. We're halfway through. Nice. Congratulations. Thanks. And then down payment on a house. So what do you guys think about how I reach those goals, like what intensity level we should be at

and whether I should invest or not up to the match at work? Well, you're on a great path, and you mentioned you've got the car lease, which would technically put you in Baby Step 2. And so do you know the early buyout amount of that car? Yeah, I'm halfway through the lease and I would say it's probably another $3,000 or $4,000 if I don't buy it out with cash. Hmm. That's the only caveat on these plans. Because other than that, you know, baby step three and three B into four, it's kind of a choose your own adventure based on your goals, where you're at. If you want to invest 15% once you have the fully funded emergency fund

while saving up the down payment, it's going to take longer, but that's a great option. If you want to split the difference and go, I'm going to invest in the match and then the rest I'm going to save for the down payment. You can also do that. Some people go split the difference and go, I'm going to invest in the match, and then the rest I'm going to save for the down payment, you can also do that. Some people go scorched earth and go, I'm not going to invest at all, and I'm going to save up this down payment really fast. So there's kind of three buckets you can choose in that regard. Okay. So what about the car lease? I was planning on saving up for one year to buy it out. It's about $16,000 residual value. How much do you make, Dustin? Starting next year, assuming a 4% raise, around $70,000 a year.

Okay. And what's the car worth? Whenever I went in to lease it, it was worth, I'd say, like $21,000, $22,000. Okay. So it'll probably be around $16,000, $17,000 by the time you would do the early buyout? Yeah, yeah, $16,000. Okay. Yeah, I mean, it's not too much of your world if you like the car and you want to keep it at that point.

Is that the plan? Yep, yeah, nothing but compliments on it. And, you know, I did the math, figured out it'll only be like a quarter of my take-home pay or the gross pay anyway. So, yeah, it's not like it's a crazy vehicle. Okay. Are you saying the payment? Oh, no, the total value of the car, like the 16 divided by the 70, would only be like a quarter or a third. Oh, got it, got it. Okay. Cool. Yeah.

Yes, I mean, if you went that route, Dustin, then obviously you said it will take you a year to save that amount. And then how much do you want to spend on a ring? I was thinking about $5,000 for the ring and leaning towards the conventional wedding cost around like, you know, $20,000 or under. Are you guys paying for the wedding? Yeah, we haven't talked to our families yet about it, but we've been together for five years. And, you know, we'd like to get married within the next two okay that's great um well sounds reasonable on that end yeah i mean you're just gonna this car lease which i hate for you i'm like man well that's what i used to keep my car payment low while i was paying off my student loans that

i knocked out in august but now you know i'm facing down another big expense saving up to buy it out yep that's, that's right. That's right. Yeah, so I would do it in that order. I would be saying, yeah, the ring in the car, obviously, and then what you guys can pull together cash-wise for the wedding. Because your life is going to look so different in two years. And because of your age and everything, obviously, investing is very important.

And the earlier you start, the better off you are. But I wouldn't lose sleep over not doing that for two years because of where you're at. You just have a lot of life change. It's going to cost money to do a lot of this stuff. And so I just want you to have the cash for it. So prioritizing it, yeah. So yeah, the car and the ring. But I would pause investing until you are out of that lease and you have the fully funded emergency fund.

Yeah, I would not be investing, Dustin, until you have the emergency fund, like George said, and the car is yours, the ring, and you guys are well on your way saving for the wedding. So if that's a pause on investing for two years, then that's probably what it's going to be. And you're young. You got plenty of time to do that. And I personally like the fire it lights under you to go, man, I'm missing out on that free money in the match. I'm missing out on compound growth. And that's going to actually propel you to do the other steps. The problem is people get comfortable because they go, well, I'm investing a little bit. I'm saving a little bit.

I'm paying off a little bit of debt. Yep. I'm good. But the problem is you don't really make progress in any of those areas because of that. That's right. So thanks for the question, Dustin. Appreciate it. Yep. All right. Up next, we have Sean in San Antonio. Hey, Sean, welcome to the show. Hey, Rachel. Hey, George. How are you guys? We're doing great. How can we help?

It's so nice to talk to you guys. I'm extremely nervous, but at the same time, I'm excited. So I have a mortgage question. I would like to pay off my house just to basically have more peace in my life. I have the means to do so, and it wouldn't take me all the way down. I would still have my emergency fund plus some. I also have a three-year-old son. My fiance is in school full-time for one more year. She's going into her senior year, and then we're going to move, so my son is in a better school district. So I don't know if I should keep liquid cash or just get the money back when I sell. Okay. So when you sell,

are you, when you guys move from, yes, your home. Okay. So how much do you have left on your mortgage? $95,000. $95,000. Okay. And how much do you have in above your emergency fund? I would say above my emergency fund, like $. So I have 135 liquid. So that would leave a decent emergency fund on top of that. Okay. Awesome. I mean, I'm 28 years old. I'm self employed. I'm gazelle intense. I listened to smart money happy hour. Um, and I've just listened to Dave for the past couple of years. I've tried my hardest to follow by y'all's, you know, principles, but it's hard sometimes, but I'm, I'm, because I'll intend. Yeah. Well, you're doing a great job, Sean. I mean, the numbers you just gave us,

and I'm assuming you have no consumer debt. This mortgage is the last thing. So yeah. That's it. I've never had any debt in my life besides this mortgage. I've had it since I was 19. And it's just one of those things that I just want out of my life. But I know when we move, we'll probably end up getting a bigger house just because that's just the way it's going to go. Well, here's what you do, Sean. Get the final payoff amount from the mortgage lender, and you're going to wire that money and be debt free by tomorrow. And then until you move, just stack up cash on top of that so that when you do move,

you have all the proceeds from your home sale plus this other stack of cash. Man, you guys are going to be set up. You guys are in a great spot. And don't combine those finances until after you're married, Sean. I know you said that we're engaged, so be saving for that wedding too. You guys get married. That's right. And that's so exciting, Sean. Well done. So cool. Hard work has paid off. Well, thank you, George, for a great hour. Thanks to all you guys in the booth. And thank you, America, for listening. This is The Ramsey Show. Do you love a good day, Brandt? Want to see the latest Ramsey Show videos going viral? Check out your favorite moments from the Ramsey Show on YouTube. Go watch and subscribe to the Ramsey Show channel on YouTube.