The Ramsey Show - App - Here’s How You Adjust Your Mindset Around Building Wealth (Hour 1)

Episode Date: November 21, 2022

Dave Ramsey & Dr. John Delony discuss: Splitting up a family farm, long-term care, and nursing homes, Psychologically adjusting to making a lot more money, If and when it makes sense to exceed a mortgage that is more than 25% of take-home pay. 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

Девочка-пай Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage studio, it's the Ramsey Show, where debt is dumb, cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice. We help people build wealth, do work that they love, and create actual amazing relationships. Thanks for being with us, America. We're so glad you're here. My co-host today, number one best-selling author and host of the Dr. John Deloney Show, Ramsey Personality, Dr. John Deloney. We're taking your calls here at 888-825-5225.

That's 888-825-5225. I should probably wait, but I'm not going to because I'm just really, really excited. If you happen to be a fan of or even slightly interested in Jordan Peterson, Dr. Jordan Peterson, his podcast on YouTube and his podcast out there. He has a really great guest that came out today. Dr. John Deloney is on there for an hour and 48 minutes and did not say a thing to get himself fired.

So it is a great podcast, and it'll be a lot of fun. These two intellects hanging out together, I'll watch and get some popcorn and just sit there and just wish I was smart as one-fourth of either one of them. But I'll hang out and be watching as a fanboy of both of you. Congratulations. That's a neat hit. I appreciate that. Yeah, it was very, very hospitable, and it was fun.

I miss sometimes the academic gymnastics that I got to do in my old job, and so it was fun just to talk in circles and have a good time. I love it. All right, again. Brilliant mind, brilliant, brilliant mind, man. Yeah, he is. Dr. John Deloney on Jordan Peterson's podcast today. It hit just a few minutes ago or earlier today.

So you watch it on YouTube, the full thing. That's one way he puts it out there, and he puts it out in podcast form all over the place as well. So however you choose to consume, we invite you to do so. We'll give Jordan a big push. He's speaking for us this year at Summit, our Entree Leadership Summit event here in May for our leadership team and for real estate, for small business people. There will be some real estate people there. But Dr. Deloney and Jordan are two of our speakers on that lineup,

along with Malcolm Gladwell and myself and several others. So it's going to be quite a knock-down, drag-out lineup. It's going to be a lot of fun. Thomas starts off this hour in Franklin, Tennessee. Hey, Thomas, how are you? I'm doing great. How about yourself? Better than I deserve, sir.

How can we help? I just had a quick question about what to do with parents and possible nursing home and them wanting to divide up the farm and didn't know if that was a good option or if they should just wait until they might need the money to help pay medical bills the reason for dividing up the farm is what well the my dad wants to uh do it before uh they might end up in a nursing home he's wanting to give his family the the farm. He's worried about the nursing homes taking his farm is basically what it is.

Okay. Bad news. He has the money to pay for a nursing home. He gets to pay for the nursing home. Yeah, he's probably got $200,000, I think, in the bank. How old is he? 80. Okay.

So let me tell you, there's only two kinds of nursing home. Nursing home you pay for and welfare nursing home called Medicaid that is for poor people. Yeah. Your dad don't qualify. He's not poor people. No. Okay. I agree.

And no amount of splitting up the farm qualifies him for welfare, nor is he a man who would have ever signed up for welfare. True. Nor does he want to be in a welfare Medicaid nursing home, by the way. No, I agree. Okay. So let's just start figuring out how we're going to pay for this and start allocating some cash that way. How big is the farm? About 150 acres.

Okay. So what do you think the market value of it is? Well, a lot of stuff around here has been selling for probably 20,000 an acre. Okay. So like three million bucks? Yes, sir. Okay. And he's owned it a long time?

Oh, yes, sir. Okay. All right. Here's what long time? Oh, yes, sir. Okay. All right. Here's what you guys need to do. All right. Number one, you guys need to sit down with an estate planner, and here's what they're going to explain to you. And it's a fairly simple idea, okay?

If he dies today and you inherit the farm and you turn around and sell the farm within six months your taxes are zero okay if he deeds the farm to you and then he dies your taxes are zero because your basis in the farm at the time of time you inherit anything is the market value of it when you inherit it. And so if you inherit it at $3 million, you and your brothers and sisters, and you sell it for $3 million within six months, you have zero taxes because it's called a stepped-up basis. Your basis for tax purposes, as if your cost basis,

is market value at the time of death. You follow me? Yes, sir. If instead he deeds it to you prior, your basis of a gift, which is what that is, is what he paid for it, which was next to nothing. So we just created taxes on $3 million for no reason. I would not do that.

Okay. I would receive it at death. Okay. Much more efficient it at death. Okay. Much more efficient. Much better off. Yeah. But you need to sit down with an estate planner and lay out what he wants to have done, and he needs to write it down, and that's called a will. And you're freaking 80 years old.

Get your will done. Absolutely. Seriously. Okay? It's just a responsible thing to do. And then the second thing you do is you sit down with an investment advisor and you start studying nursing homes as a concept because there's a vast array of price ranges out there

and services available and ways to do things. This guy's a millionaire. If we sell off $300,000 worth of this land now to pay for his care, his best bet from quality of life and cost is probably just hire a nurse and stay in the house 24-7 in home care. That's what you do when you're a millionaire, okay? Yes, sir. You get to stay in your house, and they come and take care of you there.

It's a higher quality of care. It's a one-on-one care. They don't have seven beds they're caring for. They're caring for one. And it's more expensive, but it's less expensive because you're not providing housing and food. You're already providing that. And so it actually ends up being more efficient and a higher quality situation for a millionaire to do that but it's trouble on you guys because you got to keep hiring the nurses

and make sure they're coming in there and taking care of him checking on him and all that but it's still the best deal anyway you could do that or you can check out nursing homes start shopping finding out what they actually cost and go i've got 200 grand before when i burn through that how are we gonna what's the next thing we're gonna do do? And lay out a game plan, for God's sakes. Divvying up the farm is not your plan, dude. Yeah, and Mike, you all need to make sure that you all as a family want this land. I live out there in Tennessee in the hills, and, man, there's a lot of, we're going to keep this forever, and the kids don't want it forever,

and it just gets messy. Yeah, what are we going to do with it upon death? That's right. Maybe Thomas, he lives here, maybe he wants it. Maybe he wants it. Maybe the brothers and sisters don't want it forever, and it just gets messy. Yeah. What are we going to do with it upon death? That's right. Maybe Thomas, he lives here. Maybe he wants it. Maybe he wants it. Maybe the brothers and sisters don't. Well, let's figure out how we're going to buy each other out upon death.

But it all needs to happen post-death for a stepped-up basis, and you need a plan with some expertise speaking into it. Estate planner and then study nursing homes. This is The Ramsey Show. not exactly what the cool kids are talking about but let's talk about estate planning and nursing homes for just a second okay um because the cool kids got parents and grandparents they're talking about it number one you don't get free nursing home unless you're poor people and if you lie and hide your stuff to act like poor people that's called fraud and they're really tough on it by the way they will look back five years you move everything out of grandpa's name into your name and then you stick grandpa in a

medicaid nursing home they're going to look back five years if they find it was four years and nine months you move the farm into your name they're going to come back get the farm because you defrauded the government you lied let's just be real clear nursing home has a different place in our psyche and thomas kind of brought this up he used the phrase that a lot of people phrase i'm afraid the nursing home's going to get all my money no one says that when they go to the car dealer because they're trading money for a car no one says that when they're going to a restaurant because they're trading money for someone to cook their food for them no one says that when you go to a hotel because they provide you a warm bed but when it's a nursing home suddenly they're a bunch of crooks no they're

providing a service taking care of you when you are your least attractive, by the way, and in the most horrible of situations. And they're providing a service, and you get to pay for it like you do for everything else. They are not crooks. They are not ripping you off. They are providing us.

You don't say about the hospital, hospital's going to get all my money. You're like please keep me from dying you know same thing is true in the nursing home so first thing is you don't get to dodge this bullet second thing is once you're 60 years old unless you've got millions of dollars you should get long-term care insurance which is nursing home insurance it covers good policies cover in-home care, which I was discussing earlier, or out-of-care. Now, here's the thing. In, like, most states, in-home care would be like $50,000 a year, roughly. Most nursing home states are going to be $80,000 to $100,000 a year, give or take. Okay?

So just plan on that. But here's the thing you can plan on. By the time you get to the nursing home, sorry, but I'm just helping you with the statistics, not your little feelings. By the time you get to the nursing home, you're at the end. Statistically, you will last 2.4 years. If you break a hip, three months. Statistically.

Okay? So the average nursing home stay is 2.4 years average that means some stay longer but nobody stays 24 years in a freaking nursing home so the nursing home is not going to get three million dollars from you all right they're not going to get that much okay they're going to get 50 to 100 000 a year depending on what you sign up for and that kind of a thing for caring for you in your last days when you are your least attractive so shut up seriously okay so plan it out have in long-term care insurance does not cover long-term it covers long-term care for two to three years so you'll cover you for the averages so if you do a 10-year nursing home stay your long-term

care insurance is going to run out and you're going to be into your assets you've been answering this question for years why why do people have this feeling i have a hypothesis but i may be wrong why do you think people are so adverse to nursing homes i i yeah i have a weird answer it's probably going to get me a bunch of hate okay Okay. But I'm going to do it anyway. Okay. Because you just put me on the spot. I'll follow up with mine. I'll join you.

If it was me. Yes. And you're going to spend my last 300 grand on Dave, it feels selfish, and I'm going to die anyway. It feels like a waste. i'm your is that is that right i mean i'm just being real if it's me that's how i'm gonna feel if it's old man papa dave and i'm 82 years old 88 years old whatever i am right i know what you're living i'm gonna feel like hey i ain't got anything anyway just get cook some carrots and put me out in the backyard

i mean it's good you know i mean it's just, I don't want to spend a bunch of money on this. On the last few years. Because I'm just, it feels wasteful to me. That's just my personal emotions. I don't know if everybody else mirrors that or not. See, I was thinking of it more as the kid of the adult. Oh, trying to get the money. Well, thinking, if I know you got 300 grand, I've already spent my portion in my head on,

I'm going to pay this off, and then Junior's going to go to college. What do you mean you're going to spend that on this kind of care and then it becomes yes my money versus that's the money that you set aside to care for yourself yeah if you've got a relative that has entitlement syndrome on to your stuff called they've already spent your inheritance and you ain't even kicked a bucket yet um then that's uh that that could cause a problem in this discussion too but i don't usually run into that no i usually it's mom and dad how much of it is i can't tell you it's number of times i had a call they already transferred the land oh man and they're like yeah and you know my we already mama she read she talked to her friend at the bridge club who told her to transfer her house into our name. And, you know, they're calling me from North Egypt somewhere, right?

Some out in the middle of nothing. And they're going, oh, my gosh. And I'm going, you just transferred your only asset, which is a $150,000 house that you paid $22,000 for in 1976. And now you're paying taxes on $130,000. And now you're going to pay taxes on all that game because your mother took tax advice from the idiot at the bridge club you know and this missed out on the stepped up basis and cool how much of it how much of it is they don't want the government to get is what that was no let me say this way and so let's pretend you're my dad i would have some inside deep inside sense of it should probably be

me taking care of him oh guilt you should probably be at my house and the fact that i've got to outsource that is going to be i'm going to be extra on top of it coming over the top of my own guilt of my own shame yeah maybe that's just me yeah and there's this whole thing and then we christianize it and say honor your mother and father which as if you caring for them instead of a professional caring for them is more honoring oh yeah yeah really give me a break i actually uh taught that in sunday school this week with the adults class about honoring father mother what's that actually mean and what does it look like to care for aging adults and somebody brought up a great point they said there's a honor is a part of it and care is a separate

part of that conversation and i never never pulled that apart yeah we do confuse the two when we want to especially if we want to over spiritualize it want to over guilt somebody yeah we want if we're over saved unless you're under saved james tell you we're gonna get we're gonna get those emails for sure all right hey guys it's not friday it's monday november the 21st but here at ramsey black friday starts right now head to ramsey solutions.com get your early access to do our best deals of the year prices as low as seven dollars uh no inflation is not taking place at ramsey solutions.com we are doing deflation lower prices for real i saw that today not only we not only my book didn't go up but we've cut

john's book to ten dollars out on my books that's the first time it ever happened to me it was insulting does that insult you i mean like my new baby steps millionaire number one best seller just came out in january they already cut it to ten i. I did the math on what I was going to get if it sold at full price. So I was surprised. Oh, this is all personal now. I mean. I was just insulted on the general premise that my book was cheap. You're worried about your wallet.

That's right. All right. Questions for human conversation cards. Great for the holidays. Bad news. The Christmas version John told me a minute ago is completely sold out. Is that right? Christmas version's out, but we have a few new year's cards left and these are for helping

you have a conversation with your awkward friends and adults yes but also relatives get into the new year man with some intentionality this year yeah all right let's check in on blinds.com uh find out for yourself why blinds.com is the number one online retailer of custom window coverings free samples free shipping new promos they run all the time you'll save even more i don't know if we got time to do this let's try it all right today's question comes from bill in rhode island 37 i found out my i found myself in a lucky spot three years ago i was making around 50 grand now i'm clearing over 120 as a cloud engineer don't even know what that is my wife and i combined make about 180.

For people like us, it's a bit overwhelming. We have student debt, which we are attacking hard. We have recently been writing checks towards that debt that we used to make up for an entire month. My question is, how do you psychologically process this amount of money growth and don't feel shaken up when paying off large sums of debt? We're going to do this after the break.

It's a great question. I don't want to answer it in 14 seconds. Probably should have waited until after the break. But now we can tease this after the break. It's a great question. I don't want to answer it in 14 seconds. Probably should have waited until after the break. But now we can tease you through the break. You know you want the answer to this. How do you psychologically adjust to making a buttload more money? Yeah. It's not by selling $10 books.

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featured on the Jordan Peterson Podcast this week, is my co-host. Quite an introduction at every break. Yeah, okay. So, Blinds.com. Let's go back again and read this. Our question of the day from Blinds.com, the number one online retailer of custom window coverings. Always use the promo code Ramsey when you get there.

Now, do it again. All right. Today's question comes from Bill in Rhode Island. Bill says, I'm 37, and I really found myself in a lucky spot. Just three years ago, I was making around 50 grand, and now I'm clearing over $120,000 as a cloud engineer. Rain dancer. He's a rain dancer.

Correct. Just making sure you know what that is. My wife and I combined make about $180,000, and to be honest, for people like us, man, I hate that language, but I know it. I feel it in my guts. It's a bit overwhelming. We have student debt, which we are attacking hard. And we have recently been writing checks towards that debt that used to be what we made for an entire month. My question is, how do you psychologically process this amount of money growth and don't feel shaken up when paying off large sums of debt.

I also know more is coming as my wife and I are committed to not allow, I'm not even at a management level, which on average comes with a 30% increase. My wife and I are committed not to allow our growth and income to become the life sucker I've heard about on this show. I get this in my bones because I grew up with not a lot and money was a big struggle at my home. And Dave, you and I, I've come to you for wisdom on this. Um,

because money was for those people and vacations were what those guys did. And those shoes were what they, and those cars were for them. And it was, it's, it's bizarre finding yourself in those shoes and then saying what do i what do i do because i'm not them i'm one of those right yeah i think there's it's been tough on there's two things you gotta process there um one is uh am i worthy of this and he's got that language i

just got lucky yeah there's all that in there and so yeah you got to walk away from that part of it and then the second part is kind of i think more maybe even more what he's asking about but he doesn't realize it is um you do have to psychologically adjust to more money i mean it's it's it's a thing i mean i like we spend more on coffee at Ramsey per month for the team here than I used to make in a year. I have to psychologically adjust to that. I mean, when I sit down and I see that on the P&L, it still simultaneously pisses me off, scares me, makes me feel proud, right?

Exactly. All at the same time. Yes. All at the same time. Like, what? Oh, God. Well, I guess I can do that. Yeah, yeah, yeah. me off scares me makes me feel proud right exactly all the same time yes all the same time like what and oh god and well i guess i can do that you know it's like simultaneously right and so god and and it but it's it's zeros it's emotional and uh the only way i have found for that part of it not the identity part but the part of just the shock of the zeros of i spend more on blank

than i ever made in a year which is kind of what he said we just sent out more of the sally may than i ever made in a year before or a month before or whatever it is you just the only way you you get used to it is you do it more you just you live in it more i mean so somebody that has lived with a three hundred thousand dollar income for 10 years is more psychologically adjusted to that than someone who's lived with it for three months that's right and so that that's normal so that will solve itself uh and you got to be careful because you can get to taking it for granted kind of a thing um and not counting your blessings and all of those sorts of things not feeling grateful for all of it like now you deserve now deserve this. Now I deserve 300.

What do you mean just 300? Never even solved 300. I used to have 300 pennies, you know. But now I am. But then the second part of it is, you know, are you worthy? And, you know, that's a spiritual walk and a psychological walk to say, okay, what makes me worth something in the marketplace is it my is it god loves me more well no he loves poor people as much as he loves rich people

and he loves rich people as much as he loves poor people for those of you that are socialists and so um he loves everybody that and it doesn't like you know you don't love one kid that's talented more than the kid that's not talented. All my kids, everybody's got a spectrum of them, and so that's part of it. So it's not a God's love thing. He's not blessing you beyond someone else. So what is it that's causing the money? You're doing something that's worth more to society.

It's an economic transaction. And once you kind of separate that out from your spiritual worth or your psychological worth or – and then some idiot from the old neighborhood will say something like, you've gotten too big for your britches. Oh, yeah. Like, you noticed. I've been putting on a little weight, liking donuts. But, yeah, I had to change britches a time or two,

but that wasn't what they were meant that's right we're talking about my waistline we're talking about uh you're fancy now yeah you're fancy now and you know i've had that happen actually on this show you know you go back and listen to this show if you could get a tape of it from 20 years ago it's been i've been on there 30 years it sounds ridiculously exactly the same like the same level of boldness the same level of carrying on the same level of whatever same level of kindness and compassion when someone's hurting the same level of in your face when you're stupid and and yet it never fails that someone comes along they go you know i used to listen to you

but now now that you've gotten big, you know, now you changed. I didn't change, honey. Go back and listen to other shows. You're the one changed. So it's interesting. I've had to get rid of, for people like us, language, like he writes about in this question, because I had pigeonholed myself as. Identity.

It's an identity, yeah. And you gave me some wisdom early on that has really been important for me in fact just this morning i was talking to hank about it my 12 year old um you said when you're making this transition remember ratios and that's been very important for me in that like you like man if we could scratch together sheila and i we could scratch together enough to get some spaghetti every day for the week man that was great yeah right and then we went out with a couple from work the other day and the bill came I thought that I used to be a lot of groceries all right and but the

percentage of right and the percentage of what my take-home salary what used to be versus and so and my dead income all that the ratio has been really important. Yeah, it just, it tells you if you're out of line. That's exactly right. Okay, because you're not people like you used to be. You're people like you are now. That's right. And so don't, you know, your identity can be, I came from there.

It's like Condoleezza Rice's line. It doesn't matter where you're coming from. All that matters is where you're going to. That's right. And so, you know, where you grew up is part of your story, but it is not necessarily who you are today. That's right. Your level of education is part of your story,

but it's not necessarily who you are today. These are all elements of who you are today, but I'm not the same person that little David Ramsey at 37 37 13 faulkner drive and thank goodness right yeah because he wasn't real bright john deloney wasn't either but also imagine the dumb butt stuff i've done on a bicycle i appreciate you and everyone we work with um i think the ethos of this place it's right over there on the wall. Don't despise humble beginnings. Always making sure we're tipping folks and taking care of people. Never forgetting those moments when we couldn't rub two pennies together.

I think there's an ethos here. Yeah, and in that sense, you remember, you know, what is my hillbilly upbringing? Don't forget your raisin. I'll always love raisins, but I don't know what they're talking about. Don't forget raisin how you were brought up don't forget how you're brought up right and so there's some good things you want to do with that i'm loyal to vendors that have been with us forever because part of my raisin was you dance with the girl that brought you yep you know so there's some good things in there um that you stick with that are principles, but the identity that the only way I'm wholly me is to be poor. Right. Not true.

That's a false identity. So, yeah, there's two things you have to do. One, you have to adjust the identity. And the second thing is you just get used to. Practice. With ratios, the use of money of that amount. And it's going to mean you're driving cars and you're going to look up and you go, I got a friend made $15 million last year.

And he drove up the other day in a $400,000 car. And I'm like, oh, wait a minute. It's less than a guy making $150,000 spending on a $4,000 car. Exactly the same ratio. It's no big deal. Yeah. I mean, he drives a stupid4,000 car. Exactly the same ratio. It's no big deal. I mean, he can drive a stupid thing off a cliff, and as long as nobody's hurt, it ain't going to hurt him. He'll be all right.

It's like, you know, but it's, you know, where you come from, it's like, it's your system. This is the Ramsey Show. ДИНАМИЧНАЯ МУЗЫКА Dr. John Deloney, Ramsey personality, number one best-selling author, host of the Dr. John Deloney Show, is my co-host today. Now, we talk a lot about the things you need to do to be successful with money. Let me tell you what one I miss. You need to learn not only gratitude but unbelievable generosity. And generosity is actually a muscle you can build. This is a time of year when we have the opportunity to build that.

And your generosity muscle, you can start building it in your children when they're young. You can just decide today, I'm going to change my generosity. You can decide the amount of money, the percentage, the methodology. Those of us that are evangelical Christians, we start with a tithe, 10% of our income to our local church. But you can start wherever you want to start. But generosity is a keystone among people who win at life and at money. Now, I find a few people, not many, but a few, percentage-wise,

I would say less than 10 probably approaching five percent that actually do very well with money who are just straight up scrooge and they're selfish but the vast majority 95 plus that do well with money also have their generosity muscle built and it affects their handling of money in a positive way they end up with more money because they're generous so we do an annual giving show this year it'll be on december the 14th it's our last live broadcast that's not the uh truth we're doing it earlier this year we're not doing it as our last live it usually is our last live broadcast of the year james is correct to me this year we're

going to do it early december the 14th and we're going to hear giving stories and receiving stories. Some of you that have had your mind blown by some giving you've been involved in or had your mind blown by some receiving that has happened to you. And all of this is to inspire America to be more generous. If I add up what we spend on Halloween decorations and on pets, we could not have a single hungry person in America today, and we could build six hospitals and operate them for a decade the size of St. Jude's. Free care. Just what we spend on Halloween decorations and pets.

Now, I'm not against Halloween decorations, and I'm not against pets. I'm saying there's money in this country. That's all I'm saying. And generosity always is a good thing for the whole society and you as an individual. So we always want to inspire more of that. So send your giving and receiving stories to be part of the December 14th show to ask at ramseysolutions.com, ask at ramseysolutions.com ask at ramseysolutions.com i dare say some chemicals are unleashed in the brain when you give it's one of my favorite episodes of the year at last year

i was just sat here in awe and just inspired it was incredible man incredible i look forward to um telling my story about dave when he buys us all cars i'm pretty excited about that just kind of putting that out in the universe are you yeah the universe just said no forward to um telling my story about dave when he buys us all cars i'm pretty excited about that just kind of putting that out in the universe are you yeah the universe just said no i tried guys sorry i speak to the universe regularly it listens to you man it never listens to me he just responds in the voice of dave or my wife mike is in montana hey mike how are you i'm doing well how are you? I'm doing well.

How are you, Dave? Better than I deserve. What's up? Good. Well, my wife and I have been in Babeship 3D for about 30 months now, and we are wondering if we're getting a little too long and we should start moving things around or what. We're in an area where we think that we

can find a house for one 80, uh, it's a sale price. Um, and my take home pay is such that 25% would make us have a $51,000 down payment. Um, but if we cheated that 25% up to 30%, we would only need 28%, which is about what we would have by the summer. So I'm wondering if that's something that is acceptable or if we should just go take a cold shower or something. Okay. Let's pan back for a second and say, okay, why do we have a ratio on the size of house payment? Not how much can I get away with.

Why do we teach you that? Well, we teach you that because if your house payment is too freaking big as a percentage of your income, you can't breathe. You have no margin. And then everything other than the house becomes a crisis because the house is pinching you and that's what we in our business call house poor now you know all that right mike yes sir okay and so to the extent you go over 25 you start moving in that direction but i've had people call here with a house payment that's 50% of their take-home pay and no kidding they can't breathe they've got to sell that house if they can't double their income pretty quick so if you want to quote

unquote cheat yourself because there's no one else in this discussion but you and your wife and your kids right you cheat yourself in your future up on the 30% side because you got a little bit of house fever, what's the tradeoff? Under what circumstances would that be wise or less wise? Okay. If your company is announcing that it's probably going to have layoffs this summer, well, that would be totally stupid then. Okay. If you're in a job where your income is probably going to go up 30% in the next two years,

then pretty quickly your house payment is going to be 25% of your take-home pay. If you're going to buy this house at 30% of your income and then have the third baby and your wife says she wants to be home, and now it's 48% of your take-home pay, well, that's obviously not going to work. So it kind of has to do with future plans, right? So how stable is your income? What do you do? Well, I'm actually switching into a job, and we're switching into tech from being a trucker.

So paying for school for that is part of why it's taking us, you know, the 30 months in Babesip 3B. Okay. When will you be making the switch? That'll be end of next summer,ust september somewhere in there um and we're we're basing these numbers on what i'm estimating that to be uh my wife is planning on coming home she's currently working as a nurse she's planning on coming home when we have her third child in may whoa like i've done this before or something okay yes exactly i was thinking the same thing all right and so yeah so you know when the smoke clears you're at 30 in a new career

correct yep um and until the smoke clears you're better than 30 percent because your trucker plus her income before the third kid comes and before you switch no no no the the 30 percent will be based on just my income um after i switch jobs yeah that's why i said when the smoke clears and she quits oh yeah yeah and she quits so but it should. But it should be less than 30% with both of you working in the meantime, right? Oh, yeah. Yeah, yeah, yeah. I don't have those numbers, but yeah. And then what do you think the trajectory is on your income after you get the new job?

The information I have says that it'll go up quite a bit. Okay. Then you're not going to be at 30% for very long. Okay. So what we're looking at here is we want to look at the film strip, not the snapshot. Okay. The film strip is your whole life all the way out. Are we strapping ourselves

to a house long term? And what you're doing is you're going in and out. Start with you're going to be below, then you're going to be up to 30. But 30 is just passing through because then four months into the new job you get another raise right or whatever eight months in whatever that kind of thing so you may have one year of tight but it's not but your plan is not to live a life of being home poor house poor then that starts to be more wise than i work for the state i get a three percent raise every year and my wife's going to quit in two years,

and then we're really going to be screwed. No, we're not signing up for that one. Right, okay. You see the difference? I do see the difference, yes, sir. So, Dave, this makes me nervous. Okay. Because maybe it's my years of working with young professionals,

but I can't think of a group that overestimates what they're going to be making in 18 months and then make current fiscal decisions based on this imaginary growth that may or may not come. Does that make sense? Yeah. So here's the thing. Here's what you might be facing, what John's pointing out.

If this doesn't go the way you think, you may be faced with your wife keeps working or you have to sell the house or if you had if you had to stay a trucker in three years could you make this house payment no um yeah no not without going over the road which is something yeah not not with her coming home yeah yeah so you may end up trading her being home for this house if the career path doesn't work out like you're playing. So you may have to go all in on the career plan, right? Yeah, you've got to make this thing work.

Yeah, yeah. Or you go, hey, it's just a house. We give it a shot. And it's more important that we move to a smaller house. It's more important that she stays home. That's right. And that's more important to us than that particular house. Yeah.

And you just sell the house. Also, you can refinance the house when interest rates come down. That'll help. This is The Ramsey Show. Hey, it's John Deloney, co-host of The Ramsey Show. Did you know over 18 million people listen to The Ramsey Show every week? A lot of those people listen on one of our 600-plus radio stations across the country. To find a station near you, go to RamseySolutions.com slash show.