The Ramsey Show - App - Hot Water Heater Busted & My Emergency Fund Won’t Cover It (Hour 2)

Episode Date: February 7, 2023

Dave Ramsey & Dr. John Delony answer your questions and discuss:   "My hot water heater busted and my emergency fund won't cover it." from the blog: How to Keep 3 Common Home Repairs From Busting Your Budget "I'm having a hard time getting my wife on board with cutting up our credit cards", Using an inheritance to pay off a house, Investing more in the market while it's down. 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 moving in storage studios, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Dr. John Deloney, number one best-selling author, Ramsey personality, and host of the Dr. John Deloney Show is my co-host today. Open phones at 888-825-5225. Elizabeth starts us off in New Jersey this hour.

Hi, Elizabeth. Welcome to the Ramsey Show. Thank you, Mr. Ramsey, for having me. I have a question. I am currently in a situation to where I need to. Thank you, Mr. Ramsey, for having me. I have a question. I am currently in a situation to where I need to replace a hot water heater. I have $1,000 saved in my emergency fund, and I'm on baby step two. And I know you advise people not to take advantage of credit, but I'm in a situation where I don't have the financial resources to purchase a new one without maybe

utilizing one of the finance options at my local provider. How much is the hot water heater? $2,823.17 is the least expensive I was able to find. I've contacted seven different plumbing services and each one was much more than that. And one of my local big box stores offered me that at that rate and at a 0% and I have a thousand to contribute, but I don't have the other $2,000 to put towards it. What happened to the hot water heater? It died. Um, it, it house that we recently acquired the house last year, and the hot water heater is from 2004. Okay, there's a lot of things that can happen with a hot water heater.

This is a tankless or a tank hot water heater? It is a tiny tank hot water heater. When the plumbers came out, they expressed I needed to replace it because it was leaking and it wasn't repairable. It's leaking? Yes, sir. It left a small pond on the kitchen floor. Okay. Wow, I haven't apparently been hot water shopping in a while.

I had no idea it was twenty eight hundred dollars to put in a hot water heater that just sounds outrageous to me um i agree it was it was in truth it was the least expensive one that i was able to ask obtain a quote from i was just trying to i just put one in and it was something somewhere similar okay it was two thousand so it was it was way more expensive than i thought it was going to be i don't remember being 2800 but it was a real expensive i just haven't bought one in a while i guess that's my thing okay um wow uh okay what do you make a year i make about 98 and you have one thousand dollars yes sir okay and what else do you have what other things do you have i? I have student loan payments, which are $995.55 a month.

They're on hold. I have. I'm still paying them, sir, because. I know, I know, but you have a hot water heater in the south, so it's on hold. Yes, sir. Okay. I have a car payment, which my car payment is $289 a month, and I only owe $1,176 on that,

so it will be paid off soon. And we have a few other credit card debts, which I'm working on paying off, and I don't use credit at all, so that's why I'm in a predicament that I'm concerned as to how to manage the situation. Yeah, I get that. So what is your paycheck? How often do you get a paycheck and how much is it? By weekly, and I make about $2,000 every two weeks.

That's what I take home. That's $48,000 a year. How do you get $48,000 a year out of 90? Hold on, let me double check. I was mistaken i my paycheck isn't that i guess it's more than that because i do make 98 000 on paper but and i have nothing coming out of my paycheck except for my insurances my taxes and yeah so your paycheck is more like four thousand dollars every two weeks

yes sir probably yeah okay and so when you get the next paycheck buy the hot water heater okay don't pay student loans put it on hardship i mean drop it over there in the biden plan don't pay it for right now you pick it up and pay it's not doodle may right okay so what i'm going to do is just rearrange your budget for a month and a half or two months. And, you know, you're going to have to push something and then catch it back up and pay cash for it. I think you've got the cash flow to buy this in the next check. And maybe just food. Right?

Okay. I don't know. I mean, I can't see your numbers right now but i mean well i i we have credit card debts which like i said i'm paying all well don't pay them right now don't pay them don't pay them for a month pay them late for a month i just okay it's one month or pay them pay them at the end of the month or the beginning of the month or only pay the very very bare minimums on all of them and take that extra. Because you're trying to keep baby step two going and deal with this other thing.

Yeah, you've got to push everything on pause as far as baby steps go. And you've got to push everything you can push and pay cash for this and then get back and reengage again. But I've had to do that. I've had to shuffle and just delay something to be able to cover this. And I think you can cover it inside of a couple of weeks here, but something else that you thought was absolutely vital is going to wait two more weeks, and it's not absolutely vital, other than food.

I mean, keep your lights on and your food, and that's about it. But even if you paid your rent on the 15th instead of on the 1st, as an example, whoop-dee-doop-dee for this month, and then get back in the saddle and get caught right back up, and it may take another month to get things back even again, and then after that, then push play again and start your debt snowball. But I think you've got enough money coming in with your income because you only need $1,800.

And good for you for having shopped it and gotten the best price. And just ask them what their payment terms are. I mean, will they bill you at the end of the month if they put it in? Or do they want it all up front? Or do they want $1,000 now and $1,800 at the end of the month? Or whatever. Not credit, just a billing. There's a difference. And just see what their payment terms are. There may be some things like that. Because all we're looking for here is a little bit of movement, a little bit of oomph to get your cash flow flowing that's all we're after here so dave you've done this way longer than me it sounds like if you don't shut that door all the way if you don't take i can just

go borrow this off the table that you're gonna end up back in the mess yeah you have to take borrowing money off the table the rest of your life i I just took it off the table. I don't borrow money, so I've always had to do what we're doing. I've got to figure it out. I've got to figure it out because it's not an option. Or I've got to not do it. It's not an option. Not doing hot water is not a fun thing. Especially in New Jersey.

Freaking New Jersey this time of year. Good Lord. In Tennessee this time of year, I don't want to be without hot water. Everybody's talking about the benefits of cold showers, but this is not the time to do it, right? So, yeah. So, yeah. No, thank you. Not as a mandatory item.

It works for me. That needs to be a choice. Not for my wife. But I do, like, you've got to close the door. I've got to take that off the table. Otherwise, you're going to have a thing after a thing after a thing. It's always going to be a thing always yeah so i'm even wondering where the hot water heater leaked yeah you know like did it leak around the element and the element is bad and they're trying to you know i'm gonna buy an element and seal that puppy if that's it and that's a couple hundred bucks you get me 30 more days or 60 more days. Well, or give me a year, you know.

But now, if the actual tank broke, there's no fixing that, okay? So, in Horn, yeah, there you go. This is the Ramsey personality is my co-host today Open phones as we talk about your life and your money. It's a free call at 888-825-5225. Our question of the day comes from Tony in the Ramsey Baby Steps community. John, you want to read it? Yeah, you bet. Today's question is from Tony.

It says, I'm having a hard time getting my wife on board. We have no consumer debt, just our house. Our emergency fund is fully funded for a year. We make around $311,000 a year before taxes. I've cut up my credit cards, but my wife doesn't want to cut hers up. She feels like she needs to have them for an emergency. What can I do to get her on board and not argue about cutting her cards up? So I'm looking at this. This is not an issue of this is not a math problem. This is not a rational approach problem.

Over the years, how have you seen this play out, Dave? Well, I mean, the answer to your question is how do I get her on board is complicated. But her actual statement is absolute horse crap. It's incorrect. Yeah. I mean, that's just bull. You don't need a credit card for an emergency. You make $311,000, you have a fully funded emergency fund and no debt.

That's just stupid. You have a double emergency fund. Now, but that's not exactly how you convert her, okay? We wouldn't go at it that way, okay? Hey, honey, you're stupid. Hey, you're just dumb. No, that's ridiculous. That one never worked for me.

So let's try a different tack. So the thing is this. I always, anytime I'm trying to get anyone, spouse included, on board with something, I generally will pan back and look further into the future. Instead of like this week I'm thinking about credit cards, I'm thinking about what are the best things that are in our life, what has to be true about our life that gives us, or if these things are true about our life, that give us the best probability of being

prosperous in our marriage and prosperous financially. So 20 years from today, if we're using credit cards as our emergency backstop, is that the most likely way that we become prosperous? Or if we got rid of them, is that the most likely way that we become prosperous? And so then what that does is it takes your hands off the wheel of the moment, the anxiety in the moment. Because what's happened here is she remembers being broke. And so I can tell you 30 years ago we filed bankruptcy, had our water cut off, our electricity cut off, almost lost our home,

had a brand new baby and a toddler and uh if i move towards a purchase of some kind 30 years later without my wife being involved and agreeing that the idea is within our budget and it's not going to destroy us then that that pattern of behavior that body language that i do when i do that activates her memory yeah it's a trauma response right she has a trauma response to it and so she'll go you know she'll act like we have absolutely no money and we have hundreds of millions of dollars right you know it's like oh god he's doing it again you know it's like whoa whoa whoa we're buying a box of gum here it's costco we don't need that much gum it's like holy crap you know you're out of control and it's like she doesn't yell like that but her body does i can watch her do that yeah and that i those eyes get that fire in them you know and all that is is she just is that that it activates that terror down inside of her that she felt when she was a young mom and didn't know if her kids are gonna

have food right and so that's why your wife's not cutting up her car it's not because of present-day circumstances but because she remembers am i right yes and i've also seen the more uh on on my show here is there's a sense that um and it's it's so far it's been uniquely women but it may go it may go with men too this idea that i need to hang on to something in case he leaves i'm going to hang on to some sort of something so i'm not hung out to dry here my last vestige of independence that's right and so I would ask Tony something about their dynamic at the end of the day says she doesn't feel safe could it be that she doesn't feel safe what you're talking about because of past you remember being broke she doesn't feel safe because there's something

about you husband who's making a little different definition of an emergency yeah like i i just need some an escape hatch in case this thing goes south yeah and so i if everything all everything's safe um around the board i love the idea of hey would you commit to 30 days of practicing can we put these in a drawer somewhere over here let's think about what gets us to this place we want to be 10 years from now. Yeah. And then what are those activities? And then is there a way we can baby step? Let's practice. Baby step. Let's practice into that and put them in the drawer, freeze them in the garage,

freeze them in a block of ice, use only debit cards. And then you go, okay, if we had an emergency, what could we rely on? And in the sense of being independent or safe, like, you know, after we had already were millionaires again years later uh sharon's daddy sent her some money and it wasn't a lot i mean 10 20 000 bucks or something whatever it's not a nice gift i mean he sent all his kids like some money right it wasn't a wasn't life-changing but it was just a little pile of money and she's like well what do we do with this and i'm like well let's just open a mutual fund in your name and so it's got her name on it and my name right but her name's first and that there's

something and it's like that's her mutual fund in air quotes right that we own right that her daddy gave us you know and very nice little gift and it's grown that's many years ago it's turned into some money you know over time but um to this day if you go into my file drawer it's like there's a little tab sharon's mutual fund you know and so there's a sense of that and it's not that we separated our finances or not that i was worried about the legality of it or not that she was there's none of that it was more of an emotional this is yours thing and it again relaxed that traumatized place in her spirit uh that's that was legitimately trying i mean that i'm not making fun of her not dude she had every right to be right that way and so our emergency fund now has an emergency fund

for that reason i always want to go back to that question um and it's becoming more and more of a question i ask myself and my wife and my kid in my community if you don't feel safe none of these things i'm going to teach you are going to matter because your body's going to be off trying to make sure you don't die in whatever weird way it's trying to do that so how can i create safety and there is a point when you can't hear it you're choosing not to hear that you're safe fine i can't i can't think about that but man is there a way tony yeah so a couple things here one is uh look for the safety two is look long term and then three is develop some steps of practice that that uh can cause her intellect to ride into her emotions

that you know you you live okay we're living without this oh we're living without it oh we can live without it oh we're okay without it and this word has been abused in our culture but that dave is mindfulness that is all of a sudden she gets a little bit her heart starts beating a little faster i need that credit card oh no i don't right that's just having that feeling thinking about it and then letting it pass because i've got a debit card in my wallet with a year's worth of salary in it we're good yeah yeah i mean i got a debit my debit card will do everything your credit card will do times probably two or three right yeah well yeah i mean because there's money in there right and so i can do i can go just boss i'm my own credit card something if i you know subject to the daily limitations on the stupid thing or whatever yeah maybe tony maybe

go get her two debit cards from two different banks and it's got each one of them's got x number of thousand dollars in it and yeah then that that's not to be touched you know these are these are debit cards we don't use because they're tied to the emergency fund emergencies and so and so they have the exact same power that if you wanted to drop 25 000 bucks into credit card debt due to an emergency instead we have 25 000 in this account that's never going to be touched and the debit cards in your wallet right how is that different mechanically it's not right it's in it's actually better yeah so yeah you've got to offset it and um but here you know i will tell you tony that that i run into a lot of marriages too and this falls under the heading of feeling safe or being safe um including mine in the early days where uh she doesn't feel like she has an equal vote at the budget committee

meeting and if that and so she needs to hold this in case uh in case you go crazy because her vote doesn't count and so it took a it took a while for sharon and i to get to where sharon really felt her vote was equal to mine on financial decisions and on the budget committee meeting monthly we're going to spend money on this because you want to and i don't want to nope until we come into agreement we're not doing it this is the ramsey show dr john deloney dave ramsey your host in the lobby of ramsey solutions which by the way you ought to come by and visit us when you're in the franklin tennessee nashville tennessee area it's a free visit and uh you can get to experience all

of the ramsey solutions things here including free coffee and homemade cookies yeah and the debt-free screams happen right here on the Debt-Free Stage every day. Charles and Emily are here. Welcome, guys. Hey, how's it going? Better than I deserve. Good to have you. Where do you live?

Dalton, Georgia. Oh, just down the road. Very good. Very cool. Welcome. All right. How much debt have you two paid off? About $97,000, sir.

All right. Whoa. And how long did this take you? About two years and 10 months or 34 months. Got it. Okay. And your years and 10 months or 34 months. Got it. Okay. And your range of income in that 34 months? Started out about $36,000 and we've ended now at $105,000.

Whoa! What do y'all do for a living? Well, she's a chemist and I'm a BI engineer. So now she's a stay-at-home mom, so now it's just on me. Okay. A BI? Yeah, business intelligence. Oh, thank you you dude the apparently i didn't have any so there you go okay the way i filled that acronym in my head was not appropriate so good i'm glad business intelligence well obviously you or i

neither had one so there we go now now we have him to help us all right 97 000 bucks what kind of debt uh our mortgage so completely debt-free now look at it weird people i love it i love it what's this house worth about well now it's about 180 uh we bought it a lot cheaper than that about yeah so so uh how long have you guys been married uh two and a half years two and a half years yeah oh so you started years, yeah. Oh, so you started this before. Yeah. I bought it right before we got engaged. We were already planning on getting married. So I bought a house that I was comfortable with by myself, but that would be a great house for us to start a family in. Yeah, and so he said, okay, let's do that.

And you get married, and then you dump both incomes on it and knock it out really, really fast. You had no other debt? No, not besides that wow yeah so emily i'm assuming you were your chemistry job was carrying the load and then you finally got off the couch charles well kind of when we got married the day we came back from her honeymoon uh she lost her job so it's actually just me carrying the weight but uh a couple months later she was able to find another job. We did that for, I don't know, almost nine months probably.

Nine, ten months, something like that, yeah. And then we had our son, Jimmy. Way to go, guys. Very cool. Congratulations. Thank you. So what put you on this Ramsey track, getting your house paid off? So my parents have been following Dave Ramsey for many years before this.

They paid off their house sometime before. So you're a financial peace baby. I am. I am. And then Emily, her parents have always been fairly well with money. And then we got together and we just said, we need to pay off this house. Let's get it done and change our family tree. I love it.

Love it. Way to go. So they all got to be proud of you. Yeah, I think so. All right. I wonder if they just, no, that's the expectation. A little bit of both. There's expectation of being wise with their money, but also they know you have to be on your own path.

Yeah, and being content. I mean, you didn't go buy a half million dollar house. Oh, no, no. We bought well within our means. Yeah, and something you could knock out holder, you two. I'm 25. She's 26. I'll be 27 Saturday. Oh, 27, yeah birthday yeah good good he was trying to help you out emily

she's a little nervous so you're telling me you're not even 30 yet y'all have a paid off house yes sir that's unbelievable so weird so awesome so proud of you very very well done okay people listening are going hey i don't know mean, how do you do it? What do you tell people the key is? Diligence. I think that is the biggest key. If you can continue to pay off every month, seeing those big numbers go towards debt, even though you want to use it for anything, travel, whatever, you have to use it to pay off the debt.

And if you do that, you'll get it paid off. You just throw the big numbers at it. You just throw the big numbers at it. Yeah, throw the big numbers at it. Even though you really want to spend it, you have to be diligent and say, we got to use this for debt and it's a lot of money. I want to ask you this question and it's not meant to shame anybody listening

or anybody who's made their choices. I'm always fascinated by folks who choose, you chose 120, did you say $130,000 house? Yeah. That now is worth 180. You qualified for a $300,000 house, but you said this is enough for us. Yeah.

How'd you land there? How'd you not get out of school and say, I'm a freaking chemist. I can do what I want. And I'm marrying a BI engineer, a big, interesting engineer and i'm gonna like how did you not how'd y'all decide on that honestly over the years my parents have lived in three homes since they've been married and they made gradual steps as they they had a small house when they were married then they

moved to a slightly larger house when they had us and then a slightly larger house when they had my third sibling um and so i figured hey that's a great way to not be in a lot of debt and just slowly make our way up as so contentment is a family value yeah 100 but it's very common for 25 year olds to come running out of the gate and want to live in the same house that mom and dad live in right now after 20 or 30 years and that's that's that's that self-discipline is incredible it's going to set you up over the long term in a pretty amazing way yeah that's an emotional maturity that's very very cool to watch congratulations thank you you're gonna be you're gonna be so wealthy i mean unbelievable you're making a hundred thousand bucks she's a she's a full-time mom you got a paid, and you're 25 freaking years old.

You're going to miss so many fun fights that me and Dave got to have. Yeah. Well, now we've got to figure out what to do with the money and use it to further his kingdom. Yeah, for sure. So what's your first big thing you want to do with money now that you're out of that house and everything? Well, we're planning to go on a trip to Switzerland and maybe potentially Israel, so that will be Well, we're planning to go on a trip to Switzerland and maybe potentially Israel,

so that will be a pretty expensive little vacation to go on. That is a great run. Both of those are great trips. I highly suggest both of them. I've done them both. And I'll go back to Switzerland. I'll go back to Israel someday, but we've been there three times.

But, yeah, Switzerland's a great trip. Yes, do it. That's awesome, man. man way to go you live like nobody else later you get to travel like nobody else i like it yes sir very cool good for y'all well done and you brought the baby along name and age jamie he is about four months oh yeah okay well we may scare him with a debt-free experience. Oh, that's okay. Maybe he'll join us. Not voluntarily, I'll tell you. Okay, good, good, good. Way to go, you guys. Hey, we got the Live and Give Bundle for you.

That includes the Total Money Makeover book. It includes the Baby Steps Millionaire's book, which you are well on your way to being. And, of course, Financial Peace University membership. And so use those. Give them away. Either one. It is the live and give bundle way to our way of saying thank you for coming all the way up here from dalton georgia to do your debt free scream charles and emily and jamie debt free house and everything at 25 freaking years old

so any of you whiners out there we just just put this up there for you, just to show you that this can be done. You guys are mic dropping. This is awesome. Very, very proud of you. $97,000 paid off, house and everything, 34 months, making $36,000 up to $105,000. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free! Yeah! debt-free scream three two one we're debt-free this is how it's done man i love it i love it i love it well done you two very well done so that's a second generation over there yes and i'm just i'm just laughing like it's the exact opposite of what i did dave i had some debt coming out of college and i drove a little tiny tercel easy hatchback it was just like a human roller skate and i thought i need the biggest truck i can possibly buy i got my first job making good money and i ended up that year more in debt than when i started and had to buy the biggest this then i support i just did the exact opposite and i just think what it took me a decade to dig out of that hole that they never made they never made because of contentment they were just contentment as a family value amazing and uh lack of hours on

instagram adds to contentment i'll just tell you you're not watching other people's highlight reels that of a life that they don't really have. And have other buddies who celebrate you and aren't always hassling you about, are you driving that? Or like, no, he's just got different values or he's got different dreams or whatever. Yeah, he's going to be rich. Yeah, it's amazing, guys.

Wow, way to go. Very cool. Great job, you guys. You're heroes. Very, very proud of you. Dr. John Deloney, Ramsey Personality. You can join him daily proud of you. Dr. John Deloney, Ramsey personality. You can join him daily, weekly on the Dr. John Deloney Show. As a podcast, be sure to check it out.

It's unbelievably popular. He's my co-host today here on the Ramsey Show. សូវាប់ពីបានប់ពីបានប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពី Dr. John Deloney, Ramsey Personality, is my co-host today. Thank you for joining us, America. This is The Ramsey Show. Paying off debt is smart. Saving and investing is what you can do when you don't have any payments, and that's smart. There's one key to winning with money that people overlook all the time, though, and that's protecting your finances from catastrophes emergencies this is where insurance

comes to play now there are 10 kinds of insurance coverage that you might need based on what your life looks like today and we've built a tool called the coverage checkup to show you which types you need to add drop or adjust and we'll even rank your coverage list by importance, email it to you, and connect you with Ramsey-trusted insurance providers so you can get your plan in place. Seriously, it could be the most important five minutes you spend today. It's completely free. Visit RamseySolutions.com slash checkup.

That's RamseySolutions.com slash checkup. Don't let an emergency sneak up on you because you didn't do your checkup. Did you see what I did there? All right, Libby is with us. Libby's in Austin, Texas. Hi, Libby. Welcome to the Ramsey Show. Hi, Dave.

Thanks for taking my call. Sure. What's up? I have an inheritance question for you today. My husband and I are a military family and baby step six. Should we use the inheritance money we've recently received plus our emergency fund to pay off our 15-year 2.5% mortgage or save it towards our next home? The military is going to move us across the country this fall. Doesn't matter.

Between now and fall, you're not going to make any money on the money anyway. You can park it in your house by paying it off, or you can park it in a savings account. Neither one are going to pay you anything. And if you move in the fall and you sell your house and you paid off the house, you get the money out, right? And if you move in the fall and you didn't pay off your house, you get the money out of the house.

And when you sell it and you'll take all the money from savings and buy the next house, right? Right. The trick is for sure from savings and buy the next house, right? Right. The trick is, for sure, pay cash for the next one. Okay, that part might be a little bit hard because we'll use up all of our funds. We would have to build back up. We'd have to rent where we go.

I'm sorry. Why would you use up all of it? Wait a minute. You have enough to pay off your current home if you were to stay there, but you're not staying there. Correct. What's your current home worth? About $300,000.

Okay. Where are you moving? Moving to Seattle. Okay. Yeah, $200,000 is a little tougher there than Austin, Texas, but you did it in Austin, Texas. It's not substantially different than Seattle. So if you could live in a $200,000 house in Austin,

I'm saying you probably could live in one in Seattle. Okay. That makes sense. So I'm just saying you should end up in a paid-for house on the other end. That's the plan. Thanks for your service. We appreciate you guys loading up the stuff and moving around to make sure our country's protected. Thank you for doing all that.

So Dave, I'm going to ask a question as though I was a listener to the show because it just popped into my head. Is there any, is there a length of time before I park it in my house? Or let me ask it this way. I would be concerned the value of my house goes down between now and X.

Your house value is not affected by your mortgage. But if I pay, okay, that's fair. Yeah, you're right. Paying it off doesn't cause it to go down or up. Gotcha. It just goes up or down. So if it goes down, you just have less money when you sell it out of equity

or you have less money because you paid it off out of equity. But you're still getting back that money you just put in either one yeah you'll get it all back and then it's just a matter of you maybe some of your value increase your appreciation is going to go backward but i don't think it will it might go back a little bit i don't think it's gonna be that big a deal zach's in san francisco hey zach what's up hi um i. I'm in Baby Step 3B with my wife, and with the stock market down, we're wondering if we should slow down Baby Step 3B and invest a little bit more or if we should continue on at the same rate that we've been saving. How much are you putting in of your income into retirement?

Well, no, it's about 8 or nine percent. Okay, and so you want to invest more into your retirement rather than save more towards your house? Right, pushing it more up towards 15% versus saving the eight or nine percent. Okay, so you're going to delay buying your home in order to do this so we already it would it wouldn't be delaying buying the home so much as not having as big a down payment we already have uh what our goal is over 50 of our down payment it would just be whether we have 55 or 65 i see okay yeah that's fun that's fun here's the thing it's within the guidelines of what we teach what i don't ever want to encourage too much is let's say that you're

already putting 15 percent into your retirement and you said hey i want to bump that up to 20 and in other words violate what we teach, put more in than we would tell you to do because the market. Now you're pushing to time the market. So timing the market, I love that you're a contrarian. You're going to always make money doing that. But timing the market and saying, I want to buy while it's down. I want to buy when it's down.

That makes you want to sell when it's up. And no, we're not doing any of that. We're just going to buy and keep, buy and keep, buy and keep, buy and keep, buy and keep, buy and keep, buy and keep. 15% of your income in Baby Step 4, regardless of the markets up or down, goes into retirement when you're at Baby Step 4. If you want to do that whole 15%, put a little less down on your house, that's okay. That's within the guidelines. But avoid this chasing returns, it's called in the research people who chase returns by trying to figure out and time the market very seldom do as well as those of us that just constantly invest so again what you're doing is under the constantly invest headline so we're going to go with it but the reason you're asking the question i'm not going to go with

which is timing the market don't try to time the market that's always a bad bad place to go that makes sense hope it does open phones at 888-825-5225 ethan is in michigan hi ethan welcome to the ramsey show hi dave thanks for Thanks for taking my call. Sure. What's up? So I am in baby step one. I just completed it. I only have about $7,000 in debt that should be paid off mid-July. And my question is, I'm thinking about buying a home in the next two to three years. Good. But I don't know where closing costs fit in, if I should combine them with my down payment or they should be separate. So you're talking about the total, like you're going to buy a $100,000 house and it's going to have X number of, there's no such thing as a $100,000 house anymore, a $200,000 house and there's going to be some closing costs associated with it? Yes.

Yeah. So your closing costs are just part of your down payment yeah it's a big it all falls it all falls the same bucket like you said ethan so yeah it's just so when you're working on your baby step 3b you probably heard us talk about we're talking about with the last caller which means you're out of debt you have your emergency fund of three to six months of expenses in place then that's when you start saving for your down payment. Maybe before you start retirement, in the last caller's case, he was putting in 8% towards retirement, was going to kick it on up to 15% and save a little less. But anyway, that's the point at which you're saving for your down payment. That's also the point,

the same bucket that you're going to take that money out of to cover closing costs and down payment does that make sense yes how would i calculate it i've seen so many videos on different ways to calculate it but i hear it's i i find it really hard to calculate how much i should say uh all you can and quit watching those videos um they're gonna make you crazy yeah because a bunch of them have an agenda and they're trying to push something or they're trying to push some weird crap that's flying around the internet so you're better off just to sit down with a good real estate agent go to ramsey when you're ready ramsey solutions.com click on uh elp for real estates ramsey trusted people the people that are absolute pros that do a ton of deals, and they can sit down and start telling you how closing costs will work.

What you're going to want to look for is a conventional mortgage. FHA and VA are both more expensive interest rate and more expensive fees. So your cheapest loan is a conventional, a Fannie Mae loan. And you want to save up as much as you can save up there, and then a good real estate agent can walk you through what your actual closing costs are going to be, and you really don't, you know, I really would not use YouTube for my source on that, and I sure as crap wouldn't use Tic Tac for my source on that.

So be careful with these videos. Now, get with a good real estate pro, and they can walk you right through it. It's really not rocket surgery. You can figure it out. You'll be able to do it this is the ramsey show dave here you can find all of our shows with the Ramsey Network app on your smartphone. It's the only place to listen to the entire back catalog of episodes.

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