The Ramsey Show - App - How About You Actually Do Something About Your Finances This Year?

Episode Date: October 4, 2024

From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by my good friend Rachel Cruz, and it's Open Phones this hour at 888-825-5225. Help us help you take the right next step for your money and your life. Isaac is going to kick us off in one of Rachel's favorite towns, Knoxville, Tennessee, home of the Vols. What's up, Isaac?

Go Vols, Isaac. Absolutely, go Vols. Good to talk to you all. Ples. What's up, Isaac? Go Vols, Isaac. Absolutely, go Vols. Good to talk to you all. Pleasure. What's going on? Yeah, so I'll start with the question and then get some info on. My question is,

should I liquidate some of my taxable investments to provide a larger down payment for a house? And if so, how much? So I'll start with some info. We're on the equivalent of Baby Step 3B. We've got the emergency fund, no debt. We live in a house. We're renting a house for about $500 a month. Wow. And it would not be super, yeah, it's quite a blessing. We're staying in my in-law's house, so great relationship there. Thank you.

That explains it. Wonderful. Yeah, yeah, definitely. So it would be not ideal to raise a child here. So we'd like to get into a home before we start down that path. But we are not sure if we should use my wife's prospective income. She's not working right now. She's looking for a job. Not sure if we should use her future salary to account for the 25% take home pay recommended for a monthly mortgage. So we've got $55,000 in liquid cash between a high-yield and a treasury and an additional $115,000 in those non-tax-advantaged investment accounts. Way to go. What are those in, Isaac? I'm just curious. Is it mutual funds, stock?

Yeah, various mutual funds, yeah. Okay. All right, and you're saying, should I use this money for the down payment? I personally would. What else should I use this money for the down payment? I personally would. What else were you saving this money for? Well, it didn't really have any specific earmark past that. We're doing other tax-advantaged accounts like Roth IRAs, HSN, employer Roth 401k. So are you investing 15% of your income right now into retirement accounts?

Yeah, I think it's maybe a little bit over when we're all said and done with maxing those accounts. How much will you need for the down payment? Well, in our area, $300,000 for a house is about the lower end. Anything less than that would require quite a bit of restoration. But in order to get that 25% of just my take-home pay, because we're not sure what she's going to be making and if she'll be working long-term or not, if we're able to have kids we'd like for her to stay home if possible.

Looking at probably around $100,000 or more mark, but it's a little bit of just trying to convince myself that I see all that in the investment accounts and then put it into assets. Yeah, the problem when you invest for no reason, then you go, oh, I don't want to use this toward the house. But if I told you when you started, hey, this is going to be your home down payment fund, you'd have no problem cashing it out. Yeah.

So if I'm in your shoes, Isaac, and I've done this because our first townhome was $300,000 and we saved up and we put, I think it was, you know, 40% down on that and paid the rest off quickly, I think you're going to be in the same boat. So if you liquidate this, you might have some capital gains of course use some of the cash leave your emergency fund funds separate and then if you could put down 50 i mean that'd be amazing yeah and i think the reality that your wife is going to get a job so finding on average what you think she's probably going to make i would add that to the equation because she i mean what kind of line of work is she in uh well, she's got a master's in education, but we've decided for various reasons, she's not going to go back to teaching in like a middle

school. She is looking at a local university at UT, possibly working there or some other companies in town, just wanting to help people do the work that they love. So she's very much a supporting role kind of person when it comes to work. Not necessarily exactly the job. It doesn't really matter too much. It's just who she's able to help is what's really important to her.

Okay, but she will be working is my point. So I do think finding kind of, yeah, on average, because I would add that in because it's going to take you guys a while to find the house, you know, go through all the process and the, you know, I mean, it's going to, it's not like you're going to have to have this money by tomorrow. So it's going to give her enough time to find a job and while you guys are looking. So yeah,

I definitely, I think you're, you're in a great position and I would take some of that money out of a mutual fund for sure for a down payment. Gotcha. And then I do have one quick follow-up question. Um, how much cash would you all recommend staying liquid? I heard that in the next six months or so after you get a house, it's going to be repairs, like $1,000 a month is a good estimate. And we also want to have enough to pay cash for a car if one of our two older cars goes out. I would just create a sinking fund. You don't need to park 20 grand just for that. I would just start a sinking fund where every month you put away 100 bucks, 200 bucks to start covering some of that. Maybe the car becomes a $500 sinking fund and 12 months from now, you got six grand.

So you decide what's right for you guys and your family and when this car might kick the bucket or when you want to upgrade. But I think sinking funds are the easier way to do that. So I wouldn't be too concerned about, oh my gosh, this house is going to cost us 50 grand right after we move in. Yeah. And if you need additional money, that's what the emergency fund's for too, that you can use, Isaac. Some people, it sounds like you'd be like, how could I not use this? That's a game people play. But if you need it, that's why it's there. Yeah, I know. Your savings muscle is incredible. And so the hard part for you is just letting go of that

and actually using it for your future goals. Yeah. Yeah. How young are y'all? I'm 26 and she's 25. You guys are unicorns. You're going to build so much wealth. I'm not concerned about letting go of these investments because you're going to build it right back up. And guess what? In a few years, you're not going to have a house payment. I can tell you're the kind of guy who's going to knock out this mortgage. You're going to replace a house payment. I can tell you're the kind of guy who's going to knock out this mortgage. You're going to replace that mortgage payment with investing. And before you know it, you'll have another $100,000 saved up. All right.

So way to go, man. Thanks for the call. Cool beans, guys. Yeah, thanks for the time. Love a Vols fan, Rachel. They're all smart. They're doing it out there. They're all smart, you know? It's here for the right team.

You have wisdom. Wisdom everywhere. Spoken like a diehard Vols fan. Wow. That is good, though. It's here for the right team. You have wisdom. Wisdom everywhere. Spoken like a diehard Vols fan. Wow. That is good, though. But I think it's a good point you made. When you're putting money away, especially this is non-retirement, right?

So if he's talking about 401k, Roths, you know, 403bs, in that world, we would say, no, we do not cash out retirement. But these investments that are not retirements, but are, you know, whether you're out there and you have company stock or single stocks, mutual funds, using that money towards something that's going to continue to up your net worth and up your quality of life, which is a down payment. And almost, you know, a house, I feel like, is a great asset.

And this is why we always say to pay it off. Don't just leave, you know, if you have money to pay off your house when you're in baby step six, do it because it's like assured that your money is going to something worthwhile. It's a forced savings plan with a kind of guaranteed rate of return. And once you get that paid off, I mean, that's an amazing feeling where you now have the margin to do even more wealth building.

And so I think the hard part for a go-getter like our friend Isaac is I just want to keep saving. I don't want to let it go. But guess what? On the net worth statement, nothing changed. That's right. You just move the money from here to a different house. Yeah, it's great. And it's hard because you don't see the number going up like you did with your investments. But what you do have is a lot of peace when that mortgage payment is such a small part of your world because you put 50% down. Yes. And you took on a reasonable mortgage. What most people do is say, I don't want to touch the investments. I'll take the whole thing out in the mortgage and I'll be fine. And then the mom wants to stay home and they go, oh my gosh, I can't breathe.

That $2,000, $3,000 mortgage payment now feels like it's too much. Feels like a lot. Yeah. And which is smart that they were even talking about, you know, you can't control everything in the future, right? So there's things that you have to make decisions on today that are wise. So her knowing that she'll probably get a house, right? But even the family, some people are like, well, should we wait till we start a family, all of this, right?

But if you're in the market to buy, now is the time because prices are only going to continue to go up. Yeah, if you're out of debt, you got the emergency fund, you got the pile of cash for that down payment. Don't sit around because guess what? The Fed rates are going to go down. Home prices could go up and you're going to go, oh my gosh, I should have bought. Yep. I should have bought. Don't try to time the market. This is the Ramsey Show. Hey, you guys, I'm not a fan of the big banks and you probably already know which ones I mean, but I do like credit unions because they're non-profit organizations that focus on their members. And I'm proud to endorse Fairwinds Credit Union because they

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take control of your finances. That's fairwinds, F-A-I-R-W-I-N-D- s dot org slash ramsey welcome back to the ramsey show i'm george camel joined by best-selling author rachel cruz open phones at 888-825-5225 rafael's up next in kissimmee florida what's going on hello how are you doing well how are you good good um. How are you? Good, good. So my wife and I can't come to an agreement here on what to do with our motorcycle loan that we have. Oh, this is a fun one. Rachel loves settling debates. I love motorcycles, too. Who do you think is right?

Honestly, I can't answer that. Okay. Smart man. Yes. Okay, what's going on? What's the issue? Honestly, I can't answer that. Okay. Smart man. Yes. Okay. What's going on? What's the issue? Okay. So I just think I have an employee stock purchase plan. It's going to invest, I think, in December.

I'll have about $13,000 in there. I just tell her I'd rather leave that in there and get a loan to figure out what the upside down is because I want to get out as soon as I can. And instead of owing 23, let's say I'm upside down by 10,000, I can get a personal loan for 10,000 and knock that off as fast as possible. And she's saying, no, liquidate the stocks and let's not go into debt. Be completely debt-free. Yes.

Is this the only debt you guys have? Or is there more? No, I have a personal loan of $20,000. And you want to get more personal loans? Yeah, I see. I'm just walking through the train of thought here now I love that you're wanting to trade down your big debt for a smaller debt but I like your wife's thinking more of we could be completely debt free

instead of you know struggling to pay this next 10 grand off while trying to pay the other 20 grand off plus when that when you have that volatile single stock I mean that thing could drop and so I love the idea of using this as a blessing. You got that stock at a discount, let's sell it. And, you know, probably be in minimal gains and be out of debt completely.

Okay. What's your thinking in keeping, keeping the stock? Do you just like to see the number go up? Well, I, so my thing is I make $80,000, $80,000, $85,000. And I just tell her, wouldn't it be better once we, if I do get the loan and I knock it down quick with her, I guess I want to just leave the money in there so when we get debt-free, I can go buy, like, say, a cheaper $5,000 motorcycle. I'm really not that good with budgeting. Clearly, obviously, I'm in debt, unfortunately.

But we want to prove our family wrong that there is a way to be debt-free. She's on board. I'm on board, too. I just don't know how to tackle this. Well, the best way to prove them wrong is to become debt-free and stay debt-free. Would you not agree? Yeah. Yeah you not agree? Yeah. Yeah, I agree.

Are you guys, your wife, do you guys have your money combined? Because you said, I'm making $85,000. Is she working as well? Yeah, she gets about $800 every two weeks take home. I get about $26,000 every two weeks. Okay. What does she do for a living? She's a full specialist, like in facials, nails, et cetera.

Okay. Things like that. Okay. Okay. And are you guys, yeah, does she have any debt? She does, but that's like a whole... I would say if you wanted to throw her thing in there too, we're looking at maybe $30,000 on top of that.

So $20,000 plus the $30,000. You had a personal loan for $20,000. You also owe how much on the motorcycle? $23,000. So you have $43,000 there. And then she has $30,000? What's her 30 in? It would be like

miscellaneous. One of them would be like Verizon. Another one would be student loans. Most of it is student loans. Okay, so Rafael, let me tell you this. I love, love and very encouraged that your goal, both of you want to prove people wrong.

And not just, that's not the goal to prove them wrong, but to prove them wrong to be debt free, right? So you both want to become debt free, you both want to live a debt free lifestyle. So what we have found is the fastest way to get from where you are, which is just the starting off point to actually accomplishing that as a couple of things. First and foremost, you will win. I'm going to say three four five times faster when you guys work together as a team your language is still well hers over here mine my income her income when you start you and her start actually looking at numbers together that combination of combining finances working out of the same bucket seeing seeing this together, tackling all of this together, regardless of

who's quote unquote dead it is. And you're going to get so much momentum by just simply doing that. It's unbelievable. And I'm telling you that because when you start doing a budget together, which we're going to give you every dollar premium after this call. But when you guys sit down together and you start doing a budget together and you start cutting expenses together and you start making decisions about what you're going to have for dinner together because you're not going out to eat, like things start to really pick up speed when there is an emotional attachments that you guys are a team. And again, that starts with the numbers. So that would be my first piece of advice is to is to work at this more unified than

you are now. And then number two, you're trying to do too many things to get the goal that you want. And it's way less complicated than what you're making it to be. So everything we talk about is to liquidate everything but retirement accounts to pay off debt. So that would mean liquidating the stock,

putting it towards the debt. That would be selling some stuff, figuring out what you're going to sell the motorcycle, which is great. But when you start doing these things and you guys are making around $105 a year, it's amazing the progress you guys can make when you are focused intensely on one thing and that is getting out of debt. It's not trying to do retirement over here. It's not trying to get some liquid cash of debt. It's not trying to, you know, do retirement over here. It's not trying to like get some liquid cash over there. Like it's not trying to do 18 different things together. Your number one goal is to get out of debt. And that's maybe working extra, selling stuff,

cutting expenses together. I mean, it's all of this snowball effect that occurs. And we just see people that they just get so much momentum because you're going to actually start seeing these wins. And that's going to fuel this behavior change, which is key that personal finance, it is 80% behavior. It is only 20% head knowledge. So you're going at this more from a head knowledge standpoint and less of a behavior. And I want you to flip those two and just try it.

Try it our way. And if you hate it it you can go back to what you were doing that's right and in six months if you're like this isn't working at all you can do it your way but try something different yes yes awesome and um just one last question i i heard you say you like motorcycles too oh i was kidding. Sorry. Will this budget app or like, will this teach me once we do finish baby step two, how, when am I allowed to go buy a $5,000 motorcycle off of Facebook or when am I allowed to do these things that I actually enjoy? It's simple. Once you have a foundation to where you have no debt and an emergency fund,

that's when you move from this intensity to intentionality, where you go, all right, if I save up 500 bucks a month in 12 months, I'll have $6,000 saved up to go buy a used motorcycle in cash. Do you see the difference there versus rolling up to the dealership and them going, hey, we got a nice shiny one over here and we can get your payment down. That's how broke people think. They think about how much down, how much a month. Raphael from now on is going to think like wealthy people. How much? Can I afford it right now? If not, we got to act like an adult and say, we can't do this right now. Yeah. And that's after paying off all of your debt and having a three or three to six month emergency fund saved. And once you do that, you're good to go. You're good to go. Take, you know, take a great vacation, buy a motorcycle, you know, you and good to go you're good to go take you know take a great vacation buy a motorcycle you know you and your wife together deciding on some of these big

purchases um but that would be yeah that would be the time so it's gonna be maybe maybe a year or two you know you're two and a half years uh but i'm telling you you'll do it with so much more peace and enjoyment and freedom than you will trying to yeah continue to live this this lifestyle and your your arguments and debates will change it'll be like where are we going to go on vacation this year instead of okay what debt are we going to pay off first and how are we going to do it so the fights get better as you get to a better place financially rafael so let me encourage you with that and uh i if you follow the things that rachel just told you you were going to have so much freedom not even two and a half years from now, a few months from now.

Just doing the budget, showing you the reality of what could be if you guys just got a handle on this amazing income you have. Yeah, so hold on the line and Taylor's going to pick up and we want to give you guys every dollar premium and FPU. We'll throw in Financial Peace University because I think. So kind. So kind. Outrageous generosity. You know, learning some of these basics, you two together watching these videos and kind of going through this, I think it's going to be really, really helpful. Thanks for the call, Raphael. More of your calls coming up. 888-825-5225. This is The Ramsey Show. What does the future hold for business?

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I'm George Campbell, joined by Rachel Cruz. Listen, I know nobody wants to talk about it, but I think it's cool to talk about insurance. In fact, I made a free five-day video series called Confidence in Your Coverage, and I guide you through the different types of insurance so your insurance can finally make sense. And if you know me, I like brevity. I like it short, punchy, funny. So I'm not going to overwhelm you with nerdery. You're just going to get a one email a day for five days, teaching you everything you need to know so that you have more confidence in your coverage. So you're going to get info, two daily goals to help you figure out what you need and to understand it all. Go to ramsaysolutions.com slash confidence to get your free guide to

insurance or click the link in the description if you're listening on YouTube or podcast. That's ramsaysolutions.com slash confidence to get your free guide to insurance or click the link in the description if you're listening on YouTube or podcast. That's ramsaysolutions.com slash confidence. Catherine's up next in San Francisco. What is happening, Catherine? Hello. Hi, thanks for taking my call. Hey, sure. Happy to help.

What's going on? So basically I have a 401k from a previous job, and I was wondering if I should roll it into my current 401k, or I also have two annuities that are variable annuities. Okay. How long ago was this job in this 401k? How long has it been sitting there? It's been sitting there for probably about five years. It's time, don't you think

it's collecting dust over there it is so generally the the best thing to do would be to roll it over to an ira and do a direct rollover so what you don't want to do is withdraw the money you don't want to see the money you want to directly put it into that next retirement vehicle and if you have a great 401k with great options and low fees, you could roll it directly to that new 401k. The difference is the IRA is outside of your employer and you have way more options and it's in your control. So we like the IRA for that reason. Was it traditional or was some of it Roth? It was traditional. Okay. So you want to make sure you do a direct rollover to a traditional IRA, and that way you'll have no kind of fees or penalties there.

Okay, perfect. And then I do have some money in savings, but I have it kind of in just some of those saving apps. And I was wondering if anything I should roll it into a high-yield savings account or one of the money markets. Yeah, high- savings account right now are actually outperforming money, money market accounts on on most bases. But you can what I would do is and what we've done is look at look at an online bank because usually you can get a better rate of return, especially just for a high yield savings.

So I like that option the best because I i mean money market accounts yeah for the most part they they act you know pretty similarly to uh high yield savings but what i have found at least in the last probably i don't know 12 months or so we saw better rates of return with a high yield personally but do some of your research and look but yeah just looking at it like a ally bank or you know some type of because you're getting 0.01 right now interest on your savings i'm guessing yeah what app is it in yeah it's essentially like the like acorns and capital yeah yeah i would be more i would be a little bit more aggressive with it yeah so yeah i would look at an online bank uh just a good high yield savings and making sure that um you know, some of them can come with like limitations,

meaning like you have to have a certain number or a certain amount in order to open it and all of that. But most of them are pretty good. Yeah, you want to look for ones with no fees, no minimum balances, all of that. And there's a ton out there. And essentially I'm kind of wondering, is that money accessible when it's in those savings accounts? Because I feel like I'm

going to be able to need to access it. Yeah, it is. It may take one to two business days, we've found, to take money out of our high-yield savings and transfer it to our checking account. And some of them will come with check writing privileges even out of it and a debit card, but you can only do up to like five transactions a month. So yes, you can get to it for sure, but it's just a good place to put long-term savings. It would not be an account that you would use for everyday transactions, but something that you're like, oh yeah, that money can just sit and grow. If I need it one day, I can get it. I can pull it out without fees. Yeah, because the only reason I kind of have savings right now is I'm about to

move somewhere where rent is going to be higher. So I just was also wondering if eventually if I kind of went through the savings, which obviously hopefully not going to happen, but then can I just close out the account? Yes. Yeah. Just pull the money out and close it. Yeah. About penalties? Okay. Awesome. Yeah. Thanks for the question, Catherine. Next up, we've got Hannah in Chicago.

What's happening, Hannah? Hey, how are you guys? Doing well. How are you? I'm good. You guys are my favorite duo, so I'm happy to speak to you both. Jackpot. So my question is, I have a truck loan. I owe $6,000 on it right now. I can get about $9,000 for a private sale. So I was wondering if I should sell it, clear the car note, and then be able to pay off my remaining two personal loans and be debt-free or continue working the debt snowball method. What are you going to drive if you sell it? I'm not sure. I haven't got that far, but I do work in town and I do have a work truck.

If my place of employment would allow me to drive that, I thought that might be an option. Hannah, I probably wouldn't considering how low of cost that this is. Like if you told me, you know, that it was, you know, $30,000 or something. But I'm like, you know, if you sell this, you would cash out $3,000 and then you go buy a $3,000 car. And the difference between a $3,000 car and a $6,000 car isn't crazy different. I think you'll be going into a similar type of vehicle. So I would just, from simplicity's sake, I would just put this in the debt snowball. If you like the truck, the truck's not the major problem here. What's your total debt load?

I have a personal loan for $2,500 and then a very small consumer debt of $900. So I'm almost there. I think I'm just, I'm ready to be debt free and I'm getting so close. I was considering it, but. Yeah, you're not, nothing's on fire here. You're not in a desperate situation. I just don't want you turning around and going, well, all the cars that are reliable are going to be $6,000. Now I need to come up with the the extra three and so it's not a huge part of your debt and I would just knock it out and keep the car. What's your income? That's what I thought too. I make $57 a year. Awesome well you'll be there in no time. I know you're doing great. I think so. Yeah knock out that $900 and that $25 first and then just start attacking the truck. Awesome. Thank you, guys.

I appreciate it. Absolutely. Happy to help. All right. Let's keep it moving. Jonathan is in Lexington, Kentucky. Jonathan, welcome to the Ramsey Show. Hi.

Thank you so much for all that you guys do. Happy to be on the show. Appreciate that. How can we help today? So I'm in a really, really good position, all things considered, debt-free, out of college, and making more than I'm spending. Where I live is a fairly low cost of living area. But my question is, now that I have $10K saved, everyone is encouraging me to use that $10K to get a loan for a down payment for a lot and build a rental cabin and then uh sell that turn a big profit what everyone might have are you talking like three knucklehead friends of yours my broke

brother-in-law yeah okay this feels like a very oddly specific goal well uh i'll tell you why in in the place that i live it's very high in tourism. And so a lot of people have have made money by by virtue of rental cabins. What's your primary home situation? a fantastic living situation thanks to my employment so I I have I don't pay anything for where I live and I live by myself so it's amazing but where I live is heavily it's a tourism area and that's that's business year-round and so every rental cabin that's built is bought. And so the question is, with only $10,000, you know, have an outright way. Yeah, you're breaking up too. We can't get...

Okay, my fear, Jonathan, is I want to make sure you are taking care of yourself. So the fact that you're living somewhere that you're not paying anything or getting any equity, if you leave this job, you'll probably end up having to rent somewhere for a bit so i almost on the side would take that 10k i mean how long do you think you'll this job or is this like a long-term play for you yes i'll be here for a long time as long as i can without screwing it up okay but there's but i want you i want jonathan to own a home eventually because I don't want you to get to 50 years old and not have any money to go and buy a home. And then you have to go take out a $300,000 mortgage. So I would be thinking about my living situation first and foremost because that housing part of your budget eventually will be the largest part.

So, no, I would not take $10,000 and go into debt for a rental cabin, even though it's the best market. It looks shiny. I mean, this is basically get rich quick for your area. And I know it's worked for a few folks. You're not in a place to be a real estate investor quite yet. So just hang on, keep saving up, get your own place. And later on in life, we can look at that option. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Rachel Cruz this hour. Today's Ramsey Network app question is from Melissa.

What does Melissa have to say? She says, I am single and about to move into my first apartment. My question is, how do I keep from spending foolishly since I'm now responsible for supporting myself? I would like to have an accountability partner to keep me straight and I'm not sure how to find one. I've been hurt by people in the past so I spend money to fill in the emotional gap. Wow, very self-aware. Melissa, I need to change that way of thinking so any advice you have would be fantastic. Wow. Well, therapy is I think a great start. I think we need to figure out what's at the root of all of this

and start to kind of heal from that. And I do love the idea of an accountability partner as another thing, and that could be friends. They don't have to be like your best friends physically. I mean, we have a great Facebook group, the Ramsey Baby Steps community, and they're always encouraging each other in there, and they'll say, hey, someone talk me off the ledge. I'm going to go add to cart over here.

And then the budget is really, it's kind of a built-in accountability partner. Yeah, for sure. Yeah. I mean, I think obviously there's pain from some levels of relationship. I'm not sure which kind that you've been burned by. And so I think sometimes that hurt and that rejection does come out sideways and it looks different for everyone. And in your case, being, I mean, very self-aware that, yeah, you spend money to probably keep yourself busy or to keep yourself feeling good. And I think there's a reality of understanding that, you know, what is the truth of what money does?

And, you know, it's been scientifically proven that buying stuff does not fulfill you and does not give you literal happiness or joy long term. It just doesn't. And so I think there is a way to shift that behavior of understanding, yes, the facts, but you can't just willpower your way into that. I think there needs to be some good input in your life. And that's where like therapy, George said that. And even I don't know, even the word accountability partner, I don't know why, George, it kind of makes me kind of makes me Yeah, I don't know even the word accountability partner I don't know why George it kind of makes me kind of makes me yeah I don't know it's a little accountability partner have a good friend in your life who loves you a lot who will ask you questions who will dig in who wants to know your story sit with you in the hurt and the messiness of life and they're there as supports

more than like I'm going to keep you accountable because sometimes I can feel like preachy or something you don't want to hang out with that person. But here's the other side. Don't have friends that also spend frivolously and are always going out and are broke. Like put people around you. Yeah, that respect your boundaries and respect what you're doing.

And you also want to grow. Yeah, that's right. That's right. So yeah, having just, yeah, people in your life. But it's going to take time for you, I think, you know, to build that trust because of obviously what's happened to you in the past. And the beautiful thing is about moving into your first apartment is you got bills now. So you kind of have to go. The bills have to get paid. There's not going to be

a whole lot of extra margin just to go spend frivolously. And that's where the budget becomes even more important once you gain that independence. Good for you. Love the self-awareness. I know. That's impressive. OK, let. Love the self-awareness. I know. That's impressive. Okay, let's get to the phones. Dave is in Charlotte. What's happening, Dave? Hi, guys. I'll try to make this short and sweet. I have a $1.5 million house that's in an area where the houses sell normally in less than seven days at or above asking price. And you guys have made me very cost conscious. So it's hard for me to justify to pay a 6% commission or $70,000 for a house that's going to sell in less than seven days, basically just to get it listed on the MLF. So what are my options? I know a real estate

attorney said he would charge me $6,000 to do the actual close. But in terms of working with agents, can you shed any light on how i can minimize the permission well they've they've changed the structure recently um and it's kind of becoming you know a big bubbled effect within the real estate world but i think a lot of agents are still uh kind of abiding by that six percent the three percent three percent split so um i mean if you're using someone for their services, I mean, I guess it's now, it can be dependent on the agent now to a degree

because of what they're choosing to do on the commission side, because it has changed in recent months. But overall, I mean, you're using their services, so you will be, yeah, paying some level of a commission, I'm sure. If you want to do sell by owner, you know, you're using their services, so you will be paying some level of a commission, I'm sure. If you want to do sell by owner, you could do that where it's just you doing it, then you wouldn't have an agent involved. But usually we find, statistically speaking, you'll make less as a private seller versus if you actually use an agent.

So I would use an agent, and i understand the frustration around it and some agents are changing their commission structure because of everything that's happened in recent months so you could talk to them and see what they would say and what they were what you know what they're requiring for their services so it may depend agent by agent yeah because i i recognize there's some value to an agent handling some things but i recently had an inspection done so you know i think it would be a relatively very clean sale in a very short period of time. And, you know, first you need to pay somebody $70,000 for a week's work. What'd you buy the house for? $550,000. So you're making a million dollars off of this. Right. That's pretty wild.

So letting go of... I've had it for 25 years. Yeah, you've hung on to it, and that's appreciated. Why are you guys selling? We're just downsizing and retired and moving to another house. Okay, that's great. Here's what I'll say about the agent. I think if you're just looking to get it on the MLS

and that's all the agent's good for, then you need to find a better agent. A good agent's going to make up for what they cost you. And that might be, you know, if you went for sale by owner, you might get 1.43. We don't know. And if you work with a great agent, maybe they get you, you know, you start a bidding war and you got 1.57, right? Right. So that's part of it. I just went through a tax deal with this city,

so I've done a pretty extensive study of comps in the neighborhood and in the zip code. So the data is pretty readily available in terms of how long they'll sell and how close to asking price. So that's usually the value that an agent brings. But in this case, I'll just have to look at other options. I feel like you should go into real estate, Dave. You've done all the work, man. Yeah, I know it hurts, and I'm the same way because I'm super frugal,

but the one thing I'm willing to spend money on is a good agent for the largest transaction of my life, which I assume this is for you. And I understand that, but like I say, knowing the area so well and knowing what they're selling at. There's ways you can negotiate. Let's say your agent who's going to sell, well, that becomes your buying agent, and they end up taking 1.5% off.

Yeah, yeah. And so that stuff happens all the time. So I would get in touch, and if you want to kind of vet some, we've got Ramsey Trusted Real Estate Agents. Go to ramsaysolutions.com slash agent and see who's out there. Interview them. See what they're willing to do and see what they're willing to offer. I'll reach out for a couple of them. Thanks for your time. Absolutely. It's a great question. I love that you're thinking this way.

And it's what's helped Dave built this level of wealth. Well, and to have a mediator between you and the buyer and all of that, right? I mean, it's just they take a lot of the grunt work out for you. They really do help. Absolutely. Thanks for the question. Andre's up next in out for you. They really do help. Absolutely. Thanks for the question. Andre's up next in Houston, Texas. How can we help, Andre? Yes.

I'm 28 years old with $20,000 in savings, and I wanted to know how to invest it. All right. Give us a little bit more about your financial picture. What's your income? It's about like $ 000 a year okay and do you have any debt uh no sir okay and is this your all of your savings the 20k does this include like your emergency fund um uh no not really i have uh maybe like a couple more stashed away in another bank account, but it's just like maybe like $2,000. So you have about $22,000 liquid cash in these accounts.

Okay. Well, here's the deal. Once you're following this Ramsey plan and you're out of debt, the next step is to build a buffer between you and life called an emergency fund. And we recommend three to six months of expenses. So for you, that might be, I don't know, $10,000, $15,000? Yeah. Are you single, Andre? between you and life called an emergency fund. And we recommend three to six months of expenses. So for you, that might be, I don't know, 10, 15,000. Yeah, are you single, Andre? Yes.

Okay. Yeah, so you would probably be more on that three-month side versus the six-month. So yeah, I would kind of figure out for you what would be about three months of savings to keep you afloat if something happened to your income and making sure you have that. And then, yeah, the next step would be investing. And so I, you know, would look into things, you know, like a retirement type vehicle with investing. So a Roth IRA, if you have an earned income, you can apply for a Roth IRA.

And that's a great option. You can invest up to $7,000 in that a year. And that grows tax free. So there's a lot of benefits. So that little count, that's just great. So I would probably start there. Does your employer have a 401k by chance as a benefit? They have a savings plan. I think it is. Okay. Yep. So I would look into that too. Maybe on Monday, go and ask them about that. And so I would do the match for the 401k, but I would get that emergency fund and a high-yield savings account account and then look into opening up a Roth IRA. Thanks for the call, Andre. That puts this hour of the Ramsey Show in the books. Thank you to my co-host, Rachel Cruz, all the folks in the booth keeping the show afloat, and you, America.

Thanks for hanging out with us. We'll be back before you know it. To find a Ramsey-trusted real estate agent that can help you buy or sell your house the way we teach, visit ramseysolutions.com slash agent or click the link in the show notes. From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Camel, joined by Rachel Cruz, who is also my co-host on Smart Money Happy Hour, which you can check out on the Ramsey Network. We're taking your calls at 888-825-5225. Call us up. We'll try to help you take the right next step for your life and

your money. Justin kicks us off this hour in Santa Clarita, California. What's going on, Justin? Hi there, guys. How are you doing? We're doing well. How can we help? So my question is, it's kind of a detailed question. I'm curious what you guys give for advice when an amazing job is in a different location than a happy life, I guess, would be the primary question there. So you live in California. Is this job elsewhere? The job is in Santa Clarita, and the kind of where I envision a happy life is about three hours north of there. You envision a happy life, or what does that mean?

So the location that's about three hours away is where family is, where my significant other is. That's a difference maker. You buried the lead there. Okay, so what is this amazing job, and why can it not exist in that area? So I'm a veterinarian, and about a year and a half ago now, I actually moved to where I currently am working in order to take this job because where I was working before wasn't quite making even life ends meet,

even as a veterinarian. So you weren't getting paid enough. Correct. And even then I was in the work-life balance just wasn't there. I was averaging like 100-hour work weeks. Good night. Now I've found an incredible job, but I have found somebody that is, you know,

and we've been dating for about a year now, back where my family is from and where I would like to eventually move to but now I'm in the quandary of probably not finding a similar job lifestyle that I have found. Have you looked at vets in that area? I have and they can offer similar, but it's not, I guess it's kind of one of those things where it's hard to turn down what I am currently making and the fact that I only have to work four days a week for what I'm currently making in order to... Do you think they would negotiate if you said, hey, I'd love to apply, here's kind of what I'm currently making in order to... Do you think they would negotiate? If you said, hey, I'd love to apply,

here's kind of what I'm looking for? I think it would be reasonable, but I... Is the cost of living lower three hours north? It's actually considerably higher. Okay, so that would be a tough life move financially. Yeah. Do you have any debt? No, no debt.

Awesome. I mean, I'm moving. If I'm you, I'm like, there's, I mean, you know, I think part of having a happy life, I think a job is a big part of it, right? You spend on average 40 hours a week if you're working 40 hours a week. Maybe 100 if you're Justin. Yeah, yeah. We don't want to go back to that, Justin. But the other elements of your life, your family, relationships, I mean, all of that, you can't pay for. Those are things that are priceless. And so what is going to create a healthy overall life? And I think, I don't know, for me, it wouldn't be staying in a city three hours away from the people that I love unless she's willing to, will she move to you when you guys get married? She would. But I think in it's the same situation where her, her family and her job is where I would potentially be moving back to.

So, you know, as far as the logistics, it doesn't make a whole lot of sense. Sure, sure. Is there a world where you move out there, you're working, it's not the dream pay necessarily or dream hours, but you eventually could start your own practice? That would be something that I am actually starting to do a little bit. I'm starting to create my own mobile practice in the, basically back home. I would start exploring the options. I'd start calling up and doing some Zoom interviews or

next time you're over in the area, meet with them and stop by and get a vibe for what the options are. And then you can kind of figure it out. But I think right now we're making a lot of assumptions about what life is going to be like either way. And I like to have a little more facts. Yeah. Well, I guess if I had more facts and I don't know if like a salary you know, salary numbers, anything like that, anything that that would be useful to kind of add into this conversation goes. What are you making now in this amazing job where you make crazy money and work four days

a week? Right now, it's about $440,000 a year. That'll do it for four days a week yeah and what would you make probably around 200 is what i'm getting as far as my interviews go that i've had people i've talked to what does she make a year um right now um around 40 okay so you wouldn't because i'm just thinking long term like my motivation would be even before my my own family it's the it's it's the significant other right if you're about to start a life with someone and i and i'm and i'm assuming justin you guys are wanting to get married so that's where my that this is where my perspective is so if i'm wrong

you can shift me but but me and my and my spouse. So this is a different, I'm glad you asked this George. Cause I mean, you're basically moving, you're, you're taking 200 grand a year to move for a $40,000 job versus if you guys together said, Hey, after we're married, why don't we live here for two or three, four years? See if we enjoy this area, like it would be worth taking a shot for this amount of money. And if you just stacked up hundreds of thousands a year and you were able to move and start your own practice three years from now. That's right. Yeah, yeah, yeah. Maybe you have a goal that will eventually want to be out there, but because of the situation that you're in right now.

But again, that would be speeding up the relationship. And I don't want to do that on a basis of money either, right? So there's some factors that come into play and I also would not move for someone that I'm not married to either or engaged to at least um now I know your family's there too which is great right that could be a pool but maybe that's hey once we get married have kids all right we're going to move to be closer to the grandparents yeah or a certain dollar amount or a certain time frame or something but I think that it's significant enough uh to have that conversation would she would she move at all where you are she would and i guess that's maybe part of the maybe a part of the major question is with we are currently both renting and if we were to move one way or the other, like I guess when my question now is.

Yeah, I would, I mean, you can afford just to keep renting while you guys go through the engagement process. And then once you're married, buy a house together. Don't do that before you're married. It's a disaster legally and all of that if you guys ever break up. So I would use the season you're in

to just stack up so much cash that whatever the next adventure is, it's going to be a breeze, even if it means a pay cut. Thanks for the call, Justin. Thanks for helping you walk through that situation. 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, try a biblically-based alternative to health insurance, Christian Healthcare Ministries. CHM is a health cost-sharing

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R-E-F-Y.com slash Ramsey. Might not be available in all states. Today's question comes from Nathan in Kentucky. I am 14 years old and I was just wondering what is a good way to try and become to try and become at least a hundred dollar. Oh, gosh, a hundred million. Wait, a hundred million, a hundred millionaire by the time I didn't know that was a term. I wasn't sure either. I was just wondering because I discovered you guys on TikTok. Look at us, George. And I thought to myself that y'all had good information and I just wanted to know if it's possible.

Thank you for your time. Wow. I'm doing the math for our friend Nathan here, Rachel. It's not looking good. A hundred million. Do you want to know what it takes, Rachel? I actually would love to know. Okay, it takes, get this, you would have to invest from the age of 14 to the age of 30,

and we're going to assume a 10% rate of return. Sure. Okay? Yeah. From 14 to 30, you would have to invest every single month $220,000. So there's the true answer, Nathan. Nathan. But because now your hope has been stolen from us, let me give you some different advice.

Do a million here. Do one million. One million dollars. To get to a million. Okay, well that's- So that would be, what did you say, $2,000 a month at that point? $220,000 was for $100,000. Yeah.

So if we take it down to $20,000, that's $10,000,000. That's pretty good. I'm going to go $5, grand a month would get you to two. So two million. Just about 20. Or 2,000. Yeah, just about 2,200 bucks a month. Okay, all right. From 14 to 30.

Okay, all right. That's still a lot of money for a 14-year-old to be socking away. We've at least got a bullseye we can look for. Okay, so Nathan, I would encourage you to get beyond this like label of quote unquote millionaire. Because I think a lot of people believe if I just had this amount of money. Whether it's one million or a hundred million. Yeah, everything's going to just be fine and I'm going to be okay. And the truth is financially, numbers wise, there's a good chance, yeah, that's really going to help you.

But your money habits are going to be a big part of this and who you are as a person Nathan is going to have a big part of this because there are people I would say that have millions and millions and are still very discontent people and they're still running this race acquiring trying to find some level of joy and peace in life and they're not finding it through money because money does not bring that. It can bring stability. It can bring you the ability to do things with your life that is fun and have experiences like that is all true. But there is, I would say, a bigger character question there of why do you want to have this millionaire status and to go ahead and bust the bubble that just because you reach that

does not mean that life is suddenly going to be perfect for you that's i feel like that's the myth out there you know oh yeah well if i can just do this and by 30 you know there's like kind of that whole the fire movement and it's like i'm not going to do anything with my life if this doesn't happen by this age then my life is over and i've failed. Right, yes. It's insane. So I just, I rebuke all of the get rich quick, even if it's with decent intentions and you want to do it the less risky way. There's just no good reason that any human needs to make hundreds of millions or even I need to have a million by this age. And the truth is, Nathan, if you follow the Ramsey baby steps, you're going to get there

by 30. Your net worth will be a million dollars or more just by staying out of debt, stacking up cash, buying a home, getting the house paid off, investing 15% of your income. Over time, compound growth is going to take over and do the heavy lifting for you. So that's the not fun answer. But I do think we need a new book from Dave called Baby Steps 100 Millionaires. I looked it up. It's called Centi-Millionaires. Centi-Millionaires. That's right. Oh, so it is a thing. Centi-Millionaires. You have 100 million or more. Looked it up. It's called centimillionaires.

Centimillionaire. That's right. Oh, so it is a thing. Centimillionaires. You have 100 million or more. I am not cool. I wasn't. Your words, not mine.

That's all I'm saying. But thank you for the question. You know, Nathan, it was a good brain exercise, even if it wasn't a pretty wild question. It's great, though. Good for you, Nathan. But the fact that a 14-year-old thinking that way, he's going to be the world changer out there. Sure. Because it's going to take being an entrepreneur

to make that kind of money or even close. Yeah. You know? You're not going to make that as a W-2 employee likely. But I wish you the best. Maybe Nathan will be calling in

at 30 being like, hey, just so you guys know, I have 100 million. Wait, what was it called again? A centi-millionaire. A centi. Yeah, Alex Hermosi, you know,

the super beefcake dude, we've had him on the show, and he's a centi-millionaire, and he's an entrepreneur. That's how he did it. That's great. And he's about my age, so call me a failure. Many do. Many do. You're still working, George.

I'm here. I'm doing it. Still got bills to pay. I just do it because I love it, Rachel. I haven't had to work in years. I'm kidding. All right, let's go to the phones. Einar is in Oslo, Norway.

We're going international. We're going overseas. Here we go. What's going on, Einar? Hi, guys. It's such an honor to talk to both of you. I'm great. What time is it there?

Right now, it's 24 past 9 p.m. Wow. All right. Thanks for staying up with us. Appreciate it. Thanks for the call. Yes. What's your question?

Thank you. Okay. My question is how do my wife and I decide the amount and the amount of our personal line items in the budget. So I'm a firm believer that equal isn't always necessarily fair because, for instance, a haircut for her is much more expensive than mine. Unless you're George Campbell. It is the opposite in the Campbell household. But yes, it's a good point. Yes, and you two are the perfect couple to answer this with

a woman and man and a spender as favors so okay yeah yeah um yeah i think that the amounts totally could be different and i'll be honest winston and i well i think we may budget the same amount but i spend mine every month and winston probably rarely blows through his fun money. Yeah, he may. I don't even, yeah. So we probably technically could budget less for him and he would be, I mean, he wouldn't even spend it. But is yours equal in the budget?

Yeah, I was going to say it is equal in the budget. You're making me question, why do we do that? Why do we not just correct it to what's reality in the crew's household? I'm not sure. Because I don't think Winston would care if you lowered his lowered his amount no and if winston wanted to buy something like yeah that's how it goes once a year winston goes i want to buy this and he just does it yeah he spends all of his money how much fun money do i have yeah so i would i would agree

i do not think that it has to be equal but i would i and i say that cautiously hearing people that are listening or watching us now that are not in your position because you're saying that yours would be lower than hers, correct? Correct. Yes. So I think that is totally fine. But I don't want some crazy spouse out there listening and being like, oh, my gosh, mine gets to be higher and you should lower yours. Oh, like I heard on the show, they said the husband should be lower. Yeah husbands should be low yeah yeah yeah so i don't want to like create you know conflict between married couples out there but if the reality is is that you are naturally a saver and you're not

going to spend as much as she spends um then yeah i think it's reality should reflect the budget so i would for sure and not feel bad about that because you're right i mean as technically speaking women i think do spend more. George is the exception here. You got the right co-host. But here's the other thing. I don't have any hobbies. Except for your dogs and your hair.

Exactly. And coffee. And coffee. But I don't go crazy there. Do you spend more than Whitney, though, a month? I wouldn't say in fun money. Because, again, I don't have fun. I went to a movie last night, and I was like, wow, I'm really living.

That's it. So, Einar, can you give us a number here? I don't know. What's the currency in Norway? Is it a kroner? Krone? Yes, correct. But to keep it simple, we can just divide the total amount in Norwegian kroner by 10,

and we got the dollar amount. Okay. We bring in around 6,000 a month, and for the next month, we set up $454,200. And it worked out? Yeah, sure, it worked out. But she feels kind of guilty sometimes. See, that's something we can deal with outside of this,

but it has nothing to do with the budget. It's just she feels like it should be more equal and she feels bad spending but the budget is permission to spend it is and it should be a reflection of reality and the reality is her you know what she spends per month is going to be more than yours and and that's that's totally okay regardless of who brings in the money put it all together you say what is our reality of our life and that's how we're going to budget welcome back to the ramsey show i'm george camel joined by rachel cruz the number to call is 888-825-5225 diana's up next in san jose diana welcome to the Ramsey Show. Hi, yes, thank you. Absolutely. How can we help today? So I have a question. So I'm 28.

I have no debt, and I've been saving for a house for about five years, and I'm not seeing no results. And I just wanted to ask, what else could I be doing so I can afford a home in San Jose? Where are you seeing a lack of progress? Is it in the savings account, or is it what the amount of money will do for the housing market? It's the housing market. So I have a full-time job, and I make about $100K a year.

And I have about $100K saved in cash, but it seems too little to buy a house here in San Jose. And the reason I would like to stay here is because all my family is here. Yeah. I mean, it is so difficult, Diana, because I mean, you are in what the top three highest real estate markets. I mean, the Bay Area, it's like that Miami, Manhattan. I mean, it is the most expensive real estate market I mean it is so it's going to take you on average twice as long as you know someone living in Nebraska and buying a house so even though you make a hundred grand which is great it's not crazy money for out there even I mean your your cost of living is gonna is high and the market is. So I think it's one of those things, Diana, that it's

frustrating. And I think you're going to have to map out and just say, okay, I'm in this for the long game. And it may be that I'm 32 when I own a home and not 29 or 30. Bumping it out multiple years is probably what's going to have to happen and i'm assuming you're you're looking at um like a reasonable situation for yourself because are you single uh well i have a significant other but we're not married and i don't want to buy a house yeah right now maybe in the future for sure so i think a way to get into the market, if you can, is even a condo or a townhome. It may not be a single-family home, just to get yourself in a position to even own something in that area, right? It may not be a single-family home right now. It might need to be further out of the area.

Do you commute to work in San Jose proper? Yes, so my work is in San Jose, and my commute is about 15 minutes. 15 minutes. Okay, so let's say you were going to do a half-hour commute. Would housing be cheaper out there? Yes, maybe in Guerrero or Morgan Hill, I'm guessing, but it's getting more expensive and people are moving out of San Jose to afford a home. They've got the same idea as you. They're going, well, this is where I can afford and therefore supply and demand. So here's what I would do, Diana. I would sit down and go, what are my non-negotiables?

What must be true and what can I compromise on? And that might be, hey, I'm willing to get a fixer-upper, but I'm going to live in the part of area I want to live in. Or it's going to be brand new because that's what I want, but it's going to be further out. Or it's going to be brand new because that's what I want, but it's going to be further out. Or it's going to be at the townhome instead of the single family. So I think we need to start going, listen, the reality is it's an insane area to live in.

When you make $100,000, that's amazing money for most areas of the country, and yet it's not enough to buy a home in San Jose for a single woman. You know what I mean? And that might change one day as you get married and your spouse makes a hundred grand and now we're making 200 grand or more. Well, now we can upgrade over time. So it doesn't have to be a forever decision, but I also don't want you sitting on the sidelines for another five years. Okay. Is that helpful? Yes. Okay. I wish we were. Thanks for the call. We could have like a secret

life hack good news i mean i'm telling you california real estate y'all you get your southern california you get your bay area it's just i mean it is so expensive i mean and other areas are expensive too right i mean all of housing is up yes we know that uh but there are just the there's these pockets around the country that it's like i mean it is what it is i mean you have a beautiful home but if you decided to move to Beverly Hills or wherever and you put that same money, you'd go, oh, we need to get like a-

A fourth of it probably. We can't fit the kids. You know what I mean? So there's just a reality to it. Yeah, totally. That's not fun to deal with. And so if you do decide, I'm gonna work in this area, we also have to figure out how do we get our income up

in order to go with the ultra high cost of living. We kind of need an ultra high income. Right. In order to make this work long term. That's right. And it's the math, which is not always fun. Math doesn't have emotion. We do.

Or I do. I wish math had more empathy. George has some emotion. I need more math. No, but it's hard. Rachel's the empathetic friend. No, it sucks. I mean, like, man, it's hard.

All right. Well, let's move on and hopefully have some good news. Barbara is in Atlanta. What's going on, Barbara? Hi. I don't know if I have good news or not, but I'm really happy to be here. Dang it. Barbara, we were hoping, but hey, it's okay.

You are the good news. We're happy to talk to Barbara. We're glad you called. Aw, thank you. So we're getting close to retirement. I'm glad you called. Thank you. So we have, we're getting close to retirement. I'm 63. My husband's 66. We have $700,000 in an investment account, but we also have $40,000 in consumer debt. So I'm really tempted to take some of that money and pay it off. And, but he's starting to draw social security next month and it'll be about $3,500 a month.

So I'm wondering if we should use that to pay it off or if we should invest that and take out a lump sum and pay off our debt. We also have a little mortgage. Okay, what's the $700 invested in? It's with one of your SmartPro investors. He's got it in a mutual fund account. Is it within like a Roth IRA or a 401k or is it just a standard just growth mutual fund? No, it's a 401k and we have a smaller Roth.

Okay. But that is essentially, that's your retirement nest egg is the 700k. That's exactly right. Okay. So that plus whatever we get in Social Security, that's the retirement plan. So we need to make sure that we can live off of all of that. Yes. Okay. And we figured out we can. Okay. Have you talked to your smart investor pro about the best approach sort of mathematically, strategically for where to pull this money from, whether it's from future income

versus your investment account? We talked about the lump sum and he says he thinks that's a pretty good idea, but he hasn't really gone any further than that. And I'm starting to think that maybe we have some options. You definitely have options. I mean, I love the idea of not touching the nest egg. That would be my number one goal for you guys is to leave the nest egg to grow because we know on average, it's going to double about every seven years. So seven years from now, if you don't touch it, you got $1.4 million. Well, that's a very different retirement. And so I don't want you to decimate the nest egg before we even get to retirement.

And so if you can use the $3,500 and you continue working, you guys are on a budget. Yeah, are you guys still working? Yes. Okay. My husband will work another year and I'll work probably two more years. Okay. Well, how much are you guys making? Well, we bring home $8,000 a month.

That's our take-home. Okay. How little of that could you live off of? What do you need to get by? Well, we break even each month because we've got that consumer debt. You're spending $8,000 a month right now. Yes. And we need an emergency fund. That's our whole problem because we're spending money that we're putting money on credit cards for like tires and our dogs, you know, need surgery and things like that. So we need to get an emergency fund going to, I'm really dedicated to working

these baby steps, but I feel like it's kind of late in life and I don't really know if everything applies the same way. Totally. Yeah. And it does. And what I would be, you know, thinking about Barbara is, yeah, could you pull money? You have 700 grand. So could you pull it and pay off this 40 grand and be fine? Yes, you could. Totally could. But the truth is, is the way you guys are living, your habits aren't changing by doing that. And by living paycheck to paycheck without savings is what I worry about you guys going into retirement, because with those habits, that magnifies the more money you have. And so I would rather your habits change here in the next year or two as you guys enter retirement more than anything. So I think it would be just a good practice.

And like you said, you know, you're in your 60s and you're like, is it too late? I'm like, no, it's not too late. But I do think it's harder to change a habit that has been in place for 40 years or however long you've been working and living. So I think it can be a harder change for you guys, but I think it's a needed one.

And I think taking that eight grand and saying what can we do to not just live off of that paycheck to paycheck but what can we do to cut expenses get margin pay off this 40 get an emergency fund in place do it all with your income here in the next two years um that would be a great challenge for you all because then your habits have changed you've created a new way of functioning with money. And then you get to go into retirement with freaking 700 grand, which is amazing. Yeah, that would be my goal. We're not retiring till we're out of debt with an emergency fund. And that means we're going to work until we have to. And that should put some fuel to this fire. Thank you for the call, Barbara. This is The Ramsey Show.

There's a time in your life and at the baby steps for renting, but you don't want to do it forever because when you rent, you're still paying for a mortgage, just somebody else's. Plus, rent means instability in your budget because it always goes up, never down. So when you're ready to buy, make sure you work with a mortgage partner you can rely on, Churchill Mortgage. Churchill is Ramsey-trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget. Plus, when your home is paid off, that was your largest expense. Now Now it's extra money in your pocket and an asset towards turning you into a baby steps millionaire. So get started on the American

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If you want to know the best way to manage your money, there's no get-rich-quick life life hacks here it is by doing a budget it's by looking at the reality of what you make and what you're spending and then trying to stick to it and that's what we've done with our every dollar app it's completely free we've got over 10 million people using it you can get it in the app store or google play and it's the same way rachel and i manage our money it's the same way Rachel and I manage our money. It's the same way I managed money when I was broke. And now that I got some, I still use the budget to make sure that I'm hitting my goals and spending what I should be. So go check it out in the App Store or Google Play. And if you're listening on YouTube or podcast, we've got a link in the

description for you. Wes is in Philadelphia. What's going on, Wes? How can we help? Hi, George. Hi, Rachel. So I have a question. I am on Baby Step 2, and my wife and I are on Baby Step 2. We purchased some property on a tax sale back in 2020, And then our plan was to, because it was only a couple miles from our house, to eventually build a house cash and rent that out. But plans have changed. We moved up north to Pennsylvania for my job. And I am now looking at selling that property. And while we're on baby step two, we are looking at selling that property to be able to either A, pay down on our debt, or B, help my wife start a business to be able to increase her income and then pay down the debt faster. How much are you going to get from the sell of the property? So retail appraised value is about $21,000. It's not much land. But if I were to sell it to an investor, it would sell

much quicker and I would probably get between 10 and 15. And how much debt do you have? So currently consumer debt, we have 43,000, um, various, uh, some credit card, some medical. Um, I have a little bit left on my truck along with student loans. And how much do you guys already... How much do you guys make a year? We're already down $49,000. Nice. Well done. How much do you guys make? I make $140,000 with my salary,

but I have the opportunity with bonuses and things to make up to about $180,000. Okay. How much does your wife make? She stays at home with our two boys. Okay. What kind of business is it that she's wanting to start? Well, so something we've talked about is for a family business that she would kind of manage is a monthly family type of activity type of thing where we would put together a box of a kit. Oh, yeah. So one of the ideas would be maybe for like a spring or a summertime activity,

there'd be a small easel in there with a poster board and some water balloons and some water-based paint. And you fill up the water balloons with the paint, throw it out there. You have an afternoon of fun and you have some artwork to put in the living room. How many of these kits has she sold so far? None yet. We're just in the thought process. We have not even listed the property yet. So I'm just trying to look at the, what options type of thing you would go down. So I would put this towards the debt and I would do that because the business model, you know, the business plan, it is not, you know, it hasn't even, you know, been happening.

Like it would be different if you're like, oh my gosh, she has all this business, she's doing this thing, and golly, we're making this. And if we just put a little bit in there, she can make 4X. Like if there was actually a proven sustainable business, I may could talk about something different. But as of right now, yeah, because it's just a complete startup

whiteboard i would definitely get you guys in a position where you're debt free um so that 10 grand i would definitely take to that 43 make it 33 and uh start working your way down and then i would get an emergency fund in place before you start that business. And then once you guys are debt-free with an emergency fund, then she can start that and I would start it very slowly, move at the speed of cash and slowly work her way up. Because I think sometimes,

we talk to people on the show and they have a dream and they want to go get a business loan for 60 grand to start something that's not proven out and they get themselves in a mess. So just for future advice, you didn't ask for that, but I'll give that to you for free. No, I appreciate that, Rachel. And that's the other thing is with us looking at selling this

little piece of land, we would have that cash. And we were just trying to figure out which would be the better option. Yeah, I would definitely put it towards the debts. The secret sauce here is your amazing income. It's not the land. It's not the business opportunity. It's I make 140 to 180 grand. Let's take control of that thing. Because if you can start throwing six grand a month of the debt, this thing's gone soon. soon yes and so i think we've been hanging on to it too long yeah well we've been working on it for a little bit less than a year now and they paid off 40 49 and how many in a year so you'll do the next half in what nine ten months uh if we are unable to sell the property for whatever reason, you know, the storm, Helene, that went through, I'm not sure if we'll be able to sell it.

Yeah. But if we're able to sell it, then we'll have it paid off before springtime. But if not, then it'll probably be summer to maybe early fall next year. That's great. Cool. Good for you guys, Wes. Well done. Yeah.

That's a lot of hard work. And I love the business idea. You know, they have some of those subscription boxes and I've gotten them as a gift. One of our kids got one as a birthday gift. Yeah. So every month they got this like activity, you know, in the mail is exactly what you're talking about, Wes.

And it's great. And it's great. So I think, yeah, there's some fun outlets and creativity when you see a need out there to be able to, yeah, start a business. I love it. One day she'll call back and say, I have a need out there to be able to, yeah, start a business. I love it. One day she'll call back and say, I have $100,000 for my side business. What do I do with it? That's right.

Oh my gosh, blew up. Or $500,000 and my husband quit his job. Yes, that's my favorite. All right. Ben is in Minnesota. What's going on, Ben? Hi, George. Hi, Rachel. I guess I just have a question about my company funded annuity plan okay and whether i should be investing alongside that uh maybe right now i'm technically in baby step three i'm just looking ahead okay but uh what are the options for retirement through your company? Well, it's a company-funded annuity plan. So whatever I make a month, they'll put in 25% of what I make. Regardless of if you put in anything? So you put in $0, they're still putting in 25% of your income? Yes.

That's awesome. It's great. And then, yeah, it's a national electric annuity plan, so it's like a lot of linemen have it. Yeah, and that's the only retirement option. There's no like 401K, so you're on your own. We have a 401K too, and right now I've always just put in 5%, which is kind of the minimum. Okay.

So I've just been doing that and just been kind of living that way. But I'm just wondering if I should be putting money into a Roth too? Yeah, so once you have your baby step three completed, so you have your fully funded emergency fund done, then yeah, I would look to say, because the 401k, what's the match there? Is it 5%? And that's what you're matching to? No, they don't do a match. They don't have a match. then yeah i would look to say you know because the 401k what's the match there is it five percent

and that's what you're matching to they no they don't do a match they don't have a big thing is that the big thing is the annuity plan okay okay i got you there's no option i i would then i would keep my 15 in retirement i would not do let them do the annuity and all of that i would not put my own money in it i would yes go to the they do it okay great that's awesome yeah so i would go to the roth first max it out uh and then go to the 401k after that okay uh the reason i'm really asking is this is we're gonna buy my wife's grandparents house one of these days. They're in their 90s. So I kind of was thinking of flip-flopping maybe step four, was it four and five? Well, there's 3B where you start saving up the down payment and you get to choose how much you

invest during that process. But thanks for the call, man. Hey, if you're listening on YouTube or podcast, the show's about to end. So head on over to the Ramsey Network app to finish the show in a distraction-free experience. You can go download that in the app store or click the link in the show notes. We'll see you over there. From Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by host of The Rachel Cruze Show and co-host of Smart Money Happy Hour, Rachel Cruze herself, is in the building. And we are taking your calls at 888-825-5225.

We'll try to steer you in the right direction when it comes to your life and your money. Chad's going to kick us off this hour in Wilmington, North Carolina. What's going on, Chad? What's going on, guys? Thanks for having me. Sure. How can we help? So, me and my wife, we've been on survival mode for so long. We have two kids. We're fairly young. I'm 27. She's 26. We went over our budget on my lunch break, and since then, this was like two hours ago, we're still overwhelmed. We have headaches. We feel really sick after looking at this budget

and seeing how much debt we were in. And at the end of the month, it's just like, we were trying to figure out why we were struggling so much. And obviously, I mean, a lot of events happened this year alone that led to us you know slowly falling behind over time and uh our budget as of right now we have 211 dollars left at the end of the month and that's not even including food or gas for the vehicle martin putting that into the budget do you have a food line item a gas line item uh yeah so i just i was just going down the list of everything you pay and uh obviously that stuff is the more important stuff but you know you put it like we're just enforced so so much in the red it was just like you know yeah what's happened this year chad

that's caused y'all to kind of yeah feel like you're fl. So we both had a job loss the same exact week. Oh, wow. She was a temp. She was a lab tech as a temp, and they promised her after her probationary period she'd get the job. She ended up not getting the job because the person she was, the position she was taking was to replace somebody that went to surgery. Well, they never got the surgery, so they went back to work.

And then I lost my job because of a layoff, overnight position at a hospital that didn't need the position for me anymore. There were too many of us, and I was kind of new, and they had nothing else for me to go as far as. Yeah. Are you guys back into work now? Yes, I've been working for the past three months now. Okay, good. How much do you guys make? About two months to find the job.

How much money are you guys bringing in per month? How much is hitting your account after taxes? So after taxes, we're bringing in about $3,800. Okay. Between the two of you? Yes, ma'am. She's a waiter, and the season is very bad right now for some reason uh i've made an estimate and we've understood that she's making almost 1100 a month yeah

yeah i mean it's my job is full-time and stuff for sure yeah uh well i mean i think yeah the income already i can see is a problem so So even for her to get anything else, right, that maybe retail, something more stable, something that's consistent while she's looking for more of a 40 hour a week job somewhere else and applying using some of the skills that she has. And it may be entry level. But I mean, even if she can, you make 32 000 somewhere else that's gonna change change she has the credentials to do lab tech work yeah yes she does she has her certificate okay yeah so i would be looking into that for sure because how much could she make if she was if she had a job in that field do you know uh it ranges anywhere from uh i'd say, 17 to 20. But ever since that position closed, I mean, I've helped her do applications. We can't find anything.

We've applied to every hospital, every clinic, every medical office, private care. And it's just like the market here is almost insane. Okay. Yeah. And does she know anybody? Because sometimes, you know, the connections is what really helps you get jobs if you know people with inside those systems you said you worked at a hospital she was doing the work does she not have you know friends there co-workers that could put in a good word uh i don't think so we only we've been we moved here uh we haven't been here for about a year so we

really don't know much people uh we don't know really I have like one friend here and as far as family they're all over four hours away so okay and when you said Chad when you said 14 to or 17 to 20 was that dollars an hour that you were quoting me or okay so yeah I mean she can make that at Target you know what I mean like there's there's retail yeah, that I would go ahead and just jump on. And I would be working, you know, long hours to do it while applying for maybe not that specific type of job, but something else. Or developing more skills later on that she could grow into a better career. Yeah. So for your budget, since you guys just did it, because what we talk about with the budget are the four walls. So before anything else gets paid, any debt or anything, it's food, shelter, so your rent or mortgage, utilities, making sure to keep the lights and water on, and transportation,

which is gas in your car. So your budget's a little bit upside down. So I want you guys to reprioritize it. So what would fall if you had food, mortgage or rent, gas in the car, all of that first? What would fall under that that's causing you guys to go over? Well, of course, the car itself, about $411 a month. All of our credit cards, minimums would be like $347. Okay.

We have a $128 a month personal loan. Even the phone bill is pretty high, $233. Is that because you're paying for the phones inside of the plan? Yes. Yeah. That is a problem. Yeah. And how much debt do you guys have so total uh 23 905 uh 2750 of that is a personal loan 16 594 is the car and the credit cards are 4561 okay well you definitely can't afford this car with how much you guys are making uh a year um so how much could you sell it for? Have you, Kelly Blue, booked it?

Yes, we're very underwater. The car's worth probably 10. It's that now. Private sale? A couple months ago. Yeah, private sale. And we still owe, like I said, $16,500 almost. Okay. We even tried trading down, and we can't even trade down.

Yeah. And what's your, do you have a rent uh yes our rent is another part of the problem that's another reason for the call right now we're renting our rent is 1980 uh when i first moved here i had way better income and since everything fell apart it's like you know we should just so half your income is going to rent another third is going to debt and then you're trying to live off the rest. Yes, with two kids. Oh, wow. Yeah, that's so hard.

As a man, it's just like, I don't even sleep at night because I'm going to pick them up and stuff. I'm so sorry, Chad. I can hear that. I've picked up as much overtime as possible. Yeah. I've tried everything. In my car, I had a truck myself. It got repoed because I had to pick our poisons.

So I let them take the truck. And I had two jobs at the time to keep up with the truck, keep up with everything. So when I lost the truck, I lost my second job. So I've been trying to do as much overtime as possible. So do you have a car right now or no? We have that one vehicle. You have the one car. Okay.

Okay. All right. So if I were you guys the number one thing would be i would be looking for a different apartment or a place to rent and i would try to get it down to i mean about 1200 a month that'll free up 700 a month for you guys and again it may be in the middle of nowhere i mean like whatever you have to do to to lower that monthly payment i think it's going to help a lot. And then she has to get her income up.

So those two things together, you guys could easily bring in an extra $1,200 a year to start really attacking this debt. But Chad, you got two kids at home. It has, before the freaking credit cards get paid, you need food. Okay. So food, shelter, utilities, transportation has to happen. Stay on the line and Taylor's going to pick up and we're going to gift you guys Financial Peace University and a coach as well. We'll have an hour coaching lesson. Welcome back to the Ramsey Show. I'm George Campbell joined by Rachel Cruz.

Guys, time is running out to book your cabin on the Live Like No One Else cruise. It is setting sail March 22nd through the 29th, 2025. This is not your average cruise. It's a premium Caribbean cruise. We're going to Turks and Caicos, Puerto Rico, St. Thomas, the Bahamas, and a top-of-the-line cruise ship that Dave has personally sailed.

If it's good enough for Dave, it's plenty good enough for me. Dave's bougie. He wouldn't think it all the time. He likes to play up like, I'm a hillbilly redneck, but he gets out there on vacation. It's plenty good enough for me. Dave's bougie. He wouldn't think it all the time. He likes to play up like, I'm a hillbilly redneck. But he gets out there on vacation. Vacation Dave is bougie Dave.

We'll just say that much. It's not Beverly Hillbilly. It's Beverly Hills. Not wardrobe. Not really bougie in the wardrobe department. That's fair. He's still simple in a lot of ways. He's not trying to impress anyone. No.

But I'm impressed. So join us on the cruise. Dave's going to be there. Rachel will be there. All the Ramsey personalities, lots of special celebrity guests. And it's all inclusive, of course, food, room service, restaurants are top of the line, world-class content. We're working on brand new talks to entertain you all while we're out there. So join us, go to ramsaysolutions.com slash cruise for more info or click the link in the description. If you're listening on YouTube or podcast. Jake is up next in Kansas City.

How can we help, Jake? Oh, thank you so much for taking my call. I appreciate it. Absolutely. So we just became debt-free in July. Woo! Nice. Thank you. Paid off about $100,000.

It was all normal. Medical bills, credit cards, student loans, just a lot thousand dollars. Uh, it was all normal medical bills, credit cards, student loans, just a lot of normal. And, uh, we were so excited and we crossed the finish line. Yay. We're debt free. And then I did some napkin math and I'm not, I'm not excited anymore. Um, so I either need help with my math or I need help with my mindset and you guys, uh, let me know which one. So I'm 45. The household income is 110 gross. Baby steps one and two are done. So baby step three is the three to six months of expenses. So I'm the sole breadwinner, so we're going to go with six months, which my math is 20 to 25,000.

Then we go to baby step 3B, which is 20% down for a house, plus closing costs, which is about 2% to 5%. So a decent house in our area, meaning no bars on the windows or truck outlines on the sidewalk. It'll give you popcorn ceilings and tile countertops, but you're starting at about $340,000. So if I do the down payment on that, that's going to be about $68,000 with closing costs of $17,000, which puts me at $85,000. According to the mortgage calculator on your website, that's going to give me a payment of around $2,700 and some change, which given my income is going to be about $960 over the 25% limit that you suggest for the monthly payment. So if we go into baby step four, now it's invest 15%. So I do have a 401k Roth, which per your website,

you suggest all 15% and not bouncing back and forth, which would be for my income, 1,307 and some change, which is basically what my entire debt snowball was. So now I've got my Roth IRA. I've got my investments. I've got my savings from my house. I've got my emergency fund. So now baby step five is the kid's college fund.

So I have three kids, so 16, 13, and eight. Their entire college fund right now is whatever's between my couch cushions. If I send all three of them to the cheapest state school in the state of Kansas, right now that's a little over $15,000 a year. So all three kids, four years, no inflation, no increases in tuition,

is going to be just shy of $190,000. So to sum all those numbers up, I got $25,000 for this emergency fund. I got $85,000 for down payment, closing costs, and then $190,000 for college, which is a little north of $300,000. And I need to do that with the increased mortgage payment plus the 15% that I'm investing, which would lower my disposable income by $2,800 a month. Jake, I hear you. I understand why you're overwhelmed. Hold on, hold on, hold on.

I'm not, yeah. You're okay. You're okay. You're okay. We've been doing this a long time, 30 years. Okay, Jake, we got you. We got you. Okay.

So let's just, where are you guys living right now? We're renting. You're renting. Okay. Okay. Okay. So number one, kids college, just let's take that on the back burner because they can go to a community college for two years. They can work.

They can get scholarships. They can do a gap year. You're not a bad parent if you can't pay for college and you're 45, Jake, with a 16 year old, you're probably not going to be paying for college. Okay. So let's just have that conversation with the 16 year old. We're going to have to have a different plan, but also 16 year old. I probably not going to be paying for college Okay so let's just have that Conversation with the 16 year old we're going to have To have a different plan but also 16 year old I don't want you in debt

Because this is what happened to us and Here's where we were and now we're Having to play catch up and so We want your mindset to be different so what is That going to look like so again that That I would just set that aside Jake Because I don't think that's going to happen for the 16 year old Okay are you good?

Okay. I'm good. All right. So, yes, emergency fund for sure. I think, you know, if you want to lower it to more of a four-month, you can do that. Like, again, it's a range. And I think for you guys, because you don't own a home, I would speed up the process by lowering that emergency fund to more three to four months. I think you guys will be okay. You sound like a real smart guy. If something happened, I think you can find some income, you know, if something happened to

your income. So I would lean on that to give you half of what you were thinking, to give you a little bit more of a fast forward take. Yes, our housing situation, you may, I mean, the housing conversation is one that everybody in America is having for first-time homebuyers. So we say for first-time homebuyers, a 5% down payment is where I would start. And I would suggest that for you guys, because of your age and stage of life, I would get into a home ASAP. And that may be a townhome, Jake. Like you guys, you know, there may be a situation that you're like yeah it's not it may not look exactly how we thought it was going to look or where we thought it was going to be um it may be a different part of Kansas City completely from where you guys are

I don't know but financially having some options because my my the mindset like some of these numbers are real right so what you're saying I think that's a little bit dramatized to a degree. I think we can kind of lower it and work around the system some to get you some progress. But I do think if there is this mindset of, gosh, this isn't going to happen, then, you know, the old saying, if you believe it, that's what's going to happen. So I do want to interject some hope in this. Like, yeah, you guys, you know, you have, you know, some years ahead that it's going to look a little bit different. But I want to say that, you know, you're in a whole lot better position from a net worth standpoint than where you were with a hundred grand in debt too. So celebrate that. And if you guys can do that, you can do a lot of this stuff.

Carry out those same habits. It'll work. So baby step four, let's talk about that. and if you guys can do that you can do a lot of this stuff carry out those same habits it'll work so baby step four let's talk about that even if you waited till 47 because you want to save up for the home or whatever from 47 to 67 you invest that income which by the way is going to go up over time jake you'll have a million bucks and so be encouraged there and again 1,009,960 from what george is is. Since we're both math nerds, I thought, let's just crunch the numbers for Jake and let him know there'll be a million bucks sitting in that 401k at 67. And that's without doing anything else,

not maxing it out later on. And you're going to have a paid-for home. If you follow the steps, you get a 15-year mortgage. Worst case, it's gone in 15 years. And you might not be able to throw extra at it while you're trying to cash flow college. And you have an eight-year-old. And so you don't need $200,000 tomorrow,

and you're also not taking into account that you're investing this money in college savings accounts, which will have compound growth. So you might put in $30,000 that ends up growing to $100,000. And so I don't want you to feel the weight of this all has to happen now and at hundreds of thousands of dollars. This is all happening over the course of the next decade or two. And so when you move from baby step two to three into four, five, six, you move from intensity to intentionality. So it's a long-term journey. And so you have to spread out the sort of weight of that over the

next 20 years. Yeah. And four, five, and six, Jake, too, it's more of a rhythm mindset with your money, right right it's not these like check marks that you're going to complete it more is about the habit forming of putting money away in retirement putting some for kids college you know doing doing a little bit at a time but again over the course of the long haul so it's more about the rhythms of your life with money than like getting to these like quote-un points. And I just did this, you know, calculation in a meeting I had earlier today for content stuff that even if you just made one extra mortgage payment a year, just one. It's a huge dent. Yeah. You pay off your home in five years

sooner and it saved, I think it was like $74,000 in interest. That's just one extra payment. Yeah. Like a year. that's it. So think about if you did that four times a year, right? I mean, so this stuff, the math and the compounding really does help. So yeah, I would get a nice glass of wine tonight, Jake. It's Friday night. Take a breath.

And you guys are doing good. You're doing good. But this is for the long haul, like George said. And that 25% rule, that's after taxes, but before other deductions like healthcare or investing. So that might help your numbers too. And if it's 26% instead of 25, you're going to be okay. It's just a brim. Thanks so much for the call, Jake. This is The Ramsey Show. Welcome back to The Ramsey Show. Rachel Cruz, my co-host. I'm George Camel. Open phones at 888-825-5225. We're heading to Louisiana up next. Katie joins us there. Katie, welcome to the show.

Hey, George and Rachel. Thank you so much for taking my call. I'm very emotional and very, very nervous. My heart rate is sitting around 120 right now. Oh, my. I'm starstruck with Rachel, too. So just know that I'm also freaking out. Oh, Katie, you're good. I think if it was Dave, I would be crying, but you guys, I'm just nervous. Thank you. That means a lot. We're much kinder. Okay. So real quick, I'll get into my question in just a second. 2019, I started the baby steps October of 2019. November of 2019, I was diagnosed with cancer. Surprise. Oh my gosh, Katie. So yeah, so I started out with about $45,000 and I will be finishing my debt-free journey. I'm sorry, I'm probably going to cry. Hopefully by December 31st, but if not,

by January 31st. Okay, how are you doing health-wise? How are you health-wise? I'm pretty good. I've had some things pop up here and there, but I actually got healthy and made a decision to start fostering and will be adopting hopefully very soon my first child. Oh, wow. Which is another reason this is taking so long. So are you in remission? No, actually I had a total thyroidectomy in 2019 in December, and I laid in my recovery bed

and paid off my first set of medical bills. Gosh, Katie, you're amazing. I'm so glad that you're good. I'm so glad. Okay. And then now you're looking to foster to adopt, which is so great. Yeah. So I actually, my goal is to be debt-free prior to finalizing our adoption uh we have termination this month and adoption will follow soon after so um yeah so my question we're very short on time so my question is um i have about um when i wrote in originally it was about 6400 now i have about right out $6,000 remaining on my baby step two. And my largest two debts are fairly small student loans, $3,000, and then one for $400. And then I have a $1,800 medical bill that went to collections from my cancer treatment.

And every time they would call when they sent it to collections, I got a little righteous indignation and gave them this bill about not caring if it affected my credit and that I would pay it when I got to the bottom of my dead snowball. I offered them settlement several times, and they have never accepted the settlement. They stopped calling me about six months ago. I haven't gotten a call. I actually looked at my credit report the other day to make sure there was no other loose ends I needed to tie up after that in those two student loans. And I realized it was no longer on my credit report. So I reached out to the hospital that originally had the bill. They have no record of where they sent it to for collections. And I have nothing in writing about

the collections bill. They just called me several times and told me where it was from and how much it was for, so I knew it was legitimate. But other than that, I have nothing. It's not on my credit report. So do I just consider this a miracle, or is there some other avenue I need to go down to find out if I still owe this? Well, that's interesting. I mean, with the incompetence of some of these companies, you might consider it a miracle. We might call it incompetence where it just sort of fell off. I'm good with miracles. It got sold to another collections and they fell between the filing cabinets and they're going to find it.

It is odd because it hasn't been seven years because usually things fall off your credit report after seven years. But you're saying this was what five years ago yeah i would have well the treatment was um toward the end of 2020 because covid put my cancer treatment on hold you know because that's not important apparently during covid um it's about four years ago it was yeah it's about four years ago but i did read something recently that there were some new changes in how long it takes for medical debt to fall off of your credit report, but that you still may be liable for it. And so that's where I'm kind of like, I don't know. Yeah, I would say you still could be liable for it. So it doesn't erase the legal obligation, but it is nice that it's not on the credit report and that no one's calling you about

it. But they could come back and show up one day and serve you papers and say, we're suing you for the 1800. Who knows? So I do want out of your life, but I would not say it's a priority at this point. So how does one go about finding out where it is? Is there a way that you can find that out, or do I just let it ride and do my debt-free scream, and then if they show up two years from now, pay it? I'd be ready to. Have you pulled all three bureau credit reports? I pulled mine through my bank i have capital one and they have their credit report thing i pulled it from there and then i pulled i think it's experian yeah um there was nothing on that and so i don't know if there's

another avenue i need to go yeah go to annualcreditreport.com you can pull it for for free from all three equifax experian and transunion If you don't see it on any of those three, I would say you're pretty much in the clear as far as it showing up on the report. And that'll at least give you some details. But I would try and say, hey, I have record of I tried to contact, I tried to get to the bottom of this of what is owed and can it be paid in full and that I tried to settle.

At least if you have that, it's not like you ignored it. Right. Okay. Okay. Well, that sounds great. Well, I will be seeing you guys at some point next year with my new little boy. Come to Nashville, do your debt-free scream. Congrats, Katie. We are coming. We'll be there. And we're excited for you from your health journey to the adoption and all of it. You're incredible. So sweet. So glad you called in. We're cheering you on. All right, Laura is in Michigan up next. What's happening, Laura? Hello.

Sorry, I'm nervous. I just got a really cool 1099 gig, and I'm wondering how I should handle the money separately from my normal stuff. Should I set up a business entity and pay myself out of it or just cash flow? Just basically looking for 1099 advice right now. I have a savings account that I don't use except to keep my checking and other savings account open. So right now all the money is just going in there and... What's the purpose of the side gig?

I love it. They found me. I wasn't looking for a side gig. I miss doing math and I'm teaching math. Cool. That's great. That's awesome. Okay.

So you don't need to set up... If this is not like a business, it's okay to just's awesome. Okay. So you don't need to set up, you know, if this is not like a business, it's okay to just get a 1099. And what I do is I work with my tax pro and they file it in the right spot and the schedule C and whatnot. And just make sure you're setting aside money to pay the taxes on that. And a lot of times it's, you want to do quarterly estimated payments to the IRS. So what I would do every single check you get from the side gig, set aside 25% in a savings account, and then once a quarter, log onto the site and submit what you think you'll owe. Yeah, I thought I'd probably start that next year. Since this year, I just started this.

Yeah. So kind of in the last quarter already when the job started. So I don't need to... You don't need like a business bank account. Just make it part of your monthly income in the budget. So make sure to account for it in the budget, obviously minus that 25% you set aside. So let's say 75% ends up in the budget, and that's income that you can use toward your next financial goal. But yeah, but keeping that extra 25 in a separate account, Laura, would be smart just for tax purposes to make it easy to know that you have the money there. I think the problem with 1099 is people get around to the yearly tax bill and they just do it once a year and they're like, oh my gosh.

They're so shocked when they owe thousands of dollars. I forgot that I have to pay taxes on this, right? So planning ahead and keeping that part separate, I think is really wise. But I would just, yeah, keep the other 75%, like George said, just in your checking account and use it for regular income. So are you paying off debt or saving for anything? Do you have any goals? I don't have any debt.

And I have two properties, three and clear. I just got married two years ago. So I moved out of a condo I was sharing with my college-age daughter. And she's still living there. Oh, good. Yeah. So my goal right now, I think, is to get a car because I sold my car for junk about a year ago, and so now we're a one-car family.

And I live 2 1⁄2 miles from work, so it's not a huge deal, but I might want to get another car because of the snow flies. For sure. That would be my goal. Sounds like a great goal. That's awesome, Laura. Well, congrats on all of that. That's so fun. Yeah, and I have visited you guys once,

just to let you know. I stopped by three years ago when I got this job. Oh, wonderful. So good. Something that drives me nuts, if it's okay, is when I hear people talk about their 57-year-old mother that doesn't work.

I got this job at age 58. Hey! Look at her. Don't tell them it can't be done. You're not old enough to do anything. You got Laura in Lansing, Michigan. If you're good at math, we got a side gig for you. Way to go, Laura.

What a fun season you're in. Thanks for the call. Wishing you the best. This is The Ramsey Show. Welcome back to The Ramsey Show. Our scripture of the day, Joshua 1.8. Keep this book of the law always on your lips. Meditate on it day and night so that you may be careful to do everything written in it. Then you'll be prosperous and successful. Harrison Ford said, I always see life this way. You just have to find a way to stick it out and to prevail.

All right. Easier said than done, Harrison, but I appreciate the wisdom. Just like Harrison. You know, you're just like a Harrison Ford, George. I do like the name Harrison. It's a strong name. It was on our baby list name for Charles. Yeah. Wow. I love here. I like that name a lot. Strong. Good name. Neither here nor there. You's a strong name. It was on our baby list name for Charles, yeah. Wow. I love here. I like that name a lot. Strong. Good name. Neither here nor there. You know another good name? What's that? Micah. Micah, who is up next in Denver. That's a solid name. Never met a Micah

I didn't like. What's going on, Micah? Maybe I won't like you. Well, thank you very much. It's a pleasure to speak with you both. How can we help you today? Yeah, several years ago, I got a job with a financial advisor, and I introduced that financial advisor to my father-in-law. I have learned that since then, this financial advisor, who I don't work for anymore, talked my father-in-law into a whole life policy as a means of as a means of retirement and this policy supposedly has what's called a guaranteed income benefit so at some point in time he's going to be able to start withdrawing money off of it i don't work for him anymore but i'm curious do i step back in and try and talk to my father-in-law about this being a bad policy or do I just let him go I would just just in the sense that there was a connection that was made because of you right it's not your fault that

this happened but I do think that opens the door to at least say hey you know Mike whatever his name is uh you know uh I've learned you know know, about this and this. And, man, that, in my opinion, is just not great financial advice. And I hate that I'm the one that introduced you and that he's put you in this position. But I wonder if there's a better, you know, a better avenue. Because you know this world, right? I mean, you worked for him, so you know this financial world. What is your job now? You have a, yeah, a trusted voice in it because of your experience.

Do you still work in finance? No, I actually bought the company that he started 20 years ago. So he's actually still on my payroll, doing some marketing, remote work, and stuff like that. So yeah, it's kind of messy. Yeah, no, and I would. Just as a friendly, like, hey, you're not doing, you know,

it's not like he has all this credit card dead and you're trying to convince him to pay it off. I mean, this is like a product that he bought because someone that you introduced him to sold it to him. So I think that's totally fine to let him know. And then he can make his own decision, right? Maybe he keeps it

and then I wouldn't worry about it. But I think that's a very appropriate conversation. Just like, hey, heads up. How did you find out that he had this policy? Well, to be honest with you, I've listened to the Ramsey show for a long time. And I knew whole life policies were bad. And when I started working for him, he talked me into that they were good and he was, he's a smooth talker and he's, you know, he does a very good job of selling

these things and he makes a ton of money on them. And, um, and so at the time when I introduced them and they were talking about taking out these policies and stuff, I was convinced that they were good policies. And I've done even more research the last couple of years now, especially listening to the show and things like that, and I just do not think it's good. I would tell him exactly that. And I think he put a lot of money in it. I would talk to your father-in-law and say, listen, at the time, I was convinced too.

And over the time, I've learned, I've done the research, here's why they're a bad idea, and then here's what I think you should do. And then it's up to him. I wouldn't push it beyond that. If he's real gung-ho that he wants to keep it, he's a grown man, he can do that, but at least you can rest well at night knowing you did what you could do. Yeah. Does it change the equation at all that it has some kind of guaranteed income thing

and that he's nearing retirement and he's put all this money in over the last four, five, six years and it hasn't gotten any growth to it and he's, you know, going to take it? Well, there's some cost fallacy. I mean, you could look into the policy and see what is it offering, what is he paying, and then what would it cost to surrender the policy and is there another investment vehicle that he could put that into and what could that turn into? So I don't think it's like on fire, but he's wasting money on something

that is not going to give him a return. Yep. Yep. But you're a good son-in-law for at least wanting to, you know, try to fix this problem. Yeah. Or at least giving him a heads up. I've been doing this for several months now. Yeah. Man.

I've been sitting on it for a while now, and I just don't know what to do. Yeah, I mean, do you guys have a good relationship? I mean... We do. We do. Yeah. Like I said, I'm, you know, I bought the company, my, his daughter and I bought the company together. We own it together. And so said i'm you know i bought the company my his daughter and i bought the company together uh we own it together and so we're you know what kind of company is this

what do you guys do uh it's a manufacturing it's a manufacturing company for cabinetry components and that financial advisor works for you no no separate this is separate no no my father-in-law does he just bought his father-in-law's company. That makes more sense. Yeah, not the financial advisor. Okay. Have you talked to the financial advisor? Are you still buddies with that guy? I'm not. No, I wouldn't. I kind of am. Well, George wants to go to war.

I'd be like, dude, what are you doing? Yeah. Like you sold my- No, but they don't talk now, though. He said they're still kind of buddies. Yeah. Awkward. Well, I keep my distance.

George! Yeah. You know, an even more awkward thing is he sold one of these policies to my mother-in-law and they paid into it for a few years and then she passed away. And so they kind of have a benefit from this. You know, they got a really good deal on it,

meaning they didn't pay very much into it and they got a big death benefit. Now they could have saved a bunch of money by going with term and all those kinds of things. But my father-in-law not only has this thing, but he has seen a benefit from it because they both took out policies. Yeah, that had nothing to do with whole life. It was just the fact that they had life insurance and it paid out because someone was deceased,

which is sad. Yeah, you're right. You kind of want to never have to use it. That should be kind of the goal here. But man, I'm so sorry, Micah. You have to be dealing with this, but it's part of it. And I would talk to your wife too, since it's her dad. Yeah, and the fact it's been on you for two or three months,

is it a couple of months? Tells me like, oh yeah, I need to say something. And again, it's not you trying to change who he is. You're trying to change something that he bought into, right? Like to give, like, there's a difference. Cause we get people that call the time. I'm like, can't change someone. How do I, well, how do I get my parents to get on board with all of this?

And I'm like, oh gosh, getting on board with budgeting, getting like, that's a whole mindset shift. You can't make someone do that. But he bought a crappy financial product because of a guy, you know, you feel a level of responsibility. You don't have responsibility. I don't think in it, but you can feel that level, which gives you more of an avenue to speak into it. I would. All right. Let's do one more. Ashley's in West Palm Beach. What's going on, Ashley? Get right to the question. We're up against the clock.

Hi. So basically, my husband and I have almost $400,000 in debt if you count our home, our two vehicles, and credit card debt. The problem is we have done Financial Peace University. We are very aware of the steps. We are kind of just spinning our wheels, I feel like, most of the time. Very much still living paycheck to paycheck. Very much. I'm going to stop you, Ashley, just because of time. Real quick, what is non-mortgage debt? What do you owe in the cars? On the cars, the total combined is about $16,000. What's on each? Give me car one. How much do you owe?

Yep, car one is $5,000. Car two is around $12,500. Okay. Have you Kelly Blue Booked the $12,000 one? Yes, and it comes back about $10,500. About $10,500. Okay. So under credit cards, how much on the credit cards? Uh, almost $40,000 in a credit card. What's your household income? About 105,000. Okay, good. Um, and, and that kind of therein lies the problem. Um, so I work full

time from home and I also homeschool our children. My husband also works full-time, but a couple months ago, he actually, he got a quote-unquote promotion within his company, which made him a salaried employee, and it definitely puts him on a path to a much larger income within the next few years. However, he had to give up his overtime that he was able to work as an hourly employee, and we actually took a pay cut whenever that happened. So now we are in an even worse kind of situation than we were before. When will he get back up to what he was making? I mean, we will hope within the next year, but it's just no guarantee. But can't he do something else other than overtime? Go get a side job? He really can't because the job that he has is in healthcare and

he is on call pretty much 24-7. So for him to go do something else, he wouldn't be available if he was needed at his facility. Well, you guys make $105,000 right now. I'd be getting on a budget. If you need to sell a car and come up with the other $2,000 to get out from under it, that's going to give you some runway. And at $105, then I don't know what you're bringing in or he's bringing in, but if I cut that in half, it's $50,000. So I don't know if there's another position with another situation he could plug into to make more for the time being. That would be great. So sorry for the short call, Ashley. Thanks for calling. Budgeting, debt snowball, that's the path. This is The Ramsey show you