The Ramsey Show - App - How Can I Afford To Buy a House on My Income? (Hour 2)

Episode Date: June 16, 2023

Dr. John Delony & Rachel Cruze answer your questions and discuss:  "We want to move in together but have debt",  "Should we pay off the house if we might move?" "Where does school fall into the Baby Steps?" "How can I buy a house on my income?" "Should we fully fund our retirement?" Paying off debt in collections, from the blog: How to Deal With Debt Collectors When You Can’t Pay Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Join a Personality-led FPU class. Click here! Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's the Ramsey Show, where America hangs out to have a conversation about your mental health and your relationships and your money and your emotional health, all of it. And I'm John Deloney, joined here by Rachel Cruz, and we're taking your calls toll-free, 888-888-825-5225.

That's 888-825-5225. Rachel, we doing well? Doing great. Hey, listen, before we take a call, we have to shout out our friends, Joshua Fields Milburn and Ryan Nicodemus and TK Coleman, otherwise known as The Minimalist.

Three, in this world that we're in, there's really extraordinary people and then there's some tough people to be around. And they may be three of the most extraordinary guys. They have their documentary that has been seen by over 80 million people, right? So good. And they're rolling it off of Netflix onto YouTube, I think this Sunday?

I think it's this weekend. Sunday. Yes, yep. So make sure to check it out, you guys. And they're doing, I think, I want to say like a no ad version of it. So the more traffic that goes to it, the better. Excellent, yeah. Just to help them because the algorithm and stuff of all these things.

You know what I mean? So it's an incredible documentary. And just to support them because it's the basis of so much of what we talk about on this show, how materialism, consumerism has taken over our lives here in America, which is one of the routes that has caused so much debt. So the beauty in just the simplicity of what really is true in life, what is really true in life. So they are incredible. So make sure to check that out. And just a little peek behind the scenes,

this summer when I was finishing up, I don't say finishing up, it was about halfway through with a new book that I'm working on. I got stuck and I got stuck in a way that I realized I wasn't living some of these things I was writing about and I didn't know where to go and one of the first people I was like I gotta call Josh right like he's somebody Ryan is somebody TK somebody that I trust when I need some insight into something and so they're great people behind closed doors their their documentary is amazing so check it out on YouTube this Sunday night. It's The Minimalist.

We're pretty excited for them. Good for them. All right, let's go out to Hannah in Boston. Let's see, Hannah, where are we at? There you are. Hey, Hannah, what's up? Hi, how are you? Partying.

How about you? I'm good, thank you. Thanks so much for taking our call. Of course, thanks for calling. What's up? So my boyfriend and I, we're both 22. We're going to be graduating college within the next year. Of course. Thanks for calling. What's up? significant student loans combined and I'm going to be a teacher so that salary isn't ideal. So we're just kind of hoping to find the next step how to how to set ourselves up for financial success essentially. Yeah that's a great question. So I would say my first piece of advice Hannah is when you are not legally married to not combine finances. So you kept saying like our student

loans are going to be significant and all that. I would keep things very separate and very clean until you guys get married. So how much student loans will you have, Hannah? So I'll have about 30 grand and then Brett will have roughly 120. Okay. And, what's he doing? Is he going to be a doctor? No, so he's actually going to be a mechanical engineer, but he went to school out of state. Oh, that's good.

That's fine. Yes, yes. Oh, Brett. Yeah. Oh, Brett. Yes. He won't say it all the time. So for you, Hannah, you said you'll be graduating next year. So coming up in May.

Yep, May. That's great. Okay. And what else financially, where are you at? Do you have any money saved? Are you working? Yes. What's your status?

So I do work as a nanny in addition to being a full-time student. So I do have roughly $10,000 saved right now. And we don't have any other loans. Our cars, we bought them outright. So it's really only the student loans that are the concern. Okay. And, yeah. So, Hannah, I mean, I'll just kind of be frank with you just because you're the one that called is, again, you kept saying our cars, our, like, start thinking you're, no, you're totally fine.

But I do think, especially on a financial sense, it's really important to not feel the obligation or responsibility for his loans. Hannah, you need to take care of yours, right? So like keeping these things very separate, yep, is really key. So yeah, for you, I mean, 30 grand, you have 10 grand saved, which is awesome. So what I would do, Hannah, if I woke up in your shoes is my senior year, I would just save, save, save, save, save, do what you can to save. And then when you graduate, you'll have you know you know maybe 20 grand saved yep uh 25 grand so you'll be able to knock out the student loan your student loan out pretty quickly even on a teacher's salary uh you'll be able to get through this pretty great pretty quick which is awesome and then we'll let you know brett figure out you know his job and

what he's going to be doing and what he can do with his 120. But again, I really would keep harping that these are yours. Don't feel it because you sound very kind, Hannah, and very sweet. And Brett sounds mean. No, no. Brett's great. I'm sure it's great. But I would keep my life separate in that sense. And then once you guys get married, then we can have a whole other discussion of what this looks like together.

But we just heard so many horror stories, Hannah, again. And I would say this too, if even people moving in together and they're sharing bills and they're trying to act married when they're not. And I think we can go the emotional route down that. John, if you want to do that, you can. But just the financial route.

I think when you're not married, keeping things separate until you actually are married and then be married, you know? There's a legal process for separating assets when you're married. Yeah. It is a train wreck

trying to separate assets when you're just dating. And the forensic account, it's just such a mess. Yeah. Yeah. Yeah. I mean, that's what it comes down to. And you're not going to like this that I'm saying this.

And I totally, if you say anything other than, well, that's not us, I would think something was wrong with you. But Rachel and I wouldn't have a job if things didn't happen that people didn't see coming and everybody is confident in their relationship and you work really hard and help pay off his student loans and then all of a sudden he's gone or vice versa he pays off all of your student loans and then you meet some hot PE teacher and it's all over Hannah right so all that to say is life happens um really if I'm you and you were my sister or you were my like close friend I would tell you find the cheapest place you can safely live and I would focus the first two years of teaching on paying these off and you will then be able to be the teacher that you want to be.

Cause you're not going to feel shackled. Like I can't say this thing or I can't do this thing. Cause I don't want to get fired. I got to pay my student loans. It totally unhooks you from the matrix in that way. And then maybe if, um, Brett here,

he can get a move on and. If Brett's the one, put a ring on it. That's what I'm telling him. Let's go Brett. Let's go Brett. I'm going to get all this better. If he wants to propose on air I accept that I don't think Brett's going to like you, John

No, I love Brett I think he's about to lose Hannah to some PE teacher He needs to get a move on Let's go, Brett Let's do this Teachers, you guys are amazing Thank you Hope you're enjoying your summer Enjoy your summer, let's make it happen Let's do this. Hey, teachers, man, you guys are amazing, amazing, amazing. Thank you.

Hope you're enjoying your summer. Yes, enjoy your summer. Let's make it happen. Hey, welcome back. This is The Ramsey Show. I'm John Deloney, joined by Rachel Cruz, and we're taking your calls on money and life. Let's go to Michael in Norfolk, Virginia.

What's up, Michael? How we doing, brother? Hey, how you doing? How you doing, John and Rachel? Outstanding, man. What's go to Michael in Norfolk, Virginia. What's up, Michael? How we doing, brother? Hey, how you doing? How you doing, John and Rachel? Outstanding, man. What's up? Hey, so I got a quick question for you. So my family and I, we're on baby steps six. We have no other debt other than the mortgage.

And don't freak out, but I've lost a lot of money in crypto. Yeah, you have, Michael. Yeah. Hey, are have, Michael. Yeah. Hey, are you on speakerphone, man? I'm not. Are you having a tough time hearing me? Yeah, it's a little bit distant,

like you're talking to me through a toilet paper roll. Can you talk directly into the phone? Yes, give me one second. Let me see if I can get a little louder. Is that any better? Yeah, that's better. Much better, Michael. Thanks, Michael.

Okay, perfect. All right, perfect. It took the case off again. Okay, so I lost a lot of money in curriculum, and I felt like I just completely failed my family. So it was a dark place during that time. I've been studying and researching ways to recover, but ironically I was taking all the baby steps without any knowledge

of this program, which was kind of cool. But my question is, so I'm active through the military and I know the next step is to invest the rest of our savings towards the mortgage, which we have about $51,000 in Vanguard mutual funds. However, we're a little bit hesitant to do that because right now it's $268,000 for the mortgage, a 2.25 interest rate. But I'm in the military and I do the transfer around 2025. So at that point, I think that would commit us to sell the home. Do we buy another house or do we just rent this house and rent this house out and rent in another location? Because I don't know how this, the baby steps would tie into somebody who would have to sell their home.

Sure. Yeah. So what I would recommend, Michael, is I would, I would still make that the goal of paying down the house because you're going to get it back in equity, right? So when you guys sell, you'll be able to have the equity because what ends up happening is that we see sometimes is that people earmark and say, okay, well, I have this money saved over on the side and I could put it towards the house, but we could keep it for a down payment down the road, or we could use it for something else. And or it with the intention of using it still for real estate instead of

paying down the home, we'll use it for a future home. But end up that, you know, life ends up happening and you end up taking money out of that account that was supposed to be directed towards your real estate, but it's actually being directed towards a vacation or a new car or something, right? So like the money ends up not doing what it's supposed to be doing. So I would still keep paying down the house because again, you're putting money into the home. You're going to get it back out when you guys sell. And then when you guys move in 2025, then I would sell that, get all that equity. And if you guys are going to be somewhere short term for most active military, we recommend renting because we'd want you to be somewhere for at least five years to actually own a home. And so it makes things easier not to be a long distance landlord. So to sell. And then if you're

going to be somewhere less than five years to just rent and you can keep that. Yeah. A Vanguard account is great. Put it, you know, I mean, yeah, that's still a great option. I think Vanguard's still great. Or you can just do a high yield savings account because right now you're getting close to five percent, which is crazy. But that's more kind of your short still great. Or you can just do a high-yield savings account because right now you're getting close to 5%, which is crazy. But that's more kind of your short-term mentality. Do you know when you'll be out of the military, when you're going to retire? Yeah, so we have a way to take a look at it.

If we throw the $51,000 towards that $268,000, we can also afford to throw an additional $1,000 a month. We would have the house pay off around 2032. That would be around that same time for my retirement. Yeah, but you guys are going to be moving, though. Maybe. Potentially.

That's kind of up in the air. We could actually stay here up until 2032, but anything could happen, essentially. Michael, that is what I want you to hang your hat on. Tell me if I'm wrong at any point. You work in the military. You are active duty.

You hang around with a lot of active duty guys. Y'all have a lot of, you know, this could happen and this could happen. And quite honestly, you see things that the average civilian doesn't. And that was why you put all the money in crypto because this is going to happen, bro. And then it didn't. And so you're a guy always looking ahead to try to keep everybody safe. That's your job. That's your life. That's what you do. And I would challenge you to look back two and a half years at what happened in the world, just from right now, and then cast forward and think about 2025

or the middle of 2025 we'll have been through another presidential election god help us all we'll have been through who knows what geopolitical nonsense who know all that to say is you don't know and so if you have orders if you've got paper in front of you that says 2025 we're shipping you off to x y and z i think this is a different conversation. But I think what has gotten you in trouble in the past is trying to guess the future and trying to somehow hack your way towards safety. And the biggest concerning thing you said is, I feel a lot of shame about losing money in the market, and I'm trying to make it up. And when we make it up, we end up making an emotional rash decision and we do something else goofy. I would tell you the greatest gift you can give your family right now is the gift of stability. Here, we're going to slowly march these baby steps.

We're going to keep them rolling. And if I get papers that say we're moving, then we're going to make that decision when we get there. Maybe we have an extra deep freezer with some meat just in case, but we are going to do this thing methodically, and that's going to be my gift to my family. Not this illusion that we're going to somehow avoid the meteorite if it happens to come one day, someday maybe, possibly. But we're

just going to slow and steady wins the race. Does that make sense? Yeah, that absolutely does. Thank you, John. I know that's the worst. Dude, I know it's the worst. But Michael, too, from a tactical, sorry, I know that's the worst. Dude, I know it's the worst. But, Michael, too, from a tactical, sorry, I'm going tactical, but I just want to make sure, Michael, that you still have some cash that's available to you for an emergency fund.

So make sure you do that. Don't throw all, okay, just don't want to throw all the cash. We have about a four-month emergency fund set aside, but that's completely separate. Excellent, excellent, excellent. That's fantastic, man fantastic man well done and thanks for your service michael yeah i really appreciate you guys good for you hey and thanks for just being one of those guys that you made a dumb mistake with money and you owned it and now you're looking to the future to uh be a good steward of your financial resources for you and your family and your community good for you man

awesome so many people just hide and run and they just spend all their time on YouTube and that's not you, man. So good for you. Let's go out to ATL and talk to Brandon. What's up, Brandon? Hey, what's going on, John and Rachel? How are you? Excellent. Excellent. What's up, man? Not much. So I had a quick question. So my wife and I, we just paid off our last $20,000 in student loans. Congratulations. Yeah, thank you. We're so excited. We're now looking into rewinding a whole two days, and I got accepted to a part-time MBA program. I'm trying to figure out if we're in the right

spot financially in terms of the baby steps to go ahead and take that on. All right. So, uh, so you guys are completely debt free cause you just paid off your student loans. I'm guessing, right? Correct. Cool. That's great. Uh, do you guys have savings at all? Uh, yes, we have about $19,000 in the bank right now between checking and savings okay um and then like a tiny tiny amount in a um non-retirement um investment fund okay and are you guys both working yes so i make about 70 000 my wife makes about 55 so 125 000 gross between the two of us. What is this MBA going to get you? So doing the projections and the field I want to go into, which is just financial analytics, it looks like this could get me probably about a $40,000 raise from where I am today. So it's really career growth. Okay. Are you going to be working while you're doing this, or would you just go to school full-time? Yeah.

Okay. So it's a part-time evening MBA. Okay. Cost would be about $7,000 to $10,000 a semester, but I've also got a $2,000 scholarship and potentially a $5,000 tuition reimbursement from my employer. Oh, my gosh. So you could have it paid for. Which I still have to figure out. Which you could have it paid. I mean, so that would pay for everything. Well, it'd be a one-time $5,000.

Oh, oh, oh, not like per year. Yeah, so the $5,000 is a yearly amount. Yearly? Okay, every year. That's awesome. Yeah. Yeah, so, I mean, Brandon, I mean, yeah, you are in a position totally to go back to school as long as you're cash flowing it, which you guys could. Even if some of this didn't come through, you guys make the money to be able to school as long as you're cash flowing it, which you guys could. Even if some of this didn't come through, you guys make the money to be able to cash flow it.

And a paid for MBA, it's a great arrow to have in your quiver. Yeah, I mean, and the ROI is there. Like you said, you've already run out the numbers. So it's an extra $40,000 per year that you'll make. So yeah, I mean, go for it. I would say go for it.

Don't pay off, Paul's paying off your house and cash flow yourself through college and then make a run at it. Good for you, brother. I mean, go for it. I say go for it. It's awesome. Don't pay off – I pause paying off your house and cash flow yourself through college. Yep. And then make a run at it. Good for you, brother. Good job. 888-825-5225.

This is The Ramsey Show. We're taking your calls on money and life. I'm John Deloney, joined here by Rachel Cruz. Let's run out to James in Knoxville right down the street. What's up, James? Hi, Rachel. Hi, John. How are you?

We're great, man. How are you? Well, better than I deserve. Outstanding. Outstanding. What's up, man? Well, I'm just reaching out. I'm a little discouraged right now with homeownership

and eventually getting to the point of buying a house. I'm currently on the plan, and I'm not too soon to finish up Baby Step 2, but soon enough. But I'm a teacher, and with the salary versus the home prices in the area it's just really discouraging to know if I will ever be able to own a home yeah no I hear you um so what how old are you James I'm 30 you're 30 okay and how much do you make a year between my teaching job and all my my other jobs, right at 60. Okay.

And what part of Knoxville are you in? The south area of Knoxville. Yeah. So what are homes going for down there right now? Well, looking within the area, I'm going to say reasonably about 300,000. Okay. Do you have a family?

I do not. No, ma'am. Great. Well, I mean, I can share in the frustration of the market. I mean, it's been a wacky few years for housing. It's stabilized, which is great, but also the values and everything are up. Obviously, interest rates are higher than what they were at 2% back in the day. So I understand the frustration. And the hard thing is, James, when it comes to

money and looking at what you can't afford is it's really looking at the math. And John talks a lot about this, that facts are your friends. And even though we have emotions around things, whether it's talking to an 18-year-old and they want to go to a private out-of-state college, but they can't afford it. They're frustrated about that. And I get that. They're going to have to choose a different option, right? So what I would say to you, James, is that I don't think that it's not out of the picture. I mean, making 60 grand is you're doing great. And you're single. So even what type of house or type of living situation residents you're looking at, you could even open up the door to options of a townhome. Owning some type of real estate is a

great goal to have for your overall financial picture. So I would continue to tell you to go there. It may take you longer to save up a 5%, 10% down payment for something, but I wouldn't take it completely out of the question. But where you're looking and the type of home you're looking at may have to shift that expectation may shift which is frustrating and that's not fun and all that but i think the reality of what of what you're where you're at is is what you have to focus on so james um tell me if if this is part of of the frustration too my dad was was a policeman and i remember the frustration this was he never said this out loud but it was just in the air of our home

this idea that our local community paid policemen so poor that he was took a job with public service and didn't have enough money, barely had enough money to buy a house. And we struggled with groceries sometimes. And we had a one car house. It's not like we lived this extravagant, crazy life. And then, brother, I was a public school teacher for a few years in Texas. I couldn't have bought a house.

And that was before the numbers went crazy. And I remember that same sense of, I went to college, I got a degree, I'm a teacher, and I can't buy a home. I remember that haunting, my wife was a teacher for years, that same thing. So part of that frustration, right, is going to be, I did everything right. Yeah, the overall choices. And I can't afford to live in my own community, right? Is that some of this, James?

That is part of it, yes overall choices. And I can't afford to live in my own community, right? Is that some of this, James? That is part of it, yes, yes. And, you know, it wasn't always this way. No, it wasn't. Honestly, it wasn't. And even looking at, going back to Rachel, looking at townhomes, you can't even find a townhome for a decent price. Everything in the area. They get gobbled up for college students.

Rachel's right, and I hate to second her on this one, is we can't get a pass on math. And so the questions you have to answer that nobody can answer for you are, is this the career path forward for you? Or am I going to have to commute a little bit further because I was put on earth to be a teacher? Or I'm going to take my skills that I've developed over the last X number of years as a teacher and I'm going to apply them in this setting instead of this setting. But the math part doesn't change.

And those are all questions we don't want to answer. We don't like those. They're not fun. They weren't part of the script we were given in high school. We were told if you just go to college and get a degree, everything's going to be fine. That wasn't part of the script. And so I think it's having that honest conversation with yourself

and recognizing how long have you been on baby step two, man? Probably a little over a year. Dude, you're at beat down stage. You work all these extra jobs and you're a teacher and you're exhausted and you're so tired. It wasn't even worth failing a couple of those kids because you don't want the paperwork and the fights with the principal. You're all of that and trying to pay debt off. And you see there's no shiny new things. There's no going out to eat.

You're at the frustrating part of baby step two, right? I could agree with that. I could agree with that. I absolutely could. Yeah, so I guess at the end of the day, I wish there was a magic pill, Rachel, that we could give people like James. Yeah, and I know the Knoxville area, so I'm thinking like the Powell area, South Doyle.

I mean, there's places, James, of just, and again, if it means driving another 20 minutes, that may be it. And that's the frustrating thing about the whole housing conversation, James, and you're not the only one we've had this conversation with. And our own team has experienced this as they're trying to find houses. Like, I be it. And that's the frustrating thing about the whole housing conversation, Jameson. You're not the only one we've had this conversation with. And our own team has experienced this

as they're trying to find houses. Like, I get it. It's so annoying to think, gosh, 2019 was just a different world that we live in versus today, what I could have gotten versus what I do now. And it's just, it is this, it's this level of grappling with reality

that you have to be able to say, okay, if I want this, I have to believe I can. And not in some fairy tale way, naive way, but to be able to be like, I really am going to lay out a plan between now and the next five years that I have a goal to own something within real estate. So what does that look like? Does that mean possibly changing careers? Does that mean changing, possibly changing careers? Does that mean looking and broadening where I'm looking? Because I really, I have confidence, James, that you can do this. Because we talk to people on the show all the time that make these decisions, but it's not overnight. And like John said, where you are in the process, you're in a

hard spot and you still have baby step three to save up for an emergency fund, right? So you're still years out for this. And the world could look a whole lot different in four years james when you're actually seriously looking at purchasing something or starting to save for it so um give yourself some time it is a marathon this whole thing it is it is years it's not this instant um effect that you're going to have these new results overnight it's just not and i And I wish we did have a magic pearl, man. And that's what's frustrating about this industry is I feel like there are things out there that are like flashy and like, oh, just do this and this and this and this. And people get into those things thinking they're going to get a quick turn and then they get screwed and they lose money. So

it's like, this is the smartest, wisest path, but it's slow, James. It's slow. And I get it. It's not fun, but- One of the cornerstones of emotional health, one of the cornerstones of relational health is owning reality, just choosing reality. Here is where we are. And as hard as that is, I promise that the work your body is doing, being frustrated about this and being mad about that and wishing for this, that energy spent is energy that could be going into solving a real challenge that lies before you. So if your marriage is sideways, avoiding the conversation does not heal that. Being a world-class teacher in a great part of the country, that doesn't change the math

of, I want to own a home. So like Rachel said, okay, five years. What's it going to take for me to do from here to there five years? And I'm going to just echo this too, John, because we feel this in our county here in Nashville, how frustrating it is that teachers aren't paid what they're worth. I know. And they can't even live in the county that they teach.

That's frustrating. To all you legislators who are just throwing sand at each other in your sandbox, pay teachers and cops for God's sakes. Good grief. other in your sandbox pay teachers and cops for god's sakes good grief this is the ramsey show 888-825-5225 let's go out to chris in woolville where's chris there he is hey chris what's up man thank you for taking my call how are we doing we're dude we are partying that's probably not totally true we're at work but we're doing good man? Thank you for taking my call. How are we doing? We're doing, we are partying. That's probably not totally true. We're at work, but we're doing good, man. How about you? Oh, too good to complain.

Too good to complain. Excellent, man. What's up? How can we help? So I'm a physical therapy student. I'm about to graduate in a year. I'm happily married and we're operating right now solely on my wife's income. We both opened up Roth IRAs last year, and we're not quite saving enough

this year to fully fund them. We have a fully funded emergency fund with $18,000 in excess and a high yield savings. And we have $21,000 in a brokerage account invested in mutual funds. So our question is, do we take out money from our brokerage account to fund our Roth IRAs this year? Are you cashflow in your PT school? Yes, sir. Good for you, man. Yeah, that's great. So how much is your wife making? She's making $45,000. $45,000. Okay. And then you have not been working, but you will be, I'm assuming. I work in between semesters. So super-time okay that's great uh so yeah so you guys have no debt you have good savings for um an emergency fund and that 18 may even be high

depending on what your expenses are um so honestly Chris I wouldn't look at maxing it out. I would just fund 15% of that $45,000 into the Roth. Does she have a 401k? Yes. So we both have Roth IRAs on our own, and then she has a Roth IRA through her company as well. The company matches up to 3% right now. And so she's contributing three, and then they contribute 50% of 6% after six months of her being there. Okay. So I would concentrate on that three, then they contribute 50% of 6% after six months of her being there. Okay. So I would, yeah, concentrate on that three. And then the other 12%, I would just throw at the Roth, whatever that math ends up being. And so it would not, you wouldn't be maxing it out, which is okay. And then when you guys start working again, it's 15% of your total income. Taking that match, if you get in a match

with your employer, taking that and then going back to the Roth. And if you max it out at $6,500 is what you can do. That's the maximum in 2023. So if you guys end up maxing that out after you get full-time work, then I would just go back to your 401ks and max those out, which I think it's like 22,500 to max them out this calendar year. So that's where I would focus. We always tell people that match beats Roth beats traditional. So always focusing on that match first that you can get in the 401k and then going to the Roth IRA. So even though you guys have the cash, Chris,

I wouldn't necessarily look at just completely, you know, maxing out the Roth if you don't have to. I mean, I would, I don't know, that's what I would do. Do you guys have a mortgage? Yes, we have about 105 left on our mortgage, but we're looking to move in about a year or two. Okay. So yeah, I mean, I would focus at using some of this money, even in the brokerage account to throw at this mortgage and kind of get some equity in the house. How old are you, Chris? 24. 24. You guys are doing great. Y'all are doing awesome. Have you got to do a clinical rotation yet? I'm actually on a clinical rotation right now

in a separate city from my wife. So we are on. Okay. So you're getting it done. So have you had the opportunity to work with somebody who had like a devastating shoulder or knee injury and they were kind of a hot shot and now they're working their way back and all of your PT colleagues are buzzing about the great progress this person has made, but this person only has this vision of themselves doing, you know, these amazing things. And so they lose the forest for the trees. Have you experienced that yet?

Yes, I have. Okay. That's you. You are 24. You have no debt. You're cash flowing a graduate degree. You are 24. You have no debt. You're cash flowing a graduate degree. You are absolutely so far ahead of 24-year-olds that we talk to.

You're even having this thought you're ahead of 24-year-olds. When you said you were a PT student, it's so rare that I meet a PT student that's cash flowing college. It's unbelievable. You're so far ahead of the game and I don't want you to lose the forest for the trees. Y'all aren't failing. The fact that you even know what a Roth IRA is sets you into the upper 2% of planet earth, right? You're so far ahead. I don't want you guys to burn a hole through your marriage and burn a hole

through this exciting, fun time of your life, worried that you're not maxing this out or not maximizing this out. Bro, you are, y'all are doing incredible. Okay. Yes, sir. Get through school debt-free, get your new job, wherever you're going to be. Y'all get settled in somewhere and man, then you can start saying, okay, I'm making 75 or a hundred. You're making 45. Now we can start saying okay i'm making 75 or 100 you're making 45 now we can start really getting ahead here yep but dude that 15 where you guys are without 45 i would i would stick with that there's no reason to pay my house off and put some cash aside y'all are doing great chris you're so far ahead i'm proud of you man it's really great let's run out to uh atlanta georgia and talk to Trish. What's up, Trish?

Hi, yes. Thank you for taking my call. Of course. What's happening? So my question is, do I need to pay off my collection account before paying off my regular debt? Okay, so how much is in collections? About $15,000. Okay.

What's the debt on? Old credit cards that I wasn't able to pay off in time. A car repossession. That's pretty much it. Some medical bills. Is it all lumped together in the same company, or you got multiple? It's kind of sprinkled around. Just sprinkled around, okay. And then how much other debt do you have trish so i have a total i have 180 on the

house okay and then i've got 50 on car payments and then my student loan is a total of $100,000. Okay. How much do you make a year? About $130,000. $130,000, okay. And you said $50,000 on cars. Is that a single car or two cars? It's two cars. Two cars.

And are you single, married? Unmarried. Married, okay. So just to answer, yeah, your tactical question, I mean, when debts go into collection, I mean, they've been probably run through four different other collections, companies, and they buy and sell these debts and all of it.

So it's tangled up, meaning most of the time you can negotiate and actually get these debts lowered. Do you guys have any cash? We have a $1,000 emergency fund. Okay. So, yeah, if I were you, I would get that $15,000 cleaned up, the ones that are in collections. And, again, Trish, if you can, I would call

and I would gather as much cash as you can, Trish. I would take this income that you in collections. And again, Trish, if you can, I would call and I would gather as much cash as you can, Trish. I would take this income that you guys make. You make great income. And next month, I mean, you guys aren't doing anything. You're not going out to eat. You're not going on vacation. July at Trish's house means we are barely eating ramen noodles and beans and rice. We're nothing fancy. And we are selling stuff. Look around your house. If it's not bolted to the ground, sell it, get cash. Because when you can have some cash and actually call these collectors and say, hey, I have this available and I'm able to write a check to you today for this amount versus what I owe, they're much more apt to take that deal.

And actually, you know, and you can and you can get the deal on it. And so if you do that and go down that route, make sure you get everything in writing first and foremost. But I would make that my July, August, honestly, is calling all these collections, these collectors and just talking to them and saying, okay, what would you guys take? I have this amount. It's not a lot here. Would you settle to get this 15 down? But I would work on that. And then what's the difference in the cars? 50 is total.

What's on each car? I've got about 35 on one and then 15 on the other. Okay. What's that $35,000 car worth? Maybe 20. Wow. Okay.

So you're way upside down on that thing. Yep. Okay. So Trish, this is going to be, it's going to be a process. I want you to hold on the line

and Skylar's going to pick up and I want you and your husband to go through Financial Peace University because it feels like things are a little bit scattered and all over the place. And I want you guys together on a plan to walk through this. We're going to give you every dollar plus, which attaches to your bank account. Let's give them a call with the financial coach, too, here with the team.

Yep. So hold on the line, Trish, and we'll help you out. Thanks for calling. Hey, this has been another hour in the books. This is The Ramsey Show. Hey, it's Rachel Cruz. If you love the show and want a deeper dive on your money journey, we have a weekly newsletter that gives you trending and helpful articles and tips on following the Ramsey way. Just go to ramsysolutions.com today to sign up for our newsletter. Again, that's ramseysolutions.com to sign up for our weekly newsletter.