The Ramsey Show - App - How Do I Prepare for a Separation With My Husband? (Hour 1)

Episode Date: November 24, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host, Anthony O'Neill, Ramsey personality, number one

best-selling author of the book Debt-Free Degree, is my co-host today. Open phones as we talk to you about your life and your money. Open phones at 888-825-5225. That's 888-825-5225. Victoria is in Louisville, Kentucky to start off today. Hi, Victoria. How can we help? Hi, guys. Thanks so much for taking my call. I have just a really complicated situation. I'm going to try to distill down to make the most of this call, but potential separation coming up with my husband. He's active duty military, and he makes a good living, and I work part-time and homeschool. And just facing just if we were to, you know, separate that, you know,

we've been making great traction together, and besides all the emotional stuff and everything, but I've got him on board with, you know, Dave Ramsey and Chris Hogan, and we've been paying down almost $50,000 of debt in the past three years, and basically I'll go down to just making probably bill money, you know, and I'm just wondering how I can prepare for that, and we talked about maybe staying together just for a financial thing, but like not being, you know, he would be a geographical bachelor. I wouldn't PCS with him anymore. So just wondering what your advice might be on that.

Well, I'm sorry. I'm sorry you guys are facing this. I would, number one, if you're facing something this serious, you need to get a pro in your corner. And that means you guys need to be sitting down with a good, strong marriage counselor who healthy about you guys staying married just for financial purposes. That's weird. Yeah, I thought so too. Yeah, that just sounds weird. That's just a guy talking.

I'm not a professional, but I mean, it just sounds weird. We still love each other. It's just he's kind of like there's so many good things. But he's decided to change genders. So I would love to say, you know, hey, let's be friends for the rest of our lives that are married. But that just seems weird. Right. Yeah. Yeah. Yeah.

Yeah. Yeah. Staying married in that situation is going to be very strange. Yeah. And so, you know, I think someone coaching you, a good counselor can coach you through how to set some, you know, processes and boundaries in place to, you know, to create a timeline. And then even though this sounds, yeah, you said all the emotions are there, but it also sounds like you guys are just talking about this all still in terms of you've got a good dialogue going, it sounds like, so that's good.

But even in that good situation, as good a situation as it can be in a bad situation, you still, once you decide to divorce, the transaction changes to a business transaction. Right. And it doesn't mean you have to be mean to someone because it's a business transaction, but you have to be thorough and you have to think through the math. Like, for instance, he has an income and you don't. How much debt is left? Whose name is on the debt?

Is there a house involved? You know, all these kinds of things start to be a business transaction that have to be done on the very, very clear boundaries. We see this a lot. We really do. And, Victoria, one thing I want to suggest, and by no way am I saying I'm a marriage therapist, but at the same time, let's not prolong it. Let's have an honest conversation like Dave said.

Are we going to do this or are we not? And once you decide what you're going to do, then y'all need to go down that path with the right counsel. One thing I have seen is a lot of people prolong this situation out and then it gets worse and it gets worse down the road. So have the conversation, decide what you're going to do. And once you get there, immediately seek out wise counsel to walk you all through this step. But I got to say, awesome job with at least being kind to each other in the midst of this process. Yeah. So in other words, if your name is on a debt and he is obligated to pay it in the divorce decree and does not, they do not come after him. The divorce decree does not remove

you from liability. You're still liable for that debt. That's what I mean by a business transaction. You've got to sit down and think about those kinds of things so that these debts get, anything's got your name on it gets cleared. The second thing you've got to do is you got to get in Ken Coleman's materials because you're going to have to develop a career track. Yeah. Part-time and stay-at-home mom is not on your, not in your future anymore. Yeah. You're now a single mom, divorced. And so what are you going to do with your life and what's your career look like what's your job look like and you know you got to get on that really fast because you're going to need an income yes you're going to get

child support yes you may get some alimony yes he may pick up a lot of the bills but you've still got to create a full-time income in this situation to exist and they equipped me from Rome but now that that child becomes her number one priority is no longer him sure yeah yeah no i mean that would be obvious but it was um that has the way it has to go you know it has to be that way so hey thank you for calling i'm sorry you guys are facing this open phones at 888-825-5225. One of the things that I see, Anthony, that divorce attorneys make a huge mistake on quite often is, or couples do, and the divorce attorneys allow it to happen just as a matter of transaction, is, you know, say a typical case study might be husband leaves the household.

Okay. They get divorced. Mom is left with the house and most of the time has a lesser income. That's not a statement of that's what she deserves. It's a statement of fact. Right. Okay. Most of the time she has a lesser income and can't afford the house payment.

Right. But it's trying to hold on to the house to keep it stable for the kids. And the house should have just been sold. Yes. And get the bill off of her. She does not need that bill to go with her new level of responsibility financially that she's got to pick up now. That's thing one. Thing two is, from a husband's perspective, the lawyer tells him in that case,

in the case where he's leaving the house to her, to quit claim the house over to her. Give up his ownership. And they never address the fact that he's still on the mortgage. Right. And so he's liable on the mortgage. So he gave up the asset and kept the liability. Yes. And then he goes to buy another house someday.

And he can't. And he can't because he already owns a house yes as far as the debt goes yeah he's already in debt on that other house he's not been released from liability so in that case i would you know if i were going through that i would require that the house either be sold uh or refinanced and gotten out of his name yes uh in in that case to protect him and let him go on with his life. And here's a hint. If she can't afford to refinance it, that means she can't afford to keep it.

She needs to sell it. That's right. And that's what you're facing. It's a harsh thing that occurs in a horrible situation, but there's a reality to this math, and it catches up with people sometimes three years later, and they get a double whammy from the divorce. You've worked hard to make your business successful.

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Hi, Danielle. How are you? Hey, good, guys. Thank you for taking my call. I appreciate it. Sure. What's up? Okay.

So my husband and I purchased our first home eight years ago. We're down to $49,000 of the balance. And we know there's some equity in there. I don't know if we've gotten a few opinions from people. We really don't want to do refi. We don't want our payment to go up. But we're just kind of confused as if there's equity in the home, would we be able to take it out to fix our home up, or is that how that works?

Well, the only way you take equity out of your home is you go in debt. Yeah. Okay, that's what I, okay. That's what taking equity out means. It means you're going to go borrow money against your home in order to fix it up. So what kind of repairs do you need to do? Just update. The gentleman who owned the home before us was in a wheelchair.

So he didn't get to, you know, fix the bathrooms up. And we're slowly doing the kitchen. So it's just taking more time. How much will it cost you, Danielle? Between two bathrooms, probably like maybe $30,000. What is your household income? $74,000. Okay.

You can do that over a period of time. You're just not going to do it all at once. Not at once, yeah. Okay. I mean, we've seen so many friends, like, pool a refi, and we're like, we don't want another payment. We don't want our payment to go. We're paying $469 right now a month.

So we're good. Yeah, exactly. I mean, basically what you're saying is, do I borrow on my home to fix up some bathrooms? Answer, no. No, okay. Unwise. Because here's the deal.

When we did the book, Everyday Millionaire with Chris Hogan, and we studied all the millionaires, one of the things we found about most of the millionaires is one big element of their $1 million net worth or greater is a paid-for house. Not every time I get the house paid down, I go borrow on it again. Okay. And that's what you want to avoid. And Danielle, did I miss something?

You might've said this earlier, but are you already debt free on your consumer side? Like no credit cards, car notes, none of that? We do not have credit cards, but we do have vehicles between his and mine and his, we're about 38,000 together on our vehicle. So before we fix the house, we're going to pay off the debt. Yeah. and that'll make it easier to fix the house if you don't have any car payments you could save up the money to do the bathrooms pretty quick real quick to do anything okay yeah so you need to attack your debts at this stage of the game working the debt snowball listing your debts smallest to largest and attack them in that order anthony's exactly right good catch yes sir good catch there jenny is in springfield, Illinois. Hi, Jenny.

Welcome to the Dave Ramsey Show. Hi. Thank you for taking my call. This summer we paid off our house. Yay! And so now I need to update our legacy binder. So I just need to know what documents do I need to put in the binder for our paid-off house. Nothing?

I mean, your deed is already in there. A copy of mean your deed is already in there a copy of your warranty deed is already in there the closing papers when you originally purchased the house are already in there right yeah the file on the house from the purchase and so forth so ownership is established not by a car title you need to keep the physical title around with a house title it's a warranty deed and that's recorded at the courthouse and so there's it's it's handy to keep a copy of it but it's not necessary to transfer ownership okay like if you want to transfer a car title you need the car title in your hand but if you want to transfer a home they just prepare a new deed based on what's recorded

already at the courthouse. Now, on the legacy side, I get that part, Dave, but then should she update her will as well, though? If it requires any changes, but the house being paid for versus almost paid for, you know. Now, you know what you might store in there is the payoff letter that when the mortgage company sent it back showing it's paid off, that'd be handy to keep around. Yeah. And I'd keep that in that binder. So, very good good good way to go way to go so anthony we've got this thing that you put together 20 things millennials should do yes sir now why do millennials need a specialist well because dave i mean you know this is the generation that they're the number one consumer. So they spend way more than they actually save.

They they're not investing. Only 18 percent of millennials are actually investing into their future. And so I made this list of the 20 things that I wish I knew when I was right in my young 20s. Like number one was go ahead and get a payoff to debt. Number two is get a clear vision. I get a clear vision. Where are you going in life? What do you want to do in life? A lot of people say, well, I want to be a doctor. Well, that's not a vision for where you want to go in your life.

Like, why do you want to be a doctor? And inside of their Dave, I said something that some people have heard this before, but I added a little twist to it. And it's to come up with your why. And like, if your why doesn't make you cry, then the price of commitment will make you cry. So I teach them to really dig deep into this thing. Like, hey, where are you going? And if your why doesn't make you cry, then the price of commitment, it will.

Paying off debt, you can say, I want to pay off debt. But if you don't really have a deep why, then you're going to cry throughout the baby steps. You're going to cry throughout the debt snowball. And whine. Yes, sir. Yes, sir. And moan.

Yeah. And carry on like the world's coming to an end. But, yeah, I mean, when you can see the result clearly in your mind, you know, like people that are paying off their home for the benefit of their children, and they just take their child's face right there, that's my why yeah and that'll make you fight yes it will that'll make you scratch and claw that'll make you scrappy yeah that'll make you take extra jobs that'll make you sacrifice to win and you got to have a why got to the the number of people who are successful in not only getting out of debt but in building wealth yeah always have a sense of nobility to

their reason. Oftentimes, it starts with something simple of, I'm just sick and tired of being broke. Yes, sir. But eventually, as they're starting working on it, their chin comes up and their vision starts getting bigger, and they have a why. That's really good. All right, 20 things millennials should do. All millennials should read this.

Really, everybody ought to read it. I don't know why millennials are special, but it's a good little catchphrase there. So it's free. It's a list that Anthony will send you. All you've got to do is text 20THINGS, and that's the number, 2-0, things, 2-0-THINGS, 2-3-3-7-8-9, and you'll get this list for free from Anthony O'Neill. You can also join the AO family, and he'll keep up sending you odds and ends and encouragement, lifting you up, all kinds of things like that,

by just texting AO to 33-789. Ross is in Austin, Texas. Hey, Ross, welcome to the Dave Ramsey Show. Thank you, Dave. Thank you for having me. Absolutely. How can we help? So I have kind of a life and money question.

The money side of it is my wife and I are in baby step number two. We've paid off around $14,000 in debt between two student loans and the majority of our car. We've got about three grand left. So we're making progress there. I've been listening to your show for a long time and a long time since Joe Champion hosted the FPU class early last year. So I attended that. And so I've been listening and you've been talking about, you know, building a legacy. And part of the way that you do that is you talk about money around the dinner table. I remember your story about a politician who became a politician because his dad was. Okay, right quick, Ross, before I run out of time, what's your question? Yes. I don't know what I don't know. And I don't know how to have those conversations at the dinner table. What kind of benchmarks would you say that, you know, I can see myself

hitting? What are some tangible things that I can do or see to know that I'm going in the right direction? Man, I think for the first thing for you, Ross, Dave and I just talked about it, really identify what's your vision at 24 years old. Why do you want to be wealthy? You have to answer that question. know what when god blesses you to be wealthy what are you going to do with that wealth what's it going to feel like yes you know okay and so that's the first thing i would have at the table you know mom dad what does wealth mean to you what does wealth mean to us as a family and then from there you can do the baby steps and we'll get you there but from the life perspective you need to dig into deep and figure

out what does wealth do for you for your your family, for where you're going. Yeah, you're doing you're doing some very wise things beyond your years at 24 to have these discussions. But it doesn't have to be some big every night at the dinner table. It doesn't have to be some big, deep conversation. It's just a matter of part of the rhythm of our life is we deal with the money issue. We talk about debt. We talk about student loan debt. We talk about mutual funds. We talk about buying a piece of real estate. We talk about, you know, financial transactions as a part of the rhythm of our life

at the dinner table. And that way it becomes normal for your kids as they grow up. This is the Dave Ramsey Show. In the lobby of Ramsey Solutions, standing on the debt-free stage, Kevin and Becca. That can only mean one thing. They're here to do a debt-free scream. Way to go, guys. Welcome to Nashville. Thanks, Dave.

Where do y'all live? We live in northwest Indiana, DeMont, Indiana. Oh, fun. Cool. Well, welcome to Nashville. How much have you paid off? $98,450. Good.

How long did this take? 30 months. Good for you. And your range of income during that time? About $120,000 down to $80,000. Okay, cool. What do you guys do for a living? I'm an administrator for the Indiana Gear Up grant at the College of Education at Purdue University. Okay. And I'm a kindergarten teacher turned stay-at-home mom and small business owner. I love that. Very good. Good for you guys. So what kind of debt was this $98,000? It's like $100,000 you paid off. Yeah.

Wow. We got real precise with that. It was just about everything. Student loans, car debt, credit card debt. Yeah, personal loan, things like that. So you were normal? Very normal, yes. Just kind of normal sucks, but you were just kind of going along, being normal, collecting

debts. Totally. Absolutely, yeah. making everybody else rich yeah yeah yeah but we got married we had quite a bit that we just didn't really want to talk about so how long y'all been married uh five years okay so two and a half years into the marriage ding ding something happened yeah what happened we were on our our way just three years ago at this time, on our way to Ocoee, Tennessee, to see my parents. And we stopped in Franklin to have lunch. And Kevin mentioned, hey, I think Ramsey Solutions is just on the road, and they give free cookies.

So maybe we should go grab some. We were all about the free cookies. Yeah, grab some dessert. So we stopped in, and then. You know about Ramsey Solutions. You know about the free cookies. But you're doing none of our stuff. Pretty much at the time, yeah.

Super Dave-ish. This is hilarious. Yeah. I think my dad had used to watch you on the Fox channel. And I had your book. I read it maybe a couple times and never really did anything. So you stopped in for free cookies. Yep, stopped in for the cookies.

And then they said, oh, you know, Dave's show is gone. We're like, he does a show here like and they're like yeah and he's gonna come out we're like we get to meet dave like this is it just we were so excited so uh we've got to watch a debt-free scream and uh after that we yeah we were hooked we had never seen one before we got to stand in the lobby and watch one and oh i get so emotional just thinking about it uh we drove away uh we got in the car after we watched that and headed down to my parents. And we took the $5,000.

We had $6,000 in savings, took $5,000, paid off our $5,000 credit card debt on the road to Chattanooga. Wow. As soon as you leave the office, it goes. It came on. Yep. And it was. Yeah. From that point forward, we knew we wanted to have a different life.

We realized it was dumb to have that much credit card debt when we had that money sitting right there. Wow, so cool. It goes back even further than that. I taught for 12 years, went back to get a PhD. I took a $35,000 pay cut at the time, but I started dating a pretty girl and took out student loans to try to maintain that lifestyle that I had had when I was teaching. So I had student loans, then I had to repay. And Becca had loans from when she was in college. And when we got married, it was just one of those things that we just never really talked about. We didn't want to talk about. Yeah, I felt so much shame and the debt that I had brought to our marriage. So anytime he brought up talking about any of it, I didn't even want to tell him numbers,

amounts, nothing, any of it. So I kind of just had to do the finances, hoping I knew what I was paying for her because she didn't want to talk about it. Wow. Yeah. So you did, when you saw that debt-free scream and got the free cookie, that was at the old building. Yes.

And so now you get to come to this new place and do the debt-free scream. That's pretty cool. For sure. Yeah. And every trip down to see my parents, we would stop in and see you guys. And that's a lot of our pictures that we submitted for the YouTube channel are us meeting you and some of the other personalities. We haven't met Anthony yet, so we're excited to meet him today. Oh, man, yeah.

Very cool. But that gave us so much encouragement every time we stopped in. Like, okay, we can do this. We can keep going um it was nice to be around like-minded people and to yeah just have the continued encouragement so what was what was the hardest thing on this journey ninety eight thousand dollars paid off i see you went down you know an income so it had to be some some something there yeah i think uh just budgeting you know having a budget and then doing without certain things. We went down once she stopped teaching once we had our baby.

And then that was one of the hardest things, I think, right around this time two years ago. Within the span of two and a half weeks, had a potentially dangerous car situation where on an interstate, blew out a tire. It could have been really bad. Luckily, I had an emergency fund to take care of that. A week after that, I found out I was being riffed from my position at the university. Got a new one since. And then a couple days later, we found out we were going to have a baby. So about two and a half weeks, all three of those things.

It could have went really bad at any point there. But it started when we did and been in the position that we were. And as a teacher, I would see all the moms, the teachers I taught with would come back after having their babies, and they were just so sad. But they had to. They're in a financial position where they had to have their income. And I knew I didn't want that. We didn't want that for us.

We wanted me to be able to stay home. And so we worked hard to make that happen. That dream a reality dream a reality i go to work well done that's a good why yeah it's a good why that's a good reason to push through very well done so you brought mom and dad up from okoe yep yep they're here cheering squad here yep all right and uh you you did you bring your baby we did yeah okay you want you want him in the shot for the debt-free screen? Sure, yep, we can have her. You don't have to, but... So who is this? This is Charlie Ray.

She's 15 months old. Oh, way to go, Charlie. All right, that's a beautiful reason right there. Very well done. Well, we're very proud of you guys. You're heroes. I know your mom and dad are proud of you. This is good stuff.

Very, very well done. How does it feel now that you did this? Oh, amazing. Very good, very amazing. It's, feel now that you did this? Oh, amazing. Very good. Very amazing. It's such a good feeling, for sure. It's life-changing. All right.

It's Charlie and Becca and Kevin from Indiana. 98,000 paid off in 30 months, making 120 now down to 80 because she's home full-time. Count it down. Let's hear a debt-free scream. Ready? Three, two, one. hear a debt-free scream! Ready? 3, 2, 1 We're debt-free! Yeah!

Great story! Wow. Very, very well done. Alright, Anthony, we're going to have to let Melissa know in the kitchen that her chocolate chip cookies just transformed someone's life. Ashley, it probably was strawberry shortcake cookies, Dave.

How would you know this? With that grin on your face, yeah. You know this from having consumed those in a recent commercial break. Yes, sir. Actually, every commercial break when I go out there. Well, we have a very special team that works in the lobby out here. We do. Melissa, in our coffee shop, bakes homemade chocolate chip cookies.

So when you walk into our place, it smells like Mama's Kitchen. It does. It doesn't smell like corporate America. It does not. Because this is more like Mama's Kitchen than corporate America. And that is the truth. You know what can happen at Mama's Kitchen? You can get a hug.

Yes. You can also get whacked with a wooden spoon. You corporate America. And that is the truth. You know what can happen in Mama's Kitchen? You can get a hug. Yes. You can also get whacked with a wooden spoon. You really can. Melissa wouldn't do that, but I might. I don't know. But, yeah, apparently her ministry of chocolate chip cookie baking has had fruit here. It really has. I mean, Dave, I've walked out there several times, and I have witnessed her actually, you helping people walking them through our stuff so it's what I love about her is you get greeted with the chocolate chip cookies but then

also she's going to help you out in life if she has time and always got the smile always yeah that's a job that I couldn't do yeah that's you know we we're very intentional about building the atmosphere and the situation and the type of people that are greeting you when you come in here so any of you that always wondered, now you have a reason. You can come by and get a chocolate chip cookie. It could lead you to completely transforming your life. That's pretty cool. I love that story.

Yes. That is fun stuff. Very, very well done. Folks, if you are a millionaire, meaning your net worth is greater than $1 million, we're getting ready to do a millionaire theme hour in a couple of weeks, and we need some millionaire callers. We don't care how you got your money. All we want to know is that you're a millionaire,

and we want to hear your story on the air. Yeah. Email and let us know. Just email millionairecalls at Dave Dave Ramsey dot com slash show. Oh, you can go to the website. Go to the website. There's a form there you can fill out. Dave Ramsey dot com slash show.

I'm looking at a sticky note where they told me to say this, and I was trying to figure out what I was supposed to say. Dave Ramsey dot com slash show. You can fill out the millionaire theme hour form, and Kelly will get back to you as she produces the show. And we don't tell you what to say but we need to line up millionaire calls for a millionaire theme hour an inspiring inspiring hour and your millionaire story may very well inspire someone to get a free chocolate chip cookie yes and change their lives you never know you never know this is the dave ramsey show This is The Dave Ramsey Show. Yes, even in the year of the dumpster fire 2020, we are going to have Christmas. The most wonderful time of the year.

Just around the corner. You heard that here first. No matter what this year has brought you, Christmas is still coming. And to celebrate, we're going to give away cash all season long. Enter our Ramsey Christmas giveaway daily to increase your chances of winning one of our weekly $500 cash prizes or the $5,000 grand prize. No purchase necessary. Enter at DaveRamsey.com slash giveaway. And if you're looking for life-changing gifts while you're there, you can visit our week-long Black Friday sale.

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It is. But apparently if you're in marketing, you can get away with anything. Oh, yeah. So Andrew is with us. Andrew is in Burlington, Vermont. Hi, Andrew. Welcome to the Dave Ramsey Show. Hi, Anthony and Dave.

How are you guys doing today? Better than we deserve. How can we help, sir? Thanks for taking my call. So I technically have three months saved up. Good. I would feel more comfortable with six. I am also putting 15% to retirement. Good. I don't have to save to get college. So all I have left for debt is the house. Are you okay, or is it okay if I take,

you know, as I'm saving up over the month, if I split that in half, partially to save towards getting the six, and then use the other half towards the home early, or should I just go to six and then start working on the house? Say that one more time. Split what in half? Yeah. So, so, you know, let's say I make an extra thousand dollars a month towards savings. Could I split that in half until I get up to six and put the other half

towards the house or should i just wait until i'm all the way up at six no you can do that yeah you can't you can't you know whatever you want to do but uh if i were you i'd just get it over with and get it on up to six well you're not going to stop your 15 right no no no no okay not at all okay that's cool yeah if i were you i just knock out get it all up to six and then start on the house. It's just simpler. Yes. But it doesn't matter. You can go either way.

Yeah. But I mean, I agree with Dave. Dave said you could do that. That's what I would tell you. Just go ahead and just get the full six months. Yeah. Just, you know, get it over with. Yeah.

It's just a math thing, but there's nothing there. I mean, you've got your three months, then you're doing your 15%. So that's baby step three, baby step four, Five, we're skipping, don't need it. Six is pay off the house early, so we're throwing money at the house. In the midst of that, you wanted to do some other things, including building up the emergency fund a little more past the minimum of three months, all the way up to six months. And so, you know, you could stop doing the house. You could do less on the house. For instance, let's change the were, let's change the number.

Let's change what you're doing it for. Let's say you had your six months and you said, oh, I got to buy a car. And so I need to start saving for a car. Yeah. In addition to your six months of expenses while you're putting 15% away, that would slow what you start saving towards that car is going to slow down what you pay on the house, right? Yes.

So there's always that when baby steps four, five, six are always simultaneously done, and the big thing there is don't let off the 15%, go into retirement, and just being very intentional and saying, I'm going to spend some money here on this item. In your case, I'm going to put some extra money in the emergency fund. But as I do that, whether I do it a little bit at a time or whether I do it a lot at a time, it's going to slow down how much I pay on the house. Yes, sir.

Yes, sir. Now, Dave, let me ask you this question. What if someone caught into the show and said, hey, Dave, I want to stop investing and just go ahead and put all my money towards getting me to six months? You know the answer to that. I'm just saying for the listener, though, Dave. Well, what's the answer to this? I'm going to say no.

I mean, you still invest. No, you don't stop it. Yeah. I mean, just still invest and go ahead and work your way up to three to six months. Well, you already have three, but get yourself up to six months. If you were going to make six that big a priority, that person calling, not this guy. Yes. But that person, that hypothetical person.

Yeah. If you were going to make six months that big a priority, you shouldn't have started the 15%. There you go, Dave. You should have just said, I'm going to get six before I move on to baby step four. Right. The range that you save for for your emergency fund is anywhere from three to six months of expenses. What's it take you to operate in your household? And hint, in most households, unless you make a bazillion dollars, in most households, three to six months of expenses

is not going to be far off of three to six months of your income in most cases. I mean, it might be 75% of your income. It might be 50% of your income, but it's not going to be, you know, I make $100,000 a year and my expenses are $40. No, that is not what's going on. Okay. You're missing something here. So because it's more than just replacing your income if you got laid off. It's also if the transmission goes out or you have to buy an airline ticket because your aunt is sick in Seattle or whatever, right? There's other things that come up that are not related to job loss that are called emergencies. So good question. Very good question.

Greg is with us in Boise, Idaho. Hi, Greg. Welcome to the Dave Ramsey Show. Hey, Dave. And good to chat with you. Real quick, got a question for you. About two years ago, I purchased a piece of property with the intent to build a house on it.

With housing prices going crazy and labor shortage out here in Boise and lumber prices and everything else, my wife and I decided we were just going to hold off on building, stay where we're at and sell the lot. In the two years time, though, the lot we paid $90,000 for is now worth about $230,000. Wow. So we didn't do too bad in two years. Ding, ding.

Not a bad decision. So the question is, is the taxes when we sell it? So my current home, I owe about $290,000 on it. I have about $85,000 in the bank, and we paid cash for this property. So the full $230,000 basically is coming back to me. So I can technically pay off my house, but I'm worried about the taxes on that 140 being seen as capital gains. It will be. Yeah.

And the good news is it is capital gains. It's not ordinary income. So you're going to be taxed at 15% unless you make over 400K, do you? I do not. No, I make about 250. Okay. So you're going to be taxed at 15% on the gain, which is a sale price minus expenses related to the sale minus what you paid for it,

your basis, equals your gain. And 15% of that number needs to be set aside, which means you're going to come up short. You're not going to have enough to pay off the house. Okay. So basically, should I pay off as much as I can, or should I hold on to it until I've got the lump sum? Give me the numbers again. You paid what for it and you're selling it for what I paid 90 and I'm selling it for 230 so that's the 140 gain you're talking about yeah so we got about a twenty thousand

dollar about a twenty thousand dollar tax bill give or take yeah and um you make 250 and um is it already is it already closing so we had it under contract and they backed out yesterday today we have another offer coming in so it'll close it in the next 30 to 40 close it after january 1st oh okay then your taxes aren't due until april 15th um 18 months later or 17 months later and you can cash flow those taxes and go and pay your house off absolutely wow absolutely ding ding come on dave ramsey wow way to go greg that's an awesome deal man two and a half years he makes 150 grand that's what i'm saying way to go way to go boise look at your economy cooking over there man i like it it's a great town by the way oh yeah i love that town wow good stuff man that's cool greg yeah if you just push

that out then it gives you till the next april the 15th to pay that bill and you don't have to pay quarterlies or anything on it it can just sit there but now go ahead and put in your budget with your paid-for house to have that $20,000. Don't let that sneak up on you. Yeah. Because the last thing you want sneaking up on you from behind is a freaking IRS. Tell me about that one. Don't want the KGB on my doorstep. I don't like them.

I don't like them. Oh, bless their little hearts. No, I don't want to bless them. Anthony O'Neill, my co-host this hour, talking track. James Childs, our producer. Kelly Daniel, our associate producer and phone screener. I am Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register.

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