The Ramsey Show - App - How Do I Prepare for My Future? (Hour 3)

Episode Date: November 13, 2023

🎵 Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, joined by my esteemed colleague, Dr. John Deloney. That's with two PhDs, in case you're wondering how to spell that. And we are here to help you take the right next step with your relationships, with your money, with your mental health, all of it right here on The Ramsey Show. And it's totally free, 888-825-5225. Abe joins us first in New York City.

Abe, welcome to the show. Hey, guys. Thanks so much for taking my call. Sure. How can we help? So I started a new job last month and I went out and got myself a brand new Tesla. Oof. I'm assuming not with cash? Not with cash, but I could. Oh, all right. The plot thickens. Well, George has one and I want one, so why don't you just go pay it off? We'll all have, all three of us will high five. Yeah, definitely. Well, so my company is giving me on top of my salary and everything else,

a thousand dollars flat each month for car expenses. So I was paying, my commute is around an hour and a half each way. And I was driving my 2004 Honda Accord, completely paid off. But I was consuming about $600 in gas each month. And so I figured payments on a new Tesla for $680 versus gas for $600, you know... Paid off, paid off.

It's paid off. It's paid off, dude. Alrighty. I'm trying to save the money that I have for a down payment on a house. And between me and my wife, we're going to come away with around $290,000 next year. Where's that from? My job, I make about 200 plus 20% bonus at the end of the year, plus the 12,000 for a car and my wife and teacher making in about $27,000. Okay. So what's your total household income going to be, you think?

Close to $300? $290. Okay. Yeah. So that's your total household income. What are you taking home from that? $10,000 on my part, $2,500 on her part. Wow. Is that all in taxes? Where's all that money going? Yeah, taxes. Right now, I don't have my 401k. I'm too new for a 401k here, and pretty much all taxes. Goodness gracious. I mean, you're talking just 50% gone. Yeah.

You should move to Tennessee. No state income tax. Okay, let's talk about this Tesla. So how much money do you have in the bank? In my checking savings, the stuff that's liquid I could get to any minute, I have about six. I've got 10 in a 401k.

I've got 25 in some investment accounts that my grandfather manages that I'm not touching until he dies. And I have about 180 in index funds that I manage. Wow. Okay. So you love investing. That's good. Yeah.

And how old are you? I'm 27. Wow. And what other debt do you have? Nothing. Just this one Tesla? Yep. How much?

I put nothing down. So so financed about $40,000. And it's going to come out to like $8,000 in interest and fees by the end of the loan in six years. But if I put the full $1,000 down, which I plan to do each month, I'll have it paid off in just under four years. What if you just paid it off tomorrow? Ta-da! Yeah, I could do that. And then the thousand just goes right back into the account. At this point, the investments have leveled out to where I was about a year ago. So it's no loss either way. Yeah, I would cash out on 40K worth index funds and be done with it. And you said there's pretty much no gains there. Right. And

by the way, I would also take the rest of that out and I would create an emergency fund. You make too much money to be this broke. Right. So in essence, I have it there as an emergency fund. If I need it, I'll pull it out. No. But it goes down.

Because you know what happens, Abe? Because you're smart enough to know this. When the market's down, it's going to hurt to pull money out when, oh, crap, the HVAC hit as soon as the market took a downturn and now I can't sell because I'm at a loss and you're going to have too much emotional pain to get rid of it versus it being liquid in a savings account making 4% interest, you'll be okay. So John's right. I probably cash out 80 of that 180 and use 40 on the card, put 40 in an emergency fund and a high

yield savings account and just be done with it all. And here's what you're solving for that you've probably never solved for before. You do a lot of calculations in your head and you run a lot of numbers and I don't say this pejoratively dude, I say this like out of high respect for you.

Also, you're 27 and you've never been smashed in the mouth economically. I have. And that day will come again. It's a Also, you're 27 and you've never been smashed in the mouth economically. Yeah. I have. And that day will come again. It's a cycle. It runs.

It will come again. And you make too much money to only have $6,000 liquid to your name that you can get your hands on at a moment's notice. Right. So it's only because I'm between jobs. Like this past month has been restocking on the money that I was missing between jobs. That's the only reason it's so low. But my wife and I, we do a $0 budget and we have about $3,000 this month that we have no idea what to do. Cool. Put it in an emergency fund. Well, you'll restock all the money you were investing and

whatever your down payment goal, you're going to free that up with freeing up this car payment, number one, and having money in the bank already. Then all the rest of the money can go towards investing, saving the down payment, and you can choose your own adventure with how aggressive you want to get with the down payment versus investing. We're going to pay a tiny percentage in sole tax, which is I get to sleep knowing I have cash that I can get to and get out of here if I need to, or I can fix something if I get to sleep knowing I have cash that I can get to and get out of here if I need to,

or I can fix something if I need to. I got a car that's 1000% mine. Nobody owes because here's the deal. You're working in like this 20% bonus. I've got some friends who work on a, they get paid at the bottom deal and it has been very lucrative. and they've gone through a couple of years where it has been a nightmare just because the business decides to invest instead of doing x or they're moving this around or we're going to recoup this over here it just gets messy and so i want to i would love you to have a pile of cash that you can sleep on and a car that's yours and then you buy a house with cash you'll just make too much money it's going to be dope dude're gonna be set yourself up but you're gonna be doing this in a healthy way not a what about this what about this move this over here oh gosh this is down and so on and so forth but we both love teslas so good for you yeah out of uh curiosity abe which one did you

get was a model 3 long range no no i got the base 3. I was not spending any more money on any of the non-necessary stuff. I just needed a car that could drive me to and from work, and that's it. Wow, that cost $40,000? Yeah. New York, dude. That's the New York tax, I guess. Wow. Well, enjoy it, man. You make enough

money. $7,500 federal tax credit, so that's all the way I was going to get. Oh, the tax credits, oh yeah that every wealthy people i've interviewed they all went man it's the the tax i got rich on tax credits and airplane miles push this over the edge that's how i got rich hey um here's the deal if you uh when the time comes and it sounds like it's getting there very quickly um go to ramsay solutions.com and look up um real estate agents, okay? And when you move to Tennessee or Texas or wherever you're going to move to

that doesn't have a state income tax, you're going to get out of that madness. You get to keep 80 or 90% of your check instead of 50. Then you'll get to change your fortune forever. Reach out. But Abe, I'm proud of you, man. You're crushing it at 27. Great job.

And we want you to be unbelievably wealthy and have no traps and distractions along the way. And that means no car loans, no credit cards, no student loans, no personal loans. And you're going to be a homeowner soon and you're going to pay off a mortgage real quick. If you just stay focused on one thing at a time and don't let lifestyle creep into your life where you have $150,000 in expenses every year because you can. Live on less than you make, man. That is the key to building wealth. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell joined by Dr. John Deloney. Let's get to the phone. Zach joins us up next in Tallahassee.

Zach, what's going on? Hey, how are you guys? Doing well. How are you? I'm doing good. I have hopefully not a stupid question. No stupid questions, only stupid answers, and they come from John. Oh, yes, sir, yes, sir, yes, sir. I'm 26, and I currently work as a music teacher at TeachBand in elementary music. My fiance is a general manager at a restaurant.

And so I'm looking at the Florida retirement system, and I'm grateful for the perk. But when I'm looking at it long term, it's just peanuts. And financially right now, I feel stuck and a bit clueless. And maybe it's from my own age and experience. I really don't know what to do because I'm looking at my bank account, and after watching the Dave Ramsey show and hearing what all the people are making at my age and what I'm doing right now, I love what I'm doing. I feel stuck.

How old are you? I'm worried that I'm 26. All right. I have an experience. I was 21, and it was my first high school teaching job at a giant public school, and I was a coach. And I loved every second of that job, every second of it. I liked my colleagues. I liked my fellow coaches.

I liked the athletes. I loved my students. I loved all of it. And I'll never forget, after my first year of teaching, going into my second, they handed me a spreadsheet or like a piece of paper, but it was basically a spreadsheet. They'd print it out like a table. And I could just find out what age

and how much money I'd be making. And I remember thinking- Yeah, and that's the salary schedule. And I am aware of that. No, but I remember looking at that and thinking, oh, I'm out. oh yeah I remember thinking I want there to be some variability I want the opportunity to go earn like I want to be able to to win and not just on the sporting field but I want to be able to go do good in the world and help people solve problems and and also make a good income I can provide for my family so So I've been exactly where you are.

I'm looking around going, where's all this economic security, right? And you're doing a really, really, really hard job. Hard job. Yeah, I'm very passionate about teaching dance, the one thing that I know and love. Yeah. You're a real life school of rock right now,

and I'm just, I'm jealous a little bit. George is still stuck in the ta-ta-ti-ti-ta, so he'll get there. He'll get there. Well, from two musicians, we're thankful for teachers like you

who are out there inspiring the next generation. Lord knows I'm trying my best. I love it, but man, like, I'm grateful for it, but it's peanuts. Well, let's talk about what this future could look like.

So what's your current salary? I make $42.5 a year. Okay, and you're not married. You have a fiancé. Any plans to get married, or is it still? We're getting married in June. Exciting. Okay.

Do you know what your household income would be by then? Combined income, we're roughly looking at, between the both of us, we're roughly looking at 90. Awesome. Okay. So that's the near future. You know, a dual income makes a huge difference as far as building wealth. Yeah. And what are your retirement options right now? What's it look like? Is it mandatory? I'm at the FRS. It's something I can't withdraw without penalty until I'm 65. Right now, they take about $127 out of my paycheck a month. And this is my third year of teaching, and I'm currently standing at roughly $9,000.

But I can't touch it until I retire at 65. But when you're 65, and they'll probably move it to 70 by the time you get there, but are they going to average your top three years, and that's going to pay you a percentage of that? It's just going to keep growing and then whatever it's at, I just withdraw. Is it essentially like a 401k or is it more like a pension? I think that's what John's getting at. Oh, I'm sorry. Again, I'm an experienced and I'm sorry. My teacher retirement when I was in the state,

and I've been in the state as a university professor and as a public school teacher, it was, they take your three highest years or five highest years, average that together, and then I get a percentage of that, like 70% of that number. Pay the pension. Okay, okay. All right. So it's very similar to that. Yeah. So you do have other options. One of those options is a Roth IRA, and I would encourage you to start that today.

Roth IRA. Yeah, would encourage you to start that today. Ross IRA. Yeah, write that down. And we've got tons of resources on our site. And there's a program called SmartVestor, and you can connect with investment pros all over the country through our website at ramsaysolutions.com. They can help with this to walk you through it. But this is essentially a retirement plan that's not connected to your employer, and you have full control on what to invest in there. And I've got a whole YouTube video on investing for beginners that I encourage you to go watch on my YouTube channel. And the simple strategy I lay out is match beats Roth beats traditional. So if you have a match through your employer, let's start there. Then we're going to move to all the Roth options. For you, that may just be the Roth IRA for now. And you can max that out.

And then you can move to the traditional side. And then how do you feel about a 403B? Yeah, those are great. I mean, that's essentially like the 401k for you. And I like that because you have more control versus this pension. And so are you debt free right now? Is that something you would run? I'm sorry? Are you debt free? I have 9,000 student loans and that's it. Okay. Well, I would be tackling the debt aggressively so that we can get back to investing. Because right now there's a certain process that I want you to follow. It's called the Ramsey baby steps where you attack all the consumer debt first,

meaning we're going to use our savings. Do you have any money in the bank to throw at this student loan debt? So I have about $1,200 in my bank account after paying bills. And then the only other thing that I own that's of value is I have an instrument worth about $8,000, and my car is paid off with no debt, and that's worth about $30,000. Wow. I'm curious about this instrument. What is it? It's a tuba. Is it a sentimental tuba? Half of me wants to say yes.

Okay. I'm just wondering, that looks a whole lot like dead freedom, getting rid of that tuba that's probably collecting dust. Because I'm guessing if it's $8,000, you don't want to use it much. No, I use it. It's for my side hustles. So because to supplement my income, I work, I don't take days off. I haven't had a day off in a long time. I work at a butcher shop and then I use that instrument to teach lessons, which pays me 40 an hour. And at the butcher shop, I take home, it's under the table, probably around a hundred dollars every time I show up. What's a used tuba cost these days?

So they come in beginner models, professional, and intermediate. What's good enough to do your gig? Typically, you'll see professional grade tubas that range from $5,000 all the way up to $30,000. But what about used? Could you go used?

Yeah. I mean, my tuba is used and it's worth right now at around $8,000. I'm just wondering, can we offload the tuba, get out of debt, and then cash flow the next one to keep this side hustle going? It's just an option. It's just one option to get you out of debt faster so that you can get to investing, which is something that you want to do. But when you think about this, you can go crunch the numbers on our investment calculator

at ramseysolutions.com from 26 to 66. You have 40 years to invest. And so that gives me a lot of hope and confidence that you're going to retire a millionaire. And that's not withstanding your fiance's income as you guys get married and combine finances. And you guys will both be making a great income over the years, knocking it up to six figures. And you're going to increase investing at that point as well. As your income goes up, that 15% gets bigger and bigger. And also- Now, call me silly.

Would it be worth considering? Because I've actually had more thoughts on selling off the car than I have my own instrument. That sounds stupid. No, I mean, $30,000 is a lot of money based on what you probably bring home in salary, so I wouldn't have any problem. If you sold a $30,000 car and bought a $15,000 car and took that $15,000 and paid off your debt, that's a great move, I think. Very wise.

Okay. Here's the other thing. Any advice on selling custom vehicles? Custom? How custom are we talking? Yeah, it's a... Did you build this thing in the garage? It's a Tony Dodge Challenger, and I've modified it to all hell.

You didn't get it lowered too fast, too furious, Tokyo Drift, did you? Custom rims, custom speakers, custom engine parts, all the works and everything. But I had no payments on it. I bought the thing in full. It was from the whole GameStop escapade. On an impulse that I regret, I sold, when I made a lot of money off the game, I spent it all on that stupid car. And I love the thing. Does it go like this?

That's a pretty good impression. Dave Ramsey would call that your stupid tax. That's what you get. Yeah, only when you wind it up, it makes that sound. Oh, gosh. I know. You have to pull a rope to start it. Good job, dude. You know what?

Just like NFTs and crypto, there's always another sucker that might buy it. So I'd go ahead and post it and hope for the best, my friend. But I have faith you'll be out of debt soon. You'll retire a Baby Steps millionaire. You just got to follow the proven plan, my friend. Thanks for the call. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney.

Let me tell you right now, if you like this show, please help us out. Consider subscribing, leaving a review, sharing it with a friend. All of that matters. We don't have a big, giant marketing budget. We're not sponsoring stadiums. We're just out here doing our best to help people, and you guys are the marketing. You just telling people how the show has impacted you, how it's changed your life, the entertainment value you get from it when John is on, all of that matters. So continue to do that. It would mean the world to us. Brittany joins us up next in Sacramento. Brittany, welcome to The Ramsey Show. Hi, guys. Thanks so much for taking my call. I met you both at the Smart Conference in April, and it was amazing. Awesome. So calling about, I got into a very small accident in September. It's just like front bumper damage, and I hurt my left arm, but it's not a huge deal.

The insurance agent just called me on Saturday and started offering, you know, here's some money that we're going to give you for pain and suffering, but also we're going to give you money for medical. When she found out that my two children were in the car with me, she started saying, oh, well, were they injured? And I said, no, they were on the opposite side of the vehicle. You know, they're okay. And she said, well, we want to give them something too. So she said, normally they start out at like $500 per kid, but because we've waited eight weeks to even hear from this insurance company she's like I'm going to give you the max which is $2,500 per child and they're 14 and 11 my son and my daughter and we have five kids and we're on baby step two

so when the lady was like you can use this money for them or you can use this money for you guys it's really up to your discretion and I thought oh well I don't know what we should do so I thought about calling you guys because at Follow you. We do every dollar. We're done FPU and we're working hard on babysit too, but we have a kind of a long way to go another couple of years. So we just weren't sure, should I be putting the $2,500 per kid into an account for them when they're older? Or if, because, you know, they don't care honestly about the accident.

They were like, they looked at from their phone and they're like, what just happened? Oh, nothing. And they weren't affected, so to speak. I mean, I'm just trying to find out what's ethically right and what I should do to really just I think you should call an agent back and ask for a million dollars. Yeah. That's the strangest insurance

call. I mean, I've had people with like cancer or broken legs and the insurance is like nope, nope, nope, nope. And they're trying to find ways to give you money. Yeah. And this one is the first nicest insurance agent I've ever worked with in my life. I'm not kidding. And she's very helpful. And she was just like, I'm so, so sorry. And I can't believe how this has affected you and your family and all this stuff. And I was like, wow, this is the nicest insurance agent I've ever talked to. Wow. Did you have to sign something that says no matter what,

you'll never come back and ask for anything more as long as you live? Nope. Nope. They sent me emails for both children saying if they have any growing pains or insurance problems later that they can come back until they're 20 years old and sue them for any money they'd like. Oh my goodness. Dude, you just gave me hope.

I was just telling George during the break, like, I think we're all doomed and you just turned it around with one call. I know. It's absolutely crazy. Wow. But it was like I said, one of the best phone calls I've ever taken. Okay. So your question really is about morally, what do I do with this money?

Technically, it was for the kids, but we have debt to pay off. Yeah. So $2,500, that's $5,000. That's a huge amount. And like, we've been working really hard. I'm a nurse. I work night shift, which my husband hates, but we're like, until we get out of babysit too, I'm going to work really hard. I'm going to stay on night for the next two, three years. And you know, it's an extra $30,000 a year to stay on night shift. And, um, the kids, you know, we work hard, but we like saved up, um, cash in August

and I worked four extra shifts so I could bring home $2,500 to pay for our daughter's braces outright. We wouldn't get another payment, you know? So we're trying really hard to make sure we don't go into any more debt, but we're taking care of things for the kids and stuff like that. So it's like, I'm not saying we should use the money at all. I'm just saying, I don't know what the right thing is because with compound interest,

what is 2,500 for Jackson when he's, you know, 18 versus 14 or for when he's 25 I don't know we have like I said we have five kids we have two about to go to college right now so we're like life is expensive I think the greatest gift you can give your kids and George tell me if I'm wrong I think the greatest gift you can give your kids is a mom and dad that can breathe and a mom and dad that um have peace so they can deal with the regular crap that's the rest of our life and a mom that finally gets to stop working the night shift because she's she's just worked her butt off trying to get this stuff taken care of and so i'd throw that money on

your dad and just use it as money from above and just stop somebody in a conversation in the future if they're ever bad-mouthed, an insurance agent, say, no, I met a good one once. She's amazing. She was good. And in addition to the money for the kids, she's also saying that they're double-checking if they can make it more, but they're trying to offer me like $7,000 to $10,000 just for the fact that I missed the night of work and I'm like doing doctor's work. Yeah.

So that's an addition to the medical cost. I think John's spot on here, Brittany. So what's your total debt load? What's left? $289,000, not including our house. Whoa, is that a lot of student loans? That is everything except cars. We have no car payments.

We paid off our cars during COVID and we've been working. We have two timeshares that I'm in the process of getting out of. We have student loans, we have credit cards, we have a personal loan, and we have a solar loan on our house. Oh, boy. And our house, this is something my husband and I have talked about many times,

but our house is worth $1.5 million. We're in California. And we could sell and pay off everything, but I kept telling him that's an easy fix. I don't want to not feel this. I want to make sure that we're doing hard work, you know, following all the steps and try to make sure we're doing the best we can. What's your household income? 260,000. Oh, wonderful. What does he do for a living? He installs water heaters. What do you do? I'm a night shift nurse.

I work in the ICU and the emergency department. So did you go get your doctorate or something? Uh, I have a master's, but I paid my master's in cash actually. Uh, so the student loan that's left, I think it's about 80,000 in student loans. That's all from my bachelor's degree. Cause I was, went through a really bad divorce in like 2014. And so I, we're a blended family now. And like, so we have a really good, you know, income, but we have our solar loan is 60,000. So a lot of that is student loans, solar, and then the rest is all jumbled of credit cards and personal loans and all that. Okay.

So the good news is you have a great income. I'm going to go through the baby steps one by one, smallest to largest, start knocking these out. I'm making 260. If you keep this up, how quickly do you guys plan on paying off this 289 in debt? We calculated probably about 24 months. And the only reason I say, yeah, I think 24 months because of, you know, in costs that have been incurred, I swear every month, something happens right now.

We've had car repairs. We've had, my brother ended up going into the hospital and I had to help him. There's just like all these little things that have happened where we just $1,000 here and $1,000 here. We bought cash flow now, but we started the plan again since I've been with you guys in April at the Smart Conference. So starting in July, we just have tackled and I've made, I don't even know,

I think we've paid off already. Let's see, debt payoff. We've already paid off $24,000. Awesome. Awesome. Will you make me a promise? Yes. That you will not borrow money for your kids to go to college when they leave next year?

Oh, absolutely not. We have debt-free degree. They have scholarships. We already have six colleges that have accepted my daughter with scholarship offers. We are not doing any debt. Absolutely. Awesome. Awesome.

Awesome. We are on board with that. Mom of the year right there. Thank you so much for the call, Brittany. Wow. That's a lot of debt, John. With a great income, but even in California, that income can disappear very quickly.

So we say don't do this a lot, George, but part of me thinks if you're sitting on $1.5 million and you got the message and you've learned it, I get the I want to feel it and we need to do behavior change and all that. Yeah, that's rare that you get a Brittany who's like, no, I want to change my behavior. I don't want this shortcut to get out of debt but almost it feels like i want to be flogged for this for this as we go instead of no we're gonna we got two kids leaving for

school we're gonna downsize a little bit i'm gonna go from a 1.5 to 1 million house we pay everything off it's pretty wild i might consider 1.5 to 1.2 clears the debt completely tomorrow wipes it out uh so that is something I would consider, especially as the kids head off to college. I like that game plan. And when somebody tells me, hey, I went through a traumatic divorce. I had undergrad stuff. I've got this. And we, gosh, we've just done dumb after dumb and never again. I don't know. Part of me says, man, if y'all can come together and sell that house, that'd be cool. Well, what's amazing is when you think about the fact that people, as they enter their adult life,

start accumulating debt, this might be the first time in her life they become debt-free with no payments in the world in their adult life. No question. And I think people, they don't really take time to grapple with what that would feel like mentally, emotionally, physically on their bodies to owe no one anything for the first time in their adult life because they're so used to it. Right. Or they take out a $60,000 solar loan, which I'm a huge fan of.

I'm going to get solar in my place. But so they don't have to pay a $300 a month bill, right? Oh, yeah. We can justify it all day long with math. Right. And that's when the train goes off the tracks at Justification Station. Every time, John. Did you just rhyme?

I call it a rhyme. That was painful. I'm no Eminem, but I get the job done. No, you're not. You're a skittle. This is The Ramsey Show. Welcome back to The Ramsey Show. Our scripture of the day comes from Matthew 6, 20

and 21. Store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also. Paul Stanley, from one of John's favorite bands, Kiss, there it is,

said this, charity is not an option, it is an obligation. That was not on my bingo card. And I quote, I want to rock and roll all night and party every day we should have chosen that quote i think it's just as powerful disagree okay fair enough well let's get to the phones joanne awaits in jacksonville joanne what's what's going on with you hi um john and george i just want to thank you guys for taking my call today. Sure. How can we help?

Yeah, so essentially we're wanting your thoughts on whether or not we should sell our property. Our situation is my husband is active duty military. He's been military for 22 years. And pretty much 22 years ago, his parents helped him to buy a home, a piece of property, and we've since paid it off, so we own it free and clear. We're also completely out of debt.

We have been for, gosh, probably almost 10 years now. Wow. But we're wondering if we should sell it to buy another home or if we should just buy another home where we are. We think we'll be here in this location for another five or six years. And we do have $100,000 saved up as a down payment and where we've paused retirement

to stack up more cash for all the fees and things. We do rent our property. It's in Washington State. We rent it, and we get about, after paying the property manager, we get about $1,300 a month from that. And I reached out to our property manager and asked her what it would be worth if we were to sell it. She said initially we bought it for, I think, $64,000,

and she said it's worth over $500,000 now. Wow. That's amazing. Okay, so let's say you sell it, and you get $500,000 plus your $100,000. You want to pay cash for a spot in Jacksonville for $600,000? Well, see, that's the problem. We've never lived there,

so we'd have to pay capital gains plus all the other. I think it would increase our tax bracket by having all that earned income. It definitely would. So we'd lose 20% out the gate, right, with capital gains. And then how much more would we have to pay in taxes? I don't know. George, you're the smart one here, but I thought if you roll it immediately into another property,

you don't pay capital gains. With a 1031 exchange? Right. Well, that would be investment property, but you're wanting a primary home? Right, but it has never been our primary home. So from what I understand, the law is you have to have lived in it for the last two years.

And if you bend the rules a little for the military... Yeah, to avoid up to $500,000 of gain. Yeah. Yeah, so you would have to pay the capital gains on that. Yeah, I don't think we could get out of that. And it would be that 20% tax rate, according to my estimations. Yeah. Yeah.

But let's also say this. So the house has appreciated a significant amount. So if they had called and the manager had told you, hey, it's worth $400,000 or $425,000, would you guys still have jumped up and down and celebrated?

I think so. I mean, gosh, it's depreciated so much. I just wonder, do we want to lose that much in taxes? When there is a chance, right, when he retires, we could go live there for a couple years and then not have to pay that when we sell it. But there's no guarantee that we'll go live there that's exactly right and so there's this weird phenomenon and i slipped my mind right now it's late in the

afternoon it's a it's a it's a psychological way our minds work right and it's a psychological mind or way our minds work that was a terrible sentence brilliant this is why they pay this guy the big bucks if somebody says hey um, you got $5 coming to you. And then later that afternoon, someone goes, dude, I was way off. You're getting $150. And then when you get the check, you open it, it says $100 in it. And you say, I thought I was getting $150. They're like, yeah, dude, the calculations were all over the place today.

But dude, you get $100. That's $95 more than you thought you were going to get. Yet your body goes, oh dude, I lost 50 bucks. Right? You gained 95 more than you were expecting, yet it feels like a loss because that other number was out there. And so part of me says, do what's best for your, like part of selling and transacting real estate unless somebody knows something different than i do george is paying taxes on what you buy and what you sell that's part of life what's best for your family right now might not be to have a would you buy a 500 000 property in washington to make 1300 bucks on it every month

living in jacksonville no right normally no right and so part of me says man take it take the property in Washington to make $1,300 on it every month? Living in Jacksonville? No. Right. Normally, no. Right. And so part of me says, man, take it, take the... Take your $375 that you would get plus your $100 and get yourself a spot in Jacksonville and you'll be okay missing out on the $15,000 a year in rental income.

That just feels like such a win to me. A win to the peace of your household. And even if you take on a small mortgage, you're not violating any of the principles. Get a 15-year fix where the payment's no more than a quarter of your take-home pay. And that's how you know you're not biting off more than you can chew, and you'll still be able to pay that off really quickly.

Because I want you guys debt-free again real soon. So if you can't pay cash for a place, at least roll all of that into it so you have all of that equity with a real small mortgage, which is also going to lower your monthly payment, which also allows you to pay it off real fast. Right. That's what John and I would do if we were in your shoes.

All right. Thank you guys so much. Absolutely. And thank your husband for his service. Active duty, 22 years. That's absolutely impressive. And a lot of sacrifice goes into that with all the moves every few years. And we appreciate that. Does not go unnoticed. Dylan joins us in Columbia, Missouri. Dylan, welcome to the Ramsey Show. How are you doing? Good. How are you? Not too bad. How are you guys? Good. We're hanging in. You're the last question of the day, so you better bring a hot one for us. What's up?

I've been trying to get through for a while. With my work schedule, I haven't been able to get through. But with my work schedule changing, I've been able to get through. So I'm blessed to be able to do that. So we started working on the Ranji program about eight months ago. We're on baby step number two. We have knocked down our debt pretty significantly. We started at about $46,000 with some two vehicles

and then some personal debt that we had. We're down to just the vehicles and then a couple, about 3,000 left on medical and other little individual things with the baby steps or with the snowball effect. So we are, in the next month, we'll have that 3,000 or so paid off, and that will leave our two vehicles. We owe roughly about $13,000 to $15,000 each on those. We have attempted to try and sell one of them, which is a 2016 Ford Explorer. I have a 2017 Ford F-150. And we've attempted to try and sell the Explorer. I haven't had any luck.

We've posted it. We've got a couple people interest. What's your household income? So single income. My wife stays with the kids. So our household income is roughly about $3,000 a month. Man, one of these cars has to go. That's a lot of car for making $36,000 a month. Man, one of these cars has to go. That's a lot of car for making $36,000 a year.

Yeah, well, and that's with $3,000 a paycheck. Sorry, not a month. Okay. $3,000 a paycheck. That gives me a lot more peace. I was like, man, whew. Okay, what's the Explorer worth, you think? So it's roughly, when we kill a Book it, right around 16 to 18.

Okay. And then what would you do without that car? That's the thing that we will have to get. So I drive about an hour to an hour back for work every day. I work in Jefferson City. So we would have to get just a car to drive back and forth, which that's what we'd like to use to be different than what was O. Well, you're going to need maybe a little bit more than that

because I don't want you in car repairs because you got a hoopty and said, George made me do it. So save up a little bit of money, get something reliable, maybe $5,000 or $6,000, and then you can sell it, get that other car with cash. That's the move, man. You'll get there either way. It might take some side hustles and sacrifice, but I hope you get that car sold soon. That puts this hour of The Ramsey Show in the books. Until next time, spend wisely, save intentionally, and give generously.