The Ramsey Show - App - How Do We Break Out of Our Debt Cycle? (Hour 2)

Episode Date: July 25, 2024

Live from Nashville, Tennessee, this is the Ramsey Show, where we talk about your money, talk about building wealth, we talk about your mental and emotional health, the work you do, all of it. I'm John Delaney, joined by Jade Warshaw, and we are taking your calls live at 888-825-5225. That's 888-825-5225. Whatever you got going on in your life, give us a buzz. And if we don't have an answer, we've got an opinion that we will make up on the spot just for you. Let's go out to Fargo, North Dakota. Fargo. So many things I want to say about Fargo, but I'm not going to. Why are you saying it like that?

Let's talk to Amanda. What's up, Amanda? Hi. Am I on or not? You are on in front of all dozen of our listeners. What's up? So we consistently create some financial gains and then we consistently fall back down into the pit. A lot of usually due to our layoffs.

And I guess I just, I don't know how to break this cycle and trying to figure out what to do. Should we continue in what we've been doing financially? Should we, or should we make some changes? I don't really know what to do. Should we continue in what we've been doing financially? Should we or should we make some changes? I don't really know what to do. How many layoffs? How many times has this happened? It happens twice a year. So we have a week off in July and two weeks off December, January. So you know that they're happening every time? Yes. Okay. So that actually makes me... We plan for it.

Say again? We plan for it. We have enough money to make it through. We've reached the point where we no longer have to take out debt in order to survive the layoff. Uh-huh. We just... So if you're planning for it, where's the problem? Because I'm tired of falling back down into the same, no savings, no, like it just doesn't seem to end.

So, okay. So then I think we have a situation of we have different definitions. Because for me, if you're planning for it, then there's no loss of gain. But you're saying that every time it's taking you down to zero. So whatever progress you made, there is no progress. And I'm saying, is that right? Because I'm thinking, okay, if I know there's going to be a layoff in July, how long is the layoff in July again? It's a week. One week. Okay. And then how, and then I've got a two month layoff January and December, right? So I'm thinking, okay. I'm thinking throughout the next 10 months, basically, I've got to make sure in 10 months,

I'm planning that I have enough for two months. So I'm always kind of like packing it away like a squirrel and I've got it there waiting. And that's not, that's on top of, and aside from emergency funds and all the other things that we're doing, it's almost like a sinking fund that you're creating. So what I'm thinking is that the income that you guys do have, it might be tight as it is. Am I right? Yeah, it's pretty tight. Okay. So what's your husband earning? I've never, what's that? What are you and your husband earning? I have not had a real job in 12 years. Why? I'm a state-owned mom when I homeschool my children. Okay. He makes $45 an hour with zero benefits. No PTO, no sick time, no dental, no vision.

What type of work is it? I use a contractor in a factory. He's a contractor. And no benefits. Okay. Tell me more about Fargo, North Dakota. Why are you guys staying there? That's where the Lord has called us. My husband is very involved in the ministry. We're in the process of starting a church, and we just were very involved in our home life. Okay. And I don't know, that's why we're there. So you think the Lord calls you to a situation where you're terrified of your ability to feed your family every month? Well, we're not that bad. I have at least three months supply of

food in my house at all times. It never goes below that. But I don't really feel like it's time to leave the town that we're in. We're in a small town near Fargo. Is he working 40 hours a week? Right now he's doing 50 to catch back up and put more in. Okay, so before taxes, I'm looking at the numbers before taxes and it's not really that bad. What is he actually bringing home? Because there no medical there's no two thousand one hundred and sixty eight dollars i believe was today's paycheck yeah but i mean for the month it varies um what was your household income last year i don't really know okay okay i think that's

part of the problem that is that is a big part of the problem. So the first thing here is if I ask somebody what they're making and they don't really know, then I know they can't be keeping a clear budget and a tight budget because that's just part and parcel to it. It's a month to month. I do a month to month budget. I don't do a year budget. And I wouldn't advise you to. I would advise you to do a month to month.

But when you're doing a month to month, you still have an idea of here's about what we bring home here's a good month here's a bad month right and so I think that you guys could tighten up a little bit on that unless you just were like Jade I got nervous we're on live radio like I get that um I am nervous I do know the numbers if not in front of my computer. I got you. And it's also hard because he just got fired from his job, and now he's at a different job. So he's got $5 an hour less pay. So I don't really know. Okay.

So we've had a big change. Are you doing an every dollar budget every month? I don't know what that means. So here's how I run my budget. My budget is everything is in a spreadsheet. Every bill we have is in my spreadsheet. I have the total at the bottom, and then I have that divided by four because that's how many paychecks we get in a month.

It's a week-to-week. And then every single week, I take that divided number. So today was $670 approximately. Okay, I'm going to simplify your life. I'm going to simplify your life. Before we get off this call, I'm going to make sure you get set up with every dollar. It's going to make it so simple. It's going to be at your fingertips. So much of it is going to do the work for you, which I think could be helpful for a stay-at-home mom who's homeschooling, right? Anything to take something off of your plate. So I think that's going to give you a clearer picture just on a daily basis on what's going

on with the numbers. The transactions can automatically come into every dollar and you can see it at a glance, which I think is something that will help. And it will help you come up with how can we create a line item where we're always putting away for those off months so that it's separate from everything else. Yeah. Yeah. I put $300 away every paycheck. Right. But we want to make sure what you called in and said is even though we're doing that, I still feel like we're going backwards and so i want to make sure that that doesn't happen anymore so do you guys on top of the money that you put aside for his off months do you guys have three to six months of expenses

no okay that's not even close that's the that's the goal that's what we want to get to because if you have both of if you have three to six months of expenses, if you have another fund set aside for when he's laid off, then you're not going to feel that way. And by the way, if you haven't started paying off debt, that's probably going to be a step in this process too. So hang on the line. We're going to get you set up with Financial Peace University because I have a feeling that you're doing a lot of the right things, but they may be out of order and there may be a way that we can really optimize this for you and really help you get to a point to where you feel like you're only going forward and you're never going backwards. This is The Ramsey Show.

Welcome back to The Ramsey Show. Real quick, just stop what you're doing, not because I'm about to ruin, but because it takes two seconds to subscribe, like, hit the thumbs up button, leave a five-star review. Whatever you got to do, it's a way for no money. It doesn't cost you anything, but it's a way to help out the show. But more importantly than the show, it's a way to help out your neighbors. Because the more you like and share the show and leave five-star reviews, the more it kicks it up into the internets and the algorithms and it puts it in front of your neighbors and it gets them some of the life-changing freedom and peace and hope

missing from traditional media these days. So please, please, please like and subscribe to the show. It's a gift to us, but more importantly than us, it's a gift to your neighbors. Thank you so, so much for being in our gang. Let's go to Knoxville, Tennessee to the K-X and talk to Kat. Hey Kat, what's up? Hey, hi, Jade and John. So I'm trying to figure out how bad or how good my situation actually is. I'm 68. I'm retired. I have a decent fixed income. I have a mortgage, but no other debt. And I have three months of emergency savings and nothing else.

Okay. So you're on the fixed income right now. Is that fixed income enough? It is just enough. I have to type my, I don't have a complete handle on those annual expenses that pop up. Okay. And so I've been a little overspending, but I feel like with what I have, I can get a handle on the annual and, and I can, I can definitely cover my basics. Okay. And the mortgage, how much do you owe on it? It's $350,000. Okay. And what's it worth? And I will say I am committed to keeping this house because of an obligation to a family member.

Okay. And so that's, and plus my whole life, my whole retirement is built around this land here, which has a small farm and income potential. So I just want to say that's not on the chopping block at this point. I'd have to be going into foreclosure before that would go. Listen, that's your choice. And I'm not opposed. I'm not saying I'm opposed to it. I just was wanting to get an idea of your whole picture. I'm assuming it's on a 30 year? A 30 year fixed under 3%. Okay. And how many years have you been paying?

Basically, when do you pay it off? Like two. Oh, gosh. Okay. Yeah. So I'll be quite old. 88. Okay.

So with your fixed, here's where I'm at. With your fixed income, you're, like you said, you're getting a handle on the annual stuff, but it's not allowing you to make extra payments to pay this off any faster no and it's not an order to save money I mean one of my questions is assuming I can make some more money I think I have some ways to bring in a little extra money maybe even a lot and I would do that and if I did that would I invest it or would I pay off this mortgage that doesn't have much of a chance of ever actually impacting my monthly experience? I would invest it because walking through the baby steps, the next baby step for you would be to be investing

15% of your income. And in this case, probably anything that you get above and beyond, right, would go towards that. So for that reason, I would. And the truth is, I mean, like you said, this, this, most of us plan on living, right? And so if you plan on living, then you're going to look up 20 years and that money will have grown and it will be money that you can have and pull from. So I would do that. i would do that i mean i think for you because you said the house is not on the table then that's really your only option is to say i'm gonna live a life that's on this fixed income and i'm going to the only other thing i might do and i would do is get your emergency fund up to six months of expenses

okay i would do that and then past that I would just start investing 15 or whatever above and beyond you know whatever your side hustle brings you okay and um the the other part of this question is how bad off am I should I be like my my feet are on fire I have to make more money I would i i would because like you said you don't have much wiggle room and all it takes is for something to go wrong and you're like scrambling like you're in this house hopefully everything's good but you also have a lot of land and when i see that i'm like okay there's a lot of opportunity for things to require money and so even though you have six months of expenses saved if something happens

and whittles it down to three months well how long is it going to take you to bump it back up right you don't want that to take forever so for that reason as much money as you can pack away you know obviously whatever you can you know invest and have compound interest working on your side is a good thing so that's's what I would do. I mean, I can just tell you if the house was on the chopping block, I might suggest downsizing. But in your case, I don't think that it is something that you're going to do, so we won't even talk about it. Tell me about this family obligation. I finished this house with three living spaces and, um, with a promise that

my cousin could retire here and save for life. And I'm not breaking that promise. And she's here and, and we both want to be here for life, you know? So it's, I, I, all the activity and the way I plan to live my retirement is tied up in this land. Is she contributing in any way? She has, but it's not a monthly cash. So the contribution is done, so it does not help me in a monthly way. Okay. Yeah. I just have to be honest with you.

Did you say you were 68? Yeah. Okay. It scares me for you yeah yeah um and it scares me for you simply because um you're entering into a space where um you don't have the flexibility financially to have the lack of flexibility in all areas of what you want to be true right and so it's it's I've got some acreage out here outside of Nashville and I feel like every month something comes up I got to pay for that I didn't expect yeah there's something with the well or something with the power or something with something right and man you get into thinking

it's going to be a farm producing and we're going to grow grass we're going to have people it is a thing after a thing after a thing after a thing after a thing and in a million years i wouldn't have expected that but beyond that here's here's the here's the part that makes me the most nervous. And we talk about financial peace and we talk about like, I want to be a millionaire and all that. For me personally, that's never really spoken to me. Here's what's spoken to me. I think it was two years ago now, one of my cousins who I loved, he suddenly passed away. You know what? I'll give you a more realistic example. Today, one of my closest friends in the world's mom passed away after a

bout with Alzheimer's. And he said, here's the date of the funeral. I'd love if you could be here. And I checked on nothing. I said, I won't miss this. And it's because I have an emergency fund and it's because we have built these things up over time that I don't even have to check. I know I've got the money to go be with my friend and his family during this time of pain. And so my concern for you is you've locked yourself into this thing.

I will never change this no matter what, come hell or high water. I made a promise, even one that I didn't even know I could financially keep, but I made it. And so I'm just going to, I'm going to live a life on a fixed income. And that just makes me nervous for you because life doesn't work like that, generally speaking. If it did, we wouldn't have this show, right? Right, right. Yeah. I mean, and there are definitely situations that could lead to changing that. And then, you know, maybe in 20 years, we'll, you know, we'll both be ready for something different. Maybe. Yeah. But to back up what Jade said about the investment, if I were you and you still have

the ability, I would be out there hustling work tomorrow. I think you have to. I could get one job, two job, and I would dump that into investments. It'll double every seven years. And so I think 21 years from now, they will have doubled and then doubled and then doubled again, whatever amount you put in there. Yeah. You have to think of this as you've made two choices. If you've made the choice to keep the house, then you've also made the choice that you're going to continue working. And I think as long as you do it like that, you'll be okay. And to answer your question, if you're on fire, I would say, you know, Sco your question if you're on fire i would say you know scoville meter you're probably pretty far up there like it's pretty hot it's pretty hot but you gotta work as long

as you work you can keep the temperature down as long as you work and you put that money away this is the Ramsey Show. I'm John Deloney joined by Jade Warshaw. Alright, so this is Deloney Vulnerability Time. Over the last few years I've been sitting by Dave, I've been sitting by Jade,

I've been sitting by George. Never with Rachel. But with all my fellow personalities and they will say something about money because I don't know much about it. They'll say some kind of retirement vehicle or they'll say like 50 whatever. And I will be thinking in my head, I don't know what that is. And I'm on the radio in front of millions of people.

And so off air, I'll ask them like, hey, what was that? And sometimes I just ask them on air like, hey, real quick, stop. So we're doing a new segment called Asking for a Friend, because we know that you are out there listening and we're talking about retirement investing. We're talking about 501s, talking about 401ks, talking about all these different things. And you're wondering, I don't know what that is. And I just Googled it or I put it in chat GPT, but I don't fully get it. So we've got you. We've got you. So today's asking for a friend segment is on what is retirement investing? It's such a good question. And no one wants to admit that they maybe don't know. Right. To your point. So a lot of people hear the term retirement investing

or my retirement account, and they're afraid to ask really what this means. Why is it different from other investing? Because it's something that as adults, we feel like we should know, right? You don't want to be today years old when you find out about it. But luckily, it's really not you who wants to know. It's your friend. So take a look at this. You don't have enough money. Okay. Right here. It says right here in this account we have $401,000. Jackpot! You missed it!

Nope. That says you have a 401k account. If you liquidate that right now, you'll have, you know, maybe $5,000. So what happened to the other $396,000? Boom. Gotcha. What is wrong with the two of you? That sounds like me and Dave on a regular basis. Oh my gosh.

Listen, you know, we're laughing at it, but it's very true. I remember talking to somebody and I said, well, are you investing at all? And they said, no, I mean, I have my 401k, but no. And I was like, oh, you are investing. Do you have any debt? No, I don't have any debt. I mean, except for my car, my student loans and my mortgage and that loan I took out on the pony. You're like, what are you talking about? Right. Well, I mean, the truth is a lot of people, you know, you go, you go to your job and they get you set up and it's like, do you want to invest? Do you want to put money into your 401k? Okay. You know, but they're not really explaining to you what's going on. Okay. So let's learn about this today. Let's talk about what retiring investing actually means for your

friend who is confused. So really there's really two vehicles. When we talk about retirement investing, this is money that when you are of retirement age, it's there for you because after a while you're not going to be working your job getting your normal check right and so you want to make sure that when you get that age there's money for you so for most people you know retirement age is 59 and a half so these accounts you once you put the money in you can't get to it until you're 59 and a half okay so there's really two vehicles that most people will see you see a 401k um that's, it comes in a traditional form where you pay the taxes right when you put, it comes in a traditional form where you put the money in and you pay the taxes on it later. Or it can come in a Roth form where you pay the taxes now so that

when you pull the money out later, you don't have to pay the taxes, right? And these are all, this is employee sponsored. When you go to work at a job, they say, hey, we've got this account for you. You can put money into it and invest it and it'll be there for you when you need it. Okay. Then you could do another type of account that has absolutely nothing to do with your job, right? Maybe you're self-employed or you're just, you know, not there. Are you taking notes?

I'm taking notes. I'm taking notes. I'm getting my learn on. Anything, any kind of earned income you have, you could say, well, I'm going to go out on my own and do my own retirement investing. And if that's the case, you would do an IRA, right? It's basically an individual retirement agreement, I think is what it stands for. And so that's you, aside from your job saying, I want to invest for retirement. And it's the same idea. You've got the traditional option where you put the money in and then you pay the taxes later when you take it out

or the Roth version, you put the money in, you pay taxes on it when you put it in. And then when you take it out, you don't have to pay the taxes, right? That's what we're talking about. And so that's really what it looks like. If you're a school teacher, you might have a 403B. If you're in the military, you might have a,

I think it's a 459, 559, I can't remember, but they take different, those are the tax treatments, those different numbers. And so everybody's got access to one or the other. But that's the point here. It's money that you're putting aside so that later it's there when you're ready to retire. That's the whole point. So if you're not investing and it's time for you to invest, I would say you need to do it. So then most people are like, okay, how do I know when it's time for me to invest? So would say you need to do it. So then most people are like, okay, how do I know when it's time for me to invest? So let's talk about that a little bit. John, you got your notes ready?

I'm ready. Let's do this. All right. You do the first one because you know this. What's one thing that you should have in place first before you start retiring? An emergency fund. Yay, yay.

I got to take care of my today before I start trying to plan for my tomorrow. I love that. That is just like something that would be hanging on. Yeah, that's like stitching to a pillow. You get it at like Michael's or something. That's like in Michael Scott's office, like hanging in a frame. All right.

So what I was testing John on is basically the baby steps, right? So this is a format to know if you're ready to invest. First, if you have debt, we're going to walk you through it. First, you need $1,000 saved. That's your emergency fund. It's just there as a cushion. And then baby step two, we want you paying off all of your debt except your mortgage, right? Once that debt is clear, because remember, debt is risk. Once that's clear, you're going to save up three to six months of a fully funded emergency fund. This is making sure that you are set. Like come hell or high water, you are ready to go. Okay, that's what that's about.

Then when that's done, now we start investing 15% of our income every single month into that retirement vehicle. For most of us, it's a 401k. For a lot of us, it might be then going to a Roth. So that's the framework. Some of you are now saying, well, Jade, 15%, like that's great, but how do I know?

Do I do the 401k? What can I do beyond that? Let's talk about that. All right, John. So let's say you're asking the question, well, Jade, I looked and my employer is offering a 401k. Do I invest there or do I go to the Roth IRA? This is how you want to think about it. Most employers offer some sort of match, right? 3%, 4%, whatever that is. If you have a match, that's the best thing you can get because it's free money. So you always start there. You invest up to your match. And then for most of us, unless your 401k is a Roth, because that's the best option there is, unless it's a Roth, then you would say, okay, I'm up to my match.

Now I'm going to go over and do a Roth IRA. Max that out. And then once that's gone, then you can come back to your traditional 401k, finish that up. And that is really, really good. If you still have money that you can invest, then you could go and go into another type of account. That's a non-retirement account. You could do a brokerage account or something like that.

Just to break it down for a simpleton like me. Go for it. Let's say I work at a company and they give me a 5% match. And so I'm going to put 5% of my income into that account and take their free money. That's right. Right? Yeah. The 5% is usually on income, 5% of your income. And we get this question a lot. So that adds up to 10%, but we're going to put 15 of our own

money in that account. So I put in five. Now I'm going to loop back over here and let's say I can put up to 7% of my income and max out a Roth IRA. So now I got 12%. Now I'm going to come back and say, okay, I'm going to up my original by another 3%. That's right. And so I'm going to have 8% and they're matching five. And then I'm going to have 7% of my income in a Roth and I'm walking away. And then I'm going to have 7% of my income in a Roth and I'm walking away. And that sounds complicated, but I've taken 15% and I don't care what the match is. I'm not including that. It's just gravy money on top. That's right. And then I'm going to

put 8% of my income into this account and I'm going to put 7% in that and then I'm walking away. Yeah. And you bring up a good point. So, you know, we teach 15% of your income goes away until you've paid off your house and then you can do whatever you want beyond that. But some people say, well, Jade, man, my match is amazing. I get 7 percent match or 10 percent match or even, you know, 4 percent fine. Does that count towards the 15 percent? And you're right. It does not. It's on top of that, because here's the thing. Life changes and you want to be in the rhythm of investing 15 percent regardless, because let's say you move away and now this employer doesn't do that same match or you decide to go into business for yourself so many things can change and you want that muscle

built that you know it's like when you get the money 15 goes like you don't even have to think about it so it's good also multiple jobs multiple jobs i've worked they've come in and said hey we're having tough times financially we're not in and said, hey, we're having tough times financially. We're not going to lay people off, but we're going to drop the match to X percent. And if they drop the match to X percent and you've built that in, not a lot of people can then go, okay, during tough times, well, then I'm going to have to increase X percent of my salary.

That's already part of our life. And so it just makes the gravy a little bit less. Very true. It doesn't hurt you financially the gravy a little bit less. Very true. It doesn't hurt you financially in your bigger picture. That's so true. And hey, if you have more questions about investing, you can check out one of our SmartVestor pros and they can help you out.

This is The Ramsey Show. All right, here's the deal. I need your help. Jade and I need your help. We have this amazing Live Like No One Else cruise and it is almost sold out. We've been talking about it for a few weeks now, maybe a couple

months. It is almost sold out and there is now a quiet competition for who is going to get credit for the last seats sold. And Jade and I are on together and so I am shamelessly asking if you are thinking about coming on this cruise, if you know we're going on this cruise,

I'm going to surprise the loved one. I'm going to surprise my wife. I'm going to surprise my husband. We're doing this. $600 deposit. That's all it takes. And these cabins are gone. We are running out of cabins.

And you can help me and Jade defeat George and Rachel and Ken, which is really what we want to do here. Here's the deal. It's the ultimate debt-free celebration. The vacation is for those of you who are on Baby Steps 4 and above. Seven days, March 22nd through 29th, we're going to be stopping at some amazing places. And by we, I'm talking about me, Jade, Rachel Cruz, George Campbell,

Ken Coleman, Dave Ramsey, and a bunch of Dave's rad musician and comedian and other entertainers, friends, magicians, the whole thing. We're going to Turks and Caicos. We're going to St. Thomas. We're going to Puerto Rico. We're going to the Bahamas. And we are going to eat well. We're going to have events. We're going to have music.

We're going to have all kinds of chaos on this boat. Are you going to play your guitar? I might play the guitar. have events we're gonna have music we're gonna have all kinds of chaos on this boat are you gonna play your guitar i might play the guitar if george does i will because they're gonna need to get that taste out of their ears and so yes are you gonna sing you're singing aren't you me and george are gonna do a duet of more than words well then we're duetting we're duetting saying all right here's the thing. We're almost out. We're almost out. The VIP upgrades and many of the cabin types completely sold out.

They're already gone. If you're trying to get your pick of the last few cabins, like the one with an ocean view, I think there's a couple left. Get your deposit in right now. $600 deposit. Book your cabin today at ramsaysolutions.com slash cruise. Not Tom Cruise.

Cruise. C-R-U-I-S-E. Ramsey Solution. slash cruise. Not Tom Cruise. Cruise. C-R-U-I-S-E. Ramsey Solution. Maybe how you spell Tom Cruise. I don't know. That's correct. ramseysolutions.com slash cruise. It is going to be a party.

Come join us. All right, let's go out to Edmonton, Alberta, and talk to Amber, like the light. What's up, Amber? Hey, how's it going? We're partying. What's up, Amber? Hey, how's it going? We're partying. What's up? Right on.

I just wanted to ask if you feel that we're in a position to increase our mortgage to buy our forever home or if we should be seeing put and getting the mortgage gone. Okay. Yeah, I want to help with that. Maybe give you a rundown of where we're at financially. Yeah, I'd love that. We've been doing the debt pay down, but backwards.

So I started with the mortgage. So I stopped that. We got the emergency fund in place. Kids' college funds were fully funded beforehand. I stopped retirement savings. The only thing we owe now is $9,000 on a travel trailer that will be paid off by the end of next month. So then I have a bonus coming that's guaranteed that will put us into baby step six, basically. Okay. And we own a house

that's worth about $685. We owe $14 $149,000 on it. The perfect property just came up for us that we feel will be like long-term and we have to increase our mortgage by $105,000 to take that mortgage on. Okay. So let's think about it like this. I love that you're kind of getting back on track. You're paying off the debt getting the emergency fund in place is it is it three months or six months that'll be four months four months okay are both you and your spouse working yes okay i'm fine with four months kids college is on track so when you sell this house what will it bring you all said and done we got $500 in equity on it.

Okay. And then the house that you're wanting to get, it's $100,000 more? Yeah. Okay. It'll make our mortgage about $255 instead of $149. Okay. And what's the monthly payment?

Have you looked at the percentages? Well, I wanted to do it on a 10-year, and that puts us at 22 percent listen yeah i'm like why not today kid today yeah instantly i love that you're doing a 10-year mortgage because you want to get this thing out of your hair i love that it's only going to be 22 of your take-home pay i mean you're meeting all the parameters and as long as you have peace about it that's the final parameter and so there you go my only challenge to you amber is to unclench your fist around the words forever home because there's just no such thing and it life just has a bunch of twists and turns and it's the

coolest home for this season and same as i've got a cool jacket that i got one time from philson that i love and i have some cool hunting gear that I got from Sitka. I don't wear those in the summer because it would be 1,000 degrees, right? And so for that season, it's the best, and then we roll into spring, and then we just do what's right in front of us. So I don't really believe in that forever house kind of thought, but when it comes to numbers, you are right on. Good for you.

Okay, awesome. Good for you guys. Congratulations. Thanks. All right, let's roll out to Kansas City, home of Patrick Mahomes, and talk to Jennifer. What's up, Jennifer? Hi, thank you for having me today.

Of course, what's up? So we have an incoming senior. She's going to be a senior in high school, just trying to help her kind of figure out what the next step will be so she's kind of a clean slate um just started working as a part-time job but really doesn't have a lot of money saved you know anything um the vehicle that she drives right now is one that my husband and I purchased with cash with the idea that that would be all of our children's car as they get 16.

You know, she's kind of an old beater. AC doesn't work, that kind of thing. My in-laws have offered or said they want to give her $10,000 cash as a senior present, whatever it is, total gift, but they have stated that they would really like for her to use this on a vehicle. We would like for her to get a vehicle. We have been kind of in the starting to get her to brainstorm about ways to do that, save money, what are you going to be able to afford, that kind of thing.

Is that wise? What's your hesitancy? Yeah. Do what? Why does it bother you? What's your hesitancy? I just think that's a lot of money That she could also have some of it in her savings To help her get started

Should we discourage The full $10,000 to go to a vehicle? Here's the deal Once they give you the money It's your money And if your apprehension is coming from the fact That you know that they have a record of giving and then that those gifts come with strings don't take the money no

if they're no strings if they're going to give you 10 grand and they're going to recommend that you use it to buy a car if it was my house i might buy a seven thousand dollar car and put three thousand dollars in savings interesting or i might buy all ten thousand i don't know i think i push back on that a little bit because if if i'm thinking i'm just again putting myself in these shoes if i'm like hey my cousin could really use a car i'm going to give him ten thousand dollars to get a car and i say hey i know you need a car this ten thousand dollars is for a car and they kind of do something else with it i think you can put something on a gift and you can but you just get to decide whether you want to take that gift or not right and in this case i

think you were okay when we were starting the conversation about her getting a car we were wanting her to stay more in like the 6 000 range you know so now that she has the opportunity to 10 do we still say take the 10 and go? Or do we say? I would because before it was you saving up or you guys helping her. But now you really do have a free gift. It gets, I mean, a $10,000 car. It's going to get her a great vehicle. That'll get her through college and beyond.

Yeah, beyond. And then that frees up more because you're not, you're no longer saving for that. That frees up more of the money to do what you want to do, which go towards savings, whether it be, you know, for college or whatever, what have you. Okay. And so if you don't want to do the savings, spend $7,000 on a car, put $3,000 in savings or whatever ratio you want to come up with. Let's say you spend all $10,000 on a car. I would put a dollar amount.

I might show her, here's what semester one of college costs, and we're going to be in saving towards this dollar amount. Because a lot of kids say, I'm going to start saving for college, and it's kind of an amorphous thing. Here's what semester one is going to cost. We're going to start saving. Or here is what your books are going to cost at college, or however you all have that worked out. And so she can have a target, a dollar amount that she can begin to see, I earned this and I only have to earn this much more to get this number. But it helps her work towards a project.

But a gift is a gift. And if it doesn't have strings to it and you're raising a kid of character, I'd say go for it. What do you think, Jade? I'm with it. I'm with it. I think giving them a target is good for college.

That was really, really important. Thank you so much for joining us. We'll be back very soon right here on The Ramsey Show. I'll see you next time.