The Ramsey Show - App - How Do We Prepare Financially for Another Round of COVID? (Hour 1)

Episode Date: September 15, 2021

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Thank you very much. live from the headquarters of Ramsey Solutions broadcasting from the dollar car rental studio this is the Ramsey show where America hangs out to have a conversation about your life and your money I'm Christy Wright and joining me today is my good friend George Camel and we are here for you. We're taking your calls about money as always, but if you want to talk about starting a business, y'all know I love to talk about that. I love to help you with that. I've done that for years. Of course, if you want to talk about time management, life balance, we are on a kick with that this week with the launch of my new book, Take Back Your Time. And if you want to just talk about anything in your life that you need some extra advice

on, George and I can be a sounding board for you. We can think it through with you, help you look at your options. Give us a call, 888-825-5225. George, one of the things I love about hosting the show, especially with other Ramsey personalities, is sometimes it just takes another perspective that helps people figure out what they need to do. Sometimes we give them advice and say, hey, you should do this. Sometimes we just show them their options and they go, oh, wow, I didn't realize I had so many options. Yeah, it is shocking how many calls are just

people needing a little bit of that validation and encouragement that they should do that. They should step into that thing. They should pay off the debt or sell the car because there's so many voices in the world. There's social media and the headlines and our broke friends and our in-laws and there's so much you're like, I don't know what to do. And so to have someone you can trust, I mean, we are a trusted brand here at Ramsey

and we try to give as good of advice as we can give to steer people in the right direction. Yeah, and it's all stuff that we not only know with our head and our heart, this is stuff, y'all, that we live out. So from the financial principles to the time management principles to the personal development principles, these are things that we believe we have decades of experience in, and we also really try to practice in our own lives. So give us a call, 888-825-5225. George, one of the things that I've noticed when we get calls here is sometimes someone will call in and they ask the question as if they have only two bad options.

Like, well, I can stay in my full-time job that I hate or I can quit my job and make no money. So what should I do? I'm like, well, I don't know. We're in a rock and a hard place, Christy. I feel like you have more options than that. Yeah. And I know you see this on the money side of things.

People will make excuses like, oh, well, I've got to keep the credit card because of this. Or, oh, my only option, I love this one, my only option is to take out a loan to start this business or buy this vehicle, whatever. And so it's one of the things we love to do. We love to help people see their options. Yes, absolutely. And a lot of times you get in your head and you just go, well, I painted myself in a corner here and I don't have a way out. And I love helping people see that way out. I know you do, too. And I love to do on the money side and the stuff you're doing with this new book.

I mean, just seeing the the reviews come in and people are going, oh, this isn't just another productivity book. Yeah, this actually can help me live the life that I want to live. Yeah. Well, if you guys have noticed from listening to the Ramsey show for years, whether you were listening to Jay Ramsey himself or any of us Ramsey personalities, we don't just stay at the surface of the question or the problem or the issue. We like to get to the issue below the issue, the root of it and help you solve it there.

And that's true for money. It's true with balance. It's true with anything. So give us a call. Triple eight, eight, two, five,

five, two, two, five. George and I are here for you and we want to talk about what you want to talk about. So we're going to start it off with Stephanie in Virginia Beach, Virginia. Hey, Stephanie, how are you? I'm good.

How are you doing? Good. What's going on? So I have a little small business that I started about probably about a year and a half ago. I'm a stay-at-home mom with two crazy toddlers. And it's a custom tumbler business. So I started a year ago, and it took off with a lot of my church and friends. I'm sorry, a custom what business?

A custom tumbler. So I do like the girder tumblers. I do those kind of things. Got it. And it took off with my friends and their friends. So it's been really busy, especially with the season coming up with holidays and starting to get busy again. But I was thinking within probably within a year, I want to kind of extend out. I want to maybe go

to some small business brick and mortar stores and put some like what I call ready to sell. So they're not fully custom, but they are like a quick pick me. Oh, it's like, you know, that would be cool for my husband or some stuff like that. And to be honest, I'm kind of nervous to step out and to maybe go and ask a small business owner. And I don't know what the steps would be or how to even begin to think about a plan like that. Yeah. Well, Stephanie, here's the one thing I just want to encourage you out of the gate before we even dive into this. There are some aspects of business, and this is true with anyone in business, there are

some aspects of business that feel so intimidating and so overwhelming, like, oh, there must be some really sophisticated process and you have to go through 47 steps and you have to fill out 500 pieces of paperwork to get your products in stores and here's the thing i want to remind you stephanie those people that own those stores they're small business owners just like you they're human beings and so the skills you need to get your products in stores are the skills you already have relationship skills so it's actually going to look much more simple than you may have in your head. It might look like getting a cup of coffee and showing up with some samples and

saying, Hey, I just want to bring you guys some coffee. I think we have the same target market. I'd love to set up some time with you guys to maybe explore. Do you have any needs in this area? Or, you know, I do some custom work. Do you have any quotes that really sell well on your pillows that I could put on a Tumblr because I can customize these for you? And you're really speaking to what's in it for them. What's in it for them is they want to sell products. And so if your product is a good fit for their audience, then they're going to listen. But it really comes down to relationship building.

And so I think if you do that, and it can be literally as simple and scrappy as getting some coffee and donuts and bringing some samples to that store george what do you have you know what jump in here on this thing because i think this is sometimes we over complicate things whether it's a business or money we over complicate it it really can be simple you can make this a very natural process by just knowing these stores inside out yeah shop there buy something and say hey you know i noticed that there's this opportunity you guys don't have these tumblers and And I actually make them. And we're both local business owners. I don't know if there's a way we could partner together to make this happen. And I think you're going to find that most people are going to be receptive to it.

Or you're going to get really good at being told no. And that's great. You're going to build that muscle where they go, not necessary. We don't really need that right now. And you go, OK, great. You know, some people listening may not know this, George. I just want to highlight this for them. You started out in marketing here. You worked in the marketing department on

business boutique back in the day. And so, you know, we, you and I have talked about this before, even kind of offline, but one of the things you need to know in marketing your business, which you probably know, Stephanie, in your business is who your target market is, who your ideal customer is. You want to translate that to your business, the businesses you're going after too. Who are your ideal businesses? Who's your target market in the business-to-business space and find those sweet spots where there's a natural connection? George, how would you help Stephanie thinking through

what are those businesses that fit that criteria that would be a natural fit for the product? Well, anywhere that's selling those kind of home goods kind of products is a great start. And as you were talking about these tumblers, I was like, I would go to companies because they're making branded tumblers all the time. We buy, you know, a million Yetis a year that have the Ramsey logo on it. So even going to these businesses and saying, hey, for your staff,

I'd love to make a tumbler that you guys can use, that you can sell for your store, that has your logo on it. Here's what it looks like. And you know what would really shock them? You bring them a sample that already has their logo on it, and you give them to them for free. Yeah, I love that. And play on that custom piece too, Stephanie. You can play on that custom piece where maybe you pick one thing that the store owner likes,

but then you make a ton of them in bulk that you sell there. But I think if you get scrappy, you will find it is actually easier than you think. Stay on the line, and I will have our team give you a ticket to our Business Boutique Conference live stream. If you want to come to Nashville, you can. If not, watch us on live stream. It's October 14th through the 16th. We'll be talking about things just like that. How to get your products in stores, how to grow your business, Business Boutique Conference. Stephanie, we'll see you there. This is The Ramsey Show. Hey, y'all, I'm Christi Wright. Listen, when you're tired and not getting enough sleep, your health and happiness suffers. That's why I'm a huge fan of Glorify, the number one daily worship and well-being app. This app has calming meditations and peaceful sleep music so you can

finally push pause and get some rest. Give Glorify a try. Download the Glorify app and get 50% off their full library when you use the code Ramsey. That's the code Ramsey. I'm Christy Wright and joining me today is my good friend George Camel, fellow Ramsey personality, finance expert, and also host of the Fine Print Podcast, which I'm a huge fan of, partially because I don't like the fine print of things. I'm not a person that reads instruction manuals. I don't like details. I can't tell you how many times I've ordered something on Amazon and it comes in a ridiculously wrong size just because I didn't pay attention to the dimensions. It was a child size. Perfect. My husband's like, I one time ordered a small bottle cooler

for my son to go to daycare. This was years ago and it came and it's like the size of a giant picnic basket for our entire neighborhood. So, you know, I appreciate you and the fine print, George,

because you're really shining a light onto these unknowns in the finance industry. You're calling out lies, myths, and really helping the consumer, the end person that is being misled by a lot of these marketing plays from finance companies, credit card companies, and so on that are getting them in trouble. And here at our company, we are so big on educating you and helping you and giving hope to you.

One area we do that a lot with is the student loan crisis. And we've got some exciting news coming out soon about that. But I was fascinated, as I've heard from our team on that, on just how misled these college students are. They wake up at 24. They're like, oh, you mean I have to pay this back? Or, oh, I didn't know this was my responsibility. It really felt like free money. And gosh, the work that you're doing this back? Or, oh, I didn't know this was my responsibility. It really felt

like free money. And gosh, the work that you're doing and everything you do, George, but especially with the fine print is just helping people see before they make those mistakes, which I think is so powerful. What's the latest episode that dropped this week? The latest one is about the housing gold rush is now the worst time to buy a house. That is kind of the question we ask. What's the answer? You don't want to know the know. Here's the short answer, Christy. I'll tease this. I'm very generous, but I do want you to go listen to the episode. Sure. The answer is it doesn't matter what the market's doing. It doesn't matter what the headlines say. It matters what your bank account says. Are you financially ready to take on a house? I don't care about the interest rates and the supply. Can you afford

the mortgage? Is it going to tank your budget? And so that's really what we dive into. We talked to Brian Buffini, who's a real estate expert, industry analyst. He trains thousands and thousands of coaches and real estate experts across the country. We talked to our friend Rachel Cruz, who had a lot of wisdom about the stoplights, the green lights when it comes to how do you know if you're ready? How do you do it the right way? And we hear from a guy who went through a foreclosure back in the last bubble. And he's saying it feels a lot similar. Now, I don't think there's a bubble happening. We've talked about this on the show. But I do think there's going to be a lot of people who

jump into a house too soon. They buy too much house. They waive inspections. They waive appraisals. They're doing things the wrong way because they're so excited and nervous and anxious about the housing market. Yeah. It's the desperate decisions or almost like adrenaline type of decisions, and those end up being bad decisions. And I love how you said that it doesn't matter what the housing market's doing. It matters what your bank account is doing. And we get calls on the show all the time. They're like, well, should I buy a house now because interest rates are low?

Or should I buy a car now because whatever, I can get a good deal? And they don't have the money. So it doesn't really matter what interest rates are doing. It doesn't matter what the good deal you can get on a car. If you don't have the money, it's a bad idea. So I love how we bring it back to the basics, guys. We bring it back to the basics. We keep it simple, common sense. It's not flashy. It's not like, oh, wow, this new thing. But it actually works. And it's worked for over 30 years.

And I love that you are just keeping it simple and reminding people, hey, what matters most is what's going on in your bank account. Yep. Which is valid. That's hard news. That's right. You got to look in the mirror. That's right. You're like, dang it, I wanted to buy a house. Oh, now's not the time. All right's go to lena in indianapolis indiana

hey lena how are you i'm good and yourself good what's going on um i have a question as far as the budget went just like where do i stick that money obviously Obviously, it's savings, but do I actually use my savings account? Yeah, so you're just saying for your emergency fund, you're asking what type of account to put that in? Yes. Okay, yeah. Yeah, there's a few good options here. Is this Baby Step 3 we're talking about, your fully funded emergency fund?

No, I'm talking about the first one. Okay, the first one. Yeah, you can park that in just a savings account. It can be connected to your checking account. You can also put it in a money market account. You can find those with almost any bank, or you can put it in a high yield savings account. So like I have mine in an online bank that's high yield savings, and high yield is a very generous word. You're going to get maximum a half a percent on this money. But the point is, it's not an investment. This is insurance for life to protect you right now, especially as you're paying off debt. And so you can just park it in that savings account. There's nothing wrong with doing that. A thousand dollars at a half percent. I mean, it's going to be pocket change, but you do want to make it somewhere that you can access easily

that is liquid and that's secure. And so I don't want it in the underwear drawer. I do want it in a bank. And so that's going to help you out. That was part of it. Now, do you think that it's possible? I am so nervous just because my husband makes $100,000 a year, but we only see, obviously, after taxes and other stuff, we only see $53,000. Am I in the right track? Is this possible? Is it possible to pay off debt? Well, pay off debt and do all the baby steps. Absolutely. There's people who call in who make $30,000 and they stand on our stage

and say they're debt free. And so it really is not about income. And a lot of people think, well, I just don't make enough, Christy. We'd get out of debt, but we just don't make enough money. The truth is, whatever you can do to control the money you do have coming in, that is what's going to set you up for success. So I want you guys, I mean, you make a great, $100,000 is an incredible amount of money. I do wonder where it's all going if you're only taking home 50%. The tax numbers on that don't seem right to me. Yeah. Lena, do you have someone helping you with your taxes? Well, I have someone that does my taxes. Okay. I'd look into that. I'd look into that. That does, those numbers, I'm not a tax pro, nor is George that I know of,

but those numbers don't sound right to us. That's not that. Are there other things coming out, like investments or health care costs? I'm sorry. I know that he pays into his 401K, and he also has child support that comes out of the check. Gotcha. Before it ever gets to you guys, those things are coming out.

Yeah. So basically it is $2,200 twice a month. That's like, and I never, this is one thing, I never count the $100,000 because that's not what we see. So technically what we do see is only the $53,000. Yeah, sure. That makes more sense, Lena. Here's what I want you to do. George is exactly right that you can do this on that income. It's a great income, even though you do have more coming out off the top. But the reason it feels impossible is because you can't see where it's going right

now. So I want you to get on an every dollar budget where you give every dollar a name. And if you'll stay on the line, I'll have Jenna give you a subscription to Ramsey Plus for a year. This is what George and I recommend to help you manage your money. We're going to give you the Financial Peace University class to teach you how you can do this on any income, even if that means you take some side gigs to get your income up. But really when you can see it on paper, that's when you can see how it's possible. Right now It doesn't feel possible because you don't know where anything's going. And even though you're only taking home 53, that's still a good income.

But what it means is you're going to have to lower your expenses to where you've got margin between that 53 and what's going out the door with your bill so that you've got this extra to pay onto your debt, to build that emergency fund, pay on your debt and then, and then build the three to six months is. i think the months and i think george one of the things people think just like you said is oh i need more money you may need a bigger shovel but you might need to cut your expenses back and change your lifestyle in order to have that margin to put that towards

your debt yeah and i i heard something that was a little bit of a red flag there uh and it's investing they're investing while they're trying to pay off this debt, and there's a lot going on here. So if you want some of that money back, Lena, what I would do is look to see if you're getting a refund check from your taxes. If you are, that means we need to dial back our tax withholdings with your employer to make sure that money is going to you instead of to the government interest-free all year. So that's going to help you get some money back if you are getting a refund. And on top of that, I would encourage you guys to pause investing. And I know it's going to hurt.

And you're going, oh my gosh, why would you tell me to do that? It's a financial show. You want me to not invest? Yes, temporarily, so that you have more money to pay off this debt, which is going to get you back to investing way more than you were before.

And when you watch the videos in this class, Lena, in Ramsey Plus Financial Peace University, you'll understand why. We explain why you get to baby step four when you do an invest at that point. So you can put everything extra, have a bigger shovel to pay off that debt. That will make a lot more sense. So you stay on the line. We'll get you that subscription that will give you the tools that you need to get on the plan and get out of debt. This is The Ramsey Show. You know, I heard a sad and touching story recently. Zander Insurance has set up a scholarship for children whose parents died without life insurance. Last year, they gave away over $165,000 to help kids avoid debt and go to college to pursue their dreams.

It's touching, but also sad since it's a situation that occurs all over the country and can be avoided in so many cases. This is the reason why I talk about Zander and term life insurance every day. It's not expensive or complicated, and it's gotten even easier with many companies no longer requiring medical exams. Zander shops and compares all the top term life plans and stays with you the whole time to make sure your family is taken care of. That's why I've used and recommended them for over 20 years. Go to Zander.com or call 800-356-4282. So I don't have to keep talking about these sad stories. I'm Chris Uright

joining me today is my good friend George Camel he's the host of the Fine Print Podcast I am author of the new book Take Back Your Time

The Guilt-Free Guide to Life Balance which launched yesterday and is now available anywhere books are sold including excitingly Target which is so fun.

I went to Target and signed them here in Nashville. And so you can get your copy anywhere books are sold. And we are taking your calls, 888-825-5225. Of course, we always take your money calls. But if you want to talk about the struggle of feeling balanced, having life balanced, managing your time, something we never feel like we have enough of, give us a call. I'm here for you all day and we are on this kick this week celebrating the launch of my new book. Of course, if you want

to talk about business, life, relationships, we are here for any of it. That's 888-825-5225. Blinds.com 100% satisfaction guarantee means that even if you mismeasure or pick the wrong color, they will remake your blinds for free. You get free samples, free shipping, and with the new promo codes they run every month, you'll save even more. Use promo code Ramsey to get the best deal. Today's question comes from David in Minnesota. My wife and I have followed the baby steps and thought we were in a good position financially until COVID.

We both were unemployed for several months, which meant we had to use up our emergency fund to get by. Thankfully, we've been able to find new jobs, but it was a real wake up call. How can we be better prepared in case there's another round of COVID or another pandemic? That's a great question. And David, I'm sorry that you guys went through this. That is so tough when both people lose their jobs. And I'm really glad you had the emergency fund. I mean, that's the time to use it.

It's unexpected. It's urgent. It's necessary. And you guys did the right thing here by dipping into it to get by. But the question here is, how can we be better prepared in case there's another round of COVID, another pandemic? And what I don't want here, David, let me start with this, is that I don't want you guys to get paranoid and go, we just have to keep socking away so much cash because we just don't know what's coming. We found that six months is enough to get most people by.

So I don't know how much you guys had in there. If you did have three months and you thought your jobs were more stable, because we teach you want to have closer to six months if you have someone with an unstable job, if you have dependence, if you have chronic illness, if you have some things like that going on. So if I were you guys, I'd build this thing back up to six months of full expenses across the board to prepare in case something else happens. I hope you guys are, it sounds like you're working new jobs now and I hope they're more stable. That's another thing is making sure at least one of you does have a stable job. That's where you're not both maybe working a commission job where things could get tight if another pandemic happened. Yeah. And it's interesting too, because I think sometimes we can

make decisions based on fear because, oh, wow, we both experienced unemployment last year and that scarred us. You know, that's this deep wound. Now it feels like, oh, I've we both experienced unemployment last year and that scarred us. You know, that's this deep wound. Now it feels like, oh, I've got to stockpile all this money. I've got to have so much more money in case this happens again. And the reality is your emergency fund did exactly what it's supposed to do. It took care of you in an emergency. And that was one unlike anybody ever saw coming. And so, yeah, I totally agree, George. That's what it's for. And it did what it's supposed to do. If you want to keep up to six months, that's great. And I do think that,

you know, and we're seeing this across the world, even though you're still seeing different reports on COVID cases in different states and different whatever, the world is more operational than it was last year. It just is. More industries are getting back. They're finding creative ways to stay in business, make money and so on. And so hopefully, with more stable jobs, potentially, six months emergency fund, and the world being more operational, you're going to be in a good position. You're going to be okay. All right, let's go to Salt Lake City, Utah with Robert. Hey, Robert, how are you? Doing well, yourself? Great. What's going on? Well, I'm almost into baby step number four. Awesome.

My question is related on how to account for a pension with the 15% that you recommend. Okay. So my pension is fully funded by my employer. And so, and they funded at 18% of my current salary. But when I retire, I'll have right around 66% of my salary. Okay. What are some of the details around it? How much control do you have over it, if any? I get to pick what funds and where the money is managed and the investment that kind of goes into it. So, within reason, they do manage it and charge me a small fee. But if I take that management off, then I can put it all in high

risk or all low risk. Gotcha. That's good. Is this like a state or federal company? What kind of company is this? Yes, governmental agency. Okay, great. That makes me feel better because it's going to be more stable. The government can't go out of business, technically. I hope not. God forbid. So that makes me feel better about this. And you're saying that they contribute 18%? Right. So there's a small percentage I put in, three, and then they put in 15. Wow. So you're only putting in 3% right now? Or you're about to? No. It's automatic withdrawal.

It's to participate in the program. It has to be that way. They want some skin in the game. Yep. Okay. And you're saying, do I need to still do the 15% in Baby Step 4 towards retirement if they're contributing 15 for me? Correct. That is my question.

That is, do you recommend an additional 15 on top of that pension? Or, you know, would you recommend, okay, maybe do five into a 401k or Roth? With something like this, that's real stable with a state, federal kind of company, I'm okay with you kind of splitting the difference here and counting the pension as half of the retirement. So the other half, I want you to be splitting the difference here and counting the pension as half of the retirement. So the other half, I want you to be contributing towards that, and then the rest can be gravy on top. Because you said it's 66%. So even that, I don't know where that's going to leave you.

If you just contributed zero or just a minimum, I don't like that financial position for you as you retire. How old are you? 35. 35. This is great. So you're going to be working another 25 years at least? Yeah, hopefully less, but yeah. Hopefully you can retire early, and that's where this advice comes into play.

Based on your goals, if you're saying you want to retire early, then I want you to have the ball in your court. And to me, that means investing as much as you can, at least half of that I want from your side, if not more. If you can do more, do more, especially as you get towards baby step seven, where you've got a paid for house, and now the only thing left to do is build wealth and give outrageously. And so that's going to put you in a great position as you enter baby step four. You've got a fully funded emergency fund. You have no debt. Do you have the margin to contribute 15% on top of that? Maybe.

I guess I'd have to crank the numbers and go through it. It is a possibility, I guess. Once I get through number three, I'd feel better about it. Yes. Because I'm almost through three. Okay, that's good. Well, let this fuel you because I think this is a great, I mean, it's fantastic that they're contributing this. This is coming from their money, not yours, this 15%?

That's correct. I put in three. They automatically put in 15. I love that. They're not taking 18% out of your paycheck. They're putting in 15% out of their money, and then you contribute 3%. So if I'm you, I would contribute as much as you can up to that 15. And if you make it halfway, that's great. But as you start to make more money and you get in a

better financial position, I would say keep at it and get up to that 15% on your own. Yeah. And the reason that we look at it a little bit differently is it really comes down to the control, the control and the ownership. And George, I love to help people understand, especially everybody listening right now, even if you don't have a pension, for them to understand the principle at play when we answer questions the way that we do. When you don't have control over something or ownership of something, even though, Robert, in your scenario, you have a little bit of control, you don't have complete control and

you don't have complete ownership. And so that increases the risk. If you change jobs, things change. And so it's more stable. So we're good with you counting some of it. But if you were to go ahead and fund your retirement with 15% or whatever you can after you get through baby step three, all that does is put you in a better position. So when we're answering some of these questions and when you guys are thinking through this,

when you're going through the baby steps, don't look at it as what is the bare minimum I can do. More is better when it comes to investing. More is better when it comes to putting, you know, putting more on your house, moving through the baby steps faster. And we don't want you to completely sacrifice everything and not have a life at all, especially in baby steps four, five, and six. But if you've got a pension that's a little bit got some unpredictable aspects of it, yeah, go ahead and fund your retirement, at least some, if not up to 15% on your own. And all that's going to do is put you in a more stable, better financial position. So we want you guys to have that control. And you can't take it with you when you go. That's right.

Versus passing it down with your own investments to your kids. That makes a big difference. This is The Ramsey Show. I'm Chrissy Wright. George Campbell and I are answering your calls here on The Ramsey Show. 888-825-5225. We are celebrating the launch of my new book, Take Back Your Time, The Guilt-Free Guide to Life Balance. If you feel like you are pulled in a million different directions, me too.

I have been there. It's a struggle when you've got a lot of things going on, even if they're good things. Sometimes we can get overwhelmed in our busy lives. And I want to help you get control over that. I want to help you spend your time on what's most important to you. And that is the heart behind this book. It's not a productivity book, like we were saying, George. It is not a book about how to do more. It's not one more obligation on your to-do list. It's actually a book that is going to set you free from that pressure where you can take a deep breath a sigh of relief and enjoy your life more you can get your copy at ramsay solutions.com and anywhere books are sold including your local target i went yesterday here

in nashville it's on an in-capped, which is super exciting. Right there when you walk by. So go check it out. Get your copy of Take Back Your Time. This is exciting launch week. And by the way, we're doing an event tomorrow night. Dave Ramsey and I will be speaking as a part of our kickoff for launch week. And so you can go to RamseySolutions.com and get your ticket, your live stream ticket.

By the way, you can get the book and ticket bundle there on the site. And you can join us. If you're in Nashville, come for the book signing and launch party. And if not, just join us on live stream. We will be talking about how to take back your time. And Dave will be telling the back story of when I first started talking about this, and he didn't like it. It's a hilarious story. It's worth tuning in just for that.

It's basically the forward of the book. The forward of the book written by Dave Ramsey starts with, I tried to talk her out of it. So you know it's going to be a good story. He's a fantastic storyteller and he and I have a fun banter back and forth. We like to debate on things. I lose most of them,

but it doesn't stop me from trying, George. It does not. I will give you that. Doesn't stop me from trying. Ten years later, I get a book out on this topic. So you guys can check that out at ramseysolutions.com. All right, we're going to go to Ana in LA. Hey, Ana, how are you? Good. How are you? Thanks for taking my call. Sure. What's going on? Okay. So my husband and I are in escrow on a house here in Irvine, more locally Orange County area. And it was at $950,000.

The prices out here are outrageous, but we're tired of renting. Our rent has gone up. We ran into problems with our landlord. And so we just made the leap to get into the market. The only thing is, is that our appraisal came back under $11,800. So in order to meet this rent, we would have to be cashing out stock and of course paying taxes on that. And so my question is how much is too much to put down on a house here in California?

Because we just got another one yesterday that was listed at $950,000 but they've been going $100,000 over. Sorry to speak directly into your phone, Ana. We're losing you here. Yeah, you're cutting out a little bit. Oh, sorry. The prices out here have been going for $50,000, $100,000 over asking

because it's such a competitive market. So my question is, how much is too much to put down on a house? We do have mutual funds. We have our Roth IRAs, and we have our savings. We have about $650,000 in all of that. And my husband works for Amazon. He's got a super steady job and he's vested for more Amazon stock for the next two years. That $650,000, how much of that is actual retirement accounts? Retirement is $40,000. Mutual funds is $300,000.

So the mutual funds are non-retirement, just in a brokerage account? Correct, yes. Okay. So you've got $300,000 there. How much cash are you guys putting down currently outside of any of that on this house? $180,000, roughly. So you're taking out like an $800,000 mortgage to get this house? Correct. Yikes. What is the payment on that?

The payment comes out to $4,100. Our rent right now is $3,100. And what's your take-home pay? Take-home pay, my husband's is $160,000. Mine is $40,000. I'm part-time. Part-time income, $40,000. So you guys are taking home $200,000 in your bank account? Correct. Okay. Yeah. What worries me here is that mortgage over $4,000

out of your bank. I know you're paying a lot in rent, but we recommend that you don't let that mortgage payment be more than a quarter of your take-home pay. And I'm assuming this is on a 30-year mortgage. Correct. Yeah. Okay. So another part of our recommendation is to do the 15-year mortgage, not only because of the insane interest savings over the cost of the loan when you do a 15-year, the payment is going to be a little bit higher, and people go, well, it's cheaper. Why wouldn't I not do the 30-year? But I want you guys to have a life. I want you guys to retire. And I want life to be more than just paying our mortgage until we die, which is, that's the American dream, right? And so my worry right now is more, should you be buying a house

right now? And I do love the idea of you cashing out the stock because that's just sitting there. It's not a retirement. You will pay taxes on that money, but that's going to really set you guys up to where you're not drowning with this mortgage payment. Yeah. I want you to run the scenario of a 15-year and then look at it and see what that payment would be with putting down what we're talking about here.

If you use your savings, if you cash these out, that's fine if you put more down, but I savings, if you cash these out, that's fine. If you put it, put more down, but I want you to run the scenario with that down payment. What is the payment every single month on a 15 year, not a 30 year, which is what we recommend. We don't want you to pay all that money in interest over the course of,

of 30 years. You guys have a really good take home pay and you have the potential to put a lot of money down. Sometimes people can hear these numbers and go, those numbers are crazy, you're in california you're in la so like i get that those numbers are but but here's it goes back to what we were saying a minute ago on a it's actually what we said the very beginning george i'm not as interested as what's going on the market as i am what's going on your bank account if you can look at your bank account and go yes we can we can run a scenario where we have a great down payment.

We're putting at least 25% down. We've got a monthly payment on a 15-year mortgage that's less than 25% of our take-home pay. Even though these numbers are bigger than maybe people in other parts of the country can wrap their head around because of where you are. But it works with the formula, and you're in an okay position, and that's fine. I just don't want you to – you started the question by saying we're tired of renting and i hear you but that's not a basis for buying a house the basis for buying the house is that you have the money and so i just want you to run those scenarios exactly like you're saying george and and look at that what would a 15-year payment be and do you can you put enough down to make that make sense i just crunched the numbers

for uh on a here on my phone. And on a 30-year, technically they can afford it. It's 25% of their take-home pay. But on a 15-year, that's going to jump up. And so what I would do if I was them, if they really want to get this house, they have a great income and you guys do have the cash position to do it,

to get in this house, you're going to have to cash out some of that stock to get that number below 25% of your take-home pay on the 15-year mortgage. So crunch those numbers and see how much you need to cash out from those stocks. And it was just like we were saying when we were talking about this with the fine print, George's podcast that he hosts where he talks about the housing market this week in the episode that dropped this week. It's not so much what's going on the market, it's what you can actually do. And so I don't want you to get into a desperate position like, oh, it's so competitive. And oh, I've got to get it. And I've got to overpay and offer way over. Okay. Okay. No, no. That to me is not the time to buy a house

then. Because if you don't have the money and you're making it and you're getting desperate and making dumb decisions, desperate decisions are a lot of times dumb decisions. And I don't want you to make those decisions. You can keep renting. Is it fun? No. Can you, are you over it? Yeah. But you know what, we can wait till we get a good deal on a house that's fair for you, fair for the market and fair for your bank account. And so, um, you know, on a checkout, check out Georgia's latest podcast this week, the fine print we're talking, he's talking about the housing market specifically, and hopefully that'll help you get a little bit out of the emotional aspect of, oh, this is so exciting, this frenzy. I've got to do it right now. I'm over renting. Now we've got to jump on it and look at it more objectively. Look at the

numbers, the 15 year, what makes sense from a stable, objective, unemotional decision. And those are the kind of decisions we want you to make with clarity, not desperate decisions. Yeah. And there's a stat here that that was mentioned in the podcast in may 2021 house inventory was down 20 and prices were up 23 so there's barely anything available and what is available is super expensive and so that's where they find themselves and they're in a super high cost of living area right and so they're it's not that they can't afford it it's just more the emotional part that was the red flag for me where I went, I know the renting stinks and they don't like their landlord.

Is there somewhere else that they could rent with a better landlord situation and save up for another year? Yeah. You don't have to move. You want to move. And I get that. You don't have to move. And so since you don't have to, you want to wait and make the best decision for you and

your bank account and your future. Something you're going to be proud of five years from now. All right, George, this was fun. Thanks for joining me. This is great. I want to thank producer James Child, associate producer Austin Selby, and you, America, for listening in. This is The Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Ramsey Show.

If you would like to do your debt-free scream live on the show, make sure you visit theramseyshow.com and register. We would love for you to come to Nashville and tell Dave your story.