The Ramsey Show - App - How Much House Can I Afford? (Hour 2)

Episode Date: May 22, 2024

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 actual amazing relationships. Thank you for joining us, America. The phone number is 888-825-5225. Rachel Cruz, Ramsey personality, number one best-selling author multiple times over, and my co-host, my daughter is my co-host. Gina is with us to start this hour in Phoenix. Hi, Gina. How

are you? I'm good. How are you? Better than I deserve. What's up? So I am in a situation where both my husband and I have our own businesses, and that has changed from him having a salaried position just over the last month or so. And I'm wondering how we can make it work with our two businesses without us having to supplement our income. So to kind of hit the ground running and not fall backwards financially. Okay, so he did not have enough income coming from his business to justify quitting, but he quit anyway? No, he got laid off. Oh, okay.

And so we still have some layoff money coming in that's going to help, yeah. Okay, so what is his small business? So his is a freight brokerage. Okay, and how much money is he made doing freight brokerage um well he was in the industry several years ago no no i'm talking about the business right now how much money is he making um he's only making about two grand a month okay what was he making at his job he got laid off from? About six a month. Okay.

How fast is he going to get the freight from two to six? Hopefully within the next three to four months. Realistically or hopefully? Well, that's definitely hopeful. Realistically, within the year, I think it's realistic. Okay. And what are you making on your small business? Oh, very little.

I haven't had to be in a position where I had to make much, so only about $500 a month. Okay. All right. What do you do? What's your business, Gina? I'm a health and nutrition coach, and it's virtual. Okay, cool. Okay.

Can you gear that up? I can. I'm not quite sure how okay all right you have the you have the bandwidth to do it but you don't know if you can actually get enough clients to pay you exactly gotcha okay all right cool what's your what you got for your budget every month what's it take to operate your house um it takes about five grand bare bones okay all right and so if he makes two and you make 500 you're 2500 short right right so we really need to kick it into high gear amen okay all right now i'm caught up with your concern and it's a valid concern yeah and you didn't do something stupid like quit your job before you should have or something. That's good. This is good. It just happened, and now here we are.

How much severance is left? I think we have about two or three months left. 15,000? Well, so he's getting a payoutout monthly and then at the end he's getting like his pto and everything and i don't have the exact numbers on that but i think we figured it would get us about four months after he was he was making six thousand women he's getting and he's getting he's continuing to get six thousand dollars a month yes for how much longer just uh that is about months, and then he gets the full severance once that's done.

How much is that? Yeah, that's what you don't know yet. Yeah, I don't know. Okay. Okay, so what I'm going to do is, so if I've got six, and you've got 500, and he's got 2,000, that's 8,500. It takes five to operate. You can bank 3,500.

Right. Okay, so I'm five to operate you can bank 3,500 right okay so I'm gonna I'm gonna live on beans and rice emergency do nothing spend nothing pile up cash to ensure that the curve on his income coming up on the freight business doesn't last longer than your pile of cash. Right, which we do have a pretty decent pile of cash that would take us potentially through a whole 12 months if we absolutely needed it, but obviously we don't want to do that. But that's like an emergency fund. That's not your retirement accounts or something. Right, correct. Yeah, it's all liquid cash. That good that's very good yeah and i would consider this i mean to a degree in

emergency you lose a job a job loss is that so for the if he's not seeing anything start to really progress in his job i would say by summer into summer come august if nothing has happened then that's where i'm like okay the severance is or like the payout is ending all of this we haven't touched the emergency fund yet we've been able to bank some money are we seeing any indication because you guys have some good cushion yeah you need financially to really go in order for him to stay on the freight small business path he needs to go from two to three to four to five to six right to six. Right. By the month. And if it's not happening or happening faster than that, then you have a valid concern that you're going to burn your cash.

Right. And you're doing the math right. You're thinking about this correctly. And what you've got to do with anybody who wants to start a small business, particularly somebody got burned by corporate America and laid off and then wants to start a small business and stick it to the man which i love that by the way go do that okay go the best the best the best revenge is success okay so go do that but the uh but but don't live in denial right and i'm talking to him right now actually yeah because you're not you got your feet solid on the

ground, but if he's all entrepreneurial and, uh, you know, hurt over the way he was treated, I'll never go back into that. I don't blame him for those feelings, but that can't mask out the reality of his business. Didn't get going. So he's got to get this business going. He's ready to go. Okay. He's got to get it it going i need it to go from two next month i need it to be three next month i mean need it to be four if you do that with the math you gave me you'll never even touch the emergency fund that's the hope the severance well no it's not the hope it's it's neat it's what needs to happen the severance will have funded the startup right that's what it amounts to if you go from two this month to three next month

he ain't got nothing else to do go get some money boy go get some business that's your thing man leave the cave kill something drag it on what else he gonna be doing watching netflix i mean go get it get it man this is what we do a little desperation is good for a smart for a startup and i don't want this this cash pile over here to make it okay to slumber along i'm not accusing him of that but you can tell i've coached a whole lot of small business guys and i love guys that are like your husband i love right where he is. He really has all the DNA and ingredients, the chemistry of what you're describing to me. He could be running a $50 million business someday, and it could have been born out of being pissed off with the way he was treated over there. And it took off, and then he went and learned something, and he killed it and drug it home.

I think he's in a really cool place, but he can't stay here. Yeah, I agree. Okay. Two, three, three four or reconsider five six seven or reconsider you follow me okay that math works with what you gave me you got plenty of cash to do that and you're not gonna have to go to work and freak out you can go build your business too it won't hurt might as well it's a good reason for you to go build it. You've been wanting to do it. You've been wanting to help people with this nutrition issue. Go help them. And they'll give you certificates of appreciation with president's faces on them. This is the Ramsey Show. This show is sponsored by BetterHelp. All

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to get 10% off your first month. That's betterhelp, H-E-L-P, dot com slash Ramsey Radio. Rachel Cruz, Ramsey personality, is my co-host today. One thing the Ramseys all enjoy, and certainly Rachel's husband Winston and I enjoy, is real estate, and we love the real estate market. I like building things and buying things as part of my almost, if I had a side gig, I guess that's what it would be. I've had something under construction for about six or seven years now. Next week, I will finish a project, and it'll be

the first time I haven't had a construction project going in seven years in a long time yeah you like it i'm overdue i need to find something something to stick in the dirt somewhere but the uh uh real estate is fun and it's pretty confusing out there right now when you're thinking about buying a home it's hard there's a lot there's a lot of emotion around it. It's hard. Yeah. I mean, interest rates not only are up, but houses themselves, like what you're buying, you know, the price of a house versus what it was 10 years ago, five years ago. You're just like, oh, three years ago, two years ago. So it can feel like one of the most defeating subjects, I think, financially right now for

people where they think, oh, my gosh, I don't know if I'll ever own a home right like this these this kind of negative mindset because of how hard the numbers are it's it's real when you adjust and you adjust your income and you adjust where you choose to live in order that you can get your income in a place in ratio to the house price in the area you're choosing now to live in order to buy a house then you put yourself in a position to do that and it can still be done and we still have people on here in their 20s that have bought homes and paid them off we have people on 26 years old did a debt-free scream house and everything the other day so it still is being done but uh but it's it's it's a very um i think it's as much it is mathematically tough right now it is economically tough but i think more than those two it's just psychologically tough

right now because there's just this perception this dark cloud over the subject of buying a house right now and uh houses are selling and houses have not gone down in value there's still a shortage of housing they've not gone down they've gone up in value well i mean there was a time what 18 months ago there's a bubble they said they were going to crash yes you're just i'm just going to wait till house prices come down they're not going to come down we told you and they haven't come down yes they've gone up we told you this we've told you and told you and told you and told you so here's some good rules of thumb if you're buying a house don't buy a house and we've said this for 30 years

this hasn't changed and it'll help you get the house by the way until you get out of debt don't buy a house where you have to buy an extra bedroom for sally may because you can have a student loan so long you think it's a pet you know you're sitting there with stinking car payments around your neck a bass boat payment and paying for last week last year's disney vacation on your credit card and you're still and you can't figure out why you can't afford a house well i just told you why you can't afford a house you don't have to go after disney you're stinking over spending well i can go after ford but i can't go after disney beach what's wrong it's um okay go anywhere you want to go but you're spending money you don't have to do crap you don't need to be doing and you go in debt to do it and then you're

broke and you can't figure out why you can't buy a house so first thing you get is clean up the debt you get out of debt and you build an emergency fund of three to six months of expenses no time in 35 years that i have said that formula did anybody like it a hundred percent of the decades that i've been doing this show people went well that's not very realistic no but it's smart because if you move in a house without an emergency fund your hot water heater will go out that week and the next week the roof will leak you're going to learn about home ownership baby murphy if it can't go wrong it will come visit you and if you want to if you want to do it really right i'd love to see you put down 20 now first-time homebuyers that's very difficult a lot, first-time homebuyers, that's very difficult.

A lot of first-time homebuyers listen to Ramsey. We don't yell at you for putting down 5% or 10%. But here's the reason we say put down 20%. Because you avoid PMI. Private mortgage insurance is insurance that pays the bank in the event they have to foreclose on you and they lose money. It's foreclosure insurance is what it is. And it's not for you.

It's for them. But you have to pay for it. And it's about $75 per $100,000 per month. So we're talking like, you know, $225 a month for a $300,000 loan. Just for the PMI. Because you don't put down 20%. So that's a big deal. So that's why we tell you to do that. Now, we understand some of you are going to pay PMI, but I'm just telling you,

you can't just automatically sign up for something that expensive and not know what you're doing because it benefits you zero. It's for the bank. You are paying for the bank's insurance policy to cover them in the event you get foreclosed on. Then, figure out 25% of your take-home pay and never have a payment more than a fourth of your take-home pay on a 15-year fixed-rate mortgage. Not adjustable rate. Not a balloon. Have y'all noticed rates are going up why would you sign up for a rate that goes up that's what your adjustment's going to be that's just dumb

don't do that well they might go down yeah they might go down then you can refinance so you date the rate and marry the house, get the right house. And if the rate goes down, refinance, there's your adjustment, but don't let the bank pass on the risk of higher interest rates to you with an adjustable rate mortgage. So you can get a cheaper rate. So you can get screwed later. You're kicking the can down the road and you're going to get your face kicked in. Don't do it. Don't do it.

This is straight guys. I'm just telling you, I want the house to be a blessing, not a curse. And I meet too many people that their home is a curse all because they said in the name of it's always smart to buy real estate. No, it's not. When you are broke in debt, don't have an emergency fund and sign up for a mortgage payment you can't afford that is not smart real estate that's going to slow down your wealth building bring anxiety to your home stress to your relationships it just takes all the bad stuff out i mean it brings all the bad stuff in yeah and i think that this part of the formula is where people feel like oh my gosh like as they run out their income of 70 000 or whatever it may be, their household income.

But the truth is, even though incomes, because wages have not kept up necessarily, right? No, they haven't. They haven't kept up. So that means getting into the market, it's going to look different than it did three years ago to our point earlier. And so there is a part of that that sucks. And I think we have felt that feeling with inflation.

There's things that happen that we can't we don't have control over but this but doing this it allows you for your especially this 25 but here's the here's an accurate appraisal of that okay wages have not gone up as fast as prices and interest rates which means you can probably no longer afford the home that you can that we live in right now that's how i mean like you can probably no longer afford the home that um well that's just interest rate only there yeah okay that's not price uh but the uh but you can probably no longer afford the home you thought you were going to get yes i think that's it and it's probably not moving in that neighborhood you're probably moving in a different neighborhood or you're moving a little bit further out of town yeah or you're going to compromise somewhere else in order to become a homeowner

later it's not like it's not no this is forever yeah right you can move again later when your income comes up and you make some equity on the purchase of the home yeah and and because boys and girls you never have a forever home the only forever is the only forever home is heaven that's it that's your only forever home because as soon as you build your forever home as soon as you build your dream home your dreams will change you build your forever home your kids are going to grow up and leave if you're a good parent they're going to leave and so then you've got this big old house and there you go so okay at all you need to you need to make sure you're on top of your closing costs you need to factor

in other home insurance ownership costs people act like you don't have you have extra costs when you own that you don't have when you rent maintenance utilities all this and we always tell you to do a fannie Mae, a conventional mortgage. FHA and VA are more expensive mortgages in fees and in interest rates than a Fannie Mae, the conventional mortgage. So do a conventional mortgage. And if you're going to get into this real estate market, now is a really good time, actually, to get in.

Yeah, if you're in this position to do it, do it. Do it. Yeah, and use one of our Ramsey Trusted Pros real estate agents to help you with that. So we'll put some link in the show notes for you guys to check that out. Or if you're listening, ramseysolutions.com slash agent, but have somebody in your corner in this. Because again, if you are in this position to do it, get in now. Get in now. There it is. This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down.

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CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. Rachel Cruz, Ramsey Personality, is my co-host today. Mark and Angie are on the debt-free stage in the lobby of Ramsey Solutions. Hey guys, how are you? Doing great, Dave. How about yourself? Honored to have you guys. Where do you live? We live in Ann Arbor, Michigan. Oh, very cool. Welcome to Nashville. Thank you. And how much debt have you two paid off? We paid off $192,000 in six years and three months. Good for you. All right.

And making what range of income during that six years and three months? It was about $64,000 to $90,000. Very cool. What do you all do for a living? I'm a missionary, and I work with hockey players. I work at our church. I'm the early childhood coordinator. Very good.

Good for you guys. Six years, $192,000. Is that your house? Dave, you are looking at weird people love having weird people around me yeah normal is broken you're not no way to go you guys so what's this house worth guys uh it's about 475 wow very neat awesome and how much have you guys got in your nest egg these days uh we got about 250 all right we're getting there bumping up towards baby step millionaire then yep you got it how old are you two weirdos i am 39 i'm 37 and you have a paid for house worth almost a half a million

dollars yep that's just weird y'all it's all god how does it feel yeah it feels really weird like you always say like the grass feels weirder. Every time I cut the grass, I always just touch it now. Mine, you're mine. So what happened, you guys, six years ago where you thought, we're going to take this on because it's the biggest, I mean, the mortgage, it's the mountain to climb for sure. Oh, yeah.

I mean, I remember the first payment that we made on our mortgage. We weren't doing your plan. We didn't really know about it. And you look to see how much money actually went towards the principal. Nothing. What on earth? A dollar. Totally shocked.

And then it was about, like Angie's always had a heart to say, hey, we want to pay off the house. And I just didn't know how. To me, it didn't seem possible. But my brother got me like the old financial peace kits, like, you know, just the old school ones. Oh, wow. So I had the CDs. And one day I was cleaning the grill, not our grill. I found it on this- For you people out there, that's a small disc that has the audio recording on it. Yeah. So I found a grill on the side of the road and wheeled it back to

our house. And I'm listening to the CDs as I'm cleaning it. And I honestly had no answers of about anything with investing insurance, nothing like that. And as I'm listening to these CDs, it just started clicking. And I was like, Oh my goodness, we can do this. Clean the grill, put it on Facebook, sold it within like two hours and at that point I was like Angie like we're gonna side hustle our our house and that's what we did so like our income we lived off our income that was our budget we paid off our house 100% on side hustles oh wow just complete running and gunning we did everything and honestly you could do an extra show for all the side hustle stuff we did

because it was the most lucrative the most lucrative um i would say it was buying buying and selling uh video game systems we did a lot of flipping um and we did we flipped toys we flipped everything legos legos angie got really good at garage sales, finding stuff, flipping that. You buy it for a dollar, sell it for 20. Yeah. Things people were throwing out, they would say, sure, take it. We would sell it. Yep.

It's amazing. Yeah. Yeah. Six years worth paid off your house. Six years worth. Yeah. Wow. That's a lot of Legos.

It was a lot. And it was one of those things of like, you know, you work during the day, but at night you have time. And I would research at night to say like, Hey, what, what can I get into now? Like, what's the next thing I can get? You know, I'd be listening to the show while cutting grass or, you know, driving. And then I'd be like, Hey, how can I get that next thousand and research and find out, Hey, this product, I can go after this. I can find that. And, uh, that's how we hit it. Wow. That's amazing. That's amazing.

Oh my gosh. Okay, I'm curious. Name off like three others. Because a lot of people listening, side hustling, it's a big, I mean, it is. It's obviously a really great way to pay off debt. So like, did y'all do like Uber? Did you do any driving, grocery delivery, any of that?

Or was it more like entrepreneurial with like figuring out? Yeah. We did some childcare. So with extra hours that we had, we would do for small groups and stuff at church, we would be the babysitters for that. Yes. Um, anything like that? Mark did. I did. I did a lot of studies. We're right by a university of Michigan and I did a lot of studies for them. Um, and again, there's some crazy things that you

can get money for. Um, I'll just tell you one. But there was one where I had to sit in the passenger seat of a car. And for like 45 minutes, their job was to see how much they could get me car sick. And I had to be on an iPad and complete all these tasks. And I was dying. But the longer you go, the more money you got. Oh, my gosh. And I was just like completely dead.

When that car stopped, I got out, hit the ground for like 30 minutes. I told her that was the worst one I ever did. How much did you make? I mean, it's only like a hundred, 150 bucks or something like that. For 45 minutes of car sickness, you can do it. You can do it. But they called me back and they said, will you do it again? And I said, yes. That's awesome, you guys. So great. Okay, so you're doing all of that. And then I see three kiddos over to your side.

So what's the family dynamic like? Because a lot of people listening, they have families. And you said extra time at night. I thought, I'm asleep. I'm so exhausted. So talk to me kind of about the schedule even. What does that look like? Yeah, I mean, for me i that's when i did a

lot of my research um there was times where i was waking up like during the night in the middle of the night like i would track inventory of stuff figure out hey i gotta buy it now go to stores when the doors open so i was grinding during that time for sure um the kids joined us for a few things going to garage sales so they would come with me. That'd be a fun event for the family to do. But you didn't feel like the family is like, in despair now because of this process. Yeah. I would say they had to make some sacrifices. I would definitely give them a shout out for being on our team for this because there would be times their school would, you know,

do the book fair. And I would just tell them, circle the books that you want. We'll go to the library and get them or find them at a garage sale. So they just bought into it and made it a lot easier. Great job, you guys. Six years is a long time. Rachel, you just said this story just popped my mind. There was one time where we had to go to a store right away to get something. So I was like, guys, get in the car right now right now so we all hopped in we went there and we're standing in line and i looked down at my son and we got him out of the house so fast we forgot to put pants on him he was a lot littler yeah running and going they were a huge part of this that's so great y'all that's so great

oh that happens sometimes to us and yeah and i wasn't even trying to go to a store at a certain amount of time that's parenting brain sometimes well done you guys and you're 37 years old with a paid four half million dollar house almost millionaires that's that that's that's what that i mean that's what happened i mean guys, there's a result to this. And the result is that you guys are heroes and you've changed your whole family tree. Way to go. I'm so proud of you. Thank you.

Very, very well done. Excellent job. Who was cheering you on from the outside? Man, I would say our family and our close friends knew that we were really tackling this debt. And so they said go after it. They didn't really hold us accountable, but they were super excited for us to do it. Being in the mission field and at church, we just had a lot of people encourage us and support us with babysitting or with meals and yeah, just really pouring and loving in on our family. So

things like that, that went really far with us yeah yeah and honestly like the show was ginormous like again cutting grass driving you hear that show you hear people who make the same amount of money you do yeah and have the same amount of debt and then it becomes possible bring the kiddos up and let's hear their names and ages yeah i want to introduce them before we get out of time here hey we've got every dollar uh a couple of every dollar one year subscriptions for you to say thanks for coming so what are the names and ages this is anna she's nine this is mckenzie she's seven this is harper and he's 11 and he's got his pants he's got it there way to go harper all right like it. It's good stuff. So great.

Hey, I'm proud of you guys. You're heroes. Thank you. Look at what you did, man. Look at what God did through you. I'm so proud of you. Yeah. You went out there and planted some corn and some grue. Yeah.

Well done. Yeah. Good job. Mark and Angie, Harper, Anna, and Mackenzie, Ann Arbor, Michigan. 192,000 paid off in six years and three months, making 64 to 90. They're weird. House and everything is gone. Love it.

Count it down. Let's hear a debt-free scream. All right. It's all God, so we're giving glory to God. Ready? Three, two, one. We're debt-free! Yeah!

Yeah! They're amazing. Wow! Making 64 to 90. They did that. It's amazing. Shut up. This is the Ramsey Chef.

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We appreciate you. Josh is in St. Louis. Hey, Joshosh how are you better than i deserve dave how are you just the same sir what's up i'm 22 years old i'm a business owner and um i'm just looking to figure out what's the best way for me to start setting myself up for the future as far as investing. I'm probably looking to get married here within the next couple of years, and I just want to get a good foot forward. Good for you, Josh. What kind of business do you own? I have a lawn and landscape company. Good for you. How much are you making in a year, would you say?

Last year, I made 96. This year year we're about on track to do 110 good for you that's great is that take-home pay or is that what the business is bringing in uh that was what i took home last year um i really don't take much of a i still live with my parents so i don't really have much overhead i don't take much of a salary but um that's kind of what we were doing last year way to go good for you okay do you have any debt right now um i just started listening to you guys so i do have a five thousand dollars left on my truck payment okay but uh other than that nothing awesome how much have you got saved? My business account, I have close to $55,000. My personal account, I have $25,000.

And then $2,000 in a savings account at a bank that's not doing much of anything. So you know that we're going to tell you as soon as you get off the phone, pay off the truck, right? Yes, sir. Okay. As soon as you get off. When you hang up, next thing, pay off the truck. He needed us to say it, Josh. I know. soon as you get off. When you hang up, next thing, pay off truck. Okay. He needed us to say it, Josh.

I know. I figured you guys would say it. I've been listening for a little while. Yeah. It's pretty easy. Okay. Now you're debt-free, and you stay out of debt from this point forward growing your business. You've done a great job, and the secret sauce to your business growth is not debt. It's you.

You're the secret sauce. You're the one that brought this to where secret sauce. You're the one that brought this to where it is. You're the one that'll take it to the next level. And it's not going and borrowing money to buy a bunch of equipment. That's not the secret sauce. And people get confused when you start making a little money that suddenly go, oh, I could go do this. No, you need to be reliant on what brought you here. And that is you and your hard work and your ingenuity. You are amazing. You've done a great job to build a business like that at 22 years old. Very, very well done.

But keep growing it on your ingenuity, not on borrowed money. And you haven't so far. So don't fall into that trap. That's thing. Answer one to how do you set yourself up in the future? And then answer two is to start following what we call the baby steps. It is the shortest right way from where anyone is to where wealth is. And so we're going to set aside some of your money and call it an emergency

fund of three to six months of expenses. Maybe it could be that 25 that you have. Exactly. Yeah. Maybe step one is a thousand dollars. You've done that. Two is debt-free. You're going to do that when you get off the phone.

Three is you're going to have an emergency fund of three to six months of expenses. And then four is I want you to start investing 15% of your income into retirement planning. And if you want to do something beyond that, just start throwing it over into a simple mutual fund like an S&P 500 fund or something like that to just pile up some money to buy a house someday. Somewhere in the next 18 months or so, get out on your own as a renter. It won't hurt anything. Establish yourself in the marketplace and, you know, establish yourself as an adult outside your parents' control, outside their walls. You've done, you know, you can run a business, you can run an apartment.

You know, it's not going to kill you. Or a little house somewhere or something. Yeah, but some good funds to look into, Josh. You know, opening up just a Roth IRA, you know, funding that for his small business, a SEP. Would he do that? Well, you could do a SEP. Do you have full-time employees or part-time or 1099?

How are you paying your people? Full-time. How many? I've got two how are you paying your people uh full-time how many two guys right now two okay guys all right if you want to sit down with a smart investor pro they can teach you about a roth ira or if you want to use a sep or if you want to use a uh what's called a simple ira which is a 401k for small businesses one of those two things a sep or simple will be good for you to add more than just the roth if you want to start saving for more for retirement than just the seven thousand dollars that's allowed this year okay but you can throw seven grand in there real quick and i would

do that and let it start growing tax-free for you in mutual funds and beyond that i'm going to start stocking some of this money to grow the business that's a retained earnings over in the business i'm going to start stocking some of this money to grow the business. That's a retained earnings over in the business. I'm going to start stocking some of it to move into a paid for house at some point. Uh, but there's no rush. You're 22. If you did all of that by 25, you'd still be a genius. You don't have to do it by 22 and a half. Okay. There's no, uh, you're ambitious, dude, you're go get her. It's okay to move slowly on the house purchase because if you buy a house as a single guy and then you get engaged and married you will discover you have bought the wrong house so um it's not it's okay to wait it's okay to especially if you have somebody it made it sound

like you have some sound like he's getting ready you're talking about that so buy a house after you're married that's fine it's preferable in terms of the order to do this you're doing great you're going to get there you don't have to worry about it you are going to get there nothing's going to stop you except you so well done sir very well played kaylin is in sacramento hi kaylin welcome to the ramsey show, thank you for having me. I'm honored to be here. It's an honor to have you. How can we help? I just was calling because I was wanting to get your advice on buying another car. And I wanted to see like how much you'd recommend that I would spend on it, basically. So I know you're not a fan of new cars. How much money do you have?

Um, well I did your program and I paid off like 29,000 in student loans and, um, I have an emergency fund saved. So I have 20,900 in that. And then, um, I have kind of like an everyday fund. I sort of call it, where I do like, you know, my normal transactions. So I have about like $6,800. So what do you think you want to spend on a car in cash? I don't know. So I was looking at some used cars, and I think, I don't know if it's just like I'm not very good at looking at or it's California,

but like cars with like 90,000 miles on them will be like 15,500-ish. Well, that depends on the car. Yeah, it does. But it would just take kind of a large amount of my money, and I don't make a lot per year at all. What do you make? About like $25,000 a year. You've done all of this making $25,000 a year in Sacramento, California? Yeah.

Wow, you live on nothing. I do. That's impressive. Yeah, but I'm a musician for a couple churches on the weekends, and then I'm a remote photo editor, and I shoot weddings. Okay, so yeah, you have a couple of other streams of income coming in. You're probably making as much doing all that as you are at your day job. No, that's like the total of everything,

but I'm just kind of like a simple person. So, yeah, I was a little scared to call you guys. So the answer to your question, Kaylin, is pay cash. Okay. And I wouldn't get more than a $10,000 car. In your situation, that's the max is a $10,000 car. Rachel's exactly right. About half your annual income is the most you ought to have in a vehicle,

and you pay cash for it. So with the numbers you gave us, it sounds like 10K is the right number. And get somebody at one of those churches to go with you and help you pick it out, help you shop if you don't feel comfortable with what you're doing. This is The Ramsey Show. Thank you.