The Ramsey Show - App - How Much Should We Spend on Diamonds? (Hour 3)

Episode Date: October 14, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. Dr. John Deloney, Ramsey personality, is my co-host this hour on the show. Thank you for joining us, America. Open phones at 888-825-5225. That's 888-825-5225. Tay is in Chicago starting off the hour.

Hi, Tay. How are you? Hi, how are you? Better than I deserve. What's up? Okay, so my sister and your brother are homeless. We left my mother's house because she was mentally abusive and also financially irresponsible.

So my brother left my mom's house and moved in with my friends in their basement. And then literally not even like three weeks after that, I lost my job. And I got a new one right after i'm at that one currently i've been there for like two like two or three weeks now but i hate it i hate it bad i really cannot stand it at all whatsoever you don't like your job hey tay before you keep going can you tell us how you really feel about your job what do you hate about it tay i mean you've only been there long enough to really hate it i mean Before you keep going, can you tell us how you really feel about your job? What do you hate about it, Tay? I mean, you haven't been there long enough to really hate it.

I mean, what's the problem? What's the problem? They only gave us one week of training to learn the system, but then they didn't give us any training on the actual questions that the people are going to ask us. So they tell us to call a helpline to get help to answer the questions, but then the helpline doesn't know the answer to the question. And then the answer to the question is also not in the question. So what do you do then? What do you do all day?

Because you don't know the answer to the question. The helpline doesn't know the answer to the question. You can't answer the question. What do you do? What do you do with your day? Just tell people I don't know the answer all day? Basically, I'm going to manage it for you because this is a little confusing. I'm going to transfer you.

That's all I do for eight hours. Okay. So how much do you make? This job here is $2,000 a month. Okay. So go get another job. That's the plan. But the issue is I'm trying to get i'm trying to i'm trying to we're homeless i'm trying to get out of my friend's house yeah i didn't tell you

to quit the job i said go get another job then quit the job okay yeah you're living in your friend's basement you don't have a lot of luxury right now you don't have a lot of wiggle room you're gonna have to do some really uncomfortable things and stick it out and if the worst part of this transition is that you're in a job that's annoying and they're not training you very much but it's inside and there's a heater and you gotta and they give you money yeah they're paying you i would i would ride that out and find something that's going to pay you more money that's going to be better fit for you as soon as you find a job making three thousand dollars and as soon as you do quit the dumb job okay but don't quit the dumb job when you're living in somebody's basement you have no money

okay you don't have that luxury unless there's something you haven't told me like you have a hundred thousand dollars in your bank account or something i wish i had a thousand dollars in my bank account i got a feeling you wouldn't have been calling me that's was the case. That's right. Otherwise, lead with that, right? But, yeah, feel free to go get another job, of course, but don't quit that job until you've got another, what do they say? Matter of fact, feel free to go get three more jobs.

Right. So you're never this broke again. You've got an emergency. That's right. How many hours a week are you working now? 40, and then I also have my own. I do have a nice second job. I work for a jewelry store as well, but they furloughed me,

and they just brought me back. So I only work 13 hours on the weekends for that job. That's not enough. That's only 53 hours. You need to be working 80 hours. You're broken in somebody's basement. Work more. Go get a different job. D dump the dumb job and get your

financial plan going listen here's the deal pretend with me for a second you made five thousand dollars a month how much different would your life feel that's what i'm prescribing for you it's not that money is the answer to everything, but when you have no money, money is the answer to almost everything. It's like, you know, I mean, it's not, it's not a spiritual thing.

It's a matter of you freaking you're right on the edge of homelessness. Right. And so you've got to pile up some cash. And the only way money, the only place money comes from is work. Right. So you need to be like, you re I'm,

I'm being real serious. You need to have no freaking life. You don't need to see the inside of a'm being real serious. You need to have no freaking life. You don't need to see the inside of a restaurant. Your friends are going out for drinks, toughies, unless you're serving them from behind the bar. I mean, you are not doing squat except working and making money because you have no money and you need some. It is that primitive a formula. Right. You got to you got to get going. And you've got to look at your situation and think I'm in a basement you know they're not training me that's not a thing right now

you are running it's like a gazelle running through the woods and being like this terrain is really uncomfortable we're gonna need to go over there and run in that grass you know what you just gotta run you gotta run you gotta run you gotta run yeah cause there's a cheetah on your butt that's right and you don't get the luxury of where you're running

you just run that's the deal and here don't get the luxury of where you're running that's right you just run go that's the deal go that's it good for you and here's the thing stick it out that's right stick it out until and then tell them take this job and shove it when you get the other one i'm fine with that i ain't got any issue with you changing i do have an issue with you quitting there's a difference because you don't have that mathematical option kiddo christine is up next and christine's in St. Louis. How are you, Christine? Hi, I'm doing well.

How are you guys doing? Better than I deserve. How can we help? Well, I am currently on Baby Step 3, but I'm looking forward to Baby Step 3B. I have heard you guys say that it's okay to pause investing for saving up for a 20% down payment on a condo or home for about three years or so. But then I've also heard you say to people who currently have a home and then say they want to go at this mortgage quick and they want to pause investing. You guys say not to do that because that's stealing from your future. So I'm just confused as to how the difference of rationalization

is there kind of a thing and if i should be pausing investing to get that down payment down then once i get to 3b that's a very good question really good critical thinking skills good job um the difference is is that almost always the second part of the equation where you're going to stop your baby step four in order to pay off your baby step six faster involves a lot of years the typical the typical person calling me there is not a three-year scenario it's a five to a five to a ten-year scenario where they've abandoned their 401k and so it's one of them is a short period of time, and the other one, in other words, the number of times someone calls and says, Dave, I want to stop my baby step four in order to pay off my house, and I can pay off my house in three years or less, is less than 5% of the time they ask that question. 95% of the time they ask that question, it's a long-term play.

Okay. And that's what changes the equation. But you're really thinking clearly. Good job. You're going to be fine. You're paying attention. You're listening. You want to know why because I'm not doing stuff just because some goob on the radio said to do it. I want to know why. I want to understand it. That is going to cause you to be wealthy. And it's going to be a long play, right? So you got to settle in and not get really raged up, and I've got to pay this house, I've got to pay.

Settle in, follow the plan. Millions of people have done it. Keep doing it, keep doing it. Yeah, we go from, I said it in another hour, and I don't think I've ever said it that way exactly. We go from gazelle intensity in one through three to intentionality. There you go. It's not intensity, it's intentionality.

I love it. And that's what we're talking about here. So you're going to do so great. Well done. This is the Dave Ramsey Show. folks i love telling you about well-made well-thought-out products today i'm talking about grip six belts i don't know about you but I'm not a fan of traditional belts. They never fit right, and they're uncomfortable. Grip6 belts are unique.

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To learn more and get this month's Dave Ramsey special, visit GRIP6.com. That's GRIP6.com. Dr. John Deloney Ramsey, personality, is my co-host in crime this hour. Open phones at 888-825-5225. Erin is in Nashville. Hi, Erin. Welcome to The Dave Ramsey Show. Hi, Dave. I'm so excited to talk to you.

You too. I'm hoping you'll be able to settle a friendly debate my husband and I have. Uh-oh. So just to give a little backstory, we are very proudly on Baby Step 4, 5, and 6. We paid off about $40,000 in 388 days. So we were really strict on budget, as in me. I'm super frugal. So that leads me to my question.

I've always dreamed of upgrading my wedding set, and we're coming up for our 10-year anniversary this May. So the deal is that I will be able to upgrade. Well, now I'm starting my research and realizing since we got married, there's these beautiful, new, more frugal options,

such as lab-grown diamonds. So I'm unsure. Oh, lab? Lab-grown, yeah. Oh, fake. So I'm unsure. So that's kind of the debate that we're hearing. You know, you hear that lab-grown are, you know, essentially they're just as real as real diamonds, but they're far cheaper.

So my thing is to understand, you know, is it worth paying far less up front and not having – diamonds shouldn't be an investment. I know that they are not, but they likely will never be able to be reselled much for anything, if at all, or spend the extra money the front and have something that you know is is real it doesn't matter it doesn't matter it doesn't matter here's the thing okay uh you know sharon got married with uh 38 years ago with a 0.23 spec 0.23 carats you have to get a magnifying glass to find the freaking rock okay on her hand sure that is in a that is in a uh a safe and the woman has a freaking headlight on her hands so um and so i in between those two i've made several upgrades and uh have participated in some young men marrying my daughters meaning i didn't participate and buy it but i was involved in the diamond purchases and involved in lots of diamond purchases all over

sharon's ears and arms and everything else and so uh you know we reached a point a few years ago that you know what i really started to understand is is they do not go up in value period okay and the only person that cares unless you get one big enough to blind people in the room the only person that cares is you six months after i buy that diamond i have to get a file out and try to figure out what i paid for i. I don't even remember. I don't even care. The only one that cares is Sharon. It's on her hand. And so that's what I mean. The only one that cares is you. You're not going to go around going, this one's fake, unless you're weird.

You know? You're just going to be walking around with this thing. You forgot it's on your hand even. And you go, okay, my personality is I couldn't give a rip less if it's on your hand even and you go okay i the my personality is i couldn't give a rip less if it's real i bought the you know the lab grade fake one right or whatever you call that or i really wanted it to be real it means something to me emotionally and it's a thing and i've got the money and i just bought it there's nothing wrong with either one but you can't really say oh one's not going to be worth anything because it wasn't worth anything when you bought it you're not going to pay much for it or it's it's going

to be worth about what you paid for it if you can find a market for it if you got ready to sell it erin why do you want to upgrade your wedding set after a decade it's always been a dream there's also a lot of baggage in that previous life when it comes to rings so this is kind of my the only piece of nice jewelry that I ever care to own, and I just want something that, yeah, that could knock somebody out when I look at them. So Dave's right. It's not going to knock people out. It's going to make you happy for a minute,

and it's not going to have the desired effect on other people. What are you talking about spending on this? Between, well, Lab Grown would be about $3,000. Real, you'd be looking at about $55. $100? Yes. Oh, by the real. Crap, I thought it was like $100 versus $10,000.

No, no. Our whole thing, the debate was that I thought you would go with lab-grown because it's far less expensive. Now, there's zero market for that crap. Agreed. And so it's less expensive, but it's worth zero. The other one at least probably is going to be worth $5,000 10 years from now. That's what we're looking for. That was kind of the debate.

It was one of those, you know, oh, he's celebrating. I thought there was more of a diverse value, bigger value separation and cost separation than there is. With that separation, there's no question. I'd buy the $5,500. It's not a lot of money. You got the money. You're in good shape.

You didn't tell me it's $55,000. That's why I said $100,000. I want to make sure. I went, I don't know what. But, yeah, if it was me, you do what you want to. There's nothing. There's no wrong answer. I already gave you all the other stuff that you can think through.

But just from a money standpoint, I'd buy the $5,500. And if you've waited a decade and it's still what you want, we tell people to wait 24 hours, right? If you wait 10 years, get the one that you want, right? Yeah. And you got the money, good for you. Yeah, don't be a tightwad on this one. There's so much other, the way you phrased your sentences

when you started talking about the baggage and the background and the whole thing. There's something there about the nice one. It told me you still wanted the $5,500. That's right. That's what it told me. And I would do it. I wouldn't think anything about it.

This is why we do this stuff. You live like no one else so later you can live and give like no one else, and you can make a decision like this. But, yeah, that's what I would do. But, you know, I'm not going to call you stupid for doing the other. If you want to do the other, it's fine. There's nothing wrong with it. So there's like this, because I'm just two guys talking about something we don't know anymore we're talking about.

But I actually do know a little bit about diamonds just because i bought so stinking many of them but there's this whole thing of um you get a completely fake like a hundred dollar version of an eighty thousand dollar ring that is uh for travel okay when you're traveling you don't take your real stuff okay because it doesn't get stolen. If you've got like super expensive stuff. I don't know what you call that, but apparently that's a thing too. And that's what was in my head, the way she was talking about it. Those are like plastic. So am I – I guess I just – all my alarm bells go off.

If you can't go on a trip without making sure everybody knows, this isn't the real one, but I got one at home, I promise. You know what I mean? Like, maybe I'm missing something. Just not wear anything on the trip. Or wear a wedding band. If you're that worried about it. Yeah, and I guess I'm just thinking, like, what is the... Well, if you're going to wear a headlight on your hand,

you're going to wear a headlight on your hand on a trip. That's fair. It's the same thing. That's fair. But, yeah, I mean, you know, most of us that travel have lost stuff. I've had stuff stolen. Oh, yeah. It's not an unusual thing.

So you got to be super careful. It's a very interesting, it's a very interesting way of looking. I've never heard of the words lab grown diamond. I guess they're trying to grow cows and pigs and horses. I was thinking of Dolly the sheep myself. Whatever, man. Went through my head. It's lab grown.

That gives a rock a little bit more love than it deserves, but that's all. Yeah. Becky is in Salt Lake City. Hi, Becky. How are you? I'm trying to get through some stuff. Uh-oh. So I'm going through a divorce right now.

Yuck. And definitely not something I wanted to have happen and so my question for you is more financial based I'm glad John's there because my therapist is out of town this week so I

I'm a realtor and I've always had like, um, rollercoaster income with it. Um, and really not great income with it, but I love it. And I think that part of the reason why my income wasn't so great was because I didn't have the emotional bandwidth to handle as many clients as I wanted to before, because my marriage has been falling apart for two or three years. And it's only been a four year marriage. That's very reasonable. Yeah. So, that's good to hear. So, I have a few deals that are closing this month.

One that's closing this month and then two that will close next month. And then I don't have anything else in my pipeline. But since I won't have my husband's income to carry me through stuff, I am just trying to figure out what I should do. I mean, obviously get more in my pipeline. Yeah. I'll tell you what. Hang on. We'll come back from this break.

We want to make sure you give you a good, solid answer. You're in a real pickle right now. We want to make sure we're careful with this. So hang on. We'll be right back. This is the day where i'm We're talking with Becky in Salt Lake City, going through a divorce. She's been a real estate agent and has had an irregular income, meaning that some months she did really well. She's got a couple deals in the pipeline getting ready to close.

After that, nothing else in the pipeline. She's worried about her income pending the divorce. Is that a fair summary of what you told us? If I push the button, I could talk to her. Hi, Becky. Is that a fair summary of what you told us? Yes, it is. Cool.

All right. So when is the divorce final or when was it final? So I don't know. It'll take at least 30 days. My husband wanted me to sign some papers last night, but I just realized that I wasn't ready to sign anything last night, and so I tried to get him to come back instead, which he wasn't going to do. So it was 30 days from whenever I signed the papers.

Okay. And do you have children? No. How long have you been married? Almost four years. What does he make? About $33,000 a year. Actually, no, he's sorry, that went up again, so he's up at $36,000.

There's no children. He makes $33,000. Is there any money involved in this at all? Any assets? Do you own a house? Do you have any money? We have debt that we're splitting. The asset we had was a car that was above water.

Okay. The debt that you're splitting, whose names are on it? So he has his student loan and I have my student loan, and then we have credit cards that are pretty much all in just my name, and he was just an authorized user on them. And then we haven't used them for over a year what's the balance what's the balance on those oh the total of the credit card is about seven thousand dollars okay if he promises to pay some of those and doesn't you will have to anyway

regardless of the divorce a divorce decree does not take you off of debt. Yeah. It just holds him accountable to pay it. But if he doesn't, the bank has the right still to come after you. So keep that in mind. I think you need an attorney to do a divorce. You always need an attorney to do a divorce. It sounds like a fairly simple one, a fairly clean one,

when you're ready to do that. So back to your original question, then. You're in the middle of heartbreak, and you've been dealing with a messed up situation, so you weren't, didn't have, the phrase you said, you didn't have the emotional bandwidth to address and to fully apply yourself to the real estate business, right? Right. Okay. So when there is some finality to this it should open up that bandwidth shouldn't it yeah actually already has because uh my husband was just so wishy-washy about wanting to stay together for a couple years and so finally um

in august he finally told me that he just wanted a divorce. And two of these three deals came from. Has he moved out? He moved out in March. Okay. All right. I'm sorry you're going through this. I can hear the pain in your voice.

How old are you again? I'm 25. Okay. I think you're going to be a great real estate agent, and I don't think you're going to have any trouble because you're going to have two things. One, you're going to have your emotional bandwidth back when you've got finality to this,

and two is you're going to have a level of desperation that's going to cause your little butt to go to work. And I think you're going to have a really full pipeline pretty quick. Once you can actually put your eye on the ball, I think you'll be able to catch the ball. Yeah. Yeah, but right now you're looking like six directions, and the ball goes right by you, right? Yeah.

By your own account. What am I missing, John? Yeah, Becky, I want you to honor this as though there's a death. So it hurts right now, And you are had those papers and it feels heavy. When you sign them, you're going to have feelings that you've probably never felt before. And then in 30 days, when you get that final letter, it will be as though somebody told you someone you loved has passed away. And I want you to honor it like that. We hear about divorce all the time. And it just sounds like it is happens. And we minimize it and people get blindsided with the dump truck of emotions and pain that it actually is. On the other side of it, you're 25.

And I want to promise you there's healing and light on the back end of this deal. And a better man out there. There's somebody who's going to love you and honor you and be with you and not drag you through six months, seven months, eight months. And they're going to honor you for just the wonderful woman you are. So honor this. Get some people in your life. They're going to sit with you during this messy time. And like Dave said, you're going to have no other option

but to take on a bunch of clients and to work real, real hard. But don't miss the point. Don't miss the time when you're going to grieve this the right way. Okay. Honor it. Just honor it. And I don't think you sign papers that you haven't had an attorney. Absolutely.

Don't sign a piece of paper before an attorney looks at it. That's worth the 500 bucks or the 1,000 bucks you're going to spend on it. Yep. Okay. We're not trying to pick a fight. We're trying to make sure he didn't sneak one in on you. Yeah. Okay.

I don't believe in picking a fight. I just want to make sure that you don't go, oh, well, look what he did later because you were upset and half-read something or you missed something with your emotionally clouded eyes. If I were in your situation, there's no way I would make that deal without having somebody look at it. Absolutely not. I wouldn't either.

Because, you know, I know when I'm mad or when I'm hurting that my editing skills aren't real good when I'm reading a contract. I read stuff that's not even there. I mean, I just make up stuff in my little head. I did the exact same thing. And so that's what happens to all of us when we have that. So that is what you're facing. Hey, you call us any time you need help, okay?

I hate that for you, Becky. Just know there's light on the back end of this deal. On the debt-free stage and a better story is Christine from Kansas City here in the Ramsey Solutions Lobby to do a debt-free scream. Congratulations. Thank you. How much have you paid off? About 60 grand. Way to go. How long did that take? So the first 20, I paid off in about three years. And then the last 40, it was just two. Okay. So five-year journey.

Yes. Okay. And your income during that five years range? Yes. So the first three years was crazy. I worked three jobs for about $20,000, and now I'm at 50. Good for you. What do you do for a living?

Right now, i'm a health educator at fort leavenworth kansas army wellness center oh very cool you're in the military i'm not oh so you're a civilian okay yes yes very cool good for you what kind of debt was the 60k student loans all student loans yep took five years to get sally may evicted yes five years from when i graduated so well done yes so what puts you on this journey yeah my dad who's here with me today my dad my brother um my brother they're both in the military so they were big influences on me and um my dad actually took me to fpu at his church um when i was about to graduate college and i had no subtle yes. I honestly had no idea what I was getting myself into.

And so I was just like, yeah, sure. I'll go with you. Um, and it really shed a light on what I was about to embark on. And I got really nervous, but then I also just had this great accountability in my dad. Um, literally could not have done it without him. I am just so thankful that he was there for me to help me through all my things. I moved three times in those five years. Um, so it was crazy. And then I even got my car stolen right before I was going to pay off. I got stolen actually in January. Um, and so, um, he would, he just like really helped me out financially

and was my accountability partner through the entire thing. Perfect. Very cool. Very cool. Well, that's what makes you the rock star that you are. Well done. You're a hero. I'm proud of you.

Thank you. I know he is. Yes. Very, very well done. So what was the toughest part of this? Toughest part was just keeping going. Yeah, for five years. Five years is a long time.

Yeah, really. And, you know, being in the health and wellness field, it is really hard to find a job and to pay enough, right, and to be single and by yourself. And so that's why I was so thankful to have my family. But, yeah, just buckling down. Well, we're proud of you. Thank you. Well done. Well done.

Thanks for coming to do your debt-free screen. We've got a copy of Chris Hogan's book for you, Everyday Millionaires. You're going to be one. Yes. Here it comes. I can tell. I'm going to bring my dad up and he's going to scream with me because he's also going to be a millionaire one day. I love it. Good. Alright. Christine and her dad from

Kansas City. $60,000 paid off in two years, three years, making $20,000 to $50,000. Count in two years, three years, making $20 to $50. Count it down. Is there a debt-free scream? Three, two, one. I'm debt-free! Yeah! Woo-hoo-hoo-hoo-hoo-hoo-hoo!

Wow! Well done! Very well done! This is the Dave Ramsey Show. Our scripture today, 2 Corinthians 1.20 For all the promises of God find their yes in Him. That is why it is through Him that we utter our amen to God for His glory. Eleanor Roosevelt said, never allow a person to tell you no who doesn't have the power to say yes.

That's an old sales thing. I like that. It's an old sales thing. Or even a negotiation thing. You're in the car lot, the classic bait and switch on the car lot. I've got to talk to my manager. Talk to my manager, dude.

I'll be right back. Talk to my manager. I'll be right back. And there's no to my manager. I'll be right back. And there's no manager in there. He goes in there and has a smoke break. Right. Comes back out and I always just go, listen, if you got to talk to your manager, you know what that means?

I got to talk to your manager because I'm through talking to you. Oh, I love it. So that's done. We're not playing this round thing because otherwise I got to go home, talk to my wife and then, you know, then your manager is going to want to talk to my wife and that's not going to work either. So, you know, it's just loopy. It's a bunch of crap, you know then your manager's gonna want to talk to my wife and that's not gonna work either so you know just create it's this loop deal it's a bunch of crap you know i want to talk to a salesman who's who's got enough clout to make a single deal by himself so yeah yeah i guess i just

called the wrong guy i think i stopped on the wrong lot two of the biggest things that you guys can are saying need help right now with is community and help with your money turns out we got both at ramsey plus and ramsey plus in one membership you get financial peace university the class that has taught america how to get out of debt how to become wealthy and outrageously generous to people just like you you get the premium version of our budgeting app, the robust, incredible, world-class, every-dollar budgeting app. You get our new Baby Steps tracking app, and you get a ton of different courses and tools and access to financial coaches, and you're plugged in to a positive peer community. The community there at Ramsey Plus is all about doing the same thing you're trying to do,

which is get out of debt and get your crap together, man. I mean, it's time to do it. So you don't have to figure out your money problems alone. We'll help you. Start your free trial at Ramsey Plus today at DaveRamsey.com slash FPU. That's DaveRamsey.com slash FPU. Chris is with us in Norfolk, Virginia. Hi, Chris. Welcome to the Dave Ramsey Show.

Hi, Dave. Thanks for taking my call. I listen to you almost daily. Thank you, sir. How can John Deloney and I help? So my question today is whether it would be a good idea to cash in my Roth IRA and pay off my mortgage. How old are you? I am 61. How much is in the Roth? About $150,000. What do you owe on your mortgage? $140,000. And what other money do you have? Well, I'm thinking about retiring in January. I'll have an annual retirement at the defined benefit of about $67,000 a year. And I also have a 457 plan with about $750,000 in it. And I have no other debt.

Okay. I would use the 457 to pay off the mortgage because the Roth is growing tax-free and the 457 is just growing tax-deferred. You'll have to wait until you retire to do that, though. That's correct. Yeah. And so I would rather you take tax. See, that money, every dollar that it grows in that 457 is 70 cents because the government's

going to take 30 of it. Every dollar that the Roth grows is a dollar. Right. And so I want that Roth left alone and let it grow, let the continued tax-free growth is what I would do. Zilmara is with us in Richmond, Virginia. Hi, Zilmara. How are you?

Hi, Dave. Thank you for taking my call. Sure. How can we help? So my question is, I recently graduated college, and I'm currently working virtually from Blacksburg, Virginia. And so my rent right now is $700 a month. And I have to move to San Diego when I have to start working, you know, in person. So I'm wondering how much rent I can afford.

So what's the new job in San Diego? I'm a software engineer. What will you be making? I'll be making $100,000. Good for you. Very cool. Very cool. So when do you think this will all happen?

So we are supposed to get back to work January 4th. So I'm planning to move in, you know, middle of December. And so you're not working for them right now? No, I'm working for them right now, like virtually from Blackbird. Okay, so you're currently making $100? Yes. With a $700 rent? Yes.

So you're piling up cash? Well, I'm actually in baby step two. Oh. And because of my job and all of this situation, I was able to pay off, like, almost $30,000 in credit card debt. Very cool. Yes. So, you know, I just started, like, following all your steps, and I just want to make sure I make the right decision. Now that I'm moving and renting San Diego, it's, like, double the rent that I'm paying right now.

It's California real estate. So, yeah, you're doing so good. I'm proud of you. Thank you. Very well done. All right. So here's the thing. Rent is what you do until you're able to save up money and buy something, right?

Yes. Rent is every dollar you pay in rent is a dollar you don't have to get out of debt with or a dollar that you don't have to save money for a down payment, right? Mm-hmm. And so we want to pay the least rent possible because of that, because we're paying for patients while we knock the debt out and build up the savings. Yes. So the maximum you should ever take on for housing is a fourth of your take-home pay.

But that doesn't mean you should do that. And that's like after taxes, right? A fourth of your take-home pay, your pay after taxes, not counting other things that are held out of your check but taxes only out of your check so you take california and federal income tax out of your check what do you get home with no more than a fourth of that but i would love for you in this situation to even be lower okay because you're way less than that at 700 yes yeah and then you're not going to get 700 i got i mean what you pay 700 for in richmond virginia is going to be 1500 easy in san diego probably so but but don't get out there and get

you know get all caught up in the oh you have to do that in california you don't understand about california listen there's a place to live out there okay and uh yeah but if i were in your shoes i just want to keep it as low as I can keep it so I can hit these other goals. But, you know, you don't need $2,000. You know, you're probably going to be in the low 1,000 or 1,500 range to be similar to where you are right now. That's my guess.

If everybody keeps moving out of California, she may get a pretty good deal on a place to live man three people in the lobby here today in tennessee that said they'd left california and were coming to tennessee it's getting to be i don't have a day where i don't meet somebody who comes to the studio that hasn't left california for either here or arkansas or texas or they're not looking around to see now they're trying to decide which state every day which state to come to it Every day. Which state to come to. It's really remarkable. Yeah. And no one seems to be, like, talking about this or gauging it.

I mean, anecdotally, we're seeing – I talked to a real estate agent the other day that told me that 25% of their sales here in Nashville are California only. I just know that the people who have bought are right around me california california california recently recently yeah buying land buying established houses staking it by the way we're not we're not trying to sell you on doing that people we're just observing oh it's just an anecdotal anecdotal data there's no real data i'm just every day every day day, we're talking to folks. We've got Entrez leadership right now going on here.

I was talking to a bunch of home builders last night, different people in different trades, subs and general contractors, both. Plywood, there's a shortage. Copper, there's a shortage. Copper is three times as expensive as it was a year ago. Wow.

To wire your home. Just from building new homes? They're not making it, and so there's a supply-demand. It's like they're not making any boats, so you can't find any boats because boats are all sold out. They're not making any ATVs and stuff. The factories aren't operating, but the sales are through the roof. Gotcha. And so we're creating these shortages, which is driving prices up in these different areas. And we're going to see home prices go up because building cost is going to go up because of a shortage of materials driving the price up on a supply-demand curve.

Very interesting. It is. Very interesting to watch. So good time to be owning real estate. Yes, sir. It is. Very interesting to watch. So, good time to be owning real estate. Yes, sir. Good time. Don't be panicking and doing something stupid, but it's a good time to be owning real estate. Thanks for hanging out, John.

Thank you so much. That puts this hour of the Dave Ramsey Show in the books. We'll be back with you. Before you know it, in the meantime, remember, there is ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you've heard about an event, product, or service and didn't have a chance to write it down, don't worry. We list everything you've heard about during this episode in the podcast show notes or head to DaveRamsey.com.

Thanks for listening.