The Ramsey Show - App - How Should I Pay Off My Debt? (Hour 3)

Episode Date: June 21, 2024

from the Ramsey Network it is the Ramsey show I'm Jade Warshaw joined by George Camel we're taking calls about your life and your money so So you can call in. This is a live show. It's calls from everybody around the country. And you can get in on that action. The number is 888-825-5225. Again, this is a live show. So if you want us to take your call, call in now. 888-825-5225.

Let's go straight to the phone lines. We've got Casey who's in Sacramento, California. What's going on, Casey? Hi there. How's it going? Going good. How about you? Very well. Thank you for taking my call. So basically my partner and I have been together for forever. We have separate accounts, but all of our finances are combined and shared for all intents and purposes. Okay. I am currently switching careers, going back to school to get my teaching credential. And we're thinking we can make that happen without taking out any loans or debt. So that's good news. My partner made a bad car

decision in his early 20s, which shot his credit score. He hasn't done anything to remedy it, but he also doesn't have any debt. I, on the other hand, have about $10,000 in credit card debt. We've been throwing money at it, you know, minimum payments, everything extra that we can, but obviously with the interest, we're not making any headway. We're both putting money towards it? Yes, absolutely. It's combined debt. We're working the steps and we're really trying to get past baby sub two so we can start saving for our first home. So my question being, I know you guys are not proponents of calculating your way out of debt and whatnot, but why or if is it a bad idea for us to take a personal loan out in his name so we can pay off the credit card, get that consolidated fixed rate monthly interest,

pay that off early, throw all of our extra money at it. So my credit score goes up, and once we pay the fixed rate off, his credit score will be in a better position once it comes time to buy a home. It's $10,000 in credit card debt? Is that what you said? Yes, ma'am. Is it one card or is it a bunch of little ones? So it's two cards. We've already paid off the smaller cards. So what's left? What's on card one and card two? $4,000 and $6,000. Okay. So you got a 4K, a 6K. What do you guys

bring in combined income? Combined, he's got about five grand a month and I just took a serving job. So I'm not totally sure what that's going to look like moving forward, but that'll probably add up to about five grand a month, hopefully. Okay. Any kids? No kids. So you guys are making 10,000 a month. Tell us about your renting or your mortgage. What are you paying every month? Trying to figure out where this money's going. Yeah. So my income with the career change, I have not had more than $400 monthly income for the last like five months. Got it. So he's really been floating that boat moderately and we're still making a payment, but we're just not making headway.

So interest is just shaking us. But now you have the job, so we should be making headway. I mean, if you're both bringing in $5,000 a month, I mean, that's very good. So there's no need to play the whack-a-mole debt game by using more debt to pay off the other debt so we can stay in debt. And so the goal here is, how do we use your future income to knock out this debt?

And so what's your minimum payment on card one? Like $130, but it varies based on if I can throw any extra money on it, right? But the minimum is $130. So what would you say you're throwing at it? Are you throwing $300 extra at it? $500? Sometimes it's just the minimum.

Sometimes it's like $50 to $200 extra. Well, that's why you're going to make some serious headway, and you're going to get ahead of the interest if you start throwing $500, $1,000, $ 2,000 at it. So that's the problem is you're just sprinkling some extra money on it. We need to just shovel it onto there. And here's the good news. You guys have been living on $5,000 a month. You've been living on your husband's or your partner's income. And now you're going to be making another $5,000 a month, which means we've proven that you can live on $5,000. So this other $5,000 coming in, that's your shovel. All at the credit card.

Think about that. You'd be debt-free in two months if you pretended like this money was not a raise to increase your lifestyle, but instead this is just money to pay off the debt. Could you be debt-free in a few months? Absolutely. But I was also thinking with the personal loan, right? It would be a good vehicle to get his credit score back without taking a credit card. Screw the credit score. What good is that? To get another car loan?

No. So come time to buy a house. Well, you guys are going to be debt free when you're debt free. If he's debt free now, pretty soon his credit score is going to disappear. That's what happens when you stop borrowing money, your credit score over time, usually six months to a year, it becomes indeterminable, which is basically what we would call maybe a zero credit score. And that's not bad. That's actually better than a good credit score when you think about it in the market. And so if that happens, you pay off this debt, he pays off, he remains debt free. Both of you are going

to see that happen. And when it comes time to buy a house, you'll still be able to do it. You'll just do it with manual underwriting. And the house dream, this is a few years away because we still have to get an emergency fund once we're out of debt. We still then need to save up a good down payment. So we're talking probably two or three years, right? Yeah, that was actually going to be a question. So you do still save the emergency fund prior to the down payment savings. That's right. So baby step two, pay off all consumer debt using that debt snowball method.

Smallest to largest balance, minimum payments on the rest, but that little one we're going to attack with a vengeance, throw as much extra as we can. Baby step three is save three to six months of expenses in a fully funded emergency fund, which for you guys might be what, 15 grand? What's three to six months of expenses? Okay. So once you have 15 grand there, let's create a different high yield savings account to start making that down payment fund happen. And then that could be, you know, 60 grand in there. So that could take a year or two, three.

Yeah. Casey, does it make sense to you why we're telling you to do it in that order? Yes. Yeah, it does. Yeah. I think it is kind of tough to hear like, oh man, I got to save up this money before I save up the down payment. But it really is so that you can go into that home with peace because going into a new home and buying a home is not cheap. Not for the faint of heart. It's definitely not. And you know, you go in and then all of a sudden it's like, oh, we do need a new couch and we do need, it's like, it just becomes an expensive endeavor. And just knowing that the money is in place, you can use more of your cash flow to do the things oh, we do need a new couch and we do need, it's like, it just becomes an expensive endeavor. And just knowing that the money is in place, you can use more of your cash flow to do the things you want to do. And then if something comes up that's unexpected in a new house,

you've got money there that's earmarked for emergencies in that case. So that's the way to do it. I think that in this case, sometimes consolidation can feel like the solution is like, okay, we took two things and we turn it down to one. Just transferring from one place to another using different types of debt. Yeah. It sounds good on paper. And then the same people will call us back and say, hey, I did a 0% transfer balance on the credit card to this one.

I did a personal loan. I did a HELOC because the interest rate. And that's never the solution. We have to get at the real heart of the issue, which is the person in the mirror, not the interest rate. That's right. And I think there's a psychological component to that. It's like, let's say you had five different debts and you consolidate them down to one. Part of you feels like you've done something and I have less, quote unquote, less debt now. It's like, oh, this is easy. This is one easy, convenient payment as opposed to the five I was

paying before, even though it's probably the same and so in many ways you kind of feel like oh i can i can go into debt again i only have one right and so i think you really have to guard against things like having a different you know i got a 25 pound weight here or 25 pound weight here what if instead i put them together well now i can't lift it it's just too heavy to do all at once and i'm a little guy jade so So it's more difficult. Yeah, you got to spread it out amongst the biceps. Is she still online? Okay, Casey, I'm going to send you a copy of my book, Breaking Free from Bro, because in there, I lay out the entire process for how to buy a house without a credit score. This is how I did it, how we panned it off early. And I hope you follow suit and that

becomes you guys one day. Absolutely. Hang on the line and Kelly's going to pick up. We'll send you a copy of that book. Love it. Thank you, George. That was very generous. I'm trying to be nicer these days, Jade. I've been known to be a little cruel. That's okay. Breaking Free from Broke is the book.

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This is The Ramsey Show. I'm Jade Warshaw. Next to me is George Campbell. We're taking your calls. You can call in 888-825-5225. The only caveat has got to be about your life and your money. Okay. So now it's a good caveat. You know, there's a lot of podcasts out there. This is a financial podcast. It's for personal finance. Okay. So let's go to the phone lines. We've got Michael who is in Chicago, Illinois. What's going on, Michael? Hi. How are you guys doing? We're great. What about you? I'm doing all right. So I have a situation going on right now, but just to kind of cut to the chase, my main question is whether or not I should be withdrawing more money from an

index 500 fund to put towards paying off that specifically from student loans that belong to my, well, that come from my wife along to us, and then some credit cards between the both of us as well. How much are the student loans? The student loans are $3,458.54. And how much are the credit cards? One is $2,382, and the other is $867.37. $867?

So we're just short of $7,000 for all of them. Okay. And what's in this? Is this like a taxable brokerage account for general investing? I believe so, yes. It's not retirement? No, no, it's not retirement. No, it was actually, it was originally a, I don't know what they're called,

but my grandfather, before he passed away, was saving it up for me. That's awesome. Once I turned 18. What a guy. How much is in there? Originally, it was $20,000. And so this is where the situation gets kind of weird. So I'm currently undergoing a switch in districts.

I'm a teacher for the visually impaired. I teach blind kids. Okay. So I'm moving from one district to another. But I've had a weird situation where normally a teacher's contract starts and ends in August. But for some reason in this original district, it ends in July. So I'll be technically,

originally I was planning on going through July and possibly even August without pay or insurance coverage. Fortunately, the new district is willing to at least cover part of the insurance as long as I contribute my half. I've asked them whether or not they'd be willing to start an early contract or something like that, and they still want to look into it, especially since, according to a form that they gave me recently,

my pay wouldn't start in their district until September 10th. So I'd be going from July to September 10th without any pay from my side, which would be about $3,000 a month. That's fine, considering that I've already withdrew $7,000 from my index fund to try and put towards the debt. Okay, so you've already played this game. You've already withdrawn some money. So how much left do you have in the index fund?

About like $1,500. I think originally it was $22,000. I went through $7,000. When I checked, actually, I just wrote it down. Let me go and look. You said $1,500. I think you said $15,000, right? Sorry, $15,000.

Okay. $15,000. Is it still in there? $15,440.15 is still in the index fund. And then you've got the $7,000 of debt. So that leaves you with $8,000 in the index fund, plus you've freed up your debt payments, which you can now use to save and float you for those two months if you need it. Yes.

And so the reason why I really asked is because when I brought up this idea in conversation with my wife during our monthly meeting, financial meeting that we have. She was concerned about what that would look like in regards to taxes if I withdrew essentially $14,000 from the index fund. Okay. Well, that's a calculation you can make and you can withdraw a little more to pay the taxes if you need to, but that's going to become tax time, right? So we got time to figure out what the taxes are, save up for that, and make sure that we have the money allocated for that.

What's your wife earn? She earns about, she doesn't earn a consistent salary like I do, but she makes, I'd say about $15,000, sorry, not $15,000, about $1,500 a month. $1,500 a month? What is she doing? She works as an orthodontal assistant. She makes about $850 doing that.

And then she also works at a pizza location. Just on weekends, it's something she's been doing since high school. Do you guys have kids? She makes about $175 a month. We do. We have one. Okay. What's the child care situation?

Is there one, or are they older? We have been blessed with a really, really good child care situation is there one or are they older we have been blessed with a really really good child care situation where we have her parents next to our neighbor who they're really close with watches her for like $20 a day great so yeah that's been really fortunate I mean how old are you guys

I'm 27 my wife is 25 alright I want I love I mean, how old are you guys? I'm 27. My wife is 25. All right. Um, I, I want, I, I love that you guys are paying off this debt. It sounded like you were, it sounded like because of the gap in pay that you were thinking of reaching into this again for the gap in pay. I really want to stop that habit. That's kind of been, I have this money, you know, once you, once you've invested money

in a brokerage and I understand it was a gift, but the intent is for that to sit there and stay there. And so I really want you guys working the baby steps in order, which really the next thing for you guys, you need to get a thousand dollars saved. And I want you to really lean into this and do it the right way. And you've got childcare, your wife's got to work more. You said, if I may, we actually also, we haven't combined our finances yet just because we went straight from being married to buying a house to having a kid.

So it's something on my docket. She's actually kind of against it, but I've been kind of slowly. Why is she against it? I don't know if you guys recently. She doesn't like looking at the money coming out of her account. And since I pay a majority of the bills

she would feel like if she if she looks at it what do you mean she doesn't like it her anxiety no one likes money coming out of their account i know it's part of being an adult and so my proposal to her was you know that's i mean i totally understand that like you guys said nobody likes that it's like older i'd be more than willing to take care of that myself because I'm kind of a nerd. I like numbers. I like that kind of stuff. So I'd be totally fine if she just didn't look at it. The idea is that you guys go together.

You say, where do we want to do our banking? Okay, let's go open up an account. And I'm going to change the direct deposit at my work to go into this account. And you change the direct deposit at your job to go into this account. And then we sit down together. We open up our budget. In this case, I would suggest every dollar and we decide, okay, you're bringing in this, I'm bringing in that. How do we want to spend our money? And I think that, you know, it's one of those things where you can say a word and everybody has a different

definition of what that means. And I have a feeling that when it comes to money and you say, let's share our money, everybody pops up with the definition that they grew up with or had in their last relationship or heard somebody else say. And I think when it comes to that in your life, you've got to define for you guys exactly what that means. So there's no gray area. There's no room for someone to insert, you know, insert bad situation here. Right. It's, you've got to clear that up. And I think if you sit down with her and say, listen, things are all over the place right now. I'm about to have two months where there's no salary. You know, thank you for the money that you're bringing in, but if there's a way to get it up, but I really want us to work together. And here's what that means for me. I don't, you know,

I know that you have worries and doubts and fears but I'm not going to be the person that tries to control this I want us to both look at it together 50 50 when somebody comes to you and says 50 50 that's pretty much you know bang on it's like yeah 50 50 I love that so I think that's the conversation you need to have what I was going to say also is that we actually both have our own current savings accounts too. So last I heard from her, she has like another $3,000 in another savings account. I have about $2,500, I want to say, in another savings account. So we still have that. You can almost pay off your debt without even touching the index fund.

Right. Yeah, that's true. That's true. So that's part of combining all this. And you can even use the same checking account you have. This is what I did with my wife and I. Go to the bank and say, I want to turn this into a joint checking account and add my wife. Once that's set up, we transfer her money into there. We shut down her account. Now we have full accountability and transparency of where the money's going.

Yeah, keep $1,000 of that aside. And then you're putting $4,500 onto this debt. And I would really, you know, and the index fund is a brokerage account. Yes, we would tell people all the time to drain those accounts in order to pay off debt. So there's nothing wrong with that. But now you're just withdrawing $2,500 from the index fund to pay the rest of the debt off, which is going to be very minimal in taxes when you look at what the actual long-term capital gains are on that. And then we move on. Now you can enter this new season with way less stress, freed up payments. And during those two months, you're unemployed.

You're going to go to work, do side hustles, go find some gig work. And, you know, instead of having to dip into an emergency fund or index fund to float that those two months. So just plan for that. You know, it's coming. That's what I would do. And both of them, I mean, you guys are in your early 20s. I really want to plan more so for your wife. It felt like she was floating a little bit.

So I want to make sure that she's really locked in. It doesn't seem like child care is the barrier to entry there. So I want to make sure she gets locked in. And I want you guys bringing home solid income from now on. I saw this quote, Jade. This woman said, I don't look at my bank account. I don't need that kind of negative energy in my life. And I'm like, that's how she's feeling right now. Listen, let that motivate you. The proverbial fire under your butt is what you need. Some of y'all do need to log in and look at your bank account. This is The Ramsey Show. Hey, you guys, health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the bureaucracy.

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healthcare costs. 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 budgets. This is The Ramsey Show. Hey, thanks for hanging out with us. I'm Jade Warshaw. Next to me is George Camel. We are taking your calls. This is a live show, so you call in. The number is 888-825-5225. A nice young lady will pick up on the line, screen your call, and the next thing you know, you're on the line with George Camel in the flesh. Can I just say, God bless the phone screeners. It's Kelly today. I tried it, Jade, for a second. I was like, hey, let me just take the raw call coming through the line. Y'all, it is a wild ride out there. It's a wild ride? It's a wild ride. I mean, Kelly helps you kind of get your thoughts together, right? And kind of streamline it all down into- And she's

so nice. Yeah, she's kind. She's kind. We've had a lot she's so nice yeah she's kind she's kind we've had a lot of kelly's phone screening and this kelly is the nicest we've had so far that's all i'm gonna say that's great that's great she's she's happy that you said that we can see her there's glass there and we can see her through the glass there's a lot of people back there that make this show run will rudder i'm talking to you that's right he's uh running the board the audio the faders all that stuff the, the bumps, the music. There they are. Of course, producer James Childs.

Fearless leader. I think we got Andrew, Nathan, Zach back there running all the video and the switching and the lower thirds and Zoom. Y'all, we get the easy job. This is a puppet regime. We're just here to look good. Who's pulling the strings? You tell me.

James. I can tell you who's pulling the strings. All right. I'm going to pull a string here and go out to Lauren, who's in Des Moines, Iowa. What's going on, Lauren? Hi, guys. So I was wondering what your thoughts were on signing over a vehicle title to an ex-business partner. Tell us more. I feel like there's some history here. Is there a good relationship with this ex-business partner? I mean, they didn't leave on really great terms, but they're still working through issues. And this is one of them. It's a somewhat newish mountaineer. And you know, those can get kind of, or no, wagoneer.

Wag, ooh, those are expensive. Pricey, yeah. So the partner, the ex-partner used like $60,000 to put a down payment on it. And then the rest, $35,000 I think is left. But the original loan was for $40,000. And it's in the business's name. And the partner has since left. And he's asking for the title to be signed over for $35,000, which I think is the remainder of the loan. And I just don't see. Yeah. What do you think?

Well, let me just make sure i understand so you guys own the business this was a person that was a partner with you he said i need the a new vehicle for work so i'm going to do this through the the business money spent forty thousand dollars on a wagoneer now he's no longer part of the company and he's like i want to keep the wagoneer basically so can can you guys just it's like a buy turn the title over to me and I'll just keep the car and pay the payments? Yeah, that's what he's saying. Yeah. He's, he had, he used 60,000 of the company money just out of the company. Oh, company money, not their income. Oh, I see. Yeah. It was just company money that was in the company bank account that he used to put a down payment on the vehicle. And then then they find and he financed

40 000 so it's about a hundred thousand dollars all in um 16 down payment 40k on the loan remaining so it's a hundred thousand is what it costs what is it worth today yes i don't know what it's worth i haven't ran that um that i don't know but i I could find out. So if you said, if you essentially, if you said, yeah, we'll sign the title over to you, but you owe me $60,000. Uh-huh. Would they take that deal? I mean, that would be ideal. Yeah.

I don't think they're going to do that because they're going to say, well, the value of the car is only 60,000. So I can go out and buy a better car for 60,000 if I was going to use my own money. Right. Because technically the business owns it and you are the business right now. Right. I mean, we hold the title. But do they have the loan in their personal name? No, they don't. It's in the business. And that's why I was like, this doesn't sound right.

This guy has no money. He has none of his own money into this. I mean, right now, technically, he's on the hook for the $40,000, but not really, because if he doesn't pay it, it's on you. If he doesn't pay it, it's on us. And I think in the transfer of this loan, yeah, he wants the title signed over. I'm not doing any of that. I wouldn't do it. I would make this super clean. How long ago did he buy the car? Let's figure out how much of his own money he's put into this. How long ago did he buy it? It was two years ago. And it was out of the company bank account. Oh, okay. So has he made any payments with his own money towards this no they um they stopped payment they they're pausing it till this transfer thing goes through so well who's paying the payment he hasn't paid

his own money the company's still paying it which is you is it just you two or are there more people involved here um it's my husband it's my husband and then then this other partner and then i'm just finding out about stuff well that's i stop saying the company is paying for it. Your husband is paying the payments on this. Yeah. Pretty, yeah. You guys own the car. This guy is no longer working with you.

He doesn't get to keep the car. So riddle me this. Why don't you guys just sell this vehicle and get out from under this car? You don't want it. You don't need it. Yeah, so we just need to get it in our possession then. Is that what?

He's in Minnesota. Oh, yeah. He's still get it in our possession then. Is that what? He's in Minnesota. Oh, yeah. He's still driving a car? He is. Yes, he is. This is a liability waiting to happen. Wow. You need to get back that car.

They have no right to this vehicle. Yeah. Okay. It's under the business name, and they are not part of the business. So legally, it's your car. This guy said, don't mind if I do. And he took that wagon here. I'm having heart palpitations right now.

Wow. He's like, I got a $100,000 car. No one is stopping me. Can they legally even be driving this car right now? I don't know. I would do some due diligence and homework and maybe even talk to an attorney to figure out what the right way to go about this is. Because I feel like you guys are in a precarious situation, and I'm not in on all the details, and I am not a legal expert.

But this sounds like a nightmare if you don't get out of this ASAP. Is he the kind of guy that'll figure out that you want the car back so he'll crash it on purpose or do something to it to try to get back at you? Oh, I mean, you never know when people are desperate, I suppose. I hope not. It doesn't sound like they have the money to even buy you out of this thing. No, I think he's struggling. I think you need to say, listen, we are selling it for the market value.

And if you want to be that person to buy it at market value, then you're welcome to it. And they become a general person like anyone else that would buy the car from you. So I would go check the Kelly Blue Book value private party, and you list that car. My guess is you're probably underwater on it. Yeah, I'm guessing too because it was just a couple years ago. And what's left on the loan right now? $35,000.

$35,000. So if the car is worth more than $35,000, you guys will make some money on this deal. 35. So if the car is worth more than 35, you guys will make some money on this deal. Okay. So I hope it's worth 50 or 60 when it's a nice car, two years old. I hope it hasn't depreciated from 100 down to 35 in two years. That would be... I know. Depending on the mileage and the condition.

But, you know, those luxury cars, they can depreciate real fast. And when people want a Wagoneer, they want a brand new Wagoneer. Because a used Wagoneer, no one wants to sign up for that money pit. Yeah. Yes. Yeah. Yes. So I would not keep this car. I wouldn't let them keep driving it. I would sell it ASAP and get out from under it. Yeah. When she was talking about transferring the title, I thought that he put $60,000 down of his own money. It's the business money from the company account. And then when she said he's paying payments, he was paying payments from the company account and then when she said he's paying payments he was paying payments from the company account i guarantee you he saw some stupid instagram that was like bro if you get the wagoneer technically because of the weight

you can depreciate it a hundred percent you can actually make money and it's a tax hack i want to slap every guru on the internet that has said stupid crap like that i just think that he thought you should finance a hundred thousand dollar car for your business because it's a tax hack yeah you're the hack bro don't fall for this oh my goodness and i guarantee you some accountant told them to do it oh bro this is the move you can depreciate you'll save money on you're basically making money right now well who told him he could just drive off with a car he didn't own who told him that well and part of it is on them because if i'm the if i'm the partner i'm going no we are not financing a $100,000 car through the business. Yeah, that's unnecessary.

We never found out what kind of business they are, but I can't see why this was necessary. Ooh, crazy town. And it's one more reason we say partnerships rarely make sense. They're very risky, and they're the only types of ships that are liable to sink. That's right. It's the Titanic in the business world.

Yeah. Hopefully they can make some money. You know, new cars, when they drive off the lot, you know, they're losing money instantly. But in the first four to five years, they're losing 40. They're losing so much of their value. Especially those types of vehicles. Those, you know, Range Rovers, Land Rovers, the ones that are a money pit when something goes wrong. Nobody wants to sign up for that money pit.

I know. That's right. We're seeing this happen with a lot of the electric vehicles. Buyer beware is all we're telling you guys. This is The Ramsey Show. You're listening to The Ramsey Show, our scripture and quote of the day. Isaiah 66, verse 9 says, I will not cause pain without allowing something new to be born, says the Lord. Love that promise.

That's a good promise. Albert Einstein said, a person who never made a mistake never tried anything new. Booyah. That's what I'm talking about, Al. That's what the people need to hear. All right.

That's wisdom. That is wisdom. All right, guys, if you want to give us a call, you still have time. The number is 888-825-5225. George and I will chop it up with you. That's what we're going to do with Eric, who's in Milwaukee, Wisconsin. What's going on, Eric? Hey, so my wife and I are considering to purchase my dream kind of owning a lake house.

And it feels like our income is good enough to do it, but our net worth is maybe not there quite yet. I just wanted to get your guys' thoughts. Yeah. Lay it out for us. Yeah. So our income is about $625,000 per year household income. Woo, love it.

And our net worth is about $1.4 million now. About $750,000 of that is in stocks. $225,000 is retirement. $250,000 is kind of in high-yield savings. And then we own some land where we potentially build this lake house that's worth about $175,000. Well done. So lake house is worth $175,000. Did I hear you say $250,000 and just like liquid savings? Yeah, the land is worth $175,000 where we might build this lake house. And then yeah, $250,000 in liquid savings, some high-yield savings accounts, and kind of different bonds.

And what about your house? Did I miss this? We rent an apartment, and that costs about $3,500 per month. Okay. Well done. That's awesome. Holy moly. How old are you guys?

You guys are crushing it. We're 34 and 33. Wow. What do you do for a living? Because everyone's wondering how you make $625,000 a year. Both in technology jobs, so we're kind of riding that wave, at least until AI takes our jobs. There we go. That's the spirit. I feel like you guys built AI. If you're making that kind of money in tech, you're behind it. I wish. Yeah. No, unfortunately, we're just consumers of it all.

So the goal is for the lake house to be your primary residence? No, it would be a secondary. So we'd still keep the then you know have that as a secondary kind of seasonal use only so it's like it really wouldn't save us money um and we still might buy a primary home in the next few years too although no immediate need there so this is kind of like a it's a very expensive uh it's an expensive toy wouldn't yeah you guys are you are debt-free with an emergency fund. You have all this money in the bank. And what's it going to cost to build the lake house? We think about $400.

Okay. So all in, you're talking land plus this lake house is $575? Yeah, something like that. I think for a couple making $625, that's very reasonable. This is a green light all the way around. How much are you trying to put down? We paid in cash. All in cash. Okay.

So is the plan to... Tell me more about that plan long term. Is it you're taking from this $250,000? Tell me what the plan is in your mind. Yeah, we would liquidate most of that $250,000. Just keep six months emergency expense there, and then sell some of the stocks as well. Yeah, these stocks are just like company stocks in a general investing account?

Yeah, just ETF and mutual funds primarily. Okay, none of those are retirement? No, the retirement is separate. We have probably about $225,000 in retirement. Right. And you guys, here's the thing with the net worth side. You have plenty of time to catch up on the wealth building side. I mean, you could save up a million bucks in two years. If you're completely debt free making $625,000, it wouldn't take much if you don't increase your lifestyle by a ton to just save up a million bucks and retire early. And so I'm less concerned on the wealth side and the net worth side. You guys have done such a great job managing this money, not inflating your lifestyle, paying cash for things, still being very reasonable for the amazing income you have.

So yeah, I like the idea of having a primary home. I don't want you guys renting long term. And so I might get a primary home first paid for, then do the lake house. But I don't think the order matters much because you're going to do it all so fast. Yeah, I agree. I love this. I think you have a great plan. I think you guys have been really smart and it shows.

And so kudos to you. Very good. Thank you for the call. $625,000. Riding that wave. Debt free, which means it's not all going out to payments every month. That's right. Wow.

Killing it. Killing it. We got to go into tech, Jade. What are we doing here? I know. Well, we need to help these people. I'm not that smart. That's why I'm...

That's a lie, George. All right. let's take another call we got monica she's in greenville south carolina what's going on monica hi how are you guys doing today we're great how can we help yes yes um all right so um my mom passed away and she left me a little bit of money, about $20,000. I used some of that to help with the burial, and then I used the rest to purchase a duplex. I stay in one half, and I rent out the other. I got so used to all this cash that I was getting, and my job pays me about $55,000 a year, and my rental income brings me about $11,4 a year. I got too happy because they kept dangling credit cards in front of my face and I took it and now I'm like $13,500 in debt.

Oh no. I have absolutely no emergency savings. I have like $300 and a 401k for a previous job, I was thinking about maybe rolling over to a Vanguard emergency fund. So, and my credit cards I pay every month is about $730. Oh, gosh. I mean, the 401k, yeah, you need to roll it over, but you'd roll it over into an IRA. Do a direct rollover IRA. Not to a brokerage or not try to get your hands on it because it's still retirement funds. And so we want to keep it- And you said it's 300 bucks, right? Yeah. Okay. This is chump change as far as retirement savings go. So just roll it over to an IRA because the penalties and fees you're going to pay, it's going to turn into basically

nothing if you actually withdraw that money and use it. So, okay, let's figure this out. What's your mortgage every month that you got to pay? It's 1429. And what's your mortgage every month that you've got to pay? It's $1,429. And what's your take-home pay every month? Take-home pay is about, I can give you back numbers. Is it like $4,000 a month? $3,500 a month? Just from work or are we including rentals?

Okay. It is $3,224. hundred a month are we just just from work or are we including just work okay uh it is 32 24 okay and then do what do you get from the rental how much do you charge that person a month 9 50 9 50 okay all right so things are a little bit tight. Oh, and I do get like additional $300 from my mom's like death pension. She had a remainer, so I get like $300 for the rest of my life. Okay. Okay. So we're like a little over,

we're like 4,400 bucks a month that you're taking in. Are you investing right now? I'm confused as to how you're paying 30% every month, every paycheck in taxes and whatever else. No, I don't have any additional investments. Do you get a big tax return? I always have to pay.

Okay, I'd look into that as part of your homework, figure out why you're not taking home as much as you should be. I don't know what the taxes, I don't think South Carolina has crazy, you know, income tax or anything like that, but figure out why you're, you know, look at every single thing coming out, all the deductions. There might be some healthcare, 401k, you'll see Medicare, FICA, whatever, but figure out why you're not taking home more than that because we needed the income to get up. And as you can tell, this rental income, it's not solving the actual problem, which is the spending. It sounds like you were kind of living, you were propping up a lifestyle

that was unsustainable for a while. Yep. What were you spending the money on? Oh my gosh. And I don't even buy stuff for me. I like to spend money on my nieces and my nephews. My brother recently passed away, so I like to buy stuff for them. I actually do a lot of stuff in the community. I'll buy lunch meats and stuff, and I'll pack it up, and I'll pass out to the homeless. I do buy some stuff for me, of course, but honestly, I can't even recall what I was buying because it's nothing tangible, and that's the sad part. I think you just need a budget. I think for you, in order to be able to do the lifestyle that you want and not go over to the extent that it's making you lash over into credit cards, I think you just need a really good plan for your money. Have you worked a budget?

Yep. I actually downloaded the budget sheet from EveryDollar. Okay. And I sifted that out. I put all my information in there. Okay. And I, I, uh, sifted that out. Like I put all my information in there. Um, so yeah. Okay, good. I want you working on that because at the end of the day, that's the only place you're going to find your margin. And cut up these credit cards. Can you promise me you're going to cut them up? I am. And that means we're going to use Monica's money from her bank. And guess what? You don't have the money, which means we're not

going to spend money we don't have. That's the new rule. That is. So list those credit cards out from smallest to largest. And you might cut back on some of the, I mean, you're going to have to cut back on some of the things that you were spending money on in order to make headway on this credit card debt. And get a side hustle probably just to knock this out faster. Yeah, because it'll eat up those minimum payments quick like.

So a side hustle is definitely on the menu for you. This is The Ramsey Show. Thank you.