The Ramsey Show - App - I Don’t Know What To Do With My Money (Hour 3)

Episode Date: January 24, 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 build amazing relationships. I'm your host, Jade Warshaw. Your other host is George Campbell with a K. Give us a call. We'd love to hear from you, help you sort through your issues with your money, your relationships, your career. The number is 888-825-5225. We're here to help. All right, George, I say without further ado, we go straight to these phone lines. We've got Mo in Columbus, Ohio. Hello. Hi, how are you doing, Mo? Good. I'm doing well. I'm calling.

I recently got a job promotion, and I've been listening to the show for about four months now, and I have some debt. I don't have really any guidance when it comes to money. I've cut off contact majority with my father after some money issues and I'm just trying to set myself up for success. And I'm wondering how best to go about it because I'm still new to, from what I've listened to, kind of trying to follow the steps. Okay. So kind of help us understand what you're trying to sort through. Is it debt? Is it,

tell us more. So it's debt and then like retirement plan. I currently rent and will be moving in May to where it's more affordable. After college, I got a job and I had to move out of my father's house and found the cheapest place that I could. But I've kind of been money hungry and like excited to start saving. I just, I don't really know the best way to go about things. Okay. So, okay, good. So let's find out, what are you earning? What do you earn every month? What do you bring home?

So I was earning $62,500 a year. And two weeks ago, I found out that I'll be getting promoted and I will start traveling for work and my new salary will be $78,000. Okay. So it was a decent bump. That's awesome. And so each month, what do you see? What does your check look like? So I've only gotten like the first since the first of the year. So, but my new is it's pretty close to four with the new salary. Okay, great. So you got 4,000 bucks a month to work with. Are you currently taking anything out of your check for retirement? Currently, my company matches 6%, so like dollar for dollar up to 6%.

Okay. So that's what I have put in. And in one year, I've generated like $10,000. Okay, cool. 6%. Okay, good. Now, I just want to kind of know, are you also using a budget? Is that part of your life at this point? I have somewhat of a budget, but as I with the pay increase and I also in the spring will have a little bit of a second form of income. Not exactly sure kind of what that budget should look like. I have like a general idea based on like my old income. But that was hard because I've had $10,000 of medical expenses. Why I was finishing my last semester of college and all of 2023, which I have no medical debt, that's all paid off, which is kind of prevented me from like

being where I want to. Okay, so you're new to listening to us. Obviously, we filter everything through the seven baby steps, but all of that is contingent. It all rests on a budget like it's that's the foundation of all of this. So we've just found over the years that people who win with money have budgets and they have a good budget that they follow every single month. And it really is that roadmap to get them to their financial destination. That's where it all starts. So the first things first is I do want you coming out of here and I want you hooked up with a budget that you're doing every single month and that's through every dollar. But the next thing here is we're walking

through those baby steps. And like I said, your budget's going to inform and show you how much money you have to put towards each baby step. I have a $1,000 nest egg. Sweet. Which I think is like, I don't know which step that is. That's baby step one. So that's just sitting in a savings account? Sorry, say that again? Is that in a savings account, the $1,000?

Yeah, it's in like a money market account. Excellent. So that is baby step one, just getting a thousand dollars saved. It's just getting a safety net there between you and life. And then essentially your own baby step two, which is paying off all of your debt except your mortgage. So that's the phase that you're at right now. And I want to come back to the fact that you're putting away six percent into your retirement. And we teach that in order for you to pay off debt quickly, you need as much money to throw at it as possible, right? All your extra money is what you're throwing at

your debt. You're making minimum payments on everything just to satisfy that. But all extra money goes to your smallest debt and you need extra money. And so right now you're giving away some of your extra money in retirement, which I think was a good natured choice. Like you're thinking, okay, I'm trying to be responsible. Let me do retirement. But there is a right method and a right order to go about paying off debt and building wealth ultimately. And the first step is paying off debt. So if I were in your shoes, I would temporarily, very temporarily, pause investing so I can have that 6% back in my month-to-month money. That's $400 a month for you. That's really going to help speed up the debt payoff. Yeah, that makes sense. So how much total debt do you

have? You said student loans. What's left on the student loans? So when I graduated, I worked two or three jobs through college. So I graduated with $16,000, and that's now down to $12,671. Right. My junior year of college, my car broke down, and I had no hope. I had to buy a car to be able to transport myself. It didn't go crazy, but with the car market, it was a 2018 Ford Fusion, and it was $17,500. And I have that down to $6,500. Okay, good.

All right. And then you said something about credit cards. Do you have credit card debt? I have $1,700 on a credit card. So my thought would be go lowest to highest from what I understood. That's right. And then my car payment has a 5.1% interest and my student loans only have like a 2.7 something percent interest. So I'm assuming I would pay the car percent off first

and clear that $6,500 next. Well, the way that we found is the best way is by balance. So we list those debts in order by balance, not necessarily by interest rate. So in this case, the student loan, is it just one giant student loan for $12,000 or is it built into a lot of little mini ones? It's three. They're either each, I think, about $4,000 a piece. I don't remember exactly. So in that case, those would be next. You would do the credit card, then you would make your minimum payment on student loan, which satisfies all those three mini ones. And then the extra money, you would look and say, hey, I want you to do that. So sometimes you have to call it in. But technically, those student loans would come next, it sounds like, and then the car. But with your income, with the raise, which by the way, congratulations. Listen, my girl is moving. You got 20 grand in debt. You make 78 now. Way to go. We can clean this thing up fast. I mean, basic math says if you can throw five grand a month for four months, you're done. Four grand a month for five months.

Yeah. This thing's done. And you're about to free up 400 bucks a month by pausing investing. That's right. You'll be back to investing in no time. And when you do, it's going to be 15%, not six. So it's going to be sweet. But follow the plan.

It works. I followed it. Jade followed it. We believe in it that much. That's right. Way to go. I'm proud of you, Mo. This is The Ramsey Show.

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This is George Camel. Our Ramsey Show question of the day is brought to you by Neighborly, your hub for home services. Mr. Appliance is a Neighborly brand that can make your appliances, make sure that your appliances are running properly in the new year. For appliance parts, repair, and service, find a Mr. Appliance near you at neighborly.com slash Ramsey. Today's question comes from Emily in Connecticut. My husband and I earn $106,000 annually, and our only debt is our $200,000 mortgage. have ten thousand saved for our emergency fund with a goal of twenty four thousand my husband comes

from a family that made a lot of money but never saved any because of this he has never seen an amount of ten thousand dollars in his life and thinks that's more than enough he wants to give ten percent of our savings to the church he says we have been blessed abundantly and quote should never feel comfortable i am the one who oversees our finances and wants to become financially stable, but my religion also says to let my husband be the spiritual leader of our house. How should I go about this? I want to save a full emergency fund, but at the same time, want to be generous. Interesting. A lot of layers to this tiramisu oh layers listen one is

just the financial what is the right amount for our emergency fund right two is the how should we give and from where and then three is this upbringing of abundance for scarcity that they're dealing with listen i i have a couple of thoughts, George. Let's think about the giving part because I love that the, I almost said the dad, the husband wants to be generous. I love that. But kind of the way I think of it as is when you get paid, it sounds like they're tithers. If you're a Christian person, a lot of folks practice a 10% giving. I hear 10% in church. I think, okay, tithe. Yeah. That's what they're doing. And my guess is, if you want it to really get technical here, whenever you earn your income, you're probably giving 10% of that income. And then whatever is left, that's what you're using

to run your household financially, whether it's part of your budget, groceries or whatever, or it's setting aside for savings. So whatever is in their savings, they probably have already tithed from that money um and my thought would be like listen if he wants to give more then let that be from your month-to-month income like if he's like listen i don't want to give 10 i want to give 15 great like i love generosity but i wouldn't say that you have to drain your savings to give we need to separate the buckets your emergency fund is for emergencies. Your giving savings account needs to be forgiving. So number one, I would create separate accounts to keep

these separate. Number two, I would calculate your actual expenses every month and multiply that by three or six, depending on your income situation, stability of your jobs. But if it's my wife and she says, I feel more safe with six, we're going to have a six month emergency fund. So he needs to also understand where she's coming from. And I don't buy this whole like, well, I grew up never seeing 10,000. So that's plenty. Like, that's a really weird way to think about wealth and money. He might be like, listen, $10,000 is a lot. Like some people.

And it's also not as much as it used to be. It's not as much as it used to be. It's not as much as it used to be, but if you've never had to... I can somewhat relate to this a little bit. If you've never seen $10,000, the first time you see it and get it, you're like, I am just... You're like Hulk status.

You can't believe what you've done. But I think that he needs to go ahead and let that wear off and realize that $10,000 is good, but start really thinking about it in lines of what could happen. If your AC goes out and you live in South Florida anyway, you're easily spending five to $7,000 on a new AC.

So that money can dry up lickety split. If you were to lose your job and your income, how long the purpose of that is to sustain you if the worst happens. And for most of us, the worst happening is we lose our job, right? And it's, can you really cause your household to move forward for six months with $10,000? For most of us, you know, the answer is no. And you need a little bit more, especially with what it looks like their situation is. Well, the ultimate question was, I want to save a full emergency fund, but at the same time,

want to be generous. I don't see those things as going against each other. No, not at all. You can do both. And this idea of should never feel too comfortable. Well, the more wealth you have, the more you're able to give. And so I don't see it as, oh, well, we hit 10,000. I don't want to be comfortable. We need to start giving money. That's fine if you want to be more generous, but I don't conflate the emergency fund with giving. And i think they both need to come have a come to jesus meeting no pun intended and go here's how i'm feeling we need to meet in the middle here we're gonna have a 20 000 emergency fund we're gonna set up a separate account for giving and you need to go to therapy for whatever happened in your past or read own your past change your future i feel like he wants his giving to feel like a sacrifice like he wants to feel it

and in his it feels like for him that's like it's got to come out of savings but i don't know about all that because then the hvac goes out and you go well that's not good we just gave gave away a thousand bucks we needed for that so separate them out i kind of also want to talk about this we probably should avoid it but i'm the one who oversees our finances oh yeah that's that's thing one and want to become financially stable but my religion also says to let my husband be the spiritual leader it's interesting because she said she's the one who oversees the finances but he's a spiritual leader it just sounds like they've got some conversations that need to take place because you know i mean you guys are a partnership

like there's in any partnership there usually is one person that kind of like has the final word or it's like this is it you know what i mean like like dave's the boss here you know what i mean like but there's plenty of people that speak into the things that go on and i just think too many people see that as well i don't get a vote because they're the leader it's like no you need to have be speaking into finances just as much if you don't have a vote it's going to cause resentment it's going to cause financial infidelity. So read some books on this whole spiritual leader thing

because I think there's a lot of misunderstanding around what that really means. When I was growing up, they used to say, the guy is the head, but the woman is the neck. And I'm like,

oh, that's good because think about it because I'm like, the head ain't doing nothing without the neck. Who's the rest of the body? It's just a weird... George, we're just talking

about the head and the neck. Okay. Sorry. I thought we're going to go the head and the neck. Okay. Sorry. I thought we were going to go... This analogy broke down quickly. It did. It did. That's all I'm saying.

Let's move on. All right. Let's go to the phone lines where we've got Joshua in Chicago, Illinois. What's going on, Joshua? Hi. How are you guys doing? We're doing good. How are you?

I've been better. I'm sorry to hear that. How can we, is there anything we can do to help? Yeah, I had a couple of questions for you guys. I know I've kind of reviewed your guys' website and I like to watch your guys' YouTube videos. And I know Mr. Ramsey, he typically recommends with having debt that you pay off the smallest amount first and you kind of snowball and you make your minimum payments on your larger amounts while you throw as much as you can at your smaller amounts. I'm currently 24, still living at home at the moment, so I don't really have too many expenses. But I got about $2,600 in credit card debt and then $6,500 in student loans. And my kind of issue right now is my one credit card payment, the interest rate on it is very

high and I'm getting kind of knocked down on it in the sense that I'll make a payment and it's not really making a dent in it if I'm putting all of my money towards the smaller amounts. What's the smallest dent you have right now? About $400. And how much are you putting on it? About $100 a month, roughly. Extra? Yes. Okay. What do you make? Currently, I make $16 an hour. For how many hours do you work? About 40 hours a week.

And what do you do? I'm an automotive technician. I work for a dealership. Okay. Is this a long-term play for you? Are you in the industry that you want to be in? No, I'm actually exploring different avenues. I just actually went today and signed up to join the electrical union here in Chicago. So it's, but that could take a few months to hear anything about that. And that's kind of a longer term process so i'm trying

to before i if i do switch over um careers um the opportunity does become um i'm trying to get this paid off as soon as possible yeah and the issue here the issue here is not the debt snowball whether it works or whether it doesn't because it does work the issue here is we don't have enough money going towards it and so we've got to find something where you're making more money and until then we're supplementing the job that you already have with more work you're working 60 i mean you work from home you don't have any kids you don't have a wife no bills you're going hard in the paint my friend until you get this done because yeah throwing a hundred dollars a month it is gonna barely move the needle you need to pay this off in one month. Like you need to get you an Uber cart, an Instacart, all of it and pay this off in one month and you're going to see this go out of

your life lickety split. This is The Ramsey Show. You're listening to The Ramsey Show. Thank you for listening to The Ramsey Show.'m jade warshaw this is george camel george camel host of the george camel show on youtube also author of breaking free from broke his new book that is out now that i predict george will make and become a best we'll know tomorrow jade you'll know tomorrow yeah the best seller list come out tomorrow either way i'm proud of the work we did and the feedback and the impact it's having is really what matters i love that but the list is a fun way to go to celebrate and so congrats on you becoming an author in the last few months listen this is a really fun year for us it's a fun year it's a fun job i think that

we're very very lucky and blessed i pinch myself every day that we get to do this awesome i bet don't pinch me you're stronger than me. No, I'll let Whitney pinch you. That's her job. All right. Let's go to the phone lines where we've got Luke in Chicago, Illinois. What's going on, Luke? Hi there. How's it going?

Doing good. How are you? I'm doing well. Doing well. I hope you guys are doing well. Yeah. How can we help you? Yeah, just wanted to give you guys a call. I've got some debt and also got some money tied up in some investment accounts.

Just wanted to see or get some advice, you know, based on my income. You know, what should I be doing attacking that debt or kind of continue investing into retirement? Cool. Tell us some numbers. How much debt do you have? So I have $20,000 on a car. I'm currently making more than double payments on that. So I'm paying $1,100 a month on that car. Okay.

And I have $3,200 in student loans. Okay. And I have $8,000 tied up in a Roth IRA. Okay. Well, that's not debt. You said tied up? You mean you've invested $8,000? Yes.

Okay. You kind of said it like something bad happened. Okay, good. I'm glad you got some money in a Roth IRA. So you only have a car loan and a student loan. That's it? Correct. Okay.

What's your income? My gross income is $87,000. Cool. And what do you see every month? What do you bring home every month from that? Well, it kind of depends from month to month. I'm in a commission-based position. My monthly take-home on my base salary is $4,000. Then my commission check is anywhere from $2,000 to $4,000. So I'm in that pocket. Cool, cool, cool. All right. And what's your living situation? Are you renting? Do you have roommates? Tell us more about that. Yeah, I'm renting. I have two roommates in a three-bedroom apartment. I currently pay $13.30 a month in rent. Okay. So the question here, what's your actual question for us? I just wanted to see kind of, you know, if you guys were to put yourselves in my shoes,

would you go ahead and kind of attack that student loans and pay it off in full rather than continuing to contribute to that Roth IRA and then kind of working on that car as well. Kind of wanted to get your guys' thoughts on that. Yeah. Well, you're doing a lot of good things. You're just doing them all at once. And so it's harder to make progress. And what I found was when I started this financial journey, when I paused investing and I just went all in on debt payoff, I felt so much progress and motivation and it happened faster.

And then when I got back to investing, it wasn't just a measly, you know, 3% or 5%. It was 15%. And that allowed me to build wealth with so much peace and confidence, just focusing on one thing at a time. And so that's what I'd recommend to you. How much are you investing right now?

Right now, in that Roth IRA, I'm putting about 500 a month into. Okay. So think about that. You said you're doubling your car payment, which is an extra $550. If you paused investing, you could triple the car payment and pay it off even faster. Right. And if you attack the smallest debt first, that student loan, is that broken up into multiple or is that just one? That's just one. Okay. So that's technically your smallest debt, right? Yes. So what if you made the minimum payment on the car loan and you took all the margin you

could muster up, you paused investing, how much extra could you throw at that student loan? $1,500? I could probably, yeah. $2,000? Yeah. So think about that. It's gone in a month and a half.

You just knocked out that student loan. You freed about that. It's gone in a month and a half. You just knocked out that student loan. You freed up that payment. Now we apply that to the car loan along with that extra $1,500 or $2,000. Boom. This thing's rolling, man. You're debt free in like what, eight months? That's amazing. Yeah. And in March, you don't have student loans anymore. That's great. That would be sweet. And then before the end of the year, you're back to investing. And instead of 500 bucks a month, it's going to be way more than that. Right. And so that's what we would encourage. That's how we've personally done it.

And I don't think you'll regret it that way. How old are you? I'm 22. Okay. Dude, you have so much time. Yeah. It's amazing. Way to go on that income too at 22.

That's a good job. Well, and when you look at the math on it, Jade, 15% of 87 grand, that's $13,000 a year. Yeah. So he would be investing over $1,000 a month instead of 500. Wow. So he just over doubled the savings rate, which we know is the key to building wealth. Absolutely.

Wow. How does that hit you, Luke? That's awesome. That's awesome. Thank you guys so much. Awesome. Game on, man. Ooh, thank you for the call.

I love calls like that. I put a pep in my step. I'm i'm excited for him i know me too because i never want to go back into debt but there's like an excitement when you're like get the plan you're like this is gonna work i know i know i said adrenaline rush we did a live stream um gosh two weeks ago it was the break the cycle live stream you can still go on youtube and watch it but um it was just motivation around breaking that paycheck to paycheck cycle just like we we helped Luke do, getting your money, figuring out how to pay off your debt, finding margin in your budget. And I was looking through the comments just to see if people were enjoying the live stream. And one person put, the way you talk about debt, I get so excited. I wish I had debt to pay off. I'm like, no, you don't. But be careful what you wish for.

We get the sentiment. It's so funny. Let's take another call. We've got Carter in Austin, Texas. What's going on, Carter? Are you there? Carter. I don't know. Okay, there he is. What's going on?

How can we help? Well, I just heard about the baby steps from my old youth minister, and I don't feel 100% convinced that my wife's 100% in on it and whatnot. Is she happy with the current financial plan? She likes being able to go out on weekends and and and doing things like that well i guess so she thinks the sacrifice is not going to be worth it i i don't i don't know i don't think that she sees the the the long term effect that it's causing right now i guess Is it out of hand?

Like, tell us more about your situation so we can see, like, where you guys fit on this spectrum. How much debt do you guys have? I ran the numbers, like, 20 minutes ago, actually. It's $49,250.49. In debt? Yes, ma'am. $32,300 is with her, with with 29,963 of student loans. And on my side, it's a vehicle loan, the major one of the vehicle loan of 12,000.

Okay, let me just, let me clarify that. So you said she's got a student loan and it's 32,000? 29,963. Okay, 29,000. Okay. And then you've got the car. What is yours? $11,862. And then what else do you have? And then I've got a credit card for $732. I don't know where like insurance or whatnot how that would be but that's not a debt oh oh it was just showed up so what else you mentioned your car loan you got a student loan and then the credit card but there's more here medical uh 4200 and medical bills 4200 yes ma'am. And then we took out personal loans for, let's see, $2,300 or something like that. Okay. And I think that that's it. I didn't know that the insurance thing was it. It just showed up on my credit thing.

What do you got? Does she know about all these debts and the amounts? Not fully. Okay, there's the problem. Yeah, she needs to be made aware because I can feel you realize the stress of all these payments. I mean, you're head spinning just trying to lay them out for us.

Are you the one that pays the bills every month? I do my best, yes, ma'am. I think that's the issue. Bring her into this. Yeah, you're the only one who's seen the full scope and you're the one who's paying that bill every month online, and she hasn't felt that. Let's get them FPU.

Yes. Can we do that? Go ahead. Okay, we're going to gift you guys Financial Peace University, Carter, and you're going to watch these nine video lessons with her. That's her only commitment right now, and that'll get you on the same page, speaking the same language, getting you guys fired up,

and really showing you why you guys are too smart to be this broke. You can be so successful and wealthy at this young age with this bright young marriage and see it squandered in the payment sucks. So hang on the line. We'll gift you one year of Financial Peace University, my friend. But watch it. Convince her. You're listening to The Ramsey Show, scripture quote quote of the day each one should test their own

actions then they can take pride in themselves alone without comparing themselves to someone else for each one should carry their own load that's galatians 6 verse 4 through 5 then we've got this from paul mccartney i don't work at being ordinary. Listen, I don't either, Paul. Spoken like a beetle. I don't work at being ordinary. We want to be extraordinary. Love it. Love it.

Let's go to the phone lines. Jonathan, another one from Boston, Massachusetts. That's your area, George. What's going on, Jonathan? Hi, guys. Thank you so much for taking my call. So I have to be on the air today. Awesome.

We're glad you're here. How can we help? So I'm calling. I'm 22 years old. I've been working in construction and I make about a little over $60,000 a year before taxes. And so right now I still live at home with my parents and they're very, they treat me well and they don't charge me rent um so i can get a head start with saving money which i'm very fortunate situation to be in yeah and i thank them every day for it so my question is i you know i've been i've been wanting to save for a house but the boston market is so expensive i have about a hundred thousand in a high yield savings nice so i'm just trying to decide if i should you know on a single income in Boston

on 60,000, it's kind of impossible to find anything. So should I just deploy most of that into a taxable? I've already maxed out my Roth IRA for 2024 and I do contribute to my 401k. So I'm wondering, you know, instead of just having all that cash sitting in a high yield savings, should I stop really saving for a house and prioritize moving that cash to my taxable brokerage? I see. You're saying, hey, if this isn't going to happen for another, you know, four or five years, as I continue to save, should I just invest it for the longer term and then pull it out later on? Yes, yeah. Because, you know, the only way I think I could afford a house here is, you know, if I maybe have a career change, something that makes a lot more money. So I'm kind of like torn exactly, you know, what I should do. Because all my family's in Massachusetts, so I don't really want to move out of the area.

But at the same time, you know, having money, even though it's in a high-yield savings, it still feels kind of like I'm missing out on potential opportunities. Well, right now, man, I remember saving up for our house, and our high-yield savings account was making 2%, and we were doing jumping jacks at that rate. And so we are at record highs right now. I mean, I'm making 5.5% in a high-yield savings account. It blows my mind. And so that's a great option that's going to keep your money safe.

And the problem with investing it is if you're going to pull this money out in the next three years, well, you could see a dip. All it takes is one stupid election and all of a sudden everyone freaks out and the market's down 18% or it's up 20%, but that's going to change your heart rate. And so if this is truly a long-term play, four or five years plus, then I'm fine with you investing in a taxable brokerage account into an index fund or something. But if this is three years out and you think you're going to do this sooner, the high yield is a great option with some great rates right now. And I might also go, all right, I'm going to go rent for a year or two. I'm going to go get a condo outside of town. That's what I'm thinking. So look at all of the options.

I mean, you don't need a huge single-family home for just Jonathan right now, right? Yeah, no, no, for sure. So I've been considering apartments. It's just crazy. Even outside the city, like I live outside the city, it's still almost... What area are we talking? It's still over 2,000. You're talking like outside Boston, so near like Lowell, Massachusetts. Okay, North Shore.

Near like Drake and that. Yep, exactly, North Shore. Near like Drake and Mass. Yep, exactly, North Shore. Yeah, yeah, yeah. Well, I think you're going to find much cheaper prices as you go further out from the city. And so I would be looking at condos and apartments. It's still a great way to get an asset and build wealth and create a forced savings plan. How much are you looking to spend? Like what are you looking?

Are we talking $300,000, $400,000 for a condo? Yeah, yeah, yeah. I was doing the math and it seems like, I mean, doing it, adding it into like how much house I can afford, what I was getting was about, it was showing like just over 200, like 225,000 I could afford. So I was looking at condos and low. It still seems like most are, you know, just around the $300,000 range.

And that's even before, you know, your broker the $300,000 range. And that's even before, you know, your broker fees, closing costs, everything like that. Yeah. Well, think about this. Your income's going to go up and I would encourage you to find ways to do that. You're making 60K at 22, which is awesome. You're an impressive dude. You've worked so hard. You're living on less than you make. You got no expenses. You could pretty much stack up all of that cash. I mean, could you save up 30 grand a year at this point? 40 grand a year? Yeah, yeah, for sure. I do some side hustles, and I also, you know, I always like work during the weekend, try to pick up like extra hours here and there. Like I said, you know, I'm in a very fortunate situation where, you know, my parents

don't charge me rent. I'm able to save, like, a lot of that money. Now's the time. I'd probably do this for another year or two. And if you need to go rent and just kind of get out of the nest, that's great, too. But I think you'll be a homeowner within two years, man. You got, like, $150 to put down on a $225 or $300. That mortgage is going to be real reasonable, 25% of your uh take-home pay and you're in a great spot i love it love our boston callers we had several of those this morning or this morning

this afternoon it's because i'm on it's because you're on and they know that you're here bostonian now that's good that is great so george you know i find that with these conversations there's so much like with the way the housing market is, there's like, should I go? Should I not go? Is it time? Is it not time? Should I stay or should I buy a home now? I like it.

Yes. That's the ticket. I'm trying to think who sings that song. James, tell us. The Verve? The Clash. The Clash. I know it's something.

I'm like, it's the something. I'm so punk. But these conversations, I feel like that's what everybody's, where everybody's at right now. It's like, I've got this money. It's going to take me a while longer to get the money I truly need for the down payment I want or for the payment to be what I want it to be. Do I just sit on that money or do I invest it? have a lump sum of money that you are emotionally connected to because this is your future like this is your house this is that potential mortgage to invest it if it's not going to be long term you're going to be just on edge the entire time you're going to be logging in all the time to see like what's the market doing and like you said if the market crashes you are going to have a heart

attack so that money is truly best we've seen a lot of that lately, Jade. I mean, it wasn't long ago where we had the market was down 18% for the year. But then we've had a great year so far this year. And so, but when you're ready to make that home purchase, you don't want to be like, oh gosh, I can't do it. Yeah. Because my hundred grand turned into 85. Oh, so painful. That's too stressful. But the longer you keep the money in there, the better chance that money has grown and it's going to be a wise move. But that's a rare situation that someone has no debt and 100 grand sitting there at 22. Absolutely. What a rock star. Most people have debt up to their eyeballs, Jay. And they're like, well,

I got to get a house because my parents are pressuring me and the housing market's crazy. And then they call us again going, I think we need to sell the house. We made a mistake. You know, in a situation like this guy too, it is worth noting, it doesn't hurt to have some rental history going into buying a home, especially with a zero credit score. It's a great caveat. And I would say to somebody like Jonathan,

it's great when your parents say, you can live here rent free, but it doesn't hurt to set up some situation where you're paying them rent so that you can show I've been paying rent for, you know, I have a renting history, basically, is what they're going to ask for. Especially if you go in with a zero credit score. You do that manual underwriting. They need to see that you've made some kind of rent payment.

That's right. Even if it's not market rent of $1,200. That's right. If you've made a regular payment on the first of the month to your parents for $500, That is going to change the game when it comes to getting approved for a no score loan. It's actually very, very important. So in his case, or if you're in that case, you can either look at paying your parents or in this case, it could be worth it to get out on your own and find some roommates so that you're establishing that trade line, which is really, really important.

That's big time. It is big time. I have a whole chapter in my new book, Jade, on home ownership and mortgages. And I walk through with a lot of empathy because I feel for those out there. Man, it's different. You're right. Wages have not kept up with the housing market. It used to be twice your salary could get you a home. Now it's six times your salary is what it takes to get a home. And so it is harder than it was before. That's right. But don't let that discourage you. Renting is smart. It is buying patience. It's not a sin. It's not a waste of money. I'm so sick of these myths that we're telling young people. And guess what? It's coming from you parents because you want what's

best for your kid and you go, well, you got to get in the game in the housing market. Your kid can't afford it. And if you can't afford it, it's a burden. It's not a blessing. Instead of a blessing. That's exactly right. So you got to do it the right way. Here's our parameter for this. 15-year fixed rate mortgage is the only one you want to go with. 25% of your take-home pay going towards the mortgage

and have a solid down payment. If you do it that way, you'll buy a house with peace. Yeah. How much down payment, George, for those asking? 5% to 10% is okay for first-time homeowners,

but I think 20% is a great goal to have to avoid that pesky private mortgage insurance, which protects the lender, not you. That's right. Usually insurance is great because it protects you. Not in this case. Ooh, I love it.

Another hour in the books, hosting with the great George Campbell. Thanks for being here with me today. Thanks, Jade. Thanks to the guys in the booth. Thanks, James. Appreciate you. You're welcome. This is The Ramsey Show. We'll see you next time.