The Ramsey Show - App - I Have Buyer’s Guilt After Getting a Tesla (Hour 3)

Episode Date: August 23, 2023

Live from the headquarters of Ramsey Solutions, broadcasting from the Pod's Moving in Storage studio, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I am your host, Jade Warshaw, joined to my right by the illustrious Ken Coleman. Illustrious, that is a word right there. I like that. I usually reserve that for George Campbell, but you can't come up with a different word for the two of us. Well, look at this hair you got going on today, Ken. Illustrious was the word. It's the same do every time. This is a toupee I've had for

decades. A lot of glue. A lot of glue. Don't tell him that, Ken. We're taking calls from you guys. So give us a call. The number is 888-825-5225. We know you're out there. We know you're feeling stress and you're feeling anxiety around your money, around your career, whatever the situation. Matter of fact, we're all feeling it, right? And Dr. John Deloney actually has a new book coming out about this. It's called Building a Non-Anxious Life. And I'm so excited about this because I'll be honest, Ken, I didn't think I needed it. I didn't think I needed to read about this stuff.

But now reading it, I'm like, this helps everyone. Yeah, sure it does. Everyone. You need to pre-order it. No one is. And we walk around thinking we've got it and like, I'm good. I'm good. I've got this.

I got this. You read this book. You're going to be like, oh, there are some changes that I need to make. There are daily choices. And he actually walks through a set of daily choices that you can make every day to start. I walk around knowing I don't have it. And it actually makes me less anxious because I just know I don't have it. You're like, I know I ain't got it together. I don't know what I'm doing. I don't know how I even got in the room. How did I even get here at this table? I know that's right.

But look, six daily choices. Come on. I like it because just like we talk about the money and the baby steps, he's breaking it down really in his own kind of baby steps on how you can walk this thing out. A lot of goodies, by the way, when you pre-order now. You get it at a discount and a lot of goodies. I love that. Yeah. If you pre-order it today, you can do that for $20, but you're getting $75 in goodies, as Ken would say. One of those things is access to his talk.

It's called Smoke, Fire, and Freedom. And I heard that talk. Yeah, it's good. And it's off the chain. It's on point. Then you also get an ebook or an audio book of him reading Building a Non-Anxious Life. So that's pretty sweet. You can do that at ramseysolutions.com. I've already got my copy. It's y'all's turn now. All right, let's go to the phone lines. We got Mike in New York City. What's going on, Mike? Hi, thank you for taking my call, Jaden, Ken. Ken, great reference to Stuart Scott. You and I are the same age.

I loved it. That was wonderful. Yes, sir. Yes, sir. Rich Eisen, Stuart Scott days, Dan Patrick. Those were the days, man. That's when SportsCenter was, you couldn't miss it. You had to watch it.

You couldn't miss it. You had to stay up and watch it back in the 90s into the 2000s. I'm going to give you this, Mike, just for you. Booyah. Booyah, that's right. There it is. I love it. I love it. Those guys were wonderful. You and I are the same generation. So totally awesome. Thank you, pal. You're very welcome. Got a question. I'm actually around 60 miles east of New York City out here in Suffolk County, suburbia, and got a question regarding the 3B to 4, 5, and 6 process. 3B, as I understand, you look to see when you're purchasing a home to have the mortgage no more than 25% of your take-home pay after taxes. Okay. My question was, as soon as you hit 3B, everybody's going to be now going to 4, 5, and 6, definitely 4, 5, maybe at some point, if at all, and then 6, definitely. Wouldn't be when you go

right to 4, 5, and 6, now you're contributing the 15% to your retirement, you're possibly doing a 529, and you're also finding extra money to throw out the mortgage. That's right. So wouldn't those numbers be a better true tale of sign of what your take-home, what your mortgage would be, what you could afford, than just a 3B? Because as soon as you do 3B, now I'm contributing to, you know, the 15%, and my take-home pay now decreases. So my percentage of my mortgage might increase. It might go from, as an example, 23% and jump up to, you know, 29%.

Yeah, depending on... I just wanted to know the thoughts on that. I think that's actually what you're saying. It kind of answers the question itself. I think that's the reason that we speak in this as percentages, as opposed to actual dollar amounts, because then it's customizable for your situation. Because for most people, not everybody, but most people, it's kind of like, okay, I've got my income, I'm putting 10% for tithe, I'm putting 25%, give or take on my mortgage, I'm putting another 15%

retirement, that leaves me that's 50% there. And that leaves me another 50% for the other needs and wants of my budget. That's the other 50% where there's a little extra going to 529s, which by the way, that's one area that we don't say it's got to be this percent or that percent. Some people might not choose to do any. So that kind of frees up an X amount of percentage there. And then the whole thing with the mortgage is really, you know, it's not about intensity. It's about intentionally putting aside a certain amount, whatever you decide. For some people, it could be 3%.

For some people, it could be, you know, it really is discretionary on that area. So does that answer your question a little bit? No, definitely does. Can I just maybe just add one thing? So I'm just thinking as I go through that process of 3B into now 4, 5, and 6, that I want to kind of be a little more cautious because I know 4 is right around the corner and I know 5 will most likely happen and 6 will definitely happen. So I don't want to be like house poor, if you will, because four, five, and six, that's probably the bulk of where the majority of people are on the baby step process, probably from the majority of their time in those years of four, five, and on those steps of four, five, and six.

Well, we see that most people, they walk through baby step two, 12, 24 months, and then it takes them about seven years to walk through from the time that they hit baby step four, 12, 24 months, and then it takes them about seven years to walk through from the time that they hit baby step four. It's about seven years that they're able to get in there, seven and a half, seven to 10 years of actually being able to pay off their mortgage. And that's just, that's just an average. That's not saying it's the case for everybody, but it's usually around seven to 10 years to get to that paid off mortgage mortgage, possibly baby steps millionaires situation. Okay, yeah. So I just know with my situation, once I get to 3B,

4, 5, and 6 is going to be putting into 403B. I work as a public school teacher, so I have a guaranteed pension in New York State, and then I have the 403B option, and that's going to reduce my take-home pay significantly. And then I have the flex spending plan, teachers' dues, which are around $1,000 per year. So there will be other factors in there besides just the federal taxes. Yeah, that's something to think about. At the end of the day, with pensions, obviously we say 15%. With pensions, you have less control over that money. So we don't really fully count all of that towards the 15%. We usually say count about half of it towards your 15%. And then you mentioned the 403B. That's, I mean, that's cool. And then you said there were some other required contributions as well.

Well, it would be like, you know, my teacher's dues and then also the flex spending plan, which I like to do because that's just a no brainer. You know, the cafeteria plan where you pay for, you know, expenses that aren't covered by your co-pays and stuff. So you've got a lot in there. The good thing, again, is this is based on percentage. So at the end of the day, if because of these extra things, you're a little over 15%, that's okay. It just means on down the line, you might not be putting as much money to, I don't know, paying off your house. But it's all good.

You're still building wealth. And that's all that matters at the end of the day. So very, very good question. Very good. I'm giving him another booyah. Booyah! That's what I'm talking about. This is The Ramsey Show.

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your money Dave Ramsey says we'll talk about you right in front of you I like that uh Ken let's do this question of the day all right all right the question of the day is brought to you each day by neighborly your hub for home services neighborly.com is the place to find reliable help for your home from locally owned businesses like air serve we got dryer vent wizard precision garage door by the way my nickname in high school was dryer vent wizard just an interesting point i don't want to know why. You see what I did there? They used to call me precision garage door service. That didn't happen.

No, it didn't. None of those things are true. But Window Genie would be a nice service. I need to get my windows cleaned. I'm not getting up on a ladder and neither is Sam Warshaw. You're not going to let him up there? No way. Or he's refusing, which is the truth.

No, I don't want a National Lampoon's situation on my hands all right i'm gonna call i know sam he's pretty nimble he's nimble but i'm calling window genie and i'm gonna pay all right a nice that's a good reasonable fee for them to do it decision so for expert help with just about anything you need including cleaning your windows visit neighborly.com today's question question comes from Brittany in New Mexico. I'm 28 and I'm in baby step two. I really struggle with staying on budget since I'm single and I don't have that naturally built-in accountability partner. Who do other single people use for their accountability partner

to stay on track and meet their financial goals? This is a good question, Brittany. What do you think, Jade? What are you hearing here? You need... Single lady out there. Oh, the single lady. There it is.

You need a best friend. You need a good... A BFF, they call it. Yes. Is that still a thing? I'm a little outdated. I'm old. Okay, we'll go with BFF.

You're being very polite right now. A bestie. Oh, it's now a bestie. You need a bestie. Look, I'm not much younger than you, let's be honest you are you need you need the right people okay and i'm going to explain to you right quick what this what these people are or this person okay they need to be someone who you can trust all right trustworthy they need to be someone who's walking the walk right legit so they can't talk it can't be uncle

boo-boo who's always talking about oh yeah you know you need to get your money right and uh the cryptocurrency yeah he does it has to be somebody who has money you can't take money advice from broke people okay and uncle boo-boo is broke he's not the one okay you need somebody who will tell you the truth oh truth teller hold you accountable right and and it's not that they're judging you they're just saying hey didn't you say i i thought you said you were sticking to your budget and i but i also saw that you were going to brunch with you know monica and them right monica you know monica will get you in trouble she will so you need somebody who will say those things to you and hold you accountable.

And then you have to be a person who's able to receive it. Because at the end of the day, it doesn't matter how that person is. If you aren't willing to receive the feedback, if you're not willing to receive the accountability. You're dropping it now because that's the real deal. You can have all the accountability in the world. but if you just nod, smile, and wave. Uh-huh. Uh-huh. It ain't worth nothing but a chicken wing at that point. No thing but a chicken wing. This is great. This is my favorite segment ever. Now. Ever. I love everything we've just dropped here. All the words. We got Monica. We got chicken wings. We got Uncle Boo Boo now let's let's go let's go a little further into

this um oh i can't wait to see where this goes well i want to talk about this because we get this all the time man it's hard for me and i need accountability it's hard for me to stick to my budget yeah and we talk about it like it's kind of um like it's a trait that some people possess and some people don't oh great call you're. You're right. These types of people, they got the gene. They're just disciplined people as though we came out of our mama's womb disciplined. I don't buy that. No.

I think that things like discipline and doing what you said you're going to do, those are skills that you build and develop and test and challenge in yourself over time. I agree. Hit me with some knowledge, Ken. All I got for you is amen. That's all I got.

I mean, I could take an offering, but that's all I've got left after you did that. It's absolutely right. Because here's what you're saying. When you think that, you are essentially making an excuse. You're counting yourself out. You're going, I can't do it because I'm not as organized as Jade or whatever. I get that. I think you're absolutely right.

It becomes a crutch that we go, well, I'm just not good enough. So really good stuff. Love the question, Brittany. It's a great question. And the budget, by the way, if people are saying, well, Jade, how do I build that skill? When you start a budget, give yourself that accountability. And when you say to yourself, okay, start small. Everything is not going to be perfect all at once, but maybe it's just one line item.

Okay, this month, no matter what, I'm sticking to the grocery budget. You got to get in the gym. That's the idea. That's how you build muscle. You have to show up, throw some weight around, and figure it out. Yeah. Let's go to the phone line. Dominic, San up, throw some weight around, and figure it out. Yeah. Let's go to the phone line. Dominic, San Jose, what do you have to say about it, Dominic?

Hi. Thank you so much for taking my call, guys. Of course. So, basically, I'm a bit of a – at first I called it buyer's remorse, but I think it's more a buyer's guilt because it's something that, like, I can justify, but it's something that I just don't think was quite in line with my core values. What did you buy, Dominic? We can't wait to hear this.

I think I might be overplaying it. Maybe I'm not. But I bought a new car. Oh, boy. A newer car. What did you buy? Yeah. I bought a 2020 Tesla Model 3.

2020 Tesla Model 3. And then what's that set you back? It set me back, like, out the door. It was 41.3. Oh, boy. You bought everything, and you even are talking like the car guy. Out the door. He told you, I'll get this for you right now, Dominic.

Out the door, 41,000. You're like, yes, please. Well, what's your income? No, he didn't tell me that. I had to figure that out myself. But I make 115115 before taxes. Oh, yeah. What's the payment on this beauty?

It is $687 a month. Oh, gosh. Okay. I got to get a Pepto Bismol J takeover. Well, technically, we would tell people that anything going down in value like a vehicle, you shouldn't have more than 50% of your annual income tied up in that. So you're under that. I think my guess is just maybe you've never had a car payment that's this costly and you're feeling it.

And I don't like car payments, period. But what was your car situation before you got into this Tesla? So I actually had a paid off car that's what it is only yeah and i and at the time i was like yes i just want to not have a car payment it was like 11k i paid it off in like a couple months because i didn't have all the cash right on hand but um basically recently in recent times uh i don't know i just i started thinking about like oh maybe i would enjoy having something a bit more luxurious, you know, rather than driving something so old. And I convinced myself in

doing it. And I did that the math and I was like, yeah, I can afford it. And, you know, I went through with it and now I'm sitting here and I'm just looking at that much debt coming from having zero debt whatsoever. It's just like my heart sank. So you called us. So why did you call us, Dominic? What's the question in here? I'm kind of between two decisions. So I talked about it with my fiance,

and she is telling me that it's probably just best to keep the car, just pay it off as quick as possible, because I'm able to pay off the car uh in less than 30 months if i just make double payments and i can afford that i encountered that when i was doing the map and she likes right in the other option let's let's throw that out there and she likes riding in the tesla come on yeah no she's like please get rid of the car i love your car all right what's the second option we got about a minute we want to help you out what's the second option? We got about a minute. We want to help you out. What's the second option? The second option is to sell the car privately or

trade it in and just get a cheaper car. What can you get for it if you sell it? Privately, reserve, I would say like $31,000. I'd be losing like $10,000. You know what? There's not a wrong answer here. It's your debt like i said you're kind of i i don't want anybody to have a car note i

don't want them to go into that but you're kind of under that threshold um you just hate having the payment and i don't blame you because you went from not having any payments to having a payment and it sucks so for you you, if your girlfriend is like, get out of the car and you're like, get out of the car, then sell it, you know, take that stupid tax of $10,000 and you're just going to have to bite the bullet on that and then get into something in cash or start saving towards that. So you can make it happen. That's what I would do. Yikes. You know, I'm telling you, I mean, he's got the money if he wanted to just write it out and pay it off. I think I'd get after it.

I think I'd pay it off and learn this lesson. Turn that hate into a newfound emotion that you can't even describe to get out of this thing faster than you could possibly imagine. You are listening to the ramsey show where else can you go to just talk about money ken you can't talk to you know you don't talk to your friends about money maybe some of y'all aren't even talking to your spouse about money you need to start and maybe that conversation can start here today we'll help you with whatever it is that you're dealing with. We'll help give you advice. We'll help push you to do the next right step for your situation, but you got to give us a call. The number is 888-825-5225. My name's Jade. Again, this is Ken sitting next to me and we want to talk about your situation. So we're going to do that. We got Eric in Yuma, Arizona. I've been to Yuma. What's going on, Eric? Wow.

Oh, thanks for taking my call, Kim and Jake. You're welcome. How can we help? All right. I'm 56 years old. I make $90,000 a year. I have $130,000 in a 401k and about $3,000 in an HSA that I only use as a retirement tool. I currently live in a RV that's worth about $35,000.

Yes, it is down by the river. I have a paid-for truck that's worth $32,000, a boat at $10,000, and I had another SUV at $2,500 and an enclosed trailer that I use for storage. I'm to the end of step two except for about $8,000 on the RV, and knowing that it's just short-term living until I can get into a house, should I go ahead and just make the minimum payments on the RV and go ahead and start step three in 3B so that I can move faster towards a house uh how much is your 30 there are these 35 000 okay so it's even um my thought the thought that's going through my

head is if you plan on buying a house you're going to sell the rv you're not going to keep it so i wanted to know i'd pay it off yeah yeah i i listed as that because you only have a little bit to go and if you wait till you're ready to buy a house to pay it off you will have lost money on it even more like you'll go to sell it and it won't be worth i was wanting to move directly from the rv into a house so and then just maybe sell the r RV later and whatever I get out of the RV I can dump into the mortgage. How much do you have saved up for the house? I don't have anything. That's why I need to move on to step three and three B.

I only have my $1,000. Okay, I misunderstood. I thought you said that you had paid. I misunderstood. So you have debt on all those things you listed out? No. No, he's paid off his boat. Okay.

The RV is the last step in step two. Got it. Okay. And I only owe about $8,000 on it. So if you sold it now, would that give you enough money for a down payment in Yuma, Arizona? No, he'd still be upside down. It depends on how much house I found and how much I build.

And that's another question. With 10 to 15 years of income production left in my life and my working opportunities, how much house can I have and how much do I put toward investing? What you need to do, here's what I think that I would do, because you said you're earning,

what's your income, 90K? Did I hear that? It's a good salary. I don't i don't see why you're 100 and who else is involved in your life are you married do you have no no divorce so with the 90k income i don't see why you can't knock out this ak 80 i'm sorry 8k on the rv lickety split get that out of your life and then you should have plenty of money there's no more debt so you should have plenty of money to quickly save uh what you want for whether it's a condo that you're purchasing a townhome i'm not sure what size home you're looking for um but now's a good time to kind of start looking okay what's my life going to look like you don't want to bite off more than you can chew um and see what you can afford going forward.

Yeah, Eric, the reason I would rather you sell the RV now because that is depreciating quickly. And so I want to get the most for it. And if I sell it now for $35, two things I get out of that. Number one, obviously I pay off the $8,000 that I owe on it, and now you're completely debt-free. And then I've got a nice chunk of cash that I can begin to build on if I rent for a year or whatever, or I get something smaller because it's just you. That's what I'm thinking, Jayden. I'd rather him capitalize on getting rid of this depreciating asset quickly. Yeah, that's possible.

I mean, you could definitely do that. I don't know. I'm not mad at that plan. He makes $90,000. I was going to say, you've got a boat, you've got a truck, you've got an RV. All of these things are going down in value. So based on our math, what he's asking, what kind of house should he be looking at, Jade, knowing that we're already off and

running on a nice down payment if we sell several things? Well, when I'm thinking about the RV is I'm thinking about that versus renting for however much time it's going to take for him to get the money for the house. I don't know that he needs to rent. Well, where is he going to go?

He buys a smaller house. I want to figure out with what you can do with your $90,000. You got no debt. You look at your monthly budget, your take-home. You sell a couple things. Can you get up to $50,000? Could you amass $50,000 pretty quickly? I thought I heard that much money in there.

Right. And I agree. I had thought about selling my truck and drive just drive the suv which was not you don't need two cars for years to get right well it's just what was left from my beater truck you know and i've just not got rid of it yet yeah i don't think you need two vehicles so i get yeah you've got options it's for you it's all about how quickly can we get there and i'm trying to get to home ownership as quickly as possible so I can pay off the home ownership as quickly as possible. Can you buy a $250,000?

I don't know Yuma, so I'm going somewhere with all these questions. Can you buy a $250,000 house in Yuma? You can buy $250,000 mobile homes in Yuma. I would not buy a mobile home. I don't own a mobile home. I'm not buying a mobile home. I'm not buying a mobile home. So I know that.

That's just the way prices are here. Okay, so it's... What could you afford? Yeah, what could you get? For what you're looking for, what does it cost? Well, my thought is just a small, a three-bedroom, two-bath, just a simple clean house, you know, that in 10 to 12 years I can pay off and put as much equity into. And I have to, after that point, sell and downsize.

But what does that cost? $200,000 to $300,000. Okay. So, again, I'm not the mathematician in the room, but if I sell the RV at $35,000 and I owe $8,000, all right, now I'm walking away with some money there, and then I've got a truck, and then I've got a boat, and I'm going, can I get close to $50,000? And you're making $90,000.

How quickly can you get $50,000 down payment? That's a really stellar down payment. That's a 20% on something in the $250,000 range, right? Am I wrong? You're not wrong, Ken Coleman. I'm just saying, dude. And now we get rid of the RV, which is not helping you long term. That's true.

You can part with the RV. It's just a short-term answer. I was looking at probably staying in the RV maybe another year and filing up as much money and selling the boat. I like Ken's option because if you sell the the truck then you sell the boat the last thing to go is the rv and you come up with you know a little short-term solution until it's time to get the house that you want i think that's the way to stack up that cash as quickly as possible i'm trying to come up with 23 grand that's what i need to come up with because you got the 27 if you sell the rv at 35 and you owe eight so now i'm. I need to come up with 23 more. 50,000 is pretty darn close to the kind of down payment we'd want him to put on it.

That's right. Ideally, yes? Yes, that's right. And we've got another rule that we're working with, which is the amount of assets that he has that are going down in value for his income. We've got a $35,000 deal, something that's worth 25,000, something that's worth $10,000, and another vehicle, the truck, the SUV, the boat, the RV, it's too much. We got to offload some of it. And it's way better to throw that money into something that's going up in value as quickly as possible as a home, actual freestanding home. That's what I'm doing. Yeah. What do you think? That's what I'm looking

at. 10 to 15 years left, you know, I've got to start putting as much more into my investments and my other investment will be a home. Yeah. Eric, I think this is a good move. I love this plan. This fast forwards everything for you. Oh, by the way, you're debt free. Except for the home.

And now you can pay that off and you're golden. I know, that's right. The key here is he can't bite off too much home. Like he's really got to keep that. Hey, I was looking at you to make sure my numbers were at. No know that's right. The key here is he can't bite off too much home. Like he's really got to keep that. Hey, I was looking at you to make sure my numbers were at. No, I liked it. I think he can find something. He said between two and 300 and he's got the assets to be able to make a really solid down payment right now. I think that's good. That RV, if you're right, that thing can drop like a rock if he's not too, too careful. So really good stuff. The key here is walking those

baby steps in order, looking at what you've got around you, looking at what you can sell. In his case, he's probably not picking up a bunch of side hustles. He's got a lot of stuff laying around that he can sell to get that money. And you should get that money. This is The Ramsey Show, the only place where you can go to get real talk, the real deal on your finances, on your mental health questions, on your career questions. Because we've got Ken Coleman on the show today. And you can give us a call. The number is 888-825-5225. The scripture in the quote of the day is this. I will not cause pain without allowing something new to be born, says the Lord.

That's Isaiah 66, 9. That's a good one. I will not cause pain without allowing something new to be born. That's good. That's good in retrospect. Drew Barrymore said this, life is very interesting. In the end, some of your greatest pains become your greatest strengths. That's a word. It's growing something. Nothing's wasted is what they're saying.

Nothing is ever wasted. That is so, so good. All right, let's go to Jonathan, or let's go to John in Atlanta, Georgia. That's what happens when I take my glasses off. What's going on, John? Hey, I have kind of an interesting situation. And it's more so I'm looking for career advice. Sure. So I'm in a career where I handle marketing. I make about $120,000 per year. I have a nice 401k, nice benefits package. Going back five years ago, I went through kind of the worst nightmare in terms of direct debt and career choices. I had to sell our house. We had $60,000 worth of debt, which may not seem like much, but it was a lot to me at the time. And we used the equity in our house to pay off that debt, ended up moving and just a big spiral of a nasty situation. Since then, I've kind of made it my mission to get out of debt and to go beyond that. So I started doing side hustles and doing contract work on the side.

My expertise is in really political and very nuanced marketing and communications. And I was able to build something up very successful in that. And each year it's, it's grown. Um, and I'm, I'm trying to figure out when, when I should make the switch to doing that full time, because it's what started out as kind of moonlighting in, in, um, contract work has turned into in reality, me working two full-time jobs. How much are you making on the side hustle? So every year it's grown. In 2016, I made $20,000. 2018, political, it's every other year. 2018, I made $50,000. 2020, I made $100,000.

And last year, I made $375,000. And this year is the first year in an odd year that I actually made some income. So I made $76,000 this year. So it's kind of stacking up. My gut is telling me that it's time to make a switch. John, my friend, your gut is crazy in alignment with my gut. This is a good move for you, man. I assume you've been stacking this money in this separate account, or are you paying yourself some of it uh a little bit of both um we've been primarily living on um the the main income from my good i was hoping you were

going to say that so how much do you have in the side business account uh well i don't keep much in the business account but um but are you keeping it where are you keeping it uh in i'm essentially taking it as as salaries and dividends and so you are yeah but you just told us that you were paying yourself just a little bit you were living off your main gig well i it's it's it's coming into my pocket and then i'm using it for investments, 401ks. I'd rather not keep it in a bank account. Wait, wait, wait. Well, here's the problem with that, John. That money, I understand you're paying yourself and you're doing it the right way and dividends and everything else, but I want that money in that account because if I'm going to walk away

from my full-time job, I got to have that money in the account to pay me. Yeah. And there's ways that you can invest through your business. So you're not having to pull out all the money. Do you see what I'm saying? Like if you set up the right type of simple 401k, you could do a contribution through the business and then you could do a contribution based on your payroll as well, your personal.. Part of this is that this has snowballed over the last five years. I'm working two full-time jobs. I haven't really found the right way to handle spooling all that up. Let's help you with that. I feel like you're thinking too hard.

Yeah. All right. So here's what I would do if I were you, um, I would, I would not walk. So you're in an off year right now. Um, I would, the 75 you're going to make this year, if it were me, I would have put it all and I would kept it. I would have kept it in the bank, in the business account. And what I tell people is you can move from your full-time gig to your side hustle when it is spitting off enough to take care of your needs, what you require in salary, and you've got a minimum of six months of your salary in the bank. That's what my, does it mean that I'm right? I love that. It's what I would do. I would have six months of my salary. So you make 120. So six months of that. So 60,000 I'd have in the business account.

That would be six months before I stepped away and resigned and said, I'm out. Okay. That's what I would do. And is that on top of your typical three to six months of expenses? Well, no, because it's not. My point is that it's not about the baby steps in that particular situation because it's his new salary. So he would still be working his baby steps, but he'd have six months. Oh, you're saying, yes, it does not include the emergency fund. This is separate in the business account.

This is my salary that I'm walking into. So it is separate because I don't want anybody ever touching their emergency fund for salary. Exactly. And that's why I love this, Ken. Okay. So I say minimum six months. And if you had the 75, which I feel like you've been paying yourself some of that. So I would stock it back up before I left because I want you to leave because you've already got a pipeline and I think you're gonna be fine I think this is a no-brainer but I wish you had more money in the side hustle bank account your business I wish you had more in there so that when you walk away you're not thinking about anything but building that business and I want you to take better care um because might be wrong, but what you said is like, hey, I'm pulling everything out of the business. I'm taking that as payroll and then I'm turning around and taking that money and investing it. I want to be a little more savvy on how we're doing that because, I mean,

you're going to pay taxes on that. You're going to pay payroll taxes on both sides as the employer and as the employee just to invest it where you could leave some of that money in the business and have more tax advantage by investing into your own solo 401k through the business. Are you doing that? Do you have a SEP or something like that? No, I don't. And I just hadn't gotten to that point yet where it was appropriate. I mean, last year was the one.

I mean, you got a lot of money coming in. Bro, I'm going to tell you right now, when you started making $100,000 or more, it was appropriate. Have you been paying taxes? Yeah. Okay. I just want to be sure. Okay.

You had me over here sweating, John. Okay. No, in fact, I overpaid this year. Good. So I'm getting some back. Okay, good, good, good. Yes, I just want to make sure you're doing that. But is your wife working too?

No. want to make sure you're doing that but um is your wife working too no um part part of this was um our son has has some medical conditions and so in order for her to stay home i i started doing contract work and it just good okay i think you're ready my friend but i would prefer that you stack it up a little bit more and don't pull the trigger yet you've done it this far unless let me, let me say this, unless you're fried because you're working two full-time jobs and I can hear that in your voice. I think you might be on the verge of frying. Is that right? Well, yeah, I would say so. Well, then I would, I mean, you're ready. I think you could move some money around and boost up maybe beyond your emergency fund, some of the stuff you've done. I mean, I don't know. I'd be smart with this, but I think it's time. It's time for

you to commit and go all in. I love it. That's a great call. I love it. And you had so many good nuggets that I think so many people can use in their journey to transitioning from whatever job it is to... Don't take a leap with nothing to leap into. It is not glamorous. That's a fact. You got to create a net. You can't just be jumping without a net. Make it...

That only works in the cartoons. I know, that's right. All right, guys, that does it for this hour of The Ramsey Show. This last three hours, we've enjoyed hanging out with you. And remember, when it comes to your money, you can tell me you won't do it, but don't tell me you can't do it. Hey, what's up, guys?

It's Jade. Look, if you like what you heard in this episode and want to know more about getting started on the Ramsey baby steps, go to ramseysolutions.com and click the Get Started button. We'll help you figure out the best next step for you based on your specific situation. That's ramseysolutions.com and click Get Started button. We'll help you figure out the best next step for you based on your specific situation.

That's ramseysolutions.com and click Get Started.