The Ramsey Show - App - Ignorance Is Not Bliss, It's Broke! (Hour 2)

Episode Date: June 2, 2023

George Kamel & Jade Warshaw answer your questions and discuss:  "Why should I pay off my mortgage instead of keeping money in my CD?",  "Should I pay off my fiancée's debt with my savings?",  How doing the math on student loan payments proves that making larger payments now benefits you in the long run,  "What should I be doing to set up my kids for a successful financial future?",  How to decide if you should sell your car to get out of debt,  "We have $360k in student loans and don't know if we should use profits from the sale of our home to pay them off." Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Join a Personality-led FPU class. Click here! Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey Personality, George Campbell, joined by my fellow Ramsey Personality, the exuberant Jade Warshaw, joins me this hour, and we are more than enthused to take your calls at 888-825-5225. That's 888-825-5225. Andrew kicks us off in Dallas, Texas. Andrew, welcome to the show. Hey, guys. So my question is, the only debt I've got is $190K on a first mortgage. I've got about $200,000 in a CD.

My mortgage rate is three, three quarters. My CD is over 5%. So I'm wondering, you know, what would you do? Would you still pay off the mortgage or hang on to the CD? Sometimes it's outp off the mortgage or hang on to the CD without pacing the mortgage rate? Yeah, this is a common question in today's world where people locked in these super low mortgage interest rates and now savings interest rates are sky high and they're going, why would I even pay down this mortgage?

I'm making money hand over fist in the savings account. And I understand it. Mathematically, I understand it. There's one piece of the equation is risk, of course, of not having a mortgage means less risk. 100% of the homes that get foreclosed on have a mortgage unless they don't pay property taxes. That's pretty rare. So one side of this is going, if I didn't have a mortgage payment, what could I do? And start dreaming about that vision for your life. And the other side of the coin is the actual math of going,

well, what are you paying right now in interest every month on that mortgage? Have you actually looked at the amortization schedule? Yeah, it's been a mess. I don't exactly remember. But we're probably talking north of $600 just on interest alone? For sure, yeah. And so when you start to look at the numbers on, you know, 5% on 200,000, that's 10K a year, you know, you can start to do the math and go, all right, divided by 12, I'm making 800 bucks by keeping this 200,000.

Now, most people don't have 200,000 sitting in a CD. You are very weird in a good way to have saved up this amount of money. Was this a windfall? Did you work to save this up? A little bit of both. I got a pretty decent bonus about a year ago at the job. Okay. And what's your income? $150,000 a year. So what would be the harm? Play it out where you cash out the CD and you pay off the house and you still have some other savings, I imagine, that are liquid. I do.

I mean, not a lot. That more or less kind of takes me to... Your emergency fund? Yeah, I mean, I've definitely got, you know, I've probably got another $30,000 of it. Okay. And then what's your mortgage payment every month? It's like 800 bucks.

Oh, nice. I pay a lot more than just trying to pay it off quicker. Well, we'd tell you what we would do if we were in your shoes, and what we would do is pay off the house if we had the money sitting there. I definitely would. I mean, I tend to look at statistics on this too. We know 67% of millionaires have paid for homes. That's what they do. They pay off their residence and they understand that that's a major part of their wealth building plan.

Yeah. And you'll still have, of course, property taxes and insurance. But if you take that chunk out of principal and interest that you're thrown towards the house and go, what could I do with that? The extra 500 bucks I'd have every month. Well, you're probably going to invest that because that's the kind of person you are. And so you're going to see 200 grand again. But right now it feels like I have 200 grand liquid when really you owe 200 grand on the other side. And so I would rather be free. I sleep better not owing anyone anything, especially with all the fear right now in the economy. And it's just a simpler life when you don't have a payment in the world. So I'm cheering you on. If you pay that house off today, man, that would be fun. Go down to the bank and do a wire transfer and call it a day. Oh, what a great day. Never have to think about mortgages

again. Love it. Thanks for the call. Great conversation. Let's go to Isaiah in Phoenix up next. Isaiah, what's going on? Yeah, I have $12,000 in savings, and I'm trying to determine if I should assist my fiancé in paying off credit card debt or save it for us. No! You hit Jade's button, man. You activated my no button. You activated it. Why do you want to pay off your fiance's debt I think it really comes down to her parents we want to qualify together

possibly what do you mean qualify qualify on a house together I will say she has $18,000 in debt where I actually have $0 in debt besides ten thousand dollars in student loans here's the thing i love and plus the 10k okay well hold on you're not gonna pay off your student loans but you're gonna go pay off her debt look he i i admire that you're he's got a good heart here he's got a good intention but very chivalrous yeah it's this

is the wrong plan in your mind because you're not married yet right this is your fiance you've got good intentions you want to be debt free you're putting her first like i i think i see how the wheels are turning in your brain but it's a bad plan because you're not yet married yet and so we don't want to combine money we don't want to pay money. We don't want to pay off debt. I'm not trying to put any bad, you know, juju on you to say that you're not getting married, but just be patient and let that run its course. And in the meantime, each of you work on paying off your own debt. You've got 10K that you need to pay off. She's got 18K she needs to be working to pay off. When's the wedding? Wedding's probably in about a year or so. yeah you guys can knock that out what are you earning right now uh myself i'm earning about 70 to 85k a year she's a nursing student she's not

really making any income not yet but she has that that has to be paid when when will she finish school uh she finishes in september oh nice so she'll be working by the time you're married yes making a great income so here's a goal I would have if I was sitting there in your shoes fiancés I would go hey how cool would it be to start off our marriage debt free with money in the bank

and cash flow the wedding and honeymoon that would be my goal over the next 12 months but right now it's her debt my debt my money her her money, my savings, her savings. So that would be, you have 12K in savings. I'm paying off your 10K today. What's stopping you from doing that?

Just because I want to keep that money for a house. So I don't know if I should. Isaiah, you're not ready for a house, man. Let's walk him through it. Let's walk him through it. Isaiah, because I feel him. He's got good intentions. They're just misdirected. Okay. The house is the biggest purchase you're ever going to make. All right. It's the most important purchase. We want to make sure it's done right. The best way to buy a house is after you've paid off all of your debt. And when you've got three to six months of savings set aside, and you're able to put down a nice size down payment so that you're making it to where when you buy the house, that payment is no more than 25% of your take-home pay. So that every day

when you turn the key, it feels great walking into your house. There's no burden there. You can, you know, lay in the backyard in a hammock and just be at peace, right? We wanna create that. Right now, you've both got debt. She's not working. There's a right way to do this. And you're not gonna go in to buy a house together until you've got that money saved, until you're both married, right? Yes.

This is the way we're working this plan. I would enjoy newlywed life first and just rent, not have to worry about home ownership. And then down the line when we're ready, we'll do that. And we wanna give you a little premarital gift, and that is Financial Peace University. I want you and your fiance to go through it. I think that'll light a fire under you both to get rid of your debt separately so that when we come together, it is sweet, holy matrimony, and financial peace on top of that. So hang on the line. Skylar's going to pick up. We will gift you one year of Financial Peace University.

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Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw this hour, and we're taking your calls at 888-825-5225. Well, Jade, this has been the talk of the town, all in the news. Yes. Guess who's back? Back again. Student loans! That's right. Oh, man.

So we can pretty much say that by the end of August, we're going to be back on it. It's time to pay the piper right when student loans come back online and you know i think that this has got people feeling some type of way right because we've gone three years i mean people have like almost graduated college in the time that student loans have been paused they don't even know life of a student loan payment they don't even know about it and then there's folks who, you know, they've had this reprieve and they've created a whole new life and they bought a house and they have a whole new budget. And they traded a $400 student loan payment for a $400 car payment. And now they're going, wait, wait, wait, I got another payment coming.

Oh, I can't afford that. Yeah. And this is a problem. It's a problem. But I'm glad that it's going away because I just have to throw this number out there in case nobody's heard. Do you understand, George, that this student loan pause has cost the U.S. taxpayers five billion, buh, buh, buh, billion dollars per month? That's a thousand millions, but five of

those. Every month since this pause has happened, the taxpayers are paying that. That's insane. So I had to hit that because I don't think a lot of people have dug in to understand like there's no such thing as a free lunch. Whenever something's quote unquote free, it's not actually free. Taxpayers are paying it.

People who don't have student loans, people who never went to college, single moms, teachers, everybody's been paying for this. So they're coming back online and I feel for the people who are like, dang it. I was paying my student loans before. And for some reason, it seemed like they never went down.

Why is that? So we want to give you guys some practical information this hour. And this is the hour where you need to take out a pen and paper. If you have the ability, if you're listening in your car or whatever, save this and come back to it later. Because this is so important. We're going to teach you and break down your car or whatever, save this and come back to it later because this is so important. We're going to teach you and break down your student loan payment so you actually understand what's happening every month and so that you understand this is how you've got to attack

your student loan to ultimately pay it off. Okay, so let's just take an average number, George. Let's just say you've got $35,000. That's about what I had. In a student loan. All right. Let's say your interest rate's about what I had. In a student loan. All right. Let's say your interest rate's about 400% annual interest rate. 4%. That's what this says. Oh,

I think you said 400. I was like, I'm going to throw up. That's like payday lender level. No, no, no. 4%. That's kind of what we're looking at. So we want to understand what percentage of our payment is going to interest, right? So here's what you do. It's three easy steps. We're going to figure out how much we're paying each day in interest. So you take and you calculate your daily income, or I'm sorry, your daily interest rate. Here's what we do. We take the 4% and we multiply it by 365 days, right? So 0.04 times 365. Yep. And we're going to get a number. It's going to be like 0.00010959. So whatever your number is, fill in that blank. Take your interest rate, 0.04 or 0.08, whatever your interest is. And we're going to take $35,000 because that's how much we owe. And now we're multiplying it by that daily rate, right? And we see that we're paying $3.83 per day in interest. Doesn't sound like a

lot, but it adds up. It adds up. Now we need to find how much we're paying per month. So we take that $3.83. There's 30 days in the month. So we multiply it by 30 days and that gives us $115. So in this case, that person is paying $115 per month in interest. Now you go, hey, that doesn't seem too bad. Here's the problem. On a standard 10-year payback plan, right? For this person, their payment's probably about $354. So we know, okay, out of $354, that $115 is interest. And the rest of it, $239 goes to the principal. Here's where we get into trouble. Everybody wants a lower payment, George. Everybody says, oh, I need the income based payment, or I want the lower payment. I don't want to pay so much on my student loans. So what happens if this person calls up their lender and says, hey, I need to lower this

payment. Give me the lowest payment possible. That person might get on a payment plan, maybe a 20 year plan where that payment goes down to $113. And you feel like, woo, I'm winning. I'm paying less. But here's the problem. If your payment's $113, you're not even covering the interest. The interest didn't change. The interest does not change. And so if that's how your balance is going up, so many people on payment plans,

they extend the plan and they wonder, why isn't my student loan moving? As a matter of fact, it feels like it's getting bigger. So here's the rule of thumb. Larger payments are better. All right. I kind of came up with this thing when when these student loans come back tell yourself lower as in lower payment equals larger and longer

lower equals larger as in your your balance gets bigger because of the interest and longer which means you're going to be paying it for much longer. You do not want a lower payment. Well, it's like why we recommend a 15-year mortgage over a 30-year. Your payment's higher. That's right. But you paid off in half the time with less than half the interest. That's right.

So don't fall for these traps. Don't fall for it. Get out your pen and paper and work through this and figure out, okay, because when you see, it's like when you have a home, you look at that amortization schedule and you go, oh, I get it. Like, I see why I need to pay this thing off. And it's the same thing. Do this math, do this little bit of hard work. Let me tell you something right now. I'm confessing. I hate math. I love money. Don't love math. All right. But I make myself do it because I want to see it. And it's so important for you guys to do this because with these student loans, they're sneaky and they drain our energy, right?

Nobody wants to think about it. We want to bury our head in the sand, right? Peacock status. Is it peacocks? Ostrich. Yeah, there we go. I was like, I don't know what peacocks do. I got to Google that one. But look, when it comes to this stuff, I say it all the time.

Ignorance is not bliss. It's broke. Ooh, that'll preach. It's broke. You got to look at this stuff. You can do it. The next step then is just getting on your budget, right, George? Yes. And if you have had your head in the sand, who knows what has happened in three years? Many people had their loans sold to a

different lender. Yeah. Your payments may have changed. You may have gotten married. You've changed an address. You've got to get this stuff dialed in. So contact your lender, get all of that figured out, figure out exactly what your payment is, who it's with, what the interest rate is, and then start to plan for that in your budget. And that might mean, oh, we got to stop eating out. We got to cut some subscriptions. We got to pay off the car so that we have room to pay for the student loans. We can attack that. There's going to be some life change happening this summer. Oh, yeah. It's the summer blockbuster that nobody wanted. Student loans are coming back. But we get to frame our mindset around this, George. We can either look at this and go, oh, man, I got to pay my student loan. That sucks. Or you can look at it

and go, oh, I get to get debt free. I get to pay off my debt so I can have a better future. I get to pay off my debt so I can have peace. I get to pay off my debt so I can build wealth. I get to pay off my debt so I can send my kids to college. I get to pay off debt debt so I can have peace. I get to pay off my debt so I can build wealth. I get to pay off my debt so I can send my kids to college. I get to pay off debt so I can go to the restaurants that I want to go to without feeling guilty every time I pay. Like, right? Yes. That's what this is.

It's reframing that dichotomy in your mind. And I think we need to get riled up. And to do that, go listen to the Borrowed Future podcast series that I did. And you can go watch the documentary on YouTube for free under the same name, Borrowed Future. And I interviewed some folks who have the saddest stories, people who took out 15K and then owed 60. People who took out 80 and didn't realize they were going to be paying 120. That's the kind of stuff that gets you angry enough to pay this off. And the interest is coming back. The payments are coming

back. It's not going to get forgiven by Uncle Joe. Listen, it's just not going to happen. Even if the 10k happens that's a drop in the bucket for most of your student loans look and at this rate that 10k would be back in interest lickety split let's be honest about that yes and i just i i have to say this i i have to say this in our country there is people's people got twisted. They have confused truth with popular opinion. And that's a problem. And when it comes to the popular opinion that, oh, the government should pay for this.

I got duped. The government should step in and pay my student loans. Matter of fact, they should pay everybody's student loans. Matter of fact, you know, that continues. But here's the truth. The truth is you signed up for it. You signed up for it. And when you signed your name, and don't get me wrong, we're 18. We didn't have a clue. And these student loan companies are predatory, but it's not all your fault, but it is your responsibility.

We're not saying it's your fault, but it is your responsibility. You've got to do what's right. Do what's right. Make the right next step, which is pay off these loans because the government doesn't have a great track record of solving all of your life's problems. It's the person in the mirror. And that hurts at first until you go, oh, I'm in control. The person in the mirror, I can control that guy. That's right.

And so we have full faith that you can do this because I've done it. Jade has done it. Many people on this debt-free stage have done it. And you're next. So what are you waiting for? Are you going to keep watching the headlines, waiting for your life to change? Or are you just going to get up off the couch and go change it? You got next.

You got to decide, America. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw this hour. This is your show, America. So call us up with your questions about life and money at 888-825-5225. Well, a lot of you are planning to move sometime soon. Tis the season, and that's awesome. I'm excited for you. But let's be real. In most places around the country, you'll still be facing sky-high home

prices and interest rates. Well, they're not exactly returning to those record lows that we love to see. But that doesn't make home ownership impossible. If you want to buy or sell, you've got to make sure you're financially ready and you've got to have a trusted and experienced real estate agent to walk you through this. Not a family friend who just got their license last month. Not someone who does real estate as a part-time hobby on the weekends. You need to be working with a pro who's a true expert in your local market and they know how to negotiate a strong deal, how to market this thing to get the best price, to get the best deal. And you can find high-caliber Ramsey-trusted agents just like that through our endorsed local providers program.

And since we vet agents from around the country, you'll have the best support whether you're moving from Florida to Alaska or buying your first home somewhere in between. Just go to ramseysolutions.com slash agent to find a Ramsey-trusted real estate agent today. That's ramseysolutions.com slash agent. Randall joins us up next in Houston. Randall, what's up? Hi. Thank you for taking my call. Sure. What's going on? So I just got married middle of February,

and then soon after my wife and I found out that we're pregnant. And so just wanted to see what the best steps are to set my family up as well as our future child up for financial success. Awesome. Congrats. So you want to set up the family and the child, and what does financial success mean to you? Define that for us. Probably retiring early and not always having the baggage of weighing every decision based on the money factor. I love that. Less brain calories burned because of money. Yes, sir.

Love it. And how old are you two? So I'm 26. My wife is 24. And what's your household income? It's about 85 right now. My wife is in between jobs, but she starts a new one at the end of July, and it'll be about another 50. Awesome. Very good. What kind of debt do you guys have? Zero.

Love it. Wow, good job. And you got money in the bank? Let's see. We've got about 10 or 12 grand cash and right around 100,000, depending on the day, with investments. Oh, is that just in a taxable brokerage or is that retirement? So some of it's in retirement. About, I think, 84-ish of it is in an ETF.

About 15 of it's in a Roth IRA. And about $3,000 is in a 401k with my employer. Okay, so the ETF is outside of retirement? Correct. Cool. Okay, so what are your future goals? Because we can walk you through the baby steps, which is invest 15%. If you have that fully funded emergency fund, which I think you're close.

Is the 12K cash close to three to six months of expenses? It's probably around three or four. Okay. So we're still building that. So I would up that before baby gets here. Once the baby's here, we can set up a 529 plan and get college going and put a few hundred bucks a month away there while you guys are putting 15% of that awesome income into retirement accounts. And then what would be your next goal? Is it to be

homeowners? You guys have a house? Absolutely. No, we don't. We rent right now. Okay. But possibly homeowners in the next couple of years, just trying to see what the options are and what it looks like. I know the housing market is absolutely nuts right now. Oh yeah. Well, I would liquidate those non-retirement funds and use that as a down payment. You could definitely do that. That would be a great plan, especially right now with even high-yield savings accounts, interest rates. You might want to liquidate now and just sock it away over there at 4% or 5% and not worry about what the stock market does based on what someone tweeted or what the government, who knows what.

And I think going in, I feel like we kind of don't, we talk about all the time that we want you to get a 15-year fixed rate mortgage where the payment's no more than 25% of your take-home pay all in. We talk about that a lot. But I think sometimes if you're a first-time home buyer, I know I experienced this, there are those fees up front that are big percentages of money that we don't really think about. And I want to kind of go over that a little bit. I came up with this little acronym that I think helps. I say, make sure you have a stacked deck, D-E-C. Because you've got your down payment, which is substantial.

And if you're making an offer, a lot of times you need earnest money, which is the E, and then your closing costs, which is the C. So that's a lot of money. Just add a K to make me feel good. Just call it kitchenware. All right, there we go. I have a budget for kitchenware. There you go. But that's what I'm talking about is making sure not only the down payment,

that is a big thing, but sometimes we forget those other costs that are really big and you want to have the cash for it. Just having a couch to sit on. Yeah. So you guys are in a good spot. You've got, like George said, you've got money you can liquidate and you can still continue to save towards it as well. But kind of thinking through that

and going, what does this mean? You know, of course, your down payment anywhere between, you know, 10 to 20 percent, 5 percent, I've heard some people say. Your earnest money, sometimes that's 1 to 3 percent

of the purchase cost. And then your closing cost could be anywhere between 5 to 7 percent. So that's a lot of money to think about and you've already got a great head start and randall we're we're cheering you on because you're asking yourself how to set yourself up financially you're already doing the work by remaining debt free and having money in the bank staying cash positive increasing your net worth those are the kinds of moves that allow you to burn less brain calories with every financial decision. How does that sit with you? Was that a lot? It does. Yeah. The one thing that I'm hesitant on is I know that some of the high interest savings accounts, they can make whatever percentage is

three, four or 5%. But is that something to be worried about with inflation being higher than that? No, I would not. Even if it was 2%, I still think it's a wise move. If you've got a home purchase coming up in the next year, to keep it liquid and not put it into the market. Because we just don't know. And what I would hate is a year from now, you had 84 a year ago, and you go to buy that house, and now that account is down to 70. That's right. Because of some dip in the market. And it hurts emotionally, and it it hurts financially because now you're set back with your down payment savings goal. Yeah, we've done extensive studies on that. The difference between leaving, if you were to put money in the market to

save, the difference between keeping it in five years or more or less than five years, the chances of you having gains on it goes down dramatically if it's like one year, three years. That's why we say don't put your money in the market for savings unless you're going to keep it in there long term, five years or more. So in your case, that's not really what we're looking at. So that high yield savings account is perfect. The purpose is not to outpace inflation at that point. It's just to save for your down payment. And I'm sure the Houston area housing is pretty expensive. And so I would sit down with your wife and go, hey, what kind of house is reasonable for us right now? We may not be able to afford that dream home that we really, it may have to be a townhome for now. And that's okay. We're going

to get a $300,000 townhome instead of a $600,000 single family home, or it's going to be 20 minutes further than we wanted it to be. So there's going to be some compromises and home ownership is never perfect. And so you've got to kind of know that going into it to not be emotionally jarred and scarred. I understood. Okay. Thank you all. Yeah. Congrats on the upcoming baby. That's exciting. Can you imagine? Well, I guess it happens a lot. You get married and like less than a year and you're like, we're pregnant. That's a lot. That was a real exhale. That was a real depress. But you know what makes it way easier? When you don't have debt and you have $12,000 in the bank like Randall and you're not stressed

about how are we going to afford this baby? It becomes a line item in the budget. And so we always say in the baby steps, there's no baby step that is have a baby. Right. You can have a baby in any baby step. Will it be more financially peaceful to have that baby once you're debt-free with an emergency fund? A thousand percent. Do people have babies all the time while they're in debt and they survive? Yes. But still make it a priority

to become debt-free, get the emergency fund. And Jade, more than ever, I think with today's economy and the news, everyone is going, I feel like I can't keep up with inflation. I'll never be a million. I'll never be able to. And so they start doing these Hail Mary shortcuts, buzzer beater financial moves that end up hurting them way more than it helps them. Yeah, that's right. You know, you just, you kind of have to just stay the course on this and keep going strong, keep saving. And if you don't like the rate that you're saving, you might have to increase your income in a way so that you can save more. But the key is don't make rash choices don't make speedy choices take your time um and do it right yeah you won't regret it the less exciting the financial plan sounds the more it's

probably the right one that's right if it sounds too good to be true and it sounds like if i just did this one thing this guy said if a guy said said, then maybe it's not the right financial plan. Unless they're sitting at this desk and that guy or gal has a good head on their shoulders. Because we're not trying to steer you to get rich quick. We're trying to steer you to get rich slow and have peace in your life, which is about the opposite the way the world is going right now. We are far, far away from peace, and we're all aiming towards it. It's what we really, really want deep down. We're here for you, America.

This is The Ramsey Show. This is The Ramsey Show. I'm George Camel, joined by Jade Warshaw this hour. Open phones at 888-825-5225. Hey, if you're a new listener to this show and you want to dive deeper into the Ramsey baby steps, all the stuff we talk about on the show, the lingo, you can go to ramseysolutions.com and click on the get started button and we will help you figure out the next best step for your financial journey based on where you're at today. That's ramseysolutions.com. Click on the get started button. Our question of the day is brought to you by Neighborly, your hub for home services. Spring is here and Neighborly can help keep your home and yard in tip-top shape with the Grounds

Guys, Mosquito Joe, Precision Garage Doors, and Mr. Handyman. So spend time enjoying your home, not working on it. Go to neighborly.com to find service pros in your area. All right. Today's question comes from Mark in Wisconsin. He says, a year ago, I bought a loaded 2022 Santa Fe with 18 miles for about $38,100. After a year of payments at $391, I'm starting to regret my decision. I owe $16,400 on the loan and CarMax is offering me $31,600 for the car. I put $15,000 down when I purchased it and I could pay off the loan by selling it and be left with about $15,000. All right. Can I look at this as a learning lesson, kind of like a lease and sell and go back to my motto of it's just a car it's a great that's his motto um yeah i these questions sometimes i'm like i want more context i want to know what your income is what percentage of your income is this

of course i hate car loans i want to know what other debt that you have um but at the end of the day if you don't like the car you regret having the car and you can get out which is rare when you can get out and is rare when you can get out and still have 15k left this is a wonderful situation as far as reversing the stupid tax yeah i'm like go get out of it turn it back in sell it get your 15k because they put 15k down and they're saying they're gonna get 15k out of it yeah yeah he's coming away it's a wash you basically got to drive the car for a year and have a good time and now you're done with it oh he's oh so you're saying it's wash it sounded like he was saying that he would be left with 15k did i read it wrong which is what they put down so 15 plus their year of payments is what they

paid into it so they lost a little bit of money but not too it could have been we have seen a whole lot worse with cars being underwater today yeah so so can you go back to his motto i say yeah it's just a car sell it sell. Sell it. Get out of it. Get you something that you're paying cash for, that you don't have a payment in the world. It is just a car. 15K will get you a real nice car. It sure will. To this day, Jade, the newest car I've driven that our family owns is a 2013.

Me too. I'm still behind the times. Me too, George. So all these people out here driving 2022 loaded cars, I'm like, must be nice. We're out here paying cash loaded cars i'm like must be nice we're out here paying cash look being reasonable and and it's an omen because we both said 2013 and do you want to know what i paid for our 2013 15k that's what's up that's what's up so you're gonna get a nice 2013 vehicle with your 15k you sure are and i love your motto it's just a car

and you want to know what you're gonna feel so good because you're going to secretly know inside. When you just walk through the parking lot of Costco or when you take a walk through your neighborhood and you see all the vehicles, you're going to go $717 a month, $862 a month. I wish legally. What if, Jay? Just what if? If you had a car payment, you had to stamp it onto your windshield. Do you think we drive differently?

Yes, George. I'm scared people would flex and be like $1,200. had a car payment you had to stamp it onto your windshield do you think we drive differently yes george i'm scared people would flex and be like twelve hundred dollars yeah there would be the people who were so just like mortified to put it on there and then there'd be the people the bro dudes who'd be so probably the bro the truck bros they've got the lifted they've got the under led kit going on spent spent twelve twelve hundred dollars I'm like, bro, what do you use that truck about? Oh, you go to Lowe's once a quarter to get some mulch? Okay. Oh, man.

Glad you had to buy a $60,000 truck to do that. Goodness gracious. Yeah. Cars just have never, people go, well, George, you're not a car guy. I'm like, what is a car guy? I think everybody loves a nice car. We all enjoy a nice car. I own a nice car. We all enjoy a nice car. I own a nice car.

Yeah. But the thing is, I want to own a car to where the next car I get is the nicest car I've driven. The problem with buying new cars is that anything else feels like a downgrade. But when you're in debt, you're doing it the wrong way. That car is going down in value while you continue to pay interest. Yeah. It's one of the stupidest forms of debt you can get into. That's right.

He's doing right. Get out of the car. It's just a car.est forms of debt you can get into. That's right. He's doing right. Get out of the car. It's just a car. Who cares what other people think? And every time you turn that ignition, you feel that regret. It's just not worth it. So I'd sell it. Thanks for the question.

All right, let's go to the phones. Lindsay is in Portland, Maine. Lindsay, welcome to the show. Hi. So glad it's you and Jade today. Can you hear me okay? Yes. We can. We're glad it's Lindsay. I'm sorry, it's you and Jade today. Can you hear me okay? Yes.

We're glad it's Lindsay. I'm sorry, what was that? We're glad it's Lindsay on the line. How can we help? Yay. So I have been following you guys for a while, and we completed the Financial Peace University, and we have gone bananas for the past eight months. We've paid over $100,000 off already.

Come on, somebody. Yeah. And we just sold our home. It was a really big deal, but we ended up profiting $360,000 from the sale of our home. That's awesome. So our big question though, is we have 350 in student loan debt. Oh, wow. So we're right. So we're kind of in this position of breaking even, if you will, to then be able to have this cash to pay off. Are you guys like doctors or lawyers or something? Yeah. So my husband has a master's in finance and I'm a nurse practitioner. Okay. Where are you living now since you've sold the home?

So everyone thinks we're crazy. We currently are waiting to get into a rental that's available July 1st. Okay. Awesome. What's your household income? So we currently make between the two of us to $250,000. Heck yeah. Okay. And the only debt is the student loan debt or is there more? Nope. That's now that's currently it. I have $250,000 and my husband has $80,000 and it's all federal. We pay. So, so our initiative, we, um, we cleaned out our savings and we paid off the private at the end of last year. And then, um, we've just been saving, saving, saving and paying, paying off, um, our debt. We sold, we, we were those people we had, um, now granted our interest in our cars was like 1%, but we did have $1,000 a month

in car payments on a big truck and an Audi. Wow. And so we sold both of those and we were getting a 2012 Equinox. Yes, 2012 Equinox. Let's go. Lindsey, killing the game. Awesome. So, so Lindsey, no kids, right? We have two kids. So that's

part of our initiative. Our big thing is we were trying to hustle. My husband worked overnight stocking shelves at a grocery store for the past six months to bring in an extra two grand. And, um, I have three jobs and we're just tired. We're tired of just working these long hours. We're willing to do it. And we know that our plan would have been accomplished within three to five years to pay off the 350. But we just felt like selling the house was just a better move to be able to kind of get out of Sally Mae's jail free card. Now, when this rental comes available July 1st and the whole family's living in there is this a situation let's let's hypothetical let's pretend you use this home

sale pay off all the debt right and you're starting at ground zero you're in a rental it's gonna i mean you've got a great income but you're still gonna have to save up for down payments and closing costs and all you know get your three to six months all of that stuff exactly when we start mapping out the timeline of this right and maybe we find out hey this is going to take us a year this is going to take us two years will that rental um take you there like is this the type of situation where it's like no better than a hotel room right with the family it's like oh we're on top of each other. We can't stand it. Or can you? Get this. It's a family friend who bought it for two or three years down the road

for her elderly mother. It's a three bed, two bath with a yard. Come on. Amazing. It's a desirable neighborhood. Touchdown. Five minutes from my work. Yeah.

That's incredible. And I was driving probably on average an hour and a half to two hours a day with where we, where we previously lived. You've got blessings

all around, Lindsay. No, no brainer for me. This is a no brainer for me, George. I'm paying off the student loans. You're going to have

an emergency fund left, right, Lindsay? We will. We'll have a full six month emergency fund left with our current every dollar budget and our profit. This is not a coincidence. This is like a God thing.

And I'm going to use that. And your next goal is to save up a house down payment. And making $250, you can throw $100, $150K into the savings account and be back in a house a few years from now. Come on. Touchdown. Love it. Winds all around here, Jade. That puts this hour of The Ramsey Show in the books. My thanks to my co-host, Jade Warshaw, all the folks in the booth, and you, America. Thank you for listening. We'll be back before you know it. Hey, what's up, guys? It's Jade. If you love the show and want a deeper dive on your money journey, we have a weekly newsletter that gives you trending and helpful articles and tips on following the Ramsey

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